SPANISH BROADCASTING SYSTEM INC (Form: 10-Q, Received: 08/09/2004 17:35:30)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


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

		For the quarterly period ended June 30, 2004

or

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

		For the transition period from to

Commission file number 33-82114

(SBS LOGO)

Spanish Broadcasting System, Inc.

(Exact name of registrant as specified in its charter)


Delaware		13-3827791
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2601 South Bayshore Drive, PH II

Coconut Grove, Florida 33133

(Address of principal executive offices) (Zip Code)

(305) 441-6901

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year,

if changed since last report)

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 an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of August 6, 2004, 39,656,355 shares of Class A common stock, par value $.0001 per share, and 25,105,150 shares of Class B common stock, par value $.0001 per share, were outstanding.

SPANISH BROADCASTING SYSTEM, INC.

INDEX


		Page

PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements — Unaudited		2
	Unaudited Condensed Consolidated Balance Sheets as of December 31, 2003 and June 30, 2004		2
	Unaudited Condensed Consolidated Statements of Operations for the Three- and Six-Months Ended June 30, 2003 and 2004		3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six-Months Ended June 30, 2003 and 2004		4
	Notes to Unaudited Condensed Consolidated Financial Statements		5
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		22
ITEM 4.	Controls and Procedures		22
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings		23
ITEM 4.	Submission of Matters to a Vote of Security Holders		24
ITEM 5.	Other Information		24
ITEM 6.	Exhibits and Reports on Form 8-K		24
NONQUALIFIED STOCK OPTION AGREEMENT
NONQUALIFIED STOCK OPTION AGREEMENT
AMENDMENT TO ASSET PURCHASE AGREEMENT
TIME BROKERAGE AGREEMENT
ASSET PURCHASE AGREEMENT
CERTIFICATION
CERTIFICATION
CERTIFICATION
CERTIFICATION

PART I. — FINANCIAL INFORMATION


Item 1.	*Financial Statements — Unaudited*

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets


			December 31,			June 30,
			2003			2004


			(In thousands, except
			share data)
Assets
Current assets:
	Cash and cash equivalents		$	45,609		$	63,246
	Net receivables			25,567			29,840
	Other current assets			3,482			2,908
	Assets held for sale (note 4)			25,906			13,897

		Total current assets		100,564			109,891
Property and equipment, net				24,558			24,270
Intangible assets, net				705,251			705,337
Deferred financing costs, net				11,461			10,632
Other assets				448			1,022

			$	842,282		$	851,152


Liabilities and Stockholders’ Equity
Current liabilities:
	Current portion of the senior credit facilities term loan due 2009 (note 4)		$	1,250		$	26,400
	Current portion of other long-term debt			227			3,234
	Accounts payable and accrued expenses			18,822			16,190
	Accrued interest			6,370			5,425
	Deposits on the sale of a station			1,500			2,000
	Deferred commitment fee			—			563

		Total current liabilities		28,169			53,812
Senior credit facilities term loan due 2009, less current portion				123,750			97,975
9 5/8% senior subordinated notes due 2009, net				325,246			325,843
Other long-term debt, less current portion				3,721			603
Deferred income taxes				68,354			69,734

		Total liabilities		549,240			547,967

Cumulative exchangeable redeemable preferred stock:
	10 3/4 Series B cumulative exchangeable redeemable preferred stock, $0.01 par value. Authorized 280,000 shares, 75,000 issued and outstanding at December 31, 2003 and 78,763 issued and outstanding at June 30, 2004			76,366			80,527

Stockholders’ equity:
	Class A common stock, $0.0001 par value. Authorized 100,000,000 shares; 37,087,355 shares issued and outstanding at December 31, 2003, 39,626,355 shares issued and outstanding at June 30, 2004			3			3
	Class B common stock, $0.0001 par value. Authorized 50,000,000 shares; 27,605,150 shares issued and outstanding at December 31, 2003, 25,105,150 shares issued and outstanding at June 30, 2004			3			3
Additional paid-in capital				443,961			443,812
Accumulated deficit				(227,291	)		(221,160	)

		Total stockholders’ equity		216,676			222,658

			$	842,282		$	851,152

See accompanying notes to the unaudited condensed consolidated financial statements.

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations



				Three Months Ended						Six Months Ended
				June 30,						June 30,

				2003			2004			2003			2004


				(In thousands, except						(In thousands, except
				per share data)						per share data)
Net revenue				$	36,535		$	40,292		$	64,458		$	69,524

Operating expenses:
	Engineering				930			1,176			1,847			2,263
	Programming				4,707			6,361			9,944			12,686
	Stock-based programming				1,280			—			1,622			—
	Selling				10,234			10,317			17,871			17,701
	General and administrative				4,005			4,384			7,340			7,917
	Corporate expenses				4,693			2,999			9,181			6,227
	Depreciation and amortization				758			824			1,466			1,646

		Total operating expenses			26,607			26,061			49,271			48,440

		Operating income from continuing operations			9,928			14,231			15,187			21,084

Other (expense) income:
	Interest expense, net				(8,800	)		(10,200	)		(17,429	)		(20,438	)
	Other, net				197			80			223			255

		Income (loss) from continuing operations before income taxes and discontinued operations			1,325			4,111			(2,019	)		901
Income tax expense (benefit)					325			5,446			(2,122	)		1,498

		Income (loss) from continuing operations before discontinued operations			1,000			(1,335	)		103			(597	)
(Loss) income on discontinued operations, net of tax					(211	)		(51	)		(115	)		10,889

		Net income (loss)		$	789		$	(1,386	)	$	(12	)	$	10,292

Dividends on preferred stock					—			(2,107	)		—			(4,161	)

Net income (loss) applicable to common stockholders				$	789		$	(3,493	)	$	(12	)	$	6,131

Basic and diluted loss per common share:
	Net income (loss) per common share before discontinued operations:
		Basic and Diluted		$	0.01		$	(0.05	)	$	—		$	(0.07	)
	Net (loss) income per common share for discontinued operations:
		Basic and Diluted		$	—		$	—		$	—		$	0.16

	Net income (loss) per common share:
		Basic and Diluted		$	0.01		$	(0.05	)	$	—		$	0.09

			Weighted average common shares outstanding
			Basic		64,682			64,718			64,682			64,705

			Diluted		64,786			64,718			64,682			65,178

See accompanying notes to the unaudited condensed consolidated financial statements.

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows



					Six Months Ended
					June 30,

					2003			2004


					(In thousands)
Cash flows from operating activities:
	Net (loss) income				$	(12	)	$	10,292
	Adjustments to reconcile net (loss) income to net cash used in operating activities:
		Loss (income) from discontinued operations				115			(10,889	)
		Stock-based programming expense				1,622			—
		Loss on disposal of assets				—			7
		Depreciation and amortization				1,466			1,646
		Net barter income				(102	)		(100	)
		Provision for trade doubtful accounts				290			365
		Amortization of debt discount				529			597
		Amortization of deferred financing costs				641			992
		(Decrease) increase in deferred income taxes				(2,295	)		1,390
		Amortization of deferred commitment fee				(351	)		(37	)
		Changes in operating assets and liabilities:
			Increase in receivables			(1,408	)		(5,094	)
			(Increase) decrease in other current assets			(440	)		437
			Increase in other assets			(1,105	)		(581	)
			Increase (decrease) in accounts payable and accrued expenses			572			(3,664	)
			Increase (decrease) in accrued interest			177			(945	)
			Increase in deferred commitment fee			—			600

				Net cash used in continuing operations		(301	)		(4,984	)
				Net cash provided by discontinued operations		156			789

			Net cash used in operating activities			(145	)		(4,195	)

Cash flows from investing activities:
	Proceeds from a sale of radio stations, net of closing cost					—			23,730
	Deposit on sale of station								500
	Advances on purchase price of radio stations					(15,156	)		—
	Acquisition of radio stations					(22,356	)		—
	Additions to property and equipment					(1,903	)		(1,350	)
	Additions to property and equipment of discontinued operations					(87	)		—

			Net cash (used in) provided by investing activities			(39,502	)		22,880

Cash flows from financing activities:
	Increase in deferred offering costs					—			(375	)
	Increase in deferred financing costs					—			(163	)
	Proceeds from Class A stock options exercised					—			226
	Repayment of senior credit facilities					—			(625	)
	Repayment of other long-term debt					(102	)		(111	)

			Net cash used in financing activities			(102	)		(1,048	)

Net (decrease) increase in cash and cash equivalents						(39,749	)		17,637
Cash and cash equivalents at beginning of period						71,430			45,609

Cash and cash equivalents at end of period					$	31,681		$	63,246

Supplemental cash flow information:
	Interest paid				$	16,417		$	20,086

	Income taxes paid				$	187		$	323

Non-cash financing and investing activities:
	Accrual and/or issuance of preferred stock as payment of preferred stock dividends				$	—		$	4,161

See accompanying notes to the unaudited condensed consolidated financial statements.

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.	Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of Spanish Broadcasting System, Inc. and its subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements as of December 31, 2003 and June 30, 2004, and for the three- and six-month periods ended June 30, 2003 and 2004 do not contain all disclosures required by generally accepted accounting principles. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company as of and for the fiscal year ended December 31, 2003 included in the Company’s fiscal year 2003 Annual Report on Form 10-K.

Effective December 30, 2002, the Company changed its year-end from a broadcast calendar 52-53-week fiscal year ending on the last Sunday in December to a calendar year ending on December 31. Pursuant to Securities and Exchange Commission Financial Reporting Release No. 35, such change was not deemed to be a change in fiscal year for financial reporting purposes and the Company was not required to file a separate transition report or to report separate financial information for the two-day period of December 30 and 31, 2002. Financial results for December 30 and 31, 2002 are included in the Company’s financial results for the six-month period ended June 30, 2003.

In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, which are all of a normal and recurring nature, necessary for a fair presentation of the results of the interim periods. The results of operations for the three- and six-month periods ended June 30, 2004 are not necessarily indicative of the results for a full year.


2.	Financial Information for Parent, Guarantor and Non-Guarantor Subsidiaries

Certain of the Company’s subsidiaries (collectively, the “Subsidiary Guarantors”) have guaranteed the Company’s 9 5/8% senior subordinated notes due 2009 on a joint and several basis. The Company has not included separate financial statements of the Subsidiary Guarantors because (i) all of the Subsidiary Guarantors are wholly owned subsidiaries of the Company, and (ii) the guarantees issued by the Subsidiary Guarantors are full and unconditional. The Company has not included separate parent-only financial statements since the parent (Spanish Broadcasting System, Inc., a Delaware corporation) is a holding company with no independent assets or operations other than its investments in its subsidiaries. All Federal Communications Commission (“FCC”) licenses are held by special purpose subsidiaries formed solely for the purpose of holding each respective FCC license and/or non-guarantor subsidiaries. All of the special purpose subsidiaries are non-guarantors of the 9 5/8% senior subordinated notes due 2009. Condensed consolidating

unaudited financial information for the parent and its guarantor and non-guarantor subsidiaries is as follows (in thousands):



		As of December 31, 2003

							Non-
					Guarantor		Guarantor
Condensed Consolidating Balance Sheet		Parent			Subsidiaries		Subsidiaries			Eliminations			Total

Cash and cash equivalents		$	24,503			18,340		2,766			—			45,609
Net receivables			—			23,917		1,650			—			25,567
Other current assets			2,379			760		343			—			3,482
Assets held for sale			—			2,879		23,027			—			25,906

	Total current assets		26,882			45,896		27,786			—			100,564
Property and equipment, net			1,453			15,987		7,118			—			24,558
Intangible assets, net			—			9,019		696,232			—			705,251
Deferred financing costs, net			11,461			—		—			—			11,461
Investment in subsidiaries and intercompany			775,946			274,989		(689,334	)		(361,601	)		—
Other assets			300			147		1			—			448

		$	816,042			346,038		41,803			(361,601	)		842,282

Current portion of long-term debt		$	1,250			66		161			—			1,477
Accounts payable and accrued expenses			6,355			7,785		4,682			—			18,822
Accrued interest			6,370			—		—			—			6,370
Deposit on the sale of station			1,500			—		—			—			1,500

	Total current liabilities		15,475			7,851		4,843			—			28,169
Long-term debt			448,996			637		3,084			—			452,717
Deferred income taxes			58,529			—		9,825			—			68,354

	Total liabilities		523,000			8,488		17,752			—			549,240

Preferred Stock			76,366			—		—			—			76,366
Common stock			6			—		1			(1	)		6
Additional paid-in capital			443,961			—		94,691			(94,691	)		443,961
Accumulated deficit			(227,291	)		337,550		(70,641	)		(266,909	)		(227,291	)

	Stockholders’ equity		216,676			337,550		24,051			(361,601	)		216,676

		$	816,042			346,038		41,803			(361,601	)		842,282



		As of June 30, 2004

							Non-
					Guarantor		Guarantor
Condensed Consolidating Balance Sheet		Parent			Subsidiaries		Subsidiaries			Eliminations			Total

Cash and cash equivalents		$	42,907			17,853		2,486			—			63,246
Net receivables			—			28,608		1,232			—			29,840
Other current assets			924			1,633		351			—			2,908
Assets held for sale			—			1,761		12,136			—			13,897

	Total current assets		43,831			49,855		16,205			—			109,891
Property and equipment, net			1,326			16,028		6,916			—			24,270
Intangible assets, net			—			9,004		696,333			—			705,337
Deferred financing costs, net			10,632			—		—			—			10,632
Investment in subsidiaries and intercompany			768,129			309,591		(680,409	)		(397,311	)		—
Other assets			295			726		1			—			1,022

		$	824,213			385,204		39,046			(397,311	)		851,152

Current portion of long-term debt			26,400			68		3,166			—			29,634
Accounts payable and accrued expenses			2,918			9,279		3,993			—			16,190
Accrued interest			5,420			5		—			—			5,425
Deposit on the sale of station			2,000			—		—			—			2,000
Deferred commitment fee			563			—		—			—			563

	Total current liabilities		37,301			9,352		7,159			—			53,812
Long-term debt			423,818			603		—			—			424,421
Deferred income taxes			59,909			—		9,825			—			69,734

	Total liabilities		521,028			9,955		16,984			—			547,967

Preferred Stock			80,527			—		—			—			80,527
Common stock			6			—		1			(1	)		6
Additional paid-in capital			443,812			—		94,691			(94,691	)		443,812
Accumulated deficit			(221,160	)		375,249		(72,630	)		(302,619	)		(221,160	)

	Stockholders’ equity		222,658			375,249		22,062			(397,311	)		222,658

		$	824,213			385,204		39,046			(397,311	)		851,152



		For the Three Months Ended June 30, 2003

								Non-
					Guarantor			Guarantor
Condensed Consolidating Statement of Operations		Parent			Subsidiaries			Subsidiaries			Eliminations			Total

Net revenue		$	—			33,625			2,910			—			36,535
Station operating expenses			—			18,996			2,160			—			21,156
Corporate expenses			4,693			—			120			(120	)		4,693
Depreciation and amortization			88			545			125			—			758

Operating income from continuing operations			(4,781	)		14,084			505			120			9,928
Interest (expense) income, net			(7,462	)		—			(1,338	)		—			(8,800	)
Other income (expense), net			—			318			(1	)		(120	)		197
Equity in net earnings of subsidiaries			(13,313	)		—			—			13,313			—
Income tax expense			281			—			44			—			325
Discontinued operations, net of tax			—			(211	)		—			—			(211	)

	Net income (loss)	$	789			14,191			(878	)		(13,313	)		789



		For the Three Months Ended June 30, 2004

								Non-
					Guarantor			Guarantor
Condensed Consolidating Statement of Operations		Parent			Subsidiaries			Subsidiaries			Eliminations			Total

Net revenue		$	—			37,546			2,746			—			40,292
Station operating expenses			—			20,366			1,872			—			22,238
Corporate expenses			2,999			—			120			(120	)		2,999
Depreciation and amortization			94			600			130			—			824

Operating income from continuing operations			(3,093	)		16,580			624			120			14,231
Interest (expense) income, net			(8,880	)		—			(1,320	)		—			(10,200	)
Other income (expense), net			—			119			81			(120	)		80
Equity in net earnings of subsidiaries			(15,989	)		—			—			15,989			—
Income tax expense			5,402			—			44			—			5,446
Discontinued operations, net of tax			—			(51	)		—			—			(51	)

	Net (loss) income	$	(1,386	)		16,648			(659	)		(15,989	)		(1,386	)

Dividend on preferred stock			(2,107	)		—			—			—			(2,107	)

	Net (loss) income applicable to common stockholders	$	(3,493	)		16,648			(659	)		(15,989	)		(3,493	)



		For the Six Months Ended June 30, 2003

								Non-
					Guarantor			Guarantor
Condensed Consolidating Statement of Operations		Parent			Subsidiaries			Subsidiaries			Eliminations			Total

Net revenue		$	—			59,115			5,343			—			64,458
Station operating expenses			—			34,489			4,135			—			38,624
Corporate expenses			9,181			—			240			(240	)		9,181
Depreciation and amortization			180			1,036			250			—			1,466

Operating income from continuing operations			(9,361	)		23,590			718			240			15,187
Interest (expense) income, net			(14,752	)		—			(2,677	)		—			(17,429	)
Other income (expense), net			—			463			—			(240	)		223
Equity in net earnings of subsidiaries			(21,806	)		—			—			21,806			—
Income tax (benefit) expense			(2,295	)		82			91			—			(2,122	)
Discontinued operations, net of tax			—			(115	)		—			—			(115	)

	Net (loss) income	$	(12	)		23,856			(2,050	)		(21,806	)		(12	)



		For the Six Months Ended June 30, 2004

							Non-
					Guarantor		Guarantor
Condensed Consolidating Statement of Operations		Parent			Subsidiaries		Subsidiaries			Eliminations			Total

Net revenue		$	—			64,334		5,190			—			69,524
Station operating expenses			—			36,541		4,026			—			40,567
Corporate expenses			6,227			—		240			(240	)		6,227
Depreciation and amortization			190			1,203		253			—			1,646

	Operating income from continuing operations		(6,417	)		26,590		671			240			21,084
Interest (expense) income, net			(17,788	)		—		(2,650	)		—			(20,438	)
Other income (expense), net			177			240		78			(240	)		255
Equity in net earnings of subsidiaries			(35,710	)		—		—			35,710			—
Income tax expense			1,390			20		88			—			1,498
Discontinued operations, net of tax			—			10,889		—			—			10,889

			10,292			37,699		(1,989	)		(35,710	)		10,292

Dividend on preferred stock			(4,161	)		—		—			—			(4,161	)

	Net (loss) income applicable to common stockholders	$	6,131			37,699		(1,989	)		(35,710	)		6,131



	For the Six Months Ended June 30, 2003

							Non-
				Guarantor			Guarantor
Condensed Consolidating Statement of Cash Flows	Parent			Subsidiaries			Subsidiaries			Eliminations			Total

Cash flow from operating activities	$	(27,123	)		32,215			(5,237	)		—			(145	)

Cash flow from investing activities	$	(3,666	)		(2,894	)		(21,357	)		(11,585	)		(39,502	)

Cash flow from financing activities	$	—			(38,873	)		27,186			11,585			(102	)



	For the Six Months Ended June 30, 2004

							Non-
				Guarantor			Guarantor
Condensed Consolidating Statement of Cash Flows	Parent			Subsidiaries			Subsidiaries			Eliminations			Total

Cash flow from operating activities	$	(24,623	)		22,353			(1,925	)		—			(4,195	)

Cash flow from investing activities	$	43,964			(2,343	)		24,786			(43,527	)		22,880

Cash flow from financing activities	$	(937	)		(20,185	)		(23,453	)		43,527			(1,048	)


3.	New Accounting Pronouncements

Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and generally would require instead that such transactions be accounted for using a fair-value based method. The proposed statement is effective for awards granted, modified, or settled in fiscal years beginning after December 15, 2004, for public entities that used the fair-value based method of accounting under the original provisions of SFAS No. 123, for recognition or pro forma disclosure purposes. The Company is currently evaluating the impact the proposed statement may have on its consolidated financial position, cash flows and results of operations.

In December 2003, FASB issued a revised Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51” (FIN 46R). FIN 46R requires the consolidation of entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. Currently, entities are generally consolidated by an enterprise when it has a controlling financial interest through ownership of a majority voting interest in the entity. The provisions of FIN 46R are generally effective for existing (prior to February 1, 2003) variable interest relationships of a public entity no later than the end of the first reporting period that ends after March 15, 2004. However, prior to the required application of this interpretation, a public entity that is not a small business issuer shall apply FIN 46R to those entities that are considered to be special-purpose entities no later than the end of the first reporting period that ends after December 15, 2003. The adoption of FIN 46R did not have an impact on the Company’s consolidated financial statements.


4.	Sale of Stations and/or Discontinued Operations

On September 18, 2003, the Company entered into an asset purchase agreement with Border Media Partners, LLC to sell the assets of radio stations KLEY-FM and KSAH-AM, serving the San Antonio, Texas market, for a cash purchase price of $24.4 million. On January 30, 2004, the Company completed the sale of the assets of these radio stations consisting of $11.2 million of intangible assets, net, and $0.6 million of property and equipment. The Company recognized a gain of approximately $11.3 million, net of closing costs and taxes on the sale.

On October 2, 2003, the Company entered into an asset purchase agreement with 3 Point Media — San Francisco, LLC (“Three Point Media”) to sell the assets of radio station KPTI-FM, serving the San Francisco, California market, for a cash purchase price of $30.0 million. In connection with this agreement, Three Point Media made a $1.5 million deposit on the purchase price. On February 3, 2004, the Company terminated the agreement; however, on April 15, 2004, the Company reinstated the agreement and entered into an amendment to the asset purchase agreement and a time brokerage agreement under which Three Point Media has been broadcasting its programming on KPTI-FM. In connection with this amendment, Three Point Media made an additional $0.5 million deposit on the purchase price. The Company intends to close on the sale of the assets of radio station KPTI-FM in September 2004; however, there cannot be any assurance that the sale will be completed.

The Company determined that the pending sale and/or sales of these stations met the criteria in accordance with SFAS No. 144 to classify the stations’ assets as held for sale and their respective operations as discontinued operations. The results of operations in the current year and prior year periods of these stations have been classified as discontinued operations in the condensed consolidated statements of operations. On

June 30, 2004, the Company had assets held for sale consisting of $13.6 million of intangible assets, net, and $0.3 million of property and equipment for radio station KPTI-FM. In addition, pursuant to the credit agreement governing our senior secured credit facilities, a portion (approximately $25.2 million) of the proceeds received from the sale of KPTI-FM, when and if completed, must be offered to the noteholders to repay a portion of our borrowings under the senior credit facilities. Therefore, after the reinstatement of the KPTI-FM asset purchase agreement in the second quarter, the Company determined to reclassify approximately $25.2 million from long-term debt to current debt.


5.	Subsequent Events

On July 26, 2004, the Company entered into an asset purchase agreement with Newsweb Corporation to sell the assets of radio stations WDEK-FM, WKIE-FM and WKIF-FM, serving the suburban Chicago, Illinois market, for a cash purchase price of $28.0 million. In connection with this agreement, Newsweb Corporation made a $1.4 million deposit on the purchase price, which is being held in escrow. The agreement contains customary representations and warranties and the closing of the sale is subject to the satisfaction of certain conditions, including renewal of the FCC licenses and receipt of regulatory approval from the FCC. The Company intends to sell the assets of radio stations WDEK-FM, WKIE-FM and WKIF-FM; however, there cannot be any assurance that the sale will be completed.


6.	Stock Options and Warrants

The Company accounts for its stock option plans in accordance with APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations, under which compensation expense is recorded to the extent that the market price on the grant date of the underlying stock exceeds the exercise price. No stock-based employee compensation cost is reflected in net income (loss), as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The fair value of each option granted to employees is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions at:


	June 30, 2003		June 30, 2004

Expected life		7 years		7 years
Dividends		None		None
Risk-free interest rate		3.37%		4.24%
Expected volatility		86%		76%

Had compensation expense for the Company’s plans been determined consistent with SFAS No. 123, the Company’s net income (loss) applicable to common stockholders and net income (loss) per common share would have been adjusted to pro forma amounts indicated below (in thousands, except per share data):



		Three-Months Ended						Six-Months Ended
		June 30,						June 30,

		2003			2004			2003			2004

Net income (loss) applicable to common stockholders:
As reported		$	789			(3,493	)	$	(12	)		6,131
Deduct: total stock-based employee compensation expense determined under fair value based method for all awards, net of tax			(1,006	)		(1,085	)		(2,026	)		(2,869	)

Pro forma net (loss) income		$	(217	)		(4,578	)	$	(2,038	)		3,262

Net (loss) income per common share:
	As reported: Basic and Diluted	$	0.01			(0.05	)	$	—			0.09
	Pro forma: Basic and Diluted	$	—			(0.07	)	$	(0.03	)		0.05

In connection with the purchase of KXOL-FM, serving the Los Angeles, California market, the Company issued warrants to purchase an aggregate of 2,700,000 shares of the Company’s Class A common stock. To date, these warrants have not been exercised. The following table summarizes information about these warrants:


	Number of Shares of
	Class A Common
	Stock Underlying		Per Share		Warrant Expiration
Warrant Date of Issue	Warrants		Exercise Price		Date

February 8, 2002		2,000,000	$	10.50		February 8, 2005
March 31, 2003		100,000	$	6.14		March 31, 2006
April 30, 2003		100,000	$	7.67		April 30, 2006
May 31, 2003		100,000	$	7.55		May 31, 2006
June 30, 2003		100,000	$	8.08		June 30, 2006
July 31, 2003		100,000	$	8.17		July 31, 2006
August 31, 2003		100,000	$	7.74		August 31, 2006
September 30, 2003		100,000	$	8.49		September 30, 2006

		2,700,000


7.	Litigation

From time to time the Company is involved in litigation incidental to the conduct of its business, such as contractual matters and employee-related matters. In the opinion of management, such litigation is not likely to have a material adverse effect on the Company’s business, operating results or financial position.

