e10vq

Derivative Instruments Not

Designated as Hedging

Liability Fair Value at

Instruments

Balance Sheet Location

September 30, 2009

Interest rate swap agreements

Other non-current liabilities

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 September 30, 2009


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 000-29079

REGENT COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		31-1492857

(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2000 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202

(Address of Principal Executive Offices) (Zip Code)

(513) 651-1190

(Registrant’s Telephone Number, including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company þ
		(Do not check if a smaller reporting company)

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

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

Common Stock, $.01 par value — 42,297,341 shares outstanding as of November 5, 2009

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Broadcast revenues, net of agency commissions	$	21,811		$	25,328		$	62,840		$	72,643

Station operating expenses		14,565			15,299			43,269			46,534
Depreciation and amortization		923			1,075			2,897			3,120
Corporate general and administrative expenses		2,609			1,636			6,568			5,441
Impairment of indefinite-lived intangible assets and goodwill		—			67,522			31,800			67,522
Loss (gain) on sale of stations, long-lived assets and other		66			(39	)		(13	)		(510	)

Operating income (loss)		3,648			(60,165	)		(21,681	)		(49,464	)

Interest expense		(3,070	)		(2,611	)		(7,157	)		(8,918	)
Realized and unrealized (loss) gain on derivatives, net		(1,011	)		(1,500	)		(904	)		(2,096	)
Impairment of note receivable and other		(50	)		(952	)		(50	)		(952	)
Other income (loss), net		94			(125	)		152			(108	)

Loss from continuing operations before income taxes		(389	)		(65,353	)		(29,640	)		(61,538	)
Income tax (expense) benefit		(53	)		19,088			(138	)		17,513

Loss from continuing operations		(442	)		(46,265	)		(29,778	)		(44,025	)
Discontinued operations:
Results from operations of discontinued operations, net of income taxes		—			(27	)		—			8
Gain on sale of discontinued operations, net of income taxes		—			—			—			394

Gain on discontinued operations, net of income taxes		—			(27	)		—			402


Net loss	$	(442	)	$	(46,292	)	$	(29,778	)	$	(43,623	)

Basic and diluted loss per common share:

Loss from continuing operations	$	(0.01	)	$	(1.19	)	$	(0.73	)	$	(1.13	)
(Loss) gain on discontinued operations		—			(0.00	)		—			0.01

Net loss	$	(0.01	)	$	(1.19	)	$	(0.73	)	$	(1.12	)


Weighted average number of common shares:
Basic		40,796			38,956			40,517			38,784
Diluted		40,796			38,956			40,517			38,784

The accompanying notes are an integral part of these condensed consolidated financial statements.

REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share amounts)


	September 30,			December 31,
	2009			2008
ASSETS
Current assets:
Cash and cash equivalents	$	6,021		$	1,094
Restricted cash		300			—
Accounts receivable, net of allowance of $507 and $527 at September 30, 2009 and December 31, 2008, respectively		13,248			13,914
Assets held for sale		156			156
Other current assets		2,182			1,716


Total current assets		21,907			16,880

Property and equipment, net		30,438			32,651
Intangible assets, net		109,531			135,252
Goodwill		12,192			18,392
Deferred tax assets		—			—
Other assets		1,813			2,109


Total assets	$	175,881		$	205,284


LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current portion of long-term debt	$	187,730		$	185,128
Accounts payable		1,511			1,329
Accrued compensation		1,097			1,399
Other current liabilities		4,848			4,010


Total current liabilities		195,186			191,866

Derivative liability		7,531			10,980
Other long-term liabilities		2,440			2,564


Total liabilities		205,157			205,410


Commitments and contingencies

Stockholders’ deficit:
Common stock, $.01 par value, 100,000,000 shares authorized; 50,071,292 and 49,151,642 shares issued at September 30, 2009 and December 31, 2008, respectively		501			492
Treasury stock, 7,772,083 and 9,169,465 shares, at cost, at September 30, 2009 and December 31, 2008, respectively		(40,778	)		(49,203	)
Additional paid-in capital		339,167			346,973
Accumulated deficit		(328,166	)		(298,388	)

Total stockholders’ deficit		(29,276	)		(126	)


Total liabilities and stockholders’ deficit	$	175,881		$	205,284

The accompanying notes are an integral part of these condensed consolidated financial statements.

REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)


	Nine Months Ended September 30,
	2009			2008
Cash flows from operating activities:
Net loss	$	(29,778	)	$	(43,623	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		2,897			3,120
Deferred income tax benefit		—			(17,399	)
Impairment of indefinite-lived intangible assets and goodwill		31,800			67,522
Impairment of note receivable and other		108			952
Non-cash compensation expense		525			950
Unrealized (gain) loss on derivatives		(3,449	)		460
Gain on sale of radio stations		—			(1,155	)
Other, net		674			811
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Accounts receivable		273			9
Other assets		(569	)		(127	)
Current and long-term liabilities		647			(769	)

Net cash provided by operating activities		3,128			10,751


Cash flows from investing activities:
Net proceeds from sale of radio stations		—			7,888
Capital expenditures		(620	)		(2,047	)
Change in restricted cash		(300	)		—
Cash proceeds from the sale of fixed assets and other		206			140

Net cash (used in) provided by investing activities		(714	)		5,981


Cash flows from financing activities:
Principal payments on long-term debt		(10,898	)		(26,839	)
Long-term debt borrowings		13,500			10,000
Treasury stock purchases		(14	)		(67	)
Other		(75	)		(16	)

Net cash provided by (used in) financing activities		2,513			(16,922	)


Net increase (decrease) in cash and cash equivalents		4,927			(190	)
Cash and cash equivalents at beginning of period		1,094			1,391

Cash and cash equivalents at end of period	$	6,021		$	1,201


Supplemental schedule of non-cash financing and investing activities:
Capital lease obligations incurred	$	114		$	61
Accrued capital expenditures	$	1		$	31

The accompanying notes are an integral part of these condensed consolidated financial statements.

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. SUMMARY OF SIGNIFICANT POLICIES

Preparation of Interim Financial Information

Regent Communications, Inc. (including its wholly-owned subsidiaries, the “Company” or “Regent”) was formed to acquire, own and operate radio stations in medium-sized markets in the United States.

The condensed consolidated financial statements of Regent have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all adjustments necessary for a fair presentation of the results of operations, financial position and cash flows for each period shown. All adjustments are of a normal and recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations. Results for interim periods may not be indicative of results for the full year. The December 31, 2008 condensed consolidated balance sheet was derived from audited consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in Regent’s Form 10-K for the year ended December 31, 2008.

The Company’s credit agreement contains certain financial and other covenants, which, among other things, require Regent to maintain specified financial ratios, and impose certain limitations on the Company with respect to lines of business, mergers, investments and acquisitions, additional indebtedness, distributions, guarantees, liens and encumbrances. Indebtedness under the credit agreement is secured by a lien on substantially all of the Company’s assets and of the subsidiaries, by a pledge of the operating and license subsidiaries’ stock and by a guarantee of the subsidiaries. Regent’s ability to meet certain of these financial ratios has been affected by economic trends that have caused a general downturn in the advertising sector, including advertising on the Company’s radio stations. At December 31, 2008, the likelihood that the Company would not be able to meet certain financial ratios during the 2009 year and the possibility that the Company’s lenders could require that repayment of the outstanding debt under the credit agreement be accelerated to currently payable, created substantial doubt about the Company’s ability to continue as a going concern. Accordingly, the Report of Independent Registered Public Accounting Firm issued by the Company’s auditors for the 2008 year contained an explanatory paragraph regarding this uncertainty. Under the terms of the credit agreement, any audit report containing going concern language constitutes a default under the agreement. As a result of this default, at December 31, 2008, all debt outstanding under the credit agreement was recorded as currently payable in the Company’s consolidated financial statements. In addition, a valuation allowance was established on substantially all of the Company’s deferred tax assets, as the Company was unable to conclude that it was more likely than not that the assets would be realized, given the uncertainty in the Company’s ability to continue as a going concern. Regent’s management is currently in negotiations with the parties to the credit agreement to waive or amend certain of the financial ratios and other covenants to regain compliance and/or to restructure the Company’s obligations under the credit agreement. At the request of its lenders, the Company has engaged the services of an outside consultant to

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

work towards that end and to advise the lenders during negotiations with Regent. Unless and until the Company is able to negotiate a waiver, amendment, and/or restructuring, the Company’s lenders could proceed against any or all collateral at any time.

Broadcast Revenue

Broadcast revenue for commercial broadcasting advertisements is recognized when the commercial is broadcast. Revenue is reported net of agency commissions. Agency commissions are calculated based on a stated percentage applied to gross billing revenue for advertisers that use agencies. Agency commissions were approximately $2.2 million and $2.7 million, respectively, for the three-month periods ended September 30, 2009 and 2008, and approximately $6.2 million and $7.6 million for the nine-month periods ended September 30, 2009 and 2008, respectively.

Barter Transactions

Barter transactions (advertising provided in exchange for goods and services) are reported at the estimated fair value of the products or services received. Revenue from barter transactions is recognized when advertisements are broadcast, and merchandise or services received are charged to expense when received or used. If merchandise or services are received prior to the broadcast of the advertising, a liability (deferred barter revenue) is recorded. If advertising is broadcast before the receipt of the goods or services, a receivable is recorded. Barter revenue and expense for the three- and nine-month periods ended September 30, 2009 and 2008 were as follows (in thousands):


	Three months ended				Nine months ended
	September 30,				September 30,
	2009		2008		2009		2008
Barter revenue	$	813	$	825	$	2,636	$	2,432
Barter expense	$	816	$	810	$	2,546	$	2,400

Stock-based Compensation Plans

During the first nine months of 2009 and 2008, the Company issued 880,600 and 491,600 nonvested shares, respectively, as a component of compensation to employees under The Regent Communications, Inc. 2005 Incentive Compensation Plan. The value of each nonvested share was determined by the fair market value of a share of Regent common stock on the date of grant. The nonvested shares generally vest ratably over a four-year period and the Company records expense related to the nonvested shares on a straight-line basis over the vesting period. During the first nine months of 2009 and 2008, Regent recorded approximately $437,000 and $457,000, respectively, of expense related to nonvested share awards, of which approximately $145,000 and $161,000 was recorded during the third quarters of 2009 and 2008, respectively. Included in compensation expense for the quarter and nine-month period ended September 30, 2008 was approximately $18,000 of compensation expense for the acceleration of vesting for 9,750 nonvested shares. At September 30, 2009, deferred compensation expense related to the nonvested shares was approximately $726,000, which will be recognized over the remaining vesting period. At September 30, 2009, 1,402,050 nonvested shares remained outstanding under

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

the plan, with a weighted average remaining life of approximately 2.7 years. During the first nine months of 2009 and 2008, 9,150 and 4,650 nonvested shares, respectively, were forfeited.

The Company issues shares of nonvested Regent common stock to its non-management directors under the Regent Communications, Inc. 2006 Directors Equity Compensation Plan. The value of each nonvested share is determined by the fair market value of a share of Regent common stock on the date of grant. The nonvested shares generally vest ratably over a four-year period and the Company records expense related to the nonvested shares on a straight-line basis over the vesting period. During the first nine months of 2009 and 2008, the Company issued 50,000 and 60,000, respectively, nonvested shares of Regent common stock to its non-management directors. Regent recorded approximately $39,000 and $31,000, respectively, of expense related to the nonvested share awards during the first nine months of 2009 and 2008 of which approximately $9,000 and $12,000 was recorded during the third quarters of 2009 and 2008, respectively. Additionally, during the first nine months of 2009, the Company recorded approximately $28,000 of expense related to the acceleration of vesting for nonvested awards granted to its former Chairman of the Board in conjunction with his resignation from the Board of Directors on March 17, 2009. At September 30, 2009, deferred compensation expense related to the nonvested shares was approximately $75,000, which will be recognized over the remaining vesting period. At September 30, 2009, 100,625 nonvested shares remained outstanding under the plan, with a weighted-average remaining life of approximately 3.0 years. No nonvested shares granted under the plan were forfeited during the first nine months of 2009. During the first nine months of 2008, 2,500 nonvested shares granted under the plan were forfeited.

There were no stock options granted during the first nine months of 2009 or 2008. During the first nine months of 2009, 324,678 stock options with a weighted-average exercise price of $5.36 were terminated due to expiration or forfeiture. During the first nine months of 2008, 1,466,738 stock options with a weighted-average exercise price of $5.22 were terminated due to forfeiture or expiration. The intrinsic value of all outstanding stock options was zero at September 30, 2009. See Regent’s 2008 Annual Report on Form 10-K for other disclosures of all outstanding awards.

Discontinued Operations

Disposal of Markets

During 2008, the Company disposed of its four Watertown, New York radio stations. Regent applied current accounting guidance, which requires that in a period in which a component of an entity has been disposed of or is classified as held for sale, the income statement of a business enterprise for current and prior periods shall report the results of operations of the component, including any gain or loss recognized, in discontinued operations. The Company’s policy is to allocate a portion of interest expense to discontinued operations, based upon current accounting guidance. As there was no debt required to be repaid as a result of these disposals, nor was there any debt assumed by the buyers, interest expense was allocated to discontinued operations in proportion to the net assets disposed of to total net assets of the Company.

