<PAGE>   1
 
      AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 17, 1996
 
                                                        REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                    FORM S-1
                             REGISTRATION STATEMENT
                                   UNDER THE
                             SECURITIES ACT OF 1933
                            ------------------------
 
                             COMMODORE MEDIA, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<S>                      <C>                                                  <C>
        DELAWARE                                 4832                                13-3034720
     (STATE OR OTHER                 (PRIMARY STANDARD INDUSTRIAL                 (I.R.S. EMPLOYER
      JURISDICTION OF                 CLASSIFICATION CODE NUMBER)              IDENTIFICATION NUMBER)
    INCORPORATION OR
      ORGANIZATION)
               COMMODORE MEDIA, INC.                                BRUCE A. FRIEDMAN
           500 FIFTH AVENUE, SUITE 3000                           COMMODORE MEDIA, INC.
             NEW YORK, NEW YORK 10110                         500 FIFTH AVENUE, SUITE 3000
                  (212) 302-2727                                NEW YORK, NEW YORK 10110
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,                   (212) 302-2727
   INCLUDING AREA CODE OF REGISTRANT'S PRINCIPAL    (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
                 EXECUTIVE OFFICES)                                      NUMBER,
                                                       INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
 
                            ------------------------
 
                                   COPIES TO:
 
                             IRA J. GOLDSTEIN, ESQ.
                              BLAKE HORNICK, ESQ.
                        PRYOR, CASHMAN, SHERMAN & FLYNN
                                410 PARK AVENUE
                            NEW YORK, NEW YORK 10022
                                 (212) 421-4100
                           NICHOLAS P. SAGGESE, ESQ.
                              MARK C. SMITH, ESQ.
                      SKADDEN, ARPS, SLATE, MEAGHER & FLOM
                             300 SOUTH GRAND AVENUE
                         LOS ANGELES, CALIFORNIA 90017
                                 (213) 687-5000
 
                            ------------------------
 
     Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration
Statement becomes effective.
 
     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  / /
 
     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  / /
 
     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  / /
 
     If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  / /
                            ------------------------
 
                        CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
 
<TABLE>
<S>                                         <C>             <C>             <C>             <C>
- --------------------------------------------------------------------------------
                                                                PROPOSED        PROPOSED
                                                                MAXIMUM         MAXIMUM
                                                                OFFERING       AGGREGATE       AMOUNT OF
           TITLE OF EACH CLASS OF              AMOUNT TO       PRICE PER        OFFERING      REGISTRATION
        SECURITIES TO BE REGISTERED         BE REGISTERED(1)     SHARE(2)       PRICE(2)         FEE(3)
- ------------------------------------------------------------------------------------------------------------
Class A Common Stock, $.01 par value
  shares.................................... 4,945,000 shares        $        $75,000,000       $25,863
</TABLE>
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
(1) Includes shares subject to the Underwriters' over-allotment option. See
    "Underwriting."
 
(2) Estimated solely for purposes of calculating the registration fee in
    accordance with Rule 457 under the Securities Act of 1933.
 
(3) Calculated pursuant to Rule 457(a) based upon an estimate of the maximum
    offering price.
 
     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>   2
 
                             COMMODORE MEDIA, INC.
 
                             CROSS REFERENCE SHEET
                   PURSUANT TO ITEM 501(B) OF REGULATION S-K
 
<TABLE>
<CAPTION>
               FORM S-1 ITEM NUMBER AND CAPTION             CAPTION OR LOCATION IN PROSPECTUS
<C>    <S>                                                <C>
   1.  Forepart of the Registration Statement and
       Outside Front Cover Page of Prospectus...........  Outside Front Cover Page of the
                                                          Registration Statement;
                                                          Cross-Reference Sheet; Outside Front
                                                          Cover Page of Prospectus
   2.  Inside Front and Outside Back Cover Pages of
       Prospectus.......................................  Inside Front Cover Page and Outside
                                                          Back Cover Page of Prospectus
   3.  Summary Information, Risk Factors and Ratio of
       Earnings to Fixed Charges........................  Prospectus Summary; Risk Factors
   4.  Use of Proceeds..................................  Prospectus Summary; Use of Proceeds
   5.  Determination of Offering Price..................  Underwriting
   6.  Dilution.........................................  Dilution
   7.  Selling Security Holders.........................  Principal and Selling Shareholders
   8.  Plan of Distribution.............................  Front Cover Page; Underwriting
   9.  Description of Securities to be Registered.......  Front Cover Page; Prospectus Summary;
                                                          Description of Capital Stock
  10.  Interests of Named Experts and Counsel...........  Legal Matters; Experts
  11.  Information with Respect to Registrant...........  Outside Front Cover Page of
                                                          Prospectus; Prospectus Summary; Risk
                                                          Factors: The Company; Use of
                                                          Proceeds; Capitalization; Selected
                                                          Pro Forma Financial Statements;
                                                          Selected Historical Financial Data;
                                                          Management's Discussion and Analysis
                                                          of Financial Condition and Results of
                                                          Operations; Business; Management;
                                                          Certain Transactions; Principal and
                                                          Selling Shareholders; Description of
                                                          Certain Indebtedness; Description of
                                                          Capital Stock; Financial Statements
  12.  Disclosure of Commission Position on
       Indemnification for Securities Act Liabilities...  Not applicable
</TABLE>
<PAGE>   3
 
     INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
     REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
     SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
     MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
     BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
     THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
     SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
     UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
     OF ANY SUCH STATE.
 
                   SUBJECT TO COMPLETION, DATED MAY 17, 1996
PROSPECTUS
            , 1996
 
                                4,300,000 SHARES
 
                             COMMODORE MEDIA, INC.
                              CLASS A COMMON STOCK
 
     Of the 4,300,000 shares of Class A Common Stock, $.01 par value (the "Class
A Common Stock"), offered hereby (the "Offering"), 2,882,143 shares are being
sold by Commodore Media, Inc. (the "Company") and 1,417,857 shares are being
sold by the Selling Shareholders named herein under "Principal and Selling
Shareholders." The Company will not receive any of the proceeds of shares sold
by the Selling Shareholders. The Class A Common Stock entitles the holders to
one vote per share and the Class B Common Stock entitles the holders to eight
votes per share. After the Offering, the Estate of Carter Burden will have
approximately 80% of the total voting power in respect of matters submitted for
the vote of all shareholders.
 
     Prior to the Offering, there has been no public market for the Class A
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $          and $          per share. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price.
 
     Application will be made to have the Class A Common Stock approved for
quotation on the NASDAQ National Market System under the symbol "CMIA."
 
     SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE CLASS A COMMON
STOCK OFFERED HEREBY.
                            ------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
  EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
    SECURITIES AND EXCHANGE COMMIS SION OR ANY STATE SECURITIES COMMISSION
     PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
       REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
 
<TABLE>
<S>                                    <C>             <C>             <C>             <C>
                                                         UNDERWRITING      PROCEEDS      PROCEEDS TO
                                         PRICE TO THE   DISCOUNTS AND       TO THE       THE SELLING
                                            PUBLIC      COMMISSIONS(1)    COMPANY(2)     SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------
Per Share..............................        $              $               $               $
- -------------------------------------------------------------------------------------------------------
Total(3)...............................        $              $               $               $
</TABLE>
 
- --------------------------------------------------------------------------------
 
(1) The Company and the Selling Shareholders have agreed to indemnify the
    Underwriters (as defined herein) against certain liabilities, including
    liabilities arising under the Securities Act of 1933, as amended. See
    "Underwriting."
(2) Before deducting expenses estimated at $        payable by the Company.
(3) The Company and one of the Selling Shareholders have granted to the
    Underwriters a 30-day option to purchase up to an aggregate of 645,000
    additional shares from the Company and such Selling Shareholder on the same
    terms as set forth above, solely to cover over-allotments, if any. If such
    option is exercised in full, the total Price to the Public, Underwriting
    Discounts and Commissions, Proceeds to the Company and Proceeds to the
    Selling Shareholders will be $        , $        , $        and $        ,
    respectively. See "Underwriting."
 
     The shares of Class A Common Stock are offered by the several Underwriters
when, as and if delivered to and accepted by the Underwriters against payment
therefor and subject to various prior conditions, including their right to
reject orders in whole or in part. It is expected that delivery of the
certificates representing the shares of Class A Common Stock will be made in New
York, New York on or about                     , 1996.
 
DONALDSON, LUFKIN &  JENRETTE
           SECURITIES CORPORATION
 
                    CS FIRST BOSTON
                                                CIBC WOOD GUNDY SECURITIES CORP.
<PAGE>   4
 
                             COMMODORE MEDIA, INC.
 
                          [MAP/ARTWORK TO BE PROVIDED]
 
                         ------------------------------
 
     IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
 
     DURING THE OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE CLASS A COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES
10B-6, 10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
 
                                        2
<PAGE>   5
 
                               PROSPECTUS SUMMARY
 
     The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements contained elsewhere in this Prospectus. Except as otherwise indicated
by the context, references in this Prospectus to the "Company" include Commodore
Media, Inc. and its direct and indirect wholly owned subsidiaries. All numbers
of shares, per share amounts and related information in this Prospectus have
been adjusted to reflect a 7.2-for-1 split of the Common Stock (the "Stock
Split"), which will be effected prior to the sale of the Class A Common Stock
offered hereby. See "Description of Capital Stock." Unless otherwise indicated,
the information contained in this Prospectus assumes no exercise of the
Underwriters' over-allotment option. References in this Prospectus to the
Company's "pro forma" 1995 operating results and related statistical information
give effect to the Recapitalization Transactions, the Offering and the
application of the estimated net proceeds therefrom, the Acquisitions and the
1995 Treasure Coast Acquisition (as such terms are defined herein) as if such
transactions had occurred on January 1, 1995. See "--Market Data and Certain
Definitions," "Unaudited Pro Forma Consolidated Financial Information" and "Use
of Proceeds."
 
                                  THE COMPANY
 
     Commodore Media, Inc. owns and operates, or provides sales and marketing
services for 33 radio broadcasting stations (nineteen FM and fourteen AM
stations) in six medium-sized markets. The Company is the leading radio group on
a pro forma basis in five of its six markets based on radio advertising revenue
and is the leading radio group in each of its six markets based on audience
share. The Company's average radio revenue share in its markets was 45.1% in pro
forma 1995, which the Company believes is the highest average radio revenue
share of any public radio broadcasting company in the United States. The
Company's radio stations are located in the following markets: Fairfield County,
Connecticut; Allentown, Pennsylvania; Wilmington, Delaware; Westchester/Putnam
Counties, New York; Ft. Pierce-Stuart-Vero Beach, Florida (the "Treasure Coast
Market") and Huntington, West Virginia/Ashland, Kentucky. The Company's pro
forma net revenue and broadcast cash flow for the year ended December 31, 1995
were $42.5 million and $15.3 million, respectively.
 
     The Company believes that operating radio stations in medium-sized markets
offers significant opportunities to apply its programming, marketing and
broadcasting expertise to increase broadcast cash flow and to establish a
dominant market position that would be difficult for a competitor to replicate.
The Company defines medium-sized markets as markets with approximately $10
million to $35 million of radio advertising revenue, which includes markets
ranked between 50 and 150 in terms of radio advertising revenue. The Company
believes that medium-sized markets represent attractive operating environments
because these markets are generally characterized by (i) a limited number of
radio stations, which minimizes the risk of format attack, (ii) fewer
alternative advertising media, (iii) undercapitalized owners/operators, (iv)
strong station brand identity among listeners that is not typically dependent
upon specific on-air talent, (v) a lower cost operating structure and (vi) a
high percentage of local advertisers who make advertising decisions based upon
relationships and customer service and not solely upon station ratings. The
Company believes that these characteristics allow it to capture a greater
percentage of a market's total advertising revenue and to achieve broadcast cash
flow margins typically higher than industry norms while operating in a more
stable competitive environment. In addition, the Company believes that under the
recently enacted Telecommunications Act of 1996, which liberalized radio station
ownership limits, medium-sized markets offer the Company the greatest
opportunity to create dominant, multiple station ownership situations.
 
     The Company's objective is to increase shareholder value by enhancing its
share of the advertising revenue in each of its markets, increasing the
broadcast cash flow of its existing stations and pursuing additional
acquisitions both in its existing markets and in new markets in which the
Company's operational expertise can be successfully applied to increase
broadcast cash flow. Through successful implementation of the Company's
operating and acquisition strategies, the Company's net revenue and broadcast
cash flow have increased at compound annual growth rates of 21.1% and 29.2%,
respectively, from 1991 to pro forma 1995 and the broadcast cash flow margin has
increased from 26.0% in 1991 to 36.1% in pro forma 1995. On a same station
basis, from 1991 to 1995, the Company successfully increased its net revenue and
broadcast cash flow at compound annual growth rates of 13.7% and 20.7%,
respectively.
 
                                        3
<PAGE>   6
 
     The following table sets forth, on a pro forma basis, certain information
with respect to the Company and its markets:
 
<TABLE>
<CAPTION>
                                         COMPANY DATA                                               MARKET DATA
               ----------------------------------------------------------------    ----------------------------------------------
                                                                      NUMBER OF                   1995
                RADIO    RADIO REVENUE     RADIO     RADIO AUDIENCE   STATIONS(F)                 RADIO                 1990-1995
               REVENUE    MARKET SHARE    AUDIENCE    MARKET SHARE    ---------      VIABLE      REVENUE   1995 RADIO    REVENUE
  MARKET(A)    RANK(B)        %(C)        RANK(D)         %(E)        AM    FM     STATIONS(G)   RANK(H)   REVENUE(I)    CAGR %
<S>            <C>       <C>              <C>        <C>              <C>   <C>    <C>           <C>       <C>          <C>
Fairfield
 County, CT       1          33.2%            1           26.3%        3     3         9            60      $ 27,851       9.6%
Allentown, PA     1          53.7%            1           47.2%        2     2         8            77      $ 19,300       5.1%
Wilmington,
  DE              2          33.2%            1           42.2%        1     1         5            78      $ 17,800      10.4%
Westchester/Putnam
  Counties,
  NY(j)           1          34.3%            1           47.3%        2     3         4           115      $ 12,400        N/A
Treasure
  Coast, FL       1          49.7%            1           49.8%        1     5         9           138      $  9,900       6.5%
Huntington,
  WV/
  Ashland, KY     1          66.7%            1           70.4%        5     5         9.5         140      $  9,800       7.3%
</TABLE>
 
- ------------------------------
 
(a) Actual city of license may be different from metropolitan market served.
    Market names used in this table are those used by Arbitron for Arbitron
    Metro Survey Areas or Arbitron Custom Survey Areas for the Company's
    markets.
(b) Radio Revenue Rank in each market is the ranking, by 1995 radio group market
    revenue share, of each of the Company's radio groups in its market among all
    other such radio groups in such market. For each of the Company's radio
    groups, except Fairfield County, Radio Revenue Rank was derived by the
    Company determining the radio groups in the market and by then calculating
    group revenue using the market revenue sources described in note (c) below.
    Fairfield County was ranked in the source as indicated in note (c) below.
(c) In each of the markets, except Fairfield County, Radio Revenue Market Share
    was derived by dividing (1) the total 1995 radio revenues of the Company's
    stations in the market, by (2) the total 1995 radio revenues in that market
    as published in BIA's Investing in Radio -- 1996 Market Report (2nd ed.). In
    Fairfield County, the total 1995 radio revenues in the market were obtained
    from the January 1996 Fairfield Suburban Market Revenue Report by Miller
    Kaplan (as hereinafter defined).
(d) Ranking of the Company's combined stations versus other radio groups in the
    market for persons aged 12 and older in the applicable Arbitron Metro Survey
    Area or Arbitron Custom Survey Areas, Average Quarter Hour Estimates, Monday
    through Sunday, 6 am to midnight.
(e) Radio Audience Market Share was derived by dividing (1) the sum of audience
    shares from the applicable Arbitron Market Survey of the Company's combined
    radio stations, by (2) the total sum of audience shares above the line in
    the local market served.
(f) The number of stations for Allentown, Pennsylvania includes WKAP-AM for
    which the Company is providing certain sales and marketing services pursuant
    to a JSA; the number of stations for the Treasure Coast Market, Florida
    includes WPAW-FM for which the Company is providing certain sales and
    marketing services pursuant to a JSA; and the number of stations for
    Huntington, West Virginia/Ashland, Kentucky includes WMLV-FM, WHRD-AM,
    WFXN-FM, WKEE-AM, WKEE-FM, WZZW-AM, WBVB-FM and WIRO-AM, for which the
    Company is providing certain sales and marketing services pursuant to LMAs
    pending the consummation of the Huntington Acquisitions.
(g) The number of viable radio stations for the Company's Allentown, Wilmington
    and Huntington/Ashland markets were taken from Duncan's Radio Market Guide
    (1996 Edition). The number of viable stations for the Company's remaining
    markets were derived by calculating all radio stations listed home-to-market
    by Arbitron which received an average quarter hour share of "1" or greater
    in each of the 1995 Arbitron Surveys for the indicated market.
(h) According to BIA's Investing in Radio Market Guide 1996 (2nd ed.) "Revenue
    Rank." The Fairfield County, CT and Westchester/Putnam Counties, NY Radio
    Revenue Ranks were estimated using BIA's methodology.
(i) Dollars in thousands.
(j) Radio Revenue Rank and Radio Revenue Market Share for Westchester/Putnam
    Counties, NY have been estimated by the Company because no data is available
    for this sub-market.
 
                                        4
<PAGE>   7
 
                               BUSINESS STRATEGY
 
     The Company believes the most effective way to achieve its objective of
increasing shareholder value is to dominate medium-sized markets by operating
multiple radio stations in each market. Multiple station ownership enables the
Company to maintain greater influence over the pricing of radio advertising
rates and more effectively compete against alternative forms of media
advertising. The Company has the ability to program its multiple stations to
provide advertisers with access to a variety of attractive demographic groups in
a market and as a result, capture a significant share of the market's radio
advertising revenue. In addition, multiple station ownership enables the Company
to attract and retain highly qualified personnel as well as to achieve cost
savings through eliminating duplicative overhead and consolidating broadcast
facilities.
 
     The Company's station operating strategy centers upon (i) strategically
programming its radio stations to dominate specific demographics and/or provide
advertisers a broad spectrum of multiple demographic targets, (ii) conducting
extensive market research, (iii) employing a local sales force that utilizes a
value-added sales approach designed to form marketing partnerships with
advertisers, (iv) employing separate sales forces at each major station in the
Company's markets who coordinate the advertising packages presented to its
advertisers, (v) controlling station operating costs through consolidation of
multiple station facilities and selected use of preprogrammed automation and
automated satellite delivered programming, (vi) providing performance based
management incentives and (vii) building and maintaining broad station awareness
and listener loyalty through strong community involvement.
 
                              ACQUISITION STRATEGY
 
     The Company's acquisition strategy is to selectively acquire
underperforming radio stations in medium-sized markets at prices that are
attractive relative to the Company's potential to increase the acquired
stations' broadcast cash flow. The Company believes that significant
opportunities exist in other medium-sized markets for the Company to acquire
additional radio stations at attractive prices relative to their broadcast cash
flow potential. The Company also believes it can effectively capitalize on its
presence in and knowledge of the markets in which it operates to make attractive
acquisitions in adjacent markets. The Company may also enter new markets either
through acquisitions of radio groups that have multiple station ownership in a
market or though acquisitions of individual stations in markets in which the
Company believes it can establish itself as the markets' dominant radio group by
making additional in-market acquisitions.
 
     In analyzing potential acquisitions, the Company considers many factors
including: (i) the price and terms of the purchase in relation to the estimated
potential broadcast cash flow for the station or stations; (ii) the possibility
of obtaining a synergistic combination with additional stations in a given
market; (iii) the existing quality and potential quality of the station's
broadcast signal and transmission facility and (iv) the radio and other media
competition in the market. While the Company continuously evaluates
opportunities to make strategic acquisitions, it has no present commitments or
agreements with respect to any material acquisitions other than the Huntington
Acquisitions.
 
                                THE ACQUISITIONS
 
     The Company has recently made, or entered into agreements to make, the
following acquisitions:
 
     Fairfield County, Connecticut.  In March 1996, the Company acquired radio
stations WRKI-FM and WINE-AM in Fairfield County, Connecticut (the "Danbury
Acquisition"). In May 1996, the Company acquired radio stations WKHL-FM and
WSTC-AM in Stamford, Connecticut (the "Stamford Acquisition").
 
     Westchester/Putnam Counties, New York.  As part of the Danbury Acquisition,
the Company acquired radio stations WZZN-FM (formerly WVIB-FM), WPUT-AM and
WVYB-FM in Westchester/Putnam Counties, New York in March 1996 (the "Westchester
Acquisition").
 
     Treasure Coast Market, Florida.  In May 1996, the Company acquired radio
stations WKQS-FM, WAVW-FM and WAXE-AM in the Treasure Coast Market (the "1996
Treasure Coast Acquisition").
 
     Huntington, West Virginia/Ashland, Kentucky.  In April 1996, the Company
entered into (i) an agreement to acquire radio stations WKEE-FM and WKEE-AM in
Huntington, West Virginia, WZZW-AM in Milton, West Virginia, WBVB-FM in Coal
Grove, Ohio and WIRO-AM in Ironton, Ohio and
 
                                        5
<PAGE>   8
 
(ii) agreements to acquire radio stations WHRD-AM in Huntington, West Virginia,
WFXN-FM in Milton, West Virginia and WMLV-FM in Ironton, Ohio (the "Huntington
Acquisitions"). In connection with these agreements, the Company entered into
LMAs (as defined below) to provide, on a cooperative basis, the programming,
sales, marketing and certain other services to the stations pending the closing
of the acquisitions.
 
     The term "Acquisitions" as used in this Prospectus collectively refers to
the following acquisitions of radio stations by the Company: (i) the Danbury
Acquisition, (ii) the Stamford Acquisition, (iii) the Westchester Acquisition,
(iv) the 1996 Treasure Coast Acquisition and (v) the pending Huntington
Acquisitions. The Company anticipates that the Stamford Acquisition and the 1996
Treasure Coast Acquisition will be consummated in May 1996 and that the
Huntington Acquisitions will be consummated during the second half of 1996.
However, there can be no assurance that any of such transactions will be
consummated. The term "1995 Treasure Coast Acquisition" as used in this
Prospectus refers to the acquisition of radio station WQOL-FM and the Company's
entry into a JSA with respect to WPAW-FM. Both stations are in the Treasure
Coast Market, Florida.
 
     The Company's executive offices are located at 500 Fifth Avenue, Suite
3000, New York, New York 10110. The telephone number is (212) 302-2727.
 
                                  THE OFFERING
 
<TABLE>
<S>                                                           <C>
Class A Common Stock offered by the Company.................  2,882,143 shares
Class A Common Stock offered by the Selling
  Shareholders(a)...........................................  1,417,857 shares
     Total..................................................  4,300,000 shares
Common Stock to be outstanding after the Offering(b)
  Class A Common Stock......................................  4,542,554 shares
  Class B Common Stock......................................  2,280,690 shares
     Total..................................................  6,823,244 shares
Use of proceeds.............................................  To repay existing indebtedness, to
                                                              redeem the Company's outstanding
                                                              shares of Series A Preferred Stock,
                                                              to finance a portion of the
                                                              Huntington Acquisitions and to pay
                                                              deferred compensation. The Company
                                                              will not receive any proceeds from
                                                              the sale of shares of Class A Common
                                                              Stock by the Selling Shareholders.
                                                              See "Use of Proceeds."
Voting rights...............................................  Each share of Class A Common Stock
                                                              is entitled to one vote and each
                                                              share of Class B Common Stock is
                                                              entitled to eight votes. After the
                                                              Offering, the Estate of Carter
                                                              Burden will own approximately 80% of
                                                              the total voting power and 28% of
                                                              the fully-diluted economic interest
                                                              in the Company. The Estate of Carter
                                                              Burden will continue to have the
                                                              ability to control the Company. See
                                                              "Principal and Selling Shareholders"
                                                              and "Description of Capital Stock."
NASDAQ National Market symbol...............................  CMIA
</TABLE>
 
- ------------------------------
 
(a) The Selling Shareholders include the Estate of Carter Burden and William
    A.M. Burden & Co., L.P.
 
(b) Excludes: (i) options outstanding on the date hereof to purchase
    approximately 694,368 shares of Class A Common Stock at an exercise price of
    $6.25 and (ii) warrants outstanding on the date hereof to purchase 597,960
    shares of Class A Common Stock at an exercise price of $.01.
 
                                        6
<PAGE>   9
 
                      MARKET DATA AND CERTAIN DEFINITIONS
 
     Unless otherwise indicated herein, all markets, audience ratings and
audience rankings have been derived for the indicated station or group of
stations from surveys of the indicated demographic group listening Monday
through Sunday, 6 a.m. to 12 midnight, based on the average of the survey
periods for the referenced year, as reported by Arbitron, Radio Market Report,
The Arbitron Company ("Arbitron"). Unless otherwise indicated herein, audience
share data is expressed as the "local" average quarter hour share for each
indicated radio station. A radio station's "local" audience share is derived by
comparing the radio station's average quarter hour share to the total average
quarter hour share for all stations listed as inside the Metro Survey Area
("MSA") ("home-to-market" or "above the line") by Arbitron. Average quarter
hour share is the percentage of the estimated number of persons who listened to
a given radio station for a minimum of five minutes within a quarter hour
compared to the total number of persons who listened to radio in the market
within such quarter hour. The most recent Arbitron survey utilized in this
Prospectus is Fall 1995.
 
     Unless otherwise indicated herein, metro rank, market ranking by radio
advertising revenue and market radio advertising revenue have been obtained from
Investing in Radio, 1996 Market Report--Second Edition, BIA Publications Inc.
("BIA"). Revenue share in the Company's markets has been derived from comparing
the Company's 1995 total revenue less barter revenue in each market to the
estimated market radio advertising revenue for 1995. Revenue rankings in the
Company's markets have been derived by comparing the Company's revenue share in
each market to the revenue share for the Company's competitors (utilizing the
estimated revenue for each competing radio station as provided by BIA). Market
radio advertising revenue, revenue share data and revenue rankings in the
Company's Fairfield County, Connecticut market have been obtained from Miller,
Kaplan Market Revenue Report (published monthly), a publication of Miller,
Kaplan, Arase & Co., Certified Public Accountants ("Miller Kaplan"). Market
radio advertising revenue, revenue share data and revenue rankings for
Westchester County, New York have been estimated by the Company without the
benefit of any independent investigation or confirmation, as no published data
on this sub-market is available.
 
     The terms local marketing agreement ("LMA") and joint sales agreement
("JSA") are referred to in various places in this Prospectus. An LMA refers to
an agreement, although it may take various forms, under which a radio station
agrees to provide, on a cooperative basis, the programming, sales, marketing and
similar services for a different radio station. A JSA refers to an agreement,
similar to an LMA, under which a radio station agrees to provide the sales and
marketing services for another station while the owner of such other radio
station provides the programming for such other radio station. The term
"duopoly" is referred to in various places in this Prospectus and refers to the
ownership of two or more AM or two or more FM radio stations in the same
geographic market. Duopolies, LMAs and JSAs are more fully described in
"Business-- Federal Regulation of Radio Broadcasting."
 
                                        7
<PAGE>   10
 
                      SUMMARY CONSOLIDATED FINANCIAL DATA
                             (dollars in thousands)
 
     The following table sets forth summary historical consolidated financial
data and certain pro forma financial data of the Company for the five years
ended December 31, 1995 and the three-month period ended March 26, 1995 and the
three-month period ended March 31, 1996. The financial information presented
below is qualified in its entirety by, and should be read in conjunction with,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Company's Consolidated Financial Statements and the Notes
thereto, and the other information contained elsewhere in this Prospectus.
 
<TABLE>
<CAPTION>
                                                                                                     THREE MONTHS ENDED
                                                                                               ------------------------------
                                                   YEAR ENDED DECEMBER 31,                     MARCH 26,       MARCH 31,
                                 -----------------------------------------------------------   ---------   ------------------
                                                                                   1995 PRO                          1996 PRO
                                  1991      1992      1993      1994      1995     FORMA(A)      1995       1996     FORMA(A)
                                 -------   -------   -------   -------   -------   ---------   ---------   -------   --------
<S>                              <C>       <C>       <C>       <C>       <C>       <C>         <C>         <C>       <C>
OPERATING DATA:
Total revenue..................  $17,677   $19,578   $21,643   $28,686   $33,653    $46,327     $ 6,507    $ 8,048   $ 9,787
Net revenue....................   16,335    17,961    19,798    26,225    30,795     42,536       5,967      7,416     9,033
Station operating
  expenses(b)..................   12,080    12,713    13,509    16,483    19,033     27,185       4,168      5,375     6,274
Corporate expenses.............    1,167     1,602     2,531     2,110     2,051      2,151         461        466       491
Operating income...............    1,482     1,970     1,133     3,307     5,778      7,634         316      1,095     1,384
Net loss.......................   (4,183)   (2,580)   (3,782)     (527)   (2,240)    (2,317)       (585)    (1,436)   (1,060 )
SUPPLEMENTAL INFORMATION:
Broadcast cash flow(c).........  $ 4,255   $ 5,248   $ 6,289   $ 9,742   $11,762    $15,351     $ 1,799    $ 2,041   $ 2,759
Broadcast cash flow
  margin(c)....................     26.0%     29.2%     31.8%     37.1%     38.2%      36.1%       30.1%      27.5%     30.5 %
EBITDA(c)......................    3,088     3,646     3,758     7,632     9,711     13,200       1,338      1,575     2,268
Capital expenditures...........      179       371       333       623       321                     42        124
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                               AT MARCH 31, 1996
                                                                                           -------------------------
                                                                                            ACTUAL      PRO FORMA(D)
                                                                                           --------     ------------
<S>                                                                                        <C>          <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................................................. $  5,087       $  1,644
Net working capital.......................................................................    6,050          2,307
Total assets..............................................................................   63,211         89,043
Total debt (including current maturities).................................................   75,653         67,153
Stockholders' equity (deficit)............................................................  (19,991)        15,323
</TABLE>
 
- ------------------------------
 
(a) Pro forma operating data and supplemental information for the year ended
    December 31, 1995 give effect to the Recapitalization Transactions (as
    hereinafter defined), the Acquisitions, the Offering and the application of
    the estimated net proceeds therefrom and the 1995 Treasure Coast Acquisition
    as if each had occurred on January 1, 1995. The pro forma operating data and
    supplemental information for the three months ended March 31, 1996 give
    effect to the Acquisitions and the Offering and the application of the
    estimated net proceeds therefrom as if each had occurred on January 1, 1995.
 
(b) Station operating expenses exclude depreciation and amortization, corporate
    expenses, long-term incentive compensation and separation compensation.
 
(c) For purposes of this Prospectus, EBITDA is defined as net income (loss)
    before (i) extraordinary gain (loss), (ii) income taxes, (iii) other
    expenses (income), (iv) net interest expense, (v) long-term incentive
    compensation and separation compensation and (iv) depreciation and
    amortization. Broadcast cash flow is defined as EBITDA before corporate
    expenses. Although EBITDA and broadcast cash flow are not measures of
    performance calculated in accordance with Generally Accepted Accounting
    Principles ("GAAP"), EBITDA and broadcast cash flow are widely used in the
    broadcast industry as measures of a radio broadcasting company's operating
    performance. Neither EBITDA nor broadcast cash flow should be considered in
    isolation or as a substitute for net income, cash flows from operating
    activities and other income or cash flow statement data prepared in
    accordance with GAAP or as a measure of profitability or liquidity.
    Broadcast cash flow and EBITDA differ from cash flow from operations under
    GAAP primarily because broadcast cash flow and EBITDA are not reduced by
    interest expense and income tax expense, changes in the levels of operating
    assets and liabilities and separation and long-term incentive compensation
    paid during the period. In addition, broadcast cash flow excludes corporate
    expenses that are reflected as a reduction in cash flow from operations.
    Broadcast cash flow and EBITDA are not intended to depict funds available
    for discretionary uses as they do not reflect the Company's debt service and
    capital requirements.
 
(d) The pro forma balance sheet data give effect to the 1996 Treasure Coast
    Acquisition, the Stamford Acquisition and the Huntington Acquisitions and
    the Offering and the application of the estimated net proceeds therefrom as
    if each had occurred on March 31, 1996.
 
                                        8
<PAGE>   11
 
                                  RISK FACTORS
 
     In addition to the other information set forth in this Prospectus,
prospective investors should carefully consider the following risk factors
before purchasing the shares of Class A Common Stock offered hereby.
 
CONTROL BY PRINCIPAL SHAREHOLDER
 
     After the Offering, the Estate of Carter Burden will retain the power to
control all matters submitted to stockholders of, and to elect all directors of,
the Company by virtue of its stock ownership and the disparate voting rights of
the Class A Common Stock and the Class B Common Stock. The Class A Common Stock
together with the Class B Common Stock are collectively referred to herein as
the "Common Stock." The executors of the estate are Susan L. Burden, S. Carter
Burden III and Flobelle F. Burden. Such control may have the effect of
discouraging certain types of transactions involving an actual or potential
change of control of the Company, including transactions in which the holders of
Class A Common Stock might otherwise receive a premium for their shares over
then-current market prices. See "Principal and Selling Shareholders" and
"Description of Capital Stock." Following the Offering, the Estate of Carter
Burden (and eventually the trust referred to in the next sentence) will have
approximately 80% of the total voting power and approximately 28% of the
fully-diluted economic interest in the Company. Pursuant to Mr. Burden's will,
the shares of the Class A Common Stock held by the Estate of Carter Burden is
expected to be transferred to a trust of which the trustees are the three
executors of the estate and an additional member of the Burden family, and the
beneficiaries of which are members of the Burden family. The Estate of Carter
Burden, by virtue of its ability to transfer some or all of its shares of Class
B Common Stock, will retain the power to convey control of the Company to a
third party in a transaction in which holders of Class A Common Stock do not
participate. Such an event would constitute a change of control under, and
consequent acceleration of, the repayment date of the Company's indebtedness.
 
     The Communications Act of 1934, as amended (the "Communications Act") and
the rules and regulations of the Federal Communications Commission ("FCC")
require the prior consent of the FCC to any change of control of the Company.
See "Business--Federal Regulation of Radio Broadcasting."
 
EXPANSION THROUGH ACQUISITIONS
 
     There can be no assurance that the Company can successfully implement its
operating strategy with respect to its recent acquisitions or any subsequent
acquisitions, nor can there be any assurance that growth created by its recent
acquisitions, or through any subsequent acquisitions, will not be impaired by
competition from other radio stations in the same market. In addition, rapidly
growing businesses frequently encounter unforeseen expenses and delays in
completing acquisitions, as well as difficulties and complications in
integrating the acquired operations without disruption in the overall
operations. As a result, acquisitions may adversely affect the Company's
operating results in the short term due to many factors, including capital
requirements. The Company intends to continue to evaluate acquisitions of
stations in medium-sized markets. See "Business--Expansion Strategy." Although
the Company has entered into agreements regarding the Huntington Acquisitions,
there can be no assurance that such acquisitions will be consummated or that the
Company will be able to make future acquisitions at purchase prices acceptable
to the Company.
 
COMPETITION; BUSINESS RISKS
 
     Radio broadcasting is a highly competitive business. The financial success
of each of the Company's radio stations depends, to a significant degree, upon
its audience ratings, its share of the overall radio advertising revenue within
its geographic market and the economic health of the market. The audience
ratings and advertising revenue of the Company's individual stations are subject
to change and any adverse change in a particular market could have a material
adverse effect on the total revenue and broadcast cash flow of the Company. The
Company's radio stations compete for audience share and advertising revenue
directly with other FM and AM radio stations and with other media within their
respective markets, such as newspapers, television, magazines, billboard
advertising, transit advertising, and direct mail advertising. While the Company
already competes with other stations with comparable programming formats in each
of its markets,
 
                                        9
<PAGE>   12
 
if another radio station in the market were to convert its programming format to
a format similar to one of the Company's stations, if a new station were to
adopt a competitive format, or if an existing competitor were to strengthen its
operations, the Company's stations could suffer a reduction in ratings and/or
advertising revenue and could require increased promotional and other expenses.
The Telecommunications Act of 1996 will facilitate the entry of other radio
broadcasting companies into the markets in which the Company operates or may
operate in the future, some of which may be larger and have more financial
resources than the Company. In addition, certain of the Company's stations
compete, and in the future other stations of the Company may compete, with
duopolies or other combinations of stations operated by a single operator. There
can be no assurance that the Company's radio stations will be able to maintain
or increase their current audience ratings and radio advertising revenue. See
"Business--Competition."
 
     Radio broadcasting is also subject to competition from new media
technologies that are being developed or have been introduced, such as the
delivery of audio programming through cable television wires or the introduction
of digital audio broadcasting ("DAB"). DAB may provide a medium for the delivery
by satellite (digital audio radio satellite service, or "DARS") or terrestrial
means of multiple audio programming formats to local and national audiences. The
Company cannot predict the effect, if any, that any such new technologies may
have on the radio broadcasting industry or on the Company. See
"Business--Changes in the Broadcasting Industry" and "Business--Federal
Regulation of Radio Broadcasting--Proposed Changes."
 
     The profitability of the Company's radio stations is subject to various
other factors which influence the radio broadcasting industry as a whole. The
Company's radio stations may be affected by changes in audience tastes,
priorities of advertisers, new laws and governmental regulations and policies,
changes in broadcast technical requirements, proposals to limit the tax
deductibility of expenses incurred by advertisers and changes in the willingness
of financial institutions and other lenders to finance radio station
acquisitions and operations. The Company cannot predict which, if any, of these
factors might have a significant impact on the radio broadcasting industry in
the future, nor can it predict what impact, if any, the occurrence of these
events might have on the Company's operations.
 
GOVERNMENT REGULATION
 
     Each of the Company's radio stations operate pursuant to one or more
licenses issued by the FCC that presently have a maximum term of seven years.
The Company's radio operating licenses expire at various times from April 1998
to February 2003. Although the Company may apply to renew these licenses, third
parties may challenge the Company's renewal applications. While the Company is
not aware of facts or circumstances that would prevent the Company from having
its current licenses renewed and the Company has never previously been denied a
license renewal, there can be no assurance that the licenses will be renewed.
Failure to obtain the renewal of any of the Company's broadcast licenses or to
obtain FCC approval for an assignment or transfer to the Company of a license in
connection with a radio station acquisition may have a material adverse effect
on the Company's business and operations. In addition, if the Company or any of
its officers, directors or significant stockholders violates the FCC's rules and
regulations or the Communications Act, or is convicted of a felony, the FCC may
in response to a petition from a third party or on its own motion, in its
discretion, commence a proceeding to impose sanctions upon the Company which
could involve the imposition of monetary penalties, the revocation of the
Company's broadcast licenses or other sanctions. If the FCC were to issue an
order denying a license renewal application or revoking a license, the Company
would be required to cease operating the radio station subject to the license
only after the Company has exhausted all administrative and judicial review
without success.
 
     The radio broadcasting industry is subject to extensive and changing
regulation. Among other things, the Communications Act and FCC rules and
policies limit the number of stations that one entity can own, or in which that
entity can hold an attributable interest, in a market and require FCC approval
for transfers of control of FCC licensees and assignments of FCC licenses. The
filing of petitions or complaints against the Company or other FCC licensees
could result in the FCC delaying the grant of, or refusing to grant, its consent
to the assignment of licenses to or from an FCC licensee or the transfer of
control of an FCC licensee. In certain circumstances, the Communications Act and
FCC rules will operate to impose limitations on alien ownership and voting of
the Common Stock of the Company. There can be no assurance that there will not
be
 
                                       10
<PAGE>   13
 
changes in the current regulatory scheme, the imposition of additional
regulations or the creation of new regulatory agencies, which changes would
restrict or curtail the ability of the Company to acquire, operate and dispose
of stations or, in general, to compete profitably with other operators of radio
and other media properties. Moreover, there can be no assurance that there will
not be other regulatory changes, including aspects of deregulation, that will
result in a decline in the value of broadcasting licenses held by the Company or
adversely affect the Company's competitive position. See "Business--Federal
Regulation of Radio Broadcasting."
 
DEPENDENCE ON KEY PERSONNEL
 
     The Company's business depends upon the continued efforts, abilities and
expertise of its executive officers and other key employees, including Bruce A.
Friedman, the President and Chief Executive Officer of the Company ("Mr.
Friedman") and James T. Shea, Jr., the Chief Operating Officer of the Company
("Mr. Shea"). The Company has employment agreements with each of Mr. Friedman
and Mr. Shea. For a discussion of such employment agreements, see
"Management--Employment Agreements and Arrangements." The loss of any of the
foregoing could have a material adverse effect on the Company's business. See
"Management--Employment Agreements and Arrangements."
 
NET LOSSES
 
     The Company reported net losses of approximately $4.2 million, $2.6
million, $3.8 million, $527,000 and $2.2 million for the years ended December
31, 1991, 1992, 1993, 1994 and 1995, respectively, and $1.4 million for the
three-month period ended March 31, 1996. These losses include significant
interest expense as well as substantial non-cash charges such as depreciation
and amortization. There can be no assurance that the Company will not continue
to experience net losses, principally as a result of interest expense and
depreciation and amortization. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
 
RESTRICTIONS ON DIVIDENDS
 
     The Company intends to retain future earnings for use in its business and
does not anticipate paying any dividends on shares of its Common Stock in the
foreseeable future. In addition, the Company is currently restricted from paying
cash dividends on its Common Stock under the terms of the Indenture dated April
21, 1995 as amended among the Company, IBJ Schroder Bank & Trust Company, as
Trustee, and the Guarantors named therein (the "Indenture") and the terms of the
Loan and Security Agreement (the "Senior Loan Agreement") dated as of March 13,
1996 as amended among Commodore Holdings, Inc. ("Holdings"), the Company, the
Guarantors named therein and the senior lender named therein (the "Senior
Lender"). See "Dividend Policy" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources"
and "Description of Capital Stock--Common Stock-- Dividends."
 
DILUTION
 
     Persons purchasing shares of Class A Common Stock in the Offering will
sustain immediate dilution in net tangible book value per share of Common Stock
of approximately $          per share. This dilution is based on an assumed
initial public offering price of $          per share, the mid-point of the
range shown on the cover page of this Prospectus. Dilution for this purpose
represents the difference between the per share initial public offering of the
Class A Common Stock and the pro forma net tangible book value per share of
Class A Common Stock after the Offering. See "Dilution."
 
SHARES ELIGIBLE FOR FUTURE SALE
 
     Upon completion of the Offering, 4,542,554 shares of Class A Common Stock
will be issued and outstanding and 3,573,018 shares will be issuable upon the
exercise of outstanding stock options, warrants and shares of Class B Common
Stock. The shares of Class A Common Stock sold in the Offering will be freely
 
                                       11
<PAGE>   14
 
tradeable by persons other than "affiliates" of the Company, as that term is
defined under the Securities Act of 1933, as amended (the "Securities Act"),
without restrictions or further registration under the Securities Act. The
Company, its officers, directors, the Selling Shareholders and certain other
stockholders, who collectively are the beneficial holders of an aggregate of
     shares of Common Stock, have agreed with the Underwriters not to, directly
or indirectly, issue, offer, sell, contract to sell, grant any option to
purchase or otherwise dispose of, without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), any shares of
Common Stock or any securities convertible into, or exercisable or exchangeable
for, or warrants, options or rights to purchase or acquire Common Stock or in
any other manner transfer all or a portion of the economic consequences
associated with the ownership of any Common Stock, or enter into any agreement
to do any of the foregoing, for a period of 180 days after the date of this
Prospectus. Upon expiration of such 180 day period, such holders will in general
be entitled to dispose of their shares (including the shares underlying such
options and warrants), although the shares of Common Stock held by affiliates of
the Company will continue to be subject to the volume and other restrictions of
Rule 144 under the Securities Act. In addition, certain existing stockholders of
the Company, including holders of Common Stock for whom the trading or
disposition of such Common Stock is restricted pursuant to the Securities Act,
will have registration rights with respect to Common Stock held by them. Sales
of substantial amounts of Common Stock, or the perception that such sales could
occur, may affect the market price of the Common Stock prevailing from time to
time. See "Shares Eligible for Future Sale" and "Underwriting."
 
NO PRIOR PUBLIC MARKET
 
     Prior to the Offering, there has been no public market for the Company's
Class A Common Stock or Class B Common Stock and there can be no assurance that
an active public market will develop or be sustained after the Offering or that
the initial public offering price corresponds to the price at which the Class A
Common Stock will trade in the public market subsequent to the Offering. The
initial public offering price for the Class A Common Stock will be determined by
negotiations among the Company and the representatives of the Underwriters based
upon the consideration of certain factors set forth herein under "Underwriting."
Market conditions in the radio industry and market fluctuations in the stock
market generally may have an adverse impact on the market price of the Class A
Common Stock.
 
                                       12
<PAGE>   15
 
                                USE OF PROCEEDS
 
     The net proceeds to the Company from the sale of the 2,882,143 shares of
Class A Common Stock offered by the Company hereby are estimated to be
approximately $36.0 million ($42.0 million if the Underwriters' over-allotment
option is exercised in full), assuming an initial public offering price of
$     per share (the midpoint of the currently anticipated range of the initial
public offering price), and after deducting the underwriting discount and
estimated offering expenses, all of which are payable by the Company. The
Company intends to use such net proceeds (i) to repay all amounts then
outstanding under the Senior Credit Facility (as hereinafter defined), (ii) to
redeem the outstanding shares of Senior Exchangeable Redeemable Preferred Stock,
Series A, $.01 par value per share, of the Company (the "Series A Preferred
Stock"), (iii) to finance a portion of the Huntington Acquisitions and (iv) to
pay deferred compensation to certain executives of the Company. The Company will
not receive any proceeds from the sale of shares of Class A Common Stock by the
Selling Shareholders.
 
     The following table illustrates the pro forma estimated uses of net
proceeds as if the Offering, certain borrowings under the Senior Credit
Facility, the issuance of Series A Preferred Stock under the Preferred Stock
Facility (as hereinafter defined) and the Stamford Acquisition and the 1996
Treasure Coast Acquisition had occurred on or prior to March 31, 1996:
 
<TABLE>
<CAPTION>
                                                                                 DOLLARS IN
                                                                                 THOUSANDS
    <S>                                                                          <C>
    Repayment of Amounts Outstanding Under the Senior Credit Facility(a).......   $ 15,000
    Redemption of Series A Preferred Stock(b)..................................     10,000
    Huntington Acquisitions(c).................................................      9,032
    Payment of Deferred Compensation...........................................      1,968
                                                                                 ----------
              Total............................................................   $ 36,000
                                                                                   =======
</TABLE>
 
- ------------------------------
 
(a) The Senior Credit Facility (the "Senior Credit Facility") consists of: (i) a
    revolving credit facility of $30,000,000 and (ii) a receivable loan facility
    of up to $5,000,000, each bearing interest at a floating rate of interest,
    adjusted on the first calendar day of each calendar month, equal to 3.5%
    over the London Interbank Offer Rate ("LIBOR"). As of March 31, 1996 the
    Company's indebtedness under the Senior Credit Facility was $8,500,000.
    Following the Offering, the Company expects to be able to reborrow up to $35
    million under the Senior Credit Facility. See "Description of Certain
    Indebtedness -- Senior Credit Facility."
 
(b) The Company intends to issue 10,000 shares of the Series A Preferred Stock
    in May 1996 for an aggregate consideration of $10.0 million. It is
    anticipated that the proceeds of the issuance will be used to consummate the
    Stamford Acquisition and the 1996 Treasure Coast Acquisition.
 
(c) The Company intends to finance the balance of the purchase price of the
    Huntington Acquisitions (approximately $2.4 million) through available
    funds.
 
                                DIVIDEND POLICY
 
     The Company currently intends to retain future earnings for use in its
business and does not anticipate paying any dividends on shares of its Common
Stock in the foreseeable future. In addition, the Company is currently
restricted under the terms of the Indenture and the Senior Loan Agreement from
paying cash dividends on its Common Stock. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources" and "Description of Capital Stock--Common Stock--Dividends."
 
                                       13
<PAGE>   16
 
                                    DILUTION
 
     At March 31, 1996, the deficit in net tangible book value of the Company
was approximately $(61.3 million) or $(15.56) per share. Net tangible book value
per share represents the total tangible assets of the Company, less the total
liabilities of the Company, divided by the number of shares of Common Stock
outstanding. After giving effect to the sale by the Company of the 2,882,143
shares of Common Stock offered hereby (and after deducting underwriting
discounts and commissions and estimated offering expenses) and the receipt of
the proceeds therefrom, the pro forma deficit in net tangible book value of the
Company as of March 31, 1996 would have been approximately $(54.4 million) or
$(7.97) per share. This represents an immediate increase in net tangible book
value of $7.59 per share to the existing shareholders and an immediate dilution
of $21.97 per share to new shareholders. Dilution per share represents the
difference between the price per share to be paid by the new shareholders and
the deficit in pro forma net tangible book value per share at March 31, 1996.
The following table illustrates the per share dilution:
 
<TABLE>
    <S>                                                               <C>          <C>
    Initial public offering price per share........................                $
      Deficit in net tangible book value per share before the
         Offering..................................................   $ (15.56)
      Increase in net tangible book value per share attributable
         to the Offering...........................................       7.59
    Deficit in pro forma net tangible book value per share, as
      adjusted
      for the Offering.............................................                  (7.97)
    Dilution per share to new shareholders(a)......................                $ 21.97
</TABLE>
 
     The following table sets forth, on a pro forma basis at March 31, 1996, the
difference between the number of shares of Class A Common Stock purchased from
the Company, the total consideration paid to the Company and the average price
per share paid by existing shareholders and to be paid by new shareholders.
 
<TABLE>
<CAPTION>
                                           SHARES PURCHASED          TOTAL CONSIDERATION        AVERAGE
                                         ---------------------     -----------------------     PRICE PER
                                          NUMBER       PERCENT       AMOUNT        PERCENT       SHARE
<S>                                      <C>           <C>         <C>             <C>         <C>
Existing shareholders(b)(c)............  3,941,100       57.8%     $ 9,806,405       19.6%      $  2.49
New shareholders(b)....................  2,882,143       42.2       40,350,000       80.4
                                                           --                          --
                                           -------                    --------
          Total........................  6,823,243      100.0%     $50,156,405      100.0%
                                           =======         ==         ========         ==
</TABLE>
 
- ------------------------------
 
(a) If the Underwriters' over-allotment option is exercised in full, the pro
    forma deficit in net tangible book value will be approximately $(6.64) per
    share, resulting in dilution to new shareholders in the Offering of $20.64
    per share. See "Underwriting."
 
(b) Sales by the Selling Shareholders in the Offering will reduce the number of
    shares held by existing shareholders to 2,523,243, or 37.0% (2,343,020
    shares or 34.3% if the over-allotment option is exercised in full) of the
    total number of shares of Common Stock outstanding and will increase the
    number of shares held by new investors to 4,300,000 shares, or 63.0%
    (4,764,777 shares or 65.4% if the over-allotment option is exercised in
    full) of the total number of shares of Common Stock outstanding after the
    Offering.
 
(c) Excludes: (i) options outstanding on the date hereof to purchase
    approximately 694,368 shares of Class A Common Stock at an exercise price of
    $6.25 and (ii) warrants outstanding on the date hereof to purchase 597,960
    shares of Class A Common Stock at an exercise price of $.01.
 
                                       14
<PAGE>   17
 
                                 CAPITALIZATION
 
     The following table sets forth the actual capitalization of the Company as
of March 31, 1996, and pro forma to give effect to (i) the Offering and the
application of the estimated net proceeds therefrom and (ii) the 1996 Treasure
Coast Acquisition, the Stamford Acquisition and the Huntington Acquisitions, as
if each of the foregoing had occurred on March 31, 1996. This table should be
read in conjunction with the information contained in the "Pro Forma
Consolidated Financial Information" and the Company's Consolidated Financial
Statements and Notes thereto.
 
<TABLE>
<CAPTION>
                                                                    AS OF MARCH 31, 1996
                                                                  -------------------------
                                                                   ACTUAL      PRO FORMA(A)
                                                                   (DOLLARS IN THOUSANDS)
    <S>                                                           <C>          <C>
    Long-term debt (including current maturities):
      Senior Credit Facility....................................  $  8,500       $      0
      Senior Subordinated Notes(b)..............................    65,978         65,978
      Note payable, officer(c)..................................     1,175          1,175
                                                                  --------       --------
              Total long-term debt..............................    75,653         67,153
                                                                  --------       --------
    Stockholders' equity (deficit)(d)
      Class A Common Stock, $.01 par value; 21,600,000 shares
         authorized, 1,054,988 shares issued and 439,215 shares
         outstanding, 4,542,554 shares issued and outstanding on
         a pro forma basis......................................        10             45
      Class B Common Stock, $.01 par value; 3,501,886 shares
         authorized, issued and outstanding, 2,280,690 shares
         issued and outstanding on a pro forma basis............        35             23
      Additional paid-in capital................................    23,541         59,518
      Accumulated deficit(e)....................................   (43,551)       (44,237)
      Less treasury stock at cost, 615,773 shares...............        26             26
                                                                  --------       --------
              Total stockholders' equity (deficit)..............   (19,991)        15,323
                                                                  --------       --------
              Total capitalization..............................  $ 55,662       $ 82,476
                                                                  ========       ========
</TABLE>
 
- ------------------------------
 
(a) Does not include the shares of Series A Preferred Stock issued in May 1996,
    which are being redeemed with the proceeds from the Offering. See "Use of
    Proceeds."
 
(b) The 13 1/4% Senior Subordinated Notes due 2003 (the "Senior Subordinated
    Notes") were issued at a discount and have an accreted value of $67.8
    million at March 31, 1996 and an aggregate face amount of $75.5 million.
 
(c) See Note 5 to the Company's Consolidated Financial Statements.
 
(d) Outstanding share figures do not include: (i) options outstanding on the
    date hereof to purchase approximately 694,368 shares of Class A Common Stock
    at a per share exercise price of $6.25 and (ii) warrants outstanding on the
    date hereof to purchase 597,960 shares of Class A Common Stock at a per
    share exercise price of $.01.
 
(e) Pro forma accumulated deficit includes an estimated charge of approximately
    $686,000 in connection with the payment of deferred compensation to certain
    executives of the Company which will be recorded in the period in which the
    payment is made. See "Use of Proceeds."
 
                                       15
<PAGE>   18
 
             UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
 
     The Unaudited Pro Forma Consolidated Statement of Operations for the year
ended December 31, 1995 presents the statement of operations of the Company as
if the Recapitalization Transactions, the 1995 Treasure Coast Acquisition, the
Acquisitions and the Offering and the application of the estimated net proceeds
therefrom had occurred on January 1, 1995. The Unaudited Pro Forma Consolidated
Statement of Operations for the three months ended March 31, 1996 presents the
statement of operations of the Company as if the Acquisitions and the Offering
and the application of the estimated net proceeds therefrom had occurred on
January 1, 1995. The Unaudited Pro Forma Consolidated Balance Sheet at March 31,
1996 presents the balance sheet of the Company as if the Huntington
Acquisitions, the 1996 Treasure Coast Acquisition and the Stamford Acquisition
and the Offering and the application of the estimated net proceeds therefrom had
occurred on March 31, 1996.
 
     The Acquisitions and the 1995 Treasure Coast Acquisition are accounted for
using the purchase method of accounting. The total cost of such acquisitions
will be allocated to the tangible and intangible assets acquired and liabilities
assumed based upon their respective fair values. The allocation of the
respective purchase prices included in the pro forma financial statements is
preliminary. The Company does not expect that the final allocation of the
purchase price will materially differ from the preliminary allocation.
 
     The pro forma adjustments are based upon available information and upon
certain assumptions that the Company believes are reasonable under the
circumstances. The pro forma consolidated financial information should be read
in conjunction with the Company's Consolidated Financial Statements and Notes
thereto, as well as the Financial Statements and Notes thereto of (i) Danbury
Broadcasting, Inc., with respect to the Danbury Acquisition, (ii) Adventure
Communications, Inc., with respect to the Huntington Acquisitions, (iii) Media
VI, with respect to the 1996 Treasure Coast Acquisition and (iv) Q Broadcasting,
Inc., with respect to the Stamford Acquisition, included elsewhere in this
Prospectus. The pro forma statement of operations data are not necessarily
indicative of the results that would have occurred if the Recapitalization
Transactions, the Acquisitions, the Offering and the application of the
estimated net proceeds therefrom and the 1995 Treasure Coast Acquisition had
occurred on the dates indicated, nor are they indicative of the Company's future
results of operations. There can be no assurance whether or when the Huntington
Acquisitions will be consummated.
 
     The pro forma consolidated financial information does not include the
issuance of Series A Preferred Stock since it was originally issued in May 1996
and will be redeemed by the Company using the proceeds from the Offering.
 
                                       16
<PAGE>   19
 
            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31, 1995
                          --------------------------------------------------------------------------------------------------------
                                                                                        1996                             1995
                          COMMODORE                                                   TREASURE                         TREASURE
                           MEDIA,     WESTCHESTER       DANBURY        HUNTINGTON       COAST         STAMFORD          COAST
                            INC.      ACQUISITION    ACQUISITION(A)   ACQUISITIONS   ACQUISITION   ACQUISITION(B)   ACQUISITION(C)
                          ---------   ------------   --------------   ------------   -----------   --------------   --------------
<S>                       <C>         <C>            <C>              <C>            <C>           <C>              <C>
Total revenue...........  $ 33,653       $  876         $  3,268        $  3,353       $ 2,131        $  2,509          $  537
Less: agency
  commissions...........    (2,858 )        (44)            (297)           (187)         (139)           (223)            (43)
                          --------        -----          -------         -------       -------         -------           -----
Net revenue.............    30,795          832            2,971           3,166         1,992           2,286             494
Station operating
  expenses..............    19,033          714            2,165           2,118         1,492           3,110             319
Corporate expenses......     2,051            0              369             573             0               0               0
Depreciation and
  amortization..........     1,926          173              433             244           149             448             169
Long-term incentive
  compensation..........     2,007            0                0               0             0               0               0
                          --------        -----          -------         -------       -------         -------           -----
Operating income
  (loss)................     5,778          (55)               4             231           351          (1,272)              6
Interest expense, net...     7,000          145              354               0           216             493               0
Other (income)
  expenses..............       434          (43)               3             (43)            0            (154)              0
                          --------        -----          -------         -------       -------         -------           -----
Income (loss) before
  income taxes and
  extraordinary loss....    (1,656 )       (157)            (353)            274           135          (1,611)              6
Income taxes............       140            0                0              76             0               0               0
                          --------        -----          -------         -------       -------         -------           -----
Net income (loss) before
  extraordinary item....  $ (1,796 )     $ (157)        $   (353)       $    198       $   135        $ (1,611)         $    6
                                          =====          =======         =======       =======         =======           =====
Preferred stock
  dividend..............       252
                          --------
Net loss applicable to
  common shares before
  extraordinary item....  $ (2,048 )
                          ========
Net loss per common
  share before
  extraordinary item....  $  (0.53 )
Weighted average
  common shares
  outstanding...........  3,892,300
 
<CAPTION>
 
                           PRO FORMA      PRO FORMA
                          ADJUSTMENTS      COMBINED
                          -----------     ----------
<S>                       <C>             <C>
Total revenue...........    $              $ 46,327
Less: agency
  commissions...........                     (3,791)
                            -------        --------
Net revenue.............                     42,536
Station operating
  expenses..............     (1,766)(d)      27,185
Corporate expenses......        100(e)        2,151
                               (942)(e)
Depreciation and
  amortization..........         17(f)        3,559
Long-term incentive
  compensation..........                      2,007
                            -------        --------
Operating income
  (loss)................      2,591           7,634
Interest expense, net...        606(g)        8,814
Other (income)
  expenses..............        237(h)          485
                                 51(i)
                            -------        --------
Income (loss) before
  income taxes and
  extraordinary loss....      1,697        $ (1,665)
                            -------
Income taxes............        (76)(j)         140
                            -------        --------
Net income (loss) before
  extraordinary item....      1,773          (1,805)
 
Preferred stock
  dividend..............       (252)(k)           0
                                           --------
Net loss applicable to
  common shares before
  extraordinary item....                   $ (1,805)
                                           ========
Net loss per common
  share before
  extraordinary item....                   $  (0.26)
Weighted average
  common shares
  outstanding...........                  6,774,300
</TABLE>
 
                                       17
<PAGE>   20
 
            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED MARCH 31, 1996
                                ------------------------------------------------------------------------------------
                                                                1996
                                COMMODORE                     TREASURE
                                 MEDIA,       HUNTINGTON        COAST        STAMFORD       PRO FORMA      PRO FORMA
                                  INC.       ACQUISITIONS    ACQUISITION    ACQUISITION    ADJUSTMENTS     COMBINED
                                ---------    ------------    -----------    -----------    -----------     ---------
<S>                             <C>          <C>             <C>            <C>            <C>             <C>
Total revenue.................   $ 8,048         $722           $ 310          $ 707          $             $ 9,787
Less: agency commissions......      (632)         (49)            (15)           (58)                          (754)
                                 -------         ----            ----           ----          -----           -----
Net revenue...................     7,416          673             295            649                          9,033
Station operating expenses....     5,375          407             245            852           (605)(d)       6,274
Corporate expenses............       466          145               0              0             25(l)          491
                                                                                               (145)(l)
Depreciation and
  amortization................       480           53              26             76            249(m)          884
Long-term incentive
  compensation................         0            0               0              0                              0
                                 -------         ----            ----           ----          -----           -----
Operating income (loss).......     1,095           68              24           (279)           476           1,384
Interest expense, net.........     2,336            0              46            148           (281)(n)       2,249
Other (income) expenses.......       168           (9)              0              0              9(h)          168
                                 -------         ----            ----           ----          -----           -----
Income (loss) before income
  taxes.......................    (1,409)          77             (22)          (427)           748          (1,033)
Income taxes..................        27           31               0              0            (31)(j)          27
                                 -------         ----            ----           ----                          -----
Net income (loss).............    (1,436)        $ 46           $ (22)         $(427)                        (1,060)
                                                 ====            ====           ====
Net loss applicable to common
  shares......................   $(1,436)                                                                   $(1,060)
                                 =======                                                                      =====
Net loss per common share.....   $ (0.36)                                                                   $ (0.16)
Weighted average common shares
  outstanding.................  3,949,900                                                                  6,831,900
</TABLE>
 
                                       18
<PAGE>   21
 
       NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
 
(a)  Reflects the historical statement of operations of Danbury Broadcasting,
     Inc. ("Danbury"). Danbury operates on a June 30 fiscal year end. The
     historical statement of operations included in the unaudited pro forma
     consolidated financial statements, however, have been prepared on a
     calendar year basis based on the unaudited quarterly financial statements
     of Danbury.
 
(b)  Reflects the historical Q Broadcasting, Inc. statement of operations for
     the fiscal year ended September 30, 1995.
 
(c)  Reflects the results of operations of Treasure Coast Media, Inc. for
     January through June 1995 when the Company did not own or operate the
     station acquired in connection with the 1995 Treasure Coast Acquisition.
 
(d)  Cost savings expected to be realized by combining duplicative programming,
     general and administrative functions, sales responsibilities and facilities
     in markets with multiple stations, commission reductions, employee benefit
     cost savings and reductions in professional fees due to consolidation.
 
(e)  Corporate general and administrative expenses have been incrementally
     adjusted principally due to operating as a public company.
 
(f)  To reflect additional incremental depreciation and amortization related to
     the 1995 Treasure Coast Acquisition and the Acquisitions.
 
(g)  To reflect adjustment to interest expense associated with the
     Recapitalization Transactions and the Acquisitions (dollars in thousands):
 
<TABLE>
             <S>                                                             <C>
             Incremental pro forma interest expense on debt incurred with
               the
               Recapitalization Transactions as if they occurred on January
               1, 1995.....................................................  $ 2,821
             Interest expense recorded by the Company in 1995 on debt
               retired with the Recapitalization Transactions..............   (1,007)
             Interest expense attributable to the Acquisitions.............   (1,208)
                                                                             -------
             Pro forma adjustment..........................................  $   606
                                                                             =======
</TABLE>
 
(h)  Elimination of non-operating income that is not expected to be realized by
     the Company.
 
(i)  To record the increase in amortization of deferred financing costs
     associated with the Recapitalization Transactions (dollars in thousands):
 
<TABLE>
             <S>                                                            <C>
             Incremental pro forma deferred financing costs incurred with
               the
               Recapitalization Transactions as if they occurred on
               January 1, 1995............................................  $    120
             Deferred financing costs recorded by the Company in 1995 on
               debt retired with the Recapitalization Transactions........       (69)
                                                                            --------
             Pro forma adjustment.........................................  $     51
                                                                            ========
</TABLE>
 
(j)  No incremental income taxes have been provided as the Company has a net
     operating loss. Incremental state taxes are considered immaterial.
 
(k)  To eliminate the preferred stock dividend on preferred stock redeemed in
     the Recapitalization Transactions.
 
(l)  Corporate general and administrative expenses have been incrementally
     adjusted principally due to operating as a public company.
 
(m) To reflect additional incremental depreciation and amortization related to
    the Acquisitions.
 
                                       19
<PAGE>   22
 
(n)  To reflect adjustment to interest expense associated with the Acquisitions
     (dollars in thousands):
 
<TABLE>
             <S>                                                               <C>
             Incremental pro forma interest expense on debt incurred with the
               Recapitalization Transactions as if they occurred on January
               1, 1995.......................................................  $  37
             Interest expense on the Senior Credit Facility retired with the
               proceeds from the Offering....................................    (12)
             Interest expense associated with the Westchester Acquisition and
               Danbury Acquisition prior to their acquisition by the
               Company.......................................................   (112)
             Interest expense attributable to the Acquisitions...............   (194)
                                                                               ------
                                                                                   -
             Pro forma adjustment............................................  $(281)
                                                                               =======
</TABLE>
 
                                       20
<PAGE>   23
 
                 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                      AS OF MARCH 31, 1996
                                       ----------------------------------------------------------------------------------
                                                                     1996
                                       COMMODORE                   TREASURE
                                        MEDIA,      HUNTINGTON       COAST       STAMFORD      PRO FORMA        PRO FORMA
                                         INC.      ACQUISITIONS   ACQUISITION   ACQUISITION   ADJUSTMENTS       COMBINED
                                       ---------   ------------   -----------   -----------   -----------       ---------
<S>                                    <C>         <C>            <C>           <C>           <C>               <C>
ASSETS:
Cash.................................. $   5,087      $  170        $    36       $     1      $  36,000(a)      $ 1,644
                                                                                                  (8,500)(b)
                                                                                                  (1,968)(c)
                                                                                                 (30,475)(d)
                                                                                                   1,500(d)
                                                                                                    (207)(d)
Accounts receivable, net..............     4,908         561            212           640         (1,413)(d)       4,908
Prepaid expenses and other current
  assets..............................       453          59              9           142           (210)(d)         453
                                         -------      ------         ------       -------       --------         -------
          Total current assets........    10,448         790            257           783         (5,273)          7,005
Property, plant and equipment, net....    10,016       1,186            769           329                         12,300
FCC licenses and goodwill, net........    35,213         131          2,135         2,308         23,917(d)       63,704
Other intangible and other assets,
  net.................................     7,534           0              1            37            (38)(d)       6,034
                                                                                                  (1,500)(d)
                                         -------      ------         ------       -------       --------         -------
          Total assets................ $  63,211      $2,107        $ 3,162       $ 3,457      $  17,106         $89,043
                                         =======      ======         ======       =======       ========         =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
Accounts payable and accrued
  liabilities......................... $   4,386      $   76        $    39       $   359      $    (174)(d)     $ 4,686
Current maturities of long-term
  debt................................        12       2,258            119             5         (2,382)(d)          12
                                         -------      ------         ------       -------       --------         -------
          Total current liabilities...     4,398       2,334            158           364         (2,556)          4,698
Long-term debt........................    74,466           0          2,122         7,689         (8,500)(b)      65,966
                                                                                                  (9,811)(d)
Noncurrent compensation...............     1,463           0              0             0         (1,282)(c)         181
Note payable, officer.................     1,175           0              0             0                          1,175
Deferred income taxes.................     1,700           0              0             0                          1,700
Stockholders' equity (deficit)........   (19,991)       (227)           882        (4,596)        36,000(a)       15,323
                                                                                                    (686)(c)
                                                                                                   3,941(d)
                                         -------      ------         ------       -------       --------         -------
          Total liabilities and
            stockholders' equity
            (deficit)................. $  63,211      $2,107        $ 3,162       $ 3,457      $  17,106         $89,043
                                         =======      ======         ======       =======       ========         =======
</TABLE>
 
                                       21
<PAGE>   24
 
            NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
 
(a) To reflect the proceeds from the Offering:
 
<TABLE>
        <S>                                                               <C>
        Issuance of 2,882,143 shares of Class A Common Stock............  $40,350,000
        Fees and expenses...............................................    4,350,000
                                                                          -----------
                  Net proceeds from the Offering........................  $36,000,000
                                                                          ===========
</TABLE>
 
(b) To reflect the repayment of the outstanding balance of $8.5 million under
    the Senior Credit Facility.
(c) To reflect the payment of deferred compensation in accordance with the
    provisions of employment agreements with certain executives of the Company.
    See "Use of Proceeds." A charge to earnings of approximately $686,000 will
    be taken in the period that the payment is made to reflect the payment of
    the deferred compensation in a total amount of $1.9 million, as required in
    an Initial Public Offering. The deferred compensation is currently carried
    on the Company's balance sheet at its present value.
(d) To reflect the purchase of the Huntington Acquisitions, the 1996 Treasure
    Coast Acquisition and the Stamford Acquisition and the preliminary
    allocation of the purchase price including expenses of $975,000:
 
<TABLE>
        <S>                                                               <C>
        Huntington Acquisitions.........................................  $12,000,000
        1996 Treasure Coast Acquisition.................................    8,000,000
        Stamford Acquisition............................................    9,500,000
                                                                          -----------
                  Total.................................................   29,500,000
        Fees and expenses...............................................      975,000
                                                                          -----------
                  Total.................................................  $30,475,000
                                                                          ===========
</TABLE>
 
      Deposits totaling $1.5 million have been paid for the Huntington
      Acquisitions, the 1996 Treasure Coast Acquisition and the Stamford
      Acquisition, and will be applied towards the purchase price or returned to
      the Company at the respective closings.
 
      The allocation of the purchase price and the elimination of the assets not
      acquired and the liabilities not assumed in connection with the Huntington
      Acquisitions, the 1996 Treasure Coast Acquisition and the Stamford
      Acquisition are as follows:
 
<TABLE>
<CAPTION>
                                                    ALLOCATION OF
                                                      PURCHASE        CARRYING
                                                        PRICE          VALUE       ADJUSTMENT
                                                       (000'S)        (000'S)      (000'S) --
                                                    -------------     --------
        <S>                                         <C>               <C>          <C>
        ASSETS:
        Cash......................................     $     0        $    207      $   (207)
        Accounts receivable, net..................           0           1,413        (1,413)
        Prepaid expense and other current
          assets..................................           0             210          (210)
        Property, plant and equipment, net........       2,284           2,284             0
        Intangible assets, net....................      28,491           4,574        23,917
        Other assets..............................           0              38           (38)
                                                       -------         -------      --------
                  Total assets....................     $30,775        $  8,726      $ 22,049
                                                       =======         =======      ========
        LIABILITIES:
        Accounts payable and accrued
          liabilities.............................     $   300        $    474      $   (174)
        Current portion of long term debt.........           0           2,382        (2,382)
        Long term debt............................           0           9,811        (9,811)
                                                       -------         -------      --------
        Net assets................................     $30,475        $ (3,941)     $ 34,416
                                                       =======         =======      ========
        Stockholders' equity......................                    $ (3,941)     $  3,941
                                                                       =======      ========
</TABLE>
 
      The preliminary allocation of purchase price may change upon final
      determination of the fair value of the net assets acquired.
 
                                       22
<PAGE>   25
 
         SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
 
     The following selected historical consolidated financial data of the
Company for each of the five years ended December 31, 1995 are derived from the
audited consolidated financial statements of the Company, of which the
consolidated balance sheets at December 31, 1994 and 1995 and the consolidated
statement of operations for the three years in the period ended December 31,
1995 are included herein. The following selected historical consolidated
financial data of the Company for the three months ended March 26, 1995 and
March 31, 1996 are derived from the unaudited consolidated financial statements
of the Company. The selected financial information should be read in conjunction
with the information contained in "Pro Forma Consolidated Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Company's Consolidated Financial Statements and
Notes thereto, as well as the Financial Statements and Notes thereto of (i)
Danbury Broadcasting, Inc., with respect to the Danbury Acquisition, (ii)
Adventure Communications, Inc., with respect to the Huntington Acquisitions,
(iii) Media VI, with respect to the 1996 Treasure Coast Acquisition and (iv) Q
Broadcasting, Inc., with respect to the Stamford Acquisition, included elsewhere
herein.
 
     The pro forma statement of operations data and supplemental information for
the year ended December 31, 1995 has been prepared as if the Recapitalization
Transactions, the 1995 Treasure Coast Acquisition, the Acquisitions, and the
Offering and the application of the estimated net proceeds therefrom had
occurred on January 1, 1995. The pro forma statement of operations data and
supplemental information for the three months ended March 31, 1996 has been
prepared as if the Acquisitions and the Offering and the application of the net
proceeds therefrom had occurred on January 1, 1995. The pro forma balance sheet
data at March 31, 1996 has been prepared as if the 1996 Treasure Coast
Acquisition, the Stamford Acquisition and the Huntington Acquisitions and the
Offering and the application of the estimated net proceeds therefrom had
occurred on March 31, 1996. The selected pro forma financial data is not
necessarily indicative of the results that would have occurred if such
Acquisitions had occurred on the dates indicated, nor is it indicative of the
Company's future results of operations.
 
                                       23
<PAGE>   26
 
         SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                                                      THREE MONTHS ENDED
                                                                                               --------------------------------
                                                YEAR ENDED DECEMBER 31,                        MARCH 26,         MARCH 31,
                            ---------------------------------------------------------------    ---------    -------------------
                                                                                   1995 PRO                            1996 PRO
                             1991       1992       1993       1994       1995      FORMA(A)      1995        1996      FORMA(A)
                            -------    -------    -------    -------    -------    --------    ---------    -------    --------
<S>                         <C>        <C>        <C>        <C>        <C>        <C>         <C>          <C>        <C>
OPERATING DATA:
Total revenue.............  $17,677    $19,578    $21,643    $28,686    $33,653    $46,327      $ 6,507     $ 8,048    $ 9,787
Less: agency
  commissions.............   (1,342)    (1,617)    (1,845)    (2,461)    (2,858)    (3,791 )       (540)       (632)      (754 )
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
         Net revenue......   16,335     17,961     19,798     26,225     30,795     42,536        5,967       7,416      9,033
Station operating
  expenses(b).............   12,080     12,713     13,509     16,483     19,033     27,185        4,168       5,375      6,274
Corporate expenses........    1,167      1,602      2,531      2,110      2,051      2,151          461         466        491
Depreciation and
  amortization............    1,606      1,676      1,129      2,145      1,926      3,559          437         480        884
Long-term incentive
  compensation(c).........        0          0          0      2,180      2,007      2,007          585           0          0
Separation
  compensation(d).........        0          0      1,496          0          0          0            0           0          0
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
         Operating
           income.........    1,482      1,970      1,133      3,307      5,778      7,634          316       1,095      1,384
Interest expense..........    5,139      4,410      4,219      2,932      7,421      9,235          830       2,452      2,364
Interest income...........        5          3          1          0        421        421            0         115        115
Other expenses............      527        561        658        602        434        485           56         167        168
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
Loss before income taxes
  and extraordinary gain
  (loss)..................   (4,179)    (2,998)    (3,743)      (227)    (1,656)    (1,665 )       (570)     (1,409)    (1,033 )
Income taxes..............        4         12         39        300        140        140           15          27         27
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
Loss before extraordinary
  gain (loss).............   (4,183)    (3,010)    (3,782)      (527)    (1,796)    (1,805 )       (585)     (1,436)    (1,060 )
Extraordinary
  gain (loss)(e)..........        0        430          0          0       (444)      (512 )          0           0          0
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
         Net loss.........   (4,183)    (2,580)    (3,782)      (527)    (2,240)    (2,317 )       (585)     (1,436)    (1,060 )
Preferred stock
  dividend................        0          0          0        691        252          0          208           0          0
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
Net loss applicable to
  common shares...........  $(4,183)   $(2,580)   $(3,782)   $(1,218)   $(2,492)   $(2,317 )    $  (793)    $(1,436)   $(1,060 )
                            ========   ========   =======    ========   ========   =======       ======     =======    =======
Loss per share:
  Before extraordinary
    item..................  $ (1.60)   $ (1.40)   $ (1.88)   $  (.32)   $  (.53)   $ (0.26 )    $  (.21)    $ (0.36)   $ (0.16 )
  Extraordinary item......        0        .20          0          0       (.11)      (.08 )          0           0          0
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
  Loss per share..........  $ (1.60)   $ (1.20)   $ (1.88)   $  (.32)   $  (.64)   $  (.34 )    $  (.21)    $ (0.36)   $ (0.16 )
                            ========   ========   =======    ========   ========   =======       ======     =======    =======
Weighted average common
  shares outstanding(f)...  2,610,700  2,149,900  2,013,100  3,762,700  3,892,300  6,774,300   3,755,500    3,949,900  6,831,900
SUPPLEMENTAL INFORMATION:
Broadcast cash flow(g)....  $ 4,255    $ 5,248    $ 6,289    $ 9,742    $11,762    $15,351      $ 1,799     $ 2,041    $ 2,759
Broadcast cash flow
  margin(g)...............    26.0%      29.2%      31.8%      37.1%      38.2%      36.1%        30.1%       27.5%      30.5%
EBITDA(g).................    3,088      3,646      3,758      7,632      9,711     13,200        1,338       1,575      2,268
Capital expenditures......      179        371        333        623        321                      42         124
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                                             AT MARCH 31, 1996
                                              AT DECEMBER 31,                                               -------------------
                            ---------------------------------------------------                                          PRO
                             1991       1992       1993       1994       1995                               ACTUAL     FORMA(A)
                            -------    -------    -------    -------    -------                             -------    --------
<S>                         <C>        <C>        <C>        <C>        <C>        <C>         <C>          <C>        <C>
BALANCE SHEET DATA:
Cash and cash
  equivalents.............  $   958    $ 1,045    $   887    $ 2,042    $10,891                             $ 5,087    $ 1,644
Net working capital.......   (6,512)       583      2,387        115     13,730                               6,050      2,307
Total assets..............   28,437     27,508     36,192     36,283     52,811                              63,211     89,043
Total long-term debt
  (including current
  maturities).............   51,211     51,934     41,773     39,075     66,316                              75,653     67,153
Stockholders' equity
  (deficit)...............  (26,185)   (28,766)    (8,097)   (18,038)   (18,555)                            (19,991)    15,323
</TABLE>
 
                                       24
<PAGE>   27
 
     NOTES TO SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
 
(a) Pro forma operating data and supplemental information for the year ended
    December 31, 1995 give effect to the Recapitalization Transactions (as
    hereinafter defined), the Acquisitions, the Offering and the application of
    the estimated net proceeds therefrom and the 1995 Treasure Coast Acquisition
    as if each had occurred on January 1, 1995. The pro forma operating data and
    supplemental information for the three months ended March 31, 1996 give
    effect to the Acquisitions and the Offering and the application of the
    estimated net proceeds therefrom as if each had occurred on January 1, 1995.
    The pro forma balance sheet data give effect to the 1996 Treasure Coast
    Acquisition, the Stamford Acquisition and the Huntington Acquisitions and
    the Offering and the application of the estimated net proceeds therefrom as
    if each had occurred on March 31, 1996.
 
(b) Station operating expenses exclude depreciation and amortization, corporate
    expenses, long-term incentive compensation, other expenses and separation
    compensation.
 
(c) The long-term incentive compensation expense incurred by the Company in 1994
    and 1995 consists of non-cash charges taken by the Company pursuant to the
    long-term incentive compensation provisions of its then existing employment
    agreements with Mr. Friedman and Mr. Shea. See "Management-- Employment
    Agreements and Arrangements."
 
(d) Separation compensation in 1993 consists of a provision for cash payments
    made in 1993, cash payments made in 1994 and the present value of future
    payments under a separation agreement reached between the Company and a
    former president of the Company which became effective December 31, 1993.
    Under such separation agreement, the former president will continue to
    receive $250,000 per year in equal semi-monthly payments through December
    31, 1997. See Note 10 to Consolidated Financial Statements of the Company.
 
(e) In 1992, the Company renegotiated the Amended and Restated Promissory Note
    issued by the Company to Michael Hanson (the "Hanson Note") resulting in a
    $430,000 reduction in its principal amount and an equivalent extraordinary
    gain for the Company. In 1995, in connection with the Recapitalization
    Transactions (as hereinafter defined), the Company wrote off the balance of
    the unamortized deferred financing costs on its retired debt resulting in an
    extraordinary loss of $444,000, $512,000 on a 1995 pro forma basis. See Note
    5 to Consolidated Financial Statements of the Company.
 
(f) To date the Company has not paid any dividends with respect to the Common
    Stock.
 
(g) For purposes of this Prospectus, EBITDA is defined as net income (loss)
    before (i) extraordinary gain (loss), (ii) income taxes, (iii) other
    expenses (income), (iv) net interest expense, (v) long-term incentive
    compensation and separation compensation and (vi) depreciation and
    amortization. Broadcast cash flow is defined as EBITDA before corporate
    expenses. Although EBITDA and broadcast cash flow are not measures of
    performance calculated in accordance with GAAP, EBITDA and broadcast cash
    flow are widely used in the broadcast industry as measures of a radio
    broadcasting company's operating performance. Neither EBITDA nor broadcast
    cash flow should be considered in isolation or as a substitute for net
    income, cash flows from operating activities and other income or cash flow
    statement data prepared in accordance with GAAP or as a measure of
    profitability or liquidity. Broadcast cash flow and EBITDA differ from cash
    flow from operations under GAAP primarily because broadcast cash flow and
    EBITDA are not reduced by net interest expense and income tax expense,
    changes in the levels of operating assets and liabilities and separation and
    long-term incentive compensation paid during the period. In addition,
    broadcast cash flow excludes corporate expenses that are reflected as a
    reduction in cash flow from operations. Broadcast cash flow and EBITDA are
    not intended to depict funds available for discretionary uses as they do not
    reflect the Company's debt service and capital requirements.
 
                                       25
<PAGE>   28
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
GENERAL
 
     The following discussion should be read in conjunction with the financial
statements appearing elsewhere in this Prospectus. Period to period comparisons
of the Company's historical financial statements are significantly impacted by
the acquisition of certain of the Company's radio stations and the use of JSAs
and LMAs. In this discussion, the 1995 results of operations of the Company
include the results of the WKAP-AM JSA that became effective on March 27, 1995,
the acquisition of WQOL-FM on June 27, 1995, the WPAW-FM JSA commencing in
August 1995, and the LMAs with respect to WRKI-FM, WINE-AM, WVYB-FM, WZZN-FM and
WPUT-AM that became effective on October 30, 1995. The 1996 results of
operations of the Company include the results of the JSAs with respect to
WAVW-FM, WKQS-FM and WAXE-AM that became effective on February 16, 1996.
 
     The Company analyzes its financial results in terms of variable expenses
and other operating expenses. Management believes "other operating expenses" are
typically controllable and predictable, and projects such expenses each year
during the Company's annual budgeting process; such expenses consist primarily
of employee salaries, programming and similar expenses, advertising and
promotional expenses and lease costs for office, studio space and transmission
sites, but excludes any barter expense. "Variable expenses," which have averaged
26.2% of non-barter revenue for the last five years, consist primarily of
commissions and music licensing fees.
 
     In the radio broadcasting industry, radio stations may utilize trade or
barter agreements to provide advertising time in exchange for goods or services
(such as travel, products used in promotional campaigns, "giveaways" or meals)
instead of cash compensation. The Company attempts to limit trade or barter,
employing it primarily in situations where use of trade or barter will bring
incremental cash revenue from a potential client or will reduce a cash expense
item. The Company's trade and barter revenue as a percent of total revenue was
9.6%, 8.6%, 7.5%, 8.8% and 10.1% for 1995, 1994, 1993, 1992 and 1991,
respectively.
 
     Although advertising contracts are generally short-term, the Company has
long-term relationships with many of its advertisers. The Company has developed
these relationships through both the long local history of many of its radio
stations and the long personal relationships many of its managers have developed
with advertisers in the stations' markets. In 1995, approximately 86% of the
Company's total cash revenue was generated from the broadcast of local
advertising, approximately 12% was from the broadcast of national advertising
and approximately 2% was from other forms of revenue such as political
advertisements, network revenue and tower rentals. Each radio station's local
sales staff solicits advertisements directly from local advertisers or through
an advertising agency representing local advertisers. National advertising sales
for each of the Company's stations are made in conjunction with the efforts of
an independent advertising representative who specializes in national sales,
acts as an exclusive agent for the stations and is compensated on a commission
only basis.
 
     The Company has net operating loss carryforwards ("NOLs") for federal
income tax purposes which may be available to offset the Company's taxable
income. The Offering will result in a more-than-50-percent ownership change for
purposes of Section 382. Therefore, the Company's use of its NOLs may be reduced
in the years following the ownership change, resulting in a potential increase
in the Company's effective tax rate for such years.
 
     Seasonal revenue fluctuations are common in the radio broadcasting industry
and are due primarily to fluctuations in advertising expenditures by local
retailers. The Company's first fiscal quarter generally produces the lowest
revenue for the year and the fourth fiscal quarter generally produces the
highest revenue. The Company's operating results in any period may also be
affected by the occurrence of advertising and promotional expenses that do not
produce commensurate revenue in the period in which the expenses are incurred.
Since Arbitron typically reports audience ratings on a quarterly or semiannual
basis (depending on the market), a radio station's ability to realize revenue as
a result of increased advertising and promotional expenses and any resulting
audience rating changes may be delayed for several months. The Company believes
 
                                       26
<PAGE>   29
 
the relatively moderate rates of inflation over the past three years have not
had a significant impact on the profitability of the Company. In general, the
Company believes the effects of inflation are offset through increases in
advertising rates.
 
     The following table sets forth certain consolidated summary data of the
Company (dollars in thousands):
 
<TABLE>
<CAPTION>
                                                                                               THREE-MONTHS ENDED
                                                    YEAR ENDED DECEMBER 31,                  ----------------------
                                      ---------------------------------------------------    MARCH 26,    MARCH 31,
                                       1991       1992       1993       1994       1995        1995         1996
<S>                                   <C>        <C>        <C>        <C>        <C>        <C>          <C>
OPERATING DATA:
Non barter revenue................... $15,892    $17,848    $20,026    $26,213    $30,415     $ 5,751      $ 7,132
Barter revenue.......................   1,785      1,730      1,617      2,473      3,238         756          916
                                      -------    -------    -------    -------    -------     -------      -------
  Total revenue(a)...................  17,677     19,578     21,643     28,686     33,653       6,507        8,048
Variable expenses(b)(c)..............   4,163      4,613      5,312      6,707      8,154       1,679        2,089
Other operating expenses(c)(d).......   7,492      7,886      8,548      9,886     10,683       2,289        3,048
Barter expense(c)....................   1,767      1,831      1,494      2,351      3,054         740          870
Corporate expenses...................   1,167      1,602      2,531      2,110      2,051         461          466
Depreciation & amortization..........   1,606      1,676      1,129      2,145      1,926         437          480
Long-term incentive compensation.....       0          0          0      2,180      2,007         585            0
Separation compensation..............       0          0      1,496          0          0           0            0
                                      -------    -------    -------    -------    -------     -------      -------
  Operating income................... $ 1,482    $ 1,970    $ 1,133    $ 3,307    $ 5,778     $   316      $ 1,095
                                      =======    =======    =======    =======    =======     =======      =======
OTHER DATA:
Broadcast cash flow(e)............... $ 4,255    $ 5,248    $ 6,289    $ 9,742    $11,762     $ 1,799      $ 2,041
Broadcast cash flow margin...........   26.0%      29.2%      31.8%      37.1%      38.2%       30.1%        27.5%
Variable expenses as a percent of
  non-barter revenue.................   26.2%      25.8%      26.5%      25.6%      26.8%       29.2%        29.3%
Other operating expenses as a percent
  of non-barter revenue..............   47.1%      44.2%      42.7%      37.7%      35.1%       39.8%        42.7%
Station operating expenses(c)........  12,080     12,713     13,509     16,483     19,033       4,168        5,375
</TABLE>
 
- ------------------------------
 
(a) Total revenue less agency commissions equals net revenue, as detailed in the
    Company's audited financial statements.
 
(b) Variable expenses consist of all commissions (including agency, salesperson,
    national representative and tower representative) and music licensing fees,
    and excludes any barter expense.
 
(c) Station operating expenses consists of variable expenses plus other
    operating expenses plus barter expense less agency commissions.
 
(d) Other operating expenses consist primarily of employee salaries, programming
    and similar expenses, advertising and promotional expenses and lease costs
    for office, studio space and transmission sites, and excludes any barter
    expense.
 
(e) Broadcast cash flow means EBITDA before corporate expenses.
 
    RESULTS OF OPERATIONS
 
    THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 26,
    1995.
 
     Total Revenue.  Total revenue increased 23.7% to $8.0 million in the first
quarter of 1996 from $6.5 million during the same period in 1995 primarily due
to the addition of revenues from the acquisition of WQOL-FM in the Treasure
Coast Market, Florida, from the JSAs entered into with WPAW-FM, WAVW-FM, WKQS-FM
and WAXE-AM in the Treasure Coast Market, Florida, and WKAP-AM in Allentown,
Pennsylvania and from the LMAs entered into with WRKI-FM and WINE-AM in
Fairfield County, Connecticut and WVYB-FM, WZZN-FM and WPUT-AM in
Westchester/Putnam Counties, New York. On a same station basis, total revenue
increased 1.1% to $6.6 million in the first quarter of 1996 from $6.5 million in
the first quarter of 1995.
 
                                       27
<PAGE>   30
 
     Station Operating Expenses.  Station operating expenses increased 28.9% to
$5.4 million in the first quarter of 1996 from $4.2 million during the same
period in 1995. The increase was primarily due to the addition of operating
expenses from WQOL-FM, WPAW-FM, WAVW-FM, WKQS-FM and WAXE-AM in the Treasure
Coast Market, Florida, WRKI-FM and WINE-AM in Fairfield County, Connecticut and
WVYB-FM, WZZN-FM and WPUT-AM in Westchester/Putnam Counties, New York. On a same
station basis, station operating expenses remained unchanged at $4.2 million in
the first quarter of 1996. The variable expense component of station operating
expenses increased to $2.1 million in the first quarter of 1996 from $1.7
million during the same period in 1995. The increase was due primarily to higher
commissions from increased revenues and a higher effective commission rate at
certain of the Company's stations. Variable expenses as a percent of non barter
revenue were 29.3% in the first quarter of 1996 as compared to 29.2% in the
first quarter of 1995. On a same station basis, variable expenses remained
unchanged at $1.7 million in the first quarter of 1996. On a same station basis,
variable expenses as a percent of non barter revenue were 30.2% in the first
quarter of 1996, as compared to 29.2% in the first quarter of 1995. This
increase was due primarily to higher effective commission rates at certain of
the Company's stations. The other operating expense component of station
operating expenses increased 33.2% to $3.0 million in the first quarter of 1996
from $2.3 million during the same period in 1995 primarily due to the additional
operating expenses associated with WQOL-FM, WPAW-FM, WAVW-FM, WKQS-FM and
WAXE-AM in the Treasure Coast Market, Florida, WKAP-AM in Allentown,
Pennsylvania, WRKI-FM and WINE-AM in Fairfield County, Connecticut and WVYB-FM,
WZZN-FM and WPUT-AM in Westchester/Putnam Counties, New York. Other operating
expenses were 42.7% of non barter revenue in the first quarter of 1996,
increasing from 39.8% of non barter revenue in the first quarter of 1995,
primarily due to the fees associated with the Company's various joint operating
arrangements. On a same station basis, other operating expenses decreased 2.8%
to $2.2 million or 38.5% of non barter revenue in the first quarter of 1996 from
$2.3 million or 39.8% of non barter revenue during the same period of 1995.
 
     Corporate Expenses.  Corporate expenses increased 1.1% in the first quarter
of 1996 to approximately $466,000 from approximately $461,000 during the same
period in 1995. In the first quarter of 1996 corporate expenses included higher
salary expenses, which were partially offset by lower incentive accruals as
compared to the first quarter of 1995. Corporate expenses as a percent of non
barter revenue were 6.5% in the first quarter of 1996 compared to 8.0% in the
first quarter of 1995.
 
     Other Expenses.  Depreciation and amortization increased 9.9% to
approximately $480,000 in the first quarter of 1996 from approximately $437,000
during the same period in 1995 due primarily to the addition of WQOL-FM in the
Treasure Coast Market, Florida. Interest expense increased to $2.5 million in
the first quarter of 1996 from approximately $830,000 during the same period in
1995 due to increased interest expense associated with the Senior Subordinated
Notes. Interest income of $115,000 was earned on the Company's temporary cash
investments. Other expenses increased to approximately $167,000 in the first
quarter of 1996 from approximately $56,000 during the same period in 1995. The
increase was due primarily to the amortization of financing costs associated
with the Recapitalization Transactions.
 
     Operating Income.  Operating income in the first quarter of 1996 increased
to $1.1 million from approximately $316,000 in the first quarter of 1995. The
increase was partially due to higher revenues and lower long-term incentive
compensation which was partially offset by higher station operating expenses. On
a same station basis, operating income for the first quarter of 1996 increased
to approximately $982,000 from approximately $316,000 in the first quarter of
1995. The increase was due primarily to lower long-term incentive compensation
expenses.
 
     Net Loss.  Net loss for the three months ended March 31, 1996 was $1.4
million compared to a net loss of approximately $585,000 during the same period
in 1995. The net loss was due primarily to increased interest expense and
depreciation and amortization, which were partially offset by increased revenues
and interest income and lower long-term incentive compensation.
 
     Broadcast Cash Flow.  Broadcast cash flow for the three months ended March
31, 1996 was approximately $2.0 million, a 13.5% increase from the first quarter
of 1995.
 
                                       28
<PAGE>   31
 
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994.
 
     Total Revenue.  Total revenue increased 17.3% to $33.7 million in 1995 from
$28.7 million in 1994. The inclusion of revenues from the WQOL-FM acquisition
and revenues generated from JSAs and LMAs entered into in 1995 provided
approximately $1.6 million of this increase. On a same station basis total
revenue increased 11.9% to $32.1 million in 1995 from $28.7 million in 1994.
WEFX-FM and WNLK-AM in Fairfield County, Connecticut had combined total revenue
growth of 45.0% to $3.9 million in 1995 from $2.7 million in 1994 primarily due
to increased ratings and selling efforts. WJBR-AM/FM in Wilmington, Delaware and
WAEB-AM/FM in Allentown, Pennsylvania posted revenue increases in 1995 of 14.9%
and 11.6%, respectively, also primarily due to increased ratings and selling
efforts.
 
     Station Operating Expenses.  Station operating expenses increased 15.5% to
$19.0 million in 1995 from $16.5 million in 1994 due primarily to the inclusion
of station operating expenses from the newly acquired WQOL-FM, station operating
expenses resulting from JSAs and LMAs and an increase in barter expense. On a
same station basis, station operating expenses increased 9.3% to $18.0 million
in 1995 from $16.5 million in 1994 due primarily to the increase in barter
expense. The variable expense component of station operating expenses increased
21.6% to $8.2 million or 26.8% of non-barter revenue in 1995 from $6.7 million
in 1994 or 25.6% of non-barter revenue in 1994, primarily as a result of
increases in the effective commission rates and royalties resulting from the
increased revenues and an increase in bad debt expense. On a same station basis,
variable expenses increased 17.5% to $7.9 million or 27.2% of non-barter revenue
in 1995 from $6.7 million or 25.6% of non-barter revenue in 1994. The increase
was due primarily to higher commissions and the increase in overall revenue
levels. The other operating expense component of station operating expenses
increased 8.1% to $10.7 million in 1995 from $9.9 million in 1994 primarily due
to increased operating expenses from the acquisition of WQOL-FM, the JSAs and
the LMAs. On a same station basis, other operating expenses remained unchanged
at $9.9 million in 1995 as compared to the same period in 1994.
 
     Corporate Expenses.  Corporate expenses decreased 2.8% to $2.0 million in
1995 from $2.1 million in 1994. The decrease was due primarily to reduced travel
and entertainment expenses.
 
     Other Expenses.  Depreciation and amortization decreased 10.2% to $1.9
million in 1995 from $2.1 million in 1994 primarily as a result of the Company
fully amortizing certain costs associated with the acquisition of WZZO-FM in
Allentown, Pennsylvania. Long-term incentive compensation decreased 8.0% to $2.0
million in 1995 from $2.2 million in 1994. The 1995 expense reflects the balance
of the long-term incentive compensation obligations due Mr. Friedman and Mr.
Shea pursuant to their respective employment agreements. Interest expense
increased to $7.4 million in 1995 from $2.9 million in 1994. The increase was
due primarily to higher floating rates on the Company's prior senior credit
facilities and the cash and non-cash interest on the Senior Subordinated Notes
issued in the Recapitalization Transactions (as hereinafter defined). In 1995,
interest income of approximately $421,000 was earned on the Company's temporary
cash investments. Other expenses, net, decreased 27.9% from approximately
$600,000 in 1994 to approximately $400,000 in 1995 primarily due to a decrease
in the loss on sale of assets which was partially offset by an increase in the
amortization of the deferred financing charges associated with the
Recapitalization Transactions and the Company's prior credit facilities.
 
     Operating Income.  Operating income for the year ended December 31, 1995
increased 74.7% to $5.8 million from $3.3 million in the year ended December 31,
1994. The increase was primarily due to increased revenues which were partially
offset by increased station operating expenses. On a same station basis,
operating income increased 66.8% to $5.5 million in the year ended December 31,
1995 from $3.3 million during the same period in 1994. The increase was due
primarily to increased revenues, which were partially offset by higher station
operating expenses.
 
     Net Loss.  Net loss before extraordinary items for the year ended December
31, 1995 was approximately $1.8 million as compared to a net loss before
extraordinary items of approximately $527,000 during the same period in 1994.
The increase was due primarily to higher interest expense and station operating
expenses which were partially offset by increased revenue and interest income
and lower corporate expense, long-term incentive compensation and depreciation
and amortization. Upon consummation of the Recapitalization Transactions, the
Company wrote-off approximately $444,000 of deferred financing fees associated
with its
 
                                       29
<PAGE>   32
 
prior credit agreement and recorded it as an extraordinary loss. The income tax
provision of approximately $141,000 for 1995 is related to current state and
local tax expenses.
 
     Broadcast Cash Flow.  Broadcast cash flow increased 20.7% to $11.8 million
in 1995 from $9.7 million in 1994. Excluding the results of WQOL-FM and the
results of the JSAs and LMAs, broadcast cash flow increased 16.3% to $11.3
million in 1995 from $9.7 million in 1994. The broadcast cash flow margin was
38.2% in 1995 as compared to 37.1% in 1994 and excluding the results of WQOL-FM
and the results of the JSAs and LMAs the broadcast cash flow margin was 38.6% in
1995.
 
YEAR ENDED DECEMBER 31, 1994 COMPARED TO THE YEAR ENDED DECEMBER 31, 1993.
 
     Total Revenue.  Total revenue increased 32.5% to $28.7 million in 1994 from
$21.6 million in 1993 primarily as a result of the duopoly acquisition of
WZZO-FM on December 28, 1993, increased revenue at WAEB-AM/FM and WJBR-AM/FM as
well as improved selling efforts at all of the Company's stations. All of the
Company's markets showed an increase in revenue in 1994. Excluding WZZO-FM,
total revenue for 1994 was $24.3 million, a 12.4% increase from 1993. This
increase was due to higher revenue at WAEB-AM/FM and WJBR-AM/FM as well as
improved selling efforts at all of the Company's stations.
 
     Station Operating Expenses.  Station operating expenses increased 22.0% to
16.5 million in 1994 from $13.5 million in 1993. The increase was primarily due
to the additional operating expenses associated with the acquisition of WZZO-FM
and increased selling expenses due to higher revenues. The variable expense
component of station operating expenses increased 26.3% in 1994 primarily from
increased commissions resulting from the higher levels of revenue and the
addition of the variable expenses from the acquisition of WZZO-FM. Variable
expenses as a percent of non-barter revenue decreased to 25.6% in 1994 from
26.5% in 1993 due primarily to lower levels of bad debt in 1994 as compared to
1993. Excluding WZZO-FM, variable expenses increased 6.3% in 1994 from 1993 and
variable expenses as a percent of non-barter revenue decreased to 25.4% in 1994
from 26.6% in 1993. The other operating expense component of station operating
expenses increased 15.7% to $9.9 million in 1994 from $8.5 million in 1993
primarily as a result of the addition of other operating expenses from the
acquisition of WZZO-FM and increased sales expenses at WFAS-AM/FM, WEFX-FM,
WNLK-AM and WZZR-FM. Excluding WZZO-FM, other operating expenses increased 5.1%
to $9.0 million in 1994 from $8.5 million in 1993 primarily due to increases in
sales expenses at WFAS-AM/FM, WNLK-AM and WZZR-FM.
 
     Corporate Expenses.  Corporate expenses decreased 16.6% to $2.1 million in
1994 from $2.5 million in 1993. The decrease in corporate expenses was primarily
attributable to lower legal, travel and entertainment, and severance expenses.
 
     Other Expenses.  Long-term incentive compensation expense in 1994 of $2.2
million consisted of a non-cash long-term incentive compensation expense
incurred by the Company pursuant to Mr. Friedman's and Mr. Shea's former
employment agreements. Depreciation and amortization increased 90% to $2.1
million in 1994 from $1.1 million in 1993 primarily as a result of the
acquisition of WZZO-FM. Interest expense, net, decreased to $2.9 million in 1994
from $4.2 million in 1993. The reduction in the Company's annual interest
expense was primarily due to the Company entering into the Second Amended and
Restated Credit Agreement with The Bank of New York and the conversion of
approximately $17.2 million of indebtedness of the Company to Carter Burden and
Radio Financial Partners, Inc. into equity securities of the Company. Income
taxes for the year ended 1994 consisted of a provision for current state and
local tax expenses.
 
     Operating Income.  Operating income for the year ended December 31, 1994
increased to $3.3 million from $1.1 million in the year ended December 31, 1993.
The increase was due primarily to increased revenues and the absence of
separation compensation expense incurred in the 1993 fiscal year which was
partially offset by higher station operating expenses and long-term incentive
compensation expense. On a same station basis, operating income increased to
$1.3 million in the year ended December 31, 1994 from $1.1 million in the year
ended December 31, 1993. The increase was partially due to increased revenues
and lower separation compensation expense which were partially offset by higher
station operating expenses.
 
                                       30
<PAGE>   33
 
     Net loss.  Net loss for 1994 decreased to approximately $527,000 from
approximately $3.8 million in 1993 primarily due to increased revenues, lower
corporate expenses, separation compensation and interest expense which were
partially offset by increased station operating expenses, depreciation and
amortization, long-term incentive compensation and income taxes.
 
     Broadcast Cash Flow.  Broadcast cash flow increased 54.9% to $9.7 million
in 1994 from $6.3 million in 1993. Excluding WZZO-FM, broadcast cash flow
increased 22.5% in 1994 from 1993. The broadcast cash flow margin was 37.1% in
1994, including WZZO-FM, as compared to 31.8% in 1993.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Company's liquidity needs arise primarily from its debt service
obligations, funding of the Huntington Acquisitions and the Company's working
capital needs and capital expenditures. Net cash flows provided by operating
activities were $1.9 million and approximately $60,000 in the first quarter of
1996 and 1995, respectively. Changes in the Company's net cash flows from
operating activities are primarily the result of changes in advertising revenue,
the timing of its revenue receipts and its operating expense and interest
payments.
 
     During the first quarter of 1996, net cash flow used in investing
activities increased to $15.8 million from approximately $270,000 in the first
quarter of 1995. These investing activities in the first quarter of 1996
included approximately $124,000 of capital expenditures, approximately $291,000
of deferred acquisition costs, $915,000 of deposits on acquisitions (including
$500,000 for WKHL-FM and WSTC-FM in Fairfield County, Connecticut and $400,000
for WAVW-FM, WKQS-FM and WAXE-AM in the Treasure Coast Market, Florida) and
$14.4 million for the acquisition of WRKI-FM and WINE-AM and WVYB-FM, WZZN-FM
and WPUT-AM in Fairfield County, Connecticut and Westchester/Putnam Counties,
New York, respectively. In the first quarter of 1995 investing activities
included approximately $42,000 of capital purchases, approximately $65,000 of
loans to employees and $150,000 of deposits on acquisitions.
 