On June 12, 2002, the Company filed a lawsuit in the United States District Court for the Southern District of Florida against Clear Channel Communications (“Clear Channel”) and Hispanic Broadcasting Corporation (“HBC”), and filed an amended complaint on July 31, 2002. The lawsuit asserts federal and state antitrust law violations and other state law claims and alleges that Clear Channel and HBC have adversely affected the Company’s ability to raise capital, depressed its share price, impugned its reputation, made station acquisitions more difficult and interfered with its business opportunities and contractual arrangements. In the amended complaint, the Company sought actual damages in excess of $500.0 million, to be trebled under antitrust law.

Both defendants moved to dismiss the amended complaint, and on January 31, 2003, the Court granted defendants’ motions for failure to adequately allege antitrust injury and dismissed the federal court claims with prejudice and dismissed the state court claims for lack of federal court jurisdiction in light of the dismissal of the federal court claims. The Company filed a motion for reconsideration of that opinion and asked for leave to file a proposed second amended complaint, which contains additional economic analysis and factual detail based upon the depositions of Clear Channel’s CEO and CFO and HBC’s CFO and document production in the action, and which seeks damages in an amount to be determined at trial. On August 6, 2003, the District Court denied the Company’s motion for reconsideration. On September 5, 2003, the Company filed an appeal to the 11th Circuit Court of Appeals of the District Court’s decisions dated January 31, 2003 and August 6, 2003. The briefing on that appeal was completed in December 2003, oral argument occurred in Miami on February 26, 2004 and the Eleventh Circuit affirmed the District Court decision on June 30, 2004.

As reported in the Company’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2004, in connection with the Company’s sale of WXLX-AM in 1997, the Company assigned the lease of the transmitter for WXLX in Lyndhurst, New Jersey, to the purchaser of the station. The transmitter is located on a former landfill which ceased operations in the late 1960’s. Although WXLX has been sold, the Company retains potential exposure to possible environmental liabilities relating to the transmitter site (the “Transmitter Property”). On September 12, 2002, the landlords of the property, Frank F. Viola, Thomas C. Viola Trust and Louis Viola Company (the “Property Owners”), received a notice from the New Jersey Meadowlands

Commission (“NJMC”) indicating that it was planning to redevelop the lands which include the Transmitter Property and offering compensation to the Property Owners for the purchase of the Transmitter Property.

On December 4, 2002, the NJMC filed a Verified Complaint in condemnation in the Superior Court of New Jersey, Bergen County, against the Property Owners to acquire the Transmitter Property. The Transmitter Property is one of a number of sites that the NJMC is acquiring for a redevelopment project. Many of these sites (owned both publicly and privately) were used for landfill operations including the Transmitter Property. The Company is named as a defendant in the litigation (the “Action”) by virtue of its interest of record in the Transmitter Property as a former leaseholder prior to the aforementioned lease assignment.

A settlement agreement has been entered in the Court record resolving the compensation to be paid to the Property Owners (the “Settlement Agreement”), and providing for waiver of claims for landfill closure costs against the Property Owners. While the Settlement Agreement reserved the NJMC’s claims for environmental remediation against the other parties, including the Company, the Settlement Agreement further stipulates that the NJMC’s developer will agree to indemnify and insure (under policies expiring on December 31, 2021 and providing coverage in the amount of $50.0 million) such other parties (including the Company) against claims for remediation of environmental contamination while also providing for the discontinuance of the Action.

The principal terms of the Settlement Agreement and insurance have been resolved and a proposed final Consent Judgment implementing the Settlement Agreement is pending before the Court and is expected to be entered prior to the end of the year.


Item 2.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

Overview

We are the largest Hispanic-controlled radio broadcasting company in the United States. After giving effect to the proposed pending divestitures, we will own and operate 21 radio stations in five of the top-ten Hispanic markets in the United States, including Los Angeles, New York, Puerto Rico, Miami and Chicago. Our radio stations are located in markets that reach approximately 45% of the U.S. Hispanic population. As part of our operating business, we also operate LaMusica.com, a bilingual Spanish-English Internet website providing content related to Latin music, entertainment, news and culture.

The success of each of our radio stations depends significantly upon its audience ratings and share of the overall advertising revenue within its market, among other things. The radio broadcasting industry is a highly competitive business, but some barriers to entry do exist. Each of our radio stations competes with both Spanish-language and English-language radio stations in its market as well as with other advertising media such as newspapers, broadcast television, cable television, the Internet, magazines, outdoor advertising, transit advertising and direct mail marketing. Factors which are material to competitive position include management experience, the radio station’s rank in its market, signal strength and frequency, and audience demographics, including the nature of the Spanish-language market targeted by a particular station. Our top three markets, based on net revenue, are New York, Los Angeles and Miami. A significant decline in net revenue or station operating income from our stations in any of these markets could have a material adverse effect on our financial position and results of operations.

Our primary source of revenue is the sale of advertising time on our radio stations to local and national advertisers. Our revenue is affected primarily by the advertising rates that our radio stations are able to charge, as well as the overall demand for radio advertising time in each respective market. Seasonal net broadcasting revenue fluctuations are common in the radio broadcasting industry and are due to fluctuations in advertising expenditures by local and national advertisers. Typically, for the radio broadcasting industry, the first calendar quarter generally produces the lowest revenue.

The performance of a radio station group is customarily measured by its ability to generate station operating income and Adjusted EBITDA. Our most significant operating expenses, for purposes of the computation of station operating income and Adjusted EBITDA, are compensation expenses, programming expenses, selling expenses, and advertising and promotional expenses. Our senior management strives to control these expenses as well as other expenses by working closely with local station management and others.

The term “station operating income” (our former broadcast cash flow or “BCF”) is defined as Generally Accepted Accounting Principles (“GAAP”) operating income from continuing operations, excluding corporate expenses and depreciation and amortization. Station operating income has replaced our former BCF as one of the metrics used by management to assess the performance of our radio stations. Although it is calculated in the same manner as BCF, management believes that using the term “station operating income” provides a more accurate description of the performance measure. The term “station operating income margin” consists of station operating income divided by net revenue.

EBITDA consists of earnings before interest expenses, interest income, income taxes, depreciation and amortization of assets and discontinued operations. We calculate our EBITDA differently. Our “EBITDA” is EBITDA as defined above but excluding other income or expense, or alternatively, GAAP operating income from continuing operations before depreciation and amortization. To distinguish our calculation of EBITDA from other possible meanings of EBITDA, for periods ending after March 31, 2003 and going forward we changed references to “EBITDA” in our financial reports to the term “Adjusted EBITDA.” Although our “Adjusted EBITDA” and what we formerly referred to as our “EBITDA” are calculated in the same manner, management believes “Adjusted EBITDA” is a more accurate description and represents another metric used by management to assess the performance of our stations and the Company, as a whole.

“Station operating income,” “station operating income margin,” and “Adjusted EBITDA” are non-GAAP financial measures as defined by the Securities and Exchange Commission’s Regulation G. These non-GAAP financial measures should not be construed as being superior to GAAP financial measures. The GAAP

financial measure most directly comparable to each non-GAAP financial measure and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure are included below. Although station operating income, station operating income margin and Adjusted EBITDA are not measures of performance calculated in accordance with GAAP, we believe that they are useful to an investor in evaluating an investment in our securities because they are measures widely used in the broadcast industry to evaluate a radio company’s operating performance and are used by management for internal budgeting purposes and to evaluate the performance of our radio stations. However, station operating income, station operating income margin and Adjusted EBITDA should not be considered in isolation or as substitutes for operating income, net income (loss), cash flows from operating activities and other income or cash flow statement data prepared in accordance with GAAP, or as measures of liquidity or profitability. Also, because they are not calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies.

Comparison Analysis of the Operating Results for the Three Months Ended June 30, 2003 and 2004 and Non-GAAP Measures Reconciliation.

The following summary table presents a comparison of our results of operations for the three month periods ended June 30, 2003 and 2004 with respect to certain of our key financial measures, as well as a reconciliation of the difference between each non-GAAP financial measure and the comparable GAAP financial measure. The changes illustrated in the table are discussed below. This section should be read in conjunction with the unaudited condensed consolidated financial statements and notes.



		Three Months Ended
		June 30,						Change

		2003			2004			$			%


		(In thousands)
Net revenue		$	36,535		$	40,292			3,757			10	%
Station operating expenses (Engineering, Programming, Selling and G & A expenses)			21,156			22,238			1,082			5	%

	Station operating income (formerly broadcast cash flow )		15,379			18,054			2,675			17	%
Corporate expenses			4,693			2,999			(1,694	)		(36	)%

	Adjusted EBITDA		10,686			15,055			4,369			41	%
Depreciation and amortization			758			824			66			9	%

Operating income from continuing operations			9,928			14,231			4,303			43	%
Interest expense, net			(8,800	)		(10,200	)		(1,400	)		16	%
Other income, net			197			80			(117	)		(59	)%
Income tax expense			325			5,446			5,121			1576	%
Discontinued operations, net			(211	)		(51	)		160			(76	)%

	Net income (loss)	$	789		$	(1,386	)		(2,175	)		(276	)%

Station operating income margin			42.1	%		44.8	%

Net Revenue. The increase in net revenue was due to the double-digit growth in our Miami and Los Angeles markets primarily in local and network revenue. Additionally, the New York and Chicago markets had low-single digit growth mainly from an increase in local and network revenue. We entered into two network revenue contracts in the fourth quarter of 2003, which are generating significant increases in network revenue. Offsetting these increases was a decrease in the Puerto Rico market mainly in local revenue and promotional events.

Station Operating Expenses. The increase in station operating expenses was primarily due to the investments made in our Los Angeles and New York programming departments. Other expenses that

increased were the provision for doubtful accounts, advertising and other selling expenses. These increases were offset by decreases in: (a) national commissions due to a lower commission structure, (b) stock-based programming expense related to the warrants issued in connection with our acquisition of KXOL-FM and (c) trade expense due to a decrease in trade advertising in our Los Angeles and New York markets.

Station Operating Income. The increase in station operating income and station operating income margin was due to the 10% net revenue growth compared to only a 5% increase in station operating expenses.

Corporate Expenses. The decrease in corporate expenses resulted mainly from a significant decrease in legal and professional fees related to various lawsuits and other legal matters of the prior year.

Adjusted EBITDA. The increase in Adjusted EBITDA was primarily attributed to the increase in station operating income and decrease in corporate expenses.

Operating Income from Continuing Operations. The increase in operating income from continuing operations was primarily attributed to the increase in Adjusted EBITDA.

Interest Expense, Net. The increase in interest expense, net, was due to interest incurred on the $125.0 million senior secured credit facility term loan that was entered into on October 30, 2003.

Income Taxes. The income tax expense was a result of applying our estimated effective tax rate for the full year of approximately 166% to our pre-tax income from continuing operations. The increase in income tax expense was due to an increase in our estimated effective book tax rate, over the prior year, primarily due to the additional tax amortization of FCC licenses as a result of our acquisition of KXOL-FM in October 2003. Our effective book tax rate was impacted by the adoption of SFAS No. 142 on December 31, 2001. As a result of adopting SFAS No. 142, the reversal of our deferred tax liabilities related to our intangible assets could no longer be assured over our net operating loss carryforward period. Therefore, our estimated effective book tax rate is impacted by a full valuation allowance on our deferred tax assets.

Discontinued Operations, Net of Taxes. We determined that the pending sale of our station KPTI-FM, serving the San Francisco, California market, met the criteria in accordance with SFAS No. 144 to classify its operations as discontinued operations. Consequently, the station’s results from operations for the three months ended June 30, 2003 and 2004 have been classified as discontinued operations.

Net Income (loss). The decrease in net income (loss) was primarily due to the increase in our estimated effective tax rate for the full year of 166%, which was applied to our pre-tax income from continuing operations.

Comparison Analysis of the Operating Results for the Six Months Ended June 30, 2003 and 2004 and Non-GAAP Measures Reconciliation.

The following summary table presents a comparison of our results of operations for the six months ended June 30, 2003 and 2004 with respect to certain of our key financial measures, as well as a reconciliation of the difference between each non-GAAP financial measure and the comparable GAAP financial measure. The changes illustrated in the table are discussed below. This section should be read in conjunction with the unaudited condensed consolidated financial statements and notes.



		Six Months Ended
		June 30,						Change

		2003			2004			$			%


		(In thousands)
Net revenue		$	64,458		$	69,524			5,066			8	%
Station operating expenses (Engineering, Programming, Selling and G & A expenses)			38,624			40,567			1,943			5	%

	Station operating income (formerly broadcast cash flow)		25,834			28,957			3,123			12	%
Corporate expenses			9,181			6,227			(2,954	)		(32	)%

	Adjusted EBITDA		16,653			22,730			6,077			36	%
Depreciation and amortization			1,466			1,646			180			12	%

Operating income from continuing operations			15,187			21,084			5,897			39	%
Interest expense, net			(17,429	)		(20,438	)		(3,009	)		17	%
Other income, net			223			255			32			14	%
Income tax (benefit) expense			(2,122	)		1,498			3,620			(171	)%
Discontinued operations, net			(115	)		10,889			11,004			(9569	)%

	Net income (loss)	$	(12	)	$	10,292			10,304			(85867	)%

Station operating income margin			40.1	%		41.7	%

Net Revenue. The increase in net revenue was due to the double-digit growth in our Miami and Los Angeles markets primarily in local and network revenue. Additionally, the Chicago market had mid-single digit growth mainly from an increase in local and network revenue. We entered into two network revenue contracts in the fourth quarter of 2003, which are generating significant increases in network revenue. Offsetting these increases were decreases in the New York and Puerto Rico markets mainly in national and local revenue and promotional events.

Station Operating Expenses. The increase in station operating expenses was primarily due to the investments made in our Los Angeles and New York programming departments. Other expenses that increased were compensation, transmitter rent, other selling expenses and insurance due to higher premiums. These increases were offset by decreases in: (a) local and national commissions due to lower commission structures, (b) stock-based programming expense related to the warrants issued in connection with our acquisition of KXOL-FM, (c) advertising and promotional expenses due to a decrease in promotional events and less advertising in our core markets and (d) professional fees related to a decrease in legal fees related to our stations’ operations.

Station Operating Income. The increase in station operating income and station operating income margin was due to the 8% net revenue growth compared to only a 5% increase in station operating expenses.

Adjusted EBITDA. The increase in Adjusted EBITDA was primarily attributed to the increase in station operating income and decrease in corporate expenses.

Operating Income from Continuing Operations. The increase in operating income from continuing operations was primarily attributed to the increase in Adjusted EBITDA.

Interest Expense, Net. The increase in interest expense, net, was due to interest incurred on the $125.0 million senior secured credit facility term loan that was entered into on October 30, 2003.

Discontinued Operations, Net of Taxes. We determined that the sale of our KLEY-FM and KSAH-AM stations serving the San Antonio, Texas market, and the pending sale of our KPTI-FM station serving the San Francisco, California market, all met the criteria, in accordance with SFAS No. 144, to classify their respective operations as discontinued operations. Consequently, these stations’ results from operations for the six months ended June 30, 2003 and 2004 have been classified as discontinued operations. The increase in discontinued operations, net of taxes was mainly attributable to the $11.3 million gain recognized on the sale of our KLEY-FM and KSAH-AM stations, net of closing costs and taxes on the sale.

Net Income. The increase in net income was primarily due to the increase in discontinued operations, net of taxes, related to the $11.3 million gain on the sale of radio stations KLEY-FM and KSAH-AM.

Liquidity and Capital Resources

Our primary source of liquidity is cash on hand and cash provided by operations and, to the extent necessary, undrawn commitments that are available under a $10.0 million revolving credit facility. Our ability to raise funds by increasing our indebtedness is limited by the terms of the indentures governing our senior subordinated notes, the certificates of designations governing our preferred stock and the credit agreement governing our senior secured credit facilities. Additionally, the indentures, certificates of designations and credit agreement place restrictions on us with respect to the sale of assets, liens, investments, dividends, debt repayments, capital expenditures, transactions with affiliates and consolidations and mergers, among other things. We had cash and cash equivalents of $45.6 million and $63.2 million as of December 31, 2003 and June 30, 2004, respectively.

The following summary table presents a comparison of our capital resources for the six month periods ended June 30, 2003 and 2004, with respect to certain of our key measures affecting our liquidity. The changes set forth in the table are discussed below. This section should be read in conjunction with the unaudited condensed consolidated financial statements and notes.



		Six Months Ended
		June 30,						Change

		2003			2004			$


		(In thousands)
Capital expenditures		$	1,990		$	1,350			(640	)

Net cash flows used in operating activities		$	(145	)	$	(4,195	)		(4,050	)
Net cash flows (used in) provided by investing activities			(39,502	)		22,880			62,382
Net cash flows used in financing activities			(102	)		(1,048	)		(946	)

	Net (decrease) increase in cash and cash equivalents	$	(39,749	)	$	17,637

Net Cash Flows Used In Operating Activities. Changes in our net cash flows from operating activities were primarily a result of the increase in cash paid to vendors, suppliers and employees and for interest, causing the decrease in working capital balances.

Net Cash Flows (Used In) Provided By Investing Activities. Changes in our net cash flows from investing activities were primarily a result of the proceeds received from the sale of radio stations KLEY-FM and KSAH-AM in January 2004, proceeds used to acquire radio stations WDEK-FM, WKIE-FM and WKIF-FM in April 2003, and a deposit made in March 2003 for the acquisition of KXOL-FM, which was completed in October 2003.

Net Cash Flows Used in Financing Activities. Changes in our net cash flows from financing activities were primarily a result of the additional offering costs related to our 10 3/4% Series B cumulative exchangeable redeemable preferred stock and financing costs related to our $135.0 million senior secured credit facilities, and the principal payment made on the senior secured credit facility term loan during the six month period ended June 30, 2004.

Management believes that cash from operating activities, together with cash on hand, should be sufficient to permit us to meet our operating obligations in the foreseeable future, including required interest and quarterly principal payments pursuant to the senior secured credit facilities agreement, interest payment requirements under our 9 5/8% senior subordinated notes due 2009 and capital expenditures, excluding the acquisitions of FCC licenses. Assumptions (none of which can be assured), which underlie management’s beliefs, include the following:

• the economic conditions within the radio broadcasting industry and economic conditions in general will not deteriorate in any material respect;

• we will continue to successfully implement our business strategy; and

• we will not incur any material unforeseen liabilities, including environmental liabilities.

Our strategy is to primarily utilize cash flows from operations to meet our capital needs and contractual obligations. However, we also have bank borrowings available to meet our capital needs and contractual obligations and, when appropriate and if available, will obtain financing by issuing debt or stock.

We are required to maintain financial covenant ratios under our senior secured credit facilities as follows: (i) Consolidated EBITDA minimum, (ii) Consolidated Fixed Charge Coverage Ratio, (iii) Consolidated Leverage Ratio, (iv) Consolidated Interest Coverage Ratio and (v) Consolidated Senior Secured Debt Ratio, all as defined in the credit agreement, solely for the purpose of determining compliance with the covenants. The credit agreement requiring compliance with these financial covenants states that the calculations must be based on generally accepted accounting principles promulgated by the Financial Accounting Standards Board. We are in compliance with all covenants under our senior secured credit facilities and all other debt instruments as of June 30, 2004 and expect to be in compliance in the foreseeable future.

On October 2, 2003, we entered into an asset purchase agreement with 3 Point Media — San Francisco, LLC (“Three Point Media”) to sell the assets of radio station KPTI-FM, serving the San Francisco, California market, for a cash purchase price of $30.0 million. In connection with this agreement, Three Point Media made a $1.5 million deposit on the purchase price. On February 3, 2004, we terminated the agreement; however, on April 15, 2004, we reinstated the agreement and entered into an amendment to the asset purchase agreement and a time brokerage agreement under which Three Point Media has been broadcasting its programming on KPTI-FM. In connection with this amendment, Three Point Media made an additional $0.5 million deposit on the purchase price. We intend to close on the sale of the assets of radio station KPTI-FM in September 2004; however, there cannot be any assurance that the sale will be completed. In addition, pursuant to the credit agreement governing our senior secured credit facilities, a portion (approximately $25.2 million) of the proceeds received from the sale of KPTI-FM, when and if completed, must be offered to the noteholders to repay a portion of our borrowings under the senior credit facilities. Therefore, after the reinstatement of the KPTI-FM asset purchase agreement in the second quarter, the Company determined to reclassify approximately $25.2 million from long-term debt to current debt.

On July 26, 2004, we entered into an asset purchase agreement with Newsweb Corporation to sell the assets of radio stations WDEK-FM, WKIE-FM and WKIF-FM, serving the suburban Chicago, Illinois market, for a cash purchase price of $28.0 million. In connection with this agreement, Newsweb Corporation made a $1.4 million deposit on the purchase price, which is being held in escrow. The agreement contains customary representations and warranties and the closing of the sale is subject to the satisfaction of certain conditions, including renewal of the FCC licenses and receipt of regulatory approval from the FCC. We intend to sell the assets of radio stations WDEK-FM, WKIE-FM and WKIF-FM; however, there cannot be any assurance that the sale will be completed.

We continuously review opportunities to acquire additional radio stations and sell non-core radio stations, primarily in the largest Hispanic markets in the United States. We engage in discussions regarding potential acquisitions from time to time in the ordinary course of business. We currently have no written understandings, letters of intent or contracts to acquire radio stations or other companies. We anticipate that any future acquisitions would be financed through funds generated from permitted debt financing, equity financing, operations, asset sales or a combination of these sources. However, there can be no assurance that financing from any of these sources, if necessary and available, can be obtained on favorable terms for future acquisitions.

During the six months ended June 30, 2004, we entered into various contractual obligations related to production services agreements, syndication agreements and employee agreements. We expect our unrecorded obligations to increase by approximately $5.5 million, $5.5 million, $5.8 million, $4.7 million, $4.7 million and $0.8 million for the fiscal years ended 2004, 2005, 2006, 2007, 2008 and 2009 from what was previously disclosed in our Form 10-K for 2003.

New Accounting Pronouncements

In December 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure” (SFAS No. 148). SFAS No. 148 amends the transition and disclosure provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” Among other items, SFAS No. 148 allows companies adopting SFAS No. 123 to utilize one of three alternative transition methods, one of which was a “prospective method”, as defined, that was only available if adopted during 2003. To date, the Company has not adopted SFAS No. 123 utilizing any of the transition methods of SFAS No. 148. On March 31, 2004, the FASB issued an exposure draft on a proposed statement, Share-Based Payment, that addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. The proposed statement would eliminate the ability to account for share-based compensation transactions using Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and generally would require instead that such transactions be accounted for using a fair-value based method. The proposed statement is effective for awards granted, modified, or settled in fiscal years beginning after December 15, 2004, for public entities that used the fair-value based method of accounting under the original provisions of SFAS No. 123, for recognition or pro forma disclosure purposes. The Company is currently evaluating the impact the proposed statement may have on its consolidated financial position, cash flows and results of operations.

reporting period that ends after December 15, 2003. The adoption of FIN 46R did not have an impact on the Company’s consolidated financial statements.