The disposals of one station in each of the Albany and Buffalo, New York markets did not meet the criteria for the reclassification of operating results to discontinued operations, due to

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

the migration of cash flows from the disposed stations to other Regent-owned stations. Therefore, the results for these radio stations remained classified in loss from continuing operations.

Selected financial information related to discontinued operations for the three- and nine-month periods ended September 30, 2008 is as follows (in thousands):


	Three months			Nine months
	ended			ended
	September 30,			September 30,
	2008			2008
Net broadcast revenue	$	—		$	182
Depreciation and amortization expense	$	—		$	—
Allocated interest expense	$	—		$	15
Gain on sale of discontinued operations	$	—		$	638
(Loss) gain before income taxes	$	(14	)	$	650

Assets held for sale

Long-lived assets to be sold are classified as held for sale in the period in which they meet all the criteria of current accounting guidance. Regent measures assets held for sale at the lower of their carrying amount or fair value less cost to sell. Assets held for sale at September 30, 2009 and December 31, 2008 was comprised of Regent’s former studio location in Evansville, Indiana. The assets held for sale include approximately $43,000 of land and land improvements and approximately $153,000 of building and building improvements, offset by accumulated depreciation of approximately $20,000. Based upon its assessment of the fair market value of the assets at December 31, 2008, Regent reduced the carrying value of the assets by $20,000 at that date. The reduction was allocated among the assets on a pro rata basis. The major categories of the assets held for sale are as follows (in thousands):


Land and improvements	$	39
Building and improvements		137

		176
Accumulated depreciation		(20	)

	$	156

Income Taxes

At September 30, 2009 and 2008, the Company had liabilities for uncertain tax positions of approximately $532,000 and $556,000, respectively, which amounts were recorded as a component of other long-term liabilities. Of this amount, approximately $144,000 and $123,000 represented accrued interest at September 30, 2009 and 2008, respectively. Regent recognizes accrued interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. The total amount of net unrecognized tax benefits that, if recognized, would affect income tax expense is $532,000, which includes interest of approximately $144,000. The Company settled an income tax audit during the quarter ended June 30, 2009, and the liability for unrecognized tax benefits decreased by approximately $42,000. The Company does not anticipate

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

the liability for unrecognized tax benefits to materially increase or decrease within the next 12 months.

The Company recorded income tax expense on continuing operations at an effective rate of 13.6% and 0.5% for the three- and nine-month periods ended September 30, 2009. The Company established a valuation allowance against the entire deferred tax benefit recorded during the first nine months of 2009. For the three- and nine-month periods ended September 30, 2008, the effective rate for income tax benefit on continuing operations was 29.2% and 28.5%, respectively.

Subsequent Events

The Company’s Management has evaluated subsequent events through November 10, 2009, which is the date that the Company’s consolidated financial statements were filed. Management is aware of no material subsequent events that have occurred since September 30, 2009 that would require recognition or disclosure in the financial statements.

Fair Value Measurements

In September 2006, the Financial Accounting Standards Board finalized guidance that established a framework for measuring fair value, clarified the definition of fair value, and expanded disclosures about the use of fair value measurements; however, it did not require any new fair value measurements. The provisions of this guidance have been applied prospectively beginning January 1, 2008 for all financial assets and financial liabilities recognized in the financial statements at fair value. Application of this accounting guidance for all non-financial assets and non-financial liabilities that are recognized at fair value in the financial statements on a nonrecurring basis was delayed until January 1, 2009. The adoption of this accounting guidance for non-financial assets and liabilities on January 1, 2009 did not have a material impact on the Company.

The Company’s financial assets and liabilities reflected in the condensed consolidated financial statements at fair value include short-term investments, marketable securities and derivative financial instruments. Fair value for short-term investments and marketable securities are determined utilizing quoted market prices at each period. Fair value for derivative interest rate swap agreements is obtained from counterparties to the agreements and corroborated through estimates using internal discounted cash flow calculations based upon forward interest-rate yield curves and considering the risk of non-performance by the parties to the contract. The Company’s non-financial assets and liabilities include goodwill and FCC licenses. As described in Note 4, the Company was required to test intangible assets for impairment during the first quarter of 2009. Regent uses the greenfield methodology for valuation of its FCC licenses, which allocates a start-up value to each station and employs a discounted cash flow methodology. The Company uses a market-multiple approach to value goodwill. The following table summarizes the valuation of the Company’s financial assets and liabilities at September 30, 2009 and December 31, 2008 and non-financial assets and liabilities that were required to be measured at fair value at September 30, 2009 (in thousands):

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Quoted

Market

Significant

Prices for

Other

Significant

Identical

Observable

Unobservable

Financial Asset

September

Assets -

Inputs -

(Liability)

30, 2009

Level 1

Level 2

Level 3

Recurring Valuations:

Assets:

Short-term investments

Marketable securities

776

Liabilities:

Derivative interest rate swap agreements

(7,531

)

(7,531

)

The following table summarizes the valuation of the Company’s financial assets and liabilities at December 31, 2008 (in thousands):


				Quoted
				Market		Significant
				Prices for		Other			Significant
				Identical		Observable			Unobservable
	December			Assets -		Inputs -			Inputs -
Financial Asset (Liability)	31, 2008			Level 1		Level 2			Level 3
Assets:
Short-term investments	$	5		$	5
Marketable securities	$	572		$	572

Liabilities:
Derivative interest rate swap agreements	$	(10,980	)			$	(10,980	)

The Company has not elected any eligible items for fair value measurement.

The Company follows current accounting guidance which requires disclosures about fair value of financial instruments in interim reporting periods as well as in annual financial statements. This guidance became effective for financial statements issued after June 15, 2009.

The fair value for certain financial instruments is as follows:

Cash, cash equivalents, Accounts Receivable and Accounts Payable. Due to their short-term maturity, the carrying amounts reported in the Condensed Consolidated Balance Sheets approximate fair value.

Debt. The Company estimates that the fair value of its debt at September 30, 2009 is approximately 65% of par value. Such estimate was based on indicative pricing in

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

markets where the debt is traded. While we believe the approximations are reasonably accurate, the valuations can vary widely based upon trading volume and other factors.

2. LONG-TERM DEBT

Long-term debt consisted of the following as of September 30, 2009 and December 31, 2008 (in thousands):


	September 30,			December 31,
	2009			2008
Senior secured Term A Loan	$	41,386		$	46,013
Senior secured Term B Loan		105,844			109,165
Senior secured revolving credit facility		40,500			29,950

		187,730			185,128
Less: current portion of long-term debt		(187,730	)		(185,128	)

	$	—		$	—

Borrowings under the credit facility bore interest at a weighted average rate of 6.11% at September 30, 2009 and 3.44% at December 31, 2008.

Under the provisions of the excess cash flow calculation contained in the credit agreement, on April 30, 2009, the Company was required to make repayments of approximately $4.5 million based upon the calculation of excess cash flow generated by operations. The repayment was comprised of approximately $1.1 million of the amounts borrowed under the Term A Loan portion, $2.5 million of the amounts borrowed under the Term B Loan portion, and approximately $0.9 million of the amounts borrowed under the revolving portion of the credit agreement. Regent used cash on hand to fund the $4.5 million repayment required under the excess cash flow calculation. The amounts required to be repaid under the Term A Loan and Term B Loan portions of the credit agreement are permanent reductions of the amounts available under those portions of the agreement. The amount repaid under the revolving portion of the credit agreement could typically be re-borrowed under the terms of the credit agreement. However, on April 1, 2009, the Company received notification from Bank of America, as the administrative agent for the other lenders and parties to Regent’s credit agreement, that the explanatory paragraph regarding the uncertainty in the Company’s ability to continue as a going concern in the Report of Independent Registered Public Accounting Firm issued by Regent’s auditors in connection with the audit of the December 31, 2008 consolidated financial statements, constituted a Specified Default (as defined in the Bank of America notification) under the terms of the credit agreement. As such, if the Specified Default continued unremediated for 30 days, then: (a) the default would become an Event of Default (as defined in the credit agreement) under the credit agreement; (b) unless and until the default was remedied, no further borrowings could be made under the credit agreement; and (c) the lenders have not waived the Specified Default or the conditions to make additional loans. Accordingly, no further amounts could be borrowed under the revolving portion of the credit agreement until the default was cured. As of April 30, 2009, the 30-day period expired, and the Company’s inability to cure the default constituted an Event of Default under the terms of the agreement. Due to the Event of Default, the lenders could require that outstanding borrowings under the credit agreement be accelerated to currently payable. While the Company is subject to an Event of Default, the rate of interest on borrowings

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

outstanding under the credit agreement has been increased by 2.0% per annum and the Company is precluded from electing LIBOR interest rates on its outstanding borrowings. The Company is currently in negotiations with its lenders to waive or amend the terms of the credit agreement to modify certain covenants and conditions in order to regain compliance with the terms of the agreement and/or to restructure the Company’s obligations under the credit agreement.

3. CAPITAL STOCK

The Company’s authorized capital stock consists of 100,000,000 shares of common stock and 40,000,000 shares of preferred stock. No shares of preferred stock were outstanding at September 30, 2009 or December 31, 2008. The Company has in the past designated shares of preferred stock in several different series. Of the available shares of preferred stock, 6,768,862 remain designated in several of those series and 33,231,138 shares are currently undesignated.

In January 2006, the Company began issuing grants of nonvested stock to employees under the Regent Communications, Inc. 2005 Incentive Compensation Plan. The nonvested shares generally vest over a four-year period. During the first nine months of 2009 and 2008, the Company issued 871,450 and 483,350 shares, respectively, of nonvested stock, net of forfeitures. Additionally during the first nine months of 2009 and 2008, Regent recorded treasury stock repurchases related to the forfeiture of 89,844 and 47,750 shares, respectively, of stock by employees for the payment of withholding taxes related to the vesting of nonvested shares during the period. At September 30, 2009, there were 1,402,050 nonvested shares outstanding under the plan.

In May 2006, the Company began issuing grants of nonvested stock to non-management directors under the Regent Communications, Inc. 2006 Directors Equity Compensation Plan. During the first nine months of 2009 and 2008, the Company granted 50,000 and 57,500 shares, respectively, of nonvested common stock, net of forfeitures. The stock generally vests ratably over a four-year period. At September 30, 2009, there were 100,625 nonvested shares outstanding under the plan.

On January 30, 2008, the Company issued 54,923 shares of Regent common stock from treasury shares to two executive officers at an issue price of $1.35 per share as payment of a portion of 2007 bonuses awarded and expensed under the Company’s Senior Management Bonus Plan.

During the first quarter of 2009, Regent reissued 1,225,882 shares of treasury stock for the fourth quarter of 2008 employer match to employee contributions under the Company’s 401(k) plan and 126,213 shares of treasury stock to employees enrolled in the Company’s Employee Stock Purchase Plan during the fourth quarter of 2008. During the first nine months of 2009, the Company also reissued 135,131 shares of treasury stock as employer match to employee contributions under the Company’s 401(k) plan through January 14, 2009, the date the Company ceased making matching contributions under the plan. In addition, effective with the distribution of shares for the quarter ended December 31, 2008, there were no further shares available for purchase by employees under the Employee Stock Purchase Plan. Consequently, the Company terminated the plan effective with the fourth quarter distribution of shares. During the first nine months of 2008, Regent reissued 429,457 shares of treasury stock as an employer match to employee contributions under the Company’s 401(k) plan, and to employees enrolled in the Company’s Employee Stock Purchase Plan.

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Regent has a stock buyback program, approved by its Board of Directors, which currently allows the Company to repurchase up to $1.6 million worth of shares of its common stock at certain market price levels. There were no repurchases of common stock during the first nine months of 2009 or 2008 other than treasury shares exchanged for payment of employee withholding taxes related to the vesting of nonvested stock grants.

4. GOODWILL AND OTHER INTANGIBLE ASSETS

Regent’s intangible assets consist principally of the value of FCC licenses and the excess of the purchase price over the fair value of net assets of acquired radio stations (goodwill). The Company follows current accounting guidance, which requires that a company perform annual impairment testing of goodwill and intangible assets determined to have an indefinite life. The Company performs its annual review of goodwill and indefinite-lived intangible assets for impairment during the fourth quarter, or at an earlier date if conditions exist that would indicate the possibility of an impairment issue. Based on deteriorating economic conditions, volatility in the equity markets, and operating results for the quarter, the Company performed an analysis for potential impairment of indefinite-lived intangibles and goodwill during the first quarter of 2009. Based primarily upon material changes in future revenue and cash flow projections, the Company determined that the fair value of goodwill and FCC licenses for certain markets were less than the carrying value recorded in the financial statements. Accordingly, during the first quarter of 2009 the Company recognized pre-tax impairment charges of $25.6 million for FCC licenses and $6.2 million for goodwill. As permitted by accounting guidance, the Company completed step two of its impairment analysis in the second quarter of 2009 and recorded no adjustments to its initial estimates.

