SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 AND 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007

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

CLEAR CHANNEL COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

Texas (State of Incorporation)		74-1787539 (I.R.S. Employer Identification No.)
200 East Basse Road San Antonio, Texas (Address of principal executive offices)		78209 (Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer þ           Accelerated filer o           Non-accelerated filer o

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

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

Class		Outstanding at November 7, 2007
Common Stock, $.10 par value		497,919,884

 

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

INDEX

		Page No.
Part I — Financial Information
Item 1. Unaudited Financial Statements			3
Consolidated Balance Sheets at September 30, 2007 and December 31, 2006			3
Consolidated Statements of Operations for the nine and three months ended September 30, 2007 and 2006			5
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and 2006			6
Notes to Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			15
Item 3. Quantitative and Qualitative Disclosures About Market Risk			27
Item 4. Controls and Procedures			27
Part II — Other Information
Item 1. Legal Proceedings			29
Item 1A. Risk Factors			30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			30
Item 4. Submission of Matters to a Vote of Security Holders			30
Item 6. Exhibits			31
Signatures			32
Index to Exhibits			33
Statement re: Computation of Per Share Earnings
Statement re: Computation of Ratios
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

PART I

Item 1. UNAUDITED FINANCIAL STATEMENTS

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

		September 30,				December 31,
		2007				2006
		(Unaudited)				(Audited)
CURRENT ASSETS
Cash and cash equivalents		$	124,083			$	116,000
Accounts receivable, net of allowance of $58,209 in 2007 and $56,068 in 2006			1,707,797				1,619,858
Prepaid expenses			138,308				122,000
Other current assets			268,228				244,103
Income taxes receivable			—				7,392
Current assets from discontinued operations			98,625				96,377
Total Current Assets			2,337,041				2,205,730
PROPERTY, PLANT AND EQUIPMENT
Land, buildings and improvements			805,431				767,792
Structures			3,815,503				3,601,653
Towers, transmitters and studio equipment			589,057				585,292
Furniture and other equipment			531,719				524,140
Construction in progress			112,067				89,823
			5,853,777				5,568,700
Less accumulated depreciation			2,898,824				2,604,036
			2,954,953				2,964,664
Property, plant and equipment from discontinued operations, net			230,009				271,546
INTANGIBLE ASSETS
Definite-lived intangibles, net			482,893				522,482
Indefinite-lived intangibles – licenses			4,187,511				4,197,580
Indefinite-lived intangibles – permits			247,536				260,950
Goodwill			7,028,425				7,078,705
Intangible assets from discontinued operations, net			494,009				546,610
OTHER ASSETS
Notes receivable			6,517				6,318
Investments in, and advances to, nonconsolidated affiliates			334,333				311,258
Other assets			277,212				249,524
Other investments			256,408				245,064
Other assets from discontinued operations			28,643				35,890
Total Assets		$	18,865,490			$	18,896,321

See Notes to Consolidated Financial Statements

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
(In thousands)

		September 30,				December 31,
		2007				2006
		(Unaudited)				(Audited)
CURRENT LIABILITIES
Accounts payable		$	125,089			$	151,577
Accrued expenses			910,431				884,479
Accrued interest			88,166				112,049
Accrued income taxes			61,432				—
Current portion of long-term debt			699,855				336,375
Deferred income			174,067				134,287
Current liabilities from discontinued operations			43,353				45,079
Total Current Liabilities			2,102,393				1,663,846
Long-term debt			6,320,624				7,326,700
Other long-term obligations			121,012				68,509
Deferred income taxes			764,594				746,960
Other long-term liabilities			559,444				673,953
Long-term liabilities from discontinued operations			30,872				24,621
Minority interest			406,482				349,391
Commitments and contingent liabilities (Note 6)
SHAREHOLDERS’ EQUITY
Common Stock			49,806				49,399
Additional paid-in capital			26,847,031				26,745,687
Retained deficit			(18,716,335	)			(19,054,365	)
Accumulated other comprehensive income			384,081				304,975
Cost of shares held in treasury			(4,514	)			(3,355	)
Total Shareholders’ Equity			8,560,069				8,042,341
Total Liabilities and Shareholders’ Equity		$	18,865,490			$	18,896,321

See Notes to Consolidated Financial Statements

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

		Nine Months Ended								Three Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
Revenue		$	4,987,754			$	4,694,259			$	1,726,780			$	1,639,824
Operating expenses:
Direct operating expenses (includes share-based payments of $12,331, $12,140, $4,159 and $4,034 for the nine and three months ended September 30, 2007 and 2006, respectively, and excludes depreciation and amortization)			1,976,875				1,830,788				683,830				637,075
Selling, general and administrative expenses (includes share-based payments of $11,039, $12,584, $3,708 and $4,190 for the nine and three months ended September 30, 2007 and 2006, respectively, and excludes depreciation and amortization)			1,265,539				1,232,216				421,311				406,174
Depreciation and amortization			419,356				436,158				139,894				147,076
Corporate expenses (includes share-based payments of $9,150, $7,995, $3,068 and $2,260 for the nine and three months ended September 30, 2007 and 2006, respectively, and excludes depreciation and amortization)			138,234				137,232				47,040				48,486
Merger expenses			6,372				—				2,002				—
Gain (loss) on disposition of assets – net			10,474				58,343				(567	)			9,122
Operating income			1,191,852				1,116,208				432,136				410,135
Interest expense			347,525				365,950				113,026				128,276
Gain (loss) on marketable securities			661				2,072				676				5,396
Equity in earnings of nonconsolidated affiliates			23,832				25,305				7,133				8,681
Other income (expense) – net			(1,075	)			(5,858	)			(1,403	)			(601	)
Income before income taxes, minority interest and discontinued operations			867,745				771,777				325,516				295,335
Income tax benefit (expense):
Current			(162,464	)			(163,434	)			(2,480	)			(60,717	)
Deferred			(128,614	)			(155,103	)			(54,760	)			(61,149	)
Income tax benefit (expense)			(291,078	)			(318,537	)			(57,240	)			(121,866	)
Minority interest expense, net of tax			27,206				16,630				11,961				3,673
Income before discontinued operations			549,461				436,610				256,315				169,796
Income from discontinued operations, net			68,487				43,563				23,421				16,075
Net income		$	617,948			$	480,173			$	279,736			$	185,871
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			77,018				30,007				31,129				3,621
Unrealized gain (loss) on securities and derivatives:
Unrealized holding gain (loss) on marketable securities			2,086				(68,961	)			13,263				(6,002	)
Unrealized holding gain (loss) on cash flow derivatives			—				76,132				—				15,131
Comprehensive income		$	697,052			$	517,351			$	324,128			$	198,621
Net income per common share:
Income before discontinued operations – Basic		$	1.11			$	.87			$	.52			$	.34
Discontinued operations – Basic			.14				.08				.05				.04
Net income – Basic		$	1.25			$	.95			$	.57			$	.38
Weighted average common shares – basic			494,261				503,903				494,568				492,714
Income before discontinued operations – Diluted		$	1.11			$	.87			$	.52			$	.34
Discontinued operations – Diluted			.14				.08				.04				.04
Net income – Diluted		$	1.25			$	.95			$	.56			$	.38
Weighted average common shares – diluted			495,580				504,726				496,168				493,578
Dividends declared per share		$	.5625			$	.5625			$	.1875			$	.1875