Disclosure Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are not based on historical facts, but rather reflect our current expectations concerning future results and events. These forward-looking statements generally can be identified by the use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will” or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals are, or may be, forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be different from any future results, performance and achievements expressed or implied by these statements. Factors that could cause actual results to differ from those expressed in forward-looking statements include, but are not limited to:

• Our substantial amount of debt could adversely affect our financial condition and prevent us from fulfilling our obligations under our senior secured credit facilities and Series B preferred stock;

• We will require a significant amount of cash to service our debt and to make cash dividend payments under the Series B preferred stock after October 15, 2008;

• We may not have the funds to repay or the ability to refinance our senior secured credit facilities or 9 5/8% senior subordinated notes due 2009;

• Our ability to generate cash is affected by many factors beyond our control;

• Any acceleration of our debt or event of default would harm our business and financial condition;

• Despite our current significant level of debt, we and our subsidiaries may still be able to incur substantially more debt. This could further intensify some of the risks described above;

• The terms of our debt restrict us from engaging in many activities and require us to satisfy various financial tests;

• The terms of our debt and Series B preferred stock impose or will impose restrictions on us that may adversely affect our business;

• The restrictions imposed by our debt may prevent us from paying cash dividends on the Series B preferred stock after October 15, 2008 and exchanging the Series B preferred stock for exchange notes;

• We may not have the funds or the ability to raise the funds necessary to repurchase our Series B preferred stock if holders exercise their repurchase right, or to finance the change of control offer required by the Series B preferred stock;

• We may not complete the pending sales of our radio stations;

• We have experienced net losses in the past and, to the extent that we experience net losses in the future, the market price of our common stock may be adversely affected which in turn may adversely affect our ability to raise capital;

• Our operating results could be adversely affected by a national or regional recession;

• A large portion of our net revenue and station operating income currently comes from our New York, Los Angeles and Miami markets;

• Loss of any key personnel could adversely affect our business;

• Our long-term growth depends upon successfully executing our acquisition strategy;

• Raúl Alarcón, Jr., Chairman of the Board of Directors, Chief Executive Officer and President, has majority voting control and this control may discourage or influence certain types of transactions, including an actual or potential change of control of SBS such as a merger or sale of SBS;

• We compete for advertising revenue with other radio groups as well as television and other media, many operators of which have greater resources than we do;

• We must be able to respond to rapidly changing technology, services and standards which characterize our industry for us to remain competitive;

• Our business depends on maintaining our FCC licenses and we cannot assure you that we will be able to maintain these licenses;

• We may face regulatory review for additional acquisitions;

• The market price of our shares of Class A common stock may fluctuate significantly; and

• Current or future sales by existing or future stockholders could depress the market price of our Class A common stock.

Consequently, such forward-looking statements should be regarded solely as our current plans, estimates and beliefs. We do not undertake any obligation to update any forward-looking statements to reflect subsequent events or circumstances.


Item 3.	*Quantitative and Qualitative Disclosures About Market Risk*

We believe that inflation has not had a material impact on our results of operations for the three- and six-months ended June 30, 2003 and 2004, respectively. However, there can be no assurance that inflation will not have an adverse impact on our future operating results and financial condition.

Our primary market risk is a change in interest rates associated with borrowings under our senior secured credit facilities. Advances under the senior secured credit facilities bear base rate or eurodollar rate interest (in each case subject to applicable margins), as applicable, which vary in accordance with prevailing economic conditions. Our earnings are affected by changes in interest rates due to the impact those changes have on interest expense from variable-rate debt instruments and on interest income generated from our cash and investment balances. At June 30, 2004, all of our debt, other than our $124.4 million senior secured credit facility term loan, had fixed interest rates. If variable interest rates average 10% higher in 2004 than they did during 2003, our variable interest expense would increase by approximately $0.6 million, compared to a variable annualized estimated $5.5 million for 2003 measured as of December 31, 2003. If interest rates average 10% lower in 2004 than they did during 2003, our interest income from cash and investment balances would decrease by approximately $0.1 million, compared to a variable annualized estimated $0.5 million for 2003 measured as of December 31, 2003. These amounts are determined by considering the impact of the hypothetical interest rates on our variable-rate debt, cash equivalents and short-term investment balances at December 31, 2003. There has been no material change in our market risk position since December 31, 2003.


Item 4.	*Controls and Procedures*


	Evaluation of disclosure controls and procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our

Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

As of the end of the quarterly period covered by this report, our management carried out an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures were effective.


	Changes in internal control over financial reporting

There has been no change in our internal control over financial reporting during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION


Item 1.	*Legal Proceedings*

interest of record in the Transmitter Property as a former leaseholder prior to the aforementioned lease assignment.


Item 4.	*Submission of Matters to a Vote of Security Holders*

The election of our board of directors was submitted to a vote of security holders, through the solicitation of proxies pursuant to Section 14 under the Securities Exchange Act of 1934, as amended, at the annual meeting of stockholders held on June 30, 2004.


Directors	Votes For		Votes Against/Withheld

Raúl Alarcón, Jr.		263,412,068		9,121,259
Pablo Raúl Alarcón, Sr.		260,845,833		11,687,494
Antonio S. Fernandez		272,006,215		527,112
Dan Mason		271,302,016		1,231,311
Jason L. Shrinsky		263,018,780		9,514,547
Jose A. Villamil		272,032,793		500,534

There were no broker non-votes.


Item 5.	*Other Information*


Item 6.	*Exhibits and Reports on Form 8-K*

(a) Exhibits —


3	.1	Third Amended and Restated Certificate of Incorporation of Spanish Broadcasting System, Inc. (the “Company”), dated September 29, 1999 (incorporated by reference to the Company’s 1999 Registration Statement on Form S-1 (Commission File No. 333-85499) (the “1999 Registration Statement”)) (Exhibit A to this exhibit is incorporated by reference to the Company’s Current Report on Form 8-K, dated March 25, 1996 (the “1996 Current Report”)).
3	.2	Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of the Company, dated September 29, 1999 (incorporated by reference to the Company’s 1999 Registration Statement).
3	.3	Amended and Restated By-Laws of the Company (incorporated by reference to the Company’s 1999 Registration Statement).


3	.4	Certificate of Elimination of 14 1/4% Senior Exchangeable Preferred Stock, Series A of the Company, dated October 28, 2003 (incorporated by reference to Exhibit 3.3 of the Company’s Quarterly Report on Form 10-Q, dated November 14, 2003 (the “11/14/03 Quarterly Report”)).
4	.1	Article V of the Third Amended and Restated Certificate of Incorporation of the Company, dated September 29, 1999 (incorporated by reference to the Company’s 1999 Registration Statement) (see Exhibit 3.1).
4	.2	Certificate of Designations dated October 29, 2003 Setting Forth the Voting Power, Preferences and Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and Restrictions of the 10 3/4% Series A Cumulative Exchangeable Redeemable Preferred Stock of Spanish Broadcasting System, Inc. (incorporated by reference to Exhibit 4.1 of the Company’s 11/14/03 Quarterly Report).
4	.3	Certificate of Designations dated October 29, 2003 Setting Forth the Voting Power, Preferences and Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and Restrictions of the 10 3/4% Series B Cumulative Exchangeable Redeemable Preferred Stock of Spanish Broadcasting System, Inc. (incorporated by reference to Exhibit 4.2 of the Company’s 11/14/03 Quarterly Report).
4	.4	Indenture dated June 29, 1994 among the Company, IBJ Schroder Bank & Trust Company, as Trustee, the Guarantors named therein and the Purchasers named therein (incorporated by reference to Exhibit 4.1 of the Company’s 1994 Registration Statement on Form S-4).
4	.5	First Supplemental Indenture dated as of March 25, 1996 to the Indenture dated as of June 29, 1994 among the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to the 1996 Current Report).
4	.6	Second Supplemental Indenture dated as of March 1, 1997 to the Indenture dated as of June 29, 1994 among the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to the 1996 Current Report).
4	.7	Supplemental Indenture dated as of October 21, 1999 to the Indenture dated as of June 29, 1994 among the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to the Company’s 1999 Registration Statement).
4	.8	Indenture with respect to 9 5/8% Senior Subordinated Notes due 2009 with The Bank of New York as Trustee, dated November 2, 1999 (incorporated by reference to the Current Report on Form 8-K dated November 2, 1999).
4	.9	Indenture with respect to 9 5/8% Senior Subordinated Notes due 2009 with The Bank of New York as Trustee, dated June 8, 2001 (incorporated by reference to the Company’s Registration Statement on Form S-3, filed on June 25, 2001).
4	.10	Form of stock certificate for the Class A common stock of the Company (incorporated by reference to the Company’s 1999 Registration Statement).
10	.1	Nonqualified Stock Option Agreement dated June 30, 2004 between the Company and Antonio S. Fernandez.
10	.2	Nonqualified Stock Option Agreement dated June 30, 2004 between the Company and Jose A. Villamil.
10	.3	Amendment dated as of April 15, 2004 to the Asset Purchase Agreement dated as of October 2, 2003, by and among the Company, Spanish Broadcasting System-San Francisco, Inc., KPTI Licensing, Inc. and 3 Point Media – San Francisco, LLC.
10	.4	Time Brokerage Agreement dated as of April 15, 2004, by and among the Company, Spanish Broadcasting System-San Francisco, Inc., KPTI Licensing, Inc. and 3 Point Media – San Francisco, LLC.
10	.5	Asset Purchase Agreement dated as of July 26, 2004 by and among Newsweb Corporation, an Illinois corporation, and Spanish Broadcasting System of Illinois, Inc., a Delaware corporation.
31	.1	Chief Executive Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31	.2	Chief Financial Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


32	.1	Chief Executive Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32	.2	Chief Financial Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

The Company filed the following report on Form 8-K during the three months ended June 30, 2004:

(i) a current report on Form 8-K on May 5, 2004 to report that on May 5, 2004 the Company issued a press release announcing its first quarter fiscal year 2004 financial results.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SPANISH BROADCASTING SYSTEM, INC.

BY: /s/ JOSEPH A. GARCíA

JOSEPH A. GARCíA

Executive Vice President, Chief

Financial Officer and Secretary (principal

financial and accounting officer and duly

authorized officer of the registrant)

Date: August 9, 2004

(a) Exhibits —


3	.1	Third Amended and Restated Certificate of Incorporation of Spanish Broadcasting System, Inc. (the “Company”), dated September 29, 1999 (incorporated by reference to the Company’s 1999 Registration Statement on Form S-1 (Commission File No. 333-85499) (the “1999 Registration Statement”)) (Exhibit A to this exhibit is incorporated by reference to the Company’s Current Report on Form 8-K, dated March 25, 1996 (the “1996 Current Report”)).
3	.2	Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of the Company, dated September 29, 1999 (incorporated by reference to the Company’s 1999 Registration Statement).
3	.3	Amended and Restated By-Laws of the Company (incorporated by reference to the Company’s 1999 Registration Statement).
3	.4	Certificate of Elimination of 14 1/4% Senior Exchangeable Preferred Stock, Series A of the Company, dated October 28, 2003 (incorporated by reference to Exhibit 3.3 of the Company’s Quarterly Report on Form 10-Q, dated November 14, 2003 (the “11/14/03 Quarterly Report”)).
4	.1	Article V of the Third Amended and Restated Certificate of Incorporation of the Company, dated September 29, 1999 (incorporated by reference to the Company’s 1999 Registration Statement) (see Exhibit 3.1).
4	.2	Certificate of Designations dated October 29, 2003 Setting Forth the Voting Power, Preferences and Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and Restrictions of the 10 3/4% Series A Cumulative Exchangeable Redeemable Preferred Stock of Spanish Broadcasting System, Inc. (incorporated by reference to Exhibit 4.1 of the Company’s 11/14/03 Quarterly Report).
4	.3	Certificate of Designations dated October 29, 2003 Setting Forth the Voting Power, Preferences and Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and Restrictions of the 10 3/4% Series B Cumulative Exchangeable Redeemable Preferred Stock of Spanish Broadcasting System, Inc. (incorporated by reference to Exhibit 4.2 of the Company’s 11/14/03 Quarterly Report).
4	.4	Indenture dated June 29, 1994 among the Company, IBJ Schroder Bank & Trust Company, as Trustee, the Guarantors named therein and the Purchasers named therein (incorporated by reference to Exhibit 4.1 of the Company’s 1994 Registration Statement on Form S-4).
4	.5	First Supplemental Indenture dated as of March 25, 1996 to the Indenture dated as of June 29, 1994 among the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to the 1996 Current Report).
4	.6	Second Supplemental Indenture dated as of March 1, 1997 to the Indenture dated as of June 29, 1994 among the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to the 1996 Current Report).
4	.7	Supplemental Indenture dated as of October 21, 1999 to the Indenture dated as of June 29, 1994 among the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to the Company’s 1999 Registration Statement).
4	.8	Indenture with respect to 9 5/8% Senior Subordinated Notes due 2009 with The Bank of New York as Trustee, dated November 2, 1999 (incorporated by reference to the Current Report on Form 8-K dated November 2, 1999).
4	.9	Indenture with respect to 9 5/8% Senior Subordinated Notes due 2009 with The Bank of New York as Trustee, dated June 8, 2001 (incorporated by reference to the Company’s Registration Statement on Form S-3, filed on June 25, 2001).
4	.10	Form of stock certificate for the Class A common stock of the Company (incorporated by reference to the Company’s 1999 Registration Statement).
10	.1	Nonqualified Stock Option Agreement dated June 30, 2004 between the Company and Antonio S. Fernandez.
10	.2	Nonqualified Stock Option Agreement dated June 30, 2004 between the Company and Jose A. Villamil.


10	.3	Amendment dated as of April 15, 2004 to the Asset Purchase Agreement dated as of October 2, 2003, by and among the Company, Spanish Broadcasting System-San Francisco, Inc., KPTI Licensing, Inc. and 3 Point Media – San Francisco, LLC.
10	.4	Time Brokerage Agreement dated as of April 15, 2004, by and among the Company, Spanish Broadcasting System-San Francisco, Inc., KPTI Licensing, Inc. and 3 Point Media – San Francisco, LLC.
10	.5	Asset Purchase Agreement dated as of July 26, 2004 by and among Newsweb Corporation, an Illinois corporation, and Spanish Broadcasting System of Illinois, Inc., a Delaware corporation.
31	.1	Chief Executive Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31	.2	Chief Financial Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	.1	Chief Executive Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32	.2	Chief Financial Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 10.1

[Spanish Broadcasting System, Inc. Logo]

July 2, 2004

Antonio S. Fernandez
1643 Brickell Avenue, Apt. 2702
Miami, FL 33129

Dear Antonio S. Fernandez:

Pursuant to the terms and conditions of the Spanish Broadcasting System, Inc. 1999 Stock Option Plan for NonEmployee Directors (the "Plan"), you have been granted a Nonqualified Stock Option to purchase 50,000 shares (the "Option") of Class A common stock as outlined below.

            Granted To:    Antonio S. Fernandez
                           ID# A. Fernandez

          Granted Date:    June 30, 2004

        Option Granted:    50,000

Option Price per Share:    $9.33

Total Cost to Exercise:    $466,500.00

       Expiration Date:    June 30, 2014, unless terminated earlier.

      Vesting Schedule:    20% immediately, 20% each year as follows:

                           10,000 on 06/30/2005

                           10,000 on 06/30/2006

                           10,000 on 06/30/2007

                           10,000 on 06/30/2008

       Transferability:    Not transferable except in accordance with
                           the Plan.


                              Spanish Broadcasting System, Inc.

                              By: /s/ Antonio S. Fernandez
                                  ------------------------

By my signature below, I hereby acknowledge receipt of this Option granted on the date shown above, which has been issued to me under the terms and conditions of the Plan. I further acknowledge receipt of a copy of the Plan and agree to conform to all of the terms and conditions of the Option and the Plan.

Signature: /s/ Antonio S. Fernandez                  Date:  07/08/04
           ------------------------
           Antonio S. Fernandez

Exhibit 10.2

[Spanish Broadcasting System, Inc. Logo]

July 2, 2004

Jose Antonio Villamil
2655 LeJeune Road
Coral Gables, FL 33134

Dear Jose Antonio Villamil:

            Granted To:    Jose Antonio Villamil
                           ID# J. A. Villamil

          Granted Date:    June 30, 2004

        Option Granted:    50,000

Option Price per Share:    $9.33

Total Cost to Exercise:    $466,500.00

       Expiration Date:    June 30, 2014, unless terminated earlier.

      Vesting Schedule:    20% immediately, 20% each year as follows:

                           10,000 on 06/30/2005

                           10,000 on 06/30/2006

                           10,000 on 06/30/2007

                           10,000 on 06/30/2008

       Transferability:    Not transferable except in accordance with
                           the Plan.


                              Spanish Broadcasting System, Inc.

                              By: /s/ Jose Antonio Villamil
                                  -------------------------

Signature: /s/ Jose Antonio Villamil                 Date: 07/08/04
           -------------------------
           Jose Antonio Villamil

Exhibit 10.3

AMENDMENT TO ASSET PURCHASE AGREEMENT

This Amendment dated as of April 15, 2004, ("Amendment") to the Asset Purchase Agreement dated as of October 2, 2003 ("Agreement"), by and among Spanish Broadcasting System, Inc., Spanish Broadcasting System-San Francisco, Inc., and KPTI Licensing, Inc. (collectively, "SBS Entities") and 3 Point Media
- San Francisco, LLC ("Buyer").

WITNESSETH:

WHEREAS, pursuant to the terms and conditions of the Agreement, SBS Entities and Buyer failed to consummate the acquisition of Station KPTI-FM, Alameda, California ("Station"); and

WHEREAS, the SBS Entities are desirous of providing a further extension of time to Buyer for it to consummate the acquisition of Station; and

WHEREAS, the parties desire to enter into this Amendment to the Agreement on the terms and subject to the conditions set forth herein.

1. Section 2.5 is deleted in its entirety and replaced by the following understanding and agreements. Pursuant to the terms of Section 2.5(c) of the Agreement, Buyer delivered to the SBS Entities a cash advance of One Million Five Hundred Thousand Dollars ($1,500,000) ("Cash Advance"). Due to the failure to consummate the acquisition of Station pursuant to the Agreement, the SBS Entities have retained the Cash Advance. It is agreed that upon execution of this Amendment Buyer shall deliver to the SBS Entities an additional Cash Advance in the amount Five Hundred Thousand Dollars ($500,000.00) (collectively, "Cash Advances"). Should closing occur as set forth herein, the aggregate of the Cash Advances, to wit, Two Million Dollars ($2,000,000.00) will be credited against the total purchase price of Thirty Million Dollars ($30,000,000.00) to be delivered at Closing (as defined below).

2. Section 10 is deleted in its entirety and the parties hereby agree that in the event that the Agreement, as amended herein, is not consummated on or before September 30, 2004 ("Closing"), the Agreement, as amended, will automatically terminate without further liability of any party to the other, except that notwithstanding the foregoing the SBS Entities will retain the aggregate Two Million Dollar ($2,000,000.00) Cash Advances without recourse to Buyer, provided, however, that Five Hundred Thousand Dollars ($500,000) shall be returned to Buyer if the Agreement is not consummated on or before September 30, 2004, due to:

(a) the mutual written consent of the SBS Entities and Buyer;

(b) a material breach by any SBS Entity of any of its respective covenants, agreements, representations or warranties contained in this Agreement or if any of the representations or warranties of any SBS Entity contained in this Agreement shall have been inaccurate in any material respect when made, provided that Buyer is not then in material breach of this Agreement and the SBS Entities, as the case may be, have failed to cure such breach within thirty (30) days after receipt of written notice from Buyer

requesting such breach to be cured, and provided that the failure to cure such breach would result in the conditions contained in Section 8.1 not being satisfied;

(c) a final and non-appealable order, decree or ruling of any court of competent jurisdiction in the United States or other United States Governmental Body permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; or

(d) a Specified Event, pursuant to the provisions of Section 11.12(b).

3. Section 8.8 is deleted in its entirety.

4. Buyer and the SBS Entities concurrent with the execution of this Amendment will enter into the Local Marketing Agreement attached hereto as Exhibit 1 and made a part hereof.

5. Except for the above, the Agreement remains in full force and effect without change.

6. This Amendment may be signed in counterpart originals, which collectively shall have the same legal effect as if all signatures had appeared on the same physical document. This Amendment may be signed and exchanged by facsimile transmission, with the same legal effect as if the signatures had appeared in original handwriting on the same physical document.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.

SPANISH BROADCASTING SYSTEM, INC.

By:  /s/ Raul Alarcon, Jr.
   -----------------------------------
       Raul Alarcon, Jr.
       President and CEO

SPANISH BROADCASTING SYSTEM-SAN
FRANCISCO, INC.

By:  /s/ Raul Alarcon, Jr.
   -----------------------------------
       Raul Alarcon, Jr.
       President and CEO

KPTI LICENSING, INC.

By: /s/ Raul Alarcon, Jr.
   -----------------------------------
       Raul Alarcon, Jr.
       President and CEO

3 POINT MEDIA - SAN FRANCISCO, LLC

By:  /s/ Bruce Buzil
   -----------------------------------
       Bruce Buzil
       Co-Manager

Exhibit 10.4

TIME BROKERAGE AGREEMENT

This Time Brokerage Agreement (the "Agreement") is entered into as of the 15th day of April, 2004, by and among KPTI LICENSING, INC., a Delaware corporation ("Licensee"), SPANISH BROADCASTING SYSYEM, INC., a Delaware corporation ("SBS"), and SPANISH BROADCASTING SYSTEM - SAN FRANCISCO, INC., a Delaware corporation (together with SBS and Licensee, the "SBS Entities") and 3 POINT MEDIA - SAN FRANCISCO, LLC, an Illinois limited liability company ("Programmer").

WHEREAS, Licensee is the licensee of and owns and operates radio station KPTI(FM), FCC Facility ID No. 36029, Alameda, California (the "Station"), pursuant to licenses, permits, and authorizations issued to Licensee by the Federal Communications Commission (the "Commission" or "FCC").

WHEREAS, the SBS Entities and Programmer are parties to that certain Asset Purchase Agreement, dated as of October 2, 2003, as amended on April 14, 2004 (the "Asset Purchase Agreement"), whereby the SBS Entities have agreed to sell, and Programmer has agreed to buy, substantially all of the assets used in the operation of the Station on the terms and conditions set forth therein. All capitalized terms not defined herein shall have the meaning provided in the Asset Purchase Agreement.

WHEREAS, Licensee desires to provide air time on the Station to Programmer on terms and conditions that conform to Station policies and the FCC's rules, regulations and policies for time brokerage arrangements and as set forth herein.

WHEREAS, Programmer desires to use the air time to be made available by Licensee for the purpose of providing Programmer's programming to and for the Station in conformity with all rules, regulations, and policies of the FCC.

NOW, THEREFORE, in consideration of the foregoing, and of the mutual promises set forth herein, Licensee and Programmer hereby agree as follows:

1. Time Sale. Subject to the terms of this Agreement, and to applicable rules, regulations, and policies of the FCC, Licensee shall make available to Programmer all air time on the Station as may be requested by Programmer except for time reserved to or permitted to be used by Licensee in accordance with Sections 4 and 5. Licensee shall broadcast the programming, including commercial announcements, supplied by Programmer without interruption, deletion, or addition of any kind, subject to the terms of this Agreement and Licensee's obligations under the Communications Act of 1934, as amended, and the published rules, regulations, and policies of the Commission (collectively, the "Communications Act").

2. Term. The term of this Agreement shall be from April 15, 2004, through October 15, 2004, unless earlier terminated pursuant to Paragraph 15 hereof. This Agreement may be renewed upon such terms and conditions as may be mutually agreeable to Programmer and Licensee.

3. Hours of Programming. Subject to the exceptions set forth in Sections 4 and 5 below, Programmer shall supply, and Licensee shall transmit without modification, programming

for all periods of broadcast operations as may be requested by Programmer, as long as this Agreement remains in force. Programmer shall provide all such programming, produced at its own cost and expense.

4. Reservation of Time. Licensee specifically reserves for its own use up to three (3) hours per week of programming time (the "Reserved Time") during which it may broadcast programming of its choice to serve community needs. The Reserved Time shall be at a mutually agreeable time between the hours of 6:00
a.m. to 11:00 a.m. Sundays.

5. Licensee's Programming Discretion. Nothing herein shall be construed as limiting in any way the reasonable, good faith exercise by Licensee of its rights and obligations as the licensee of the Station to make the ultimate programming decisions for the Station. Licensee shall be responsible for ensuring that the Station's overall programming is responsive to community needs and in the public interest. Programmer's programming shall be broadcast in conformity with the regulations and restrictions set forth in Attachment 1, which are an integral part of this Agreement. Programmer agrees to abide by the standards set forth in Attachment 1 in its programming and operations. Licensee has the authority, in its sole discretion, to reject and refuse to transmit any programming produced or proposed by Programmer that, in the reasonable good faith judgment of Licensee, is contrary to the public interest. Licensee shall notify Programmer, unless such notice is impractical or impossible, at least one
(1) week in advance of any such refusal of Programmer's programming that Licensee deems necessary to serve the public interest. In the event of any such refusal, Programmer shall receive a pro-rated credit for the preempted time against the compensation required under Section 7 hereof and, in addition, shall be entitled to the cash value equivalent of any consideration received by the Licensee for the programming included in such period of preemption. Although the parties shall cooperate in the broadcast of emergency information over the Station, Licensee shall have the right to interrupt Programmer's programming in case of an emergency or for programming that, in the reasonable good faith judgment of Licensee, is of overriding public importance. In the event of any such interruption, except interruptions reasonably necessary to inform the public of a governmentally declared federal, state, or local emergency, Programmer shall receive a pro-rated credit for the preempted time against the compensation required under Section 7 hereof.

