<SUBMISSION>
<ACCESSION-NUMBER>0000950134-00-006979
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>10
<PERIOD>20000630
<FILING-DATE>20000814
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>AMFM INC
<CIK>0000894972
<ASSIGNED-SIC>4832
<IRS-NUMBER>752247099
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-15145
<FILM-NUMBER>697726
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>600 CONGRESS AVE
<STREET2>SUITE 1400
<CITY>AUSTIN
<STATE>TX
<ZIP>78701
<PHONE>5123407800
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>1845 WOODALL RODGERS FREEWAY
<STREET2>SUITE 1300
<CITY>DALLAS
<STATE>TX
<ZIP>75201
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>CHANCELLOR MEDIA CORP/
<DATE-CHANGED>19970924
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>CHANCELLOR MEDIA CORP
<DATE-CHANGED>19970905
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>EVERGREEN MEDIA CORP
<DATE-CHANGED>19930326
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>e10-q.txt
<DESCRIPTION>FORM 10-Q FOR QUARTER ENDED JUNE 30, 2000
<TEXT>

<PAGE>   1

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000

                        COMMISSION FILE NUMBER 001-15145

                                   AMFM INC.
             (Exact name of Registrant as Specified in its Charter)

                                    DELAWARE
                        (State or other jurisdiction of
                         incorporation or organization)

                                   75-2247099
                    (I.R.S. Employer Identification Number)

         1845 WOODALL RODGERS FREEWAY, SUITE 1300, DALLAS, TEXAS 75201
          (Address of principal executive offices, including zip code)

                                 (214) 922-8700
              (Registrant's telephone number, including area code)

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]  No [ ]

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: As of July 31, 2000,
217,869,658 shares of common stock of AMFM Inc. were outstanding.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

                                     INDEX

<TABLE>
<CAPTION>
                                                                        PAGE
                                                                       NUMBER
                                                                       ------
<S>      <C>                                                           <C>
PART I. FINANCIAL INFORMATION
Item 1.  Financial Statements........................................     3
         Condensed Consolidated Balance Sheets (unaudited)...........     3
         Condensed Consolidated Statements of Operations
         (unaudited).................................................     4
         Condensed Consolidated Statements of Cash Flows
         (unaudited).................................................     5
         Notes to Condensed Consolidated Financial Statements
         (unaudited).................................................     6
Item 2.  Management's Discussion and Analysis of Financial Condition
         and
         Results of Operations.......................................    13
Item 3.  Quantitative and Qualitative Disclosures About Market           22
         Risk........................................................

PART II. OTHER INFORMATION
Item 1.  Legal Proceedings...........................................    23
Item 4.  Submission of Matters to a Vote of Security Holders.........    24
Item 6.  Exhibits and Reports on Form 8-K............................    24
         Signature...................................................    25
</TABLE>

                                        2
<PAGE>   3

                        PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                           AMFM INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                 (DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)

<TABLE>
<CAPTION>
                                                              DECEMBER 31,    JUNE 30,
                                                                  1999          2000
                                                              ------------   -----------
                                                                             (UNAUDITED)
<S>                                                           <C>            <C>
                                         ASSETS
Current assets:
  Cash and cash equivalents.................................  $    59,277    $    76,900
  Accounts receivable, less allowance for doubtful accounts
     of $21,428 in 1999 and $27,000 in 2000.................      531,818        547,935
  Other current assets......................................       92,324         61,802
                                                              -----------    -----------
          Total current assets..............................      683,419        686,637
Property and equipment, net.................................      471,508        445,171
Intangible assets, net......................................   10,346,005      9,896,518
Investments in non-consolidated affiliates..................    1,103,442      1,058,154
Other assets, net...........................................      261,434        239,028
                                                              -----------    -----------
                                                              $12,865,808    $12,325,508
                                                              ===========    ===========
                          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses.....................  $   293,155    $   277,494
Long-term debt..............................................    5,890,217      5,742,027
Deferred tax liabilities....................................    1,707,023      1,628,643
Other liabilities...........................................       60,154         49,052
                                                              -----------    -----------
          Total liabilities.................................    7,950,549      7,697,216
                                                              -----------    -----------
Commitments and contingencies
Minority interest in consolidated subsidiary................        3,694          3,192
Redeemable senior exchangeable preferred stock of
  subsidiary, par value $.01 per share; 10,000,000 shares
  authorized in 1999; 1,254,616 shares issued and
  outstanding in 1999.......................................      151,982             --
Stockholders' equity:
  Preferred stock, $.01 par value. 2,200,000 shares of 7%
     convertible preferred stock authorized, issued and
     outstanding in 1999....................................      110,000             --
  Common stock, $.01 par value. 750,000,000 shares
     authorized; 210,158,922 shares and 217,600,324 shares
     issued and outstanding in 1999 and 2000,
     respectively...........................................        2,102          2,176
  Paid-in capital...........................................    5,115,785      5,308,725
  Accumulated deficit.......................................     (468,304)      (685,801)
                                                              -----------    -----------
          Total stockholders' equity........................    4,759,583      4,625,100
                                                              -----------    -----------
                                                              $12,865,808    $12,325,508
                                                              ===========    ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                        3
<PAGE>   4

                           AMFM INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED       SIX MONTHS ENDED
                                                  -------------------   ----------------------
                                                  JUNE 30,   JUNE 30,   JUNE 30,     JUNE 30,
                                                    1999       2000       1999         2000
                                                  --------   --------   ---------   ----------
<S>                                               <C>        <C>        <C>         <C>
Gross revenues..................................  $490,720   $722,825   $ 884,843   $1,311,709
  Less agency commissions.......................    56,574     84,924     100,432      152,538
                                                  --------   --------   ---------   ----------
          Net revenues..........................   434,146    637,901     784,411    1,159,171
Operating expenses..............................   219,258    318,485     427,768      626,573
Depreciation and amortization...................   145,139    222,994     292,883      435,485
Corporate general and administrative............    12,798     14,010      30,612       29,312
Non-cash compensation...........................        --        957          --       35,835
Merger and non-recurring costs..................        --      7,831      28,979       18,946
                                                  --------   --------   ---------   ----------
  Operating income..............................    56,951     73,624       4,169       13,020
Interest expense, net...........................    87,719    119,032     172,111      242,677
Gain on disposition of assets...................   (12,488)    (8,285)    (12,406)     (31,104)
Gain on disposition of representation
  contracts.....................................    (5,168)      (772)     (8,853)     (16,989)
                                                  --------   --------   ---------   ----------
  Loss before income taxes......................   (13,112)   (36,351)   (146,683)    (181,564)
Income tax expense (benefit)....................     2,777     (9,767)    (27,349)     (20,516)
Credit on exchange of preferred stock of
  subsidiary....................................        --         --          --        3,310
                                                  --------   --------   ---------   ----------
  Loss before equity in net loss of affiliates
     and minority interest and extraordinary
     item.......................................   (15,889)   (26,584)   (119,334)    (157,738)
Equity in net loss of affiliates and minority
  interest......................................       200     22,717         200       47,089
                                                  --------   --------   ---------   ----------
  Loss before extraordinary item................   (16,089)   (49,301)   (119,534)    (204,827)
Extraordinary loss, net of income tax benefit...        --      6,255          --       12,349
                                                  --------   --------   ---------   ----------
          Net loss..............................   (16,089)   (55,556)   (119,534)    (217,176)
Preferred stock dividends.......................     6,418         --      12,835          321
                                                  --------   --------   ---------   ----------
  Net loss attributable to common
     stockholders...............................  $(22,507)  $(55,556)  $(132,369)  $ (217,497)
                                                  ========   ========   =========   ==========
Basic and diluted loss per common share:
  Before extraordinary item.....................  $  (0.16)  $  (0.23)  $   (0.93)  $    (0.95)
  Extraordinary item............................        --      (0.03)         --        (0.06)
                                                  --------   --------   ---------   ----------
          Net loss..............................  $  (0.16)  $  (0.26)  $   (0.93)  $    (1.01)
                                                  ========   ========   =========   ==========
Weighted average common shares outstanding......   143,334    217,111     142,349      216,113
                                                  ========   ========   =========   ==========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                        4
<PAGE>   5

                           AMFM INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                SIX MONTHS ENDED
                                                              ---------------------
                                                              JUNE 30,    JUNE 30,
                                                                1999        2000
                                                              ---------   ---------
<S>                                                           <C>         <C>
Net cash provided by operating activities...................  $  71,886   $ 246,942
                                                              ---------   ---------
Cash flows from investing activities:
  Acquisitions, net of cash acquired........................   (364,608)     (5,255)
  Proceeds from sale of assets..............................     44,085     101,076
  Purchases of property and equipment.......................    (17,685)    (23,259)
  Construction of advertising structures....................    (16,687)         --
  Payments made for purchases of representation contracts...    (16,249)    (13,704)
  Payments received from sales of representation
     contracts..............................................     10,914       9,323
  Other.....................................................    (33,158)      6,063
                                                              ---------   ---------
          Net cash provided by (used by) investing
            activities......................................   (393,388)     74,244
                                                              ---------   ---------
Cash flows from financing activities:
  Proceeds of long-term debt................................    427,000     362,500
  Payments on long-term debt................................   (103,000)   (681,912)
  Net proceeds from issuance of equity instruments..........     20,466      25,302
  Dividends on preferred stock..............................    (12,835)     (9,453)
                                                              ---------   ---------
          Net cash provided by (used by) financing
            activities......................................    331,631    (303,563)
                                                              ---------   ---------
Increase in cash and cash equivalents.......................     10,129      17,623
Cash and cash equivalents at beginning of period............     12,256      59,277
                                                              ---------   ---------
Cash and cash equivalents at end of period..................  $  22,385   $  76,900
                                                              =========   =========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                        5
<PAGE>   6

                           AMFM INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
               (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

1. BASIS OF PRESENTATION

     The accompanying unaudited interim financial statements include the
accounts of AMFM Inc. and its wholly-owned and majority-owned subsidiaries
(collectively, the "Company" or "AMFM"). All significant intercompany balances
and transactions have been eliminated in consolidation and, in the opinion of
management, all adjustments (consisting of normal recurring accruals) necessary
to present fairly the financial position, results of operations and cash flows
have been recorded. Investments in which the Company owns 20 percent to 50
percent of the voting common stock or otherwise exercises significant influence
over operating and financial policies of the investee are accounted for using
the equity method. Interim period results are not necessarily indicative of
results to be expected for the year.

     These financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999. The
year-end consolidated balance sheet data was derived from the audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles.