See Notes to Consolidated Financial Statements

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

		Nine Months Ended September 30,
		2007				2006
Cash flows from operating activities:
Net income		$	617,948			$	480,173
(Income) loss from discontinued operations, net			(68,487	)			(43,563	)
			549,461				436,610
Reconciling items:
Depreciation and amortization			419,356				436,158
Deferred taxes			128,614				155,103
(Gain) loss on disposal of assets			(10,474	)			(58,343	)
(Gain) loss forward exchange contract			11,924				(18,899	)
(Gain) loss on trading securities			(12,586	)			16,827
Provision for doubtful accounts			26,405				23,390
Share-based compensation			32,520				32,719
Equity in earnings of nonconsolidated affiliates			(23,832	)			(25,305	)
Other reconciling items — net			29,433				26,603
Changes in operating assets and liabilities:
Federal income tax refund			—				133,336
Decrease in income taxes receivable			3,234				28,421
Changes in other operating assets and liabilities, net of effects of acquisitions and dispositions			(169,459	)			(88,421	)
Net cash provided by operating activities			984,596				1,098,199
Cash flows from investing activities:
Decrease (increase) in notes receivable — net			(198	)			(1,953	)
Decrease (increase) in investments in and advances to nonconsolidated affiliates — net			26,848				5,297
Purchases of investments			(422	)			(461	)
Purchases of property, plant and equipment			(223,416	)			(226,615	)
Proceeds from disposal of assets			20,069				73,496
Acquisition of operating assets, net of cash acquired			(71,593	)			(270,614	)
Decrease (increase) in other — net			(12,547	)			(53,750	)
Net cash used in investing activities			(261,259	)			(474,600	)
Cash flows from financing activities:
Draws on credit facilities			618,372				2,500,198
Payments on credit facilities			(1,026,040	)			(2,098,358	)
Proceeds from long-term debt			14,680				778,455
Payments on long-term debt			(277,523	)			(111,827	)
Payments for purchase of common shares			(435	)			(1,371,462	)
Payment on forward exchange contract			—				(83,132	)
Proceeds from exercise of stock options, stock purchase plan, common stock warrants and other			77,295				26,488
Dividends paid			(279,008	)			(290,411	)
Net cash used in financing activities			(872,659	)			(650,049	)
Cash flows from discontinued operations:
Net cash provided by operating activities			50,230				84,598
Net cash provided by (used in) investing activities			107,175				(35,689	)
Net cash provided by (used in) financing activities			—				—
Net cash provided by discontinued operations			157,405				48,909
Net (decrease) increase in cash and cash equivalents			8,083				22,459
Cash and cash equivalents at beginning of period			116,000				84,337
Cash and cash equivalents at end of period		$	124,083			$	106,796

See Notes to Consolidated Financial Statements

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

               Preparation of Interim Financial Statements

The consolidated financial statements were prepared by Clear Channel Communications, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all adjustments (consisting of normal recurring accruals and adjustments necessary for adoption of new accounting standards) necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. Due to seasonality and other factors, the results for the interim periods are not necessarily indicative of results for the full year. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2006 Annual Report on Form 10-K.

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

               Merger Update

The Company’s shareholders approved the adoption of the merger agreement, as amended, with a group led by T.H. Lee Partners, L.P. and Bain Capital Partners, LLC on September 25, 2007. The transaction remains subject to requisite regulatory approvals and customary closing conditions.

Under the terms of the merger agreement, as amended, the Company’s shareholders will receive $39.20 in cash for each share they own plus additional per share consideration, if any, if the closing of the merger occurs after December 31, 2007. For a description of the computation of any additional per share consideration and the circumstances under which it is payable, please refer to the joint proxy statement/prospectus dated August 21, 2007, filed with the Securities & Exchange Commission (the “Proxy Statement”). As an alternative to receiving the $39.20 per share cash consideration, the Company’s unaffiliated shareholders were offered the opportunity on a purely voluntary basis to exchange some or all of their shares of Clear Channel common stock on a one-for-one basis for shares of Class A common stock in the new corporation formed by the private equity group to acquire the Company (subject to aggregate and individual caps), plus the additional per share consideration, if any.

Holders of shares of the Company’s common stock (including shares issuable upon conversion of outstanding options) in excess of the aggregate cap provided in the merger agreement, as amended, elected to receive the stock consideration. As a result, unaffiliated shareholders of the Company will own an aggregate of 30,612,245 shares of CC Media Holdings Class A common stock upon consummation of the merger.

               Certain Reclassifications

The Company has reclassified certain selling, general and administrative expenses to direct operating expenses in 2006 to conform to current year presentation. The historical financial statements and footnote disclosures have been revised to exclude amounts related to the Company’s television business and certain radio stations as discussed below.

               Discontinued Operations and Assets Held for Sale

On November 16, 2006, the Company announced plans to sell certain radio markets, comprising 448 of its radio stations, as well as all of its television stations. The radio markets are located outside the top 100 U.S. media markets. As of September 30, 2007, the Company had sold 55 radio stations, 5 of which were not part of the announced 448 stations, and had definitive agreements to sell an additional 360 radio stations, 8 of which were not part of the announced 448 stations. The closing of the transactions under definitive asset purchase agreements are subject to antitrust clearances, FCC approval and other customary closing conditions. Further, the sale of these stations is not a condition to the closing of the merger described above. The Company determined that each of these markets represents a disposal group. Consistent with the provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-lived Assets (“Statement 144”), the Company classified these markets’ assets that are subject to transfer under the definitive asset purchase agreements as discontinued operations at September 30, 2007 and December 31, 2006. Accordingly, depreciation and amortization associated with these assets was discontinued. Additionally, the Company determined

that these markets comprise operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Company. As of September 30, 2007, the Company determined that the estimated fair value less costs to sell attributable to these markets was in excess of the carrying value of their related net assets held for sale.

On April 20, 2007, the Company entered into a definitive agreement to sell its television business. The closing of the transaction is subject to regulatory approvals and other customary closing conditions. Further, the sale of the television business is not a condition to the closing of the merger described above. Consistent with its radio station divestitures, the Company classified its television business as discontinued operations at September 30, 2007 and December 31, 2006 and presented the results of operations as discontinued operations, net of tax, for all periods presented. As of September 30, 2007, the Company determined that the estimated fair value less costs to sell attributable to its television business was in excess of the carrying value of their related net assets held for sale.

Summarized operating results for the nine and three months ended September 30, 2007 and 2006 from these businesses are as follows:

		Nine Months								Three Months
(In thousands)		2007				2006				2007				2006
Revenue		$	416,909			$	461,294			$	132,470			$	156,932
Income before income taxes		$	109,120			$	70,258			$	46,621			$	25,923

Included in income from discontinued operations, net are income tax expenses of $40.6 million, $26.7 million, $23.2 million and $9.9 million for the nine and three months ended September 30, 2007 and 2006, respectively. Also included in income from discontinued operations for the nine and three months ended September 30, 2007 is a gain on the sale of certain radio stations of $40.9 million and $21.3 million, respectively.