     Net cash flow provided by financing activities in the first quarter of 1996
totaled $8.1 million as compared to $1.6 million of net cash flow used in
financing activities during the first quarter of 1995. These financing
activities included $8.5 million of senior debt issued by the Senior Lender
under the Company's revolving Senior Credit Facility as partial funding for the
acquisitions of WRKI-FM and WINE-AM and the WVYB-FM, WZZN-FM and WPUT-AM in
Fairfield County, Connecticut and Westchester/Putnam Counties, New York,
respectively, and the payment of approximately $394,000 of deferred debt
issuance costs in connection with the Senior Credit Facility. In the first
quarter of 1995 net cash flows used in investing activities included
approximately $224,000 of deferred debt issuance costs, approximately $333,000
of principal payments on the Senior Credit Facility and payment of $1.0 million
to The Bank of New York for the purchase of the redeemable warrant.
 
     The Senior Credit Facility allows the Company to borrow up to $30 million
in revolving loans and up to $5 million in accounts receivable loans. Interest
is payable monthly at a rate of 3.5% over LIBOR. Principal amortization
commences on November 30, 1997 for the receivable loan.
 
     On May 1, 1996, the Company entered into a Securities Purchase Agreement
with CIBC WG Argosy Merchant Fund 2, LLC ("CIBC Merchant Fund"), pursuant to
which the CIBC Merchant Fund agreed to purchase from the Company, if and when
requested by the Company, up to an aggregate liquidation value of $12,500,000 of
Series A Preferred Stock of the Company in such amounts as the Company may
request (the "Preferred Stock Facility"), provided that such request be for an
aggregate liquidation value of at least $2.5 million and be made no later than
October 31, 1996. The Series A Preferred Stock accrues cash dividends at the
rate of 8% per annum, or 10% per annum if paid in additional shares of Series A
Preferred Stock, through April 30, 1999. The Company intends to redeem the
Series A Preferred Stock with proceeds from the Offering.
 
     The Company has utilized borrowings under the Senior Credit Facility and
the proceeds of issuances of Series A Preferred Stock under the Preferred Stock
Facility (which will be redeemed upon the closing of the Offering), together
with cash from operating activities, to satisfy its financial needs in the
recent past.
 
                                       31
<PAGE>   34
 
Management believes that after consummation of the Offering contemplated hereby,
cash from operating activities together with available revolving credit
borrowings under the Senior Credit Facility should be sufficient to permit the
Company to meet its financial obligations and fund its operations for the
foreseeable future. Upon the completion of the Offering management expects that
the maximum of $35 million of borrowing capacity under the Senior Credit
Facility will be available to it for future cash needs. The Company's long-term
debt is comprised of the Senior Subordinated Notes and the Senior Credit
Facility. The Company may require additional financing for future acquisitions
and there can be no assurance that it will be able to obtain such financing on
terms considered by management to be favorable.
 
RECAPITALIZATION TRANSACTIONS
 
     On April 21, 1995, the Company completed the offering of its Senior
Subordinated Notes. The gross proceeds of approximately $65.0 million were used
to: (i) retire existing senior and subordinated indebtedness of approximately
$38.6 million resulting in an extraordinary loss of approximately $444,000; (ii)
redeem the preferred stock of approximately $8.7 million; (iii) pay the
long-term incentive compensation of Mr. Friedman and Mr. Shea of approximately
$1.9 million; (iv) pay the estimated fees and expenses of the Recapitalization
Transactions which total approximately $4.2 million; and (v) reserve
approximately $11.6 million for general corporate purposes and possible future
acquisitions and fund the 1995 Treasure Coast Acquisition. In addition, the
Company converted all of its existing Common Stock for 486,373 shares of its
Class B Common Stock and 119,212 shares (including treasury shares) of its Class
A Common Stock. The consolidated financial statements have been retroactively
adjusted for this conversion. The above transactions constitute the
Recapitalization Transactions. See Note 2 to the "Consolidated Financial
Statements." On May 26, 1995, the Company filed with the Securities and Exchange
Commission a registration statement on Form S-4 offering to exchange the Senior
Subordinated Notes for new notes which are substantially identical except that
they are freely transferable (the "Exchange Offer"). The Form S-4 was effective
on July 28, 1995 and the Exchange Offer was consummated on August 28, 1995.
 
RECENT ACCOUNTING PRONOUNCEMENTS
 
     The Financial Accounting Standards Board issued SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" in March 1995, which establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles and goodwill related to
those assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. SFAS No. 121 will be effective for
the Company's financial statements beginning in 1996. The Company evaluates
intangible assets for potential impairment by analyzing the operating results,
trends and prospects of the Company's stations, as well as by comparing them to
their competitors. The Company also takes into consideration recent acquisition
patterns within the broadcast industry, the impact of recently enacted or
potential FCC rules and regulations and any other events or circumstances which
might indicate potential impairment. As a result of continued strong growth in
radio advertising revenue, and based upon recent valuations of various station
acquisitions in many of the Company's markets, management does not believe that
the implementations of SFAS No. 121 will have a material effect on its financial
statements.
 
     The Financial Accounting Standards Board issued SFAS No. 123, "Accounting
for Stock Based Compensation" in October 1995, which establishes financial
accounting and reporting standards for stock based employee compensation plans
including, stock purchase plans, stock options, restricted stock and stock
appreciation rights. The Company has elected to continue accounting for stock
based compensation under Accounting Principles Board Opinion No. 25. The
disclosure requirements of SFAS No. 123 will be effective for the Company's
financial statements beginning in 1996. Management does not believe that the
implementation of SFAS No. 123 will have a material effect on its financial
statements.
 
                                       32
<PAGE>   35
 
                                    BUSINESS
 
GENERAL
 
     The Company owns and operates, or provides sales and marketing services for
33 radio broadcasting stations (nineteen FM and fourteen AM stations) in six
medium-sized markets. The Company is the leading radio group on a pro forma
basis in five of its six markets based on radio advertising revenue and is the
leading radio group in each of its six markets based on audience share. The
Company's average radio revenue share in its markets was 45.1% in pro forma
1995, which the Company believes is the highest average radio revenue share of
any public radio broadcasting company in the United States. The Company's radio
stations are located in the following markets: Fairfield County, Connecticut;
Allentown, Pennsylvania; Wilmington, Delaware; Westchester/Putnam Counties, New
York; the Treasure Coast Market, Florida and Huntington, West Virginia/Ashland,
Kentucky. The Company's pro forma net revenue and broadcast cash flow for the
year ended December 31, 1995 were $42.5 million and $15.3 million, respectively.
 
     The Company believes that operating radio stations in medium-sized markets
offers significant opportunities to apply its programming, marketing and
broadcasting expertise to increase broadcast cash flow and to establish a
dominant market position that would be difficult for a competitor to replicate.
The Company defines medium-sized markets as markets with approximately $10
million to $35 million of radio advertising revenue, which includes markets
ranked between 50 and 150 in terms of radio advertising revenue. The Company
believes that medium-sized markets represent attractive operating environments
because these markets are generally characterized by (i) a limited number of
radio stations, which minimizes the risk of format attack, (ii) fewer
alternative advertising media, (iii) undercapitalized owners/operators, (iv)
strong station brand identity among listeners that is not typically dependent
upon specific on-air talent, (v) a lower cost operating structure and (vi) a
high percentage of local advertisers who make advertising decisions based upon
relationships and customer service and not solely upon station ratings. The
Company believes that these characteristics allow it to capture a greater
percentage of a market's total advertising revenue and to achieve broadcast cash
flow margins typically higher than industry norms while operating in a more
stable competitive environment. In addition, the Company believes that under the
recently enacted Telecommunications Act of 1996, which liberalized radio station
ownership limits, medium-sized markets offer the Company the greatest
opportunity to create dominant, multiple station ownership situations.
 
     The Company's objective is to increase shareholder value by enhancing its
share of the advertising revenue in each of its markets, increasing the
broadcast cash flow of its existing stations and pursuing additional
acquisitions both in its existing markets and in new markets in which the
Company's operational expertise can be successfully applied to increase
broadcast cash flow. Through successful implementation of the Company's
operating and acquisition strategies, the Company's net revenue and broadcast
cash flow have increased at compound annual growth rates of 21.1% and 29.2%,
respectively, from 1991 to pro forma 1995 and the broadcast cash flow margin has
increased from 26.0% in 1991 to 36.0% in pro forma 1995. On a same station
basis, from 1991 to 1995, the Company successfully increased its net revenue and
broadcast cash flow at compound annual growth rates of 13.7% and 20.7%,
respectively.
 
                                       33
<PAGE>   36
 
     The following table sets forth, on a pro forma basis, certain information
with respect to the Company and its markets:
 
<TABLE>
<CAPTION>
                                         COMPANY DATA                                               MARKET DATA
               ----------------------------------------------------------------    ----------------------------------------------
                                                                      NUMBER OF                   1995
                RADIO    RADIO REVENUE     RADIO     RADIO AUDIENCE   STATIONS(F)                 RADIO                 1990-1995
               REVENUE    MARKET SHARE    AUDIENCE    MARKET SHARE    ---------      VIABLE      REVENUE   1995 RADIO    REVENUE
  MARKET(A)    RANK(B)        %(C)        RANK(D)         %(E)        AM    FM     STATIONS(G)   RANK(H)   REVENUE(I)    CAGR %
<S>            <C>       <C>              <C>        <C>              <C>   <C>    <C>           <C>       <C>          <C>
Fairfield
 County, CT       1          33.2%            1           26.3%        3     3         9            60      $ 27,851       9.6%
Allentown, PA     1          53.7%            1           47.2%        2     2         8            77      $ 19,300       5.1%
Wilmington,
  DE              2          33.2%            1           42.2%        1     1         5            78      $ 17,800      10.4%
Westchester/Putnam
  Counties, NY(j)    1       34.3%            1           47.3%        2     3         4           115      $ 12,400        N/A
Treasure
  Coast, FL       1          49.7%            1           49.8%        1     5         9           138      $  9,900       6.5%
Huntington,
  WV/
  Ashland, KY     1          66.7%            1           70.4%        5     5         9.5         140      $  9,800       7.3%
</TABLE>
 
- ------------------------------
(a) Actual city of license may be different from metropolitan market served.
    Market names used in this table are those used by Arbitron for Arbitron
    Metro Survey Areas or Arbitron Custom Survey Areas for the Company's
    markets.
(b) Radio Revenue Rank in each market is the ranking, by 1995 radio group market
    revenue share, of each of the Company's radio groups in its market among all
    other such radio groups in such market. For each of the Company's radio
    groups, except Fairfield County, Radio Revenue Rank was derived by the
    Company determining the radio groups in the market and by then calculating
    group revenue using the market revenue sources described in note (c) below.
    Fairfield County was ranked in the source as indicated in note (c) below.
(c) In each of the markets, except Fairfield County, Radio Revenue Market Share
    was derived by dividing (1) the total 1995 radio revenues of the Company's
    stations in the market, by (2) the total 1995 radio revenues in that market
    as published in BIA's Investing in Radio -- 1996 Market Report (2nd ed.). In
    Fairfield County, the total 1995 radio revenues in the market were obtained
    from the January 1996 Fairfield Suburban Market Revenue Report by Miller
    Kaplan (as hereinafter defined).
(d) Ranking of the Company's combined stations versus other radio groups in the
    market for persons aged 12 and older in the applicable Arbitron Metro Survey
    Area or Arbitron Custom Survey Areas, Average Quarter Hour Estimates, Monday
    through Sunday, 6 am to midnight.
(e) Radio Audience Market Share was derived by dividing (1) the sum of audience
    shares from the applicable Arbitron Market Survey of the Company's combined
    radio stations, by (2) the total sum of audience shares above the line in
    the local market served.
(f) The number of stations for Allentown, Pennsylvania includes WKAP-AM for
    which the Company is providing certain sales and marketing services pursuant
    to a JSA; the number of stations for the Treasure Coast Market, Florida
    includes WPAW-FM for which the Company is providing certain sales and
    marketing services pursuant to a JSA; and the number of stations for
    Huntington, West Virginia/Ashland, Kentucky includes WMLV-FM, WHRD-AM,
    WFXN-FM, WKEE-AM, WKEE-FM, WZZW-AM, WBVB-FM and WIRO-AM, for which the
    Company is providing certain sales and marketing services pursuant to LMAs
    pending the consummation of the Huntington Acquisitions.
(g) The number of viable radio stations for the Company's Allentown, Wilmington
    and Huntington/Ashland markets were taken from Duncan's Radio Market Guide
    (1996 Edition). The number of viable stations for the Company's remaining
    markets were derived by calculating all radio stations listed home-to-market
    by Arbitron which received an average quarter hour share of "1" or greater
    in each of the 1995 Arbitron Surveys for the indicated market.
(h) According to BIA's Investing in Radio Market Guide 1996 (2nd ed.) "Revenue
    Rank." Fairfield County, CT and Westchester/Putnam Counties, NY Radio
    Revenue Ranks were estimated using BIA's methodology.
(i) Dollars in thousands.
(j) Radio Revenue Rank and Radio Revenue Market Share for Westchester/Putnam
    Counties, NY have been estimated by the Company because no data is available
    for this sub-market.
 
                                       34
<PAGE>   37
 
BUSINESS STRATEGY
 
     The Company believes the most effective way to achieve its objective of
increasing shareholder value is to dominate medium-sized markets by operating
multiple radio stations. Multiple station ownership enables the Company to
maintain greater influence over the pricing of radio advertising rates and more
effectively compete against alternative forms of media advertising. The Company
has the ability to program its multiple stations to provide advertisers with
access to a variety of attractive demographic groups and as a result capture a
significant share of the market's radio advertising revenue. In addition,
multiple station ownership enables the Company to attract and retain highly
qualified personnel as well as to achieve cost savings through eliminating
duplicative overhead and consolidating broadcast facilities. The Company's
station operating strategy centers upon the following principal elements:
 
     Targeted Programming and Market Research.  The Company believes that
targeted programming is a key element in developing brand loyalty and sustaining
high audience and revenue shares. The Company attempts to strategically program
its radio stations to dominate specific demographic groups and/or provide
advertisers a broad spectrum of multiple demographic targets. The Company
utilizes research consultants and performs periodic music testing to assess
listener preferences for the station's music and services and adjusts its
programming to reflect the results of its research. The Company has developed
the in-house expertise to provide weekly call out research and periodic
auditorium music testing and believes that it can perform these functions
in-house more cost effectively.
 
     Marketing Partnerships.  The Company believes its value-added sales
approach creates a marketing partnership with advertisers and provides the
Company with a competitive advantage in attracting and retaining advertisers.
While station audience ratings are an important measure for selling advertising
time in all radio markets, management believes that in many medium-sized
markets, the decision to advertise on a given radio station is driven in large
measure by customer relationships and the level of customer success with past
advertising programs. The Company pursues a value-added sales approach by
providing advertisers with: (i) quantitative and qualitative information
regarding customer spending habits in the market which assist the advertiser to
target advertising campaigns; (ii) promotional ideas and support to increase the
effectiveness of the advertising campaign; (iii) "spec" spots, a sample
commercial prepared by the Company's on-air talent, which the Company believes
increases the likelihood the prospective advertiser will purchase advertising
time; (iv) analyses which demonstrate the effectiveness of utilizing radio in
tandem with other media and the ability to enhance customer reach and frequency
by shifting a portion of the advertiser's budget to radio and (v) professional
production of the advertiser's final commercial.
 
     The Company believes that advertisers in its markets are retained through
superior customer service. The Company focuses on providing superior customer
service to its top 100 clients at each station, which the Company believes
generally provide 80% or more of a radio station's revenue. In order to provide
customers with a high level of service, the Company employs separate local sales
forces at each of the Company's major stations. Such superior customer service
consists of assisting businesses in analyzing advertising expenditures,
developing customized promotions and creating jingle packages, among other
things. Management believes that building and solidifying the marketing
partnership with advertisers and retaining such customers through high quality
customer service are significant factors in maintaining leading revenue shares
in its markets.
 
     Cost Controls.  Management believes that it is important to maintain the
lowest possible cost structure while achieving its operating objectives. The
Company seeks to reduce station operating costs by consolidating multiple
station facilities in a given market and through the selected use of
preprogrammed automation and automated satellite delivered programming. The
Company attempts to limit trade or barter, employing it primarily in situations
where use of trade or barter will bring incremental cash revenue from a
potential client or will reduce a cash expense item. The Company's detailed
annual budgeting process reviews expense items for possible reduction and its
financial reporting system allows management to track expense variances on a
weekly basis at each radio station.
 
     Performance Based Management Incentives.  The Company's senior management
has decentralized the daily operation of its stations, while maintaining tight
controls through a weekly monitoring system and frequent station visits. The
Company believes that it employs highly experienced and qualified station level
 
                                       35
<PAGE>   38
 
management. The Company's local radio station management teams have substantial
annual incentive opportunities based on achieving aggressive broadcast cash flow
targets. The Company believes that its management style enhances a local
manager's creativity and enables the Company to attract and retain a highly
skilled management staff. By giving its managers the autonomy to operate their
stations, focusing a significant portion of each manager's compensation on cash
flow incentives, setting target earning goals for each station and providing
managers with the sales and financial tools necessary to succeed, the Company
believes its managers are highly motivated to meet the goals of the station. The
Company provides further incentives to management through potential
participation in the Company's stock option plan.
 
     Community Involvement.  The Company believes community involvement is
particularly important in medium-sized markets and seeks to use creative
promotional activities tied to the local community and charitable events. Each
of the Company's radio stations participate in numerous community programs,
fund-raisers and activities that benefit a wide variety of organizations and
provide the station with community identity. The Company believes this
involvement helps to build and maintain station awareness and listener loyalty.
 
ACQUISITION STRATEGY
 
     The Company's acquisition strategy is to selectively acquire
underperforming radio stations in medium-sized markets at prices that are
attractive relative to the Company's potential to increase the acquired
stations' broadcast cash flow. The Company believes that significant
opportunities exist in other medium-sized markets for the Company to acquire
additional radio stations at attractive prices relative to their broadcast cash
flow potential. The Company also believes it can effectively capitalize on its
presence in and knowledge of the markets in which it operates to make attractive
acquisitions in adjacent markets. The Company may also enter new markets either
through acquisitions of radio groups that have multiple station ownership in a
market or through acquisitions of individual stations in markets in which the
Company believes it can establish itself as the markets' dominant radio group by
making additional in-market acquisitions.
 
     In analyzing potential acquisitions, the Company considers many factors
including: (i) the price and terms of the purchase in relation to the estimated
potential broadcast cash flow for the station or stations; (ii) the possibility
of obtaining a synergistic combination with additional stations in a given
market; (iii) the existing quality and potential quality of the station's
broadcast signal and transmission facility and (iv) the radio and other media
competition in the market. While the Company continuously evaluates
opportunities to make strategic acquisitions, it has no present commitments or
agreements with respect to any material acquisitions other than the Huntington
Acquisitions.
 
RECENT ACQUISITIONS OF RADIO STATIONS
 
     The Company has made, or has entered into agreements to make, the following
acquisitions:
 
     Fairfield County, Connecticut.  In March 1996, the Company consummated the
Danbury Acquisition by acquiring, through a subsidiary, all of the issued and
outstanding stock of Danbury that is the licensee of radio stations WRKI-FM and
WINE-AM in Fairfield County, Connecticut. In May 1996, the Company acquired
radio stations WKHL-FM and WSTC-AM in Stamford, Connecticut from Q Broadcasting,
Inc.
 
     Westchester/Putnam Counties, New York.  In conjunction with the Danbury
Acquisition, in March 1996, the Company acquired the radio broadcast business
conducted by radio stations WZZN-FM, WPUT-AM and WVYB-FM in Westchester/Putnam
Counties, New York.
 
     Treasure Coast Market, Florida.  In May 1996, the Company acquired radio
stations WKQS-FM, WAVW-FM and WAXE-AM in the Treasure Coast Market, Florida from
Media VI.
 
     Huntington, West Virginia/Ashland, Kentucky.  In April 1996, the Company,
through a subsidiary, entered into (i) a purchase agreement with Adventure
Communications, Inc. ("Adventure") to acquire the radio broadcast business
conducted by radio stations WKEE-FM and WKEE-AM in Huntington, West Virginia,
WZZW-AM in Milton, West Virginia, WBVB-FM in Coal Grove, Ohio and WIRO-AM in
Ironton, Ohio, and (ii) a purchase agreement with Simmons Broadcasting Company
("Simmons Broadcasting") and
 
                                       36
<PAGE>   39
 
an option agreement to acquire the radio broadcast business conducted by radio
stations WHRD-AM in Huntington, West Virginia, WFXN-FM in Milton, West Virginia
and WMLV-FM in Ironton, Ohio. In connection therewith, the Company entered into
an LMA with Adventure (the "Adventure LMA") and an LMA with Simmons (the
"Simmons LMA") to provide, on a cooperative basis, the programming, sales,
marketing and certain other services to the stations pending the closing of the
acquisitions. The Company anticipates that the Huntington Acquisitions will be
consummated in the second half of 1996, however, there can be no assurance that
such transactions will be consummated.
 
STATION AND MARKET OVERVIEW
 
     Listed below is selected information, on a pro forma basis, relating to the
Company's stations and markets:
 
<TABLE>
<CAPTION>
                              1995
                             MARKET      COMBINED
                              RADIO       RADIO                                              1995 TARGET
                             REVENUE     REVENUE        RADIO STATION          TARGET        DEMOGRAPHIC
        MARKET(A)            RANK(B)     RANK(C)           FORMAT           DEMOGRAPHIC      SHARE %/RANK
- -------------------------    -------     --------     -----------------     ------------     ------------
<S>                          <C>         <C>          <C>                   <C>              <C>
Fairfield County, CT            60           1
                                                                            Persons
  WKHL-FM                                                  Oldies           25-54               11.0%/3
  WRKI-FM                                                    AOR            Men 18-49           18.7%/3
  WEFX-FM                                               Classic Rock        Men 18-49           12.5%/4
  WINE-AM                                                  Country          Persons 35+          3.8%/5(d)
  WSTC-AM                                              News/Info/Jazz       Persons 35+          6.2%/6
  WNLK-AM                                                   Talk            Persons 35+         1.4%/12
Allentown-Bethlehem, PA         77           1
  WAEB-FM                                                    CHR            Women 18-49         32.0%/1
  WZZO-FM                                                    AOR            Men 18-49           35.4%/1
  WAEB-AM                                             News/Talk/Sports      Persons 35+         10.4%/4
  WKAP-AM(e)                                                 MOR            Persons 35+          9.9%/6
Wilmington, DE                  78           2
  WJBR-FM                                                    A/C            Women 25-54         48.0%/1
  WJBR-AM                                                    MOR            Persons 35+         10.9%/5
Westchester/Putnam
  Counties, NY (f)             115           1
  WFAS-FM                                                    A/C            Women 25-54         41.3%/1
  WVYB-FM(g)                                               Oldies           Women 25-54          1.9%/5
  WZZN-FM(g)                                                 AOR            Women 25-54          1.9%/5
  WFAS-AM                                                    MOR            Persons 35+         19.7%/3
  WPUT-AM(h)                                               Country          Persons 35+             (i)
Treasure Coast
  Market, FL                   138           1
                                                                            Persons
  WAVW-FM(e)                                               Country          25-54               22.4%/1
  WZZR-FM                                                    AOR            Men 18-49           32.5%/1
                                                                            Persons
  WQOL-FM                                                  Oldies           25-54               16.3%/3
                                                                            Persons
  WKQS-FM(e)                                               Country          25-54                3.2%/8
                                                                            Persons
  WPAW-FM(e)                                           Classic Country      25-54                2.6%/9
  WAXE-AM(e)                                             Mature A/C         Persons 35+          3.2%/10
Huntington, WV/
  Ashland, KY                  140           1
                                                                            Persons
  WTCR-FM                                                  Country          25-54               30.6%/1
                                                                            Persons
  WKEE-FM(e)                                                 A/C            25-54               21.8%/2
  WBVB-FM(e)                                               Country          Men 18-34           12.7%/4
  WFXN-FM(e)                                            Classic Rock        Men 25-54            7.7%/5
  WMLV-FM(e)                                            Classic Rock        Men 25-54           1.4%/10
  WHRD-AM(e)                                               Sports           Men 25-54               (i)
  WKEE-AM(e)                                                Easy            Persons 35+          6.2%/6
  WZZW-AM(e)                                               Sports           Men 25-54               (i)
  WIRO-AM(e)                                             Sports/Talk        Men 25-54               (i)
  WTCR-AM                                              Classic Country      Persons 35+          2.4%/9
</TABLE>
 
- ------------------------------
(a) Actual city of license may be different from metropolitan market served.
    Market names used in this table are those used by Arbitron.
 
                                       37
<PAGE>   40
 
(b) According to BIA's Investing In Radio, Market Guide 1996 (2nd ed.) "Revenue
    Rank". The Fairfield County, CT and Westchester/Putnam Counties, NY Radio
    Revenue Ranks were estimated using BIA's methodology.
 
(c) Combined Radio Revenue Rank in each market is the ranking, by 1995 radio
    market revenue, of the Company's combined radio revenue in its markets as
    compared to the radio revenue for all other radio groups in such market. For
    each of the Company's radio groups, except Fairfield County, Combined Radio
    Revenue Rank was derived by the Company determining the radio groups in the
    market and then calculating group revenue using the market revenue as
    published in BIA's Investing in Radio, 1996 Market Report (2nd ed.). In
    Fairfield County, the total 1995 radio revenue in the market was obtained
    from the January 1996 Fairfield Suburban Market Revenue Report by Miller
    Kaplan. The Combined Revenue Share Rank assumes that the 1995 Treasure Coast
    Acquisition and the Acquisitions had occurred as of January 1, 1995.
 
(d) Data for this station was derived from the Danbury Arbitron Survey.
 
(e) The Company is providing sales and marketing services pursuant to a JSA or
    an LMA.
 
(f) Radio Revenue Rank and Combined Radio Revenue Rank for Westchester/Putnam
    Counties has been estimated by the Company because no published data is
    available for this sub-market.
 
(g) In 1995, WVYB-FM and WZZN-FM simulcasted the same program.
 
(h) WPUT-AM does not receive ratings in the Westchester County market.
 
(i) The station did not produce a rating in the Arbitron Survey for this market.
 
FAIRFIELD COUNTY, CONNECTICUT
Radio Revenue Rank:  #60
Market Radio Revenue:  $27.9 million
 
     The Company has the #1 combined radio revenue share in Fairfield County and
has increased its radio revenue share from 9.2% in 1994 to 33.2% in pro forma
1995. The Company entered this market with the 1989 acquisitions of WEFX-FM and
WNLK-AM. In 1994, the Company installed a new local management team at these
stations which applied the Company's marketing strategy and invested in new
transmitting equipment which significantly improved WEFX-FM's signal strength.
Following these steps, cash revenue for WEFX-FM and WNLK-AM increased 48.7% to
$3.5 million in 1995 and broadcast cash flow increased 117.0% to $813,000 in
1995.
 
     In 1996, the Company acquired WRKI-FM, WKHL-FM, WSTC-AM and WINE-AM
enhancing its position in this market and giving the Company four of the nine
total viable stations in the market. The Company believes that opportunities
exist to improve the broadcast cash flow of the Company's Fairfield County
stations. Prior to its acquisition by the Company, WRKI-FM had competed directly
with the Company's WEFX-FM station. The Company refocused WRKI-FM's programming
to Album Oriented Rock targeting younger males to complement the Company's
WEFX-FM which targets older males with a Classic Rock format. In 1995, WKHL-FM
and WSTC-AM had a radio revenue share of 9.8% and a local audience share of
12.3% and the Company believes that the stations' radio revenue share can be
significantly increased through implementation of the Company's marketing
strategy.
 
     In 1996, the Company also purchased WVYB-FM which broadcasts from Putnam
County, New York. The Company intends to position WVYB-FM, which has sufficient
signal reach into Fairfield County, to provide the Company with another viable
station in the Fairfield County market. The Company believes it will be able to
improve the station's financial performance by targeting the station to the
larger Fairfield County market.
 
     As the Company integrates its recent acquisitions, the Company intends to
share programming between the Company's three AM radio stations in the market to
capitalize on the strong news and information presence of WSTC-AM and to provide
greater coverage to potential advertisers. In order to capture a greater share
of the national advertising revenue in the region and of new media expenditures
from the New York City market, the Company has combined its 11 Fairfield County
and Westchester County radio stations for
 
                                       38
<PAGE>   41
 
national sales purposes using an Interep Radio Store sales representative and
the Company's own full time national sales representative in this region.
 
     Fairfield County is a particularly attractive market to advertisers because
it is in one of the nation's most affluent regions. The Fairfield County market
receives a large share of local and national media expenditures relative to its
population. The comparatively few local FM radio stations competing in Fairfield
County also adds to the appeal of this market.
 
ALLENTOWN, PENNSYLVANIA
Radio Revenue Rank:  #77
Market Radio Revenue:  $19.3 million
 
     The Company has the #1 combined radio revenue share in Allentown and has
successfully increased its radio revenue share from 18.7% in 1991 to 53.7% in
1995. The Company entered the market with the 1982 acquisition of WAEB-AM/FM. In
1992, the Company retained a new local management team which created separate
sales forces for each of WAEB-FM and WAEB-AM, implemented the Company's
marketing strategy and conducted in-house auditorium testing. Following these
actions, the stations' cash revenue increased from $2.9 million in 1991 to $5.9
million in 1995, a 19.1% compound annual growth rate, and the stations'
broadcast cash flow increased from $445,000 in 1991 to $2.4 million in 1995, a
51.7% compound annual growth rate.
 
     The Company enhanced its position in the market with the 1993 acquisition
of WZZO-FM. This acquisition created the Company's first duopoly which, in part,
enabled the Company to increase WZZO's cash revenue from $3.2 million in 1993 to
$4.3 million in 1995 and to improve its broadcast cash flow from $1.3 million in
1993 to $2.3 million in 1995. In order to further capitalize on its presence in
the Allentown market, in March 1995 the Company entered into a JSA with WKAP-AM,
an underperforming station which the Company believes will benefit from the
Company's marketing strategy. The Company has also capitalized on its multiple
station ownership position by consolidating all of its radio stations in
Allentown into one broadcast facility, thereby reducing overhead expense and
allowing for greater coordination of the Company's programming, sales and
marketing efforts. The Allentown market has only five viable FM radio stations
and no local television stations affiliated with a network.
 
WILMINGTON, DELAWARE
Radio Revenue Rank:  #78
Market Radio Revenue:  $17.8 million
 
     The Company has the #2 combined radio revenue share in Wilmington and has
the #1 combined radio audience share in this market. The Company entered the
market with the 1985 acquisition of WJBR-AM/FM. Cash revenue for WJBR-AM/FM
increased from $3.9 million in 1991 to $5.9 million in 1995, an 11.0% compound
annual growth rate, and broadcast cash flow increased from $1.9 million in 1991
to $3.0 million in 1995, a 12.4% compound annual growth rate. In order to fill a
programming void in the market created by a competitor, in August 1994 the
Company changed WJBR-AM from a simulcast of the WJBR-FM format to a fully
automated satellite-delivered Middle-of-the-Road format which allows advertisers
to target a broader demographic group in this market.
 
     The Wilmington market is particularly attractive due to the fact that the
market has only two and a half viable FM radio stations and no local television
stations.
 
WESTCHESTER/PUTNAM COUNTIES, NEW YORK
Radio Revenue Rank:  #115
Market Radio Revenue:  $12.4 million
 
     The Company has the #1 combined radio revenue share in Westchester/Putnam
Counties and has successfully increased its radio revenue market share from an
estimated 33.0% in 1995 to 34.3% in pro forma 1995. The Company entered the
market with the 1986 acquisition of WFAS-AM/FM. Cash revenues for WFAS-AM/FM
increased from $3.2 million in 1991 to $4.1 million in 1995, a 6.1% compound
annual growth
 
                                       39
<PAGE>   42
 
rate. By emphasizing cost controls, the Company was able to increase broadcast
cash flow from $751,000 to $1.4 million, a 15.9% compound annual growth rate.
The Company believes that significant opportunities exist to improve
WFAS-AM/FM's net revenue and broadcast cash flow and the Company has hired a new
station general manager with extensive experience in order to capitalize on
these opportunities.
 
     In March 1996, the Company acquired WZZN-FM which had previously simulcast
a Hot Adult Contemporary format. The Company intends to reposition WZZN-FM as an
Album Oriented Rock station serving Westchester County, thus providing a
complementary male-oriented advertising vehicle to the Company's already
dominant female oriented WFAS-FM.
 
     Westchester County is one of the nation's most affluent regions and has a
limited number of viable local FM stations. Westchester County generally has
lower advertising rates than those offered by New York City radio stations,
thereby making the Company's stations attractive to advertisers interested in
reaching only Westchester County listeners as opposed to the entire New York
metropolitan population.
 
TREASURE COAST MARKET, FLORIDA
Radio Revenue Rank:  #138
Market Radio Revenue:  $9.9 million
 
     The Company has the #1 combined radio revenue share in the Treasure Coast
Market and has successfully increased its radio revenue market share from 10.1%
in 1991 to 49.7% in pro forma 1995. The Company entered the market with the 1987
acquisition of WZZR-FM. In 1992, the Company retained a new local management
team which applied the Company's marketing strategy and implemented a format
change from Contemporary Hit Radio to Album Oriented Rock. As a result, cash
revenues for WZZR-FM increased from $826,000 in 1991 to $2.1 million in 1995, a
26.7% compound annual growth rate, and broadcast cash flow increased from a loss
of $271,000 in 1991 to a profit of $546,000 in 1995.
 
     In 1995, the Company acquired WQOL-FM and entered into a JSA with WPAW-FM.
In 1996, the Company acquired WAVW-FM, WAXE-AM and WKQS-FM. These acquisitions
enhanced the Company's position in this market, giving the Company five of the
eight viable FM stations and six of the ten total viable stations in the market.
 
     The Company believes that considerable opportunities exist to apply its
operating strategy to improve the broadcast cash flow of the Company's combined
stations in the Treasure Coast Market. In 1995, WZZR-FM, WQOL-FM and WAVW-FM
were ranked #1, #2 and #3, respectively, in the market for adults 25-54 and the
Company is capitalizing on its leading presence in the market by providing
advertisers a full range of advertising options. In addition, the Company
believes that opportunities exist to improve the performance of WKQS-FM, an
undeveloped property in this market which commenced broadcasting in 1995,
through refocusing the format of WKQS-FM, building a viable brand and ultimately
introducing a dedicated local sales force to this station.
 
     The Treasure Coast Market is one of the fastest growing markets in the
United States and is located directly north of the West Palm Beach market. There
is no local television affiliated with a network in the Treasure Coast Market.
 
HUNTINGTON, WEST VIRGINIA/ASHLAND, KENTUCKY
Radio Revenue Rank:  #140
Market Radio Revenue:  $9.8 million
 
     The Company has the #1 combined radio revenue share in this market and has
successfully increased its radio revenue share from 35.4% in 1991 to 66.7% in
pro forma 1995. The Company entered the market with the 1982 acquisition of
WTCR-AM/FM. WTCR-FM programs a heritage Country format which consistently ranks
first in its targeted demographic ratings and typically ranks in the top ten
radio stations in the United States based on average quarter hour share of a
market. This strong market position attracted a format competitor beginning in
1992 and a second format competitor in 1995. As a result, cash revenue for WTCR
AM/FM grew moderately from $2.8 million in 1991 to $3.2 million in 1995, a 3.3%
compound annual growth rate, and broadcast cash flow decreased from $1.0 million
in 1991 to $724,000 in 1995. However, the Company believes it has successfully
defended its market position and in the first quarter of 1996 WTCR-
 
                                       40
<PAGE>   43
 
AM/FM's cash revenue increased 15.9% from the first quarter of 1995.
Furthermore, one of the Company's competitors in this market is under contract
to be acquired by the Company in connection with the Huntington Acquisitions.
 
     Prior to June 1994, WTCR-AM simulcasted the WTCR-FM format. In order to
cost effectively capitalize on WTCR's strong brand equity, the Company
repositioned WTCR-AM as a primarily satellite-delivered Classic Country format.
 
     In April 1996, the Company entered into purchase agreements to acquire
WKEE-FM, WKEE-AM, WZZW-AM, WBVB-FM, WIRO-FM, WHRD-AM, WHRD-FM and WFXN-FM. These
acquisitions enhance the Company's position in this market, giving the Company
control of six of the nine viable stations in the market. The Company
anticipates that these acquisitions will be consummated during the second half
of 1996.
 
     The Company believes that opportunities exist to apply its operating
strategy to improve the broadcast cash flow of the Company's combined group in
this market. The combination of WBVB-FM and WTCR-AM/FM will enable the Company
to offer advertisers a wide range of advertising options on these three
stations. WFXN-FM and WMLV-FM are relatively undeveloped stations which are in
the process of petitioning for upgrades and signal improvements at the FCC. With
only one other significant radio owner in the market, the Company intends to
focus on achieving a greater share of all media expenditures in this market for
radio.
 
ADVERTISING
 
     Radio is considered an efficient means of reaching specifically identified
demographic groups. Stations are typically classified by their on-air format,
such as country, adult contemporary, oldies or news/talk. A station's format and
style of presentation enable it to target certain demographic and psychographic
groups. By capturing a specific listening audience share of a market's radio
audience, with particular concentration in a targeted demographic group, a
station is able to market its broadcasting time to advertisers seeking to reach
a specific audience. Advertisers and stations utilize data published by audience
measuring services, such as Arbitron, to estimate how many people within
particular geographical markets and demographic groups listen to specific
stations.
 
     Stations determine the number of advertisements broadcast hourly that will
balance revenue goals without jeopardizing listening levels. Although the number
of advertisements broadcast during a given time period may vary, the total
number of advertisements broadcast on a particular station generally does not
vary significantly from year to year.
 
     A station's local sales staff generates the majority of its local and
regional advertising sales through direct solicitations of local advertising
agencies and businesses. To generate national advertising sales, a station will
engage a firm that specializes 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 the revenue from the advertising obtained.
 
COMPETITION
 
     The radio broadcasting industry is a highly competitive business. The
success of each of the Company's stations depends largely upon its audience
ratings and its share of the overall advertising revenue within its market. The
Company's stations compete for listeners and advertising revenue directly with
other radio stations within their respective markets. Radio stations compete for
listeners primarily on the basis of program content that appeals to a particular
demographic group. By building a strong listener base consisting of a specific
demographic group in each of its markets, the Company is able to attract
advertisers seeking to reach those listeners.
 
     Factors that are material to a radio station's competitive position include
management experience, the station's local audience rank in its market,
transmitter power, assigned frequency, audience characteristics, local program
acceptance and the number and characteristics of other radio stations in the
market area. The
 
                                       41
<PAGE>   44
 
Company attempts to improve its competitive position with promotional campaigns
aimed at the demographic groups targeted by its stations and by sales efforts
designed to attract advertisers. Recent changes in the FCC's policies and rules
permit increased ownership and operation of local radio stations. Management
believes that radio stations which elect to take advantage of these joint
arrangements may in certain circumstances have lower operating costs and may be
able to offer advertisers more attractive rates and services. Although the
Company operates duopolies in Allentown, Pennsylvania, Fairfield County,
Connecticut, the Treasure Coast Market, Florida, Westchester/Putnam Counties,
New York and Huntington, West Virginia/Ashland, Kentucky, and intends to pursue
the creation of additional duopolies, the Company's competitors in certain
markets include operators of duopolies or operators who already have entered
into LMAs or JSAs.
 
     Although the radio broadcasting industry is highly competitive, some
barriers to entry exist. The operation of a radio broadcast station requires a
license from the FCC and the number of radio stations that can operate in a
given market is limited by the availability of FM and AM radio frequencies
allotted by the FCC to communities in that market, as well as by the FCC's
multiple ownership rules which regulate the number of stations which may be
owned and controlled by a single entity.
 
     The Company's stations also compete for advertising revenue with other
media, including broadcast television, cable television, newspapers, magazines,
direct mail, coupons and billboard advertising. In addition, the radio
broadcasting industry is subject to competition from new media technologies that
are being developed or introduced, such as the delivery of audio programming by
cable television systems, by DAB, including DARS. The delivery of information
through the presently unregulated Internet also could create a new form of
competition. The radio broadcasting industry historically has grown despite the
introduction of new technologies for the delivery of entertainment and
information, such as television broadcasting, cable television, audio tapes and
compact disks. Growing population and greater availability of radios,
particularly car and portable radios, have contributed to this growth. There can
be no assurance, however, that the development or introduction in the future of
any new media technology will not have an adverse effect on the radio
broadcasting industry.
 
CHANGES IN THE BROADCASTING INDUSTRY
 
     Radio stations generate the majority of their revenue from the sale of
advertising time to local and national spot advertisers and national network
advertisers. Radio serves primarily as a medium for local advertising. During
the past decade, local advertising revenue as a percentage of total radio
advertising revenue in a given market has ranged from approximately 75% to 79%.
 
     According to the Radio Advertising Bureau's Radio Marketing Guide and Fact
Book for Advertisers 1994-1995, each week, radio reaches approximately 96% of
all Americans over the age of twelve. More than one-half of all radio listening
is done outside the home, in contrast to other advertising mediums and three out
of four adults are reached by car radio each week. The average listener spends
approximately three hours and twenty minutes per day listening to radio. The
highest portion of radio listenership occurs during the morning, particularly
between the time a listener wakes up and the time the listener reaches work.
This "morning drive time" period reaches more than 86% of people over twelve
years of age and, as a result, radio advertising sold during this period
receives premium advertising rates. Radio listeners have gradually shifted over
the years from AM (amplitude modulation) to FM (frequency modulation) stations.
FM reception, as compared to AM, is generally clearer and provides greater tonal
range and higher fidelity. FM's listener share is now in excess of 80%, despite
the fact that the number of AM and FM commercial stations in the United States
is approximately equal.
 
     The FCC currently has before it proceedings that will permit the use of DAB
to deliver audio programming, and has allocated spectrum for the provision of
satellite DAB service. DAB provides a medium for the delivery by satellite or
terrestrial means of multiple new, high quality audio programming formats to
local and national audiences. This technology also may be used in the future by
radio broadcast stations either on existing or alternate broadcasting
frequencies or on new frequency bands. In addition, the FCC has authorized an
additional 100 kHz of spectrum for the AM band and will soon allocate
frequencies in this new band to certain existing AM station licensees. By the
end of a transition period to be determined by the FCC,
 
                                       42
<PAGE>   45
 
those licensees will be required to return to the FCC either the license for
their existing AM band station or the license for the expanded AM band station.
 
     The Company cannot predict what other matters might be considered in the
future by the FCC, nor can it assess in advance what impact, if any, the
implementation of any of these proposals or changes might have on its business.
 
FEDERAL REGULATION OF RADIO BROADCASTING
 
     The ownership, operation and sale of radio stations are subject to the
jurisdiction of the FCC, which acts under authority granted by the
Communications Act. Among other things, the FCC assigns frequency bands for
broadcasting; determines the particular frequencies, locations and operating
power of stations; issues, renews, revokes and modifies station licenses;
determines whether to approve changes in ownership or control of station
licensees; regulates equipment used by stations; and adopts and implements
regulations and policies that directly or indirectly affect the ownership,
operation and employment practices of stations. The FCC has the power to impose
penalties for violation of its rules or the Communications Act.
 
     In February 1996, President Clinton signed into law the Telecommunications
Act of 1996 (the "1996 Act"). This law amended the Communications Act with
respect to the regulation of broadcasters in several key respects. The 1996 Act
required the FCC to revise its ownership rule with respect to radio stations (a)
to remove the national limit on the number of stations that any one entity could
own or in which it could hold an attributable interest and (b) to increase the
number of stations that one entity could own, or in which that entity could hold
an attributable interest, in a market. The revised rule in most situations
permits an entity to own, or hold an attributable interest in, a maximum of
between five and eight stations (a maximum of between three and five of which
can be FM stations) depending on the size of the market. In addition, whereas
the rule previously prohibited the purchase of a station if the purchase would
result in the licensee's audience share exceeding 25 percent, the revised rule
refers solely to the number of stations that would be owned by the licensee (or
in which the licensee would hold an attributable interest) without regard to
audience share. Further, under the 1996 Act, competing applications can no
longer be filed with respect to a station's renewal unless the FCC first finds
that the station is no longer entitled to a grant of its renewal and the 1996
Act significantly strengthens the incumbent licensee's right to a renewal
expectancy. The 1996 Act also removed certain prohibitions with respect to
foreign ownership of broadcast licenses.
 
     The following is a brief summary of certain provisions of the
Communications Act (as revised by the 1996 Act) and of specific FCC regulations
and policies. Reference should be made to the Communications Act, FCC rules and
the public notices and rulings of the FCC for further information concerning the
nature and extent of Federal regulation of radio stations.
 
     FCC Licenses.  Radio stations operate pursuant to broadcasting licenses
that are granted by the FCC. Pursuant to the 1996 Act, the FCC may grant a
broadcast license for a maximum term of eight years. Broadcast licenses may be
renewed through the submission of an application to the FCC. The FCC licenses
for the Company's stations are held by the Company's subsidiaries. During
certain periods when a renewal application is pending, petitions to deny license
renewals can be filed by interested parties, including members of the public.
Historically, the Company's management has not experienced any material
difficulty in renewing any licenses for stations under its control. As a result
of amendments to the Communications Act of 1934 brought about through the 1996
Act, the FCC must grant the renewal application for a station if it finds that,
during the preceding term of that station's license, the station has served the
public interest, convenience, and necessity; there have been no serious
violations by the licensee of the Communications Act or the rules and
regulations of the Commission; and there have been no other violations by the
licensee of the Communications Act or the rules and regulations of the
Commission which, taken together, would constitute a pattern of abuse. If the
Commission is unable to make such findings with respect to the station, it can
grant the station's renewal application, but on terms and conditions that the
Commission considers to be appropriate or, the Commission can, after providing
the licensee with notice and an opportunity for hearing, and if the Commission
determines that no mitigating factors justify the imposition of a lesser
sanction, deny the renewal application. The terms and conditions that could be
imposed by the Commission in granting the renewal include requiring the payment
of a forfeiture, requiring the licensee to make periodic reports to the
Commission or granting the renewal for a period of time less than a normal
license term. In making its
 
                                       43
<PAGE>   46
 
determination as to whether the licensee's renewal application can be granted,
the Commission may consider facts brought to its attention by parties filing
petitions seeking denial of the renewal application.
 
     The FCC classifies each AM and FM station. An AM station operates on either
a clear channel, regional channel or local channel. A clear channel is one on
which AM stations are assigned to serve wide areas. Clear channel AM stations
are classified as either: (i) Class A stations, which operate unlimited time and
are designed to render primary and secondary service over an extended area; (ii)
Class B stations, which operate unlimited time and are designed to render
service only over a primary service area; (iii) and Class D stations, which
operate either daytime, limited time or unlimited time with low nighttime power.
A regional channel is one on which Class B and Class D AM stations may operate
and serve primarily a principal center of population and the rural area
contiguous to it. A local channel is one on which AM stations operate unlimited
time and serve primarily a community and the suburban and rural areas
immediately contiguous to it. A Class C AM station operates on a local channel
and is designed to render service only over a primary service area that may be
reduced as a consequence of interference.
 
     The minimum and maximum facilities requirements for an FM station are
determined by its class. Possible FM class designations depend upon the
geographic zone in which the transmitter of the FM station is located. In
general, commercial FM stations are classified as follows, in order of
increasing power and antenna height: Class A, B1, C3, B, C2, C1 or C stations.
 
     The following table sets forth the market, FCC license classification,
antenna height above average terrain (HAAT), power and frequency of each of the
Company's owned stations and the date on which each station's FCC license
expires:
<TABLE>
<CAPTION>
                                     YEAR OF         RADIO STATION        FCC      POWER IN
     MARKET(A)         STATION     ACQUISITION          FORMAT           CLASS       KW'S       HEIGHT(B)     FREQUENCY
<S>                    <C>         <C>             <C>                   <C>       <C>          <C>           <C>
Fairfield County,
 CT                    WEFX-FM         1989          Classic Rock           A           3          300        95.9MHz
                       WNLK-AM         1989              Talk               B         1.0(e)       203        1350kHz
                       WRKI-FM         1996               AOR               B          50          470        95.1MHz
                       WINE-AM         1996             Country             D           1          255        940kHz
                       WKHL-FM         1996(f)          Oldies              A           8          828        96.7 MHz
                       WSTC-AM         1996(f)      News/Info/Jazz          C         .78          444        1400kHz
Allentown, PA          WAEB-FM         1982               CHR               B          50          499        104.1MHz
                       WAEB-AM         1982        News/Talk/Sports         B         3.6(c)       325        790kHz
                       WZZO-FM         1993               AOR               B          30          631        95.1MHz
Wilmington, DE         WJBR-FM         1985               A/C               B          50          500        99.5MHz
                       WJBR-AM         1985               MOR               D         2.5(d)       205        1290kHz
Westchester/Putnam
 Counties, NY          WFAS-FM         1986               A/C               A         0.6          670        103.9MHz
                       WFAS-AM         1986               MOR               C         1.0(c)       430        1230kHz
                       WVYB-FM         1996             Oldies              A          .9          610        105.5MHz
                       WZZN-FM         1996               AOR               A         1.4          440        106.3MHz
                       WPUT-AM         1996             Country             D         1.0          140        1510kHz
Huntington, WV/
 Ashland, KY           WTCR-FM         1982             Country             B          50          492        103.3MHz
                       WTCR-AM         1982         Classic Country         B         5.0(e)       304        1420kHz
Treasure Coast
 Market, FL            WZZR-FM         1987               AOR              C2          50          482        92.7MHz
                       WQOL-FM         1995             Oldies             C2          50          476        103.7MHz
                       WKQS-FM         1996(f)          Country            C3          25          295        94.7MHz
                       WAVW-FM         1996(f)          Country             A         8.1          466        101.7MHz
                       WAXE-AM         1996(f)        Mature A/C            B           1(d)       190        1370kHz
 
<CAPTION>
                       EXPIRATION
     MARKET(A)         OF LICENSE
<S>                    <C>
Fairfield County,
 CT                  April 1998
                     April 1998
                     April 1998
                     April 1998
                     April 1998
                     April 1998
Allentown, PA        August 1998
                     August 1998
                     August 1998
Wilmington, DE       August 1998
                     August 1998
Westchester/Putnam
 Counties, NY        June 1998
                     June 1998
                     June 1998
                     June 1998
                     June 1998
Huntington, WV/
 Ashland, KY         October 2002
                     October 2002
Treasure Coast
 Market, FL          February 2003
                     February 2003
                     February 2003
                     February 2003
                     February 2003
</TABLE>
 
- ------------------------------
(a) Actual city of license may be different from metropolitan market served.
(b) Height in feet of antenna radiation center above average terrain for FM
    stations; height in feet of antenna for AM stations.
(c) Power for daytime only; power of 1.0 kilowatt for nighttime.
(d) Power for daytime only.
(e) Power for daytime only; power of 0.5 kilowatt for nighttime.
(f) The Company anticipates that the Stamford Acquisition and the 1996 Treasure
    Coast Acquisition will close prior to the effective date of the Offering,
    however, there can be no assurance that such acquisitions will be
    consummated.
 
                                       44
<PAGE>   47
 
     Ownership Matters.  The Communications Act prohibits the assignment of a
license or the transfer of control of a broadcast licensee without the prior
approval of the FCC. In determining whether to grant or renew a broadcast
license, the FCC considers a number of factors pertaining to the licensee,
including compliance with various rules limiting common ownership of broadcast,
cable and newspaper properties, the "character" of the licensee and those
persons holding "attributable" interests therein, and compliance with the
Communications Act's limitations on alien ownership, as well as compliance with
other FCC policies, including its equal employment opportunity requirements.
 
     Pursuant to the 1996 Act, the FCC has revised its ownership rule so as to
remove the national limit on the number of stations that any one entity may own
or in which that entity may have an attributable interest. Also pursuant to the
1996 Act the FCC revised its ownership rule so as to provide that (a) in a radio
market with 45 or more commercial radio stations, a party may own, operate, or
control up to eight commercial radio stations, not more than five of which may
be in the same service (i.e., AM or FM); (b) in a radio market with between 30
and 44 (inclusive) commercial radio stations, a party may own, operate, or
control up to seven commercial radio stations, not more than four of which may
be in the same service; (c) in a radio market with between 15 and 29 (inclusive)
commercial radio stations, a party may own, operate, or control up to six
commercial radio stations, not more than four of which may be in the same
service; and (d) in a radio market with 14 or fewer commercial radio stations, a
party may own, operate, or control up to five commercial radio stations, not
more than three of which are in the same service, except that the party may not
own, operate, or control more than 50 percent of the stations in such market.
For the purposes of these rules, the FCC considers the "market" of commonly
owned or operated stations to be the area in which such stations provide signals
of a designated strength. Stations that have signals of designated strength that
overlap or intersect the signals of the commonly owned stations are deemed to be
within the same market. Accordingly, the number of stations in a market as
designated by Arbitron or other ratings services are not the same as those used
in applying multiple ownership rules.
 
     The Communications Act and FCC rules also prohibit the common ownership,
operation or control of a radio broadcast station and a television broadcast
station serving the same geographic market (subject to the possibility of a
waiver of such prohibition if certain conditions are satisfied) and of a radio
broadcast station and a daily newspaper serving the same geographic market.
Under these rules, absent waivers, the Company would not be permitted to acquire
any newspaper or television broadcast station (other than a low-power
television) in any geographic market in which it now owns radio broadcast
properties.
 
     The FCC generally applies its ownership limits to "attributable" interests
held by an individual, corporation, partnership or other association. In the
case of corporations holding broadcast licenses, the interests of officers,
directors and those who, directly or indirectly, have the right to vote 5% or
more of the corporation's voting stock (or 10% or more of such stock in the case
of insurance companies, investment companies and bank trust departments) or to
designate any of the Company's directors are generally attributable, as are
positions as an officer or director of a corporate parent of a broadcast
licensee. Currently, none of the Company's officers, directors or holders of
voting stock has an attributable interest in any company licensed to operate
broadcast stations other than the Company's stations.
 
     The Communications Act prohibits the issuance of broadcast licenses to, or
the holding of a broadcast license by, any corporation of which more than 20% of
the capital stock is owned of record or voted by non-U.S. citizens or their
representatives or by a foreign government or a representative thereof, or by
any corporation organized under the laws of a foreign country (collectively,
"Aliens"). The Communications Act also authorizes the FCC, if the FCC determines
that it would be in the public interest, to prohibit the issuance of a broadcast
license to, or the holding of a broadcast license by, any corporation directly
or indirectly controlled by any other corporation of which more than 25% of the
capital stock is owned of record or voted by non-U.S. citizens or their
representatives or by a foreign government or representative thereof, or by any
corporation organized under the laws of a foreign country. The FCC has issued
interpretations of existing law under which these restrictions in modified form
apply to other forms of business organizations, including partnerships. As a
result of these provisions the licenses granted to the radio station
subsidiaries of the Company by the FCC could be rescinded if, among other
restrictions imposed by the FCC, more than 25% of the Company's stock were owned
or voted by Aliens.
 
                                       45
<PAGE>   48
 
     Local Marketing Agreements.  Over the past several years, a number of radio
stations have entered into LMAs. While these agreements may take varying forms,
under a typical LMA, separately owned and licensed radio stations agree to enter
into cooperative arrangements of varying sorts, subject to compliance with the
requirements of antitrust laws and with the FCC's rules and policies. Under
these arrangements, separately-owned stations could agree to function
cooperatively in programming, advertising sales, and similar matters, subject to
the licensee of each station maintaining independent control over the
programming and operations of its own station. One typical type of LMA is a
programming agreement between two separately-owned radio stations serving a
common service area, where the licensee of one station programs substantial
portions of the broadcast day on the other licensee's station, subject to
ultimate editorial and other controls being exercised by the latter licensee,
and sells advertising time during those program segments. Such arrangements are
an extension of the concept of "time brokerage" agreements, under which a
licensee of a station sells blocks of time on its station to an entity or
entities that program the blocks of time and sell their own commercial
advertising announcements during the time periods in question. The Company is
currently a party to the Adventure LMA and the Simmons LMA.
 
     In the past, the FCC has determined that issues of joint advertising sales
should be left to enforcement by antitrust authorities and has revised its
so-called "cross-interest" policy to permit time brokerage arrangements whereby
one station in a market provides programming to another station in the same
market (under this policy, the FCC in certain circumstances may prohibit one
party from acquiring non-attributable economic interests in two broadcast
stations in the same market). Furthermore, over the past several years, the
staff of the FCC's Mass Media Bureau has held that LMAs are not contrary to the
Communications Act provided that the licensee of the station that is being
substantially programmed by another entity maintains complete responsibility
for, and control over, programming and operations of its broadcast station and
assures compliance with applicable FCC rules and policies.
 
     The FCC's multiple ownership rules specifically permit radio station LMAs
to continue to be entered into and implemented, but provide that a station
brokering more than 15% of the time on another station serving the same market
will be considered to have an attributable ownership interest in the brokered
station for purposes of the FCC's multiple ownership rules. As a result, the
Company would not be permitted to enter into an LMA with another local radio
station that it could not own under the FCC's local ownership rules, unless the
Company's programming would constitute 15% or less of the other local station's
programming time on a weekly basis. The FCC's rules also prohibit a broadcast
licensee from simulcasting more than 25% of its programming on another station
in the same broadcast service (i.e., AM-AM or FM-FM) either through a time
brokerage or LMA arrangement or as a result of common ownership, if the coverage
areas of the two stations substantially overlap.
 
     Another type of LMA that recently has come into use is the so-called JSA.
Under a JSA, one station (the "Brokering Station") purchases all, or
substantially all, of the commercial time available on another station (the
"Brokered Station"), while the licensee of the Brokered Station provides all of
the Brokered Station's entertainment programming. Because the Brokering Station
provides no entertainment programming under a JSA, arguments have been advanced
that a JSA is not an LMA for purposes of the FCC's rules, but instead is a type
of joint sales arrangement. Traditionally, the FCC has not treated joint sales
arrangements as causing the Brokering Station to hold an attributable interest
in the Brokered Station. If a JSA were deemed to be an LMA for purposes of the
FCC's attribution rules, and if the Brokering Station aired commercials for more
than 15% of the Brokered Station's broadcast week, the Brokering Station could
be deemed to hold an attributable interest in the Brokered Station, with the
result that the Brokered Station could be counted toward the maximum number of
stations that could be held by the Brokering Station. Currently before the FCC
is a proceeding wherein the FCC is considering whether it should treat JSAs as
LMAs or as joint sales arrangements.
 
     Programming and Operation.  The Communications Act requires broadcasters to
serve the "public interest, convenience and necessity." The FCC gradually has
relaxed or eliminated many of the more formalized procedures it had developed in
the past to promote the broadcast of certain types of programming responsive to
the needs of a station's community of license. A licensee continues to be
required, however, to present programming that is responsive to issues of
concern to the station's community, and to maintain
 
                                       46
<PAGE>   49
 
certain records demonstrating such responsiveness. Complaints from listeners
concerning a station's programming often will be considered by the FCC when it
evaluates renewal applications of a licensee, although listener complaints may
be filed at any time and generally may be considered by the FCC at any time.
Stations also must follow various rules promulgated under the Communications Act
that regulate, among other things, political advertising, sponsorship
identifications, the advertisement of contests and lotteries, obscene and
indecent broadcasts, and technical operations, including limits on radio
frequency radiation. In addition, licensees must develop and implement
affirmative action programs designed to promote equal employment opportunities,
and must submit reports to the FCC with respect to these matters on an annual
basis and in connection with a renewal application. To ensure that stations
provide service to communities, the FCC's rules generally require a radio
station to maintain a signal of designated strength that encompasses the
community to which it is licensed and to maintain a main studio within an area
of such designated signal strength.
 
     Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
"short" (less than the full eight-year term in the case of radio broadcasting)
renewal terms or, for particularly egregious violations, the denial of a license
renewal application or the revocation of a license.
 
     Proposed Changes.  On January 12, 1995, the FCC initiated a proceeding to
solicit comment on whether it should alter its radio and television broadcast
ownership "attribution" rules by (i) raising the basic benchmark for attributing
ownership in a corporate licensee from 5% to 10% of the licensee's voting stock;
(ii) increasing from 10% to 20% of the licensee's voting stock the attribution
benchmark for "passive investors" in corporate licensees; (iii) changing the
class of investors eligible for "passive investor" status; (iv) changing the
current exemption which provides that minority voting stock interests held in a
corporate licensee are not attributable if there is a single majority
shareholder of more than 50% of the corporate licensee's outstanding voting
stock; (v) changing the current attribution rule which provides that all
nonvoting interests are generally nonattributable; and (vi) exempting certain
widely-held limited partnership interests from attribution.
 
     The Congress and the FCC have under consideration, and in the future may
consider and adopt, new laws, regulations and policies regarding a wide variety
of matters that could affect, directly or indirectly, the operation, ownership
and profitability of the Company's radio stations, result in the loss of
audience share and advertising revenue for the Company's radio stations, and
affect the ability of the Company to acquire additional radio stations or
finance those acquisitions. Such matters include: changes to the license renewal
process; spectrum use or other fees on FCC licensees; revisions to the FCC's
equal employment opportunity rules and other matters relating to minority and
female involvement in the broadcasting industry; proposals to change rules
relating to political broadcasting; technical and frequency allocation matters;
proposals to restrict or prohibit the advertising of beer, wine and other
alcoholic beverages on radio; changes in the FCC's cross-interest, multiple
ownership and cross-ownership policies; changes to broadcast technical
requirements; the rules under which telephone companies may deliver audio and
video programming to the home through existing phone lines; new technologies
such as DAB; proposals to limit the tax deductibility of advertising expenses by
advertisers; proposals to auction the right to use the radio broadcast spectrum
to the highest bidder, instead of granting FCC licenses and subsequent license
renewals; and proposals to repeal or modify existing restrictions on foreign
ownership of licensed telecommunications facilities and interests.
 
     The FCC has recently allocated spectrum for the provision of digital audio
radio satellite service ("DARS"). When implemented, DARS would permit a few
licensees to broadcast radio programming on a national basis to special
receivers designed to receive and decode digital signals.
 
     The Company cannot predict what other matters might be considered in the
future, nor can it judge in advance what impact, if any, the implementation of
any of these proposals or changes might have on its business.
 
SEASONALITY
 
     Seasonal revenue fluctuations are common in the radio broadcasting industry
and are due primarily to fluctuations in advertising expenditures by local
retailers. The Company's first fiscal quarter generally
 
                                       47
<PAGE>   50
 
produces the lowest revenue for the year and the fourth fiscal quarter generally
produces the highest revenue for the year.
 
EMPLOYEES
 
     At April 30, 1996, the Company had a staff of approximately 259 full-time
employees and 120 part-time employees. The on-air performance staff of
WFAS-AM/FM is in the process of deciding whether or not the American Federation
of Television and Radio Artists of America will represent them for collective
bargaining purposes. The Company believes that its relations with its employees
are good.
 
     The Company employs several on-air personalities and generally enters into
employment agreements with certain of these personalities to protect its
interests in those relationships that it believes to be valuable. The loss of
certain of these personalities could result in a short-term loss of audience
share, but the Company does not believe that any such loss would have a material
adverse effect on the Company's financial condition or results of operations.
 
PATENTS AND TRADEMARKS
 
     The Company owns seven domestic trademark registrations related to the
business of the Company and does not own any patents or patent applications. The
Company does not believe that any of its trademarks are material to its business
or operation.
 
PROPERTIES/FACILITIES
 
     The Company's corporate offices are located in New York, New York. The
types of properties required to support each of the Company's radio stations
include offices, studios, transmitter sites and antenna sites.
 
     The Company owns, leases or licenses the studios, offices, and transmitter
and antenna sites of its stations. The Company considers its facilities to be
suitable and of adequate sizes for its current and intended purposes, and does
not anticipate any difficulties in renewing those leases or licenses or in
leasing or licensing additional space, if required.
 
     The Company owns substantially all its other equipment, consisting
principally of transmitting antennae, transmitters, studio equipment and general
office equipment. The towers, antennae and other transmission equipment used by
the Company's stations are generally in good condition, although opportunities
to upgrade facilities are continuously reviewed.
 
                                       48
<PAGE>   51
 
     The following table sets forth the locations of properties owned by the
Company, the stations utilizing such properties and the uses of such properties:
 
<TABLE>
<CAPTION>
     PROPERTY LOCATION              USE
- ----------------------------    ------------
<S>                             <C>
Norwalk, CT                     AM/FM Tower
Brookfield, CT                  Studio
                                AM/FM Tower
Wilmington, DE                  AM/FM Tower
Port St. Lucie, FL              Studio
                                FM Tower
Vero Beach, FL                  Studio
                                FM Tower
Catlettsburg, KY                Studio
                                AM Tower
Hartsdale, NY                   Studio
                                AM/FM Tower
Patterson, NY                   Studio
Brewster, NY                    AM Tower
Whitehall, PA                   AM Tower
</TABLE>
 
     The following table sets forth the locations of properties leased or
licensed by the Company, the stations utilizing such properties and the uses of
such properties:
 
<TABLE>
<CAPTION>
       PROPERTY LOCATION               USE
- -------------------------------    ------------
<S>                                <C>
Norwalk, CT                        Studio
Claymount, DE                      Studio
Vero Beach, FL                     Studio
Pawling, NY                        FM Tower
Bedford, NY                        FM Tower
Mt. Kisco, NY                      Studio
Whitehall, PA                      Studio
Washington Township, PA            FM Tower
Bethlehem, PA                      FM Tower
Huntington, WV                     FM Tower
Stamford, CT                       Studio
                                   AM/FM Tower
Indian River County, FL            AM Tower
</TABLE>
 
LEGAL PROCEEDINGS
 
     The Company is involved in litigation from time to time in the ordinary
course of its business. In management's opinion, the litigation in which the
Company is currently involved, individually and in the aggregate, is not
material to the Company's financial condition or results of operations.
 
                                       49
<PAGE>   52
 
                                   MANAGEMENT
 
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     The following table sets forth the name, age and position with the Company
of each person who is a director and/or executive officer of the Company as of
May 15, 1996:
 
<TABLE>
<CAPTION>
NAME                                        AGE     POSITION
<S>                                         <C>     <C>
Susan L. Burden...........................  48      Chairman of the Board
Bruce A. Friedman.........................  31      President, Chief Executive Officer and
                                                    Director
James T. Shea, Jr.........................  42      Chief Operating Officer
James J. Sullivan.........................  39      Chief Financial Officer, Treasurer and
                                                    Secretary
Scott J. Bacherman........................  42      President of the Northeast Region
Charlie V. DiToro.........................  42      President of the Southern Region
Jay M. Sterin.............................  37      Regional President of Wilmington, Delaware
                                                    and Huntington, West Virginia
Daniel H. Stern...........................  35      Director
</TABLE>
 
     Set forth below is the background of each of the Company's executive
officers and directors. Upon completion of the Offering, the Company intends to
expand its Board of Directors from three directors to five directors, filling
the two vacancies created by such expansion with individuals who are not
executive officers of or perform other duties for the Company (other than as
directors).
 
     Susan L. Burden.  Susan L. Burden has been a member of the Board of
Directors since 1990 and has been a practicing family therapist for 20 years.
Mrs. Burden is co-author of The Evaluation and Treatment of Marital Conflict
(1986) and a Director of The Burden Center for the Aging, The Brookdale Center
of Aging and The Florence V. Burden Foundation. Mrs. Burden is a graduate of the
University of Arizona. Mrs. Burden was elected Chairman of the Board of
Directors in April 1996.
 
     Bruce A. Friedman.  Bruce A. Friedman has been the President and Chief
Executive Officer of the Company since December 1993 and joined the Company as
Chief Financial Officer in 1991. From 1989 to 1991 Mr. Friedman was a Partner of
Wedbush Capital Partners, a $30 million private equity fund, and served on the
Board of Directors of Anna's Linens, Inc. From 1988 to 1989 Mr. Friedman was
owner/manager of Hands on Learning Distribution Corporation, a marketer of
educational videotapes and software. Mr. Friedman is a graduate of Stanford
University and the Harvard Business School.
 
     James T. Shea, Jr.  James T. Shea, Jr. is the Chief Operating Officer of
the Company. Mr. Shea joined the Company as the President of the Mid-Atlantic
Region in March 1992 with nearly 20 years experience in the radio business,
including eleven years with Wilks-Schwartz Broadcasting. He was Vice President
and General Manager of WKRZ-AM/FM in Wilkes-Barre, Pennsylvania from 1980 to
1984 and Vice President and General Manager of WQQQ-FM and WEEX-AM in Allentown,
Pennsylvania from 1984 to 1989. In 1986 he was promoted to Executive Vice
President of Wilks-Schwartz Broadcasting and from 1989 to 1992 he was the on
site General Manager of WNVZ-FM Norfolk, Virginia. He was also the youngest
sales manager for RKO General at their Boston property WROR-FM in 1979. Mr. Shea
is a graduate of Boston University.
 
     James J. Sullivan.  James J. Sullivan is the Chief Financial Officer,
Treasurer and Secretary of the Company. Mr. Sullivan joined the Company in
December of 1994. Prior to joining the Company, Mr. Sullivan was Vice President
in charge of finance and operations for Screen Media Partners from 1990 to 1994.
Before joining Screen Media Partners, Mr. Sullivan was the Senior Manager of
Operations for Grant Tinker/Gannett East, Inc. from 1987 through 1989 and held
various senior management positions in finance and production at NBC News from
1980 through 1987. Mr. Sullivan is a graduate of Fairfield University.
 
     Scott J. Bacherman.  Scott J. Bacherman is President of the Northeast
Region the Company (WEFX-FM, WNLK-AM, WRKI-FM and WINE-AM in Fairfield County
and WFAS-AM/FM, WZZN-FM, WVYB-FM and WPUT-AM in Westchester/Putnam County). Mr.
Bacherman joined the
 
                                       50
<PAGE>   53
 
Company in April 1994 with almost twenty years experience in the radio industry.
Prior to joining the Company, Mr. Bacherman was Vice President/General Manager
with Wilks-Schwartz Broadcasting at WWBB-FM in Providence, Rhode Island from
1987 until 1993. Mr. Bacherman is a graduate of the University of Massachusetts.
 
     Charlie V. DiToro.  Charlie V. DiToro is President of the Southern Region
of the Company (WZZR-FM, WQOL-FM and WPAW-FM in the Treasure Coast Market). Mr.
DiToro joined the Company in June of 1992 from Cox Cable Cedar Rapids (Iowa)
where he was Vice President and General Manager from 1989 through 1992. Mr.
DiToro was Director of Field Marketing for eight cable systems comprising one
Cox cable division from 1986 to 1989, and had broad responsibilities for Cox
field sales and telemarketing efforts from 1984 to 1986. Mr. DiToro is a
graduate of Florida State University.
 
     Jay M. Sterin.  Jay M. Sterin is Regional President of WJBR-AM/FM in
Wilmington, Delaware; WTCR-AM/FM in Huntington, West Virginia-Ashland, Kentucky;
WKEE-AM/FM in Huntington, West Virginia; WZZW-AM in Milton, West Virginia;
WBVB-FM in Coal Grove, Ohio; WIRO-AM in Ironton, Ohio; WHRD-AM in Huntington,
West Virginia; WFXN-FM in Milton, West Virginia; and WMLV-FM in Ironton, Ohio.
Mr. Sterin joined the Company in September 1993 with over 15 years experience in
the radio business from Wilks-Schwartz Broadcasting where he served for eight
years as Vice President/General Manager and directed all operational aspects of
WKFM-FM and WFBC-AM in Syracuse, New York, including sales, programming and
marketing. From 1980 through 1985 he was General Sales Manager at WROR in
Boston. Mr. Sterin is a graduate of Boston University and has a Masters of
Business Administration from Babson College.
 
     Daniel H. Stern.  Daniel H. Stern has been a member of the Board of
Directors since April 1995. Mr. Stern has been President of Ziff Brothers
Investments, LLC, a privately held investment company based in New York City
since 1992. From 1989 to 1992, Mr. Stern was Co-Managing Director of William A.
M. Burden & Co., L.P., an investment limited partnership. From 1983 to 1989, Mr.
Stern was a Director at Adler & Co., a New York based venture capital firm, and
an Associate at Bass Brothers Enterprises, a Fort Worth, Texas based investment
management company. Mr. Stern is a graduate of Harvard College and the Harvard
Business School.
 
     All officers are elected until the next annual meeting of the Board of
Directors or until their respective successors are chosen and qualified.
Directors serve for a one year term or until their successors are elected.
 
BOARD COMMITTEES
 
     The Board of Directors will establish an audit committee and a compensation
committee at or prior to the consummation of the Offering. The audit committee,
the members of which will be non-management directors, will oversee actions
taken by the Company's independent auditors, recommend the engagement of
auditors and review the scope and results of the Company's accounting and
control procedures and the accuracy of its system of internal accounting and
control procedures. The compensation committee will review and approve the
compensation of executives of the Company, make recommendations to the Board of
Directors with respect to standards for setting compensation levels and
administer the Company's stock option and incentive plans.
 
DIRECTORS COMPENSATION
 
     Directors who are employed by the Company receive no additional
compensation in their capacities as directors. However, non-employee directors
receive $1,000 for each Board meeting attended.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     The Company does not currently have a compensation committee, however, as
stated above, the Company will establish a compensation committee at or prior to
the consummation of the Offering. See "Board Committees." During 1995, Mr.
Burden and Mr. Friedman established the compensation of the Company's executive
officers, including Mr. Friedman's compensation.
 
                                       51
<PAGE>   54
 
EXECUTIVE COMPENSATION
 
     The following table sets forth the aggregate compensation paid or accrued
in 1995, 1994 and 1993 to the Chief Executive Officer of the Company and the
next four most highly compensated individuals of the Company:
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                                                LONG-TERM
                                                                                 OTHER     COMPENSATION AWARDS
                                                    ANNUAL COMPENSATION         ANNUAL     -------------------
                    NAME AND                     -------------------------     COMPENSA-          LTIP
               PRINCIPAL POSITION                YEAR  SALARY($)  BONUS($)      TION($)        PAYOUTS($)
<S>                                              <C>   <C>        <C>          <C>         <C>
Bruce A. Friedman............................... 1995   242,361   144,500         4,477         1,796,000
  President & Chief                              1994   200,000   300,000         6,428         1,750,000
  Executive Officer                              1993   130,000   294,000            --                --
James T. Shea, Jr............................... 1995   242,361   144,500        22,839           183,000
  Chief Operating Officer                        1994   200,000   184,000         1,582           430,000
                                                 1993   162,500    55,000            --                --
James J. Sullivan............................... 1995   146,944    91,000         1,935                --
  Chief Financial Officer                        1994    11,667        --            --                --
                                                 1993        --        --            --                --
Scott J. Bacherman.............................. 1995   175,885    70,000            --                --
  President of the                               1994   109,616    25,000            --                --
  Northeast Region                               1993        --        --            --                --
Jay M. Sterin................................... 1995   168,000    40,000            --                --
  Regional President                             1994   138,000    20,000            --                --
  of Wilmington, DE                              1993    39,807    10,000            --                --
  and Huntington, WV
</TABLE>
 
STOCK OPTION PLAN
 
     1995 Stock Option Plan.  The Company's 1995 Stock Option Plan (the "1995
Option Plan") became effective upon the consummation of the sale of the Senior
Subordinated Notes and Warrants (as hereinafter defined) on April 21, 1995 (the
"Private Offering"). 951,300 shares of Class A Common Stock are reserved for
issuance under the 1995 Option Plan. The purpose of the 1995 Option Plan is to
attract and retain qualified personnel and to provide additional incentives to
executive and other key employees of the Company.
 
     The 1995 Option Plan provides for the granting to executives and other key
employees of the Company of incentive stock options ("ISOs") within the meaning
of Section 422 of the Code, and nonqualified stock options ("NQOs"). The 1995
Option Plan will be administered by a compensation committee of the Board of
Directors (the "Committee") which will determine the terms of the options
granted under the 1995 Option Plan, including the exercise price, number of
shares subject to the option and excercisability. If as a result of the grant,
the optionee has the right in any calendar year to exercise for the first time
one or more ISOs for shares having an aggregate fair market value (under all
plans of the Company and determined for each share as of the date the option to
purchase the share was granted) in excess of $100,000, or such higher amount as
may be permitted from time to time under the Code, such options shall be treated
as NQOs. Generally, unless the Committee otherwise determines, no option may be
transferred by the optionee other than by will or the laws of descent or
distribution. Each option may be exercised, during the lifetime of the optionee,
only by the optionee. The exercise price of all ISOs and NQOs under the 1995
Option Plan must equal at least the fair market value of the Class A Common
Stock of the Company on the date of grant. Payment of the exercise price may be
made in cash, Class A Common Stock or such other consideration determined by the
Committee.
 
     The 1995 Option Plan authorizes the Committee to permit a participant to
satisfy the exercise price obligation arising from the exercise of an option by
surrendering to the Company other shares of Class A Common Stock held by such
participant which have on the day of exercise an aggregate fair market value
equal to the aggregate exercise price of shares being purchased through exercise
of the option. This right enables a participant to increase such participant's
ownership of Common Stock through a series of
 
                                       52
<PAGE>   55
 
simultaneous tenders of Class A Common Stock as payment for the exercise of
options to purchase a greater number of shares of Class A Common Stock.
 
     The 1995 Option Plan also permits participants to elect to have the Company
withhold all or a portion of the shares which the participant may acquire upon
exercise of an option, or deliver to the Company other shares of Class A Common
Stock which the participant holds, to satisfy tax withholding obligations of the
participant resulting from an exercise.
 
     The Committee has exclusive discretion to select the participants and to
determine the type, size and terms of each award, to modify the terms of awards,
to determine when awards will be granted and paid, and to make all other
determinations which it deems necessary or desirable in the interpretation and
administration of the 1995 Option Plan. With limited exceptions, including
termination of employment as a result of death, disability or retirement, or
except as otherwise determined by the Committee, rights to these forms of
contingent compensation are forfeited if a recipient's employment or performance
of services terminates within a specified period following the award. In the
event of a proposed sale of all or substantially all of the assets of the
Company, the merger of the Company with or into another corporation or other
transactions constituting a change of control, all restrictions on any
outstanding awards shall lapse and participants will be entitled to the partial
benefit of such awards, as determined by the Committee, immediately prior to the
closing date of such sale or merger.
 
OPTION GRANTS IN 1995
 
     The following table sets forth certain information concerning stock option
grants during the year ended December 31, 1995 to the named executive officers
pursuant to the 1995 Option Plan.
 
                           INDIVIDUAL GRANTS IN 1995
 
<TABLE>
<CAPTION>
                                                                                        POTENTIAL REALIZABLE
                                                                                              VALUE AT
                                                                                        ASSUMED ANNUAL RATES
                            NUMBER OF     PERCENT OF                                       OF STOCK PRICE
                            SECURITIES       TOTAL                                          APPRECIATION
                            UNDERLYING  OPTIONS GRANTED     EXERCISE                     FOR OPTION TERM(A)
                             OPTIONS     TO EMPLOYEES         PRICE       EXPIRATION   -----------------------
           NAME              GRANTED      IN 1995(%)      ($/PER SHARE)      DATE          5%          10%
<S>                         <C>         <C>               <C>             <C>          <C>          <C>
Bruce A. Friedman.........   203,854          29.3%           $6.25         4/21/05    $3,375,006   $6,129,075
James T. Shea, Jr.........   203,854          29.3%            6.25         4/21/05     3,375,006    6,129,075
James J. Sullivan.........    81,540          11.7%            6.25         4/21/05     1,350,538    2,448,875
Scott J. Bacherman........    81,540          11.7%            6.25         4/21/05     1,350,538    2,448,875
Jay M. Sterin.............    54,360           7.8%            6.25         4/21/05       899,984    1,634,388
</TABLE>
 
- ------------------------------
(a) The potential realizable value portion of the foregoing table illustrates
    values that might be realized upon exercise of the options prior to the
    expiration of their term, assuming the specified compounded rates of
    appreciation on the Company's Common Stock over the remaining life of the
    options. This table does not take into account provisions of certain options
    providing for termination of the option following termination of employment,
    nontransferability or vesting over periods. The dollar amounts under these
    columns are the result of calculations at the 5% and 10% rates set by the
    Securities and Exchange Commission and therefore are not intended to
    forecast possible future appreciation, if any, of the Company's stock price.
    The Company did not use an alternative formula for a grant date valuation,
    as the Company is not aware of any formula which will determine with
    reasonable accuracy a present value based on future unknown or volatile
    factors. No gain to the optionees is possible without an increase in stock
    price appreciation, which will benefit all stockholders commensurably.
 
                                       53
<PAGE>   56
 
     The following table sets forth the option values at December 31, 1995 for
options held by each named executive officer.
 
                       AGGREGATED OPTION/SAR EXERCISES IN
                 FISCAL YEAR 1995 AND FY-END OPTION/SAR VALUES
 
<TABLE>
<CAPTION>
                                                                                              VALUE OF UNEXERCISED
                                                                     NUMBER OF SECURITIES         IN-THE-MONEY
                                                                    UNDERLYING UNEXERCISED      OPTIONS/SARS AT
                                                                   OPTIONS/SARS AT 12/31/95       12/31/95(A)
                         SHARES ACQUIRED ON                              EXERCISABLE/             EXERCISABLE/
         NAME               EXERCISE ($)      VALUE REALIZED ($)        UNEXERCISABLE            UNEXERCISABLE
                         ------------------   ------------------   ------------------------   --------------------
<S>                      <C>                  <C>                  <C>                        <C>
Bruce A. Friedman......           0                    0                   0/203,854              $0/$1,579,869
James T. Shea, Jr......           0                    0                   0/203,854               0/ 1,579,869
James J. Sullivan......           0                    0                   0/ 81,540               0/   631,935
Scott J. Bacherman.....           0                    0                   0/ 81,540               0/   631,935
Jay M. Sterin..........           0                    0                   0/ 54,360               0/   421,290
</TABLE>
 
- ------------------------------
(a) Assumes a per share value of the Company's Common Stock of $          , the
assumed Offering price.
 
EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
 
     Carter Burden Employment Agreement.  Carter Burden served as the Company's
Chairman of the Board from its formation in 1980 until his death in January
1996. For the year ended December 31, 1994, the Company paid Mr. Burden an
annual salary of $27,000 and reimbursed Mr. Burden and certain entities
affiliated with Mr. Burden an aggregate of $172,000 for various expenses
incurred by or on behalf of Mr. Burden in connection with his role as its
Chairman of the Board. On April 21, 1995, Mr. Burden and the Company entered
into a three-year employment agreement. Pursuant to such employment agreement,
Mr. Burden was entitled to receive annual compensation of $250,000, subject to
annual increases at the discretion of the Board of Directors. Such employment
agreement terminated upon the death of Mr. Burden in January 1996. Commencing
April 1, 1996, the Company elected to compensate Susan Burden for her services
to the Company as Chairman of the Board at the rate of $250,000 per annum.
 
     Bruce A. Friedman Employment Agreement.  On April 21, 1995, the Company and
Mr. Friedman amended and restated Mr. Friedman's employment agreement with the
Company (the "Amended and Restated Friedman Agreement"). The term of the Amended
and Restated Friedman Agreement is three years, terminating on April 30, 1998,
and provides for annual base compensation of $250,000, with annual increases of
not less than 5% per annum. Mr. Friedman will also be entitled to receive
certain incentives based upon the Company's EBITDA. In 1995 such incentive was
approximately $144,500. In addition, the Company granted Mr. Friedman stock
options to acquire 203,854 shares of Class A Common Stock of the Company under
its 1995 Option Plan. On April 21, 1995, Mr. Friedman purchased from Carter
Burden 197,057 shares of Class A Common Stock of the Company in exchange for
$900,000 in the form of a recourse promissory note (the "Friedman Promissory
Note") which accrues interest at the rate of 8% per annum and is secured by such
shares of Class A Common Stock. Mr. Friedman's shares of Class A Common Stock
are subject to certain rights of repurchase by the Company. Upon the death of
Mr. Friedman, the Company will be required to purchase, to the extent of the
life insurance proceeds received by the Company as a result of his death, any of
the Company's Common Stock which was purchased from Mr. Burden and any shares of
Common Stock purchased under the options issued to him in each case as described
above and which is owned by Mr. Friedman immediately prior to his death, at a
price equal to the fair market value thereof and any excess insurance proceeds
remaining after such repurchase shall be paid to Mr. Friedman's estate. The
Company will maintain, subject to certain limitations, ten-year term life
insurance policies on Mr. Friedman for the benefit of the Company providing
aggregate coverage of approximately $9,000,000. In addition, the agreements
governing Mr. Friedman's Class A Common Stock contain certain voting provisions
which give certain rights to Mr. Burden's estate to vote Mr. Friedman's shares
of Class A Common Stock upon the occurrence of certain events. Such agreements
also grant Mr. Friedman piggyback registration rights and
 
                                       54
<PAGE>   57
 
demand registration rights. In connection with the Amended and Restated Friedman
Agreement and in lieu of the long-term compensation arrangement under Mr.
Friedman's prior employment agreement, on April 21, 1995: (i) the Company made a
cash payment to Mr. Friedman in the amount of $1.5 million; (ii) the Company
issued to a trust for the benefit of Mr. Friedman $1,308,000 of the Company's
outstanding Senior Subordinated Notes (the "Friedman Senior Subordinated Note");
and (iii) the Company agreed to be obligated to pay Mr. Friedman deferred
compensation in the amount of approximately $1.5 million which accrues interest
at the rate of 7% per annum and is due on the earlier of (a) eight and one-half
years after the consummation of the Private Offering, (b) a Change of Control
(as defined in the Amended and Restated Friedman Agreement), (c) an initial
public offering of Common Stock of the Company (other than on a registration
statement on Form S-4 or S-8) and (d) Mr. Friedman's death; provided, however,
the Company's obligation to pay such deferred compensation in the event of Mr.
Friedman's death is limited to the extent of the life insurance proceeds
actually received by the Company as described above. It is anticipated that
proceeds received by the Company in the Offering will be used for the payment of
the deferred compensation owed to Mr. Friedman in the amount of approximately
$1.5 million plus accrued interest for an aggregate amount of $1,599,247 as of
March 31, 1996. It is further anticipated that Mr. Friedman will use such
proceeds for the repayment of indebtedness under the Friedman Promissory Note
and the 197,057 shares of Class A Common Stock which were pledged to secure the
Friedman Promissory Note will be released to Mr. Friedman. Additionally, it is
anticipated that upon the consummation of the Offering, the Company and Mr.
Friedman will enter into an amendment to the Amended and Restated Friedman
Agreement to provide for the release of the Friedman Senior Subordinated Note
from trust and their subsequent delivery to Mr. Friedman. At such time, the
Friedman Senior Subordinated Note will become freely transferrable, subject to
certain securities laws restrictions. The Company has agreed to indemnify Mr.
Friedman from certain tax liabilities he may incur in the event such deferred
compensation is treated as a parachute payment under Section 280(g) of the
Internal Revenue Code of 1986, as amended.
 
     James T. Shea, Jr. Employment Agreement.  On April 21, 1995, the Company
and Mr. Shea amended and restated Mr. Shea's employment agreement with the
Company (the "Amended and Restated Shea Agreement"). The term of the Amended and
Restated Shea Agreement is four years, terminating on April 30, 1999 and
provides for annual base compensation of $250,000, with annual increases of not
less than 5% per annum. Mr. Shea will also be entitled to annual incentives on
terms and conditions substantially similar to Mr. Friedman's annual incentives
as described above. In addition, the Company granted Mr. Shea stock options
under its 1995 Option Plan which entitle Mr. Shea to acquire 203,854 shares of
Class A Common Stock of the Company. The other terms and conditions of the
Amended and Restated Shea Agreement are generally similar to the Amended and
Restated Friedman Agreement. In 1995 Mr. Shea's incentive was approximately
$144,500. In addition, on April 21, 1995, Mr. Shea purchased from Carter Burden
45,497 shares of Class A Common Stock of the Company in exchange for $208,000 in
the form of a recourse promissory note (the "Shea Promissory Note") which
accrues interest at the rate of 8% per annum and is secured by such shares of
Class A Common Stock. In connection with the Amended and Restated Shea Agreement
and in lieu of the long-term incentive compensation arrangements under Mr.
Shea's prior employment agreement, on April 21, 1995: (i) the Company made a
cash payment to Mr. Shea in the amount of $400,000 and (ii) the Company agreed
to be obligated to pay Mr. Shea deferred compensation in the amount of $346,000
on terms and conditions generally similar to Mr. Friedman's deferred
compensation arrangements as described above. It is anticipated that proceeds
received by the Company in the Offering will be used for the payment of the
deferred compensation owed to Mr. Shea in the amount of approximately $346,000
plus accrued interest for an aggregate amount of $368,893 as of March 31, 1996.
It is further anticipated that Mr. Shea will use such proceeds for the repayment
of indebtedness under the Shea Promissory Note and the 45,497 shares of Class A
Common Stock which were pledged to secure the Shea Promissory Note will be
released to Mr. Shea.
 
     James J. Sullivan Employment Agreement.  On April 21, 1995, the Company and
Mr. Sullivan entered into an employment agreement that expires on April 30,
1999. The employment agreement provides for a base salary of $150,000 with
annual increases in the base salary of $10,000. Mr. Sullivan's employment
agreement provides for incentive compensation in 1995 equal to 15% of EBITDA
above $9.5 million and 2.5% for all EBITDA above $9.9 million, and in each
calendar year thereafter, as established by the President of the
 
                                       55
<PAGE>   58
 
Company with a potential target between $60,000 and $75,000. In addition, the
Company granted Mr. Sullivan stock options under its 1995 Option Plan which
entitle Mr. Sullivan to purchase 81,540 shares of Class A Common Stock of the
Company.
 
     Scott J. Bacherman Employment Agreement.  On April 21, 1995, the Company
and Mr. Bacherman entered into an employment agreement that expires on April 30,
1999. The employment agreement provides for a base salary of $170,000 with
annual increases in the base salary of an amount which shall not be less than 5%
of the annual base salary in effect immediately prior to such increase. Mr.
Bacherman's employment agreement provides for incentive compensation based on
the operating cash flow of WEFX-FM, WNLK-AM, WFAS-FM and WFAS-AM, with a maximum
payout in 1995 of $70,000, and in each calendar year thereafter, as established
by the President of the Company with a potential target of at least $70,000. In
addition, the Company granted Mr. Bacherman stock options under its 1995 Option
Plan which entitle Mr. Bacherman to purchase 81,540 shares of Class A Common
Stock of the Company.
 
     Charlie V. DiToro Employment Agreement.  Mr. DiToro currently has an
employment agreement with the Company that expires on June 30, 1999. The
employment agreement provides for a base salary of $92,500 from July 1, 1995 to
and including December 31, 1995, and a base salary of $170,000 from January 1,
1996 to and including December 31, 1996, with annual increases in the base
salary of 5% of the annual base salary in effect immediately prior to such
increase. In addition, Mr. DiToro's employment agreement provides for incentive
compensation based on the operating cash flow of WZZR-FM, WQOL-FM and WPAW-FM,
with a maximum payout in 1995 of $50,000, and in each calendar year thereafter,
as established by the President of the Company with a potential target of
$50,000. In addition, the Company granted Mr. DiToro stock options under its
1995 Option Plan which entitle Mr. DiToro to purchase 29,880 shares of Class A
Common Stock of the Company.
 
     Jay M. Sterin Employment Agreement.  Mr. Sterin currently has an employment
agreement with the Company that expires on April 30, 1999. The employment
agreement provides for a base salary of $158,000 with annual increases in the
base salary of an amount which shall not be less than 5% of the annual base
salary in effect immediately prior to such increase. Mr. Sterin's employment
agreement provides for incentive compensation based on the operating cash flow
of WJBR-AM and WJBR-FM, with a maximum payout in 1995 of $60,000, and in each
calendar year thereafter, as established by the President of the Company with a
potential target of $60,000. In addition, the Company granted Mr. Sterin stock
options under its 1995 Option Plan which entitle Mr. Sterin to purchase 54,360
shares of Class A Common Stock of the Company.
 
LIMITATIONS ON DIRECTORS AND OFFICERS LIABILITY
 
     The Company's Amended and Restated Certificate of Incorporation limits the
liability of directors to the maximum extent permitted by Delaware law, which
specifies that a director of a company adopting such a provision will not be
personally liable for monetary damages for breach of fiduciary duty as a
director, except for the liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) for unlawful payments of dividends or unlawful stock purchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law;
or (iv) for any transaction from which the director derived an improper personal
benefit.
 
     The Company's Amended and Restated Certificate of Incorporation provides
for mandatory indemnification of directors and officers (and others) in such
manner, under such circumstances and to the fullest extent permitted by the
Delaware General Corporation Law, which generally authorizes indemnification as
to all expenses incurred or imposed as a result of actions, suits or proceedings
if the indemnified parties act in good faith and in a manner they reasonably
believe to be in or not opposed to the best interests of the Company and the
Amended and Restated Certificate of Incorporation provides the right to such
expenses in advance of the final disposition of any such action, suit or
proceeding. The Company believes that these provisions are necessary or useful
to attract and retain qualified persons as directors and officers.
 
     There is no pending litigation or proceeding involving a director or
officer as to which indemnification is being sought.
 
                                       56
<PAGE>   59
 
                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     Since 1993, the Company made various loans to Mr. Burden totalling
approximately $183,000. Such loans did not bear interest and were in the form of
three separate advances of $60,000, $57,500 and $65,500. Mr. Burden repaid all
such loans upon the consummation of the Private Offering. In addition, for the
year ended December 31, 1995, the Company reimbursed Carter Burden and certain
entities affiliated with Mr. Burden for an aggregate amount of approximately
$18,000 for various expenses incurred by or on behalf of Mr. Burden in
connection with his role as its Chairman of the Board; such expenses were
comprised of general administrative and overhead costs, travel and related
expenses incurred by Mr. Burden in connection with his activities on behalf of
the Company.
 
     On December 28, 1993, the Company granted a warrant to William A. M. Burden
& Co., L.P., an investment limited partnership ("WAMBCO"), to purchase 4.99% of
its common stock at an exercise price of $100, on a fully diluted basis. On
April 21, 1995, WAMBCO exercised the warrant and purchased 196,661 shares of
Class A Common Stock of the Company which shares are being registered in the
Offering. See "Principal and Selling Shareholders." WAMBCO consists of partners
which are either individuals or entities directly or indirectly related to or
affiliated with the family of Carter Burden.
 
     On April 21, 1995, the Company entered into employment agreements with each
of Carter Burden, Bruce A. Friedman, James T. Shea, Jr., Scott J. Bacherman,
James J. Sullivan, Judy Jennings and Jay M. Sterin. On July 1, 1995, the Company
entered into employment agreements with Richard Lewis and Charlie V. DiToro. See
"Employment Agreements and Arrangements."
 
     During May 1995 the Company advanced funds to certain executive officers as
loans. As of the date hereof, an aggregate of $250,375 of such advances is
outstanding. Such loans were advanced to enable such officers to purchase
Warrants from unrelated third parties exercisable for an aggregate of 36,000
shares of Class A Common Stock and are evidenced by five year notes bearing
interest at 7.0% with all interest and principal due on the maturity date. As a
result of such advances, the Estate of Carter Burden owes $50,215, Bruce A.
Friedman owes $100,160, James T. Shea, Jr. and James J. Sullivan each owe
$50,000, plus accrued interest, to the Company.
 
     The Company has no current intention of making additional loans to
employees, executive officers and/or affiliates. If the Company does make such
loans in the future, the terms thereof will be determined by the Board of
Directors with respect to executive officers and affiliates, and by the
President and Chief Executive Officer with respect to employees, each acting in
the best interest of the Company. Such determinations will be based upon the
likelihood of repayment and the value of such employee, executive officer or
affiliate to the Company.
 
                                       57
<PAGE>   60
 
                       PRINCIPAL AND SELLING SHAREHOLDERS
 
     The following table sets forth information concerning the beneficial
ownership of the Company's Common Stock as of April 30, 1996 by (i) each person
known to the Company to own beneficially more than 5% of any class of Common
Stock, (ii) each director and each named executive officer, (iii) each Selling
Shareholder and (iv) all directors and executive officers of the Company as a
group. All shares are owned with sole voting and investment power other than the
shares held by the Executors of the Estate of Carter Burden.
<TABLE>
<CAPTION>
                                                                                                                 
                                                                                                                 
                                                                                                                 
                                                                                                                 
                        SHARES OF CLASS A                            SHARES OF CLASS A      SHARES OF CLASS B    
                       COMMON STOCK OWNED                           COMMON STOCK OWNED     COMMON STOCK OWNED    
                        PRIOR TO OFFERING                             AFTER OFFERING      PRIOR TO THE OFFERING  
                      ---------------------   SHARES     SHARES    ---------------------  ---------------------  
    DIRECTORS AND                PERCENT OF    BEING      BEING               PERCENT OF             PERCENT OF
EXECUTIVE OFFICERS(A) NUMBER(B)   CLASS A     OFFERED   PURCHASED(C)  NUMBER   CLASS A    NUMBER(B)   CLASS B    
<S>                   <C>        <C>         <C>        <C>        <C>        <C>         <C>        <C>        
Susan Burden(d)(l)...       --        --            --        --          --       --     3,501,886      100%   
Bruce A.
 Friedman(e).........  284,610      54.0%           --        --     284,610      6.1%          --        --    
James T. Shea,
 Jr.(f)..............  108,771      21.6%           --        --     108,771      2.4%          --        --    
James J.
 Sullivan(g).........   29,420       6.3%           --        --      29,420     *              --        --    
Scott J.
 Bacherman(h)........   20,384       4.4%           --        --      20,384     *              --        --    
Charlie V.
 DiToro(i)...........    2,988      *               --        --       2,988     *              --        --    
Jay Sterin(j)........   13,587       3.0%           --        --      13,587     *              --        --    
Daniel Stern.........       --        --            --        --          --       --           --        --    
All directors and
 executive officers
 as a group(k)
 (8 people)..........  459,760      70.0%           --        --     459,760      9.7%          --        --    
FIVE PERCENT
 SHAREHOLDERS AND
 SELLING SHAREHOLDERS
Estate of
 Carter Burden(l).... 3,501,886     88.8%    1,201,480        --   2,280,690     33.4%    3,501,886      100%   
William A.M. Burden &
 Co., L.P.(m)........  216,367      47.1%      216,367        --          --       --           --        --    
Putnam Co., Inc.
 1 Post Office Square
 Boston, MA(n).......  288,000      39.6%           --        --     288,000      6.0%          --        --    
 
<CAPTION>
 
                           SHARES OF CLASS B                      PERCENT OF VOTING
                          COMMON STOCK OWNED    PERCENT OF ALL       POWER OF ALL
                         AFTER  THE OFFERING     COMMON STOCK        COMMON STOCK
                         --------------------  ------------------  ------------------
    DIRECTORS AND                  PERCENT OF  PRIOR TO   AFTER    PRIOR TO   AFTER
EXECUTIVE OFFICERS(A)   NUMBER      CLASS B    OFFERING  OFFERING  OFFERING  OFFERING
<S>                    <C>        <C>          <C>       <C>       <C>       <C>
Susan Burden(d)(l)...  2,280,690       100%        89%     33.4%       98%       80%
Bruce A.
 Friedman(e).........         --        --        7.0%      4.1%      1.0%      1.2%
James T. Shea,
 Jr.(f)..............         --        --        2.7%      1.5%     *         *
James J.
 Sullivan(g).........         --        --       *         *         *         *
Scott J.
 Bacherman(h)........         --        --       *         *         *         *
Charlie V.
 DiToro(i)...........         --        --       *         *         *         *
Jay Sterin(j)........         --        --       *         *         *         *
Daniel Stern.........         --        --         --        --        --        --
All directors and
 executive officers
 as a group(k)
 (8 people)..........         --        --       11.1%      6.5%      1.6%      2.0%
FIVE PERCENT
 SHAREHOLDERS AND
 SELLING SHAREHOLDERS
Estate of
 Carter Burden(l)....  2,280,690       100%        89%     33.4%       98%       80%
William A.M. Burden &
 Co., L.P.(m)........         --        --        5.5%       --      *           --
Putnam Co., Inc.
 1 Post Office Square
 Boston, MA(n).......         --        --        6.8%      4.1%      1.0%      1.2%
</TABLE>
 
- ------------------------------
 
 *  less than 1%
 
(a)  The address of all persons in this table, unless otherwise specified, is
     c/o Commodore Media, Inc., 500 Fifth Avenue, Suite 3000, New York, New York
     10110.
 
(b)  As used in this table, "beneficial ownership" means the sole or shared
     power to vote or direct the voting of a security, or the sole or shared
     investment power with respect to a security (i.e., the power to dispose, or
     direct the disposition, of a security). A person is deemed as of any date
     to have "beneficial ownership" of any security that such person has the
     right to acquire within 60 days after such date. For purposes of computing
     the percentage of outstanding shares held by each person named above, any
     security that such person has the right to acquire within 60 days of the
     date of calculation is deemed to be outstanding, but is not deemed to be
     outstanding for purposes of computing the percentage ownership of any other
     person.
 
(c)  For further information regarding shares of Class A Common Stock being
     purchased in the Offering, see "Underwriting."
 
(d)  Includes shares owned by the Estate of Carter Burden of which Susan Burden
     is an executor and may be deemed a beneficial owner thereof.
 
(e)  Includes (i) 19,599 shares of Class A Common Stock purchasable upon
     exercise of Warrants held by Mr. Friedman and (ii) 67,954 shares of Class A
     Common Stock currently purchasable pursuant to options granted to Mr.
     Friedman under the 1995 Stock Option Plan. Does not include options under
     the 1995 Stock Option Plan to acquire 135,900 shares of Class A Common
     Stock which are not presently exercisable.
 
(f)  Includes (i) 12,312 shares of Class A Common Stock purchasable upon
     exercise of Warrants held by Mr. Shea and (ii) 50,962 shares of Class A
     Common Stock currently purchasable pursuant to options granted to Mr. Shea
     under the 1995 Stock Option Plan. Does not include options under the 1995
     Stock Option Plan to acquire 152,992 shares of Class A Common Stock which
     are not presently exercisable.
 
(g)  Includes (i) 9,036 shares of Class A Common Stock purchasable upon exercise
     of Warrants held by Mr. Sullivan and (ii) 20,384 shares of Class A Common
     Stock currently purchasable pursuant to options granted to Mr. Sullivan
     under the 1995 Stock Option Plan. Does not include options under the 1995
     Stock Option Plan to acquire 61,157 shares of Class A Common Stock which
     are not presently exercisable.
 
(h)  Includes 20,384 shares of Class A Common Stock currently purchasable
     pursuant to options granted to Mr. Bacherman under the 1995 Stock Option
     Plan. Does not include options under the 1995 Stock Option Plan to acquire
     61,157 shares of Class A Common Stock which are not presently exercisable.
 
(i)  Includes 2,988 shares of Class A Common Stock currently purchasable
     pursuant to options granted to Mr. DiToro under the 1995 Stock Option Plan.
     Does not include options under the 1995 Stock Option Plan to acquire 26,892
     shares of Class A Common Stock which are not presently exercisable.
 
(j)  Includes 13,587 shares of Class A Common Stock currently purchasable
     pursuant to options granted to Mr. Sterin under the 1995 Stock Option Plan.
     Does not include options under the 1995 Stock Option Plan to acquire 62,374
     shares of Class A Common Stock which are not presently exercisable.
 
                                       58
<PAGE>   61
 
(k)  Includes (i) 40,947 shares of Class A Common Stock purchasable upon
     exercise of Warrants held by all directors and executive officers and (ii)
     176,264 shares of Class A Common Stock currently purchasable pursuant to
     options granted to all directors and executive officers under the 1995
     Stock Option Plan. Does not include options under the 1995 Stock Option
     Plan to acquire 478,771 shares of Common Stock which are not presently
     exercisable.
 
(l)  Includes 3,501,886 shares of Class A Common Stock issuable upon conversion
     of the shares of Class B Common Stock owned by the Estate of Carter Burden.
     Carter Burden, the Company's Chairman of the Board, died in January 1996.
     The Executors of the Estate of Carter Burden are Susan L. Burden, S. Carter
     Burden III and Flobelle F. Burden. Each of Susan L. Burden, Carter Burden
     III and Flobelle F. Burden may be deemed to be beneficial owners of the
     Common Stock owned by the Estate of Carter Burden.
 