     Loss per common share is based on the weighted average shares of common
stock outstanding during the period. Weighted average shares excluded from the
calculation that related to potentially dilutive securities amounted to
approximately 23.5 million and 7.8 million for the three months ended June 30,
1999 and 2000, respectively, and 23.2 million and 8.7 million for the six months
ended June 30, 1999 and 2000, respectively. Such shares have been excluded as
their inclusion would have been antidilutive.

     Certain reclassifications have been made to prior period condensed
consolidated financial statements to conform to the current period presentation.

2. CLEAR CHANNEL MERGER

     On October 2, 1999, AMFM and Clear Channel Communications, Inc. ("Clear
Channel") entered into a definitive merger agreement. Under the terms of the
merger agreement, AMFM stockholders will receive 0.94 shares of Clear Channel
common stock, on a fixed exchange basis, for each share of the Company's common
stock held on the closing date of the transaction and AMFM will become a
wholly-owned subsidiary of Clear Channel. On April 26, 2000 and April 27, 2000,
stockholders of both companies approved the merger. On July 20, 2000, the U.S.
Department of Justice preliminarily cleared the merger after AMFM and Clear
Channel agreed to divest approximately 100 stations in 27 markets and also to
dispose of AMFM's approximate 30% equity interest in Lamar Advertising Company
("Lamar"). AMFM and Clear Channel are currently negotiating a consent decree
with the U.S. Department of Justice documenting the agreement reached. To date,
AMFM and Clear Channel have signed definitive agreements to sell approximately
100 radio stations for aggregate proceeds of approximately $4.2 billion. Of
these stations, 58 are owned and operated by AMFM. As the transaction is
currently structured, a further seven stations currently owned by AMFM will be
put into trust until the eventual sale of these stations can be approved by the
various regulatory agencies. Completion of these sales is subject to the
completion of the Clear Channel merger, obtaining final regulatory approvals and
other closing conditions. It is expected that the merger will be consummated
during the third quarter of 2000. The accompanying financial statements do not
include any adjustments related to the merger and divestitures.

                                        6
<PAGE>   7
                           AMFM INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. ACQUISITIONS AND DISPOSITIONS

  (a) Completed Transactions

     On January 14, 2000, the Company sold the capital stock of its Puerto Rico
subsidiaries to Spanish Broadcasting System of Puerto Rico, Inc. for $90,860 in
cash and recognized a pre-tax gain of approximately $22,800. The Company owned
and operated eight radio stations in Puerto Rico.

     On January 31, 2000, the Company sold radio stations KIOK-FM, KALE-AM and
KEGX-FM in Richland, Washington and KTCR-AM in Kennewick, Washington to New
Northwest Broadcasters II, Inc. for $3,781 in cash.

     On January 31, 2000, the Company acquired radio station KQOD-FM in
Stockton, California from Carson Group, Inc. for a purchase price of $5,255 in
cash, including direct acquisition costs. The Company had previously been
operating KQOD-FM under a local marketing agreement effective September 20,
1999.

     On June 30, 2000, the Company sold radio station KSKY-AM in Dallas in
exchange for radio station KPRZ-FM (now known as KMOM-FM) in Colorado Springs
plus $7,500 in cash from Bison Media, Inc. and recorded a preliminary pre-tax
gain of approximately $8,300.

     The foregoing acquisitions were accounted for as purchases. Accordingly,
the accompanying consolidated financial statements include the results of
operations of the acquired entities from their respective dates of acquisition.

     A summary of the net assets acquired in the six-month period ended June 30,
2000 follows:

<TABLE>
<CAPTION>
                                                            SIX MONTHS
                                                              ENDED
                                                             JUNE 30,
                                                               2000
                                                            ----------
<S>                                                         <C>
Property and equipment...................................    $   808
Intangible assets........................................      9,947
                                                             -------
          Total net assets acquired......................     10,755
Less:
  Assets transferred in exchange.........................      5,500
                                                             -------
          Cash paid for acquisitions.....................    $ 5,255
                                                             =======
</TABLE>

     The unaudited pro forma condensed consolidated results of operations data
for the six months ended June 30, 1999 and 2000, as if the acquisitions and
dispositions through June 30, 2000 occurred at January 1, 1999, follow:

<TABLE>
<CAPTION>
                                                          SIX MONTHS ENDED
                                                        ---------------------
                                                        JUNE 30,    JUNE 30,
                                                          1999        2000
                                                        --------   ----------
<S>                                                     <C>        <C>
Net revenues..........................................  $966,174   $1,158,631
Loss before extraordinary item........................  (281,632)    (203,838)
Net loss..............................................  (281,632)    (216,187)
Basic and diluted loss per common share -- before
  extraordinary item..................................     (1.50)       (0.94)
Basic and diluted loss per common share...............     (1.50)       (1.00)
</TABLE>

     The pro forma results are not necessarily indicative of the financial
results which would have occurred if the transactions had been in effect for the
entire periods presented.

                                        7
<PAGE>   8
                           AMFM INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  (b) Pending Transaction

     On August 30, 1999, the Company entered into an agreement with Cox Radio,
Inc. ("Cox") to acquire KOST-FM and KFI-AM in Los Angeles plus $3,000 in cash
payable by Cox in exchange for 13 of its radio stations including WEDR-FM in
Miami, WFOX-FM in Atlanta, WEFX-FM, WNLK-AM, WKHL-FM and WSTC-AM in
Stamford/Norwalk, WFYV-FM, WAPE-FM, WBWL-AM, WKQL-FM, WMXQ-FM and WOKV-AM in
Jacksonville and WPLR-FM and the local sales rights of a 14th station, WYBC-FM,
in New Haven. The Company began programming KOST-FM and KFI-AM in Los Angeles
and Cox began programming the 13 Company stations under time brokerage
agreements effective October 1, 1999. Although there can be no assurance, the
Company expects that the Cox exchange will be consummated during the third
quarter of 2000.

4. PREFERRED STOCK CONVERSIONS AND REDEMPTIONS OF DEBT

     On December 8, 1999, the Company gave notice to the holders of its 7%
Convertible Preferred Stock of its election to redeem all of the outstanding
shares of 7% Convertible Preferred Stock at a per share redemption price of
$52.45, plus accrued and unpaid dividends. Each holder had the right to convert
each share of the 7% Convertible Preferred Stock held by it into approximately
2.76 shares of the Company's common stock in lieu of being redeemed. On January
19, 2000, preferred holders converted all 2,200,000 shares of 7% Convertible
Preferred Stock into 6,078,995 shares of the Company's common stock.

     Effective January 1, 2000, the Company exchanged all of the outstanding
shares of its 12% Senior Exchangeable Preferred Stock for $125,462 in aggregate
principal amount of its 12% Subordinated Exchange Debentures due 2009. The 12%
Subordinated Exchange Debentures due 2009 were revalued at fair market value
upon the exchange, and the excess of the carrying value of the preferred stock
over the fair value of the subordinated debentures of $3,310 has been reflected
in the financial statements as a credit on exchange of preferred stock of
subsidiary.

     On February 1, 2000, the Company completed the redemption of all of its
outstanding 9 3/8% Senior Subordinated Notes due 2004 for an aggregate
repurchase cost of $216,355, which included the principal amount of the notes of
$200,000, premiums on the repurchase of the notes of $9,376 and accrued and
unpaid interest on the notes from October 1, 1999 through February 14, 2000 of
$6,979. An extraordinary charge of $6,094 (net of a tax benefit of $3,282) was
recorded in connection with the redemption.

     On June 2, 2000, the Company completed a cash tender offer to acquire its
outstanding 10 1/2% Senior Subordinated Notes due 2007. Prior to the initiation
of the tender offer, the Company received the irrevocable consent of the holder
of the majority of the notes to certain amendments, which eliminated most of the
restrictive covenants and certain other provisions of the indenture pursuant to
which the notes were issued. Approximately $99,400 in aggregate principal amount
of the notes, representing 99.4% of the outstanding notes, was accepted for
payment for an aggregate repurchase cost of approximately $112,995, which
included the principal amount of the notes of $99,400, premiums on the
repurchase of the notes of $9,592, accrued and unpaid interest on the notes from
January 16, 2000 through June 1, 2000 of $3,972 and other transaction costs of
$31. An extraordinary change of $6,255 (net of a tax benefit of $3,368) was
recorded in connection with the redemption. On June 29, 2000, the Company
purchased an additional $100 principal amount of the 10 1/2% Senior Subordinated
Notes due 2007 for an aggregate purchase price of approximately $114.

5. CONTINGENCIES

     On July 24, 1998, in connection with Capstar Broadcasting Corporation's
then pending acquisition of Triathlon Broadcasting Company, Capstar Broadcasting
was notified of an action filed on behalf of all holders of depositary shares of
Triathlon against Triathlon, Triathlon's directors, and Capstar Broadcasting.
The action was filed in the Court of Chancery of the State of Delaware (Civil
Action No. 16560) in and for New Castle

                                        8
<PAGE>   9
                           AMFM INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

County, Delaware by Herbert Behrens. The complaint alleges that Triathlon and
its directors breached their fiduciary duties to the class of depositary
stockholders. Capstar Broadcasting is accused of knowingly aiding and abetting
the breaches of fiduciary duties allegedly committed by the other defendants.
The complaint sought to have the action certified as a class action and sought
to enjoin the Triathlon acquisition, or in the alternative, sought monetary
damages in an unspecified amount. On April 30, 1999, the acquisition of
Triathlon closed. On May 26, 2000, the parties signed a Stipulation Settlement
that provided for a proposed settlement of the lawsuit. That proposed settlement
is subject to court approval. The amount of the settlement will equal $0.11 in
additional consideration for each depositary share owned by any class member at
the effective time of the Triathlon acquisition. At the time of the acquisition,
there were approximately 5.8 million depositary shares outstanding. Capstar
Broadcasting also agreed not to oppose plaintiff's counsel's application for
attorney fees and expenses in the aggregate amount of $150. On July 11, 2000,
the court preliminarily approved the proposed settlement. The court has set a
fairness hearing for the proposed settlement for August 29, 2000. On November
19, 1999, Capstar Broadcasting merged into Chancellor Mezzanine Holdings
Corporation and the surviving corporation was renamed AMFM Holdings Inc.