The following table summarizes the carrying amount at September 30, 2007 and December 31, 2006 of the major classes of assets and liabilities of the Company’s businesses classified as discontinued operations:

(In thousands)		September 30,				December 31,
		2007				2006
Assets
Accounts receivable, net		$	75,437			$	75,490
Other current assets			23,188				20,887
Total current assets		$	98,625			$	96,377
Land, buildings and improvements		$	107,120			$	133,203
Transmitter and studio equipment			279,013				300,810
Other property, plant and equipment			35,181				43,197
Less accumulated depreciation			(191,305	)			(205,664	)
Property, plant and equipment, net		$	230,009			$	271,546
Definite-lived intangibles, net		$	300			$	335
Licenses			128,963				134,082
Goodwill			364,746				412,193
Total intangible assets		$	494,009			$	546,610
Film rights		$	20,308			$	20,442
Other long-term assets			8,335				15,448
Total non current assets		$	28,643			$	35,890
Liabilities
Accounts payable and accrued expenses		$	9,987			$	13,911
Film liability			21,243				21,765
Other current liabilities			12,123				9,403
Total current liabilities		$	43,353			$	45,079
Film liability			21,896				22,158
Other long-term liabilities			8,976				2,463
Total long-term liabilities		$	30,872			$	24,621

               Recent Accounting Pronouncements

Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115 (“Statement 159”), was issued in February 2007. Statement 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Statement 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. Statement 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. Statement 159 does not eliminate disclosure

requirements included in other accounting standards, including requirements for disclosures about fair value measurements included in Statements No. 157, Fair Value Measurements, and No. 107, Disclosures about Fair Value of Financial Instruments. Statement 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company expects to adopt Statement 159 on January 1, 2008 and does not anticipate adoption to materially impact its financial position or results of operations.

               New Accounting Standard

The Company adopted Financial Accounting Standard Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”) on January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the financial statements. FIN 48 prescribes a recognition threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken within an income tax return. The adoption of FIN 48 resulted in a decrease of $0.2 million to the January 1, 2007 balance of “Retained deficit”, an increase of $101.7 million in “Other long term-liabilities” for unrecognized tax benefits and a decrease of $123.0 million in “Deferred income taxes”. The total amount of unrecognized tax benefits at January 1, 2007 was $416.1 million, inclusive of $89.6 million for interest. Of this total, $218.4 million represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods.

The Company continues to record interest and penalties related to unrecognized tax benefits in current income tax expense. The total amount of interest accrued during the nine months ended September 30, 2007 was $10.2 million. During the three months ended September 30, 2007 the Company recorded a benefit of $9.3 million for interest and penalties as a result of the settlement of several federal tax positions through the 2004 tax year. The total amount of unrecognized tax benefits at September 30, 2007 was $181.8 million. Of this total, $177.5 million represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods.

The Company and its subsidiaries file income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. As stated above, the Company settled several federal tax positions with the Internal Revenue Service (“IRS”) during the three months ended September 30, 2007. As a result of the settlement the Company reduced its balance of unrecognized tax benefits by $246.2 million. The IRS is currently auditing the Company’s 2005 and 2006 tax years. The Company does not expect to resolve any material federal tax positions within the next twelve months. Substantially all material state, local, and foreign income tax matters have been concluded for years through 1999.

The Company’s effective income tax rates for the nine and three months ended September 30, 2007 were 33.5% and 17.6%, respectively, as compared to 41.3% for the nine and three months ended September 30, 2006. For the three months ended September 30, 2007, the effective tax rate was primarily affected by the recording of current tax benefits of approximately $45.7 million related to the settlement of several tax positions with the IRS for the 1999 through 2004 tax years and deferred tax benefits of approximately $14.8 million related to the release of valuation allowances for the use of certain capital loss carryforwards.

Note 2: INTANGIBLE ASSETS AND GOODWILL

The Company has definite-lived intangible assets which consist primarily of transit and street furniture contracts and other contractual rights in its Americas and International outdoor segments, talent and program right contracts in its radio segment, and contracts for non-affiliated radio and television stations in the Company’s media representation operations, all of which are amortized over the respective lives of the agreements. Other definite-lived intangible assets are amortized over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows.

The following table presents the gross carrying amount and accumulated amortization for each major class of definite-lived intangible assets at September 30, 2007 and December 31, 2006:

(In thousands)		September 30, 2007								December 31, 2006
		Gross Carrying				Accumulated				Gross Carrying				Accumulated
		Amount				Amortization				Amount				Amortization
Transit, street furniture, and other outdoor contractual rights		$	860,276			$	596,450			$	821,364			$	530,063
Talent contracts			125,270				125,270				125,270				115,537
Representation contracts			376,206				202,613				349,493				175,658
Other			90,884				45,410				121,179				73,566
Total		$	1,452,636			$	969,743			$	1,417,306			$	894,824

Total amortization expense from continuing operations related to definite-lived intangible assets for the nine and three months ended September 30, 2007 and for the year ended December 31, 2006 was $79.7 million, $25.0 million and $150.7 million, respectively. The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets:

(In thousands)
2008		$	86,076
2009			73,294
2010			52,435
2011			42,106
2012			37,319

As acquisitions and dispositions occur in the future and as purchase price allocations are finalized, amortization expense may vary.

The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses and billboard permits. FCC broadcast licenses are granted to both radio and television stations for up to eight years under the Telecommunications Act of 1996. The Act requires the FCC to renew a broadcast license if: it finds that the station has served the public interest, convenience and necessity; there have been no serious violations of either the Communications Act of 1934 or the FCC’s rules and regulations by the licensee; and there have been no other serious violations which taken together constitute a pattern of abuse. The licenses may be renewed indefinitely at little or no cost. The Company does not believe that the technology of wireless broadcasting will be replaced in the foreseeable future. The Company’s billboard permits are issued in perpetuity by state and local governments and are transferable or renewable at little or no cost. Permits typically include the location which allows the Company the right to operate an advertising structure. The Company’s permits are located on either owned or leased land. In cases where the Company’s permits are located on leased land, the leases are typically from 10 to 20 years and renew indefinitely, with rental payments generally escalating at an inflation based index. If the Company loses its lease, the Company will typically obtain permission to relocate the permit or bank it with the municipality for future use.

The Company does not amortize its FCC broadcast licenses or billboard permits. The Company tests these indefinite-lived intangible assets for impairment at least annually using the direct method. Under the direct method, it is assumed that rather than acquiring indefinite-lived intangible assets as a part of a going concern business, the buyer hypothetically obtains indefinite-lived intangible assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the discounted cash flows model which results in value that is directly attributable to the indefinite-lived intangible assets.

Under the direct method, the Company aggregates its indefinite-lived intangible assets at the market level for purposes of impairment testing. The Company’s key assumptions using the direct method are market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information.

               Goodwill

The Company tests goodwill for impairment using a two-step process. The first step, used to screen for potential impairment, compares the fair value of the reporting unit with its carrying amount, including goodwill. The second step, used to measure the amount of the impairment loss, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The following table presents the changes in the carrying amount of goodwill in each of the Company’s reportable segments for the nine month period ended September 30, 2007:

						Americas				International
(In thousands)		Radio				Outdoor				Outdoor				Other				Total
Balance as of December 31, 2006		$	5,984,512			$	667,986			$	425,630			$	577			$	7,078,705
Acquisitions			6,565				9,094				7,410				1,994				25,063
Dispositions			(4,909	)			—				—				—				(4,909	)
Foreign currency			—				148				27,105				—				27,253
Adjustments			(97,597	)			(90	)			—				—				(97,687	)
Balance as of September 30, 2007		$	5,888,571			$	677,138			$	460,145			$	2,571			$	7,028,425

The Company recorded a $97.4 million adjustment to its balance of goodwill related to tax positions established as part of various radio station acquisitions for which the IRS audit periods have now closed.