Definite-lived Intangible Assets

The Company’s definite-lived intangible assets, consisting primarily of non-competition agreements, acquired advertising contracts, employment and sports rights agreements, and advertiser relationships and lists, are amortized in accordance with the provisions of current accounting guidance. Acquired advertising contracts are amortized over a six-month period, starting at the earlier of the purchase date or the commencement of a time brokerage agreement or similar arrangement. Non-compete, employment and sports rights agreements are amortized over the life of the related agreement. Advertiser lists and relationships are amortized over a three-year period. The following table presents the gross carrying amount and accumulated amortization for the Company’s definite-lived intangibles at September 30, 2009 and December 31, 2008 (in thousands):

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


	September 30, 2009				December 31, 2008
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Non-compete agreements	$	—	$	—	$	219	$	171
Sports rights and employment agreements and advertiser lists and relationships		54		38		779		690

Total	$	54	$	38	$	998	$	861

The aggregate amortization expense related to the Company’s definite-lived intangible assets was approximately $16,000 and $121,000, respectively, for the three- and nine-month periods ended September 30, 2009. For the three- and nine-month periods ended September 30, 2008, amortization expense was approximately $59,000 and $176,000, respectively. The estimated annual amortization expense for the years ending December 31, 2009, 2010, 2011, 2012 and 2013 is approximately $123,000, $1,000, $1,000, $1,000 and $1,000, respectively.

Indefinite-lived Intangible Assets

The Company’s indefinite-lived intangible assets consist primarily of FCC licenses for radio stations. The following table presents the change in the carrying amount for the Company’s indefinite-lived intangible assets for the nine-month period ended September 30, 2009 (in thousands):


	Indefinite-lived
	Intangible Assets
Balance as of December 31, 2008	$	135,105
Impairment of FCC licenses		(25,600	)

Balance as of September 30, 2009	$	109,505

Other indefinite-lived intangible assets, consisting primarily of trademarks and website domain names, were approximately $10,000 at September 30, 2009 and December 31, 2008.

Goodwill

The following table presents the changes in the carrying amount of goodwill for the nine-month period ended September 30, 2009 (in thousands):


	Goodwill
Balance as of December 31, 2008	$	18,392
Impairment of Goodwill		(6,200	)

Balance as of September 30, 2009	$	12,192

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

5. EARNINGS PER SHARE

Accounting guidance calls for the dual presentation of basic and diluted earnings per share (“EPS”). Basic EPS is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period, and excluding shares issued under the Regent Communications, Inc. 2005 Incentive Compensation Plan and the Regent Communications, Inc. 2006 Directors Equity Compensation Plan that were not vested as of the reporting period. The calculation of diluted earnings per share is similar to basic except that the weighted average number of shares outstanding includes the additional dilution that would occur if potential common stock, such as stock options and warrants were exercised, except when the effect would be antidilutive. The number of additional shares is calculated by assuming that outstanding stock options and warrants with an exercise price less than the Company’s average stock price for the period were exercised, and that the proceeds from such exercises were used to acquire shares of common stock at the average market price during the reporting period. At September 30, 2009, none of the Company’s 2,253,373 stock options had exercise prices that were less than the Company’s average stock price for the three or nine months ended September 30, 2009. At September 30, 2008, none of the Company’s 2,616,301 stock options had exercise prices that were less than the Company’s average stock price for the three or nine months ended September 30, 2008. The Company adopted new accounting guidance effective January 1, 2009 related to participating securities. Regent’s nonvested stock contains rights to receive non-forfeitable dividends, and thus, are participating securities requiring the two-class method of computing earnings per share. Under the provisions of the guidance, in periods in which the Company records net income, the calculation of earnings per share for common shares will exclude the income attributed to the Company’s nonvested stock from the numerator and will exclude the dilutive impact for those nonvested shares from the denominator. The accounting guidance also requires us to retroactively adjust all prior period earnings per share computations for the two-class method of computing earnings per share. The retroactive application of this guidance had no impact on our earnings per share calculation for the three- and nine-month periods ended September 30, 2008, as the Company recorded a net loss in each of those periods. There were 1,502,675 and 852,325 nonvested shares outstanding at September 30, 2009 and 2008, respectively.

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	September 30,			September 30,			September 30,			September 30,
	2009			2008			2009			2008
	(in thousands, except per share amounts)
Numerator:

Loss from continuing operations	$	(442	)	$	(46,265	)	$	(29,778	)	$	(44,025	)
(Loss)/gain on discontinued operations, net of taxes		—			(27	)		—			402

Net loss	$	(442	)	$	(46,292	)	$	(29,778	)	$	(43,623	)
Less: dividends declared		—			—			—			—

Undistributed earnings	$	(442	)	$	(46,292	)	$	(29,778	)	$	(43,623	)
Percentage allocated to common shares ⁽¹⁾		100.0	%		100.0	%		100.0	%		100.0	%
Undistributed earnings - common shares	$	(442	)	$	(46,292	)	$	(29,778	)	$	(43,623	)
Add: dividends declared - common shares		—			—			—			—

Numerator for basic and diluted loss per share	$	(442	)	$	(46,292	)	$	(29,778	)	$	(43,623	)


Denominator:

Weighted-average basic common shares		40,796			38,956			40,517			38,784
Dilutive effect of stock options and warrants		—			—			—			—

Weighted-average diluted common shares		40,796			38,956			40,517			38,784


Net basic and diluted loss per common share:

Net loss from continuing operations	$	(0.01	)	$	(1.19	)	$	(0.73	)	$	(1.13	)
Discontinued operations		—			(0.00	)		—			0.01

Net loss	$	(0.01	)	$	(1.19	)	$	(0.73	)	$	(1.12	)



⁽¹⁾ Weighted-average common shares outstanding:		40,796			38,956			40,517			38,784
Weighted-average nonvested shares (participating securities)		—	⁽²⁾		—	⁽²⁾		—	⁽²⁾		—	⁽²⁾

Total		40,796			38,956			40,517			38,784
Percentage allocated to common shares		100.0	%		100.0	%		100.0	%		100.0	%


⁽²⁾		As the Company was in a net loss position for the indicated period, nonvested shares are not included in the allocation of loss for the numerator in the calculation of earnings per share.

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

6. DERIVATIVE INSTRUMENTS

The Company is exposed to a variety of market risks, including the effects of changes in interest rates. The Company’s risk management strategy includes the use of derivative instruments to convert a portion of its debt from variable to fixed rates in order to reduce the effect of fluctuating interest rates. The Company follows current accounting guidance, which requires that all derivative financial instruments, such as interest rate swap agreements, be recognized in the financial statements as assets or liabilities and be measured at fair value. The Company has not designated its interest rate swap agreements as hedging instruments in 2009 or 2008. The following tables present information on the Company’s derivative financial instruments.

Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets
(in thousands):

The Effect of Derivative Instruments on the Condensed Consolidated Statements of Operations for
the three and nine months ended September 30, 2009
(in thousands):


Derivative Instruments Not	Location of Net (Loss) or
Designated as Hedging	Gain Recognized on	(Loss) Gain Recognized on
Instruments	Derivatives	Derivatives
		Three months			Nine Months
		ended			ended
		September 30,			September 30,
		2009			2009
Interest rate swap agreements	Realized and unrealized (loss) gain on derivatives, net	$	(1,011	)	$	(904	)

7. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2009, the Financial Accounting Standards Board (“FASB”) issued updated accounting guidance that amends the requirements for determination of the primary beneficiary of a variable interest entity, requires an ongoing assessment of whether an entity is the primary beneficiary and requires enhanced interim and annual disclosures that will provide users of financial statements information regarding an enterprise’s involvement in a variable interest entity. The updated accounting guidance is effective for annual reporting periods beginning after

REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

November 15, 2009. The adoption of the updated accounting guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

In June 2009, the FASB issued new guidance concerning the transfer of financial assets. This guidance amends criteria for a transfer of a financial asset to be accounted for as a sale, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, changes the initial measurement of a transferor’s interests in transferred financial assets, eliminates the qualifying special-purpose entity concept and provides for new disclosures. This new guidance is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. The adoption of the updated accounting guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

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

GENERAL

Cautionary Statement Concerning Forward-Looking Statements

This Form 10-Q includes certain forward-looking statements with respect to our Company and its business that involve risks and uncertainties. These statements are influenced by our financial position, business strategy, budgets, projected costs and the plans and objectives of management for future operations. We use words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “project” and other similar expressions. Although we believe our expectations reflected in these forward-looking statements are based on reasonable assumptions, we cannot assure you that our expectations will prove correct. Actual results and developments may differ materially from those conveyed in the forward-looking statements. For these statements, we claim the protections for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements made in this Form 10-Q include changes in general economic, business and market conditions, as well as changes in such conditions that may affect the radio broadcast industry or the markets in which we operate, and nationally, including, in particular: increased competition for attractive radio properties and advertising dollars; increased competition from emerging technologies; fluctuations in the cost of operating radio properties; our ability to manage our potential growth; our ability to effectively integrate our acquisitions; potential costs relating to stockholder demands; changes in the regulatory climate affecting radio broadcast companies; cancellations, disruptions or postponements of advertising schedules in response to national or world events; our ability to manage our costs in uncertain economic times; and our ability to regain and maintain compliance with the terms of our credit agreement or to refinance or restructure such obligations. Further information on other factors that could affect the financial results of Regent Communications, Inc. is included in Regent’s other filings with the Securities and Exchange Commission (“SEC”). These documents are available free of charge at the SEC’s website at http://www.sec.gov and/or from Regent Communications, Inc. The forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 10-Q. If we do update one or more forward-looking statements, you should not conclude that we will make additional updates with respect to those or any other forward-looking statements.

Executive Overview Update

•

On April 1, 2009, we received notification from Bank of America, as the administrative agent for the other lenders and parties to our credit agreement, that the explanatory paragraph regarding the uncertainty in our ability to continue as a going concern contained in the Report of Independent Registered Public Accounting Firm issued by our auditors in connection with the audit of our December 31, 2008 consolidated financial statements constituted a Specified Default (as defined in the Bank of America notification) under the terms of our credit agreement. We were informed that if the Specified Default continued unremediated for 30 days, then the default would become an Event of Default (as defined in the credit agreement) under the credit agreement, unless and until the default was remedied, no further borrowings could be made under the credit

agreement, and the lenders had not waived the Specified Default or the conditions to make additional loans. At April 30, 2009, the 30-day period expired and our inability to cure the default constituted an Event of Default under the terms of the agreement. Due to the Event of Default, our lenders could require that outstanding borrowings under the credit agreement be accelerated to currently payable. While we are subject to an Event of Default, the rate of interest on amounts outstanding under the credit agreement has been increased by 2.0% per annum and we are prohibited from electing LIBOR-based interest rates on our outstanding loan amounts. Instead, all loans are currently Base Rate Loans, which accrue interest based on the current prime rate plus applicable margin. We are currently in negotiations with our lenders to temporarily waive or amend the terms of our credit agreement to modify certain covenants and conditions in order to regain compliance with the terms of the agreement and/or to restructure our obligations under the agreement. At the request of our lenders, we have engaged the services of an outside consultant to work towards that end and to advise the lenders during negotiations with us. Although there can be no assurance that we will be successful in obtaining a waiver or amendment to our credit agreement, if we are successful, we anticipate we will incur fees to the lenders and other parties for such waiver or amendment, the amount of which we cannot predict with any degree of certainty at this time. Through September 30, 2009, we have incurred approximately $1.1 million in professional fees related to the process of obtaining a waiver or amendment to our credit agreement. We will continue to incur substantial fees through resolution of this process.

	•		As a result of the current trend of long-term interest rates, we recorded an unrealized gain of approximately $0.7 million during the third quarter of 2009 related to changes in the fair value measurements of interest rate swap agreements we have in place on the term loan portions of our credit agreement. Also during the quarter, we recorded a realized loss of approximately $1.7 million due to the unfavorable fixed swap rates compared to market rates during the period.

	•		We are currently broadcasting 24 FM stations and two AM stations in digital, or high definition radio (HD Radio). The conversion to HD Radio will enable the stations to broadcast digital-quality sound and also provide additional services, such as on-demand traffic, weather and sports scores. Additionally, this new technology will enable each converted radio station to broadcast additional channels of programming for public, private or subscription services. The economic benefit, if any, to our stations that have converted to HD Radio currently cannot be measured. Any future economic benefit to our stations as a result of digital conversion is not known at this time.

	•		We have continued to develop our Interactive initiative in 2009, which focuses on generating revenues through our stations’ websites. Our integrated selling effort combines the sale of our Interactive products with sales of our traditional broadcasting spots. Net revenue provided by our Interactive initiatives during the first nine months of 2009 increased by approximately 45% over the comparable 2008 period, and we anticipate that our economic benefits from this revenue source will increase through the remainder of 2009 and beyond. In addition, our 2009 focus is also directed towards developing Interactive revenue from new sources that are not affiliated with our radio stations. While we do not anticipate that this revenue will be material in 2009, we expect that it will increase in future years.

	•		We continue to monitor the costs we incur in the operation of our broadcast markets. This oversight allows us to respond quickly to changes in national and local economic

conditions, and to evaluate potential cost savings within each station cluster and implement appropriate cost control measures to optimize station operating performance.

RESULTS OF OPERATIONS

The key factors that have affected our business are discussed and analyzed in the following paragraphs. This commentary should be read in conjunction with our condensed consolidated financial statements and the related footnotes included herein.