     In September 1998, a stockholder class action complaint was filed in the
Delaware Court of Chancery by a stockholder purporting to act individually and
on behalf of all other persons, other than defendants, who own securities of the
Company and are similarly situated. The defendants named in the case are the
Company, Hicks Muse, Thomas O. Hicks, Jeffrey A. Marcus, James E. de Castro,
Eric C. Neuman, Lawrence D. Stuart, Jr., Steven Dinetz, Thomas J. Hodson, Perry
Lewis, John H. Massey and Vernon E. Jordan, Jr. The plaintiff alleges breach of
fiduciary duties, gross mismanagement, gross negligence or recklessness, and
other matters relating to the defendants' actions in connection with the Capstar
merger. The plaintiff sought to certify the complaint as a class action, enjoin
consummation of the Capstar merger, order defendants to account to plaintiff and
other alleged class members for damages, and award attorneys' fees and other
costs. The Company believes that the lawsuit is without merit and intends to
vigorously defend the action.

     On April 11, 2000, an action was commenced in New York Supreme Court, New
York County, by Interep National Radio Sales, Inc. seeking $47,118 in damages,
plus interest, from Clear Channel Communications, Inc. and $19,691 in damages,
plus interest, from Katz Communications, Inc., a co-defendant and an indirect
wholly-owned subsidiary of the Company. The complaint alleges, among other
things, that Clear Channel wrongfully terminated a February 3, 1996 agreement
between Clear Channel and Interep under which Interep agreed to act as Clear
Channel's exclusive advertising representative by procuring advertising time on
Clear Channel's radio stations and also under which Interep, Clear Channel and
Katz executed certain "triparty agreements" in which Interep agreed to buy out
the existing representation agreement of Clear Channel's then current
representative, Katz, for $23,000. The complaint also alleges that Interep's
representation agreement, by its terms, could not be terminated by Clear Channel
until February 1, 2005 and that Clear Channel's November 30, 1999 termination of
Interep constituted a breach of the representation agreement. The complaint
alleges further that Clear Channel and Katz continue to demand that Interep make
all buy out payments to Katz as set forth in the various triparty agreements.
$5,188 of the requested damages correspond to buyouts in excess of the pro rata
amount attributable to the time Interep had the right to represent the bought
out stations and $280 of the requested damages correspond to a refund of a
portion of a "signing bonus" paid by Interep to Clear Channel upon the execution
of Interep's representation agreement. The complaint does not specify the basis
for the remaining damages sought by Interep. Although this matter is in the
early stages of litigation, Katz has pending before the Court a motion to
dismiss entirely all the claims asserted by Interep against it.

     On July 13, 2000, a lawsuit was filed in the Supreme Court of the State of
New York, County of Westchester by plaintiff Charles E. Armstrong against AMFM
Inc. and AMFM Interactive, Inc. The complaint alleges that AMFM Inc. and AMFM
Interactive, Inc. breached an alleged employment agreement and also an alleged
agreement to issue stock options to the plaintiff. The plaintiff seeks a
declaration regarding his rights and obligations under the alleged employment
agreement and compensatory and punitive damages
                                        9
<PAGE>   10
                           AMFM INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

in excess of $50,000. AMFM Inc. and AMFM Interactive, Inc. deny the existence of
any employment agreement, and also deny that they have breached any agreement to
issue stock options to Mr. Armstrong. AMFM Inc. and AMFM Interactive, Inc. are
vigorously defending the action.

     The Company is also involved in various other claims and lawsuits which are
generally incidental to its business. The Company is also vigorously contesting
all of these matters and believes that the ultimate resolution of these matters
and those mentioned above will not have a material adverse effect on its
consolidated financial position, results of operations or cash flows.

6. NON-CASH COMPENSATION

     The Company recorded non-cash compensation of $35,835 during the six months
ended June 30, 2000 primarily related to amendments made to the stock option
agreements of certain operating personnel terminated upon implementation of the
Company's market strategy.

7. MERGER AND NON-RECURRING COSTS

     Merger and non-recurring costs consist of the following:

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED     SIX MONTHS ENDED
                                                 -------------------   -------------------
                                                 JUNE 30,   JUNE 30,   JUNE 30,   JUNE 30,
                                                   1999       2000       1999       2000
                                                 --------   --------   --------   --------
<S>                                              <C>        <C>        <C>        <C>
Severance(a)..................................   $    --     $  914    $12,196    $ 9,313
Merger and other(b)...........................        --      6,917     16,783      9,633
                                                 -------     ------    -------    -------
                                                 $    --     $7,831    $28,979    $18,946
                                                 =======     ======    =======    =======
</TABLE>

---------------

(a) 1999
    ----
    On March 15, 1999, the Company announced an executive realignment and
    recorded a charge of $12,196 for executive severance and other costs.

    2000
    ----
    On February 16, 2000, the Company announced the retirement of James E. de
    Castro as Vice-Chairman of AMFM Inc., President and Chief Executive Officer
    of AMFM Radio Group and Chairman and Chief Executive Officer of AMFM
    Interactive, Inc., effective February 18, 2000. In connection with Mr. de
    Castro's retirement, the Company recorded a charge of $5,340 for severance
    costs.

    In 1999, the Company announced its market strategy, whereby each cluster of
    stations in a market will be managed as a single business unit. In
    connection with this strategy, certain personnel, consisting primarily of
    operating personnel, have been terminated and other personnel-related costs
    have been incurred to align formats within a market to target certain
    demographics. During the three months and six months ended June 30, 2000,
    the Company incurred costs of $914 and $3,973, respectively, of which $603
    and $3,240 related to personnel costs. At June 30, 2000, $7,294 of the total
    costs incurred to date were accrued and are expected to be paid during the
    remainder of 2000.

(b) 1999
    ----
    Effective March 15, 1999, the Company and LIN Television Corporation ("LIN")
    agreed to terminate the LIN merger agreement. The Company subsequently
    assigned to LIN its contract to acquire Petry Media Corporation ("Petry").
    The Company recorded a charge of $16,783 to write off transaction costs
    incurred in connection with the LIN merger agreement and Petry transaction.

    2000
    ----
    During the three months and six months ended June 30, 2000, the Company
    incurred costs of $5,141 and $6,804, respectively, related to the Clear
    Channel merger, developmental costs of $1,044 and $2,097, respectively,
    related to the Galaxy(TM) system, AMFM's proprietary traffic system, and
    other non-recurring charges of $732.

                                       10
<PAGE>   11
                           AMFM INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. SEGMENT DATA

     During the six months ended June 30, 1999, the Company conducted business
in three distinct operating segments consisting of radio broadcasting, new media
and outdoor advertising. Following the sale of the Company's outdoor advertising
business to Lamar on September 15, 1999, the Company operates in only the radio
broadcasting and new media segments. Separate financial data for each of the
Company's operating segments is provided below. The Company evaluates the
performance of its segments based on the following:

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED      SIX MONTHS ENDED
                                           -------------------   ---------------------
                                           JUNE 30,   JUNE 30,   JUNE 30,    JUNE 30,
                                             1999       2000       1999        2000
                                           --------   --------   --------   ----------
<S>                                        <C>        <C>        <C>        <C>
AMFM Radio Group -- radio broadcasting:
  Net revenues...........................  $334,406   $589,105   $596,185   $1,069,811
  Operating expenses.....................   162,861    290,865    316,982      570,527
  Depreciation and amortization..........   101,419    202,837    206,101      395,164
  Merger and non-recurring costs.........        --        794         --        9,181
  Operating income.......................    66,031     92,167     65,733       89,425
AMFM New Media Group -- media
  representation:
  Net revenues...........................    48,841     59,976     88,536      109,760
  Operating expenses.....................    32,503     38,800     63,251       76,446
  Depreciation and amortization..........     7,685     14,025     15,468       28,157
  Merger and non-recurring costs.........        --      1,044         --        2,097
  Operating income (loss)................     7,135      3,395      6,791       (2,480)
Chancellor Outdoor Group -- outdoor
  advertising:
  Net revenues...........................    57,288         --    110,889           --
  Operating expenses.....................    30,283         --     58,734           --
  Depreciation and amortization..........    32,131         --     63,527           --
  Merger and non-recurring costs.........        --         --         --           --
  Operating loss.........................    (8,185)        --    (17,256)          --
</TABLE>

     The segment financial data includes intersegment revenues and expenses
which must be excluded to reconcile to the Company's consolidated financial
statements. In addition, certain depreciation and amortization expenses,
corporate general and administrative expenses, non-cash compensation and merger
and non-recurring costs were not allocated to operating segments and must be
included to reconcile to the Company's consolidated financial statements.
Reconciling financial data is provided below:

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED     SIX MONTHS ENDED
                                                 -------------------   -------------------
                                                 JUNE 30,   JUNE 30,   JUNE 30,   JUNE 30,
                                                   1999       2000       1999       2000
                                                 --------   --------   --------   --------
<S>                                              <C>        <C>        <C>        <C>
Intersegment net revenues......................   $6,389    $11,180    $11,199    $20,400
Intersegment operating expenses................    6,389     11,180     11,199     20,400
Unallocated depreciation and amortization......    3,904      6,132      7,787     12,164
Unallocated corporate general and
  administrative expenses......................    4,126      8,856     14,333     18,258
Unallocated non-cash compensation..............       --        957         --     35,835
Unallocated merger and non-recurring costs.....       --      5,993     28,979      7,668
</TABLE>

                                       11
<PAGE>   12
                           AMFM INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. This statement
establishes accounting and reporting standards for derivative instruments and
hedging activities. SFAS No. 133, as amended by SFAS No. 137, is effective for
all fiscal quarters of all fiscal years beginning after June 15, 2000.
Management does not anticipate that this statement will have a material impact
on the Company's consolidated financial statements.

     In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation, an interpretation of APB No. 25, Accounting for Stock Issued to
Employees. The provisions of this Interpretation became effective July 1, 2000.
Due to the terms of certain options previously granted, the Company will record
a non-cash charge upon consummation of the Clear Channel merger regardless of
the new Interpretation. The size of such charge is not presently determinable
since it will be based on, among other things, the fair value of AMFM's common
stock on the day of the merger. On July 5, 2000, the Company amended its stock
option plans to provide that all unvested options will accelerate and vest for
employees terminated as a result of the pending AMFM/Clear Channel merger.
Further, those employees will have the remainder of the term of the option to
exercise. As a result of the Interpretation, the amendments have no accounting
impact until an event of termination occurs.

