STOCKHOLDERS' EQUITY:

9 Months Ended

Sep. 30, 2011

STOCKHOLDERS' EQUITY:

10. STOCKHOLDERS’ EQUITY:

Common Stock

The Company has four classes of common stock, Class A, Class B, Class C and Class D. Generally, the shares of each class are identical in all respects and entitle the holders thereof to the same rights and privileges. However, with respect to voting rights, each share of Class A common stock entitles its holder to one vote and each share of Class B common stock entitles its holder to ten votes. The holders of Class C and Class D common stock are not entitled to vote on any matters. The holders of Class A common stock can convert such shares into shares of Class C or Class D common stock. Subject to certain limitations, the holders of Class B common stock can convert such shares into shares of Class A common stock. The holders of Class C common stock can convert such shares into shares of Class A common stock. The holders of Class D common stock have no such conversion rights.

Stock Repurchase Program

In April 2011, the Company’s board of directors authorized a repurchase of shares of the Company’s Class A and Class D common stock (the “2011 Repurchase Authorization”). Under the 2011 Repurchase Authorization, the Company is authorized, but is not obligated, to repurchase up to $15 million worth of its Class A and/or Class D common stock prior to April 13, 2013. Repurchases will be made from time to time in the open market or in privately negotiated transactions in accordance with applicable laws and regulations. The timing and extent of any repurchases will depend upon prevailing market conditions, the trading price of the Company’s Class A and/or Class D common stock and other factors, and subject to restrictions under applicable law. The Company expects to implement this stock repurchase program in a manner consistent with market conditions and the interests of the stockholders, including maximizing stockholder value. For the three months ended September 30, 2011, the Company repurchased 29,316 shares of Class A common stock in the amount of approximately $41,000 at an average price of $1.39 per share and 706,093 shares of Class D common stock in the amount of approximately $965,000 at an average price of $1.37 per share. The Company continues to have an open stock repurchase authorization with respect to its Class A and D stock and continued to make purchases subsequent to September 30, 2011 (See Note 15 – Subsequent Events).

Stock Option and Restricted Stock Grant Plan

Under the Company’s 1999 Stock Option and Restricted Stock Grant Plan (“Plan”), the Company had the authority to issue up to 10,816,198 shares of Class D common stock and 1,408,099 shares of Class A common stock. The Plan expired March 10, 2009. The options previously issued under this plan are exercisable in installments determined by the compensation committee of the Company’s board of directors at the time of grant. These options expire as determined by the compensation committee, but no later than ten years from the date of the grant. The Company uses an average life for all option awards. The Company settles stock options upon exercise by issuing stock.

A new stock option and restricted stock plan (the “2009 Stock Plan”) was approved by the stockholders at the Company’s annual meeting on December 16, 2009. The terms of the 2009 Stock Plan are substantially similar to the prior Plan. The Company has the authority to issue up to 8,250,000 shares of Class D common stock under the 2009 Stock Plan. As of September 30, 2011, 4,820,717 shares of Class D common stock were available for grant under the 2009 Stock Plan.

The compensation committee and the non-executive members of the Board of Directors have approved a long-term incentive plan (the “2009 LTIP”) for certain “key” employees of the Company. The purpose of the 2009 LTIP is to retain and incent these “key” employees in light of sacrifices they have made as a result of the cost savings initiatives in response to economic conditions. These sacrifices included not receiving performance-based bonuses in 2008 and salary reductions and shorter work weeks in 2009 in order to provide expense savings and financial flexibility to the Company. The 2009 LTIP is comprised of 3,250,000 shares (the “LTIP Shares”) of the 2009 Stock Plan’s 8,250,000 shares of Class D common stock. Awards of the LTIP Shares were granted in the form of restricted stock and allocated among 31 employees of the Company, including the named executive officers. The named executive officers were allocated LTIP Shares as follows: (i) Chief Executive Officer (“CEO”) (1.0 million shares); (ii) the Chairperson (300,000 shares); (iii) the Chief Financial Officer (“CFO”) (225,000 shares); (iv) the Chief Administrative Officer (“CAO”) (225,000 shares); and (v) the President of the Radio Division (“PRD”) (130,000 shares). The remaining 1,370,000 shares were allocated among 26 other “key” employees. All awards will vest in three installments. The awards were granted effective January 5, 2010, the first installment of 33% vested on June 5, 2010 and the second installment vested on June 5, 2011. The remaining installment will vest on June 5, 2012. Pursuant to the terms of the 2009 Stock Plan, subject to the Company’s insider trading policy, a portion of each recipient’s vested shares may be sold into the open market for tax purposes on or about the vesting dates.