Note 3: DERIVATIVE INSTRUMENTS

The Company holds options under two secured forward exchange contracts that limit its exposure to and benefit from price fluctuations in American Tower Corporation (“AMT”) over the terms of the contracts (the “AMT contracts”). These options are not designated as hedges of the underlying shares of AMT. The AMT contracts had a value of $22.2 million and $10.3 million recorded in “Other long term liabilities” at September 30, 2007 and December 31, 2006, respectively. For the nine months ended September 30, 2007 and for the year ended December 31, 2006, the Company recognized losses of $11.9 million and $22.0 million, respectively, in “Gain (loss) on marketable securities” related to the change in fair value of the options. To offset the change in the fair value of these contracts, the Company has recorded AMT shares as trading securities. During the nine months ended September 30, 2007 and for the year ended December 31, 2006, the Company recognized gains of $12.6 million and $20.5 million, respectively, in “Gain (loss) on marketable securities” related to the change in the fair value of the shares.

The Company is exposed to foreign currency exchange risks related to its investment in net assets in foreign countries. To manage this risk, the Company entered into two United States dollar — Euro cross currency swaps with an aggregate Euro notional amount of €706.0 million and a corresponding aggregate U.S. dollar notional amount of $877.7 million. These cross currency swaps had a value of $121.0 million at September 30, 2007 and $68.5 million at December 31, 2006, which was recorded in “Other long-term obligations”. These cross currency swaps require the Company to make fixed cash payments on the Euro notional amount while it receives fixed cash payments on the equivalent U.S. dollar notional amount, all on a semiannual basis. The Company has designated these cross currency swaps as a hedge of its net investment in Euro denominated assets. The Company selected the forward method under the guidance of the Derivatives Implementation Group Statement 133 Implementation Issue H8, Foreign Currency Hedges: Measuring the Amount of Ineffectiveness in a Net Investment Hedge. The forward method requires all changes in the fair value of the cross currency swaps and the semiannual cash payments to be reported as a cumulative translation adjustment in other comprehensive income in the same manner as the underlying hedged net assets. As of September 30, 2007, a $73.7 million loss, net of tax, was recorded as a cumulative translation adjustment to other comprehensive income related to the cross currency swap.

Note 4: RECENT DEVELOPMENTS

               Acquisitions

The Company acquired Americas outdoor display faces and additional equity interests in international outdoor companies for $42.7 million in cash during the nine months ended September 30, 2007. The Company’s national representation business acquired representation contracts for $28.9 million in cash during the nine months ended September 30, 2007.

               Disposition of Assets

The Company received proceeds of $9.7 million primarily related to the sale of representation contracts and international street furniture assets recorded in cash flows from investing activities and recorded a gain of $6.3 million in Gain (loss) on disposition of assets — net during the nine months ended September 30, 2007. The Company also received proceeds of $114.2 million related to the sale of radio stations recorded as investing cash flows from discontinued operations and recorded a gain of $40.9 million as a component of Income from discontinued operations, net during the nine months ended September 30, 2007.

               Debt Maturities

On February 1, 2007, the Company redeemed its 3.125% Senior Notes at their maturity for $250.0 million plus accrued interest with proceeds from its bank credit facility.

               Recent Legal Proceedings

The Company is currently involved in certain legal proceedings and, as required, has accrued its estimate of the probable costs for the resolution of these claims. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in management’s assumptions or the effectiveness of its strategies related to these proceedings.

Note 5: RESTRUCTURING

The Company restructured its outdoor operations in France in the third quarter of 2005. As a result, the Company recorded $26.6 million in restructuring costs as a component of selling, general and administrative expenses. Of the $26.6 million, $22.5 million was related to severance costs and $4.1 million was related to other costs. During 2007, $8.7 million of related costs were paid and charged to the restructuring accrual. As of September 30, 2007, the balance was $2.5 million.

Note 6: COMMITMENTS AND CONTINGENCIES

Certain agreements relating to acquisitions provide for purchase price adjustments and other future contingent payments based on the financial performance of the acquired companies. The Company will continue to accrue additional amounts related to such contingent payments if and when it is determinable that the applicable financial performance targets will be met. The aggregate of these contingent payments, if performance targets are met, would not significantly impact the financial position or results of operations of the Company.

As discussed in Note 4, there are various lawsuits and claims pending against the Company. Based on current assumptions, the Company has accrued its estimate of the probable costs for the resolution of these claims. Future results of operations could be materially affected by changes in these assumptions.

Note 7: GUARANTEES

Within the Company’s $1.75 billion credit facility, there exists a $150.0 million sub-limit available to certain of the Company’s international subsidiaries. This $150.0 million sub-limit allows for borrowings in various foreign currencies, which are used to hedge net assets in those currencies and provide funds to the Company’s international operations for certain working capital needs. Subsidiary borrowings under this sub-limit are guaranteed by the Company. At September 30, 2007, there was no outstanding balance on this portion of the $1.75 billion credit facility.

Within the Company’s bank credit facility agreement is a provision that requires the Company to reimburse lenders for any increased costs that they may incur in an event of a change in law, rule or regulation resulting in their reduced returns from any change in capital requirements. In addition to not being able to estimate the potential amount of any future payment under this provision, the Company is not able to predict if such event will ever occur.

The Company guarantees $40.2 million of credit lines provided to certain of its international subsidiaries by a major international bank. Most of these credit lines relate to intraday overdraft facilities covering participants in the Company’s European cash management pool. As of September 30, 2007, no amounts were outstanding under these agreements.

As of September 30, 2007, the Company has outstanding commercial standby letters of credit and surety bonds of $83.8 million and $43.5 million, respectively. These letters of credit and surety bonds relate to various operational matters including insurance, bid, and performance bonds as well as other items. Letters of credit issued under the Company’s $1.75 billion credit facility reduce the borrowing availability on the credit facility, and are included in the Company’s calculation of its leverage ratio covenant under the bank credit facilities. The surety bonds are not considered as borrowings under the Company’s bank credit facilities.