6. Programmer's Rights in Programming. All right, title and interest in and to the programming provided by Programmer, and the right to authorize the use of the programming in any manner and in any media whatsoever, shall be and remain vested at all times solely in Programmer. Programmer may use the network and syndicated programs of Licensee in accordance with appropriate Licensee contracts and agreements pertaining to such programming, but all right, title and interest in and to such programming shall be and remain vested at all times solely in Licensee.

7. Compensation. In consideration of the broadcast time provided to Programmer pursuant to this Agreement, Programmer shall pay Licensee the fee set forth in Attachment 2 hereto.

8. Expenses.

a. Licensee shall be responsible for paying to appropriate third parties all direct and indirect capital, operating and maintenance costs of the Station, including but not limited to: (i)

rents and utilities at Licensee's studio, tower, and transmitter site facilities; (ii) insurance costs related to Licensee's assets and operations;
(iii) Licensee's telephone, delivery, and postal service; (iv) costs related to the operation and maintenance of Licensee's main studio and operation and maintenance of the equipment necessary for the operation of the Station in compliance with the rules, regulations, and policies of the FCC; (v) salaries, payroll taxes, insurance, and related costs of personnel employed by Licensee in connection with the operation of the Station; (vi) all costs and expenses related to the production and broadcast of the programming provided by Licensee; and (vii) all performing rights, licensing fees for music and other material contained in the programming provided by Licensee.

b. Programmer shall be responsible for all direct and indirect costs of the production and delivery of Programmer's programming, including but not limited to: (i) all costs for the power and utilities at any facilities owned by Programmer and used by Programmer in the production of programming; (ii) insurance costs related to Programmer's equipment and assets used in its business operations; (iii) costs related to the maintenance of the studio and equipment owned by Programmer and used for the production and delivery of Programmer's programming; (iv) salaries, payroll taxes, insurance, and related costs of personnel employed by Programmer in connection with production and delivery of the programming, Programmer's promotion of that programming, and the sale of advertising in that programming; and (v) all performing rights, licensing fees for music and other material contained in the programming provided by Programmer.

9. Accounts Receivable.

a. On and after the Effective Date, during the term of this Agreement, all revenue from broadcasts on the Station (except for revenue from broadcasts of the Licensee's programming during the Reserved Time) shall belong to Programmer and Programmer shall be responsible for all traffic, billing and collection functions with respect to such revenue.

b. All cash accounts receivable for broadcasts on the Station, which occur prior to the Effective Date (the "Accounts Receivable") shall belong to Licensee and Licensee shall be responsible for all billing and collection functions with respect to such Accounts Receivable.

10. Use of Facilities. During the term of this Agreement, Programmer shall have the right to use the studio equipment and premises of the Station (collectively, the "Studio Facilities") for producing the programming and related functions (including the sale of advertising). Programmer may, at its own expense, install any additional studio equipment reasonably necessary for producing the programming and related functions. Programmer shall replace all spare parts belonging to Licensee that Programmer may use during the term of this Agreement and shall reimburse Licensee for any and all damages to the facilities caused by Programmer, ordinary wear and tear excepted, except to the extent that such damage is reimbursed by policies of insurance. Programmer shall maintain its own business liability insurance and hazard insurance in commercially reasonable amounts. Programmer also shall have the right to use the call letters of the Station in correspondence and in promotion related to the programming provided by Programmer, provided, however, that, during the term hereof, any use of the Station's call letters as part of letterhead or in any other preprinted form such as, but not limited

to, checks, invoices or business cards, shall indicate that Programmer provides programming services for the Station. Programmer acknowledges that it has no authority to bind Licensee, the Station or any affiliate thereof to any agreement, contract, obligation or understanding of any nature whatsoever. Programmer shall have no right to mortgage, pledge or otherwise encumber the assets of Licensee.

11. Representations, Warranties, and Covenants of Programmer. Programmer represents and warrants to, and covenants with, Licensee that:

a. This Agreement has been duly executed and delivered by Programmer, and is valid, binding and enforceable against Programmer in accordance with its terms. Programmer has full right, power, authority and legal capacity to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.

b. The programming provided by Programmer for broadcast on the Station shall comply in all material respects with the Communications Act, and with the programming standards established by Licensee as set forth in Attachment 1 hereto.

c. Programmer shall obtain, at its own cost and expense, music licenses for the music in the programs it provides for broadcast. The performing rights to all music contained in its programming shall be licensed by BMI, ASCAP, or SESAC or shall be in the public domain. The Programmer shall keep all the payment of all such accounts current.

d. Programmer shall cooperate with Licensee in making time available in programming supplied to the Station by Programmer for broadcasting proper station identification announcements as required by FCC rules and regulations.

e. Neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated hereby will constitute or result in the breach of any term, condition or provision of, or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any property or assets of Programmer pursuant to, the certificate of formation and the limited liability company operating agreement of Programmer, any agreement or other instrument to which Programmer is a party or by which any part of its property is bound, or violate any law, regulation, judgment or order binding upon Programmer.

f. Programmer shall promptly pay any and all expenses or obligations of any kind or nature relating to the provision of programming when such expenses become due.

g. Programmer shall forward to Licensee any letter from a member of the general public addressing the Station's programming or documentation which comes into its custody which is required to be included in the Station's public file or which is reasonably requested by Licensee.

h. No representation or warranty made by Programmer in this Agreement, contains any untrue statement of a material fact or omits a material fact necessary in order to make such statements or information not misleading in any material respect.

12. Representations, Warranties, and Covenants of Licensee. The SBS Entities represent and warrant to, and covenant with, Programmer that:

a. This Agreement has been duly executed and delivered by the SBS Entities, and is valid, binding and enforceable against Licensee in accordance with its terms. The SBS Entities have full right, power, authority and legal capacity to enter into and perform their obligations under this Agreement and to consummate the transactions contemplated hereby.

b. No consent, license, approval or authorization of or exemption by, or filing, restriction or declaration with, any governmental authority bureau, agency or regulatory authority, other than the filing of this Agreement with the FCC, is required in connection with the execution, delivery or performance of this Agreement and to consummate the transactions contemplated hereby.

c. Neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated hereby will constitute or result in the breach of any term, condition or provision of, or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the SBS Entities pursuant to, the articles of incorporation or bylaws of the SBS Entities , any agreement or other instrument to which SBS Entities are party or by which any part of their property is bound, or violate any law, regulation, judgment or order binding upon the SBS Entities.

d. The Licensee shall ensure that the Station's overall programming is responsive to community needs and the public interest. Licensee shall prepare the quarterly listings of significant community issues and responsive programming.

e. The Station's facilities and equipment shall be operated in accordance with good engineering standards of the radio broadcast industry, with all applicable laws and regulations and broadcast to the full power and height authorized for it by the FCC. During the term of this Agreement, Licensee shall maintain the transmission facility and the broadcast output with the same quality, normal wear and tear excepted, to broadcast to the same power and height as Licensee is presently authorized by the FCC. Any maintenance work, other than emergency repairs, which prevent the operation of the Station at full power and maximum facility, shall not be scheduled without giving at least forty-eight (48) hours notice to Programmer, unless Programmer waives such notice.

f. Licensee shall employ such management and staff-level employees to direct the day-to-day operations of the Station as may be necessary to fully comply with the provisions of the Communications Act regarding main studio staffing and such additional personnel as shall be necessary to enable the Licensee to perform its obligations under this Agreement. All such employees will report to and be accountable solely to Licensee. Licensee shall notify Programmer prior to making any changes in management personnel.

g. Licensee shall maintain a main studio (as defined by the rules and regulations of the FCC). Licensee shall maintain an appropriate public inspection file at the main studio and shall, from time to time, place such documents in that file as may be required by present or future FCC rules and regulations.

h. On and after the Effective Date, during the term of this Agreement, the SBS Entities shall not enter into any contract or agreement for the cash or non-cash sale of time on the Station. The SBS Entities acknowledge that they have no authority to bind Programmer or any affiliate thereof to any agreement, contract, obligation or understanding of any nature whatsoever. The SBS Entities shall have no right to mortgage, pledge or otherwise encumber the assets of Programmer.

i. Licensee, at the election of Programmer on or before the Effective Date, shall change the call sign of the Station to a call sign designated by Programmer. Licensee shall use commercially reasonable efforts to prepare, file and prosecute any filings with the FCC that may be required, necessary or desirable to effectuate such call sign change on or before the Effective Date.

j. No representation or warranty made by any of the SBS Entities in this Agreement, contains any untrue statement of a material fact or omits a material fact necessary in order to make such statements or information not misleading in any material respect.

13. Political Time. Licensee shall retain responsibility to comply with the FCC's political programming rules. Programmer shall cooperate with Licensee to assist Licensee in complying with the FCC's political programming rules. Licensee shall promptly supply to Programmer, and Programmer shall promptly supply to Licensee, such information, including all inquiries concerning the broadcast of political advertising, as may be necessary to comply with FCC rules and policies, including the lowest unit rate, equal opportunities, reasonable access, political file and related requirements of federal law. Licensee, in consultation with Programmer, shall develop a statement which discloses its political broadcasting policies to political candidates, and Programmer shall follow those policies and rates in the sale of political programming and advertising.

14. Indemnification.

a. Programmer shall indemnify, defend, and hold harmless Licensee from and against any Claim (as defined herein) arising out of (i) programming exclusively provided by Programmer, and (ii) any inaccuracy or breach of any representations, warranties, covenants, or obligations of Programmer under this Agreement, and (iii) Programmer's use of the facilities of Licensee.

b. Licensee shall indemnify, defend, and hold harmless Programmer from and against any Claim arising out of (i) programming exclusively provided by Licensee, and (ii) any inaccuracy or breach of any representations, warranties, covenants, or obligations of Licensee under this Agreement.

c. As used in this Section 14, the term "Claim" shall include (i) all liabilities; (ii) all losses, damages (including, without limitation, consequential damages), judgments, awards, penalties and settlements; (iii) all demands, claims, suits, actions, causes of action, proceedings and assessments, whether or not ultimately determined to be valid; and (iv) all costs and expenses (including, without limitation, interest (including prejudgment interest in any litigated or arbitrated

matter), court costs and fees and expenses of attorneys and expert witnesses) of investigating, defending or asserting any of the foregoing or of enforcing this Agreement.

d. The indemnification obligations of this Section 14 shall survive any termination of this Agreement and shall continue until the expiration of all applicable statutes of limitations and the conclusion and payment of all judgments which may be rendered in all litigation which may be commenced prior to such expiration.

e. Any party seeking indemnification hereunder (the "Indemnified Party") shall give promptly to the party obligated to provide indemnification to such Indemnified Party (the "Indemnitor") a written notice (a "Claim Notice") describing in reasonable detail the facts giving rise to the claim for indemnification hereunder and shall include in such Claim Notice (if then known or estimable) the amount or the method of computation of the amount of such claim, and a reference to the provision of this Agreement or any other agreement, document or instrument executed hereunder or in connection herewith upon which such claim is based. The failure of any Indemnified Party to give the Claim Notice promptly as required by this Section 14e shall not affect such Indemnified Party's rights under this Section 14 except to the extent such failure is actually prejudicial to the rights and obligations of the Indemnitor.

f. After the giving of any Claim Notice pursuant hereto, the amount of indemnification to which an Indemnified Party shall be entitled under this
Section 14 shall be determined: (i) by the written agreement between the Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any court of competent jurisdiction; or (iii) by any other means to which the Indemnified Party and the Indemnitor shall agree in writing. The judgment or decree of a court shall be deemed final when the time for appeal, if any, shall have expired and no appeal shall have been taken or when all appeals taken shall have been finally determined. The Indemnified Party shall have the burden of proof in establishing the amount of losses and expenses suffered by it.

g. In order for a party to be entitled to any indemnification provided for under this Agreement in respect of, arising out of or involving a claim or demand made by any third Person against the Indemnified Party, such Indemnified Party must notify the Indemnitor in writing, and in reasonable detail, of the third Person claim promptly after receipt by such Indemnified Party of written notice of the third Person claim. Thereafter, the Indemnified Party shall promptly deliver to the Indemnitor copies of all notices and documents (including court papers) received by the Indemnified Party relating to the third Person claim. Notwithstanding the foregoing, should a party be physically served with a complaint with regard to a third Person claim, the Indemnified Party must notify the Indemnitor with a copy of the complaint within five (5) business days after receipt thereof and shall deliver to the Indemnitor within seven (7) business days after the receipt of such complaint copies of notices and documents (including court papers) physically served upon the Indemnified Party relating to the third Person claim. The failure of any Indemnified Party to give the Claim Notice promptly (or in five (5) business days in the case of service of a complaint upon the Indemnified Party) or to deliver copies of notices and documents as required by this Section 14g shall not affect such Indemnified Party's rights under this Section 14 except to the extent such failure is actually prejudicial to the rights and obligations of the Indemnitor.

h. In the event of the initiation of any legal proceeding against the Indemnified Party by a third Person, the Indemnitor shall have the sole and absolute right after the receipt of notice, at its option and at its own expense, to be represented by counsel of its choice and to control, defend against, negotiate, settle or otherwise deal with any proceeding, claim, or demand which relates to any loss, liability or damage indemnified against hereunder; provided, however, that the Indemnified Party may participate in any such proceeding with counsel of its choice and at its expense. The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand. To the extent the Indemnitor elects not to defend such proceeding, claim or demand, and the Indemnified Party defends against or otherwise deals with any such proceeding, claim or demand, the Indemnified Party may retain counsel, reasonably acceptable to the Indemnitor, at the expense of the Indemnitor, and control the defense of such proceeding. Neither the Indemnitor nor the Indemnified Party may settle any such proceeding which settlement obligates the other party to pay money, to perform obligations or to admit liability without the consent of the other party, such consent not to be unreasonably withheld. After any final judgment or award shall have been rendered by a court, arbitration board or administrative agency of competent jurisdiction and the time in which to appeal therefrom has expired, or a settlement shall have been consummated, or the Indemnified Party and the Indemnitor shall arrive at a mutually binding agreement with respect to each separate matter alleged to be indemnified by the Indemnitor hereunder, the Indemnified Party shall forward to the Indemnitor notice of any sums due and owing by it with respect to such matter and the Indemnitor shall pay all of the sums so owing to the Indemnified Party by wire transfer, certified or bank cashier's check within thirty (30) days after the date of such notice.

i. In any case where an Indemnified Party recovers from third Persons any amount in respect of a matter with respect to which an Indemnitor has indemnified it pursuant to this Section 14, such Indemnified Party shall promptly pay over to the Indemnitor the amount so recovered (after deducting therefrom the full amount of the expenses incurred by it in procuring such recovery), but not in excess of the sum of (i) any amount previously so paid by the Indemnitor to or on behalf of the Indemnified Party in respect of such matter and (ii) any amount expended by the Indemnitor in pursuing or defending any claim arising out of such matter. All Loss and Expenses shall be computed net of any insurance proceeds (less any increase in premiums, reasonably attributable to such Loss, for the one-year period following such Loss) that reduce any damages that would otherwise be sustained.

15. Termination; Effect of Termination.

a. The term of this Agreement is subject to the limitations that:

i. This Agreement may be terminated by mutual consent of the parties.

ii. Either party may terminate this Agreement if the terminating party is not then in material breach and the other party is in material breach under this Agreement and has failed to cure such breach within thirty (30) calendar days after receiving notice of breach from the terminating party.

iii. Either party may terminate this Agreement if the Asset Purchase Agreement is terminated in accordance with its terms and the terminating party is not then in material breach of this Agreement.

iv. This Agreement shall terminate automatically upon the occurrence of any of the following:

(1) This Agreement is declared invalid or illegal in whole or material part by an order or decree of the FCC or any other administrative agency or court of competent jurisdiction and such order or decree has become final and no longer subject to further administrative or judicial review;

(2) The assignment of the license of the Station from Licensee to Programmer (FCC File No. BALH-20031010ACK) is consummated by the parties.

v. Programmer shall have the right at its sole option to terminate this Agreement if Licensee, pursuant to this Agreement, preempts or substitutes other programming for that supplied by Programmer during ten percent (10%) or more of the total hours of operation of the Station during any period of seven consecutive days.

b. In the event of termination hereunder, Licensee shall be under no further obligation to make available to Programmer any further broadcast time or broadcast transmission facilities, and Programmer shall have no further obligation to make any payments to Licensee hereunder. All unperformed agreements and contracts for advertising to be aired during Programmer's time shall automatically belong to Licensee, who shall have the right to perform such agreements and contracts and to collect and receive the money derived therefrom. Programmer shall remit to Licensee any money or consideration it shall have received as pre-payment for such unaired advertising. Programmer shall be entitled to all uncollected revenue for advertising already broadcast over the Station prior to such termination, and Licensee shall pay over to Programmer any sums received in respect of the same.

16. Exclusivity. Any air time not used by Programmer in accordance with
Section 3 or by Licensee shall not be available for use by any other Person. During the term of this Agreement, Licensee agrees not to enter into any other time brokerage, program provision, local management, or similar agreement relating to the Station with any Person.

17. Insurance. Licensee will maintain in full force and effect throughout the term of this Agreement insurance with responsible and reputable insurance companies or associations covering such risks (including fire and other risks insured against by extended coverage, public liability insurance, insurance for claims against personal injury or death or property damage and such other insurance as may be required by law) and in such amounts and on such terms as is conventionally carried by broadcasters operating radio stations with facilities comparable to those of the Station. Any insurance proceeds received by Licensee in respect of damaged property will be used to repair or replace such property so that the operation of the Station conforms with this Agreement.

18. Regulatory Requirements. Licensee shall operate the Station in conformity with the Communications Act, FCC rules and requirements, and all other applicable federal, state, and

local rules. Notwithstanding anything to the contrary set forth in this Agreement, Licensee shall be solely responsible for the management, operation, and regulatory compliance of the Station, including, specifically, control over the Station's finances, personnel, and programming.

19. Payola/Plugola. Neither Programmer nor its agents, employees, consultants, or personnel shall accept any consideration, compensation, gift, or gratuity of any kind whatsoever, regardless of its value or form, including but not limited to, a commission, discount, bonus, material, supplies, or other merchandise, services, or labor (collectively "Consideration"), whether or not pursuant to written contracts or agreements between Programmer and merchants or advertisers, unless the payer is identified in the program for which Consideration was provided as having paid for or furnished such Consideration, in accordance with the Communications Act and FCC requirements.

20. Notices. All notices and other communications permitted or required hereunder shall be in writing and any payment, notice, or other communications shall be deemed given by (a) personal delivery, (b) U. S. certified mail, postage prepaid, with return receipt requested, or (c) a nationally recognized overnight carrier, in each case addressed as follows:

If to Programmer, to:

3 Point Media - San Francisco, LLC

980 North Michigan Avenue
Suite 1880
Chicago, Illinois 60611
Attention: Bruce Buzil
Tel: (312) 204-9900

With a copy (which shall not constitute notice) to:

Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W. Washington, D.C. 20036
Telephone: (202) 776-2556
Facsimile: (202) 776-2526
Attention: Michael D. Basile

If to Licensee, to:

Spanish Broadcasting System, Inc.
2601 South Bayshore Drive PH II
Coconut Grove, FL 33133

Telephone: (305) 441-6901
Facsimile: (305) 441-2179
Attention: Raul Alarcon

With a copy to:

Kaye Scholer LLP
901 15th St., NW
Suite 1100
Washington, D.C. 20005
Telephone: (202) 682-3506
Facsimile: (202) 682-3580
Attention: Jason L. Shrinsky

or to such other person or address as any of the parties may specify to the others in writing from time to time. Notice shall be deemed to have been given upon actual receipt.

21. No Agency. No agency relationship among the parties shall be expressed or implied by the terms of this Agreement, nor shall this Agreement be construed to create a joint venture or partnership among the parties. None of the parties shall hold itself out as an agent, partner, or joint venturer with any of the others. Programmer shall not perform or assume any obligation or liability of the SBS Entities. All contracts for the sale of airtime, purchase orders, agreements, sales materials, and similar documents produced or executed by Programmer shall be executed in the name of Programmer, and not on behalf of the Station or Licensee, and shall represent that Programmer is not the licensee of the Station.

22. Entire Agreement. This Agreement embodies the entire agreement between the parties with respect to the subject matter hereof and there are no other agreements, representations, warranties, or understandings, oral or written, between them with respect to the subject matter hereof. No alteration, modification or change of this Agreement shall be valid unless by like written instrument signed by each party hereto.

23. Further Assurances. Each of the parties shall execute and deliver such additional documents and take such further actions as are reasonably necessary for the purposes of carrying out this Agreement.

24. Broker. The parties agree to indemnify and hold each other harmless against any claims from any broker or finder based upon any agreement, arrangement, or understanding alleged to have been made by the indemnifying party.

25. Assignment. None of the parties shall assign its rights or delegate its duties under this Agreement without the other parties' prior written consent, which consent shall not be unreasonably withheld or delayed, provided, however, that, upon notice to Licensee, Programmer may assign its rights and delegate its duties under this Agreement to any person or entity controlling, controlled by or under common control with Programmer. Any assignment or delegation by any of the parties in contravention of this Section 25 shall be null and void.

26. Binding Effect. This Agreement shall be binding upon the parties hereto and their successors and permitted assigns.

27. No Waiver; Remedies Cumulative. No failure or delay on the part of Licensee or Programmer in exercising any right or power hereunder shall operate as a waiver thereof, nor shall

any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of Licensee and Programmer herein provided are cumulative and are not exclusive of any right or remedies which it may otherwise have.

28. Force Majeure. Any failure or impairment of facilities or any delay or interruption in broadcasting Programmer's programs, or failure at any time to furnish facilities, in whole or in part, for broadcasting, due to acts of God, strikes or threats thereof, or force majeure, shall not constitute a breach of this Agreement and Licensee will not be liable to Programmer with respect to facilities that failed or were impaired or not furnished as a result of such events.

29. Severability. If any provision of this Agreement or the application thereof to any person or circumstances shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. In the event that the FCC raises a substantial and material question as to the validity of any provision of this Agreement, the parties hereto shall negotiate in good faith to revise any such provision of this Agreement with a view toward assuring compliance with all then existing FCC rules and policies which may be applicable, while attempting to preserve, as closely as possible, the intent of the parties as embodied in the provision of this Agreement which is to be so modified.

30. Governing Law. This Agreement and the transactions contemplated hereby shall be governed by and construed in accordance with the laws of the State of New York without reference to its choice of law rules. Each of the parties hereto irrevocably submits to the exclusive jurisdiction (subject to the immediately following sentence) of the United States District Court for the Northern District of Illinois for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each of the parties hereto agrees, to the extent permitted under applicable laws and rules of procedure, to commence any action, suit or proceeding relating hereto either in the United States District Court for the Northern District of Illinois, or if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the Circuit Court of Cook County of the State of Illinois. Each of the parties hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to such party's respective address set forth below shall be effective service of process for any action, suit or proceeding in either the United States District Court for the Northern District of Illinois or the Circuit Court of Cook County of the State of Illinois with respect to any matters to which it has submitted to jurisdiction in this Section31. Each of the parties hereto irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) the United States District Court for the Northern District of Illinois or (ii) the Circuit Court of Cook County of the State of Illinois, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Notwithstanding the foregoing, judgments, orders or decrees resulting from lawsuits or court actions brought in accordance with the foregoing provisions of this Section 31 may be appealed to or enforced in any court of competent jurisdiction.

31. Headings. The headings contained in this Agreement are included for convenience only and no such heading shall in any way alter the meaning of any provision.

32. Counterparts. This Agreement may be signed in counterpart originals, which collectively shall have the same legal effect as if all signatures had appeared on the same physical document. This Agreement may be signed and exchanged by facsimile transmission, with the same legal effect as if the signatures had appeared in original handwriting on the same physical document.

33. Amendment. This Agreement may be modified or amended only in writing and signed by the parties hereto.

34. Certifications. Programmer certifies that this Agreement complies with the Commission's multiple ownership rules, 47 C.F.R. ss. 73.3555, specifically including paragraphs (a), (c) and (d) thereof. Licensee certifies that it maintains, and shall continue to maintain during the term of this Agreement, ultimate control over the Station's facilities, including specific control over Station finances, personnel and programming.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties have executed this Time Brokerage Agreement as of the date first above written.

KPTI LICENSING, INC.

By:       /s/ Raul Alarcon, Jr.
     ------------------------------
     Name:  Raul Alarcon, Jr.
          -------------------------
     Title: President and CEO
          -------------------------

Spanish Broadcasting System, Inc.

By:      /s/ Raul Alarcon, Jr.
     ------------------------------
     Name:   Raul Alarcon, Jr.
          -------------------------
     Title:  President and CEO
          -------------------------

Spanish Broadcasting System - San Francisco, Inc.