Our financial results are seasonal. Historically, and as is typical in the radio broadcasting industry, we expect our first calendar quarter to produce the lowest revenues for the year. Our operating results in any period may be affected by advertising and promotion expenses that do not necessarily produce commensurate revenues until the impact of the advertising and promotion is realized in future periods.

During the first quarter of 2008, we disposed of our four Watertown, New York radio stations. Accordingly, all results of operations for the first nine months of 2008 related to the Watertown, New York market, including an allocated portion of interest expense, have been reclassified to discontinued operations.

Comparison of three months ended September 30, 2009 to three months ended September 30, 2008

Results from continuing operations for the quarter ended September 30, 2009 compared to September 30, 2008 were impacted by a general deterioration in spending by advertisers due to recessionary economic conditions throughout the United States. This reduction was partially offset by the timing of a non-traditional revenue event in our El Paso, Texas market. In 2009, the event was held during the third quarter, while in 2008, the event was held during the second quarter. The overall reduction in net revenue was partially mitigated by decreases in revenue-related station operating expenses and discretionary promotional expense, offset partially by expenses associated with the E1 Paso, Texas non-traditional revenue event in the third quarter of 2009.

Net Broadcast Revenues

Net broadcast revenues for Regent decreased 13.9% to approximately $21.8 million in the third quarter of 2009 from approximately $25.3 million in the third quarter of 2008. The table below provides a summary of the net broadcast revenue variance for the comparable three-month periods (in thousands):

Net broadcast revenue variance:


	Decrease in net
	broadcast			%
	revenue			Change
Local advertising	$	(2,268	)		(10.9	)%
National advertising		(564	)		(22.1	)%
Barter revenue		(11	)		(1.4	)%
Political advertising		(487	)		(82.6	)%
Other		(187	)		(30.0	)%

Net broadcast revenue variance	$	(3,517	)		(13.9	)%

Local advertising — The decrease of approximately $2.3 million, or 10.9%, in local advertising revenue in the third quarter of 2009 compared to same period of 2008 was due primarily to the effects on advertising spending of poor economic conditions throughout the United States. The overall declines in local direct and agency revenues were partially offset by increases in Interactive revenue at the majority of our broadcast markets compared to prior year results. Excluding the impact due to the timing of our El Paso Downtown Street Festival event in our El Paso, Texas market, local advertising would have decreased approximately 12.1%.

National advertising — National advertising revenue decreased approximately $0.6 million in the third quarter of 2009, or 22.1%, compared to 2008, and was spread across all of our broadcast markets. The general decline in national revenue was due primarily to the poor economic conditions present during 2009.

Barter revenue — The decrease in barter revenue during the quarter was due primarily to the timing of when advertisers elected to air their commercials.

Political advertising — Political advertising revenue decreased approximately 82.6% in the third quarter of 2009 compared to the same quarter in 2008. The 2008 year was a very strong political revenue year due to numerous local, state and national elections.

Other — Other revenue decreased approximately $0.2 million, or 30.0% compared to 2008. The majority of the decline is due to fewer network contracts in several of our markets.

Station Operating Expenses

Station operating expenses decreased 4.8%, to approximately $14.6 million in the third quarter of 2009 from approximately $15.3 million in the third quarter of 2008. The table below provides a summary of the station operating expense variance for the comparable three-month periods (in thousands):

Station operating expense variance:


	Decrease/
	(increase) in
	station operating			%
	expenses			Change
Technical expense	$	61			7.0	%
Programming expense		205			4.8	%
Promotion expense		88			22.1	%
Interactive expense		2			0.8	%
Sales expense		347			6.9	%
Administrative expense		36			1.0	%
Barter expense		(5	)		(0.7	)%

Station operating expense variance	$	734			4.8	%

Technical expense — Technical expenses decreased approximately 7.0% during the third quarter of 2009, due primarily to lower utility costs in our New York markets, offset partially by higher rent expense over the comparable 2008 quarter.

Programming expense — Programming expense decreased by approximately 4.8% during the third quarter of 2009. The decrease was due to a combination of salary savings and lower outside consultant fees in several of our markets. In addition, we incurred lower broadcast rights fees in our Flint, Michigan market, where we replaced the morning show on one station with our syndicated “Free Beer & Hot Wings” morning show. These savings were partially offset by increased music license fees in all of our broadcast markets.

Promotion expense — Promotion expense decreased approximately $0.1 million, or 22.1% compared to the 2008 quarter. The decrease is due primarily to salary savings and lower levels of promotional spending for billboards, contest prizes, and promotional products, as we continued to manage our discretionary costs in response to challenging economic conditions.

Interactive expense — Interactive expense decreased 0.8% during the third quarter of 2009. Savings in salaries and streaming fees were partially offset by higher commission expense associated with our higher revenue levels during the 2009 quarter, and increased music license fees for all our broadcast markets.

Sales expense — During the third quarter of 2009, sales expense decreased approximately $0.3 million, or 6.9% compared to the 2008 quarter. Excluding the impact of event-related costs for our El Paso, Texas non-traditional revenue event which was held in the second quarter during 2008 and the third quarter during 2009, sales expense decreased approximately 10.9%. The decrease was due primarily to lower salaries, commissions, bonuses and national representation fees associated with lower revenue levels during the 2009 quarter. These savings were partially offset by increased rating service fees across all our broadcast markets.

Administrative expense — During the third quarter of 2009, administrative expense decreased 1.0% from the comparable 2008 period. The savings were primarily due to: reduced bonus expense as a result of lower operating results compared to targeted bonus-plan levels; lower payroll taxes due to lower overall payroll, commission and bonus expense during the

quarter; savings in Company match expense on employee contributions to the 401(k) Profit Sharing Plan, which match was eliminated January 14, 2009; and savings in legal and professional fees, as certain legal matters were resolved subsequent to the third quarter of 2008. These savings were partially offset by higher medical and dental costs during the third quarter of 2009 compared to the same period in 2008 due to variability in the timing and amount of medical claims, and higher levels of bad debt expense during the third quarter of 2009.

Barter expense — The change in barter expense is due to the timing of the use of bartered goods and services.

Depreciation and Amortization

Depreciation and amortization expense decreased approximately $0.2 million, or 14.1% during the third quarter of 2009 compared to the same period in 2008. The decrease was due to lower depreciation expense for our Evansville, Indiana, Ft. Collins, Colorado, Flint, Michigan and Utica, New York stations, as many assets acquired in those purchases are now fully depreciated. Our Buffalo, New York market also saw a decline in depreciation expense during the quarter, primarily due to the sale of the broadcasting assets of WECK-AM in 2008. Amortization expense decreased during the third quarter of 2009 compared to the same quarter in 2008, as certain definite-lived intangible assets acquired with our purchase of the Bloomington, Illinois market became fully amortized mid-way through the second quarter of 2009.

Corporate Expense

Corporate general and administrative expense increased by approximately 59.5% to approximately $2.6 million for the three-month period ended September 30, 2009. Approximately $0.8 million of the increase was due to professional fees incurred in connection with our efforts to obtain a waiver or amendment of our credit agreement. We recorded additional expense related to the Company’s deferred compensation plan, as positive investment results in the plan during the third quarter of 2009 resulted in higher levels of compensation cost to the Company. These expenses were partially offset by reduced bonus expense based upon the Company’s operating results compared to its established goals, and savings in rent expense due to lower negotiated rates for the 2009 year.

Interest Expense

Interest expense increased to approximately $3.1 million in the third quarter of 2009 from approximately $2.6 million in the comparable 2008 quarter. The increase was due primarily to the default pricing in effect on our credit agreement during the third quarter of 2009, as well as our inability to utilize LIBOR-based interest rates on our outstanding borrowings during our period of non-compliance with the terms and conditions of our credit agreement. The average interest rate for the current quarter was 6.05%, compared to 5.02% for the comparable 2008 quarter.

Realized and unrealized (loss) gain on derivatives, net

associated with changes in the fair value measurement of the swaps are recorded within realized and unrealized (loss) gain on derivatives in the condensed consolidated statements of operations. During the third quarter of 2009, we recorded an unrealized gain of approximately $0.7 million on the change in the fair value of the swaps, offset by a realized loss of approximately $1.7 million due to unfavorable swap fixed rates compared to market rates during the period. During the third quarter of 2008, we recorded an unrealized loss of approximately $0.7 million on the change in the fair value of the swaps, and a realized loss of approximately $0.8 million due to the unfavorable swap fixed rates compared to market rates during the quarter.

Impairment of Note Receivable and Other

During the third quarter of 2008, we recorded an other-than-temporary impairment loss of approximately $1.0 million on an investment in notes receivable due to changing market conditions potentially affecting the collectibility of the investment.

Income Taxes

For the third quarter of 2009, we recorded income tax expense at an effective rate of 13.6%. This rate includes a tax benefit at a (34.0)% federal rate, a state tax expense, net of federal benefit, of 2.8% and miscellaneous adjustments of 5.6%. At December 31, 2008, we recorded a full valuation allowance against our entire deferred tax assets balance as we were unable to conclude that it was more likely than not that the assets would be realized. Consistent with our conclusions at December 31, 2008, the tax benefits recorded were offset by a charge to the valuation allowance against our deferred tax assets of 39.2%. We recorded income tax benefit on continuing operations of approximately $19.1 million in the third quarter of 2008, which represented a (29.2)% effective rate. The rate included a (34.0)% federal tax benefit, a state tax benefit, net of federal benefit, of (3.3)%, miscellaneous adjustments of (0.8)%, and an adjustment to the valuation allowance of 8.9%.

Discontinued Operations

The disposal of our four Watertown, New York radio stations during the first quarter of 2008 qualified as discontinued operations, which requires that in a period in which a component of an entity has been disposed of or is classified as held for sale, the income statement of a business enterprise for current and prior periods shall report the results of operations of the component, including any gain or loss recognized, in discontinued operations. The table below summarizes the effect of the reclassification on the period ended September 30, 2008 (in thousands):


	2008
Net broadcast revenue	$	—
Station operating expense		14

Loss before income taxes		(14	)
Income tax expense		(13	)

Net loss	$	(27	)

Same Station Results

Our revenues are produced exclusively by our radio stations and their related internet websites. While dispositions and acquisition can affect the comparability of operating results between quarters, we believe meaningful quarter-to-quarter net broadcast revenue comparisons can be made for results of operations for those stations which we have been operating for five full quarters, exclusive of stations acquired or disposed of during those quarters, if any. Additionally, we exclude barter in this comparison as barter customarily results in volatility between quarters, although differences over the full year are not material. We believe this presentation is important because it presents a more direct view of the effectiveness of our stations’ operations. Nevertheless, this measure should not be considered in isolation or as a substitute for broadcast

net revenue, operating income (loss), net income (loss), net cash provided by operating activities or any other measure for determining our operating performance or liquidity that is calculated in accordance with generally accepted accounting principles. The following comparable results between 2009 and 2008 are listed in the table below (in thousands).

Same station net revenue decreased 14.3% in the third quarter of 2009 compared to the same period of 2008 due to a general deterioration in spending by advertisers due to recessionary economic conditions throughout the United States during the quarter. Excluding the effect of the El Paso, Texas non-traditional revenue event that was held during the second quarter of 2008 versus the third quarter of 2009, same station net revenue would have decreased 15.3%.


	2009		2008
Quarter 3	Net		Net		%
*(62 stations in 13 markets)*	Revenue		Revenue		Change
Net broadcast revenue	$	21,811	$	25,328
Less:
Barter effect		813		825

Same station net broadcast revenue	$	20,998	$	24,503		(14.3	)%

Comparison of nine months ended September 30, 2009 to nine months ended September 30, 2008

Results from continuing operations for the nine months ended September 30, 2009 compared to September 30, 2008 were impacted by a general deterioration in spending by advertisers due to recessionary economic conditions throughout the United States during the period. The reduction in net revenue was partially mitigated by decreases in revenue-related station operating expenses and discretionary promotional expense.

Net Broadcast Revenues

Net broadcast revenues for Regent decreased 13.5% to approximately $62.8 million for the first nine months of 2009 from approximately $72.6 million for the comparable 2008 period. The table below provides a summary of the net broadcast revenue variance for the comparable nine-month periods (in thousands):

Net broadcast revenue variance:


	(Decrease)/
	increase in net
	broadcast			%
	revenue			Change
Local advertising	$	(7,246	)		(12.1	)%
National advertising		(2,009	)		(26.2	)%
Barter revenue		204			8.4	%
Political advertising		(605	)		(74.0	)%
Other		(147	)		(8.1	)%

Net broadcast revenue variance	$	(9,803	)		(13.5	)%

Local advertising — The decrease of approximately $7.2 million, or 12.1%, in local advertising revenue in 2009 compared to 2008 was due primarily to the effects on advertising spending of deteriorating economic conditions throughout the United States. The overall declines in local direct and agency revenues were partially offset by increases in Interactive revenue at each of our broadcast markets compared to prior year results.

National advertising — National advertising revenue decreased approximately $2.0 million during the first nine months of 2009, or 26.2% compared to 2008, and was spread across all of our broadcast markets. The general decline in national revenue was due primarily to the poor economic conditions present during 2009.

Barter revenue — The increase in barter revenue was due primarily to the timing of when advertisers elected to air their commercials.