                                       12
<PAGE>   13

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

GENERAL

     AMFM Inc. together with its subsidiaries ("AMFM") is a large national
pure-play radio broadcasting and related media company with operations in radio
broadcasting and media representation and growing Internet operations, which
focus on developing AMFM's Internet web sites, streaming online broadcasts of
AMFM's on-air programming and other media, and promoting emerging Internet and
new media concerns. In addition, AMFM owns an approximate 30% equity (11%
voting) interest in Lamar Advertising Company ("Lamar"), one of the largest
owners and operators of outdoor advertising structures in the United States,
which AMFM has agreed with the U.S. Department of Justice to dispose of after
the merger with Clear Channel. As of June 30, 2000, AMFM owned and operated,
programmed or sold air time for 442 radio stations (319 FM and 123 AM) in 100
markets in the United States, including nine radio stations programmed under
time brokerage or joint sales agreements. AMFM also operates a national radio
network, The AMFM Radio Networks, which broadcasts advertising and syndicated
programming shows to a national audience of approximately 68 million listeners
in the United States (including approximately 59 million listeners from AMFM's
portfolio of stations) and the Chancellor Marketing Group, a full-service sales
promotion firm developing integrated marketing programs for Fortune 1000
companies. The media representation business consists of Katz Media Group, Inc.
("Katz"), a full-service media representation firm that sells national spot
advertising time for its clients in the radio and television industries
throughout the United States and for AMFM's portfolio of stations.

     See Note 8 to the Condensed Consolidated Financial Statements included
elsewhere in this Form 10-Q for additional information on AMFM's operating
segments as of June 30, 2000.

     AMFM's results of operations for the three months and six months ended June
30, 2000 are not comparable to the results of operations for the three months
and six months ended June 30, 1999 due to the impact of AMFM's various
acquisitions and dispositions. AMFM completed the following transactions from
July 1, 1999 through June 30, 2000:

     - the July 13, 1999 merger with Capstar Broadcasting Corporation ("Capstar
       Broadcasting"), which at consummation of the merger operated 338 radio
       stations (239 FM and 99 AM);

     - the disposition of AMFM's entire outdoor advertising business to Lamar on
       September 15, 1999;

     - the acquisition of eight radio stations (seven FM and one AM) for
       approximately $115.5 million in cash;

     - the disposition of 13 radio stations (ten FM and three AM) for
       approximately $95.1 million in cash; and

     - the disposition of one AM radio station in exchange for one FM radio
       station and approximately $7.5 million in cash.

     Seasonal revenue fluctuations are common in the radio broadcasting and
outdoor advertising industries and are due primarily to fluctuations in
advertising expenditures by local and national advertisers. Advertising
expenditures are typically lower in the first and third calendar quarters and
higher in the second and fourth calendar quarters of each year. AMFM's operating
results in any period may be affected by the occurrence of advertising and
promotion expenses that do not produce commensurate revenues in the period in
which the expenditures are made.

CLEAR CHANNEL MERGER

     On October 2, 1999, AMFM and Clear Channel agreed to a merger that will
create one of the largest out-of-home media companies reaching local, national
and international consumers through a complementary portfolio of radio stations,
radio broadcast networks, outdoor advertising displays and television stations
and a growing presence in the Internet and media representation business. If the
merger is completed, AMFM stockholders will receive 0.94 shares of Clear Channel
common stock, on a fixed exchange basis, for each

                                       13
<PAGE>   14

share of AMFM common stock held on the record date of the transaction and AMFM
will become a wholly-owned subsidiary of Clear Channel. On April 26, 2000 and
April 27, 2000, stockholders of AMFM and Clear Channel approved the merger. On
July 20, 2000, the U.S. Department of Justice preliminarily cleared the merger
after AMFM and Clear Channel agreed to divest approximately 100 stations in 27
markets and also to dispose of AMFM's approximate 30% equity interest in Lamar.
AMFM and Clear Channel are currently negotiating a consent decree with the U.S.
Department of Justice documenting the agreement reached. To date, AMFM and Clear
Channel have signed definitive agreements to sell approximately 100 radio
stations for aggregate proceeds of approximately $4.2 billion. Of these
stations, 58 are owned and operated by AMFM. As the transaction is currently
structured, a further seven stations currently owned by AMFM will be put into
trust until the eventual sale of these stations can be approved by the various
regulatory agencies. Completion of these sales is subject to the completion of
the Clear Channel merger, obtaining final regulatory approvals and other closing
conditions. It is expected that the merger will be consummated during the third
quarter of 2000. AMFM cannot give any assurance that the merger will be
completed on the terms agreed to on October 2, 1999 or at all because there are
many conditions to the merger that are not within AMFM's control. The
accompanying financial statements do not include any adjustments related to the
merger and divestitures.

RESULTS OF OPERATIONS

  Three Months Ended June 30, 2000 Compared To Three Months Ended June 30, 1999

     AMFM Radio Group net revenues for the three months ended June 30, 2000
increased 76.2% to $589.1 million compared to $334.4 million for the three
months ended June 30, 1999. AMFM Radio Group operating expenses for the three
months ended June 30, 2000 increased 78.6% to $290.9 million compared to $162.9
million for the second quarter of 1999. The increase in net revenues and
operating expenses was primarily attributable to the net impact of the various
acquisitions and dispositions discussed elsewhere herein. Additional factors
contributing to the increase included higher revenues from dot-com clients and
the positive effects of the market strategy implemented in many major markets at
the end of the third quarter of 1999. On a pro forma basis for all stations
owned and operated as of June 30, 2000, net revenues increased 18.2% during the
three months ended June 30, 2000 compared to the three months ended June 30,
1999 and pro forma net operating expenses increased 10.5%.

     AMFM New Media Group net revenues for the three months ended June 30, 2000
increased 22.8% to $60.0 million compared to $48.8 million for the three months
ended June 30, 1999. AMFM New Media Group operating expenses for the three
months ended June 30, 2000 increased 19.4% to $38.8 million compared to $32.5
million for the second quarter of 1999. This increase is primarily attributable
to Katz, which experienced an increase in net revenues for the three months
ended June 30, 2000 of 17.3% to $57.3 million compared to $48.8 million for the
second quarter of 1999 due to a growth in new business and an overall growth in
both radio and television advertising spending. Additionally, Prophet Systems,
which was acquired in 1999 in conjunction with the Capstar merger and provides
the hardware necessary for the utilization of StarSystem(TM), generated $2.7
million in revenues during the second quarter of 2000 from the sale of hardware
to third parties.

     AMFM's outdoor advertising business was formed on July 31, 1998 with the
acquisition of Martin Media and Martin & MacFarlane, Inc. and also included the
assets of the outdoor advertising division of Whiteco Industries, Inc., which
was acquired on December 1, 1998. On September 15, 1999, AMFM completed the sale
of its outdoor advertising business to Lamar. AMFM's outdoor advertising
business had net revenues of $57.3 million and operating expenses of $30.3
million for the three months ended June 30, 1999.

     Depreciation and amortization for the three months ended June 30, 2000
increased 53.6% to $223.0 million compared to $145.1 million for the second
quarter of 1999. The increase is due to the impact of the acquisitions completed
during 1999 and through June 30, 2000.

                                       14
<PAGE>   15

     Corporate general and administrative expenses for the three months ended
June 30, 2000 increased 9.5% to $14.0 million compared to $12.8 million for the
second quarter of 1999 primarily due to increases in properties and staff
related to acquisitions.

     During the three months ended June 30, 2000, AMFM recorded merger and
non-recurring costs of $0.9 million related to the costs to terminate employees
and close certain facilities in connection with the implementation of AMFM's
market strategy, $5.1 million related to the Clear Channel merger, and other
costs of $1.8 million including developmental costs associated with the
Galaxy(TM) system, AMFM's proprietary traffic system.

     As a result of the above factors, AMFM realized operating income of $73.6
million for the three months ended June 30, 2000 compared to operating income of
$57.0 million for the second quarter of 1999.

     Net interest expense for the three months ended June 30, 2000 increased
35.7% to $119.0 million compared to $87.7 million for the same period in 1999.
The net increase was primarily due to (i) additional bank borrowings under the
senior credit facility required to finance the various acquisitions discussed
elsewhere herein offset by cash proceeds of approximately $720.0 million
received upon the sale of AMFM's outdoor advertising business to Lamar on
September 15, 1999 and cash proceeds from other various dispositions discussed
elsewhere herein; (ii) additional debt recorded in connection with the Capstar
merger on July 13, 1999; (iii) the exchange of the 12 5/8% Series E cumulative
exchangeable preferred stock of AMFM Operating for 12 5/8% Senior Subordinated
Exchange Debentures due 2006 on November 23, 1999; and (iv) the exchange of the
12% Senior Exchangeable Preferred Stock of Capstar Partners for 12% Subordinated
Exchange Debentures due 2009 effective on January 1, 2000 .

     The gain on disposition of assets of $8.3 million for the three months
ended June 30, 2000 related primarily to the exchange of KSKY-AM in Dallas for
KPRZ-FM (now known as KMOM-FM) in Colorado Springs plus $7.5 million in cash
from Bison Media, Inc. on June 30, 2000. The gain on disposition of assets of
$12.5 million for the three months ended June 30, 1999 related primarily to the
sale of WMVP-AM in Chicago to ABC, Inc. on April 16, 1999.

     AMFM recorded a gain on disposition of representation contracts of $0.8
million for the three months ended June 30, 2000 and $5.2 million for the second
quarter of 1999 related to its media representation operations. The gain
represents the sales proceeds received from successor representation firms for
the buyout of existing media representation contracts, net of any remaining
deferred costs associated with obtaining the original representation contract.
While the consolidation of the radio broadcasting industry has resulted in an
increase in buyout activity, the impact on future periods cannot be predicted.

     AMFM recorded an income tax benefit of $9.8 million for the three months
ended June 30, 2000 compared with income tax expense of $2.8 million for the
three months ended June 30, 1999 primarily due to an increase in AMFM's pre-tax
loss for the second quarter of 2000.

     AMFM recorded equity in net loss of affiliates and minority interest of
$22.7 million and $0.2 million for the three months ended June 30, 2000 and
1999, respectively, which consisted of $23.0 million for 2000 and $0.2 million
for 1999 related to AMFM's investments accounted for using the equity method
offset by $0.3 million in 2000 related to the approximate 8.5% interest in AMFM
Interactive, Inc. owned by third parties.

     During the second quarter of 2000, AMFM recorded an extraordinary charge of
$6.3 million, net of a tax benefit of $3.4 million, consisting of the premiums
paid in connection with the redemption of AMFM Operating's 10 1/2% Senior
Subordinated Notes due 2007.