By:      /s/ Raul Alarcon, Jr.
     ------------------------------
     Name:   Raul Alarcon, Jr.
          -------------------------
     Title:  President and CEO
          -------------------------

3 POINT MEDIA - SAN FRANCISCO, LLC

By:      /s/ Bruce Buzil
     ------------------------------
     Name:   Bruce Buzil
          -------------------------
     Title:  Co-Manager
          -------------------------

Exhibit 10.5

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made as of the 26th day of July, 2004, by and among NEWSWEB CORPORATION, an Illinois corporation ("PURCHASER"), and SPANISH BROADCASTING SYSTEM OF ILLINOIS, INC., a Delaware corporation ("SELLER").

WHEREAS, the following wholly-owned, single-purpose subsidiaries of Seller (collectively the "SELLER AFFILIATES") are the licensees of the following radio broadcast stations (collectively the "STATIONS"): WDEK Licensing, Inc., a Delaware corporation: WDEK(FM), licensed to DeKalb, Illinois; WKIE Licensing, Inc, a Delaware corporation.: WKIE(FM), licensed to Arlington Heights, Illinois; and WKIF Licensing, Inc., a Delaware corporation: WKIF(FM), licensed to Kankakee, Illinois;

WHEREAS, Seller owns the assets which are used in the operation of the Stations;

WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, certain of the radio station properties and assets relating to the Stations as described herein under the terms and conditions herein set forth; and

WHEREAS, Purchaser intends to assign its right, title and interest in each of the Stations to separate Affiliates and Seller agrees to such assignment.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereto agree as follows:

ARTICLE 1.
DEFINITIONS AND REFERENCES

Capitalized terms used herein without definition shall have the respective meanings assigned thereto in Annex I attached hereto and incorporated herein for all purposes of this Agreement (such definitions to be equally applicable to both the singular and plural forms of the terms defined). Unless otherwise specified, all references herein to "Articles," "Sections," "Exhibits" and "Schedules" are to Articles, Sections, Exhibits or Schedules of this Agreement. The word "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation." The terms "hereof," "herein," and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement and not to any particular provision of this Agreement. The word "or" shall not be exclusive and provisions shall apply, when appropriate, to successive events and transactions.

ARTICLE 2.
PURCHASE AND SALE

2.1. PURCHASE AND SALE OF ASSETS.

Subject to the conditions set forth in this Agreement, at the Closing, Seller shall assign, transfer, convey and deliver to Purchaser, and Purchaser shall purchase and accept from Seller, all right, title and interest of Seller in and to the following assets relating to the Stations (the "PURCHASED ASSETS"), free and clear of all Liens (other than Permitted Liens):

2.1.1. FCC LICENSES.

All licenses, construction permits or authorizations issued by or pending before the FCC for use in the operation of the Stations that are set forth on Schedule 2.1.1 attached hereto, together with any and all renewals, extensions and modifications thereof (the "FCC LICENSES").

2.1.2. OWNED TRANSMITTER SITE.

The real property, improvements and fixtures owned by Seller at the sites described on Schedule 2.1.2 hereto (the "OWNED TRANSMITTER SITE").

2.1.3. LEASED TRANSMITTER SITES.

The leasehold interests of Seller at each of the sites described on Schedule 2.1.3 hereto (the "LEASED TRANSMITTER SITES" and together with the Owned Transmitter Site, the "TRANSMITTER SITES").

2.1.4. TRANSMISSION EQUIPMENT.

The broadcast towers, antennas, main and back-up transmitters and generators, STLs and other tangible personal property owned by Seller and located, or otherwise held for use, at the Transmitter Sites that are set forth on Schedule 2.1.4 hereto, together with replacements thereof and additions thereto made between the date hereof and the Closing (the "TRANSMISSION EQUIPMENT").

2.1.5. STUDIO SITE.

The leasehold interest of Seller at the site described on Schedule 2.1.5 hereto together with replacements thereof and additions thereto made between the date hereof and the Closing (the "STUDIO SITE").

2.1.6. STUDIO EQUIPMENT.

The studio equipment as described on Schedule 2.1.6 hereto together with replacements thereof and additions thereto made between the date hereof and the Closing (the "STUDIO EQUIPMENT").

2.1.7. OFFICE EQUIPMENT.

The office equipment as described on Schedule 2.1.7 hereto together with replacements thereof and additions thereto made between the date hereof and the Closing (the "OFFICE EQUIPMENT").

2.1.8. CERTAIN INTANGIBLE PROPERTY.

The call letters of the Stations as described on Schedule 2.1.8 hereof (the "CALL LETTERS").

2.1.9. BUSINESS RECORDS.

Unless as may be otherwise required by law, the books, files and records related to the Purchased Assets, such as property tax records, equipment instruction material and warranties, logs, all materials maintained in the FCC public file relating to the Stations, technical data, political advertising records and all other records, correspondence with and documents pertaining to the operation of the station and governmental authorities and similar third parties (the "BUSINESS RECORDS").

2.1.10. EQUIPMENT WARRANTIES.

The manufacturer and vendor warranties, if any, on the Transmission Equipment, Studio Equipment and Office Equipment as are set forth in Schedule 2.1.10 hereto (the "Equipment Warranties").

2.1.11. SECURITY DEPOSIT.

Seller's interest in the Security Deposit in the amount of One Thousand Six Hundred Dollars ($1,600.00) held by Sonsinger Broadcasting Company of Chicago, LLC pursuant to Tower Lease Agreement between Big City Radio, Inc. and Sonsinger Broadcasting Company of Chicago, LLC dated September 17, 1998 and the Consent to Assignment, Assumption and Estoppel dated as of January 24, 2003.

2.1.12. OTHER TANGIBLE AND INTANGIBLE ASSETS.

All other fixed, tangible and intangible assets used and usable in the operations of the Stations together with replacements thereof and additions thereto made between the date hereof and the Closing.

2.2. EXCLUDED ASSETS.

Notwithstanding the terms of Section 2.1, Seller shall not assign, transfer, convey or deliver to Purchaser, and Purchaser shall not purchase and accept, and the Purchased Assets shall not include, any of Seller's right, title and interest in and to any of the following assets (the "EXCLUDED ASSETS"):

2.2.1. CASH.

All cash and cash equivalents of Seller or the Stations on hand on the day immediately preceding the Closing Date.

2.2.2. RECEIVABLES.

Any Accounts Receivable, notes receivable or other receivables of Seller (including Tax refunds).

2.2.3. DEPOSITS AND PREPAID EXPENSES.

All deposits and prepaid expenses of the Stations.

2.2.4. INTELLECTUAL PROPERTY.

That Intellectual Property of Seller set forth on Schedule 2.2.4 hereof.

2.2.5. CERTAIN BOOKS AND RECORDS.

Seller's corporate seal, minute books, charter documents, corporate stock record books and other books and records that pertain to the organization of Seller.

2.2.6. SECURITIES.

All securities of any kind owned by Seller.

2.2.7. INSURANCE.

All insurance contracts or proceeds thereof.

2.2.8. TIME SALES AGREEMENTS.

All time sales agreements or barter rights of the Stations.

2.2.9. PRE-CLOSING CLAIMS.

All claims arising out of acts occurring prior to the Closing Date, or claims that relate to the period prior to the Closing Date.

2.2.10. RIGHTS UNDER THIS AGREEMENT.

All of the rights of Seller under or pursuant to this Agreement.

2.2.11. EMPLOYEE BENEFIT PLANS.

All pension, profit sharing, retirement, bonus, medical, dental, life, accident insurance, disability, executive or deferred compensation, and other similar fringe or employee benefit plans.

2.3. ASSUMED LEASES.

At the Closing, Purchaser shall assume the obligations of Seller for periods on and after the Closing Date under the leases set forth on Schedule 2.1.3, Schedule 2.1.5 and Schedule 2.3 hereof (the "ASSUMED LEASES"), and Purchaser agrees to pay and perform the Assumed Leases from and after the Closing Date.

2.4. ASSUMED CONTRACTS.

At the Closing, Purchaser shall assume the obligations of Seller for periods on and after the Closing Date under the agreements set forth on Schedule 2.4 hereof (the "Assumed Contracts"), and Purchaser agrees to pay and perform the Assumed Contracts from and after the Closing Date. Except as specifically set forth in the preceding sentence, Purchaser does not assume and shall in no event be liable for any Liability of the Stations or Seller, including any Liabilities with respect to any employees of Seller.

2.5. EXCLUDED LIABILITIES.

Except for the Assumed Leases and Assumed Contracts, Purchaser shall not assume or be liable for and Seller shall retain, pay, perform and discharge when due, and indemnify and hold Purchaser harmless in accordance with Article 13 from and against, any other Liabilities of Seller (the "EXCLUDED LIABILITIES"), including the following Liabilities: All Taxes of Seller or attributable to the Business or the Stations Assets for any period, or any portion of any period, ending prior to the Closing Date.

2.5.1 All Taxes of Seller attributable to the business of operating the Stations or the Purchased Assets resulting from the transactions contemplated hereby (except as provided in Section 3.6.2).

2.5.2 All Liabilities relating to or arising out of Tradeout Agreements and all other Excluded Assets.

2.5.3 Any Liabilities of Seller under this Agreement.

2.5.4 Any Liabilities arising out of any severance policy of Seller or any severance agreement or similar arrangement between Seller and any employee of Seller that also results or arises from the transactions contemplated by this Agreement.

2.5.5 Any Liabilities for severance or any similar obligation of Seller arising by operation of Law that results or arises from the transactions contemplated by this Agreement.

2.5.6 Any Liabilities arising out of vacation benefits for any employee of Seller that accrued or were earned prior to the Closing Date.

2.5.7 All Liabilities arising out of or relating to the ownership of the Stations Assets or operation of the Stations, Purchased Assets or the Stations prior to the Closing Date.

ARTICLE 3.
PURCHASE PRICE; CLOSING

3.1. PURCHASE PRICE.

The purchase price for the Purchased Assets shall be Twenty-Eight Million Dollars ($28,000,000.00) (the "PURCHASE PRICE"). Purchaser shall pay the Purchase Price in cash to

Seller at Closing by wire transfer of immediately available funds to an account or accounts identified by Seller in writing prior to Closing.

3.2. ESCROW DEPOSIT.

Upon the execution of the Escrow Agreement, concurrent with the execution of this Agreement, Purchaser, by bank wire transfer of immediately available funds, shall deposit in escrow with SunTrust Bank, a Georgia banking corporation, acting as escrow agent on the parties' behalf ("ESCROW AGENT"), a deposit ("DEPOSIT") in the amount of One Million Four Hundred Thousand Dollars ($1,400,000.00). The Deposit shall be security for the consummation of the sale of the Purchased Assets and shall be held in escrow pursuant to a separate escrow agreement ("ESCROW AGREEMENT") entered into between Seller, Purchaser and the Escrow Agent in the form of Exhibit A hereto. In the event of any conflict between this Agreement and the Escrow Agreement, the terms of the Escrow Agreement shall control. The Deposit shall be invested and disbursed in accordance with the terms of the Escrow Agreement.

3.3. TIME OF CLOSING.

The closing for the sale and purchase of the Purchased Assets (the "CLOSING") shall be conducted via electronic mail, with original signatures to follow via overnight courier, or in such other manner as shall be mutually agreed upon by Seller and Purchaser. Subject to the satisfaction of the conditions precedent set forth in Article 8 and Article 9 of this Agreement, the Closing shall occur on such date (the "CLOSING DATE") that is the fifth (5th) Business Day after the latter of the date on which the FCC Assignment Order or the FCC Renewal Order for each of the Stations shall have become a Final Order. The Closing shall be deemed to be effective as of 12:01 a.m. on the Closing Date.

3.4. CLOSING PROCEDURES.

At the Closing, Seller shall deliver to the appropriate Purchaser Affiliate, as directed by Purchaser, all Ancillary Agreements in the name of the appropriate Purchaser Affiliate. Against such delivery, Purchaser shall, or cause Purchaser's Affiliates to (a) pay the Purchase Price to Seller in accordance with Section 3.1 above and (b) execute and deliver an assumption agreement with respect to the Assumed Contracts in a form reasonably acceptable to both Seller and Purchaser. Each party will cause to be prepared, executed and delivered all other documents required to be delivered by such party pursuant to this Agreement and all other appropriate and customary documents as another party or its counsel may reasonably request for the purpose of consummating the transactions contemplated by this Agreement. All actions taken at the Closing shall be deemed to have been taken simultaneously at the time the last of any such actions is taken or completed. The Purchaser shall remain primarily liable as a guarantor for all Purchaser Affiliates.

3.5. ALLOCATION OF PURCHASE PRICE.

3.5.1. Seller and Purchaser each represent, warrant, covenant, and agree with each other that the Purchase Price shall be allocated among the classes of Purchased Assets for each Station for all purposes (including financial, accounting and Tax purposes), as agreed by the parties

within ninety (90) days after the Closing Date. If Seller and Purchaser are unable to agree on such allocation within ninety (90) days following execution of this Agreement, Seller and Purchaser agree to retain a nationally recognized appraisal firm experienced in valuing radio broadcast properties which is mutually acceptable to Seller and Purchaser (the "Appraisal Firm") to appraise the classes of Purchased Assets of each Station. The Appraisal Firm shall be instructed to perform an appraisal of the classes of Purchased Assets of each Station and to deliver a report to Seller and Purchaser as soon as reasonably practicable. The fees, costs and expenses of the Appraisal Firm, whether or not the transactions contemplated hereby are consummated, shall be paid and borne equally by Seller and Purchaser. If the agreed upon allocation of the purchase price is disputed by any Governmental Authority, the party receiving notice of such dispute shall promptly notify the other party hereto concerning the existence and resolution of such dispute. Notwithstanding the terms of this
Section 3.5.1, the Purchase Price for the Owned Transmitter Site must be separately allocated on or prior to the Closing Date.

3.5.2. Seller and Purchaser agree, pursuant to Section 1060 of the Code, that the Purchase Price shall be allocated in accordance with this Section 3.5.1, and that all Tax returns and reports shall be filed consistent with such allocation. Notwithstanding any other provision of this Agreement, the provisions of this Section 3.5. shall survive the Closing Date without limitation.

3.6. PRORATIONS.

3.6.1. All items of income and expense arising from the operation of the Stations with respect to the Purchased Assets and the Assumed Contracts on or before the close of business on the Closing Date shall be for the account of Seller and thereafter shall be for the account of Purchaser. Proration of the items described below between Seller and Purchaser shall be effective as of 12:00 midnight, local time, on the Closing Date and shall occur as follows with respect to those rights, liabilities and obligations of Seller transferred to and assumed by Purchaser hereunder.

3.6.2. Liability for state and local Taxes assessed on the Purchased Assets payable with respect to the tax year in which the Closing Date falls shall each be prorated as between Seller and Purchaser on the basis of the number of days of the Tax year elapsed to and including the Closing Date. Notwithstanding the terms of this Section 3.6.2, liability for all real estate Taxes accrued but not yet payable as of the Closing Date on the Owned Transmitter Site shall be prorated as of the Closing Date based upon 110% of the last ascertainable real estate tax bill and upon the actual number of days in the calendar year in which the Closing occurs. The Seller shall be responsible for all real estate general property (ad valorem) taxes accruing by reason of any improvements to the Owned Transmitter Site made up to the Closing. In the event that at the time of the Closing, the Owned Transmitter Site or any portion thereof shall be or shall have been affected by any assessment, levy, charge or other imposition that is or may become payable in installments, then for purposes of this Agreement, all of the unpaid installments thereof shall be considered due and payable and liens upon the Owned Transmitter Site affected thereby and shall be paid and discharged by the Seller at the Closing or, credited by the Seller at the Closing against and reduce the Purchase Price.

3.6.3. The FCC annual regulatory fees for the fiscal year October 1, 2004 through September 20, 2005 for the Stations which are payable in September, 2005 shall be assumed to be the same as the annual regulatory fees paid in September, 2004 and shall be prorated at Closing as of the Closing Date.

3.6.4. Prepaid items, deposits, credits and accruals such as water, electricity, telephone, other utility and service charges, lease expenses, license fees (if any) and payments under any contracts or utility services to be assumed by Purchaser shall be prorated between Seller and Purchaser on the basis of the period of time to which such liabilities, prepaid items and accruals apply.

3.6.5. Filing and recordation fees and any other fees incurred in connection with the transfer of title to the property being conveyed hereunder, and any applicable transfer, sales or use taxes, and all expenses incurred in connection with such filing or recordation, shall be borne equally by Seller and Purchaser.

3.6.6. All prorations shall be made and paid insofar as feasible on the Closing Date; any prorations not made on such date shall be made as soon as practicable (not to exceed ninety (90) days) thereafter. As soon as practical within said ninety (90) day period, Purchaser shall deliver to Seller Purchaser's certificate setting forth as of the Closing Date all adjustments to be made as provided in this Article 3. Purchaser shall provide Seller or Seller's representatives access to copies of all books and records as Seller may reasonably request for purposes of verifying such adjustments. Purchaser's certificate shall be final and conclusive unless objected to by Seller in writing within thirty (30) days after delivery. Seller and Purchaser shall attempt jointly to reach agreement as to the amount of the adjustments to be made hereunder within sixty (60) days after receipt by Purchaser of such written objection by Seller, which agreement, if achieved, shall be binding upon all parties to this Agreement and not subject to dispute or review. In the event of a disagreement between Purchaser and Seller with respect to the accounting to be made hereunder, the parties agree that a public accounting firm chosen jointly by Purchaser and Seller shall be the final arbiter of such disagreement. The cost of such accounting firm shall be shared equally by the parties. Any amounts due Purchaser or Seller for the adjustments provided for herein shall be paid within ten (10) calendar days after final determination.

ARTICLE 4.
USE OF STUDIOS

4.1. For the period not to exceed nine (9) months following the Closing Date, Seller shall grant to Purchaser a license to use such portions of the studio located at 150 N. Michigan Avenue, Chicago, IL, as are presently being used by Seller for the operation of Stations WKIE, WKIF and WDKR. As Seller is renting the premises at 150 N. Michigan Avenue, Seller shall use its best efforts to obtain written consent from the landlord agreeing to Purchaser's occupation and use of the premises. During said license period, Purchaser shall use commercially reasonable efforts to relocate studio facilities for WKIE, WKIF and WDKR. Such license shall be substantially in the form of the Studio Use License Agreement attached as Exhibit G hereto.

4.2. Seller shall use its best efforts to obtain for Purchaser the continued right to use the present main studio location for Station WKIF and the present main studio location of Station WDEK.

ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby covenants, represents and warrants to Purchaser that the following are true and correct as of the date of this Agreement and will be true and correct at Closing, unless expressly stated otherwise, to wit:

5.1. ORGANIZATION; GOOD STANDING.

Seller is a Delaware corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware and Illinois. Seller has all requisite power and authority to own and lease its properties and carry on its business as currently conducted. Each Seller Affiliate is a Delaware corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware and Illinois. Each Seller Affiliate has all requisite power and authority to be the licensee of the Station of which it is the licensee.

5.2. PERFORMANCE OF SELLER AFFILIATES.

Each Seller Affiliate shall perform such acts and duties as are required to consummate this transaction.

5.3. DUE AUTHORIZATION.

Subject to the FCC Assignment Order, Seller has full power and authority to enter into and perform this Agreement to carry out the transactions contemplated hereby. Seller has taken all necessary action to approve the execution and delivery of this Agreement and the transactions contemplated hereby. This Agreement constitutes the legal, valid and binding obligation of Seller, enforceable against it in accordance with its terms, except as may be limited by the availability of equitable remedies or by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally.

5.4. EXECUTION AND DELIVERY.

Neither the execution and delivery by Seller of this Agreement or the Ancillary Agreements nor the consummation by Seller of the transactions contemplated hereby or thereby will: (a) conflict with or result in a breach of any provisions of Seller's organizational documents, (b) subject to the FCC Assignment Order, violate any Law or Order of any court or Governmental Authority; or (c) violate or conflict with or constitute a default under (or give rise to any right of termination, cancellation or acceleration under), or result in the creation of any Lien on any of the Purchased Assets pursuant to, any agreement, indenture, mortgage or other instrument to which Seller is a party or by which it or its assets may be bound or affected.

5.5. GOVERNMENTAL APPROVALS.

No approval, authorization, consent, order or other action of, or filing with, any court or Governmental Authority is required in connection with the execution and delivery by Seller of this Agreement or the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby, other than those of the FCC.

5.6. TITLE TO PERSONAL PROPERTY.

Seller is the sole and exclusive legal owner of all right, title and interest in, and has good and marketable title to, all of the Purchased Assets constituting personal property, free and clear of all Liens except (a) Permitted Liens, (b) Liens which will be released on or prior to the Closing, or (c) the Assumed Contracts. Subject to Seller's right to dispose of any properties, equipment and assets in the ordinary course of business, on the Closing Date, Seller will convey to Purchaser good and valid title to such properties, equipment and assets and any other properties, equipment and assets acquired by it subsequent to the date hereof and used or usable in the business or operation of the Stations, free of any and all Liens and rights of third parties of any kind whatsoever.

5.7. LEASED TRANSMITTER SITES AND STUDIO SITE.

5.7.1. Seller has valid, binding and enforceable leasehold interests, which are free and clear of all Liens except for Permitted Liens, in and to the Leased Transmitter Sites and Studio Site.

5.7.2. Seller has not received from any Governmental Authority any notice of, and has no knowledge of, any violation of or notice of noncompliance with any zoning, building, health, fire, water use or similar Law in connection with the Leased Transmitter Sites or Studio Site. There is no zoning ordinance or building code or use or occupancy restriction or condemnation proceeding pending or, to the knowledge of Seller, threatened, which would preclude or impair the use of the Leased Transmitter Sites or the Studio Site or the improvements thereon by Purchaser, in the manner and for the purposes for which they are presently used and, to the knowledge of Seller, no fact or condition exists which would result in the termination or impairment of access of the Stations to the Leased Transmitter Sites or the Studio Site or discontinuation of necessary sewer, water, electrical, gas, telephone or other utilities or services.

5.8. TANGIBLE PERSONAL PROPERTY.

Schedule 2.1.4, Schedule 2.1.6 and Schedule 2.1.7 sets forth a list, complete and accurate in all material respects, of the Purchased Assets which consist of tangible personal property. All of such tangible personal property are in good condition and working order, ordinary wear and tear excepted, and free from any known defects except such minor defects that do not interfere with the continued present use thereof by Seller and are in material compliance with all current FCC requirements and all other applicable Law.

5.9. FCC LICENSES.

Schedule 2.1.1 lists and accurately describes all of the FCC Licenses necessary for the lawful ownership and operation of the Stations and the conduct of their businesses. Seller has furnished to Purchaser true and accurate copies of all of the FCC Licenses. Each such FCC License is in full force and effect and is valid under applicable Laws; the Stations are being operated in compliance in all material respects with the Communications Act; and to the knowledge of Seller, no event has occurred which (whether with or without notice, lapse of time or the happening or occurrence of any other event) is reasonably likely to result in the revocation or termination of any FCC License or the imposition of any restriction of such a nature as would have a Material Adverse Effect, except for proceedings of a legislative or rule-making nature intended to affect the broadcasting industry generally. The Stations, each of their physical facilities, electrical and mechanical systems and transmitting and studio equipment are being operated in all material respects in accordance with the specifications of the FCC Licenses. The FCC Licenses are unimpaired by any act or omission of Seller or any of Seller's officers, directors or employees and, Seller has fulfilled and performed all of Sellers obligations with respect to the FCC Licenses and has full power and authority thereunder. No application, action or proceeding is pending for the modification of any of the FCC Licenses. No event has occurred which, individually or in the aggregate, and with or without the giving of notice or the lapse of time or both, would constitute grounds for revocation or non-renewal thereof. There are no proceedings or complaints pending or, to the knowledge of Seller, threatened at the FCC against Seller with respect to the Stations and Seller is not aware of any facts or circumstances that could reasonably provide a basis for any such proceedings or complaints.

5.10. COMPLIANCE WITH LAW.

On the Closing Date the operation of the Stations will be in compliance in all material respects with all applicable Law and there will be no judgment outstanding or litigation or proceeding pending or, to Seller's knowledge, threatened which affects the title or interest of Seller in or to any license or any of the other Purchased Assets or its power or right to sell, convey, transfer or assign the same to Purchaser as provided herein, or which would prevent or affect the operation and use of the same by Purchaser, as presently operated and used by Seller.

5.11. REPORTS.

Seller has duly filed all reports required to be filed by any Law or Order of any court or Governmental Authority and has made payment of all charges and other payments, if any, shown by such reports to be due and payable. All reports required to be filed by Seller with the FCC with respect to the Stations have been filed. Such reports and disclosures are complete and accurate in all material respects.