Political advertising — Political advertising revenue decreased approximately 74.0% for the first nine months of 2009 compared to 2008. The 2008 year was a very strong political revenue year due to numerous local, state and national elections.

Other — Other revenue decreased approximately 8.1% for the first nine months of 2009 compared to 2008. The decrease was attributable to lower syndication revenue due to fewer affiliate agreements for our “Free Beer & Hot Wings” syndicated morning show.

Station Operating Expenses

Station operating expenses decreased 7.0%, to approximately $43.3 million for the first nine months of 2009 from approximately $46.5 million in the comparable period of 2008. The table below provides a summary of the station operating expense variance for the comparable nine-month periods (in thousands):

Station operating expense variance:


	Decrease/
	(increase) in
	station operating			%
	expenses			Change
Technical expense	$	207			8.1	%
Programming expense		500			3.9	%
Promotion expense		570			34.2	%
Interactive expense		(5	)		(0.5	)%
Sales expense		1,361			9.3	%
Administrative expense		777			6.8	%
Barter expense		(145	)		(6.1	)%

Station operating expense variance	$	3,265			7.0	%

Technical expense — Technical expenses decreased approximately 8.1% during the first nine months of 2009, due primarily to lower utility costs in our New York markets and fewer equipment and building repairs, and associated consulting costs, during the current period. These savings were partially offset by higher rent expense for certain of our broadcast facilities.

Programming expense — Programming expense decreased by approximately 3.9% in 2009 compared to the previous year. The decrease was due primarily to a combination of salary savings and lower outside consultant fees in several of our markets. In addition, we incurred lower broadcast rights fees in our Flint, Michigan market, where we replaced the morning show on one station with our syndicated “Free Beer & Hot Wings” morning show. These savings were partially offset by increased music license fees in all of our broadcast markets.

Promotion expense — Promotion expense decreased approximately $0.6 million, or 34.2% compared to the 2008 period. The decrease is due primarily to lower levels of promotional spending for television time, billboards, contest prizes, and promotional products, as we continued to manage our discretionary costs in response to challenging economic conditions. In addition, several of our markets had savings in salary expense during the current nine-month period.

Interactive expense — Interactive expense was essentially flat for the first nine months of 2009 compared to the same period in 2008. Savings in salaries and streaming fees were offset by higher commission expense associated with our higher revenue levels during 2009, and increased music license fees for all our broadcast markets.

Sales expense — During the first nine months of 2009, sales expense decreased approximately $1.4 million, or 9.3% compared to the same 2008 period. The decrease was due primarily to lower salaries, commissions, bonuses and national representation fees associated with lower revenue levels during the 2009 period. These savings were partially offset by increased rating service fees across all our broadcast markets.

Administrative expense — During the first nine months of 2009, administrative expense decreased approximately $0.8 million, or 6.8%, from the comparable 2008 period. The savings were primarily due to: reduced bonus expense as a result of lower operating results compared to targeted bonus-plan levels; lower payroll taxes due to lower overall payroll, commission and bonus expense during the period; savings in Company match expense on employee contributions to the 401(k) Profit Sharing Plan, which match was eliminated January 14, 2009; franchise tax savings in several of our broadcast markets; savings in utilities and maintenance and repair costs; and savings in legal and professional fees, as certain legal matters were resolved during the 2008 year. These savings were partially offset by higher medical costs during the first nine months of 2009 compared to the same period in 2008 due to variability in the timing and amount of medical claims, higher bad debt expense, and increased credit card fees, as the number of customers paying by credit card increased during the 2009 year.

Barter expense — The change in barter expense is due to the timing of the use of bartered goods and services.

Depreciation and Amortization

Depreciation and amortization expense decreased approximately $0.2 million, or 7.1% during the first nine months of 2009 compared to the same period in 2008. The decrease was due primarily to reduced depreciation expense for our Evansville, Indiana, Ft. Collins, Colorado, and Flint and Grand Rapids, Michigan stations, as many assets acquired during those purchases are now fully depreciated. Additionally, depreciation in our Buffalo, New York market decreased due to the sale of the broadcasting assets of WECK-AM in 2008. Amortization expense decreased during the first nine months of 2009 compared to the same period in 2008, as certain definite-

lived intangible assets acquired with our purchase of the Bloomington, Illinois market became fully amortized mid-way through the second quarter of 2009.

Corporate Expense

Corporate general and administrative expense increased by approximately 20.7% to approximately $6.6 million for the nine-month period ended September 30, 2009. Approximately $1.1 million of the increase was due to professional fees incurred in connection with our efforts to obtain a waiver or amendment of our credit agreement. We recorded additional expense related to the Company’s deferred compensation plan during the current period, as positive investment results in the plan during 2009 resulted in higher levels of compensation cost to the Company. In addition, stock compensation expense increased during the first nine months of 2009, as nonvested stock previously granted to the Company’s former Chairman of the Board was accelerated upon his resignation. Salary expense increased during the period, as we increased staff related to our Interactive initiative. These expenses were partially offset by reduced bonus expense based upon the Company’s operating results compared to its established goals and lower levels of business travel and entertainment.

Impairment of Indefinite-Lived Intangible Assets and Goodwill

Based on deteriorating global economic conditions, volatility in the equity markets, and operating results for the quarter, we performed an analysis for potential impairment of our indefinite-lived intangibles and goodwill during the first quarter of 2009. Based primarily upon material reductions in future revenue and cash flow projections, we determined that the fair value of goodwill and FCC licenses for certain markets were less than the carrying values recorded in our financial statements. Due to the timing and complexity of fair value calculations, we were unable to complete the impairment analysis during the first quarter of 2009. However, based upon our preliminary valuations, we determined that an impairment loss was probable and reasonably estimable; accordingly, we recorded a pre-tax impairment charge of $25.6 million for FCC licenses and approximately $6.2 million for goodwill. We completed our impairment analysis during the second quarter of 2009 and made no adjustments to our previously recorded impairment estimates.

Interest Expense

Interest expense decreased to approximately $7.2 million during the first nine months of 2009, from approximately $8.9 million in the comparable 2008 period. The decrease was due primarily to lower average interest rates during 2009 compared to 2008. The average interest rate for the first nine months of 2009 was 4.61%, compared to 5.59% for the first nine months of 2008. Commencing in May 2009, we began paying a 2.0% default premium on our outstanding borrowings under the credit agreement, and in June 2009, we were precluded from further utilizing LIBOR-based interest rates on our outstanding borrowings; however, despite these factors, average interest rates for the first nine months of 2009 were still lower than those in the previous year due to the steep decline in LIBOR-based interest rates during the period in which we could utilize them. In addition, lower average debt levels during 2009 also contributed to the decrease in interest expense. Through September 2009, our average debt was approximately $188.8 million, compared to approximately $195.2 million for the comparable 2008 period.

Realized and unrealized (loss) gain on derivatives, net

In order to mitigate the impact of potential interest rate fluctuations, during the fourth quarter of 2006, we swapped the interest rates on both the Term A Loan and Term B Loan portions of our credit agreement, from floating rates to fixed rates. The Term A Loan pricing is fixed at approximately 4.83% for five years and the Term B Loan pricing is fixed at approximately 4.72% for five years, in both cases plus the applicable margin. Since hedge accounting was not applied to these interest rate swap agreements, revaluation gains and losses associated with changes in the fair value measurement of the swaps are recorded within realized and unrealized (loss) gain on derivatives in the condensed consolidated statements of operations. During the first nine months of 2009, we recorded an unrealized gain of approximately $3.5 million on the change in the fair value of the swaps, offset by a realized loss of approximately $4.4 million due to unfavorable swap fixed rates compared to market rates during the period. During the first nine months of 2008, we recorded an unrealized loss of approximately $0.5 million on the change in the fair value of the swaps, and a realized loss of approximately $1.6 million due to the unfavorable swap fixed rates compared to market rates during the period.

Impairment of Note Receivable and Other

Income Taxes

During the first nine months of 2009, we recorded income tax expense at an effective rate of 0.5%. This rate includes a tax benefit at a (34.0)% federal rate, a state tax benefit, net of federal benefit, of (4.3)% and miscellaneous adjustments of 0.2%. Consistent with our conclusions at December 31, 2008, the tax benefits recorded were offset by a charge to the valuation allowance against our deferred tax assets of 38.6%, as we are unable to conclude that it is more likely than not that the assets will be realized. We recorded an income tax benefit on continuing operations of approximately $17.5 million in the first nine months of 2008, which represented a (28.5)% effective rate. The rate included a (34.0)% federal tax benefit rate, a state tax rate, net of federal benefit, of (3.0)%, an adjustment to the valuation allowance of 9.4%, and miscellaneous adjustments of (0.9)%.

Discontinued Operations


	2008
Net broadcast revenue	$	182
Station operating expense		155
Allocated interest expense		15
Gain on sale and other		(638	)

Gain before income taxes		650
Income tax expense		248

Net gain	$	402

LIQUIDITY AND CAPITAL RESOURCES

Executive Overview

Our credit agreement contains certain financial and other covenants, which, among other things, require us to maintain specified financial ratios, and impose certain limitations on us with respect to lines of business, mergers, investments and acquisitions, additional indebtedness, distributions, guarantees, liens and encumbrances. Indebtedness under the credit agreement is secured by a lien on substantially all of our assets and of our operating subsidiaries and by a pledge of our operating and license subsidiaries’ stock, and by a guarantee of our obligations by our subsidiaries. Our ability to meet certain of these financial ratios has been affected by economic trends that have caused a general downturn in the advertising sector, including advertising on our radio stations. The likelihood that we would not be able to meet certain financial ratios during the 2009 year and the possibility that our lenders could require that repayment of the outstanding debt under the credit agreement be accelerated created substantial doubt about our ability to continue as a going concern at December 31, 2008. Accordingly, the Report of Independent Registered Public Accounting Firm issued by our auditors for the 2008 year contained an explanatory paragraph regarding this uncertainty. Under the terms of the credit agreement, any audit report containing going concern language constitutes a default under the agreement. As a result of this default, at December 31, 2008, all debt outstanding under the credit agreement was recorded as currently payable in our consolidated financial statements. In addition, a valuation allowance was established on substantially all of our deferred tax assets, as we were unable to conclude that it is more likely than not that the assets will be realized, given the uncertainty in our ability to continue as a going concern. On April 1, 2009, we received notification from our lenders that the explanatory paragraph would constitute an Event of Default if continued unremediated within 30 days. At April 30, 2009, the 30-day period expired and our inability to cure the default constituted an Event of Default under the agreement. We are currently in negotiations with our lenders to waive or amend the terms of our credit agreement to modify certain of the covenants and conditions in order to regain compliance with the terms of the agreement, and/or to restructure our obligations under the agreement, and at the request of our lenders, have engaged the services of an outside consultant to work towards that end and to advise the lenders during negotiations with us. We have and will continue to incur fees through the resolution of this process. If we are successful in obtaining a waiver or amendment to our credit agreement, we anticipate we will incur fees to the lenders and other parties for such waiver or amendment, the amount of which we cannot predict with any degree of certainty at this time. Through September 30, 2009, we have incurred approximately $1.1 million in professional fees related to the process of obtaining a waiver or amendment. There can be no assurances that a waiver or amendment will be obtained.

Excluding the effect of any potential acceleration of repayment of the borrowings under our credit agreement, we believe that the cash generated from operations and available cash on hand will be sufficient to meet our requirements for corporate expenses, capital expenditures and scheduled debt and interest repayments through the remainder of the 2009 year. However, if subsequent to that date we are unable to borrow amounts available under the revolving portion of our credit agreement, we may not have sufficient funds to meet our obligations for required interest and debt repayments in 2010. If we are successful in obtaining a waiver or amendment to our credit agreement, we expect that we will need to refinance the outstanding debt on terms subject to market conditions at that date due to the fact that the majority of the borrowings under the Term B Loan portion are due at the end of the life of our credit agreement.

Our cash and cash equivalents balance at September 30, 2009 was approximately $6.0 million, compared to approximately $1.2 million at September 30, 2008. We typically maintain a target cash balance of approximately one million dollars, as our excess cash generated by operating activities after investing activities is utilized to pay down our revolving credit agreement. However, due to the likelihood that available borrowings under our credit agreement could be imminently suspended, we borrowed $13.5 million of our available revolver balance during the first quarter of 2009, which we believe will enable us to make scheduled repayments of debt and interest through the remainder of 2009. Additionally, since during the Event of Default we cannot re-borrow any voluntary repayments that we would make under the revolving portion of our loan with cash provided by our operations, we have ceased making voluntary repayments, which has contributed to the increase in our cash balances.

We have three LIBOR-based interest rate swap agreements on our Term B Loan and two LIBOR-based interest rate swap agreements on our Term A Loan, the purpose of which are to effectively convert borrowings under our Term B Loan and Term A Loan from variable-rate to fixed-rate debt. During the first nine months of 2009, we realized a loss of approximately $4.4 million related to the settlement of our swap agreements as a result of lower market interest rates compared to our fixed swap rates. During the first nine months of 2008, we realized a loss of $1.6 million on the settlement of our swap agreements as a result of lower market interest rates compared to our fixed rates. Due to the Event of Default under the terms of our credit agreement, effective June 2009, we were no longer permitted to elect LIBOR-based interest rates for our outstanding balances under the credit agreement. Accordingly, we have begun paying interest utilizing Base Rate Loan interest rates, which are based on the current prime rate plus applicable margin. At September 30, 2009, Base Rate Loan interest rates exceeded LIBOR rates. Consequently, our future interest rates will likely be higher than the fixed rates we secured through our interest rate swap agreements, until such time when we are permitted to elect LIBOR rates for our outstanding balances.

