Annual Reports 10K-1999

To Westwood One Shareholders:

I am pleased to report that, in the face of very unique and challenging circumstances, in 2001 Westwood One produced record operating results, virtually across the board. Despite an approximate 7% decrease in Net Revenues, Our Free Cash Flow -- which we define as net income plus depreciation and amortization, less capital expenditures -- rose 9% to a record $104.0 million in 2001 from $95.2 million in 2000. Our Free Cash Flow per share surged 13% to a record $.93 per fully-diluted share compared with 2000’s record of $.82 per fully-diluted share. Operating Cash Flow rose to a record $166.0 million in 2001 from $165.6 million in 2000. Net Income in 2001 was a record $43.2 million ($.38 per diluted share) compared with $42.3 million ($.36 per diluted share) in 2000.

Your Company posted these results in what was one of the most difficult business environments in recent memory, due to the slowdown in the advertising market, the perennial threat of competition from rival traffic information providers, the termination of Metro Networks/Shadow Broadcast Services affiliations as well as the impact of the tragic events of 9/11. The significant successes we achieved were the result of continuing to do what we do best -- creating and delivering quality programming and content to our radio and television affiliates, while focusing on new business development and controlling costs.

No single company delivers a greater number of programming choices to radio audiences across America than Westwood One. News, Music, Talk, Sports – our ability to deliver the best to the most is the cornerstone of our extraordinary popularity with listeners and our very profitable relationship with advertisers. Throughout 2001 your company built upon its long-standing position as the preeminent supplier of programming and content to radio stations, creating new programming opportunities while maximizing the power and potential of existing partnerships and franchises.

News: Westwood One is the single, largest provider of news content and programming to radio. Reaching over 50 million listeners every week, your Company represents the most recognized and reputable brands in the world, including CBS, CNN, FOX, NBC, MarketWatch, Metro Networks and Shadow Broadcast Services. In 2001 our already pre-eminent services to affiliates was improved importantly in a number of key areas. In it’s second year, FOX News Radio expanded beyond morning drive to include midday and afternoon newscasts. As the demand for its round-the-clock business and financial news continues to grow, the MarketWatch.com Radio Network passed a milestone in 2001 topping 200 affiliates across the US and increasing listenership 40%. Undersocring the quality of the news Westwood One delivered, in 2001, our networks received a number of prestigious industry awards, including the Edward R. Murrow Awards for Overall Excellence, The American Women in Radio and Television’s Gracie Award for outstanding coverage of Mideast Violence and The Writer’s Guild Award to CBS Radio News.

Sports: In sports programming, we culminated the 2000-2001 NFL season with our broadcast of Super Bowl XXXV on a record of over 400 radio stations nationwide. Westwood One’s regular season NFL broadcasts scored a 15% jump in overall audience. In Fall 2001 we made media history by being the first to put a woman in an NFL broadcast booth, when Lesley Visser joined our critically acclaimed Monday Night Football team of Howard David and Boomer Esiason. We also presented special guest announcers throughout the Monday Night Football season including: Mike Ditka, Don Shula, Bill Parcells and Warren Moon. In a special salute to the heroes of 9/11, we secured members of the FDNY, NYPD and PAPD as guests during the October 1, Monday Night Football broadcast of the NY Jets vs. San Francisco game from Giants Stadium.

Westwood One’s extensive 2001 sports programming schedule included our exclusive play-by-play coverage of NCAA football, Notre Dame Football, the National Hockey League regular season Game of the Week and Stanley Cup Championship, HBO Boxing and Wimbledon. Westwood One continued as the exclusive provider of the most prestigious golf events in the world, including the Masters and US Open golf with whom we announced a new multi-year deal. In 2001, we also finalized a new eleven year deal with the NCAA for radio rights to NCAA basketball including the Final Four Championship Tournament.

Music & Entertainment: Once again, courtesy of Westwood One, it was the sound of music all over America in 2001. We moved to consolidate our position as the radio industry leader in music and entertainment by renewing our agreement with MTV to produce and distribute MTV Radio Networks and extended the MTV brand with the launch of MTV’s Total Request Live Countdown for top 40 radio stations last spring and expanded to TRL Rhythmic for Urban radio stations last fall. We remained a duet with The Recording Academy as we signed a new multi-year agreement for Westwood One to continue as the Official Grammy Radio Network Worldwide. Last year, we produced and distributed Grammy content and coverage to over 2,500 stations. Westwood One’s roster of special features programming—askMartha (with Martha Stewart), The Osgood File and The Late Show with David Letterman Top Ten List--was enhanced with the launch of new features with Viacom’s top entertainment news program, Entertainment Tonight, with the ET Radio Minute with Mary Hart and their popular network, Comedy Central, with The Daily Show with Jon Stewart. Our commitment to presenting the best in long and short form music programming was highlighted with concert specials from top-grossing artists: Madonna, Britney Spears, The Backstreet Boys, Destiny’s Child, Martina McBride and BonJovi. Our VH-1 Radio Networks continued to provide unparalleled programming and content to radio, including the specials: VH-1 Divas, Rock n’ Roll Hall of Fame, VH1 Storytellers and VH1 Behind the Music.