(m) Includes 19,706 shares of Class A Common Stock purchasable upon partial
    exercise of the option granted to WAMBCO by Carter Burden to acquire up to
    177,351 shares of Class A Common Stock (the "WAMBCO Option"). Does not
    include 157,645 shares of Class A Common Stock purchasable under the portion
    of the WAMBCO Option which is not presently exercisable. WAMBCO is an
    investment limited partnership, the partners of which are individuals and
    other entities that were directly or indirectly related to or affiliated
    with the family of Carter Burden. At the time of Carter Burden's death in
    January 1996, he was both a limited partner of WAMBCO and controlling
    shareholder of its general partner.
 
(n)  Includes 288,000 shares of Class A Common Stock purchasable upon exercise
     of Warrants held by Putnam Co., Inc.
 
                                       59
<PAGE>   62
 
                      DESCRIPTION OF CERTAIN INDEBTEDNESS
 
SENIOR CREDIT FACILITY
 
     On March 13, 1996, the Company, Holdings and their subsidiaries entered
into the Senior Loan Agreement pursuant to which the Senior Lender made
available to Holdings senior secured (i) revolving loans (the "Revolving Loans")
in an amount up to $30 million and (ii) accounts receivable loans ("Receivable
Loans") in an amount which must be the lesser of (A) $5 million or (B) 85% of
the net book value of the accounts receivable of the Company and the
wholly-owned subsidiaries of Holdings.
 
     Each Receivable Loan and Revolving Loan bears interest at a floating rate
of interest, adjusted on the first calendar day of each calendar month, equal to
three and one-half percent (3 1/2%) above LIBOR as published in the Eastern
Edition of The Wall Street Journal. Interest on each Receivable Loan and
Revolving Loan is payable monthly in arrears on the first day of each month
beginning April 1, 1996.
 
     The indebtedness of Holdings under the Senior Credit Facility is
collateralized by liens on substantially all of the assets of Holdings and its
subsidiaries and by the Company's pledge of the stock of Holdings and by
Holdings' pledge of the stock of the wholly-owned subsidiaries of Holdings, and
is guaranteed by the Company and the wholly-owned subsidiaries of Holdings.
Principal amortization for the Receivable Loans commences on November 30, 1997
and the principal amortization for the Revolving Loans commences in June 1998.
 
     Restrictive covenants in the Senior Loan Agreement include: (i) a
prohibition on the creation of additional liens on any assets of the Company or
any of its subsidiaries, with certain customary and limited exceptions; (ii) a
restriction on the use of proceeds of any loan pursuant to the Senior Loan
Agreement; (iii) restrictions on non-ordinary course dispositions of assets;
(iv) restrictions on mergers or consolidations involving the Company or any of
its subsidiaries; (v) a prohibition on the payment and declaration of any
dividends or other distributions on any class of its capital stock, with certain
limited exceptions; (vi) restrictions on the incurrence of additional
indebtedness and guarantees; (vii) a prohibition on new investments, except for
certain intercompany advances, permitted acquisitions, reasonable and customary
loans to employees, temporary cash investments and other limited investments;
(viii) restrictions on the disposition of licenses; and (ix) a prohibition on an
amendment to either the Indenture or any Senior Subordinated Note or any
document governing the obligations evidenced by the Indenture or the Senior
Subordinated Notes.
 
     The Company is also required to satisfy, among other things, the following
financial ratios under the Senior Loan Agreement: (i) a ratio of the Company's
consolidated EBITDA to consolidated pro forma total debt service, as defined in
the Senior Loan Agreement, of not less than 1.10 to 1.00 at the end of each
fiscal quarter; (ii) a ratio of the Company's consolidated EBITDA to
consolidated senior debt service of not less that 2.0 to 1.0 at the end of each
fiscal quarter; (iii) at the time of the making of a Revolving Loan, the ratio
of the Company's consolidated debt for borrowed money (excluding the Receivable
Loan) to EBITDA shall not exceed 6.75 to 1.0 at any time prior to May 1, 1998
and shall not exceed 6.25 to 1.0 at any time thereafter; and (iv) the ratio of
the aggregate outstanding balance of all Revolving Loans to the Company's
consolidated EBITDA shall not exceed 3.5 to 1.0 at any time. The Company is
currently in compliance with all maintenance covenants contained in the Senior
Loan Agreement.
 
THE 13 1/4% SENIOR SUBORDINATED NOTES DUE 2003
 
     The Senior Subordinated Notes are general unsecured obligations of the
Company and are subordinated in rights of payment of all Senior Indebtedness (as
defined in the Indenture) and senior in rights of payment to any current or
future indebtedness of the Company, which is by its terms subordinated to the
Senior Subordinated Notes. The Senior Subordinated Notes are unconditionally
guaranteed, on a senior subordinated basis, as to payment of principal, premium,
if any, and interest, jointly and severally, by the Guarantors named in the
Indenture (together with each other Restricted Subsidiary (as defined in the
Indenture) which guarantees payment of the Senior Subordinated Notes). The
Senior Subordinated Notes were issued pursuant to the Indenture among the
Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as
Trustee. The Senior Subordinated Notes mature on May 1, 2003, are limited in
aggregate
 
                                       60
<PAGE>   63
 
principal amount to $76,808,000 and bear cash interest at a rate of 7 1/2% per
annum from the date of original issuance until May 1, 1998, and at a rate of
13 1/4% per annum from and including May 1, 1998 until maturity. Interest is
payable semi-annually in arrears on May 1 and November 1.
 
     The Senior Subordinated Notes are redeemable at the option of the Company,
in whole or in part, at any time on or after (i) May 1, 1999 at 107.5% of the
principal amount, (ii) May 1, 2000, at 105.0% of the principal amount, (iii) May
1, 2001, at 102.5% of the principal amount and (iv) May 1, 2002 and thereafter,
at 100.0% of the principal amount, together, in each case, with accrued and
unpaid interest to the redemption date. Notwithstanding the foregoing, the
Company may redeem in the aggregate up to 33 1/3% of the original principal
amount of the Senior Subordinated Notes at any time and from time to time prior
to May 1, 1998 at a redemption price equal to 108% of the Accreted Value of the
Senior Subordinated Notes thereof plus accrued interest to the redemption date
out of the net proceeds of one or more Public Equity Offerings (as defined in
the Indenture), provided, that at least $50 million in aggregate principal
amount of Senior Subordinated Notes remains outstanding immediately after the
occurrence of any such redemption and that any such redemption occurs within 120
days following the closing of any such Public Equity Offering.
 
     The Indenture contains, among others, the following covenants:
 
     Limitation on Additional Indebtedness.  The Company will not, and will not
permit any Restricted Subsidiary of the Company to, directly or indirectly,
incur any Indebtedness (including Acquired Indebtedness as such term is defined
in the Indenture) unless (a) after giving effect to the incurrence of such
Indebtedness and the receipt and application of the proceeds thereof, the ratio
of the Company's total Indebtedness to the Company's EBITDA (determined on a pro
forma basis for the last four fiscal quarters of the Company for which financial
statements are available at the date of determination) is less than 6.75 to 1 if
the Indebtedness is incurred prior to May 1, 1998 and 6.25 to 1 if the
Indebtedness is incurred thereafter; provided, however, that if the Indebtedness
which is the subject of a determination under this provision is Acquired
Indebtedness, or Indebtedness incurred in connection with the simultaneous
acquisition of any Person, business, property or assets, then such ratio shall
be determined by giving effect to (on a pro forma basis, as if the transaction
had occurred at the beginning of the four-quarter period) both the incurrence or
assumption of such Acquired Indebtedness or such other Indebtedness by the
Company and the inclusion in the Company's EBITDA of the EBITDA of the acquired
Person, business, property or assets, and (b) no Default or Event of Default (as
such terms are defined in the Indenture) shall have occurred and be continuing
at the time or immediately after giving effect to the incurrence of such
Indebtedness.
 
     Limitation on Restricted Payments.  Subject to certain exceptions set forth
in the Indenture, the Company will not make, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, make, any Restricted Payment
(as defined in the Indenture), unless:
 
          (a) no Default or Event of Default shall have occurred and be
     continuing at the time of or immediately after giving effect to such
     Restricted Payment;
 
          (b) immediately after giving pro forma effect to such Restricted
     Payment, the Company could incur $1.00 of additional Indebtedness (other
     than Permitted Indebtedness) in compliance with the covenant described
     above under "Limitation on Additional Indebtedness"; and
 
          (c) immediately after giving effect to such Restricted Payment, the
     aggregate of all Restricted Payments declared or made after the Issue Date
     (as defined in the Indenture) does not exceed the sum of (1) 50% of the
     Company's cumulative consolidated net income (or in the event such
     consolidated net income shall be a deficit, minus 100% of such deficit)
     after the Issue Date, plus (2) 100% of the aggregate net proceeds and the
     fair market value of securities or other property received by the Company
     from the issue or sale, after the Issue Date, of capital stock (other than
     Disqualified Capital Stock or Capital Stock of the Company issued to any
     Subsidiary of the Company) of the Company or any Indebtedness or other
     securities of the Company convertible into or exercisable or exchangeable
     for capital stock (other than Disqualified Capital Stock as such term is
     defined in the Indenture) of the Company which has been so converted or
     exercised or exchanged, as the case may be. For purposes of determining
     under this clause (c) the amount expended for Restricted Payments, cash
     distributed shall be valued at the face amount thereof and property other
     than cash shall be valued at its fair market value.
 
                                       61
<PAGE>   64
 
                          DESCRIPTION OF CAPITAL STOCK
 
     The Company's authorized capital stock consists of 25,101,886 shares of
Common Stock, of which 21,600,000 shares are Class A Common Stock, $.01 par
value, 439,215 of which are issued and outstanding; and 3,501,886 shares are
Class B Common Stock, $.01 par value, of which 3,501,886 are issued and
outstanding and 100,000 shares of Preferred Stock, of which 10,000 shares of
Series A Preferred Stock are issued and outstanding. In addition, the Company
has reserved for issuance (i) 3,501,886 shares of Class A Common Stock upon the
conversion of the Class B Common Stock, (ii) 597,960 shares of Class A Common
Stock upon the exercise of the warrants and (iii) 951,300 shares of Class A
Common Stock under the 1995 Option Plan (see "Management--Stock Option Plans").
There is no established trading market for the Common Stock.
 
COMMON STOCK
 
     Dividends.  Holders of shares of Common Stock are entitled to receive such
dividends as may be declared by the Company's Board of Directors out of funds
legally available for such purpose. No dividends may be declared or paid in cash
or property on any share of any class of Common Stock, however, unless
simultaneously the same dividend is declared or paid on each share of the other
classes of Common Stock. In the case of any stock dividend, holders of Class A
Common Stock are entitled to receive the same percentage dividend (payable in
shares of Class A Common Stock) as the holders of Class B Common Stock receive
(payable in shares of Class B Common Stock). The payment of dividends is
currently restricted by the Indenture governing the Notes. Under the Indenture,
the Company generally is not permitted to pay cash dividends unless (i) no event
of default under the Indenture exists at the time of payment or immediately
thereafter, (ii) certain ratios regarding the incurrence of additional
indebtedness are satisfied and (iii) the aggregate of all dividends or
distributions do not exceed certain limits set forth in the Indenture.
Additionally, under the Senior Loan Agreement, the Company generally may not pay
dividends. However, if no event of default exists the Company may pay noncash
dividends consisting of its capital stock, subject to certain restrictions.
 
     Voting Rights.  Holders of shares of Common Stock vote as a single class on
all matters submitted to a vote of the stockholders except as otherwise required
by law. Each share of Class A Common Stock is entitled to one vote and each
share of Class B Common Stock is entitled to eight votes on all matters. Under
Delaware law, the affirmative vote of the holders of a majority of the
outstanding shares of any class of Common Stock voting as a separate class is
required to approve, among other things, a change in the designations,
preferences and limitations of the shares of such class of common stock.
 
     Liquidation Rights.  Upon liquidation, dissolution or winding-up of the
Company, the holders of Class A Common Stock are entitled to share ratably with
the holders of Class B Common Stock in all assets available for distribution
after payment in full of all obligations to creditors.
 
     Other Provisions.  Each share of Class B Common Stock is convertible, at
the option of its holder, into one share of Class A Common Stock at any time.
The holders of Common Stock are not entitled to preemptive or subscription
rights. The shares of Common Stock presently outstanding are validly issued,
fully paid and nonassessable. The shares of Common Stock issuable upon exercise
of the Warrants have been reserved and when issued will be validly issued, fully
paid and nonassessable. In any merger, consolidation or business combination,
the consideration to be received per share by holders of Class A Common Stock
must be identical to that received by holders of Class B Common Stock, except
that in any such transaction in which shares of Common Stock are distributed,
such shares may differ as to voting rights to the extent that voting rights
differ among the classes of Common Stock. No class of Common Stock may be
subdivided, consolidated, reclassified or otherwise changed unless concurrently
the other classes of Common Stock are subdivided, consolidated, reclassified or
otherwise changed in the same proportion and in the same manner.
 
PREFERRED STOCK
 
     The Amended and Restated Certificate of Incorporation of the Company
authorizes the Company's Board of Directors to establish series of Preferred
Stock (in an aggregate of 100,000 shares) and to determine,
 
                                       62
<PAGE>   65
 
with respect to any series of Preferred Stock, the voting powers, if any, and
such designations, preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions thereof, as
are stated in the resolutions of the Board of Directors providing for such class
or series and as evidenced by a certificate of designation filed pursuant to the
General Corporation Law of the State of Delaware.
 
     In order to finance prospective acquisitions of radio stations and to
provide working capital, in May 1996 the Company entered into a Securities
Purchase Agreement (the "Preferred Stock Purchase Agreement") with CIBC Merchant
Fund, pursuant to which the CIBC Merchant Fund agreed to purchase from the
Company up to an aggregate liquidation value of $12,500,000 of the Series A
Preferred Stock, at such time and in such amounts as requested by the Company
(the "Preferred Stock Facility"), provided that such request be for an aggregate
liquidation value of at least $2,500,000 and be made no later than October 31,
1996. The Company anticipates that all of the outstanding shares of Series A
Preferred Stock will be redeemed by the Company by using proceeds from the
Offering and that the Preferred Stock Facility will not be utilized by the
Company after the consummation of the Offering.
 
WARRANTS
 
     Each warrant to purchase one share of the Company's Class A Common Stock
issued in the Private Offering (each, a "Warrant" and collectively the
"Warrants") entitles the registered holder thereof, subject to and upon
compliance with the provisions thereof and of the Warrant Agreement (the
"Warrant Agreement") between the Company and IBJ Schroder Bank & Trust Company
(the "Warrant Agent"), at such holder's option, prior to May 1, 2000, to
purchase at a price of $.01 per Warrant (the "Exercise Price") from the Company
one share of Class A Common Stock (the "Warrant Shares"). The number of shares
of Class A Common Stock for which a Warrant may be exercised is subject to
adjustment as set forth in the Warrant Agreement.
 
     Holders of Warrants will not be entitled, by virtue of being such holders,
to receive dividends, vote, receive notice of any meetings of stockholders or
otherwise have any right of stockholders of the Company. Each Warrant may only
be exercised in whole. Warrants may be exercised after the occurrence of an
Exercise Event which is defined in the Warrant Agreement as the date of the
earliest to occur of: (1) a Change of Control (as defined in the Indenture)
shall have occurred or (2) seven days prior to the date on which the Company
files a registration statement with respect to a Public Equity Offering (as
defined in the Warrant Agreement) or (3) the date on which any class of equity
securities of the Company is listed on a national securities exchange or
authorized for quotation on the National Association of Securities Dealers
Automated Quotation System or (4) May 1, 1999. The Offering will qualify as a
Public Equity Offering and therefore the Warrants are presently exercisable. The
Exercisability Date may be deferred if FCC approval is required for issuance of
the Class A Common Stock upon exercise of the Warrants. In no event will the
Warrants be exercisable for less than one full year following any deferral
required to obtain FCC approval.
 
     In connection with the Preferred Stock Facility, the Company issued to the
CIBC Merchant Fund a warrant to purchase 54,360 shares of the Company's
outstanding Class A Common Stock which is immediately exercisable (the
"Preferred Facility Warrant"). The terms of the Preferred Facility Warrant are
substantially identical to the terms of the Warrants (as hereinafter defined)
issued in connection with the Senior Subordinated Notes. The Preferred Facility
Warrant contains registration rights and tag-along rights which are
substantially similar to the registration rights and tag-along rights of the
holders of the Warrants. See "Description of Capital Stock--Registration and
Tag-Along Rights" and "Description of Capital Stock-- Preferred Stock."
 
REGISTRATION AND TAG-ALONG RIGHTS
 
     The Company, the Control Stockholders (as defined below) and the holders of
the Warrants entered into a Registration Rights and Stockholders' Agreement (the
"Common Stock Registration Rights Agreement") with respect to the shares of
Class A Common Stock issuable upon exercise of the Warrants ("Registrable
Securities"). The Common Stock Registration Rights Agreement provides that the
purchasers and persons to
 
                                       63
<PAGE>   66
 
whom Registrable Securities are transferred (collectively, the "Registrable
Holders") will have the registration rights and other rights and obligations
with respect to the Registrable Securities described below.
 
     Registration Rights.  The Registrable Holders of at least 25% of the
outstanding Registrable Securities are currently entitled to require the Company
to effect up to two registrations under the Act of such Registrable Securities
(each a "Demand Registration"), subject to certain limitations. In lieu of
filing such registration statement the Company may make an offer to repurchase
all of the Registrable Securities at a price per share equal to the fair market
value per share of Common Stock (without any discount for lack of liquidity, the
amount of Common Stock proposed to be sold or the fact that the shares of Common
Stock held by the Registrable Holders may represent a minority interest in a
private company) determined by a nationally recognized investment banking firm
selected by the Company.
 
     The Registrable Holders will also have the right to include such
Registrable Securities in any registration statement, subject to certain
exceptions, under the Act filed by the Company for its own account or for the
account of any of its securityholders for sale on the same terms and conditions
as the securities of the Company or any other selling securityholder included
therein.
 
     Tag-Along Rights.  In the event of any proposed transfer, sale or other
disposition (collectively, a "Transfer") of Common Stock by any of the Control
Stockholders (as defined below) in any transaction, or a series of related
transactions involving shares of Common Stock aggregating at least 15% of the
shares of Common Stock then owned by the Control Stockholders to a person (such
other person being hereinafter referred to as the "proposed purchaser"), other
than pursuant to an Exempt Transfer (as defined below), each of the Registrable
Holders shall have the right to require the proposed purchaser to purchase from
each of them up to a percentage of the number of Warrants or Warrant Shares
owned by such holder equalling the percentage derived by dividing the total
number of shares of Common Stock the Control Stockholders propose to transfer by
the total number of shares of Common Stock owned by such Control Stockholder.
 
     In the event that the proposed purchaser does not purchase Warrants and/or
Warrant Shares from the Registrable Holders on the same terms and conditions as
purchased from the Control Stockholders, then the Control Stockholders making
such Transfer shall purchase such Warrants and/or Warrant Shares if the Transfer
occurs. It is anticipated that the tag-along rights will terminate in accordance
with their terms upon the consummation of the Offering since after giving effect
to the Offering, it is expected that at least 25% of the Company's Common Stock
on a fully-diluted basis will be held by persons other than Control Stockholders
or Mr. Friedman.
 
     As used herein, the term "Exempt Transfer" shall mean a transfer by a
Control Stockholder to another Control Stockholder. As used herein, the term
"Control Stockholder" shall mean (i) the heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of Carter Burden, to the extent
such Persons beneficially own shares of Common Stock as a result of a Transfer
from Carter Burden after the date hereof (other than pursuant to the WAMBCO
Option) and (ii) a trust the beneficiaries of which include only Carter Burden
and his spouse and lineal descendants.
 
                                       64
<PAGE>   67
 
STOCK TRANSFER AND WARRANT AGENT
 
     The Company's registrar and transfer agent for the Common Stock is
               and the Company's warrant agent for the Warrants and the
Preferred Facility Warrant is IBJ Schroder Bank & Trust Company.
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Prior to the Offering, there has been no public market for the Class A
Common Stock of the Company. Upon completion of the Offering, 4,542,554 shares
of Class A Common Stock will be issued and outstanding and 3,573,018 shares will
be issuable upon exercise of outstanding stock options, warrants and shares of
Class B Common Stock. See "Description of Capital Stock--Common Stock." The
shares of Class A Common Stock sold in the Offering (assuming no exercise of the
Underwriters' over-allotment option) will be freely tradeable in the public
market without restriction under the Securities Act, except that any shares
purchased by "affiliates" of the Company (as defined in Rule 144 promulgated
under the Securities Act ("Rule 144")) may generally only be sold in compliance
with the applicable provisions of Rule 144.
 
     The remaining outstanding shares of Common Stock are deemed "restricted
securities" within the meaning of Rule 144 in that they were originally issued
and sold by the Company in private transactions in reliance upon exemptions from
the Securities Act. The Company, its officers, directors, the Selling
Shareholders and certain other stockholders, who collectively are the beneficial
holders of an aggregate of           shares of Common Stock, have agreed with
the Underwriters not to, directly or indirectly, offer, sell, contract to sell,
grant any option to purchase or otherwise dispose of, without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), any
shares of Common Stock or any securities convertible into, or exercisable or
exchangeable for, or warrants, options or rights to purchase or acquire Common
Stock or in any other manner transfer all or a portion of the economic
consequences associated with the ownership of any Common Stock, or enter into
any agreement to do any of the foregoing, for a period of 180 days after the
date of this Prospectus. Upon expiration of such 180 day period, such holders
will in general be entitled to dispose of their shares (including the shares
underlying such options and warrants), although the shares of Common Stock held
by affiliates of the Company will continue to be subject to the volume and other
restrictions of Rule 144 under the Securities Act.
 
     In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate of the Company, who has
beneficially owned restricted securities for at least two years from the later
of the date such restricted securities were acquired from the Company or the
date they were acquired from an affiliate of the Company, is entitled to sell,
within any three-month period, a number of shares that does not exceed the
greater of (i) 1% of the then outstanding shares of Class A Common Stock or (ii)
the average weekly trading volume of the Class A Common Stock in the
over-the-counter market during the four calendar weeks preceding the date on
which notice of such sale was filed under Rule 144, subject to certain other
limitations and restrictions. In addition, a person who is not deemed to have
been an affiliate of the Company at any time during the 90 days preceding a sale
by such person, and who has beneficially owned the shares proposed to be sold
for at least three years (including the holding period of any prior owner other
than an affiliate), would be entitled to sell such shares under Rule 144(k)
without regard to any of the restrictions described above.
 
     The Company has granted registration rights to certain holders of
securities and other rights convertible into Class A Common Stock. See
"Capitalization" and "Description of Capital Stock." Registration of such shares
under the Securities Act would result in such shares becoming freely tradeable
without restriction under the Securities Act (except for shares held by
affiliates of the Company) immediately upon the effectiveness of such
registration. Sales of substantial amounts of Class A Common Stock in the public
market could adversely affect prevailing market prices and could impair the
Company's future ability to raise capital through the sale of its equity
securities.
 
                                       65
<PAGE>   68
 
                                  UNDERWRITING
 
     The Underwriters named below (the "Underwriters"), for whom DLJ, CS First
Boston Corporation and CIBC Wood Gundy Securities Corp. ("CIBC Wood Gundy") are
acting as representatives (the "Representatives"), have severally agreed,
subject to the terms and conditions of an underwriting agreement (the
"Underwriting Agreement"), to purchase from the Company and the Selling
Shareholders the respective number of shares of Class A Common Stock set forth
opposite their names below:
 
<TABLE>
<CAPTION>
                                                                                NUMBER OF
                                   UNDERWRITERS                                  SHARES
    <S>                                                                         <C>
    Donaldson, Lufkin & Jenrette Securities Corporation.......................
    CS First Boston Corporation...............................................
    CIBC Wood Gundy Securities Corp. .........................................
                                                                                  -------
              Total...........................................................  4,300,000
                                                                                  =======
</TABLE>
 
     The Underwriting Agreement provides that the obligation of the several
Underwriters to purchase and accept delivery of the shares of Class A Common
Stock offered hereby is subject to the approval of certain legal matters by
counsel and to certain other conditions. If any of the shares of Class A Common
Stock are purchased by the Underwriters pursuant to the Underwriting Agreement,
all such shares of Class A Common Stock (other than the shares of Class A Common
Stock covered by the overallotment option described below) must be so purchased.
 
     The Representatives have advised the Company and the Selling Shareholders
that the Underwriters propose to offer the Class A Common Stock to the public
initially at the price to the public set forth on the cover page of this
Prospectus and to certain dealers (who may include the Underwriters) at such
price less a concession not to exceed $     per share. The Underwriters may
allow, and such dealers may reallow, discounts not in excess of $          per
share to any other Underwriter and certain other dealers. After the public
offering of the shares of Class A Common Stock, the public offering price and
other selling terms may be changed by the Representatives.
 
     The Company and the Estate of Carter Burden have granted to the
Underwriters options to purchase up to an aggregate of 645,000 additional shares
of Class A Common Stock, at the initial public offering price less underwriting
discounts and commissions, solely to cover overallotments. Such options may be
exercised at any time until 30 days after the date of this Prospectus. To the
extent that the Underwriters exercise such option, each of the Underwriters will
be committed, subject to certain conditions, to purchase a number of option
shares proportionate to such Underwriter's initial commitment as indicated in
the table above.
 
     Of the shares of Class A Common Stock offered hereby,           have been
reserved (the "Reserved Shares") for sale to certain individuals, including
employees of the Company, family members of such employees and other persons
associated with the Company. The Reserved Shares will be sold at a price per
share equal to the price to the public set forth on the cover page of this
Prospectus. The number of shares available to the general public will be reduced
to the extent those persons purchase Reserved Shares. Any shares not so
purchased will be offered in the Offering at the price to the public set forth
on the cover page of this Prospectus.
 
     Prior to the Offering, there has been no established trading market for the
Class A Common Stock. The initial price to the public for the shares of Class A
Common Stock offered hereby will be determined by negotiation among the Company,
the Selling Shareholders and the Representatives. The factors considered in
determining the initial price to the public include the history of and the
prospects for the industry in which the Company competes, the past and present
operations of the Company, the historical results of operations of the Company,
the prospects for future earnings of the Company, the recent market prices of
securities of generally comparable companies and the general condition of the
securities markets at the time of the Offering.
 
                                       66
<PAGE>   69
 
     The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.
 
     Application has been made to have the shares of Class A Common Stock
offered hereby approved for quotation on the NASDAQ National Market System under
the symbol "CMIA."
 
     The Company, its officers, directors and the Selling Shareholders, who
collectively are the beneficial owners of an aggregate of        shares of
Common Stock, have agreed with the Underwriters not to, directly or indirectly,
issue, offer, sell, contract to sell, grant any option to purchase or otherwise
dispose of, without the prior written consent of DLJ, any shares of Common Stock
or any securities convertible into or exercisable or exchangeable for, or
warrants, options or rights to purchase or acquire, Common Stock or in any other
manner transfer all or a portion of the economic consequences associated with
the ownership of any Common Stock, or enter into any agreement to do any of the
foregoing, for a period of 180 days after the date of this Prospectus.
 
     From time to time CIBC Wood Gundy (or its predecessor firm The Argosy
Securities Group, L.P. ("Argosy")) has performed investment banking services for
the Company. Argosy acted as placement agent in respect of the Private Offering,
for which services Argosy received customary fees. In May 1996 the Company
entered into the Preferred Stock Purchase Agreement with the CIBC Merchant Fund,
an affiliate of CIBC Wood Gundy. In connection with the Preferred Stock Purchase
Agreement, the CIBC Merchant Fund received the Preferred Facility Warrant, and
CIBC Wood Gundy will receive a preferred stock advisory fee of $210,000 at the
closing of the Offering.
 
     The CIBC Merchant Fund, an affiliate of CIBC Wood Gundy, will receive more
than 10% of the net proceeds from the Offering as a result of the use of
proceeds by the Company to redeem all of the outstanding shares of the Company's
Series A Preferred Stock. See "Use of Proceeds." As a result, the Offering is
being conducted in accordance with Schedule E to the Bylaws of the National
Association of Securities Dealers, Inc. (the "NASD"), which provides that, among
other things, when more than 10% of the net proceeds of a public offering of
equity securities are to be paid to a member of the NASD or an affiliate of a
member, the price at which such equity securities are to be distributed to the
public can be no higher than that recommended by a "qualified independent
underwriter" meeting certain standards ("QIU"). In accordance with this
requirement, DLJ has assumed the responsibilities of acting as QIU and will
recommend a maximum price to the public in compliance with the requirements of
Schedule E. In connection with the Offering, DLJ is performing due diligence
investigations and reviewing and participating in the preparation of this
Prospectus and the Registration Statement of which this Prospectus forms a part.
As compensation for the services of DLJ as QIU, the Company has agreed to pay
DLJ $5,000.
 
     Pursuant to the provisions of Schedule E, NASD members may not execute
transactions in the shares of Class A Common Stock in discretionary accounts
without the prior written approval of the customer.
 
                                 LEGAL MATTERS
 
     Certain legal matters with respect to the validity of the issuance of the
Class A Common Stock will be passed upon for the Company by Pryor, Cashman,
Sherman & Flynn, New York, New York. Certain legal matters will be passed upon
for the Underwriters by Skadden, Arps, Slate, Meagher & Flom, New York, New
York.
 
                                    EXPERTS
 
     The consolidated financial statements of the Company at December 31, 1995
and 1994, and for each of the two years in the period ended December 31, 1995
and the financial statements of Media VI (the 1996 Treasure Coast Acquisition)
at December 31, 1995, and for the year ended December 31, 1995, each appearing
in this Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon, appearing
elsewhere herein and in the Registration
 
                                       67
<PAGE>   70
 
Statement, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
 
     The consolidated statement of operations, cash flows and stockholders'
deficit for the year ended December 31, 1993 of the Company appearing in this
Prospectus and Registration Statement have been audited by Weeks DeGraw &
Company, P.A., independent auditors, given upon the authority of such firm as
experts in accounting and auditing.
 
     The financial statements of Danbury Broadcasting, Inc. (the Danbury
Acquisitions) at June 30, 1995 and 1994 and for the two years in the period
ended June 30, 1995, appearing in this Prospectus and Registration Statement
have been audited by Paneth, Haber & Zimmerman LLP, independent auditors, as set
forth in their report thereon, appearing elsewhere herein and in the
Registration Statement, and are included in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
 
     The financial statements of Q Broadcasting, Inc. (the Stamford Acquisition)
at September 30, 1995 and for the three years in the period ended September 30,
1995, appearing in this Prospectus and Registration Statement have been audited
by Holtz Rubenstein & Co., LLP, independent auditors, as set forth in their
report thereon, appearing elsewhere herein and in the Registration Statement,
and are included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
 
     The financial statements of Adventure Communications, Inc. (the Huntington
Acquisitions) at December 31, 1995 and for the three years in the period ended
December 31, 1995, appearing in this Prospectus and Registration Statement have
been audited by Brown, Edwards & Co., LLP, independent auditors, as set forth in
their report thereon, appearing elsewhere herein and in the Registration
Statement, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
 
                             AVAILABLE INFORMATION
 
     The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act with
respect to the shares of Class A Common Stock offered hereby. This Prospectus,
which constitutes a part of the Registration Statement, omits certain
information contained in the Registration Statement, and reference is made to
the Registration Statement and the exhibits and schedules thereto for further
information with respect to the Company and the shares of Class A Common Stock
offered hereby. Statements contained herein concerning the provisions of any
documents are not necessarily complete, and in each instance reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or previously filed with the Commission. Each such statement is qualified in its
entirety by such reference. The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, and in accordance therewith, files reports, proxy
and information statements, and other information with the Commission. The
Registration Statement, including exhibits and schedules filed therewith, and
the Company's reports, proxy and information statements, and other information
filed by the Company with the Commission may be inspected without charge at the
Public Reference Room of the Commission, 450 Fifth Street, N.W., Room 1024, Room
1024, Washington, D.C. 20549 or at its Regional Offices located at Room 1400,
500 West Madison Street, Chicago, Illinois 60661 and 7 World Trade Center, New
York, New York 10048. Copies of such material may be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and its public reference facilities in New York, New
York and Chicago, Illinois at prescribed rates.
 
                                       68
<PAGE>   71
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
COMMODORE MEDIA, INC. AND SUBSIDIARIES:
Reports of Independent Auditors.......................................................  F-2
Consolidated Balance Sheets at December 31, 1994 and 1995 and March 31, 1996
  (unaudited).........................................................................  F-4
Consolidated Statements of Operations for the years ended December 31, 1993, 1994 and
  1995 and for the three months ended March 26, 1995 (unaudited) and March 31, 1996
  (unaudited).........................................................................  F-5
Consolidated Statements of Stockholders' Deficit for the years ended December 31,
  1993, 1994 and 1995 and for the three months ended March 31, 1996 (unaudited).......  F-6
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994 and
  1995 and for the three months ended March 26, 1995 (unaudited) and March 31, 1996
  (unaudited).........................................................................  F-7
Notes to Consolidated Financial Statements............................................  F-9
MEDIA VI:
Report of Independent Auditors........................................................  F-23
Balance Sheets at December 31, 1995 and March 31, 1996 (unaudited)....................  F-24
Statements of Operations for the year ended December 31, 1995 and for the three months
  ended March 31, 1995 (unaudited) and 1996 (unaudited)...............................  F-25
Statements of Partners' Equity for the year ended December 31, 1995 and for the three
  months ended March 31, 1995 (unaudited) and 1996 (unaudited)........................  F-26
Statements of Cash Flows for the year ended December 31, 1995 and for the three months
  ended March 31, 1995 (unaudited) and 1996 (unaudited)...............................  F-27
Notes to Financial Statements.........................................................  F-28
ADVENTURE COMMUNICATIONS--HUNTINGTON:
  (Division of Adventure Communications, Inc.)
Independent Auditors' Report..........................................................  F-33
Balance Sheets at December 31, 1994 and 1995 and March 31, 1996 (unaudited)...........  F-34
Statements of Operations for the years ended December 31, 1993, 1994 and 1995, and for
  the three months ended March 31, 1995 (unaudited) and 1996 (unaudited)..............  F-35
Statements of Divisional Equity (Deficit) for the years ended December 31, 1993, 1994
  and 1995 and for the three months ended March 31, 1996 (unaudited)..................  F-36
Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995, and for
  the three months ended March 31, 1995 (unaudited) and 1996 (unaudited)..............  F-37
Notes to Financial Statements.........................................................  F-38
DANBURY BROADCASTING, INC.:
Report of Independent Auditors........................................................  F-43
Balance Sheets at June 30, 1994 and 1995 and March 26, 1996 (unaudited)...............  F-44
Statements of Operations and Accumulated Deficit for the years ended June 30, 1994 and
  1995, for the nine months ended March 31, 1995 (unaudited) and for the period July
  1, 1995 through March 26, 1996 (unaudited)..........................................  F-45
Statements of Cash Flows for the years ended June 30, 1994 and 1995, for the nine
  months ended March 31, 1995 (unaudited) and for the period July 1, 1995 through
  March 26, 1996 (unaudited)..........................................................  F-46
Notes to Financial Statements.........................................................  F-47
Q BROADCASTING, INC.:
Independent Auditors' Report..........................................................  F-53
Balance Sheets at September 30, 1994 and 1995 and March 31, 1996 (unaudited)..........  F-54
Statements of Operations and Deficit for the years ended September 30, 1993, 1994 and
  1995, and for the six months ended March 31, 1995 (unaudited) and 1996
  (unaudited).........................................................................  F-55
Statements of Cash Flows for the years ended September 30, 1993, 1994 and 1995, and
  for the six months ended March 31, 1995 (unaudited) and 1996 (unaudited)............  F-56
Notes to Financial Statements.........................................................  F-57
</TABLE>
 
                                       F-1
<PAGE>   72
 
                         REPORT OF INDEPENDENT AUDITORS
 
To the Board of Directors
Commodore Media, Inc.
 
     We have audited the accompanying consolidated balance sheets of Commodore
Media, Inc. and Subsidiaries as of December 31, 1995 and 1994 and the related
consolidated statements of operations, stockholders' deficit and cash flows for
each of the two years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. These 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Commodore Media, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
 
                                          ERNST & YOUNG LLP
New York, New York
February 28, 1996, except for Note 14,
  as to which the date is May 16, 1996
 
- --------------------------------------------------------------------------------
 
     The foregoing report is in the form that will be signed upon the completion
of the 7.2:1 stock split on the Company's Common Stock as described in Note 14
to the financial statements.
 
                                          ERNST & YOUNG LLP
New York, New York
May 16, 1996
 
                                       F-2
<PAGE>   73
 
                         REPORT OF INDEPENDENT AUDITORS
 
To the Board of Directors
Commodore Media, Inc.
 
     We have audited the accompanying consolidated statements of operations,
stockholders' deficit and cash flows of Commodore Media, Inc. and Subsidiaries
for the year ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
 
     We conducted our audit in accordance with generally accepted auditing
standards. These 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 audit provides a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Commodore
Media, Inc. and Subsidiaries for the year ended December 31, 1993, in conformity
with generally accepted accounting principles.
 
                                          WEEKS DEGRAW & COMPANY, P.A.
 
Edison, New Jersey
March 4, 1994
  (except for Note 14, as to which the date is May 16, 1996)
 
- --------------------------------------------------------------------------------
 
     The foregoing report is in the form that will be signed upon the completion
of the 7.2:1 stock split on the Company's Common Stock as described in Note 14
to the financial statements.
 
                                          WEEKS DEGRAW & COMPANY, P.A.
 
Edison, New Jersey
May 16, 1996
 
                                       F-3
<PAGE>   74
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                             -----------------------------      MARCH 31,
                                                                 1994             1995             1996
                                                             ------------     ------------     ------------
                                                                                               (unaudited)
<S>                                                          <C>              <C>              <C>
ASSETS
Current assets:
  Cash and short-term cash investments.....................  $  2,042,249     $ 10,891,489     $  5,086,725
  Accounts receivable, less allowance of $532,231 and
    $700,336 in 1994 and 1995..............................     4,768,905        6,131,447        4,908,411
  Prepaid expenses and other current assets................       526,078          285,412          452,451
                                                             ------------     ------------     ------------
Total current assets.......................................     7,337,232       17,308,348       10,447,587
Property, plant and equipment, net.........................     7,849,037        8,080,043       10,015,567
FCC licenses, net of accumulated amortization of $3,141,761
  in 1994 and $3,677,841 in 1995...........................    17,297,619       18,769,172       29,628,878
Goodwill net of accumulated amortization of $182,258 in
  1994 and $234,327 in 1995................................     1,750,522        1,998,453        5,584,498
Other intangible assets....................................     1,553,574        1,761,306        1,934,213
Deferred charges, net......................................       439,786        3,910,582        4,184,346
Deposits and other assets..................................        54,946          982,876        1,415,769
                                                             ------------     ------------     ------------
Total assets...............................................  $ 36,282,716     $ 52,810,780     $ 63,210,858
                                                             ============     ============     ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable and accrued expenses....................  $  1,695,583     $  1,774,256     $  1,546,938
  Accrued compensation.....................................     1,261,064          815,162          415,972
  Accrued interest.........................................       377,843          960,368        2,412,728
  Accrued income taxes.....................................       293,975           16,840           10,603
  Current maturities of long-term debt.....................     2,908,544           11,977           11,977
  Subordinated note payable to affiliate...................       685,000               --               --
                                                             ------------     ------------     ------------
Total current liabilities..................................     7,222,009        3,578,603        4,398,218
Long-term debt.............................................    34,112,858       65,142,763       74,465,671
Noncurrent compensation....................................     2,204,018        1,482,275        1,463,345
Subordinated note payable to affiliate.....................     1,368,000               --               --
8.87% cumulative redeemable preferred stock, $1 par value,
  20,000 shares authorized, 10,000 shares issued and
  outstanding in 1994......................................     8,413,660               --               --
Redeemable warrant (Note 5)................................     1,000,000               --               --
Note payable, officer......................................            --        1,161,706        1,174,617
Deferred income taxes......................................            --               --        1,700,000
Stockholders' deficit:
  Class A Common Stock, $0.01 par value; 21,600,000 shares
    authorized and issued: 858,327 shares in 1994 and
    1,054,988 shares in 1995...............................         8,583           10,550           10,550
  Class B Common Stock, convertible into Class A Common
    Stock, $0.01 par value; 3,501,886 shares authorized and
    issued.................................................        35,019           35,019           35,019
  Additional paid-in capital...............................    21,794,986       23,540,944       23,540,944
  Accumulated deficit......................................   (39,875,417)     (42,115,080)     (43,551,506)
                                                             ------------     ------------     ------------
                                                              (18,036,829)     (18,528,567)     (19,964,993)
  Less treasury stock, at cost, 612,598 shares in 1994 and
    615,773 shares in 1995.................................         1,000           26,000           26,000
                                                             ------------     ------------     ------------
Total stockholders' deficit................................   (18,037,829)     (18,554,567)     (19,990,993)
                                                             ------------     ------------     ------------
Total liabilities and stockholders' deficit................  $ 36,282,716     $ 52,810,780     $ 63,210,858
                                                             ============     ============     ============
</TABLE>
 
See accompanying notes.
 
                                       F-4
<PAGE>   75
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                           YEAR ENDED DECEMBER 31,              THREE MONTHS ENDED
                                   ---------------------------------------   ------------------------
                                      1993          1994          1995       MARCH 26,     MARCH 31,
                                   -----------   -----------   -----------      1995         1996
                                                                             ----------   -----------
                                                                             (unaudited)  (unaudited)
<S>                                <C>           <C>           <C>           <C>          <C>
Total revenue..................... $21,643,059   $28,686,381   $33,652,677   $6,507,658   $ 8,047,568
Less agency commissions...........  (1,845,502)   (2,461,478)   (2,857,912)    (540,271)     (631,887)
                                   -----------   -----------   -----------   ----------   -----------
Net revenue.......................  19,797,557    26,224,903    30,794,765    5,967,387     7,415,681
                                   -----------   -----------   -----------   ----------   -----------
Operating expenses:
  Programming, technical and
     news.........................   4,028,677     4,601,374     5,365,686    1,090,881     1,513,468
  Sales and promotion.............   5,289,311     7,325,549     8,796,481    1,867,684     2,421,153
  General and administrative......   4,190,735     4,556,515     4,870,463    1,210,206     1,440,612
  Corporate expenses..............   2,530,703     2,109,741     2,051,181      460,738       465,684
  Depreciation and amortization...   1,129,379     2,145,201     1,926,250      436,991       480,210
  Long-term incentive
     compensation.................          --     2,180,000     2,006,550      584,935            --
  Separation compensation.........   1,496,000            --            --           --            --
                                   -----------   -----------   -----------   ----------   -----------
  Operating income................   1,132,752     3,306,523     5,778,154      315,952     1,094,554
Interest expense..................   4,217,697     2,932,459     7,420,617      829,680     2,451,638
Interest income...................          --           266       420,659           --       115,252
Other expenses, net...............     657,861       601,443       433,704       56,666       167,594
                                   -----------   -----------   -----------   ----------   -----------
Loss before provision for income
  taxes and extraordinary loss....  (3,742,806)     (227,113)   (1,655,508)    (570,394)   (1,409,426)
Provision for income taxes........      39,503       300,000       140,634       15,000        27,000
                                   -----------   -----------   -----------   ----------   -----------
Loss before extraordinary loss....  (3,782,309)     (527,113)   (1,796,142)    (585,394)   (1,436,426)
Extraordinary loss on
  extinguishment of debt (Note
  5)..............................          --            --      (443,521)          --            --
                                   -----------   -----------   -----------   ----------   -----------
Net loss..........................  (3,782,309)     (527,113)   (2,239,663)    (585,394)   (1,436,426)
Preferred Stock dividend..........          --       690,660       252,175      208,000            --
                                   -----------   -----------   -----------   ----------   -----------
Net loss for common
  shareholders.................... $(3,782,309)  $(1,217,773)  $(2,491,838)  $ (793,394)  $(1,436,426)
                                   ===========   ===========   ===========   ==========   ===========
Loss per share:
  Before extraordinary item....... $     (1.88)  $      (.32)  $      (.53)  $     (.21)  $      (.36)
  Extraordinary item..............          --            --          (.11)          --            --
                                   -----------   -----------   -----------   ----------   -----------
  Loss per share.................. $     (1.88)  $      (.32)  $      (.64)  $     (.21)  $      (.36)
                                   ===========   ===========   ===========   ==========   ===========
Weighted average common shares
  outstanding.....................   2,013,100     3,762,700     3,892,300    3,755,500     3,949,900
                                   ===========   ===========   ===========   ==========   ===========
</TABLE>
 
See accompanying notes.
 
                                       F-5
<PAGE>   76
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
 
<TABLE>
<CAPTION>
                                                       COMMON STOCK
                                                         PAR VALUE       ADDITIONAL                                  TOTAL
                                        PREFERRED    -----------------     PAID-IN     ACCUMULATED    TREASURY   STOCKHOLDERS'
                                          STOCK      CLASS A   CLASS B     CAPITAL       DEFICIT       STOCK        DEFICIT
                                       -----------   -------   -------   -----------   ------------   --------   -------------
<S>                                    <C>           <C>       <C>       <C>           <C>            <C>        <C>
BALANCE AT DECEMBER 31, 1992, AS
  RESTATED...........................  $ 5,799,686   $8,583    $17,409   $   (25,092)  $(34,565,995)  $ (1,000)  $(28,766,409)
Sale of common stock.................           --       --     8,085      2,491,915            --          --      2,500,000
Conversion of preferred stock to
  common stock.......................   (3,300,000)      --     9,525      3,290,475            --          --
Contribution of loans and accrued
  interest...........................           --       --        --     14,228,662            --          --     14,228,662
Contribution of preferred stock......   (2,499,686)      --        --      2,499,686            --          --             --
Loss for the year....................           --       --        --             --     (3,782,309)        --     (3,782,309)
                                       -----------   ------    ------    -----------   ------------   --------   ------------
BALANCE AT DECEMBER 31, 1993.........           --    8,583    35,019     22,485,646    (38,348,304)    (1,000)   (15,820,056)
Cumulative dividends on redeemable
  preferred stock....................           --       --        --       (690,660)           --          --       (690,660)
Adjustment to carrying value of
  redeemable warrant.................           --       --        --             --     (1,000,000)        --     (1,000,000)
Loss for the year....................           --       --        --             --       (527,113)        --       (527,113)
                                       -----------   ------    ------    -----------   ------------   --------   ------------
BALANCE AT DECEMBER 31, 1994.........           --    8,583    35,019     21,794,986    (39,875,417)    (1,000)   (18,037,829)
Cumulative dividends on redeemable
  preferred stock....................           --       --        --       (252,175)           --          --       (252,175)
Allocation of net proceeds of debt
  offering to warrants...............           --       --        --      2,000,000            --          --      2,000,000
Repurchase of common stock...........           --       --        --             --            --     (25,000)       (25,000)
Exercise of warrants.................           --    1,967        --         (1,867)           --          --            100
Loss for the year....................           --       --        --             --     (2,239,663)        --     (2,239,663)
                                       -----------   ------    ------    -----------   ------------   --------   ------------
BALANCE AT DECEMBER 31, 1995.........           --   10,550    35,019     23,540,944    (42,115,080)   (26,000)   (18,554,567)
                                       -----------   ------    ------    -----------   ------------   --------   ------------
Net loss for the period
  (unaudited)........................           --       --        --             --     (1,436,426)        --     (1,436,426)
                                       -----------   ------    ------    -----------   ------------   --------   ------------
BALANCE AT MARCH 31, 1996
  (unaudited)........................  $        --   $10,550   $35,019   $23,540,944   $(43,551,506)  $(26,000)  $(19,990,993)
                                       ===========   ======    ======    ===========   ============   ========   ============
</TABLE>
 
See accompanying notes.
 
                                       F-6
<PAGE>   77
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                  YEAR ENDED DECEMBER 31,                THREE MONTHS ENDED
                                          ----------------------------------------   --------------------------
                                              1993          1994          1995        MARCH 26,
                                          ------------   -----------   -----------      1995
                                                                                     -----------
                                                                                     (unaudited)    MARCH 31,
                                                                                                       1996
                                                                                                   ------------
                                                                                                   (unaudited)
<S>                                       <C>            <C>           <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss................................  $ (3,782,309)  $  (527,113)  $(2,239,663)  $  (585,394)  $ (1,436,426)
Adjustments to reconcile net loss to net
  cash provided by operating activities:
  Loss on extinguishment of debt........            --            --       443,521            --             --
  Depreciation and amortization.........     1,277,859     2,365,111     2,311,162       491,964        639,180
  Noncash interest......................            --            --     2,288,917            --        839,274
  Long-term incentive compensation......            --     2,180,000        79,000            --             --
  Noncash settlement compensation.......     1,001,000            --            --            --             --
  Provision for uncollectible accounts
    and notes receivable................       825,129       468,155       556,137       177,208        104,981
  (Gain) loss on disposition of
    assets..............................        (8,115)      335,736         9,819            --             --
  Net barter income.....................      (123,310)     (122,163)     (184,300)      (15,292)       (44,864)
  Changes in assets and liabilities, net
    of amounts acquired:
    Increase in accounts receivable.....      (958,612)   (1,509,195)   (1,847,015)      416,863      1,137,320
    Decrease (increase) in prepaid
      expenses and other current
      assets............................       300,824      (267,196)      (88,787)      (93,240)      (153,096)
    Increase (decrease) in accounts
      payable and accrued expenses......       336,812       326,251      (158,855)     (134,166)      (159,141)
    Increase (decrease) in accrued
      compensation......................            --       197,881      (230,645)      139,867       (457,120)
    Increase in accrued interest........     1,586,211       351,639       582,525      (128,738)     1,452,360
    Increase (decrease) in accrued
      income taxes......................        21,889       261,541      (277,135)     (209,440)       (31,908)
                                          ------------   -----------   -----------    ----------   ------------
Total adjustments.......................     4,259,687     4,587,760     3,484,344       645,026      3,326,986
                                          ------------   -----------   -----------    ----------   ------------
Net cash provided by operating
  activities............................       477,378     4,060,647     1,244,681        59,632      1,890,560
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from redemption of note........            --       405,000            --            --             --
Proceeds from sale of property, plant
  and equipment.........................        11,332       398,018            --            --             --
Repayment of loan by stockholder........            --            --       182,988            --             --
Purchase of property, plant and
  equipment.............................      (333,149)     (623,414)     (320,980)      (42,030)      (124,192)
Purchase of station assets..............    (9,375,000)           --    (3,100,000)           --    (14,400,000)
Deferred acquisition costs incurred.....      (245,346)     (172,558)     (417,020)           --       (290,766)
Deposits on pending acquisitions........            --            --      (525,000)     (150,000)      (915,000)
Loans to stockholders and employees.....       (60,000)      (57,500)     (315,863)      (65,488)            --
Other investing activities, net.........       (10,705)           --        87,528       (12,646)       (68,177)
                                          ------------   -----------   -----------    ----------   ------------
Net cash used in investing activities...   (10,012,868)      (50,454)   (4,408,347)     (270,164)   (15,798,135)
</TABLE>
 
                                       F-7
<PAGE>   78
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
               CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
 
<TABLE>
<CAPTION>
                                                  YEAR ENDED DECEMBER 31,                THREE MONTHS ENDED
                                              1993          1994          1995        MARCH 26,
                                          ------------   -----------   -----------      1995
                                                                                     ----------
                                                                                     (unaudited)    MARCH 31,
                                                                                                       1996
                                                                                                   ------------
                                                                                                   (unaudited)
<S>                                       <C>            <C>           <C>           <C>           <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Gross proceeds from issuance of Senior
  Subordinated Notes and warrants.......  $         --   $        --   $64,956,422            --             --
Proceeds from stockholder loans.........       300,000            --            --            --             --
Proceeds from borrowing.................     7,900,000            --            --            --   $  8,500,000
Proceeds from issuance of common
  stock.................................     2,500,000            --           100            --             --
Repayment of amounts borrowed...........    (1,200,000)   (2,738,166)  (39,014,833)  $  (333,333)            --
Payment of financing related costs......      (110,000)     (104,245)   (4,226,762)           --             --
Payment of deferred debt issuance
  costs.................................            --            --            --      (224,101)      (393,734)
Redemption of preferred stock...........            --            --    (8,665,835)           --             --
Purchase of redeemable warrant..........            --            --    (1,000,000)   (1,000,000)            --
Repurchase of common stock..............            --            --       (25,000)      (25,000)            --
Principal payments on capital leases....       (12,817)      (12,389)      (11,186)       (1,463)        (3,455)
                                          ------------   -----------   -----------    ----------   ------------
Net cash provided by (used in) financing
  activities............................     9,377,183    (2,854,800)   12,012,906    (1,583,897)     8,102,811
                                          ------------   -----------   -----------    ----------   ------------
Net (decrease) increase in cash and
  short-term cash investments...........      (158,307)    1,155,393     8,849,240    (1,794,429)    (5,804,764)
Cash and short-term cash investments at
  beginning of year.....................     1,045,163       886,856     2,042,249     2,042,249     10,891,489
                                          ------------   -----------   -----------    ----------   ------------
  Cash and short-term cash investments
    at end of year......................  $    886,856   $ 2,042,249   $10,891,489   $   247,820   $  5,086,725
                                          ============   ===========   ===========    ==========   ============
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash paid for interest..................  $  2,631,484   $ 2,580,522   $ 4,474,789   $   958,418   $     46,738
Cash paid for income taxes..............        17,915        38,209       417,769       224,440         58,908
</TABLE>
 
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
 
Asset acquisitions recorded in connection with barter transactions were
approximately $54,700, $144,500 and $112,636 for the years ended December 31,
1993, 1994 and 1995, respectively.
 
On December 28, 1993, the Company refinanced its loan agreement with The Bank of
New York and restructured its capitalization. See Notes 5, 9 and 11 for a
description of the noncash financing activities associated with these
transactions.
 
See accompanying notes.
 
                                       F-8
<PAGE>   79
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                               DECEMBER 31, 1995
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Organization and Nature of Business
 
     Commodore Media, Inc. and Subsidiaries (the "Company") is comprised of
radio stations that derive their revenue from local, regional and national
advertisers. The radio stations are located in the following Arbitron markets:
Wilmington, Delaware; Westchester, Putnam and Dutchess Counties, New York;
Huntington, West Virginia--Ashland, Kentucky; Allentown--Bethlehem,
Pennsylvania; Fort Pierce--Stuart--Vero Beach, Florida; and Fairfield County,
Connecticut. The Company extends credit to its customers in the normal course of
business.
 
  Change of Name
 
     The Company changed its name from CRB Broadcasting Corporation to Commodore
Media, Inc. on March 17, 1995.
 
  Principles of Consolidation
 
     The consolidated financial statements include the accounts of Commodore
Media, Inc. and all subsidiaries, after elimination of intercompany accounts and
transactions.
 
     Certain reclassifications have been made to the prior year financial
statements in order to conform with the current year's presentation.
 
  Short-Term Cash Investments
 
     The Company considers investments which have a remaining maturity of three
months or less at the time of purchase to be short term cash investments. The
Company invests its excess cash in U.S. Treasury Bills.
 
  Income Taxes
 
     The Company accounts for income taxes in accordance with FASB Statement No.
109, "Accounting for Income Taxes." Under this method, deferred income taxes are
provided for differences between the book and tax bases of the Company's assets
and liabilities.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
 
                                       F-9
<PAGE>   80
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
  Property, Plant and Equipment
 
     Property, plant and equipment are stated at cost. Depreciation is provided
on the straight-line method based on the following estimated useful lives:
 
<TABLE>
<CAPTION>
                            CLASSIFICATION                         ESTIMATED LIFE (YEARS)
        <S>                                                        <C>
        Land improvements......................................              20
        Buildings..............................................              20
        Furniture, fixtures and equipment......................             7-10
        Broadcasting and technical equipment...................             7-10
        Towers and antennas....................................              20
        Music library..........................................               7
        Leasehold improvements.................................             10-20
        Vehicles...............................................               3
</TABLE>
 
     Expenditures for maintenance and repairs are charged to operations as
incurred. Expenditures for betterments and major renewals are capitalized and,
therefore, are included in property, plant and equipment.
 
  Property Held Under Capital Leases
 
     The Company is the lessee of office equipment under capital leases expiring
in various years through 2004. The assets and liabilities under capital leases
are recorded at the lower of the present value of the minimum lease payments or
the fair value of the asset. The assets are depreciated over their estimated
productive lives of seven to ten years.
 
  Revenue Recognition
 
     The Company recognizes revenue upon the airing of advertisements.
 
  Intangible Assets
 
     Intangible assets are being amortized by the straight-line method over the
following estimated useful lives.
 
<TABLE>
<CAPTION>
                             CLASSIFICATION                        ESTIMATED LIFE (YEARS)
        <S>                                                        <C>
        FCC licenses and goodwill................................            40
        Tower site lease.........................................             3
        Organization expenses....................................             5
        Network affiliation agreement............................             5
        Covenant not to compete..................................             5
        Pre-sold advertising contracts...........................             1
</TABLE>
 
     Management continually reviews the appropriateness of the carrying value of
goodwill of its subsidiaries and the related amortization period based on
anticipated undiscounted cash flow of each subsidiary.
 
  Deferred Charges
 
     Legal fees, bank loan closing costs and other expenses associated with debt
financing and the Recapitalization Transaction (Note 2) are being amortized
using the effective interest rate method. Amortization of debt expense charged
to operations and included in other expenses amounted to $148,478 in 1993,
$219,893 in 1994 and $384,908 in 1995.
 
                                      F-10
<PAGE>   81
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
  Barter Transactions
 
     The fair value of barter and trade-out transactions is included in
broadcast revenue and sales and promotion expense. Barter revenue is recorded
when advertisements are broadcast and barter expense is recorded when
merchandise or services are received. Barter transactions charged to operations
were as follows for the years ended December 31:
 
<TABLE>
<CAPTION>
                                                     1993            1994            1995
    <S>                                           <C>             <C>             <C>
    Trade sales.................................  $ 1,617,288     $ 2,473,002     $ 3,238,111
    Trade expense...............................   (1,493,978)     (2,350,839)     (3,053,811)
                                                  -----------     -----------     -----------
    Net barter transactions.....................  $   123,310     $   122,163     $   184,300
                                                  ===========     ===========     ===========
</TABLE>
 
  Interim Financial Information
 
     Financial information as of and for the three months ended March 31, 1996
and for the three months ended March 31, 1995 is unaudited. In the opinion of
management, all adjustments of a normal and recurring nature, and those that are
necessary for a fair presentation of the results as of and for such periods,
have been included. Interim results are not necessarily indicative of the
results for a full year.
 
  Net Loss Per Common Share
 
     Net (loss) income per common share is determined by dividing net income or
loss available to common stockholders by the average number of common shares
outstanding. The calculation of net income or loss available to common
stockholders is based on the net income or loss in each year after the dividend
requirement on preferred stock of approximately $691,000 and $252,000 in 1994
and 1995, respectively.
 
     In all periods, the calculation of average common shares outstanding
includes only the common shares outstanding and options issued at an exercise
price less than the initial public offering price (see Note 14) to management in
July 1995.
 
2. THE RECAPITALIZATION TRANSACTIONS
 
     On April 21, 1995, the Company completed the offering of its 13 1/4% Senior
Subordinated Notes due 2003 ("Senior Subordinated Notes"). The net proceeds of
approximately $65.0 million were used to retire existing senior indebtedness of
approximately $36.2 million, fund the Treasure Coast Acquisition for $3.1
million, and repay the Hanson note and RFP note for an aggregate amount of $2.4
million. In addition, the Company used $8.7 million to redeem its preferred
stock, paid $1.9 million in connection with the long-term incentive compensation
of its President and its Chief Operating Officer (Note 10), paid approximately
$4.2 million in related deferred fees of the offering, and used the balance of
$8.5 million for general corporate purposes. The Company converted all of its
existing common stock for 3,501,886 shares of its Class B Common Stock ("Class
B") and 858,327 shares (including 615,773 treasury shares) of its Class A Common
Stock ("Class A"). At the time of conversion, the Company's President and its
Chief Operating Officer purchased 197,057 shares and 45,497 shares,
respectively, of Class A from the Chairman. In addition, William A.M. Burden and
Company, an affiliated entity, exercised its option to acquire 196,661 shares of
Class A from the Company. Each share of Class B is entitled to 8 votes and each
share of Class A is entitled to 1 vote. The consolidated financial statements
have been retroactively adjusted for this conversion.
 
                                      F-11
<PAGE>   82
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
3. PROPERTY, PLANT AND EQUIPMENT
 
     Property, plant and equipment, at cost, consisted of the following at
December 31:
 
<TABLE>
<CAPTION>
                                                                   1994            1995
    <S>                                                         <C>             <C>
    Land and land improvements................................  $ 2,588,139     $ 2,813,139
    Buildings.................................................    2,420,027       2,499,399
    Furniture, fixtures and equipment.........................    1,984,059       2,188,502
    Broadcasting and technical equipment......................    5,563,763       5,907,905
    Towers and antennas.......................................    3,280,482       3,401,300
    Music library.............................................      239,024         250,456
    Leasehold improvements....................................      336,905         365,825
    Vehicles..................................................      113,946         147,567
    Property held under capital leases........................       78,478          81,497
                                                                -----------     -----------
                                                                 16,604,823      17,655,590
    Less accumulated depreciation and amortization............   (8,755,786)     (9,575,547)
                                                                -----------     -----------
    Property, plant and equipment, net........................  $ 7,849,037     $ 8,080,043
                                                                ===========     ===========
</TABLE>
 
     Accumulated amortization of property held under capital leases as of
December 31, 1994 and 1995 was $4,942 and $12,728, respectively. Depreciation as
a charge to income amounted to $728,681 in 1993, $768,826 in 1994 and $831,656
in 1995.
 
4. OTHER INTANGIBLE ASSETS
 
     Other intangible assets, at cost, consisted of the following at December
31:
 
<TABLE>
<CAPTION>
                                                                     1994           1995
    <S>                                                           <C>            <C>
    Covenant not to compete.....................................  $1,250,000     $1,325,000
    Deferred acquisition expenses...............................     495,609        953,441
    Pre-sold advertising contracts..............................     416,584        103,642
    Network affiliation agreement...............................     260,000        260,000
    Tower site lease............................................      14,516         14,516
                                                                  ----------     ----------
                                                                   2,436,709      2,656,599
    Less accumulated amortization...............................    (883,135)      (895,293)
                                                                  ----------     ----------
    Other intangible assets, net................................  $1,553,574     $1,761,306
                                                                  ==========     ==========
</TABLE>
 
     Amortization of the aforementioned intangible assets included as a charge
to income amounted to $15,541 for 1993, $817,087 for 1994 and $506,447 for 1995.
Amortization of FCC licenses and goodwill amounted to $385,157 for 1993 ,
$559,304 for 1994 and $588,149 for 1995.
 
                                      F-12
<PAGE>   83
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
5. LONG-TERM DEBT
 
     Long-term debt consisted of the following at December 31:
 
<TABLE>
<CAPTION>
                                                                       1994            1995
<S>                                                                 <C>             <C>
Senior Subordinated Notes due 2003, $75,500,000 principal, net of
  unamortized discount of $10,400,367.............................  $        --     $65,099,633
Senior Subordinated Notes due 2003, $1,308,000 principal, net of
  unamortized discount of $146,294, held in trust for the benefit
  of the President................................................           --       1,161,706
Loans payable--The Bank of New York, collateralized by capital
  stock of all subsidiaries and other assets pledged by majority
  stockholder, repaid on April 21, 1995...........................   36,561,833              --
Note payable to Michael Hanson ("Hanson"), interest at 10%,
  maturing January 31, 1997; repaid on April 21, 1995.............      400,000              --
Obligations under capital leases..................................       59,569          55,107
                                                                    -----------     -----------
Total debt........................................................   37,021,402      66,316,446
Less current maturities...........................................    2,908,544          11,977
                                                                    -----------     -----------
Long-term debt....................................................  $34,112,858     $66,304,469
                                                                    ===========     ===========
</TABLE>
 
  Senior Subordinated Notes
 
     The Senior Subordinated Notes bear cash interest at a rate of 7 1/2% per
annum on the principal amount until May 1, 1998 then at a rate of 13 1/4% per
annum until maturity, with interest payment dates on May 1 and November 1. The
notes may be redeemed at the option of the Company at any time on or after May
1, 1999 at redemption prices specified in the indenture. The terms of the Senior
Subordinated Notes contain various covenants for the benefit of the holders
that, among other things, restrict the ability of the Company to incur
additional indebtedness, pay dividends and make certain investments. The notes,
excluding the notes held for the benefit of the President, were issued with
detachable warrants to purchase 543,600 shares of Class A Common Stock at an
exercise price of $.01 per warrant. The warrants can be exercised upon the
earliest of: (1) a change of control as defined in the indenture or (2) an
initial public offering or (3) the date upon which the Company's equity
securities are registered on a national exchange or (4) May 1, 1999. The holders
of warrants are not entitled to any voting rights or otherwise have any rights
as stockholders of the Company. The Company estimated the fair market value of
the warrants to be $2,000,000 as of the date of issuance and has allocated this
amount out of the net proceeds of the debt offering to paid-in capital. Based
upon available market information, the fair value of the Senior Subordinated
Notes and warrants were $930 per unit and $15 per unit, respectively, as of
December 31, 1995.
 
  The Bank of New York Loans
 
     As of December 31, 1994, the Company's outstanding obligations under this
agreement were as follows:
 
<TABLE>
        <S>                                                               <C>
        Term loan, maturing December 31, 1996, interest at 1.5% above
          the bank's prime rate or 2.5% over the LIBOR rate.............  $31,500,000
        Term loan, maturing December 31, 1996, interest at 2.5% over the
          bank's prime rate.............................................    5,061,833
        $2,000,000 Revolving credit loan, maturing December 31, 1996,
          interest at 1.5% above the bank's prime rate or 2.5% over the
          LIBOR rate....................................................           --
                                                                          -----------
                                                                          $36,561,833
                                                                          ===========
</TABLE>
 
                                      F-13
<PAGE>   84
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
5. LONG-TERM DEBT--(CONTINUED)
     The Bank of New York loans were repaid in full as part of the
Recapitalization Transaction on April 21, 1995.
 
     In connection with the debt restructuring of The Bank of New York loan on
December 28, 1993, the Company issued the bank a warrant to purchase 4.99% of
the common stock of the Company, on a fully diluted basis, for $100. The warrant
was exercisable at any time prior to its expiration on December 28, 2003 and
contained a put option under which the bank could require the Company to
purchase the warrant at any time after January 1, 1997 up until expiration or
upon an initial public offering or a sale of the Company at a price based upon
(1) the actual proceeds received by the Company in an initial public offering or
sale (2) negotiations between the parties, or (3) an independent appraisal. No
value was ascribed to the warrant at the time of issuance. The increase in the
fair value of the warrant in 1994 of $1,000,000 was recorded as a reduction to
retained earnings (see Note 12). The Company repurchased the warrant in March
1995 for a negotiated price of $1,000,000.
 
     Aggregate maturities of long-term debt due within the next five years
ending December 31, are as follows:
 
<TABLE>
        <S>                                                               <C>
        1996............................................................  $    11,977
        1997............................................................        8,899
        1998............................................................        7,169
        1999............................................................        5,155
        2000............................................................        5,155
        Thereafter......................................................   66,278,091
                                                                          -----------
                                                                          $66,316,446
                                                                          ===========
</TABLE>
 
     In connection with the Recapitalization Transactions, the Company wrote-off
the balance of the unamortized deferred financing costs on its retired debt of
$443,521. Inasmuch as the Company has no current federal taxable income and has
fully reserved for its net deferred tax assets, there is no tax effect
attributable to this extraordinary item.
 
6. ACQUISITION OF BUSINESSES AND JOINT OPERATING AGREEMENTS
 
  Acquisitions
 
     On June 27, 1995, the Company purchased the assets (excluding cash and
accounts receivable) and broadcasting license of radio broadcast station WQOL-FM
in Vero Beach, Florida (Treasure Coast Acquisition) for a total purchase price
of $3,150,000. The Company accounted for this transaction under the purchase
method of accounting.
 
     On December 28, 1993, the Company purchased the assets (excluding cash and
accounts receivable) and broadcasting license of radio broadcast station WZZO-FM
in Allentown, Pennsylvania, for a total purchase price of $9,375,000, which was
also accounted for using the purchase method of accounting.
 
                                      F-14
<PAGE>   85
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
6. ACQUISITION OF BUSINESSES AND JOINT OPERATING AGREEMENTS--(CONTINUED)
     The total purchase price of the aforementioned acquisitions was allocated
as follows:
 
<TABLE>
<CAPTION>
                                                                   WQOL-FM        WZZO-FM
    <S>                                                           <C>            <C>
    Tangible assets.............................................  $  663,724     $  468,008
    Intangible assets:
      FCC license...............................................   2,007,634      6,029,000
      Goodwill..................................................     300,000        936,892
      Noncompete agreement......................................      75,000      1,250,000
      Pre-sold advertising contracts............................     103,642        416,584
      Network affiliation agreement.............................          --        260,000
      Other.....................................................          --         14,516
                                                                  ----------     ----------
                                                                   2,486,276      8,906,992
                                                                  ----------     ----------
    Total purchase price........................................  $3,150,000     $9,375,000
                                                                  ==========     ==========
</TABLE>
 
     Unaudited pro forma results of operations for the Company for 1993 as if
WZZO-FM was acquired on January 1, 1993 are as follows:
 
<TABLE>
<CAPTION>
                                                                                 1993
    <S>                                                                       <C>
    Net revenue...........................................................    $22,701,935
    Net loss before extraordinary item....................................     (2,684,984)
    Net loss..............................................................     (2,684,984)
</TABLE>
 
     Unaudited pro forma results of operations for the Company for 1995 and 1994
as if WQOL-FM was acquired on January 1, 1994 are as follows:
 
<TABLE>
<CAPTION>
                                                                   1994            1995
    <S>                                                         <C>             <C>
    Net revenue...............................................  $27,361,642     $31,289,433
    Net loss before extraordinary item........................     (491,886)     (1,793,307)
    Net loss..................................................     (491,886)     (2,236,828)
</TABLE>
 
     On October 30, 1995, the Company entered into agreements to purchase the
stock of Danbury Broadcasting, Inc., which owns stations WRKI-FM and WINE-AM in
Brookfield, CT., and all of the assets (excluding cash and accounts receivable)
and FCC licenses of Hudson Valley Growth, L.P., which owns stations WZZN-FM,
WVYB-FM, and WPUT-AM in Mt. Kisco, Patterson and Brewster, NY. The total
purchase price for all of these stations is $14,900,000. The Company has paid a
deposit of $500,000 in connection with these agreements, which is included in
other noncurrent assets.
 
     The Company closed on the acquisition agreements with Danbury Broadcasting,
Inc. and Hudson Valley Growth, L.P. on March 27, 1996. The Company used $6.7
million of available cash funds and financed the remaining $8.2 million of the
purchase price with funds obtained from AT&T Commercial Finance Corporation
("AT&T"). Under the loan agreement with AT&T, the Company may borrow up to $30
million under a Senior Secured Reducing Revolver Loan, and up to $5 million
under a Senior Secured Accounts Receivable Loan. These loans are secured by all
of the existing and future assets of the Company. The Company plans to use this
facility to finance future acquisitions.
 
  Local Marketing and Joint Sales Agreements
 
     The Company has entered into various Local Marketing Agreements ("LMA") and
Joint Sales Agreements ("JSA") during 1995. While each agreement is unique in
its terms and conditions, generally under an LMA and JSA the brokering station
purchases substantially all of the commercial time available on
 
                                      F-15
<PAGE>   86
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
6. ACQUISITION OF BUSINESSES AND JOINT OPERATING AGREEMENTS--(CONTINUED)
the brokered station and provides promotional and sales related services. Under
an LMA, the brokering station may also provide the programming; a JSA requires
the licensee to continue all of the programming. The brokering station pays a
fee to the brokered station for the services provided based upon a flat monthly
amount, and/or an amount contingent on the net revenue or profit as calculated
in the agreement. As the brokering station, the Company currently has LMAs or
JSAs with WKAP-AM, Allentown, PA, and WPAW-FM, Vero Beach, FL. The Company has
an option to purchase WPAW-FM for $1.2 million which it may exercise during the
twenty-nine month period beginning August 1995. The Company operated stations
WRKI-FM/WINE-AM in Brookfield, CT, and WZZN-FM/WVYB-FM/WPUT-AM in
Westchester/Putnam Counties, New York under LMA agreements that terminated upon
the consummation of the related purchase agreements for the stations.
 
7. INCOME TAXES
 
     The Company has recorded a provision for income taxes as follows for the
years ended December 31:
 
<TABLE>
<CAPTION>
                                                           1993         1994         1995
    <S>                                                   <C>         <C>          <C>
    Current:
      Federal...........................................  $    --     $ 70,400     $     --
      State and local...................................   39,503      229,600      140,634
    Deferred:
      Federal...........................................       --           --           --
      State and local...................................       --           --           --
                                                          -------     --------     --------
              Total.....................................  $39,503     $300,000     $140,634
                                                          =======     ========     ========
</TABLE>
 
     The Company did not record a federal tax benefit on the taxable loss for
the years ended December 31, 1995 and 1993 since it was not assured that it
could realize a benefit for such loss in the future. During 1994, the Company
utilized approximately $2,500,000 of Federal net operating losses to offset
current taxable income. Since the valuation allowance remained at 100% at the
end of the year, there was no deferred tax effect on 1994 earnings. The Company
recorded a provision for federal alternative minimum tax in 1994 because net
operating loss carryforwards may be used to offset only 90% of a corporation's
alternative minimum taxable income.
 
     The Company has applied to change its tax method of accounting for FCC
licenses for the tax year ended December 31, 1995. The aggregate amount of
cumulative amortization that will be deductible ratably over six years for tax
purposes is approximately $12,130,000. The Company has reflected this change in
the current year and expects final approval from the IRS shortly.
 
     The reconciliation of income tax computed at the U.S. federal statutory
rates to effective income tax expense is as follows for the years ended December
31:
 
<TABLE>
<CAPTION>
                                                         1993           1994         1995
    <S>                                               <C>             <C>          <C>
    Provision at statutory rate.....................  $(1,309,982)    $(79,400)    $(734,695)
    State and local taxes...........................       39,503      229,600       140,634
    Nondeductible expense...........................       21,885       36,575         8,286
    Increase in valuation allowance, net of rate
      changes.......................................    1,288,097       42,825       726,409
    Alternative minimum tax.........................           --       70,400            --
                                                      -----------     --------     ---------
              Total.................................  $    39,503     $300,000     $ 140,634
                                                      ===========     ========     =========
</TABLE>
 
                                      F-16
<PAGE>   87
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
7. INCOME TAXES--(CONTINUED)
     Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The approximate effect of
temporary differences were as follows at December 31:
 
<TABLE>
<CAPTION>
                                                                  1994             1995
    <S>                                                       <C>              <C>
    Deferred tax assets:
      Allowance for bad debts...............................  $    239,764     $    312,100
      Deferred compensation.................................     1,518,645        1,244,100
      Unamortized discount on Senior Subordinated Notes.....            --          959,200
      Intangibles...........................................     1,521,168          290,300
      Depreciation..........................................        14,805           76,460
      Net operating loss carryforwards......................    11,169,686       12,405,800
                                                              ------------     ------------
              Total deferred tax assets.....................    14,464,068       15,287,960
    Deferred tax liabilities:
      Depreciation..........................................      (518,609)        (537,260)
      Other.................................................       (37,800)          (4,800)
                                                              ------------     ------------
    Total deferred tax liabilities..........................      (556,409)        (542,060)
                                                              ------------     ------------
    Net deferred tax asset..................................    13,907,659       14,745,900
    Less valuation allowance................................   (13,907,659)     (14,745,900)
                                                              ------------     ------------
    Net deferred tax asset, net of allowance................  $         --     $         --
                                                              ============     ============
</TABLE>
 
     The Company has provided a valuation allowance equivalent to its net
deferred tax asset in 1993, 1994 and 1995 as the past history of the Company
makes the realization of taxable income in the future years uncertain. At
December 31, 1995, the Company had net operating loss carryforwards of
approximately $30,700,000 for federal purposes that expire in the years 1999
through 2010, and $19,700,000 for state purposes that expire in the years 1996
to 2010. Pending final approval from the IRS, the Company will also have
available $10,100,000 of carryforward deductions related to the change in
accounting for FCC licenses that will be deductible in the years 1996 to 2000.
 
8. COMMITMENTS
 
  Lease Commitments
 
     The principal types of property leased by the Company and its subsidiaries
are office space, tower, real estate related to tower sites, office equipment
and transmitting equipment.
 
     Total rent expense for the Company was approximately $220,200, $306,400 and
$332,000 for the years ended December 31, 1993, 1994 and 1995, respectively.
 
                                      F-17
<PAGE>   88
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
8. COMMITMENTS--(CONTINUED)
     The minimum rental commitments of the Company, under all noncancellable
operating leases, are set forth below:
 
<TABLE>
<CAPTION>
                                      YEAR                                   AMOUNT
        <S>                                                                <C>
        1996.............................................................  $  318,267
        1997.............................................................     296,088
        1998.............................................................     272,755
        1999.............................................................     254,433
        2000.............................................................     207,803
        Thereafter.......................................................     515,244
                                                                           ----------
        Total minimum lease payments.....................................  $1,864,590
                                                                           ==========
</TABLE>
 
  Other Commitments
 
     The Company entered into a separation agreement with its former President
effective December 31, 1993, under which the Company agreed to pay him an
aggregate amount of $1,650,000; a portion was paid in cash, and the remainder of
$1,000,000 became payable in semi-monthly installments through December 31,
1997. A present value discount of $154,000 was recorded against the total
installment liability of $1,000,000 as of December 31, 1993. At December 31,
1994 and 1995, the current portion under this obligation of $201,939 and
$219,816 is included in accounts payable and accrued expenses and the remainder
of $454,018 and $239,275 is reflected in noncurrent compensation.
 
     The Company has other employment agreements with key executives under which
the executives are paid a base salary and annual incentives based on broadcast
cash flow and EBITDA, as defined in the agreements.
 
9. STOCKHOLDERS' DEFICIT
 
  Preferred Stock
 
     Under the December 28, 1993 debt restructuring, all previously authorized,
issued and outstanding shares of Series A, Series B, and Series C Preferred
Stock were contributed to paid-in capital or converted into common stock and
canceled.
 
     The Series A and Series B preferred shares were converted into 237,600
shares of common stock resulting in additional paid-in capital of $3,290,475.
All dividends in arrears, of which none had been declared or accrued, were
forfeited by the preferred stockholders.
 
     The Series C preferred shares were contributed to paid-in capital by the
Company's former President.
 
  Redeemable Preferred Stock
 
     On December 28, 1993, Radio Financial Partners, Inc. ("RFP"), a related
entity (see Note 11), converted $7,723,000 of outstanding debt and accrued
interest into 10,000 shares of the Company's new 8.87% cumulative redeemable
preferred stock ("Redeemable Preferred Stock"). The Company redeemed all
outstanding shares of the preferred stock as part of the Recapitalization
Transactions on April 21, 1995; the total liquidation value as of the date of
redemption was $8,665,835 which included $942,835 in accumulated dividends.
 
                                      F-18
<PAGE>   89
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
9. STOCKHOLDERS' DEFICIT--(CONTINUED)
  Common Stock
 
     Each share of Class B stock is convertible at the option of the holder into
one share of Class A stock. The Company has reserved a total of 4,996,786 shares
of Class A stock for issuance as follows: (1) 543,600 shares upon the exercise
of the warrants (2) 951,300 shares upon the exercise of shares granted under the
1995 Stock Option Plan and (3) 3,501,886 shares upon the conversion of Class B
common stock. Shareholders of Class A and Class B stock are provided the same
dividend and liquidation rights, although dividend payments are currently
restricted by the indenture governing the notes. Holders of shares of common
stock vote as a single class on all matters submitted to a vote; each share of
Class A stock is entitled to one vote and each share of Class B stock is
entitled to eight votes on all matters.
 
10. LONG-TERM INCENTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
 
     Effective January 1, 1994, the Company entered into an agreement with its
President and Chief Executive Officer under which he would be employed in that
capacity through 1996 and provided for annual salary requirements and bonuses,
and a Long-Term Incentive Payment ("LTIP"). The LTIP is based on a formula
derived from the Company's net equity value, as defined. A fair value amount of
$1,750,000 was charged to income as long-term incentive compensation in 1994
relating to the LTIP. On April 21, 1995, the President's employment agreement
was amended and restated. In lieu of the LTIP, the Company paid the President
$1,500,000 in cash, issued $1,308,000 principal ($1,125,000 net of discount) of
the Company's Senior Subordinated Notes to a trust for his benefit, and agreed
to provide $1,500,000 in deferred compensation which accrues interest at a rate
of 7% and is payable in 2003. The Company recorded the deferred compensation on
April 21, 1995 at its calculated net present value of $921,000. The aggregate
effect of the employment agreement restructuring was to charge $1,817,750 to
long term incentive compensation expense during 1995. In addition, the
President's amended employment agreement extended his date of employment through
April 30, 1998, granted stock options to him to acquire 203,854 shares of Class
A Common Stock at an exercise price of $6.25 per share and provides for annual
bonuses based upon specific operating results of the Company.
 
     The Company also amended its existing employment agreement with its Chief
Operating Officer on April 21, 1995. The prior employment agreement provided for
a long-term incentive based upon the increase in certain station values. As of
December 31, 1994, $430,000 had been accrued as long-term incentive
compensation. The amended employment agreement provided for a cash payment of
$400,000 on April 21, 1995 and deferred compensation of $346,000 which accrues
interest at a rate of 7% and is payable in 2003. The Company recorded the
deferred compensation on April 21, 1995 at its calculated net present value of
$213,000. The aggregate effect of the employment agreement restructuring was to
charge $188,800 to long term incentive compensation expense during 1995. In
addition, the amended employment agreement extended his date of employment
through April 30, 1999, granted stock options to acquire 203,854 shares of Class
A Common Stock at an exercise price of $6.25 per share, and provides for annual
bonuses based upon specific operating results of the Company.
 
11. RELATED PARTY TRANSACTIONS
 
     In connection with the debt restructuring that occurred on December 28,
1993, $9,617,240 of notes payable to the majority stockholder, as well as an
additional $300,000 loan provided to the Company during the year ended December
31, 1993, were converted into additional paid-in capital. In addition, all
accrued interest on the notes, which was $4,311,422 as of the date of the
restructuring, was canceled and recorded as a capital contribution. The majority
stockholder purchased an additional 201,600 shares of common stock for
$2,500,000 on December 28, 1993.
 
                                      F-19
<PAGE>   90
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
11. RELATED PARTY TRANSACTIONS--(CONTINUED)
     During 1995 the Company paid the majority stockholder approximately
$180,000 in annual salary. In addition, the majority stockholder repaid an
outstanding loan of $182,988 of which $65,488 was advanced in the year ended
December 31, 1995; the majority stockholder owed the Company $117,500 as of
December 31, 1994. These loans are reflected in other current assets in 1994 and
1995.
 
     On April 10, 1992, the Company obtained $9,300,000 from RFP in exchange for
a subordinated note bearing interest at 7% and maturing in 1997. On December 28,
1993, RFP agreed to convert a total of $7,247,000 of the unpaid principal on the
subordinated note and $476,000 of accrued interest into 10,000 shares of
Redeemable Preferred Stock (see Note 9). The remaining principal balance of
$2,053,000 was converted into a noninterest-bearing subordinated note with a
final maturity of April 10, 1997. The Company repaid the outstanding balance of
the note and redeemed the preferred stock on April 21, 1995.
 
     During May 1995, the Company loaned approximately $250,000 to certain
executive officers as evidenced by 7% promissory notes that mature in 2001, with
all accrued interest and principal due on the maturity date. The total amount
owed the Company as of December 31, 1995 is $261,329 which is included in
noncurrent assets.
 
     In connection with the debt restructuring described above, on December 28,
1993, the Company granted a warrant to an affiliate to purchase 4.99% of its
common stock at an exercise price of $100, on a fully diluted basis. The warrant
was exercised during 1995.
 
12. STOCK OPTION AND 401(K) PLANS
 
     On April 21, 1995, the Company adopted a stock option plan which provides
for the granting of incentive stock options and nonqualified stock options to
executives and key employees. The Company has reserved 951,300 shares of Class A
Common Stock, which represents 17.5% of the Company's outstanding common stock
on a fully diluted basis, for options issued under this plan. The options are
exercisable at a price equal to the fair market value on the date of grant. As
of December 31, 1995, a total of 696,024 shares were granted at an exercise
price of $6.25 per share under this plan, of which none were exercisable as of
that date.
 
     The Financial Accounting Standards Board issued SFAS No. 123, "Accounting
for Stock Based Compensation" in October 1995, which establishes financial
accounting and reporting standards of stock based employee compensation plans
including stock option plans. The Company has elected to continue accounting for
stock based compensation under APB No. 25. The disclosure requirements of SFAS
No. 123 will be effective for the Company's financial statements beginning in
1996. The Company does not believe that the implementation of SFAS 123 will have
a material effect on its financial statements.
 
     During the year ended December 31, 1995, the Company established the
Commodore Media, Inc. 401(K) Plan for the benefit of all eligible employees.
Eligible participants under this plan are defined as all full-time employees
with one year of service. All eligible participants may elect to contribute a
portion of their compensation to the plan subject to Internal Revenue Service
limitations. The Company may make discretionary matching contributions to the
plan, subject to board approval; no contributions were made for the plan year
ended December 31, 1995.
 
13. LEGAL PROCEEDINGS
 
     The Company is involved is various legal proceedings from time to time in
the normal course of business. In management's opinion, the litigation in which
the Company is currently involved, individually and in the aggregate, is not
material to the Company's financial condition or results of operations.
 
                                      F-20
<PAGE>   91
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
14. SUBSEQUENT EVENTS
 
     On February 16, 1996, the Company entered into an Asset Purchase Agreement
to purchase radio stations WKQS-FM, WAVW-FM and WAXE-AM in the Fort
Pierce-Stuart-Vero Beach, Florida Market from Media VI for approximately
$8,000,000. In addition, the Company entered into a Joint Sales Agreement with
Media VI to provide sales, marketing and certain other functions to the stations
pending the closing of the acquisition. The Company expects to close on the
Media VI acquisition in the second quarter of 1996 and will fund the transaction
with borrowings from the Senior Credit Facility (as hereinafter defined), and
funds from the Preferred Stock Facility (as hereinafter described).
 
     On March 13, 1996, the Company entered into a Loan and Security Agreement
with AT&T Commercial Finance Corporation ("AT&T") pursuant to which AT&T will
make available to the Company senior secured (i) revolving loans in an amount up
to $30 million and (ii) accounts receivable loans in an amount which shall be
the lessor of (A) $5 million or (B) 85% of the net book value of the accounts
receivable of the Company (the "Senior Credit Facility"). The Company's
subsidiaries agreed to guarantee the indebtedness to AT&T. Interest is payable
monthly at a rate of 3.5% over LIBOR and principal amortization of the revolving
loans and accounts receivable loans begins June 1, 1998 and November 30, 1999,
respectively.
 
     On March 15, 1996, the Company entered into an Asset Purchase Agreement to
acquire radio stations WKHL-FM and WSTC-AM in Stamford, Connecticut from Q
Broadcasting, Inc. for approximately $9,500,000. The Company expects to close on
the Q Broadcasting acquisition in the second quarter of 1996 and will fund the
transaction with borrowings from the Senior Credit Facility and funds from the
Preferred Stock Facility (as hereinafter defined).
 
     On March 27, 1996 the Company purchased (i) certain defined assets of radio
stations WZZN-FM in Mount Kisco, New York, WVYB-FM in Patterson, New York and
WPUT-AM in Brewster, New York from Hudson Valley Growth, L.P. for $4,950,000 and
(ii) all of the issued and outstanding common stock of Danbury Broadcasting,
Inc., owner of WRKI-FM and WINE-AM in Brookfield, Connecticut, plus certain real
property for $9,950,000. The transaction was financed with the Company's
existing cash and borrowings under the Senior Credit Facility.
 
     On April 8, 1996 the Company entered into (i) an Asset Purchase Agreement
to purchase from Adventure Communications, Inc., radio stations WKEE(FM) and
WKEE(AM) in Huntington, West Virginia, WZZW(AM) in Milton, West Virginia,
WBVB(FM) in Coral Grove, Ohio and WIRO(AM) in Ironton, Ohio for an aggregate
purchase price of approximately $7,765,000 and (ii) an Asset Purchase Agreement
with Simmons Broadcasting Company and an Option Agreement with Michael R. Shott
to acquire radio stations WHRD(AM) in Huntington, West Virginia, WFXN(FM) in
Milton, West Virginia and WMLV(FM) in Ironton, Ohio for an aggregate purchase
price of approximately $4,235,000. In addition, the Company entered into Local
Marketing Agreements with each of Adventure Communications, Inc. and Simmons
Broadcasting Company to provide, on a cooperative basis, the programming, sales,
marketing and certain other services to the stations pending the closing of the
acquisitions. The Company expects to close on the aforementioned acquisitions in
the latter part of 1996 and will fund the transaction with borrowings from the
Senior Credit Facility and funds from the Preferred Stock Facility (as
hereinafter defined).
 
     On May 1, 1996, the Company entered into a Securities Purchase Agreement
with CIBC WG Argosy Merchant Fund 2, LLC ("CIBC Merchant Fund"), pursuant to
which the CIBC Merchant Fund agreed to purchase from the Company, if and when
requested by the Company, up to an aggregate liquidation value of $12,500,000 of
Senior Exchangeable Redeemable Preferred Stock, Series A, $.01 par value per
share, of the Company in such amounts as the Company may request (the "Preferred
Stock Facility"), provided that such request be for an aggregate liquidation
value of at least $2,500,000 and be made no later than October 31, 1996. The
Preferred Stock accrues cash dividends at the rate of 8% per annum, or 10% per
annum if paid in additional shares of Preferred Stock, through April 30, 1999.
The Company has the option to purchase the
 
                                      F-21
<PAGE>   92
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
14. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
Preferred Stock at any time for a price equal to its liquidation value plus
accrued dividends. However, if the Company does not purchase the Preferred Stock
in the case of a change in control, an initial public offering, certain asset
sales or under certain circumstances, the dividend rate increases by four
hundred basis points. In connection with the Preferred Stock Facility, the
Company issued to the CIBC Merchant Fund a warrant to purchase 54,360 shares of
the Company's Class A Common Stock, at an exercise price of $.01 per warrant,
which is immediately exercisable and expires April 30, 2000. Should the
Preferred Stock not be redeemed by October 31, 1996, the Company is obligated to
issue additional warrants for 1% of the Company's fully-diluted common equity
for each $2,500,000 of Preferred Stock liquidation value outstanding.
 
     In May 1996, the Company filed a Registration Statement on Form S-1 with
the Securities and Exchange Commission for a primary and secondary public
offering of shares of Class A Common Stock. In connection with this offering,
the Company's Common Stock was split 7.2 for 1. The consolidated financial
statements have been restated to retroactively reflect this split.
 
                                      F-22
<PAGE>   93
 
                         REPORT OF INDEPENDENT AUDITORS
 
The Partners
Media VI
 
     We have audited the accompanying balance sheet of Media VI as of December
31, 1995, and the related statement of operations, partners' equity and cash
flows for the year ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
 
     We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Media VI at December 31,
1995, and the results of its operations and its cash flows for the year ended
December 31, 1995 in conformity with generally accepted accounting principles.
                                          ERNST & YOUNG LLP
 
New York, New York
April 26, 1996
 
                                      F-23
<PAGE>   94
 
                                    MEDIA VI
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                                       MARCH 31,
                                                                                         1996
                                                                     DECEMBER 31,     -----------
                                                                         1995
                                                                     ------------     (unaudited)
<S>                                                                  <C>              <C>
ASSETS
Current assets:
  Cash.............................................................   $   57,762      $    36,635
  Accounts receivable, net of allowance for doubtful accounts of
     $12,200 in 1995 and $10,600 in 1996...........................      284,941          183,821
  Due from Commodore Media, Inc. (Note 1)..........................           --           28,169
  Prepaid expenses and other current assets........................        9,666            8,941
                                                                      ----------       ----------
          Total current assets.....................................      352,369          257,566
Property and equipment, at cost less accumulated depreciation......      782,690          769,065
Intangible assets at cost, less accumulated amortization...........    2,147,258        2,134,434
Other assets.......................................................        1,340            1,340
                                                                      ----------       ----------
          Total assets.............................................   $3,283,657      $ 3,162,405
                                                                      ==========       ==========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
  Accounts payable.................................................   $    9,613      $    21,319
  Accrued expenses and other current liabilities...................       54,949           17,477
  Current portion of long-term debt................................      119,185          119,185
                                                                      ----------       ----------
          Total current liabilities................................      183,747          157,981
Long term debt.....................................................    2,152,371        2,122,575
Partners' equity...................................................      947,539          881,849
                                                                      ----------       ----------
          Total liabilities and partners' equity...................   $3,283,657      $ 3,162,405
                                                                      ==========       ==========
</TABLE>
 
See notes to financial statements.
 
                                      F-24
<PAGE>   95
 
                                    MEDIA VI
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                          YEAR ENDED          THREE MONTHS ENDED
                                                         DECEMBER 31,              MARCH 31,
                                                             1995         ---------------------------
                                                         ------------        1995            1996
                                                                          -----------     -----------
                                                                          (unaudited)     (unaudited)
<S>                                                      <C>              <C>             <C>
Broadcast revenue......................................   $2,131,480       $ 519,981       $ 230,507
Less agency commissions................................      138,807          34,241          15,117
                                                          ----------        --------        --------
Net broadcast revenue..................................    1,992,673         485,740         215,390
Net JSA revenue (Note 1)...............................           --              --          79,893
                                                          ----------        --------        --------
Net revenue............................................    1,992,673         485,740         295,283
Operating expenses:
  Programming, technical and news......................      108,591          24,585          23,983
  Sales and promotion..................................      973,219         217,484         125,572
  General and administrative...........................      410,528          71,356          94,951
  Depreciation and amortization........................      149,160          38,242          26,450
                                                          ----------        --------        --------
Income (loss) from operations..........................      351,175         134,073          24,327
Interest expense, net..................................     (215,966)        (57,069)        (46,232)
                                                          ----------        --------        --------
Net income (loss)......................................   $  135,209       $  77,004       $ (21,905)
                                                          ==========        ========        ========
</TABLE>
 
See notes to financial statements.
 
                                      F-25
<PAGE>   96
 
                                    MEDIA VI
 
                         STATEMENTS OF PARTNERS' EQUITY
 
<TABLE>
<CAPTION>
                                                          YEAR ENDED          THREE MONTHS ENDED
                                                         DECEMBER 31,              MARCH 31,
                                                             1995         ---------------------------
                                                         ------------        1995            1996
                                                                          -----------     -----------
                                                                          (unaudited)     (unaudited)
<S>                                                      <C>              <C>             <C>
Partners' equity, beginning of period..................    $911,332        $ 911,332       $ 947,539
Net income (loss)......................................     135,209           77,004         (21,905)
Distributions to partners..............................     (99,002)              --         (43,785)
                                                           --------         --------        --------
Partners' equity, end of period........................    $947,539        $ 988,336       $ 881,849
                                                           ========         ========        ========
</TABLE>
 
See notes to financial statements.
 
                                      F-26
<PAGE>   97
 
                                    MEDIA VI
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                          YEAR ENDED          THREE MONTHS ENDED
                                                         DECEMBER 31,              MARCH 31,
                                                             1995         ---------------------------
                                                         ------------        1995            1996
                                                                          -----------     -----------
                                                                          (unaudited)     (unaudited)
<S>                                                      <C>              <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)......................................   $  135,209       $  77,004       $ (21,905)
Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
  Depreciation and amortization........................      149,160          38,242          26,450
Changes in current assets and liabilities:
  (Increase) decrease in accounts receivable...........      (27,328)         20,599         101,120
  (Increase) in Due from Commodore Media, Inc..........                                      (28,169)
  (Increase) decrease in prepaid expenses and other
     current assets....................................         (572)             --             725
  (Decrease) increase in accounts payable..............      (15,044)        (23,373)         11,706
  Increase (decrease) in accrued expenses and other
     current liabilities...............................       16,333         (27,869)        (37,472)
                                                           ---------        --------        --------
Net cash provided by operating activities..............      257,758          84,603          52,455
                                                           ---------        --------        --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment....................       (8,048)         (1,617)             --
Proceeds from sale of property and equipment...........       21,936              --              --
                                                           ---------        --------        --------
Net cash provided by (used in) investing activities....       13,888          (1,617)             --
                                                           ---------        --------        --------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners..............................      (99,002)             --         (43,786)
Proceeds from debt.....................................      650,000              --              --
Repayment of debt......................................     (854,419)        (53,992)        (29,796)
                                                           ---------        --------        --------
Net cash used in financing activities..................     (303,421)        (53,992)        (73,582)
                                                           ---------        --------        --------
Net (decrease) increase in cash........................      (31,775)         28,994         (21,127)
Cash, beginning of period..............................       89,537          89,537          57,762
                                                           ---------        --------        --------
Cash, end of period....................................   $   57,762       $ 118,531       $  36,635
                                                           =========        ========        ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest.................................   $  206,884       $  46,538       $  48,304
                                                           =========        ========        ========
</TABLE>
 
See notes to financial statements.
 
                                      F-27
<PAGE>   98
 
                                    MEDIA VI
 
                         NOTES TO FINANCIAL STATEMENTS
 
                               DECEMBER 31, 1995
 
1. NATURE OF BUSINESS AND ORGANIZATION
 
     Media VI (the "Company") was formed under the laws of the State of Florida
as a general partnership, comprised of six general partners for the primary
purpose of owning and operating radio stations WAXE-AM and WAVW-FM located in
Vero Beach/Ft. Pierce, Florida.
 
     In August 1995, the Company acquired substantially all of the assets of
Media 5, Inc. ("Media 5"), consisting primarily of radio station WKQS-FM, in a
business combination between companies under common control, similar to a
pooling of interest, for a 6% interest in the Company. Accordingly, the results
of operations of Media 5 have been included in the Company's statement of
operations for the year ended December 31, 1995.
 
     On February 16, 1996, the Company entered into an Asset Purchase Agreement
(the "Agreement") to sell substantially all of the assets relating to the
operation of WAXE-FM, WAVW-FM and WKQS-FM (collectively, the "Stations") to
Commodore Media, Inc. ("Commodore") for $8,000,000 in cash. Commodore paid an
initial cash deposit of $400,000, which is being held by an escrow agent until
the closing date, which is expected to occur during 1996.
 
     In conjunction with the Agreement, the Company entered into a Joint Sales
Agreement ("JSA") with Commodore. Under the terms of the JSA, Commodore
purchases all available broadcast air time from the Company for a fee of $60,000
per month. Additionally, Commodore assumed responsibility for a majority of the
operating expenses of the Stations. The JSA will terminate upon closing of the
Agreement.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition/Credit Risk
 
     The Company's primary source of revenue is the sale of airtime to
advertisers. Revenue is recorded when the advertisements are broadcast. The
Company provides advertising time to national, regional, and local advertisers
within the geographic areas in which the Company operates. Credit is extended
based on an evaluation of the customer's financial condition; generally, advance
payment is not required. Credit losses are provided for in the financial
statements in the form of an allowance for doubtful accounts.
 
     During the three months ended March 31, 1996, the Company recognized
approximately $80,000 additional revenue related to the JSA with Commodore Media
(Note 1).
 
     Cash is deposited in a major money center financial institution, to which
the Company is exposed to credit risk. At times, deposited amounts may exceed
federally insured limits.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
 
  Barter Transactions
 
     Barter transactions represent the exchange of commercial air time for
programming, merchandise or services. These transactions are included in
broadcast revenue and both sales and promotion and general and administrative
expenses at the fair value of the merchandise or services received. Barter
revenue is recorded when advertisements are broadcast and barter expense is
recognized when the merchandise or services are received.
 
                                      F-28
<PAGE>   99
 
                                    MEDIA VI
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
     For the year ended December 31, 1995, barter revenue and expense amounted
to $96,651 and $85,103, respectively.
 
  Income Taxes
 
     The Company is not subject to federal or state income taxes. Income or loss
from the Company's operations is included in the determination of taxable income
of the respective partners, pursuant to the terms of the partnership agreement.
 
  Property and Equipment
 
     Property and equipment are stated at cost. Depreciation is provided for
using the straight-line method based on the following schedule of estimated
useful lives:
 
<TABLE>
<CAPTION>
                                                                         ESTIMATED LIFE
                                CLASSIFICATION                               (YEARS)
        <S>                                                              <C>
        Land improvements..............................................        15
        Building and building improvements.............................        31
        Furniture, fixtures and equipment..............................         5
        Broadcasting and technical equipment...........................       5-20
        Vehicles.......................................................        3-5
</TABLE>
 
     Expenditures for maintenance and repairs are charged to operations as
incurred. Expenditures for betterments and major renewals are capitalized and,
therefore, are included in property and equipment.
 
  Intangible Assets
 
     Intangible assets are being amortized using the straight-line method based
on the following schedule of estimated useful lives:
 
<TABLE>
<CAPTION>
                                                                         ESTIMATED LIFE
                                CLASSIFICATION                               (YEARS)
        <S>                                                              <C>
        FCC licenses...................................................        40
        Goodwill.......................................................        40
        Deferred financing costs.......................................        4-7
</TABLE>
 
     It is the Company's policy to account for intangible assets at the lower of
amortized cost or fair value. As part of an ongoing review of the valuation and
amortization of intangible assets, management assesses the carrying value of the
Company's intangible assets if facts and circumstances suggest that it may have
been impaired, If this review indicates that the intangible assets will not be
recoverable as determined by an undiscounted cash flow analysis of the Company
over the remaining amortization period, the carrying value of the Company's
intangible assets would be reduced to its estimated fair value.
 
     In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets to be Disposed of ("FAS 121"), effective for fiscal years
beginning after December 15, 1995. The new rules establish standards for the
recognition and measurement of impairment losses on long-lived assets and
certain intangible assets. The Company expects the adoption of FAS 121 will not
have a material effect on its financial statements.
 
  Interim Financial Information
 
     Financial information as of and for the three months ended March 31, 1996
and for the three months ended March 31, 1995 is unaudited. In the opinion of
management, all adjustments of a normal and recurring
 
                                      F-29
<PAGE>   100
 
                                    MEDIA VI
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
nature, and those that are necessary for a fair presentation of the results as
of and for such periods, have been included. Interim results are not necessarily
indicative of the results for a full year.
 
3. ACQUISITION OF MEDIA 5
 
     The separate results of the combining entities prior to the combination for
the seven months ended July 31, 1995 are as follows:
 
<TABLE>
<CAPTION>
                                                                 MEDIA VI     MEDIA 5
        <S>                                                      <C>          <C>
        Net revenue............................................  $960,142     $241,803
        Less intercompany transactions.........................    49,360           --
                                                                 --------     --------
                                                                  910,782      241,803
                                                                 ========     ========
        Net income (loss)......................................  $181,043     $(30,133)
                                                                 ========     ========
</TABLE>
 
4. PROPERTY AND EQUIPMENT
 
     Property and equipment consists of the following at December 31, 1995:
 
<TABLE>
        <S>                                                                <C>
        Land and land improvements.......................................  $  216,671
        Building and building improvements...............................     283,909
        Furniture, fixtures and equipment................................      76,776
        Broadcasting and technical equipment.............................     611,101
        Vehicles.........................................................      13,300
                                                                           ----------
                                                                            1,201,757
        Less accumulated depreciation....................................    (419,067)
                                                                           ----------
        Property, plant and equipment, net...............................  $  782,690
                                                                           ==========
</TABLE>
 
5. INTANGIBLE ASSETS
 
     Intangible assets consists of the following at December 31, 1995:
 
<TABLE>
        <S>                                                                <C>
        FCC License......................................................  $2,295,349
        Goodwill.........................................................     132,510
        Deferred financing costs.........................................      48,617
                                                                           ----------
                                                                            2,476,476
        Less accumulated amortization....................................    (329,218)
                                                                           ----------
        Other intangible assets, net.....................................  $2,147,258
                                                                           ==========
</TABLE>
 
                                      F-30
<PAGE>   101
 
                                    MEDIA VI
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
6. LONG-TERM DEBT
 
     At December 31, 1995, the Company's long-term debt consisted of the
following:
 
<TABLE>
        <S>                                                                <C>
        First Mortgage payable to Barnett Bank of the Treasure Coast (the
          "First Mortgage")..............................................  $1,675,723
        Second Mortgage payable to Barnett Bank of the Treasure Coast
          (the "Second Mortgage")........................................     595,833
                                                                           ----------
                                                                            2,271,556
        Less current maturities..........................................    (119,185)
                                                                           ----------
        Total long-term debt.............................................  $2,152,371
                                                                           ==========
</TABLE>
 
  The First Mortgage
 
     Principal is being repaid in equal monthly installments of approximately
$2,200, with a lump sum payment of the balance due on May 31, 2002. Interest is
payable monthly at a variable rate equal to the Barnett Bank prime, which
fluctuated from a low of 8.5% to a high of 9% during 1995. The First Mortgage is
secured by an interest in all of the Company's assets and a first mortgage on
all real property owned or subsequently acquired prior to maturity.
 