Historically, we have focused on acquiring radio stations in new broadcast markets and expanding or strengthening our presence in our existing markets. However, due to our current debt covenant compliance issues, as well as existing market and general economic conditions, we are currently focused on reducing our leverage ratio. We may continue to evaluate opportunities to acquire suitable broadcast targets at acceptable prices based on the availability of public or private capital at satisfactory terms at future dates.

Under the provisions of the excess cash flow calculation contained in the credit agreement, on April 30, 2009, we were required to make repayments of approximately $4.5 million based upon the calculation of excess cash flow generated by our operations. The repayment was comprised of approximately $1.1 million of the amounts borrowed under the Term A Loan portion, $2.5 million of the amounts borrowed under the Term B Loan portion, and approximately $0.9 million of the amounts borrowed under the revolving portion of the credit agreement. We used cash on hand to fund the $4.5 million repayment required under the excess cash flow calculation. The amounts required to be repaid under the Term A Loan and Term B Loan portions of the credit agreement are permanent reductions of the amounts available under those portions of the agreement. The amount repaid under the revolving portion of the credit agreement could typically be re-borrowed under the terms of the credit agreement. However, due to our Event of Default under our credit agreement, no further amounts can be borrowed under the revolving portion of the agreement until an amendment or waiver agreement is reached with our lenders. Due to the Event of Default, the lenders could require that outstanding borrowings under the credit agreement be accelerated to currently payable. While we are subject to an Event of Default, the rate of interest on amounts outstanding under the credit agreement has been

increased by 2.0% per annum and we may not elect LIBOR-based interest rates on our outstanding loan balances. Instead, all outstanding balances incur interest at Base Rate Loan interest rates, which are based upon the current prime rate plus applicable margin.

Sources of Funds

In the first nine months of 2009, our sources of cash were derived primarily from cash provided by operating activities and borrowings under our credit agreement.

At September 30, 2009, we had approximately $6.0 million in cash or cash equivalents on hand and $0.3 million of restricted cash. During the quarter ended September 30, 2009, cash used in operations was approximately $0.1 million. Because of the existing default under our credit agreement we do not have access to our revolver or any other lines of credit, and depend solely upon our available cash and cash provided by our operations to meet working capital requirements, make cash interest payments on our debt, and repay our debt as required under our credit agreement, as discussed below.

Net cash provided by operating activities decreased during the first nine months of 2009 to approximately $3.1 million, compared to approximately $10.8 million in the 2008 period. The $7.6 million decrease was due primarily to the lower operating results during the 2009 period, higher swap settlement costs in 2009, and the timing of cash outflows and inflows of operating asset and liability accounts.

Cash flows provided by financing activities during the first nine months of 2009 were approximately $2.5 million, compared to cash flows used in financing activities of approximately $16.9 million in the first nine months of 2008. During the 2009 period, we had net borrowings of approximately $2.6 million under the credit agreement to allow for repayments of debt and interest throughout the remainder of the 2009 year. During the first nine months of 2008, we repaid borrowings under our credit agreement with proceeds from the sale of certain radio stations and cash provided by operations.

At December 31, 2008, we reclassified all outstanding balances under our credit agreement to currently payable, as our lenders may, at their discretion, accelerate the payments of the outstanding amounts to current due to our failure to comply with certain provisions of our credit agreement. However, we are providing the information below with regard to certain terms and conditions contained within our credit agreement in the event the debt is not required to be repaid currently.

At September 30, 2009, we had borrowings under the credit agreement of approximately $187.7 million, comprised of approximately $41.4 million of Term A Loan borrowings, approximately $105.8 million of Term B Loan borrowings, and $40.5 million of revolver borrowings. On April 1, 2009, we received notice from Bank of America, administrative agent for our credit agreement, that due to an Event of Default under the terms of the agreement, caused by an explanatory paragraph regarding the uncertainty in our ability to continue as a going concern in the Report of Independent Registered Public Accounting Firm issued by our auditors in connection with the audit of our December 31, 2008 consolidated financial statements, no further amounts could be borrowed under the revolving portion of the credit agreement until the default is cured or waived.

Our available borrowings under the Term A and Term B portions of the credit agreement were permanently reduced by approximately $3.6 million on April 30, 2009 due to the required repayment based upon our calculation of excess cash flow generated from our operations, per the terms of the agreement. In addition, we were required to repay approximately $0.9 million under the revolving portion of the credit agreement. The amount repaid under the revolving portion could typically be re-borrowed under the terms of the credit agreement; however, we are currently precluded from borrowing additional amounts until our Event of Default is cured or waived.

Borrowings under the credit agreement bore interest at an average rate of 6.11% and 5.90% at September 30, 2009 and 2008, respectively. Our weighted-average interest rate for the quarter ended September 30, 2009 and 2008 was 6.05% and 5.02%, respectively.

Under the terms of our credit agreement, we are subject to a Maximum Consolidated Leverage Ratio, a Minimum Consolidated Interest Coverage Ratio, and a Minimum Consolidated Fixed Charge Coverage Ratio, as well as to negative covenants customary for facilities of this type. We were not in compliance with all of the required covenants and conditions of our credit agreement at September 30, 2009.

Uses of Funds

During the first nine months of 2009, we utilized our sources of cash primarily to repay long-term debt borrowings and fund capital expenditures. Additionally, due to our ongoing default under certain terms and conditions of our credit agreement, our lenders required us to place $0.3 million of cash into a restricted bank account.

Cash flows used in investing activities was approximately $0.7 million in the first nine months of 2009, compared to approximately $6.0 million provided by investing activities in the same period of 2008. Our sale of four Watertown, New York stations and one station in each of our Albany and Buffalo, New York markets during the first quarter of 2008 provided approximately $7.9 million of net cash proceeds.

We funded capital expenditures of approximately $0.6 million in the first three quarters of 2009 compared to approximately $2.0 million in the comparable 2008 period. Consolidation capital expenditures for our Evansville building project were approximately $1.0 million during the first nine months of 2008. No consolidation projects were ongoing during the comparable 2009 period. Maintenance capital expenditures, excluding HD technology expenditures, were approximately $0.6 million in 2009 compared to approximately $0.9 million in 2008. There were no material expenditures for conversions of stations to HD Radio during the first nine months of 2009, and approximately $0.1 million during the first nine months of 2008.

As of March 31, 2007, we began making required quarterly repayments of the amounts borrowed under the Term B Loan, which repayments continue until November 21, 2013, at which date any remaining amounts outstanding under the loan are due and payable. Based upon the reduction in the principal balance of the Term B Loan due to the required repayments under the excess cash flow calculation, the future repayments of principal under the Term B Loan have been reduced to approximately $271,361 per quarter, commencing with the December 31, 2009 quarterly repayment. Borrowings under the Term A Loan must be repaid in 24 quarterly installments, which repayments began March 31, 2008. Quarterly repayments are currently at 2.36% of the original principal amount, which percentage increases to a maximum of 5.91% of the original principal amount, until the final payment date of November 21, 2013. No permanent

repayments are required under the revolving facility until the termination of the credit agreement on November 21, 2013.

Off-Balance Sheet Financing Arrangements

We have no off-balance sheet financing arrangements with related or unrelated parties and no unconsolidated subsidiaries.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to the impact of interest rate changes as borrowings under our credit agreement bear interest at variable rates. It is our policy to enter into interest rate transactions only to the extent considered necessary to meet our objectives. Under the terms of our credit agreement, we were required to enter into within 180 days of the effective date of the credit agreement and maintain for a two-year period after becoming effective, an interest rate protection agreement, providing interest rate protection for a minimum of one-half of the aggregate outstanding borrowings under the Term B Loan portion of the credit agreement. In December 2006, we entered into five LIBOR-based forward interest rate swap agreements, the purpose of which was to convert a portion of our outstanding debt balances from variable rate interest to fixed rate interest. The swap agreements became effective in December 2006 and expire in December 2011. Under these agreements, payments are made based on fixed rates of between 4.72% and 4.83%, plus applicable margin. Due to the Event of Default under the terms of our credit agreement, we are prohibited from electing LIBOR-based interest rates on our outstanding loan balances. Instead we must utilize Base Rate Loan interest rates, which are based on the current prime rate plus applicable margin. Based on our exposure to variable rate borrowings at September 30, 2009, a one percent (1%) change in the weighted average interest rate would change our annual interest by approximately $1.9 million.

ITEM 4T. CONTROLS AND PROCEDURES.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s 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 the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Rule 13a-15(e). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company has carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

There have been no changes in the Company’s internal controls over financial reporting for the quarter ended September 30, 2009, or in other factors that could significantly affect the internal controls subsequent to the date the Company completed its evaluation. Therefore, no corrective actions were taken.

PART II- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We currently and from time to time are involved in litigation incidental to the conduct of our business. During the second quarter of 2009, Regent and approximately 12 other parties (not associated with Regent) were named as defendants in a lawsuit brought by Aldav, LLC alleging infringement on a

patent issued to Aldav for an Internet Radio System with Selective Replacement Capability. We intend to defend our position in this matter vigorously.

Please see our Annual Report on Form 10-K for the year ended December 31, 2008 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 regarding the lawsuit filed against us by Alan Brill and various of his related entities in conjunction with Regent’s 2003 purchase of twelve radio stations from Brill Media Company LLC and related entities.

We are not aware of any probable or levied penalties against the Company relating to the American Jobs Creation Act.

ITEM 1A. RISK FACTORS.

RISKS RELATED TO OUR CAPITAL STRUCTURE

We Are in Default Under Our Credit Agreement.

The Report of Independent Registered Public Accounting Firm issued by our auditors relating to our financial statements for the period ended December 31, 2008 contains an explanatory paragraph regarding uncertainty in our ability to continue as a going concern. Under the terms of our credit agreement, any audit report containing such going concern language constitutes a default. On April 1, 2009, our lenders notified us that a default had occurred, that no further borrowings could be made under the credit agreement until the default was remedied, and that we had thirty days to cure such default. We have not yet cured such default nor have we sought or obtained any forbearance agreement that would limit our lenders rights and/or remedies with respect to our default. Accordingly, our lenders have imposed a default rate of interest and could at any time accelerate the maturity of our outstanding debt to become immediately payable, and/or exercise other rights and remedies available to the lenders under the terms of the credit agreement including, without limitation, the right to foreclose on the collateral securing our indebtedness. Our indebtedness under the credit agreement is secured by a lien on substantially all of our assets and of our subsidiaries and by a pledge of our operating and license subsidiaries’ stock, and is further supported by guarantees from our subsidiaries.

Our credit agreement also contains a number of financial covenants, which, among other things, require us to maintain specified financial ratios and impose certain limitations on us with respect to lines of business, mergers, investments and acquisitions, additional indebtedness, distributions, guarantees, liens and encumbrances. At March 31, June 30 and September 30, 2009, we were not in compliance with the Maximum Consolidated Leverage Ratio, as defined in our credit agreement. Additionally, at September 30, 2009, we were not in compliance with the Minimum Interest Coverage Ratio and the Minimum Consolidated Fixed Charge Coverage Ratio, as defined in our credit agreement. Such non-compliance constitutes additional defaults under our credit agreement and further subjects us to the possibility that our lenders could exercise any or all of their rights and remedies. Unless and until such covenant default is cured, we will be unable to remedy the default created by the inclusion of the going concern language in the report of our auditors.

Because of the default, we are unable to elect LIBOR-based rates of interest on our outstanding loans and thus are unable to take advantage of the current low interest rate environment. We currently make quarterly cash interest payments using a Base Rate plus applicable margin interest rate on our loans.

Without Access to the Revolving Portion of our Credit Agreement, We May Not Have Sufficient Cash to Fund Operations Through 2010.

So long as we remain in default under our credit agreement, we do not have access to the revolving portion of that agreement, and thus are dependent entirely on cash on hand and cash generated from operations to fund our future operations. Without an amendment to the credit agreement, and/or new equity capital, if any were available on terms reasonably acceptable to us, it is possible that we will have insufficient cash to fund future operations and make required interest and debt repayments through the first half of 2010.

We Are In the Process of Renegotiating Certain Terms of Our Credit Agreement, Which Renegotiations May Not Be Successful. We Expect That Any New Terms Will Be Less Favorable To Us.

We are currently in discussions with the lenders under our credit agreement to amend certain of the financial ratios and other covenants contained in the agreement in order to regain compliance, and/or to potentially restructure our debt. We cannot guarantee that we will be able to negotiate an amendment to our credit agreement. If we are unable to negotiate such an amendment, our lenders could foreclose on our assets and those of our operating subsidiaries, and on the stock we hold in our license subsidiaries. In addition, if we are able to negotiate an amendment to our credit agreement, such an amendment could contain terms unfavorable to us and could result in the imposition of additional finance fees and higher interest charges. Such terms and charges could have a material adverse effect on our future cash flows, results of operations or financial condition.