5.12. TAXES.

All Tax reports and returns required to be filed by or relating to the Purchased Assets have been filed with the appropriate Governmental Authority, and there have been paid all Taxes, penalties, interest, deficiencies, assessments or other charges due with respect to such Taxes, as reflected on the filed returns or claimed to be due by such federal, state or local taxing

authorities (other than Taxes, deficiencies, assessments or claims which are being contested in good faith and which in the aggregate are not material). Seller has not received any written notice of any examinations or audits pending or unresolved examinations or audit issues with respect to Seller's federal, state or local Tax returns that could adversely affect the Purchased Assets. All additional Taxes, if any, assessed as a result of such examinations or audits have been paid, and to Seller's knowledge, there are no pending claims or proceedings relating to, or asserted for, Taxes, penalties, interest, deficiencies or assessments against the Purchased Assets.

5.13. OWNED TRANSMITTER SITE.

5.13.1. Seller has good and marketable title to the Owned Transmitter Site, free and clear of all Liens and exceptions, except for Permitted Exceptions.

5.13.2. Seller has not received from any Governmental Authority any notice of, and has no knowledge of, any violation of or notice of noncompliance with any zoning, building, health, fire, water use or similar Law in connection with the Owned Transmitter Site. The Owned Transmitter Site is currently zoned in a manner which permits the use of the Owned Transmitter Site or the improvements thereon by Purchaser, in the manner and for the purposes for which they are presently used. There is no zoning ordinance or building code or use or occupancy restriction or condemnation proceeding pending or, to the knowledge of Seller, threatened, which would preclude or impair the use of the Owned Transmitter Site or the improvements thereon by Purchaser, in the manner and for the purposes for which they are presently used and, to the knowledge of Seller, no fact or condition exists which would result in the termination or impairment of access of the Station or to the Owned Transmitter Site or discontinuation of necessary sewer, water, electrical, gas, telephone or other utilities or services.

5.13.3. Neither the Owned Transmitter Site nor the ground or ground water there underlying contain or are contaminated by, nor has the Owned Transmitter Site ever been utilized to release, place, treat, dispose of, discharge, generate or store for more than 90 days, any toxic, hazardous, corrosive, pesticidal or radioactive substance or material, polychlorinated biphenyls, asbestos or any other unsafe or hazardous material.

5.13.4. There are no covenants or restrictions affecting the Owned Transmitter Site not shown in the public records.

5.13.5. To Seller's knowledge, the Owned Transmitter Site does not contain any underground storage tanks.

5.13.6. As of the Closing and except as elsewhere herein expressly provided for, there shall exist no contracts for the sale and purchase (including options, redemption rights and rights of first refusal) of the Owned Transmitter Site other than this Agreement, or leases, subleases, tenancies, subtenancies, reservations, licenses or other interests in, to, of, for or against the Owned Transmitter Site not of public record, or operation, management, service, labor, maintenance, cleaning, utility, brokerage, listing, construction, design or other types of contracts or instruments with respect to the Owned Transmitter Site not fully paid and performed which will survive the Closing.

5.13.7. The Seller is not a "foreign person" as that term is defined in Internal Revenue Code Section 1445(f) (or any successor provision thereto) and the regulations thereunder.

5.13.8. To Seller's knowledge, no violation(s) of any health, safety, building, zoning, fire, environmental, tenant right or other applicable code, ordinance, rule, regulation, order, law or statute with respect to the Owned Transmitter Site exists.

5.13.9. To Seller's knowledge, no eminent domain or condemnation proceeding or other taking with respect to any of the Owned Transmitter Site has been commenced, noticed or threatened by any government, quasi-government, public utility or other entity having such power.

5.13.10. to Seller's knowledge, no notice of any increased assessed valuation of the Owned Transmitter Site for purposes of real estate general property (ad valorem) taxes has been issued.

5.13.11. There are no amounts owed to the State of Illinois, including specifically the Illinois Department of Revenue, or any successor agency or department, by the Seller or with respect to the Owned Transmitter Site that is chargeable against the Purchaser and/or the Owned Transmitter Site pursuant to 35 ILCS 5/902(d), as amended, or 35 ILCS 120/5j, as amended, or any portion of the Illinois Sales Tax Act.

5.13.12. All of the improvements on the Owned Transmitter Site are in good working order and repair without any defects which would prevent the operation, use and function thereof in a normal and expected manner and the same comply with all legal requirements therefor.

5.13.13. There are no actions, suits, proceedings, judgments, orders, decrees, defaults, delinquencies or deficiencies outstanding, pending or, to Seller's knowledge, threatened against the Owned Transmitter Site or the Seller which would affect the Seller's ability to perform hereunder or the continued use, maintenance, occupancy or operation of the Owned Transmitter Site in the same manner as on the date of this Agreement.

5.13.14. The Owned Transmitter Site is free and clear of any and all mechanic liens and claims thereof or rights thereto, either inchoate or consummated.

5.14. ENVIRONMENTAL MATTERS.

5.14.1. Except as set forth in Schedule 5.14, with respect to the Purchased Assets, Seller is in material compliance with all Environmental Laws.

5.14.2. Except as set forth in Schedule 5.14, the Seller is not aware of any pending or threatened litigation or proceedings before any administrative or judicial body or authority relating to the presence, release, threat of release or placement at, on or in the Owned Transmitter Site, or the generation, transportation, storage, treatment, or disposal to or at the Owned Transmitter Site, of any hazardous substance and has not received any notice of the same.

5.14.3. To Seller's knowledge, except as set forth in Schedule 5.14, the Owned

Transmitter Site has never appeared on any federal or state registry of inactive hazardous waste sites.

5.14.4. To Seller's knowledge, except as set forth in Schedule 5.14, no condition exists at the Transmitter Sites or Studio Site that is reasonably likely to result in a material claim under Environmental Laws.

5.14.5. Except as set forth in Schedule 5.14, there are no pending or, to the knowledge of Seller, threatened actions, suits, claims, or other legal proceedings based on (and Seller has not received any written notice of any complaint, order, directive, citation, notice of responsibility, notice of potential responsibility, or information request from any Governmental Authority arising out of or attributable to): (a) the current or past presence at any part of the Transmitter Sites or Studio Site of Hazardous Materials; (b) the current or past release or threatened release into the environment from the Transmitter Sites or Studio Site (including into any storm drain, sewer, septic system or publicly owned treatment works) of any Hazardous Materials; (c) the off-site disposal of Hazardous Materials originating on or from the Transmitter Sites or Studio Site or the businesses or Purchased Assets of Seller; (d) any violation of Environmental Laws at any part of the Transmitter Sites or Studio Site (i) arising from Seller's activities involving Hazardous Materials, or (ii) to Seller's knowledge, from the activities of any other Person involving Hazardous Materials.

5.14.6. Except as set forth in Schedule 5.14, Seller has been duly issued all permits, licenses, certificates and approvals required under any Environmental Law to operate the Purchased Assets as they are currently operated.

5.14.7. Seller has made available to Purchaser all environmental assessments, reports, audits and other documents in its possession or under its control that relate to the Transmitter Sites or Seller's compliance with Environmental Laws with respect to the Purchased Assets.

5.14.8. Within sixty (60) days following the date of this Agreement (the "Environmental Inspection Period"), Purchaser and/or its agents, employees and contractors, shall be entitled to (i) enter upon the Transmitter Sites and Studio Site, on at least twenty-four (24) hours' notice to Seller, to perform inspections and tests of the Transmitter Sites and Studio Site, including but not limited to an environmental audit and such soil borings as Purchaser deems advisable, and (ii) make such investigations with regard to environmental matters, including a Phase I site assessment of the Owned Transmitter Site ("Phase I"), as Purchaser deems advisable. The Phase I shall be conducted by an environmental professional chosen by Purchaser and performed in accordance with the minimum requirements for Phase I environmental audits as set forth in the Illinois Environmental Protection Act. The results of the Phase I shall show the absence of environmental contaminants at, on or under the Transmitter Sites and Studio Site in accordance with all Environmental Laws, including polychlorinated biphenols, asbestos and petroleum or fractions thereof. The Phase I may include a minimum of three (3) soil samples taken at such intervals, locations and/or depths as, in the judgment of the environmental professional conducting the Phase I, are most likely to reveal the presence of environmental contaminants. The samples shall thereafter be analyzed at a certified laboratory for the presence of any such contaminants. Purchaser shall deliver to Seller a copy of the results of any such Phase I. In the event that Purchaser disturbs or damages any portion of the Owned Transmitter Site in

connection with such inspections, Purchaser shall repair and restore such portion, at no cost or expense to Seller, to substantially the condition existing prior to such disturbance or damage.

5.14.9. If the result of any inspection, test, examination, verification or investigation performed pursuant to Section 5.14.8 indicates that remediation or other environmental clean-up is required (the "Remediation"), Purchaser, in its sole discretion and as its sole remedy, may, upon written notice to Seller within ten (10) business days following expiration of the Inspection Period, terminate this Agreement, in which event neither party shall have any further liability to the other hereunder. Notwithstanding the foregoing, Purchaser may, in lieu of terminating this Agreement, deliver written notice to Seller prior to the expiration of such ten (10) business day period demand that Seller perform the Remediation at Seller's sole expense. Seller shall thereafter commence Remediation, as soon as commercially reasonable. In the event that Remediation is not completed on or before the Closing Date, Purchaser shall have the right, at its option, to proceed with Closing upon Seller placing in escrow an amount equal to One Hundred Fifty percent (150%) of the unpaid estimated cost of Remediation to be completed. Said escrow shall be used to pay all costs of Remediation and the balance of funds remaining in escrow at the completion of all Remediation, if any, shall be returned to Seller.

5.15. LITIGATION.

There is no Order of any court or Governmental Authority and no action, suit, proceeding or investigation, judicial, administrative or otherwise that is pending or, to Seller's knowledge, threatened against or affecting the Stations.

5.16. ASSUMED CONTRACTS AND ASSUMED LEASES.

True and complete copies of all Assumed Contracts and Assumed Leases and all modifications, amendments and renewals thereof have been furnished to Purchaser and represent all contracts, leases, understandings and/or agreements of Seller in conjunction with the operation of the Stations except contracts for the sale of commercial air time. Seller is not in default in any material respect under any of the Assumed Contracts and Assumed Leases, and, as of the Closing Date, Seller will have paid all sums and performed in all material respects all obligations under the Assumed Contracts and Assumed Leases which are required to be paid or performed prior to the Closing Date. The Assumed Contracts and Assumed Leases are in full force and effect and are valid and, to the knowledge of Seller, enforceable in accordance with their respective terms.

5.17. PUBLIC INSPECTION FILES.

The public inspection files for the Stations are in material compliance with the regulations of the FCC relating thereto.

5.18. BUSINESS RECORDS.

Seller has, and after the Closing, Purchaser will have, the right to use the Business Records included in the Purchased Assets, free and clear of any royalty or other payment obligations.

5.19. UNION ACTIVITY.

Employees are not presently represented by and, to the knowledge of Seller, are not seeking representation through any union or other collective bargaining unit. Within two years of the date of this Agreement, no Action has been filed with or filed by the National Labor Relations Board or, to Seller's knowledge threatened.

5.20. EMPLOYEE BENEFITS.

Purchaser will have no obligation or liability due to or because of any past service liability, vested benefits, retirement plan insolvencies or other obligation under Law (including ERISA) resulting from the purchase of the Stations or from former Employees becoming employees of Purchaser. Nothing contained in this Agreement shall confer upon any Employee any right with respect to continued employment by Purchaser, nor shall anything herein interfere with any right Purchaser may have after the Closing Date to (i) terminate the employment of any of the Employees at any time, with or without cause, or (ii) establish or modify any of the terms or conditions of employment of the Employees in the exercise of Purchaser's independent business judgment.

5.21. INTELLECTUAL PROPERTY.

Schedule 2.1.8 sets forth a true and complete list of all Stations' Intangible Personal Property being sold to Purchaser under this Agreement. There are no pending or, to the knowledge of Seller, threatened Actions against Seller in respect to any Stations' Intangible Personable Property. Seller has such ownership of or such rights by Contract in and to the Stations' Intangible Personal Property as is necessary to use the Intangible Personal Property in the operation of the Stations as currently being used.

5.22. INSURANCE.

Seller now has in force adequate fire and other risk insurance covering the full replacement value of the Transmitter Sites and tangible personal property to be transferred herein and shall cause such insurance to be maintained in full force until the Closing Date.

5.23. ALL ASSETS.

The Purchased Assets constitute all of the assets, property and business owned or used by Seller or in which Seller has any interest in its operation of the Stations (other than the Excluded Assets and the facilities of the studio to be used by Purchaser under the Studio Use License Agreement pursuant to Article
4. The Purchase Assets include all of the assets necessary to comply with the Main Studio Rule for Station WKIF and Station WDEK.

5.24. THIRD PARTY CONSENTS.

The only consents from any Person, other than a Governmental Authority, which are required to be obtained by Seller in connection with the execution and delivery by Seller of this

Agreement and the consummation of the transactions contemplated hereby are set forth on Schedule 5.24. (the "THIRD PARTY CONSENTS").

5.25. FINDERS AND BROKERS.

No person has, as a result of any agreement entered into by Seller, any valid claim against any of the parties hereto for a brokerage commission, finder's fee or other like payment.

ARTICLE 6.
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller as follows:

6.1. ORGANIZATION AND GOOD STANDING.

Purchaser and each Purchaser Affiliate is a corporation duly organized, validly existing and in good standing under the laws of the State of Illinois and has all requisite power and authority to own and lease its properties and carry on its business as currently conducted.

6.2. DUE AUTHORIZATION.

Subject to the FCC Assignment Order, Purchaser has full power and authority to enter into this Agreement and to carry out Purchaser's obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Purchaser and Purchaser Affiliate. This Agreement has been duly executed and delivered by Purchaser and constitutes the legal, valid and binding obligation of Purchaser, enforceable against it in accordance with its respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally or general equitable principles.

6.3. EXECUTION AND DELIVERY.

Neither the execution and delivery by Purchaser of this Agreement nor the consummation of the transactions contemplated hereby or thereby will: (a) conflict with or result in a breach of the certificate of incorporation or bylaws of Purchaser or Purchaser Affiliate; (b) subject to the FCC Assignment Order, violate any Law or Order of any court or Governmental Authority; or (c) violate or conflict with or constitute a default under (or give rise to any right of termination, cancellation or acceleration under) any material agreement, indenture, mortgage, or other instrument to which Purchaser or Purchaser Affiliate is a party or by which it is bound or affected.

6.4. CONSENTS.

No approval, authorization, consent, order or other action of, or filing with, any court or Governmental Authority is required in connection with the execution and delivery by Purchaser of this Agreement or the consummation of the transactions contemplated hereby, other than those of the FCC. No approval, authorization or consent of any other Person is required in connection

with the execution and delivery by Purchaser of this Agreement and the consummation of the transactions contemplated hereby or thereby, except as may have been previously obtained by Purchaser or Purchaser Affiliate.

6.5. FINDERS AND BROKERS.

No person has as a result of any agreement entered into by Purchaser any valid claim against any of the parties hereto for a brokerage commission, finder's fee or other like payment.

6.6. PURCHASER'S QUALIFICATION.

6.6.1. Purchaser and each Purchaser Affiliate is legally, financially and otherwise qualified to be the assignee of the FCC Licenses, and no waivers shall be required by the FCC for the consummation of the transactions contemplated hereby or the grant of the FCC Assignment Order. To Purchaser's knowledge, there are no facts or proceedings which would reasonably be expected (a) to disqualify Purchaser under the Communications Act or otherwise from holding the FCC Licenses, (b) to cause the FCC to flag the FCC Application and/or initiate a review of the potential effects on competition and/or diversity of the transaction, or (c) to cause the FCC not to approve the assignment of the FCC Licenses to Purchaser.

6.6.2. To the knowledge of Purchaser, Purchaser or any Purchaser Affiliate shall not be required to sell, dispose of or surrender any FCC license held by Purchaser or any such Purchaser Affiliate with respect to any broadcast properties, or any other properties or businesses of Purchaser or such Purchaser Affiliate, as may be required under the Communications Act or the antitrust laws in order to consummate the sale and purchase of the Purchased Assets contemplated by this Agreement.

6.7. FINANCIAL ABILITY.

Purchaser has, and on the Closing Date will have, cash available that is sufficient to enable Purchaser or a Purchaser Affiliate to consummate the transactions contemplated by this Agreement.

ARTICLE 7.
CERTAIN COVENANTS AND AGREEMENTS

7.1. REGULATORY APPROVALS.

7.1.1. No later than three (3) Business Days after the date hereof, Seller and Purchaser shall jointly cause to be filed by Seller's FCC counsel one or more applications with the FCC requesting its consent to the assignment of the FCC Licenses from Seller to a Purchaser Affiliate, which applications are attached hereto at Exhibit B (the "FCC Application"). Each party shall pay its own expenses in connection with the preparation and prosecution of the FCC Application and shall share equally any filing fees associated with the FCC Application.

7.1.2. Upon the terms and subject to the conditions set forth in this Agreement, Seller and Purchaser shall each use their respective commercially reasonable efforts to promptly (a) take, or to cause to be taken, all actions, and to do, or to cause to be done, and to assist and

cooperate with the other parties in doing all things proper or advisable under applicable Law or otherwise to consummate and make effective the transactions contemplated by this Agreement; (b) obtain from any Governmental Authority or other Person any actions, non-actions, clearances, waivers, consents, approvals, permits or Orders required to be obtained by Seller, Purchaser or any of their respective Affiliates in connection with the authorization, execution, delivery and performance of this Agreement, the consummation of the other transactions contemplated hereby and thereby and the assignment of the FCC Licenses from Seller to a Purchaser Affiliate; (c) furnish all information required for any application or other filing to be made pursuant to any applicable Law or any applicable regulations of any Governmental Authority in connection with the transactions contemplated by this Agreement, including filings in connection with the FCC Application, and to supply promptly any additional information and documentary material that may be requested in connection with such filings or applications; (d) avoid the entry of, or have vacated or terminated, any Order that would restrain, prevent or delay the Closing or the FCC Assignment Order, including defending against and opposing any lawsuits or other proceedings (including any FCC reconsideration or review), whether judicial or administrative, reviewing or challenging this Agreement, the consummation of the other transactions contemplated hereby and thereby or the assignment of the FCC Licenses from Seller to a Purchaser Affiliate. No party to this Agreement shall consent to any voluntary delay of the assignment of the FCC Licenses from Seller to a Purchaser Affiliate or the consummation of the other transactions contemplated hereby at the behest of any Governmental Authority or other Person without the consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed.

7.1.3. Notwithstanding anything in this Agreement to the contrary, if the Closing occurs before the FCC Assignment Order becomes a Final Order, the terms of Section 7.1.2 shall survive the Closing until the FCC Assignment Order becomes a Final Order; provided, however that such terms shall only survive as applied to actions relating to the obtaining of the FCC Assignment Order and such FCC Assignment Order becoming a Final Order. No assignment of the FCC Licenses shall occur prior to obtaining the FCC Assignment Order.

7.2. THIRD PARTY CONSENTS AND NOTICES.

7.2.1. The consummation of this Agreement is subject to and contingent upon Seller obtaining the Third Party Consents for the Assumed Leases, which Third Party Consents shall be substantially in the form of the Consent to Assignment of Lease and Estoppel Agreement attached as Exhibit C hereto. As promptly as practicable after the date of this Agreement, Seller will use its commercially reasonable efforts to obtain all other Third Party Consents, each of which shall be in a form reasonably satisfactory to Purchaser. None of the Third Party Consents shall provide for any increase in cost or other change in terms and conditions after the Closing which would be materially adverse to Purchaser.

7.2.2. If any Third Party Consent has not been obtained prior to Closing, and prior to Closing an Alternative Arrangement has been obtained with respect to the Assumed Contract to which such Third Party Consent pertains (in each case, a "Deferred Contract"), then Seller shall retain, until such time as such Third Party Consent shall have been obtained by Seller, all rights to and liabilities under the Deferred Contract. Until the assignment of the Deferred Contract, (a) Seller shall continue to use commercially reasonable efforts and Purchaser shall cooperate

with Seller to obtain all required consents or approvals to remove any other impediments to such assignment, and (b) Seller shall cooperate with Purchaser (and Purchaser shall cooperate with Seller) in any lawful arrangement to provide (to the extent permitted without breach of such Deferred Contract) that Purchaser shall receive the benefits of such Deferred Contract after the Closing Date to the same extent, and without any additional cost or expense to Purchaser, as if such Deferred Contract had been assigned to Purchaser (such arrangement, an "Alternative Arrangement"). To the extent that Purchaser receives such benefits, Purchaser shall assume Seller's Liabilities thereunder arising on or after the Closing Date with respect to such Alternative Arrangement and Purchaser shall perform any such obligations of Seller arising under such Alternative Arrangement. If, subsequent to the Closing, Seller shall obtain all required consents or approvals required to assign any Deferred Contract, the Deferred Contract for which consent or approval to assign has been obtained shall at that time be deemed to be conveyed, granted, bargained, sold, transferred, setover, assigned, released, delivered and confirmed to Purchaser and assumed by Purchaser, without need of further action by Seller or of further documentation except for notice from Seller to Purchaser that such consent or approval has been obtained; and from and after the effective date such Deferred Contract is assigned to Purchaser, (i) no party shall have any further liability under the Alternative Arrangement related thereto, and (ii) the Deferred Contract shall be deemed to be an Assumed Contract.

7.3. ACCESS TO INFORMATION.

From the date hereof until the Closing (upon reasonable notice to Seller), during normal business hours, Seller shall, and shall cause its officers, directors, employees, auditors and agents to, (a) afford the officers, employees and authorized agents and representatives of Purchaser reasonable access to the offices, properties, books and records of Seller to the extent related to the Purchased Assets, and (b) furnish to the officers, employees and authorized agents and representatives of Purchaser such additional information regarding the Purchased Assets as Purchaser may from time to time reasonably request in order to assist Purchaser in fulfilling its obligations under this Agreement and to facilitate the consummation of the transactions contemplated hereby; provided, however, that such investigation shall not unreasonably interfere with any of the businesses or operations of Seller or any Station.

7.4. PUBLIC ANNOUNCEMENTS.

Seller and Purchaser shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or the transactions contemplated herein and shall not issue any such press release or make any such public statement without the prior written consent of the other party, which shall not be unreasonably withheld; provided, however, that a party may, without the prior written consent of the other party, issue such press release or make such public statement as may be required by Law or any listing agreement with a national securities exchange to which Seller or Purchaser is a party if it has used all commercially reasonable efforts to consult with the other party and to obtain such party's consent but has been unable to do so in a timely manner.

7.5. ORDINARY COURSE OF BUSINESS.

7.5.1. During the period from the date hereof to the Closing Date, unless the prior

consent of Purchaser is first obtained, Seller shall cause the Stations to not knowingly take any action which would cause the conditions set forth in Section 7.1 and Section 7.2 not to be satisfied as of the Closing Date.

7.5.2. Seller shall not enter into or terminate any contract in an amount greater than $10,000 or for a term exceeding one year and to be assumed by Purchaser or a Purchaser Affiliate, or amend any provision of any contract in an amount greater than $10,000 or for a term exceeding one year and to be assumed by Purchaser, whether or not in the ordinary course of business, without the prior written consent of Purchaser, which consent will not be unreasonably withheld.

7.5.3. In the event a Station operates with less than the maximum effective radiated power authorized by the FCC or fails to broadcast programming for a period of more than thirty (30) consecutive minutes, Seller shall notify Purchaser promptly of such event and shall provide an explanation for such reduction in operating power.

7.6. CONTROL OF THE STATION.

Prior to the Closing, Purchaser shall not, directly or indirectly, control, supervise, direct, or attempt to control, supervise, or direct, the operations of the Stations; such operations, including complete control and supervision of all of the Stations programs, employees, and policies, shall be the sole responsibility of Seller until the Closing.

7.7. RISK OF LOSS.

Seller shall bear the risk of all damage to, loss of or destruction of any of the Purchased Assets between the date of this Agreement and the Closing Date. If any material portion of the Purchased Assets (other than items that are obsolete and not necessary for the continued operations of the Stations) shall suffer any material damage or destruction prior to the Closing Date, Seller shall promptly notify Purchaser in writing of such damage or destruction, shall promptly take all necessary steps to restore, repair or replace such assets at Seller's sole expense, and shall advise Purchaser in writing of the estimated cost to complete such restoration, repair or replacement and all amounts actually paid as of the date of the estimate. If necessary and provided that Seller is diligently pursuing such restoration, repair or replacement, the Closing Date shall be extended for a period not exceeding ninety (90) days to accomplish such restoration, repair or replacement. If such restoration, repair or replacement is not accomplished prior to the Closing Date, as the same may be extended as provided herein, Purchaser shall have the right, at its option, to proceed with to Closing upon Seller placing in escrow an amount equal to One Hundred Fifty percent (150%) of the estimated cost of restoration, repair or replacement to be completed. Said escrow shall be used to pay all costs of restoration, repair or replacement of the Purchased Assets and the balance of funds remaining in escrow at the completion of all restoration, repair or replacement, if any, shall be returned to Seller.