  The Second Mortgage
 
     Principal is being repaid in equal monthly installments of approximately
$7,700, with the final payment due on May 17, 2002. Interest is payable monthly
at a variable rate equal to Barnett Bank prime, which fluctuated from a low of
8.5% to a high of 9% during 1995. The Second Mortgage is secured by an interest
in all the Company's assets and a second mortgage on all real property.
 
     Aggregate maturities of long-term debt due within the next five years
ending December 31, are as follows:
 
<TABLE>
        <S>                                                                <C>
        1996.............................................................  $  119,185
        1997.............................................................     119,185
        1998.............................................................     119,185
        1999.............................................................     119,185
        2000.............................................................     119,185
        Thereafter.......................................................   1,675,631
                                                                           ----------
                                                                           $2,271,556
                                                                           ==========
</TABLE>
 
7. LEASE COMMITMENTS
 
     The principle types of property leased by the Company consist of land used
for its broadcast tower, vehicles, computer software and other office equipment.
The Company's minimum lease commitments under all non-cancelable operating
leases are as follows:
 
<TABLE>
        <S>                                                                  <C>
        1996...............................................................  $39,408
        1997...............................................................   19,171
        1998...............................................................    9,828
        1999...............................................................    3,259
        2000...............................................................    1,200
        Thereafter.........................................................   10,800
                                                                             -------
                                                                             $83,666
                                                                             =======
</TABLE>
 
                                      F-31
<PAGE>   102
 
                                    MEDIA VI
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
7. LEASE COMMITMENTS--(CONTINUED)
     The Company's rental expense, covering the use of a modular office unit,
amounted to approximately $7,800 for the year ended December 31, 1995, and has
been included in general and administrative expenses.
 
8. LEGAL PROCEEDINGS
 
     The Company is involved in various legal proceedings from time to time in
the normal course of business. In management's opinion, the litigation with
which the Company is currently involved, individually and in the aggregate, is
not material to the Company's financial condition or the results of its
operations.
 
9. RELATED PARTY TRANSACTIONS
 
     The sole shareholder of one of the Company's general partners is an
attorney employed by a law firm which provides professional services to the
Company on a continuing and regular basis. During 1995, fees of approximately
$14,000 were paid to this firm.
 
     Additionally, the sole shareholder of one of the Company's general partners
is the owner of a local business with which the Company's radio stations conduct
business. During 1995, the Company recorded sales of approximately $7,000
related to advertisements aired for this partner's business.
 
10. DEFINED CONTRIBUTION RETIREMENT PLAN
 
     The Company has a 401(k) Plan (the "Plan") for the benefit of all
employees. Participants may elect to contribute a percentage of their annual
compensation to the Plan, subject to applicable Internal Revenue Service
limitations. The Company makes a matching contribution to the Plan, not to
exceed 1% of the employees' contributions. The employer's share of the
contributions vest according to a predetermined schedule. Total contributions
made by the Company for the year ended December 31, 1995 amounted to $9,181.
 
                                      F-32
<PAGE>   103
 
                          INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors
Adventure Communications--Huntington
(Division of Adventure Communications, Inc.)
 
     We have audited the accompanying balance sheets of Adventure
Communications--Huntington (Division of Adventure Communications, Inc.) as of
December 31, 1995 and 1994, and the related statements of operations, division's
equity (deficit), and cash flows for the three years ended December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. 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 financial position of Adventure
Communications--Huntington (Division of Adventure Communications, Inc.) as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the three years ended December 31, 1995 in conformity with generally
accepted accounting principles.
                                          BROWN, EDWARDS & CO., LLP
 
Bluefield, West Virginia
May 1, 1996
 
                                      F-33
<PAGE>   104
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                     DECEMBER 31,                  MARCH 31,
                                                -----------------------     -----------------------
                                                   1994         1995           1995         1996
<S>                                             <C>          <C>            <C>          <C>
                                                                            (UNAUDITED)  (UNAUDITED)
ASSETS
CURRENT ASSETS
  Cash........................................  $  271,000   $  105,926     $  292,881   $  169,814
  Accounts receivable, less allowance for
     doubtful accounts of $48,000, $66,000,
     $50,992 and $74,717 on December 31, 1994
     and 1995 and March 31, 1995 and 1996,
     respectively (Note 7)....................     535,031      647,986        439,398      561,348
  Prepaid assets..............................       8,310        1,325         14,422        1,045
  Other receivables...........................      40,162       43,120         27,948       31,718
  Deferred income taxes (Note 5)..............          --       26,400             --       26,400
                                                ----------   ----------     ----------   ----------
          Total current assets................     854,503      824,757        774,649      790,325
                                                ----------   ----------     ----------   ----------
PROPERTY AND EQUIPMENT, NET
  (Notes 3 and 7).............................   1,090,102    1,225,957      1,102,838    1,186,035
                                                ----------   ----------     ----------   ----------
INTANGIBLES, NET (Note 4).....................      59,727      135,140         56,625      130,269
                                                ----------   ----------     ----------   ----------
                                                $2,004,332   $2,185,854     $1,934,112   $2,106,629
                                                ==========   ==========     ==========   ==========
               LIABILITIES AND
              DIVISION'S EQUITY
CURRENT LIABILITIES
  Accounts payable and accrued expenses.......  $  148,848   $  177,321     $  163,441   $   76,004
  Inter-divisional payable (Note 6)...........   2,327,152    2,282,170      2,263,962    2,258,038
                                                ----------   ----------     ----------   ----------
          Total current liabilities...........   2,476,000    2,459,491      2,427,403    2,334,042
                                                ----------   ----------     ----------   ----------
Commitment (Note 7)...........................          --           --             --           --
DIVISION'S EQUITY (DEFICIT)...................    (471,668)    (273,637)      (493,291)    (227,413)
                                                ----------   ----------     ----------   ----------
                                                $2,004,332   $2,185,854     $1,934,112   $2,106,629
                                                ==========   ==========     ==========   ==========
</TABLE>
 
The Notes to Financial Statements are an integral part of these statements.
 
                                      F-34
<PAGE>   105
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                               THREE MONTHS ENDED
                                          YEARS ENDED DECEMBER 31,                  MARCH 31,
                                    ------------------------------------     -----------------------
                                       1993         1994         1995           1995         1996
<S>                                 <C>          <C>          <C>            <C>          <C>
                                                                             (UNAUDITED)  (UNAUDITED)
Advertising revenue...............  $2,370,460   $2,718,483   $3,352,771      $700,746     $721,678
Agency commissions................     109,983     (144,313)    (187,292)      (35,875)     (48,607)
                                    ----------   ----------   ----------      --------     --------
          Net revenue.............   2,260,477    2,574,170    3,165,479       664,871      673,071
Other operating revenue...........      27,218       22,060       36,225         5,550        7,649
                                    ----------   ----------   ----------      --------     --------
          Total revenue...........   2,287,695    2,596,230    3,201,704       670,421      680,720
                                    ----------   ----------   ----------      --------     --------
Operating expenses (Note 6):
  Station operating expenses......   1,472,000    1,657,235    2,118,139       505,591      406,651
  Corporate expenses..............     369,077      413,117      572,980       145,052      145,052
  Depreciation....................      88,635       97,374      230,600        48,734       48,471
  Amortization....................       8,932        9,511       13,587         3,102        4,871
                                    ----------   ----------   ----------      --------     --------
                                     1,938,644    2,177,237    2,935,306       702,479      605,045
                                    ----------   ----------   ----------      --------     --------
          Operating income
            (loss)................     349,051      418,993      266,398       (32,058)      75,675
Interest income...................       4,558        7,753        7,273         2,193        1,366
                                    ----------   ----------   ----------      --------     --------
          Income (loss) before
            taxes.................     353,609      426,746      273,671       (29,865)      77,041
(Provision) benefit for income
  taxes (Note 5)..................          --           --      (75,640)        8,242      (30,816)
                                    ----------   ----------   ----------      --------     --------
          Net income (loss).......  $  353,609   $  426,746   $  198,031      $(21,623)    $ 46,224
                                    ==========   ==========   ==========      ========     ========
</TABLE>
 
The Notes to Financial Statements are an integral part of these statements.
 
                                      F-35
<PAGE>   106
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                   STATEMENTS OF DIVISION'S EQUITY (DEFICIT)
                  YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
 
<TABLE>
<S>                                                                               <C>
Balance, December 31, 1992......................................................  $(1,252,023)
  1993 net income...............................................................      353,609
                                                                                  -----------
Balance, December 31, 1993......................................................     (898,414)
  1994 net income...............................................................      426,746
                                                                                  -----------
Balance, December 31, 1994......................................................     (471,668)
  1995 net income...............................................................      198,031
                                                                                  -----------
Balance, December 31, 1995......................................................     (273,637)
  Three months ended March 31, 1996 net income (unaudited)......................       46,224
                                                                                  -----------
Balance, March 31, 1996 (unaudited).............................................  $  (227,413)
                                                                                  ===========
</TABLE>
 
The Notes to Financial Statements are an integral part of these statements.
 
                                      F-36
<PAGE>   107
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                                   THREE MONTHS ENDED
                                                 YEARS ENDED DECEMBER 31,               MARCH 31,
                                            -----------------------------------   ---------------------
                                              1993        1994         1995         1995        1996
<S>                                         <C>         <C>         <C>           <C>         <C>
                                                                                  (UNAUDITED) (UNAUDITED)
CASH FLOW FROM OPERATING ACTIVITIES
  Net income (loss)........................ $ 353,609   $ 426,746   $   198,031   $ (21,623)  $  46,224
  Adjustments to reconcile net income
     (loss) to net cash provided by
     operating activities:
     Depreciation and amortization.........    97,567     106,885       244,187      51,836      53,342
     Deferred income taxes.................        --          --       (26,400)         --          --
  Changes in current assets and
     liabilities:
     (Increase) decrease in:
       Accounts receivable.................   (77,872)   (115,602)     (112,955)     95,633      86,638
       Prepaid expenses and other
          receivables......................    25,720      15,506         4,027       6,102      11,682
     (Decrease) increase in:
       Accounts payable and accrued
          expenses.........................     2,317      (5,421)       28,473      14,593    (101,317)
                                            ----------- ---------     ---------   ---------   ---------
          Net cash provided by operating
            activities.....................   401,341     428,114       335,363     146,541      96,569
                                            ----------- ---------     ---------   ---------   ---------
CASH FLOW FROM INVESTING ACTIVITIES
  Purchase of property and
     equipment.............................   (52,697)   (391,518)     (366,455)    (61,470)     (8,549)
  Purchase of intangible assets............        --     (35,000)      (89,000)         --          --
                                            ----------- ---------     ---------   ---------   ---------
          Net cash used in investing
            activities.....................   (52,697)   (426,518)     (455,455)    (61,470)     (8,549)
                                            ----------- ---------     ---------   ---------   ---------
CASH FLOW FROM FINANCING ACTIVITIES
  Increase in inter-divisional payable.....   369,077     813,117       975,018     136,810     175,868
  Repayment of inter-divisional payable....  (580,000)   (850,000)   (1,020,000)   (200,000)   (200,000)
                                            ----------- ---------     ---------   ---------   ---------
          Net cash used in financing
            activities.....................  (210,923)    (36,883)      (44,982)    (63,190)    (24,132)
                                            ----------- ---------     ---------   ---------   ---------
          Increase (decrease) in cash......   137,721     (35,287)     (165,074)     21,881      63,888
CASH
  Beginning................................   168,566     306,287       271,000     271,000     105,926
                                            ----------- ---------     ---------   ---------   ---------
  Ending................................... $ 306,287   $ 271,000   $   105,926   $ 292,881   $ 169,814
                                            =========== =========     =========   =========   =========
SUPPLEMENTAL SCHEDULE OF
  NONCASH TRANSACTIONS
  Barter revenue........................... $ 142,065   $ 181,861   $   233,219   $  56,406   $  62,658
                                            =========== =========     =========   =========   =========
  Barter expense........................... $ 142,370   $ 202,653   $   163,100   $  26,493   $  30,082
                                            =========== =========     =========   =========   =========
</TABLE>
 
The Notes to Financial Statements are an integral part of these statements.
 
                                      F-37
<PAGE>   108
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                         NOTES TO FINANCIAL STATEMENTS
                    (INFORMATION FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)
                               DECEMBER 31, 1995
 
NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES
 
  Nature of business:
 
     Adventure Communications--Huntington (the Division) is a division of
Adventure Communications, Inc. (the Company). The Company's principal business
is the operation of AM and FM radio broadcasting stations in the areas of
Bluefield and Huntington, West Virginia; Statesville, North Carolina; and Hilton
Head, South Carolina. The Division operates WKEE-AM and FM, WBVB-FM, WZZW-AM and
WIRO-AM (the Stations).
 
     The Company also has joint operating and marketing agreements with other
radio stations located in the Huntington area. Under these agreements, the
Company is responsible for various promotional and marketing activities of the
Stations. Revenue and expenses resulting from these agreements are included in
the Division's operations.
 
     On April 8, 1996, the Company entered into an asset purchase agreement to
sell substantially all the assets relating to the operations of the Stations
(Note 11).
 
  Revenue recognition:
 
     Advertising revenue is recognized in the accounting period which
corresponds with the broadcast of the advertisement. Barter revenue is reported
when advertisements are broadcast and barter merchandise or services received
are expensed when used. Barter transactions are valued at the market value of
the broadcast time which approximates the market value of the product or
services received.
 
  Property and equipment:
 
     Property and equipment are recorded at cost and are depreciated over their
estimated useful lives using straight-line and accelerated methods.
 
  Valuation of receivables:
 
     The Division provides for bad debts under the reserve method which charges
current operations for estimated uncollectibles based upon the Division's
collection experience and an evaluation of the receivables at year end.
 
  Intangible assets:
 
     Acquisition costs (non-compete covenants and goodwill) in excess of the net
tangible assets of acquired radio stations are amortized on a straight-line
basis over periods of up to 15 years, and are included in the financial
statements at cost less accumulated amortization.
 
  Income taxes:
 
     Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred taxes
related primarily to the allowance for doubtful accounts which is not deductible
for income tax return purposes until the accounts are written off as
uncollectible. The deferred tax asset represents the future tax return
deduction.
 
     Effective January 1, 1995, the Company revoked its S Corporation election
and became a taxable entity. Previously, its income and losses were included in
the personal tax returns of the stockholders, and the Company did not record an
income tax provision or benefit.
 
                                      F-38
<PAGE>   109
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
                    (INFORMATION FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)
                               DECEMBER 31, 1995
 
NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
  Statement of cash flows:
 
     Separate disclosures have not been made for cash paid for interest and
income taxes because these amounts are included in inter-divisional transactions
with the Company.
 
  Use of estimates:
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
 
NOTE 2.  ACQUISITIONS
 
     In November 1994, the Company purchased selected assets of an AM radio
station in Milton, West Virginia. The acquisition was accounted for by the
purchase method, and the statement of income includes the results of operations
of this station from the date of acquisition.
 
<TABLE>
        <S>                                                                 <C>
        Property and equipment............................................  $365,000
        Intangibles.......................................................    35,000
                                                                            --------
                                                                            $400,000
                                                                            ========
</TABLE>
 
     In June 1995, the Company purchased selected assets of an AM radio station
in Ironton, Ohio. The acquisition was accounted for by the purchase method, and
the statement of income includes the results of operations of this station from
the date of acquisition.
 
<TABLE>
        <S>                                                                 <C>
        Property and equipment............................................  $211,000
        Intangibles.......................................................    89,000
                                                                            --------
                                                                            $300,000
                                                                            ========
</TABLE>
 
     Pro forma results of operations from these acquisitions were not material
to the Division's operations. Therefore, such information has not been
presented.
 
NOTE 3.  PROPERTY AND EQUIPMENT
 
     Major classes of property and equipment are as follows:
 
<TABLE>
<CAPTION>
                                              DECEMBER 31,                    MARCH 31,
                                        -------------------------     -------------------------
                                           1994           1995           1995           1996
    <S>                                 <C>            <C>            <C>            <C>
    Land and improvements.............  $   50,000     $   60,000     $   50,000     $   60,000
    Buildings and improvements........     520,557        550,557        520,557        550,557
    Broadcasting equipment............   1,482,136      1,735,498      1,482,136      1,735,498
    Furniture and fixtures............     119,846        124,756        141,681        124,756
    Transportation equipment..........       4,480         22,280         22,280         22,280
    Computer and office equipment.....     137,033        187,416        158,868        195,965
                                        ----------     ----------     ----------     ----------
                                         2,314,052      2,680,507      2,375,522      2,689,056
    Less accumulated depreciation.....   1,223,950      1,454,550      1,272,684      1,503,021
                                        ----------     ----------     ----------     ----------
                                        $1,090,102     $1,225,957     $1,102,838     $1,186,035
                                        ==========     ==========     ==========     ==========
</TABLE>
 
                                      F-39
<PAGE>   110
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
                    (INFORMATION FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)
                               DECEMBER 31, 1995
 
NOTE 4.  INTANGIBLES
 
     Intangibles are stated at cost, net of amortization and consist of the
following:
 
<TABLE>
<CAPTION>
                                                  DECEMBER 31,                MARCH 31,
                                              ---------------------     ---------------------
                                                1994         1995         1995         1996
    <S>                                       <C>          <C>          <C>          <C>
    Non-compete covenant....................  $ 10,000     $ 20,000     $ 10,000     $ 20,000
    Goodwill................................    99,317      163,317       99,317      163,317
    License fees............................    15,000       30,000       15,000       30,000
                                              --------     --------      -------     --------
                                               124,317      213,317      124,317      213,317
    Less accumulated amortization...........    64,590       78,177       67,692       83,048
                                              --------     --------      -------     --------
                                              $ 59,727     $135,140     $ 56,625     $130,269
                                              ========     ========      =======     ========
</TABLE>
 
NOTE 5.  INCOME TAXES
 
     The (provision) benefit for income taxes consists of the following
components:
 
<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED
                                                          YEAR ENDED           MARCH 31,
                                                         DECEMBER 31,     -------------------
                                                             1995          1995        1996
    <S>                                                  <C>              <C>        <C>
    Current (expense) benefit..........................   $ (102,040)     $8,242     $(30,816)
    Deferred...........................................       26,400          --           --
                                                         ------------     ------     --------
         (Provision) benefit for income taxes..........   $  (75,640)     $8,242     $(30,816)
                                                          ==========      ======     ========
</TABLE>
 
     Income tax (expense) benefit differs from the statutory federal rate of 34%
as follows:
 
<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED
                                                          YEAR ENDED           MARCH 31,
                                                         DECEMBER 31,     -------------------
                                                             1995          1995        1996
    <S>                                                  <C>              <C>        <C>
    Tax (expense) benefit..............................   $ (109,468)     $4,520     $(30,816)
    Non-deductible items...............................       (4,172)         --           --
    Change in tax status...............................       38,000       3,722           --
                                                         ------------     ------     --------
         (Provision) benefit for income taxes..........   $  (75,640)     $8,242     $(30,816)
                                                          ==========      ======     ========
</TABLE>
 
     As discussed in Note 1, the Company changed its tax status from nontaxable
to taxable effective for 1995. Accordingly, the deferred tax asset of
approximately $38,000 at the date that the termination election became effective
has been recorded through a charge to the tax provision for 1995.
 
NOTE 6.  INTER-DIVISIONAL TRANSACTIONS
 
     The Company has allocated to the Division various expenses it incurred for
corporate services, overhead and interest costs. The amounts included in
corporate services and overhead allocations are comprised mainly of corporate
office salaries, related payroll taxes and employee benefits, professional fees
and administrative expenses. These costs have been allocated based on revenues
of the Division compared to total revenues of the Company. Management believes
the amounts allocated to the Division have been computed and charged to the
Division on a reasonable basis.
 
                                      F-40
<PAGE>   111
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
                    (INFORMATION FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)
                               DECEMBER 31, 1995
 
NOTE 6.  INTER-DIVISIONAL TRANSACTIONS--(CONTINUED)
     The Division is obligated to the Company for monies received from the
Company for the original purchase of the Stations as well as the allocated
expenses mentioned above. The Division, in return, transfers cash to the Company
that is in excess of its operating needs. These transactions are conducted on an
interest free basis. The inter-divisional payable is analyzed below:
 
<TABLE>
<CAPTION>
                                                  DECEMBER 31,                    MARCH 31,
                                           --------------------------     -------------------------
                                              1994           1995            1995           1996
<S>                                        <C>            <C>             <C>            <C>
Balance, beginning.......................  $2,364,035     $ 2,327,152     $2,327,152     $2,282,170
Allocations of corporate costs to the
  Division...............................     413,117         675,018        136,810        175,868
Purchase of Stations.....................     400,000         300,000             --             --
Cash transfers...........................    (850,000)     (1,020,000)      (200,000)      (200,000)
                                           ----------     -----------     ----------     ----------
Balance, ending..........................  $2,327,152     $ 2,282,170     $2,263,962     $2,258,038
                                           ==========     ===========     ==========     ==========
</TABLE>
 
NOTE 7.  COMMITMENT
 
     Adventure Communications Inc. is obligated for long-term debt of
approximately $6,900,000 for which substantially all assets of the Company
(including the Division) are pledged as collateral. At December 31, 1995, the
book value of total assets of the Company exceeds the long-term debt.
Approximately $3,700,000 of the debt is also secured by a $4,000,000 life
insurance policy on the majority stockholder of the Company.
 
     A note payable to the majority stockholder of the Company of $2,400,000 is
included in the $6,900,000 debt referred to above.
 
NOTE 8.  EMPLOYEE BENEFIT PLANS
 
     The Company has a contributory profit sharing plan covering all full time
employees with one or more years of service. The plan provides for annual
employer contributions on a discretionary basis as determined by the Board of
Directors. No contributions were made to the plan in 1993, 1994 or 1995.
 
     The Company also has a 401(k) retirement plan, whereby participants may
contribute a percentage of their compensation.
 
     The Company's matching contribution percentage (which is determined
annually by the Company) is limited to 10% of the participant's compensation for
each plan year. The Division's contributions were approximately $8,600, $9,400
and $8,200 for the years ended December 31, 1993, 1994 and 1995, respectively.
 
NOTE 9.  OPERATING LEASES
 
     The Division leases certain transmission towers and automobiles under
non-cancelable lease agreements. These leases have been classified as operating
leases; and accordingly, all rents are charged to operations as incurred.
 
                                      F-41
<PAGE>   112
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
                    (INFORMATION FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)
                               DECEMBER 31, 1995
 
NOTE 9.  OPERATING LEASES--(CONTINUED)
     The following is a schedule by years of future minimum rental payments
required under operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of December 31, 1995:
 
<TABLE>
        <S>                                                                  <C>
        YEAR ENDING DECEMBER 31:
        1996...............................................................  $15,630
        1997...............................................................    8,500
        1998...............................................................    2,400
        1999...............................................................    2,400
        2000...............................................................    2,400
                                                                             -------
        Total minimum payments required....................................  $31,330
                                                                             =======
</TABLE>
 
     Lease expense was approximately $30,800, $28,200 and $15,630 for 1993, 1994
and 1995, respectively.
 
NOTE 10.  DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The carrying amount of the inter-divisional payable approximates fair
value. It is included in the financial statements as a current liability due to
the pending sales discussed in Note 11. The inter-divisional payable will be
satisfied by the proceeds of the sale. In the financial statements of the
Company, all inter-divisional payables/receivables are eliminated.
 
NOTE 11.  SUBSEQUENT EVENT
 
     On April 8, 1996, the Company entered into an asset purchase agreement to
sell substantially all the assets relating to the operations of the Stations for
$7,765,000. The sale of the Station is contingent based on FCC consent. The
buyer will purchase all of the assets for the Stations, free and clear of any
liabilities, mortgages, liens, pledges, conditions or encumbrances except for
the Stations' cash, rights to refunds or deposits which relate to the period
prior to closing and accounts receivable. Also at closing, $475,000 of the sales
price will be deposited with the indemnification escrow agent. The
indemnification period will be for a period of two (2) years following the
closing. The indemnification by seller and buyer shall be for any losses,
liabilities or damages resulting from untrue representations, breach of warranty
or non-fulfillment of covenants, liabilities not expressly assumed by buyer,
liabilities resulting from operations prior to the closing date for the buyer or
liabilities resulting from operation after the closing date for the seller.
 
                                      F-42
<PAGE>   113
 
                         REPORT OF INDEPENDENT AUDITORS
 
Board of Directors
Danbury Broadcasting Inc.
 
     We have audited the accompanying balance sheets of Danbury Broadcasting
Inc. as of June 30, 1995 and 1994, and the related statements of operations and
accumulated deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 financial position of Danbury Broadcasting Inc. as
of June 30, 1995 and 1994, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
 
                                          PANETH, HABER & ZIMMERMAN LLP
 
New York, NY
August 18, 1995
 
                                      F-43
<PAGE>   114
 
                           DANBURY BROADCASTING INC.
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                    JUNE 30,
                                                            ------------------------   MARCH 26,
                                                               1994          1995         1996
                                                                                       (unaudited)
<S>                                                         <C>           <C>          <C>
CURRENT ASSETS
  Cash....................................................  $    92,716   $  177,627   $  422,092
  Accounts receivable, net of allowance for doubtful
     accounts of $22,000 and $22,738 at June 30, 1994 and
     1995, respectively...................................      621,637      700,274      129,407
  Due from related party..................................           --       12,189       43,810
  Prepaid expenses........................................       18,951       36,526       14,598
  Other...................................................        7,593       10,165        9,140
                                                             ----------   ----------   -----------
          Total Current Assets............................      740,897      936,781      619,047
PROPERTY AND EQUIPMENT, at cost, less accumulated
  depreciation............................................    1,508,309    1,120,583    1,002,879
INTANGIBLE ASSETS, less accumulated amortization..........    1,064,940    1,233,912    1,071,404
OTHER ASSETS..............................................        5,986        5,258           --
                                                             ----------   ----------   -----------
                                                            $ 3,320,132   $3,296,534   $2,693,330
                                                             ==========   ==========   ===========
                            LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
  Current maturities of long-term debt....................  $   487,500   $  225,369   $  300,745
  Advances from affiliate.................................        6,100           --           --
  Accounts payable........................................       49,243        8,842       36,352
  Accrued expenses........................................      245,486      174,021      154,600
  Dividend payable........................................       13,750           --           --
                                                             ----------   ----------   -----------
          Total Current Liabilities.......................      802,079      408,232      491,697
LONG-TERM DEBT, less current maturities...................    2,700,000    3,102,853    2,950,000
                                                             ----------   ----------   -----------
          Total Liabilities...............................    3,502,079    3,511,085    3,441,697
                                                             ----------   ----------   -----------
COMMITMENTS
REDEEMABLE PREFERRED STOCK
  Series A cumulative preferred, 500 shares, nonvoting,
     par value $100 per share; authorized, issued and
     outstanding. Liquidation preference and redemption
     amount $1,000 per share plus accrued dividends.......      500,000      541,250      582,500
                                                             ----------   ----------   -----------
STOCKHOLDERS' DEFICIENCY
  Common stock, par value $.01 per share; authorized 1,000
     shares; issued and outstanding 40 shares.............           --           --           --
  Accumulated deficit.....................................     (681,947)    (755,801)  (1,330,867)
                                                             ----------   ----------   -----------
          Total Stockholders' Deficiency..................     (681,947)    (755,801)  (1,330,867)
                                                             ----------   ----------   -----------
                                                            $ 3,320,132   $3,296,534   $2,693,330
                                                             ==========   ==========   ===========
</TABLE>
 
See notes to financial statements.
 
                                      F-44
<PAGE>   115
 
                           DANBURY BROADCASTING INC.
 
                STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
 
<TABLE>
<CAPTION>
                                                  YEAR ENDED                 NINE          JULY 1,
                                                   JUNE 30,                 MONTHS          1995
                                          ---------------------------       ENDED          THROUGH
                                             1994            1995         MARCH 31,       MARCH 26,
                                          -----------     -----------        1995           1996
                                                                          ----------     -----------
                                                                          (unaudited)    (unaudited)
<S>                                       <C>             <C>             <C>            <C>
REVENUE
  Broadcasting revenue..................  $ 3,027,281     $3,451,684      $2,566,181     $ 1,086,935
  Less agency commissions...............      260,702        311,768         228,664          97,015
                                           ----------     ----------      ----------     -----------
          Net Revenue...................    2,766,579      3,139,916       2,337,517         989,920
                                           ----------     ----------      ----------     -----------
EXPENSES
  Programming...........................      427,896        502,299         384,488         176,639
  Technical.............................       93,016        106,475          77,567          96,262
  Selling...............................      826,110        865,381         659,034         413,511
  General and Administrative............      770,714        903,627         624,320         557,666
  Interest Expense......................      352,253        347,578         257,570         314,567
  Depreciation..........................      204,543        197,197         140,367         119,552
  Amortization..........................      181,916        236,213         151,332         165,915
  Local marketing agreement fees........           --             --              --        (320,376)
                                           ----------     ----------      ----------     -----------
          Total Expenses................    2,856,448      3,158,770       2,294,678       1,523,736
                                           ----------     ----------      ----------     -----------
NET (LOSS) INCOME.......................      (89,869)       (18,854 )        42,839        (533,816)
ACCUMULATED DEFICIT
  Beginning of year (period)............     (537,078)      (681,947 )      (681,947)       (755,801)
  Preferred stock dividends.............      (55,000)       (55,000 )       (41,250)        (41,250)
                                           ----------     ----------      ----------     -----------
          End of year (period)..........  $  (681,947)    $ (755,801 )    $ (680,358)    $(1,330,867)
                                           ==========     ==========      ==========     ===========
</TABLE>
 
See notes to financial statements.
 
                                      F-45
<PAGE>   116
 
                           DANBURY BROADCASTING INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                  YEAR ENDED                          JULY 1,
                                                                   JUNE 30,            NINE MONTHS     1995
                                                          --------------------------      ENDED       THROUGH
                                                              1994          1995        MARCH 31,    MARCH 26,
                                                          ------------   -----------      1995         1996
                                                                                       -----------   ---------
                                                                                       (unaudited)   (unaudited)
<S>                                                       <C>            <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)......................................  $   (89,869)  $   (18,854)  $    42,839   $(533,816)
  Adjustments to reconcile net loss to net cash provided
     by operating activities:
     Depreciation and amortization.......................      386,459       433,410       291,699     285,467
     Change in:
       Accounts receivable...............................     (140,959)      (78,637)      (59,733)    570,867
       Due from related party............................           --        24,663       (45,940)    (31,621)
       Prepaid expenses and other current assets.........        1,139       (20,147)      (23,263)     22,953
       Other assets......................................          955        (2,749)        2,864       5,258
       Accounts payable..................................      (12,950)      (42,801)       27,940      27,510
       Accrued expenses..................................       58,485       (71,465)     (147,037)    (19,421)
                                                             ---------   -----------   -----------   ---------
          Net Cash Provided by Operating Activities......      203,260       223,420        89,369     327,197
                                                             ---------   -----------   -----------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Advances from affiliate................................           --        (6,100)       (6,100)         --
  Purchases of property and equipment....................      (59,047)      (34,521)      (27,710)     (5,255)
                                                             ---------   -----------   -----------   ---------
          Net Cash Used in Investing Activities..........      (59,047)      (40,621)      (33,810)     (5,255)
                                                             ---------   -----------   -----------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Deferred financing costs...............................           --      (211,110)     (211,110)         --
  Proceeds of notes payable..............................      (62,500)    3,404,106     3,404,106          --
  Repayments of notes payable............................           --    (3,263,384)   (3,226,158)    (77,477)
  Preferred stock dividends..............................      (55,250)      (27,500)      (27,500)         --
                                                             ---------   -----------   -----------   ---------
Net Cash Used in Financing Activities....................     (117,750)      (97,888)      (60,662)    (77,477)
                                                             ---------   -----------   -----------   ---------
NET INCREASE (DECREASE) IN CASH..........................       26,463        84,911        (5,103)    244,465
CASH
  Beginning of year......................................       66,253        92,716        92,716     177,627
                                                             ---------   -----------   -----------   ---------
  End of year............................................  $    92,716   $   177,627   $    87,613   $ 422,092
                                                             =========   ===========   ===========   =========
SUPPLEMENTAL DISCLOSURES OF CASH
  FLOW INFORMATION
  Interest Paid..........................................  $   354,649   $   434,894   $   344,188   $ 262,449
  Income Taxes Paid......................................           --            --            --          --
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
  ACTIVITIES
  Broadcast equipment acquired through trade-out
     transactions........................................  $    15,475   $     2,400   $     2,400   $      --
  Broadcast equipment and property exchanged for
     favorable tower lease (Note 12).....................  $        --   $   190,248   $   190,248   $      --
  Unpaid accrual of redeemable preferred stock
     dividends...........................................  $        --   $    41,250   $    27,500   $  41,250
</TABLE>
 
See notes to financial statements.
 
                                      F-46
<PAGE>   117
 
                           DANBURY BROADCASTING INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
                                 JUNE 30, 1995
 
1. SIGNIFICANT ACCOUNTING POLICIES
 
  Nature of Business
 
     Danbury Broadcasting Inc. (the "Company"), a Connecticut corporation,
operates radio stations WRKI-FM and WINE-AM in Danbury, Connecticut. Its
revenues are derived from advertisers consisting primarily of local businesses.
Credit is extended to its advertisers in the normal course of business.
 
  Depreciation and Amortization
 
     Depreciation of property and equipment is computed over the estimated
useful lives of the respective assets using the straight-line method. Estimated
useful lives range from 5 to 20 years. Expenditures for repairs and maintenance
are charged to operations as incurred.
 
     Goodwill, which is included in intangible assets, represents the cost of
acquired assets in excess of values ascribed to the net identified assets and is
being amortized using the straight-line method over 40 years. Costs incurred in
obtaining long-term financing were capitalized and are included in intangible
assets. They are being amortized using the straight-line method (that does not
differ materially from the interest rate method) over the term of the related
debt.
 
     A covenant not to compete, which restricts the seller and the previous
owner from competing with the Company in the Greater Danbury, Connecticut area
for a period of four years, is included in intangible assets. This covenant is
being amortized on a straight-line basis over its four year life.
 
     The stations' broadcast license is being amortized using the straight-line
method over 25 years.
 
     A favorable lease for broadcast tower rental is being amortized using the
straight-line method over its 30 year term.
 
  Non-Monetary Transactions
 
     Barter transactions represent the exchange of unsold advertising time for
merchandise or services. Barter transactions are reported at the estimated fair
value of the product or service received. Revenue is recognized when commercials
are broadcast and merchandise or services obtained are reported when received or
used. For merchandise or services received prior to the broadcast of the
commercial, a liability is provided; conversely, a receivable is established
when the commercial is broadcast prior to the receipt of the merchandise or
services.
 
  Income Taxes
 
     The Company has adopted Statement of Financial Accounting Standards 109
("SFAS 109") and recognizes deferred tax assets and liabilities for temporary
differences between amounts recorded for financial statement and tax purposes.
 
  Reclassification
 
     Certain prior year amounts have been reclassified to conform with current
year presentation.
 
2. CASH
 
     Cash in the amount of $164,000 and $351,000 (including outstanding checks
of $38,000 and $213,000) shown on the June 30, 1994 and 1995 balance sheets
respectively, was on deposit in a commercial bank located in Fairfield,
Connecticut, of which $100,000 was insured by the FDIC.
 
                                      F-47
<PAGE>   118
 
                           DANBURY BROADCASTING INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
                                 JUNE 30, 1995
 
3. PROPERTY AND EQUIPMENT
 
     Property and equipment consists of the following:
 
<TABLE>
<CAPTION>
                                                                          JUNE 30,
                                                                  -------------------------
                                                                     1994           1995
    <S>                                                           <C>            <C>
    Land........................................................  $  209,722     $  163,583
    Building....................................................     704,314        551,831
    Equipment, furniture and fixtures...........................     958,603        980,729
    Tower improvements in progress..............................      36,851             --
                                                                  ----------     ----------
                                                                   1,909,490      1,696,143
    Less accumulated depreciation...............................     401,181        575,560
                                                                  ----------     ----------
                                                                  $1,508,309     $1,120,583
                                                                  ==========     ==========
</TABLE>
 
4. INTANGIBLE ASSETS
 
     Intangible assets consist of the following:
 
<TABLE>
<CAPTION>
                                                                          JUNE 30,
                                                                  -------------------------
                                                                     1994           1995
    <S>                                                           <C>            <C>
    Goodwill....................................................  $  192,421     $  192,421
    Deferred financing costs....................................      61,815        272,925
    Covenant not to compete.....................................     550,000        550,000
    Stations' licenses..........................................     618,000        618,000
    Favorable lease.............................................          --        190,248
                                                                  ----------     ----------
                                                                   1,422,236      1,823,594
    Less accumulated amortization...............................     357,296        589,682
                                                                  ----------     ----------
                                                                  $1,064,940     $1,233,912
                                                                  ==========     ==========
</TABLE>
 
5. ACCRUED EXPENSES
 
     Accrued expenses consist of the following:
 
<TABLE>
<CAPTION>
                                                                          JUNE 30,
                                                                  -------------------------
                                                                     1994           1995
    <S>                                                           <C>            <C>
    Accrued commissions.........................................    $ 89,000       $ 66,511
    Accrued compensation........................................      30,558         70,000
    Accrued interest............................................      87,656          1,889
    Other items.................................................      38,272         35,621
                                                                  ----------     ----------
                                                                    $245,486       $174,021
                                                                  ==========     ==========
</TABLE>
 
                                      F-48
<PAGE>   119
 
                           DANBURY BROADCASTING INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
                                 JUNE 30, 1995
 
6. LONG TERM DEBT
 
<TABLE>
<CAPTION>
                                                                          JUNE 30,
                                                                  -------------------------
                                                                     1994           1995
    <S>                                                           <C>            <C>
    Term loan payable to United Jersey Bank (UJB) at an interest
      rate of 1.5% over the bank's per annum index rate (9% at
      June 30, 1995) plus principal payments escalating from
      $37,500 quarterly for the year ending June 30, 1995 to
      $200,000 quarterly for the period ending December 31,
      1999......................................................  $       --     $2,175,000
    Revolving loan payable to United Jersey Bank requiring
      payment of interest only at 1.5% over the bank's per annum
      index rate (9% at June 30, 1995) and payable quarterly.
      Payment of the outstanding principal balance is due
      December 31, 1999.........................................          --      1,150,000
    Capital lease payable.......................................                      3,222
    Note payable to BCI Growth, L.P ("BCI") at 11% interest only
      for the period from July 1, 1992 through June 30, 1993,
      payable quarterly. Thereafter, interest at 11% on the
      unpaid balance plus principal payments escalating from
      $62,500 quarterly for the year ending June 30, 1994 to
      $100,000 quarterly for the period ending March 31, 1997.
      The note was paid off from the proceeds of the UJB loan.
      This note was owed to the holder of the outstanding
      warrants. See Note 10.....................................   3,187,500             --
                                                                  ----------     ----------
                                                                   3,187,500      3,328,222
    Less current maturities.....................................     487,500        225,369
                                                                  ----------     ----------
                                                                  $2,700,000     $3,102,853
                                                                  ==========     ==========
</TABLE>
 
     The notes with UJB contain certain restrictive covenants and stipulate
various financial and operating requirements. Included, among other things, are
covenants regarding dividends, operating expenditures, capital expenditures and
debt.
 
     Capital stock, preferred stock, all tangible and intangible assets of the
Company, and a key man life insurance policy of $1,000,000 are pledged as
collateral on the above note. Scheduled maturities of long-term debt during the
next five years ending June 30, are:
 
<TABLE>
        <S>                                                                <C>
        1996.............................................................  $  225,369
        1997.............................................................     377,479
        1998.............................................................     500,374
        1999.............................................................     675,000
        2000.............................................................   1,550,000
                                                                           ----------
                                                                           $3,328,222
                                                                           ==========
</TABLE>
 
                                      F-49
<PAGE>   120
 
                           DANBURY BROADCASTING INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
                                 JUNE 30, 1995
 
7. BARTER TRANSACTIONS
 
     The accompanying financial statements include the following barter
transactions:
 
<TABLE>
<CAPTION>
                                                                          YEAR ENDED
                                                                           JUNE 30,
                                                                     ---------------------
                                                                       1994         1995
    <S>                                                              <C>          <C>
    Barter revenue.................................................  $255,908     $271,253
                                                                     ========     ========
    Barter expenditures............................................  $241,340     $182,821
                                                                     ========     ========
    Amounts included in accounts receivable from trade-out
      transactions.................................................  $ 47,005     $136,493
                                                                     ========     ========
</TABLE>
 
8. REDEEMABLE PREFERRED STOCK
 
     The Series A cumulative preferred stock carries a liquidation preference of
$1,000 per share and a par value of $100 per share. The Company may redeem the
shares at this price, plus accrued but unpaid dividends, at any time through
June 30, 1997. At the earlier of that date, or an event of default (as defined)
the holder can require the Company to redeem the shares in full, with accrued
but unpaid dividends out of funds "legally available". An event of default
occurred during the year ended June 30, 1995 in that the Company did not pay the
full dividend. This gives the holders of the shares the right to demand
redemption.
 
     The Series A cumulative preferred stock provides for an annual dividend of
$110 per share. Dividends of $55,000 and $13,750 were declared on the preferred
stock and paid for the years ended June 30, 1994 and 1995, respectively. At June
30, 1995, dividends in arrears amounted to $41,250 and were accrued in the
accompanying balance sheet.
 
9. COMMITMENTS
 
  Operating Leases
 
     During 1995, the Company leased space on a transmitting tower under a five
year lease renewable in five (5) year terms at the Company's option from a
related party (Note 12). Automobiles under operating leases expire in various
years through 1998.
 
     Future minimum annual lease payments, by year and in the aggregate, under
such leases are as follows:
 
<TABLE>
        <S>                                                                 <C>
        1996..............................................................  $ 38,000
        1997..............................................................    32,000
        1998..............................................................    23,000
        1999..............................................................    21,000
        2000..............................................................     9,000
                                                                            --------
                                                                            $123,000
                                                                            ========
</TABLE>
 
     Rent expense on the above, for the years ended June 30, 1994 and 1995 was
$44,000 and $46,500, respectively.
 
  Other Commitments
 
     The Company also has various commitments under contracts with a rating
service, programming services, advertising displays and a software license
expiring in various years through 1998.
 
                                      F-50
<PAGE>   121
 
                           DANBURY BROADCASTING INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
                                 JUNE 30, 1995
 
9. COMMITMENTS--(CONTINUED)
     Future annual payments by year and in the aggregate under such commitments
are as follows:
 
<TABLE>
        <S>                                                                  <C>
        1996...............................................................  $12,000
        1997...............................................................    6,000
        1998...............................................................    1,000
                                                                             -------
                                                                             $19,000
                                                                             =======
</TABLE>
 
10. STOCKHOLDERS' DEFICIENCY
 
     There is an outstanding warrant (the "warrant") issued to BCI in 1992,
giving it the right to purchase up to 80% of the Company's Common Stock for
$0.01 per share. This warrant also allows them the option to acquire 90% of the
common stock if the Company fails to achieve certain cash flow levels after June
30, 1997, as extended. No value has been assigned to this warrant which expires
June 30, 1998.
 
11. INCOME TAXES
 
     The Company has a net operating loss carryforward of approximately $284,000
which can be carried forward to the years 2008 and 2009 to offset taxable income
resulting in a deferred tax asset of $118,000. Other temporary differences
resulting from differences between book and tax amortization and depreciation
result in a deferred tax asset of approximately $195,000 and $81,000 at June 30,
1994 and 1995, respectively. Total deferred tax assets of approximately $224,000
at June 30, 1994 and $199,000 at June 30, 1995 have been completely offset by a
valuation allowance. The valuation allowance increased by $69,000 during the
year ended June 30, 1994 and decreased by $25,000 during the year ended June 30,
1995.
 
     Income tax benefit for the years ended June 30, 1994 and 1995 differs from
the expected statutory rate for the following reasons:
 
<TABLE>
<CAPTION>
                                                                       1994         1995
    <S>                                                              <C>          <C>
    Federal, at statutory rates....................................  $(30,500)    $ (6,500)
    State, net of Federal benefit..................................    (6,500)      (1,500)
    Nondeductible expenses.........................................     5,500       10,000
    Taxable gain on asset transfer.................................        --       23,000
    Change in estimate.............................................   (37,500)          --
                                                                     ---------    ----------
                                                                      (69,000)      25,000
    Change in deferred tax asset valuation allowance...............    69,000      (25,000)
                                                                     ---------    ----------
    Tax provision..................................................  $     --     $     --
                                                                     =========    ==========
</TABLE>
 
12. RETIREMENT PLAN
 
     Employees of the Company may participate in profit sharing/401(k) savings
plan and may elect to make contributions pursuant to a salary reduction
agreement upon meeting length of service and age requirements. The Company can
elect to make discretionary contributions to the profit sharing plan but has not
done so for either year. The Company has matched 20% of individual 401(k)
contributions during the year ended June 30, 1995. The Company's cost amounted
to approximately $4,500.
 
                                      F-51
<PAGE>   122
 
                           DANBURY BROADCASTING INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
                                 JUNE 30, 1995
 
13. RELATED PARTY TRANSACTIONS
 
     During the year ended June 30, 1995, the Company exchanged its tower and
associated real property with a book value of $190,000 for a favorable lease
with a Partnership formed to improve and rent the tower to the Company and
others. The Partnership has committed to the financing of tower improvements
which will improve the broadcast signal. The Company's lease for placement of
its antenna on the tower at the optimal site is at below market rates. The
Company and the Partnership are related through common control. The favorable
lease has been valued at $190,000, the book value of the property exchanged.
 
     In connection with the tower improvement project, the Company advanced
$12,189 on behalf of the Partnership.
 
14. SUBSEQUENT EVENT (UNAUDITED)
 
     In March 1996, the outstanding warrants held by BCI (Note 10) were
exercised.
 
                                      F-52
<PAGE>   123
 
                          INDEPENDENT AUDITORS' REPORT
 
Stockholders and Board of Directors
Q Broadcasting, Inc.
Stamford, Connecticut
 
     We have audited the accompanying balance sheets of Q Broadcasting, Inc. as
of September 30, 1995 and 1994 and the related statements of operations and
deficit and cash flows for each of the three years in the period ended September
30, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. 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, these financial statements referred to above present
fairly, in all material respects, the financial position of Q Broadcasting, Inc.
as of September 30, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended September 30, 1995,
in conformity with generally accepted accounting principles.
 
                                          HOLTZ RUBENSTEIN & CO., LLP
                                          CERTIFIED PUBLIC ACCOUNTANTS
 
Melville, New York
February 12, 1996
 
                                      F-53
<PAGE>   124
 
                              Q BROADCASTING, INC.
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                             SEPTEMBER 30,
                                                      ---------------------------      MARCH 31,
                                                         1994            1995            1996
                                                      -----------     -----------     -----------
                                                                                      (unaudited)
<S>                                                   <C>             <C>             <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.........................  $    56,327     $       831     $     1,300
  Accounts receivable, less allowance for doubtful
     accounts of $55,000 in 1994, $58,000 in 1995
     and $58,000 as of March 31, 1996...............      652,416         510,971         640,322
  Prepaid expenses and other current assets.........       54,288          53,951          94,744
  Due from related parties (Note 4).................       35,433          72,880          46,925
                                                      -----------     -----------     -----------
          Total current assets......................      798,464         638,633         783,291
PROPERTY AND EQUIPMENT, net (Notes 5 and 7).........      523,025         407,292         328,517
INTANGIBLES, net (Notes 6 and 8)....................    2,633,683       2,375,195       2,308,451
OTHER ASSETS........................................       57,131          39,168          37,262
                                                      -----------     -----------     -----------
                                                      $ 4,012,303     $ 3,460,288     $ 3,457,521
                                                      ===========     ===========     ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
  Accounts payable..................................  $    70,116     $   124,646     $   210,443
  Accrued expenses..................................      113,151         159,316         148,503
  Current portion of capital lease obligations
     (Notes 5 and 7)................................        8,695           6,183           5,098
                                                      -----------     -----------     -----------
          Total current liabilities.................      191,962         290,145         364,044
                                                      -----------     -----------     -----------
CAPITAL LEASE OBLIGATIONS (Notes 5 and 7)...........       10,161           3,981           1,519
                                                      -----------     -----------     -----------
NOTE PAYABLE--STOCKHOLDERS (Note 9).................    6,027,893       6,995,290       7,688,074
                                                      -----------     -----------     -----------
COMMITMENTS (Note 8)
STOCKHOLDERS' DEFICIT:
  Common stock, no par value, 1,000 shares
     authorized, issued and outstanding.............        1,000           1,000           1,000
  Additional paid-in capital........................      999,000         999,000         999,000
  Deficit...........................................   (3,217,713)     (4,829,128)     (5,596,116)
                                                      -----------     -----------     -----------
                                                       (2,217,713)     (3,829,128)     (4,596,116)
                                                      -----------     -----------     -----------
                                                      $ 4,012,303     $ 3,460,288     $ 3,457,521
                                                      ===========     ===========     ===========
</TABLE>
 
See notes to financial statements.
 
                                      F-54
<PAGE>   125
 
                              Q BROADCASTING, INC.
 
                      STATEMENTS OF OPERATIONS AND DEFICIT
 
<TABLE>
<CAPTION>
                                                YEARS ENDED                     SIX MONTHS ENDED
                                               SEPTEMBER 30,                        MARCH 31,
                                  ---------------------------------------   -------------------------
                                     1993          1994          1995          1995          1996
                                  -----------   -----------   -----------   -----------   -----------
<S>                               <C>           <C>           <C>           <C>           <C>
                                                                            (unaudited)   (unaudited)
REVENUE.........................  $ 1,511,181   $ 2,267,625   $ 2,508,867   $ 1,181,990   $ 1,690,948
  Less: Commissions and fees....      127,866       193,342       222,411       105,714       144,633
                                  ------------  ------------  ------------  ------------  ------------
                                    1,383,315     2,074,283     2,286,456     1,076,276     1,546,315
                                  ------------  ------------  ------------  ------------  ------------
EXPENSES:
  Broadcast and production (Note
     8).........................      715,511       742,018       786,377       361,014       607,182
  Selling and promotion.........      844,004       880,429     1,500,873       647,172       967,285
  General and administrative
     (Note 8)...................      764,768       703,908       823,312       361,744       352,108
  Depreciation and
     amortization...............      637,397       538,600       447,602       158,568       152,600
                                  ------------  ------------  ------------  ------------  ------------
                                    2,961,680     2,864,955     3,558,164     1,528,498     2,079,175
                                  ------------  ------------  ------------  ------------  ------------
LOSS FROM OPERATIONS............   (1,578,365)     (790,672)   (1,271,708)     (452,222)     (532,860)
                                  ------------  ------------  ------------  ------------  ------------
OTHER INCOME (EXPENSE):
  Interest expense (Note 9).....     (257,732)     (438,647)     (493,578)     (240,384)     (295,784)
  Other, net....................       13,705        51,805       153,871        76,963        61,656
                                  ------------  ------------  ------------  ------------  ------------
                                     (244,027)     (386,842)     (339,707)     (163,421)     (234,128)
                                  ------------  ------------  ------------  ------------  ------------
NET LOSS........................   (1,822,392)   (1,177,514)   (1,611,415)     (615,643)     (766,988)
DEFICIT, beginning of period....     (217,807)   (2,040,199)   (3,217,713)   (3,217,713)   (4,829,128)
                                  ------------  ------------  ------------  ------------  ------------
DEFICIT, end of period..........  $(2,040,199)  $(3,217,713)  $(4,829,128)  $(3,833,356)  $(5,596,116)
                                  ============  ============  ============  ============  ============
</TABLE>
 
See notes to financial statements.
 
                                      F-55
<PAGE>   126
 
                              Q BROADCASTING, INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                                 SIX MONTHS ENDED
                                            YEARS ENDED SEPTEMBER 30,                MARCH 31,
                                     ---------------------------------------   ---------------------
                                        1993          1994          1995         1995        1996
                                     -----------   -----------   -----------   ---------   ---------
<S>                                  <C>           <C>           <C>           <C>         <C>
                                                                               (unaudited) (unaudited)
CASH FLOWS FROM OPERATING
  ACTIVITIES:
  Net loss.........................  $(1,822,392)  $(1,177,514)  $(1,611,415)  $(615,643)  $(766,988)
                                     -----------   -----------   -----------   ---------   ---------
  Adjustments to reconcile net loss
     to net cash used in operating
     activities:
     Depreciation and
       amortization................      637,397       538,600       447,602     158,568     152,600
     Provision for doubtful
       accounts....................       25,150        75,655        29,702          --          --
     Changes in operating assets
       and liabilities:
       (Increase) decrease in
          assets:
          Accounts receivable......       (9,557)     (444,619)      111,743     131,467    (129,351)
          Prepaid expenses and
            other current assets...         (690)         (196)          337     (70,952)    (40,793)
          Other assets.............       (3,853)      (25,309)       17,963        (201)      1,906
       (Decrease) increase in
          liabilities:
          Accounts payable.........      (22,712)       14,456        54,530     (39,679)     85,797
          Accrued expenses.........      (31,444)       12,009        46,165      38,259     (10,813)
                                     -----------   -----------   -----------   ---------   ---------
     Total adjustments.............      594,291       170,596       708,042     217,462      59,346
                                     -----------   -----------   -----------   ---------   ---------
     Net cash used in operating
       activities..................   (1,228,101)   (1,006,918)     (903,373)   (398,181)   (707,642)
                                     -----------   -----------   -----------   ---------   ---------
CASH FLOWS FROM INVESTING
  ACTIVITIES:
  Purchase of property and
     equipment.....................      (91,532)      (23,118)      (73,381)       (995)     (7,081)
                                     -----------   -----------   -----------   ---------   ---------
     Net cash used in investing
       activities..................      (91,532)      (23,118)      (73,381)       (995)     (7,081)
                                     -----------   -----------   -----------   ---------   ---------
CASH FLOWS FROM FINANCING
  ACTIVITIES:
  Principal repayment of note
     payable.......................     (327,719)           --            --          --          --
  Repayment of capital lease
     obligations...................       (8,585)       (9,823)       (8,692)     (5,841)     (3,547)
  Loans from stockholders..........    1,632,185     1,111,592       967,397     317,374     692,784
  Loans to related parties.........           --       (35,433)      (37,447)     35,433      25,955
                                     -----------   -----------   -----------   ---------   ---------
     Net cash provided by financing
       activities..................    1,295,881     1,066,336       921,258     346,966     715,192
                                     -----------   -----------   -----------   ---------   ---------
Net (decrease) increase in cash and
  cash equivalents.................      (23,752)       36,300       (55,496)    (52,210)        469
Cash and cash equivalents at
  beginning of period..............       43,779        20,027        56,327      56,327         831
                                     -----------   -----------   -----------   ---------   ---------
Cash and cash equivalents at end of
  period...........................  $    20,027   $    56,327   $       831   $   4,117   $   1,300
                                     ===========   ===========   ===========   =========   =========
</TABLE>
 
See notes to financial statements.
 
                                      F-56
<PAGE>   127
 
                              Q BROADCASTING, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
                 YEARS ENDED SEPTEMBER 30, 1993, 1994 AND 1995
                AND THE SIX MONTHS ENDED MARCH 31, 1995 AND 1996
  (INFORMATION WITH RESPECT TO THE SIX MONTHS ENDED MARCH 31, 1995 AND 1996 IS
                                   UNAUDITED)
 
1. DESCRIPTION OF ORGANIZATION AND BUSINESS:
 
     Q Broadcasting, Inc. (the "Company") owns and operates two radio broadcast
stations in Stamford, Connecticut. These stations, WSTC-AM and WKHL-FM,
principally serve the Stamford metropolitan area.
 
2. BASIS OF PRESENTATION:
 
     The financial statements have been prepared on a going concern basis which
contemplates continuity of operations and realization of assets and liquidation
of liabilities in the ordinary course of business. The Company's ability to
continue as a going concern is dependent upon the continued financial support of
its shareholders.
 
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
  a. Revenue recognition
 
     Broadcasting revenue is recognized when commercials are aired. Barter
transactions are recorded at the estimated fair value of the merchandise or
services received.
 
  b. Depreciation
 
     The Company provides for depreciation using the declining balance method
over the estimated useful lives of the fixed assets as follows:
 
<TABLE>
        <S>                                                                   <C>
        Broadcast and other equipment.......................................   5 years
        Tower and antenna systems...........................................   7 years
        Transmitter equipment...............................................   7 years
        Furniture and fixtures..............................................   7 years
</TABLE>
 
  c. Amortization
 
     The Company provides for amortization using the straight-line method over
the estimated useful lives of the intangible assets as follows:
 
<TABLE>
        <S>                                                                  <C>
        Broadcast license..................................................   25 years
        Transmitter lease..................................................   23 years
        Covenant not to compete............................................    3 years
        Organizational costs...............................................    5 years
</TABLE>
 
  d. Income taxes
 
     The shareholders of the Company elected to be taxed as a "Small Business
Corporation," for federal and state income tax purposes pursuant to the Internal
Revenue Code. As a result of this election, the income of the Company will be
taxed directly to the individual shareholders. Accordingly, no provision for
taxes is included in the financial statements of the Company.
 
  e. Statement of cash flows
 
     For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
 
                                      F-57
<PAGE>   128
 
                              Q BROADCASTING, INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:--(CONTINUED)
  f. Advertising
 
     The Company charges to expense, advertising costs as incurred. Advertising
costs amounted to $227,094, $41,405 and $112,226 for the years ended September
30, 1993, 1994 and 1995, respectively and $17,168 and $23,972 for the six months
ended March 31, 1995 and 1996, respectively.
 
  g. Interim financial statements
 
     The unaudited financial statements as of March 31, 1996 and for the six
months ended March 31, 1995 and 1996 reflect all adjustments (consisting only of
normal recurring accruals) which are, in the opinion of management, necessary
for a fair statement of the results for the period. The results of operations
are not necessarily indicative of the results expected for the fiscal year.
 
4. DUE FROM RELATED PARTIES:
 
     The Company advanced funds on behalf of three related entities.
Approximately $16,800 and $54,200 for two entities 100% owned by the Company's
owners as of September 30, 1994 and 1995, respectively and approximately $18,700
to an entity which the Company's owners have a minority interest as of September
30, 1994 and 1995. As of March 31, 1996 these receivables amounted to
approximately $18,700 and $28,200, respectively.
 
5. PROPERTY AND EQUIPMENT:
 
     Property and equipment, at cost, is summarized as follows:
 
<TABLE>
<CAPTION>
                                                           SEPTEMBER 30,            MARCH 31,
                                                     -------------------------        1996
                                                        1994           1995        -----------
                                                                                   (unaudited)
    <S>                                              <C>            <C>            <C>
    Broadcast and office equipment.................  $  583,853     $  586,269     $   586,269
    Tower and antenna systems......................     268,000        268,000         268,000
    Transmitter equipment..........................      75,000         75,000          75,000
    Furniture and fixtures.........................     229,519        300,484         307,565
                                                     ----------     ----------      ----------
                                                      1,156,372      1,229,753       1,236,834
    Less accumulated depreciation..................     633,347        822,461         908,317
                                                     ----------     ----------      ----------
                                                     $  523,025     $  407,292     $   328,517
                                                     ==========     ==========      ==========
</TABLE>
 
     Included in furniture and fixtures was $41,975 related to assets recorded
under capital leases; the related amount included in accumulated depreciation is
$19,095 and $28,707 as of September 30, 1994 and 1995 and $33,513 as of March
31, 1996.
 
                                      F-58
<PAGE>   129
 
                              Q BROADCASTING, INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
6. INTANGIBLES:
 
     Intangibles, at cost, is summarized as follows:
 
<TABLE>
<CAPTION>
                                                           SEPTEMBER 30,           MARCH 31,
                                                     -------------------------        1996
                                                        1994           1995        ----------
                                                                                   (unaudited)
    <S>                                              <C>            <C>            <C>
    Organizational costs...........................  $   97,917     $   97,917     $   97,917
    Covenant not to compete........................     450,000        450,000        450,000
    Broadcast license..............................   1,000,000      1,000,000      1,000,000
    Transmitter lease..............................   1,700,000      1,700,000      1,700,000
                                                     ----------     ----------     ----------
                                                      3,247,917      3,247,917      3,247,917
    Less accumulated amortization..................     614,234        872,722        939,466
                                                     ----------     ----------     ----------
                                                     $2,633,683     $2,375,195     $2,308,451
                                                     ==========     ==========     ==========
</TABLE>
 
7. CAPITAL LEASE OBLIGATIONS:
 
     Included in property and equipment are assets recorded under capital
leases. The future minimum lease payments for these capital leases and the
present value of the net minimum lease payments as of September 30, 1995 are as
follows:
 
<TABLE>
<CAPTION>
                                    FISCAL YEAR
        <S>                                                                  <C>
          1996.............................................................  $ 6,826
          1997.............................................................    4,168
                                                                             -------
        Minimum lease payments.............................................   10,994
        Less amount representing interest..................................      830
                                                                             -------
        Present value of net minimum lease payments........................  $10,164
                                                                             =======
</TABLE>
 
8. COMMITMENTS:
 
     The Company leases studio and office space and a transmitter tower site
under operating leases expiring in September 1999 and December 2017,
respectively. Rent expense for these leases was approximately $179,000, $186,000
and $211,000 for the years ended September 30, 1993, 1994 and 1995,
respectively. Rent expense for these leases was approximately $110,000 for the
six months ended March 31, 1995 and 1996.
 
     Minimum rental commitments for the remaining terms of the operating leases
are as follows:
 
<TABLE>
<CAPTION>
                            YEAR ENDING SEPTEMBER 30,
        <S>                                                                 <C>
             1996.........................................................  $212,685
             1997.........................................................   213,180
             1998.........................................................   213,180
             1999.........................................................   213,180
             2000.........................................................    21,780
        Thereafter........................................................   430,939
</TABLE>
 
9. NOTE PAYABLE--STOCKHOLDERS:
 
     In connection with advances made by its stockholders for the acquisition of
assets and working capital, the Company has issued an 8% demand note payable to
its stockholders. The stockholders have agreed not to demand payment until a
date subsequent to October 1, 1996. Interest expense for the years ended
 
                                      F-59
<PAGE>   130
 
                              Q BROADCASTING, INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
9. NOTE PAYABLE--STOCKHOLDERS--(CONTINUED)
September 30, 1993, 1994 and 1995 was $238,187, $435,895 and $492,397,
respectively. Interest expense for the six months ended March 31, 1995 and 1996
was $240,384 and $295,784, respectively.
 
10. SUBSEQUENT EVENT:
 
     The Company has entered into a letter of intent for the sale of
substantially all of its operating assets.
 
11. SUPPLEMENTARY INFORMATION--STATEMENT OF CASH FLOWS:
 
     Barter transactions resulted in sales and related expenses of $306,600,
$314,500 and $315,900 for the years ending September 30, 1993, 1994 and 1995,
respectively. Barter transactions resulted in sales and related expenses of
$105,455 and $121,930 for the six months ended March 31, 1995 and 1996,
respectively.
 
     Cash paid during the years ended September 30, 1993, 1994 and 1995 for
interest was $261,018, $438,648 and $493,578, respectively. Cash paid during the
six months ended March 31, 1995 and 1996 for interest was $137,526 and $-0-,
respectively.
 
                                      F-60
<PAGE>   131
 
             ------------------------------------------------------
             ------------------------------------------------------
 
NO DEALER, SALES REPRESENTATIVE, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
 
                               ------------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                        PAGE
<S>                                     <C>
Prospectus Summary....................      3
Risk Factors..........................      9
Use of Proceeds.......................     13
Dividend Policy.......................     13
Dilution..............................     14
Capitalization........................     15
Unaudited Pro Forma Consolidated
  Financial Information...............     16
Selected Historical and Pro Forma
  Consolidated Financial Data.........     23
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................     26
Business..............................     33
Management............................     50
Certain Relationships and Related
  Transactions........................     57
Principal and Selling Shareholders....     58
Description of Certain Indebtedness...     60
Description of Capital Stock..........     62
Shares Eligible for Future Sale.......     65
Underwriting..........................     66
Legal Matters.........................     67
Experts...............................     67
Available Information.................     68
Index to Financial Statements.........    F-1
</TABLE>
 
             ------------------------------------------------------
             ------------------------------------------------------
 
             ------------------------------------------------------
             ------------------------------------------------------
                                4,300,000 SHARES
                             COMMODORE MEDIA, INC.
 
                              CLASS A COMMON STOCK
                            -----------------------
 
                                   PROSPECTUS
                            -----------------------
                          DONALDSON, LUFKIN & JENRETTE
              SECURITIES CORPORATION
 
                                CS FIRST BOSTON
 
                        CIBC WOOD GUNDY SECURITIES CORP.
 
                                           , 1996
             ------------------------------------------------------
             ------------------------------------------------------
<PAGE>   132
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
     The following table sets forth the expenses expected to be incurred by the
Company in connection with the issuance and distribution of the Class A Common
Stock registered hereby, all of which expenses, except for the Securities and
Exchange Commission registration fee, the National Association of Securities
Dealers, Inc. filing fee and the NASDAQ National Market System listing
application fee, are estimates:
 
<TABLE>
<CAPTION>
                                    DESCRIPTION                              AMOUNT
                                                                             -------
        <S>                                                                  <C>
        Securities and Exchange Commission registration fee................  $25,863
        National Association of Securities Dealers, Inc. filing fee........  $ 8,000
        NASDAQ National Market System listing application fee..............        *
        Accounting fees and expenses.......................................        *
        Legal fees and expenses............................................        *
        Printing and engraving fees and expenses...........................        *
        Blue Sky fees and expenses.........................................        *
        Transfer Agent fees and expenses...................................        *
        Miscellaneous fees and expenses....................................        *
                                                                             -------
                  Total....................................................  $     *
                                                                             =======
</TABLE>
 
- ---------------
* To be filed by amendment.
 
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
     Each of Commodore Media, Inc. (the "Company"), Commodore Holdings, Inc.
("Holdings"), Commodore Media of Delaware, Inc. ("Commodore-DE"), Commodore
Media of Pennsylvania, Inc. ("Commodore-PA"), Commodore Media of Florida, Inc.
("Commodore-FL"), Commodore Media of Kentucky, Inc. ("Commodore-KY"), Commodore
Media of Norwalk, Inc. ("Commodore-Norwalk") and Commodore Media of Westchester,
Inc. ("Commodore-Westchester") is a Delaware corporation, and Danbury
Broadcasting, Inc. is a Connecticut corporation ("Danbury"). Each such company's
Certificate of Incorporation or By-laws also contains provisions making
indemnification of such company's directors and officers mandatory to the
fullest extent permitted by the Delaware General Corporation Law or the
Connecticut General Corporation law, as the case may be, provided that certain
procedural requirements are met and any applicable authorizations by such
company's Board of Directors are obtained.
 
     The Delaware General Corporation Law permits the indemnification by a
Delaware corporation of its directors, officers, employees and other agents
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement in connection with specified actions, suits or proceedings,
whether civil, criminal, administrative or investigative (other than derivative
actions which are by or in the right of the corporation) if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was illegal. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with defense or settlement of such an action and court
approval is required before there can be any indemnification where the person
seeking indemnification has been found liable to the corporation.
 
     The Connecticut General Corporation Law permits the indemnification by a
Connecticut corporation of its shareholders, directors, officers, employees
and/or agents, against judgments, fines, penalties, amounts paid in settlement
and reasonable expenses actually incurred provided (i) such person is successful
on the merits in the defense of any proceeding; or (ii) it is determined such
person acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was illegal; or (iii) the court
 
                                      II-1
<PAGE>   133
 
determines that such person is fairly and reasonably entistled to be
indemnified, and then for such amount as the court shall determine. Such persons
shall receive indemnification against reasonable expenses actually incurred in
derivative proceedings provided that either he or she is adjudged not to have
breached his or her duty to the corporation or where the court shall have
determined that such person is fairly and reasonably entitled to be indemnified,
and then for such amount as the court shall determine; provided, however, that
such persons shall not be indemnified for amounts paid in settling or otherwise
disposing of a derivative proceeding, with or without court approval, or for
expenses incurred in defending a proceeding which is settled or otherwise
disposed of without court approval.
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES
 
     In May 1996, the Company issued 10,000 shares of Series A Preferred Stock
under the Preferred Stock Facility to the CIBC Merchant Fund for an aggregate of
$10 million. In connection with the Preferred Stock Facility, in May 1996 the
Company issued to the CIBC Merchant Fund a warrant to purchase 7,550 shares of
the Company's Class A Common Stock which is immediately exercisable.
 
     As part of the Recapitalization Transactions in April 1995, the Company
completed the sale of 75,500 Units (the "Units"), each Unit consisting of $1,000
principal amount of the Company's Senior Subordinated Notes and a warrant to
purchase one share of the Company's Class A Common Stock at an exercise price of
$.01 per warrant. Also as part of the Recapitalization Transactions, in April
1995 the Company converted all of its existing common stock at such time into
486,373 shares of its Class B Common Stock and 119,212 shares (including 85,524
treasury shares) of its Class A Common Stock, which reflects a conversion ratio
of approximately 4:1. Further, in connection with the Recapitalization
Transactions, the Company issued the Friedman Senior Subordinated Note to a
trust for the benefit of Mr. Friedman.
 
     In connection with the refinancing of the Company's loan agreement with The
Bank of New York in December 1993, the Company issued to The Bank of New York a
warrant to purchase 4.99% of the Common Stock of the Company, on a fully diluted
basis, for $100. In March 1995, the Company redeemed the warrant for an
aggregate purchase price of $1,000,000. In addition, as part of the December
1993 debt restructuring, all previously authorized, issued and outstanding
shares of Series A, Series B and Series C Preferred Stock were contributed to
paid-in capital or converted into common stock and canceled. The shares of
Series A and Series B Preferred Stock were converted into 33,000 shares of
common stock resulting in additional paid-in capital of $3,299,670. The shares
of Series C Preferred Stock were contributed to paid-in capital by the Company's
former President. Further, in December 1993, Carter Burden purchased 28,000
shares of Class A Common Stock for $2,500,000.
 
     In December 1993, the Company granted a warrant to WAMBCO, to purchase
4.99% of its common stock at an exercise price of $100, on a fully diluted
basis. In April 1995, WAMBCO exercised the warrant and purchased 27,314 shares
of Class A Common Stock of the Company.
 
     In December 1993, Radio Financial Partners, Inc. converted $7,723,000 of
outstanding debt and accrued interest into 10,000 shares of the Company's 8.87%
cumulative redeemable preferred stock. In April 1995, as part of the
Recapitalization Transactions, the Company redeemed all outstanding shares of
preferred stock for an aggregate purchase price of approximately $8.7 million.
 
     The Company has reserved 132,125 shares of Class A Common Stock for options
issued under the Company's 1995 Stock Option Plan. As of May 17, 1996, options
to purchase a total of 25,730 shares were exercisable at an exercise price of
$45 per share.
 
     All of the shares referred to in the foregoing paragraphs do not give
effect to the 7.2-for-1 stock split of the Common Stock. All of the securities
referred to in the foregoing paragraphs were issued by the Company in reliance
on the exemption from registration provided by Section 4(2) of the Securities
Act of 1933, as amended.
 
                                      II-2
<PAGE>   134
 
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
     (a) Exhibits
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                          DESCRIPTION
<S>       <C>  <C>
1*         --  Proposed form of Underwriting Agreement.
3.1.1      --  Amended and Restated Certificate of Incorporation of the Company, as amended.
3.1.2      --  By-laws of the Company, as amended.
3.2.1      --  Certificate of Incorporation of Commodore-Delaware, as amended.
3.2.2(a)   --  By-laws of Commodore-Delaware.
3.3.1      --  Certificate of Incorporation of Commodore-Pennsylvania, as amended.
3.3.2(a)   --  By-laws of Commodore-Pennsylvania.
3.4.1      --  Certificate of Incorporation of Commodore-Florida.
3.4.2(a)   --  By-laws of Commodore-Florida.
3.5.1      --  Certificate of Incorporation of Commodore-Kentucky, as amended.
3.5.2(a)   --  By-laws of Commodore-Kentucky.
3.6.1      --  Certificate of Incorporation of Commodore-Norwalk.
3.6.2(a)   --  By-laws of Commodore-Norwalk.
3.7.1      --  Certificate of Incorporation of Commodore-Westchester, as amended.
3.7.2(a)   --  By-laws of Commodore-Westchester.
3.8.1(b)   --  Certificate of Incorporation of Danbury Broadcasting, Inc.
3.8.2(b)   --  By-laws of Danbury Broadcasting, Inc.
3.9.1      --  Certificate of Incorporation of Commodore Holdings, Inc.
3.9.2      --  By-laws of Commodore Holdings, Inc.
4.1.1(a)   --  Indenture dated as of April 21, 1995 among the Company, IBJ Schroder Bank &
               Trust Company, as Trustee, and the Guarantors named therein (the "Indenture").
4.1.2(a)   --  Amendment No. 1 to Indenture.
4.1.3(b)   --  Amendment No. 2 to Indenture.
4.1.4(b)   --  Amendment No. 3 to Indenture.
4.1.5(c)   --  Amendment No. 4 to Indenture.
4.2(a)     --  Form of Original Note No. 1 for $75,500,000, Cusip No. 20266P AA 9, with
               Guarantee of Guarantors listed therein.
4.3(a)     --  Form of Note with Form of Guarantee.
4.4(a)     --  Registration Rights Agreement dated as of April 21, 1995 by and among the
               Company, the Guarantors named therein and each of the Purchasers referred to
               therein.
5.1*       --  Form of Opinion of Pryor, Cashman, Sherman & Flynn.
10.1(a)    --  Securities Purchase Agreement dated as of April 13, 1995 by and among the
               Company, the Guarantors named therein and each of the Purchasers referred to
               therein.
10.2(a)    --  Warrant Agreement dated as of April 21, 1995 between the Company and IBJ
               Schroder Bank & Trust Company, as Warrant Agent.
10.3(a)    --  Form of Original Warrant Certificate No. 1 for 75,500 Warrants, Cusip No. 20266P
               11 9.
10.4(a)    --  Common Stock Registration Rights and Stockholders' Agreement dated as of April
               21, 1995 among the Company, certain control stockholders and each of the
               Purchasers referred to therein.
</TABLE>
 
                                      II-3
<PAGE>   135
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                          DESCRIPTION
<S>       <C>  <C>
10.5(a)    --  Note No. 1 for $1,308,000, Cusip No. 20266P AA 9, with Guarantee of Guarantors
               listed therein.
10.6.1     --  1995 Stock Option Plan of the Company.
10.7.1(a)  --  Construction Permit dated October 19, 1994 issued by the FCC to Commodore-PA in
               connection with WAEB-AM.
10.7.2(a)  --  Letters dated April 27, 1995 and May 10, 1995 from the FCC to Commodore-PA
               regarding Program Test Authority.
10.7.3(b)  --  Broadcast Station License dated July 28, 1995 issued by the FCC to Commodore-PA
               in connection with WAEB-AM.
10.8(a)    --  Broadcast Station License dated August 5, 1993 issued by the FCC to Commodore-PA
               in connection with WAEB-FM.
10.9(a)    --  Broadcast Station License dated June 19, 1990 issued by the FCC to Holt Corp. of
               Pennsylvania ("Holt") in connection with WZZO-FM, together with an assignment
               thereof from Holt to Commodore-PA, and evidence of license renewal.
10.10(a)   --  Broadcast Station License dated April 30, 1987 issued by the FCC to
               Commodore-Delaware in connection with WJBR-AM and evidence of license renewal.
10.11.1(a)  -- Incorporated by reference to the Company's S-4. Broadcast Station License dated
               February 6, 1992 issued by the FCC to Commodore-Delaware in connection with
               WJBR-FM.
10.11.2(b)  -- Broadcast Station License dated April 26, 1995 issued by the FCC to
               Commodore-Delaware in connection with WJBR-FM which modifies Broadcast License
               issued on February 6, 1992.
10.12(a)   --  Broadcast Station License dated December 14, 1984 and Auxiliary Broadcast
               Station License dated August 22, 1985, each issued by the FCC to Hanson
               Communications, Inc. ("Hanson") in connection with WEFX-FM, together with an
               assignment thereof from Hanson to Commodore-Norwalk, and evidence of license
               renewal.
10.13(a)   --  Broadcast Station License dated February 14, 1985 issued by the FCC to Hanson in
               connection with WNLK-AM, together with an assignment thereof from Hanson to
               Commodore-Norwalk, and evidence of license renewal.
10.14(a)   --  Broadcast Station License dated November 18, 1988 issued by the FCC to
               Commodore-Westchester in connection with WFAS-AM and evidence of license
               renewal.
10.15(a)   --  Broadcast Station License dated July 22, 1986 issued by the FCC to
               Commodore-Westchester in connection with WFAS-FM and evidence of license
               renewal.
10.16(b)   --  Broadcast Station License dated April 13, 1981 issued by the FCC to Greater
               Kentucky Radio, Inc. in connection with WTCR-AM and evidence of license renewal
               in the name of Commodore-Kentucky.
10.17(b)   --  Broadcast Station License dated September 17, 1985 issued by the FCC to CRB
               Broadcasting of West Virginia (which merged with and into Commodore-Kentucky on
               November 22, 1989) in connection with WTCR-FM and evidence of license renewal.
10.18(b)   --  Broadcast Station License dated June 13, 1991 issued by the FCC to
               Commodore-Florida in connection with WZZR-FM.
10.19(a)   --  Joint Sales Agreement between Commodore-PA and East Penn. Broadcasting, Inc.
               with respect to WKAP-AM (formerly WXKW-AM).
10.20(a)   --  Employment Agreement dated April 21, 1995 by and between the Company and Carter
               Burden.
10.21.1(a)  -- Amended and Restated Employment Agreement dated April 21, 1995 by and between
               the Company and Bruce A. Friedman.
10.21.2(b)  -- Amendment No. 1 to Amended and Restated Employment Agreement between the Company
               and Bruce A. Friedman.
</TABLE>
 
                                      II-4
<PAGE>   136
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                          DESCRIPTION
<S>       <C>  <C>
10.22(b)   --  Amended and Restated Employment Agreement dated April 21, 1995 by and between
               the Company and James T. Shea, Jr.
10.23(b)   --  Employment Agreement dated July 1, 1995 by and between the Company and Charlie
               V. DiToro.
10.24(b)   --  Employment Agreement dated as of April 21, 1995 by and between the Company and
               Jay Sterin.
10.25(a)   --  Promissory Note, dated April 21, 1995, in the aggregate principal amount of
               $900,000, issued by Bruce A. Friedman to Carter Burden as security for Class A
               shares held by Mr. Friedman.
10.26(a)   --  Promissory Note, dated April 21, 1995, in the aggregate principal amount
               $208,000, issued by James T. Shea, Jr. to Carter Burden as security for Class A
               shares held by Mr. Shea.
10.27(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate principal amount
               $50,215.00, issued by Carter Burden to the Company.
10.28(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate principal amount
               $100,160.00, issued by Bruce A. Friedman to the Company.
10.29(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate principal amount
               $50,000, issued by James T. Shea, Jr. to the Company.
10.30(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate principal amount
               $50,000, issued by James J. Sullivan to the Company.
10.31(a)   --  Representation Agreement dated June 1, 1987 between Katz Communications, Inc.
               and Commodore-Delaware regarding WJBR-AM.
10.32(a)   --  Representation Agreement dated June 1, 1987 between Katz Communications, Inc.
               and Commodore-Delaware regarding WJBR-FM.
10.33(a)   --  Representation Agreement dated March 28, 1988 between Katz Communications, Inc.
               and Commodore-Kentucky regarding WTCR-AM.
10.34(a)   --  Representation Agreement dated March 28, 1988 between Katz Communications, Inc.
               and Commodore-Kentucky regarding WTCR-FM.
10.35(a)   --  Representation Agreement dated June 1, 1994 between Katz Communications, Inc.
               and Commodore-PA regarding WAEB-AM.
10.36(a)   --  Representation Agreement dated June 1, 1994 between Katz Communications, Inc.
               and Commodore-PA regarding WAEB-FM.
10.37(a)   --  Representation Agreement dated June 1, 1994 between Katz Communications, Inc.
               and Commodore-PA regarding WZZO-FM.
10.38(a)   --  National Radio Sales Representation Agreement dated February 15, 1995 between
               McGavren Guild, Inc. and Commodore-Norwalk regarding WNLK-AM/WEFX-FM.
10.39(a)   --  Representation Agreement dated October 5, 1987 between Katz Communications, Inc.
               and Commodore-FL regarding WZZR-FM.
10.40(a)   --  National Radio Sales Representation Agreement dated February 15, 1995 between
               McGavren Guild, Inc. and Commodore-Westchester regarding WFAS-AM/FM.
10.41(b)   --  Option Purchase Agreement dated as of March 17, 1995 between Treasure Coast
               Media, Inc. ("Treasure Coast") and Commodore-Florida.
10.42(b)   --  Sales Local Marketing Agreement dated as of March 17, 1995 between Treasure
               Coast and Commodore-Florida.
</TABLE>
 
                                      II-5
<PAGE>   137
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                          DESCRIPTION
<S>       <C>  <C>
10.43(b)   --  Asset Purchase Agreement dated as of October 30, 1995 between Hudson Valley
               Growth, L.P. ("Hudson Valley") and Commodore-Westchester and Amendment No. 1
               thereto dated March 27, 1996.
10.44(b)   --  Stock Purchase Agreement dated as of October 30, 1995 among Danbury
               Broadcasting, Inc. ("Danbury"), Gary Starr ("Starr"), BCI Growth III, L.P. ("BCI
               Growth") and Commodore-Norwalk and Amendment No. 1 thereto dated March 27, 1996.
10.45(b)   --  Integration Agreement dated as of October 30, 1995 between
               Commodore-Westchester, Commodore-Norwalk, Hudson Valley, Danbury, BCI Growth and
               Starr and Amendment No. 1 thereto dated March 27, 1996.
10.46(b)   --  Local Marketing Agreement dated as of October 30, 1995 between
               Commodore-Westchester and Hudson Valley.
10.47(b)   --  Local Marketing Agreement dated as of October 30, 1995 between Commodore-Norwalk
               and Danbury.
10.48(b)   --  Asset Purchase Agreement dated as of February 16, 1996 between Media VI and
               Commodore-Florida.
10.49(b)   --  Joint Sales Agreement dated as of February 16, 1996 between Commodore-Florida
               and Media VI.
10.50(b)   --  Loan and Security Agreement dated as of March 13, 1996 among Commodore Holdings,
               Inc., as Borrower, the Company, Commodore-Delaware, Commodore-Pennsylvania,
               Commodore-Florida, Commodore-Kentucky, Commodore-Norwalk and
               Commodore-Westchester, as Guarantors, and AT&T Commercial Finance Corporation,
               as Lender.
10.51(b)   --  Supplement No. 1 to the Loan Agreement.
10.52(b)   --  Asset Purchase Agreement dated as of March 15, 1996 between Commodore Media of
               Norwalk, Inc. and Q Broadcasting, Inc.
10.53(b)   --  Employment Agreement dated as of April 21, 1995 by and between the Company and
               Scott J. Bacherman.
10.54(b)   --  Employment Agreement dated as of April 21, 1995 by and between the Company and
               Judy Jennings.
10.55(b)   --  Employment Agreement dated as of April 21, 1995 by and between the Company and
               James J. Sullivan.
10.56(b)   --  Employment Agreement dated as of July 1, 1995 by and between the Company and
               Rich Lewis.
10.57(b)   --  Broadcast Station License dated November 14, 1991 issued by the FCC to Treasure
               Coast Media, Inc. ("Treasure Coast") in connection with WQOL-FM, together with
               an assignment thereof by Treasure Coast to Commodore-Florida, and evidence of
               license renewal.
10.58.1(b)  -- Broadcast Station License dated June 22, 1992 issued by the FCC to Housatonic
               Valley Broadcasting Inc. ("Housatonic") in connection with WINE-AM, together
               with an FCC Consent to the transfer of control of the licensee to
               Commodore-Norwalk, and evidence of license renewal.
10.58.2(b)  -- Construction Permit dated August 31, 1994 issued by the FCC to Danbury
               Broadcasting, Inc. ("Danbury") in connection with WINE-AM.
10.59.1(b)  -- Construction Permit dated August 23, 1995 issued by the FCC to Danbury in
               connection with WRKI-FM.
10.59.2(b)  -- Program Test Authority dated January 17, 1996 issued by the FCC to Danbury in
               connection with WRKI-FM.
</TABLE>
 
                                      II-6
<PAGE>   138
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                          DESCRIPTION
<S>       <C>  <C>
10.59.3(b)  -- Broadcast Station License dated April 26, 1978 issued by the FCC to Housatonic
               in connection with WRKI-FM, together with an FCC Consent to the transfer of
               control of the licensee to Commodore-Norwalk, and evidence of license renewal.
10.60(b)   --  Broadcast Station License dated July 20, 1993 issued by the FCC to Tri-Valley
               Broadcasting Corporation in connection with WVYB-FM (formerly WMJV-FM), together
               with an assignment thereof by Hudson Valley Growth, L.P. ("Hudson") to
               Commodore-Westchester, and evidence of license renewal.
10.61(b)   --  Broadcast Station License dated June 19, 1985 issued by the FCC to Putnam
               Broadcasting Corp. in connection with WPUT-AM, together with an assignment
               thereof from Hudson to Commodore-Westchester, and evidence of license renewal.
10.62(b)   --  Broadcast Station License and Modification issued by the FCC to VIP
               Broadcasting, Inc. in connection with WZZN-FM (formerly WVIB-FM, WMJU-FM and
               WVIP-FM), together with an assignment thereof by Hudson to
               Commodore-Westchester.
10.63      --  Asset Purchase Agreement dated as of April 8, 1996 between Commodore-Kentucky
               and Simmons Broadcasting Company ("Simmons").
10.64      --  Local Marketing Agreement dated as of April 8, 1996 between Commodore-Kentucky
               and Simmons.
10.65      --  Asset Purchase Agreement dated as of April 8, 1996 between Commodore-Kentucky
               and Adventure Communications, Inc. ("Adventure").
10.66      --  Local Marketing Agreement dated as of April 8, 1996 between Commodore-Kentucky
               and Adventure.
10.67      --  Contingent Sale and Assignment of Options Agreement dated as of April 8, 1996
               between Commodore-Kentucky and Michael R. Shott.
10.68      --  Securities Purchase Agreement dated as of May 1, 1996 among the Company, the
               Guarantors and CIBC WG Argosy Merchant Fund 2, L.L.C. (the "CIBC Merchant
               Fund").
10.69      --  Common Stock Registration Rights and Stockholders Agreement dated as of May 1,
               1996 among the Company, Certain Control Stockholders and the CIBC Merchant Fund.
10.70      --  Registration Rights Agreement dated as of May 1, 1996 among the Company, the
               Guarantors and the CIBC Merchant Fund.
10.71      --  Warrant Agreement dated as of May 1, 1996 between the Company and IBJ Schroder
               Bank & Trust Company, as Warrant Agent.
11.1       --  Statement regarding computation of earnings per share.
16.1(a)    --  Letter of Weeks DeGraw & Co., P.A. regarding change in certifying accountants.
21.1(b)    --  List of Subsidiaries.
23.1       --  Consent of Ernst & Young LLP, independent auditors.
23.2       --  Consent of Weeks DeGraw & Co., P.A., independent auditors.
23.3       --  Consent of Brown, Edwards & Company, LLP, independent auditors.
23.4       --  Consent of Holtz Rubenstein & Company, LLP, independent auditors.
23.5       --  Consent of Paneth Haber & Zimmerman LLP, independent auditors.
</TABLE>
 
- ------------------------------
* To be filed by amendment.
 
(a) Incorporated by reference to the Company's Registration Statement on Form
    S-4 (File No. 33-92732) effective July 26, 1995.
 
(b) Incorporated by reference to the Company's Annual Report on Form 10-K for
    the year ended December 31, 1995.
 
(c) Incorporated by reference to the Company's Form 10-Q for the quarter ended
    March 31, 1996.
 
                                      II-7
<PAGE>   139
 
     (b) Financial Statement Schedules
 
<TABLE>
<CAPTION>
                                                                                PAGE
        <S>                                                                     <C>
        Report of Ernst & Young LLP on Financial Statement Schedules..........   S-1
        Report of Weeks DeGraw & Co., P.A. on Financial Statement Schedules...   S-2
        Valuation and Qualifying Accounts.....................................   S-3
</TABLE>
 
ITEM 17.  UNDERTAKINGS
 
     Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Company, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
 
     The undersigned registrant undertakes to provide to the Underwriters at the
closings specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
 
     The undersigned registrant hereby undertakes that:
 
          (1) For purposes of determining any liability under the Securities Act
     of 1933, the information omitted from the form of prospectus filed as part
     of this Registration Statement in reliance upon Rule 430A and contained in
     a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     Registration Statement as of the time it was declared effective.
 
          (2) For the purpose of determining any liability under the Securities
     Act of 1933, each post-effective amendment that contains a form of
     prospectus shall be deemed to be a new registration statement relating to
     the securities offered therein, and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.
 
                                      II-8
<PAGE>   140
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, COMMODORE
MEDIA, INC., a Delaware corporation, has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of New York, New York on May 17, 1996.
 
                                          COMMODORE MEDIA, INC.
 
                                          By:      /s/ BRUCE A. FRIEDMAN
                                                     Bruce A. Friedman
                                               President and Chief Executive
                                                           Officer
 
     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Bruce A. Friedman as true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution
and for him/her and in his/her name, place and stead, in any and all capacities
to sign any and all amendments (including pre-effective and post-effective
amendments) to this Registration Statement, as well as any new registration
statement filed to register additional securities pursuant to Rule 462(b) under
the Securities Act, and to file the same with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
                   SIGNATURE                                 TITLE                   DATE
<C>                                                <S>                           <C>
                       /s/ BRUCE A.                President, Chief Executive    May 17, 1996
                    FRIEDMAN                       Officer, Assistant
               Bruce A. Friedman                   Secretary and Director
                                                   (principal executive
                                                   officer)
                        /s/ SUSAN L.               Chairman of the Board         May 17, 1996
                     BURDEN
                Susan L. Burden
                    /s/ JAMES T. SHEA,             Chief Operating Officer       May 17, 1996
                       JR.
              James T. Shea, Jr.
                       /s/ JAMES J.                Chief Financial Officer,      May 17, 1996
                    SULLIVAN                       Treasurer and Secretary
               James J. Sullivan                   (principal financial and
                                                   accounting officer)
                       /s/ DANIEL H.               Director                      May 17, 1996
                      STERN
                Daniel H. Stern
</TABLE>
 
                                      II-9
<PAGE>   141
 
The Board of Directors
Commodore Media, Inc.
 
We have audited the consolidated financial statements of Commodore Media, Inc.
(the "Company") as of December 31, 1995 and 1994, and for each of the two years
in the period ended December 31, 1995 (included elsewhere in this Registration
Statement). Our audits also included the financial statement schedule listed in
Part II, Item 16(b) of this Registration Statement. This schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.
 
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects, the information set forth therein.
 
                                          ERNST & YOUNG LLP
New York, New York
February 28, 1996, except for Note 14, as
to which the date is May 16, 1996
 
- --------------------------------------------------------------------------------
 
The foregoing report is in the form that will be signed upon the completion of
the 7.2:1 stock split of the Company's common stock, as described in Note 14 to
the financial statements.
 
                                          ERNST & YOUNG LLP
New York, New York
May 16, 1996
 
                                       S-1
<PAGE>   142
 
The Board of Directors
Commodore Media, Inc.
 
We have audited the consolidated financial statements of Commodore Media, Inc.
(the "Company") as of December 31, 1995 and 1994, and for each of the two years
in the period ended December 31, 1995 (included elsewhere in this Registration
Statement). Our audits also included the financial statement schedule listed in
Part II, Item 16(b) of this Registration Statement. This schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.
 
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects, the information set forth therein.
 
                                          WEEKS DE GRAW & COMPANY, P.A.
 
New York, New York
February 28, 1996, except for Note 14, as
to which the date is May 16, 1996
 
- --------------------------------------------------------------------------------
 
The foregoing report is in the form that will be signed upon the completion of
the 7.2:1 stock split of the Company's common stock, as described in Note 14 to
the financial statements.
 
                                          WEEKS DE GRAW & COMPANY, P.A.
 
New York, New York
May 16, 1996
 
                                       S-2
<PAGE>   143
 
                             COMMODORE MEDIA, INC.
                                AND SUBSIDIARIES
 
                                  SCHEDULE II
                       VALUATION AND QUALIFYING ACCOUNTS
 
<TABLE>
<CAPTION>
                                                              COLUMN C             COLUMN D
                                          COLUMN B     -----------------------   -------------
                                        ------------                ADDITIONS     DEDUCTIONS        COLUMN E
               COLUMN A                  BALANCE AT    ADDITIONS    CHARGED TO   DIRECT WRITE-   --------------
- --------------------------------------  BEGINNING OF   CHARGED TO     OTHER      OFFS, NET OF    BALANCE AT END
             DESCRIPTION                   PERIOD      OPERATIONS    ACCOUNTS     RECOVERIES       OF PERIOD
<S>                                     <C>            <C>          <C>          <C>             <C>
Allowance for uncollectible note
  receivable at December 31, 1993.....    $375,375       319,625           --       (695,000)       $     --
Allowance for doubtful accounts at
  December 31, 1993...................    $320,829       505,504           --       (372,551)       $453,782
Allowance for doubtful accounts at
  December 31, 1994...................    $453,782       468,155           --       (389,706)       $532,231
Allowance for doubtful accounts at
  December 31, 1995...................    $532,231       556,137           --       (388,032)       $700,336
</TABLE>
 
                                       S-3
<PAGE>   144
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                  EXHIBIT TITLE                                 PAGE
<S>       <C>  <C>                                                               <C>
1*         --  Proposed form of Underwriting Agreement.
3.1.1      --  Amended and Restated Certificate of Incorporation of the Company,
               as amended.
3.1.2      --  By-laws of the Company, as amended.
3.2.1      --  Certificate of Incorporation of Commodore-Delaware, as amended.
3.2.2(a)   --  By-laws of Commodore-Delaware.
3.3.1      --  Certificate of Incorporation of Commodore-Pennsylvania, as
               amended.
3.3.2(a)   --  By-laws of Commodore-Pennsylvania.
3.4.1      --  Certificate of Incorporation of Commodore-Florida.
3.4.2(a)   --  By-laws of Commodore-Florida.
3.5.1      --  Certificate of Incorporation of Commodore-Kentucky, as amended.
3.5.2(a)   --  By-laws of Commodore-Kentucky.
3.6.1      --  Certificate of Incorporation of Commodore-Norwalk.
3.6.2(a)   --  By-laws of Commodore-Norwalk.
3.7.1      --  Certificate of Incorporation of Commodore-Westchester, as amended.
3.7.2(a)   --  By-laws of Commodore-Westchester.
3.8.1(b)   --  Certificate of Incorporation of Danbury Broadcasting, Inc.
3.8.2(b)   --  By-laws of Danbury Broadcasting, Inc.
3.9.1      --  Certificate of Incorporation of Commodore Holdings, Inc.
3.9.2      --  By-laws of Commodore Holdings, Inc.
4.1.1(a)   --  Indenture dated as of April 21, 1995 among the Company, IBJ
               Schroder Bank & Trust Company, as Trustee, and the Guarantors
               named therein (the "Indenture").
4.1.2(a)   --  Amendment No. 1 to Indenture.
4.1.3(b)   --  Amendment No. 2 to Indenture.
4.1.4(b)   --  Amendment No. 3 to Indenture.
4.1.5(c)   --  Amendment No. 4 to Indenture.
4.2(a)     --  Form of Original Note No. 1 for $75,500,000, Cusip No. 20266P AA
               9, with Guarantee of Guarantors listed therein.
4.3(a)     --  Form of Note with Form of Guarantee.
4.4(a)     --  Registration Rights Agreement dated as of April 21, 1995 by and
               among the Company, the Guarantors named therein and each of the
               Purchasers referred to therein.
5.1*       --  Form of Opinion of Pryor, Cashman, Sherman & Flynn.
10.1(a)    --  Securities Purchase Agreement dated as of April 13, 1995 by and
               among the Company, the Guarantors named therein and each of the
               Purchasers referred to therein.
10.2(a)    --  Warrant Agreement dated as of April 21, 1995 between the Company
               and IBJ Schroder Bank & Trust Company, as Warrant Agent.
10.3(a)    --  Form of Original Warrant Certificate No. 1 for 75,500 Warrants,
               Cusip No. 20266P 11 9.
</TABLE>
<PAGE>   145
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                  EXHIBIT TITLE                                 PAGE
<S>       <C>  <C>                                                               <C>
10.4(a)    --  Common Stock Registration Rights and Stockholders' Agreement dated
               as of April 21, 1995 among the Company, certain control
               stockholders and each of the Purchasers referred to therein.
10.5(a)    --  Note No. 1 for $1,308,000, Cusip No. 20266P AA 9, with Guarantee
               of Guarantors listed therein.
10.6.1     --  1995 Stock Option Plan of the Company.
10.7.1(a)  --  Construction Permit dated October 19, 1994 issued by the FCC to
               Commodore-PA in connection with WAEB-AM.
10.7.2(a)  --  Letters dated April 27, 1995 and May 10, 1995 from the FCC to
               Commodore-PA regarding Program Test Authority.
10.7.3(b)  --  Broadcast Station License dated July 28, 1995 issued by the FCC to
               Commodore-PA in connection with WAEB-AM.
10.8(a)    --  Broadcast Station License dated August 5, 1993 issued by the FCC
               to Commodore-PA in connection with WAEB-FM.
10.9(a)    --  Broadcast Station License dated June 19, 1990 issued by the FCC to
               Holt Corp. of Pennsylvania ("Holt") in connection with WZZO-FM,
               together with an assignment thereof from Holt to Commodore-PA, and
               evidence of license renewal.
10.10(a)   --  Broadcast Station License dated April 30, 1987 issued by the FCC
               to Commodore-Delaware in connection with WJBR-AM and evidence of
               license renewal.
10.11.1(a)  -- Incorporated by reference to the Company's S-4. Broadcast Station
               License dated February 6, 1992 issued by the FCC to
               Commodore-Delaware in connection with WJBR-FM.
10.11.2(b)  -- Broadcast Station License dated April 26, 1995 issued by the FCC
               to Commodore-Delaware in connection with WJBR-FM which modifies
               Broadcast License issued on February 6, 1992.
10.12(a)   --  Broadcast Station License dated December 14, 1984 and Auxiliary
               Broadcast Station License dated August 22, 1985, each issued by
               the FCC to Hanson Communications, Inc. ("Hanson") in connection
               with WEFX-FM, together with an assignment thereof from Hanson to
               Commodore-Norwalk, and evidence of license renewal.
10.13(a)   --  Broadcast Station License dated February 14, 1985 issued by the
               FCC to Hanson in connection with WNLK-AM, together with an
               assignment thereof from Hanson to Commodore-Norwalk, and evidence
               of license renewal.
10.14(a)   --  Broadcast Station License dated November 18, 1988 issued by the
               FCC to Commodore-Westchester in connection with WFAS-AM and
               evidence of license renewal.
10.15(a)   --  Broadcast Station License dated July 22, 1986 issued by the FCC to
               Commodore-Westchester in connection with WFAS-FM and evidence of
               license renewal.
10.16(b)   --  Broadcast Station License dated April 13, 1981 issued by the FCC
               to Greater Kentucky Radio, Inc. in connection with WTCR-AM and
               evidence of license renewal in the name of Commodore-Kentucky.
</TABLE>
<PAGE>   146
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                  EXHIBIT TITLE                                 PAGE
<S>       <C>  <C>                                                               <C>
10.17(b)   --  Broadcast Station License dated September 17, 1985 issued by the
               FCC to CRB Broadcasting of West Virginia (which merged with and
               into Commodore-Kentucky on November 22, 1989) in connection with
               WTCR-FM and evidence of license renewal.
10.18(b)   --  Broadcast Station License dated June 13, 1991 issued by the FCC to
               Commodore-Florida in connection with WZZR-FM.
10.19(a)   --  Joint Sales Agreement between Commodore-PA and East Penn.
               Broadcasting, Inc. with respect to WKAP-AM (formerly WXKW-AM).
10.20(a)   --  Employment Agreement dated April 21, 1995 by and between the
               Company and Carter Burden.
10.21.1(a)  -- Amended and Restated Employment Agreement dated April 21, 1995 by
               and between the Company and Bruce A. Friedman.
10.21.2(b)  -- Amendment No. 1 to Amended and Restated Employment Agreement
               between the Company and Bruce A. Friedman.
10.22(b)   --  Amended and Restated Employment Agreement dated April 21, 1995 by
               and between the Company and James T. Shea, Jr.
10.23(b)   --  Employment Agreement dated July 1, 1995 by and between the Company
               and Charlie V. DiToro.
10.24(b)   --  Employment Agreement dated as of April 21, 1995 by and between the
               Company and Jay Sterin.
10.25(a)   --  Promissory Note, dated April 21, 1995, in the aggregate principal
               amount of $900,000, issued by Bruce A. Friedman to Carter Burden
               as security for Class A shares held by Mr. Friedman.
10.26(a)   --  Promissory Note, dated April 21, 1995, in the aggregate principal
               amount $208,000, issued by James T. Shea, Jr. to Carter Burden as
               security for Class A shares held by Mr. Shea.
10.27(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate
               principal amount $50,215.00, issued by Carter Burden to the
               Company.
10.28(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate
               principal amount $100,160.00, issued by Bruce A. Friedman to the
               Company.
10.29(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate
               principal amount $50,000, issued by James T. Shea, Jr. to the
               Company.
10.30(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate
               principal amount $50,000, issued by James J. Sullivan to the
               Company.
10.31(a)   --  Representation Agreement dated June 1, 1987 between Katz
               Communications, Inc. and Commodore-Delaware regarding WJBR-AM.
10.32(a)   --  Representation Agreement dated June 1, 1987 between Katz
               Communications, Inc. and Commodore-Delaware regarding WJBR-FM.
10.33(a)   --  Representation Agreement dated March 28, 1988 between Katz
               Communications, Inc. and Commodore-Kentucky regarding WTCR-AM.
10.34(a)   --  Representation Agreement dated March 28, 1988 between Katz
               Communications, Inc. and Commodore-Kentucky regarding WTCR-FM.
10.35(a)   --  Representation Agreement dated June 1, 1994 between Katz
               Communications, Inc. and Commodore-PA regarding WAEB-AM.
10.36(a)   --  Representation Agreement dated June 1, 1994 between Katz
               Communications, Inc. and Commodore-PA regarding WAEB-FM.
</TABLE>
<PAGE>   147
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                  EXHIBIT TITLE                                 PAGE
<S>       <C>  <C>                                                               <C>
10.37(a)   --  Representation Agreement dated June 1, 1994 between Katz
               Communications, Inc. and Commodore-PA regarding WZZO-FM.
10.38(a)   --  National Radio Sales Representation Agreement dated February 15,
               1995 between McGavren Guild, Inc. and Commodore-Norwalk regarding
               WNLK-AM/WEFX-FM.
10.39(a)   --  Representation Agreement dated October 5, 1987 between Katz
               Communications, Inc. and Commodore-FL regarding WZZR-FM.
10.40(a)   --  National Radio Sales Representation Agreement dated February 15,
               1995 between McGavren Guild, Inc. and Commodore-Westchester
               regarding WFAS-AM/FM.
10.41(b)   --  Option Purchase Agreement dated as of March 17, 1995 between
               Treasure Coast Media, Inc. ("Treasure Coast") and
               Commodore-Florida.
10.42(b)   --  Sales Local Marketing Agreement dated as of March 17, 1995 between
               Treasure Coast and Commodore-Florida.
10.43(b)   --  Asset Purchase Agreement dated as of October 30, 1995 between
               Hudson Valley Growth, L.P. ("Hudson Valley") and
               Commodore-Westchester and Amendment No. 1 thereto dated March 27,
               1996.
10.44(b)   --  Stock Purchase Agreement dated as of October 30, 1995 among
               Danbury Broadcasting, Inc. ("Danbury"), Gary Starr ("Starr"), BCI
               Growth III, L.P. ("BCI Growth") and Commodore-Norwalk and
               Amendment No. 1 thereto dated March 27, 1996.
10.45(b)   --  Integration Agreement dated as of October 30, 1995 between
               Commodore-Westchester, Commodore-Norwalk, Hudson Valley, Danbury,
               BCI Growth and Starr and Amendment No. 1 thereto dated March 27,
               1996.
10.46(b)   --  Local Marketing Agreement dated as of October 30, 1995 between
               Commodore-Westchester and Hudson Valley.
10.47(b)   --  Local Marketing Agreement dated as of October 30, 1995 between
               Commodore-Norwalk and Danbury.
10.48(b)   --  Asset Purchase Agreement dated as of February 16, 1996 between
               Media VI and Commodore-Florida.
10.49(b)   --  Joint Sales Agreement dated as of February 16, 1996 between
               Commodore-Florida and Media VI.
10.50(b)   --  Loan and Security Agreement dated as of March 13, 1996 among
               Commodore Holdings, Inc., as Borrower, the Company,
               Commodore-Delaware, Commodore-Pennsylvania, Commodore-Florida,
               Commodore-Kentucky, Commodore-Norwalk and Commodore-Westchester,
               as Guarantors, and AT&T Commercial Finance Corporation, as Lender.
10.51(b)   --  Supplement No. 1 to the Loan Agreement.
10.52(b)   --  Asset Purchase Agreement dated as of March 15, 1996 between
               Commodore Media of Norwalk, Inc. and Q Broadcasting, Inc.
10.53(b)   --  Employment Agreement dated as of April 21, 1995 by and between the
               Company and Scott J. Bacherman.
10.54(b)   --  Employment Agreement dated as of April 21, 1995 by and between the
               Company and Judy Jennings.
10.55(b)   --  Employment Agreement dated as of April 21, 1995 by and between the
               Company and James J. Sullivan.
</TABLE>
<PAGE>   148
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                  EXHIBIT TITLE                                 PAGE
<S>       <C>  <C>                                                               <C>
10.56(b)   --  Employment Agreement dated as of July 1, 1995 by and between the
               Company and Rich Lewis.
10.57(b)   --  Broadcast Station License dated November 14, 1991 issued by the
               FCC to Treasure Coast Media, Inc. ("Treasure Coast") in connection
               with WQOL-FM, together with an assignment thereof by Treasure
               Coast to Commodore-Florida, and evidence of license renewal.
10.58.1(b)  -- Broadcast Station License dated June 22, 1992 issued by the FCC to
               Housatonic Valley Broadcasting Inc. ("Housatonic") in connection
               with WINE-AM, together with an FCC Consent to the transfer of
               control of the licensee to Commodore-Norwalk, and evidence of
               license renewal.
10.58.2(b)  -- Construction Permit dated August 31, 1994 issued by the FCC to
               Danbury Broadcasting, Inc. ("Danbury") in connection with WINE-AM.
10.59.1(b)  -- Construction Permit dated August 23, 1995 issued by the FCC to
               Danbury in connection with WRKI-FM.
10.59.2(b)  -- Program Test Authority dated January 17, 1996 issued by the FCC to
               Danbury in connection with WRKI-FM.
10.59.3(b)  -- Broadcast Station License dated April 26, 1978 issued by the FCC
               to Housatonic in connection with WRKI-FM, together with an FCC
               Consent to the transfer of control of the licensee to
               Commodore-Norwalk, and evidence of license renewal.
10.60(b)   --  Broadcast Station License dated July 20, 1993 issued by the FCC to
               Tri-Valley Broadcasting Corporation in connection with WVYB-FM
               (formerly WMJV-FM), together with an assignment thereof by Hudson
               Valley Growth, L.P. ("Hudson") to Commodore-Westchester, and
               evidence of license renewal.
10.61(b)   --  Broadcast Station License dated June 19, 1985 issued by the FCC to
               Putnam Broadcasting Corp. in connection with WPUT-AM, together
               with an assignment thereof from Hudson to Commodore-Westchester,
               and evidence of license renewal.
10.62(b)   --  Broadcast Station License and Modification issued by the FCC to
               VIP Broadcasting, Inc. in connection with WZZN-FM (formerly
               WVIB-FM, WMJU-FM and WVIP-FM), together with an assignment thereof
               by Hudson to Commodore-Westchester.
10.63      --  Asset Purchase Agreement dated as of April 8, 1996 between
               Commodore-Kentucky and Simmons Broadcasting Company ("Simmons").
10.64      --  Local Marketing Agreement dated as of April 8, 1996 between
               Commodore-Kentucky and Simmons.
10.65      --  Asset Purchase Agreement dated as of April 8, 1996 between
               Commodore-Kentucky and Adventure Communications, Inc.
               ("Adventure").
10.66      --  Local Marketing Agreement dated as of April 8, 1996 between
               Commodore-Kentucky and Adventure.
10.67      --  Contingent Sale and Assignment of Options Agreement dated as of
               April 8, 1996 between Commodore-Kentucky and Michael R. Shott.
10.68      --  Securities Purchase Agreement dated as of May 1, 1996 among the
               Company, the Guarantors and CIBC WG Argosy Merchant Fund 2, L.L.C.
               (the "CIBC Merchant Fund").
</TABLE>
<PAGE>   149
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                  EXHIBIT TITLE                                 PAGE
<S>       <C>  <C>                                                               <C>
10.69      --  Common Stock Registration Rights and Stockholders Agreement dated
               as of May 1, 1996 among the Company, Certain Control Stockholders
               and the CIBC Merchant Fund.
10.70      --  Registration Rights Agreement dated as of May 1, 1996 among the
               Company, the Guarantors and the CIBC Merchant Fund.
10.71      --  Warrant Agreement dated as of May 1, 1996 between the Company and
               IBJ Schroder Bank & Trust Company, as Warrant Agent.
11.1       --  Statement regarding computation of earnings per share.
16.1(a)    --  Letter of Weeks DeGraw & Co., P.A. regarding change in certifying
               accountants.
21.1(b)    --  List of Subsidiaries.
23.1       --  Consent of Ernst & Young LLP, independent auditors.
23.2       --  Consent of Weeks DeGraw & Co., P.A., independent auditors.
23.3       --  Consent of Brown, Edwards & Company, LLP, independent auditors.
23.4       --  Consent of Holtz Rubenstein & Company, LLP, independent auditors.
23.5       --  Consent of Paneth Haber & Zimmerman LLP, independent auditors.
</TABLE>
 
- ------------------------------
 
* To be filed by amendment.
 