     For the three months ended June 30, 1999, dividends on AMFM's preferred
stock were $6.4 million and included dividends on AMFM's 7% Convertible
Preferred Stock and AMFM's $3.00 Convertible Exchangeable Preferred Stock issued
in June 1997. On January 19, 2000, preferred holders converted all 2,200,000
shares of 7% Convertible Preferred Stock into 6,078,995 shares of AMFM common
stock. On August 24, 1999, preferred holders converted 5,989,900 shares of $3.00
Convertible Exchangeable Preferred Stock into

                                       15
<PAGE>   16

11,979,800 shares of AMFM common stock, and AMFM redeemed the remaining 100
shares of $3.00 Convertible Exchangeable Preferred Stock for $5,298 in the
aggregate.

     As a result of the above factors, AMFM incurred a net loss attributable to
common stockholders of $55.6 million for the three months ended June 30, 2000
compared to a $22.5 million net loss attributable to common stockholders for the
three months ended June 30, 1999.

  Six Months Ended June 30, 2000 Compared To Six Months Ended June 30, 1999

     AMFM Radio Group net revenues for the six months ended June 30, 2000
increased 79.4% to $1.1 billion compared to $0.6 billion for the six months
ended June 30, 1999. AMFM Radio Group operating expenses for the six months
ended June 30, 2000 increased 80.0% to $570.5 million compared to $317.0 million
for the six months ended June 30, 1999. The increase in net revenues and
operating expenses was primarily attributable to the net impact of the various
acquisitions and dispositions discussed elsewhere herein. Additional factors
contributing to the increase included higher revenues from dot-com clients and
the positive effects of the market strategy implemented in many major markets at
the end of the third quarter of 1999. On a pro forma basis for all stations
owned and operated as of June 30, 2000, net revenues increased 20.2% during the
six months ended June 30, 2000 compared to the six months ended June 30, 1999
and pro forma net operating expenses increased 11.9%.

     AMFM New Media Group net revenues for the six months ended June 30, 2000
increased 24.0% to $109.8 million compared to $88.5 million for the six months
ended June 30, 1999. AMFM New Media Group operating expenses for the six months
ended June 30, 2000 increased 20.9% to $76.4 million compared to $63.3 million
for the first six months of 1999. This increase is primarily attributable to
Katz, which experienced an increase in net revenues for the six months ended
June 30, 2000 of 17.5% to $104.0 million compared to $88.5 million for the six
months ended June 30, 1999 due to a growth in new business and an overall growth
in both radio and television advertising spending. Additionally, Prophet
Systems, which was acquired in 1999 in conjunction with the Capstar merger and
provides the hardware necessary for the utilization of StarSystem(TM), generated
$5.8 million in revenues during the six months ended June 30, 2000 from the sale
of hardware to third parties.

     AMFM's outdoor advertising business was formed on July 31, 1998 with the
acquisition of Martin Media and Martin & MacFarlane, Inc. and also included the
assets of the outdoor advertising division of Whiteco Industries, Inc., which
was acquired on December 1, 1998. On September 15, 1999, AMFM completed the sale
of its outdoor advertising business to Lamar. AMFM's outdoor advertising
business had net revenues of $110.9 million and operating expenses of $58.7
million for the six months ended June 30, 1999.

     Depreciation and amortization for the six months ended June 30, 2000
increased 48.7% to $435.5 million compared to $292.9 million for the six months
ended June 30, 1999. The increase is due to the impact of the acquisitions
completed during 1999 and through June 30, 2000.

     Corporate general and administrative expenses for the six months ended June
30, 2000 decreased 4.2% to $29.3 million compared to $30.6 million for the six
months ended June 30, 1999 primarily due to a reduction in personnel.

     The non-cash compensation expense of $35.8 million for the six months ended
June 30, 2000 is primarily related to amendments made to the stock option
agreements of certain operating personnel terminated upon implementation of
AMFM's market strategy.

     During the six months ended June 30, 2000, AMFM recorded merger and
non-recurring costs of $5.3 million related to severance costs in connection
with the retirement of James E. de Castro, $4.0 million related to the costs to
terminate employees and close certain facilities in connection with the
implementation of AMFM's market strategy, $6.8 million related to the Clear
Channel merger, and other costs of $2.8 million including developmental costs
associated with the Galaxy(TM) system, AMFM's proprietary traffic system. The
merger and non-recurring costs of $29.0 million for the six months ended June
30, 1999 million related to the write-off of LIN Television Corporation and
Petry Media Corporation transaction costs and executive severance and other
costs related to the executive management realignment.
                                       16
<PAGE>   17

     As a result of the above factors, AMFM realized operating income of $13.0
million for the six months ended June 30, 2000 compared to operating income of
$4.2 million for the six months ended June 30, 1999.

     Net interest expense for the six months ended June 30, 2000 increased 41.0%
to $242.7 million compared to $172.1 million for the same period in 1999. The
net increase was primarily due to (i) additional bank borrowings under the
senior credit facility required to finance the various acquisitions discussed
elsewhere herein offset by cash proceeds of approximately $720.0 million
received upon the sale of AMFM's outdoor advertising business to Lamar on
September 15, 1999 and cash proceeds from other various dispositions discussed
elsewhere herein; (ii) additional debt recorded in connection with the Capstar
merger on July 13, 1999; (iii) the exchange of the 12 5/8% Series E cumulative
exchangeable preferred stock of AMFM Operating for 12 5/8% Senior Subordinated
Exchange Debentures due 2006 on November 23, 1999; and (iv) the exchange of the
12% Senior Exchangeable Preferred Stock of Capstar Partners for 12% Subordinated
Exchange Debentures due 2009 effective on January 1, 2000 .

     The gain on disposition of assets of $31.1 million for the six months ended
June 30, 2000 primarily related to the January 14, 2000 sale of the capital
stock of AMFM's Puerto Rico subsidiaries to Spanish Broadcasting System of
Puerto Rico, Inc. and the June 30, 2000 exchange of KSKY-AM in Dallas for
KPRZ-FM (now known as KMOM-FM) in Colorado Springs plus $7.5 million in cash
from Bison Media, Inc. The gain on disposition of assets of $12.4 million for
the six months ended June 30, 1999 related primarily to the sale of WMVP-AM in
Chicago to ABC, Inc. on April 16, 1999.

     AMFM recorded a gain on disposition of representation contracts of $17.0
million for the six months ended June 30, 2000 and $8.9 million for the six
months ended June 30, 1999 related to its media representation operations. The
gain represents the sales proceeds received from successor representation firms
for the buyout of existing media representation contracts, net of any remaining
deferred costs associated with obtaining the original representation contract.
While the consolidation of the radio broadcasting industry has resulted in an
increase in buyout activity, the impact on future periods cannot be predicted.

     AMFM recorded an income tax benefit of $20.5 million for the six months
ended June 30, 2000 compared with an income tax benefit of $27.3 million for the
six months ended June 30, 1999 primarily due to a higher proportion of
non-deductible amortization in 2000 relative to AMFM's taxable loss.

     AMFM recorded a credit on exchange of preferred stock of subsidiary of $3.3
million during the six months ended June 30, 2000 related to the January 1, 2000
exchange of all of the outstanding shares of Capstar Partners' 12% Senior
Exchangeable Preferred Stock for 12% Subordinated Exchange Debentures due 2009.
The 12% Subordinated Exchange Debentures due 2009 were revalued at fair market
value upon the exchange, and the $3.3 million is the excess of the carrying
value of the preferred stock over the fair value of the subordinated debentures.

     AMFM recorded equity in net loss of affiliates and minority interest of
$47.1 million and $0.2 million for the six months ended June 30, 2000 and 1999,
respectively, which consisted of $47.6 million for 2000 and $0.2 million for
1999 related to AMFM's investments accounted for using the equity method offset
by $0.5 million in 2000 related to the approximate 8.5% interest in AMFM
Interactive, Inc. owned by third parties.

     During the six months ended June 30, 2000, AMFM recorded an extraordinary
charge of $12.3 million, net of a tax benefit of $6.6 million, consisting of the
premiums paid in connection with the redemption of AMFM Operating's 9 3/8%
Subordinated Exchange Debentures due 2004 and 10 1/2% Senior Subordinated Notes
due 2007.

     Dividends on AMFM's preferred stock were $0.3 million for the six months
ended June 30, 2000 and included dividends on AMFM's 7% Convertible Preferred
Stock issued in September 1997. On January 19, 2000, preferred holders converted
all 2,200,000 shares of 7% Convertible Preferred Stock into 6,078,995 shares of
AMFM common stock. Dividends on AMFM's preferred stock were $12.8 million for
the six months ended June 30, 1999 and included dividends on AMFM's 7%
Convertible Preferred Stock and AMFM's $3.00 Convertible Exchangeable Preferred
Stock issued in June 1997. On August 24, 1999, preferred holders converted
5,989,900 shares of $3.00 Convertible Exchangeable Preferred Stock into
11,979,800 shares of
                                       17
<PAGE>   18

AMFM common stock, and AMFM redeemed the remaining 100 shares of $3.00
Convertible Exchangeable Preferred Stock for $5,298 in the aggregate.

     As a result of the above factors, AMFM incurred a net loss attributable to
common stock of $217.5 million for the six months ended June 30, 2000 compared
to a $132.4 million net loss attributable to common stock for the six months
ended June 30, 1999.

LIQUIDITY AND CAPITAL RESOURCES

  Overview

     AMFM historically has generated sufficient cash flow from operations to
finance its existing operational requirements and debt service requirements, and
AMFM anticipates that this will continue to be the case. Operating activities
provided net cash of $246.9 million and $71.9 million for the six months ended
June 30, 2000 and 1999, respectively. AMFM historically has used the proceeds of
bank debt and private and public debt and equity offerings, supplemented by cash
flow from operations not required to fund operational requirements and debt
service, to fund implementation of AMFM's acquisition strategy.

     AMFM Inc. is a holding company with no significant assets other than the
capital stock of its direct and indirect subsidiaries. Consequently, its sole
source of cash from which to service indebtedness is through dividends
distributed or other payments made to it by its operating subsidiaries. The
instruments governing AMFM's indebtedness contain certain covenants that
restrict or, in some cases, prohibit the ability of subsidiaries to pay
dividends and make other distributions. These restrictions are not anticipated
to have an impact on AMFM Inc.'s ability to meet its cash obligations.

  Financing Transactions

     Effective January 1, 2000, AMFM exchanged all of the outstanding shares of
its 12% Senior Exchangeable Preferred Stock for $125.5 million in aggregate
principal amount of its 12% Subordinated Exchange Debentures due 2009.

     On January 11, 2000, AMFM completed a change of control offer to purchase
all of its outstanding 12 5/8% Senior Subordinated Exchange Debentures due 2006
at an offer price in cash equal to 101% of the aggregate principal amount, plus
accrued and unpaid interest. AMFM repurchased $1.2 million, or 0.9%, of the
aggregate outstanding principal amount of the debentures for an aggregate
repurchase cost of $1.3 million.