7.8. COLLECTION OF RECEIVABLES.

Seller shall collect its own Accounts Receivable.

7.9. EMPLOYEE RELATED MATTERS.

Purchaser and Seller agree that all Employees of Seller are the responsibility of Seller and Purchaser shall assume no Liabilities with respect to any Employees of Seller.

ARTICLE 8.
CONDITIONS TO PURCHASER'S CLOSING

The obligations of Purchaser to purchase the Purchased Assets and to proceed with the Closing are subject to the satisfaction (or waiver in writing by Purchaser) at or prior to the Closing of each of the following conditions:

8.1. REPRESENTATIONS AND WARRANTIES.

The representations and warranties of Seller contained in this Agreement shall be true and correct as of the Closing Date with the same effect as though made at such time (except as contemplated or permitted by this Agreement). If as of the Closing, any of the warranties contained in this Agreement are untrue, then upon notice to Seller given on or before the Closing, Purchaser may terminate this Agreement, except in all cases where the failure of any representation or warranty to be true and correct would not have a Material Adverse Effect.

8.2. COVENANTS.

Seller shall have performed in all material respects the covenants and agreements contained in this Agreement that are to be performed by Seller at or prior to the Closing.

8.3. PRIMARY BROADCAST LICENSES.

The FCC primary broadcast licenses of the Stations shall contain no adverse modifications of the terms of such authorizations as they exist as of the date of this Agreement.

8.4. FCC ASSIGNMENT ORDER.

The FCC Assignment Order shall be in full force and effect and be a Final Order.

8.5. FCC RENEWAL ORDERS.

The FCC Renewal Orders shall be in full force and effect and be Final Orders.

8.6. NO ORDERS.

No Order or temporary, preliminary or permanent injunction or restraining order shall have been entered by any Governmental Authority which expressly prohibits or materially restrains the transactions contemplated by this Agreement.

8.7. THIRD PARTY CONSENTS.

All Third Party Consents shall have been obtained without the imposition of any conditions materially adverse to Purchaser; provided, that if an Alternative Arrangement has been entered into in lieu of the receipt of any such Third Party Consent for an Assumed Contract as contemplated by Section 7.2.2, no consents or approvals with respect to such Assumed Contract shall be required to be obtained under this Section 8.7.

8.8. MATERIAL ADVERSE EFFECT.

No circumstance or event causing a Material Adverse Effect shall have occurred after the date of this Agreement which as not been cured by Seller as of the Closing Date.

8.9. CLOSING DELIVERIES.

Purchaser shall have received the executed Ancillary Agreements and each of the other documents or items required to be delivered to it pursuant to
Section 10.1 hereof.

8.10. TITLE TO OWNED TRANSMITTER SITE.

8.10.1. Prior to the Closing Date, Purchaser shall obtain a current commitment for title insurance dated on or after the date hereof in the amount of the Purchase Price issued by Chicago Title Insurance Company (the "TITLE INSURER" showing title to the Owned Transmitter Site in Seller, and subject only to the Permitted Exceptions, with extended coverage over the general exceptions contained in such commitment, and with a survey, contiguity (if applicable), separate tax parcel, acreage and such other endorsements as Purchaser deems necessary (the "TITLE COMMITMENT"). If a separate price has not been allocated to the Owned Transmitter Site within such thirty (30) day period, the Seller shall have the Title Commitment updated with the correct Purchase Price for the Owned Transmitter Site at the time such allocation is made, in accordance with
Section 3.5.1 hereof. The Title Commitment shall be evidence of title as therein shown as to all matters insured by the owner's title insurance policy. All costs, fees and premiums for said title insurance required in this Section 8.10.1 shall be the liability of the Purchaser.

8.10.2. If the Title Commitment discloses liens, encumbrances, exceptions or defects in title other than the Permitted Exceptions ("UNPERMITTED EXCEPTIONS") the Seller, at the Seller's sole expense shall have until:

(a) fifteen (15) days prior to the Closing Date to cause the Title Insurer to waive the Unpermitted Exceptions off of the Title Commitment or commit to insure for the full amount of title insurance requested, against loss or damage that may be occasioned by the Unpermitted Exceptions, and give notice of same to the Purchaser; and/or

(b) the Closing to cure or remove the Unpermitted Exceptions from the land title or other public records by payment of money or otherwise and give notice of same to the Purchaser.

If the Seller fails to have the Title Insurer waive the Unpermitted Exceptions off of the Title Commitment or have a commitment from the Title Insurer for insurance over the Unpermitted Exceptions issued and give notice thereof to the Purchaser, or cure or remove from the public record(s) the Unpermitted Exceptions by payment of money or otherwise and give notice of same to the Purchaser, within such specified times, so that the title insurance is subject only to the Permitted Exceptions, then the Purchaser may terminate this Agreement or elect upon notice given to the Seller on or before the Closing to take title to the Owned Transmitter Site as it is then, with the right to deduct from and set off and credit against the Purchase Price the amount or value of any such of the Unpermitted Exceptions. If the Purchaser does not so elect and give notice, this Agreement shall terminate.

8.11. POSSESSION.

The Seller shall deliver or cause to be delivered to the Purchaser as of the Closing full, unencumbered, complete and unrestricted physical possession, occupancy, use, control and quiet and peaceable enjoyment of the Owned Transmitter Site. If the Seller does not perform pursuant to this Section 8.11, then upon notice to the Seller given on the Closing, the Purchaser may terminate this Agreement.

8.12. DAMAGE TO OR CONDEMNATION OF THE OWNED TRANSMITTER SITE.

If at any time prior to the Closing all or any portion of the improvements on the Owned Transmitter Site are destroyed or damaged as a result of fire or any cause whatsoever, or if any eminent domain or condemnation proceedings are threatened or initiated or notice of the initiation of any such eminent domain or condemnation proceedings is received by the Seller, the Seller shall promptly give notice thereof to the Purchaser. All risk of condemnation or loss to the Owned Transmitter Site by governmental taking or exercise of power of eminent domain and all risk of loss, damage, or destruction to the Owned Transmitter Site by fire or otherwise, prior to the Closing, shall be on and belong to the Seller. If, prior to the Closing, all or a portion of the Owned Transmitter Site is subjected to a bona fide threat or notification of condemnation, taking or exercise of power of eminent domain by any government, quasi-government, public utility or other entity having such power or is taken by eminent domain or condemnation (or sale in lieu thereof), or all or any portion of the Owned Transmitter Site is damaged or destroyed by fire, wind, storm, hail, explosion, or other casualty or cause whatsoever, then the Purchaser may terminate this Agreement.

8.13 Seller shall have obtained the written consent of the landlord agreeing to Purchaser's occupation and use of the studio located at 150 N. Michigan Avenue, Chicago, IL (leased by Seller for the operation of Stations WKIE, WKIF and WDKR.

ARTICLE 9.
CONDITIONS TO SELLER'S CLOSING

The obligations of Seller to sell, transfer, convey and deliver the Purchased Assets and to proceed with the Closing are subject to the satisfaction (or waiver in writing by Seller) at or prior to the Closing of the following conditions:

9.1. REPRESENTATIONS AND WARRANTIES.

The representations and warranties of Purchaser contained in this Agreement shall be true and correct as of the Closing Date with the same effect as though made at such time (except as contemplated or permitted by this Agreement), except in all cases where the failure of any representation or warranty to be true and correct would not prevent Purchaser from consummating this Agreement.

9.2. COVENANTS.

Purchaser shall have performed the covenants and agreements contained in this Agreement that are to be performed by Purchaser as of the Closing, except in all cases where the failure to perform such covenants and agreements would not prevent Purchaser from consummating this Agreement.

9.3. FCC ASSIGNMENT ORDER.

The FCC Assignment Order shall be in full force and effect and be a Final Order.

9.4. FCC RENEWAL ORDERS.

The FCC Renewal Orders shall be in full force and effect and be Final Orders.

9.5. NO ORDERS.

9.6. CLOSING DELIVERIES.

Seller shall have received the executed Ancillary Agreements and each of the other documents or items required to be delivered to it pursuant to Section 10.2 hereof.

ARTICLE 10.
DOCUMENTS TO BE DELIVERED AT CLOSING

10.1. DELIVERY BY SELLER.

At the Closing, Seller shall deliver to Purchaser the following:

10.1.1. Executed counterparts of the Ancillary Agreements and each of the other documents or items required to be delivered to Purchaser.

10.1.2. The Business Records.

10.1.3. Executed Third Party Consents.

10.1.4. Executed counterpart of the joint instructions to Escrow Agent.

10.1.5. All documents, if any, required by law or the Title Insurer for consummating the purchase and sale of the Owned Transmitter Site.

10.1.6. All applicable real estate transfer tax declarations or affidavits related to the purchase and sale of the Owned Transmitter Site, as required by law.

10.1.7. All keys and other means of access to the Owned Transmitter Site, all books and records of the Owned Transmitter Site, and all other indicia of ownership of the Owned Transmitter Site.

10.1.8. Completed and executed Non-Foreign Person Affidavit for purposes of complying with the documentation and evidentiary standards of the Foreign Investment in Real Property Tax Act, IRC Section 1445, as amended, and the regulations thereunder and establishing that the Seller is not a "foreign person" (as defined therein).

10.1.9. Such other instruments and documents as may be reasonably requested by Purchaser to effectuate the transaction contemplated herein.

10.2. DELIVERY BY PURCHASER.

At the Closing, Purchaser shall deliver to Seller the following:

10.2.1. The Purchase Price in the amount and manner set forth in Section 3.1.

10.2.2. Executed counterparts of the Ancillary Agreements and each of the other documents or items required to be delivered to Seller.

10.2.3. Executed counterpart of the joint instructions to Escrow Agent.

10.2.4. Such other instruments and documents as may reasonably requested by Seller to effectuate the transactions contemplated hereby.

ARTICLE 11.
TERMINATION

11.1. TERMINATION.

This Agreement may be terminated by the mutual written agreement of Purchaser and Seller, or, if the terminating party is not then in material breach of its obligations hereunder, upon written notice as follows:

11.1.1. by Purchaser if Seller is in material breach of its obligations hereunder, such that the conditions set forth in Section 8.1 and Section 8.2 would not be satisfied as of the Closing, and such breach has not been cured by Seller within thirty (30) days of written notice of such breach (or such longer period of time if the breach cannot be reasonably cured within thirty (30) days and Seller is diligently attempting to cure such breach);

11.1.2. by Seller if Purchaser is in material breach of its obligations hereunder, such that the conditions set forth in Section 9.1 and Section 9.2 would not be satisfied as of the Closing, and such breach has not been cured by Purchaser within thirty (30) days of written notice of such breach (or such longer period of time if the breach cannot be reasonably cured within thirty
(30) days and Purchaser is diligently attempting to cure such breach);

11.1.3. by either Purchaser or Seller if the FCC denies the FCC Application in an order that has become a Final Order, or has designated the FCC Application for a hearing; or

11.1.4. by either Purchaser or Seller if the Closing has not occurred on or before such date which is twelve (12) months after the date of this Agreement (the "Termination Date").

11.2. EFFECT OF TERMINATION.

In the event of termination of this Agreement pursuant to Section 11.1 above, all rights and obligations of the parties under this Agreement shall terminate without any liability of any party to any other party (except for any liability of any party for any material breach of this Agreement, in which case any non-breaching party shall have all rights and remedies available at law or in equity). In the event of such termination, the Escrow Deposit shall be returned to Purchaser. Notwithstanding anything to the contrary contained herein, the provisions of Section 14.4 shall expressly survive the termination of this Agreement.

ARTICLE 12.
DISBURSEMENT OF DEPOSIT

12.1. FAILURE TO CLOSE WITHOUT FAULT.

In the event that (i) each of the parties hereto shall have satisfied in full all of the obligations of such party under this Agreement which were to have been satisfied by such party prior to the Closing Date and shall not have breached in any material respect any representation, warranty, covenant or agreement of such party contained in this Agreement, but (ii) the closing shall nevertheless fail to take place (without any fault on the part of any party) prior to the Termination Date because one or more conditions to the closing in Article 8 and Article 9 hereof shall not have been satisfied or waived, and this Agreement has been terminated, the Deposit, together with any interest earned thereon, shall be returned to Purchaser.

12.2. DISBURSEMENT OF DEPOSIT TO SELLER.

If the conditions to closing specified in Article 8 and Article 9 hereof shall have been satisfied and either (i) Purchaser shall default in the performance of any of its material obligations or materially breach any of its representations, warranties, covenants or agreements hereunder and Seller shall have performed all of its material obligations and shall not have materially breached any of its representations, warranties, covenants or agreements hereunder, or (ii) (1) pursuant to the terms of this Agreement, Purchaser shall be obligated to purchase the Stations Assets, (2) Seller shall have duly satisfied each of the conditions of Article 9 above to be satisfied by it (or, in the case of any such condition which is to be satisfied at the Closing, shall have demonstrated a willingness and ability to satisfy such condition in the event the

Closing were to take place), except to the extent that any failure to satisfy such condition was caused in any material respect by Purchaser, and (3) Purchaser shall nevertheless fail to purchase the Stations Assets in accordance herewith, in the event Seller terminates this Agreement, the Deposit, together with any interest earned thereon, shall be disbursed to Seller as liquidated damages in accordance with the terms of the Escrow Agreement. The parties agree that such disbursement of the Deposit is not a penalty and is a reasonable estimation of damages actually incurred.

12.3. RETURN OF DEPOSIT TO PURCHASER.

If the conditions to closing specified in Article 8 and Article 9 hereof shall have been satisfied and either (i) Seller shall default in the performance of its material obligations or materially breach any of its representations, warranties, covenants or agreements hereunder and Purchaser shall have performed all of its material obligations and shall not have materially breached any of its representations, warranties, covenants or agreements hereunder, or (ii) (1) pursuant to the terms of this Agreement, Seller shall be obligated to sell the assets and properties hereunder to Purchaser, (2) Purchaser shall have duly satisfied each of the conditions of Article 8 above to be satisfied by it (or, in the case of any such condition which is to be satisfied at the closing, shall have demonstrated a willingness and ability to satisfy such condition in the event the closing were to take place), except to the extent that any failure to satisfy such condition was caused in any material respect by Seller, and (3) Seller shall nevertheless fail to sell the assets and properties to Purchaser in accordance herewith, in the event Purchaser terminates this Agreement, the Deposit, together with any interest earned thereon, shall forthwith be returned to Purchaser.

12.4. MUTUAL AGREEMENT.

In the event this Agreement is terminated by mutual agreement of Seller and Purchaser, the Deposit, together with any interest earned thereon, shall be delivered in accordance with the mutual agreement of the parties.

ARTICLE 13.
RIGHTS OF INDEMNIFICATION; DEFAULT

13.1. SELLER'S INDEMNIFICATION OF PURCHASER.

13.1.1. It is understood and agreed that Purchaser does not assume, and shall not be obligated to pay, any Liabilities of Seller under the terms of this Agreement or otherwise and shall not be obligated to perform any obligations of Seller of any kind or manner except the Assumed Contracts. Seller hereby agrees to indemnify and hold Purchaser, its successors and assigns, harmless from and against: (i) actions and Liabilities arising from the operation of the Stations prior to the Closing Date, including Actions and Liabilities arising or required to be performed prior to the Closing Date under any Contract assumed by Purchaser hereunder; (ii) any and all Losses resulting from a material misrepresentation, breach of warranty or nonfulfillment of a Contract on the part of Seller under this Agreement, arising out of events occurring prior to the Closing Date, or from a material misrepresentation in or omission from any certificate, Ancillary Agreement or other instrument furnished to Purchaser pursuant to this

Agreement, or in connection with any of the transactions contemplated hereby; and (iii) any and all Losses, including reasonable attorneys' fees, incurred by Purchaser as a result of Seller's failure or refusal to compromise or defend any Action incident to the foregoing provisions.

Notwithstanding the foregoing, Seller shall not be required to indemnify Purchaser under the foregoing clauses (i), (ii) or (iii) unless the aggregate amount owed by Seller to Purchaser pursuant to the foregoing clauses (i), (ii) and (iii) exceeds Fifty Thousand Dollars ($50,000.00), in which event Seller shall be required to indemnify Purchaser for the entire amount owed.

13.1.2. If any Action for which Purchaser is entitled to indemnity is asserted against Purchaser by a third party, Purchaser shall promptly give Seller notice thereof and give Seller an opportunity to defend the same with counsel of Seller's choice (subject to the approval of Purchaser, not to be unreasonably withheld or delayed) at Seller's expense. Purchaser, at Seller's expense, shall provide reasonable cooperation in connection with such defense. In the event that Seller desires to compromise or settle any such Action, Purchaser shall have the right to consent to such settlement or compromise; provided, however, that if such compromise or settlement is for money damages only and will include a full release and discharge of Purchaser, and Purchaser withholds its consent to such compromise or settlement, Purchaser and Seller agree that (i) Seller's liability shall be limited to the amount of the proposed settlement and, upon payment of such sum to Purchaser, Seller shall thereupon be relieved of any further liability with respect to such Action, and (ii) from and after such date, Purchaser will undertake all legal costs and expenses in connection with any such Action. If Seller fails to defend any Action within a reasonable time, Purchaser shall be entitled to assume the defense thereof, and Seller shall be liable to Purchaser for its expenses reasonably incurred, including attorneys' fees and payment of any settlement amount or judgment.

13.2. PURCHASER'S INDEMNIFICATION OF SELLER.

13.2.1. Purchaser hereby agrees to indemnify and hold Seller and its successors and assigns harmless from and against: (i) actions and Liabilities arising from the operation of the Stations on or after the Closing Date, including Actions arising or required to be performed on or after the Closing Date under any Contract assumed by Purchaser hereunder; (ii) any and all Losses resulting from a material misrepresentation, breach of warranty, nonfulfillment of any Contract, assumed or required to be assumed by Purchaser under this Agreement, or from a material misrepresentation in or omission from any certificate, Ancillary Agreement or other instrument furnished to Purchaser pursuant to this Agreement, or in connection with any of the transactions contemplated hereby; and (iii) any and all Losses, including reasonable attorneys' fees, incurred by Seller as the result of Purchaser's failure or refusal to defend or compromise any Action incident to any of the foregoing provisions.

Notwithstanding the foregoing, Purchaser shall not be required to indemnify Seller under the foregoing clauses (i), (ii) or (iii) unless the aggregate amount owed by Purchaser to Seller pursuant to the foregoing clauses (i), (ii) and (iii) exceeds Fifty Thousand Dollars ($50,000.00), in which event Purchaser shall be required to indemnify Seller for the entire amount owed.

13.2.2. If any Action covered by the foregoing indemnity is asserted against Seller by a third party, Seller shall notify Purchaser promptly and give Purchaser an opportunity to defend

the same with counsel of Purchaser's choice (subject to the approval of Seller, not to be unreasonably withheld or delayed) at Purchaser's expense. Seller, at Purchaser's expense, shall provide reasonable cooperation in connection with such defense. In the event that Purchaser desires to compromise or settle any such Action and such compromise will adversely affect Seller, Seller shall have the right to consent to such settlement or compromise; provided, however, that if such compromise or settlement is for money damages only and will include a full release and discharge of Seller, and Seller withholds its consent to such compromise or settlement, Purchaser and Seller agree that (i) Purchaser's liability shall be limited to the amount of the proposed settlement and, upon payment of such sum to Seller, Purchaser shall thereupon be relieved of any further liability with respect to such Action, and (ii) from and after such date, Seller will undertake all legal costs and expenses in connection with any such Actions. If Purchaser fails to defend any Action within a reasonable time, Seller shall be entitled to assume the defense thereof, and Purchaser shall be liable to Seller for its expenses reasonably incurred, including attorneys' fees and payment of any settlement amount or judgment.

13.3. CURE PERIOD.

In the event either party shall default in its obligations hereunder, such party shall have a period not to exceed fifteen (15) days after notice thereof by the other party in which to cure said default.

ARTICLE 14.
MISCELLANEOUS PROVISIONS

14.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

All representations, warranties, covenants and agreements contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date as though such representations, warranties, covenant and agreements were made on and as of such time, and all such representations warranties, covenants and agreements shall survive the Closing for a period of eighteen (18) months from the Closing Date; provided, however, neither party shall have any liability for a misrepresentation or breach of warranty unless written notice of claim specifying with particularity the facts upon which such claim is based has been given the other party within eighteen (18) months of the Closing Date.

14.2. SPECIFIC PERFORMANCE.

Seller acknowledges that the Purchased Assets and the transactions contemplated hereby are unique, that a failure by Seller to complete such transactions will cause irreparable injury to Purchaser, and that actual damages for any such failure may be difficult to ascertain and may be inadequate. Consequently, Seller and Purchaser agree that Purchaser shall be entitled, in the event of a default by Seller, to specific performance of any of the provisions of this Agreement in addition to any other legal or equitable remedies to which Purchaser may otherwise be entitled. In the event any action is brought, the prevailing party shall be entitled to recover court costs and reasonable attorneys' fees.

14.3. ADDITIONAL ACTIONS, DOCUMENTS AND INFORMATION.

Purchaser agrees that it will, at any time, prior to, at or after the Closing Date, take or cause to be taken such further actions, and execute, deliver and file or cause to be executed, delivered and filed such further documents and instruments and obtain such consents, as may be reasonably requested by Seller in connection with the consummation of the transactions contemplated by this Agreement. Seller agrees that it will, at any time, prior to, at or after the Closing Date, take or cause to be taken such further actions, and execute, deliver and file or cause to be executed, delivered and filed such further documents and instruments and obtain such consents, as may be reasonably requested by Purchaser in connection with the consummation of the transactions contemplated by this Agreement.

14.4. FEES AND EXPENSES.

Except as otherwise expressly provided in this Agreement, all fees and expenses, including fees and expenses of counsel, financial advisors, and accountants incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fee or expense, whether or not the Closing shall have occurred.

14.5. NOTICES.

All notices, demands, requests, or other communications which may be or are required to be given or made by any party to any other party pursuant to this Agreement shall be in writing and shall be hand delivered, mailed by first-class registered or certified mail, return receipt requested, postage prepaid, delivered by overnight air courier, or transmitted by facsimile transmission addressed as follows:

If to Seller:

Spanish Broadcasting System, Inc.
2601 South Bayshore Drive, PH II
Coconut Grove, Florida 33133

Attention: Raul Alarcon, Jr.

Telephone: (305) 441-6901

Facsimile: (305) 444-2179

with a copy (which shall not constitute notice) to:

Kaye Scholer LLP
901 15th Street, N.W.
Suite 1100
Washington, D.C. 20005
Attention: Jason L. Shrinsky, Esq.

Telephone: (202) 682-3506

Facsimile (202) 682-3580

If to Purchaser:

Newsweb Corporation
1645 West Fullerton Avenue Chicago, Illinois 60614
Attention: Charles Frank Gross, COO Telephone: (773) 975-0401
Facsimile: (773) 975-1301

with a copy (which shall not constitute notice) to:

Holland & Knight LLP
2099 Pennsylvania Avenue, NW Suite 100
Washington, DC 20006-6801 Attention: Edward W. Hummers, Jr.

Telephone: (202) 457-7145

Facsimile: (202) 955-5564

or such other address as the addressee may indicate by written notice to the other parties.

Each notice, demand, request, or communication which shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, the affidavit of messenger being deemed conclusive but not exclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.

14.6. WAIVER.

No delay or failure on the part of any party hereto in exercising any right, power or privilege under this Agreement or under any other instrument or document given in connection with or pursuant to this Agreement shall impair any such right, power or privilege or be construed as a waiver of any default or any acquiescence therein. No single or partial exercise of any such right, power or privilege shall preclude the further exercise of such right, power or privilege, or the exercise of any other right, power or privilege. No waiver shall be valid against any party hereto unless made in writing and signed by the party against whom enforcement of such waiver is sought and then only to the extent expressly specified therein.

14.7. BENEFIT AND ASSIGNMENT.

14.7.1. Except as to the assignments by Purchaser to Purchaser Affiliates (to which assignments Seller hereby consents), no party hereto shall assign this Agreement, in whole or in part, whether by operation of law or otherwise, without the prior written consent of the other party hereto.

14.7.2. Any purported assignment contrary to the terms hereof shall be null, void and of no force and effect. This Agreement shall be binding upon and shall inure to the benefit of the

parties hereto and their respective successors and assigns as permitted hereunder. No Person, other than the parties hereto, is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the parties hereto or their respective successors and assigns as permitted hereunder.

14.8. ENTIRE AGREEMENT; AMENDMENT.

This Agreement and the Escrow Agreement, including the Schedules and Exhibits hereto and thereto and the other instruments and documents referred to herein or therein or delivered pursuant hereto or thereto contain the entire agreement among the parties with respect to the subject matter hereof and supersede all prior oral or written agreements, commitments or understandings with respect to such matters. No amendment, modification or discharge of this Agreement shall be valid or binding unless set forth in writing and duly executed by the party or parties against whom enforcement of the amendment, modification or discharge is sought.