(a) Incorporated by reference to the Company's Registration Statement on Form
    S-4 (File No. 33-92732) effective July 26, 1995.
 
(b) Incorporated by reference to the Company's Annual Report on Form 10-K for
    the year ended December 31, 1995.
 
(c) Incorporated by reference to the Company's Form 10-Q for the quarter ended
    March 31, 1996.
[{"type": "S-1", "sequence": "1", "description": "COMMODORE MEDIA, INC.", "secsgml_size_bytes": 588877}]
{"company-data": {"conformed-name": "COMMODORE MEDIA INC", "cik": "0000945821", "assigned-sic": "4832", "irs-number": "13334720", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-03993", "film-number": "96569463"}, "business-address": {"street1": "500 FIFTH AVE", "street2": "STE 3000", "city": "NEW YORK", "state": "NY", "zip": "10110", "phone": "2123022727"}, "mail-address": {"street1": "500 FIFTH AVE", "street2": "STE 3000", "city": "NEW YORK", "state": "NY", "zip": "10110"}}
1
 
      AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 17, 1996
 
                                                        REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                    FORM S-1
                             REGISTRATION STATEMENT
                                   UNDER THE
                             SECURITIES ACT OF 1933
                            ------------------------
 
                             COMMODORE MEDIA, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE                                 4832                                13-3034720
     (STATE OR OTHER                 (PRIMARY STANDARD INDUSTRIAL                 (I.R.S. EMPLOYER
      JURISDICTION OF                 CLASSIFICATION CODE NUMBER)              IDENTIFICATION NUMBER)
    INCORPORATION OR
      ORGANIZATION)
               COMMODORE MEDIA, INC.                                BRUCE A. FRIEDMAN
           500 FIFTH AVENUE, SUITE 3000                           COMMODORE MEDIA, INC.
             NEW YORK, NEW YORK 10110                         500 FIFTH AVENUE, SUITE 3000
                  (212) 302-2727                                NEW YORK, NEW YORK 10110
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,                   (212) 302-2727
   INCLUDING AREA CODE OF REGISTRANT'S PRINCIPAL    (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
                 EXECUTIVE OFFICES)                                      NUMBER,
                                                       INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
 
                                   COPIES TO:
 
                             IRA J. GOLDSTEIN, ESQ.
                              BLAKE HORNICK, ESQ.
                        PRYOR, CASHMAN, SHERMAN & FLYNN
                                410 PARK AVENUE
                            NEW YORK, NEW YORK 10022
                                 (212) 421-4100
                           NICHOLAS P. SAGGESE, ESQ.
                              MARK C. SMITH, ESQ.
                      SKADDEN, ARPS, SLATE, MEAGHER & FLOM
                             300 SOUTH GRAND AVENUE
                         LOS ANGELES, CALIFORNIA 90017
                                 (213) 687-5000
 
                            ------------------------
 
     Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration
Statement becomes effective.
 
     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  / /
 
     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  / /
 
     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  / /
 
     If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  / /
                            ------------------------
 
                        CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                                                                PROPOSED        PROPOSED
                                                                MAXIMUM         MAXIMUM
                                                                OFFERING       AGGREGATE       AMOUNT OF
           TITLE OF EACH CLASS OF              AMOUNT TO       PRICE PER        OFFERING      REGISTRATION
        SECURITIES TO BE REGISTERED         BE REGISTERED(1)     SHARE(2)       PRICE(2)         FEE(3)
- ------------------------------------------------------------------------------------------------------------
Class A Common Stock, $.01 par value
  shares.................................... 4,945,000 shares        $        $75,000,000       $25,863
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
(1) Includes shares subject to the Underwriters' over-allotment option. See
    "Underwriting."
 
(2) Estimated solely for purposes of calculating the registration fee in
    accordance with Rule 457 under the Securities Act of 1933.
 
(3) Calculated pursuant to Rule 457(a) based upon an estimate of the maximum
    offering price.
 
     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
 
                             COMMODORE MEDIA, INC.
 
                             CROSS REFERENCE SHEET
                   PURSUANT TO ITEM 501(B) OF REGULATION S-K
FORM S-1 ITEM NUMBER AND CAPTION             CAPTION OR LOCATION IN PROSPECTUS
1.  Forepart of the Registration Statement and
       Outside Front Cover Page of Prospectus...........  Outside Front Cover Page of the
                                                          Registration Statement;
                                                          Cross-Reference Sheet; Outside Front
                                                          Cover Page of Prospectus
   2.  Inside Front and Outside Back Cover Pages of
       Prospectus.......................................  Inside Front Cover Page and Outside
                                                          Back Cover Page of Prospectus
   3.  Summary Information, Risk Factors and Ratio of
       Earnings to Fixed Charges........................  Prospectus Summary; Risk Factors
   4.  Use of Proceeds..................................  Prospectus Summary; Use of Proceeds
   5.  Determination of Offering Price..................  Underwriting
   6.  Dilution.........................................  Dilution
   7.  Selling Security Holders.........................  Principal and Selling Shareholders
   8.  Plan of Distribution.............................  Front Cover Page; Underwriting
   9.  Description of Securities to be Registered.......  Front Cover Page; Prospectus Summary;
                                                          Description of Capital Stock
  10.  Interests of Named Experts and Counsel...........  Legal Matters; Experts
  11.  Information with Respect to Registrant...........  Outside Front Cover Page of
                                                          Prospectus; Prospectus Summary; Risk
                                                          Factors: The Company; Use of
                                                          Proceeds; Capitalization; Selected
                                                          Pro Forma Financial Statements;
                                                          Selected Historical Financial Data;
                                                          Management's Discussion and Analysis
                                                          of Financial Condition and Results of
                                                          Operations; Business; Management;
                                                          Certain Transactions; Principal and
                                                          Selling Shareholders; Description of
                                                          Certain Indebtedness; Description of
                                                          Capital Stock; Financial Statements
  12.  Disclosure of Commission Position on
       Indemnification for Securities Act Liabilities...  Not applicable
3
 
     INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
     REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
     SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
     MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
     BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
     THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
     SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
     UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
     OF ANY SUCH STATE.
 
                   SUBJECT TO COMPLETION, DATED MAY 17, 1996
PROSPECTUS
            , 1996
 
                                4,300,000 SHARES
 
                             COMMODORE MEDIA, INC.
                              CLASS A COMMON STOCK
 
     Of the 4,300,000 shares of Class A Common Stock, $.01 par value (the "Class
A Common Stock"), offered hereby (the "Offering"), 2,882,143 shares are being
sold by Commodore Media, Inc. (the "Company") and 1,417,857 shares are being
sold by the Selling Shareholders named herein under "Principal and Selling
Shareholders." The Company will not receive any of the proceeds of shares sold
by the Selling Shareholders. The Class A Common Stock entitles the holders to
one vote per share and the Class B Common Stock entitles the holders to eight
votes per share. After the Offering, the Estate of Carter Burden will have
approximately 80% of the total voting power in respect of matters submitted for
the vote of all shareholders.
 
     Prior to the Offering, there has been no public market for the Class A
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $          and $          per share. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price.
 
     Application will be made to have the Class A Common Stock approved for
quotation on the NASDAQ National Market System under the symbol "CMIA."
 
     SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE CLASS A COMMON
STOCK OFFERED HEREBY.
                            ------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
  EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
    SECURITIES AND EXCHANGE COMMIS SION OR ANY STATE SECURITIES COMMISSION
     PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
       REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
UNDERWRITING      PROCEEDS      PROCEEDS TO
                                         PRICE TO THE   DISCOUNTS AND       TO THE       THE SELLING
                                            PUBLIC      COMMISSIONS(1)    COMPANY(2)     SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------
Per Share..............................        $              $               $               $
- -------------------------------------------------------------------------------------------------------
Total(3)...............................        $              $               $               $
- --------------------------------------------------------------------------------
 
(1) The Company and the Selling Shareholders have agreed to indemnify the
    Underwriters (as defined herein) against certain liabilities, including
    liabilities arising under the Securities Act of 1933, as amended. See
    "Underwriting."
(2) Before deducting expenses estimated at $        payable by the Company.
(3) The Company and one of the Selling Shareholders have granted to the
    Underwriters a 30-day option to purchase up to an aggregate of 645,000
    additional shares from the Company and such Selling Shareholder on the same
    terms as set forth above, solely to cover over-allotments, if any. If such
    option is exercised in full, the total Price to the Public, Underwriting
    Discounts and Commissions, Proceeds to the Company and Proceeds to the
    Selling Shareholders will be $        , $        , $        and $        ,
    respectively. See "Underwriting."
 
     The shares of Class A Common Stock are offered by the several Underwriters
when, as and if delivered to and accepted by the Underwriters against payment
therefor and subject to various prior conditions, including their right to
reject orders in whole or in part. It is expected that delivery of the
certificates representing the shares of Class A Common Stock will be made in New
York, New York on or about                     , 1996.
 
DONALDSON, LUFKIN &  JENRETTE
           SECURITIES CORPORATION
 
                    CS FIRST BOSTON
                                                CIBC WOOD GUNDY SECURITIES CORP.
4
 
                             COMMODORE MEDIA, INC.
 
                          [MAP/ARTWORK TO BE PROVIDED]
 
                         ------------------------------
 
     IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
 
     DURING THE OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE CLASS A COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES
10B-6, 10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
 
                                        2
5
 
                               PROSPECTUS SUMMARY
 
     The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements contained elsewhere in this Prospectus. Except as otherwise indicated
by the context, references in this Prospectus to the "Company" include Commodore
Media, Inc. and its direct and indirect wholly owned subsidiaries. All numbers
of shares, per share amounts and related information in this Prospectus have
been adjusted to reflect a 7.2-for-1 split of the Common Stock (the "Stock
Split"), which will be effected prior to the sale of the Class A Common Stock
offered hereby. See "Description of Capital Stock." Unless otherwise indicated,
the information contained in this Prospectus assumes no exercise of the
Underwriters' over-allotment option. References in this Prospectus to the
Company's "pro forma" 1995 operating results and related statistical information
give effect to the Recapitalization Transactions, the Offering and the
application of the estimated net proceeds therefrom, the Acquisitions and the
1995 Treasure Coast Acquisition (as such terms are defined herein) as if such
transactions had occurred on January 1, 1995. See "--Market Data and Certain
Definitions," "Unaudited Pro Forma Consolidated Financial Information" and "Use
of Proceeds."
 
                                  THE COMPANY
 
     Commodore Media, Inc. owns and operates, or provides sales and marketing
services for 33 radio broadcasting stations (nineteen FM and fourteen AM
stations) in six medium-sized markets. The Company is the leading radio group on
a pro forma basis in five of its six markets based on radio advertising revenue
and is the leading radio group in each of its six markets based on audience
share. The Company's average radio revenue share in its markets was 45.1% in pro
forma 1995, which the Company believes is the highest average radio revenue
share of any public radio broadcasting company in the United States. The
Company's radio stations are located in the following markets: Fairfield County,
Connecticut; Allentown, Pennsylvania; Wilmington, Delaware; Westchester/Putnam
Counties, New York; Ft. Pierce-Stuart-Vero Beach, Florida (the "Treasure Coast
Market") and Huntington, West Virginia/Ashland, Kentucky. The Company's pro
forma net revenue and broadcast cash flow for the year ended December 31, 1995
were $42.5 million and $15.3 million, respectively.
 
     The Company believes that operating radio stations in medium-sized markets
offers significant opportunities to apply its programming, marketing and
broadcasting expertise to increase broadcast cash flow and to establish a
dominant market position that would be difficult for a competitor to replicate.
The Company defines medium-sized markets as markets with approximately $10
million to $35 million of radio advertising revenue, which includes markets
ranked between 50 and 150 in terms of radio advertising revenue. The Company
believes that medium-sized markets represent attractive operating environments
because these markets are generally characterized by (i) a limited number of
radio stations, which minimizes the risk of format attack, (ii) fewer
alternative advertising media, (iii) undercapitalized owners/operators, (iv)
strong station brand identity among listeners that is not typically dependent
upon specific on-air talent, (v) a lower cost operating structure and (vi) a
high percentage of local advertisers who make advertising decisions based upon
relationships and customer service and not solely upon station ratings. The
Company believes that these characteristics allow it to capture a greater
percentage of a market's total advertising revenue and to achieve broadcast cash
flow margins typically higher than industry norms while operating in a more
stable competitive environment. In addition, the Company believes that under the
recently enacted Telecommunications Act of 1996, which liberalized radio station
ownership limits, medium-sized markets offer the Company the greatest
opportunity to create dominant, multiple station ownership situations.
 
     The Company's objective is to increase shareholder value by enhancing its
share of the advertising revenue in each of its markets, increasing the
broadcast cash flow of its existing stations and pursuing additional
acquisitions both in its existing markets and in new markets in which the
Company's operational expertise can be successfully applied to increase
broadcast cash flow. Through successful implementation of the Company's
operating and acquisition strategies, the Company's net revenue and broadcast
cash flow have increased at compound annual growth rates of 21.1% and 29.2%,
respectively, from 1991 to pro forma 1995 and the broadcast cash flow margin has
increased from 26.0% in 1991 to 36.1% in pro forma 1995. On a same station
basis, from 1991 to 1995, the Company successfully increased its net revenue and
broadcast cash flow at compound annual growth rates of 13.7% and 20.7%,
respectively.
 
                                        3
6
 
     The following table sets forth, on a pro forma basis, certain information
with respect to the Company and its markets:
COMPANY DATA                                               MARKET DATA
               ----------------------------------------------------------------    ----------------------------------------------
                                                                      NUMBER OF                   1995
                RADIO    RADIO REVENUE     RADIO     RADIO AUDIENCE   STATIONS(F)                 RADIO                 1990-1995
               REVENUE    MARKET SHARE    AUDIENCE    MARKET SHARE    ---------      VIABLE      REVENUE   1995 RADIO    REVENUE
  MARKET(A)    RANK(B)        %(C)        RANK(D)         %(E)        AM    FM     STATIONS(G)   RANK(H)   REVENUE(I)    CAGR %
Fairfield
 County, CT       1          33.2%            1           26.3%        3     3         9            60      $ 27,851       9.6%
Allentown, PA     1          53.7%            1           47.2%        2     2         8            77      $ 19,300       5.1%
Wilmington,
  DE              2          33.2%            1           42.2%        1     1         5            78      $ 17,800      10.4%
Westchester/Putnam
  Counties,
  NY(j)           1          34.3%            1           47.3%        2     3         4           115      $ 12,400        N/A
Treasure
  Coast, FL       1          49.7%            1           49.8%        1     5         9           138      $  9,900       6.5%
Huntington,
  WV/
  Ashland, KY     1          66.7%            1           70.4%        5     5         9.5         140      $  9,800       7.3%
- ------------------------------
 
(a) Actual city of license may be different from metropolitan market served.
    Market names used in this table are those used by Arbitron for Arbitron
    Metro Survey Areas or Arbitron Custom Survey Areas for the Company's
    markets.
(b) Radio Revenue Rank in each market is the ranking, by 1995 radio group market
    revenue share, of each of the Company's radio groups in its market among all
    other such radio groups in such market. For each of the Company's radio
    groups, except Fairfield County, Radio Revenue Rank was derived by the
    Company determining the radio groups in the market and by then calculating
    group revenue using the market revenue sources described in note (c) below.
    Fairfield County was ranked in the source as indicated in note (c) below.
(c) In each of the markets, except Fairfield County, Radio Revenue Market Share
    was derived by dividing (1) the total 1995 radio revenues of the Company's
    stations in the market, by (2) the total 1995 radio revenues in that market
    as published in BIA's Investing in Radio -- 1996 Market Report (2nd ed.). In
    Fairfield County, the total 1995 radio revenues in the market were obtained
    from the January 1996 Fairfield Suburban Market Revenue Report by Miller
    Kaplan (as hereinafter defined).
(d) Ranking of the Company's combined stations versus other radio groups in the
    market for persons aged 12 and older in the applicable Arbitron Metro Survey
    Area or Arbitron Custom Survey Areas, Average Quarter Hour Estimates, Monday
    through Sunday, 6 am to midnight.
(e) Radio Audience Market Share was derived by dividing (1) the sum of audience
    shares from the applicable Arbitron Market Survey of the Company's combined
    radio stations, by (2) the total sum of audience shares above the line in
    the local market served.
(f) The number of stations for Allentown, Pennsylvania includes WKAP-AM for
    which the Company is providing certain sales and marketing services pursuant
    to a JSA; the number of stations for the Treasure Coast Market, Florida
    includes WPAW-FM for which the Company is providing certain sales and
    marketing services pursuant to a JSA; and the number of stations for
    Huntington, West Virginia/Ashland, Kentucky includes WMLV-FM, WHRD-AM,
    WFXN-FM, WKEE-AM, WKEE-FM, WZZW-AM, WBVB-FM and WIRO-AM, for which the
    Company is providing certain sales and marketing services pursuant to LMAs
    pending the consummation of the Huntington Acquisitions.
(g) The number of viable radio stations for the Company's Allentown, Wilmington
    and Huntington/Ashland markets were taken from Duncan's Radio Market Guide
    (1996 Edition). The number of viable stations for the Company's remaining
    markets were derived by calculating all radio stations listed home-to-market
    by Arbitron which received an average quarter hour share of "1" or greater
    in each of the 1995 Arbitron Surveys for the indicated market.
(h) According to BIA's Investing in Radio Market Guide 1996 (2nd ed.) "Revenue
    Rank." The Fairfield County, CT and Westchester/Putnam Counties, NY Radio
    Revenue Ranks were estimated using BIA's methodology.
(i) Dollars in thousands.
(j) Radio Revenue Rank and Radio Revenue Market Share for Westchester/Putnam
    Counties, NY have been estimated by the Company because no data is available
    for this sub-market.
 
                                        4
7
 
                               BUSINESS STRATEGY
 
     The Company believes the most effective way to achieve its objective of
increasing shareholder value is to dominate medium-sized markets by operating
multiple radio stations in each market. Multiple station ownership enables the
Company to maintain greater influence over the pricing of radio advertising
rates and more effectively compete against alternative forms of media
advertising. The Company has the ability to program its multiple stations to
provide advertisers with access to a variety of attractive demographic groups in
a market and as a result, capture a significant share of the market's radio
advertising revenue. In addition, multiple station ownership enables the Company
to attract and retain highly qualified personnel as well as to achieve cost
savings through eliminating duplicative overhead and consolidating broadcast
facilities.
 
     The Company's station operating strategy centers upon (i) strategically
programming its radio stations to dominate specific demographics and/or provide
advertisers a broad spectrum of multiple demographic targets, (ii) conducting
extensive market research, (iii) employing a local sales force that utilizes a
value-added sales approach designed to form marketing partnerships with
advertisers, (iv) employing separate sales forces at each major station in the
Company's markets who coordinate the advertising packages presented to its
advertisers, (v) controlling station operating costs through consolidation of
multiple station facilities and selected use of preprogrammed automation and
automated satellite delivered programming, (vi) providing performance based
management incentives and (vii) building and maintaining broad station awareness
and listener loyalty through strong community involvement.
 
                              ACQUISITION STRATEGY
 
     The Company's acquisition strategy is to selectively acquire
underperforming radio stations in medium-sized markets at prices that are
attractive relative to the Company's potential to increase the acquired
stations' broadcast cash flow. The Company believes that significant
opportunities exist in other medium-sized markets for the Company to acquire
additional radio stations at attractive prices relative to their broadcast cash
flow potential. The Company also believes it can effectively capitalize on its
presence in and knowledge of the markets in which it operates to make attractive
acquisitions in adjacent markets. The Company may also enter new markets either
through acquisitions of radio groups that have multiple station ownership in a
market or though acquisitions of individual stations in markets in which the
Company believes it can establish itself as the markets' dominant radio group by
making additional in-market acquisitions.
 
     In analyzing potential acquisitions, the Company considers many factors
including: (i) the price and terms of the purchase in relation to the estimated
potential broadcast cash flow for the station or stations; (ii) the possibility
of obtaining a synergistic combination with additional stations in a given
market; (iii) the existing quality and potential quality of the station's
broadcast signal and transmission facility and (iv) the radio and other media
competition in the market. While the Company continuously evaluates
opportunities to make strategic acquisitions, it has no present commitments or
agreements with respect to any material acquisitions other than the Huntington
Acquisitions.
 
                                THE ACQUISITIONS
 
     The Company has recently made, or entered into agreements to make, the
following acquisitions:
 
     Fairfield County, Connecticut.  In March 1996, the Company acquired radio
stations WRKI-FM and WINE-AM in Fairfield County, Connecticut (the "Danbury
Acquisition"). In May 1996, the Company acquired radio stations WKHL-FM and
WSTC-AM in Stamford, Connecticut (the "Stamford Acquisition").
 
     Westchester/Putnam Counties, New York.  As part of the Danbury Acquisition,
the Company acquired radio stations WZZN-FM (formerly WVIB-FM), WPUT-AM and
WVYB-FM in Westchester/Putnam Counties, New York in March 1996 (the "Westchester
Acquisition").
 
     Treasure Coast Market, Florida.  In May 1996, the Company acquired radio
stations WKQS-FM, WAVW-FM and WAXE-AM in the Treasure Coast Market (the "1996
Treasure Coast Acquisition").
 
     Huntington, West Virginia/Ashland, Kentucky.  In April 1996, the Company
entered into (i) an agreement to acquire radio stations WKEE-FM and WKEE-AM in
Huntington, West Virginia, WZZW-AM in Milton, West Virginia, WBVB-FM in Coal
Grove, Ohio and WIRO-AM in Ironton, Ohio and
 
                                        5
8
 
(ii) agreements to acquire radio stations WHRD-AM in Huntington, West Virginia,
WFXN-FM in Milton, West Virginia and WMLV-FM in Ironton, Ohio (the "Huntington
Acquisitions"). In connection with these agreements, the Company entered into
LMAs (as defined below) to provide, on a cooperative basis, the programming,
sales, marketing and certain other services to the stations pending the closing
of the acquisitions.
 
     The term "Acquisitions" as used in this Prospectus collectively refers to
the following acquisitions of radio stations by the Company: (i) the Danbury
Acquisition, (ii) the Stamford Acquisition, (iii) the Westchester Acquisition,
(iv) the 1996 Treasure Coast Acquisition and (v) the pending Huntington
Acquisitions. The Company anticipates that the Stamford Acquisition and the 1996
Treasure Coast Acquisition will be consummated in May 1996 and that the
Huntington Acquisitions will be consummated during the second half of 1996.
However, there can be no assurance that any of such transactions will be
consummated. The term "1995 Treasure Coast Acquisition" as used in this
Prospectus refers to the acquisition of radio station WQOL-FM and the Company's
entry into a JSA with respect to WPAW-FM. Both stations are in the Treasure
Coast Market, Florida.
 
     The Company's executive offices are located at 500 Fifth Avenue, Suite
3000, New York, New York 10110. The telephone number is (212) 302-2727.
 
                                  THE OFFERING
Class A Common Stock offered by the Company.................  2,882,143 shares
Class A Common Stock offered by the Selling
  Shareholders(a)...........................................  1,417,857 shares
     Total..................................................  4,300,000 shares
Common Stock to be outstanding after the Offering(b)
  Class A Common Stock......................................  4,542,554 shares
  Class B Common Stock......................................  2,280,690 shares
     Total..................................................  6,823,244 shares
Use of proceeds.............................................  To repay existing indebtedness, to
                                                              redeem the Company's outstanding
                                                              shares of Series A Preferred Stock,
                                                              to finance a portion of the
                                                              Huntington Acquisitions and to pay
                                                              deferred compensation. The Company
                                                              will not receive any proceeds from
                                                              the sale of shares of Class A Common
                                                              Stock by the Selling Shareholders.
                                                              See "Use of Proceeds."
Voting rights...............................................  Each share of Class A Common Stock
                                                              is entitled to one vote and each
                                                              share of Class B Common Stock is
                                                              entitled to eight votes. After the
                                                              Offering, the Estate of Carter
                                                              Burden will own approximately 80% of
                                                              the total voting power and 28% of
                                                              the fully-diluted economic interest
                                                              in the Company. The Estate of Carter
                                                              Burden will continue to have the
                                                              ability to control the Company. See
                                                              "Principal and Selling Shareholders"
                                                              and "Description of Capital Stock."
NASDAQ National Market symbol...............................  CMIA
- ------------------------------
 
(a) The Selling Shareholders include the Estate of Carter Burden and William
    A.M. Burden & Co., L.P.
 
(b) Excludes: (i) options outstanding on the date hereof to purchase
    approximately 694,368 shares of Class A Common Stock at an exercise price of
    $6.25 and (ii) warrants outstanding on the date hereof to purchase 597,960
    shares of Class A Common Stock at an exercise price of $.01.
 
                                        6
9
 
                      MARKET DATA AND CERTAIN DEFINITIONS
 
     Unless otherwise indicated herein, all markets, audience ratings and
audience rankings have been derived for the indicated station or group of
stations from surveys of the indicated demographic group listening Monday
through Sunday, 6 a.m. to 12 midnight, based on the average of the survey
periods for the referenced year, as reported by Arbitron, Radio Market Report,
The Arbitron Company ("Arbitron"). Unless otherwise indicated herein, audience
share data is expressed as the "local" average quarter hour share for each
indicated radio station. A radio station's "local" audience share is derived by
comparing the radio station's average quarter hour share to the total average
quarter hour share for all stations listed as inside the Metro Survey Area
("MSA") ("home-to-market" or "above the line") by Arbitron. Average quarter
hour share is the percentage of the estimated number of persons who listened to
a given radio station for a minimum of five minutes within a quarter hour
compared to the total number of persons who listened to radio in the market
within such quarter hour. The most recent Arbitron survey utilized in this
Prospectus is Fall 1995.
 
     Unless otherwise indicated herein, metro rank, market ranking by radio
advertising revenue and market radio advertising revenue have been obtained from
Investing in Radio, 1996 Market Report--Second Edition, BIA Publications Inc.
("BIA"). Revenue share in the Company's markets has been derived from comparing
the Company's 1995 total revenue less barter revenue in each market to the
estimated market radio advertising revenue for 1995. Revenue rankings in the
Company's markets have been derived by comparing the Company's revenue share in
each market to the revenue share for the Company's competitors (utilizing the
estimated revenue for each competing radio station as provided by BIA). Market
radio advertising revenue, revenue share data and revenue rankings in the
Company's Fairfield County, Connecticut market have been obtained from Miller,
Kaplan Market Revenue Report (published monthly), a publication of Miller,
Kaplan, Arase & Co., Certified Public Accountants ("Miller Kaplan"). Market
radio advertising revenue, revenue share data and revenue rankings for
Westchester County, New York have been estimated by the Company without the
benefit of any independent investigation or confirmation, as no published data
on this sub-market is available.
 
     The terms local marketing agreement ("LMA") and joint sales agreement
("JSA") are referred to in various places in this Prospectus. An LMA refers to
an agreement, although it may take various forms, under which a radio station
agrees to provide, on a cooperative basis, the programming, sales, marketing and
similar services for a different radio station. A JSA refers to an agreement,
similar to an LMA, under which a radio station agrees to provide the sales and
marketing services for another station while the owner of such other radio
station provides the programming for such other radio station. The term
"duopoly" is referred to in various places in this Prospectus and refers to the
ownership of two or more AM or two or more FM radio stations in the same
geographic market. Duopolies, LMAs and JSAs are more fully described in
"Business-- Federal Regulation of Radio Broadcasting."
 
                                        7
10
 
                      SUMMARY CONSOLIDATED FINANCIAL DATA
                             (dollars in thousands)
 
     The following table sets forth summary historical consolidated financial
data and certain pro forma financial data of the Company for the five years
ended December 31, 1995 and the three-month period ended March 26, 1995 and the
three-month period ended March 31, 1996. The financial information presented
below is qualified in its entirety by, and should be read in conjunction with,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Company's Consolidated Financial Statements and the Notes
thereto, and the other information contained elsewhere in this Prospectus.
THREE MONTHS ENDED
                                                                                               ------------------------------
                                                   YEAR ENDED DECEMBER 31,                     MARCH 26,       MARCH 31,
                                 -----------------------------------------------------------   ---------   ------------------
                                                                                   1995 PRO                          1996 PRO
                                  1991      1992      1993      1994      1995     FORMA(A)      1995       1996     FORMA(A)
                                 -------   -------   -------   -------   -------   ---------   ---------   -------   --------
OPERATING DATA:
Total revenue..................  $17,677   $19,578   $21,643   $28,686   $33,653    $46,327     $ 6,507    $ 8,048   $ 9,787
Net revenue....................   16,335    17,961    19,798    26,225    30,795     42,536       5,967      7,416     9,033
Station operating
  expenses(b)..................   12,080    12,713    13,509    16,483    19,033     27,185       4,168      5,375     6,274
Corporate expenses.............    1,167     1,602     2,531     2,110     2,051      2,151         461        466       491
Operating income...............    1,482     1,970     1,133     3,307     5,778      7,634         316      1,095     1,384
Net loss.......................   (4,183)   (2,580)   (3,782)     (527)   (2,240)    (2,317)       (585)    (1,436)   (1,060 )
SUPPLEMENTAL INFORMATION:
Broadcast cash flow(c).........  $ 4,255   $ 5,248   $ 6,289   $ 9,742   $11,762    $15,351     $ 1,799    $ 2,041   $ 2,759
Broadcast cash flow
  margin(c)....................     26.0%     29.2%     31.8%     37.1%     38.2%      36.1%       30.1%      27.5%     30.5 %
EBITDA(c)......................    3,088     3,646     3,758     7,632     9,711     13,200       1,338      1,575     2,268
Capital expenditures...........      179       371       333       623       321                     42        124
AT MARCH 31, 1996
                                                                                           -------------------------
                                                                                            ACTUAL      PRO FORMA(D)
                                                                                           --------     ------------
BALANCE SHEET DATA:
Cash and cash equivalents................................................................. $  5,087       $  1,644
Net working capital.......................................................................    6,050          2,307
Total assets..............................................................................   63,211         89,043
Total debt (including current maturities).................................................   75,653         67,153
Stockholders' equity (deficit)............................................................  (19,991)        15,323
- ------------------------------
 
(a) Pro forma operating data and supplemental information for the year ended
    December 31, 1995 give effect to the Recapitalization Transactions (as
    hereinafter defined), the Acquisitions, the Offering and the application of
    the estimated net proceeds therefrom and the 1995 Treasure Coast Acquisition
    as if each had occurred on January 1, 1995. The pro forma operating data and
    supplemental information for the three months ended March 31, 1996 give
    effect to the Acquisitions and the Offering and the application of the
    estimated net proceeds therefrom as if each had occurred on January 1, 1995.
 
(b) Station operating expenses exclude depreciation and amortization, corporate
    expenses, long-term incentive compensation and separation compensation.
 
(c) For purposes of this Prospectus, EBITDA is defined as net income (loss)
    before (i) extraordinary gain (loss), (ii) income taxes, (iii) other
    expenses (income), (iv) net interest expense, (v) long-term incentive
    compensation and separation compensation and (iv) depreciation and
    amortization. Broadcast cash flow is defined as EBITDA before corporate
    expenses. Although EBITDA and broadcast cash flow are not measures of
    performance calculated in accordance with Generally Accepted Accounting
    Principles ("GAAP"), EBITDA and broadcast cash flow are widely used in the
    broadcast industry as measures of a radio broadcasting company's operating
    performance. Neither EBITDA nor broadcast cash flow should be considered in
    isolation or as a substitute for net income, cash flows from operating
    activities and other income or cash flow statement data prepared in
    accordance with GAAP or as a measure of profitability or liquidity.
    Broadcast cash flow and EBITDA differ from cash flow from operations under
    GAAP primarily because broadcast cash flow and EBITDA are not reduced by
    interest expense and income tax expense, changes in the levels of operating
    assets and liabilities and separation and long-term incentive compensation
    paid during the period. In addition, broadcast cash flow excludes corporate
    expenses that are reflected as a reduction in cash flow from operations.
    Broadcast cash flow and EBITDA are not intended to depict funds available
    for discretionary uses as they do not reflect the Company's debt service and
    capital requirements.
 
(d) The pro forma balance sheet data give effect to the 1996 Treasure Coast
    Acquisition, the Stamford Acquisition and the Huntington Acquisitions and
    the Offering and the application of the estimated net proceeds therefrom as
    if each had occurred on March 31, 1996.
 
                                        8
11
 
                                  RISK FACTORS
 
     In addition to the other information set forth in this Prospectus,
prospective investors should carefully consider the following risk factors
before purchasing the shares of Class A Common Stock offered hereby.
 
CONTROL BY PRINCIPAL SHAREHOLDER
 
     After the Offering, the Estate of Carter Burden will retain the power to
control all matters submitted to stockholders of, and to elect all directors of,
the Company by virtue of its stock ownership and the disparate voting rights of
the Class A Common Stock and the Class B Common Stock. The Class A Common Stock
together with the Class B Common Stock are collectively referred to herein as
the "Common Stock." The executors of the estate are Susan L. Burden, S. Carter
Burden III and Flobelle F. Burden. Such control may have the effect of
discouraging certain types of transactions involving an actual or potential
change of control of the Company, including transactions in which the holders of
Class A Common Stock might otherwise receive a premium for their shares over
then-current market prices. See "Principal and Selling Shareholders" and
"Description of Capital Stock." Following the Offering, the Estate of Carter
Burden (and eventually the trust referred to in the next sentence) will have
approximately 80% of the total voting power and approximately 28% of the
fully-diluted economic interest in the Company. Pursuant to Mr. Burden's will,
the shares of the Class A Common Stock held by the Estate of Carter Burden is
expected to be transferred to a trust of which the trustees are the three
executors of the estate and an additional member of the Burden family, and the
beneficiaries of which are members of the Burden family. The Estate of Carter
Burden, by virtue of its ability to transfer some or all of its shares of Class
B Common Stock, will retain the power to convey control of the Company to a
third party in a transaction in which holders of Class A Common Stock do not
participate. Such an event would constitute a change of control under, and
consequent acceleration of, the repayment date of the Company's indebtedness.
 
     The Communications Act of 1934, as amended (the "Communications Act") and
the rules and regulations of the Federal Communications Commission ("FCC")
require the prior consent of the FCC to any change of control of the Company.
See "Business--Federal Regulation of Radio Broadcasting."
 
EXPANSION THROUGH ACQUISITIONS
 
     There can be no assurance that the Company can successfully implement its
operating strategy with respect to its recent acquisitions or any subsequent
acquisitions, nor can there be any assurance that growth created by its recent
acquisitions, or through any subsequent acquisitions, will not be impaired by
competition from other radio stations in the same market. In addition, rapidly
growing businesses frequently encounter unforeseen expenses and delays in
completing acquisitions, as well as difficulties and complications in
integrating the acquired operations without disruption in the overall
operations. As a result, acquisitions may adversely affect the Company's
operating results in the short term due to many factors, including capital
requirements. The Company intends to continue to evaluate acquisitions of
stations in medium-sized markets. See "Business--Expansion Strategy." Although
the Company has entered into agreements regarding the Huntington Acquisitions,
there can be no assurance that such acquisitions will be consummated or that the
Company will be able to make future acquisitions at purchase prices acceptable
to the Company.
 
COMPETITION; BUSINESS RISKS
 
     Radio broadcasting is a highly competitive business. The financial success
of each of the Company's radio stations depends, to a significant degree, upon
its audience ratings, its share of the overall radio advertising revenue within
its geographic market and the economic health of the market. The audience
ratings and advertising revenue of the Company's individual stations are subject
to change and any adverse change in a particular market could have a material
adverse effect on the total revenue and broadcast cash flow of the Company. The
Company's radio stations compete for audience share and advertising revenue
directly with other FM and AM radio stations and with other media within their
respective markets, such as newspapers, television, magazines, billboard
advertising, transit advertising, and direct mail advertising. While the Company
already competes with other stations with comparable programming formats in each
of its markets,
 
                                        9
12
 
if another radio station in the market were to convert its programming format to
a format similar to one of the Company's stations, if a new station were to
adopt a competitive format, or if an existing competitor were to strengthen its
operations, the Company's stations could suffer a reduction in ratings and/or
advertising revenue and could require increased promotional and other expenses.
The Telecommunications Act of 1996 will facilitate the entry of other radio
broadcasting companies into the markets in which the Company operates or may
operate in the future, some of which may be larger and have more financial
resources than the Company. In addition, certain of the Company's stations
compete, and in the future other stations of the Company may compete, with
duopolies or other combinations of stations operated by a single operator. There
can be no assurance that the Company's radio stations will be able to maintain
or increase their current audience ratings and radio advertising revenue. See
"Business--Competition."
 
     Radio broadcasting is also subject to competition from new media
technologies that are being developed or have been introduced, such as the
delivery of audio programming through cable television wires or the introduction
of digital audio broadcasting ("DAB"). DAB may provide a medium for the delivery
by satellite (digital audio radio satellite service, or "DARS") or terrestrial
means of multiple audio programming formats to local and national audiences. The
Company cannot predict the effect, if any, that any such new technologies may
have on the radio broadcasting industry or on the Company. See
"Business--Changes in the Broadcasting Industry" and "Business--Federal
Regulation of Radio Broadcasting--Proposed Changes."
 
     The profitability of the Company's radio stations is subject to various
other factors which influence the radio broadcasting industry as a whole. The
Company's radio stations may be affected by changes in audience tastes,
priorities of advertisers, new laws and governmental regulations and policies,
changes in broadcast technical requirements, proposals to limit the tax
deductibility of expenses incurred by advertisers and changes in the willingness
of financial institutions and other lenders to finance radio station
acquisitions and operations. The Company cannot predict which, if any, of these
factors might have a significant impact on the radio broadcasting industry in
the future, nor can it predict what impact, if any, the occurrence of these
events might have on the Company's operations.
 
GOVERNMENT REGULATION
 
     Each of the Company's radio stations operate pursuant to one or more
licenses issued by the FCC that presently have a maximum term of seven years.
The Company's radio operating licenses expire at various times from April 1998
to February 2003. Although the Company may apply to renew these licenses, third
parties may challenge the Company's renewal applications. While the Company is
not aware of facts or circumstances that would prevent the Company from having
its current licenses renewed and the Company has never previously been denied a
license renewal, there can be no assurance that the licenses will be renewed.
Failure to obtain the renewal of any of the Company's broadcast licenses or to
obtain FCC approval for an assignment or transfer to the Company of a license in
connection with a radio station acquisition may have a material adverse effect
on the Company's business and operations. In addition, if the Company or any of
its officers, directors or significant stockholders violates the FCC's rules and
regulations or the Communications Act, or is convicted of a felony, the FCC may
in response to a petition from a third party or on its own motion, in its
discretion, commence a proceeding to impose sanctions upon the Company which
could involve the imposition of monetary penalties, the revocation of the
Company's broadcast licenses or other sanctions. If the FCC were to issue an
order denying a license renewal application or revoking a license, the Company
would be required to cease operating the radio station subject to the license
only after the Company has exhausted all administrative and judicial review
without success.
 
     The radio broadcasting industry is subject to extensive and changing
regulation. Among other things, the Communications Act and FCC rules and
policies limit the number of stations that one entity can own, or in which that
entity can hold an attributable interest, in a market and require FCC approval
for transfers of control of FCC licensees and assignments of FCC licenses. The
filing of petitions or complaints against the Company or other FCC licensees
could result in the FCC delaying the grant of, or refusing to grant, its consent
to the assignment of licenses to or from an FCC licensee or the transfer of
control of an FCC licensee. In certain circumstances, the Communications Act and
FCC rules will operate to impose limitations on alien ownership and voting of
the Common Stock of the Company. There can be no assurance that there will not
be
 
                                       10
13
 
changes in the current regulatory scheme, the imposition of additional
regulations or the creation of new regulatory agencies, which changes would
restrict or curtail the ability of the Company to acquire, operate and dispose
of stations or, in general, to compete profitably with other operators of radio
and other media properties. Moreover, there can be no assurance that there will
not be other regulatory changes, including aspects of deregulation, that will
result in a decline in the value of broadcasting licenses held by the Company or
adversely affect the Company's competitive position. See "Business--Federal
Regulation of Radio Broadcasting."
 
DEPENDENCE ON KEY PERSONNEL
 
     The Company's business depends upon the continued efforts, abilities and
expertise of its executive officers and other key employees, including Bruce A.
Friedman, the President and Chief Executive Officer of the Company ("Mr.
Friedman") and James T. Shea, Jr., the Chief Operating Officer of the Company
("Mr. Shea"). The Company has employment agreements with each of Mr. Friedman
and Mr. Shea. For a discussion of such employment agreements, see
"Management--Employment Agreements and Arrangements." The loss of any of the
foregoing could have a material adverse effect on the Company's business. See
"Management--Employment Agreements and Arrangements."
 
NET LOSSES
 
     The Company reported net losses of approximately $4.2 million, $2.6
million, $3.8 million, $527,000 and $2.2 million for the years ended December
31, 1991, 1992, 1993, 1994 and 1995, respectively, and $1.4 million for the
three-month period ended March 31, 1996. These losses include significant
interest expense as well as substantial non-cash charges such as depreciation
and amortization. There can be no assurance that the Company will not continue
to experience net losses, principally as a result of interest expense and
depreciation and amortization. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
 
RESTRICTIONS ON DIVIDENDS
 
     The Company intends to retain future earnings for use in its business and
does not anticipate paying any dividends on shares of its Common Stock in the
foreseeable future. In addition, the Company is currently restricted from paying
cash dividends on its Common Stock under the terms of the Indenture dated April
21, 1995 as amended among the Company, IBJ Schroder Bank & Trust Company, as
Trustee, and the Guarantors named therein (the "Indenture") and the terms of the
Loan and Security Agreement (the "Senior Loan Agreement") dated as of March 13,
1996 as amended among Commodore Holdings, Inc. ("Holdings"), the Company, the
Guarantors named therein and the senior lender named therein (the "Senior
Lender"). See "Dividend Policy" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources"
and "Description of Capital Stock--Common Stock-- Dividends."
 
DILUTION
 
     Persons purchasing shares of Class A Common Stock in the Offering will
sustain immediate dilution in net tangible book value per share of Common Stock
of approximately $          per share. This dilution is based on an assumed
initial public offering price of $          per share, the mid-point of the
range shown on the cover page of this Prospectus. Dilution for this purpose
represents the difference between the per share initial public offering of the
Class A Common Stock and the pro forma net tangible book value per share of
Class A Common Stock after the Offering. See "Dilution."
 
SHARES ELIGIBLE FOR FUTURE SALE
 
     Upon completion of the Offering, 4,542,554 shares of Class A Common Stock
will be issued and outstanding and 3,573,018 shares will be issuable upon the
exercise of outstanding stock options, warrants and shares of Class B Common
Stock. The shares of Class A Common Stock sold in the Offering will be freely
 
                                       11
14
 
tradeable by persons other than "affiliates" of the Company, as that term is
defined under the Securities Act of 1933, as amended (the "Securities Act"),
without restrictions or further registration under the Securities Act. The
Company, its officers, directors, the Selling Shareholders and certain other
stockholders, who collectively are the beneficial holders of an aggregate of
     shares of Common Stock, have agreed with the Underwriters not to, directly
or indirectly, issue, offer, sell, contract to sell, grant any option to
purchase or otherwise dispose of, without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), any shares of
Common Stock or any securities convertible into, or exercisable or exchangeable
for, or warrants, options or rights to purchase or acquire Common Stock or in
any other manner transfer all or a portion of the economic consequences
associated with the ownership of any Common Stock, or enter into any agreement
to do any of the foregoing, for a period of 180 days after the date of this
Prospectus. Upon expiration of such 180 day period, such holders will in general
be entitled to dispose of their shares (including the shares underlying such
options and warrants), although the shares of Common Stock held by affiliates of
the Company will continue to be subject to the volume and other restrictions of
Rule 144 under the Securities Act. In addition, certain existing stockholders of
the Company, including holders of Common Stock for whom the trading or
disposition of such Common Stock is restricted pursuant to the Securities Act,
will have registration rights with respect to Common Stock held by them. Sales
of substantial amounts of Common Stock, or the perception that such sales could
occur, may affect the market price of the Common Stock prevailing from time to
time. See "Shares Eligible for Future Sale" and "Underwriting."
 
NO PRIOR PUBLIC MARKET
 
     Prior to the Offering, there has been no public market for the Company's
Class A Common Stock or Class B Common Stock and there can be no assurance that
an active public market will develop or be sustained after the Offering or that
the initial public offering price corresponds to the price at which the Class A
Common Stock will trade in the public market subsequent to the Offering. The
initial public offering price for the Class A Common Stock will be determined by
negotiations among the Company and the representatives of the Underwriters based
upon the consideration of certain factors set forth herein under "Underwriting."
Market conditions in the radio industry and market fluctuations in the stock
market generally may have an adverse impact on the market price of the Class A
Common Stock.
 
                                       12
15
 
                                USE OF PROCEEDS
 
     The net proceeds to the Company from the sale of the 2,882,143 shares of
Class A Common Stock offered by the Company hereby are estimated to be
approximately $36.0 million ($42.0 million if the Underwriters' over-allotment
option is exercised in full), assuming an initial public offering price of
$     per share (the midpoint of the currently anticipated range of the initial
public offering price), and after deducting the underwriting discount and
estimated offering expenses, all of which are payable by the Company. The
Company intends to use such net proceeds (i) to repay all amounts then
outstanding under the Senior Credit Facility (as hereinafter defined), (ii) to
redeem the outstanding shares of Senior Exchangeable Redeemable Preferred Stock,
Series A, $.01 par value per share, of the Company (the "Series A Preferred
Stock"), (iii) to finance a portion of the Huntington Acquisitions and (iv) to
pay deferred compensation to certain executives of the Company. The Company will
not receive any proceeds from the sale of shares of Class A Common Stock by the
Selling Shareholders.
 
     The following table illustrates the pro forma estimated uses of net
proceeds as if the Offering, certain borrowings under the Senior Credit
Facility, the issuance of Series A Preferred Stock under the Preferred Stock
Facility (as hereinafter defined) and the Stamford Acquisition and the 1996
Treasure Coast Acquisition had occurred on or prior to March 31, 1996:
DOLLARS IN
                                                                                 THOUSANDS
Repayment of Amounts Outstanding Under the Senior Credit Facility(a).......   $ 15,000
    Redemption of Series A Preferred Stock(b)..................................     10,000
    Huntington Acquisitions(c).................................................      9,032
    Payment of Deferred Compensation...........................................      1,968
                                                                                 ----------
              Total............................................................   $ 36,000
                                                                                   =======
- ------------------------------
 
(a) The Senior Credit Facility (the "Senior Credit Facility") consists of: (i) a
    revolving credit facility of $30,000,000 and (ii) a receivable loan facility
    of up to $5,000,000, each bearing interest at a floating rate of interest,
    adjusted on the first calendar day of each calendar month, equal to 3.5%
    over the London Interbank Offer Rate ("LIBOR"). As of March 31, 1996 the
    Company's indebtedness under the Senior Credit Facility was $8,500,000.
    Following the Offering, the Company expects to be able to reborrow up to $35
    million under the Senior Credit Facility. See "Description of Certain
    Indebtedness -- Senior Credit Facility."
 
(b) The Company intends to issue 10,000 shares of the Series A Preferred Stock
    in May 1996 for an aggregate consideration of $10.0 million. It is
    anticipated that the proceeds of the issuance will be used to consummate the
    Stamford Acquisition and the 1996 Treasure Coast Acquisition.
 
(c) The Company intends to finance the balance of the purchase price of the
    Huntington Acquisitions (approximately $2.4 million) through available
    funds.
 
                                DIVIDEND POLICY
 
     The Company currently intends to retain future earnings for use in its
business and does not anticipate paying any dividends on shares of its Common
Stock in the foreseeable future. In addition, the Company is currently
restricted under the terms of the Indenture and the Senior Loan Agreement from
paying cash dividends on its Common Stock. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources" and "Description of Capital Stock--Common Stock--Dividends."
 
                                       13
16
 
                                    DILUTION
 
     At March 31, 1996, the deficit in net tangible book value of the Company
was approximately $(61.3 million) or $(15.56) per share. Net tangible book value
per share represents the total tangible assets of the Company, less the total
liabilities of the Company, divided by the number of shares of Common Stock
outstanding. After giving effect to the sale by the Company of the 2,882,143
shares of Common Stock offered hereby (and after deducting underwriting
discounts and commissions and estimated offering expenses) and the receipt of
the proceeds therefrom, the pro forma deficit in net tangible book value of the
Company as of March 31, 1996 would have been approximately $(54.4 million) or
$(7.97) per share. This represents an immediate increase in net tangible book
value of $7.59 per share to the existing shareholders and an immediate dilution
of $21.97 per share to new shareholders. Dilution per share represents the
difference between the price per share to be paid by the new shareholders and
the deficit in pro forma net tangible book value per share at March 31, 1996.
The following table illustrates the per share dilution:
Initial public offering price per share........................                $
      Deficit in net tangible book value per share before the
         Offering..................................................   $ (15.56)
      Increase in net tangible book value per share attributable
         to the Offering...........................................       7.59
    Deficit in pro forma net tangible book value per share, as
      adjusted
      for the Offering.............................................                  (7.97)
    Dilution per share to new shareholders(a)......................                $ 21.97
The following table sets forth, on a pro forma basis at March 31, 1996, the
difference between the number of shares of Class A Common Stock purchased from
the Company, the total consideration paid to the Company and the average price
per share paid by existing shareholders and to be paid by new shareholders.
SHARES PURCHASED          TOTAL CONSIDERATION        AVERAGE
                                         ---------------------     -----------------------     PRICE PER
                                          NUMBER       PERCENT       AMOUNT        PERCENT       SHARE
Existing shareholders(b)(c)............  3,941,100       57.8%     $ 9,806,405       19.6%      $  2.49
New shareholders(b)....................  2,882,143       42.2       40,350,000       80.4
                                                           --                          --
                                           -------                    --------
          Total........................  6,823,243      100.0%     $50,156,405      100.0%
                                           =======         ==         ========         ==
- ------------------------------
 
(a) If the Underwriters' over-allotment option is exercised in full, the pro
    forma deficit in net tangible book value will be approximately $(6.64) per
    share, resulting in dilution to new shareholders in the Offering of $20.64
    per share. See "Underwriting."
 
(b) Sales by the Selling Shareholders in the Offering will reduce the number of
    shares held by existing shareholders to 2,523,243, or 37.0% (2,343,020
    shares or 34.3% if the over-allotment option is exercised in full) of the
    total number of shares of Common Stock outstanding and will increase the
    number of shares held by new investors to 4,300,000 shares, or 63.0%
    (4,764,777 shares or 65.4% if the over-allotment option is exercised in
    full) of the total number of shares of Common Stock outstanding after the
    Offering.
 
(c) Excludes: (i) options outstanding on the date hereof to purchase
    approximately 694,368 shares of Class A Common Stock at an exercise price of
    $6.25 and (ii) warrants outstanding on the date hereof to purchase 597,960
    shares of Class A Common Stock at an exercise price of $.01.
 
                                       14
17
 
                                 CAPITALIZATION
 
     The following table sets forth the actual capitalization of the Company as
of March 31, 1996, and pro forma to give effect to (i) the Offering and the
application of the estimated net proceeds therefrom and (ii) the 1996 Treasure
Coast Acquisition, the Stamford Acquisition and the Huntington Acquisitions, as
if each of the foregoing had occurred on March 31, 1996. This table should be
read in conjunction with the information contained in the "Pro Forma
Consolidated Financial Information" and the Company's Consolidated Financial
Statements and Notes thereto.
AS OF MARCH 31, 1996
                                                                  -------------------------
                                                                   ACTUAL      PRO FORMA(A)
                                                                   (DOLLARS IN THOUSANDS)
Long-term debt (including current maturities):
      Senior Credit Facility....................................  $  8,500       $      0
      Senior Subordinated Notes(b)..............................    65,978         65,978
      Note payable, officer(c)..................................     1,175          1,175
                                                                  --------       --------
              Total long-term debt..............................    75,653         67,153
                                                                  --------       --------
    Stockholders' equity (deficit)(d)
      Class A Common Stock, $.01 par value; 21,600,000 shares
         authorized, 1,054,988 shares issued and 439,215 shares
         outstanding, 4,542,554 shares issued and outstanding on
         a pro forma basis......................................        10             45
      Class B Common Stock, $.01 par value; 3,501,886 shares
         authorized, issued and outstanding, 2,280,690 shares
         issued and outstanding on a pro forma basis............        35             23
      Additional paid-in capital................................    23,541         59,518
      Accumulated deficit(e)....................................   (43,551)       (44,237)
      Less treasury stock at cost, 615,773 shares...............        26             26
                                                                  --------       --------
              Total stockholders' equity (deficit)..............   (19,991)        15,323
                                                                  --------       --------
              Total capitalization..............................  $ 55,662       $ 82,476
                                                                  ========       ========
- ------------------------------
 
(a) Does not include the shares of Series A Preferred Stock issued in May 1996,
    which are being redeemed with the proceeds from the Offering. See "Use of
    Proceeds."
 
(b) The 13 1/4% Senior Subordinated Notes due 2003 (the "Senior Subordinated
    Notes") were issued at a discount and have an accreted value of $67.8
    million at March 31, 1996 and an aggregate face amount of $75.5 million.
 
(c) See Note 5 to the Company's Consolidated Financial Statements.
 
(d) Outstanding share figures do not include: (i) options outstanding on the
    date hereof to purchase approximately 694,368 shares of Class A Common Stock
    at a per share exercise price of $6.25 and (ii) warrants outstanding on the
    date hereof to purchase 597,960 shares of Class A Common Stock at a per
    share exercise price of $.01.
 
(e) Pro forma accumulated deficit includes an estimated charge of approximately
    $686,000 in connection with the payment of deferred compensation to certain
    executives of the Company which will be recorded in the period in which the
    payment is made. See "Use of Proceeds."
 
                                       15
18
 
             UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
 
     The Unaudited Pro Forma Consolidated Statement of Operations for the year
ended December 31, 1995 presents the statement of operations of the Company as
if the Recapitalization Transactions, the 1995 Treasure Coast Acquisition, the
Acquisitions and the Offering and the application of the estimated net proceeds
therefrom had occurred on January 1, 1995. The Unaudited Pro Forma Consolidated
Statement of Operations for the three months ended March 31, 1996 presents the
statement of operations of the Company as if the Acquisitions and the Offering
and the application of the estimated net proceeds therefrom had occurred on
January 1, 1995. The Unaudited Pro Forma Consolidated Balance Sheet at March 31,
1996 presents the balance sheet of the Company as if the Huntington
Acquisitions, the 1996 Treasure Coast Acquisition and the Stamford Acquisition
and the Offering and the application of the estimated net proceeds therefrom had
occurred on March 31, 1996.
 
     The Acquisitions and the 1995 Treasure Coast Acquisition are accounted for
using the purchase method of accounting. The total cost of such acquisitions
will be allocated to the tangible and intangible assets acquired and liabilities
assumed based upon their respective fair values. The allocation of the
respective purchase prices included in the pro forma financial statements is
preliminary. The Company does not expect that the final allocation of the
purchase price will materially differ from the preliminary allocation.
 
     The pro forma adjustments are based upon available information and upon
certain assumptions that the Company believes are reasonable under the
circumstances. The pro forma consolidated financial information should be read
in conjunction with the Company's Consolidated Financial Statements and Notes
thereto, as well as the Financial Statements and Notes thereto of (i) Danbury
Broadcasting, Inc., with respect to the Danbury Acquisition, (ii) Adventure
Communications, Inc., with respect to the Huntington Acquisitions, (iii) Media
VI, with respect to the 1996 Treasure Coast Acquisition and (iv) Q Broadcasting,
Inc., with respect to the Stamford Acquisition, included elsewhere in this
Prospectus. The pro forma statement of operations data are not necessarily
indicative of the results that would have occurred if the Recapitalization
Transactions, the Acquisitions, the Offering and the application of the
estimated net proceeds therefrom and the 1995 Treasure Coast Acquisition had
occurred on the dates indicated, nor are they indicative of the Company's future
results of operations. There can be no assurance whether or when the Huntington
Acquisitions will be consummated.
 
     The pro forma consolidated financial information does not include the
issuance of Series A Preferred Stock since it was originally issued in May 1996
and will be redeemed by the Company using the proceeds from the Offering.
 
                                       16
19
 
            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31, 1995
                          --------------------------------------------------------------------------------------------------------
                                                                                        1996                             1995
                          COMMODORE                                                   TREASURE                         TREASURE
                           MEDIA,     WESTCHESTER       DANBURY        HUNTINGTON       COAST         STAMFORD          COAST
                            INC.      ACQUISITION    ACQUISITION(A)   ACQUISITIONS   ACQUISITION   ACQUISITION(B)   ACQUISITION(C)
                          ---------   ------------   --------------   ------------   -----------   --------------   --------------
Total revenue...........  $ 33,653       $  876         $  3,268        $  3,353       $ 2,131        $  2,509          $  537
Less: agency
  commissions...........    (2,858 )        (44)            (297)           (187)         (139)           (223)            (43)
                          --------        -----          -------         -------       -------         -------           -----
Net revenue.............    30,795          832            2,971           3,166         1,992           2,286             494
Station operating
  expenses..............    19,033          714            2,165           2,118         1,492           3,110             319
Corporate expenses......     2,051            0              369             573             0               0               0
Depreciation and
  amortization..........     1,926          173              433             244           149             448             169
Long-term incentive
  compensation..........     2,007            0                0               0             0               0               0
                          --------        -----          -------         -------       -------         -------           -----
Operating income
  (loss)................     5,778          (55)               4             231           351          (1,272)              6
Interest expense, net...     7,000          145              354               0           216             493               0
Other (income)
  expenses..............       434          (43)               3             (43)            0            (154)              0
                          --------        -----          -------         -------       -------         -------           -----
Income (loss) before
  income taxes and
  extraordinary loss....    (1,656 )       (157)            (353)            274           135          (1,611)              6
Income taxes............       140            0                0              76             0               0               0
                          --------        -----          -------         -------       -------         -------           -----
Net income (loss) before
  extraordinary item....  $ (1,796 )     $ (157)        $   (353)       $    198       $   135        $ (1,611)         $    6
                                          =====          =======         =======       =======         =======           =====
Preferred stock
  dividend..............       252
                          --------
Net loss applicable to
  common shares before
  extraordinary item....  $ (2,048 )
                          ========
Net loss per common
  share before
  extraordinary item....  $  (0.53 )
Weighted average
  common shares
  outstanding...........  3,892,300
PRO FORMA      PRO FORMA
                          ADJUSTMENTS      COMBINED
                          -----------     ----------
Total revenue...........    $              $ 46,327
Less: agency
  commissions...........                     (3,791)
                            -------        --------
Net revenue.............                     42,536
Station operating
  expenses..............     (1,766)(d)      27,185
Corporate expenses......        100(e)        2,151
                               (942)(e)
Depreciation and
  amortization..........         17(f)        3,559
Long-term incentive
  compensation..........                      2,007
                            -------        --------
Operating income
  (loss)................      2,591           7,634
Interest expense, net...        606(g)        8,814
Other (income)
  expenses..............        237(h)          485
                                 51(i)
                            -------        --------
Income (loss) before
  income taxes and
  extraordinary loss....      1,697        $ (1,665)
                            -------
Income taxes............        (76)(j)         140
                            -------        --------
Net income (loss) before
  extraordinary item....      1,773          (1,805)
 
Preferred stock
  dividend..............       (252)(k)           0
                                           --------
Net loss applicable to
  common shares before
  extraordinary item....                   $ (1,805)
                                           ========
Net loss per common
  share before
  extraordinary item....                   $  (0.26)
Weighted average
  common shares
  outstanding...........                  6,774,300
17
20
 
            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED MARCH 31, 1996
                                ------------------------------------------------------------------------------------
                                                                1996
                                COMMODORE                     TREASURE
                                 MEDIA,       HUNTINGTON        COAST        STAMFORD       PRO FORMA      PRO FORMA
                                  INC.       ACQUISITIONS    ACQUISITION    ACQUISITION    ADJUSTMENTS     COMBINED
                                ---------    ------------    -----------    -----------    -----------     ---------
Total revenue.................   $ 8,048         $722           $ 310          $ 707          $             $ 9,787
Less: agency commissions......      (632)         (49)            (15)           (58)                          (754)
                                 -------         ----            ----           ----          -----           -----
Net revenue...................     7,416          673             295            649                          9,033
Station operating expenses....     5,375          407             245            852           (605)(d)       6,274
Corporate expenses............       466          145               0              0             25(l)          491
                                                                                               (145)(l)
Depreciation and
  amortization................       480           53              26             76            249(m)          884
Long-term incentive
  compensation................         0            0               0              0                              0
                                 -------         ----            ----           ----          -----           -----
Operating income (loss).......     1,095           68              24           (279)           476           1,384
Interest expense, net.........     2,336            0              46            148           (281)(n)       2,249
Other (income) expenses.......       168           (9)              0              0              9(h)          168
                                 -------         ----            ----           ----          -----           -----
Income (loss) before income
  taxes.......................    (1,409)          77             (22)          (427)           748          (1,033)
Income taxes..................        27           31               0              0            (31)(j)          27
                                 -------         ----            ----           ----                          -----
Net income (loss).............    (1,436)        $ 46           $ (22)         $(427)                        (1,060)
                                                 ====            ====           ====
Net loss applicable to common
  shares......................   $(1,436)                                                                   $(1,060)
                                 =======                                                                      =====
Net loss per common share.....   $ (0.36)                                                                   $ (0.16)
Weighted average common shares
  outstanding.................  3,949,900                                                                  6,831,900
18
21
 
       NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
 
(a)  Reflects the historical statement of operations of Danbury Broadcasting,
     Inc. ("Danbury"). Danbury operates on a June 30 fiscal year end. The
     historical statement of operations included in the unaudited pro forma
     consolidated financial statements, however, have been prepared on a
     calendar year basis based on the unaudited quarterly financial statements
     of Danbury.
 
(b)  Reflects the historical Q Broadcasting, Inc. statement of operations for
     the fiscal year ended September 30, 1995.
 
(c)  Reflects the results of operations of Treasure Coast Media, Inc. for
     January through June 1995 when the Company did not own or operate the
     station acquired in connection with the 1995 Treasure Coast Acquisition.
 
(d)  Cost savings expected to be realized by combining duplicative programming,
     general and administrative functions, sales responsibilities and facilities
     in markets with multiple stations, commission reductions, employee benefit
     cost savings and reductions in professional fees due to consolidation.
 
(e)  Corporate general and administrative expenses have been incrementally
     adjusted principally due to operating as a public company.
 
(f)  To reflect additional incremental depreciation and amortization related to
     the 1995 Treasure Coast Acquisition and the Acquisitions.
 
(g)  To reflect adjustment to interest expense associated with the
     Recapitalization Transactions and the Acquisitions (dollars in thousands):
Incremental pro forma interest expense on debt incurred with
               the
               Recapitalization Transactions as if they occurred on January
               1, 1995.....................................................  $ 2,821
             Interest expense recorded by the Company in 1995 on debt
               retired with the Recapitalization Transactions..............   (1,007)
             Interest expense attributable to the Acquisitions.............   (1,208)
                                                                             -------
             Pro forma adjustment..........................................  $   606
                                                                             =======
(h)  Elimination of non-operating income that is not expected to be realized by
     the Company.
 
(i)  To record the increase in amortization of deferred financing costs
     associated with the Recapitalization Transactions (dollars in thousands):
Incremental pro forma deferred financing costs incurred with
               the
               Recapitalization Transactions as if they occurred on
               January 1, 1995............................................  $    120
             Deferred financing costs recorded by the Company in 1995 on
               debt retired with the Recapitalization Transactions........       (69)
                                                                            --------
             Pro forma adjustment.........................................  $     51
                                                                            ========
(j)  No incremental income taxes have been provided as the Company has a net
     operating loss. Incremental state taxes are considered immaterial.
 
(k)  To eliminate the preferred stock dividend on preferred stock redeemed in
     the Recapitalization Transactions.
 
(l)  Corporate general and administrative expenses have been incrementally
     adjusted principally due to operating as a public company.
 
(m) To reflect additional incremental depreciation and amortization related to
    the Acquisitions.
 
                                       19
22
 
(n)  To reflect adjustment to interest expense associated with the Acquisitions
     (dollars in thousands):
Incremental pro forma interest expense on debt incurred with the
               Recapitalization Transactions as if they occurred on January
               1, 1995.......................................................  $  37
             Interest expense on the Senior Credit Facility retired with the
               proceeds from the Offering....................................    (12)
             Interest expense associated with the Westchester Acquisition and
               Danbury Acquisition prior to their acquisition by the
               Company.......................................................   (112)
             Interest expense attributable to the Acquisitions...............   (194)
                                                                               ------
                                                                                   -
             Pro forma adjustment............................................  $(281)
                                                                               =======
20
23
 
                 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
                             (DOLLARS IN THOUSANDS)
AS OF MARCH 31, 1996
                                       ----------------------------------------------------------------------------------
                                                                     1996
                                       COMMODORE                   TREASURE
                                        MEDIA,      HUNTINGTON       COAST       STAMFORD      PRO FORMA        PRO FORMA
                                         INC.      ACQUISITIONS   ACQUISITION   ACQUISITION   ADJUSTMENTS       COMBINED
                                       ---------   ------------   -----------   -----------   -----------       ---------
ASSETS:
Cash.................................. $   5,087      $  170        $    36       $     1      $  36,000(a)      $ 1,644
                                                                                                  (8,500)(b)
                                                                                                  (1,968)(c)
                                                                                                 (30,475)(d)
                                                                                                   1,500(d)
                                                                                                    (207)(d)
Accounts receivable, net..............     4,908         561            212           640         (1,413)(d)       4,908
Prepaid expenses and other current
  assets..............................       453          59              9           142           (210)(d)         453
                                         -------      ------         ------       -------       --------         -------
          Total current assets........    10,448         790            257           783         (5,273)          7,005
Property, plant and equipment, net....    10,016       1,186            769           329                         12,300
FCC licenses and goodwill, net........    35,213         131          2,135         2,308         23,917(d)       63,704
Other intangible and other assets,
  net.................................     7,534           0              1            37            (38)(d)       6,034
                                                                                                  (1,500)(d)
                                         -------      ------         ------       -------       --------         -------
          Total assets................ $  63,211      $2,107        $ 3,162       $ 3,457      $  17,106         $89,043
                                         =======      ======         ======       =======       ========         =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
Accounts payable and accrued
  liabilities......................... $   4,386      $   76        $    39       $   359      $    (174)(d)     $ 4,686
Current maturities of long-term
  debt................................        12       2,258            119             5         (2,382)(d)          12
                                         -------      ------         ------       -------       --------         -------
          Total current liabilities...     4,398       2,334            158           364         (2,556)          4,698
Long-term debt........................    74,466           0          2,122         7,689         (8,500)(b)      65,966
                                                                                                  (9,811)(d)
Noncurrent compensation...............     1,463           0              0             0         (1,282)(c)         181
Note payable, officer.................     1,175           0              0             0                          1,175
Deferred income taxes.................     1,700           0              0             0                          1,700
Stockholders' equity (deficit)........   (19,991)       (227)           882        (4,596)        36,000(a)       15,323
                                                                                                    (686)(c)
                                                                                                   3,941(d)
                                         -------      ------         ------       -------       --------         -------
          Total liabilities and
            stockholders' equity
            (deficit)................. $  63,211      $2,107        $ 3,162       $ 3,457      $  17,106         $89,043
                                         =======      ======         ======       =======       ========         =======
21
24
 
            NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
 
(a) To reflect the proceeds from the Offering:
Issuance of 2,882,143 shares of Class A Common Stock............  $40,350,000
        Fees and expenses...............................................    4,350,000
                                                                          -----------
                  Net proceeds from the Offering........................  $36,000,000
                                                                          ===========
(b) To reflect the repayment of the outstanding balance of $8.5 million under
    the Senior Credit Facility.
(c) To reflect the payment of deferred compensation in accordance with the
    provisions of employment agreements with certain executives of the Company.
    See "Use of Proceeds." A charge to earnings of approximately $686,000 will
    be taken in the period that the payment is made to reflect the payment of
    the deferred compensation in a total amount of $1.9 million, as required in
    an Initial Public Offering. The deferred compensation is currently carried
    on the Company's balance sheet at its present value.
(d) To reflect the purchase of the Huntington Acquisitions, the 1996 Treasure
    Coast Acquisition and the Stamford Acquisition and the preliminary
    allocation of the purchase price including expenses of $975,000:
Huntington Acquisitions.........................................  $12,000,000
        1996 Treasure Coast Acquisition.................................    8,000,000
        Stamford Acquisition............................................    9,500,000
                                                                          -----------
                  Total.................................................   29,500,000
        Fees and expenses...............................................      975,000
                                                                          -----------
                  Total.................................................  $30,475,000
                                                                          ===========
Deposits totaling $1.5 million have been paid for the Huntington
      Acquisitions, the 1996 Treasure Coast Acquisition and the Stamford
      Acquisition, and will be applied towards the purchase price or returned to
      the Company at the respective closings.
 
      The allocation of the purchase price and the elimination of the assets not
      acquired and the liabilities not assumed in connection with the Huntington
      Acquisitions, the 1996 Treasure Coast Acquisition and the Stamford
      Acquisition are as follows:
ALLOCATION OF
                                                      PURCHASE        CARRYING
                                                        PRICE          VALUE       ADJUSTMENT
                                                       (000'S)        (000'S)      (000'S) --
                                                    -------------     --------
ASSETS:
        Cash......................................     $     0        $    207      $   (207)
        Accounts receivable, net..................           0           1,413        (1,413)
        Prepaid expense and other current
          assets..................................           0             210          (210)
        Property, plant and equipment, net........       2,284           2,284             0
        Intangible assets, net....................      28,491           4,574        23,917
        Other assets..............................           0              38           (38)
                                                       -------         -------      --------
                  Total assets....................     $30,775        $  8,726      $ 22,049
                                                       =======         =======      ========
        LIABILITIES:
        Accounts payable and accrued
          liabilities.............................     $   300        $    474      $   (174)
        Current portion of long term debt.........           0           2,382        (2,382)
        Long term debt............................           0           9,811        (9,811)
                                                       -------         -------      --------
        Net assets................................     $30,475        $ (3,941)     $ 34,416
                                                       =======         =======      ========
        Stockholders' equity......................                    $ (3,941)     $  3,941
                                                                       =======      ========
The preliminary allocation of purchase price may change upon final
      determination of the fair value of the net assets acquired.
 
                                       22
25
 
         SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
 
     The following selected historical consolidated financial data of the
Company for each of the five years ended December 31, 1995 are derived from the
audited consolidated financial statements of the Company, of which the
consolidated balance sheets at December 31, 1994 and 1995 and the consolidated
statement of operations for the three years in the period ended December 31,
1995 are included herein. The following selected historical consolidated
financial data of the Company for the three months ended March 26, 1995 and
March 31, 1996 are derived from the unaudited consolidated financial statements
of the Company. The selected financial information should be read in conjunction
with the information contained in "Pro Forma Consolidated Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Company's Consolidated Financial Statements and
Notes thereto, as well as the Financial Statements and Notes thereto of (i)
Danbury Broadcasting, Inc., with respect to the Danbury Acquisition, (ii)
Adventure Communications, Inc., with respect to the Huntington Acquisitions,
(iii) Media VI, with respect to the 1996 Treasure Coast Acquisition and (iv) Q
Broadcasting, Inc., with respect to the Stamford Acquisition, included elsewhere
herein.
 
     The pro forma statement of operations data and supplemental information for
the year ended December 31, 1995 has been prepared as if the Recapitalization
Transactions, the 1995 Treasure Coast Acquisition, the Acquisitions, and the
Offering and the application of the estimated net proceeds therefrom had
occurred on January 1, 1995. The pro forma statement of operations data and
supplemental information for the three months ended March 31, 1996 has been
prepared as if the Acquisitions and the Offering and the application of the net
proceeds therefrom had occurred on January 1, 1995. The pro forma balance sheet
data at March 31, 1996 has been prepared as if the 1996 Treasure Coast
Acquisition, the Stamford Acquisition and the Huntington Acquisitions and the
Offering and the application of the estimated net proceeds therefrom had
occurred on March 31, 1996. The selected pro forma financial data is not
necessarily indicative of the results that would have occurred if such
Acquisitions had occurred on the dates indicated, nor is it indicative of the
Company's future results of operations.
 
                                       23
26
 
         SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
                                                                                               --------------------------------
                                                YEAR ENDED DECEMBER 31,                        MARCH 26,         MARCH 31,
                            ---------------------------------------------------------------    ---------    -------------------
                                                                                   1995 PRO                            1996 PRO
                             1991       1992       1993       1994       1995      FORMA(A)      1995        1996      FORMA(A)
                            -------    -------    -------    -------    -------    --------    ---------    -------    --------
OPERATING DATA:
Total revenue.............  $17,677    $19,578    $21,643    $28,686    $33,653    $46,327      $ 6,507     $ 8,048    $ 9,787
Less: agency
  commissions.............   (1,342)    (1,617)    (1,845)    (2,461)    (2,858)    (3,791 )       (540)       (632)      (754 )
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
         Net revenue......   16,335     17,961     19,798     26,225     30,795     42,536        5,967       7,416      9,033
Station operating
  expenses(b).............   12,080     12,713     13,509     16,483     19,033     27,185        4,168       5,375      6,274
Corporate expenses........    1,167      1,602      2,531      2,110      2,051      2,151          461         466        491
Depreciation and
  amortization............    1,606      1,676      1,129      2,145      1,926      3,559          437         480        884
Long-term incentive
  compensation(c).........        0          0          0      2,180      2,007      2,007          585           0          0
Separation
  compensation(d).........        0          0      1,496          0          0          0            0           0          0
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
         Operating
           income.........    1,482      1,970      1,133      3,307      5,778      7,634          316       1,095      1,384
Interest expense..........    5,139      4,410      4,219      2,932      7,421      9,235          830       2,452      2,364
Interest income...........        5          3          1          0        421        421            0         115        115
Other expenses............      527        561        658        602        434        485           56         167        168
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
Loss before income taxes
  and extraordinary gain
  (loss)..................   (4,179)    (2,998)    (3,743)      (227)    (1,656)    (1,665 )       (570)     (1,409)    (1,033 )
Income taxes..............        4         12         39        300        140        140           15          27         27
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
Loss before extraordinary
  gain (loss).............   (4,183)    (3,010)    (3,782)      (527)    (1,796)    (1,805 )       (585)     (1,436)    (1,060 )
Extraordinary
  gain (loss)(e)..........        0        430          0          0       (444)      (512 )          0           0          0
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
         Net loss.........   (4,183)    (2,580)    (3,782)      (527)    (2,240)    (2,317 )       (585)     (1,436)    (1,060 )
Preferred stock
  dividend................        0          0          0        691        252          0          208           0          0
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
Net loss applicable to
  common shares...........  $(4,183)   $(2,580)   $(3,782)   $(1,218)   $(2,492)   $(2,317 )    $  (793)    $(1,436)   $(1,060 )
                            ========   ========   =======    ========   ========   =======       ======     =======    =======
Loss per share:
  Before extraordinary
    item..................  $ (1.60)   $ (1.40)   $ (1.88)   $  (.32)   $  (.53)   $ (0.26 )    $  (.21)    $ (0.36)   $ (0.16 )
  Extraordinary item......        0        .20          0          0       (.11)      (.08 )          0           0          0
                            --------   --------   -------    --------   --------   -------       ------     -------    -------
  Loss per share..........  $ (1.60)   $ (1.20)   $ (1.88)   $  (.32)   $  (.64)   $  (.34 )    $  (.21)    $ (0.36)   $ (0.16 )
                            ========   ========   =======    ========   ========   =======       ======     =======    =======
Weighted average common
  shares outstanding(f)...  2,610,700  2,149,900  2,013,100  3,762,700  3,892,300  6,774,300   3,755,500    3,949,900  6,831,900
SUPPLEMENTAL INFORMATION:
Broadcast cash flow(g)....  $ 4,255    $ 5,248    $ 6,289    $ 9,742    $11,762    $15,351      $ 1,799     $ 2,041    $ 2,759
Broadcast cash flow
  margin(g)...............    26.0%      29.2%      31.8%      37.1%      38.2%      36.1%        30.1%       27.5%      30.5%
EBITDA(g).................    3,088      3,646      3,758      7,632      9,711     13,200        1,338       1,575      2,268
Capital expenditures......      179        371        333        623        321                      42         124
AT MARCH 31, 1996
                                              AT DECEMBER 31,                                               -------------------
                            ---------------------------------------------------                                          PRO
                             1991       1992       1993       1994       1995                               ACTUAL     FORMA(A)
                            -------    -------    -------    -------    -------                             -------    --------
BALANCE SHEET DATA:
Cash and cash
  equivalents.............  $   958    $ 1,045    $   887    $ 2,042    $10,891                             $ 5,087    $ 1,644
Net working capital.......   (6,512)       583      2,387        115     13,730                               6,050      2,307
Total assets..............   28,437     27,508     36,192     36,283     52,811                              63,211     89,043
Total long-term debt
  (including current
  maturities).............   51,211     51,934     41,773     39,075     66,316                              75,653     67,153
Stockholders' equity
  (deficit)...............  (26,185)   (28,766)    (8,097)   (18,038)   (18,555)                            (19,991)    15,323
24
27
 
     NOTES TO SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
 
(a) Pro forma operating data and supplemental information for the year ended
    December 31, 1995 give effect to the Recapitalization Transactions (as
    hereinafter defined), the Acquisitions, the Offering and the application of
    the estimated net proceeds therefrom and the 1995 Treasure Coast Acquisition
    as if each had occurred on January 1, 1995. The pro forma operating data and
    supplemental information for the three months ended March 31, 1996 give
    effect to the Acquisitions and the Offering and the application of the
    estimated net proceeds therefrom as if each had occurred on January 1, 1995.
    The pro forma balance sheet data give effect to the 1996 Treasure Coast
    Acquisition, the Stamford Acquisition and the Huntington Acquisitions and
    the Offering and the application of the estimated net proceeds therefrom as
    if each had occurred on March 31, 1996.
 
(b) Station operating expenses exclude depreciation and amortization, corporate
    expenses, long-term incentive compensation, other expenses and separation
    compensation.
 
(c) The long-term incentive compensation expense incurred by the Company in 1994
    and 1995 consists of non-cash charges taken by the Company pursuant to the
    long-term incentive compensation provisions of its then existing employment
    agreements with Mr. Friedman and Mr. Shea. See "Management-- Employment
    Agreements and Arrangements."
 
(d) Separation compensation in 1993 consists of a provision for cash payments
    made in 1993, cash payments made in 1994 and the present value of future
    payments under a separation agreement reached between the Company and a
    former president of the Company which became effective December 31, 1993.
    Under such separation agreement, the former president will continue to
    receive $250,000 per year in equal semi-monthly payments through December
    31, 1997. See Note 10 to Consolidated Financial Statements of the Company.
 
(e) In 1992, the Company renegotiated the Amended and Restated Promissory Note
    issued by the Company to Michael Hanson (the "Hanson Note") resulting in a
    $430,000 reduction in its principal amount and an equivalent extraordinary
    gain for the Company. In 1995, in connection with the Recapitalization
    Transactions (as hereinafter defined), the Company wrote off the balance of
    the unamortized deferred financing costs on its retired debt resulting in an
    extraordinary loss of $444,000, $512,000 on a 1995 pro forma basis. See Note
    5 to Consolidated Financial Statements of the Company.
 
(f) To date the Company has not paid any dividends with respect to the Common
    Stock.
 
(g) For purposes of this Prospectus, EBITDA is defined as net income (loss)
    before (i) extraordinary gain (loss), (ii) income taxes, (iii) other
    expenses (income), (iv) net interest expense, (v) long-term incentive
    compensation and separation compensation and (vi) depreciation and
    amortization. Broadcast cash flow is defined as EBITDA before corporate
    expenses. Although EBITDA and broadcast cash flow are not measures of
    performance calculated in accordance with GAAP, EBITDA and broadcast cash
    flow are widely used in the broadcast industry as measures of a radio
    broadcasting company's operating performance. Neither EBITDA nor broadcast
    cash flow should be considered in isolation or as a substitute for net
    income, cash flows from operating activities and other income or cash flow
    statement data prepared in accordance with GAAP or as a measure of
    profitability or liquidity. Broadcast cash flow and EBITDA differ from cash
    flow from operations under GAAP primarily because broadcast cash flow and
    EBITDA are not reduced by net interest expense and income tax expense,
    changes in the levels of operating assets and liabilities and separation and
    long-term incentive compensation paid during the period. In addition,
    broadcast cash flow excludes corporate expenses that are reflected as a
    reduction in cash flow from operations. Broadcast cash flow and EBITDA are
    not intended to depict funds available for discretionary uses as they do not
    reflect the Company's debt service and capital requirements.
 
                                       25
28
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
GENERAL
 
     The following discussion should be read in conjunction with the financial
statements appearing elsewhere in this Prospectus. Period to period comparisons
of the Company's historical financial statements are significantly impacted by
the acquisition of certain of the Company's radio stations and the use of JSAs
and LMAs. In this discussion, the 1995 results of operations of the Company
include the results of the WKAP-AM JSA that became effective on March 27, 1995,
the acquisition of WQOL-FM on June 27, 1995, the WPAW-FM JSA commencing in
August 1995, and the LMAs with respect to WRKI-FM, WINE-AM, WVYB-FM, WZZN-FM and
WPUT-AM that became effective on October 30, 1995. The 1996 results of
operations of the Company include the results of the JSAs with respect to
WAVW-FM, WKQS-FM and WAXE-AM that became effective on February 16, 1996.
 
     The Company analyzes its financial results in terms of variable expenses
and other operating expenses. Management believes "other operating expenses" are
typically controllable and predictable, and projects such expenses each year
during the Company's annual budgeting process; such expenses consist primarily
of employee salaries, programming and similar expenses, advertising and
promotional expenses and lease costs for office, studio space and transmission
sites, but excludes any barter expense. "Variable expenses," which have averaged
26.2% of non-barter revenue for the last five years, consist primarily of
commissions and music licensing fees.
 
     In the radio broadcasting industry, radio stations may utilize trade or
barter agreements to provide advertising time in exchange for goods or services
(such as travel, products used in promotional campaigns, "giveaways" or meals)
instead of cash compensation. The Company attempts to limit trade or barter,
employing it primarily in situations where use of trade or barter will bring
incremental cash revenue from a potential client or will reduce a cash expense
item. The Company's trade and barter revenue as a percent of total revenue was
9.6%, 8.6%, 7.5%, 8.8% and 10.1% for 1995, 1994, 1993, 1992 and 1991,
respectively.
 
     Although advertising contracts are generally short-term, the Company has
long-term relationships with many of its advertisers. The Company has developed
these relationships through both the long local history of many of its radio
stations and the long personal relationships many of its managers have developed
with advertisers in the stations' markets. In 1995, approximately 86% of the
Company's total cash revenue was generated from the broadcast of local
advertising, approximately 12% was from the broadcast of national advertising
and approximately 2% was from other forms of revenue such as political
advertisements, network revenue and tower rentals. Each radio station's local
sales staff solicits advertisements directly from local advertisers or through
an advertising agency representing local advertisers. National advertising sales
for each of the Company's stations are made in conjunction with the efforts of
an independent advertising representative who specializes in national sales,
acts as an exclusive agent for the stations and is compensated on a commission
only basis.
 
     The Company has net operating loss carryforwards ("NOLs") for federal
income tax purposes which may be available to offset the Company's taxable
income. The Offering will result in a more-than-50-percent ownership change for
purposes of Section 382. Therefore, the Company's use of its NOLs may be reduced
in the years following the ownership change, resulting in a potential increase
in the Company's effective tax rate for such years.
 
     Seasonal revenue fluctuations are common in the radio broadcasting industry
and are due primarily to fluctuations in advertising expenditures by local
retailers. The Company's first fiscal quarter generally produces the lowest
revenue for the year and the fourth fiscal quarter generally produces the
highest revenue. The Company's operating results in any period may also be
affected by the occurrence of advertising and promotional expenses that do not
produce commensurate revenue in the period in which the expenses are incurred.
Since Arbitron typically reports audience ratings on a quarterly or semiannual
basis (depending on the market), a radio station's ability to realize revenue as
a result of increased advertising and promotional expenses and any resulting
audience rating changes may be delayed for several months. The Company believes
 
                                       26
29
 
the relatively moderate rates of inflation over the past three years have not
had a significant impact on the profitability of the Company. In general, the
Company believes the effects of inflation are offset through increases in
advertising rates.
 
     The following table sets forth certain consolidated summary data of the
Company (dollars in thousands):
THREE-MONTHS ENDED
                                                    YEAR ENDED DECEMBER 31,                  ----------------------
                                      ---------------------------------------------------    MARCH 26,    MARCH 31,
                                       1991       1992       1993       1994       1995        1995         1996
OPERATING DATA:
Non barter revenue................... $15,892    $17,848    $20,026    $26,213    $30,415     $ 5,751      $ 7,132
Barter revenue.......................   1,785      1,730      1,617      2,473      3,238         756          916
                                      -------    -------    -------    -------    -------     -------      -------
  Total revenue(a)...................  17,677     19,578     21,643     28,686     33,653       6,507        8,048
Variable expenses(b)(c)..............   4,163      4,613      5,312      6,707      8,154       1,679        2,089
Other operating expenses(c)(d).......   7,492      7,886      8,548      9,886     10,683       2,289        3,048
Barter expense(c)....................   1,767      1,831      1,494      2,351      3,054         740          870
Corporate expenses...................   1,167      1,602      2,531      2,110      2,051         461          466
Depreciation & amortization..........   1,606      1,676      1,129      2,145      1,926         437          480
Long-term incentive compensation.....       0          0          0      2,180      2,007         585            0
Separation compensation..............       0          0      1,496          0          0           0            0
                                      -------    -------    -------    -------    -------     -------      -------
  Operating income................... $ 1,482    $ 1,970    $ 1,133    $ 3,307    $ 5,778     $   316      $ 1,095
                                      =======    =======    =======    =======    =======     =======      =======
OTHER DATA:
Broadcast cash flow(e)............... $ 4,255    $ 5,248    $ 6,289    $ 9,742    $11,762     $ 1,799      $ 2,041
Broadcast cash flow margin...........   26.0%      29.2%      31.8%      37.1%      38.2%       30.1%        27.5%
Variable expenses as a percent of
  non-barter revenue.................   26.2%      25.8%      26.5%      25.6%      26.8%       29.2%        29.3%
Other operating expenses as a percent
  of non-barter revenue..............   47.1%      44.2%      42.7%      37.7%      35.1%       39.8%        42.7%
Station operating expenses(c)........  12,080     12,713     13,509     16,483     19,033       4,168        5,375
- ------------------------------
 
(a) Total revenue less agency commissions equals net revenue, as detailed in the
    Company's audited financial statements.
 
(b) Variable expenses consist of all commissions (including agency, salesperson,
    national representative and tower representative) and music licensing fees,
    and excludes any barter expense.
 
(c) Station operating expenses consists of variable expenses plus other
    operating expenses plus barter expense less agency commissions.
 
(d) Other operating expenses consist primarily of employee salaries, programming
    and similar expenses, advertising and promotional expenses and lease costs
    for office, studio space and transmission sites, and excludes any barter
    expense.
 
(e) Broadcast cash flow means EBITDA before corporate expenses.
 
    RESULTS OF OPERATIONS
 
    THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 26,
    1995.
 
     Total Revenue.  Total revenue increased 23.7% to $8.0 million in the first
quarter of 1996 from $6.5 million during the same period in 1995 primarily due
to the addition of revenues from the acquisition of WQOL-FM in the Treasure
Coast Market, Florida, from the JSAs entered into with WPAW-FM, WAVW-FM, WKQS-FM
and WAXE-AM in the Treasure Coast Market, Florida, and WKAP-AM in Allentown,
Pennsylvania and from the LMAs entered into with WRKI-FM and WINE-AM in
Fairfield County, Connecticut and WVYB-FM, WZZN-FM and WPUT-AM in
Westchester/Putnam Counties, New York. On a same station basis, total revenue
increased 1.1% to $6.6 million in the first quarter of 1996 from $6.5 million in
the first quarter of 1995.
 
                                       27
30
 
     Station Operating Expenses.  Station operating expenses increased 28.9% to
$5.4 million in the first quarter of 1996 from $4.2 million during the same
period in 1995. The increase was primarily due to the addition of operating
expenses from WQOL-FM, WPAW-FM, WAVW-FM, WKQS-FM and WAXE-AM in the Treasure
Coast Market, Florida, WRKI-FM and WINE-AM in Fairfield County, Connecticut and
WVYB-FM, WZZN-FM and WPUT-AM in Westchester/Putnam Counties, New York. On a same
station basis, station operating expenses remained unchanged at $4.2 million in
the first quarter of 1996. The variable expense component of station operating
expenses increased to $2.1 million in the first quarter of 1996 from $1.7
million during the same period in 1995. The increase was due primarily to higher
commissions from increased revenues and a higher effective commission rate at
certain of the Company's stations. Variable expenses as a percent of non barter
revenue were 29.3% in the first quarter of 1996 as compared to 29.2% in the
first quarter of 1995. On a same station basis, variable expenses remained
unchanged at $1.7 million in the first quarter of 1996. On a same station basis,
variable expenses as a percent of non barter revenue were 30.2% in the first
quarter of 1996, as compared to 29.2% in the first quarter of 1995. This
increase was due primarily to higher effective commission rates at certain of
the Company's stations. The other operating expense component of station
operating expenses increased 33.2% to $3.0 million in the first quarter of 1996
from $2.3 million during the same period in 1995 primarily due to the additional
operating expenses associated with WQOL-FM, WPAW-FM, WAVW-FM, WKQS-FM and
WAXE-AM in the Treasure Coast Market, Florida, WKAP-AM in Allentown,
Pennsylvania, WRKI-FM and WINE-AM in Fairfield County, Connecticut and WVYB-FM,
WZZN-FM and WPUT-AM in Westchester/Putnam Counties, New York. Other operating
expenses were 42.7% of non barter revenue in the first quarter of 1996,
increasing from 39.8% of non barter revenue in the first quarter of 1995,
primarily due to the fees associated with the Company's various joint operating
arrangements. On a same station basis, other operating expenses decreased 2.8%
to $2.2 million or 38.5% of non barter revenue in the first quarter of 1996 from
$2.3 million or 39.8% of non barter revenue during the same period of 1995.
 
     Corporate Expenses.  Corporate expenses increased 1.1% in the first quarter
of 1996 to approximately $466,000 from approximately $461,000 during the same
period in 1995. In the first quarter of 1996 corporate expenses included higher
salary expenses, which were partially offset by lower incentive accruals as
compared to the first quarter of 1995. Corporate expenses as a percent of non
barter revenue were 6.5% in the first quarter of 1996 compared to 8.0% in the
first quarter of 1995.
 
     Other Expenses.  Depreciation and amortization increased 9.9% to
approximately $480,000 in the first quarter of 1996 from approximately $437,000
during the same period in 1995 due primarily to the addition of WQOL-FM in the
Treasure Coast Market, Florida. Interest expense increased to $2.5 million in
the first quarter of 1996 from approximately $830,000 during the same period in
1995 due to increased interest expense associated with the Senior Subordinated
Notes. Interest income of $115,000 was earned on the Company's temporary cash
investments. Other expenses increased to approximately $167,000 in the first
quarter of 1996 from approximately $56,000 during the same period in 1995. The
increase was due primarily to the amortization of financing costs associated
with the Recapitalization Transactions.
 
     Operating Income.  Operating income in the first quarter of 1996 increased
to $1.1 million from approximately $316,000 in the first quarter of 1995. The
increase was partially due to higher revenues and lower long-term incentive
compensation which was partially offset by higher station operating expenses. On
a same station basis, operating income for the first quarter of 1996 increased
to approximately $982,000 from approximately $316,000 in the first quarter of
1995. The increase was due primarily to lower long-term incentive compensation
expenses.
 
     Net Loss.  Net loss for the three months ended March 31, 1996 was $1.4
million compared to a net loss of approximately $585,000 during the same period
in 1995. The net loss was due primarily to increased interest expense and
depreciation and amortization, which were partially offset by increased revenues
and interest income and lower long-term incentive compensation.
 
     Broadcast Cash Flow.  Broadcast cash flow for the three months ended March
31, 1996 was approximately $2.0 million, a 13.5% increase from the first quarter
of 1995.
 
                                       28
31
 
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994.
 
     Total Revenue.  Total revenue increased 17.3% to $33.7 million in 1995 from
$28.7 million in 1994. The inclusion of revenues from the WQOL-FM acquisition
and revenues generated from JSAs and LMAs entered into in 1995 provided
approximately $1.6 million of this increase. On a same station basis total
revenue increased 11.9% to $32.1 million in 1995 from $28.7 million in 1994.
WEFX-FM and WNLK-AM in Fairfield County, Connecticut had combined total revenue
growth of 45.0% to $3.9 million in 1995 from $2.7 million in 1994 primarily due
to increased ratings and selling efforts. WJBR-AM/FM in Wilmington, Delaware and
WAEB-AM/FM in Allentown, Pennsylvania posted revenue increases in 1995 of 14.9%
and 11.6%, respectively, also primarily due to increased ratings and selling
efforts.
 
     Station Operating Expenses.  Station operating expenses increased 15.5% to
$19.0 million in 1995 from $16.5 million in 1994 due primarily to the inclusion
of station operating expenses from the newly acquired WQOL-FM, station operating
expenses resulting from JSAs and LMAs and an increase in barter expense. On a
same station basis, station operating expenses increased 9.3% to $18.0 million
in 1995 from $16.5 million in 1994 due primarily to the increase in barter
expense. The variable expense component of station operating expenses increased
21.6% to $8.2 million or 26.8% of non-barter revenue in 1995 from $6.7 million
in 1994 or 25.6% of non-barter revenue in 1994, primarily as a result of
increases in the effective commission rates and royalties resulting from the
increased revenues and an increase in bad debt expense. On a same station basis,
variable expenses increased 17.5% to $7.9 million or 27.2% of non-barter revenue
in 1995 from $6.7 million or 25.6% of non-barter revenue in 1994. The increase
was due primarily to higher commissions and the increase in overall revenue
levels. The other operating expense component of station operating expenses
increased 8.1% to $10.7 million in 1995 from $9.9 million in 1994 primarily due
to increased operating expenses from the acquisition of WQOL-FM, the JSAs and
the LMAs. On a same station basis, other operating expenses remained unchanged
at $9.9 million in 1995 as compared to the same period in 1994.
 
     Corporate Expenses.  Corporate expenses decreased 2.8% to $2.0 million in
1995 from $2.1 million in 1994. The decrease was due primarily to reduced travel
and entertainment expenses.
 
     Other Expenses.  Depreciation and amortization decreased 10.2% to $1.9
million in 1995 from $2.1 million in 1994 primarily as a result of the Company
fully amortizing certain costs associated with the acquisition of WZZO-FM in
Allentown, Pennsylvania. Long-term incentive compensation decreased 8.0% to $2.0
million in 1995 from $2.2 million in 1994. The 1995 expense reflects the balance
of the long-term incentive compensation obligations due Mr. Friedman and Mr.
Shea pursuant to their respective employment agreements. Interest expense
increased to $7.4 million in 1995 from $2.9 million in 1994. The increase was
due primarily to higher floating rates on the Company's prior senior credit
facilities and the cash and non-cash interest on the Senior Subordinated Notes
issued in the Recapitalization Transactions (as hereinafter defined). In 1995,
interest income of approximately $421,000 was earned on the Company's temporary
cash investments. Other expenses, net, decreased 27.9% from approximately
$600,000 in 1994 to approximately $400,000 in 1995 primarily due to a decrease
in the loss on sale of assets which was partially offset by an increase in the
amortization of the deferred financing charges associated with the
Recapitalization Transactions and the Company's prior credit facilities.
 
     Operating Income.  Operating income for the year ended December 31, 1995
increased 74.7% to $5.8 million from $3.3 million in the year ended December 31,
1994. The increase was primarily due to increased revenues which were partially
offset by increased station operating expenses. On a same station basis,
operating income increased 66.8% to $5.5 million in the year ended December 31,
1995 from $3.3 million during the same period in 1994. The increase was due
primarily to increased revenues, which were partially offset by higher station
operating expenses.
 
     Net Loss.  Net loss before extraordinary items for the year ended December
31, 1995 was approximately $1.8 million as compared to a net loss before
extraordinary items of approximately $527,000 during the same period in 1994.
The increase was due primarily to higher interest expense and station operating
expenses which were partially offset by increased revenue and interest income
and lower corporate expense, long-term incentive compensation and depreciation
and amortization. Upon consummation of the Recapitalization Transactions, the
Company wrote-off approximately $444,000 of deferred financing fees associated
with its
 
                                       29
32
 
prior credit agreement and recorded it as an extraordinary loss. The income tax
provision of approximately $141,000 for 1995 is related to current state and
local tax expenses.
 
     Broadcast Cash Flow.  Broadcast cash flow increased 20.7% to $11.8 million
in 1995 from $9.7 million in 1994. Excluding the results of WQOL-FM and the
results of the JSAs and LMAs, broadcast cash flow increased 16.3% to $11.3
million in 1995 from $9.7 million in 1994. The broadcast cash flow margin was
38.2% in 1995 as compared to 37.1% in 1994 and excluding the results of WQOL-FM
and the results of the JSAs and LMAs the broadcast cash flow margin was 38.6% in
1995.
 
YEAR ENDED DECEMBER 31, 1994 COMPARED TO THE YEAR ENDED DECEMBER 31, 1993.
 
     Total Revenue.  Total revenue increased 32.5% to $28.7 million in 1994 from
$21.6 million in 1993 primarily as a result of the duopoly acquisition of
WZZO-FM on December 28, 1993, increased revenue at WAEB-AM/FM and WJBR-AM/FM as
well as improved selling efforts at all of the Company's stations. All of the
Company's markets showed an increase in revenue in 1994. Excluding WZZO-FM,
total revenue for 1994 was $24.3 million, a 12.4% increase from 1993. This
increase was due to higher revenue at WAEB-AM/FM and WJBR-AM/FM as well as
improved selling efforts at all of the Company's stations.
 
     Station Operating Expenses.  Station operating expenses increased 22.0% to
16.5 million in 1994 from $13.5 million in 1993. The increase was primarily due
to the additional operating expenses associated with the acquisition of WZZO-FM
and increased selling expenses due to higher revenues. The variable expense
component of station operating expenses increased 26.3% in 1994 primarily from
increased commissions resulting from the higher levels of revenue and the
addition of the variable expenses from the acquisition of WZZO-FM. Variable
expenses as a percent of non-barter revenue decreased to 25.6% in 1994 from
26.5% in 1993 due primarily to lower levels of bad debt in 1994 as compared to
1993. Excluding WZZO-FM, variable expenses increased 6.3% in 1994 from 1993 and
variable expenses as a percent of non-barter revenue decreased to 25.4% in 1994
from 26.6% in 1993. The other operating expense component of station operating
expenses increased 15.7% to $9.9 million in 1994 from $8.5 million in 1993
primarily as a result of the addition of other operating expenses from the
acquisition of WZZO-FM and increased sales expenses at WFAS-AM/FM, WEFX-FM,
WNLK-AM and WZZR-FM. Excluding WZZO-FM, other operating expenses increased 5.1%
to $9.0 million in 1994 from $8.5 million in 1993 primarily due to increases in
sales expenses at WFAS-AM/FM, WNLK-AM and WZZR-FM.
 