     On December 8, 1999, AMFM gave notice to the holders of AMFM's 7%
convertible preferred stock of AMFM's election to redeem all of the outstanding
shares of 7% convertible preferred stock at a per share redemption price of
$52.45, plus accrued and unpaid dividends. Each holder had the right to convert
each share of the 7% convertible preferred stock held by it into approximately
2.76 shares of AMFM common stock in lieu of being redeemed. On January 19, 2000,
preferred holders converted all 2.2 million shares of 7% convertible preferred
stock into 6,078,995 shares of AMFM common stock.

     On February 1, 2000, AMFM repurchased $5.0 million, or 1.8%, of the
aggregate outstanding principal amount of its 12 3/4% Senior Discount Notes due
2009.

     On February 15, 2000, AMFM completed the redemption of all of its
outstanding 9 3/8% Senior Subordinated Notes due 2004 for an aggregate
repurchase cost of $216.4 million, which included:

     - the principal amount of the notes of $200.0 million;

     - premiums on the repurchase of the notes of $9.4 million; and

     - accrued and unpaid interest on the notes from October 1, 1999 through
       February 14, 2000 of $7.0 million.

     On June 2, 2000, AMFM completed a cash tender offer to acquire all of its
outstanding 10 1/2% Senior Subordinated Notes due 2007 at a purchase price equal
to $1,096.50 per $1,000 principal amount tendered, plus accrued and unpaid
interest. Prior to the initiation of the tender offer, AMFM received the
irrevocable

                                       18
<PAGE>   19

consent of the holder of the majority of the notes to certain amendments, which
eliminated most of the restrictive covenants and certain other provisions of the
indenture pursuant to which the notes were issued. Approximately $99.4 million
in aggregate principal amount of the notes, representing 99.4% of the
outstanding notes, was accepted for payment for an aggregate repurchase cost of
approximately $113.0 million which included:

     - the principal amount of the notes of $99.4 million;

     - premiums on the repurchase of the notes of $9.6 million; and

     - accrued and unpaid interest on the notes from January 16, 2000 through
       June 1, 2000 of $4.0 million.

  Outstanding Debt

     Senior Credit Facility. AMFM Operating's senior credit facility includes
commitments for a revolving loan facility of $600.0 million and a term loan
facility of $2.6 billion. The proceeds of such facilities were used to repay
AMFM's previously existing senior credit facilities, to repay, repurchase or
redeem other debt and equity securities of AMFM and its subsidiaries and for
other general corporate purposes. Both the revolving loan facility and the term
loan facility of AMFM Operating will mature on November 19, 2001. No scheduled
amortization of principal is required prior to maturity. Both the revolving loan
facility and the term loan facility of AMFM Operating bear interest at
fluctuating rates based upon the prime rate and the eurodollar rate. The margin
above the applicable prime rate or the eurodollar rate is determined by
reference to AMFM Operating's ratio of consolidated debt to consolidated
earnings before interest, taxes, depreciation and amortization, provided that
such margins are capped at .50% and 1.50%, respectively, so long as the Clear
Channel merger agreement has not been terminated. The merger of AMFM and Clear
Channel will constitute an event of default under AMFM Operating's senior credit
facility and will require refinancing at the effective time of the merger. As of
July 31, 2000, the total outstanding principal balance on the senior credit
facility was $2.8 billion, including $0.2 billion under the revolving loan
facility and $2.6 billion under the term loan facility.

     AMFM Operating 8% Senior Notes. AMFM Operating's 8% Senior Notes due 2008
are senior unsecured obligations of AMFM Operating and rank equal in right of
payment to the obligations of AMFM Operating under AMFM Operating's senior
credit facility and existing and all other indebtedness of AMFM Operating not
expressly subordinated to the 8% Senior Notes due 2008. However, because the 8%
Senior Notes due 2008 are unsecured, the 8% Senior Notes due 2008 are
effectively subordinated in right of payment to AMFM Operating's senior credit
facility. The 8% Senior Notes due 2008 are fully and unconditionally guaranteed,
on a joint and several basis, by all of AMFM Operating's direct and indirect
wholly owned subsidiaries other than certain inconsequential subsidiaries (the
"Subsidiary Guarantors"). As of July 31, 2000, the outstanding principal balance
was $750.0 million. Interest payment requirements on the 8% Senior Notes due
2008 are approximately $60.0 million per year.

     AMFM Operating Senior Subordinated Notes. AMFM Operating's 8 3/4% Senior
Subordinated Notes due 2007, 10 1/2% Senior Subordinated Notes due 2007, 8 1/8%
Senior Subordinated Notes due 2007, 9 1/4% Senior Subordinated Notes due 2007,
9% Senior Subordinated Notes due 2008, 10 3/4% Senior Subordinated Notes due
2006 and 12 5/8% Senior Subordinated Exchange Debentures due 2006 (collectively,
the "Subordinated Notes") are unsecured obligations of AMFM Operating. The
Subordinated Notes are subordinated in right of payment to all existing and any
future senior indebtedness of AMFM Operating. Except for the 9 1/4% Senior
Subordinated Notes due 2007, the Subordinated Notes are fully and
unconditionally guaranteed, on a joint and several basis, by the Subsidiary
Guarantors. As of July 31, 2000, the total outstanding principal balance on the
Subordinated Notes was approximately $1.7 billion. Interest payment requirements
on the Subordinated Notes are approximately $155.2 million per year, payable in
semi-annual payments.

     Capstar Partners 12 3/4% Senior Discount Notes. Capstar Partners' 12 3/4%
Senior Discount Notes due 2009 are senior unsecured obligations of Capstar
Partners and rank equal to all other indebtedness of Capstar Partners not
expressly subordinated to the 12 3/4% Senior Discount Notes due 2009. The
12 3/4% Senior Discount Notes due 2009 are carried at a discount from their
aggregate principal amount at maturity of $268.4 million.

                                       19
<PAGE>   20

The carrying value of the 12 3/4% Capstar Partners Senior Discount Notes due
2009 will increase through accretion until February 1, 2002. As of July 31,
2000, the carrying value was approximately $256.3 million. Beginning on August
1, 2002, Capstar Partners will pay interest of approximately $17.1 million
semi-annually on February 1 and August 1 of each year until maturity.

     Capstar Partners 12% Subordinated Exchange Debentures. Capstar Partners'
12% Senior Subordinated Exchange Debentures due 2009 are unsecured obligations
of Capstar Partners and subordinate in right of payment to Capstar Partners'
12 3/4% Senior Discount Notes due 2009 and any future senior indebtedness of
Capstar Partners. As of July 31, 2000, the aggregate outstanding principal
balance was approximately $125.5 million. Capstar Partners pays interest of
approximately $7.5 million on the debentures semi-annually on January 1 and July
1 of each year.

     AMFM Operating's senior credit facility and the indentures governing AMFM
Operating's 8% Senior Notes due 2008, the Subordinated Notes and Capstar
Partners' 12 3/4% Senior Discount Notes due 2009 and 12% Subordinated Exchange
Debentures due 2009 contain customary restrictive covenants, which, among other
things and with certain exceptions, limit the ability of Capstar Partners and
its subsidiaries, including AMFM Operating, to incur additional indebtedness and
liens in connection therewith, enter into certain transactions with affiliates,
pay dividends, consolidate, merge or effect certain asset sales, issue
additional stock, effect an asset swap and make acquisitions. AMFM Operating is
required under its senior credit facility to maintain specified financial
ratios, including leverage, cash flow and debt service coverage ratios. As of
July 31, 2000, AMFM remains in compliance with these covenants.

  Pending Transaction

     On August 30, 1999, AMFM entered into an agreement with Cox Radio, Inc. to
acquire KOST-FM and KFI-AM in Los Angeles plus $3.0 million in cash payable by
Cox Radio, Inc. in exchange for 13 of its radio stations, including WEDR-FM in
Miami, WFOX-FM in Atlanta, WEFX-FM, WNLK-AM, WKHL-FM and WSTC-AM in
Stamford/Norwalk, WFYV-FM, WAPE-FM, WBWL-AM, WKQL-FM, WMXQ-FM and WOKV-AM in
Jacksonville and WPLR-FM and the local sales rights of a 14th station, WYBC-FM,
in New Haven. AMFM began programming KOST-FM and KFI-AM in Los Angeles and Cox
Radio, Inc. began programming the 13 AMFM stations under time brokerage
agreements effective October 1, 1999. Although there can be no assurance, AMFM
expects that the exchange will be consummated in the third quarter of 2000.

     Consummation of the transaction discussed above is subject to various
conditions, including approval from the Federal Communications Commission, in
the case of radio broadcast station transactions, and the expiration or early
termination of any waiting period required under the HSR Act or any approval
required by the DOJ pursuant to a consent decree. AMFM believes that such
conditions will be satisfied in the ordinary course, but there can be no
assurance that this will be the case.

  Principal Liquidity Requirements

     The principal liquidity requirements of AMFM (in addition to debt service
and tax liabilities) will be for working capital, general corporate purposes,
capital expenditures and pending acquisitions, and as opportunities arise and
subject to the terms of the Clear Channel merger agreement, to acquire
additional radio stations or complementary broadcast-related businesses. AMFM
believes that disposition of certain assets and cash from operating activities,
together with available revolving credit borrowings under its senior credit
facility, should be sufficient to permit AMFM to meet its obligations. As of
July 31, 2000, AMFM had $369.9 million available under its senior credit
facility, subject to financial covenants contained in the senior credit facility
and the indentures that govern the indebtedness of AMFM.

     In the future, AMFM may require additional financing, either in the form of
additional debt or equity securities. AMFM evaluates potential acquisition
opportunities on an ongoing basis and has had, and continues to have,
preliminary discussions concerning the purchase of additional stations and other
assets. AMFM expects that in connection with the financing of future
acquisitions, it may consider disposing of stations in its current markets.
                                       20
<PAGE>   21

FORWARD-LOOKING STATEMENTS

     Certain statements used in the preceding and following discussion and
elsewhere in this Quarterly Report on Form 10-Q are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These forward-
looking statements about the financial condition, prospects, operations and
business of AMFM are generally accompanied by words such as "believes,"
"expects," "plans," "anticipates," "intends," "likely," "estimates," or similar
expressions. These forward-looking statements are subject to numerous risks,
uncertainties and other factors, some of which are beyond the control of AMFM,
that could cause actual results to differ materially from those forecasted or
anticipated in such forward-looking statements.

