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EXHIBIT 10.33
[CHANCELLOR MEDIA CORPORATION OF LOS ANGELES LETTERHEAD]
January 2, 1998
Mr. X. Xxxxxx Xxxxx
President and Chief Executive Officer
Capstar Broadcasting Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Dear Xxxxx:
This letter, when signed by both parties below, will set forth our
agreement regarding the affiliation of Capstar Broadcasting Corporation
("Capstar") with the AMFM Radio Network (the "Network"), a division of
Chancellor Media Corporation ("Chancellor").
Upon execution of this letter, Capstar will affiliate with the Network
on the following terms and conditions:
1. Capstar's affiliation will include all Capstar-owned and/or
operated radio stations as of January 4, 1998, excluding only (i) those
stations which the Network has previously indicated would be inappropriate for
affiliation (as indicated on Schedule 1 hereto), and (ii) Capstar stations
licensed to communities in Alaska and Hawaii. All radio stations acquired buy
Capstar or placed under Capstar's management after January 4, 1998 (including
all radio stations owned or operated by SFX Broadcasting, Inc. ("SFX Stations")
from and after the Capstar-SFX merger closing, or such earlier date on which
any SFX Station is placed under Capstar's management) will become affiliates,
at the Network's sole discretion, on the earliest date on which maximum RADAR
reporting is feasible. (If the Network opts to exclude any post-January 4, 1998
acquired Capstar station from the Network, Capstar shall have the right to
require such affiliation by waiving the January 3, 1999 expiration date set
forth in Section 4 hereof and agreeing instead to a full, one-year term for
that Capstar station, commencing on its affiliation date.) The Network shall,
at its discretion, assign each Capstar affiliate to a particular demographic or
lifestyle network among the demographic and lifestyle networks maintained by
the Network from time to time.
2. All Capstar's affiliates shall be contractually obligated to clear
100% of the weekly inventory, with the exception of commercials deemed
unsuitable for broadcast in a particular Capstar community of license. (The
Network inventory shall include a maximum of one (1) minute each
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hour between the hours of 5:00 a.m. and midnight, Monday through Sunday.)
Capstar affiliates shall timely declare through appropriate Network reporting
forms scheduled air times for all Network commercial spots. All Capstar
affiliates will submit weekly affidavits of performance within ten working days
after the close of each broadcast week. (Absent persistent or chronic breaches
of this requirement, the failure to timely submit weekly affidavits of
performance shall be preceded by a notice and a five-day cure period before
such failure will constitute a breach of this letter agreement.)
3. Capstar affiliates will be compensated in accordance with the
following formula: each station shall receive a percentage of the Net Revenue
earned by the demographic or lifestyle network to which it has been assigned.
Each station's percentage shall be equal to that station's proportional
contribution of Weighted Audience to the total Weighted Audience of its sales
network. For purposes of this agreement, "Net Revenue" shall mean gross sales
revenues minus direct and allocated network costs. (Network cost allocations
shall be made on the same basis as such allocations are made to Chancellor
stations which are affiliates of the Network.) "Weighted Audience" shall men
the most recent Arbitron-rated Total US Average Quarter Hour Audience, Monday
through Sunday, 6a-12 midnight in a particular audience demo (either 18-49
adults or 25-54 adults) specified by the Network, adjusted by a weighting
factor based on the size of the DMA market. (DMA markets 1 through 30 are
weighted in descending order. For example, New York is DMA #1 and would have a
weighting of 1.30; Philadelphia is market #4, and would have a weighting of
1.27. Markets 31 and below all will have a weighting factor of 1.0). Initial
compensation will be based on the Spring 1997 Arbitron Total US book.
Compensation adjustments will be made in DMA's ranked 1 through 50 twice each
year on the first Monday in April and the first Monday in October, based on the
most recent Fall/Spring Arbitron Total US two-book average. In DMA markets
below DMA number 50, adjustments will be made once each year on the first
Monday in October, based on the most recent Spring Arbitron Total US book.
Payment of station compensation is predicated upon 100% clearance of the weekly
commercial inventory. If any Capstar Station affiliate clears 90% or more, but
less than 100%, of its weekly Network commercial inventory, that Station shall
receive a pro rata weekly Network commercial inventory, it shall be deemed to
be in breach of this agreement and, in addition to any other remedy available
to the Network, that affiliate shall receive no compensation whatsoever
therefor.
4. The Network affiliation of all current Capstar stations will be for
a term of one year, commencing on January 5, 1998, and terminating on January
3, 1999. For all Capstar stations acquired after January 4, 1998, the
affiliation term shall commence on the date on which such stations become
affiliates, as described above. Except as provided in Section 1 hereof, all
affiliations for Capstar stations which commence after January 4, 1998 shall
terminate on January 3, 1999.
5. Capstar agrees to make reasonable efforts to assist in the
publicizing of its affiliation with the Network and will, upon reasonable
requests from the Network, make appropriate contacts with and comments to the
press regarding that affiliation.
As you know, Chancellor and Xxxxxxx are presently engaged in ongoing
discussions regarding a transaction or series of transactions under which
Xxxxxxxxxx would acquire certain SFX Stations
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following the merger of SFX Broadcasting, Inc. and Capstar (The "Transaction").
If agreement regarding the Transaction is not reached and reduced to a
definitive agreement by January 21, 1998, either Capstar or Chancellor may
terminate this letter agreement upon ninety (90) days written notice to the
other party, so long as such notice is given by February 28, 1998. In the event
of such termination, Capstar and Chancellor will be returned to the status quo
ante, and nothing in this letter agreement may be used by either party in
connection with any dispute which may ensue regarding Xxxxxxx's affiliation
with the Network, provided however, that Xxxxxxx's right to receive
compensation for advertising run prior to the date of termination shall survive
the termination of this agreement.
For your information, AMFM Radio Networks is a division of Chancellor
Media Corporation of Los Angeles, which is a subsidiary of Chancellor Media
Corporation.
Please indicate your agreement by executing one copy of this letter
and returning it to me at your earliest convenience.
Sincerely,
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx, Senior Vice President for Radio Network
Xxxxxx and accepted this 7th day of January, 1998
CAPSTAR BROADCASTING CORPORATION
By: /s/ X. Xxxxxx Xxxxx
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X. Xxxxxx Xxxxx, President and Chief Executive Officer