     Corporate Expenses.  Corporate expenses decreased 16.6% to $2.1 million in
1994 from $2.5 million in 1993. The decrease in corporate expenses was primarily
attributable to lower legal, travel and entertainment, and severance expenses.
 
     Other Expenses.  Long-term incentive compensation expense in 1994 of $2.2
million consisted of a non-cash long-term incentive compensation expense
incurred by the Company pursuant to Mr. Friedman's and Mr. Shea's former
employment agreements. Depreciation and amortization increased 90% to $2.1
million in 1994 from $1.1 million in 1993 primarily as a result of the
acquisition of WZZO-FM. Interest expense, net, decreased to $2.9 million in 1994
from $4.2 million in 1993. The reduction in the Company's annual interest
expense was primarily due to the Company entering into the Second Amended and
Restated Credit Agreement with The Bank of New York and the conversion of
approximately $17.2 million of indebtedness of the Company to Carter Burden and
Radio Financial Partners, Inc. into equity securities of the Company. Income
taxes for the year ended 1994 consisted of a provision for current state and
local tax expenses.
 
     Operating Income.  Operating income for the year ended December 31, 1994
increased to $3.3 million from $1.1 million in the year ended December 31, 1993.
The increase was due primarily to increased revenues and the absence of
separation compensation expense incurred in the 1993 fiscal year which was
partially offset by higher station operating expenses and long-term incentive
compensation expense. On a same station basis, operating income increased to
$1.3 million in the year ended December 31, 1994 from $1.1 million in the year
ended December 31, 1993. The increase was partially due to increased revenues
and lower separation compensation expense which were partially offset by higher
station operating expenses.
 
                                       30
33
 
     Net loss.  Net loss for 1994 decreased to approximately $527,000 from
approximately $3.8 million in 1993 primarily due to increased revenues, lower
corporate expenses, separation compensation and interest expense which were
partially offset by increased station operating expenses, depreciation and
amortization, long-term incentive compensation and income taxes.
 
     Broadcast Cash Flow.  Broadcast cash flow increased 54.9% to $9.7 million
in 1994 from $6.3 million in 1993. Excluding WZZO-FM, broadcast cash flow
increased 22.5% in 1994 from 1993. The broadcast cash flow margin was 37.1% in
1994, including WZZO-FM, as compared to 31.8% in 1993.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Company's liquidity needs arise primarily from its debt service
obligations, funding of the Huntington Acquisitions and the Company's working
capital needs and capital expenditures. Net cash flows provided by operating
activities were $1.9 million and approximately $60,000 in the first quarter of
1996 and 1995, respectively. Changes in the Company's net cash flows from
operating activities are primarily the result of changes in advertising revenue,
the timing of its revenue receipts and its operating expense and interest
payments.
 
     During the first quarter of 1996, net cash flow used in investing
activities increased to $15.8 million from approximately $270,000 in the first
quarter of 1995. These investing activities in the first quarter of 1996
included approximately $124,000 of capital expenditures, approximately $291,000
of deferred acquisition costs, $915,000 of deposits on acquisitions (including
$500,000 for WKHL-FM and WSTC-FM in Fairfield County, Connecticut and $400,000
for WAVW-FM, WKQS-FM and WAXE-AM in the Treasure Coast Market, Florida) and
$14.4 million for the acquisition of WRKI-FM and WINE-AM and WVYB-FM, WZZN-FM
and WPUT-AM in Fairfield County, Connecticut and Westchester/Putnam Counties,
New York, respectively. In the first quarter of 1995 investing activities
included approximately $42,000 of capital purchases, approximately $65,000 of
loans to employees and $150,000 of deposits on acquisitions.
 
     Net cash flow provided by financing activities in the first quarter of 1996
totaled $8.1 million as compared to $1.6 million of net cash flow used in
financing activities during the first quarter of 1995. These financing
activities included $8.5 million of senior debt issued by the Senior Lender
under the Company's revolving Senior Credit Facility as partial funding for the
acquisitions of WRKI-FM and WINE-AM and the WVYB-FM, WZZN-FM and WPUT-AM in
Fairfield County, Connecticut and Westchester/Putnam Counties, New York,
respectively, and the payment of approximately $394,000 of deferred debt
issuance costs in connection with the Senior Credit Facility. In the first
quarter of 1995 net cash flows used in investing activities included
approximately $224,000 of deferred debt issuance costs, approximately $333,000
of principal payments on the Senior Credit Facility and payment of $1.0 million
to The Bank of New York for the purchase of the redeemable warrant.
 
     The Senior Credit Facility allows the Company to borrow up to $30 million
in revolving loans and up to $5 million in accounts receivable loans. Interest
is payable monthly at a rate of 3.5% over LIBOR. Principal amortization
commences on November 30, 1997 for the receivable loan.
 
     On May 1, 1996, the Company entered into a Securities Purchase Agreement
with CIBC WG Argosy Merchant Fund 2, LLC ("CIBC Merchant Fund"), pursuant to
which the CIBC Merchant Fund agreed to purchase from the Company, if and when
requested by the Company, up to an aggregate liquidation value of $12,500,000 of
Series A Preferred Stock of the Company in such amounts as the Company may
request (the "Preferred Stock Facility"), provided that such request be for an
aggregate liquidation value of at least $2.5 million and be made no later than
October 31, 1996. The Series A Preferred Stock accrues cash dividends at the
rate of 8% per annum, or 10% per annum if paid in additional shares of Series A
Preferred Stock, through April 30, 1999. The Company intends to redeem the
Series A Preferred Stock with proceeds from the Offering.
 
     The Company has utilized borrowings under the Senior Credit Facility and
the proceeds of issuances of Series A Preferred Stock under the Preferred Stock
Facility (which will be redeemed upon the closing of the Offering), together
with cash from operating activities, to satisfy its financial needs in the
recent past.
 
                                       31
34
 
Management believes that after consummation of the Offering contemplated hereby,
cash from operating activities together with available revolving credit
borrowings under the Senior Credit Facility should be sufficient to permit the
Company to meet its financial obligations and fund its operations for the
foreseeable future. Upon the completion of the Offering management expects that
the maximum of $35 million of borrowing capacity under the Senior Credit
Facility will be available to it for future cash needs. The Company's long-term
debt is comprised of the Senior Subordinated Notes and the Senior Credit
Facility. The Company may require additional financing for future acquisitions
and there can be no assurance that it will be able to obtain such financing on
terms considered by management to be favorable.
 
RECAPITALIZATION TRANSACTIONS
 
     On April 21, 1995, the Company completed the offering of its Senior
Subordinated Notes. The gross proceeds of approximately $65.0 million were used
to: (i) retire existing senior and subordinated indebtedness of approximately
$38.6 million resulting in an extraordinary loss of approximately $444,000; (ii)
redeem the preferred stock of approximately $8.7 million; (iii) pay the
long-term incentive compensation of Mr. Friedman and Mr. Shea of approximately
$1.9 million; (iv) pay the estimated fees and expenses of the Recapitalization
Transactions which total approximately $4.2 million; and (v) reserve
approximately $11.6 million for general corporate purposes and possible future
acquisitions and fund the 1995 Treasure Coast Acquisition. In addition, the
Company converted all of its existing Common Stock for 486,373 shares of its
Class B Common Stock and 119,212 shares (including treasury shares) of its Class
A Common Stock. The consolidated financial statements have been retroactively
adjusted for this conversion. The above transactions constitute the
Recapitalization Transactions. See Note 2 to the "Consolidated Financial
Statements." On May 26, 1995, the Company filed with the Securities and Exchange
Commission a registration statement on Form S-4 offering to exchange the Senior
Subordinated Notes for new notes which are substantially identical except that
they are freely transferable (the "Exchange Offer"). The Form S-4 was effective
on July 28, 1995 and the Exchange Offer was consummated on August 28, 1995.
 
RECENT ACCOUNTING PRONOUNCEMENTS
 
     The Financial Accounting Standards Board issued SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" in March 1995, which establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles and goodwill related to
those assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. SFAS No. 121 will be effective for
the Company's financial statements beginning in 1996. The Company evaluates
intangible assets for potential impairment by analyzing the operating results,
trends and prospects of the Company's stations, as well as by comparing them to
their competitors. The Company also takes into consideration recent acquisition
patterns within the broadcast industry, the impact of recently enacted or
potential FCC rules and regulations and any other events or circumstances which
might indicate potential impairment. As a result of continued strong growth in
radio advertising revenue, and based upon recent valuations of various station
acquisitions in many of the Company's markets, management does not believe that
the implementations of SFAS No. 121 will have a material effect on its financial
statements.
 
     The Financial Accounting Standards Board issued SFAS No. 123, "Accounting
for Stock Based Compensation" in October 1995, which establishes financial
accounting and reporting standards for stock based employee compensation plans
including, stock purchase plans, stock options, restricted stock and stock
appreciation rights. The Company has elected to continue accounting for stock
based compensation under Accounting Principles Board Opinion No. 25. The
disclosure requirements of SFAS No. 123 will be effective for the Company's
financial statements beginning in 1996. Management does not believe that the
implementation of SFAS No. 123 will have a material effect on its financial
statements.
 
                                       32
35
 
                                    BUSINESS
 
GENERAL
 
     The Company owns and operates, or provides sales and marketing services for
33 radio broadcasting stations (nineteen FM and fourteen AM stations) in six
medium-sized markets. The Company is the leading radio group on a pro forma
basis in five of its six markets based on radio advertising revenue and is the
leading radio group in each of its six markets based on audience share. The
Company's average radio revenue share in its markets was 45.1% in pro forma
1995, which the Company believes is the highest average radio revenue share of
any public radio broadcasting company in the United States. The Company's radio
stations are located in the following markets: Fairfield County, Connecticut;
Allentown, Pennsylvania; Wilmington, Delaware; Westchester/Putnam Counties, New
York; the Treasure Coast Market, Florida and Huntington, West Virginia/Ashland,
Kentucky. The Company's pro forma net revenue and broadcast cash flow for the
year ended December 31, 1995 were $42.5 million and $15.3 million, respectively.
 
     The Company believes that operating radio stations in medium-sized markets
offers significant opportunities to apply its programming, marketing and
broadcasting expertise to increase broadcast cash flow and to establish a
dominant market position that would be difficult for a competitor to replicate.
The Company defines medium-sized markets as markets with approximately $10
million to $35 million of radio advertising revenue, which includes markets
ranked between 50 and 150 in terms of radio advertising revenue. The Company
believes that medium-sized markets represent attractive operating environments
because these markets are generally characterized by (i) a limited number of
radio stations, which minimizes the risk of format attack, (ii) fewer
alternative advertising media, (iii) undercapitalized owners/operators, (iv)
strong station brand identity among listeners that is not typically dependent
upon specific on-air talent, (v) a lower cost operating structure and (vi) a
high percentage of local advertisers who make advertising decisions based upon
relationships and customer service and not solely upon station ratings. The
Company believes that these characteristics allow it to capture a greater
percentage of a market's total advertising revenue and to achieve broadcast cash
flow margins typically higher than industry norms while operating in a more
stable competitive environment. In addition, the Company believes that under the
recently enacted Telecommunications Act of 1996, which liberalized radio station
ownership limits, medium-sized markets offer the Company the greatest
opportunity to create dominant, multiple station ownership situations.
 
     The Company's objective is to increase shareholder value by enhancing its
share of the advertising revenue in each of its markets, increasing the
broadcast cash flow of its existing stations and pursuing additional
acquisitions both in its existing markets and in new markets in which the
Company's operational expertise can be successfully applied to increase
broadcast cash flow. Through successful implementation of the Company's
operating and acquisition strategies, the Company's net revenue and broadcast
cash flow have increased at compound annual growth rates of 21.1% and 29.2%,
respectively, from 1991 to pro forma 1995 and the broadcast cash flow margin has
increased from 26.0% in 1991 to 36.0% in pro forma 1995. On a same station
basis, from 1991 to 1995, the Company successfully increased its net revenue and
broadcast cash flow at compound annual growth rates of 13.7% and 20.7%,
respectively.
 
                                       33
36
 
     The following table sets forth, on a pro forma basis, certain information
with respect to the Company and its markets:
COMPANY DATA                                               MARKET DATA
               ----------------------------------------------------------------    ----------------------------------------------
                                                                      NUMBER OF                   1995
                RADIO    RADIO REVENUE     RADIO     RADIO AUDIENCE   STATIONS(F)                 RADIO                 1990-1995
               REVENUE    MARKET SHARE    AUDIENCE    MARKET SHARE    ---------      VIABLE      REVENUE   1995 RADIO    REVENUE
  MARKET(A)    RANK(B)        %(C)        RANK(D)         %(E)        AM    FM     STATIONS(G)   RANK(H)   REVENUE(I)    CAGR %
Fairfield
 County, CT       1          33.2%            1           26.3%        3     3         9            60      $ 27,851       9.6%
Allentown, PA     1          53.7%            1           47.2%        2     2         8            77      $ 19,300       5.1%
Wilmington,
  DE              2          33.2%            1           42.2%        1     1         5            78      $ 17,800      10.4%
Westchester/Putnam
  Counties, NY(j)    1       34.3%            1           47.3%        2     3         4           115      $ 12,400        N/A
Treasure
  Coast, FL       1          49.7%            1           49.8%        1     5         9           138      $  9,900       6.5%
Huntington,
  WV/
  Ashland, KY     1          66.7%            1           70.4%        5     5         9.5         140      $  9,800       7.3%
- ------------------------------
(a) Actual city of license may be different from metropolitan market served.
    Market names used in this table are those used by Arbitron for Arbitron
    Metro Survey Areas or Arbitron Custom Survey Areas for the Company's
    markets.
(b) Radio Revenue Rank in each market is the ranking, by 1995 radio group market
    revenue share, of each of the Company's radio groups in its market among all
    other such radio groups in such market. For each of the Company's radio
    groups, except Fairfield County, Radio Revenue Rank was derived by the
    Company determining the radio groups in the market and by then calculating
    group revenue using the market revenue sources described in note (c) below.
    Fairfield County was ranked in the source as indicated in note (c) below.
(c) In each of the markets, except Fairfield County, Radio Revenue Market Share
    was derived by dividing (1) the total 1995 radio revenues of the Company's
    stations in the market, by (2) the total 1995 radio revenues in that market
    as published in BIA's Investing in Radio -- 1996 Market Report (2nd ed.). In
    Fairfield County, the total 1995 radio revenues in the market were obtained
    from the January 1996 Fairfield Suburban Market Revenue Report by Miller
    Kaplan (as hereinafter defined).
(d) Ranking of the Company's combined stations versus other radio groups in the
    market for persons aged 12 and older in the applicable Arbitron Metro Survey
    Area or Arbitron Custom Survey Areas, Average Quarter Hour Estimates, Monday
    through Sunday, 6 am to midnight.
(e) Radio Audience Market Share was derived by dividing (1) the sum of audience
    shares from the applicable Arbitron Market Survey of the Company's combined
    radio stations, by (2) the total sum of audience shares above the line in
    the local market served.
(f) The number of stations for Allentown, Pennsylvania includes WKAP-AM for
    which the Company is providing certain sales and marketing services pursuant
    to a JSA; the number of stations for the Treasure Coast Market, Florida
    includes WPAW-FM for which the Company is providing certain sales and
    marketing services pursuant to a JSA; and the number of stations for
    Huntington, West Virginia/Ashland, Kentucky includes WMLV-FM, WHRD-AM,
    WFXN-FM, WKEE-AM, WKEE-FM, WZZW-AM, WBVB-FM and WIRO-AM, for which the
    Company is providing certain sales and marketing services pursuant to LMAs
    pending the consummation of the Huntington Acquisitions.
(g) The number of viable radio stations for the Company's Allentown, Wilmington
    and Huntington/Ashland markets were taken from Duncan's Radio Market Guide
    (1996 Edition). The number of viable stations for the Company's remaining
    markets were derived by calculating all radio stations listed home-to-market
    by Arbitron which received an average quarter hour share of "1" or greater
    in each of the 1995 Arbitron Surveys for the indicated market.
(h) According to BIA's Investing in Radio Market Guide 1996 (2nd ed.) "Revenue
    Rank." Fairfield County, CT and Westchester/Putnam Counties, NY Radio
    Revenue Ranks were estimated using BIA's methodology.
(i) Dollars in thousands.
(j) Radio Revenue Rank and Radio Revenue Market Share for Westchester/Putnam
    Counties, NY have been estimated by the Company because no data is available
    for this sub-market.
 
                                       34
37
 
BUSINESS STRATEGY
 
     The Company believes the most effective way to achieve its objective of
increasing shareholder value is to dominate medium-sized markets by operating
multiple radio stations. Multiple station ownership enables the Company to
maintain greater influence over the pricing of radio advertising rates and more
effectively compete against alternative forms of media advertising. The Company
has the ability to program its multiple stations to provide advertisers with
access to a variety of attractive demographic groups and as a result capture a
significant share of the market's radio advertising revenue. In addition,
multiple station ownership enables the Company to attract and retain highly
qualified personnel as well as to achieve cost savings through eliminating
duplicative overhead and consolidating broadcast facilities. The Company's
station operating strategy centers upon the following principal elements:
 
     Targeted Programming and Market Research.  The Company believes that
targeted programming is a key element in developing brand loyalty and sustaining
high audience and revenue shares. The Company attempts to strategically program
its radio stations to dominate specific demographic groups and/or provide
advertisers a broad spectrum of multiple demographic targets. The Company
utilizes research consultants and performs periodic music testing to assess
listener preferences for the station's music and services and adjusts its
programming to reflect the results of its research. The Company has developed
the in-house expertise to provide weekly call out research and periodic
auditorium music testing and believes that it can perform these functions
in-house more cost effectively.
 
     Marketing Partnerships.  The Company believes its value-added sales
approach creates a marketing partnership with advertisers and provides the
Company with a competitive advantage in attracting and retaining advertisers.
While station audience ratings are an important measure for selling advertising
time in all radio markets, management believes that in many medium-sized
markets, the decision to advertise on a given radio station is driven in large
measure by customer relationships and the level of customer success with past
advertising programs. The Company pursues a value-added sales approach by
providing advertisers with: (i) quantitative and qualitative information
regarding customer spending habits in the market which assist the advertiser to
target advertising campaigns; (ii) promotional ideas and support to increase the
effectiveness of the advertising campaign; (iii) "spec" spots, a sample
commercial prepared by the Company's on-air talent, which the Company believes
increases the likelihood the prospective advertiser will purchase advertising
time; (iv) analyses which demonstrate the effectiveness of utilizing radio in
tandem with other media and the ability to enhance customer reach and frequency
by shifting a portion of the advertiser's budget to radio and (v) professional
production of the advertiser's final commercial.
 
     The Company believes that advertisers in its markets are retained through
superior customer service. The Company focuses on providing superior customer
service to its top 100 clients at each station, which the Company believes
generally provide 80% or more of a radio station's revenue. In order to provide
customers with a high level of service, the Company employs separate local sales
forces at each of the Company's major stations. Such superior customer service
consists of assisting businesses in analyzing advertising expenditures,
developing customized promotions and creating jingle packages, among other
things. Management believes that building and solidifying the marketing
partnership with advertisers and retaining such customers through high quality
customer service are significant factors in maintaining leading revenue shares
in its markets.
 
     Cost Controls.  Management believes that it is important to maintain the
lowest possible cost structure while achieving its operating objectives. The
Company seeks to reduce station operating costs by consolidating multiple
station facilities in a given market and through the selected use of
preprogrammed automation and automated satellite delivered programming. The
Company attempts to limit trade or barter, employing it primarily in situations
where use of trade or barter will bring incremental cash revenue from a
potential client or will reduce a cash expense item. The Company's detailed
annual budgeting process reviews expense items for possible reduction and its
financial reporting system allows management to track expense variances on a
weekly basis at each radio station.
 
     Performance Based Management Incentives.  The Company's senior management
has decentralized the daily operation of its stations, while maintaining tight
controls through a weekly monitoring system and frequent station visits. The
Company believes that it employs highly experienced and qualified station level
 
                                       35
38
 
management. The Company's local radio station management teams have substantial
annual incentive opportunities based on achieving aggressive broadcast cash flow
targets. The Company believes that its management style enhances a local
manager's creativity and enables the Company to attract and retain a highly
skilled management staff. By giving its managers the autonomy to operate their
stations, focusing a significant portion of each manager's compensation on cash
flow incentives, setting target earning goals for each station and providing
managers with the sales and financial tools necessary to succeed, the Company
believes its managers are highly motivated to meet the goals of the station. The
Company provides further incentives to management through potential
participation in the Company's stock option plan.
 
     Community Involvement.  The Company believes community involvement is
particularly important in medium-sized markets and seeks to use creative
promotional activities tied to the local community and charitable events. Each
of the Company's radio stations participate in numerous community programs,
fund-raisers and activities that benefit a wide variety of organizations and
provide the station with community identity. The Company believes this
involvement helps to build and maintain station awareness and listener loyalty.
 
ACQUISITION STRATEGY
 
     The Company's acquisition strategy is to selectively acquire
underperforming radio stations in medium-sized markets at prices that are
attractive relative to the Company's potential to increase the acquired
stations' broadcast cash flow. The Company believes that significant
opportunities exist in other medium-sized markets for the Company to acquire
additional radio stations at attractive prices relative to their broadcast cash
flow potential. The Company also believes it can effectively capitalize on its
presence in and knowledge of the markets in which it operates to make attractive
acquisitions in adjacent markets. The Company may also enter new markets either
through acquisitions of radio groups that have multiple station ownership in a
market or through acquisitions of individual stations in markets in which the
Company believes it can establish itself as the markets' dominant radio group by
making additional in-market acquisitions.
 
     In analyzing potential acquisitions, the Company considers many factors
including: (i) the price and terms of the purchase in relation to the estimated
potential broadcast cash flow for the station or stations; (ii) the possibility
of obtaining a synergistic combination with additional stations in a given
market; (iii) the existing quality and potential quality of the station's
broadcast signal and transmission facility and (iv) the radio and other media
competition in the market. While the Company continuously evaluates
opportunities to make strategic acquisitions, it has no present commitments or
agreements with respect to any material acquisitions other than the Huntington
Acquisitions.
 
RECENT ACQUISITIONS OF RADIO STATIONS
 
     The Company has made, or has entered into agreements to make, the following
acquisitions:
 
     Fairfield County, Connecticut.  In March 1996, the Company consummated the
Danbury Acquisition by acquiring, through a subsidiary, all of the issued and
outstanding stock of Danbury that is the licensee of radio stations WRKI-FM and
WINE-AM in Fairfield County, Connecticut. In May 1996, the Company acquired
radio stations WKHL-FM and WSTC-AM in Stamford, Connecticut from Q Broadcasting,
Inc.
 
     Westchester/Putnam Counties, New York.  In conjunction with the Danbury
Acquisition, in March 1996, the Company acquired the radio broadcast business
conducted by radio stations WZZN-FM, WPUT-AM and WVYB-FM in Westchester/Putnam
Counties, New York.
 
     Treasure Coast Market, Florida.  In May 1996, the Company acquired radio
stations WKQS-FM, WAVW-FM and WAXE-AM in the Treasure Coast Market, Florida from
Media VI.
 
     Huntington, West Virginia/Ashland, Kentucky.  In April 1996, the Company,
through a subsidiary, entered into (i) a purchase agreement with Adventure
Communications, Inc. ("Adventure") to acquire the radio broadcast business
conducted by radio stations WKEE-FM and WKEE-AM in Huntington, West Virginia,
WZZW-AM in Milton, West Virginia, WBVB-FM in Coal Grove, Ohio and WIRO-AM in
Ironton, Ohio, and (ii) a purchase agreement with Simmons Broadcasting Company
("Simmons Broadcasting") and
 
                                       36
39
 
an option agreement to acquire the radio broadcast business conducted by radio
stations WHRD-AM in Huntington, West Virginia, WFXN-FM in Milton, West Virginia
and WMLV-FM in Ironton, Ohio. In connection therewith, the Company entered into
an LMA with Adventure (the "Adventure LMA") and an LMA with Simmons (the
"Simmons LMA") to provide, on a cooperative basis, the programming, sales,
marketing and certain other services to the stations pending the closing of the
acquisitions. The Company anticipates that the Huntington Acquisitions will be
consummated in the second half of 1996, however, there can be no assurance that
such transactions will be consummated.
 
STATION AND MARKET OVERVIEW
 
     Listed below is selected information, on a pro forma basis, relating to the
Company's stations and markets:
1995
                             MARKET      COMBINED
                              RADIO       RADIO                                              1995 TARGET
                             REVENUE     REVENUE        RADIO STATION          TARGET        DEMOGRAPHIC
        MARKET(A)            RANK(B)     RANK(C)           FORMAT           DEMOGRAPHIC      SHARE %/RANK
- -------------------------    -------     --------     -----------------     ------------     ------------
Fairfield County, CT            60           1
                                                                            Persons
  WKHL-FM                                                  Oldies           25-54               11.0%/3
  WRKI-FM                                                    AOR            Men 18-49           18.7%/3
  WEFX-FM                                               Classic Rock        Men 18-49           12.5%/4
  WINE-AM                                                  Country          Persons 35+          3.8%/5(d)
  WSTC-AM                                              News/Info/Jazz       Persons 35+          6.2%/6
  WNLK-AM                                                   Talk            Persons 35+         1.4%/12
Allentown-Bethlehem, PA         77           1
  WAEB-FM                                                    CHR            Women 18-49         32.0%/1
  WZZO-FM                                                    AOR            Men 18-49           35.4%/1
  WAEB-AM                                             News/Talk/Sports      Persons 35+         10.4%/4
  WKAP-AM(e)                                                 MOR            Persons 35+          9.9%/6
Wilmington, DE                  78           2
  WJBR-FM                                                    A/C            Women 25-54         48.0%/1
  WJBR-AM                                                    MOR            Persons 35+         10.9%/5
Westchester/Putnam
  Counties, NY (f)             115           1
  WFAS-FM                                                    A/C            Women 25-54         41.3%/1
  WVYB-FM(g)                                               Oldies           Women 25-54          1.9%/5
  WZZN-FM(g)                                                 AOR            Women 25-54          1.9%/5
  WFAS-AM                                                    MOR            Persons 35+         19.7%/3
  WPUT-AM(h)                                               Country          Persons 35+             (i)
Treasure Coast
  Market, FL                   138           1
                                                                            Persons
  WAVW-FM(e)                                               Country          25-54               22.4%/1
  WZZR-FM                                                    AOR            Men 18-49           32.5%/1
                                                                            Persons
  WQOL-FM                                                  Oldies           25-54               16.3%/3
                                                                            Persons
  WKQS-FM(e)                                               Country          25-54                3.2%/8
                                                                            Persons
  WPAW-FM(e)                                           Classic Country      25-54                2.6%/9
  WAXE-AM(e)                                             Mature A/C         Persons 35+          3.2%/10
Huntington, WV/
  Ashland, KY                  140           1
                                                                            Persons
  WTCR-FM                                                  Country          25-54               30.6%/1
                                                                            Persons
  WKEE-FM(e)                                                 A/C            25-54               21.8%/2
  WBVB-FM(e)                                               Country          Men 18-34           12.7%/4
  WFXN-FM(e)                                            Classic Rock        Men 25-54            7.7%/5
  WMLV-FM(e)                                            Classic Rock        Men 25-54           1.4%/10
  WHRD-AM(e)                                               Sports           Men 25-54               (i)
  WKEE-AM(e)                                                Easy            Persons 35+          6.2%/6
  WZZW-AM(e)                                               Sports           Men 25-54               (i)
  WIRO-AM(e)                                             Sports/Talk        Men 25-54               (i)
  WTCR-AM                                              Classic Country      Persons 35+          2.4%/9
- ------------------------------
(a) Actual city of license may be different from metropolitan market served.
    Market names used in this table are those used by Arbitron.
 
                                       37
40
 
(b) According to BIA's Investing In Radio, Market Guide 1996 (2nd ed.) "Revenue
    Rank". The Fairfield County, CT and Westchester/Putnam Counties, NY Radio
    Revenue Ranks were estimated using BIA's methodology.
 
(c) Combined Radio Revenue Rank in each market is the ranking, by 1995 radio
    market revenue, of the Company's combined radio revenue in its markets as
    compared to the radio revenue for all other radio groups in such market. For
    each of the Company's radio groups, except Fairfield County, Combined Radio
    Revenue Rank was derived by the Company determining the radio groups in the
    market and then calculating group revenue using the market revenue as
    published in BIA's Investing in Radio, 1996 Market Report (2nd ed.). In
    Fairfield County, the total 1995 radio revenue in the market was obtained
    from the January 1996 Fairfield Suburban Market Revenue Report by Miller
    Kaplan. The Combined Revenue Share Rank assumes that the 1995 Treasure Coast
    Acquisition and the Acquisitions had occurred as of January 1, 1995.
 
(d) Data for this station was derived from the Danbury Arbitron Survey.
 
(e) The Company is providing sales and marketing services pursuant to a JSA or
    an LMA.
 
(f) Radio Revenue Rank and Combined Radio Revenue Rank for Westchester/Putnam
    Counties has been estimated by the Company because no published data is
    available for this sub-market.
 
(g) In 1995, WVYB-FM and WZZN-FM simulcasted the same program.
 
(h) WPUT-AM does not receive ratings in the Westchester County market.
 
(i) The station did not produce a rating in the Arbitron Survey for this market.
 
FAIRFIELD COUNTY, CONNECTICUT
Radio Revenue Rank:  #60
Market Radio Revenue:  $27.9 million
 
     The Company has the #1 combined radio revenue share in Fairfield County and
has increased its radio revenue share from 9.2% in 1994 to 33.2% in pro forma
1995. The Company entered this market with the 1989 acquisitions of WEFX-FM and
WNLK-AM. In 1994, the Company installed a new local management team at these
stations which applied the Company's marketing strategy and invested in new
transmitting equipment which significantly improved WEFX-FM's signal strength.
Following these steps, cash revenue for WEFX-FM and WNLK-AM increased 48.7% to
$3.5 million in 1995 and broadcast cash flow increased 117.0% to $813,000 in
1995.
 
     In 1996, the Company acquired WRKI-FM, WKHL-FM, WSTC-AM and WINE-AM
enhancing its position in this market and giving the Company four of the nine
total viable stations in the market. The Company believes that opportunities
exist to improve the broadcast cash flow of the Company's Fairfield County
stations. Prior to its acquisition by the Company, WRKI-FM had competed directly
with the Company's WEFX-FM station. The Company refocused WRKI-FM's programming
to Album Oriented Rock targeting younger males to complement the Company's
WEFX-FM which targets older males with a Classic Rock format. In 1995, WKHL-FM
and WSTC-AM had a radio revenue share of 9.8% and a local audience share of
12.3% and the Company believes that the stations' radio revenue share can be
significantly increased through implementation of the Company's marketing
strategy.
 
     In 1996, the Company also purchased WVYB-FM which broadcasts from Putnam
County, New York. The Company intends to position WVYB-FM, which has sufficient
signal reach into Fairfield County, to provide the Company with another viable
station in the Fairfield County market. The Company believes it will be able to
improve the station's financial performance by targeting the station to the
larger Fairfield County market.
 
     As the Company integrates its recent acquisitions, the Company intends to
share programming between the Company's three AM radio stations in the market to
capitalize on the strong news and information presence of WSTC-AM and to provide
greater coverage to potential advertisers. In order to capture a greater share
of the national advertising revenue in the region and of new media expenditures
from the New York City market, the Company has combined its 11 Fairfield County
and Westchester County radio stations for
 
                                       38
41
 
national sales purposes using an Interep Radio Store sales representative and
the Company's own full time national sales representative in this region.
 
     Fairfield County is a particularly attractive market to advertisers because
it is in one of the nation's most affluent regions. The Fairfield County market
receives a large share of local and national media expenditures relative to its
population. The comparatively few local FM radio stations competing in Fairfield
County also adds to the appeal of this market.
 
ALLENTOWN, PENNSYLVANIA
Radio Revenue Rank:  #77
Market Radio Revenue:  $19.3 million
 
     The Company has the #1 combined radio revenue share in Allentown and has
successfully increased its radio revenue share from 18.7% in 1991 to 53.7% in
1995. The Company entered the market with the 1982 acquisition of WAEB-AM/FM. In
1992, the Company retained a new local management team which created separate
sales forces for each of WAEB-FM and WAEB-AM, implemented the Company's
marketing strategy and conducted in-house auditorium testing. Following these
actions, the stations' cash revenue increased from $2.9 million in 1991 to $5.9
million in 1995, a 19.1% compound annual growth rate, and the stations'
broadcast cash flow increased from $445,000 in 1991 to $2.4 million in 1995, a
51.7% compound annual growth rate.
 
     The Company enhanced its position in the market with the 1993 acquisition
of WZZO-FM. This acquisition created the Company's first duopoly which, in part,
enabled the Company to increase WZZO's cash revenue from $3.2 million in 1993 to
$4.3 million in 1995 and to improve its broadcast cash flow from $1.3 million in
1993 to $2.3 million in 1995. In order to further capitalize on its presence in
the Allentown market, in March 1995 the Company entered into a JSA with WKAP-AM,
an underperforming station which the Company believes will benefit from the
Company's marketing strategy. The Company has also capitalized on its multiple
station ownership position by consolidating all of its radio stations in
Allentown into one broadcast facility, thereby reducing overhead expense and
allowing for greater coordination of the Company's programming, sales and
marketing efforts. The Allentown market has only five viable FM radio stations
and no local television stations affiliated with a network.
 
WILMINGTON, DELAWARE
Radio Revenue Rank:  #78
Market Radio Revenue:  $17.8 million
 
     The Company has the #2 combined radio revenue share in Wilmington and has
the #1 combined radio audience share in this market. The Company entered the
market with the 1985 acquisition of WJBR-AM/FM. Cash revenue for WJBR-AM/FM
increased from $3.9 million in 1991 to $5.9 million in 1995, an 11.0% compound
annual growth rate, and broadcast cash flow increased from $1.9 million in 1991
to $3.0 million in 1995, a 12.4% compound annual growth rate. In order to fill a
programming void in the market created by a competitor, in August 1994 the
Company changed WJBR-AM from a simulcast of the WJBR-FM format to a fully
automated satellite-delivered Middle-of-the-Road format which allows advertisers
to target a broader demographic group in this market.
 
     The Wilmington market is particularly attractive due to the fact that the
market has only two and a half viable FM radio stations and no local television
stations.
 
WESTCHESTER/PUTNAM COUNTIES, NEW YORK
Radio Revenue Rank:  #115
Market Radio Revenue:  $12.4 million
 
     The Company has the #1 combined radio revenue share in Westchester/Putnam
Counties and has successfully increased its radio revenue market share from an
estimated 33.0% in 1995 to 34.3% in pro forma 1995. The Company entered the
market with the 1986 acquisition of WFAS-AM/FM. Cash revenues for WFAS-AM/FM
increased from $3.2 million in 1991 to $4.1 million in 1995, a 6.1% compound
annual growth
 
                                       39
42
 
rate. By emphasizing cost controls, the Company was able to increase broadcast
cash flow from $751,000 to $1.4 million, a 15.9% compound annual growth rate.
The Company believes that significant opportunities exist to improve
WFAS-AM/FM's net revenue and broadcast cash flow and the Company has hired a new
station general manager with extensive experience in order to capitalize on
these opportunities.
 
     In March 1996, the Company acquired WZZN-FM which had previously simulcast
a Hot Adult Contemporary format. The Company intends to reposition WZZN-FM as an
Album Oriented Rock station serving Westchester County, thus providing a
complementary male-oriented advertising vehicle to the Company's already
dominant female oriented WFAS-FM.
 
     Westchester County is one of the nation's most affluent regions and has a
limited number of viable local FM stations. Westchester County generally has
lower advertising rates than those offered by New York City radio stations,
thereby making the Company's stations attractive to advertisers interested in
reaching only Westchester County listeners as opposed to the entire New York
metropolitan population.
 
TREASURE COAST MARKET, FLORIDA
Radio Revenue Rank:  #138
Market Radio Revenue:  $9.9 million
 
     The Company has the #1 combined radio revenue share in the Treasure Coast
Market and has successfully increased its radio revenue market share from 10.1%
in 1991 to 49.7% in pro forma 1995. The Company entered the market with the 1987
acquisition of WZZR-FM. In 1992, the Company retained a new local management
team which applied the Company's marketing strategy and implemented a format
change from Contemporary Hit Radio to Album Oriented Rock. As a result, cash
revenues for WZZR-FM increased from $826,000 in 1991 to $2.1 million in 1995, a
26.7% compound annual growth rate, and broadcast cash flow increased from a loss
of $271,000 in 1991 to a profit of $546,000 in 1995.
 
     In 1995, the Company acquired WQOL-FM and entered into a JSA with WPAW-FM.
In 1996, the Company acquired WAVW-FM, WAXE-AM and WKQS-FM. These acquisitions
enhanced the Company's position in this market, giving the Company five of the
eight viable FM stations and six of the ten total viable stations in the market.
 
     The Company believes that considerable opportunities exist to apply its
operating strategy to improve the broadcast cash flow of the Company's combined
stations in the Treasure Coast Market. In 1995, WZZR-FM, WQOL-FM and WAVW-FM
were ranked #1, #2 and #3, respectively, in the market for adults 25-54 and the
Company is capitalizing on its leading presence in the market by providing
advertisers a full range of advertising options. In addition, the Company
believes that opportunities exist to improve the performance of WKQS-FM, an
undeveloped property in this market which commenced broadcasting in 1995,
through refocusing the format of WKQS-FM, building a viable brand and ultimately
introducing a dedicated local sales force to this station.
 
     The Treasure Coast Market is one of the fastest growing markets in the
United States and is located directly north of the West Palm Beach market. There
is no local television affiliated with a network in the Treasure Coast Market.
 
HUNTINGTON, WEST VIRGINIA/ASHLAND, KENTUCKY
Radio Revenue Rank:  #140
Market Radio Revenue:  $9.8 million
 
     The Company has the #1 combined radio revenue share in this market and has
successfully increased its radio revenue share from 35.4% in 1991 to 66.7% in
pro forma 1995. The Company entered the market with the 1982 acquisition of
WTCR-AM/FM. WTCR-FM programs a heritage Country format which consistently ranks
first in its targeted demographic ratings and typically ranks in the top ten
radio stations in the United States based on average quarter hour share of a
market. This strong market position attracted a format competitor beginning in
1992 and a second format competitor in 1995. As a result, cash revenue for WTCR
AM/FM grew moderately from $2.8 million in 1991 to $3.2 million in 1995, a 3.3%
compound annual growth rate, and broadcast cash flow decreased from $1.0 million
in 1991 to $724,000 in 1995. However, the Company believes it has successfully
defended its market position and in the first quarter of 1996 WTCR-
 
                                       40
43
 
AM/FM's cash revenue increased 15.9% from the first quarter of 1995.
Furthermore, one of the Company's competitors in this market is under contract
to be acquired by the Company in connection with the Huntington Acquisitions.
 
     Prior to June 1994, WTCR-AM simulcasted the WTCR-FM format. In order to
cost effectively capitalize on WTCR's strong brand equity, the Company
repositioned WTCR-AM as a primarily satellite-delivered Classic Country format.
 
     In April 1996, the Company entered into purchase agreements to acquire
WKEE-FM, WKEE-AM, WZZW-AM, WBVB-FM, WIRO-FM, WHRD-AM, WHRD-FM and WFXN-FM. These
acquisitions enhance the Company's position in this market, giving the Company
control of six of the nine viable stations in the market. The Company
anticipates that these acquisitions will be consummated during the second half
of 1996.
 
     The Company believes that opportunities exist to apply its operating
strategy to improve the broadcast cash flow of the Company's combined group in
this market. The combination of WBVB-FM and WTCR-AM/FM will enable the Company
to offer advertisers a wide range of advertising options on these three
stations. WFXN-FM and WMLV-FM are relatively undeveloped stations which are in
the process of petitioning for upgrades and signal improvements at the FCC. With
only one other significant radio owner in the market, the Company intends to
focus on achieving a greater share of all media expenditures in this market for
radio.
 
ADVERTISING
 
     Radio is considered an efficient means of reaching specifically identified
demographic groups. Stations are typically classified by their on-air format,
such as country, adult contemporary, oldies or news/talk. A station's format and
style of presentation enable it to target certain demographic and psychographic
groups. By capturing a specific listening audience share of a market's radio
audience, with particular concentration in a targeted demographic group, a
station is able to market its broadcasting time to advertisers seeking to reach
a specific audience. Advertisers and stations utilize data published by audience
measuring services, such as Arbitron, to estimate how many people within
particular geographical markets and demographic groups listen to specific
stations.
 
     Stations determine the number of advertisements broadcast hourly that will
balance revenue goals without jeopardizing listening levels. Although the number
of advertisements broadcast during a given time period may vary, the total
number of advertisements broadcast on a particular station generally does not
vary significantly from year to year.
 
     A station's local sales staff generates the majority of its local and
regional advertising sales through direct solicitations of local advertising
agencies and businesses. To generate national advertising sales, a station will
engage a firm that specializes 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 the revenue from the advertising obtained.
 
COMPETITION
 
     The radio broadcasting industry is a highly competitive business. The
success of each of the Company's stations depends largely upon its audience
ratings and its share of the overall advertising revenue within its market. The
Company's stations compete for listeners and advertising revenue directly with
other radio stations within their respective markets. Radio stations compete for
listeners primarily on the basis of program content that appeals to a particular
demographic group. By building a strong listener base consisting of a specific
demographic group in each of its markets, the Company is able to attract
advertisers seeking to reach those listeners.
 
     Factors that are material to a radio station's competitive position include
management experience, the station's local audience rank in its market,
transmitter power, assigned frequency, audience characteristics, local program
acceptance and the number and characteristics of other radio stations in the
market area. The
 
                                       41
44
 
Company attempts to improve its competitive position with promotional campaigns
aimed at the demographic groups targeted by its stations and by sales efforts
designed to attract advertisers. Recent changes in the FCC's policies and rules
permit increased ownership and operation of local radio stations. Management
believes that radio stations which elect to take advantage of these joint
arrangements may in certain circumstances have lower operating costs and may be
able to offer advertisers more attractive rates and services. Although the
Company operates duopolies in Allentown, Pennsylvania, Fairfield County,
Connecticut, the Treasure Coast Market, Florida, Westchester/Putnam Counties,
New York and Huntington, West Virginia/Ashland, Kentucky, and intends to pursue
the creation of additional duopolies, the Company's competitors in certain
markets include operators of duopolies or operators who already have entered
into LMAs or JSAs.
 
     Although the radio broadcasting industry is highly competitive, some
barriers to entry exist. The operation of a radio broadcast station requires a
license from the FCC and the number of radio stations that can operate in a
given market is limited by the availability of FM and AM radio frequencies
allotted by the FCC to communities in that market, as well as by the FCC's
multiple ownership rules which regulate the number of stations which may be
owned and controlled by a single entity.
 
     The Company's stations also compete for advertising revenue with other
media, including broadcast television, cable television, newspapers, magazines,
direct mail, coupons and billboard advertising. In addition, the radio
broadcasting industry is subject to competition from new media technologies that
are being developed or introduced, such as the delivery of audio programming by
cable television systems, by DAB, including DARS. The delivery of information
through the presently unregulated Internet also could create a new form of
competition. The radio broadcasting industry historically has grown despite the
introduction of new technologies for the delivery of entertainment and
information, such as television broadcasting, cable television, audio tapes and
compact disks. Growing population and greater availability of radios,
particularly car and portable radios, have contributed to this growth. There can
be no assurance, however, that the development or introduction in the future of
any new media technology will not have an adverse effect on the radio
broadcasting industry.
 
CHANGES IN THE BROADCASTING INDUSTRY
 
     Radio stations generate the majority of their revenue from the sale of
advertising time to local and national spot advertisers and national network
advertisers. Radio serves primarily as a medium for local advertising. During
the past decade, local advertising revenue as a percentage of total radio
advertising revenue in a given market has ranged from approximately 75% to 79%.
 
     According to the Radio Advertising Bureau's Radio Marketing Guide and Fact
Book for Advertisers 1994-1995, each week, radio reaches approximately 96% of
all Americans over the age of twelve. More than one-half of all radio listening
is done outside the home, in contrast to other advertising mediums and three out
of four adults are reached by car radio each week. The average listener spends
approximately three hours and twenty minutes per day listening to radio. The
highest portion of radio listenership occurs during the morning, particularly
between the time a listener wakes up and the time the listener reaches work.
This "morning drive time" period reaches more than 86% of people over twelve
years of age and, as a result, radio advertising sold during this period
receives premium advertising rates. Radio listeners have gradually shifted over
the years from AM (amplitude modulation) to FM (frequency modulation) stations.
FM reception, as compared to AM, is generally clearer and provides greater tonal
range and higher fidelity. FM's listener share is now in excess of 80%, despite
the fact that the number of AM and FM commercial stations in the United States
is approximately equal.
 
     The FCC currently has before it proceedings that will permit the use of DAB
to deliver audio programming, and has allocated spectrum for the provision of
satellite DAB service. DAB provides a medium for the delivery by satellite or
terrestrial means of multiple new, high quality audio programming formats to
local and national audiences. This technology also may be used in the future by
radio broadcast stations either on existing or alternate broadcasting
frequencies or on new frequency bands. In addition, the FCC has authorized an
additional 100 kHz of spectrum for the AM band and will soon allocate
frequencies in this new band to certain existing AM station licensees. By the
end of a transition period to be determined by the FCC,
 
                                       42
45
 
those licensees will be required to return to the FCC either the license for
their existing AM band station or the license for the expanded AM band station.
 
     The Company cannot predict what other matters might be considered in the
future by the FCC, nor can it assess in advance what impact, if any, the
implementation of any of these proposals or changes might have on its business.
 
FEDERAL REGULATION OF RADIO BROADCASTING
 
     The ownership, operation and sale of radio stations are subject to the
jurisdiction of the FCC, which acts under authority granted by the
Communications Act. Among other things, the FCC assigns frequency bands for
broadcasting; determines the particular frequencies, locations and operating
power of stations; issues, renews, revokes and modifies station licenses;
determines whether to approve changes in ownership or control of station
licensees; regulates equipment used by stations; and adopts and implements
regulations and policies that directly or indirectly affect the ownership,
operation and employment practices of stations. The FCC has the power to impose
penalties for violation of its rules or the Communications Act.
 
     In February 1996, President Clinton signed into law the Telecommunications
Act of 1996 (the "1996 Act"). This law amended the Communications Act with
respect to the regulation of broadcasters in several key respects. The 1996 Act
required the FCC to revise its ownership rule with respect to radio stations (a)
to remove the national limit on the number of stations that any one entity could
own or in which it could hold an attributable interest and (b) to increase the
number of stations that one entity could own, or in which that entity could hold
an attributable interest, in a market. The revised rule in most situations
permits an entity to own, or hold an attributable interest in, a maximum of
between five and eight stations (a maximum of between three and five of which
can be FM stations) depending on the size of the market. In addition, whereas
the rule previously prohibited the purchase of a station if the purchase would
result in the licensee's audience share exceeding 25 percent, the revised rule
refers solely to the number of stations that would be owned by the licensee (or
in which the licensee would hold an attributable interest) without regard to
audience share. Further, under the 1996 Act, competing applications can no
longer be filed with respect to a station's renewal unless the FCC first finds
that the station is no longer entitled to a grant of its renewal and the 1996
Act significantly strengthens the incumbent licensee's right to a renewal
expectancy. The 1996 Act also removed certain prohibitions with respect to
foreign ownership of broadcast licenses.
 
     The following is a brief summary of certain provisions of the
Communications Act (as revised by the 1996 Act) and of specific FCC regulations
and policies. Reference should be made to the Communications Act, FCC rules and
the public notices and rulings of the FCC for further information concerning the
nature and extent of Federal regulation of radio stations.
 
     FCC Licenses.  Radio stations operate pursuant to broadcasting licenses
that are granted by the FCC. Pursuant to the 1996 Act, the FCC may grant a
broadcast license for a maximum term of eight years. Broadcast licenses may be
renewed through the submission of an application to the FCC. The FCC licenses
for the Company's stations are held by the Company's subsidiaries. During
certain periods when a renewal application is pending, petitions to deny license
renewals can be filed by interested parties, including members of the public.
Historically, the Company's management has not experienced any material
difficulty in renewing any licenses for stations under its control. As a result
of amendments to the Communications Act of 1934 brought about through the 1996
Act, the FCC must grant the renewal application for a station if it finds that,
during the preceding term of that station's license, the station has served the
public interest, convenience, and necessity; there have been no serious
violations by the licensee of the Communications Act or the rules and
regulations of the Commission; and there have been no other violations by the
licensee of the Communications Act or the rules and regulations of the
Commission which, taken together, would constitute a pattern of abuse. If the
Commission is unable to make such findings with respect to the station, it can
grant the station's renewal application, but on terms and conditions that the
Commission considers to be appropriate or, the Commission can, after providing
the licensee with notice and an opportunity for hearing, and if the Commission
determines that no mitigating factors justify the imposition of a lesser
sanction, deny the renewal application. The terms and conditions that could be
imposed by the Commission in granting the renewal include requiring the payment
of a forfeiture, requiring the licensee to make periodic reports to the
Commission or granting the renewal for a period of time less than a normal
license term. In making its
 
                                       43
46
 
determination as to whether the licensee's renewal application can be granted,
the Commission may consider facts brought to its attention by parties filing
petitions seeking denial of the renewal application.
 
     The FCC classifies each AM and FM station. An AM station operates on either
a clear channel, regional channel or local channel. A clear channel is one on
which AM stations are assigned to serve wide areas. Clear channel AM stations
are classified as either: (i) Class A stations, which operate unlimited time and
are designed to render primary and secondary service over an extended area; (ii)
Class B stations, which operate unlimited time and are designed to render
service only over a primary service area; (iii) and Class D stations, which
operate either daytime, limited time or unlimited time with low nighttime power.
A regional channel is one on which Class B and Class D AM stations may operate
and serve primarily a principal center of population and the rural area
contiguous to it. A local channel is one on which AM stations operate unlimited
time and serve primarily a community and the suburban and rural areas
immediately contiguous to it. A Class C AM station operates on a local channel
and is designed to render service only over a primary service area that may be
reduced as a consequence of interference.
 
     The minimum and maximum facilities requirements for an FM station are
determined by its class. Possible FM class designations depend upon the
geographic zone in which the transmitter of the FM station is located. In
general, commercial FM stations are classified as follows, in order of
increasing power and antenna height: Class A, B1, C3, B, C2, C1 or C stations.
 
     The following table sets forth the market, FCC license classification,
antenna height above average terrain (HAAT), power and frequency of each of the
Company's owned stations and the date on which each station's FCC license
expires:
YEAR OF         RADIO STATION        FCC      POWER IN
     MARKET(A)         STATION     ACQUISITION          FORMAT           CLASS       KW'S       HEIGHT(B)     FREQUENCY
Fairfield County,
 CT                    WEFX-FM         1989          Classic Rock           A           3          300        95.9MHz
                       WNLK-AM         1989              Talk               B         1.0(e)       203        1350kHz
                       WRKI-FM         1996               AOR               B          50          470        95.1MHz
                       WINE-AM         1996             Country             D           1          255        940kHz
                       WKHL-FM         1996(f)          Oldies              A           8          828        96.7 MHz
                       WSTC-AM         1996(f)      News/Info/Jazz          C         .78          444        1400kHz
Allentown, PA          WAEB-FM         1982               CHR               B          50          499        104.1MHz
                       WAEB-AM         1982        News/Talk/Sports         B         3.6(c)       325        790kHz
                       WZZO-FM         1993               AOR               B          30          631        95.1MHz
Wilmington, DE         WJBR-FM         1985               A/C               B          50          500        99.5MHz
                       WJBR-AM         1985               MOR               D         2.5(d)       205        1290kHz
Westchester/Putnam
 Counties, NY          WFAS-FM         1986               A/C               A         0.6          670        103.9MHz
                       WFAS-AM         1986               MOR               C         1.0(c)       430        1230kHz
                       WVYB-FM         1996             Oldies              A          .9          610        105.5MHz
                       WZZN-FM         1996               AOR               A         1.4          440        106.3MHz
                       WPUT-AM         1996             Country             D         1.0          140        1510kHz
Huntington, WV/
 Ashland, KY           WTCR-FM         1982             Country             B          50          492        103.3MHz
                       WTCR-AM         1982         Classic Country         B         5.0(e)       304        1420kHz
Treasure Coast
 Market, FL            WZZR-FM         1987               AOR              C2          50          482        92.7MHz
                       WQOL-FM         1995             Oldies             C2          50          476        103.7MHz
                       WKQS-FM         1996(f)          Country            C3          25          295        94.7MHz
                       WAVW-FM         1996(f)          Country             A         8.1          466        101.7MHz
                       WAXE-AM         1996(f)        Mature A/C            B           1(d)       190        1370kHz
EXPIRATION
     MARKET(A)         OF LICENSE
Fairfield County,
 CT                  April 1998
                     April 1998
                     April 1998
                     April 1998
                     April 1998
                     April 1998
Allentown, PA        August 1998
                     August 1998
                     August 1998
Wilmington, DE       August 1998
                     August 1998
Westchester/Putnam
 Counties, NY        June 1998
                     June 1998
                     June 1998
                     June 1998
                     June 1998
Huntington, WV/
 Ashland, KY         October 2002
                     October 2002
Treasure Coast
 Market, FL          February 2003
                     February 2003
                     February 2003
                     February 2003
                     February 2003
- ------------------------------
(a) Actual city of license may be different from metropolitan market served.
(b) Height in feet of antenna radiation center above average terrain for FM
    stations; height in feet of antenna for AM stations.
(c) Power for daytime only; power of 1.0 kilowatt for nighttime.
(d) Power for daytime only.
(e) Power for daytime only; power of 0.5 kilowatt for nighttime.
(f) The Company anticipates that the Stamford Acquisition and the 1996 Treasure
    Coast Acquisition will close prior to the effective date of the Offering,
    however, there can be no assurance that such acquisitions will be
    consummated.
 
                                       44
47
 
     Ownership Matters.  The Communications Act prohibits the assignment of a
license or the transfer of control of a broadcast licensee without the prior
approval of the FCC. In determining whether to grant or renew a broadcast
license, the FCC considers a number of factors pertaining to the licensee,
including compliance with various rules limiting common ownership of broadcast,
cable and newspaper properties, the "character" of the licensee and those
persons holding "attributable" interests therein, and compliance with the
Communications Act's limitations on alien ownership, as well as compliance with
other FCC policies, including its equal employment opportunity requirements.
 
     Pursuant to the 1996 Act, the FCC has revised its ownership rule so as to
remove the national limit on the number of stations that any one entity may own
or in which that entity may have an attributable interest. Also pursuant to the
1996 Act the FCC revised its ownership rule so as to provide that (a) in a radio
market with 45 or more commercial radio stations, a party may own, operate, or
control up to eight commercial radio stations, not more than five of which may
be in the same service (i.e., AM or FM); (b) in a radio market with between 30
and 44 (inclusive) commercial radio stations, a party may own, operate, or
control up to seven commercial radio stations, not more than four of which may
be in the same service; (c) in a radio market with between 15 and 29 (inclusive)
commercial radio stations, a party may own, operate, or control up to six
commercial radio stations, not more than four of which may be in the same
service; and (d) in a radio market with 14 or fewer commercial radio stations, a
party may own, operate, or control up to five commercial radio stations, not
more than three of which are in the same service, except that the party may not
own, operate, or control more than 50 percent of the stations in such market.
For the purposes of these rules, the FCC considers the "market" of commonly
owned or operated stations to be the area in which such stations provide signals
of a designated strength. Stations that have signals of designated strength that
overlap or intersect the signals of the commonly owned stations are deemed to be
within the same market. Accordingly, the number of stations in a market as
designated by Arbitron or other ratings services are not the same as those used
in applying multiple ownership rules.
 
     The Communications Act and FCC rules also prohibit the common ownership,
operation or control of a radio broadcast station and a television broadcast
station serving the same geographic market (subject to the possibility of a
waiver of such prohibition if certain conditions are satisfied) and of a radio
broadcast station and a daily newspaper serving the same geographic market.
Under these rules, absent waivers, the Company would not be permitted to acquire
any newspaper or television broadcast station (other than a low-power
television) in any geographic market in which it now owns radio broadcast
properties.
 
     The FCC generally applies its ownership limits to "attributable" interests
held by an individual, corporation, partnership or other association. In the
case of corporations holding broadcast licenses, the interests of officers,
directors and those who, directly or indirectly, have the right to vote 5% or
more of the corporation's voting stock (or 10% or more of such stock in the case
of insurance companies, investment companies and bank trust departments) or to
designate any of the Company's directors are generally attributable, as are
positions as an officer or director of a corporate parent of a broadcast
licensee. Currently, none of the Company's officers, directors or holders of
voting stock has an attributable interest in any company licensed to operate
broadcast stations other than the Company's stations.
 
     The Communications Act prohibits the issuance of broadcast licenses to, or
the holding of a broadcast license by, any corporation of which more than 20% of
the capital stock is owned of record or voted by non-U.S. citizens or their
representatives or by a foreign government or a representative thereof, or by
any corporation organized under the laws of a foreign country (collectively,
"Aliens"). The Communications Act also authorizes the FCC, if the FCC determines
that it would be in the public interest, to prohibit the issuance of a broadcast
license to, or the holding of a broadcast license by, any corporation directly
or indirectly controlled by any other corporation of which more than 25% of the
capital stock is owned of record or voted by non-U.S. citizens or their
representatives or by a foreign government or representative thereof, or by any
corporation organized under the laws of a foreign country. The FCC has issued
interpretations of existing law under which these restrictions in modified form
apply to other forms of business organizations, including partnerships. As a
result of these provisions the licenses granted to the radio station
subsidiaries of the Company by the FCC could be rescinded if, among other
restrictions imposed by the FCC, more than 25% of the Company's stock were owned
or voted by Aliens.
 
                                       45
48
 
     Local Marketing Agreements.  Over the past several years, a number of radio
stations have entered into LMAs. While these agreements may take varying forms,
under a typical LMA, separately owned and licensed radio stations agree to enter
into cooperative arrangements of varying sorts, subject to compliance with the
requirements of antitrust laws and with the FCC's rules and policies. Under
these arrangements, separately-owned stations could agree to function
cooperatively in programming, advertising sales, and similar matters, subject to
the licensee of each station maintaining independent control over the
programming and operations of its own station. One typical type of LMA is a
programming agreement between two separately-owned radio stations serving a
common service area, where the licensee of one station programs substantial
portions of the broadcast day on the other licensee's station, subject to
ultimate editorial and other controls being exercised by the latter licensee,
and sells advertising time during those program segments. Such arrangements are
an extension of the concept of "time brokerage" agreements, under which a
licensee of a station sells blocks of time on its station to an entity or
entities that program the blocks of time and sell their own commercial
advertising announcements during the time periods in question. The Company is
currently a party to the Adventure LMA and the Simmons LMA.
 
     In the past, the FCC has determined that issues of joint advertising sales
should be left to enforcement by antitrust authorities and has revised its
so-called "cross-interest" policy to permit time brokerage arrangements whereby
one station in a market provides programming to another station in the same
market (under this policy, the FCC in certain circumstances may prohibit one
party from acquiring non-attributable economic interests in two broadcast
stations in the same market). Furthermore, over the past several years, the
staff of the FCC's Mass Media Bureau has held that LMAs are not contrary to the
Communications Act provided that the licensee of the station that is being
substantially programmed by another entity maintains complete responsibility
for, and control over, programming and operations of its broadcast station and
assures compliance with applicable FCC rules and policies.
 
     The FCC's multiple ownership rules specifically permit radio station LMAs
to continue to be entered into and implemented, but provide that a station
brokering more than 15% of the time on another station serving the same market
will be considered to have an attributable ownership interest in the brokered
station for purposes of the FCC's multiple ownership rules. As a result, the
Company would not be permitted to enter into an LMA with another local radio
station that it could not own under the FCC's local ownership rules, unless the
Company's programming would constitute 15% or less of the other local station's
programming time on a weekly basis. The FCC's rules also prohibit a broadcast
licensee from simulcasting more than 25% of its programming on another station
in the same broadcast service (i.e., AM-AM or FM-FM) either through a time
brokerage or LMA arrangement or as a result of common ownership, if the coverage
areas of the two stations substantially overlap.
 
     Another type of LMA that recently has come into use is the so-called JSA.
Under a JSA, one station (the "Brokering Station") purchases all, or
substantially all, of the commercial time available on another station (the
"Brokered Station"), while the licensee of the Brokered Station provides all of
the Brokered Station's entertainment programming. Because the Brokering Station
provides no entertainment programming under a JSA, arguments have been advanced
that a JSA is not an LMA for purposes of the FCC's rules, but instead is a type
of joint sales arrangement. Traditionally, the FCC has not treated joint sales
arrangements as causing the Brokering Station to hold an attributable interest
in the Brokered Station. If a JSA were deemed to be an LMA for purposes of the
FCC's attribution rules, and if the Brokering Station aired commercials for more
than 15% of the Brokered Station's broadcast week, the Brokering Station could
be deemed to hold an attributable interest in the Brokered Station, with the
result that the Brokered Station could be counted toward the maximum number of
stations that could be held by the Brokering Station. Currently before the FCC
is a proceeding wherein the FCC is considering whether it should treat JSAs as
LMAs or as joint sales arrangements.
 
     Programming and Operation.  The Communications Act requires broadcasters to
serve the "public interest, convenience and necessity." The FCC gradually has
relaxed or eliminated many of the more formalized procedures it had developed in
the past to promote the broadcast of certain types of programming responsive to
the needs of a station's community of license. A licensee continues to be
required, however, to present programming that is responsive to issues of
concern to the station's community, and to maintain
 
                                       46
49
 
certain records demonstrating such responsiveness. Complaints from listeners
concerning a station's programming often will be considered by the FCC when it
evaluates renewal applications of a licensee, although listener complaints may
be filed at any time and generally may be considered by the FCC at any time.
Stations also must follow various rules promulgated under the Communications Act
that regulate, among other things, political advertising, sponsorship
identifications, the advertisement of contests and lotteries, obscene and
indecent broadcasts, and technical operations, including limits on radio
frequency radiation. In addition, licensees must develop and implement
affirmative action programs designed to promote equal employment opportunities,
and must submit reports to the FCC with respect to these matters on an annual
basis and in connection with a renewal application. To ensure that stations
provide service to communities, the FCC's rules generally require a radio
station to maintain a signal of designated strength that encompasses the
community to which it is licensed and to maintain a main studio within an area
of such designated signal strength.
 
     Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
"short" (less than the full eight-year term in the case of radio broadcasting)
renewal terms or, for particularly egregious violations, the denial of a license
renewal application or the revocation of a license.
 
     Proposed Changes.  On January 12, 1995, the FCC initiated a proceeding to
solicit comment on whether it should alter its radio and television broadcast
ownership "attribution" rules by (i) raising the basic benchmark for attributing
ownership in a corporate licensee from 5% to 10% of the licensee's voting stock;
(ii) increasing from 10% to 20% of the licensee's voting stock the attribution
benchmark for "passive investors" in corporate licensees; (iii) changing the
class of investors eligible for "passive investor" status; (iv) changing the
current exemption which provides that minority voting stock interests held in a
corporate licensee are not attributable if there is a single majority
shareholder of more than 50% of the corporate licensee's outstanding voting
stock; (v) changing the current attribution rule which provides that all
nonvoting interests are generally nonattributable; and (vi) exempting certain
widely-held limited partnership interests from attribution.
 
     The Congress and the FCC have under consideration, and in the future may
consider and adopt, new laws, regulations and policies regarding a wide variety
of matters that could affect, directly or indirectly, the operation, ownership
and profitability of the Company's radio stations, result in the loss of
audience share and advertising revenue for the Company's radio stations, and
affect the ability of the Company to acquire additional radio stations or
finance those acquisitions. Such matters include: changes to the license renewal
process; spectrum use or other fees on FCC licensees; revisions to the FCC's
equal employment opportunity rules and other matters relating to minority and
female involvement in the broadcasting industry; proposals to change rules
relating to political broadcasting; technical and frequency allocation matters;
proposals to restrict or prohibit the advertising of beer, wine and other
alcoholic beverages on radio; changes in the FCC's cross-interest, multiple
ownership and cross-ownership policies; changes to broadcast technical
requirements; the rules under which telephone companies may deliver audio and
video programming to the home through existing phone lines; new technologies
such as DAB; proposals to limit the tax deductibility of advertising expenses by
advertisers; proposals to auction the right to use the radio broadcast spectrum
to the highest bidder, instead of granting FCC licenses and subsequent license
renewals; and proposals to repeal or modify existing restrictions on foreign
ownership of licensed telecommunications facilities and interests.
 
     The FCC has recently allocated spectrum for the provision of digital audio
radio satellite service ("DARS"). When implemented, DARS would permit a few
licensees to broadcast radio programming on a national basis to special
receivers designed to receive and decode digital signals.
 
     The Company cannot predict what other matters might be considered in the
future, nor can it judge in advance what impact, if any, the implementation of
any of these proposals or changes might have on its business.
 
SEASONALITY
 
     Seasonal revenue fluctuations are common in the radio broadcasting industry
and are due primarily to fluctuations in advertising expenditures by local
retailers. The Company's first fiscal quarter generally
 
                                       47
50
 
produces the lowest revenue for the year and the fourth fiscal quarter generally
produces the highest revenue for the year.
 
EMPLOYEES
 
     At April 30, 1996, the Company had a staff of approximately 259 full-time
employees and 120 part-time employees. The on-air performance staff of
WFAS-AM/FM is in the process of deciding whether or not the American Federation
of Television and Radio Artists of America will represent them for collective
bargaining purposes. The Company believes that its relations with its employees
are good.
 
     The Company employs several on-air personalities and generally enters into
employment agreements with certain of these personalities to protect its
interests in those relationships that it believes to be valuable. The loss of
certain of these personalities could result in a short-term loss of audience
share, but the Company does not believe that any such loss would have a material
adverse effect on the Company's financial condition or results of operations.
 
PATENTS AND TRADEMARKS
 
     The Company owns seven domestic trademark registrations related to the
business of the Company and does not own any patents or patent applications. The
Company does not believe that any of its trademarks are material to its business
or operation.
 
PROPERTIES/FACILITIES
 
     The Company's corporate offices are located in New York, New York. The
types of properties required to support each of the Company's radio stations
include offices, studios, transmitter sites and antenna sites.
 
     The Company owns, leases or licenses the studios, offices, and transmitter
and antenna sites of its stations. The Company considers its facilities to be
suitable and of adequate sizes for its current and intended purposes, and does
not anticipate any difficulties in renewing those leases or licenses or in
leasing or licensing additional space, if required.
 
     The Company owns substantially all its other equipment, consisting
principally of transmitting antennae, transmitters, studio equipment and general
office equipment. The towers, antennae and other transmission equipment used by
the Company's stations are generally in good condition, although opportunities
to upgrade facilities are continuously reviewed.
 
                                       48
51
 
     The following table sets forth the locations of properties owned by the
Company, the stations utilizing such properties and the uses of such properties:
PROPERTY LOCATION              USE
- ----------------------------    ------------
Norwalk, CT                     AM/FM Tower
Brookfield, CT                  Studio
                                AM/FM Tower
Wilmington, DE                  AM/FM Tower
Port St. Lucie, FL              Studio
                                FM Tower
Vero Beach, FL                  Studio
                                FM Tower
Catlettsburg, KY                Studio
                                AM Tower
Hartsdale, NY                   Studio
                                AM/FM Tower
Patterson, NY                   Studio
Brewster, NY                    AM Tower
Whitehall, PA                   AM Tower
The following table sets forth the locations of properties leased or
licensed by the Company, the stations utilizing such properties and the uses of
such properties:
PROPERTY LOCATION               USE
- -------------------------------    ------------
Norwalk, CT                        Studio
Claymount, DE                      Studio
Vero Beach, FL                     Studio
Pawling, NY                        FM Tower
Bedford, NY                        FM Tower
Mt. Kisco, NY                      Studio
Whitehall, PA                      Studio
Washington Township, PA            FM Tower
Bethlehem, PA                      FM Tower
Huntington, WV                     FM Tower
Stamford, CT                       Studio
                                   AM/FM Tower
Indian River County, FL            AM Tower
LEGAL PROCEEDINGS
 
     The Company is involved in litigation from time to time in the ordinary
course of its business. In management's opinion, the litigation in which the
Company is currently involved, individually and in the aggregate, is not
material to the Company's financial condition or results of operations.
 
                                       49
52
 
                                   MANAGEMENT
 
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     The following table sets forth the name, age and position with the Company
of each person who is a director and/or executive officer of the Company as of
May 15, 1996:
NAME                                        AGE     POSITION
Susan L. Burden...........................  48      Chairman of the Board
Bruce A. Friedman.........................  31      President, Chief Executive Officer and
                                                    Director
James T. Shea, Jr.........................  42      Chief Operating Officer
James J. Sullivan.........................  39      Chief Financial Officer, Treasurer and
                                                    Secretary
Scott J. Bacherman........................  42      President of the Northeast Region
Charlie V. DiToro.........................  42      President of the Southern Region
Jay M. Sterin.............................  37      Regional President of Wilmington, Delaware
                                                    and Huntington, West Virginia
Daniel H. Stern...........................  35      Director
Set forth below is the background of each of the Company's executive
officers and directors. Upon completion of the Offering, the Company intends to
expand its Board of Directors from three directors to five directors, filling
the two vacancies created by such expansion with individuals who are not
executive officers of or perform other duties for the Company (other than as
directors).
 
     Susan L. Burden.  Susan L. Burden has been a member of the Board of
Directors since 1990 and has been a practicing family therapist for 20 years.
Mrs. Burden is co-author of The Evaluation and Treatment of Marital Conflict
(1986) and a Director of The Burden Center for the Aging, The Brookdale Center
of Aging and The Florence V. Burden Foundation. Mrs. Burden is a graduate of the
University of Arizona. Mrs. Burden was elected Chairman of the Board of
Directors in April 1996.
 
     Bruce A. Friedman.  Bruce A. Friedman has been the President and Chief
Executive Officer of the Company since December 1993 and joined the Company as
Chief Financial Officer in 1991. From 1989 to 1991 Mr. Friedman was a Partner of
Wedbush Capital Partners, a $30 million private equity fund, and served on the
Board of Directors of Anna's Linens, Inc. From 1988 to 1989 Mr. Friedman was
owner/manager of Hands on Learning Distribution Corporation, a marketer of
educational videotapes and software. Mr. Friedman is a graduate of Stanford
University and the Harvard Business School.
 
     James T. Shea, Jr.  James T. Shea, Jr. is the Chief Operating Officer of
the Company. Mr. Shea joined the Company as the President of the Mid-Atlantic
Region in March 1992 with nearly 20 years experience in the radio business,
including eleven years with Wilks-Schwartz Broadcasting. He was Vice President
and General Manager of WKRZ-AM/FM in Wilkes-Barre, Pennsylvania from 1980 to
1984 and Vice President and General Manager of WQQQ-FM and WEEX-AM in Allentown,
Pennsylvania from 1984 to 1989. In 1986 he was promoted to Executive Vice
President of Wilks-Schwartz Broadcasting and from 1989 to 1992 he was the on
site General Manager of WNVZ-FM Norfolk, Virginia. He was also the youngest
sales manager for RKO General at their Boston property WROR-FM in 1979. Mr. Shea
is a graduate of Boston University.
 
     James J. Sullivan.  James J. Sullivan is the Chief Financial Officer,
Treasurer and Secretary of the Company. Mr. Sullivan joined the Company in
December of 1994. Prior to joining the Company, Mr. Sullivan was Vice President
in charge of finance and operations for Screen Media Partners from 1990 to 1994.
Before joining Screen Media Partners, Mr. Sullivan was the Senior Manager of
Operations for Grant Tinker/Gannett East, Inc. from 1987 through 1989 and held
various senior management positions in finance and production at NBC News from
1980 through 1987. Mr. Sullivan is a graduate of Fairfield University.
 
     Scott J. Bacherman.  Scott J. Bacherman is President of the Northeast
Region the Company (WEFX-FM, WNLK-AM, WRKI-FM and WINE-AM in Fairfield County
and WFAS-AM/FM, WZZN-FM, WVYB-FM and WPUT-AM in Westchester/Putnam County). Mr.
Bacherman joined the
 
                                       50
53
 
Company in April 1994 with almost twenty years experience in the radio industry.
Prior to joining the Company, Mr. Bacherman was Vice President/General Manager
with Wilks-Schwartz Broadcasting at WWBB-FM in Providence, Rhode Island from
1987 until 1993. Mr. Bacherman is a graduate of the University of Massachusetts.
 
     Charlie V. DiToro.  Charlie V. DiToro is President of the Southern Region
of the Company (WZZR-FM, WQOL-FM and WPAW-FM in the Treasure Coast Market). Mr.
DiToro joined the Company in June of 1992 from Cox Cable Cedar Rapids (Iowa)
where he was Vice President and General Manager from 1989 through 1992. Mr.
DiToro was Director of Field Marketing for eight cable systems comprising one
Cox cable division from 1986 to 1989, and had broad responsibilities for Cox
field sales and telemarketing efforts from 1984 to 1986. Mr. DiToro is a
graduate of Florida State University.
 
     Jay M. Sterin.  Jay M. Sterin is Regional President of WJBR-AM/FM in
Wilmington, Delaware; WTCR-AM/FM in Huntington, West Virginia-Ashland, Kentucky;
WKEE-AM/FM in Huntington, West Virginia; WZZW-AM in Milton, West Virginia;
WBVB-FM in Coal Grove, Ohio; WIRO-AM in Ironton, Ohio; WHRD-AM in Huntington,
West Virginia; WFXN-FM in Milton, West Virginia; and WMLV-FM in Ironton, Ohio.
Mr. Sterin joined the Company in September 1993 with over 15 years experience in
the radio business from Wilks-Schwartz Broadcasting where he served for eight
years as Vice President/General Manager and directed all operational aspects of
WKFM-FM and WFBC-AM in Syracuse, New York, including sales, programming and
marketing. From 1980 through 1985 he was General Sales Manager at WROR in
Boston. Mr. Sterin is a graduate of Boston University and has a Masters of
Business Administration from Babson College.
 
     Daniel H. Stern.  Daniel H. Stern has been a member of the Board of
Directors since April 1995. Mr. Stern has been President of Ziff Brothers
Investments, LLC, a privately held investment company based in New York City
since 1992. From 1989 to 1992, Mr. Stern was Co-Managing Director of William A.
M. Burden & Co., L.P., an investment limited partnership. From 1983 to 1989, Mr.
Stern was a Director at Adler & Co., a New York based venture capital firm, and
an Associate at Bass Brothers Enterprises, a Fort Worth, Texas based investment
management company. Mr. Stern is a graduate of Harvard College and the Harvard
Business School.
 
     All officers are elected until the next annual meeting of the Board of
Directors or until their respective successors are chosen and qualified.
Directors serve for a one year term or until their successors are elected.
 
BOARD COMMITTEES
 
     The Board of Directors will establish an audit committee and a compensation
committee at or prior to the consummation of the Offering. The audit committee,
the members of which will be non-management directors, will oversee actions
taken by the Company's independent auditors, recommend the engagement of
auditors and review the scope and results of the Company's accounting and
control procedures and the accuracy of its system of internal accounting and
control procedures. The compensation committee will review and approve the
compensation of executives of the Company, make recommendations to the Board of
Directors with respect to standards for setting compensation levels and
administer the Company's stock option and incentive plans.
 
DIRECTORS COMPENSATION
 
     Directors who are employed by the Company receive no additional
compensation in their capacities as directors. However, non-employee directors
receive $1,000 for each Board meeting attended.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     The Company does not currently have a compensation committee, however, as
stated above, the Company will establish a compensation committee at or prior to
the consummation of the Offering. See "Board Committees." During 1995, Mr.
Burden and Mr. Friedman established the compensation of the Company's executive
officers, including Mr. Friedman's compensation.
 
                                       51
54
 
EXECUTIVE COMPENSATION
 
     The following table sets forth the aggregate compensation paid or accrued
in 1995, 1994 and 1993 to the Chief Executive Officer of the Company and the
next four most highly compensated individuals of the Company:
 
                           SUMMARY COMPENSATION TABLE
LONG-TERM
                                                                                 OTHER     COMPENSATION AWARDS
                                                    ANNUAL COMPENSATION         ANNUAL     -------------------
                    NAME AND                     -------------------------     COMPENSA-          LTIP
               PRINCIPAL POSITION                YEAR  SALARY($)  BONUS($)      TION($)        PAYOUTS($)
Bruce A. Friedman............................... 1995   242,361   144,500         4,477         1,796,000
  President & Chief                              1994   200,000   300,000         6,428         1,750,000
  Executive Officer                              1993   130,000   294,000            --                --
James T. Shea, Jr............................... 1995   242,361   144,500        22,839           183,000
  Chief Operating Officer                        1994   200,000   184,000         1,582           430,000
                                                 1993   162,500    55,000            --                --
James J. Sullivan............................... 1995   146,944    91,000         1,935                --
  Chief Financial Officer                        1994    11,667        --            --                --
                                                 1993        --        --            --                --
Scott J. Bacherman.............................. 1995   175,885    70,000            --                --
  President of the                               1994   109,616    25,000            --                --
  Northeast Region                               1993        --        --            --                --
Jay M. Sterin................................... 1995   168,000    40,000            --                --
  Regional President                             1994   138,000    20,000            --                --
  of Wilmington, DE                              1993    39,807    10,000            --                --
  and Huntington, WV
STOCK OPTION PLAN
 
     1995 Stock Option Plan.  The Company's 1995 Stock Option Plan (the "1995
Option Plan") became effective upon the consummation of the sale of the Senior
Subordinated Notes and Warrants (as hereinafter defined) on April 21, 1995 (the
"Private Offering"). 951,300 shares of Class A Common Stock are reserved for
issuance under the 1995 Option Plan. The purpose of the 1995 Option Plan is to
attract and retain qualified personnel and to provide additional incentives to
executive and other key employees of the Company.
 
     The 1995 Option Plan provides for the granting to executives and other key
employees of the Company of incentive stock options ("ISOs") within the meaning
of Section 422 of the Code, and nonqualified stock options ("NQOs"). The 1995
Option Plan will be administered by a compensation committee of the Board of
Directors (the "Committee") which will determine the terms of the options
granted under the 1995 Option Plan, including the exercise price, number of
shares subject to the option and excercisability. If as a result of the grant,
the optionee has the right in any calendar year to exercise for the first time
one or more ISOs for shares having an aggregate fair market value (under all
plans of the Company and determined for each share as of the date the option to
purchase the share was granted) in excess of $100,000, or such higher amount as
may be permitted from time to time under the Code, such options shall be treated
as NQOs. Generally, unless the Committee otherwise determines, no option may be
transferred by the optionee other than by will or the laws of descent or
distribution. Each option may be exercised, during the lifetime of the optionee,
only by the optionee. The exercise price of all ISOs and NQOs under the 1995
Option Plan must equal at least the fair market value of the Class A Common
Stock of the Company on the date of grant. Payment of the exercise price may be
made in cash, Class A Common Stock or such other consideration determined by the
Committee.
 
     The 1995 Option Plan authorizes the Committee to permit a participant to
satisfy the exercise price obligation arising from the exercise of an option by
surrendering to the Company other shares of Class A Common Stock held by such
participant which have on the day of exercise an aggregate fair market value
equal to the aggregate exercise price of shares being purchased through exercise
of the option. This right enables a participant to increase such participant's
ownership of Common Stock through a series of
 
                                       52
55
 
simultaneous tenders of Class A Common Stock as payment for the exercise of
options to purchase a greater number of shares of Class A Common Stock.
 
     The 1995 Option Plan also permits participants to elect to have the Company
withhold all or a portion of the shares which the participant may acquire upon
exercise of an option, or deliver to the Company other shares of Class A Common
Stock which the participant holds, to satisfy tax withholding obligations of the
participant resulting from an exercise.
 
     The Committee has exclusive discretion to select the participants and to
determine the type, size and terms of each award, to modify the terms of awards,
to determine when awards will be granted and paid, and to make all other
determinations which it deems necessary or desirable in the interpretation and
administration of the 1995 Option Plan. With limited exceptions, including
termination of employment as a result of death, disability or retirement, or
except as otherwise determined by the Committee, rights to these forms of
contingent compensation are forfeited if a recipient's employment or performance
of services terminates within a specified period following the award. In the
event of a proposed sale of all or substantially all of the assets of the
Company, the merger of the Company with or into another corporation or other
transactions constituting a change of control, all restrictions on any
outstanding awards shall lapse and participants will be entitled to the partial
benefit of such awards, as determined by the Committee, immediately prior to the
closing date of such sale or merger.
 
OPTION GRANTS IN 1995
 
     The following table sets forth certain information concerning stock option
grants during the year ended December 31, 1995 to the named executive officers
pursuant to the 1995 Option Plan.
 
                           INDIVIDUAL GRANTS IN 1995
POTENTIAL REALIZABLE
                                                                                              VALUE AT
                                                                                        ASSUMED ANNUAL RATES
                            NUMBER OF     PERCENT OF                                       OF STOCK PRICE
                            SECURITIES       TOTAL                                          APPRECIATION
                            UNDERLYING  OPTIONS GRANTED     EXERCISE                     FOR OPTION TERM(A)
                             OPTIONS     TO EMPLOYEES         PRICE       EXPIRATION   -----------------------
           NAME              GRANTED      IN 1995(%)      ($/PER SHARE)      DATE          5%          10%
Bruce A. Friedman.........   203,854          29.3%           $6.25         4/21/05    $3,375,006   $6,129,075
James T. Shea, Jr.........   203,854          29.3%            6.25         4/21/05     3,375,006    6,129,075
James J. Sullivan.........    81,540          11.7%            6.25         4/21/05     1,350,538    2,448,875
Scott J. Bacherman........    81,540          11.7%            6.25         4/21/05     1,350,538    2,448,875
Jay M. Sterin.............    54,360           7.8%            6.25         4/21/05       899,984    1,634,388
- ------------------------------
(a) The potential realizable value portion of the foregoing table illustrates
    values that might be realized upon exercise of the options prior to the
    expiration of their term, assuming the specified compounded rates of
    appreciation on the Company's Common Stock over the remaining life of the
    options. This table does not take into account provisions of certain options
    providing for termination of the option following termination of employment,
    nontransferability or vesting over periods. The dollar amounts under these
    columns are the result of calculations at the 5% and 10% rates set by the
    Securities and Exchange Commission and therefore are not intended to
    forecast possible future appreciation, if any, of the Company's stock price.
    The Company did not use an alternative formula for a grant date valuation,
    as the Company is not aware of any formula which will determine with
    reasonable accuracy a present value based on future unknown or volatile
    factors. No gain to the optionees is possible without an increase in stock
    price appreciation, which will benefit all stockholders commensurably.
 
                                       53
56
 
     The following table sets forth the option values at December 31, 1995 for
options held by each named executive officer.
 
                       AGGREGATED OPTION/SAR EXERCISES IN
                 FISCAL YEAR 1995 AND FY-END OPTION/SAR VALUES
VALUE OF UNEXERCISED
                                                                     NUMBER OF SECURITIES         IN-THE-MONEY
                                                                    UNDERLYING UNEXERCISED      OPTIONS/SARS AT
                                                                   OPTIONS/SARS AT 12/31/95       12/31/95(A)
                         SHARES ACQUIRED ON                              EXERCISABLE/             EXERCISABLE/
         NAME               EXERCISE ($)      VALUE REALIZED ($)        UNEXERCISABLE            UNEXERCISABLE
                         ------------------   ------------------   ------------------------   --------------------
Bruce A. Friedman......           0                    0                   0/203,854              $0/$1,579,869
James T. Shea, Jr......           0                    0                   0/203,854               0/ 1,579,869
James J. Sullivan......           0                    0                   0/ 81,540               0/   631,935
Scott J. Bacherman.....           0                    0                   0/ 81,540               0/   631,935
Jay M. Sterin..........           0                    0                   0/ 54,360               0/   421,290
- ------------------------------
(a) Assumes a per share value of the Company's Common Stock of $          , the
assumed Offering price.
 
EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
 
     Carter Burden Employment Agreement.  Carter Burden served as the Company's
Chairman of the Board from its formation in 1980 until his death in January
1996. For the year ended December 31, 1994, the Company paid Mr. Burden an
annual salary of $27,000 and reimbursed Mr. Burden and certain entities
affiliated with Mr. Burden an aggregate of $172,000 for various expenses
incurred by or on behalf of Mr. Burden in connection with his role as its
Chairman of the Board. On April 21, 1995, Mr. Burden and the Company entered
into a three-year employment agreement. Pursuant to such employment agreement,
Mr. Burden was entitled to receive annual compensation of $250,000, subject to
annual increases at the discretion of the Board of Directors. Such employment
agreement terminated upon the death of Mr. Burden in January 1996. Commencing
April 1, 1996, the Company elected to compensate Susan Burden for her services
to the Company as Chairman of the Board at the rate of $250,000 per annum.
 
     Bruce A. Friedman Employment Agreement.  On April 21, 1995, the Company and
Mr. Friedman amended and restated Mr. Friedman's employment agreement with the
Company (the "Amended and Restated Friedman Agreement"). The term of the Amended
and Restated Friedman Agreement is three years, terminating on April 30, 1998,
and provides for annual base compensation of $250,000, with annual increases of
not less than 5% per annum. Mr. Friedman will also be entitled to receive
certain incentives based upon the Company's EBITDA. In 1995 such incentive was
approximately $144,500. In addition, the Company granted Mr. Friedman stock
options to acquire 203,854 shares of Class A Common Stock of the Company under
its 1995 Option Plan. On April 21, 1995, Mr. Friedman purchased from Carter
Burden 197,057 shares of Class A Common Stock of the Company in exchange for
$900,000 in the form of a recourse promissory note (the "Friedman Promissory
Note") which accrues interest at the rate of 8% per annum and is secured by such
shares of Class A Common Stock. Mr. Friedman's shares of Class A Common Stock
are subject to certain rights of repurchase by the Company. Upon the death of
Mr. Friedman, the Company will be required to purchase, to the extent of the
life insurance proceeds received by the Company as a result of his death, any of
the Company's Common Stock which was purchased from Mr. Burden and any shares of
Common Stock purchased under the options issued to him in each case as described
above and which is owned by Mr. Friedman immediately prior to his death, at a
price equal to the fair market value thereof and any excess insurance proceeds
remaining after such repurchase shall be paid to Mr. Friedman's estate. The
Company will maintain, subject to certain limitations, ten-year term life
insurance policies on Mr. Friedman for the benefit of the Company providing
aggregate coverage of approximately $9,000,000. In addition, the agreements
governing Mr. Friedman's Class A Common Stock contain certain voting provisions
which give certain rights to Mr. Burden's estate to vote Mr. Friedman's shares
of Class A Common Stock upon the occurrence of certain events. Such agreements
also grant Mr. Friedman piggyback registration rights and
 
                                       54
57
 
demand registration rights. In connection with the Amended and Restated Friedman
Agreement and in lieu of the long-term compensation arrangement under Mr.
Friedman's prior employment agreement, on April 21, 1995: (i) the Company made a
cash payment to Mr. Friedman in the amount of $1.5 million; (ii) the Company
issued to a trust for the benefit of Mr. Friedman $1,308,000 of the Company's
outstanding Senior Subordinated Notes (the "Friedman Senior Subordinated Note");
and (iii) the Company agreed to be obligated to pay Mr. Friedman deferred
compensation in the amount of approximately $1.5 million which accrues interest
at the rate of 7% per annum and is due on the earlier of (a) eight and one-half
years after the consummation of the Private Offering, (b) a Change of Control
(as defined in the Amended and Restated Friedman Agreement), (c) an initial
public offering of Common Stock of the Company (other than on a registration
statement on Form S-4 or S-8) and (d) Mr. Friedman's death; provided, however,
the Company's obligation to pay such deferred compensation in the event of Mr.
Friedman's death is limited to the extent of the life insurance proceeds
actually received by the Company as described above. It is anticipated that
proceeds received by the Company in the Offering will be used for the payment of
the deferred compensation owed to Mr. Friedman in the amount of approximately
$1.5 million plus accrued interest for an aggregate amount of $1,599,247 as of
March 31, 1996. It is further anticipated that Mr. Friedman will use such
proceeds for the repayment of indebtedness under the Friedman Promissory Note
and the 197,057 shares of Class A Common Stock which were pledged to secure the
Friedman Promissory Note will be released to Mr. Friedman. Additionally, it is
anticipated that upon the consummation of the Offering, the Company and Mr.
Friedman will enter into an amendment to the Amended and Restated Friedman
Agreement to provide for the release of the Friedman Senior Subordinated Note
from trust and their subsequent delivery to Mr. Friedman. At such time, the
Friedman Senior Subordinated Note will become freely transferrable, subject to
certain securities laws restrictions. The Company has agreed to indemnify Mr.
Friedman from certain tax liabilities he may incur in the event such deferred
compensation is treated as a parachute payment under Section 280(g) of the
Internal Revenue Code of 1986, as amended.
 
     James T. Shea, Jr. Employment Agreement.  On April 21, 1995, the Company
and Mr. Shea amended and restated Mr. Shea's employment agreement with the
Company (the "Amended and Restated Shea Agreement"). The term of the Amended and
Restated Shea Agreement is four years, terminating on April 30, 1999 and
provides for annual base compensation of $250,000, with annual increases of not
less than 5% per annum. Mr. Shea will also be entitled to annual incentives on
terms and conditions substantially similar to Mr. Friedman's annual incentives
as described above. In addition, the Company granted Mr. Shea stock options
under its 1995 Option Plan which entitle Mr. Shea to acquire 203,854 shares of
Class A Common Stock of the Company. The other terms and conditions of the
Amended and Restated Shea Agreement are generally similar to the Amended and
Restated Friedman Agreement. In 1995 Mr. Shea's incentive was approximately
$144,500. In addition, on April 21, 1995, Mr. Shea purchased from Carter Burden
45,497 shares of Class A Common Stock of the Company in exchange for $208,000 in
the form of a recourse promissory note (the "Shea Promissory Note") which
accrues interest at the rate of 8% per annum and is secured by such shares of
Class A Common Stock. In connection with the Amended and Restated Shea Agreement
and in lieu of the long-term incentive compensation arrangements under Mr.
Shea's prior employment agreement, on April 21, 1995: (i) the Company made a
cash payment to Mr. Shea in the amount of $400,000 and (ii) the Company agreed
to be obligated to pay Mr. Shea deferred compensation in the amount of $346,000
on terms and conditions generally similar to Mr. Friedman's deferred
compensation arrangements as described above. It is anticipated that proceeds
received by the Company in the Offering will be used for the payment of the
deferred compensation owed to Mr. Shea in the amount of approximately $346,000
plus accrued interest for an aggregate amount of $368,893 as of March 31, 1996.
It is further anticipated that Mr. Shea will use such proceeds for the repayment
of indebtedness under the Shea Promissory Note and the 45,497 shares of Class A
Common Stock which were pledged to secure the Shea Promissory Note will be
released to Mr. Shea.
 
     James J. Sullivan Employment Agreement.  On April 21, 1995, the Company and
Mr. Sullivan entered into an employment agreement that expires on April 30,
1999. The employment agreement provides for a base salary of $150,000 with
annual increases in the base salary of $10,000. Mr. Sullivan's employment
agreement provides for incentive compensation in 1995 equal to 15% of EBITDA
above $9.5 million and 2.5% for all EBITDA above $9.9 million, and in each
calendar year thereafter, as established by the President of the
 
                                       55
58
 
Company with a potential target between $60,000 and $75,000. In addition, the
Company granted Mr. Sullivan stock options under its 1995 Option Plan which
entitle Mr. Sullivan to purchase 81,540 shares of Class A Common Stock of the
Company.
 
     Scott J. Bacherman Employment Agreement.  On April 21, 1995, the Company
and Mr. Bacherman entered into an employment agreement that expires on April 30,
1999. The employment agreement provides for a base salary of $170,000 with
annual increases in the base salary of an amount which shall not be less than 5%
of the annual base salary in effect immediately prior to such increase. Mr.
Bacherman's employment agreement provides for incentive compensation based on
the operating cash flow of WEFX-FM, WNLK-AM, WFAS-FM and WFAS-AM, with a maximum
payout in 1995 of $70,000, and in each calendar year thereafter, as established
by the President of the Company with a potential target of at least $70,000. In
addition, the Company granted Mr. Bacherman stock options under its 1995 Option
Plan which entitle Mr. Bacherman to purchase 81,540 shares of Class A Common
Stock of the Company.
 
     Charlie V. DiToro Employment Agreement.  Mr. DiToro currently has an
employment agreement with the Company that expires on June 30, 1999. The
employment agreement provides for a base salary of $92,500 from July 1, 1995 to
and including December 31, 1995, and a base salary of $170,000 from January 1,
1996 to and including December 31, 1996, with annual increases in the base
salary of 5% of the annual base salary in effect immediately prior to such
increase. In addition, Mr. DiToro's employment agreement provides for incentive
compensation based on the operating cash flow of WZZR-FM, WQOL-FM and WPAW-FM,
with a maximum payout in 1995 of $50,000, and in each calendar year thereafter,
as established by the President of the Company with a potential target of
$50,000. In addition, the Company granted Mr. DiToro stock options under its
1995 Option Plan which entitle Mr. DiToro to purchase 29,880 shares of Class A
Common Stock of the Company.
 
     Jay M. Sterin Employment Agreement.  Mr. Sterin currently has an employment
agreement with the Company that expires on April 30, 1999. The employment
agreement provides for a base salary of $158,000 with annual increases in the
base salary of an amount which shall not be less than 5% of the annual base
salary in effect immediately prior to such increase. Mr. Sterin's employment
agreement provides for incentive compensation based on the operating cash flow
of WJBR-AM and WJBR-FM, with a maximum payout in 1995 of $60,000, and in each
calendar year thereafter, as established by the President of the Company with a
potential target of $60,000. In addition, the Company granted Mr. Sterin stock
options under its 1995 Option Plan which entitle Mr. Sterin to purchase 54,360
shares of Class A Common Stock of the Company.
 
LIMITATIONS ON DIRECTORS AND OFFICERS LIABILITY
 
     The Company's Amended and Restated Certificate of Incorporation limits the
liability of directors to the maximum extent permitted by Delaware law, which
specifies that a director of a company adopting such a provision will not be
personally liable for monetary damages for breach of fiduciary duty as a
director, except for the liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) for unlawful payments of dividends or unlawful stock purchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law;
or (iv) for any transaction from which the director derived an improper personal
benefit.
 
     The Company's Amended and Restated Certificate of Incorporation provides
for mandatory indemnification of directors and officers (and others) in such
manner, under such circumstances and to the fullest extent permitted by the
Delaware General Corporation Law, which generally authorizes indemnification as
to all expenses incurred or imposed as a result of actions, suits or proceedings
if the indemnified parties act in good faith and in a manner they reasonably
believe to be in or not opposed to the best interests of the Company and the
Amended and Restated Certificate of Incorporation provides the right to such
expenses in advance of the final disposition of any such action, suit or
proceeding. The Company believes that these provisions are necessary or useful
to attract and retain qualified persons as directors and officers.
 
     There is no pending litigation or proceeding involving a director or
officer as to which indemnification is being sought.
 
                                       56
59
 
                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     Since 1993, the Company made various loans to Mr. Burden totalling
approximately $183,000. Such loans did not bear interest and were in the form of
three separate advances of $60,000, $57,500 and $65,500. Mr. Burden repaid all
such loans upon the consummation of the Private Offering. In addition, for the
year ended December 31, 1995, the Company reimbursed Carter Burden and certain
entities affiliated with Mr. Burden for an aggregate amount of approximately
$18,000 for various expenses incurred by or on behalf of Mr. Burden in
connection with his role as its Chairman of the Board; such expenses were
comprised of general administrative and overhead costs, travel and related
expenses incurred by Mr. Burden in connection with his activities on behalf of
the Company.
 
     On December 28, 1993, the Company granted a warrant to William A. M. Burden
& Co., L.P., an investment limited partnership ("WAMBCO"), to purchase 4.99% of
its common stock at an exercise price of $100, on a fully diluted basis. On
April 21, 1995, WAMBCO exercised the warrant and purchased 196,661 shares of
Class A Common Stock of the Company which shares are being registered in the
Offering. See "Principal and Selling Shareholders." WAMBCO consists of partners
which are either individuals or entities directly or indirectly related to or
affiliated with the family of Carter Burden.
 
     On April 21, 1995, the Company entered into employment agreements with each
of Carter Burden, Bruce A. Friedman, James T. Shea, Jr., Scott J. Bacherman,
James J. Sullivan, Judy Jennings and Jay M. Sterin. On July 1, 1995, the Company
entered into employment agreements with Richard Lewis and Charlie V. DiToro. See
"Employment Agreements and Arrangements."
 
     During May 1995 the Company advanced funds to certain executive officers as
loans. As of the date hereof, an aggregate of $250,375 of such advances is
outstanding. Such loans were advanced to enable such officers to purchase
Warrants from unrelated third parties exercisable for an aggregate of 36,000
shares of Class A Common Stock and are evidenced by five year notes bearing
interest at 7.0% with all interest and principal due on the maturity date. As a
result of such advances, the Estate of Carter Burden owes $50,215, Bruce A.
Friedman owes $100,160, James T. Shea, Jr. and James J. Sullivan each owe
$50,000, plus accrued interest, to the Company.
 
     The Company has no current intention of making additional loans to
employees, executive officers and/or affiliates. If the Company does make such
loans in the future, the terms thereof will be determined by the Board of
Directors with respect to executive officers and affiliates, and by the
President and Chief Executive Officer with respect to employees, each acting in
the best interest of the Company. Such determinations will be based upon the
likelihood of repayment and the value of such employee, executive officer or
affiliate to the Company.
 
                                       57
60
 
                       PRINCIPAL AND SELLING SHAREHOLDERS
 
     The following table sets forth information concerning the beneficial
ownership of the Company's Common Stock as of April 30, 1996 by (i) each person
known to the Company to own beneficially more than 5% of any class of Common
Stock, (ii) each director and each named executive officer, (iii) each Selling
Shareholder and (iv) all directors and executive officers of the Company as a
group. All shares are owned with sole voting and investment power other than the
shares held by the Executors of the Estate of Carter Burden.
SHARES OF CLASS A                            SHARES OF CLASS A      SHARES OF CLASS B    
                       COMMON STOCK OWNED                           COMMON STOCK OWNED     COMMON STOCK OWNED    
                        PRIOR TO OFFERING                             AFTER OFFERING      PRIOR TO THE OFFERING  
                      ---------------------   SHARES     SHARES    ---------------------  ---------------------  
    DIRECTORS AND                PERCENT OF    BEING      BEING               PERCENT OF             PERCENT OF
EXECUTIVE OFFICERS(A) NUMBER(B)   CLASS A     OFFERED   PURCHASED(C)  NUMBER   CLASS A    NUMBER(B)   CLASS B
Susan Burden(d)(l)...       --        --            --        --          --       --     3,501,886      100%   
Bruce A.
 Friedman(e).........  284,610      54.0%           --        --     284,610      6.1%          --        --    
James T. Shea,
 Jr.(f)..............  108,771      21.6%           --        --     108,771      2.4%          --        --    
James J.
 Sullivan(g).........   29,420       6.3%           --        --      29,420     *              --        --    
Scott J.
 Bacherman(h)........   20,384       4.4%           --        --      20,384     *              --        --    
Charlie V.
 DiToro(i)...........    2,988      *               --        --       2,988     *              --        --    
Jay Sterin(j)........   13,587       3.0%           --        --      13,587     *              --        --    
Daniel Stern.........       --        --            --        --          --       --           --        --    
All directors and
 executive officers
 as a group(k)
 (8 people)..........  459,760      70.0%           --        --     459,760      9.7%          --        --    
FIVE PERCENT
 SHAREHOLDERS AND
 SELLING SHAREHOLDERS
Estate of
 Carter Burden(l).... 3,501,886     88.8%    1,201,480        --   2,280,690     33.4%    3,501,886      100%   
William A.M. Burden &
 Co., L.P.(m)........  216,367      47.1%      216,367        --          --       --           --        --    
Putnam Co., Inc.
 1 Post Office Square
 Boston, MA(n).......  288,000      39.6%           --        --     288,000      6.0%          --        --
SHARES OF CLASS B                      PERCENT OF VOTING
                          COMMON STOCK OWNED    PERCENT OF ALL       POWER OF ALL
                         AFTER  THE OFFERING     COMMON STOCK        COMMON STOCK
                         --------------------  ------------------  ------------------
    DIRECTORS AND                  PERCENT OF  PRIOR TO   AFTER    PRIOR TO   AFTER
EXECUTIVE OFFICERS(A)   NUMBER      CLASS B    OFFERING  OFFERING  OFFERING  OFFERING
Susan Burden(d)(l)...  2,280,690       100%        89%     33.4%       98%       80%
Bruce A.
 Friedman(e).........         --        --        7.0%      4.1%      1.0%      1.2%
James T. Shea,
 Jr.(f)..............         --        --        2.7%      1.5%     *         *
James J.
 Sullivan(g).........         --        --       *         *         *         *
Scott J.
 Bacherman(h)........         --        --       *         *         *         *
Charlie V.
 DiToro(i)...........         --        --       *         *         *         *
Jay Sterin(j)........         --        --       *         *         *         *
Daniel Stern.........         --        --         --        --        --        --
All directors and
 executive officers
 as a group(k)
 (8 people)..........         --        --       11.1%      6.5%      1.6%      2.0%
FIVE PERCENT
 SHAREHOLDERS AND
 SELLING SHAREHOLDERS
Estate of
 Carter Burden(l)....  2,280,690       100%        89%     33.4%       98%       80%
William A.M. Burden &
 Co., L.P.(m)........         --        --        5.5%       --      *           --
Putnam Co., Inc.
 1 Post Office Square
 Boston, MA(n).......         --        --        6.8%      4.1%      1.0%      1.2%
- ------------------------------
 
 *  less than 1%
 
(a)  The address of all persons in this table, unless otherwise specified, is
     c/o Commodore Media, Inc., 500 Fifth Avenue, Suite 3000, New York, New York
     10110.
 
(b)  As used in this table, "beneficial ownership" means the sole or shared
     power to vote or direct the voting of a security, or the sole or shared
     investment power with respect to a security (i.e., the power to dispose, or
     direct the disposition, of a security). A person is deemed as of any date
     to have "beneficial ownership" of any security that such person has the
     right to acquire within 60 days after such date. For purposes of computing
     the percentage of outstanding shares held by each person named above, any
     security that such person has the right to acquire within 60 days of the
     date of calculation is deemed to be outstanding, but is not deemed to be
     outstanding for purposes of computing the percentage ownership of any other
     person.
 
(c)  For further information regarding shares of Class A Common Stock being
     purchased in the Offering, see "Underwriting."
 
(d)  Includes shares owned by the Estate of Carter Burden of which Susan Burden
     is an executor and may be deemed a beneficial owner thereof.
 
(e)  Includes (i) 19,599 shares of Class A Common Stock purchasable upon
     exercise of Warrants held by Mr. Friedman and (ii) 67,954 shares of Class A
     Common Stock currently purchasable pursuant to options granted to Mr.
     Friedman under the 1995 Stock Option Plan. Does not include options under
     the 1995 Stock Option Plan to acquire 135,900 shares of Class A Common
     Stock which are not presently exercisable.
 
(f)  Includes (i) 12,312 shares of Class A Common Stock purchasable upon
     exercise of Warrants held by Mr. Shea and (ii) 50,962 shares of Class A
     Common Stock currently purchasable pursuant to options granted to Mr. Shea
     under the 1995 Stock Option Plan. Does not include options under the 1995
     Stock Option Plan to acquire 152,992 shares of Class A Common Stock which
     are not presently exercisable.
 
(g)  Includes (i) 9,036 shares of Class A Common Stock purchasable upon exercise
     of Warrants held by Mr. Sullivan and (ii) 20,384 shares of Class A Common
     Stock currently purchasable pursuant to options granted to Mr. Sullivan
     under the 1995 Stock Option Plan. Does not include options under the 1995
     Stock Option Plan to acquire 61,157 shares of Class A Common Stock which
     are not presently exercisable.
 