Note 8: SEGMENT DATA

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

(In thousands)																		Corporate,
																		Merger and
						Americas				International								Gain on
		Radio				Outdoor				Outdoor								disposition of
		Broadcasting				Advertising				Advertising				Other				assets - net				Eliminations				Consolidated
Nine Months Ended September 30, 2007
Revenue		$	2,572,405			$	1,080,219			$	1,264,891			$	165,262			$	—			$	(95,023	)		$	4,987,754
Direct operating expenses			704,728				427,138				830,682				62,883				—				(48,556	)			1,976,875
Selling, general and administrative expenses			842,559				167,004				226,314				76,129				—				(46,467	)			1,265,539
Depreciation and amortization			81,396				140,885				152,731				32,171				12,173				—				419,356
Corporate expenses			—				—				—				—				138,234				—				138,234
Merger expenses			—				—				—				—				6,372				—				6,372
Gain on disposition of assets — net			—				—				—				—				10,474				—				10,474
Operating income (loss)		$	943,722			$	345,192			$	55,164			$	(5,921	)		$	(146,305	)		$	—			$	1,191,852
Intersegment revenues		$	33,186			$	9,489			$	—			$	52,348			$	—			$	—			$	95,023
Identifiable assets		$	11,581,709			$	2,816,825			$	2,542,316			$	746,236			$	327,118			$	—			$	18,014,204
Capital expenditures		$	52,135			$	76,795			$	88,361			$	6,125			$	—			$	—			$	223,416
Share-based payments		$	16,751			$	5,451			$	1,168			$	—			$	9,150			$	—			$	32,520
Nine Months Ended September 30, 2006
Revenue		$	2,546,052			$	965,733			$	1,101,293			$	170,317			$	—			$	(89,136	)		$	4,694,259
Direct operating expenses			712,860				382,401				719,987				61,992				—				(46,452	)			1,830,788
Selling, general and administrative expenses			841,861				150,846				202,212				79,981				—				(42,684	)			1,232,216
Depreciation and amortization			89,159				129,382				169,888				33,430				14,299				—				436,158
Corporate expenses			—				—				—				—				137,232				—				137,232
Gain on disposition of assets — net			—				—				—				—				58,343				—				58,343
Operating income (loss)		$	902,172			$	303,104			$	9,206			$	(5,086	)		$	(93,188	)		$	—			$	1,116,208
Intersegment revenues		$	30,244			$	6,770			$	—			$	52,122			$	—			$	—			$	89,136
Identifiable assets		$	11,711,339			$	2,764,509			$	2,265,066			$	679,931			$	564,442			$	—			$	17,985,287
Capital expenditures		$	59,241			$	60,367			$	103,613			$	3,394			$	—			$	—			$	226,615
Share-based payments		$	18,928			$	3,560			$	994			$	1,242			$	7,995			$	—			$	32,719
Three Months Ended September 30, 2007
Revenue		$	882,152			$	386,353			$	431,188			$	58,458			$	—			$	(31,371	)		$	1,726,780
Direct operating expenses			242,686				147,339				287,133				21,282				—				(14,610	)			683,830
Selling, general and administrative expenses			281,632				56,636				74,592				25,212				—				(16,761	)			421,311
Depreciation and amortization			24,966				47,692				52,101				11,192				3,943				—				139,894
Corporate expenses			—				—				—				—				47,040				—				47,040
Merger expenses			—				—				—				—				2,002				—				2,002
Gain on disposition of assets — net			—				—				—				—				(567	)			—				(567	)
Operating income (loss)		$	332,868			$	134,686			$	17,362			$	772			$	(53,552	)		$	—			$	432,136
Intersegment revenues		$	10,557			$	2,755			$	—			$	18,059			$	—			$	—			$	31,371
Share-based payments		$	5,610			$	1,859			$	398			$	—			$	3,068			$	—			$	10,935

(In thousands)																		Corporate,
																		Merger and
						Americas				International								Gain on
		Radio				Outdoor				Outdoor								disposition of
		Broadcasting				Advertising				Advertising				Other				assets - net				Eliminations				Consolidated
Three Months Ended September 30, 2006
Revenue		$	890,219			$	356,384			$	363,870			$	58,506			$	—			$	(29,155	)		$	1,639,824
Direct operating expenses			246,599				133,468				250,365				20,266				—				(13,623	)			637,075
Selling, general and administrative expenses			275,844				52,029				66,395				27,438				—				(15,532	)			406,174
Depreciation and amortization			29,100				45,897				56,226				10,748				5,105				—				147,076
Corporate expenses			—				—				—				—				48,486				—				48,486
Gain on disposition of assets — net			—				—				—				—				9,122				—				9,122
Operating income (loss)		$	338,676			$	124,990			$	(9,116	)		$	54			$	(44,469	)		$	—			$	410,135
Intersegment revenues		$	10,136			$	1,852			$	—			$	17,167			$	—			$	—			$	29,155
Share-based payments		$	6,309			$	1,173			$	328			$	414			$	2,260			$	—			$	10,484

Revenue of $1.4 billion and $1.2 billion derived from foreign operations are included in the data above for the nine months ended September 30, 2007 and 2006, respectively. Revenue of $462.3 million and $388.0 million derived from foreign operations are included in the data above for the three months ended September 30, 2007 and 2006, respectively. Identifiable assets of $2.8 billion and $2.5 billion derived from foreign operations are included in the data above for the nine months ended September 30, 2007 and 2006, respectively.

Note 9: SUBSEQUENT EVENTS

Subsequent to September 30, 2007, the Company entered into definitive agreements for the sale of 11 additional radio stations and closed on the sales of 91 radio stations. As of November 7, 2007, the Company had definitive asset purchase agreements for the sale of 93 radio stations. The closing of the radio stations under definitive agreements is subject to antitrust clearances, FCC approval and other customary closing conditions. Further, the closing of these stations is not a condition to the closing of the merger described above. Agreements to sell 187 stations that were under definitive agreement at September 30, 2007 were subsequently terminated. However, the Company continues to actively market these radio stations and they continue to meet the criteria in Statement 144 for classification as discontinued operations. Therefore, the assets, results of operations and cash flows from these stations remain classified as discontinued operations in the Company’s consolidated financial statements.

On April 20, 2007, the Company entered into a definitive agreement with an affiliate (the “Buyer”) of Providence Equity Partners Inc. (“Providence”) to sell its television business. A representative of Providence has informed the Company that the Buyer is considering its options under the definitive agreement including not closing the acquisition on the terms and conditions in the definitive agreement. The definitive agreement is in full force and effect and has not been terminated. There have been no allegations that the Company has breached any of the terms or conditions of the definitive agreement or that there is a failure of a condition to closing the acquisition.

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

Approved Merger with a Group led by Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC

     Our shareholders approved the adoption of the merger agreement, as amended, with a group led by T.H. Lee Partners, L.P. and Bain Capital Partners, LLC on September 25, 2007. The transaction remains subject to requisite regulatory approvals and customary closing conditions.

     Under the terms of the merger agreement, as amended, our shareholders will receive $39.20 in cash for each share they own plus additional per share consideration, if any, if the closing of the merger occurs after December 31, 2007. For a description of the computation of any additional per share consideration and the circumstances under which it is payable, please refer to the joint proxy statement/prospectus dated August 21, 2007, filed with the Securities & Exchange Commission (the “Proxy Statement”). As an alternative to receiving the $39.20 per share cash consideration, our unaffiliated shareholders were offered the opportunity on a purely voluntary basis to exchange some or all of their shares of our common stock on a one-for-one basis for shares of Class A common stock in the new corporation formed by the private equity group to acquire us (subject to aggregate and individual caps), plus the additional per share consideration, if any.

     Holders of shares of our common stock (including shares issuable upon conversion of outstanding options) in excess of the aggregate cap provided in the merger agreement, as amended, elected to receive the stock consideration. As a result, unaffiliated shareholders of us will own an aggregate of 30,612,245 shares of CC Media Holdings Class A common stock upon consummation of the merger.