We Have Substantial Indebtedness and Debt Service Requirements That We May Not be Able to Meet.

At September 30, 2009, our outstanding debt was approximately $187.7 million. In the past, we have borrowed to finance acquisitions, repurchase shares of our common stock, or for other corporate purposes. We may incur additional debt in the future to fund our operations, subject to existing restrictions within our credit agreement. Because of our substantial indebtedness, a significant portion of our cash flow from operations is, and will be, required for debt service. Our significant levels of debt could have negative consequences for us. You should note that:

	•		a substantial portion of our cash flow is, and will be, dedicated to debt service and is not, and will not be, available for other purposes;

	•		our ability to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate or other purposes may be impaired in the future;

	•		certain of our borrowings are, and will be, at variable rates of interest, which may expose us to the risk of increases in interest rates;

	•		our level of indebtedness could make us more vulnerable to economic downturns, limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and economic conditions.

In the event our lenders would not require the acceleration of repayment of all amounts owed under the credit agreement, we are required to make scheduled repayments of amounts borrowed. Under the terms of our credit agreement, the amount outstanding under the Term B Loan permanently reduces each quarter by approximately 0.24% of the initial balance, with the final payment due on November 21, 2013. Amounts outstanding under the Term A Loan permanently reduce each quarter in amounts ranging from 1.21% to 5.91% of the initial balance. In addition, we may be required to make mandatory prepayments of debt with any excess cash flow we may generate from operations. However, if such cash flow is not sufficient, we may be required to issue additional debt or equity securities, refinance our obligations, or dispose of one or more of our properties in order to make such scheduled payments. We cannot be sure that we would be able to effect any such transactions on favorable terms, if at all.

We May Be Required to Raise New Equity Capital To Fund Our Working Capital and Continue Operations.

We are dependent upon our available cash and cash from operations to meet our working capital requirements, to make interest payments on our debt, and to pay down our debt as required under our existing credit agreement. While management is focused on controlling costs, we may need to restructure our debt and/or raise new capital from the sale of equity to fund working capital and continue operations. Any such transaction or series of transactions will have an immediate dilutive effect on our existing common stockholders, and may lead to a change in control of the Company.

Continued Net Losses Have Resulted in a Deficit to Our Stockholders’ Equity Which May Continue to Deteriorate Absent a Restructuring or New Equity Capital.

At September 30, 2009, our balance sheet reflected a deficit in stockholder’s equity of approximately $29.3 million due to continued net losses and impairment charges to our assets. It is uncertain when revenue and net income will improve to begin to restore our stockholder’s equity, or whether continued net losses and impairments will cause our stockholder’s equity to deteriorate further. We do not anticipate restoring our equity to a positive balance in the near term absent a restructuring and/or the raising of new equity capital, which may be available to us only on substantially unfavorable terms to our existing common stockholders, or not at all.

Counterparties to Our Credit Agreement and Interest Rate Swaps May Not Be Able to Fulfill Their Obligations Due to Disruptions in the Global Credit Markets.

Current economic conditions have been and continue to be volatile. In recent months, the volatility has reached unprecedented levels. As a result of concerns about the stability of the markets and the strength of counterparties, many financial institutions have reduced and, in some cases, ceased to provide funding to borrowers. Based on information available to us, we have no indication as of our filing date that the financial institutions syndicated under our credit agreement would be unable to fulfill their commitments to us. Additionally, we have interest rate swap agreements to hedge the variability of the interest payments associated with our credit agreement. We could be exposed to losses in the event of nonperformance by the counterparties on these instruments.

Our Deferred Income Tax Assets May Not Be Realizable.

Deferred income tax represents the tax effect of the differences between the book and tax bases of assets and liabilities. Deferred tax assets, which include net operating loss carryforwards for entities that have generated or continue to generate taxable losses, are assessed periodically by management to determine if they are realizable. The Company’s deferred tax assets could enable it to satisfy a portion of its future tax liabilities without the use of cash resources. If, based on available information, it is more likely than not that the deferred income tax assets will not be realized, then a valuation allowance must be established with a corresponding charge to net income. As a result of the anticipated failure to meet the required financial covenants in our credit agreement, the potential acceleration of the maturity of our debt creates uncertainty in our ability to conclude that it is more likely than not that the deferred tax assets will be realized. Consequently, at December 31, 2008, we recorded a valuation allowance against substantially all of our deferred tax assets based upon our inability to conclude that it is more likely than not that the deferred tax assets will be realized. The potential need to record additional valuation allowances could have a material effect on our future results of operations by reducing income tax benefits that we could otherwise have recognized in our financial statements. In addition, any change in control of the Company due to a restructuring of our debt and/or the sale of equity to raise capital may result in annual limitations on our

ability to use our deferred tax assets to offset tax on future income under Section 382 of the Internal Revenue Code.

We May Incur Future Losses Due to Impairment of Our Intangible Assets.

Indefinite-lived intangible assets, primarily consisting of FCC licenses and goodwill, represent a significant portion of our non-current assets. Such intangible assets are subject to annual impairment testing under current accounting guidance to determine if their carrying amount exceeds their fair value. If it is determined the fair value is lower than the carrying value of an intangible asset, we are required to reduce the value of the asset to its fair value and record a corresponding impairment charge. During our 2006 annual impairment review of indefinite-lived intangible assets, we recorded an impairment loss of approximately $48.4 million ($4.7 million of which was reclassified to discontinued operations) as a component of operating loss in our Consolidated Statements of Operations and Comprehensive Loss. During our 2007 annual impairment review of indefinite-lived intangible assets, we recorded an impairment loss of approximately $163.6 million as a component of operating loss in our Consolidated Statements of Operations and Comprehensive Loss. During our 2008 review of indefinite-lived intangible assets, we recorded an impairment loss of approximately $67.5 million as a component of operating loss in our Consolidated Statements of Operations and Comprehensive Loss. Many factors may affect our fair value calculations, including, but not limited to, local economic conditions in our radio markets, interest rates, the performance of the S&P 500, cash flow multiples, and capital expenditures. Our future impairment reviews could result in additional write-downs, and we cannot with any degree of certainty predict what effect, if any, such write-downs could have on our future operations.

RISKS RELATED TO OUR OPERATIONS

We Face Many Unpredictable Business Risks That Could Have a Material Adverse Effect on Our Future Operations.

Our operations are subject to many business risks, including certain risks that specifically influence the radio broadcasting industry, which could have a material adverse effect on our business. These include:

	•		changing economic conditions, both generally and relative to the radio broadcasting industry;

	•		shifts in population, listenership, demographics, or audience tastes;

	•		the level of competition for advertising revenues with other radio stations, satellite radio, television stations, newspapers, internet-based media, and other communications media;

	•		technological changes and innovations;

	•		the potential future imposition of fees or charges specific to the broadcasting industry; and

	•		changes in governmental regulations and policies and actions of federal regulatory bodies, including the U.S. Department of Justice, the Federal Trade Commission, and the Federal Communications Commission (FCC).

Given the inherent unpredictability of these variables, we cannot with any degree of certainty predict what effect, if any, these risks will have on our future operations.

Adverse Economic Conditions Have Caused a Decline in Client Spending Which Has Adversely Affected Our Business and Financial Performance.

Our operating results continue to be impacted by the health of the national economy and the local economies in which we operate. Our business and financial performance, including the collection of our accounts receivable, have been and may continue to be adversely affected by current and future economic conditions (including a reduction in the availability of credit, the potential for higher energy costs, and financial market volatility) which have caused a decline in client spending. Additionally, declines in the financial health of specific industries that routinely advertise on our stations, such as the automotive sector, have negatively impacted our business, and could continue to do so in the future.

We May Lose Key Personnel.

Our business depends upon the continued efforts, abilities and expertise of our executive officers and key employees, particularly William L. Stakelin, our President and CEO. We believe that the unique combination of skills and experience possessed by Mr. Stakelin and these individuals would be difficult to replace and could have a material adverse effect on us. These adverse effects could include the impairment of our ability to execute our operating and acquisition strategies and a decline in our standing in the radio broadcast industry.

We also employ several on-air personalities with large loyal audiences in their individual markets. The loss of one or more of these personalities could result in a loss of audience share in that particular market.

An Economic Downturn in Any of Our Significant Markets Could Adversely Affect Our Revenue and Cash Flow.

Our stations are located in 13 markets. A significant decline in net broadcasting revenue from our stations in any of our significant markets could have a material adverse effect on our operations and financial condition.

Our Results of Operations Have Been and May Continue to Be Adversely Affected by a General Deterioration in Economic Conditions.

We derive substantially all of our revenue from the sale of advertising time on our radio stations. Generally, advertising tends to decline during economic recessions or downturns. Furthermore, because a substantial portion of our revenue is derived from local advertisers, our ability to generate advertising revenue in specific markets is directly affected by local or regional economic conditions. The current downturn in the U.S. economy has had a negative effect on our financial condition and results of operations, and could continue to negatively affect us for the foreseeable future.

Our Acquisition Strategy May Not Be Successful.

While we are currently focused on reducing our leverage ratio, historically we have looked to acquisitions to enhance our growth. Our growth strategy includes acquiring new stations in mid-sized markets. This strategy is subject to a variety of risks, including the:

	•		potential inability to obtain financing for acquisitions;

	•		reduction in the number of suitable acquisition targets resulting from continued industry consolidation;

	•		state of general broadcast industry valuations;

	•		inability to negotiate definitive purchase agreements on satisfactory terms;

	•		current adverse credit conditions;

	•		inability to sell any under-performing station; and

	•		failure or unanticipated delays in completing acquisitions due to difficulties in obtaining required regulatory approvals.

If we are unable to grow as planned, we may not be able to compete successfully with larger broadcasting companies and other media. Additionally, in the event that the operations of a newly acquired business do not meet our expectations, we may be required to write-off the value of some or all of the assets of the new business. The success of our completed acquisitions will depend on our ability to effectively integrate the acquired stations into our existing portfolio. Integration of acquisitions involves numerous risks, including difficulties in integration of operations, systems and management of a large and geographically diverse group of stations, the potential loss of key personnel at acquired stations, and the diversion of management’s attention from other business concerns during periods of integration.

We May Lose Audience Share and Advertising Revenue Due to Competition.

Our radio stations compete with other radio stations in each market for audience share and advertising revenue. Our advertising revenue primarily depends upon our stations’ audience share in the demographic groups targeted by our advertisers. Audience ratings and market shares are subject to change, and any change in a particular market could have a material adverse effect on the revenue of our stations located in that market. While we already compete in some of our markets with other stations with similar programming formats, if a competing station converts to a format similar to that of one of our stations, or if one of our competitors strengthens its operations, our stations could suffer a reduction in ratings and/or advertising revenue, and could incur increased promotional and other expenses. Other radio companies which are larger and have more financial resources may also enter our markets. Although we believe our stations are well-positioned to compete, we cannot assure that our stations will maintain or increase their current ratings or advertising revenue.

We also compete with other media, such as satellite-delivered digital audio radio, television, newspapers, direct mail, outdoor advertising, and internet-based media for advertising revenue. A loss of audience share to these media, or the introduction of new media competitors, could result in the inability to grow our advertising revenue, or decreased advertising revenue for us.

We Are Subject to Competition From New Technologies That May Affect Our Broadcasting Operations.

Our radio stations are subject to rapid technological change, evolving industry standards, and the emergence of competition from new media technologies and services. Various new media technologies and services have been introduced, or are being developed, including:

	•		satellite-delivered digital audio radio service, which has resulted in the introduction of new subscriber-based satellite radio services with numerous niche formats;

	•		audio programming by cable systems, direct-broadcast satellite systems, personal communications systems, internet content providers and other digital audio broadcast formats;

	•		in-band on-channel digital radio, which provides multi-channel, multi-format digital radio services in the same bandwidth currently occupied by traditional AM and FM radio services;

	•		low-powered FM radio, which could result in additional FM radio broadcast outlets; and

	•		MP3 players and other personal audio systems that create new ways for individuals to listen to music and other content of their own choosing.

We cannot predict the effect, if any, that competition arising from new technologies or regulatory change may have on the radio broadcasting industry or on our financial condition and results of operations. We continue to monitor technological changes and advances that could potentially have an impact on our business.

RISKS RELATED TO TRADING IN OUR COMMON STOCK

We Are Currently Not in Compliance with Nasdaq Rules for Continued Listing of Our Common Stock.