Talk: In the high profile talk programming arena we complemented our already impressive roster of talent with the launch of two new shows in 2001: Laura Ingraham and Opie & Anthony. Now on over 200 radio stations, The Laura Ingraham Show has boken new ground by bringing a new, young audience demographic to nighttime talk radio and The Opie & Anthony Show’s irreverent comedy is gaining great momentum across the country. Following the events of 9/11, Westwood One’s helped inform and rally the nation. Imus in the Morning, Larry King Live, The Jim Bohannon Show, G. Gordon Liddy, The Laura Ingraham Show, The Tom Leykis Show, Troubleshooter Tom Martino, and The Don & Mike Show featured guest line-ups of outstanding public figures sharing their viewpoints and important facts about the events that plagued and continue to face our country. From America’s Mayor, Rudy Giuliani, to Secretary of Defense Donald Rumsfeld to listeners calling in from across America, Westwood One’s Talk Programs’ reputation for delivering excellent, quality grew exponentially.

In 2002, Westwood One’s commitment to creating innovative programming will continue with the announcement of The Radio Factor with Bill O’Reilly, the American Country Music Awards, the prestigious British Open Golf Tournament as well as a multi-year renewal with the NFL.

Our Metro Networks/Shadow Broadcast Services business – one of the nation’s largest providers of traffic, news and information services to radio and TV affiliates – is robust and growing. With an unparalleled infrastructure of reporters, fixed wing aircrafts, helicopters and operation centers, Metro/Shadow is equipped to gather and distribute traffic, news and information content to virtually anyone who needs via radio, television, Internet or wireless. Utilizing its vast network of resources, in 2001 Metro/Shadow was credited with breaking major news stories across the country and was live at the World Trade Center in New York, the Pentagon and in rural Pennsylvania within minutes of the September 11 attacks against America.

In 2001, the number of Metro Source and news affiliates broke the 1,000 radio station barrier with affiliations that included stations owned by all major radio group owners. Metro/Shadow TV services increased the number of television affiliates to over 200 with two key renewal agreements with WABC-TV and WNBC-TV in New York for the next five years as well as with Cablevision to be the exclusive provider of local traffic for all five of its Metro Traffic and Weather cable channels in the New York area.

A survey by the Texas Transportation Institute reveals that traffic congestion has reached new highs in just about every city across America. That’s bad news for drivers, but good news for Metro/Shadow’s traffic business. Our 2000 acquisition of the operating assets of SmartRoute Systems expanded the Company’s delivery of traffic information to local and state government agencies. In 2001, SmartRoute was awarded a five-year contract by the State of Florida Department of Transportation to create an advanced traveler information system for Miami-Dade, Broward and Palm Beach counties.

At Westwood One it is a matter of pride and principle that we use our vast resources to help those in need. This was never more important than in aftermath of 9/11, when we mobilized our Company to generate support across America to help rebuild and heal our communities.

As the preeminent voice of national news and exclusive distributor of CBS, CNN, FOX, NBC, MarketWatch, Metro Networks and Shadow Broadcast Services. Westwood One provided live continuous coverage, beginning the morning of 9/11. For the first 72 hours, we made all news products available to all radio stations—even non-affiliates. As a result, over 100 new news affiliates have been signed. Additionally, our Metro/Shadow unit provided listeners with critical information on the status of roadways and mass transit systems.

Westwood One also provided radio stations across America with a simulcast of the historic broadcast of America: A Tribute to Heroes. Broadcast partners CBS, ABC, NBC and FOX, together with more than 30 additional broadcast and cable entities and 8,000 radio stations, raised over $150 million for 9/11 relief efforts. Additionally, we simulcast two star-studded VH1 benefit concerts on October 20 and 21.

Westwood One’s popular Talk programs -- Imus in the Morning, Larry King Live, The Jim Bohannon Show, G. Gordon Liddy, The Laura Ingraham Show, The Tom Leykis Show, Troubleshooter Tom Martino, and The Don & Mike Show – all rallied around following 9/11, featuring guest line-ups of outstanding public figures sharing their viewpoints and important facts about the events that September 11 attacks and their impact on the nation.

Charitable organizations that are the beneficiaries of Westwood One’s giving (for 9/11 relief and other causes) include:

Westwood One employees did a spectacular job responding to the tremendous challenges that we faced in 2001. As the economy improves and revenues begin to increase, we will take advantage of our operating leverage to create even greater value for our shareholders.

In closing, I would like to thank all of our employees for their dedication and hard work, our Board of Directors for the extraordinary value of their counsel, and you, our shareholders, for your continued support.