Sale of Radio Stations and all of our Television Stations

     On November 16, 2006, we announced plans to sell 448 radio stations and all of our television stations. The sale of these assets is not contingent on the closing of the merger described above. Definitive asset purchase agreements were signed for 360 radio stations, 8 of which were not part of the announced 448 stations, as of September 30, 2007. These stations, along with 55 stations which were sold in the fourth quarter of 2006 and first nine months of 2007, 5 of which were not part of the announced 448 stations, were classified as assets from discontinued operations in our consolidated balance sheet and as discontinued operations in our consolidated statements of operations. Through November 7, 2007, we had definitive asset purchase agreements for the sale of 11 additional radio stations. The closing of these sales is subject to antitrust clearances, FCC approval and other customary closing conditions. Further, the closing of these sales is not a condition to the closing of the merger described above. Also through November 7, 2007, we completed the sales of 91 radio stations that were under definitive agreement at September 30, 2007.

     Agreements to sell 187 stations that were under definitive agreement at September 30, 2007 were subsequently terminated. However we continue to actively market these radio stations and they continue to meet the criteria in Statement 144 for classification as discontinued operations. Therefore, the assets, results of operations and cash flows from these stations remain classified as discontinued operations in our consolidated financial statements.

     On April 20, 2007, we entered into a definitive agreement with an affiliate, or the Buyer, of Providence Equity Partners Inc., or Providence, to sell our television business. The closing of the transaction is subject to regulatory approvals and other customary closing conditions. Further, the sale of the television business is not a condition to the closing of the merger described above. A representative of Providence has informed us that the Buyer is considering its options under the definitive agreement including not closing the acquisition on the terms and conditions in the definitive agreement. The definitive agreement is full force and effect and has not been terminated. There have been no allegations that we have breached any of the terms or conditions of the definitive agreement or that there is a failure of a condition to closing the acquisition. Our television business is reported as assets and liabilities of discontinued operations on our consolidated balance sheet and the results of operations as discontinued operations on our statements of operations.

Format of Presentation

     Management’s discussion and analysis of our results of operations and financial condition should be read in conjunction with the consolidated financial statements and related footnotes. Our discussion is presented on both a consolidated and segment basis. Our reportable operating segments are Radio Broadcasting, or radio, which includes our national syndication business, Americas Outdoor Advertising, or Americas, and International Outdoor Advertising, or International. Included in the “other” segment are our media representation business, Katz Media, as well as other general support services and initiatives.

     We manage our operating segments primarily focusing on their operating income, while Corporate expenses, Merger expenses, Gain (loss) on disposition of assets — net, Interest expense, Gain (loss) on marketable securities, Equity in earnings of nonconsolidated affiliates, Other income (expense) — net, Income tax benefit (expense) and Minority interest — net of tax are managed on a total company basis and are, therefore, included only in our discussion of consolidated results.

Radio Broadcasting

     Our revenues are derived from selling advertising time, or spots, on our radio stations, with advertising contracts typically less than one year. The formats are designed to reach audiences with targeted demographic characteristics that appeal to our advertisers. Management monitors average advertising rates, which are principally based on the length of the spot and how many people in a targeted audience listen to our stations, as measured by an independent ratings service. The size of the market influences rates as well, with larger markets typically receiving higher rates than smaller markets. Also, our advertising rates are influenced by the time of day the advertisement airs, with morning and evening drive-time hours typically the highest. Management monitors yield in addition to average rates because yield allows management to track revenue performance across our inventory. Yield is defined by management as revenue earned divided by commercial capacity available.

     Management monitors macro level indicators to assess our radio operations’ performance. Due to the geographic diversity and autonomy of our markets, we have a multitude of market specific advertising rates and audience demographics. Therefore, management reviews average unit rates across all of our stations.

     Management looks at our radio operations’ overall revenues as well as local advertising, which is sold predominately in a station’s local market, and national advertising, which is sold across multiple markets. Local advertising is sold by each radio stations’ sales staffs while national advertising is sold, for the most part, through our national representation firm. Local advertising, which is our largest source of advertising revenue, and national advertising revenues are tracked separately, because these revenue streams have different sales forces and respond differently to changes in the economic environment.

     Management also looks at radio revenue by market size, as defined by Arbitron. Typically, larger markets can reach larger audiences with wider demographics than smaller markets. Additionally, management reviews our share of target demographics listening to the radio in an average quarter hour. This metric gauges how well our formats are attracting and retaining listeners.

     A portion of our radio segment’s expenses vary in connection with changes in revenue. These variable expenses primarily relate to costs in our sales department, such as salaries, commissions and bad debt. Our programming and general and administrative departments incur most of our fixed costs, such as talent costs, rights fees, utilities and office salaries. Lastly, our highly discretionary costs are in our marketing and promotions department, which we primarily incur to maintain and/or increase our audience share.

Americas and International Outdoor Advertising

     Our revenues are derived from selling advertising space on the displays that we own or operate in key markets worldwide consisting primarily of billboards, street furniture and transit displays. We own the majority of our advertising displays, which typically are located on sites that we either lease or own or for which we have acquired permanent easements. Our advertising contracts typically outline the number of displays reserved, the duration of the advertising campaign and the unit price per display.

     Our advertising rates are based on the gross rating points, or total number of impressions delivered by a display or group of displays, expressed as a percentage of a market population. The number of impressions delivered by a display is measured by the number of people passing the site during a defined period of time and, in some international markets, is weighted to account for such factors as illumination, proximity to other displays and the speed and viewing angle of approaching traffic. Management typically monitors our business by reviewing the average rates, average revenues per display, or yield, occupancy, and inventory levels of each of our display types by market. In addition, because a significant portion of our advertising operations are conducted in foreign markets, principally France and the United Kingdom, management reviews the operating results from our foreign operations on a constant dollar basis. A constant dollar basis allows for comparison of operations independent of foreign exchange movements. Because revenue-sharing and minimum guaranteed payment arrangements are more prevalent in our International operations, the margins in our International operations typically are less than the margins in our Americas operations.

     The significant expenses associated with our operations include (i) direct production, maintenance and installation expenses, (ii) site lease expenses for land under our displays and (iii) revenue-sharing or minimum guaranteed amounts payable under our street furniture and transit display contracts. Our direct production, maintenance and installation expenses include costs for printing, transporting and changing the advertising copy on our displays, the related labor costs, the vinyl and paper costs and the costs for cleaning and maintaining our displays. Vinyl and paper costs vary according to the complexity of the advertising copy and the quantity of displays. Our site lease expenses include lease payments for use of the land under our displays, as well as any revenue-sharing arrangements or minimum guaranteed amounts payable that we may have with the landlords. The terms of our site leases and revenue-sharing or minimum guaranteed contracts generally range from 1 to 20 years.

     Our street furniture and transit display contracts, the terms of which range from 3 to 20 years, generally require us to make upfront investments in property, plant and equipment. These contracts may also include upfront lease payments and/or minimum

annual guaranteed lease payments. We can give no assurance that our cash flows from operations over the terms of these contracts will exceed the upfront and minimum required payments.

     The results in 2007 include our acquisition of Interspace Airport Advertising, or Interspace, which we acquired in July 2006.