(h)  Includes 20,384 shares of Class A Common Stock currently purchasable
     pursuant to options granted to Mr. Bacherman under the 1995 Stock Option
     Plan. Does not include options under the 1995 Stock Option Plan to acquire
     61,157 shares of Class A Common Stock which are not presently exercisable.
 
(i)  Includes 2,988 shares of Class A Common Stock currently purchasable
     pursuant to options granted to Mr. DiToro under the 1995 Stock Option Plan.
     Does not include options under the 1995 Stock Option Plan to acquire 26,892
     shares of Class A Common Stock which are not presently exercisable.
 
(j)  Includes 13,587 shares of Class A Common Stock currently purchasable
     pursuant to options granted to Mr. Sterin under the 1995 Stock Option Plan.
     Does not include options under the 1995 Stock Option Plan to acquire 62,374
     shares of Class A Common Stock which are not presently exercisable.
 
                                       58
61
 
(k)  Includes (i) 40,947 shares of Class A Common Stock purchasable upon
     exercise of Warrants held by all directors and executive officers and (ii)
     176,264 shares of Class A Common Stock currently purchasable pursuant to
     options granted to all directors and executive officers under the 1995
     Stock Option Plan. Does not include options under the 1995 Stock Option
     Plan to acquire 478,771 shares of Common Stock which are not presently
     exercisable.
 
(l)  Includes 3,501,886 shares of Class A Common Stock issuable upon conversion
     of the shares of Class B Common Stock owned by the Estate of Carter Burden.
     Carter Burden, the Company's Chairman of the Board, died in January 1996.
     The Executors of the Estate of Carter Burden are Susan L. Burden, S. Carter
     Burden III and Flobelle F. Burden. Each of Susan L. Burden, Carter Burden
     III and Flobelle F. Burden may be deemed to be beneficial owners of the
     Common Stock owned by the Estate of Carter Burden.
 
(m) Includes 19,706 shares of Class A Common Stock purchasable upon partial
    exercise of the option granted to WAMBCO by Carter Burden to acquire up to
    177,351 shares of Class A Common Stock (the "WAMBCO Option"). Does not
    include 157,645 shares of Class A Common Stock purchasable under the portion
    of the WAMBCO Option which is not presently exercisable. WAMBCO is an
    investment limited partnership, the partners of which are individuals and
    other entities that were directly or indirectly related to or affiliated
    with the family of Carter Burden. At the time of Carter Burden's death in
    January 1996, he was both a limited partner of WAMBCO and controlling
    shareholder of its general partner.
 
(n)  Includes 288,000 shares of Class A Common Stock purchasable upon exercise
     of Warrants held by Putnam Co., Inc.
 
                                       59
62
 
                      DESCRIPTION OF CERTAIN INDEBTEDNESS
 
SENIOR CREDIT FACILITY
 
     On March 13, 1996, the Company, Holdings and their subsidiaries entered
into the Senior Loan Agreement pursuant to which the Senior Lender made
available to Holdings senior secured (i) revolving loans (the "Revolving Loans")
in an amount up to $30 million and (ii) accounts receivable loans ("Receivable
Loans") in an amount which must be the lesser of (A) $5 million or (B) 85% of
the net book value of the accounts receivable of the Company and the
wholly-owned subsidiaries of Holdings.
 
     Each Receivable Loan and Revolving Loan bears interest at a floating rate
of interest, adjusted on the first calendar day of each calendar month, equal to
three and one-half percent (3 1/2%) above LIBOR as published in the Eastern
Edition of The Wall Street Journal. Interest on each Receivable Loan and
Revolving Loan is payable monthly in arrears on the first day of each month
beginning April 1, 1996.
 
     The indebtedness of Holdings under the Senior Credit Facility is
collateralized by liens on substantially all of the assets of Holdings and its
subsidiaries and by the Company's pledge of the stock of Holdings and by
Holdings' pledge of the stock of the wholly-owned subsidiaries of Holdings, and
is guaranteed by the Company and the wholly-owned subsidiaries of Holdings.
Principal amortization for the Receivable Loans commences on November 30, 1997
and the principal amortization for the Revolving Loans commences in June 1998.
 
     Restrictive covenants in the Senior Loan Agreement include: (i) a
prohibition on the creation of additional liens on any assets of the Company or
any of its subsidiaries, with certain customary and limited exceptions; (ii) a
restriction on the use of proceeds of any loan pursuant to the Senior Loan
Agreement; (iii) restrictions on non-ordinary course dispositions of assets;
(iv) restrictions on mergers or consolidations involving the Company or any of
its subsidiaries; (v) a prohibition on the payment and declaration of any
dividends or other distributions on any class of its capital stock, with certain
limited exceptions; (vi) restrictions on the incurrence of additional
indebtedness and guarantees; (vii) a prohibition on new investments, except for
certain intercompany advances, permitted acquisitions, reasonable and customary
loans to employees, temporary cash investments and other limited investments;
(viii) restrictions on the disposition of licenses; and (ix) a prohibition on an
amendment to either the Indenture or any Senior Subordinated Note or any
document governing the obligations evidenced by the Indenture or the Senior
Subordinated Notes.
 
     The Company is also required to satisfy, among other things, the following
financial ratios under the Senior Loan Agreement: (i) a ratio of the Company's
consolidated EBITDA to consolidated pro forma total debt service, as defined in
the Senior Loan Agreement, of not less than 1.10 to 1.00 at the end of each
fiscal quarter; (ii) a ratio of the Company's consolidated EBITDA to
consolidated senior debt service of not less that 2.0 to 1.0 at the end of each
fiscal quarter; (iii) at the time of the making of a Revolving Loan, the ratio
of the Company's consolidated debt for borrowed money (excluding the Receivable
Loan) to EBITDA shall not exceed 6.75 to 1.0 at any time prior to May 1, 1998
and shall not exceed 6.25 to 1.0 at any time thereafter; and (iv) the ratio of
the aggregate outstanding balance of all Revolving Loans to the Company's
consolidated EBITDA shall not exceed 3.5 to 1.0 at any time. The Company is
currently in compliance with all maintenance covenants contained in the Senior
Loan Agreement.
 
THE 13 1/4% SENIOR SUBORDINATED NOTES DUE 2003
 
     The Senior Subordinated Notes are general unsecured obligations of the
Company and are subordinated in rights of payment of all Senior Indebtedness (as
defined in the Indenture) and senior in rights of payment to any current or
future indebtedness of the Company, which is by its terms subordinated to the
Senior Subordinated Notes. The Senior Subordinated Notes are unconditionally
guaranteed, on a senior subordinated basis, as to payment of principal, premium,
if any, and interest, jointly and severally, by the Guarantors named in the
Indenture (together with each other Restricted Subsidiary (as defined in the
Indenture) which guarantees payment of the Senior Subordinated Notes). The
Senior Subordinated Notes were issued pursuant to the Indenture among the
Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as
Trustee. The Senior Subordinated Notes mature on May 1, 2003, are limited in
aggregate
 
                                       60
63
 
principal amount to $76,808,000 and bear cash interest at a rate of 7 1/2% per
annum from the date of original issuance until May 1, 1998, and at a rate of
13 1/4% per annum from and including May 1, 1998 until maturity. Interest is
payable semi-annually in arrears on May 1 and November 1.
 
     The Senior Subordinated Notes are redeemable at the option of the Company,
in whole or in part, at any time on or after (i) May 1, 1999 at 107.5% of the
principal amount, (ii) May 1, 2000, at 105.0% of the principal amount, (iii) May
1, 2001, at 102.5% of the principal amount and (iv) May 1, 2002 and thereafter,
at 100.0% of the principal amount, together, in each case, with accrued and
unpaid interest to the redemption date. Notwithstanding the foregoing, the
Company may redeem in the aggregate up to 33 1/3% of the original principal
amount of the Senior Subordinated Notes at any time and from time to time prior
to May 1, 1998 at a redemption price equal to 108% of the Accreted Value of the
Senior Subordinated Notes thereof plus accrued interest to the redemption date
out of the net proceeds of one or more Public Equity Offerings (as defined in
the Indenture), provided, that at least $50 million in aggregate principal
amount of Senior Subordinated Notes remains outstanding immediately after the
occurrence of any such redemption and that any such redemption occurs within 120
days following the closing of any such Public Equity Offering.
 
     The Indenture contains, among others, the following covenants:
 
     Limitation on Additional Indebtedness.  The Company will not, and will not
permit any Restricted Subsidiary of the Company to, directly or indirectly,
incur any Indebtedness (including Acquired Indebtedness as such term is defined
in the Indenture) unless (a) after giving effect to the incurrence of such
Indebtedness and the receipt and application of the proceeds thereof, the ratio
of the Company's total Indebtedness to the Company's EBITDA (determined on a pro
forma basis for the last four fiscal quarters of the Company for which financial
statements are available at the date of determination) is less than 6.75 to 1 if
the Indebtedness is incurred prior to May 1, 1998 and 6.25 to 1 if the
Indebtedness is incurred thereafter; provided, however, that if the Indebtedness
which is the subject of a determination under this provision is Acquired
Indebtedness, or Indebtedness incurred in connection with the simultaneous
acquisition of any Person, business, property or assets, then such ratio shall
be determined by giving effect to (on a pro forma basis, as if the transaction
had occurred at the beginning of the four-quarter period) both the incurrence or
assumption of such Acquired Indebtedness or such other Indebtedness by the
Company and the inclusion in the Company's EBITDA of the EBITDA of the acquired
Person, business, property or assets, and (b) no Default or Event of Default (as
such terms are defined in the Indenture) shall have occurred and be continuing
at the time or immediately after giving effect to the incurrence of such
Indebtedness.
 
     Limitation on Restricted Payments.  Subject to certain exceptions set forth
in the Indenture, the Company will not make, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, make, any Restricted Payment
(as defined in the Indenture), unless:
 
          (a) no Default or Event of Default shall have occurred and be
     continuing at the time of or immediately after giving effect to such
     Restricted Payment;
 
          (b) immediately after giving pro forma effect to such Restricted
     Payment, the Company could incur $1.00 of additional Indebtedness (other
     than Permitted Indebtedness) in compliance with the covenant described
     above under "Limitation on Additional Indebtedness"; and
 
          (c) immediately after giving effect to such Restricted Payment, the
     aggregate of all Restricted Payments declared or made after the Issue Date
     (as defined in the Indenture) does not exceed the sum of (1) 50% of the
     Company's cumulative consolidated net income (or in the event such
     consolidated net income shall be a deficit, minus 100% of such deficit)
     after the Issue Date, plus (2) 100% of the aggregate net proceeds and the
     fair market value of securities or other property received by the Company
     from the issue or sale, after the Issue Date, of capital stock (other than
     Disqualified Capital Stock or Capital Stock of the Company issued to any
     Subsidiary of the Company) of the Company or any Indebtedness or other
     securities of the Company convertible into or exercisable or exchangeable
     for capital stock (other than Disqualified Capital Stock as such term is
     defined in the Indenture) of the Company which has been so converted or
     exercised or exchanged, as the case may be. For purposes of determining
     under this clause (c) the amount expended for Restricted Payments, cash
     distributed shall be valued at the face amount thereof and property other
     than cash shall be valued at its fair market value.
 
                                       61
64
 
                          DESCRIPTION OF CAPITAL STOCK
 
     The Company's authorized capital stock consists of 25,101,886 shares of
Common Stock, of which 21,600,000 shares are Class A Common Stock, $.01 par
value, 439,215 of which are issued and outstanding; and 3,501,886 shares are
Class B Common Stock, $.01 par value, of which 3,501,886 are issued and
outstanding and 100,000 shares of Preferred Stock, of which 10,000 shares of
Series A Preferred Stock are issued and outstanding. In addition, the Company
has reserved for issuance (i) 3,501,886 shares of Class A Common Stock upon the
conversion of the Class B Common Stock, (ii) 597,960 shares of Class A Common
Stock upon the exercise of the warrants and (iii) 951,300 shares of Class A
Common Stock under the 1995 Option Plan (see "Management--Stock Option Plans").
There is no established trading market for the Common Stock.
 
COMMON STOCK
 
     Dividends.  Holders of shares of Common Stock are entitled to receive such
dividends as may be declared by the Company's Board of Directors out of funds
legally available for such purpose. No dividends may be declared or paid in cash
or property on any share of any class of Common Stock, however, unless
simultaneously the same dividend is declared or paid on each share of the other
classes of Common Stock. In the case of any stock dividend, holders of Class A
Common Stock are entitled to receive the same percentage dividend (payable in
shares of Class A Common Stock) as the holders of Class B Common Stock receive
(payable in shares of Class B Common Stock). The payment of dividends is
currently restricted by the Indenture governing the Notes. Under the Indenture,
the Company generally is not permitted to pay cash dividends unless (i) no event
of default under the Indenture exists at the time of payment or immediately
thereafter, (ii) certain ratios regarding the incurrence of additional
indebtedness are satisfied and (iii) the aggregate of all dividends or
distributions do not exceed certain limits set forth in the Indenture.
Additionally, under the Senior Loan Agreement, the Company generally may not pay
dividends. However, if no event of default exists the Company may pay noncash
dividends consisting of its capital stock, subject to certain restrictions.
 
     Voting Rights.  Holders of shares of Common Stock vote as a single class on
all matters submitted to a vote of the stockholders except as otherwise required
by law. Each share of Class A Common Stock is entitled to one vote and each
share of Class B Common Stock is entitled to eight votes on all matters. Under
Delaware law, the affirmative vote of the holders of a majority of the
outstanding shares of any class of Common Stock voting as a separate class is
required to approve, among other things, a change in the designations,
preferences and limitations of the shares of such class of common stock.
 
     Liquidation Rights.  Upon liquidation, dissolution or winding-up of the
Company, the holders of Class A Common Stock are entitled to share ratably with
the holders of Class B Common Stock in all assets available for distribution
after payment in full of all obligations to creditors.
 
     Other Provisions.  Each share of Class B Common Stock is convertible, at
the option of its holder, into one share of Class A Common Stock at any time.
The holders of Common Stock are not entitled to preemptive or subscription
rights. The shares of Common Stock presently outstanding are validly issued,
fully paid and nonassessable. The shares of Common Stock issuable upon exercise
of the Warrants have been reserved and when issued will be validly issued, fully
paid and nonassessable. In any merger, consolidation or business combination,
the consideration to be received per share by holders of Class A Common Stock
must be identical to that received by holders of Class B Common Stock, except
that in any such transaction in which shares of Common Stock are distributed,
such shares may differ as to voting rights to the extent that voting rights
differ among the classes of Common Stock. No class of Common Stock may be
subdivided, consolidated, reclassified or otherwise changed unless concurrently
the other classes of Common Stock are subdivided, consolidated, reclassified or
otherwise changed in the same proportion and in the same manner.
 
PREFERRED STOCK
 
     The Amended and Restated Certificate of Incorporation of the Company
authorizes the Company's Board of Directors to establish series of Preferred
Stock (in an aggregate of 100,000 shares) and to determine,
 
                                       62
65
 
with respect to any series of Preferred Stock, the voting powers, if any, and
such designations, preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions thereof, as
are stated in the resolutions of the Board of Directors providing for such class
or series and as evidenced by a certificate of designation filed pursuant to the
General Corporation Law of the State of Delaware.
 
     In order to finance prospective acquisitions of radio stations and to
provide working capital, in May 1996 the Company entered into a Securities
Purchase Agreement (the "Preferred Stock Purchase Agreement") with CIBC Merchant
Fund, pursuant to which the CIBC Merchant Fund agreed to purchase from the
Company up to an aggregate liquidation value of $12,500,000 of the Series A
Preferred Stock, at such time and in such amounts as requested by the Company
(the "Preferred Stock Facility"), provided that such request be for an aggregate
liquidation value of at least $2,500,000 and be made no later than October 31,
1996. The Company anticipates that all of the outstanding shares of Series A
Preferred Stock will be redeemed by the Company by using proceeds from the
Offering and that the Preferred Stock Facility will not be utilized by the
Company after the consummation of the Offering.
 
WARRANTS
 
     Each warrant to purchase one share of the Company's Class A Common Stock
issued in the Private Offering (each, a "Warrant" and collectively the
"Warrants") entitles the registered holder thereof, subject to and upon
compliance with the provisions thereof and of the Warrant Agreement (the
"Warrant Agreement") between the Company and IBJ Schroder Bank & Trust Company
(the "Warrant Agent"), at such holder's option, prior to May 1, 2000, to
purchase at a price of $.01 per Warrant (the "Exercise Price") from the Company
one share of Class A Common Stock (the "Warrant Shares"). The number of shares
of Class A Common Stock for which a Warrant may be exercised is subject to
adjustment as set forth in the Warrant Agreement.
 
     Holders of Warrants will not be entitled, by virtue of being such holders,
to receive dividends, vote, receive notice of any meetings of stockholders or
otherwise have any right of stockholders of the Company. Each Warrant may only
be exercised in whole. Warrants may be exercised after the occurrence of an
Exercise Event which is defined in the Warrant Agreement as the date of the
earliest to occur of: (1) a Change of Control (as defined in the Indenture)
shall have occurred or (2) seven days prior to the date on which the Company
files a registration statement with respect to a Public Equity Offering (as
defined in the Warrant Agreement) or (3) the date on which any class of equity
securities of the Company is listed on a national securities exchange or
authorized for quotation on the National Association of Securities Dealers
Automated Quotation System or (4) May 1, 1999. The Offering will qualify as a
Public Equity Offering and therefore the Warrants are presently exercisable. The
Exercisability Date may be deferred if FCC approval is required for issuance of
the Class A Common Stock upon exercise of the Warrants. In no event will the
Warrants be exercisable for less than one full year following any deferral
required to obtain FCC approval.
 
     In connection with the Preferred Stock Facility, the Company issued to the
CIBC Merchant Fund a warrant to purchase 54,360 shares of the Company's
outstanding Class A Common Stock which is immediately exercisable (the
"Preferred Facility Warrant"). The terms of the Preferred Facility Warrant are
substantially identical to the terms of the Warrants (as hereinafter defined)
issued in connection with the Senior Subordinated Notes. The Preferred Facility
Warrant contains registration rights and tag-along rights which are
substantially similar to the registration rights and tag-along rights of the
holders of the Warrants. See "Description of Capital Stock--Registration and
Tag-Along Rights" and "Description of Capital Stock-- Preferred Stock."
 
REGISTRATION AND TAG-ALONG RIGHTS
 
     The Company, the Control Stockholders (as defined below) and the holders of
the Warrants entered into a Registration Rights and Stockholders' Agreement (the
"Common Stock Registration Rights Agreement") with respect to the shares of
Class A Common Stock issuable upon exercise of the Warrants ("Registrable
Securities"). The Common Stock Registration Rights Agreement provides that the
purchasers and persons to
 
                                       63
66
 
whom Registrable Securities are transferred (collectively, the "Registrable
Holders") will have the registration rights and other rights and obligations
with respect to the Registrable Securities described below.
 
     Registration Rights.  The Registrable Holders of at least 25% of the
outstanding Registrable Securities are currently entitled to require the Company
to effect up to two registrations under the Act of such Registrable Securities
(each a "Demand Registration"), subject to certain limitations. In lieu of
filing such registration statement the Company may make an offer to repurchase
all of the Registrable Securities at a price per share equal to the fair market
value per share of Common Stock (without any discount for lack of liquidity, the
amount of Common Stock proposed to be sold or the fact that the shares of Common
Stock held by the Registrable Holders may represent a minority interest in a
private company) determined by a nationally recognized investment banking firm
selected by the Company.
 
     The Registrable Holders will also have the right to include such
Registrable Securities in any registration statement, subject to certain
exceptions, under the Act filed by the Company for its own account or for the
account of any of its securityholders for sale on the same terms and conditions
as the securities of the Company or any other selling securityholder included
therein.
 
     Tag-Along Rights.  In the event of any proposed transfer, sale or other
disposition (collectively, a "Transfer") of Common Stock by any of the Control
Stockholders (as defined below) in any transaction, or a series of related
transactions involving shares of Common Stock aggregating at least 15% of the
shares of Common Stock then owned by the Control Stockholders to a person (such
other person being hereinafter referred to as the "proposed purchaser"), other
than pursuant to an Exempt Transfer (as defined below), each of the Registrable
Holders shall have the right to require the proposed purchaser to purchase from
each of them up to a percentage of the number of Warrants or Warrant Shares
owned by such holder equalling the percentage derived by dividing the total
number of shares of Common Stock the Control Stockholders propose to transfer by
the total number of shares of Common Stock owned by such Control Stockholder.
 
     In the event that the proposed purchaser does not purchase Warrants and/or
Warrant Shares from the Registrable Holders on the same terms and conditions as
purchased from the Control Stockholders, then the Control Stockholders making
such Transfer shall purchase such Warrants and/or Warrant Shares if the Transfer
occurs. It is anticipated that the tag-along rights will terminate in accordance
with their terms upon the consummation of the Offering since after giving effect
to the Offering, it is expected that at least 25% of the Company's Common Stock
on a fully-diluted basis will be held by persons other than Control Stockholders
or Mr. Friedman.
 
     As used herein, the term "Exempt Transfer" shall mean a transfer by a
Control Stockholder to another Control Stockholder. As used herein, the term
"Control Stockholder" shall mean (i) the heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of Carter Burden, to the extent
such Persons beneficially own shares of Common Stock as a result of a Transfer
from Carter Burden after the date hereof (other than pursuant to the WAMBCO
Option) and (ii) a trust the beneficiaries of which include only Carter Burden
and his spouse and lineal descendants.
 
                                       64
67
 
STOCK TRANSFER AND WARRANT AGENT
 
     The Company's registrar and transfer agent for the Common Stock is
               and the Company's warrant agent for the Warrants and the
Preferred Facility Warrant is IBJ Schroder Bank & Trust Company.
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Prior to the Offering, there has been no public market for the Class A
Common Stock of the Company. Upon completion of the Offering, 4,542,554 shares
of Class A Common Stock will be issued and outstanding and 3,573,018 shares will
be issuable upon exercise of outstanding stock options, warrants and shares of
Class B Common Stock. See "Description of Capital Stock--Common Stock." The
shares of Class A Common Stock sold in the Offering (assuming no exercise of the
Underwriters' over-allotment option) will be freely tradeable in the public
market without restriction under the Securities Act, except that any shares
purchased by "affiliates" of the Company (as defined in Rule 144 promulgated
under the Securities Act ("Rule 144")) may generally only be sold in compliance
with the applicable provisions of Rule 144.
 
     The remaining outstanding shares of Common Stock are deemed "restricted
securities" within the meaning of Rule 144 in that they were originally issued
and sold by the Company in private transactions in reliance upon exemptions from
the Securities Act. The Company, its officers, directors, the Selling
Shareholders and certain other stockholders, who collectively are the beneficial
holders of an aggregate of           shares of Common Stock, have agreed with
the Underwriters not to, directly or indirectly, offer, sell, contract to sell,
grant any option to purchase or otherwise dispose of, without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), any
shares of Common Stock or any securities convertible into, or exercisable or
exchangeable for, or warrants, options or rights to purchase or acquire Common
Stock or in any other manner transfer all or a portion of the economic
consequences associated with the ownership of any Common Stock, or enter into
any agreement to do any of the foregoing, for a period of 180 days after the
date of this Prospectus. Upon expiration of such 180 day period, such holders
will in general be entitled to dispose of their shares (including the shares
underlying such options and warrants), although the shares of Common Stock held
by affiliates of the Company will continue to be subject to the volume and other
restrictions of Rule 144 under the Securities Act.
 
     In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate of the Company, who has
beneficially owned restricted securities for at least two years from the later
of the date such restricted securities were acquired from the Company or the
date they were acquired from an affiliate of the Company, is entitled to sell,
within any three-month period, a number of shares that does not exceed the
greater of (i) 1% of the then outstanding shares of Class A Common Stock or (ii)
the average weekly trading volume of the Class A Common Stock in the
over-the-counter market during the four calendar weeks preceding the date on
which notice of such sale was filed under Rule 144, subject to certain other
limitations and restrictions. In addition, a person who is not deemed to have
been an affiliate of the Company at any time during the 90 days preceding a sale
by such person, and who has beneficially owned the shares proposed to be sold
for at least three years (including the holding period of any prior owner other
than an affiliate), would be entitled to sell such shares under Rule 144(k)
without regard to any of the restrictions described above.
 
     The Company has granted registration rights to certain holders of
securities and other rights convertible into Class A Common Stock. See
"Capitalization" and "Description of Capital Stock." Registration of such shares
under the Securities Act would result in such shares becoming freely tradeable
without restriction under the Securities Act (except for shares held by
affiliates of the Company) immediately upon the effectiveness of such
registration. Sales of substantial amounts of Class A Common Stock in the public
market could adversely affect prevailing market prices and could impair the
Company's future ability to raise capital through the sale of its equity
securities.
 
                                       65
68
 
                                  UNDERWRITING
 
     The Underwriters named below (the "Underwriters"), for whom DLJ, CS First
Boston Corporation and CIBC Wood Gundy Securities Corp. ("CIBC Wood Gundy") are
acting as representatives (the "Representatives"), have severally agreed,
subject to the terms and conditions of an underwriting agreement (the
"Underwriting Agreement"), to purchase from the Company and the Selling
Shareholders the respective number of shares of Class A Common Stock set forth
opposite their names below:
NUMBER OF
                                   UNDERWRITERS                                  SHARES
Donaldson, Lufkin & Jenrette Securities Corporation.......................
    CS First Boston Corporation...............................................
    CIBC Wood Gundy Securities Corp. .........................................
                                                                                  -------
              Total...........................................................  4,300,000
                                                                                  =======
The Underwriting Agreement provides that the obligation of the several
Underwriters to purchase and accept delivery of the shares of Class A Common
Stock offered hereby is subject to the approval of certain legal matters by
counsel and to certain other conditions. If any of the shares of Class A Common
Stock are purchased by the Underwriters pursuant to the Underwriting Agreement,
all such shares of Class A Common Stock (other than the shares of Class A Common
Stock covered by the overallotment option described below) must be so purchased.
 
     The Representatives have advised the Company and the Selling Shareholders
that the Underwriters propose to offer the Class A Common Stock to the public
initially at the price to the public set forth on the cover page of this
Prospectus and to certain dealers (who may include the Underwriters) at such
price less a concession not to exceed $     per share. The Underwriters may
allow, and such dealers may reallow, discounts not in excess of $          per
share to any other Underwriter and certain other dealers. After the public
offering of the shares of Class A Common Stock, the public offering price and
other selling terms may be changed by the Representatives.
 
     The Company and the Estate of Carter Burden have granted to the
Underwriters options to purchase up to an aggregate of 645,000 additional shares
of Class A Common Stock, at the initial public offering price less underwriting
discounts and commissions, solely to cover overallotments. Such options may be
exercised at any time until 30 days after the date of this Prospectus. To the
extent that the Underwriters exercise such option, each of the Underwriters will
be committed, subject to certain conditions, to purchase a number of option
shares proportionate to such Underwriter's initial commitment as indicated in
the table above.
 
     Of the shares of Class A Common Stock offered hereby,           have been
reserved (the "Reserved Shares") for sale to certain individuals, including
employees of the Company, family members of such employees and other persons
associated with the Company. The Reserved Shares will be sold at a price per
share equal to the price to the public set forth on the cover page of this
Prospectus. The number of shares available to the general public will be reduced
to the extent those persons purchase Reserved Shares. Any shares not so
purchased will be offered in the Offering at the price to the public set forth
on the cover page of this Prospectus.
 
     Prior to the Offering, there has been no established trading market for the
Class A Common Stock. The initial price to the public for the shares of Class A
Common Stock offered hereby will be determined by negotiation among the Company,
the Selling Shareholders and the Representatives. The factors considered in
determining the initial price to the public include the history of and the
prospects for the industry in which the Company competes, the past and present
operations of the Company, the historical results of operations of the Company,
the prospects for future earnings of the Company, the recent market prices of
securities of generally comparable companies and the general condition of the
securities markets at the time of the Offering.
 
                                       66
69
 
     The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.
 
     Application has been made to have the shares of Class A Common Stock
offered hereby approved for quotation on the NASDAQ National Market System under
the symbol "CMIA."
 
     The Company, its officers, directors and the Selling Shareholders, who
collectively are the beneficial owners of an aggregate of        shares of
Common Stock, have agreed with the Underwriters not to, directly or indirectly,
issue, offer, sell, contract to sell, grant any option to purchase or otherwise
dispose of, without the prior written consent of DLJ, any shares of Common Stock
or any securities convertible into or exercisable or exchangeable for, or
warrants, options or rights to purchase or acquire, Common Stock or in any other
manner transfer all or a portion of the economic consequences associated with
the ownership of any Common Stock, or enter into any agreement to do any of the
foregoing, for a period of 180 days after the date of this Prospectus.
 
     From time to time CIBC Wood Gundy (or its predecessor firm The Argosy
Securities Group, L.P. ("Argosy")) has performed investment banking services for
the Company. Argosy acted as placement agent in respect of the Private Offering,
for which services Argosy received customary fees. In May 1996 the Company
entered into the Preferred Stock Purchase Agreement with the CIBC Merchant Fund,
an affiliate of CIBC Wood Gundy. In connection with the Preferred Stock Purchase
Agreement, the CIBC Merchant Fund received the Preferred Facility Warrant, and
CIBC Wood Gundy will receive a preferred stock advisory fee of $210,000 at the
closing of the Offering.
 
     The CIBC Merchant Fund, an affiliate of CIBC Wood Gundy, will receive more
than 10% of the net proceeds from the Offering as a result of the use of
proceeds by the Company to redeem all of the outstanding shares of the Company's
Series A Preferred Stock. See "Use of Proceeds." As a result, the Offering is
being conducted in accordance with Schedule E to the Bylaws of the National
Association of Securities Dealers, Inc. (the "NASD"), which provides that, among
other things, when more than 10% of the net proceeds of a public offering of
equity securities are to be paid to a member of the NASD or an affiliate of a
member, the price at which such equity securities are to be distributed to the
public can be no higher than that recommended by a "qualified independent
underwriter" meeting certain standards ("QIU"). In accordance with this
requirement, DLJ has assumed the responsibilities of acting as QIU and will
recommend a maximum price to the public in compliance with the requirements of
Schedule E. In connection with the Offering, DLJ is performing due diligence
investigations and reviewing and participating in the preparation of this
Prospectus and the Registration Statement of which this Prospectus forms a part.
As compensation for the services of DLJ as QIU, the Company has agreed to pay
DLJ $5,000.
 
     Pursuant to the provisions of Schedule E, NASD members may not execute
transactions in the shares of Class A Common Stock in discretionary accounts
without the prior written approval of the customer.
 
                                 LEGAL MATTERS
 
     Certain legal matters with respect to the validity of the issuance of the
Class A Common Stock will be passed upon for the Company by Pryor, Cashman,
Sherman & Flynn, New York, New York. Certain legal matters will be passed upon
for the Underwriters by Skadden, Arps, Slate, Meagher & Flom, New York, New
York.
 
                                    EXPERTS
 
     The consolidated financial statements of the Company at December 31, 1995
and 1994, and for each of the two years in the period ended December 31, 1995
and the financial statements of Media VI (the 1996 Treasure Coast Acquisition)
at December 31, 1995, and for the year ended December 31, 1995, each appearing
in this Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon, appearing
elsewhere herein and in the Registration
 
                                       67
70
 
Statement, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
 
     The consolidated statement of operations, cash flows and stockholders'
deficit for the year ended December 31, 1993 of the Company appearing in this
Prospectus and Registration Statement have been audited by Weeks DeGraw &
Company, P.A., independent auditors, given upon the authority of such firm as
experts in accounting and auditing.
 
     The financial statements of Danbury Broadcasting, Inc. (the Danbury
Acquisitions) at June 30, 1995 and 1994 and for the two years in the period
ended June 30, 1995, appearing in this Prospectus and Registration Statement
have been audited by Paneth, Haber & Zimmerman LLP, independent auditors, as set
forth in their report thereon, appearing elsewhere herein and in the
Registration Statement, and are included in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
 
     The financial statements of Q Broadcasting, Inc. (the Stamford Acquisition)
at September 30, 1995 and for the three years in the period ended September 30,
1995, appearing in this Prospectus and Registration Statement have been audited
by Holtz Rubenstein & Co., LLP, independent auditors, as set forth in their
report thereon, appearing elsewhere herein and in the Registration Statement,
and are included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
 
     The financial statements of Adventure Communications, Inc. (the Huntington
Acquisitions) at December 31, 1995 and for the three years in the period ended
December 31, 1995, appearing in this Prospectus and Registration Statement have
been audited by Brown, Edwards & Co., LLP, independent auditors, as set forth in
their report thereon, appearing elsewhere herein and in the Registration
Statement, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
 
                             AVAILABLE INFORMATION
 
     The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act with
respect to the shares of Class A Common Stock offered hereby. This Prospectus,
which constitutes a part of the Registration Statement, omits certain
information contained in the Registration Statement, and reference is made to
the Registration Statement and the exhibits and schedules thereto for further
information with respect to the Company and the shares of Class A Common Stock
offered hereby. Statements contained herein concerning the provisions of any
documents are not necessarily complete, and in each instance reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or previously filed with the Commission. Each such statement is qualified in its
entirety by such reference. The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, and in accordance therewith, files reports, proxy
and information statements, and other information with the Commission. The
Registration Statement, including exhibits and schedules filed therewith, and
the Company's reports, proxy and information statements, and other information
filed by the Company with the Commission may be inspected without charge at the
Public Reference Room of the Commission, 450 Fifth Street, N.W., Room 1024, Room
1024, Washington, D.C. 20549 or at its Regional Offices located at Room 1400,
500 West Madison Street, Chicago, Illinois 60661 and 7 World Trade Center, New
York, New York 10048. Copies of such material may be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and its public reference facilities in New York, New
York and Chicago, Illinois at prescribed rates.
 
                                       68
71
 
                         INDEX TO FINANCIAL STATEMENTS
PAGE
                                                                                        ----
COMMODORE MEDIA, INC. AND SUBSIDIARIES:
Reports of Independent Auditors.......................................................  F-2
Consolidated Balance Sheets at December 31, 1994 and 1995 and March 31, 1996
  (unaudited).........................................................................  F-4
Consolidated Statements of Operations for the years ended December 31, 1993, 1994 and
  1995 and for the three months ended March 26, 1995 (unaudited) and March 31, 1996
  (unaudited).........................................................................  F-5
Consolidated Statements of Stockholders' Deficit for the years ended December 31,
  1993, 1994 and 1995 and for the three months ended March 31, 1996 (unaudited).......  F-6
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994 and
  1995 and for the three months ended March 26, 1995 (unaudited) and March 31, 1996
  (unaudited).........................................................................  F-7
Notes to Consolidated Financial Statements............................................  F-9
MEDIA VI:
Report of Independent Auditors........................................................  F-23
Balance Sheets at December 31, 1995 and March 31, 1996 (unaudited)....................  F-24
Statements of Operations for the year ended December 31, 1995 and for the three months
  ended March 31, 1995 (unaudited) and 1996 (unaudited)...............................  F-25
Statements of Partners' Equity for the year ended December 31, 1995 and for the three
  months ended March 31, 1995 (unaudited) and 1996 (unaudited)........................  F-26
Statements of Cash Flows for the year ended December 31, 1995 and for the three months
  ended March 31, 1995 (unaudited) and 1996 (unaudited)...............................  F-27
Notes to Financial Statements.........................................................  F-28
ADVENTURE COMMUNICATIONS--HUNTINGTON:
  (Division of Adventure Communications, Inc.)
Independent Auditors' Report..........................................................  F-33
Balance Sheets at December 31, 1994 and 1995 and March 31, 1996 (unaudited)...........  F-34
Statements of Operations for the years ended December 31, 1993, 1994 and 1995, and for
  the three months ended March 31, 1995 (unaudited) and 1996 (unaudited)..............  F-35
Statements of Divisional Equity (Deficit) for the years ended December 31, 1993, 1994
  and 1995 and for the three months ended March 31, 1996 (unaudited)..................  F-36
Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995, and for
  the three months ended March 31, 1995 (unaudited) and 1996 (unaudited)..............  F-37
Notes to Financial Statements.........................................................  F-38
DANBURY BROADCASTING, INC.:
Report of Independent Auditors........................................................  F-43
Balance Sheets at June 30, 1994 and 1995 and March 26, 1996 (unaudited)...............  F-44
Statements of Operations and Accumulated Deficit for the years ended June 30, 1994 and
  1995, for the nine months ended March 31, 1995 (unaudited) and for the period July
  1, 1995 through March 26, 1996 (unaudited)..........................................  F-45
Statements of Cash Flows for the years ended June 30, 1994 and 1995, for the nine
  months ended March 31, 1995 (unaudited) and for the period July 1, 1995 through
  March 26, 1996 (unaudited)..........................................................  F-46
Notes to Financial Statements.........................................................  F-47
Q BROADCASTING, INC.:
Independent Auditors' Report..........................................................  F-53
Balance Sheets at September 30, 1994 and 1995 and March 31, 1996 (unaudited)..........  F-54
Statements of Operations and Deficit for the years ended September 30, 1993, 1994 and
  1995, and for the six months ended March 31, 1995 (unaudited) and 1996
  (unaudited).........................................................................  F-55
Statements of Cash Flows for the years ended September 30, 1993, 1994 and 1995, and
  for the six months ended March 31, 1995 (unaudited) and 1996 (unaudited)............  F-56
Notes to Financial Statements.........................................................  F-57
F-1
72
 
                         REPORT OF INDEPENDENT AUDITORS
 
To the Board of Directors
Commodore Media, Inc.
 
     We have audited the accompanying consolidated balance sheets of Commodore
Media, Inc. and Subsidiaries as of December 31, 1995 and 1994 and the related
consolidated statements of operations, stockholders' deficit and cash flows for
each of the two years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. These 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Commodore Media, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
 
                                          ERNST & YOUNG LLP
New York, New York
February 28, 1996, except for Note 14,
  as to which the date is May 16, 1996
 
- --------------------------------------------------------------------------------
 
     The foregoing report is in the form that will be signed upon the completion
of the 7.2:1 stock split on the Company's Common Stock as described in Note 14
to the financial statements.
 
                                          ERNST & YOUNG LLP
New York, New York
May 16, 1996
 
                                       F-2
73
 
                         REPORT OF INDEPENDENT AUDITORS
 
To the Board of Directors
Commodore Media, Inc.
 
     We have audited the accompanying consolidated statements of operations,
stockholders' deficit and cash flows of Commodore Media, Inc. and Subsidiaries
for the year ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
 
     We conducted our audit in accordance with generally accepted auditing
standards. These 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 audit provides a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Commodore
Media, Inc. and Subsidiaries for the year ended December 31, 1993, in conformity
with generally accepted accounting principles.
 
                                          WEEKS DEGRAW & COMPANY, P.A.
 
Edison, New Jersey
March 4, 1994
  (except for Note 14, as to which the date is May 16, 1996)
 
- --------------------------------------------------------------------------------
 
     The foregoing report is in the form that will be signed upon the completion
of the 7.2:1 stock split on the Company's Common Stock as described in Note 14
to the financial statements.
 
                                          WEEKS DEGRAW & COMPANY, P.A.
 
Edison, New Jersey
May 16, 1996
 
                                       F-3
74
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
                                                             -----------------------------      MARCH 31,
                                                                 1994             1995             1996
                                                             ------------     ------------     ------------
                                                                                               (unaudited)
ASSETS
Current assets:
  Cash and short-term cash investments.....................  $  2,042,249     $ 10,891,489     $  5,086,725
  Accounts receivable, less allowance of $532,231 and
    $700,336 in 1994 and 1995..............................     4,768,905        6,131,447        4,908,411
  Prepaid expenses and other current assets................       526,078          285,412          452,451
                                                             ------------     ------------     ------------
Total current assets.......................................     7,337,232       17,308,348       10,447,587
Property, plant and equipment, net.........................     7,849,037        8,080,043       10,015,567
FCC licenses, net of accumulated amortization of $3,141,761
  in 1994 and $3,677,841 in 1995...........................    17,297,619       18,769,172       29,628,878
Goodwill net of accumulated amortization of $182,258 in
  1994 and $234,327 in 1995................................     1,750,522        1,998,453        5,584,498
Other intangible assets....................................     1,553,574        1,761,306        1,934,213
Deferred charges, net......................................       439,786        3,910,582        4,184,346
Deposits and other assets..................................        54,946          982,876        1,415,769
                                                             ------------     ------------     ------------
Total assets...............................................  $ 36,282,716     $ 52,810,780     $ 63,210,858
                                                             ============     ============     ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable and accrued expenses....................  $  1,695,583     $  1,774,256     $  1,546,938
  Accrued compensation.....................................     1,261,064          815,162          415,972
  Accrued interest.........................................       377,843          960,368        2,412,728
  Accrued income taxes.....................................       293,975           16,840           10,603
  Current maturities of long-term debt.....................     2,908,544           11,977           11,977
  Subordinated note payable to affiliate...................       685,000               --               --
                                                             ------------     ------------     ------------
Total current liabilities..................................     7,222,009        3,578,603        4,398,218
Long-term debt.............................................    34,112,858       65,142,763       74,465,671
Noncurrent compensation....................................     2,204,018        1,482,275        1,463,345
Subordinated note payable to affiliate.....................     1,368,000               --               --
8.87% cumulative redeemable preferred stock, $1 par value,
  20,000 shares authorized, 10,000 shares issued and
  outstanding in 1994......................................     8,413,660               --               --
Redeemable warrant (Note 5)................................     1,000,000               --               --
Note payable, officer......................................            --        1,161,706        1,174,617
Deferred income taxes......................................            --               --        1,700,000
Stockholders' deficit:
  Class A Common Stock, $0.01 par value; 21,600,000 shares
    authorized and issued: 858,327 shares in 1994 and
    1,054,988 shares in 1995...............................         8,583           10,550           10,550
  Class B Common Stock, convertible into Class A Common
    Stock, $0.01 par value; 3,501,886 shares authorized and
    issued.................................................        35,019           35,019           35,019
  Additional paid-in capital...............................    21,794,986       23,540,944       23,540,944
  Accumulated deficit......................................   (39,875,417)     (42,115,080)     (43,551,506)
                                                             ------------     ------------     ------------
                                                              (18,036,829)     (18,528,567)     (19,964,993)
  Less treasury stock, at cost, 612,598 shares in 1994 and
    615,773 shares in 1995.................................         1,000           26,000           26,000
                                                             ------------     ------------     ------------
Total stockholders' deficit................................   (18,037,829)     (18,554,567)     (19,990,993)
                                                             ------------     ------------     ------------
Total liabilities and stockholders' deficit................  $ 36,282,716     $ 52,810,780     $ 63,210,858
                                                             ============     ============     ============
See accompanying notes.
 
                                       F-4
75
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31,              THREE MONTHS ENDED
                                   ---------------------------------------   ------------------------
                                      1993          1994          1995       MARCH 26,     MARCH 31,
                                   -----------   -----------   -----------      1995         1996
                                                                             ----------   -----------
                                                                             (unaudited)  (unaudited)
Total revenue..................... $21,643,059   $28,686,381   $33,652,677   $6,507,658   $ 8,047,568
Less agency commissions...........  (1,845,502)   (2,461,478)   (2,857,912)    (540,271)     (631,887)
                                   -----------   -----------   -----------   ----------   -----------
Net revenue.......................  19,797,557    26,224,903    30,794,765    5,967,387     7,415,681
                                   -----------   -----------   -----------   ----------   -----------
Operating expenses:
  Programming, technical and
     news.........................   4,028,677     4,601,374     5,365,686    1,090,881     1,513,468
  Sales and promotion.............   5,289,311     7,325,549     8,796,481    1,867,684     2,421,153
  General and administrative......   4,190,735     4,556,515     4,870,463    1,210,206     1,440,612
  Corporate expenses..............   2,530,703     2,109,741     2,051,181      460,738       465,684
  Depreciation and amortization...   1,129,379     2,145,201     1,926,250      436,991       480,210
  Long-term incentive
     compensation.................          --     2,180,000     2,006,550      584,935            --
  Separation compensation.........   1,496,000            --            --           --            --
                                   -----------   -----------   -----------   ----------   -----------
  Operating income................   1,132,752     3,306,523     5,778,154      315,952     1,094,554
Interest expense..................   4,217,697     2,932,459     7,420,617      829,680     2,451,638
Interest income...................          --           266       420,659           --       115,252
Other expenses, net...............     657,861       601,443       433,704       56,666       167,594
                                   -----------   -----------   -----------   ----------   -----------
Loss before provision for income
  taxes and extraordinary loss....  (3,742,806)     (227,113)   (1,655,508)    (570,394)   (1,409,426)
Provision for income taxes........      39,503       300,000       140,634       15,000        27,000
                                   -----------   -----------   -----------   ----------   -----------
Loss before extraordinary loss....  (3,782,309)     (527,113)   (1,796,142)    (585,394)   (1,436,426)
Extraordinary loss on
  extinguishment of debt (Note
  5)..............................          --            --      (443,521)          --            --
                                   -----------   -----------   -----------   ----------   -----------
Net loss..........................  (3,782,309)     (527,113)   (2,239,663)    (585,394)   (1,436,426)
Preferred Stock dividend..........          --       690,660       252,175      208,000            --
                                   -----------   -----------   -----------   ----------   -----------
Net loss for common
  shareholders.................... $(3,782,309)  $(1,217,773)  $(2,491,838)  $ (793,394)  $(1,436,426)
                                   ===========   ===========   ===========   ==========   ===========
Loss per share:
  Before extraordinary item....... $     (1.88)  $      (.32)  $      (.53)  $     (.21)  $      (.36)
  Extraordinary item..............          --            --          (.11)          --            --
                                   -----------   -----------   -----------   ----------   -----------
  Loss per share.................. $     (1.88)  $      (.32)  $      (.64)  $     (.21)  $      (.36)
                                   ===========   ===========   ===========   ==========   ===========
Weighted average common shares
  outstanding.....................   2,013,100     3,762,700     3,892,300    3,755,500     3,949,900
                                   ===========   ===========   ===========   ==========   ===========
See accompanying notes.
 
                                       F-5
76
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
COMMON STOCK
                                                         PAR VALUE       ADDITIONAL                                  TOTAL
                                        PREFERRED    -----------------     PAID-IN     ACCUMULATED    TREASURY   STOCKHOLDERS'
                                          STOCK      CLASS A   CLASS B     CAPITAL       DEFICIT       STOCK        DEFICIT
                                       -----------   -------   -------   -----------   ------------   --------   -------------
BALANCE AT DECEMBER 31, 1992, AS
  RESTATED...........................  $ 5,799,686   $8,583    $17,409   $   (25,092)  $(34,565,995)  $ (1,000)  $(28,766,409)
Sale of common stock.................           --       --     8,085      2,491,915            --          --      2,500,000
Conversion of preferred stock to
  common stock.......................   (3,300,000)      --     9,525      3,290,475            --          --
Contribution of loans and accrued
  interest...........................           --       --        --     14,228,662            --          --     14,228,662
Contribution of preferred stock......   (2,499,686)      --        --      2,499,686            --          --             --
Loss for the year....................           --       --        --             --     (3,782,309)        --     (3,782,309)
                                       -----------   ------    ------    -----------   ------------   --------   ------------
BALANCE AT DECEMBER 31, 1993.........           --    8,583    35,019     22,485,646    (38,348,304)    (1,000)   (15,820,056)
Cumulative dividends on redeemable
  preferred stock....................           --       --        --       (690,660)           --          --       (690,660)
Adjustment to carrying value of
  redeemable warrant.................           --       --        --             --     (1,000,000)        --     (1,000,000)
Loss for the year....................           --       --        --             --       (527,113)        --       (527,113)
                                       -----------   ------    ------    -----------   ------------   --------   ------------
BALANCE AT DECEMBER 31, 1994.........           --    8,583    35,019     21,794,986    (39,875,417)    (1,000)   (18,037,829)
Cumulative dividends on redeemable
  preferred stock....................           --       --        --       (252,175)           --          --       (252,175)
Allocation of net proceeds of debt
  offering to warrants...............           --       --        --      2,000,000            --          --      2,000,000
Repurchase of common stock...........           --       --        --             --            --     (25,000)       (25,000)
Exercise of warrants.................           --    1,967        --         (1,867)           --          --            100
Loss for the year....................           --       --        --             --     (2,239,663)        --     (2,239,663)
                                       -----------   ------    ------    -----------   ------------   --------   ------------
BALANCE AT DECEMBER 31, 1995.........           --   10,550    35,019     23,540,944    (42,115,080)   (26,000)   (18,554,567)
                                       -----------   ------    ------    -----------   ------------   --------   ------------
Net loss for the period
  (unaudited)........................           --       --        --             --     (1,436,426)        --     (1,436,426)
                                       -----------   ------    ------    -----------   ------------   --------   ------------
BALANCE AT MARCH 31, 1996
  (unaudited)........................  $        --   $10,550   $35,019   $23,540,944   $(43,551,506)  $(26,000)  $(19,990,993)
                                       ===========   ======    ======    ===========   ============   ========   ============
See accompanying notes.
 
                                       F-6
77
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31,                THREE MONTHS ENDED
                                          ----------------------------------------   --------------------------
                                              1993          1994          1995        MARCH 26,
                                          ------------   -----------   -----------      1995
                                                                                     -----------
                                                                                     (unaudited)    MARCH 31,
                                                                                                       1996
                                                                                                   ------------
                                                                                                   (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss................................  $ (3,782,309)  $  (527,113)  $(2,239,663)  $  (585,394)  $ (1,436,426)
Adjustments to reconcile net loss to net
  cash provided by operating activities:
  Loss on extinguishment of debt........            --            --       443,521            --             --
  Depreciation and amortization.........     1,277,859     2,365,111     2,311,162       491,964        639,180
  Noncash interest......................            --            --     2,288,917            --        839,274
  Long-term incentive compensation......            --     2,180,000        79,000            --             --
  Noncash settlement compensation.......     1,001,000            --            --            --             --
  Provision for uncollectible accounts
    and notes receivable................       825,129       468,155       556,137       177,208        104,981
  (Gain) loss on disposition of
    assets..............................        (8,115)      335,736         9,819            --             --
  Net barter income.....................      (123,310)     (122,163)     (184,300)      (15,292)       (44,864)
  Changes in assets and liabilities, net
    of amounts acquired:
    Increase in accounts receivable.....      (958,612)   (1,509,195)   (1,847,015)      416,863      1,137,320
    Decrease (increase) in prepaid
      expenses and other current
      assets............................       300,824      (267,196)      (88,787)      (93,240)      (153,096)
    Increase (decrease) in accounts
      payable and accrued expenses......       336,812       326,251      (158,855)     (134,166)      (159,141)
    Increase (decrease) in accrued
      compensation......................            --       197,881      (230,645)      139,867       (457,120)
    Increase in accrued interest........     1,586,211       351,639       582,525      (128,738)     1,452,360
    Increase (decrease) in accrued
      income taxes......................        21,889       261,541      (277,135)     (209,440)       (31,908)
                                          ------------   -----------   -----------    ----------   ------------
Total adjustments.......................     4,259,687     4,587,760     3,484,344       645,026      3,326,986
                                          ------------   -----------   -----------    ----------   ------------
Net cash provided by operating
  activities............................       477,378     4,060,647     1,244,681        59,632      1,890,560
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from redemption of note........            --       405,000            --            --             --
Proceeds from sale of property, plant
  and equipment.........................        11,332       398,018            --            --             --
Repayment of loan by stockholder........            --            --       182,988            --             --
Purchase of property, plant and
  equipment.............................      (333,149)     (623,414)     (320,980)      (42,030)      (124,192)
Purchase of station assets..............    (9,375,000)           --    (3,100,000)           --    (14,400,000)
Deferred acquisition costs incurred.....      (245,346)     (172,558)     (417,020)           --       (290,766)
Deposits on pending acquisitions........            --            --      (525,000)     (150,000)      (915,000)
Loans to stockholders and employees.....       (60,000)      (57,500)     (315,863)      (65,488)            --
Other investing activities, net.........       (10,705)           --        87,528       (12,646)       (68,177)
                                          ------------   -----------   -----------    ----------   ------------
Net cash used in investing activities...   (10,012,868)      (50,454)   (4,408,347)     (270,164)   (15,798,135)
F-7
78
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
               CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
YEAR ENDED DECEMBER 31,                THREE MONTHS ENDED
                                              1993          1994          1995        MARCH 26,
                                          ------------   -----------   -----------      1995
                                                                                     ----------
                                                                                     (unaudited)    MARCH 31,
                                                                                                       1996
                                                                                                   ------------
                                                                                                   (unaudited)
CASH FLOWS FROM FINANCING ACTIVITIES
Gross proceeds from issuance of Senior
  Subordinated Notes and warrants.......  $         --   $        --   $64,956,422            --             --
Proceeds from stockholder loans.........       300,000            --            --            --             --
Proceeds from borrowing.................     7,900,000            --            --            --   $  8,500,000
Proceeds from issuance of common
  stock.................................     2,500,000            --           100            --             --
Repayment of amounts borrowed...........    (1,200,000)   (2,738,166)  (39,014,833)  $  (333,333)            --
Payment of financing related costs......      (110,000)     (104,245)   (4,226,762)           --             --
Payment of deferred debt issuance
  costs.................................            --            --            --      (224,101)      (393,734)
Redemption of preferred stock...........            --            --    (8,665,835)           --             --
Purchase of redeemable warrant..........            --            --    (1,000,000)   (1,000,000)            --
Repurchase of common stock..............            --            --       (25,000)      (25,000)            --
Principal payments on capital leases....       (12,817)      (12,389)      (11,186)       (1,463)        (3,455)
                                          ------------   -----------   -----------    ----------   ------------
Net cash provided by (used in) financing
  activities............................     9,377,183    (2,854,800)   12,012,906    (1,583,897)     8,102,811
                                          ------------   -----------   -----------    ----------   ------------
Net (decrease) increase in cash and
  short-term cash investments...........      (158,307)    1,155,393     8,849,240    (1,794,429)    (5,804,764)
Cash and short-term cash investments at
  beginning of year.....................     1,045,163       886,856     2,042,249     2,042,249     10,891,489
                                          ------------   -----------   -----------    ----------   ------------
  Cash and short-term cash investments
    at end of year......................  $    886,856   $ 2,042,249   $10,891,489   $   247,820   $  5,086,725
                                          ============   ===========   ===========    ==========   ============
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash paid for interest..................  $  2,631,484   $ 2,580,522   $ 4,474,789   $   958,418   $     46,738
Cash paid for income taxes..............        17,915        38,209       417,769       224,440         58,908
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
 
Asset acquisitions recorded in connection with barter transactions were
approximately $54,700, $144,500 and $112,636 for the years ended December 31,
1993, 1994 and 1995, respectively.
 
On December 28, 1993, the Company refinanced its loan agreement with The Bank of
New York and restructured its capitalization. See Notes 5, 9 and 11 for a
description of the noncash financing activities associated with these
transactions.
 
See accompanying notes.
 
                                       F-8
79
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                               DECEMBER 31, 1995
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Organization and Nature of Business
 
     Commodore Media, Inc. and Subsidiaries (the "Company") is comprised of
radio stations that derive their revenue from local, regional and national
advertisers. The radio stations are located in the following Arbitron markets:
Wilmington, Delaware; Westchester, Putnam and Dutchess Counties, New York;
Huntington, West Virginia--Ashland, Kentucky; Allentown--Bethlehem,
Pennsylvania; Fort Pierce--Stuart--Vero Beach, Florida; and Fairfield County,
Connecticut. The Company extends credit to its customers in the normal course of
business.
 
  Change of Name
 
     The Company changed its name from CRB Broadcasting Corporation to Commodore
Media, Inc. on March 17, 1995.
 
  Principles of Consolidation
 
     The consolidated financial statements include the accounts of Commodore
Media, Inc. and all subsidiaries, after elimination of intercompany accounts and
transactions.
 
     Certain reclassifications have been made to the prior year financial
statements in order to conform with the current year's presentation.
 
  Short-Term Cash Investments
 
     The Company considers investments which have a remaining maturity of three
months or less at the time of purchase to be short term cash investments. The
Company invests its excess cash in U.S. Treasury Bills.
 
  Income Taxes
 
     The Company accounts for income taxes in accordance with FASB Statement No.
109, "Accounting for Income Taxes." Under this method, deferred income taxes are
provided for differences between the book and tax bases of the Company's assets
and liabilities.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
 
                                       F-9
80
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
  Property, Plant and Equipment
 
     Property, plant and equipment are stated at cost. Depreciation is provided
on the straight-line method based on the following estimated useful lives:
CLASSIFICATION                         ESTIMATED LIFE (YEARS)
Land improvements......................................              20
        Buildings..............................................              20
        Furniture, fixtures and equipment......................             7-10
        Broadcasting and technical equipment...................             7-10
        Towers and antennas....................................              20
        Music library..........................................               7
        Leasehold improvements.................................             10-20
        Vehicles...............................................               3
Expenditures for maintenance and repairs are charged to operations as
incurred. Expenditures for betterments and major renewals are capitalized and,
therefore, are included in property, plant and equipment.
 
  Property Held Under Capital Leases
 
     The Company is the lessee of office equipment under capital leases expiring
in various years through 2004. The assets and liabilities under capital leases
are recorded at the lower of the present value of the minimum lease payments or
the fair value of the asset. The assets are depreciated over their estimated
productive lives of seven to ten years.
 
  Revenue Recognition
 
     The Company recognizes revenue upon the airing of advertisements.
 
  Intangible Assets
 
     Intangible assets are being amortized by the straight-line method over the
following estimated useful lives.
CLASSIFICATION                        ESTIMATED LIFE (YEARS)
FCC licenses and goodwill................................            40
        Tower site lease.........................................             3
        Organization expenses....................................             5
        Network affiliation agreement............................             5
        Covenant not to compete..................................             5
        Pre-sold advertising contracts...........................             1
Management continually reviews the appropriateness of the carrying value of
goodwill of its subsidiaries and the related amortization period based on
anticipated undiscounted cash flow of each subsidiary.
 
  Deferred Charges
 
     Legal fees, bank loan closing costs and other expenses associated with debt
financing and the Recapitalization Transaction (Note 2) are being amortized
using the effective interest rate method. Amortization of debt expense charged
to operations and included in other expenses amounted to $148,478 in 1993,
$219,893 in 1994 and $384,908 in 1995.
 
                                      F-10
81
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
  Barter Transactions
 
     The fair value of barter and trade-out transactions is included in
broadcast revenue and sales and promotion expense. Barter revenue is recorded
when advertisements are broadcast and barter expense is recorded when
merchandise or services are received. Barter transactions charged to operations
were as follows for the years ended December 31:
1993            1994            1995
Trade sales.................................  $ 1,617,288     $ 2,473,002     $ 3,238,111
    Trade expense...............................   (1,493,978)     (2,350,839)     (3,053,811)
                                                  -----------     -----------     -----------
    Net barter transactions.....................  $   123,310     $   122,163     $   184,300
                                                  ===========     ===========     ===========
Interim Financial Information
 
     Financial information as of and for the three months ended March 31, 1996
and for the three months ended March 31, 1995 is unaudited. In the opinion of
management, all adjustments of a normal and recurring nature, and those that are
necessary for a fair presentation of the results as of and for such periods,
have been included. Interim results are not necessarily indicative of the
results for a full year.
 
  Net Loss Per Common Share
 
     Net (loss) income per common share is determined by dividing net income or
loss available to common stockholders by the average number of common shares
outstanding. The calculation of net income or loss available to common
stockholders is based on the net income or loss in each year after the dividend
requirement on preferred stock of approximately $691,000 and $252,000 in 1994
and 1995, respectively.
 
     In all periods, the calculation of average common shares outstanding
includes only the common shares outstanding and options issued at an exercise
price less than the initial public offering price (see Note 14) to management in
July 1995.
 
2. THE RECAPITALIZATION TRANSACTIONS
 
     On April 21, 1995, the Company completed the offering of its 13 1/4% Senior
Subordinated Notes due 2003 ("Senior Subordinated Notes"). The net proceeds of
approximately $65.0 million were used to retire existing senior indebtedness of
approximately $36.2 million, fund the Treasure Coast Acquisition for $3.1
million, and repay the Hanson note and RFP note for an aggregate amount of $2.4
million. In addition, the Company used $8.7 million to redeem its preferred
stock, paid $1.9 million in connection with the long-term incentive compensation
of its President and its Chief Operating Officer (Note 10), paid approximately
$4.2 million in related deferred fees of the offering, and used the balance of
$8.5 million for general corporate purposes. The Company converted all of its
existing common stock for 3,501,886 shares of its Class B Common Stock ("Class
B") and 858,327 shares (including 615,773 treasury shares) of its Class A Common
Stock ("Class A"). At the time of conversion, the Company's President and its
Chief Operating Officer purchased 197,057 shares and 45,497 shares,
respectively, of Class A from the Chairman. In addition, William A.M. Burden and
Company, an affiliated entity, exercised its option to acquire 196,661 shares of
Class A from the Company. Each share of Class B is entitled to 8 votes and each
share of Class A is entitled to 1 vote. The consolidated financial statements
have been retroactively adjusted for this conversion.
 
                                      F-11
82
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
3. PROPERTY, PLANT AND EQUIPMENT
 
     Property, plant and equipment, at cost, consisted of the following at
December 31:
1994            1995
Land and land improvements................................  $ 2,588,139     $ 2,813,139
    Buildings.................................................    2,420,027       2,499,399
    Furniture, fixtures and equipment.........................    1,984,059       2,188,502
    Broadcasting and technical equipment......................    5,563,763       5,907,905
    Towers and antennas.......................................    3,280,482       3,401,300
    Music library.............................................      239,024         250,456
    Leasehold improvements....................................      336,905         365,825
    Vehicles..................................................      113,946         147,567
    Property held under capital leases........................       78,478          81,497
                                                                -----------     -----------
                                                                 16,604,823      17,655,590
    Less accumulated depreciation and amortization............   (8,755,786)     (9,575,547)
                                                                -----------     -----------
    Property, plant and equipment, net........................  $ 7,849,037     $ 8,080,043
                                                                ===========     ===========
Accumulated amortization of property held under capital leases as of
December 31, 1994 and 1995 was $4,942 and $12,728, respectively. Depreciation as
a charge to income amounted to $728,681 in 1993, $768,826 in 1994 and $831,656
in 1995.
 
4. OTHER INTANGIBLE ASSETS
 
     Other intangible assets, at cost, consisted of the following at December
31:
1994           1995
Covenant not to compete.....................................  $1,250,000     $1,325,000
    Deferred acquisition expenses...............................     495,609        953,441
    Pre-sold advertising contracts..............................     416,584        103,642
    Network affiliation agreement...............................     260,000        260,000
    Tower site lease............................................      14,516         14,516
                                                                  ----------     ----------
                                                                   2,436,709      2,656,599
    Less accumulated amortization...............................    (883,135)      (895,293)
                                                                  ----------     ----------
    Other intangible assets, net................................  $1,553,574     $1,761,306
                                                                  ==========     ==========
Amortization of the aforementioned intangible assets included as a charge
to income amounted to $15,541 for 1993, $817,087 for 1994 and $506,447 for 1995.
Amortization of FCC licenses and goodwill amounted to $385,157 for 1993 ,
$559,304 for 1994 and $588,149 for 1995.
 
                                      F-12
83
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
5. LONG-TERM DEBT
 
     Long-term debt consisted of the following at December 31:
1994            1995
Senior Subordinated Notes due 2003, $75,500,000 principal, net of
  unamortized discount of $10,400,367.............................  $        --     $65,099,633
Senior Subordinated Notes due 2003, $1,308,000 principal, net of
  unamortized discount of $146,294, held in trust for the benefit
  of the President................................................           --       1,161,706
Loans payable--The Bank of New York, collateralized by capital
  stock of all subsidiaries and other assets pledged by majority
  stockholder, repaid on April 21, 1995...........................   36,561,833              --
Note payable to Michael Hanson ("Hanson"), interest at 10%,
  maturing January 31, 1997; repaid on April 21, 1995.............      400,000              --
Obligations under capital leases..................................       59,569          55,107
                                                                    -----------     -----------
Total debt........................................................   37,021,402      66,316,446
Less current maturities...........................................    2,908,544          11,977
                                                                    -----------     -----------
Long-term debt....................................................  $34,112,858     $66,304,469
                                                                    ===========     ===========
Senior Subordinated Notes
 
     The Senior Subordinated Notes bear cash interest at a rate of 7 1/2% per
annum on the principal amount until May 1, 1998 then at a rate of 13 1/4% per
annum until maturity, with interest payment dates on May 1 and November 1. The
notes may be redeemed at the option of the Company at any time on or after May
1, 1999 at redemption prices specified in the indenture. The terms of the Senior
Subordinated Notes contain various covenants for the benefit of the holders
that, among other things, restrict the ability of the Company to incur
additional indebtedness, pay dividends and make certain investments. The notes,
excluding the notes held for the benefit of the President, were issued with
detachable warrants to purchase 543,600 shares of Class A Common Stock at an
exercise price of $.01 per warrant. The warrants can be exercised upon the
earliest of: (1) a change of control as defined in the indenture or (2) an
initial public offering or (3) the date upon which the Company's equity
securities are registered on a national exchange or (4) May 1, 1999. The holders
of warrants are not entitled to any voting rights or otherwise have any rights
as stockholders of the Company. The Company estimated the fair market value of
the warrants to be $2,000,000 as of the date of issuance and has allocated this
amount out of the net proceeds of the debt offering to paid-in capital. Based
upon available market information, the fair value of the Senior Subordinated
Notes and warrants were $930 per unit and $15 per unit, respectively, as of
December 31, 1995.
 
  The Bank of New York Loans
 
     As of December 31, 1994, the Company's outstanding obligations under this
agreement were as follows:
Term loan, maturing December 31, 1996, interest at 1.5% above
          the bank's prime rate or 2.5% over the LIBOR rate.............  $31,500,000
        Term loan, maturing December 31, 1996, interest at 2.5% over the
          bank's prime rate.............................................    5,061,833
        $2,000,000 Revolving credit loan, maturing December 31, 1996,
          interest at 1.5% above the bank's prime rate or 2.5% over the
          LIBOR rate....................................................           --
                                                                          -----------
                                                                          $36,561,833
                                                                          ===========
F-13
84
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
5. LONG-TERM DEBT--(CONTINUED)
     The Bank of New York loans were repaid in full as part of the
Recapitalization Transaction on April 21, 1995.
 
     In connection with the debt restructuring of The Bank of New York loan on
December 28, 1993, the Company issued the bank a warrant to purchase 4.99% of
the common stock of the Company, on a fully diluted basis, for $100. The warrant
was exercisable at any time prior to its expiration on December 28, 2003 and
contained a put option under which the bank could require the Company to
purchase the warrant at any time after January 1, 1997 up until expiration or
upon an initial public offering or a sale of the Company at a price based upon
(1) the actual proceeds received by the Company in an initial public offering or
sale (2) negotiations between the parties, or (3) an independent appraisal. No
value was ascribed to the warrant at the time of issuance. The increase in the
fair value of the warrant in 1994 of $1,000,000 was recorded as a reduction to
retained earnings (see Note 12). The Company repurchased the warrant in March
1995 for a negotiated price of $1,000,000.
 
     Aggregate maturities of long-term debt due within the next five years
ending December 31, are as follows:
1996............................................................  $    11,977
        1997............................................................        8,899
        1998............................................................        7,169
        1999............................................................        5,155
        2000............................................................        5,155
        Thereafter......................................................   66,278,091
                                                                          -----------
                                                                          $66,316,446
                                                                          ===========
In connection with the Recapitalization Transactions, the Company wrote-off
the balance of the unamortized deferred financing costs on its retired debt of
$443,521. Inasmuch as the Company has no current federal taxable income and has
fully reserved for its net deferred tax assets, there is no tax effect
attributable to this extraordinary item.
 
6. ACQUISITION OF BUSINESSES AND JOINT OPERATING AGREEMENTS
 
  Acquisitions
 
     On June 27, 1995, the Company purchased the assets (excluding cash and
accounts receivable) and broadcasting license of radio broadcast station WQOL-FM
in Vero Beach, Florida (Treasure Coast Acquisition) for a total purchase price
of $3,150,000. The Company accounted for this transaction under the purchase
method of accounting.
 
     On December 28, 1993, the Company purchased the assets (excluding cash and
accounts receivable) and broadcasting license of radio broadcast station WZZO-FM
in Allentown, Pennsylvania, for a total purchase price of $9,375,000, which was
also accounted for using the purchase method of accounting.
 
                                      F-14
85
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
6. ACQUISITION OF BUSINESSES AND JOINT OPERATING AGREEMENTS--(CONTINUED)
     The total purchase price of the aforementioned acquisitions was allocated
as follows:
WQOL-FM        WZZO-FM
Tangible assets.............................................  $  663,724     $  468,008
    Intangible assets:
      FCC license...............................................   2,007,634      6,029,000
      Goodwill..................................................     300,000        936,892
      Noncompete agreement......................................      75,000      1,250,000
      Pre-sold advertising contracts............................     103,642        416,584
      Network affiliation agreement.............................          --        260,000
      Other.....................................................          --         14,516
                                                                  ----------     ----------
                                                                   2,486,276      8,906,992
                                                                  ----------     ----------
    Total purchase price........................................  $3,150,000     $9,375,000
                                                                  ==========     ==========
Unaudited pro forma results of operations for the Company for 1993 as if
WZZO-FM was acquired on January 1, 1993 are as follows:
1993
Net revenue...........................................................    $22,701,935
    Net loss before extraordinary item....................................     (2,684,984)
    Net loss..............................................................     (2,684,984)
Unaudited pro forma results of operations for the Company for 1995 and 1994
as if WQOL-FM was acquired on January 1, 1994 are as follows:
1994            1995
Net revenue...............................................  $27,361,642     $31,289,433
    Net loss before extraordinary item........................     (491,886)     (1,793,307)
    Net loss..................................................     (491,886)     (2,236,828)
On October 30, 1995, the Company entered into agreements to purchase the
stock of Danbury Broadcasting, Inc., which owns stations WRKI-FM and WINE-AM in
Brookfield, CT., and all of the assets (excluding cash and accounts receivable)
and FCC licenses of Hudson Valley Growth, L.P., which owns stations WZZN-FM,
WVYB-FM, and WPUT-AM in Mt. Kisco, Patterson and Brewster, NY. The total
purchase price for all of these stations is $14,900,000. The Company has paid a
deposit of $500,000 in connection with these agreements, which is included in
other noncurrent assets.
 
     The Company closed on the acquisition agreements with Danbury Broadcasting,
Inc. and Hudson Valley Growth, L.P. on March 27, 1996. The Company used $6.7
million of available cash funds and financed the remaining $8.2 million of the
purchase price with funds obtained from AT&T Commercial Finance Corporation
("AT&T"). Under the loan agreement with AT&T, the Company may borrow up to $30
million under a Senior Secured Reducing Revolver Loan, and up to $5 million
under a Senior Secured Accounts Receivable Loan. These loans are secured by all
of the existing and future assets of the Company. The Company plans to use this
facility to finance future acquisitions.
 
  Local Marketing and Joint Sales Agreements
 
     The Company has entered into various Local Marketing Agreements ("LMA") and
Joint Sales Agreements ("JSA") during 1995. While each agreement is unique in
its terms and conditions, generally under an LMA and JSA the brokering station
purchases substantially all of the commercial time available on
 
                                      F-15
86
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
6. ACQUISITION OF BUSINESSES AND JOINT OPERATING AGREEMENTS--(CONTINUED)
the brokered station and provides promotional and sales related services. Under
an LMA, the brokering station may also provide the programming; a JSA requires
the licensee to continue all of the programming. The brokering station pays a
fee to the brokered station for the services provided based upon a flat monthly
amount, and/or an amount contingent on the net revenue or profit as calculated
in the agreement. As the brokering station, the Company currently has LMAs or
JSAs with WKAP-AM, Allentown, PA, and WPAW-FM, Vero Beach, FL. The Company has
an option to purchase WPAW-FM for $1.2 million which it may exercise during the
twenty-nine month period beginning August 1995. The Company operated stations
WRKI-FM/WINE-AM in Brookfield, CT, and WZZN-FM/WVYB-FM/WPUT-AM in
Westchester/Putnam Counties, New York under LMA agreements that terminated upon
the consummation of the related purchase agreements for the stations.
 
7. INCOME TAXES
 
     The Company has recorded a provision for income taxes as follows for the
years ended December 31:
1993         1994         1995
Current:
      Federal...........................................  $    --     $ 70,400     $     --
      State and local...................................   39,503      229,600      140,634
    Deferred:
      Federal...........................................       --           --           --
      State and local...................................       --           --           --
                                                          -------     --------     --------
              Total.....................................  $39,503     $300,000     $140,634
                                                          =======     ========     ========
The Company did not record a federal tax benefit on the taxable loss for
the years ended December 31, 1995 and 1993 since it was not assured that it
could realize a benefit for such loss in the future. During 1994, the Company
utilized approximately $2,500,000 of Federal net operating losses to offset
current taxable income. Since the valuation allowance remained at 100% at the
end of the year, there was no deferred tax effect on 1994 earnings. The Company
recorded a provision for federal alternative minimum tax in 1994 because net
operating loss carryforwards may be used to offset only 90% of a corporation's
alternative minimum taxable income.
 
     The Company has applied to change its tax method of accounting for FCC
licenses for the tax year ended December 31, 1995. The aggregate amount of
cumulative amortization that will be deductible ratably over six years for tax
purposes is approximately $12,130,000. The Company has reflected this change in
the current year and expects final approval from the IRS shortly.
 
     The reconciliation of income tax computed at the U.S. federal statutory
rates to effective income tax expense is as follows for the years ended December
31:
1993           1994         1995
Provision at statutory rate.....................  $(1,309,982)    $(79,400)    $(734,695)
    State and local taxes...........................       39,503      229,600       140,634
    Nondeductible expense...........................       21,885       36,575         8,286
    Increase in valuation allowance, net of rate
      changes.......................................    1,288,097       42,825       726,409
    Alternative minimum tax.........................           --       70,400            --
                                                      -----------     --------     ---------
              Total.................................  $    39,503     $300,000     $ 140,634
                                                      ===========     ========     =========
F-16
87
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
7. INCOME TAXES--(CONTINUED)
     Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The approximate effect of
temporary differences were as follows at December 31:
1994             1995
Deferred tax assets:
      Allowance for bad debts...............................  $    239,764     $    312,100
      Deferred compensation.................................     1,518,645        1,244,100
      Unamortized discount on Senior Subordinated Notes.....            --          959,200
      Intangibles...........................................     1,521,168          290,300
      Depreciation..........................................        14,805           76,460
      Net operating loss carryforwards......................    11,169,686       12,405,800
                                                              ------------     ------------
              Total deferred tax assets.....................    14,464,068       15,287,960
    Deferred tax liabilities:
      Depreciation..........................................      (518,609)        (537,260)
      Other.................................................       (37,800)          (4,800)
                                                              ------------     ------------
    Total deferred tax liabilities..........................      (556,409)        (542,060)
                                                              ------------     ------------
    Net deferred tax asset..................................    13,907,659       14,745,900
    Less valuation allowance................................   (13,907,659)     (14,745,900)
                                                              ------------     ------------
    Net deferred tax asset, net of allowance................  $         --     $         --
                                                              ============     ============
The Company has provided a valuation allowance equivalent to its net
deferred tax asset in 1993, 1994 and 1995 as the past history of the Company
makes the realization of taxable income in the future years uncertain. At
December 31, 1995, the Company had net operating loss carryforwards of
approximately $30,700,000 for federal purposes that expire in the years 1999
through 2010, and $19,700,000 for state purposes that expire in the years 1996
to 2010. Pending final approval from the IRS, the Company will also have
available $10,100,000 of carryforward deductions related to the change in
accounting for FCC licenses that will be deductible in the years 1996 to 2000.
 
8. COMMITMENTS
 
  Lease Commitments
 
     The principal types of property leased by the Company and its subsidiaries
are office space, tower, real estate related to tower sites, office equipment
and transmitting equipment.
 
     Total rent expense for the Company was approximately $220,200, $306,400 and
$332,000 for the years ended December 31, 1993, 1994 and 1995, respectively.
 
                                      F-17
88
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
8. COMMITMENTS--(CONTINUED)
     The minimum rental commitments of the Company, under all noncancellable
operating leases, are set forth below:
YEAR                                   AMOUNT
1996.............................................................  $  318,267
        1997.............................................................     296,088
        1998.............................................................     272,755
        1999.............................................................     254,433
        2000.............................................................     207,803
        Thereafter.......................................................     515,244
                                                                           ----------
        Total minimum lease payments.....................................  $1,864,590
                                                                           ==========
Other Commitments
 
     The Company entered into a separation agreement with its former President
effective December 31, 1993, under which the Company agreed to pay him an
aggregate amount of $1,650,000; a portion was paid in cash, and the remainder of
$1,000,000 became payable in semi-monthly installments through December 31,
1997. A present value discount of $154,000 was recorded against the total
installment liability of $1,000,000 as of December 31, 1993. At December 31,
1994 and 1995, the current portion under this obligation of $201,939 and
$219,816 is included in accounts payable and accrued expenses and the remainder
of $454,018 and $239,275 is reflected in noncurrent compensation.
 
     The Company has other employment agreements with key executives under which
the executives are paid a base salary and annual incentives based on broadcast
cash flow and EBITDA, as defined in the agreements.
 
9. STOCKHOLDERS' DEFICIT
 
  Preferred Stock
 
     Under the December 28, 1993 debt restructuring, all previously authorized,
issued and outstanding shares of Series A, Series B, and Series C Preferred
Stock were contributed to paid-in capital or converted into common stock and
canceled.
 
     The Series A and Series B preferred shares were converted into 237,600
shares of common stock resulting in additional paid-in capital of $3,290,475.
All dividends in arrears, of which none had been declared or accrued, were
forfeited by the preferred stockholders.
 
     The Series C preferred shares were contributed to paid-in capital by the
Company's former President.
 
  Redeemable Preferred Stock
 
     On December 28, 1993, Radio Financial Partners, Inc. ("RFP"), a related
entity (see Note 11), converted $7,723,000 of outstanding debt and accrued
interest into 10,000 shares of the Company's new 8.87% cumulative redeemable
preferred stock ("Redeemable Preferred Stock"). The Company redeemed all
outstanding shares of the preferred stock as part of the Recapitalization
Transactions on April 21, 1995; the total liquidation value as of the date of
redemption was $8,665,835 which included $942,835 in accumulated dividends.
 
                                      F-18
89
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
9. STOCKHOLDERS' DEFICIT--(CONTINUED)
  Common Stock
 
     Each share of Class B stock is convertible at the option of the holder into
one share of Class A stock. The Company has reserved a total of 4,996,786 shares
of Class A stock for issuance as follows: (1) 543,600 shares upon the exercise
of the warrants (2) 951,300 shares upon the exercise of shares granted under the
1995 Stock Option Plan and (3) 3,501,886 shares upon the conversion of Class B
common stock. Shareholders of Class A and Class B stock are provided the same
dividend and liquidation rights, although dividend payments are currently
restricted by the indenture governing the notes. Holders of shares of common
stock vote as a single class on all matters submitted to a vote; each share of
Class A stock is entitled to one vote and each share of Class B stock is
entitled to eight votes on all matters.
 
10. LONG-TERM INCENTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
 
     Effective January 1, 1994, the Company entered into an agreement with its
President and Chief Executive Officer under which he would be employed in that
capacity through 1996 and provided for annual salary requirements and bonuses,
and a Long-Term Incentive Payment ("LTIP"). The LTIP is based on a formula
derived from the Company's net equity value, as defined. A fair value amount of
$1,750,000 was charged to income as long-term incentive compensation in 1994
relating to the LTIP. On April 21, 1995, the President's employment agreement
was amended and restated. In lieu of the LTIP, the Company paid the President
$1,500,000 in cash, issued $1,308,000 principal ($1,125,000 net of discount) of
the Company's Senior Subordinated Notes to a trust for his benefit, and agreed
to provide $1,500,000 in deferred compensation which accrues interest at a rate
of 7% and is payable in 2003. The Company recorded the deferred compensation on
April 21, 1995 at its calculated net present value of $921,000. The aggregate
effect of the employment agreement restructuring was to charge $1,817,750 to
long term incentive compensation expense during 1995. In addition, the
President's amended employment agreement extended his date of employment through
April 30, 1998, granted stock options to him to acquire 203,854 shares of Class
A Common Stock at an exercise price of $6.25 per share and provides for annual
bonuses based upon specific operating results of the Company.
 
     The Company also amended its existing employment agreement with its Chief
Operating Officer on April 21, 1995. The prior employment agreement provided for
a long-term incentive based upon the increase in certain station values. As of
December 31, 1994, $430,000 had been accrued as long-term incentive
compensation. The amended employment agreement provided for a cash payment of
$400,000 on April 21, 1995 and deferred compensation of $346,000 which accrues
interest at a rate of 7% and is payable in 2003. The Company recorded the
deferred compensation on April 21, 1995 at its calculated net present value of
$213,000. The aggregate effect of the employment agreement restructuring was to
charge $188,800 to long term incentive compensation expense during 1995. In
addition, the amended employment agreement extended his date of employment
through April 30, 1999, granted stock options to acquire 203,854 shares of Class
A Common Stock at an exercise price of $6.25 per share, and provides for annual
bonuses based upon specific operating results of the Company.
 
11. RELATED PARTY TRANSACTIONS
 
     In connection with the debt restructuring that occurred on December 28,
1993, $9,617,240 of notes payable to the majority stockholder, as well as an
additional $300,000 loan provided to the Company during the year ended December
31, 1993, were converted into additional paid-in capital. In addition, all
accrued interest on the notes, which was $4,311,422 as of the date of the
restructuring, was canceled and recorded as a capital contribution. The majority
stockholder purchased an additional 201,600 shares of common stock for
$2,500,000 on December 28, 1993.
 
                                      F-19
90
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
11. RELATED PARTY TRANSACTIONS--(CONTINUED)
     During 1995 the Company paid the majority stockholder approximately
$180,000 in annual salary. In addition, the majority stockholder repaid an
outstanding loan of $182,988 of which $65,488 was advanced in the year ended
December 31, 1995; the majority stockholder owed the Company $117,500 as of
December 31, 1994. These loans are reflected in other current assets in 1994 and
1995.
 
     On April 10, 1992, the Company obtained $9,300,000 from RFP in exchange for
a subordinated note bearing interest at 7% and maturing in 1997. On December 28,
1993, RFP agreed to convert a total of $7,247,000 of the unpaid principal on the
subordinated note and $476,000 of accrued interest into 10,000 shares of
Redeemable Preferred Stock (see Note 9). The remaining principal balance of
$2,053,000 was converted into a noninterest-bearing subordinated note with a
final maturity of April 10, 1997. The Company repaid the outstanding balance of
the note and redeemed the preferred stock on April 21, 1995.
 
     During May 1995, the Company loaned approximately $250,000 to certain
executive officers as evidenced by 7% promissory notes that mature in 2001, with
all accrued interest and principal due on the maturity date. The total amount
owed the Company as of December 31, 1995 is $261,329 which is included in
noncurrent assets.
 
     In connection with the debt restructuring described above, on December 28,
1993, the Company granted a warrant to an affiliate to purchase 4.99% of its
common stock at an exercise price of $100, on a fully diluted basis. The warrant
was exercised during 1995.
 
12. STOCK OPTION AND 401(K) PLANS
 
     On April 21, 1995, the Company adopted a stock option plan which provides
for the granting of incentive stock options and nonqualified stock options to
executives and key employees. The Company has reserved 951,300 shares of Class A
Common Stock, which represents 17.5% of the Company's outstanding common stock
on a fully diluted basis, for options issued under this plan. The options are
exercisable at a price equal to the fair market value on the date of grant. As
of December 31, 1995, a total of 696,024 shares were granted at an exercise
price of $6.25 per share under this plan, of which none were exercisable as of
that date.
 
     The Financial Accounting Standards Board issued SFAS No. 123, "Accounting
for Stock Based Compensation" in October 1995, which establishes financial
accounting and reporting standards of stock based employee compensation plans
including stock option plans. The Company has elected to continue accounting for
stock based compensation under APB No. 25. The disclosure requirements of SFAS
No. 123 will be effective for the Company's financial statements beginning in
1996. The Company does not believe that the implementation of SFAS 123 will have
a material effect on its financial statements.
 
     During the year ended December 31, 1995, the Company established the
Commodore Media, Inc. 401(K) Plan for the benefit of all eligible employees.
Eligible participants under this plan are defined as all full-time employees
with one year of service. All eligible participants may elect to contribute a
portion of their compensation to the plan subject to Internal Revenue Service
limitations. The Company may make discretionary matching contributions to the
plan, subject to board approval; no contributions were made for the plan year
ended December 31, 1995.
 
13. LEGAL PROCEEDINGS
 
     The Company is involved is various legal proceedings from time to time in
the normal course of business. In management's opinion, the litigation in which
the Company is currently involved, individually and in the aggregate, is not
material to the Company's financial condition or results of operations.
 
                                      F-20
91
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
14. SUBSEQUENT EVENTS
 
     On February 16, 1996, the Company entered into an Asset Purchase Agreement
to purchase radio stations WKQS-FM, WAVW-FM and WAXE-AM in the Fort
Pierce-Stuart-Vero Beach, Florida Market from Media VI for approximately
$8,000,000. In addition, the Company entered into a Joint Sales Agreement with
Media VI to provide sales, marketing and certain other functions to the stations
pending the closing of the acquisition. The Company expects to close on the
Media VI acquisition in the second quarter of 1996 and will fund the transaction
with borrowings from the Senior Credit Facility (as hereinafter defined), and
funds from the Preferred Stock Facility (as hereinafter described).
 
     On March 13, 1996, the Company entered into a Loan and Security Agreement
with AT&T Commercial Finance Corporation ("AT&T") pursuant to which AT&T will
make available to the Company senior secured (i) revolving loans in an amount up
to $30 million and (ii) accounts receivable loans in an amount which shall be
the lessor of (A) $5 million or (B) 85% of the net book value of the accounts
receivable of the Company (the "Senior Credit Facility"). The Company's
subsidiaries agreed to guarantee the indebtedness to AT&T. Interest is payable
monthly at a rate of 3.5% over LIBOR and principal amortization of the revolving
loans and accounts receivable loans begins June 1, 1998 and November 30, 1999,
respectively.
 
     On March 15, 1996, the Company entered into an Asset Purchase Agreement to
acquire radio stations WKHL-FM and WSTC-AM in Stamford, Connecticut from Q
Broadcasting, Inc. for approximately $9,500,000. The Company expects to close on
the Q Broadcasting acquisition in the second quarter of 1996 and will fund the
transaction with borrowings from the Senior Credit Facility and funds from the
Preferred Stock Facility (as hereinafter defined).
 
     On March 27, 1996 the Company purchased (i) certain defined assets of radio
stations WZZN-FM in Mount Kisco, New York, WVYB-FM in Patterson, New York and
WPUT-AM in Brewster, New York from Hudson Valley Growth, L.P. for $4,950,000 and
(ii) all of the issued and outstanding common stock of Danbury Broadcasting,
Inc., owner of WRKI-FM and WINE-AM in Brookfield, Connecticut, plus certain real
property for $9,950,000. The transaction was financed with the Company's
existing cash and borrowings under the Senior Credit Facility.
 
     On April 8, 1996 the Company entered into (i) an Asset Purchase Agreement
to purchase from Adventure Communications, Inc., radio stations WKEE(FM) and
WKEE(AM) in Huntington, West Virginia, WZZW(AM) in Milton, West Virginia,
WBVB(FM) in Coral Grove, Ohio and WIRO(AM) in Ironton, Ohio for an aggregate
purchase price of approximately $7,765,000 and (ii) an Asset Purchase Agreement
with Simmons Broadcasting Company and an Option Agreement with Michael R. Shott
to acquire radio stations WHRD(AM) in Huntington, West Virginia, WFXN(FM) in
Milton, West Virginia and WMLV(FM) in Ironton, Ohio for an aggregate purchase
price of approximately $4,235,000. In addition, the Company entered into Local
Marketing Agreements with each of Adventure Communications, Inc. and Simmons
Broadcasting Company to provide, on a cooperative basis, the programming, sales,
marketing and certain other services to the stations pending the closing of the
acquisitions. The Company expects to close on the aforementioned acquisitions in
the latter part of 1996 and will fund the transaction with borrowings from the
Senior Credit Facility and funds from the Preferred Stock Facility (as
hereinafter defined).
 
     On May 1, 1996, the Company entered into a Securities Purchase Agreement
with CIBC WG Argosy Merchant Fund 2, LLC ("CIBC Merchant Fund"), pursuant to
which the CIBC Merchant Fund agreed to purchase from the Company, if and when
requested by the Company, up to an aggregate liquidation value of $12,500,000 of
Senior Exchangeable Redeemable Preferred Stock, Series A, $.01 par value per
share, of the Company in such amounts as the Company may request (the "Preferred
Stock Facility"), provided that such request be for an aggregate liquidation
value of at least $2,500,000 and be made no later than October 31, 1996. The
Preferred Stock accrues cash dividends at the rate of 8% per annum, or 10% per
annum if paid in additional shares of Preferred Stock, through April 30, 1999.
The Company has the option to purchase the
 
                                      F-21
92
 
                     COMMODORE MEDIA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
14. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
Preferred Stock at any time for a price equal to its liquidation value plus
accrued dividends. However, if the Company does not purchase the Preferred Stock
in the case of a change in control, an initial public offering, certain asset
sales or under certain circumstances, the dividend rate increases by four
hundred basis points. In connection with the Preferred Stock Facility, the
Company issued to the CIBC Merchant Fund a warrant to purchase 54,360 shares of
the Company's Class A Common Stock, at an exercise price of $.01 per warrant,
which is immediately exercisable and expires April 30, 2000. Should the
Preferred Stock not be redeemed by October 31, 1996, the Company is obligated to
issue additional warrants for 1% of the Company's fully-diluted common equity
for each $2,500,000 of Preferred Stock liquidation value outstanding.
 
     In May 1996, the Company filed a Registration Statement on Form S-1 with
the Securities and Exchange Commission for a primary and secondary public
offering of shares of Class A Common Stock. In connection with this offering,
the Company's Common Stock was split 7.2 for 1. The consolidated financial
statements have been restated to retroactively reflect this split.
 
                                      F-22
93
 
                         REPORT OF INDEPENDENT AUDITORS
 
The Partners
Media VI
 
     We have audited the accompanying balance sheet of Media VI as of December
31, 1995, and the related statement of operations, partners' equity and cash
flows for the year ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
 
     We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Media VI at December 31,
1995, and the results of its operations and its cash flows for the year ended
December 31, 1995 in conformity with generally accepted accounting principles.
                                          ERNST & YOUNG LLP
 
New York, New York
April 26, 1996
 
                                      F-23
94
 
                                    MEDIA VI
 
                                 BALANCE SHEETS
MARCH 31,
                                                                                         1996
                                                                     DECEMBER 31,     -----------
                                                                         1995
                                                                     ------------     (unaudited)
ASSETS
Current assets:
  Cash.............................................................   $   57,762      $    36,635
  Accounts receivable, net of allowance for doubtful accounts of
     $12,200 in 1995 and $10,600 in 1996...........................      284,941          183,821
  Due from Commodore Media, Inc. (Note 1)..........................           --           28,169
  Prepaid expenses and other current assets........................        9,666            8,941
                                                                      ----------       ----------
          Total current assets.....................................      352,369          257,566
Property and equipment, at cost less accumulated depreciation......      782,690          769,065
Intangible assets at cost, less accumulated amortization...........    2,147,258        2,134,434
Other assets.......................................................        1,340            1,340
                                                                      ----------       ----------
          Total assets.............................................   $3,283,657      $ 3,162,405
                                                                      ==========       ==========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
  Accounts payable.................................................   $    9,613      $    21,319
  Accrued expenses and other current liabilities...................       54,949           17,477
  Current portion of long-term debt................................      119,185          119,185
                                                                      ----------       ----------
          Total current liabilities................................      183,747          157,981
Long term debt.....................................................    2,152,371        2,122,575
Partners' equity...................................................      947,539          881,849
                                                                      ----------       ----------
          Total liabilities and partners' equity...................   $3,283,657      $ 3,162,405
                                                                      ==========       ==========
See notes to financial statements.
 
                                      F-24
95
 
                                    MEDIA VI
 
                            STATEMENTS OF OPERATIONS
YEAR ENDED          THREE MONTHS ENDED
                                                         DECEMBER 31,              MARCH 31,
                                                             1995         ---------------------------
                                                         ------------        1995            1996
                                                                          -----------     -----------
                                                                          (unaudited)     (unaudited)
Broadcast revenue......................................   $2,131,480       $ 519,981       $ 230,507
Less agency commissions................................      138,807          34,241          15,117
                                                          ----------        --------        --------
Net broadcast revenue..................................    1,992,673         485,740         215,390
Net JSA revenue (Note 1)...............................           --              --          79,893
                                                          ----------        --------        --------
Net revenue............................................    1,992,673         485,740         295,283
Operating expenses:
  Programming, technical and news......................      108,591          24,585          23,983
  Sales and promotion..................................      973,219         217,484         125,572
  General and administrative...........................      410,528          71,356          94,951
  Depreciation and amortization........................      149,160          38,242          26,450
                                                          ----------        --------        --------
Income (loss) from operations..........................      351,175         134,073          24,327
Interest expense, net..................................     (215,966)        (57,069)        (46,232)
                                                          ----------        --------        --------
Net income (loss)......................................   $  135,209       $  77,004       $ (21,905)
                                                          ==========        ========        ========
See notes to financial statements.
 
                                      F-25
96
 
                                    MEDIA VI
 
                         STATEMENTS OF PARTNERS' EQUITY
YEAR ENDED          THREE MONTHS ENDED
                                                         DECEMBER 31,              MARCH 31,
                                                             1995         ---------------------------
                                                         ------------        1995            1996
                                                                          -----------     -----------
                                                                          (unaudited)     (unaudited)
Partners' equity, beginning of period..................    $911,332        $ 911,332       $ 947,539
Net income (loss)......................................     135,209           77,004         (21,905)
Distributions to partners..............................     (99,002)              --         (43,785)
                                                           --------         --------        --------
Partners' equity, end of period........................    $947,539        $ 988,336       $ 881,849
                                                           ========         ========        ========
See notes to financial statements.
 
                                      F-26
97
 
                                    MEDIA VI
 
                            STATEMENTS OF CASH FLOWS
YEAR ENDED          THREE MONTHS ENDED
                                                         DECEMBER 31,              MARCH 31,
                                                             1995         ---------------------------
                                                         ------------        1995            1996
                                                                          -----------     -----------
                                                                          (unaudited)     (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)......................................   $  135,209       $  77,004       $ (21,905)
Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
  Depreciation and amortization........................      149,160          38,242          26,450
Changes in current assets and liabilities:
  (Increase) decrease in accounts receivable...........      (27,328)         20,599         101,120
  (Increase) in Due from Commodore Media, Inc..........                                      (28,169)
  (Increase) decrease in prepaid expenses and other
     current assets....................................         (572)             --             725
  (Decrease) increase in accounts payable..............      (15,044)        (23,373)         11,706
  Increase (decrease) in accrued expenses and other
     current liabilities...............................       16,333         (27,869)        (37,472)
                                                           ---------        --------        --------
Net cash provided by operating activities..............      257,758          84,603          52,455
                                                           ---------        --------        --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment....................       (8,048)         (1,617)             --
Proceeds from sale of property and equipment...........       21,936              --              --
                                                           ---------        --------        --------
Net cash provided by (used in) investing activities....       13,888          (1,617)             --
                                                           ---------        --------        --------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners..............................      (99,002)             --         (43,786)
Proceeds from debt.....................................      650,000              --              --
Repayment of debt......................................     (854,419)        (53,992)        (29,796)
                                                           ---------        --------        --------
Net cash used in financing activities..................     (303,421)        (53,992)        (73,582)
                                                           ---------        --------        --------
Net (decrease) increase in cash........................      (31,775)         28,994         (21,127)
Cash, beginning of period..............................       89,537          89,537          57,762
                                                           ---------        --------        --------
Cash, end of period....................................   $   57,762       $ 118,531       $  36,635
                                                           =========        ========        ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest.................................   $  206,884       $  46,538       $  48,304
                                                           =========        ========        ========
See notes to financial statements.
 
                                      F-27
98
 
                                    MEDIA VI
 
                         NOTES TO FINANCIAL STATEMENTS
 
                               DECEMBER 31, 1995
 
1. NATURE OF BUSINESS AND ORGANIZATION
 
     Media VI (the "Company") was formed under the laws of the State of Florida
as a general partnership, comprised of six general partners for the primary
purpose of owning and operating radio stations WAXE-AM and WAVW-FM located in
Vero Beach/Ft. Pierce, Florida.
 
     In August 1995, the Company acquired substantially all of the assets of
Media 5, Inc. ("Media 5"), consisting primarily of radio station WKQS-FM, in a
business combination between companies under common control, similar to a
pooling of interest, for a 6% interest in the Company. Accordingly, the results
of operations of Media 5 have been included in the Company's statement of
operations for the year ended December 31, 1995.
 
     On February 16, 1996, the Company entered into an Asset Purchase Agreement
(the "Agreement") to sell substantially all of the assets relating to the
operation of WAXE-FM, WAVW-FM and WKQS-FM (collectively, the "Stations") to
Commodore Media, Inc. ("Commodore") for $8,000,000 in cash. Commodore paid an
initial cash deposit of $400,000, which is being held by an escrow agent until
the closing date, which is expected to occur during 1996.
 
     In conjunction with the Agreement, the Company entered into a Joint Sales
Agreement ("JSA") with Commodore. Under the terms of the JSA, Commodore
purchases all available broadcast air time from the Company for a fee of $60,000
per month. Additionally, Commodore assumed responsibility for a majority of the
operating expenses of the Stations. The JSA will terminate upon closing of the
Agreement.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition/Credit Risk
 
     The Company's primary source of revenue is the sale of airtime to
advertisers. Revenue is recorded when the advertisements are broadcast. The
Company provides advertising time to national, regional, and local advertisers
within the geographic areas in which the Company operates. Credit is extended
based on an evaluation of the customer's financial condition; generally, advance
payment is not required. Credit losses are provided for in the financial
statements in the form of an allowance for doubtful accounts.
 
     During the three months ended March 31, 1996, the Company recognized
approximately $80,000 additional revenue related to the JSA with Commodore Media
(Note 1).
 
     Cash is deposited in a major money center financial institution, to which
the Company is exposed to credit risk. At times, deposited amounts may exceed
federally insured limits.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
 
  Barter Transactions
 
     Barter transactions represent the exchange of commercial air time for
programming, merchandise or services. These transactions are included in
broadcast revenue and both sales and promotion and general and administrative
expenses at the fair value of the merchandise or services received. Barter
revenue is recorded when advertisements are broadcast and barter expense is
recognized when the merchandise or services are received.
 
                                      F-28
99
 
                                    MEDIA VI
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
     For the year ended December 31, 1995, barter revenue and expense amounted
to $96,651 and $85,103, respectively.
 
  Income Taxes
 
     The Company is not subject to federal or state income taxes. Income or loss
from the Company's operations is included in the determination of taxable income
of the respective partners, pursuant to the terms of the partnership agreement.
 
  Property and Equipment
 
     Property and equipment are stated at cost. Depreciation is provided for
using the straight-line method based on the following schedule of estimated
useful lives:
ESTIMATED LIFE
                                CLASSIFICATION                               (YEARS)
Land improvements..............................................        15
        Building and building improvements.............................        31
        Furniture, fixtures and equipment..............................         5
        Broadcasting and technical equipment...........................       5-20
        Vehicles.......................................................        3-5
Expenditures for maintenance and repairs are charged to operations as
incurred. Expenditures for betterments and major renewals are capitalized and,
therefore, are included in property and equipment.
 
  Intangible Assets
 
     Intangible assets are being amortized using the straight-line method based
on the following schedule of estimated useful lives:
ESTIMATED LIFE
                                CLASSIFICATION                               (YEARS)
FCC licenses...................................................        40
        Goodwill.......................................................        40
        Deferred financing costs.......................................        4-7
It is the Company's policy to account for intangible assets at the lower of
amortized cost or fair value. As part of an ongoing review of the valuation and
amortization of intangible assets, management assesses the carrying value of the
Company's intangible assets if facts and circumstances suggest that it may have
been impaired, If this review indicates that the intangible assets will not be
recoverable as determined by an undiscounted cash flow analysis of the Company
over the remaining amortization period, the carrying value of the Company's
intangible assets would be reduced to its estimated fair value.
 
     In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets to be Disposed of ("FAS 121"), effective for fiscal years
beginning after December 15, 1995. The new rules establish standards for the
recognition and measurement of impairment losses on long-lived assets and
certain intangible assets. The Company expects the adoption of FAS 121 will not
have a material effect on its financial statements.
 
  Interim Financial Information
 
     Financial information as of and for the three months ended March 31, 1996
and for the three months ended March 31, 1995 is unaudited. In the opinion of
management, all adjustments of a normal and recurring
 
                                      F-29
100
 
                                    MEDIA VI
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
nature, and those that are necessary for a fair presentation of the results as
of and for such periods, have been included. Interim results are not necessarily
indicative of the results for a full year.
 
3. ACQUISITION OF MEDIA 5
 
     The separate results of the combining entities prior to the combination for
the seven months ended July 31, 1995 are as follows:
MEDIA VI     MEDIA 5
Net revenue............................................  $960,142     $241,803
        Less intercompany transactions.........................    49,360           --
                                                                 --------     --------
                                                                  910,782      241,803
                                                                 ========     ========
        Net income (loss)......................................  $181,043     $(30,133)
                                                                 ========     ========
4. PROPERTY AND EQUIPMENT
 
     Property and equipment consists of the following at December 31, 1995:
Land and land improvements.......................................  $  216,671
        Building and building improvements...............................     283,909
        Furniture, fixtures and equipment................................      76,776
        Broadcasting and technical equipment.............................     611,101
        Vehicles.........................................................      13,300
                                                                           ----------
                                                                            1,201,757
        Less accumulated depreciation....................................    (419,067)
                                                                           ----------
        Property, plant and equipment, net...............................  $  782,690
                                                                           ==========
5. INTANGIBLE ASSETS
 
     Intangible assets consists of the following at December 31, 1995:
FCC License......................................................  $2,295,349
        Goodwill.........................................................     132,510
        Deferred financing costs.........................................      48,617
                                                                           ----------
                                                                            2,476,476
        Less accumulated amortization....................................    (329,218)
                                                                           ----------
        Other intangible assets, net.....................................  $2,147,258
                                                                           ==========
F-30
101
 
                                    MEDIA VI
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
6. LONG-TERM DEBT
 
     At December 31, 1995, the Company's long-term debt consisted of the
following:
First Mortgage payable to Barnett Bank of the Treasure Coast (the
          "First Mortgage")..............................................  $1,675,723
        Second Mortgage payable to Barnett Bank of the Treasure Coast
          (the "Second Mortgage")........................................     595,833
                                                                           ----------
                                                                            2,271,556
        Less current maturities..........................................    (119,185)
                                                                           ----------
        Total long-term debt.............................................  $2,152,371
                                                                           ==========
The First Mortgage
 
     Principal is being repaid in equal monthly installments of approximately
$2,200, with a lump sum payment of the balance due on May 31, 2002. Interest is
payable monthly at a variable rate equal to the Barnett Bank prime, which
fluctuated from a low of 8.5% to a high of 9% during 1995. The First Mortgage is
secured by an interest in all of the Company's assets and a first mortgage on
all real property owned or subsequently acquired prior to maturity.
 
  The Second Mortgage
 
     Principal is being repaid in equal monthly installments of approximately
$7,700, with the final payment due on May 17, 2002. Interest is payable monthly
at a variable rate equal to Barnett Bank prime, which fluctuated from a low of
8.5% to a high of 9% during 1995. The Second Mortgage is secured by an interest
in all the Company's assets and a second mortgage on all real property.
 
     Aggregate maturities of long-term debt due within the next five years
ending December 31, are as follows:
1996.............................................................  $  119,185
        1997.............................................................     119,185
        1998.............................................................     119,185
        1999.............................................................     119,185
        2000.............................................................     119,185
        Thereafter.......................................................   1,675,631
                                                                           ----------
                                                                           $2,271,556
                                                                           ==========
7. LEASE COMMITMENTS
 
     The principle types of property leased by the Company consist of land used
for its broadcast tower, vehicles, computer software and other office equipment.
The Company's minimum lease commitments under all non-cancelable operating
leases are as follows:
1996...............................................................  $39,408
        1997...............................................................   19,171
        1998...............................................................    9,828
        1999...............................................................    3,259
        2000...............................................................    1,200
        Thereafter.........................................................   10,800
                                                                             -------
                                                                             $83,666
                                                                             =======
F-31
102
 
                                    MEDIA VI
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
7. LEASE COMMITMENTS--(CONTINUED)
     The Company's rental expense, covering the use of a modular office unit,
amounted to approximately $7,800 for the year ended December 31, 1995, and has
been included in general and administrative expenses.
 