Our common stock is currently not in compliance with Nasdaq Stock Market (“Nasdaq”) rules for continued listing on the Nasdaq Global Market and is at risk of being delisted. This may subject us to decreased liquidity of our common stock. On August 11, 2008, we received a letter from Nasdaq notifying us that for the prior 30 consecutive business days, our common stock had not maintained a minimum $1.00 per share bid price as required by Marketplace Rule 4450(a)(5). In accordance with Marketplace Rule 4450(e)(2), we were provided 180 days, or until February 9, 2009, to regain compliance. To regain compliance, the closing bid price of our common stock must remain at or above $1.00 per share for a minimum of 10 consecutive business days. If compliance is not regained, Nasdaq will provide written notification that our common stock will be delisted from The Nasdaq Global Market. At that time, the Company has the right to appeal Nasdaq’s determination to a Nasdaq Listing Qualifications Panel or to step down the listing of our common stock to the Nasdaq Capital Market. We received subsequent notifications from Nasdaq that it suspended enforcement of the bid price and market value of publicly held shares requirements through July 31, 2009. As a result, all companies that were in a bid price or market value of publicly held shares compliance period would remain at that same stage of the process and would not be subject to being delisted for these concerns. As such, our cure period to regain compliance with the bid price rules has been extended to November 25, 2009, unless additional extensions are granted by Nasdaq, which we do not expect to occur. In addition, Marketplace Rule 4450(a)(2) requires that companies must maintain a market value of at least $5 million for their publicly held shares. The Company currently meets such requirement, but has been below that value for more than 30 consecutive business days at times during the past year which may have triggered a notice from Nasdaq if not for Nasdaq’s suspension of such requirement. If the Company would become unable to satisfy this requirement and if notified by Nasdaq of such deficiency, we expect that the Company will have 90 days to regain compliance following receipt of a delisting notice from Nasdaq.

Our Stock Price Has and May Continue to Experience Volatility.

The market price for our common stock may fluctuate due to various factors. These factors could include, among others:

	•		acquisition- or disposition-related announcements;

	•		market sentiment regarding the general long-term growth potential for broadcasters;

	•		changes to competing radio broadcasters and fluctuations in the price of other radio broadcasters’ common stock;

	•		ongoing or new technological innovations or products by competing broadcasters or other competitors;

	•		fluctuations in our quarterly and annual operating results;

	•		general market conditions;

	•		our ability to obtain adequate financing on reasonable terms;

	•		being delisted from Nasdaq; and

	•		our ability to continue as a going concern.

In addition, the stock markets have, in recent years, experienced significant price fluctuations. These fluctuations often have been unrelated to the operating performance of the specific companies whose stock is traded. Market fluctuations, as well as economic conditions, have adversely affected, and may continue to adversely affect, the market price of our common stock.

RISKS RELATED TO REGULATION

We Are Subject to Extensive and Changing Federal Regulation.

Our business is dependent upon maintaining our broadcasting licenses issued by the FCC, which are issued currently for a maximum term of eight years. Our broadcasting licenses will expire between 2012 and 2014. Although the vast majority of FCC radio station licenses are routinely renewed, we cannot assure you that our pending or future renewal applications will be approved, or that such renewals will not include conditions or qualifications that could adversely affect our operations. The non-renewal or renewal with substantial conditions or modifications of one or more of our licenses could have a material adverse effect on us.

We must also comply with the extensive FCC regulations and policies in the ownership and operation of our radio stations. FCC regulations limit the number of radio stations that a licensee can own in a market, which could restrict our ability to complete future transactions and in certain circumstances could require us to divest some radio stations. The FCC’s rules also limit our ability to transfer our radio stations in certain markets as a group to a single buyer. Additionally, these FCC regulations could change over time and we cannot assure you that those changes would not have a material adverse affect on us.

Enforcement by the FCC of its Indecency Rules Could Adversely Impact Our Business.

FCC rules prohibit the broadcast of “obscene” material at any time, and of “indecent” material between the hours of 6:00 a.m. and 10:00 p.m. Over the past several years, the FCC has increased its enforcement efforts with respect to these rules. In addition, recent legislation has substantially increased the penalties for broadcasting indecent material (up to $325,000 per incident). Broadcasters may also be subject to other penalties for the broadcast of obscene or indecent material, including revocation or non-renewal of their licenses. We may become subject to inquiries or proceedings regarding our stations’ broadcast of allegedly obscene or indecent material. To the extent any such proceeding results in the imposition of fines, a settlement with the FCC, or revocation or non-renewal of any of our licenses, our business could be adversely impacted.

We Could Experience Delays in Expanding Our Business Due to Antitrust Laws and Other Regulatory Considerations.

Although part of our growth strategy is the acquisition of additional radio stations, we may not be able to complete all the acquisitions that we agree to make. The Federal Trade Commission, the United States Department of Justice and the FCC carefully review proposed transactions under their respective regulatory authority, focusing, among other things, on the effects on competition, the number of radio stations and other media outlets owned in a market, and compliance with federal antitrust and communications laws and regulations. Any delay, prohibition or modification required by these regulatory authorities could adversely affect the terms of a proposed transaction or could require us to abandon an otherwise attractive opportunity. We have experienced delays from time to time in connection with some of our acquisitions. Additionally, we may be unable to maximize our profit when selling properties that no longer fit in our strategy, due to the same such regulations imposed upon our competitors.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

2(c) Repurchases of stock


								Approximate
						Total Number of		Dollar Value of
						Shares Purchased		Shares that May
	Total Number of			Average Price Paid		as Part of Publicly		Yet be Purchased
Period	Shares Purchased			per Share		Announced Plan ⁽¹⁾		under the Plan ⁽¹⁾
								(in thousands)
July 1, 2009 — July 31, 2009		0			—		0	$	1,593
August 1, 2009 — August 31, 2009		190	⁽²⁾	$	0.24		0	$	1,593
September 1, 2009 — September 30, 2009		0			—		0	$	1,593
Total		190		$	0.24		0	$	1,593


⁽¹⁾		On June 1, 2000, Regent’s Board of Directors approved a stock buyback program which authorized the Company to repurchase shares of its common stock at certain market price levels. Through September 30, 2007, the Board authorized the Company to repurchase approximately $56.7 million of Regent common stock, of which amount the Company has utilized approximately $55.1 million, leaving available repurchases of approximately $1.6 million, subject to the terms and conditions of the Company’s credit agreement. There were no repurchases of common stock under the program during the first nine months of 2009.

⁽²⁾		Represents shares of common stock exchanged as payment of employee withholding taxes related to the vesting of shares of nonvested stock granted under The Regent Communications, Inc. 2005 Incentive Compensation Plan.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

On April 1, 2009, the Company received notification from Bank of America, as the administrative agent for the other lenders and parties to Regent’s credit agreement, that the explanatory

paragraph regarding the uncertainty in the Company’s ability to continue as a going concern in the Report of Independent Registered Public Accounting Firm issued by Regent’s auditors in connection with the audit of the December 31, 2008 consolidated financial statements, constituted a Specified Default (as defined in the Bank of America notification) under the terms of the credit agreement. As such, if the Specified Default continued unremediated for 30 days, then: (a) the default would become an Event of Default (as defined in the credit agreement) under the credit agreement; (b) unless and until the default was remedied, no further borrowings could be made under the credit agreement; and (c) the lenders have not waived the Specified Default or the conditions to make additional loans. As of April 30, 2009, the 30-day period expired and the Company’s inability to cure the default constituted an Event of Default under the terms of the agreement. Due to the Event of Default, the lenders could require that outstanding borrowings under the credit agreement be accelerated to currently payable. While the Company is subject to an Event of Default, the rate of interest on the $187.7 million currently outstanding under the credit agreement has been increased by 2.0% per annum and we are precluded from utilizing LIBOR-based interest rates. The Company is currently in negotiations with its lenders to waive or amend the terms of the credit agreement to modify certain covenants and conditions in order to regain compliance with the terms of the agreement. However, there can be no assurances that a waiver or amendment will be obtained.

ITEM 6. EXHIBITS.

Exhibits

The exhibits identified as Part II Exhibits on the following Exhibit Index, which is incorporated herein by this reference, are filed or incorporated by reference as exhibits to Part II of this Form 10-Q.

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, hereunto duly authorized.


	REGENT COMMUNICATIONS, INC.
Date: November 10, 2009	By:	/s/ William L. Stakelin
		William L. Stakelin, President
		and Chief Executive Officer (Principal Executive Officer)


Date: November 10, 2009	By:	/s/ Anthony A. Vasconcellos
		Anthony A. Vasconcellos, Executive
		Vice President and Chief Financial Officer (Principal Accounting Officer)

EXHIBIT INDEX

The following exhibits are filed, or incorporated by reference where indicated, as part of Part II of this report on Form 10-Q:


EXHIBIT
NUMBER		EXHIBIT DESCRIPTION

3(a)*		Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended by a Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Special Rights and the Qualifications, Limitations, Restrictions, and Other Distinguishing Characteristics of Series G Preferred Stock of Regent Communications, Inc., filed January 21, 1999 (previously filed as Exhibit 3(a) to the Registrant’s Form 10-K for the year ended December 31, 1998 and incorporated herein by this reference)

3(b)*		Certificate of Amendment of Amended and Restated Certificate of Incorporation of Regent Communications, Inc. filed with the Delaware Secretary of State on November 19, 1999 (previously filed as Exhibit 3(b) to the Registrant’s Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by this reference)

3(c)*		Certificate of Decrease of Shares Designated as Series G Convertible Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on June 21, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(c) to the Registrant’s Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by this reference)

3(d)*		Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Special Rights and the Qualifications, Limitations, Restrictions, and Other Distinguishing Characteristics of Series H Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on June 21, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(d) to the Registrant’s Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by this reference)

3(e)*		Certificate of Decrease of Shares Designated as Series G Convertible Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on August 23, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(e) to the Registrant’s Form 10-Q for the quarter ended September 30, 1999 and incorporated herein by this reference)

3(f)*		Certificate of Increase of Shares Designated as Series H Convertible Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on August 23, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(f) to the Registrant’s Form 10-Q for the quarter ended September 30, 1999 and incorporated herein by this reference)

E-1


EXHIBIT
NUMBER		EXHIBIT DESCRIPTION

3(g)*		Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional, and Other Special Rights and the Qualifications, Limitations, Restrictions, and Other Distinguishing Characteristics of Series K Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on December 13, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(g) to Amendment No. 1 to the Registrants Form S-1 Registration Statement No. 333-91703 filed December 29, 1999 and incorporated herein by this reference)

3(h)*		Certificate of Amendment of Amended and Restated Certificate of Incorporation of Regent Communications, Inc. filed with the Delaware Secretary of State on March 13, 2002 (previously filed as Exhibit 3(h) to the Registrant’s Form 10-K for the year ended December 31, 2001 and incorporated herein by this reference)

3(i)*		Amended and Restated By-Laws of Regent Communications, Inc. adopted October 24, 2007 (previously filed as Exhibit 3(i) to the Registrant’s Form 10-Q for the quarter ended September 30, 2007 and incorporated herein by this reference)

4(a)*		Credit Agreement dated as of November 21, 2006 among Regent Broadcasting, LLC, Regent Communications, Inc. and the lenders identified therein (without schedules and exhibits, which Regent has determined are not material) (previously filed as Exhibit 4 to the Registrant’s Form 8-K filed November 28, 2006 and incorporated herein by this reference)

4(b)*		Amendment No. 1 to the Credit Agreement, dated as of February 23, 2007 among Regent Broadcasting, LLC, Regent Communications, Inc. and the lenders identified therein (without schedules and exhibits, with Regent has determined are not material) (previously filed as Exhibit 4(1) to the Registrants Form 8-K filed March 1, 2007 and incorporated here by this reference)

4(c)*		Amendment No. 2 to the Credit Agreement, dated as of November 15, 2007 by and among Regent Broadcasting, LLC, Regent Communications, Inc. and the lenders identified therewith (without schedules and exhibits, which Regent has determined are not material) (previously filed as Exhibit 4(a) to the Registrant’s Form 8-K filed November 21, 2007 and incorporated herein by this reference)

4(d)*		Rights Agreement dated as of May 19, 2003 between Regent Communications, Inc. and Fifth Third Bank (previously filed as Exhibit 4.1 to the Registrant’s Form 8-K filed May 20, 2003 and incorporated herein by this reference)

4(e)*		First Amendment to Rights Agreement dated and effective as of February 27, 2004 between Regent Communications, Inc., Fifth Third Bank, and Computershare Services, LLC (previously filed as Exhibit 4(c) to the Registrant’s Form 10-Q for the quarter ended September 30, 2004 and incorporated herein by this reference)

31(a)		Chief Executive Officer Rule 13a-14(a)/15d-14(a) Certification

31(b)		Chief Financial Officer Rule 13a-14(a)/15d-14(a) Certification

32(a)		Chief Executive Officer Section 1350 Certification

E-2


	Page
	Number
PART I FINANCIAL INFORMATION

Item 1. Financial Statements.

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2009 (unaudited) and September 30, 2008 (unaudited)		3

Condensed Consolidated Balance Sheets as of September 30, 2009 (unaudited) and December 31, 2008 (unaudited)		4

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 (unaudited) and September 30, 2008 (unaudited)		5

Notes to Condensed Consolidated Financial Statements (unaudited)		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		20

Item 3. Quantitative and Qualitative Disclosures About Market Risk		37

Item 4T. Controls and Procedures		37

PART II OTHER INFORMATION

Item 1. Legal Proceedings		37

Item 1A. Risk Factors		38

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		46

Item 3. Defaults upon Senior Securities		46

Item 6. Exhibits		47
EX-31.A
EX-31.B
EX-32.A
EX-32.B



	/s/ William L. Stakelin
	President and Chief Executive Officer



	/s/ Anthony A. Vasconcellos
	Executive Vice President and
	Chief Financial Officer



	/s/ William L. Stakelin
	William L. Stakelin
	Chief Executive Officer



	/s/ Anthony A. Vasconcellos
	Anthony A. Vasconcellos
	Chief Financial Officer