FAS 123(R), Share-Based Payment

     As of September 30, 2007, there was $102.1 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. This cost is expected to be recognized over a weighted average period of approximately three years. The following table details compensation costs related to share-based payments for the three and nine months ended September 30, 2007 and 2006:

		Three Months ended September 30,								Nine Months ended September 30,
(In millions)		2007				2006				2007				2006
Radio Broadcasting
Direct Operating Expenses		$	2.5			$	2.7			$	7.5			$	8.3
SG&A			3.1				3.6				9.2				10.6
Americas Outdoor Advertising
Direct Operating Expenses		$	1.3			$	0.9			$	3.9			$	2.6
SG&A			0.5				0.3				1.5				0.9
International Outdoor Advertising
Direct Operating Expenses		$	0.3			$	0.2			$	0.9			$	0.6
SG&A			0.1				0.1				0.3				0.3
Other
Direct Operating Expenses		$	—			$	0.2			$	—			$	0.6
SG&A			—				0.2				—				0.8
Corporate		$	3.1			$	2.3			$	9.2			$	8.0

     The comparison of Three and Nine Months Ended September 30, 2007 to Three and Nine Months Ended September 30, 2006 is as follows:

(In thousands)		Three Months Ended												Nine Months Ended
		September 30,								%				September 30,								%
		2007				2006				Change				2007				2006				Change
Revenue		$	1,726,780			$	1,639,824				5	%		$	4,987,754			$	4,694,259				6	%
Operating expenses:
Direct operating expenses			683,830				637,075				7	%			1,976,875				1,830,788				8	%
Selling, general and administrative expenses			421,311				406,174				4	%			1,265,539				1,232,216				3	%
Depreciation and amortization			139,894				147,076				(5	%)			419,356				436,158				(4	%)
Corporate expenses			47,040				48,486				(3	%)			138,234				137,232				1	%
Merger expenses			2,002				—								6,372				—
Gain (loss) on disposition of assets — net			(567	)			9,122								10,474				58,343
Operating income			432,136				410,135				5	%			1,191,852				1,116,208				7	%
Interest expense			113,026				128,276								347,525				365,950
Gain (loss) on marketable securities			676				5,396								661				2,072
Equity in earnings of nonconsolidated affiliates			7,133				8,681								23,832				25,305
Other income (expense) — net			(1,403	)			(601	)							(1,075	)			(5,858	)
Income before income taxes, minority interest and discontinued operations			325,516				295,335								867,745				771,777
Income tax benefit (expense):
Current			(2,480	)			(60,717	)							(162,464	)			(163,434	)
Deferred			(54,760	)			(61,149	)							(128,614	)			(155,103	)
Income tax benefit (expense)			(57,240	)			(121,866	)							(291,078	)			(318,537	)
Minority interest expense, net of tax			11,961				3,673								27,206				16,630
Income before discontinued operations			256,315				169,796								549,461				436,610
Income from discontinued operations, net			23,421				16,075								68,487				43,563
Net income		$	279,736			$	185,871							$	617,948			$	480,173

Consolidated Revenue

Three Months

     Our consolidated revenues increased $87.0 million during the third quarter of 2007 compared to the same period of 2006. Our International revenue increased $67.3 million, including approximately $30.7 million related to movements in foreign exchange. In addition to foreign exchange, International revenue growth was primarily led by increased billboards and street furniture revenues. Our Americas revenue increased $30.0 million from increases across our display inventory including bulletins, posters, street furniture, airports and taxi displays. Our radio revenue declined $8.1 million primarily from declines in both local and national advertising partially offset by increases in our syndicated radio programming, traffic and on-line businesses.

Nine Months

     Our consolidated revenues increased $293.5 million during the nine months of 2007 compared to the same period of 2006. Our International revenue increased $163.6 million, including approximately $90.0 million related to movements in foreign exchange. In addition to foreign exchange, International revenue growth was led by billboards and street furniture revenues. Our Americas revenue increased $114.5 million with Interspace, which we acquired in July 2006, contributing approximately $31.7 million of the increase. In addition to Interspace, our Americas revenue growth was driven by increases across our display inventory. Our radio revenue increased $26.4 million primarily from an increase in our syndicated radio programming, traffic and on-line businesses. These increases were partially offset by declines from operations classified in our “other” segment.

Consolidated Direct Operating Expenses

Three Months

     Our consolidated direct operating expenses increased approximately $46.8 million during the third quarter of 2007 compared to the same period of 2006. International direct operating expenses increased $36.8 million primarily from $20.4 million related to movements in foreign exchange. Americas direct operating expenses increased $13.8 million principally related to increased site-

lease expenses. Partially offsetting these increases was a decline in our radio direct operating expenses of approximately $3.9 million primarily from a decline in programming expenses.

Nine Months

     Our consolidated direct operating expenses increased approximately $146.1 million during the first nine months of 2007 compared to the same period of 2006. International direct operating expenses increased $110.7 million principally from $61.4 million related to movements in foreign exchange. Americas direct operating expenses increased $44.7 million with Interspace contributing approximately $14.7 million and the remainder primarily attributable to increased site-lease expenses. Partially offsetting these increases was a decline in our radio direct operating expenses of approximately $8.1 million primarily from a decline in programming expenses.

Consolidated Selling, General and Administrative Expenses, or SG&A

Three Months

     Our consolidated SG&A expenses increased approximately $15.1 million during the third quarter of 2007 compared to the same period of 2006. International SG&A expenses increased $8.2 million primarily related to movements in foreign exchange. Americas SG&A expenses increased $4.6 million attributable to selling expenses primarily associated with the increase in revenue. Our radio SG&A expenses increased $5.8 million for the same period primarily driven by an increase in selling expenses in our syndicated radio and on-line businesses associated with the increase in revenue for these businesses. We also experienced expense declines from operations classified in our “other” segment.

Nine Months

     Our consolidated SG&A expenses increased approximately $33.3 million during the first nine months of 2007 compared to the same period of 2006. International SG&A expenses increased $24.1 million primarily related to movements in foreign exchange. Americas SG&A expenses increased $16.2 million attributable to $7.3 million from Interspace and the rest primarily attributable to sales expenses associated with the increase in revenue. Our radio SG&A expenses were essentially unchanged during the first nine months of 2007 compared to the same period of 2006. We also experienced declines in our SG&A expenses from operations classified in our “other” segment.

Gain (loss) on Disposition of Assets — Net

     The loss of $0.6 million in the third quarter 2007 primarily relates to the sale of two radio stations in a certain market where we continue to own radio stations. The gain of $9.1 million in 2006 relates to a $6.7 gain from an LMA termination fee, $1.4 million gain on the sale of sports rights and $1.0 million gain on various other items.

     The gain for the nine months ended September 30, 2007 related primarily to a $5.5 million gain from the sale of street furniture assets. The gain for the nine months ended September 30, 2006 primarily relates to the items discussed above as well as gains recognized in the first quarter of 2006 including a $13.2 million gain in our Americas outdoor segment from the exchange of assets in one of our markets for the assets of a third party located in a different market and $22.5 million in our radio segment primarily from the sale of programming rights in one of our markets.

Interest Expense

     Interest expense declined $15.3 million and $18.4 million in the third quarter of 2007 and nine months ended September 30, 2007, respectively, compared to the same periods of 2006. The declines were primarily from a reduction in our outstanding debt.

Gain (loss) on marketable securities

     The $0.7 million gain on marketable securities for the third quarter of 2007 related to changes in fair value of the AMT shares and the related forward exchange contracts. The gain on marketable securities of $5.4 million in the third quarter of 2006 related to a $1.6 million gain associated with the changes in fair value of our AMT securities and the related secured forward exchange contracts, plus $3.8 million from terminating our secured forward exchange contract associated with our investment in XM Satellite Radio Holdings, Inc.