     These risks, uncertainties and other factors include, but are not limited
to: the restrictions imposed on AMFM by Clear Channel pending completion of the
Clear Channel merger; the potential negative consequences of the substantial
indebtedness of AMFM; the restrictions imposed on AMFM by the agreements
governing its debt instruments; the competitive nature of the radio broadcasting
and new media businesses; the potential adverse effects of the recent volatility
of internet related stocks; the potential adverse effects on station licenses
and ownership of regulation of the radio broadcasting industry; the difficulty
of integrating substantial acquisitions and entering new lines of business; and
the control of AMFM by affiliates of Hicks, Muse, Tate & Furst Incorporated and
potential conflicts of interest relating thereto.

     Because such forward-looking statements are subject to risks and
uncertainties, readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's view only as of the date
of this Quarterly Report on Form 10-Q. AMFM undertakes no obligation to update
such statements or publicly release the result of any revisions to these
forward-looking statements which it may make to reflect events or circumstances
after the date of this report or to reflect the occurrence of unanticipated or
unforeseen events.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities. This statement establishes accounting and reporting
standards for derivative instruments and hedging activities. SFAS No. 133, as
amended by SFAS No. 137, is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. Management does not anticipate that this
statement will have a material impact on AMFM's consolidated financial
statements.

     In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation, an interpretation of APB No. 25, Accounting for Stock Issued to
Employees. The provisions of this Interpretation became effective July 1, 2000.
Due to the terms of certain options previously granted, AMFM will record a
non-cash charge upon consummation of the Clear Channel merger regardless of the
new Interpretation. The size of such charge is not presently determinable since
it will be based on, among other things, the fair value of AMFM's common stock
on the day of the merger. On July 5, 2000, the Company amended its stock option
plans to provide that all unvested options will accelerate and vest for
employees terminated as a result of the pending AMFM/Clear Channel merger.
Further, those employees will have the remainder of the term of the option to
exercise. As a result of the Interpretation, the amendments have no accounting
impact until an event of termination occurs.

                                       21
<PAGE>   22

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK MANAGEMENT

     AMFM's exposure to market risk associated with changes in interest rates
relates primarily to its debt obligations. AMFM manages its interest rate risk
through a combination of fixed and floating rate debt and swap agreements.

     The following table presents descriptions of the financial instruments and
derivative instruments that were held by AMFM at June 30, 2000, which are
sensitive to interest rate fluctuation. For the outstanding debt, the table
presents required principal cash flows by maturity date and the related average
interest rate. For the interest rate swaps, the table presents the notional
amounts and expected interest rates that exist by contractual dates, and the
notional amount is used to calculate the contractual payments to be exchanged
under the contract. The variable rates are estimated based on implied forward
rates in the yield curve at the reporting date.
<TABLE>
<CAPTION>
                            SIX MONTHS
                              ENDED        YEAR ENDED     YEAR ENDED     YEAR ENDED     YEAR ENDED
                           DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                               2000           2001           2002           2003           2004       THEREAFTER
                           ------------   ------------   ------------   ------------   ------------   ----------
                                                          (DOLLARS IN THOUSANDS)
<S>                        <C>            <C>            <C>            <C>            <C>            <C>
Fixed rate debt
  (U.S. $)...............    $     --      $       --        $ --           $ --           $ --       $2,887,027
  Average interest
    rate.................          --              --          --             --             --             8.77%
Variable rate debt
  (U.S. $)...............    $     --      $2,855,000        $ --           $ --           $ --       $       --
  Average interest
    rate.................          --            8.42%         --             --             --               --
Interest rate swaps
  (variable to fixed):
  Notional amount........    $100,000      $  400,000        $ --           $ --           $ --       $       --
  Unrecorded gain -- fair
    value................          --              --          --             --             --               --
  Average pay rate.......        5.83%           5.17%         --             --             --               --
  Average receive rate...        6.92%           7.14%         --             --             --               --

<CAPTION>

                             TOTAL      FAIR VALUE
                           ----------   ----------
                           (DOLLARS IN THOUSANDS)
<S>                        <C>          <C>
Fixed rate debt
  (U.S. $)...............  $2,887,027   $2,918,946
  Average interest
    rate.................        8.77%
Variable rate debt
  (U.S. $)...............  $2,855,000   $2,855,000
  Average interest
    rate.................        8.42%
Interest rate swaps
  (variable to fixed):
  Notional amount........  $  500,000
  Unrecorded gain -- fair
    value................          --   $    8,793
  Average pay rate.......        5.30%
  Average receive rate...        7.09%
</TABLE>

                                       22
<PAGE>   23

                          PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     On July 24, 1998, in connection with Capstar Broadcasting Corporation's
then pending acquisition of Triathlon Broadcasting Company, Capstar Broadcasting
was notified of an action filed on behalf of all holders of depositary shares of
Triathlon against Triathlon, Triathlon's directors, and Capstar Broadcasting.
The action was filed in the Court of Chancery of the State of Delaware (Civil
Action No. 16560) in and for New Castle County, Delaware by Herbert Behrens. The
complaint alleges that Triathlon and its directors breached their fiduciary
duties to the class of depositary stockholders. Capstar Broadcasting is accused
of knowingly aiding and abetting the breaches of fiduciary duties allegedly
committed by the other defendants. The complaint sought to have the action
certified as a class action and sought to enjoin the Triathlon acquisition, or
in the alternative, sought monetary damages in an unspecified amount. On April
30, 1999, the acquisition of Triathlon closed. On May 26, 2000, the parties
signed a Stipulation Settlement that provided for a proposed settlement of the
lawsuit. That proposed settlement is subject to court approval. The amount of
the settlement will equal $0.11 in additional consideration for each depositary
share owned by any class member at the effective time of the Triathlon
acquisition. At the time of the acquisition, there were approximately 5.8
million depositary shares outstanding. Capstar Broadcasting also agreed not to
oppose plaintiff's counsel's application for attorney fees and expenses in the
aggregate amount of $0.2 million. On July 11, 2000, the court preliminarily
approved the proposed settlement. The court has set a fairness hearing for the
proposed settlement for August 29, 2000. On November 19, 1999, Capstar
Broadcasting merged into Chancellor Mezzanine Holdings Corporation and the
surviving corporation was renamed AMFM Holdings Inc.

     In September 1998, a stockholder class action complaint was filed in the
Delaware Court of Chancery by a stockholder purporting to act individually and
on behalf of all other persons, other than defendants, who own securities of
AMFM and are similarly situated. The defendants named in the case are AMFM,
Hicks Muse, Thomas O. Hicks, Jeffrey A. Marcus, James E. de Castro, Eric C.
Neuman, Lawrence D. Stuart, Jr., Steven Dinetz, Thomas J. Hodson, Perry Lewis,
John H. Massey and Vernon E. Jordan, Jr. The plaintiff alleges breach of
fiduciary duties, gross mismanagement, gross negligence or recklessness, and
other matters relating to the defendants' actions in connection with the Capstar
merger. The plaintiff sought to certify the complaint as a class action, enjoin
consummation of the Capstar merger, order defendants to account to plaintiff and
other alleged class members for damages, and award attorneys' fees and other
costs. AMFM believes that the lawsuit is without merit and intends to vigorously
defend the action.

     On April 11, 2000 an action was commenced in New York Supreme Court, New
York County, by Interep National Radio Sales, Inc. seeking $47.1 million in
damages, plus interest, from Clear Channel Communications, Inc. and $19.7
million in damages, plus interest, from Katz Communications, Inc., a co-
defendant and an indirect wholly-owned subsidiary of AMFM. The complaint
alleges, among other things, that Clear Channel wrongfully terminated a February
3, 1996 agreement between Clear Channel and Interep under which Interep agreed
to act as Clear Channel's exclusive advertising representative by procuring
advertising time on Clear Channel's radio stations and also under which Interep,
Clear Channel and Katz executed certain "triparty agreements" in which Interep
agreed to buy out the existing representation agreement of Clear Channel's then
current representative, Katz, for $23.0 million. The complaint also alleges that
Interep's representation agreement, by its terms, could not be terminated by
Clear Channel until February 1, 2005 and that Clear Channel's November 30, 1999
termination of Interep constituted a breach of the representation agreement. The
complaint alleges further that Clear Channel and Katz continue to demand that
Interep make all buy out payments to Katz as set forth in the various triparty
agreements. $5.2 million of the requested damages correspond to buyouts in
excess of the pro rata amount attributable to the time Interep had the right to
represent the bought out stations and $0.3 million of the requested damages
correspond to a refund of a portion of a "signing bonus" paid by Interep to
Clear Channel upon the execution of Interep's representation agreement. The
complaint does not specify the basis for the remaining damages sought by
Interep. Although this matter is in the early stages of litigation, Katz has
pending before the Court a motion to dismiss entirely all the claims asserted by
Interep against it.

                                       23
<PAGE>   24

     On July 13, 2000, a lawsuit was filed in the Supreme Court of the State of
New York, County of Westchester by plaintiff Charles E. Armstrong against AMFM
Inc. and AMFM Interactive, Inc. The complaint alleges that AMFM Inc. and AMFM
Interactive, Inc. breached an alleged employment agreement and also an alleged
agreement to issue stock options to the plaintiff. The plaintiff seeks a
declaration regarding his rights and obligations under the alleged employment
agreement and compensatory and punitive damages in excess of $50.0 million. AMFM
Inc. and AMFM Interactive, Inc. deny the existence of any employment agreement,
and also deny that they have breached any agreement to issue stock options to
Mr. Armstrong. AMFM and AMFM Interactive, Inc. are vigorously defending the
action.