14.9. SEVERABILITY.

If any part of any provision of this Agreement or any other contract, agreement, document or writing given pursuant to or in connection with this Agreement shall be invalid or unenforceable under applicable law, such part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of such provisions or the remaining provisions of said contract, agreement, document or writing.

14.10. HEADINGS.

The headings of the sections and subsections contained in this Agreement are inserted for convenience only and do not form a part or affect the meaning, construction or scope thereof.

14.11. GOVERNING LAW; JURISDICTION.

This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed under and in accordance with the laws of the State of Illinois, without giving effect to the conflicts of law principles thereof. The parties hereto hereby waive personal service of any process in connection with any such action, suit or proceeding and agree that the service thereof may be made by certified or registered mail addressed to or by personal delivery to the other party, at such other party's address set forth pursuant to Section 14.5 hereof. In the alternative, in its discretion, any of the parties hereto may effect service upon any other party in any other form or manner permitted by law.

14.12. SIGNATURE IN COUNTERPARTS.

This Agreement may be executed in separate counterparts, none of which need contain the signatures of all parties, each of which shall be deemed to be an original, and all of which taken together constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than the number of counterparts containing the respective signatures of, or on behalf of, all of the parties hereto.

IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase Agreement as of the date first above written.

PURCHASER:

NEWSWEB CORPORATION

By:  /s/ Charles Frank Gross
     ----------------------------------
Name: Charles Frank Gross
Title: Senior Vice President & Chief
       Operating Officer

SELLER:

SPANISH BROADCASTING SYSTEM OF
ILLINOIS, INC.

By:  /s/ Raul Alarcon, Jr.
     -----------------------------------
Name: Raul Alarcon, Jr.
Title: President/Chief Executive Officer

ANNEX I
DEFINITIONS

"ACCOUNTS RECEIVABLE" shall mean all accounts receivable with respect to the Stations as of the end of the broadcast day immediately preceding the Closing Date.

"ACTION" shall mean any claim, action, suit, arbitration, opposition, inquiry, proceeding or investigation by or before any Governmental Authority.

"AFFILIATES" of a party shall mean persons or entities that directly, or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, such party.

"AGREEMENT" shall have the meaning set forth in the Preamble.

"ALTERNATIVE ARRANGEMENT" shall have the meaning set forth in Section 7.2.2.

"ANCILLARY AGREEMENTS" shall mean, collectively, the Assignment and Assumption of Contracts, Assignment and Assumption of Lease Agreements, Bill of Sale, Warranty Deed, Escrow Agreement, Studio Use License Agreement and all certificates executed or delivered by a Person pursuant to this Agreement and such Agreements.

"APPRAISAL FIRM" shall have the meaning set forth in Section 3.5.1.

"ASSIGNMENT AND ASSUMPTION OF CONTRACTS" shall mean the Assignment and Assumption of Contracts to be executed by Purchaser and Seller on the Closing Date in substantially the form attached as Exhibit D hereto.

"ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENTS" shall mean the Assignment and Assumption of Lease Agreements to be executed by Purchaser and Seller on the Closing Date in substantially the form attached as Exhibit E hereto.

"ASSUMED CONTRACTS" shall have the meaning set forth in Section 2.4.

"ASSUMED LEASES" shall have the meaning set forth in Section 2.3.

"BILL OF SALE" shall mean the Bill of Sale to be executed by Purchaser and Seller on the Closing Date in substantially the form attached as Exhibit F hereto.

"BUSINESS DAY" shall mean a day other than a Saturday, Sunday or other day on which commercial banks in Illinois are authorized or required by law to close.

"BUSINESS RECORDS" shall have the meaning set forth in Section 2.1.9.

"CALL LETTERS" shall have the meaning set forth in Section 2.1.8.

"CLOSING" shall have the meaning set forth in Section 3.3.

"CLOSING DATE" shall have the meaning set forth in Section 3.3.

"CODE" shall mean the Internal Revenue Code of 1986, as amended, and all Laws promulgated pursuant thereto or in connection therewith.

"COMMUNICATIONS ACT" shall mean the Communications Act of 1934, as amended and the rules, regulations, policies and orders promulgated thereunder, as in effect from time to time.

"CONSENT TO ASSIGNMENT OF LEASE AND ESTOPPEL AGREEMENTS" shall mean the Consent to Assignment of Lease and Estoppel Agreements to be executed with regard to the Leased Transmitter Sites and Studio Site substantially in the form attached as Exhibit C.

"CONTRACT" shall mean any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument.

"CONTROL" shall mean, as to any Person, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. The term "CONTROLLED" shall have a correlative meaning.

"DEFERRED CONTRACT" shall have the meaning set forth in Section 7.2.2.

"DEPOSIT" shall have the meaning set forth in Section 3.2.

"EMPLOYEE" shall mean an individual employed by Seller and primarily engaged in the operation of a Station.

"ENVIRONMENTAL INSPECTION PERIOD" shall have the meaning set forth in
Section 5.14.8.

"ENVIRONMENTAL LAWS" shall mean the applicable provisions of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, ("CERCLA"); 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101 et seq.; the Resource Conservation and Recovery Act ("RCRA"), as amended by the Solid Waste Disposal Act, 42 U.S.C. Section 6901; the Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C.
Section 7401 et seq.; Section 101(14) of the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. Section 9601(14); or any other applicable federal, state, or local laws relating to Hazardous Materials generation, production, use, storage, treatment, transportation or disposal, or the protection of the environment.

"EQUIPMENT WARRANTIES" shall have the meaning set forth in Section 2.1.10.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.

"ESCROW AGENT" shall have the meaning set forth in Section 3.2.

ESCROW AGREEMENT shall have the meaning set forth in Section 3.2.

"EXCLUDED ASSETS" shall have the meaning set forth in Section 2.2.

"EXCLUDED LIABILITIES" shall have the meaning set forth in Section 2.5.

"FCC" shall mean the Federal Communications Commission.

"FCC APPLICATION" shall have the meaning set forth in Section 7.1.1.

"FCC ASSIGNMENT ORDER" shall mean the FCC action (including action by the Media Bureau pursuant to delegated authority) consenting, without any condition materially adverse to Purchaser or Seller, to the assignment of the FCC Licenses from Seller to the appropriate Purchaser Affiliate.

"FCC LICENSES" shall have the meaning set forth in Section 2.1.1.

"FCC RENEWAL ORDER" shall mean the FCC action or actions (including action by the Media Bureau pursuant to delegated authority) granting the renewal of the license of each of the Stations.

"FINAL ORDER" shall mean that the FCC Assignment Order or FCC Renewal Order shall have become final, that is, that the time period for filing any protests or requests or petitions for stay, reconsideration, rehearing, review or appeal by the FCC or a court of competent jurisdiction of such order and the time period for the FCC or its staff to have taken any actions to reconsider or review such order shall have expired, and that no timely protest or request or petition for stay, reconsideration, rehearing, review or appeal by the FCC or a court of competent jurisdiction or action by the FCC or its staff to reconsider or review such order shall be pending.

"GOVERNMENTAL AUTHORITY" shall mean any court, arbitrator, department, commission, board, bureau, agency, authority, instrumentality or other body, whether federal, state, municipal, foreign or other.

"HAZARDOUS MATERIALS" shall mean any wastes, substances, or materials (whether solids, liquids or gases) that is listed, regulated or defined (a) as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. Section 300.5, or defined as such by, or regulated as such or (b) under any Environmental Law, including petroleum, oil or any derivative thereof, PCBs or asbestos.

"INSPECTION PERIOD" shall have the meaning set forth is Section 5.14.8.

"INTELLECTUAL PROPERTY" shall mean (a) all trademarks, service marks, trade names, Internet domain names, call signs, designs, logos, slogans, jingles and general intangibles of like kind, together with all goodwill, associated therewith, including any registrations and/or applications relating to the foregoing; (b) all patents and copyrights, including any registrations and/or applications relating to either of the foregoing; (c) all Internet web sites, content and databases; (d) all software; (e) all confidential information, technology, know how, inventions, processes, formulae, algorithms, models and methodologies; and (f) all Contracts with any third parties in respect of the foregoing.

"LAW" shall mean any federal, state, local or non-United States statute, law, ordinance, rule, regulation, code order or other requirement of law.

"LEASED TRANSMITTER SITES" shall have the meaning set forth in Section 2.1.3.

"LIABILITIES" shall mean, as to any Person, all debts, adverse claims, liabilities and obligations, direct, indirect, absolute or contingent of such Person, whether accrued, vested or otherwise, whether in contract, tort, strict liability or otherwise and whether or not actually reflected, or required by generally accepted accounting principles to be reflected, in such Person's balance sheets or other books and records.

"LIENS" shall mean, statutory or otherwise, mortgage, liens, security interests, claims, pledges, licenses, equities, options, conditional sales contracts, assessments, levies, charges or encumbrances of any nature whatsoever.

"LOSSES" shall mean any and all losses, damages, costs, costs of enforcement, expenses, Liabilities, obligations and claims of any kind (including any Action brought by any Governmental Authority or Person and including reasonable attorneys' and consultants' fees and expenses and other costs and expenses reasonably incurred in any investigation, remediation, defense or settlement).

"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the Purchased Assets taken as a whole, but shall specifically exclude any material adverse effect caused by (a) factors affecting the radio industry generally or the market in which the Stations operate or (b) general, national, regional or local economic or financial conditions; and provided that none of the following shall be deemed by itself or by themselves, either alone or in combination with one another, to constitute, create or cause a Material Adverse Effect: (i) the failure to achieve any financial targets, projections or milestones set forth in any Seller business plan or budget, or
(ii) liquidity or cash flow deficiencies affecting Seller's business, properties, assets, liabilities, financial condition, results of operations, properties or prospects.

"OFFICE EQUIPMENT" shall have the meaning set forth in Section 2.1.7.

"ORDER" shall mean any order, writ, injunction, judgment, plan or decree of any Governmental Authority.

"OWNED TRANSMITTER SITES" shall have the meaning set forth in Section 2.1.2.

"PERMITTED EXCEPTIONS" shall mean (a) real estate general property (ad valorem) taxes accrued but not due and payable as of the Closing; (b) acts and deeds done or suffered by the Purchaser affecting the Owned Transmitter Site;
(c) utility easements of record, not restricting or interfering with the Purchaser's intended improvement and development of the Owned Transmitter Site and which have not been encroached upon; (d) restrictions or rights granted to governmental authorities under applicable law to the extent not arising pursuant to any defaults thereunder; and (e) zoning, building, or similar restrictions relating to or affecting the Owned Transmitter Site which do not arise in connection with a violation of applicable law and do not limit the current use of the Owned Transmitter Site in any material respect.

"PERMITTED LIENS" shall mean (a) Liens for taxes not yet due and payable;
(b) landlord's Liens and Liens for property taxes not delinquent; (c) statutory Liens that were created in the ordinary course of business and which are not delinquent; (d) restrictions or rights granted to Governmental Authorities under applicable Law to the extent not arising pursuant to any defaults thereunder;
(e) zoning, building, or similar restrictions relating to or affecting property which do not arise in connection with a violation of applicable Law and do not limit the current use of the property in any material respect; (f) customary utility and similar easements affecting property; and (g) Liens for which a proration adjustment is made pursuant to Section 3.6 of this Agreement.

"PERSON" or "PERSON" shall mean any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization, other form of business or legal entity or Governmental Authority.

"PHASE I" shall have the meaning set forth in Section 5.14.8.

"PURCHASED ASSETS" shall have the meaning set forth in Section 2.1.

"PURCHASE PRICE" shall have the meaning set forth in Section 3.1.

"PURCHASER" shall have the meaning set forth in the Preamble.

"PURCHASER AFFILIATE" shall mean each Affiliate of Purchaser, as established by Purchaser, to be the licensee of each Station.

"REMEDIATION" shall have the meaning set forth in Section 5.14.9.

"SELLER" shall have the meaning set forth in the Preamble and shall include Seller Affiliates.

"SELLER AFFILIATES" shall have the meaning set forth in the Recitals.

"STATIONS" shall have the meaning set forth in the Recitals.

"STUDIO SITE" shall have the meaning set forth in Section 2.1.5.

"STUDIO USE LICENSE AGREEMENT" shall mean the Studio Use License Agreement to be executed by Purchaser and Seller on the Closing Date in substantially the form attached as Exhibit G hereto.

"TAXES" shall mean all federal, state and local taxes (including income, profit, franchise, sales, use, real property, personal property, ad valorem, excise, employment, social security and wage withholding taxes) and installments of estimated taxes, assessments, deficiencies, levies, imports, duties, license fees, registration fees, withholdings, or other similar charges of every kind, character or description imposed by any Governmental Authorities.

"TERMINATION DATE" shall have the meaning set forth in Section 11.1.4.

"THIRD PARTY CONSENTS" shall have the meaning set forth in Section 5.24.

"TITLE COMMITMENT" shall have the meaning set forth in Section 8.10.

"TITLE INSURER" shall have the meaning set forth in Section 8.10.

"TRADEOUT AGREEMENT" shall mean any Contract of Seller, oral or written, pursuant to which Seller has agreed to sell or trade commercial air time or commercial production services of the Stations in consideration for any property or services in lieu of or in addition to cash.

"TRANSMITTER SITES" shall have the meaning set forth in Section 2.1.3.

"UNPERMITTED EXCEPTIONS" shall have the meaning set forth in Section 8.10.2.

"WARRANTY DEED" shall mean a recordable warranty deed, in customary form, consistent with statutory requirements, that provides for return thereof to grantee therein after recording, free and clear of all liens, encumbrances, exceptions and defects except and subject to only the Permitted Exceptions.

TABLE OF CONTENTS

                                                                                    PAGE NOS.
ARTICLE 1. DEFINITIONS AND REFERENCES...........................................         1
ARTICLE 2. PURCHASE AND SALE....................................................         1
     2.1.           PURCHASE AND SALE OF ASSETS.................................         1
     2.2.           EXCLUDED ASSETS.............................................         3
     2.3.           ASSUMED LEASES..............................................         4
     2.4.           ASSUMED CONTRACTS...........................................         5
     2.5.           EXCLUDED LIABILITIES........................................         5
ARTICLE 3. PURCHASE PRICE; CLOSING..............................................         5
     3.1.           PURCHASE PRICE..............................................         5
     3.2.           ESCROW DEPOSIT..............................................         6
     3.3.           TIME OF CLOSING.............................................         6
     3.4.           CLOSING PROCEDURES..........................................         6
     3.5.           ALLOCATION OF PURCHASE PRICE................................         6
     3.6.           PRORATIONS..................................................         7
ARTICLE 4. USE OF STUDIOS.......................................................         8
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLER.............................         9
     5.1.           ORGANIZATION; GOOD STANDING.................................         9
     5.2.           PERFORMANCE OF SELLER AFFILIATES............................         9
     5.3.           DUE AUTHORIZATION...........................................         9
     5.4.           EXECUTION AND DELIVERY......................................         9
     5.5.           GOVERNMENTAL APPROVALS......................................        10
     5.6.           TITLE TO PERSONAL PROPERTY..................................        10
     5.7.           LEASED TRANSMITTER SITES AND STUDIO SITE....................        10
     5.8.           TANGIBLE PERSONAL PROPERTY..................................        10
     5.9.           FCC LICENSES................................................        11
     5.10.          COMPLIANCE WITH LAW.........................................        11
     5.11.          REPORTS.....................................................        11
     5.12.          TAXES.......................................................        11
     5.13.          OWNED TRANSMITTER SITE......................................        12
     5.14.          ENVIRONMENTAL MATTERS.......................................        13
     5.15.          LITIGATION..................................................        15

     5.16.          ASSUMED CONTRACTS AND ASSUMED LEASES........................        15
     5.17.          PUBLIC INSPECTION FILES.....................................        15
     5.18.          BUSINESS RECORDS............................................        15
     5.19.          UNION ACTIVITY..............................................        16
     5.20.          EMPLOYEE BENEFITS...........................................        16
     5.21.          INTELLECTUAL PROPERTY.......................................        16
     5.22.          INSURANCE...................................................        16
     5.23.          ALL ASSETS..................................................        16
     5.24.          THIRD PARTY CONSENTS........................................        16
     5.25.          FINDERS AND BROKERS.........................................        17
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................        17
     6.1.           ORGANIZATION AND GOOD STANDING..............................        17
     6.2.           DUE AUTHORIZATION...........................................        17
     6.3.           EXECUTION AND DELIVERY......................................        17
     6.4.           CONSENTS....................................................        17
     6.5.           FINDERS AND BROKERS.........................................        18
     6.6.           PURCHASER'S QUALIFICATION...................................        18
     6.7.           FINANCIAL ABILITY...........................................        18
ARTICLE 7. CERTAIN COVENANTS AND AGREEMENTS.....................................        18
     7.1.           REGULATORY APPROVALS........................................        18
     7.2.           THIRD PARTY CONSENTS AND NOTICES............................        19
     7.3.           ACCESS TO INFORMATION.......................................        20
     7.4.           PUBLIC ANNOUNCEMENTS........................................        20
     7.5.           ORDINARY COURSE OF BUSINESS.................................        20
     7.6.           CONTROL OF THE STATION......................................        21
     7.7.           RISK OF LOSS................................................        21
     7.8.           COLLECTION OF RECEIVABLES...................................        21
     7.9.           EMPLOYEE RELATED MATTERS....................................        22
ARTICLE 8. CONDITIONS TO PURCHASER'S CLOSING....................................        22
     8.1.           REPRESENTATIONS AND WARRANTIES..............................        22
     8.2.           COVENANTS...................................................        22
     8.3.           PRIMARY BROADCAST LICENSES..................................        22
     8.4.           FCC ASSIGNMENT ORDER........................................        22
     8.5.           FCC RENEWAL ORDERS..........................................        22
     8.6.           NO ORDERS...................................................        22

     8.7.           THIRD PARTY CONSENTS........................................        23
     8.8.           MATERIAL ADVERSE EFFECT.....................................        23
     8.9.           CLOSING DELIVERIES..........................................        23
     8.10.          TITLE TO OWNED TRANSMITTER SITE.............................        23
     8.11.          POSSESSION..................................................        24
     8.12.          DAMAGE TO OR CONDEMNATION OF THE OWNED TRANSMITTER SITE.....        24
ARTICLE 9. CONDITIONS TO SELLER'S CLOSING.......................................        24
     9.1.           REPRESENTATIONS AND WARRANTIES..............................        25
     9.2.           COVENANTS...................................................        25
     9.3.           FCC ASSIGNMENT ORDER........................................        25
     9.4.           FCC RENEWAL ORDERS..........................................        25
     9.5.           NO ORDERS...................................................        25
     9.6.           CLOSING DELIVERIES..........................................        25
ARTICLE 10. DOCUMENTS TO BE DELIVERED AT CLOSING................................        25
     10.1.          DELIVERY BY SELLER..........................................        25
     10.2.          DELIVERY BY PURCHASER.......................................        26
ARTICLE 11. TERMINATION.........................................................        26
     11.1.          TERMINATION.................................................        26
     11.2.          EFFECT OF TERMINATION.......................................        27
ARTICLE 12. DISBURSEMENT OF DEPOSIT.............................................        27
     12.1.          FAILURE TO CLOSE WITHOUT FAULT..............................        27
     12.2.          DISBURSEMENT OF DEPOSIT TO SELLER...........................        27
     12.3.          RETURN OF DEPOSIT TO PURCHASER..............................        28
     12.4.          MUTUAL AGREEMENT............................................        28
ARTICLE 13. RIGHTS OF INDEMNIFICATION; DEFAULT..................................        28
     13.1.          SELLER'S INDEMNIFICATION OF PURCHASER.......................        28
     13.2.          PURCHASER'S INDEMNIFICATION OF SELLER.......................        29
     13.3.          CURE PERIOD.................................................        30
ARTICLE 14. MISCELLANEOUS PROVISIONS............................................        30
     14.1.          SURVIVAL OF REPRESENTATIONS AND WARRANTIES..................        30
     14.2.          SPECIFIC PERFORMANCE........................................        30
     14.3.          ADDITIONAL ACTIONS, DOCUMENTS AND INFORMATION...............        31
     14.4.          FEES AND EXPENSES...........................................        31
     14.5.          NOTICES.....................................................        31
     14.6.          WAIVER......................................................        32

14.7.          BENEFIT AND ASSIGNMENT......................................        32
14.8.          ENTIRE AGREEMENT; AMENDMENT.................................        33
14.9.          SEVERABILITY................................................        33
14.10.         HEADINGS....................................................        33
14.11.         GOVERNING LAW; JURISDICTION.................................        33
14.12.         SIGNATURE IN COUNTERPARTS...................................        33

Exhibit 31.1

CERTIFICATION

I, Raul Alarcon, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Spanish Broadcasting System, Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 9, 2004



                                   /s/   Raul Alarcon, Jr.
                                   --------------------------------------------
                                   Name:  Raul Alarcon, Jr.
                                   Title: Chairman of the Board of  Directors,
                                          Chief Executive Officer and President

Exhibit 31.2

CERTIFICATION

I, Joseph A. Garcia, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Spanish Broadcasting System, Inc;

(c) disclosed in this report any change in the registrant's internal control over financial reporting that occured during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 9, 2004



                                   /s/   Joseph A. Garcia
                                   --------------------------------------------
                                   Name:  Joseph A. Garcia
                                   Title: Chief Financial Officer,
                                          Executive Vice President and
                                          Secretary

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Spanish Broadcasting System, Inc. (the "Company") for the period ended June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Raul Alarcon, Jr., Chairman of the Board of Directors, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

                                   /s/   Raul Alarcon, Jr.
                                   --------------------------------------------
                                   Raul Alarcon, Jr.
                                   Chairman of the Board of Directors,
                                   President and Chief Executive Officer
August 9, 2004

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Spanish Broadcasting System, Inc. (the "Company") for the period ended June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Joseph A. Garcia, Chief Financial Officer, Executive Vice President and Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/   Joseph A. Garcia
--------------------------------------------
Joseph A. Garcia
Chief Financial Officer, Executive Vice
President and Secretary
August 9, 2004

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	•	the economic conditions within the radio broadcasting industry and economic conditions in general will not deteriorate in any material respect;

	•	we will continue to successfully implement our business strategy; and

	•	we will not incur any material unforeseen liabilities, including environmental liabilities.


	•	Our substantial amount of debt could adversely affect our financial condition and prevent us from fulfilling our obligations under our senior secured credit facilities and Series B preferred stock;

	•	We will require a significant amount of cash to service our debt and to make cash dividend payments under the Series B preferred stock after October 15, 2008;

	•	We may not have the funds to repay or the ability to refinance our senior secured credit facilities or 9 5/8% senior subordinated notes due 2009;

	•	Our ability to generate cash is affected by many factors beyond our control;

	•	Any acceleration of our debt or event of default would harm our business and financial condition;

	•	Despite our current significant level of debt, we and our subsidiaries may still be able to incur substantially more debt. This could further intensify some of the risks described above;

	•	The terms of our debt restrict us from engaging in many activities and require us to satisfy various financial tests;

	•	The terms of our debt and Series B preferred stock impose or will impose restrictions on us that may adversely affect our business;

	•	The restrictions imposed by our debt may prevent us from paying cash dividends on the Series B preferred stock after October 15, 2008 and exchanging the Series B preferred stock for exchange notes;

	•	We may not have the funds or the ability to raise the funds necessary to repurchase our Series B preferred stock if holders exercise their repurchase right, or to finance the change of control offer required by the Series B preferred stock;

	•	We may not complete the pending sales of our radio stations;

	•	We have experienced net losses in the past and, to the extent that we experience net losses in the future, the market price of our common stock may be adversely affected which in turn may adversely affect our ability to raise capital;

	•	Our operating results could be adversely affected by a national or regional recession;

	•	A large portion of our net revenue and station operating income currently comes from our New York, Los Angeles and Miami markets;

	•	Loss of any key personnel could adversely affect our business;

	•	Our long-term growth depends upon successfully executing our acquisition strategy;


	•	Raúl Alarcón, Jr., Chairman of the Board of Directors, Chief Executive Officer and President, has majority voting control and this control may discourage or influence certain types of transactions, including an actual or potential change of control of SBS such as a merger or sale of SBS;

	•	We compete for advertising revenue with other radio groups as well as television and other media, many operators of which have greater resources than we do;

	•	We must be able to respond to rapidly changing technology, services and standards which characterize our industry for us to remain competitive;

	•	Our business depends on maintaining our FCC licenses and we cannot assure you that we will be able to maintain these licenses;

	•	We may face regulatory review for additional acquisitions;

	•	The market price of our shares of Class A common stock may fluctuate significantly; and

	•	Current or future sales by existing or future stockholders could depress the market price of our Class A common stock.



	JOSEPH A. GARCíA
	Executive Vice President, Chief
	Financial Officer and Secretary (principal
	financial and accounting officer and duly
	authorized officer of the registrant)