The Company follows the provisions under ASC 718, “Compensation - Stock Compensation,” using the modified prospective method, which requires measurement of compensation cost for all stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. These stock-based awards do not participate in dividends until fully vested. The fair value of stock options is determined using the Black-Scholes (“BSM”) valuation model. Such fair value is recognized as an expense over the service period, net of estimated forfeitures, using the straight-line method. Estimating the number of stock awards that will ultimately vest requires judgment, and to the extent actual forfeitures differ substantially from our current estimates, amounts will be recorded as a cumulative adjustment in the period the estimated number of stock awards are revised. We consider many factors when estimating expected forfeitures, including the types of awards, employee classification and historical experience. Actual forfeitures may differ substantially from our current estimate.

The Company also uses the BSM valuation model to calculate the fair value of stock-based awards. The BSM incorporates various assumptions including volatility, expected life, and interest rates. For options granted, the Company uses the BSM option-pricing model and determines: (i) the term by using the simplified “plain-vanilla” method as allowed under SAB No. 110; (ii) a historical volatility over a period commensurate with the expected term, with the observation of the volatility on a daily basis; and (iii) a risk-free interest rate that was consistent with the expected term of the stock options and based on the U.S. Treasury yield curve in effect at the time of the grant.

Stock-based compensation expense for the three months ended September 30, 2011 and 2010 was approximately $760,000 and $908,000 respectively and for the nine months ended September 30, 2011 and 2010 was approximately $2.9 million and $4.9 million, respectively.

The Company did not grant any stock options during the three months ended September 30, 2011 and 2010, respectively. The Company granted 181,520 and 39,430 stock options during the nine months ended September 30, 2011 and 2010, respectively.

	Three MonthsEnded September 30,				Nine Months Ended September 30,
	2011		2010		2011			2010
Average risk-free interest rate		—		—		2.23	%		3.28	%
Expected dividend yield		—		—		0.00	%		0.00	%
Expected lives		—		—	6.00 Years			6.25 Years
Expected volatility		—		—		120.7	%		111.3	%

Transactions and other information relating to stock options for the nine months ended September 30, 2011 are summarized below:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2010		4,999,000		$	9.40		—		—
Grants		182,000		$	1.38		—		—
Exercised		—			—		—		—
Forfeited/cancelled/expired		(52,000	)		15.81		—		—
Balance as of September 30, 2011		5,129,000		$	9.05		4.51		11,500
Vested and expected to vest at September 30, 2011		5,116,000		$	9.07		4.49		11,000
Unvested at September 30, 2011		128,000		$	1.75		9.36		4,600
Exercisable at September 30, 2011		5,001,000		$	9.24		4.38		6,900

The aggregate intrinsic value in the table above represents the difference between the Company’s stock closing price on the last day of trading during the nine months ended September 30, 2011 and the exercise price, multiplied by the number of shares that would have been received by the holders of in-the-money options had all the option holders exercised their options on September 30, 2011. This amount changes based on the fair market value of the Company’s stock. There were no options exercised during the three and nine months ended September 30, 2011 and 2010. There were no options that vested during the three months ended September 30, 2011 and 2010. The number of options that vested during the nine months ended September 30, 2011 and 2010 were 725,794 and 693,156, respectively.

As of September 30, 2011, approximately $139,000 of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 10.7 months. The stock option weighted-average fair value per share was $3.94 at September 30, 2011.

The Company granted 60,000 shares of restricted stock during the three months ended September 30, 2011 and did not issue any shares of restricted stock during the three months ended September 30, 2010. The Company granted 60,000 and 3,250,000 shares of restricted stock during the nine months ended September 30, 2011 and 2010, respectively.

Transactions and other information relating to restricted stock grants for the nine months ended September 30, 2011 are summarized below:

	Shares			Average Fair Value at Grant Date
Unvested at December 31, 2010		2,310,000		$	2.92
Grants		60,000		$	1.19
Vested		(1,221,000	)	$	2.85
Forfeited/cancelled/expired		(12,000	)	$	3.17
Unvested at September 30, 2011		1,137,000		$	2.91

The restricted stock grants were included in the Company’s outstanding share numbers on the effective date of grant. As of September 30, 2011, approximately $2.3 million of total unrecognized compensation cost related to restricted stock grants is expected to be recognized over the next 9.3 months.