     The $0.7 million and $2.1 million gains for the nine months ended September 30, 2007 and 2006, respectively, relates to the items discussed above.

Income Tax Benefit (Expense)

Three Months

     Current tax expense for the three months ended September 30, 2007 decreased $58.2 million compared to the three months ended September 30, 2006 primarily due to current tax benefits of approximately $45.7 million recorded in 2007 related to the settlement of several tax positions with the IRS for the 1999 through 2004 tax years.

     Deferred tax expense decreased $6.4 million for the three months ended September 30, 2007 primarily due to additional deferred tax expense of $8.3 million recorded during the third quarter of 2006 related to the uncertainty of our ability to utilize certain tax losses in the future for international operations. In addition, we recorded a deferred tax benefit of $14.8 million in 2007 related to the release of valuation allowances for the use of certain capital loss carryforwards. This deferred tax benefit was offset by additional deferred tax expense recorded in 2007 related to the true up of the 2006 federal tax return filed in 2007.

Nine Months

     Current tax expense for the nine months ended September 30, 2007 decreased $1.0 million compared to the nine months ended September 30, 2006 primarily due to current tax benefits of approximately $45.7 million recorded in 2007 related to the IRS settlement, partially offset by additional current tax expense recorded in 2007 due to an increase in Income before income taxes, minority interest and discontinued operations of $96.0 million.

     Deferred tax expense for the nine months ended September 30, 2007 decreased $26.5 million compared to the nine months ended September 30, 2006 primarily due to additional deferred tax expense of approximately $16.7 million recorded during 2006 related to the uncertainty of our ability to utilize certain tax losses in the future for international operations. In addition, we recorded a deferred tax benefit of $14.8 million during 2007 related to the release of valuation allowances for the use of certain capital loss carryforwards. This deferred tax benefit was offset by additional deferred tax expense recorded in 2007 related to the true up of the 2006 federal tax return filed in 2007.

Segment Revenue and Divisional Operating Expenses

Radio Broadcasting

(In thousands)		Three Months Ended												Nine Months Ended
		September 30,								%				September 30,								%
		2007				2006				Change				2007				2006				Change
Revenue		$	882,152			$	890,219				(1)%			$	2,572,405			$	2,546,052				1%
Direct operating expenses			242,686				246,599				(2)%				704,728				712,860				(1)%
Selling, general and administrative expenses			281,632				275,844				2%				842,559				841,861				0%
Depreciation and amortization			24,966				29,100				(14)%				81,396				89,159				(9)%
Operating income		$	332,868			$	338,676				(2)%			$	943,722			$	902,172				5%

Three Months

     Our radio revenue decreased 1% during the third quarter of 2007 as compared to the same period of 2006 primarily from a decline in both local and national revenues. Local and national revenues were down partially as a result of declines in automotive, retail and political advertising categories. The decline in revenues was partially offset by increases in network, traffic, syndicated radio and on-line revenues. During the quarter, we increased our average unit rates compared to the third quarter of 2006, however, total minutes sold declined during this same period.

     Our direct operating expenses decreased approximately $3.9 million during the third quarter of 2007 as compared to the same period of 2006 primarily from a decline of $3.6 million in programming expenses and a $2.0 million decline in research and other ancillary expenses. Partially offsetting these declines were increases of $1.5 million in traffic expenses and $1.4 million in programming expenses in our syndicated radio business associated with the increased revenues in these businesses. SG&A expenses increased $5.8 million during the third quarter of 2007 as compared to the same period of 2006 primarily from an increase in commission expenses in our syndicated radio business and salaries and commission expenses in our on-line business, both associated with the increase in revenue from these businesses.

Nine Months

     Our radio revenue increased 1% during the first nine months of 2007 as compared to the same period of 2006 primarily from an increase in our syndicated radio programming, traffic and on-line businesses. Our radio direct operating expenses decreased approximately $8.1 million primarily from an $11.4 million decline in programming expenses and a $4.6 million decline in research and other ancillary expenses. Partially offsetting these declines were increases of $5.1 million in traffic expenses and $1.4 million in

engineering expenses. SG&A expenses were essentially unchanged during the nine months ended September 30, 2007 as compared to the same period of 2006. Increases in commission expenses in our syndicated radio business and salaries and commission expenses in our on-line business were partially offset by declines in expenses associated with non-traditional revenues and commission expenses for our radio sales personnel.

Americas Outdoor Advertising

(In thousands)		Three Months Ended												Nine Months Ended
		September 30,								%				September 30,								%
		2007				2006				Change				2007				2006				Change
Revenue		$	386,353			$	356,384				8%			$	1,080,219			$	965,733				12%
Direct operating expenses			147,339				133,468				10%				427,138				382,401				12%
Selling, general and administrative expenses			56,636				52,029				9%				167,004				150,846				11%
Depreciation and amortization			47,692				45,897				4%				140,885				129,382				9%
Operating income		$	134,686			$	124,990				8%			$	345,192			$	303,104				14%

Three Months

     Americas revenue increased $30.0 million, or 8%, during the third quarter of 2007 as compared to the same period of 2006. The growth occurred across our inventory, including bulletins, posters, street furniture, airports and taxi displays. The revenue growth was led by bulletin revenue which was driven by increased rates and by increased airport display revenue which had both increased rates and occupancy. Leading advertising categories during the quarter were telecommunications, beverages, retail, financial services, amusements and real estate. Revenue growth occurred across our markets, led by Los Angeles, New York, Washington/Baltimore, Atlanta and Albuquerque.

     Direct operating expenses increased $13.8 million in the third quarter of 2007 as compared to the same period of 2006 primarily from an $11.6 million increase in site lease expenses related to new contracts and the increase in airport, street furniture and taxi revenues. SG&A expenses increased $4.6 million primarily from an increase in selling expenses associated with the increase in revenue.

Nine Months

     Our Americas revenue increased 12%, or $114.5 million, during the nine months ended September 30, 2007 as compared to the same period of 2006. Interspace contributed approximately $31.7 million to the increase. Bulletin, posters, street furniture, airports and taxi displays all contributed to the increase in revenues. Direct operating expenses increased $44.7 million in the nine months ended September 30, 2007 over the same period of 2006 primarily from an increase of $14.7 million related to Interspace and a $24.6 million increase in site lease expenses associated with new contracts and the increase in airport, street furniture and taxi revenues. Our SG&A expenses increased $16.2 million in the first nine months of 2007 over the same period of 2006. Interspace contributed approximately $7.3 million to the increase and the rest of the increase was primarily attributable to bonus, commission and bad debt expenses associated with the increase in revenues.

     Depreciation and amortization increased $11.5 million for the nine months ended September 30, 2007 compared to the same period of the prior year primarily associated with $6.3 million from Interspace.

International Outdoor Advertising

(In thousands)		Three Months Ended												Nine Months Ended
		September 30,								%				September 30,								%
		2007				2006				Change				2007				2006				Change
Revenue		$	431,188			$	363,870				19%			$	1,264,891			$	1,101,293				15%
Direct operating expenses			287,133				250,365				15%				830,682				719,987				15%
Selling, general and administrative expenses			74,592				66,395				12%				226,314				202,212				12%
Depreciation and amortization			52,101				56,226				(7)%				152,731				169,888				(10)%
Operating income		$	17,362			$	(9,116	)		NA				$	55,164			$	9,206				499%