8. LEGAL PROCEEDINGS
 
     The Company is involved in various legal proceedings from time to time in
the normal course of business. In management's opinion, the litigation with
which the Company is currently involved, individually and in the aggregate, is
not material to the Company's financial condition or the results of its
operations.
 
9. RELATED PARTY TRANSACTIONS
 
     The sole shareholder of one of the Company's general partners is an
attorney employed by a law firm which provides professional services to the
Company on a continuing and regular basis. During 1995, fees of approximately
$14,000 were paid to this firm.
 
     Additionally, the sole shareholder of one of the Company's general partners
is the owner of a local business with which the Company's radio stations conduct
business. During 1995, the Company recorded sales of approximately $7,000
related to advertisements aired for this partner's business.
 
10. DEFINED CONTRIBUTION RETIREMENT PLAN
 
     The Company has a 401(k) Plan (the "Plan") for the benefit of all
employees. Participants may elect to contribute a percentage of their annual
compensation to the Plan, subject to applicable Internal Revenue Service
limitations. The Company makes a matching contribution to the Plan, not to
exceed 1% of the employees' contributions. The employer's share of the
contributions vest according to a predetermined schedule. Total contributions
made by the Company for the year ended December 31, 1995 amounted to $9,181.
 
                                      F-32
103
 
                          INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors
Adventure Communications--Huntington
(Division of Adventure Communications, Inc.)
 
     We have audited the accompanying balance sheets of Adventure
Communications--Huntington (Division of Adventure Communications, Inc.) as of
December 31, 1995 and 1994, and the related statements of operations, division's
equity (deficit), and cash flows for the three years ended December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. 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 financial position of Adventure
Communications--Huntington (Division of Adventure Communications, Inc.) as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the three years ended December 31, 1995 in conformity with generally
accepted accounting principles.
                                          BROWN, EDWARDS & CO., LLP
 
Bluefield, West Virginia
May 1, 1996
 
                                      F-33
104
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                                 BALANCE SHEETS
DECEMBER 31,                  MARCH 31,
                                                -----------------------     -----------------------
                                                   1994         1995           1995         1996
(UNAUDITED)  (UNAUDITED)
ASSETS
CURRENT ASSETS
  Cash........................................  $  271,000   $  105,926     $  292,881   $  169,814
  Accounts receivable, less allowance for
     doubtful accounts of $48,000, $66,000,
     $50,992 and $74,717 on December 31, 1994
     and 1995 and March 31, 1995 and 1996,
     respectively (Note 7)....................     535,031      647,986        439,398      561,348
  Prepaid assets..............................       8,310        1,325         14,422        1,045
  Other receivables...........................      40,162       43,120         27,948       31,718
  Deferred income taxes (Note 5)..............          --       26,400             --       26,400
                                                ----------   ----------     ----------   ----------
          Total current assets................     854,503      824,757        774,649      790,325
                                                ----------   ----------     ----------   ----------
PROPERTY AND EQUIPMENT, NET
  (Notes 3 and 7).............................   1,090,102    1,225,957      1,102,838    1,186,035
                                                ----------   ----------     ----------   ----------
INTANGIBLES, NET (Note 4).....................      59,727      135,140         56,625      130,269
                                                ----------   ----------     ----------   ----------
                                                $2,004,332   $2,185,854     $1,934,112   $2,106,629
                                                ==========   ==========     ==========   ==========
               LIABILITIES AND
              DIVISION'S EQUITY
CURRENT LIABILITIES
  Accounts payable and accrued expenses.......  $  148,848   $  177,321     $  163,441   $   76,004
  Inter-divisional payable (Note 6)...........   2,327,152    2,282,170      2,263,962    2,258,038
                                                ----------   ----------     ----------   ----------
          Total current liabilities...........   2,476,000    2,459,491      2,427,403    2,334,042
                                                ----------   ----------     ----------   ----------
Commitment (Note 7)...........................          --           --             --           --
DIVISION'S EQUITY (DEFICIT)...................    (471,668)    (273,637)      (493,291)    (227,413)
                                                ----------   ----------     ----------   ----------
                                                $2,004,332   $2,185,854     $1,934,112   $2,106,629
                                                ==========   ==========     ==========   ==========
The Notes to Financial Statements are an integral part of these statements.
 
                                      F-34
105
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                            STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
                                          YEARS ENDED DECEMBER 31,                  MARCH 31,
                                    ------------------------------------     -----------------------
                                       1993         1994         1995           1995         1996
(UNAUDITED)  (UNAUDITED)
Advertising revenue...............  $2,370,460   $2,718,483   $3,352,771      $700,746     $721,678
Agency commissions................     109,983     (144,313)    (187,292)      (35,875)     (48,607)
                                    ----------   ----------   ----------      --------     --------
          Net revenue.............   2,260,477    2,574,170    3,165,479       664,871      673,071
Other operating revenue...........      27,218       22,060       36,225         5,550        7,649
                                    ----------   ----------   ----------      --------     --------
          Total revenue...........   2,287,695    2,596,230    3,201,704       670,421      680,720
                                    ----------   ----------   ----------      --------     --------
Operating expenses (Note 6):
  Station operating expenses......   1,472,000    1,657,235    2,118,139       505,591      406,651
  Corporate expenses..............     369,077      413,117      572,980       145,052      145,052
  Depreciation....................      88,635       97,374      230,600        48,734       48,471
  Amortization....................       8,932        9,511       13,587         3,102        4,871
                                    ----------   ----------   ----------      --------     --------
                                     1,938,644    2,177,237    2,935,306       702,479      605,045
                                    ----------   ----------   ----------      --------     --------
          Operating income
            (loss)................     349,051      418,993      266,398       (32,058)      75,675
Interest income...................       4,558        7,753        7,273         2,193        1,366
                                    ----------   ----------   ----------      --------     --------
          Income (loss) before
            taxes.................     353,609      426,746      273,671       (29,865)      77,041
(Provision) benefit for income
  taxes (Note 5)..................          --           --      (75,640)        8,242      (30,816)
                                    ----------   ----------   ----------      --------     --------
          Net income (loss).......  $  353,609   $  426,746   $  198,031      $(21,623)    $ 46,224
                                    ==========   ==========   ==========      ========     ========
The Notes to Financial Statements are an integral part of these statements.
 
                                      F-35
106
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                   STATEMENTS OF DIVISION'S EQUITY (DEFICIT)
                  YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
Balance, December 31, 1992......................................................  $(1,252,023)
  1993 net income...............................................................      353,609
                                                                                  -----------
Balance, December 31, 1993......................................................     (898,414)
  1994 net income...............................................................      426,746
                                                                                  -----------
Balance, December 31, 1994......................................................     (471,668)
  1995 net income...............................................................      198,031
                                                                                  -----------
Balance, December 31, 1995......................................................     (273,637)
  Three months ended March 31, 1996 net income (unaudited)......................       46,224
                                                                                  -----------
Balance, March 31, 1996 (unaudited).............................................  $  (227,413)
                                                                                  ===========
The Notes to Financial Statements are an integral part of these statements.
 
                                      F-36
107
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                            STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
                                                 YEARS ENDED DECEMBER 31,               MARCH 31,
                                            -----------------------------------   ---------------------
                                              1993        1994         1995         1995        1996
(UNAUDITED) (UNAUDITED)
CASH FLOW FROM OPERATING ACTIVITIES
  Net income (loss)........................ $ 353,609   $ 426,746   $   198,031   $ (21,623)  $  46,224
  Adjustments to reconcile net income
     (loss) to net cash provided by
     operating activities:
     Depreciation and amortization.........    97,567     106,885       244,187      51,836      53,342
     Deferred income taxes.................        --          --       (26,400)         --          --
  Changes in current assets and
     liabilities:
     (Increase) decrease in:
       Accounts receivable.................   (77,872)   (115,602)     (112,955)     95,633      86,638
       Prepaid expenses and other
          receivables......................    25,720      15,506         4,027       6,102      11,682
     (Decrease) increase in:
       Accounts payable and accrued
          expenses.........................     2,317      (5,421)       28,473      14,593    (101,317)
                                            ----------- ---------     ---------   ---------   ---------
          Net cash provided by operating
            activities.....................   401,341     428,114       335,363     146,541      96,569
                                            ----------- ---------     ---------   ---------   ---------
CASH FLOW FROM INVESTING ACTIVITIES
  Purchase of property and
     equipment.............................   (52,697)   (391,518)     (366,455)    (61,470)     (8,549)
  Purchase of intangible assets............        --     (35,000)      (89,000)         --          --
                                            ----------- ---------     ---------   ---------   ---------
          Net cash used in investing
            activities.....................   (52,697)   (426,518)     (455,455)    (61,470)     (8,549)
                                            ----------- ---------     ---------   ---------   ---------
CASH FLOW FROM FINANCING ACTIVITIES
  Increase in inter-divisional payable.....   369,077     813,117       975,018     136,810     175,868
  Repayment of inter-divisional payable....  (580,000)   (850,000)   (1,020,000)   (200,000)   (200,000)
                                            ----------- ---------     ---------   ---------   ---------
          Net cash used in financing
            activities.....................  (210,923)    (36,883)      (44,982)    (63,190)    (24,132)
                                            ----------- ---------     ---------   ---------   ---------
          Increase (decrease) in cash......   137,721     (35,287)     (165,074)     21,881      63,888
CASH
  Beginning................................   168,566     306,287       271,000     271,000     105,926
                                            ----------- ---------     ---------   ---------   ---------
  Ending................................... $ 306,287   $ 271,000   $   105,926   $ 292,881   $ 169,814
                                            =========== =========     =========   =========   =========
SUPPLEMENTAL SCHEDULE OF
  NONCASH TRANSACTIONS
  Barter revenue........................... $ 142,065   $ 181,861   $   233,219   $  56,406   $  62,658
                                            =========== =========     =========   =========   =========
  Barter expense........................... $ 142,370   $ 202,653   $   163,100   $  26,493   $  30,082
                                            =========== =========     =========   =========   =========
The Notes to Financial Statements are an integral part of these statements.
 
                                      F-37
108
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                         NOTES TO FINANCIAL STATEMENTS
                    (INFORMATION FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)
                               DECEMBER 31, 1995
 
NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES
 
  Nature of business:
 
     Adventure Communications--Huntington (the Division) is a division of
Adventure Communications, Inc. (the Company). The Company's principal business
is the operation of AM and FM radio broadcasting stations in the areas of
Bluefield and Huntington, West Virginia; Statesville, North Carolina; and Hilton
Head, South Carolina. The Division operates WKEE-AM and FM, WBVB-FM, WZZW-AM and
WIRO-AM (the Stations).
 
     The Company also has joint operating and marketing agreements with other
radio stations located in the Huntington area. Under these agreements, the
Company is responsible for various promotional and marketing activities of the
Stations. Revenue and expenses resulting from these agreements are included in
the Division's operations.
 
     On April 8, 1996, the Company entered into an asset purchase agreement to
sell substantially all the assets relating to the operations of the Stations
(Note 11).
 
  Revenue recognition:
 
     Advertising revenue is recognized in the accounting period which
corresponds with the broadcast of the advertisement. Barter revenue is reported
when advertisements are broadcast and barter merchandise or services received
are expensed when used. Barter transactions are valued at the market value of
the broadcast time which approximates the market value of the product or
services received.
 
  Property and equipment:
 
     Property and equipment are recorded at cost and are depreciated over their
estimated useful lives using straight-line and accelerated methods.
 
  Valuation of receivables:
 
     The Division provides for bad debts under the reserve method which charges
current operations for estimated uncollectibles based upon the Division's
collection experience and an evaluation of the receivables at year end.
 
  Intangible assets:
 
     Acquisition costs (non-compete covenants and goodwill) in excess of the net
tangible assets of acquired radio stations are amortized on a straight-line
basis over periods of up to 15 years, and are included in the financial
statements at cost less accumulated amortization.
 
  Income taxes:
 
     Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred taxes
related primarily to the allowance for doubtful accounts which is not deductible
for income tax return purposes until the accounts are written off as
uncollectible. The deferred tax asset represents the future tax return
deduction.
 
     Effective January 1, 1995, the Company revoked its S Corporation election
and became a taxable entity. Previously, its income and losses were included in
the personal tax returns of the stockholders, and the Company did not record an
income tax provision or benefit.
 
                                      F-38
109
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
                    (INFORMATION FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)
                               DECEMBER 31, 1995
 
NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
  Statement of cash flows:
 
     Separate disclosures have not been made for cash paid for interest and
income taxes because these amounts are included in inter-divisional transactions
with the Company.
 
  Use of estimates:
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
 
NOTE 2.  ACQUISITIONS
 
     In November 1994, the Company purchased selected assets of an AM radio
station in Milton, West Virginia. The acquisition was accounted for by the
purchase method, and the statement of income includes the results of operations
of this station from the date of acquisition.
Property and equipment............................................  $365,000
        Intangibles.......................................................    35,000
                                                                            --------
                                                                            $400,000
                                                                            ========
In June 1995, the Company purchased selected assets of an AM radio station
in Ironton, Ohio. The acquisition was accounted for by the purchase method, and
the statement of income includes the results of operations of this station from
the date of acquisition.
Property and equipment............................................  $211,000
        Intangibles.......................................................    89,000
                                                                            --------
                                                                            $300,000
                                                                            ========
Pro forma results of operations from these acquisitions were not material
to the Division's operations. Therefore, such information has not been
presented.
 
NOTE 3.  PROPERTY AND EQUIPMENT
 
     Major classes of property and equipment are as follows:
DECEMBER 31,                    MARCH 31,
                                        -------------------------     -------------------------
                                           1994           1995           1995           1996
Land and improvements.............  $   50,000     $   60,000     $   50,000     $   60,000
    Buildings and improvements........     520,557        550,557        520,557        550,557
    Broadcasting equipment............   1,482,136      1,735,498      1,482,136      1,735,498
    Furniture and fixtures............     119,846        124,756        141,681        124,756
    Transportation equipment..........       4,480         22,280         22,280         22,280
    Computer and office equipment.....     137,033        187,416        158,868        195,965
                                        ----------     ----------     ----------     ----------
                                         2,314,052      2,680,507      2,375,522      2,689,056
    Less accumulated depreciation.....   1,223,950      1,454,550      1,272,684      1,503,021
                                        ----------     ----------     ----------     ----------
                                        $1,090,102     $1,225,957     $1,102,838     $1,186,035
                                        ==========     ==========     ==========     ==========
F-39
110
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
                    (INFORMATION FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)
                               DECEMBER 31, 1995
 
NOTE 4.  INTANGIBLES
 
     Intangibles are stated at cost, net of amortization and consist of the
following:
DECEMBER 31,                MARCH 31,
                                              ---------------------     ---------------------
                                                1994         1995         1995         1996
Non-compete covenant....................  $ 10,000     $ 20,000     $ 10,000     $ 20,000
    Goodwill................................    99,317      163,317       99,317      163,317
    License fees............................    15,000       30,000       15,000       30,000
                                              --------     --------      -------     --------
                                               124,317      213,317      124,317      213,317
    Less accumulated amortization...........    64,590       78,177       67,692       83,048
                                              --------     --------      -------     --------
                                              $ 59,727     $135,140     $ 56,625     $130,269
                                              ========     ========      =======     ========
NOTE 5.  INCOME TAXES
 
     The (provision) benefit for income taxes consists of the following
components:
THREE MONTHS ENDED
                                                          YEAR ENDED           MARCH 31,
                                                         DECEMBER 31,     -------------------
                                                             1995          1995        1996
Current (expense) benefit..........................   $ (102,040)     $8,242     $(30,816)
    Deferred...........................................       26,400          --           --
                                                         ------------     ------     --------
         (Provision) benefit for income taxes..........   $  (75,640)     $8,242     $(30,816)
                                                          ==========      ======     ========
Income tax (expense) benefit differs from the statutory federal rate of 34%
as follows:
THREE MONTHS ENDED
                                                          YEAR ENDED           MARCH 31,
                                                         DECEMBER 31,     -------------------
                                                             1995          1995        1996
Tax (expense) benefit..............................   $ (109,468)     $4,520     $(30,816)
    Non-deductible items...............................       (4,172)         --           --
    Change in tax status...............................       38,000       3,722           --
                                                         ------------     ------     --------
         (Provision) benefit for income taxes..........   $  (75,640)     $8,242     $(30,816)
                                                          ==========      ======     ========
As discussed in Note 1, the Company changed its tax status from nontaxable
to taxable effective for 1995. Accordingly, the deferred tax asset of
approximately $38,000 at the date that the termination election became effective
has been recorded through a charge to the tax provision for 1995.
 
NOTE 6.  INTER-DIVISIONAL TRANSACTIONS
 
     The Company has allocated to the Division various expenses it incurred for
corporate services, overhead and interest costs. The amounts included in
corporate services and overhead allocations are comprised mainly of corporate
office salaries, related payroll taxes and employee benefits, professional fees
and administrative expenses. These costs have been allocated based on revenues
of the Division compared to total revenues of the Company. Management believes
the amounts allocated to the Division have been computed and charged to the
Division on a reasonable basis.
 
                                      F-40
111
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
                    (INFORMATION FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)
                               DECEMBER 31, 1995
 
NOTE 6.  INTER-DIVISIONAL TRANSACTIONS--(CONTINUED)
     The Division is obligated to the Company for monies received from the
Company for the original purchase of the Stations as well as the allocated
expenses mentioned above. The Division, in return, transfers cash to the Company
that is in excess of its operating needs. These transactions are conducted on an
interest free basis. The inter-divisional payable is analyzed below:
DECEMBER 31,                    MARCH 31,
                                           --------------------------     -------------------------
                                              1994           1995            1995           1996
Balance, beginning.......................  $2,364,035     $ 2,327,152     $2,327,152     $2,282,170
Allocations of corporate costs to the
  Division...............................     413,117         675,018        136,810        175,868
Purchase of Stations.....................     400,000         300,000             --             --
Cash transfers...........................    (850,000)     (1,020,000)      (200,000)      (200,000)
                                           ----------     -----------     ----------     ----------
Balance, ending..........................  $2,327,152     $ 2,282,170     $2,263,962     $2,258,038
                                           ==========     ===========     ==========     ==========
NOTE 7.  COMMITMENT
 
     Adventure Communications Inc. is obligated for long-term debt of
approximately $6,900,000 for which substantially all assets of the Company
(including the Division) are pledged as collateral. At December 31, 1995, the
book value of total assets of the Company exceeds the long-term debt.
Approximately $3,700,000 of the debt is also secured by a $4,000,000 life
insurance policy on the majority stockholder of the Company.
 
     A note payable to the majority stockholder of the Company of $2,400,000 is
included in the $6,900,000 debt referred to above.
 
NOTE 8.  EMPLOYEE BENEFIT PLANS
 
     The Company has a contributory profit sharing plan covering all full time
employees with one or more years of service. The plan provides for annual
employer contributions on a discretionary basis as determined by the Board of
Directors. No contributions were made to the plan in 1993, 1994 or 1995.
 
     The Company also has a 401(k) retirement plan, whereby participants may
contribute a percentage of their compensation.
 
     The Company's matching contribution percentage (which is determined
annually by the Company) is limited to 10% of the participant's compensation for
each plan year. The Division's contributions were approximately $8,600, $9,400
and $8,200 for the years ended December 31, 1993, 1994 and 1995, respectively.
 
NOTE 9.  OPERATING LEASES
 
     The Division leases certain transmission towers and automobiles under
non-cancelable lease agreements. These leases have been classified as operating
leases; and accordingly, all rents are charged to operations as incurred.
 
                                      F-41
112
 
                      ADVENTURE COMMUNICATIONS--HUNTINGTON
                  (DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
                    (INFORMATION FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)
                               DECEMBER 31, 1995
 
NOTE 9.  OPERATING LEASES--(CONTINUED)
     The following is a schedule by years of future minimum rental payments
required under operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of December 31, 1995:
YEAR ENDING DECEMBER 31:
        1996...............................................................  $15,630
        1997...............................................................    8,500
        1998...............................................................    2,400
        1999...............................................................    2,400
        2000...............................................................    2,400
                                                                             -------
        Total minimum payments required....................................  $31,330
                                                                             =======
Lease expense was approximately $30,800, $28,200 and $15,630 for 1993, 1994
and 1995, respectively.
 
NOTE 10.  DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The carrying amount of the inter-divisional payable approximates fair
value. It is included in the financial statements as a current liability due to
the pending sales discussed in Note 11. The inter-divisional payable will be
satisfied by the proceeds of the sale. In the financial statements of the
Company, all inter-divisional payables/receivables are eliminated.
 
NOTE 11.  SUBSEQUENT EVENT
 
     On April 8, 1996, the Company entered into an asset purchase agreement to
sell substantially all the assets relating to the operations of the Stations for
$7,765,000. The sale of the Station is contingent based on FCC consent. The
buyer will purchase all of the assets for the Stations, free and clear of any
liabilities, mortgages, liens, pledges, conditions or encumbrances except for
the Stations' cash, rights to refunds or deposits which relate to the period
prior to closing and accounts receivable. Also at closing, $475,000 of the sales
price will be deposited with the indemnification escrow agent. The
indemnification period will be for a period of two (2) years following the
closing. The indemnification by seller and buyer shall be for any losses,
liabilities or damages resulting from untrue representations, breach of warranty
or non-fulfillment of covenants, liabilities not expressly assumed by buyer,
liabilities resulting from operations prior to the closing date for the buyer or
liabilities resulting from operation after the closing date for the seller.
 
                                      F-42
113
 
                         REPORT OF INDEPENDENT AUDITORS
 
Board of Directors
Danbury Broadcasting Inc.
 
     We have audited the accompanying balance sheets of Danbury Broadcasting
Inc. as of June 30, 1995 and 1994, and the related statements of operations and
accumulated deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 financial position of Danbury Broadcasting Inc. as
of June 30, 1995 and 1994, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
 
                                          PANETH, HABER & ZIMMERMAN LLP
 
New York, NY
August 18, 1995
 
                                      F-43
114
 
                           DANBURY BROADCASTING INC.
 
                                 BALANCE SHEETS
JUNE 30,
                                                            ------------------------   MARCH 26,
                                                               1994          1995         1996
                                                                                       (unaudited)
CURRENT ASSETS
  Cash....................................................  $    92,716   $  177,627   $  422,092
  Accounts receivable, net of allowance for doubtful
     accounts of $22,000 and $22,738 at June 30, 1994 and
     1995, respectively...................................      621,637      700,274      129,407
  Due from related party..................................           --       12,189       43,810
  Prepaid expenses........................................       18,951       36,526       14,598
  Other...................................................        7,593       10,165        9,140
                                                             ----------   ----------   -----------
          Total Current Assets............................      740,897      936,781      619,047
PROPERTY AND EQUIPMENT, at cost, less accumulated
  depreciation............................................    1,508,309    1,120,583    1,002,879
INTANGIBLE ASSETS, less accumulated amortization..........    1,064,940    1,233,912    1,071,404
OTHER ASSETS..............................................        5,986        5,258           --
                                                             ----------   ----------   -----------
                                                            $ 3,320,132   $3,296,534   $2,693,330
                                                             ==========   ==========   ===========
                            LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
  Current maturities of long-term debt....................  $   487,500   $  225,369   $  300,745
  Advances from affiliate.................................        6,100           --           --
  Accounts payable........................................       49,243        8,842       36,352
  Accrued expenses........................................      245,486      174,021      154,600
  Dividend payable........................................       13,750           --           --
                                                             ----------   ----------   -----------
          Total Current Liabilities.......................      802,079      408,232      491,697
LONG-TERM DEBT, less current maturities...................    2,700,000    3,102,853    2,950,000
                                                             ----------   ----------   -----------
          Total Liabilities...............................    3,502,079    3,511,085    3,441,697
                                                             ----------   ----------   -----------
COMMITMENTS
REDEEMABLE PREFERRED STOCK
  Series A cumulative preferred, 500 shares, nonvoting,
     par value $100 per share; authorized, issued and
     outstanding. Liquidation preference and redemption
     amount $1,000 per share plus accrued dividends.......      500,000      541,250      582,500
                                                             ----------   ----------   -----------
STOCKHOLDERS' DEFICIENCY
  Common stock, par value $.01 per share; authorized 1,000
     shares; issued and outstanding 40 shares.............           --           --           --
  Accumulated deficit.....................................     (681,947)    (755,801)  (1,330,867)
                                                             ----------   ----------   -----------
          Total Stockholders' Deficiency..................     (681,947)    (755,801)  (1,330,867)
                                                             ----------   ----------   -----------
                                                            $ 3,320,132   $3,296,534   $2,693,330
                                                             ==========   ==========   ===========
See notes to financial statements.
 
                                      F-44
115
 
                           DANBURY BROADCASTING INC.
 
                STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
YEAR ENDED                 NINE          JULY 1,
                                                   JUNE 30,                 MONTHS          1995
                                          ---------------------------       ENDED          THROUGH
                                             1994            1995         MARCH 31,       MARCH 26,
                                          -----------     -----------        1995           1996
                                                                          ----------     -----------
                                                                          (unaudited)    (unaudited)
REVENUE
  Broadcasting revenue..................  $ 3,027,281     $3,451,684      $2,566,181     $ 1,086,935
  Less agency commissions...............      260,702        311,768         228,664          97,015
                                           ----------     ----------      ----------     -----------
          Net Revenue...................    2,766,579      3,139,916       2,337,517         989,920
                                           ----------     ----------      ----------     -----------
EXPENSES
  Programming...........................      427,896        502,299         384,488         176,639
  Technical.............................       93,016        106,475          77,567          96,262
  Selling...............................      826,110        865,381         659,034         413,511
  General and Administrative............      770,714        903,627         624,320         557,666
  Interest Expense......................      352,253        347,578         257,570         314,567
  Depreciation..........................      204,543        197,197         140,367         119,552
  Amortization..........................      181,916        236,213         151,332         165,915
  Local marketing agreement fees........           --             --              --        (320,376)
                                           ----------     ----------      ----------     -----------
          Total Expenses................    2,856,448      3,158,770       2,294,678       1,523,736
                                           ----------     ----------      ----------     -----------
NET (LOSS) INCOME.......................      (89,869)       (18,854 )        42,839        (533,816)
ACCUMULATED DEFICIT
  Beginning of year (period)............     (537,078)      (681,947 )      (681,947)       (755,801)
  Preferred stock dividends.............      (55,000)       (55,000 )       (41,250)        (41,250)
                                           ----------     ----------      ----------     -----------
          End of year (period)..........  $  (681,947)    $ (755,801 )    $ (680,358)    $(1,330,867)
                                           ==========     ==========      ==========     ===========
See notes to financial statements.
 
                                      F-45
116
 
                           DANBURY BROADCASTING INC.
 
                            STATEMENTS OF CASH FLOWS
YEAR ENDED                          JULY 1,
                                                                   JUNE 30,            NINE MONTHS     1995
                                                          --------------------------      ENDED       THROUGH
                                                              1994          1995        MARCH 31,    MARCH 26,
                                                          ------------   -----------      1995         1996
                                                                                       -----------   ---------
                                                                                       (unaudited)   (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)......................................  $   (89,869)  $   (18,854)  $    42,839   $(533,816)
  Adjustments to reconcile net loss to net cash provided
     by operating activities:
     Depreciation and amortization.......................      386,459       433,410       291,699     285,467
     Change in:
       Accounts receivable...............................     (140,959)      (78,637)      (59,733)    570,867
       Due from related party............................           --        24,663       (45,940)    (31,621)
       Prepaid expenses and other current assets.........        1,139       (20,147)      (23,263)     22,953
       Other assets......................................          955        (2,749)        2,864       5,258
       Accounts payable..................................      (12,950)      (42,801)       27,940      27,510
       Accrued expenses..................................       58,485       (71,465)     (147,037)    (19,421)
                                                             ---------   -----------   -----------   ---------
          Net Cash Provided by Operating Activities......      203,260       223,420        89,369     327,197
                                                             ---------   -----------   -----------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Advances from affiliate................................           --        (6,100)       (6,100)         --
  Purchases of property and equipment....................      (59,047)      (34,521)      (27,710)     (5,255)
                                                             ---------   -----------   -----------   ---------
          Net Cash Used in Investing Activities..........      (59,047)      (40,621)      (33,810)     (5,255)
                                                             ---------   -----------   -----------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Deferred financing costs...............................           --      (211,110)     (211,110)         --
  Proceeds of notes payable..............................      (62,500)    3,404,106     3,404,106          --
  Repayments of notes payable............................           --    (3,263,384)   (3,226,158)    (77,477)
  Preferred stock dividends..............................      (55,250)      (27,500)      (27,500)         --
                                                             ---------   -----------   -----------   ---------
Net Cash Used in Financing Activities....................     (117,750)      (97,888)      (60,662)    (77,477)
                                                             ---------   -----------   -----------   ---------
NET INCREASE (DECREASE) IN CASH..........................       26,463        84,911        (5,103)    244,465
CASH
  Beginning of year......................................       66,253        92,716        92,716     177,627
                                                             ---------   -----------   -----------   ---------
  End of year............................................  $    92,716   $   177,627   $    87,613   $ 422,092
                                                             =========   ===========   ===========   =========
SUPPLEMENTAL DISCLOSURES OF CASH
  FLOW INFORMATION
  Interest Paid..........................................  $   354,649   $   434,894   $   344,188   $ 262,449
  Income Taxes Paid......................................           --            --            --          --
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
  ACTIVITIES
  Broadcast equipment acquired through trade-out
     transactions........................................  $    15,475   $     2,400   $     2,400   $      --
  Broadcast equipment and property exchanged for
     favorable tower lease (Note 12).....................  $        --   $   190,248   $   190,248   $      --
  Unpaid accrual of redeemable preferred stock
     dividends...........................................  $        --   $    41,250   $    27,500   $  41,250
See notes to financial statements.
 
                                      F-46
117
 
                           DANBURY BROADCASTING INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
                                 JUNE 30, 1995
 
1. SIGNIFICANT ACCOUNTING POLICIES
 
  Nature of Business
 
     Danbury Broadcasting Inc. (the "Company"), a Connecticut corporation,
operates radio stations WRKI-FM and WINE-AM in Danbury, Connecticut. Its
revenues are derived from advertisers consisting primarily of local businesses.
Credit is extended to its advertisers in the normal course of business.
 
  Depreciation and Amortization
 
     Depreciation of property and equipment is computed over the estimated
useful lives of the respective assets using the straight-line method. Estimated
useful lives range from 5 to 20 years. Expenditures for repairs and maintenance
are charged to operations as incurred.
 
     Goodwill, which is included in intangible assets, represents the cost of
acquired assets in excess of values ascribed to the net identified assets and is
being amortized using the straight-line method over 40 years. Costs incurred in
obtaining long-term financing were capitalized and are included in intangible
assets. They are being amortized using the straight-line method (that does not
differ materially from the interest rate method) over the term of the related
debt.
 
     A covenant not to compete, which restricts the seller and the previous
owner from competing with the Company in the Greater Danbury, Connecticut area
for a period of four years, is included in intangible assets. This covenant is
being amortized on a straight-line basis over its four year life.
 
     The stations' broadcast license is being amortized using the straight-line
method over 25 years.
 
     A favorable lease for broadcast tower rental is being amortized using the
straight-line method over its 30 year term.
 
  Non-Monetary Transactions
 
     Barter transactions represent the exchange of unsold advertising time for
merchandise or services. Barter transactions are reported at the estimated fair
value of the product or service received. Revenue is recognized when commercials
are broadcast and merchandise or services obtained are reported when received or
used. For merchandise or services received prior to the broadcast of the
commercial, a liability is provided; conversely, a receivable is established
when the commercial is broadcast prior to the receipt of the merchandise or
services.
 
  Income Taxes
 
     The Company has adopted Statement of Financial Accounting Standards 109
("SFAS 109") and recognizes deferred tax assets and liabilities for temporary
differences between amounts recorded for financial statement and tax purposes.
 
  Reclassification
 
     Certain prior year amounts have been reclassified to conform with current
year presentation.
 
2. CASH
 
     Cash in the amount of $164,000 and $351,000 (including outstanding checks
of $38,000 and $213,000) shown on the June 30, 1994 and 1995 balance sheets
respectively, was on deposit in a commercial bank located in Fairfield,
Connecticut, of which $100,000 was insured by the FDIC.
 
                                      F-47
118
 
                           DANBURY BROADCASTING INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
                                 JUNE 30, 1995
 
3. PROPERTY AND EQUIPMENT
 
     Property and equipment consists of the following:
JUNE 30,
                                                                  -------------------------
                                                                     1994           1995
Land........................................................  $  209,722     $  163,583
    Building....................................................     704,314        551,831
    Equipment, furniture and fixtures...........................     958,603        980,729
    Tower improvements in progress..............................      36,851             --
                                                                  ----------     ----------
                                                                   1,909,490      1,696,143
    Less accumulated depreciation...............................     401,181        575,560
                                                                  ----------     ----------
                                                                  $1,508,309     $1,120,583
                                                                  ==========     ==========
4. INTANGIBLE ASSETS
 
     Intangible assets consist of the following:
JUNE 30,
                                                                  -------------------------
                                                                     1994           1995
Goodwill....................................................  $  192,421     $  192,421
    Deferred financing costs....................................      61,815        272,925
    Covenant not to compete.....................................     550,000        550,000
    Stations' licenses..........................................     618,000        618,000
    Favorable lease.............................................          --        190,248
                                                                  ----------     ----------
                                                                   1,422,236      1,823,594
    Less accumulated amortization...............................     357,296        589,682
                                                                  ----------     ----------
                                                                  $1,064,940     $1,233,912
                                                                  ==========     ==========
5. ACCRUED EXPENSES
 
     Accrued expenses consist of the following:
JUNE 30,
                                                                  -------------------------
                                                                     1994           1995
Accrued commissions.........................................    $ 89,000       $ 66,511
    Accrued compensation........................................      30,558         70,000
    Accrued interest............................................      87,656          1,889
    Other items.................................................      38,272         35,621
                                                                  ----------     ----------
                                                                    $245,486       $174,021
                                                                  ==========     ==========
F-48
119
 
                           DANBURY BROADCASTING INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
                                 JUNE 30, 1995
 
6. LONG TERM DEBT
JUNE 30,
                                                                  -------------------------
                                                                     1994           1995
Term loan payable to United Jersey Bank (UJB) at an interest
      rate of 1.5% over the bank's per annum index rate (9% at
      June 30, 1995) plus principal payments escalating from
      $37,500 quarterly for the year ending June 30, 1995 to
      $200,000 quarterly for the period ending December 31,
      1999......................................................  $       --     $2,175,000
    Revolving loan payable to United Jersey Bank requiring
      payment of interest only at 1.5% over the bank's per annum
      index rate (9% at June 30, 1995) and payable quarterly.
      Payment of the outstanding principal balance is due
      December 31, 1999.........................................          --      1,150,000
    Capital lease payable.......................................                      3,222
    Note payable to BCI Growth, L.P ("BCI") at 11% interest only
      for the period from July 1, 1992 through June 30, 1993,
      payable quarterly. Thereafter, interest at 11% on the
      unpaid balance plus principal payments escalating from
      $62,500 quarterly for the year ending June 30, 1994 to
      $100,000 quarterly for the period ending March 31, 1997.
      The note was paid off from the proceeds of the UJB loan.
      This note was owed to the holder of the outstanding
      warrants. See Note 10.....................................   3,187,500             --
                                                                  ----------     ----------
                                                                   3,187,500      3,328,222
    Less current maturities.....................................     487,500        225,369
                                                                  ----------     ----------
                                                                  $2,700,000     $3,102,853
                                                                  ==========     ==========
The notes with UJB contain certain restrictive covenants and stipulate
various financial and operating requirements. Included, among other things, are
covenants regarding dividends, operating expenditures, capital expenditures and
debt.
 
     Capital stock, preferred stock, all tangible and intangible assets of the
Company, and a key man life insurance policy of $1,000,000 are pledged as
collateral on the above note. Scheduled maturities of long-term debt during the
next five years ending June 30, are:
1996.............................................................  $  225,369
        1997.............................................................     377,479
        1998.............................................................     500,374
        1999.............................................................     675,000
        2000.............................................................   1,550,000
                                                                           ----------
                                                                           $3,328,222
                                                                           ==========
F-49
120
 
                           DANBURY BROADCASTING INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
                                 JUNE 30, 1995
 
7. BARTER TRANSACTIONS
 
     The accompanying financial statements include the following barter
transactions:
YEAR ENDED
                                                                           JUNE 30,
                                                                     ---------------------
                                                                       1994         1995
Barter revenue.................................................  $255,908     $271,253
                                                                     ========     ========
    Barter expenditures............................................  $241,340     $182,821
                                                                     ========     ========
    Amounts included in accounts receivable from trade-out
      transactions.................................................  $ 47,005     $136,493
                                                                     ========     ========
8. REDEEMABLE PREFERRED STOCK
 
     The Series A cumulative preferred stock carries a liquidation preference of
$1,000 per share and a par value of $100 per share. The Company may redeem the
shares at this price, plus accrued but unpaid dividends, at any time through
June 30, 1997. At the earlier of that date, or an event of default (as defined)
the holder can require the Company to redeem the shares in full, with accrued
but unpaid dividends out of funds "legally available". An event of default
occurred during the year ended June 30, 1995 in that the Company did not pay the
full dividend. This gives the holders of the shares the right to demand
redemption.
 
     The Series A cumulative preferred stock provides for an annual dividend of
$110 per share. Dividends of $55,000 and $13,750 were declared on the preferred
stock and paid for the years ended June 30, 1994 and 1995, respectively. At June
30, 1995, dividends in arrears amounted to $41,250 and were accrued in the
accompanying balance sheet.
 
9. COMMITMENTS
 
  Operating Leases
 
     During 1995, the Company leased space on a transmitting tower under a five
year lease renewable in five (5) year terms at the Company's option from a
related party (Note 12). Automobiles under operating leases expire in various
years through 1998.
 
     Future minimum annual lease payments, by year and in the aggregate, under
such leases are as follows:
1996..............................................................  $ 38,000
        1997..............................................................    32,000
        1998..............................................................    23,000
        1999..............................................................    21,000
        2000..............................................................     9,000
                                                                            --------
                                                                            $123,000
                                                                            ========
Rent expense on the above, for the years ended June 30, 1994 and 1995 was
$44,000 and $46,500, respectively.
 
  Other Commitments
 
     The Company also has various commitments under contracts with a rating
service, programming services, advertising displays and a software license
expiring in various years through 1998.
 
                                      F-50
121
 
                           DANBURY BROADCASTING INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
                                 JUNE 30, 1995
 
9. COMMITMENTS--(CONTINUED)
     Future annual payments by year and in the aggregate under such commitments
are as follows:
1996...............................................................  $12,000
        1997...............................................................    6,000
        1998...............................................................    1,000
                                                                             -------
                                                                             $19,000
                                                                             =======
10. STOCKHOLDERS' DEFICIENCY
 
     There is an outstanding warrant (the "warrant") issued to BCI in 1992,
giving it the right to purchase up to 80% of the Company's Common Stock for
$0.01 per share. This warrant also allows them the option to acquire 90% of the
common stock if the Company fails to achieve certain cash flow levels after June
30, 1997, as extended. No value has been assigned to this warrant which expires
June 30, 1998.
 
11. INCOME TAXES
 
     The Company has a net operating loss carryforward of approximately $284,000
which can be carried forward to the years 2008 and 2009 to offset taxable income
resulting in a deferred tax asset of $118,000. Other temporary differences
resulting from differences between book and tax amortization and depreciation
result in a deferred tax asset of approximately $195,000 and $81,000 at June 30,
1994 and 1995, respectively. Total deferred tax assets of approximately $224,000
at June 30, 1994 and $199,000 at June 30, 1995 have been completely offset by a
valuation allowance. The valuation allowance increased by $69,000 during the
year ended June 30, 1994 and decreased by $25,000 during the year ended June 30,
1995.
 
     Income tax benefit for the years ended June 30, 1994 and 1995 differs from
the expected statutory rate for the following reasons:
1994         1995
Federal, at statutory rates....................................  $(30,500)    $ (6,500)
    State, net of Federal benefit..................................    (6,500)      (1,500)
    Nondeductible expenses.........................................     5,500       10,000
    Taxable gain on asset transfer.................................        --       23,000
    Change in estimate.............................................   (37,500)          --
                                                                     ---------    ----------
                                                                      (69,000)      25,000
    Change in deferred tax asset valuation allowance...............    69,000      (25,000)
                                                                     ---------    ----------
    Tax provision..................................................  $     --     $     --
                                                                     =========    ==========
12. RETIREMENT PLAN
 
     Employees of the Company may participate in profit sharing/401(k) savings
plan and may elect to make contributions pursuant to a salary reduction
agreement upon meeting length of service and age requirements. The Company can
elect to make discretionary contributions to the profit sharing plan but has not
done so for either year. The Company has matched 20% of individual 401(k)
contributions during the year ended June 30, 1995. The Company's cost amounted
to approximately $4,500.
 
                                      F-51
122
 
                           DANBURY BROADCASTING INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
                                 JUNE 30, 1995
 
13. RELATED PARTY TRANSACTIONS
 
     During the year ended June 30, 1995, the Company exchanged its tower and
associated real property with a book value of $190,000 for a favorable lease
with a Partnership formed to improve and rent the tower to the Company and
others. The Partnership has committed to the financing of tower improvements
which will improve the broadcast signal. The Company's lease for placement of
its antenna on the tower at the optimal site is at below market rates. The
Company and the Partnership are related through common control. The favorable
lease has been valued at $190,000, the book value of the property exchanged.
 
     In connection with the tower improvement project, the Company advanced
$12,189 on behalf of the Partnership.
 
14. SUBSEQUENT EVENT (UNAUDITED)
 
     In March 1996, the outstanding warrants held by BCI (Note 10) were
exercised.
 
                                      F-52
123
 
                          INDEPENDENT AUDITORS' REPORT
 
Stockholders and Board of Directors
Q Broadcasting, Inc.
Stamford, Connecticut
 
     We have audited the accompanying balance sheets of Q Broadcasting, Inc. as
of September 30, 1995 and 1994 and the related statements of operations and
deficit and cash flows for each of the three years in the period ended September
30, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. 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, these financial statements referred to above present
fairly, in all material respects, the financial position of Q Broadcasting, Inc.
as of September 30, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended September 30, 1995,
in conformity with generally accepted accounting principles.
 
                                          HOLTZ RUBENSTEIN & CO., LLP
                                          CERTIFIED PUBLIC ACCOUNTANTS
 
Melville, New York
February 12, 1996
 
                                      F-53
124
 
                              Q BROADCASTING, INC.
 
                                 BALANCE SHEETS
SEPTEMBER 30,
                                                      ---------------------------      MARCH 31,
                                                         1994            1995            1996
                                                      -----------     -----------     -----------
                                                                                      (unaudited)
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.........................  $    56,327     $       831     $     1,300
  Accounts receivable, less allowance for doubtful
     accounts of $55,000 in 1994, $58,000 in 1995
     and $58,000 as of March 31, 1996...............      652,416         510,971         640,322
  Prepaid expenses and other current assets.........       54,288          53,951          94,744
  Due from related parties (Note 4).................       35,433          72,880          46,925
                                                      -----------     -----------     -----------
          Total current assets......................      798,464         638,633         783,291
PROPERTY AND EQUIPMENT, net (Notes 5 and 7).........      523,025         407,292         328,517
INTANGIBLES, net (Notes 6 and 8)....................    2,633,683       2,375,195       2,308,451
OTHER ASSETS........................................       57,131          39,168          37,262
                                                      -----------     -----------     -----------
                                                      $ 4,012,303     $ 3,460,288     $ 3,457,521
                                                      ===========     ===========     ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
  Accounts payable..................................  $    70,116     $   124,646     $   210,443
  Accrued expenses..................................      113,151         159,316         148,503
  Current portion of capital lease obligations
     (Notes 5 and 7)................................        8,695           6,183           5,098
                                                      -----------     -----------     -----------
          Total current liabilities.................      191,962         290,145         364,044
                                                      -----------     -----------     -----------
CAPITAL LEASE OBLIGATIONS (Notes 5 and 7)...........       10,161           3,981           1,519
                                                      -----------     -----------     -----------
NOTE PAYABLE--STOCKHOLDERS (Note 9).................    6,027,893       6,995,290       7,688,074
                                                      -----------     -----------     -----------
COMMITMENTS (Note 8)
STOCKHOLDERS' DEFICIT:
  Common stock, no par value, 1,000 shares
     authorized, issued and outstanding.............        1,000           1,000           1,000
  Additional paid-in capital........................      999,000         999,000         999,000
  Deficit...........................................   (3,217,713)     (4,829,128)     (5,596,116)
                                                      -----------     -----------     -----------
                                                       (2,217,713)     (3,829,128)     (4,596,116)
                                                      -----------     -----------     -----------
                                                      $ 4,012,303     $ 3,460,288     $ 3,457,521
                                                      ===========     ===========     ===========
See notes to financial statements.
 
                                      F-54
125
 
                              Q BROADCASTING, INC.
 
                      STATEMENTS OF OPERATIONS AND DEFICIT
YEARS ENDED                     SIX MONTHS ENDED
                                               SEPTEMBER 30,                        MARCH 31,
                                  ---------------------------------------   -------------------------
                                     1993          1994          1995          1995          1996
                                  -----------   -----------   -----------   -----------   -----------
(unaudited)   (unaudited)
REVENUE.........................  $ 1,511,181   $ 2,267,625   $ 2,508,867   $ 1,181,990   $ 1,690,948
  Less: Commissions and fees....      127,866       193,342       222,411       105,714       144,633
                                  ------------  ------------  ------------  ------------  ------------
                                    1,383,315     2,074,283     2,286,456     1,076,276     1,546,315
                                  ------------  ------------  ------------  ------------  ------------
EXPENSES:
  Broadcast and production (Note
     8).........................      715,511       742,018       786,377       361,014       607,182
  Selling and promotion.........      844,004       880,429     1,500,873       647,172       967,285
  General and administrative
     (Note 8)...................      764,768       703,908       823,312       361,744       352,108
  Depreciation and
     amortization...............      637,397       538,600       447,602       158,568       152,600
                                  ------------  ------------  ------------  ------------  ------------
                                    2,961,680     2,864,955     3,558,164     1,528,498     2,079,175
                                  ------------  ------------  ------------  ------------  ------------
LOSS FROM OPERATIONS............   (1,578,365)     (790,672)   (1,271,708)     (452,222)     (532,860)
                                  ------------  ------------  ------------  ------------  ------------
OTHER INCOME (EXPENSE):
  Interest expense (Note 9).....     (257,732)     (438,647)     (493,578)     (240,384)     (295,784)
  Other, net....................       13,705        51,805       153,871        76,963        61,656
                                  ------------  ------------  ------------  ------------  ------------
                                     (244,027)     (386,842)     (339,707)     (163,421)     (234,128)
                                  ------------  ------------  ------------  ------------  ------------
NET LOSS........................   (1,822,392)   (1,177,514)   (1,611,415)     (615,643)     (766,988)
DEFICIT, beginning of period....     (217,807)   (2,040,199)   (3,217,713)   (3,217,713)   (4,829,128)
                                  ------------  ------------  ------------  ------------  ------------
DEFICIT, end of period..........  $(2,040,199)  $(3,217,713)  $(4,829,128)  $(3,833,356)  $(5,596,116)
                                  ============  ============  ============  ============  ============
See notes to financial statements.
 
                                      F-55
126
 
                              Q BROADCASTING, INC.
 
                            STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
                                            YEARS ENDED SEPTEMBER 30,                MARCH 31,
                                     ---------------------------------------   ---------------------
                                        1993          1994          1995         1995        1996
                                     -----------   -----------   -----------   ---------   ---------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING
  ACTIVITIES:
  Net loss.........................  $(1,822,392)  $(1,177,514)  $(1,611,415)  $(615,643)  $(766,988)
                                     -----------   -----------   -----------   ---------   ---------
  Adjustments to reconcile net loss
     to net cash used in operating
     activities:
     Depreciation and
       amortization................      637,397       538,600       447,602     158,568     152,600
     Provision for doubtful
       accounts....................       25,150        75,655        29,702          --          --
     Changes in operating assets
       and liabilities:
       (Increase) decrease in
          assets:
          Accounts receivable......       (9,557)     (444,619)      111,743     131,467    (129,351)
          Prepaid expenses and
            other current assets...         (690)         (196)          337     (70,952)    (40,793)
          Other assets.............       (3,853)      (25,309)       17,963        (201)      1,906
       (Decrease) increase in
          liabilities:
          Accounts payable.........      (22,712)       14,456        54,530     (39,679)     85,797
          Accrued expenses.........      (31,444)       12,009        46,165      38,259     (10,813)
                                     -----------   -----------   -----------   ---------   ---------
     Total adjustments.............      594,291       170,596       708,042     217,462      59,346
                                     -----------   -----------   -----------   ---------   ---------
     Net cash used in operating
       activities..................   (1,228,101)   (1,006,918)     (903,373)   (398,181)   (707,642)
                                     -----------   -----------   -----------   ---------   ---------
CASH FLOWS FROM INVESTING
  ACTIVITIES:
  Purchase of property and
     equipment.....................      (91,532)      (23,118)      (73,381)       (995)     (7,081)
                                     -----------   -----------   -----------   ---------   ---------
     Net cash used in investing
       activities..................      (91,532)      (23,118)      (73,381)       (995)     (7,081)
                                     -----------   -----------   -----------   ---------   ---------
CASH FLOWS FROM FINANCING
  ACTIVITIES:
  Principal repayment of note
     payable.......................     (327,719)           --            --          --          --
  Repayment of capital lease
     obligations...................       (8,585)       (9,823)       (8,692)     (5,841)     (3,547)
  Loans from stockholders..........    1,632,185     1,111,592       967,397     317,374     692,784
  Loans to related parties.........           --       (35,433)      (37,447)     35,433      25,955
                                     -----------   -----------   -----------   ---------   ---------
     Net cash provided by financing
       activities..................    1,295,881     1,066,336       921,258     346,966     715,192
                                     -----------   -----------   -----------   ---------   ---------
Net (decrease) increase in cash and
  cash equivalents.................      (23,752)       36,300       (55,496)    (52,210)        469
Cash and cash equivalents at
  beginning of period..............       43,779        20,027        56,327      56,327         831
                                     -----------   -----------   -----------   ---------   ---------
Cash and cash equivalents at end of
  period...........................  $    20,027   $    56,327   $       831   $   4,117   $   1,300
                                     ===========   ===========   ===========   =========   =========
See notes to financial statements.
 
                                      F-56
127
 
                              Q BROADCASTING, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
                 YEARS ENDED SEPTEMBER 30, 1993, 1994 AND 1995
                AND THE SIX MONTHS ENDED MARCH 31, 1995 AND 1996
  (INFORMATION WITH RESPECT TO THE SIX MONTHS ENDED MARCH 31, 1995 AND 1996 IS
                                   UNAUDITED)
 
1. DESCRIPTION OF ORGANIZATION AND BUSINESS:
 
     Q Broadcasting, Inc. (the "Company") owns and operates two radio broadcast
stations in Stamford, Connecticut. These stations, WSTC-AM and WKHL-FM,
principally serve the Stamford metropolitan area.
 
2. BASIS OF PRESENTATION:
 
     The financial statements have been prepared on a going concern basis which
contemplates continuity of operations and realization of assets and liquidation
of liabilities in the ordinary course of business. The Company's ability to
continue as a going concern is dependent upon the continued financial support of
its shareholders.
 
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
  a. Revenue recognition
 
     Broadcasting revenue is recognized when commercials are aired. Barter
transactions are recorded at the estimated fair value of the merchandise or
services received.
 
  b. Depreciation
 
     The Company provides for depreciation using the declining balance method
over the estimated useful lives of the fixed assets as follows:
Broadcast and other equipment.......................................   5 years
        Tower and antenna systems...........................................   7 years
        Transmitter equipment...............................................   7 years
        Furniture and fixtures..............................................   7 years
c. Amortization
 
     The Company provides for amortization using the straight-line method over
the estimated useful lives of the intangible assets as follows:
Broadcast license..................................................   25 years
        Transmitter lease..................................................   23 years
        Covenant not to compete............................................    3 years
        Organizational costs...............................................    5 years
d. Income taxes
 
     The shareholders of the Company elected to be taxed as a "Small Business
Corporation," for federal and state income tax purposes pursuant to the Internal
Revenue Code. As a result of this election, the income of the Company will be
taxed directly to the individual shareholders. Accordingly, no provision for
taxes is included in the financial statements of the Company.
 
  e. Statement of cash flows
 
     For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
 
                                      F-57
128
 
                              Q BROADCASTING, INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:--(CONTINUED)
  f. Advertising
 
     The Company charges to expense, advertising costs as incurred. Advertising
costs amounted to $227,094, $41,405 and $112,226 for the years ended September
30, 1993, 1994 and 1995, respectively and $17,168 and $23,972 for the six months
ended March 31, 1995 and 1996, respectively.
 
  g. Interim financial statements
 
     The unaudited financial statements as of March 31, 1996 and for the six
months ended March 31, 1995 and 1996 reflect all adjustments (consisting only of
normal recurring accruals) which are, in the opinion of management, necessary
for a fair statement of the results for the period. The results of operations
are not necessarily indicative of the results expected for the fiscal year.
 
4. DUE FROM RELATED PARTIES:
 
     The Company advanced funds on behalf of three related entities.
Approximately $16,800 and $54,200 for two entities 100% owned by the Company's
owners as of September 30, 1994 and 1995, respectively and approximately $18,700
to an entity which the Company's owners have a minority interest as of September
30, 1994 and 1995. As of March 31, 1996 these receivables amounted to
approximately $18,700 and $28,200, respectively.
 
5. PROPERTY AND EQUIPMENT:
 
     Property and equipment, at cost, is summarized as follows:
SEPTEMBER 30,            MARCH 31,
                                                     -------------------------        1996
                                                        1994           1995        -----------
                                                                                   (unaudited)
Broadcast and office equipment.................  $  583,853     $  586,269     $   586,269
    Tower and antenna systems......................     268,000        268,000         268,000
    Transmitter equipment..........................      75,000         75,000          75,000
    Furniture and fixtures.........................     229,519        300,484         307,565
                                                     ----------     ----------      ----------
                                                      1,156,372      1,229,753       1,236,834
    Less accumulated depreciation..................     633,347        822,461         908,317
                                                     ----------     ----------      ----------
                                                     $  523,025     $  407,292     $   328,517
                                                     ==========     ==========      ==========
Included in furniture and fixtures was $41,975 related to assets recorded
under capital leases; the related amount included in accumulated depreciation is
$19,095 and $28,707 as of September 30, 1994 and 1995 and $33,513 as of March
31, 1996.
 
                                      F-58
129
 
                              Q BROADCASTING, INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
6. INTANGIBLES:
 
     Intangibles, at cost, is summarized as follows:
SEPTEMBER 30,           MARCH 31,
                                                     -------------------------        1996
                                                        1994           1995        ----------
                                                                                   (unaudited)
Organizational costs...........................  $   97,917     $   97,917     $   97,917
    Covenant not to compete........................     450,000        450,000        450,000
    Broadcast license..............................   1,000,000      1,000,000      1,000,000
    Transmitter lease..............................   1,700,000      1,700,000      1,700,000
                                                     ----------     ----------     ----------
                                                      3,247,917      3,247,917      3,247,917
    Less accumulated amortization..................     614,234        872,722        939,466
                                                     ----------     ----------     ----------
                                                     $2,633,683     $2,375,195     $2,308,451
                                                     ==========     ==========     ==========
7. CAPITAL LEASE OBLIGATIONS:
 
     Included in property and equipment are assets recorded under capital
leases. The future minimum lease payments for these capital leases and the
present value of the net minimum lease payments as of September 30, 1995 are as
follows:
FISCAL YEAR
1996.............................................................  $ 6,826
          1997.............................................................    4,168
                                                                             -------
        Minimum lease payments.............................................   10,994
        Less amount representing interest..................................      830
                                                                             -------
        Present value of net minimum lease payments........................  $10,164
                                                                             =======
8. COMMITMENTS:
 
     The Company leases studio and office space and a transmitter tower site
under operating leases expiring in September 1999 and December 2017,
respectively. Rent expense for these leases was approximately $179,000, $186,000
and $211,000 for the years ended September 30, 1993, 1994 and 1995,
respectively. Rent expense for these leases was approximately $110,000 for the
six months ended March 31, 1995 and 1996.
 
     Minimum rental commitments for the remaining terms of the operating leases
are as follows:
YEAR ENDING SEPTEMBER 30,
1996.........................................................  $212,685
             1997.........................................................   213,180
             1998.........................................................   213,180
             1999.........................................................   213,180
             2000.........................................................    21,780
        Thereafter........................................................   430,939
9. NOTE PAYABLE--STOCKHOLDERS:
 
     In connection with advances made by its stockholders for the acquisition of
assets and working capital, the Company has issued an 8% demand note payable to
its stockholders. The stockholders have agreed not to demand payment until a
date subsequent to October 1, 1996. Interest expense for the years ended
 
                                      F-59
130
 
                              Q BROADCASTING, INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
9. NOTE PAYABLE--STOCKHOLDERS--(CONTINUED)
September 30, 1993, 1994 and 1995 was $238,187, $435,895 and $492,397,
respectively. Interest expense for the six months ended March 31, 1995 and 1996
was $240,384 and $295,784, respectively.
 
10. SUBSEQUENT EVENT:
 
     The Company has entered into a letter of intent for the sale of
substantially all of its operating assets.
 
11. SUPPLEMENTARY INFORMATION--STATEMENT OF CASH FLOWS:
 
     Barter transactions resulted in sales and related expenses of $306,600,
$314,500 and $315,900 for the years ending September 30, 1993, 1994 and 1995,
respectively. Barter transactions resulted in sales and related expenses of
$105,455 and $121,930 for the six months ended March 31, 1995 and 1996,
respectively.
 
     Cash paid during the years ended September 30, 1993, 1994 and 1995 for
interest was $261,018, $438,648 and $493,578, respectively. Cash paid during the
six months ended March 31, 1995 and 1996 for interest was $137,526 and $-0-,
respectively.
 
                                      F-60
131
 
             ------------------------------------------------------
             ------------------------------------------------------
 
NO DEALER, SALES REPRESENTATIVE, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
 
                               ------------------
 
                               TABLE OF CONTENTS
PAGE
Prospectus Summary....................      3
Risk Factors..........................      9
Use of Proceeds.......................     13
Dividend Policy.......................     13
Dilution..............................     14
Capitalization........................     15
Unaudited Pro Forma Consolidated
  Financial Information...............     16
Selected Historical and Pro Forma
  Consolidated Financial Data.........     23
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................     26
Business..............................     33
Management............................     50
Certain Relationships and Related
  Transactions........................     57
Principal and Selling Shareholders....     58
Description of Certain Indebtedness...     60
Description of Capital Stock..........     62
Shares Eligible for Future Sale.......     65
Underwriting..........................     66
Legal Matters.........................     67
Experts...............................     67
Available Information.................     68
Index to Financial Statements.........    F-1
------------------------------------------------------
             ------------------------------------------------------
 
             ------------------------------------------------------
             ------------------------------------------------------
                                4,300,000 SHARES
                             COMMODORE MEDIA, INC.
 
                              CLASS A COMMON STOCK
                            -----------------------
 
                                   PROSPECTUS
                            -----------------------
                          DONALDSON, LUFKIN & JENRETTE
              SECURITIES CORPORATION
 
                                CS FIRST BOSTON
 
                        CIBC WOOD GUNDY SECURITIES CORP.
 
                                           , 1996
             ------------------------------------------------------
             ------------------------------------------------------
132
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
     The following table sets forth the expenses expected to be incurred by the
Company in connection with the issuance and distribution of the Class A Common
Stock registered hereby, all of which expenses, except for the Securities and
Exchange Commission registration fee, the National Association of Securities
Dealers, Inc. filing fee and the NASDAQ National Market System listing
application fee, are estimates:
DESCRIPTION                              AMOUNT
                                                                             -------
Securities and Exchange Commission registration fee................  $25,863
        National Association of Securities Dealers, Inc. filing fee........  $ 8,000
        NASDAQ National Market System listing application fee..............        *
        Accounting fees and expenses.......................................        *
        Legal fees and expenses............................................        *
        Printing and engraving fees and expenses...........................        *
        Blue Sky fees and expenses.........................................        *
        Transfer Agent fees and expenses...................................        *
        Miscellaneous fees and expenses....................................        *
                                                                             -------
                  Total....................................................  $     *
                                                                             =======
- ---------------
* To be filed by amendment.
 
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
     Each of Commodore Media, Inc. (the "Company"), Commodore Holdings, Inc.
("Holdings"), Commodore Media of Delaware, Inc. ("Commodore-DE"), Commodore
Media of Pennsylvania, Inc. ("Commodore-PA"), Commodore Media of Florida, Inc.
("Commodore-FL"), Commodore Media of Kentucky, Inc. ("Commodore-KY"), Commodore
Media of Norwalk, Inc. ("Commodore-Norwalk") and Commodore Media of Westchester,
Inc. ("Commodore-Westchester") is a Delaware corporation, and Danbury
Broadcasting, Inc. is a Connecticut corporation ("Danbury"). Each such company's
Certificate of Incorporation or By-laws also contains provisions making
indemnification of such company's directors and officers mandatory to the
fullest extent permitted by the Delaware General Corporation Law or the
Connecticut General Corporation law, as the case may be, provided that certain
procedural requirements are met and any applicable authorizations by such
company's Board of Directors are obtained.
 
     The Delaware General Corporation Law permits the indemnification by a
Delaware corporation of its directors, officers, employees and other agents
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement in connection with specified actions, suits or proceedings,
whether civil, criminal, administrative or investigative (other than derivative
actions which are by or in the right of the corporation) if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was illegal. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with defense or settlement of such an action and court
approval is required before there can be any indemnification where the person
seeking indemnification has been found liable to the corporation.
 
     The Connecticut General Corporation Law permits the indemnification by a
Connecticut corporation of its shareholders, directors, officers, employees
and/or agents, against judgments, fines, penalties, amounts paid in settlement
and reasonable expenses actually incurred provided (i) such person is successful
on the merits in the defense of any proceeding; or (ii) it is determined such
person acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was illegal; or (iii) the court
 
                                      II-1
133
 
determines that such person is fairly and reasonably entistled to be
indemnified, and then for such amount as the court shall determine. Such persons
shall receive indemnification against reasonable expenses actually incurred in
derivative proceedings provided that either he or she is adjudged not to have
breached his or her duty to the corporation or where the court shall have
determined that such person is fairly and reasonably entitled to be indemnified,
and then for such amount as the court shall determine; provided, however, that
such persons shall not be indemnified for amounts paid in settling or otherwise
disposing of a derivative proceeding, with or without court approval, or for
expenses incurred in defending a proceeding which is settled or otherwise
disposed of without court approval.
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES
 
     In May 1996, the Company issued 10,000 shares of Series A Preferred Stock
under the Preferred Stock Facility to the CIBC Merchant Fund for an aggregate of
$10 million. In connection with the Preferred Stock Facility, in May 1996 the
Company issued to the CIBC Merchant Fund a warrant to purchase 7,550 shares of
the Company's Class A Common Stock which is immediately exercisable.
 
     As part of the Recapitalization Transactions in April 1995, the Company
completed the sale of 75,500 Units (the "Units"), each Unit consisting of $1,000
principal amount of the Company's Senior Subordinated Notes and a warrant to
purchase one share of the Company's Class A Common Stock at an exercise price of
$.01 per warrant. Also as part of the Recapitalization Transactions, in April
1995 the Company converted all of its existing common stock at such time into
486,373 shares of its Class B Common Stock and 119,212 shares (including 85,524
treasury shares) of its Class A Common Stock, which reflects a conversion ratio
of approximately 4:1. Further, in connection with the Recapitalization
Transactions, the Company issued the Friedman Senior Subordinated Note to a
trust for the benefit of Mr. Friedman.
 
     In connection with the refinancing of the Company's loan agreement with The
Bank of New York in December 1993, the Company issued to The Bank of New York a
warrant to purchase 4.99% of the Common Stock of the Company, on a fully diluted
basis, for $100. In March 1995, the Company redeemed the warrant for an
aggregate purchase price of $1,000,000. In addition, as part of the December
1993 debt restructuring, all previously authorized, issued and outstanding
shares of Series A, Series B and Series C Preferred Stock were contributed to
paid-in capital or converted into common stock and canceled. The shares of
Series A and Series B Preferred Stock were converted into 33,000 shares of
common stock resulting in additional paid-in capital of $3,299,670. The shares
of Series C Preferred Stock were contributed to paid-in capital by the Company's
former President. Further, in December 1993, Carter Burden purchased 28,000
shares of Class A Common Stock for $2,500,000.
 
     In December 1993, the Company granted a warrant to WAMBCO, to purchase
4.99% of its common stock at an exercise price of $100, on a fully diluted
basis. In April 1995, WAMBCO exercised the warrant and purchased 27,314 shares
of Class A Common Stock of the Company.
 
     In December 1993, Radio Financial Partners, Inc. converted $7,723,000 of
outstanding debt and accrued interest into 10,000 shares of the Company's 8.87%
cumulative redeemable preferred stock. In April 1995, as part of the
Recapitalization Transactions, the Company redeemed all outstanding shares of
preferred stock for an aggregate purchase price of approximately $8.7 million.
 
     The Company has reserved 132,125 shares of Class A Common Stock for options
issued under the Company's 1995 Stock Option Plan. As of May 17, 1996, options
to purchase a total of 25,730 shares were exercisable at an exercise price of
$45 per share.
 
     All of the shares referred to in the foregoing paragraphs do not give
effect to the 7.2-for-1 stock split of the Common Stock. All of the securities
referred to in the foregoing paragraphs were issued by the Company in reliance
on the exemption from registration provided by Section 4(2) of the Securities
Act of 1933, as amended.
 
                                      II-2
134
 
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
     (a) Exhibits
EXHIBIT
 NUMBER                                          DESCRIPTION
1*         --  Proposed form of Underwriting Agreement.
3.1.1      --  Amended and Restated Certificate of Incorporation of the Company, as amended.
3.1.2      --  By-laws of the Company, as amended.
3.2.1      --  Certificate of Incorporation of Commodore-Delaware, as amended.
3.2.2(a)   --  By-laws of Commodore-Delaware.
3.3.1      --  Certificate of Incorporation of Commodore-Pennsylvania, as amended.
3.3.2(a)   --  By-laws of Commodore-Pennsylvania.
3.4.1      --  Certificate of Incorporation of Commodore-Florida.
3.4.2(a)   --  By-laws of Commodore-Florida.
3.5.1      --  Certificate of Incorporation of Commodore-Kentucky, as amended.
3.5.2(a)   --  By-laws of Commodore-Kentucky.
3.6.1      --  Certificate of Incorporation of Commodore-Norwalk.
3.6.2(a)   --  By-laws of Commodore-Norwalk.
3.7.1      --  Certificate of Incorporation of Commodore-Westchester, as amended.
3.7.2(a)   --  By-laws of Commodore-Westchester.
3.8.1(b)   --  Certificate of Incorporation of Danbury Broadcasting, Inc.
3.8.2(b)   --  By-laws of Danbury Broadcasting, Inc.
3.9.1      --  Certificate of Incorporation of Commodore Holdings, Inc.
3.9.2      --  By-laws of Commodore Holdings, Inc.
4.1.1(a)   --  Indenture dated as of April 21, 1995 among the Company, IBJ Schroder Bank &
               Trust Company, as Trustee, and the Guarantors named therein (the "Indenture").
4.1.2(a)   --  Amendment No. 1 to Indenture.
4.1.3(b)   --  Amendment No. 2 to Indenture.
4.1.4(b)   --  Amendment No. 3 to Indenture.
4.1.5(c)   --  Amendment No. 4 to Indenture.
4.2(a)     --  Form of Original Note No. 1 for $75,500,000, Cusip No. 20266P AA 9, with
               Guarantee of Guarantors listed therein.
4.3(a)     --  Form of Note with Form of Guarantee.
4.4(a)     --  Registration Rights Agreement dated as of April 21, 1995 by and among the
               Company, the Guarantors named therein and each of the Purchasers referred to
               therein.
5.1*       --  Form of Opinion of Pryor, Cashman, Sherman & Flynn.
10.1(a)    --  Securities Purchase Agreement dated as of April 13, 1995 by and among the
               Company, the Guarantors named therein and each of the Purchasers referred to
               therein.
10.2(a)    --  Warrant Agreement dated as of April 21, 1995 between the Company and IBJ
               Schroder Bank & Trust Company, as Warrant Agent.
10.3(a)    --  Form of Original Warrant Certificate No. 1 for 75,500 Warrants, Cusip No. 20266P
               11 9.
10.4(a)    --  Common Stock Registration Rights and Stockholders' Agreement dated as of April
               21, 1995 among the Company, certain control stockholders and each of the
               Purchasers referred to therein.
II-3
135
EXHIBIT
 NUMBER                                          DESCRIPTION
10.5(a)    --  Note No. 1 for $1,308,000, Cusip No. 20266P AA 9, with Guarantee of Guarantors
               listed therein.
10.6.1     --  1995 Stock Option Plan of the Company.
10.7.1(a)  --  Construction Permit dated October 19, 1994 issued by the FCC to Commodore-PA in
               connection with WAEB-AM.
10.7.2(a)  --  Letters dated April 27, 1995 and May 10, 1995 from the FCC to Commodore-PA
               regarding Program Test Authority.
10.7.3(b)  --  Broadcast Station License dated July 28, 1995 issued by the FCC to Commodore-PA
               in connection with WAEB-AM.
10.8(a)    --  Broadcast Station License dated August 5, 1993 issued by the FCC to Commodore-PA
               in connection with WAEB-FM.
10.9(a)    --  Broadcast Station License dated June 19, 1990 issued by the FCC to Holt Corp. of
               Pennsylvania ("Holt") in connection with WZZO-FM, together with an assignment
               thereof from Holt to Commodore-PA, and evidence of license renewal.
10.10(a)   --  Broadcast Station License dated April 30, 1987 issued by the FCC to
               Commodore-Delaware in connection with WJBR-AM and evidence of license renewal.
10.11.1(a)  -- Incorporated by reference to the Company's S-4. Broadcast Station License dated
               February 6, 1992 issued by the FCC to Commodore-Delaware in connection with
               WJBR-FM.
10.11.2(b)  -- Broadcast Station License dated April 26, 1995 issued by the FCC to
               Commodore-Delaware in connection with WJBR-FM which modifies Broadcast License
               issued on February 6, 1992.
10.12(a)   --  Broadcast Station License dated December 14, 1984 and Auxiliary Broadcast
               Station License dated August 22, 1985, each issued by the FCC to Hanson
               Communications, Inc. ("Hanson") in connection with WEFX-FM, together with an
               assignment thereof from Hanson to Commodore-Norwalk, and evidence of license
               renewal.
10.13(a)   --  Broadcast Station License dated February 14, 1985 issued by the FCC to Hanson in
               connection with WNLK-AM, together with an assignment thereof from Hanson to
               Commodore-Norwalk, and evidence of license renewal.
10.14(a)   --  Broadcast Station License dated November 18, 1988 issued by the FCC to
               Commodore-Westchester in connection with WFAS-AM and evidence of license
               renewal.
10.15(a)   --  Broadcast Station License dated July 22, 1986 issued by the FCC to
               Commodore-Westchester in connection with WFAS-FM and evidence of license
               renewal.
10.16(b)   --  Broadcast Station License dated April 13, 1981 issued by the FCC to Greater
               Kentucky Radio, Inc. in connection with WTCR-AM and evidence of license renewal
               in the name of Commodore-Kentucky.
10.17(b)   --  Broadcast Station License dated September 17, 1985 issued by the FCC to CRB
               Broadcasting of West Virginia (which merged with and into Commodore-Kentucky on
               November 22, 1989) in connection with WTCR-FM and evidence of license renewal.
10.18(b)   --  Broadcast Station License dated June 13, 1991 issued by the FCC to
               Commodore-Florida in connection with WZZR-FM.
10.19(a)   --  Joint Sales Agreement between Commodore-PA and East Penn. Broadcasting, Inc.
               with respect to WKAP-AM (formerly WXKW-AM).
10.20(a)   --  Employment Agreement dated April 21, 1995 by and between the Company and Carter
               Burden.
10.21.1(a)  -- Amended and Restated Employment Agreement dated April 21, 1995 by and between
               the Company and Bruce A. Friedman.
10.21.2(b)  -- Amendment No. 1 to Amended and Restated Employment Agreement between the Company
               and Bruce A. Friedman.
II-4
136
EXHIBIT
 NUMBER                                          DESCRIPTION
10.22(b)   --  Amended and Restated Employment Agreement dated April 21, 1995 by and between
               the Company and James T. Shea, Jr.
10.23(b)   --  Employment Agreement dated July 1, 1995 by and between the Company and Charlie
               V. DiToro.
10.24(b)   --  Employment Agreement dated as of April 21, 1995 by and between the Company and
               Jay Sterin.
10.25(a)   --  Promissory Note, dated April 21, 1995, in the aggregate principal amount of
               $900,000, issued by Bruce A. Friedman to Carter Burden as security for Class A
               shares held by Mr. Friedman.
10.26(a)   --  Promissory Note, dated April 21, 1995, in the aggregate principal amount
               $208,000, issued by James T. Shea, Jr. to Carter Burden as security for Class A
               shares held by Mr. Shea.
10.27(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate principal amount
               $50,215.00, issued by Carter Burden to the Company.
10.28(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate principal amount
               $100,160.00, issued by Bruce A. Friedman to the Company.
10.29(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate principal amount
               $50,000, issued by James T. Shea, Jr. to the Company.
10.30(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate principal amount
               $50,000, issued by James J. Sullivan to the Company.
10.31(a)   --  Representation Agreement dated June 1, 1987 between Katz Communications, Inc.
               and Commodore-Delaware regarding WJBR-AM.
10.32(a)   --  Representation Agreement dated June 1, 1987 between Katz Communications, Inc.
               and Commodore-Delaware regarding WJBR-FM.
10.33(a)   --  Representation Agreement dated March 28, 1988 between Katz Communications, Inc.
               and Commodore-Kentucky regarding WTCR-AM.
10.34(a)   --  Representation Agreement dated March 28, 1988 between Katz Communications, Inc.
               and Commodore-Kentucky regarding WTCR-FM.
10.35(a)   --  Representation Agreement dated June 1, 1994 between Katz Communications, Inc.
               and Commodore-PA regarding WAEB-AM.
10.36(a)   --  Representation Agreement dated June 1, 1994 between Katz Communications, Inc.
               and Commodore-PA regarding WAEB-FM.
10.37(a)   --  Representation Agreement dated June 1, 1994 between Katz Communications, Inc.
               and Commodore-PA regarding WZZO-FM.
10.38(a)   --  National Radio Sales Representation Agreement dated February 15, 1995 between
               McGavren Guild, Inc. and Commodore-Norwalk regarding WNLK-AM/WEFX-FM.
10.39(a)   --  Representation Agreement dated October 5, 1987 between Katz Communications, Inc.
               and Commodore-FL regarding WZZR-FM.
10.40(a)   --  National Radio Sales Representation Agreement dated February 15, 1995 between
               McGavren Guild, Inc. and Commodore-Westchester regarding WFAS-AM/FM.
10.41(b)   --  Option Purchase Agreement dated as of March 17, 1995 between Treasure Coast
               Media, Inc. ("Treasure Coast") and Commodore-Florida.
10.42(b)   --  Sales Local Marketing Agreement dated as of March 17, 1995 between Treasure
               Coast and Commodore-Florida.
II-5
137
EXHIBIT
 NUMBER                                          DESCRIPTION
10.43(b)   --  Asset Purchase Agreement dated as of October 30, 1995 between Hudson Valley
               Growth, L.P. ("Hudson Valley") and Commodore-Westchester and Amendment No. 1
               thereto dated March 27, 1996.
10.44(b)   --  Stock Purchase Agreement dated as of October 30, 1995 among Danbury
               Broadcasting, Inc. ("Danbury"), Gary Starr ("Starr"), BCI Growth III, L.P. ("BCI
               Growth") and Commodore-Norwalk and Amendment No. 1 thereto dated March 27, 1996.
10.45(b)   --  Integration Agreement dated as of October 30, 1995 between
               Commodore-Westchester, Commodore-Norwalk, Hudson Valley, Danbury, BCI Growth and
               Starr and Amendment No. 1 thereto dated March 27, 1996.
10.46(b)   --  Local Marketing Agreement dated as of October 30, 1995 between
               Commodore-Westchester and Hudson Valley.
10.47(b)   --  Local Marketing Agreement dated as of October 30, 1995 between Commodore-Norwalk
               and Danbury.
10.48(b)   --  Asset Purchase Agreement dated as of February 16, 1996 between Media VI and
               Commodore-Florida.
10.49(b)   --  Joint Sales Agreement dated as of February 16, 1996 between Commodore-Florida
               and Media VI.
10.50(b)   --  Loan and Security Agreement dated as of March 13, 1996 among Commodore Holdings,
               Inc., as Borrower, the Company, Commodore-Delaware, Commodore-Pennsylvania,
               Commodore-Florida, Commodore-Kentucky, Commodore-Norwalk and
               Commodore-Westchester, as Guarantors, and AT&T Commercial Finance Corporation,
               as Lender.
10.51(b)   --  Supplement No. 1 to the Loan Agreement.
10.52(b)   --  Asset Purchase Agreement dated as of March 15, 1996 between Commodore Media of
               Norwalk, Inc. and Q Broadcasting, Inc.
10.53(b)   --  Employment Agreement dated as of April 21, 1995 by and between the Company and
               Scott J. Bacherman.
10.54(b)   --  Employment Agreement dated as of April 21, 1995 by and between the Company and
               Judy Jennings.
10.55(b)   --  Employment Agreement dated as of April 21, 1995 by and between the Company and
               James J. Sullivan.
10.56(b)   --  Employment Agreement dated as of July 1, 1995 by and between the Company and
               Rich Lewis.
10.57(b)   --  Broadcast Station License dated November 14, 1991 issued by the FCC to Treasure
               Coast Media, Inc. ("Treasure Coast") in connection with WQOL-FM, together with
               an assignment thereof by Treasure Coast to Commodore-Florida, and evidence of
               license renewal.
10.58.1(b)  -- Broadcast Station License dated June 22, 1992 issued by the FCC to Housatonic
               Valley Broadcasting Inc. ("Housatonic") in connection with WINE-AM, together
               with an FCC Consent to the transfer of control of the licensee to
               Commodore-Norwalk, and evidence of license renewal.
10.58.2(b)  -- Construction Permit dated August 31, 1994 issued by the FCC to Danbury
               Broadcasting, Inc. ("Danbury") in connection with WINE-AM.
10.59.1(b)  -- Construction Permit dated August 23, 1995 issued by the FCC to Danbury in
               connection with WRKI-FM.
10.59.2(b)  -- Program Test Authority dated January 17, 1996 issued by the FCC to Danbury in
               connection with WRKI-FM.
II-6
138
EXHIBIT
 NUMBER                                          DESCRIPTION
10.59.3(b)  -- Broadcast Station License dated April 26, 1978 issued by the FCC to Housatonic
               in connection with WRKI-FM, together with an FCC Consent to the transfer of
               control of the licensee to Commodore-Norwalk, and evidence of license renewal.
10.60(b)   --  Broadcast Station License dated July 20, 1993 issued by the FCC to Tri-Valley
               Broadcasting Corporation in connection with WVYB-FM (formerly WMJV-FM), together
               with an assignment thereof by Hudson Valley Growth, L.P. ("Hudson") to
               Commodore-Westchester, and evidence of license renewal.
10.61(b)   --  Broadcast Station License dated June 19, 1985 issued by the FCC to Putnam
               Broadcasting Corp. in connection with WPUT-AM, together with an assignment
               thereof from Hudson to Commodore-Westchester, and evidence of license renewal.
10.62(b)   --  Broadcast Station License and Modification issued by the FCC to VIP
               Broadcasting, Inc. in connection with WZZN-FM (formerly WVIB-FM, WMJU-FM and
               WVIP-FM), together with an assignment thereof by Hudson to
               Commodore-Westchester.
10.63      --  Asset Purchase Agreement dated as of April 8, 1996 between Commodore-Kentucky
               and Simmons Broadcasting Company ("Simmons").
10.64      --  Local Marketing Agreement dated as of April 8, 1996 between Commodore-Kentucky
               and Simmons.
10.65      --  Asset Purchase Agreement dated as of April 8, 1996 between Commodore-Kentucky
               and Adventure Communications, Inc. ("Adventure").
10.66      --  Local Marketing Agreement dated as of April 8, 1996 between Commodore-Kentucky
               and Adventure.
10.67      --  Contingent Sale and Assignment of Options Agreement dated as of April 8, 1996
               between Commodore-Kentucky and Michael R. Shott.
10.68      --  Securities Purchase Agreement dated as of May 1, 1996 among the Company, the
               Guarantors and CIBC WG Argosy Merchant Fund 2, L.L.C. (the "CIBC Merchant
               Fund").
10.69      --  Common Stock Registration Rights and Stockholders Agreement dated as of May 1,
               1996 among the Company, Certain Control Stockholders and the CIBC Merchant Fund.
10.70      --  Registration Rights Agreement dated as of May 1, 1996 among the Company, the
               Guarantors and the CIBC Merchant Fund.
10.71      --  Warrant Agreement dated as of May 1, 1996 between the Company and IBJ Schroder
               Bank & Trust Company, as Warrant Agent.
11.1       --  Statement regarding computation of earnings per share.
16.1(a)    --  Letter of Weeks DeGraw & Co., P.A. regarding change in certifying accountants.
21.1(b)    --  List of Subsidiaries.
23.1       --  Consent of Ernst & Young LLP, independent auditors.
23.2       --  Consent of Weeks DeGraw & Co., P.A., independent auditors.
23.3       --  Consent of Brown, Edwards & Company, LLP, independent auditors.
23.4       --  Consent of Holtz Rubenstein & Company, LLP, independent auditors.
23.5       --  Consent of Paneth Haber & Zimmerman LLP, independent auditors.
- ------------------------------
* To be filed by amendment.
 
(a) Incorporated by reference to the Company's Registration Statement on Form
    S-4 (File No. 33-92732) effective July 26, 1995.
 
(b) Incorporated by reference to the Company's Annual Report on Form 10-K for
    the year ended December 31, 1995.
 
(c) Incorporated by reference to the Company's Form 10-Q for the quarter ended
    March 31, 1996.
 
                                      II-7
139
 
     (b) Financial Statement Schedules
PAGE
Report of Ernst & Young LLP on Financial Statement Schedules..........   S-1
        Report of Weeks DeGraw & Co., P.A. on Financial Statement Schedules...   S-2
        Valuation and Qualifying Accounts.....................................   S-3
ITEM 17.  UNDERTAKINGS
 
     Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Company, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
 
     The undersigned registrant undertakes to provide to the Underwriters at the
closings specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
 
     The undersigned registrant hereby undertakes that:
 
          (1) For purposes of determining any liability under the Securities Act
     of 1933, the information omitted from the form of prospectus filed as part
     of this Registration Statement in reliance upon Rule 430A and contained in
     a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     Registration Statement as of the time it was declared effective.
 
          (2) For the purpose of determining any liability under the Securities
     Act of 1933, each post-effective amendment that contains a form of
     prospectus shall be deemed to be a new registration statement relating to
     the securities offered therein, and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.
 
                                      II-8
140
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, COMMODORE
MEDIA, INC., a Delaware corporation, has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of New York, New York on May 17, 1996.
 
                                          COMMODORE MEDIA, INC.
 
                                          By:      /s/ BRUCE A. FRIEDMAN
                                                     Bruce A. Friedman
                                               President and Chief Executive
                                                           Officer
 
     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Bruce A. Friedman as true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution
and for him/her and in his/her name, place and stead, in any and all capacities
to sign any and all amendments (including pre-effective and post-effective
amendments) to this Registration Statement, as well as any new registration
statement filed to register additional securities pursuant to Rule 462(b) under
the Securities Act, and to file the same with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
SIGNATURE                                 TITLE                   DATE
/s/ BRUCE A.                President, Chief Executive    May 17, 1996
                    FRIEDMAN                       Officer, Assistant
               Bruce A. Friedman                   Secretary and Director
                                                   (principal executive
                                                   officer)
                        /s/ SUSAN L.               Chairman of the Board         May 17, 1996
                     BURDEN
                Susan L. Burden
                    /s/ JAMES T. SHEA,             Chief Operating Officer       May 17, 1996
                       JR.
              James T. Shea, Jr.
                       /s/ JAMES J.                Chief Financial Officer,      May 17, 1996
                    SULLIVAN                       Treasurer and Secretary
               James J. Sullivan                   (principal financial and
                                                   accounting officer)
                       /s/ DANIEL H.               Director                      May 17, 1996
                      STERN
                Daniel H. Stern
II-9
141
 
The Board of Directors
Commodore Media, Inc.
 
We have audited the consolidated financial statements of Commodore Media, Inc.
(the "Company") as of December 31, 1995 and 1994, and for each of the two years
in the period ended December 31, 1995 (included elsewhere in this Registration
Statement). Our audits also included the financial statement schedule listed in
Part II, Item 16(b) of this Registration Statement. This schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.
 
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects, the information set forth therein.
 
                                          ERNST & YOUNG LLP
New York, New York
February 28, 1996, except for Note 14, as
to which the date is May 16, 1996
 
- --------------------------------------------------------------------------------
 
The foregoing report is in the form that will be signed upon the completion of
the 7.2:1 stock split of the Company's common stock, as described in Note 14 to
the financial statements.
 
                                          ERNST & YOUNG LLP
New York, New York
May 16, 1996
 
                                       S-1
142
 
The Board of Directors
Commodore Media, Inc.
 
We have audited the consolidated financial statements of Commodore Media, Inc.
(the "Company") as of December 31, 1995 and 1994, and for each of the two years
in the period ended December 31, 1995 (included elsewhere in this Registration
Statement). Our audits also included the financial statement schedule listed in
Part II, Item 16(b) of this Registration Statement. This schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.
 
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects, the information set forth therein.
 
                                          WEEKS DE GRAW & COMPANY, P.A.
 
New York, New York
February 28, 1996, except for Note 14, as
to which the date is May 16, 1996
 
- --------------------------------------------------------------------------------
 
The foregoing report is in the form that will be signed upon the completion of
the 7.2:1 stock split of the Company's common stock, as described in Note 14 to
the financial statements.
 
                                          WEEKS DE GRAW & COMPANY, P.A.
 
New York, New York
May 16, 1996
 
                                       S-2
143
 
                             COMMODORE MEDIA, INC.
                                AND SUBSIDIARIES
 
                                  SCHEDULE II
                       VALUATION AND QUALIFYING ACCOUNTS
COLUMN C             COLUMN D
                                          COLUMN B     -----------------------   -------------
                                        ------------                ADDITIONS     DEDUCTIONS        COLUMN E
               COLUMN A                  BALANCE AT    ADDITIONS    CHARGED TO   DIRECT WRITE-   --------------
- --------------------------------------  BEGINNING OF   CHARGED TO     OTHER      OFFS, NET OF    BALANCE AT END
             DESCRIPTION                   PERIOD      OPERATIONS    ACCOUNTS     RECOVERIES       OF PERIOD
Allowance for uncollectible note
  receivable at December 31, 1993.....    $375,375       319,625           --       (695,000)       $     --
Allowance for doubtful accounts at
  December 31, 1993...................    $320,829       505,504           --       (372,551)       $453,782
Allowance for doubtful accounts at
  December 31, 1994...................    $453,782       468,155           --       (389,706)       $532,231
Allowance for doubtful accounts at
  December 31, 1995...................    $532,231       556,137           --       (388,032)       $700,336
S-3
144
 
                                 EXHIBIT INDEX
EXHIBIT
 NUMBER                                  EXHIBIT TITLE                                 PAGE
1*         --  Proposed form of Underwriting Agreement.
3.1.1      --  Amended and Restated Certificate of Incorporation of the Company,
               as amended.
3.1.2      --  By-laws of the Company, as amended.
3.2.1      --  Certificate of Incorporation of Commodore-Delaware, as amended.
3.2.2(a)   --  By-laws of Commodore-Delaware.
3.3.1      --  Certificate of Incorporation of Commodore-Pennsylvania, as
               amended.
3.3.2(a)   --  By-laws of Commodore-Pennsylvania.
3.4.1      --  Certificate of Incorporation of Commodore-Florida.
3.4.2(a)   --  By-laws of Commodore-Florida.
3.5.1      --  Certificate of Incorporation of Commodore-Kentucky, as amended.
3.5.2(a)   --  By-laws of Commodore-Kentucky.
3.6.1      --  Certificate of Incorporation of Commodore-Norwalk.
3.6.2(a)   --  By-laws of Commodore-Norwalk.
3.7.1      --  Certificate of Incorporation of Commodore-Westchester, as amended.
3.7.2(a)   --  By-laws of Commodore-Westchester.
3.8.1(b)   --  Certificate of Incorporation of Danbury Broadcasting, Inc.
3.8.2(b)   --  By-laws of Danbury Broadcasting, Inc.
3.9.1      --  Certificate of Incorporation of Commodore Holdings, Inc.
3.9.2      --  By-laws of Commodore Holdings, Inc.
4.1.1(a)   --  Indenture dated as of April 21, 1995 among the Company, IBJ
               Schroder Bank & Trust Company, as Trustee, and the Guarantors
               named therein (the "Indenture").
4.1.2(a)   --  Amendment No. 1 to Indenture.
4.1.3(b)   --  Amendment No. 2 to Indenture.
4.1.4(b)   --  Amendment No. 3 to Indenture.
4.1.5(c)   --  Amendment No. 4 to Indenture.
4.2(a)     --  Form of Original Note No. 1 for $75,500,000, Cusip No. 20266P AA
               9, with Guarantee of Guarantors listed therein.
4.3(a)     --  Form of Note with Form of Guarantee.
4.4(a)     --  Registration Rights Agreement dated as of April 21, 1995 by and
               among the Company, the Guarantors named therein and each of the
               Purchasers referred to therein.
5.1*       --  Form of Opinion of Pryor, Cashman, Sherman & Flynn.
10.1(a)    --  Securities Purchase Agreement dated as of April 13, 1995 by and
               among the Company, the Guarantors named therein and each of the
               Purchasers referred to therein.
10.2(a)    --  Warrant Agreement dated as of April 21, 1995 between the Company
               and IBJ Schroder Bank & Trust Company, as Warrant Agent.
10.3(a)    --  Form of Original Warrant Certificate No. 1 for 75,500 Warrants,
               Cusip No. 20266P 11 9.
145
EXHIBIT
 NUMBER                                  EXHIBIT TITLE                                 PAGE
10.4(a)    --  Common Stock Registration Rights and Stockholders' Agreement dated
               as of April 21, 1995 among the Company, certain control
               stockholders and each of the Purchasers referred to therein.
10.5(a)    --  Note No. 1 for $1,308,000, Cusip No. 20266P AA 9, with Guarantee
               of Guarantors listed therein.
10.6.1     --  1995 Stock Option Plan of the Company.
10.7.1(a)  --  Construction Permit dated October 19, 1994 issued by the FCC to
               Commodore-PA in connection with WAEB-AM.
10.7.2(a)  --  Letters dated April 27, 1995 and May 10, 1995 from the FCC to
               Commodore-PA regarding Program Test Authority.
10.7.3(b)  --  Broadcast Station License dated July 28, 1995 issued by the FCC to
               Commodore-PA in connection with WAEB-AM.
10.8(a)    --  Broadcast Station License dated August 5, 1993 issued by the FCC
               to Commodore-PA in connection with WAEB-FM.
10.9(a)    --  Broadcast Station License dated June 19, 1990 issued by the FCC to
               Holt Corp. of Pennsylvania ("Holt") in connection with WZZO-FM,
               together with an assignment thereof from Holt to Commodore-PA, and
               evidence of license renewal.
10.10(a)   --  Broadcast Station License dated April 30, 1987 issued by the FCC
               to Commodore-Delaware in connection with WJBR-AM and evidence of
               license renewal.
10.11.1(a)  -- Incorporated by reference to the Company's S-4. Broadcast Station
               License dated February 6, 1992 issued by the FCC to
               Commodore-Delaware in connection with WJBR-FM.
10.11.2(b)  -- Broadcast Station License dated April 26, 1995 issued by the FCC
               to Commodore-Delaware in connection with WJBR-FM which modifies
               Broadcast License issued on February 6, 1992.
10.12(a)   --  Broadcast Station License dated December 14, 1984 and Auxiliary
               Broadcast Station License dated August 22, 1985, each issued by
               the FCC to Hanson Communications, Inc. ("Hanson") in connection
               with WEFX-FM, together with an assignment thereof from Hanson to
               Commodore-Norwalk, and evidence of license renewal.
10.13(a)   --  Broadcast Station License dated February 14, 1985 issued by the
               FCC to Hanson in connection with WNLK-AM, together with an
               assignment thereof from Hanson to Commodore-Norwalk, and evidence
               of license renewal.
10.14(a)   --  Broadcast Station License dated November 18, 1988 issued by the
               FCC to Commodore-Westchester in connection with WFAS-AM and
               evidence of license renewal.
10.15(a)   --  Broadcast Station License dated July 22, 1986 issued by the FCC to
               Commodore-Westchester in connection with WFAS-FM and evidence of
               license renewal.
10.16(b)   --  Broadcast Station License dated April 13, 1981 issued by the FCC
               to Greater Kentucky Radio, Inc. in connection with WTCR-AM and
               evidence of license renewal in the name of Commodore-Kentucky.
146
EXHIBIT
 NUMBER                                  EXHIBIT TITLE                                 PAGE
10.17(b)   --  Broadcast Station License dated September 17, 1985 issued by the
               FCC to CRB Broadcasting of West Virginia (which merged with and
               into Commodore-Kentucky on November 22, 1989) in connection with
               WTCR-FM and evidence of license renewal.
10.18(b)   --  Broadcast Station License dated June 13, 1991 issued by the FCC to
               Commodore-Florida in connection with WZZR-FM.
10.19(a)   --  Joint Sales Agreement between Commodore-PA and East Penn.
               Broadcasting, Inc. with respect to WKAP-AM (formerly WXKW-AM).
10.20(a)   --  Employment Agreement dated April 21, 1995 by and between the
               Company and Carter Burden.
10.21.1(a)  -- Amended and Restated Employment Agreement dated April 21, 1995 by
               and between the Company and Bruce A. Friedman.
10.21.2(b)  -- Amendment No. 1 to Amended and Restated Employment Agreement
               between the Company and Bruce A. Friedman.
10.22(b)   --  Amended and Restated Employment Agreement dated April 21, 1995 by
               and between the Company and James T. Shea, Jr.
10.23(b)   --  Employment Agreement dated July 1, 1995 by and between the Company
               and Charlie V. DiToro.
10.24(b)   --  Employment Agreement dated as of April 21, 1995 by and between the
               Company and Jay Sterin.
10.25(a)   --  Promissory Note, dated April 21, 1995, in the aggregate principal
               amount of $900,000, issued by Bruce A. Friedman to Carter Burden
               as security for Class A shares held by Mr. Friedman.
10.26(a)   --  Promissory Note, dated April 21, 1995, in the aggregate principal
               amount $208,000, issued by James T. Shea, Jr. to Carter Burden as
               security for Class A shares held by Mr. Shea.
10.27(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate
               principal amount $50,215.00, issued by Carter Burden to the
               Company.
10.28(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate
               principal amount $100,160.00, issued by Bruce A. Friedman to the
               Company.
10.29(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate
               principal amount $50,000, issued by James T. Shea, Jr. to the
               Company.
10.30(a)   --  Promissory Note, dated as of May 15, 1995, in the aggregate
               principal amount $50,000, issued by James J. Sullivan to the
               Company.
10.31(a)   --  Representation Agreement dated June 1, 1987 between Katz
               Communications, Inc. and Commodore-Delaware regarding WJBR-AM.
10.32(a)   --  Representation Agreement dated June 1, 1987 between Katz
               Communications, Inc. and Commodore-Delaware regarding WJBR-FM.
10.33(a)   --  Representation Agreement dated March 28, 1988 between Katz
               Communications, Inc. and Commodore-Kentucky regarding WTCR-AM.
10.34(a)   --  Representation Agreement dated March 28, 1988 between Katz
               Communications, Inc. and Commodore-Kentucky regarding WTCR-FM.
10.35(a)   --  Representation Agreement dated June 1, 1994 between Katz
               Communications, Inc. and Commodore-PA regarding WAEB-AM.
10.36(a)   --  Representation Agreement dated June 1, 1994 between Katz
               Communications, Inc. and Commodore-PA regarding WAEB-FM.
147
EXHIBIT
 NUMBER                                  EXHIBIT TITLE                                 PAGE
10.37(a)   --  Representation Agreement dated June 1, 1994 between Katz
               Communications, Inc. and Commodore-PA regarding WZZO-FM.
10.38(a)   --  National Radio Sales Representation Agreement dated February 15,
               1995 between McGavren Guild, Inc. and Commodore-Norwalk regarding
               WNLK-AM/WEFX-FM.
10.39(a)   --  Representation Agreement dated October 5, 1987 between Katz
               Communications, Inc. and Commodore-FL regarding WZZR-FM.
10.40(a)   --  National Radio Sales Representation Agreement dated February 15,
               1995 between McGavren Guild, Inc. and Commodore-Westchester
               regarding WFAS-AM/FM.
10.41(b)   --  Option Purchase Agreement dated as of March 17, 1995 between
               Treasure Coast Media, Inc. ("Treasure Coast") and
               Commodore-Florida.
10.42(b)   --  Sales Local Marketing Agreement dated as of March 17, 1995 between
               Treasure Coast and Commodore-Florida.
10.43(b)   --  Asset Purchase Agreement dated as of October 30, 1995 between
               Hudson Valley Growth, L.P. ("Hudson Valley") and
               Commodore-Westchester and Amendment No. 1 thereto dated March 27,
               1996.
10.44(b)   --  Stock Purchase Agreement dated as of October 30, 1995 among
               Danbury Broadcasting, Inc. ("Danbury"), Gary Starr ("Starr"), BCI
               Growth III, L.P. ("BCI Growth") and Commodore-Norwalk and
               Amendment No. 1 thereto dated March 27, 1996.
10.45(b)   --  Integration Agreement dated as of October 30, 1995 between
               Commodore-Westchester, Commodore-Norwalk, Hudson Valley, Danbury,
               BCI Growth and Starr and Amendment No. 1 thereto dated March 27,
               1996.
10.46(b)   --  Local Marketing Agreement dated as of October 30, 1995 between
               Commodore-Westchester and Hudson Valley.
10.47(b)   --  Local Marketing Agreement dated as of October 30, 1995 between
               Commodore-Norwalk and Danbury.
10.48(b)   --  Asset Purchase Agreement dated as of February 16, 1996 between
               Media VI and Commodore-Florida.
10.49(b)   --  Joint Sales Agreement dated as of February 16, 1996 between
               Commodore-Florida and Media VI.
10.50(b)   --  Loan and Security Agreement dated as of March 13, 1996 among
               Commodore Holdings, Inc., as Borrower, the Company,
               Commodore-Delaware, Commodore-Pennsylvania, Commodore-Florida,
               Commodore-Kentucky, Commodore-Norwalk and Commodore-Westchester,
               as Guarantors, and AT&T Commercial Finance Corporation, as Lender.
10.51(b)   --  Supplement No. 1 to the Loan Agreement.
10.52(b)   --  Asset Purchase Agreement dated as of March 15, 1996 between
               Commodore Media of Norwalk, Inc. and Q Broadcasting, Inc.
10.53(b)   --  Employment Agreement dated as of April 21, 1995 by and between the
               Company and Scott J. Bacherman.
10.54(b)   --  Employment Agreement dated as of April 21, 1995 by and between the
               Company and Judy Jennings.
10.55(b)   --  Employment Agreement dated as of April 21, 1995 by and between the
               Company and James J. Sullivan.
148
EXHIBIT
 NUMBER                                  EXHIBIT TITLE                                 PAGE
10.56(b)   --  Employment Agreement dated as of July 1, 1995 by and between the
               Company and Rich Lewis.
10.57(b)   --  Broadcast Station License dated November 14, 1991 issued by the
               FCC to Treasure Coast Media, Inc. ("Treasure Coast") in connection
               with WQOL-FM, together with an assignment thereof by Treasure
               Coast to Commodore-Florida, and evidence of license renewal.
10.58.1(b)  -- Broadcast Station License dated June 22, 1992 issued by the FCC to
               Housatonic Valley Broadcasting Inc. ("Housatonic") in connection
               with WINE-AM, together with an FCC Consent to the transfer of
               control of the licensee to Commodore-Norwalk, and evidence of
               license renewal.
10.58.2(b)  -- Construction Permit dated August 31, 1994 issued by the FCC to
               Danbury Broadcasting, Inc. ("Danbury") in connection with WINE-AM.
10.59.1(b)  -- Construction Permit dated August 23, 1995 issued by the FCC to
               Danbury in connection with WRKI-FM.
10.59.2(b)  -- Program Test Authority dated January 17, 1996 issued by the FCC to
               Danbury in connection with WRKI-FM.
10.59.3(b)  -- Broadcast Station License dated April 26, 1978 issued by the FCC
               to Housatonic in connection with WRKI-FM, together with an FCC
               Consent to the transfer of control of the licensee to
               Commodore-Norwalk, and evidence of license renewal.
10.60(b)   --  Broadcast Station License dated July 20, 1993 issued by the FCC to
               Tri-Valley Broadcasting Corporation in connection with WVYB-FM
               (formerly WMJV-FM), together with an assignment thereof by Hudson
               Valley Growth, L.P. ("Hudson") to Commodore-Westchester, and
               evidence of license renewal.
10.61(b)   --  Broadcast Station License dated June 19, 1985 issued by the FCC to
               Putnam Broadcasting Corp. in connection with WPUT-AM, together
               with an assignment thereof from Hudson to Commodore-Westchester,
               and evidence of license renewal.
10.62(b)   --  Broadcast Station License and Modification issued by the FCC to
               VIP Broadcasting, Inc. in connection with WZZN-FM (formerly
               WVIB-FM, WMJU-FM and WVIP-FM), together with an assignment thereof
               by Hudson to Commodore-Westchester.
10.63      --  Asset Purchase Agreement dated as of April 8, 1996 between
               Commodore-Kentucky and Simmons Broadcasting Company ("Simmons").
10.64      --  Local Marketing Agreement dated as of April 8, 1996 between
               Commodore-Kentucky and Simmons.
10.65      --  Asset Purchase Agreement dated as of April 8, 1996 between
               Commodore-Kentucky and Adventure Communications, Inc.
               ("Adventure").
10.66      --  Local Marketing Agreement dated as of April 8, 1996 between
               Commodore-Kentucky and Adventure.
10.67      --  Contingent Sale and Assignment of Options Agreement dated as of
               April 8, 1996 between Commodore-Kentucky and Michael R. Shott.
10.68      --  Securities Purchase Agreement dated as of May 1, 1996 among the
               Company, the Guarantors and CIBC WG Argosy Merchant Fund 2, L.L.C.
               (the "CIBC Merchant Fund").
149
EXHIBIT
 NUMBER                                  EXHIBIT TITLE                                 PAGE
10.69      --  Common Stock Registration Rights and Stockholders Agreement dated
               as of May 1, 1996 among the Company, Certain Control Stockholders
               and the CIBC Merchant Fund.
10.70      --  Registration Rights Agreement dated as of May 1, 1996 among the
               Company, the Guarantors and the CIBC Merchant Fund.
10.71      --  Warrant Agreement dated as of May 1, 1996 between the Company and
               IBJ Schroder Bank & Trust Company, as Warrant Agent.
11.1       --  Statement regarding computation of earnings per share.
16.1(a)    --  Letter of Weeks DeGraw & Co., P.A. regarding change in certifying
               accountants.
21.1(b)    --  List of Subsidiaries.
23.1       --  Consent of Ernst & Young LLP, independent auditors.
23.2       --  Consent of Weeks DeGraw & Co., P.A., independent auditors.
23.3       --  Consent of Brown, Edwards & Company, LLP, independent auditors.
23.4       --  Consent of Holtz Rubenstein & Company, LLP, independent auditors.
23.5       --  Consent of Paneth Haber & Zimmerman LLP, independent auditors.
- ------------------------------
 
* To be filed by amendment.
 
(a) Incorporated by reference to the Company's Registration Statement on Form
    S-4 (File No. 33-92732) effective July 26, 1995.
 
(b) Incorporated by reference to the Company's Annual Report on Form 10-K for
    the year ended December 31, 1995.
 
(c) Incorporated by reference to the Company's Form 10-Q for the quarter ended
    March 31, 1996.