     AMFM is also involved in various other claims and lawsuits which are
generally incidental to its business. AMFM is also vigorously contesting all of
these matters and believes that the ultimate resolution of these matters and
those mentioned above will not have a material adverse effect on its
consolidated financial position, results of operations or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     AMFM held a special meeting of stockholders on April 26, 2000 in Dallas,
Texas. At the special meeting, the stockholders of AMFM voted to approve and
adopt the Agreement and Plan of Merger, dated as of October 2, 1999, among Clear
Channel Communications, Inc., CCU Merger Sub, Inc. and AMFM Inc. as follows:

<TABLE>
<CAPTION>
    FOR       AGAINST   ABSTENTIONS
    ---       -------   -----------
<S>           <C>       <C>
168,909,281   87,367      19,517
</TABLE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

<TABLE>
<CAPTION>
     EXHIBIT NUMBER                              DESCRIPTION
     --------------                              -----------
<C>                      <S>
          4.9.6*         -- Sixth Supplemental Indenture, dated June 2, 2000, to the
                            Indenture, dated as of October 28, 1997, governing the
                            10 1/2% Senior Subordinated Notes due 2007 of AMFM
                            Operating Inc.
         10.4.3*         -- Second Amendment to Chancellor Holdings Corp. 1994
                            Director Stock Option Plan.
         10.5.3*         -- Second Amendment to the 1995 Stock Option Plan for
                            Executive Officers and Key Employees of Evergreen Media
                            Corporation.
         10.6.3*         -- Second Amendment to Chancellor Broadcasting Company 1996
                            Stock Award Plan.
         10.7.4*         -- Third Amendment to Amended and Restated AMFM Inc. Stock
                            Option Plan for Non-Employee Directors.
         10.8.4*         -- Third Amendment to the Capstar Broadcasting Corporation
                            1998 Stock Option Plan.
         10.9.4*         -- Third Amendment to the AMFM Inc. 1998 Stock Option Plan.
         10.10.4*        -- Third Amendment to the AMFM Inc. 1999 Stock Option Plan.
         27.1*           -- Financial Data Schedule of AMFM Inc.
</TABLE>

---------------

* Filed herewith.

     (b) Reports on Form 8-K

     1. Current Report on Form 8-K (Items 5 and 7), dated May 5, 2000 and filed
May 8, 2000, announcing (i) the commencement of a tender offer to purchase for
cash all of AMFM Operating's outstanding 10 1/2% Senior Subordinated Notes due
2007 and (ii) the receipt by AMFM Operating of the consent of the holder of the
majority in aggregate principal amount of the 10 1/2% Senior Subordinated Notes
due 2007 to proposed amendments to eliminate certain restrictive covenants and
to amend certain other provisions of the indenture to which the 10 1/2% Senior
Subordinated Notes due 2007 were issued.

                                       24
<PAGE>   25

                                   SIGNATURE

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

                                            AMFM INC.

                                            By:   /s/ W. SCHUYLER HANSEN
                                              ----------------------------------
                                                      W. Schuyler Hansen
                                                  Senior Vice President and
                                                   Chief Accounting Officer

Date: August 14, 2000

                                       25
<PAGE>   26

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
     EXHIBIT NUMBER                              DESCRIPTION
     --------------                              -----------
<C>                      <S>
          4.9.6*         -- Sixth Supplemental Indenture, dated June 2, 2000, to the
                            Indenture, dated as of October 28, 1997, governing the
                            10 1/2% Senior Subordinated Notes due 2007 of AMFM
                            Operating Inc.
         10.4.3*         -- Second Amendment to Chancellor Holdings Corp. 1994
                            Director Stock Option Plan.
         10.5.3*         -- Second Amendment to the 1995 Stock Option Plan for
                            Executive Officers and Key Employees of Evergreen Media
                            Corporation.
         10.6.3*         -- Second Amendment to Chancellor Broadcasting Company 1996
                            Stock Award Plan.
         10.7.4*         -- Third Amendment to Amended and Restated AMFM Inc. Stock
                            Option Plan for Non-Employee Directors.
         10.8.4*         -- Third Amendment to the Capstar Broadcasting Corporation
                            1998 Stock Option Plan.
         10.9.4*         -- Third Amendment to the AMFM Inc. 1998 Stock Option Plan.
         10.10.4*        -- Third Amendment to the AMFM Inc. 1999 Stock Option Plan.
         27.1*           -- Financial Data Schedule of AMFM Inc.
</TABLE>

---------------

 *  Filed herewith.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.9.6
<SEQUENCE>2
<FILENAME>ex4-9_6.txt
<DESCRIPTION>6TH SUPPLEMENTAL INDENTURE DATED 6/2/00
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 4.9.6



================================================================================






                              AMFM OPERATING INC.,

                                   as Obligor

                                       and

                   THE GUARANTORS LISTED IN SCHEDULE I HERETO

                                       and


                   AMERICAN STOCK TRANSFER AND TRUST COMPANY,

                                   as Trustee

                   ------------------------------------------


                          SIXTH SUPPLEMENTAL INDENTURE

                            Dated as of June 2, 2000

                                       to

                                    Indenture

                          Dated as of December 19, 1996

                           Amended and Restated as of

                                October 28, 1997

                   ------------------------------------------


                                  $100,000,000

                   10 1/2% Senior Subordinated Notes due 2007


================================================================================




<PAGE>   2



                          SIXTH SUPPLEMENTAL INDENTURE

         SIXTH SUPPLEMENTAL INDENTURE dated as of June 2, 2000 among AMFM
OPERATING INC., a corporation duly organized and existing under the laws of the
State of Delaware (hereinafter called the "Company"), the guarantors listed in
Schedule I hereto (the "Guarantors"), and AMERICAN STOCK TRANSFER AND TRUST
COMPANY, a New York trust corporation, as trustee (the "Trustee");

         WHEREAS, the Company has heretofore executed and delivered to the
Trustee the Amended and Restated Indenture dated as of December 19, 1996,
amended and restated as of October 28, 1997, among Katz Media Corporation, as
issuer, and the Trustee, as amended by the Second Supplemental Indenture dated
as of October 28, 1997 among Chancellor Media Corporation of Los Angeles
("CMCLA," as successor in interest to Katz Media Corporation), the guarantors
named therein and the Trustee, as further amended by the Third Supplemental
Indenture dated as of August 23, 1999 among CMCLA, the guarantors named therein
and the Trustee, as further amended by the Fourth Supplemental Indenture dated
as of November 19, 1999 among the Company (as successor in interest to CMCLA),
the guarantors named therein and the Trustee, and as further amended by the
Fifth Supplemental Indenture dated as of January 18, 2000 among the Company, the
guarantors named therein and the Trustee (collectively, the "Original
Indenture") to provide for the issuance of its 10 1/2% Senior Subordinated Notes
due 2007 (the "Notes"); and

         WHEREAS, Section 9.02 of the Original Indenture provides, among other
things, that, with the consent of the Holders of at least a majority in
aggregate principal amount of the Notes then outstanding, the Company, the
Guarantors and the Trustee may enter into indentures supplemental to the
Original Indenture for the purpose of amending any provision of the Original
Indenture or the Notes (other than as provided in Section 9.02 of the Original
Indenture); and

         WHEREAS, the Company desires to amend and delete certain provisions of
the Original Indenture; and

         WHEREAS, all action on the part of the Company necessary to authorize
its execution, delivery and performance of the Original Indenture, as further
supplemented by this Sixth Supplemental Indenture, has been duly taken; and

         WHEREAS, the Company has solicited the consent of the Holders of the
Notes to certain amendments to the Original Indenture (the "Amendments")
pursuant to that certain Consent Solicitation Statement dated April 27, 2000;
and

         WHEREAS, Holders of at least a majority in aggregate principal amount
of the Notes have consented to the Amendments and instruments evidencing such
consent have been delivered to the Trustee; and

         WHEREAS, the Company desires and has requested the Trustee and the
Guarantors to join in the execution and delivery of this Sixth Supplemental
Indenture for the purpose of amending the Original Indenture;


<PAGE>   3



         NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, it is mutually covenanted and agreed for the equal and
ratable benefit of all Holders of the Notes as follows, effective upon execution
hereof by the Company, the Trustee and the Guarantors:

                                   DEFINITION

         Section 1.1 Definition. When used herein, "Tender Offer Completion
Event" shall mean such time as each of the following events shall have occurred:
(i) the Company shall have completed a tender offer in accordance with the terms
and conditions set forth in the Company's Letter to Noteholders dated April 28,
2000, (ii) each holder of Notes that has tendered its Notes pursuant to the
tender offer shall have received payment for any Notes purchased pursuant to the
tender offer and (iii) the Company shall provide written notice of the events
described in (i) and (ii) to the Trustee.

                                   ARTICLE TWO
                        AMENDMENTS TO ORIGINAL INDENTURE

         Section 2.1 Deleted Definitions. Upon the occurrence of the Tender
Offer Completion Event,

         (a) Section 1.01 of the Original Indenture shall be amended by deleting
the following definitions in their entirety:

                  "Acquired Indebtedness"
                  "Acquired Preferred Stock"
                  "Asset Acquisition"
                  "Asset Sale"
                  "Asset Swap"
                  "Capital Lease Obligation"
                  "Capital Stock"
                  "Chancellor Broadcasting"
                  "Change of Control"
                  "Consolidated EBITDA"
                  "Consolidated Interest Expense"
                  "Consolidated Net Income"
                  "Consolidated Non-Cash Charges"
                  "Continuing Director"
                  "Contract Buy Out"
                  "DLJ"
                  "DLJMB"
                  "Eligible Institution"
                  "Existing Indebtedness"
                  "Financial Monitoring and Oversight Agreements"
                  "GAAP"
                  "Hedging Obligations"





                                       2
<PAGE>   4

                  "Hicks Muse"
                  "Initial Purchaser"
                  "Interim Credit Facility"
                  "Investments"
                  "Katz Notes"
                  "KCC Merger"
                  "KMG"
                  "KMSI"
                  "Leverage Ratio"
                  "Media Representation Venture"
                  "Moody's"
                  "NCC"
                  "Net Proceeds"
                  "Non-Cash Rent Expense"
                  "Non-Recourse Debt"
                  "Offering"
                  "Offering Memorandum"'
                  "Permitted Indebtedness"
                  "Permitted Investments"
                  "Permitted Liens"
                  "Productive Assets"
                  "pro forma"
                  "Qualified Capital Stock"
                  "Radio Broadcasting"
                  "Refinancing Indebtedness"
                  "Restricted Investment"
                  "Restricted Payment"
                  "SFAS No. 13"
                  "S&P"
                  "Significant Subsidiary"
                  "Tax Sharing Agreement"
                  "Tender Offer"
                  "Unrestricted Subsidiary"
                  "U.S. Government Obligations"
                  "U.S. Legal Tender"
                  "U.S. Person"
                  "Weighted Average Life to Maturity"
                  "Wholly Owned Subsidiary"

         (b) Section 1.02 of the Original Indenture shall be amended by deleting
the following definitions in their entirety:

                  "Affiliate Transaction"
                  "Asset Sale Payment"
                  "Change of Control Payment"

                                        3

<PAGE>   5



                  "Change of Control Offer"
                  "Incur"
                  "Net Proceeds Offer"
                  "Payment Date"
                  "Purchase Date"
                  "Restricted Payments"

         (c) The following definitions in Section 1.01 of the Original Indenture
shall be amended and restated in their entirety as follows:

                           "Company" means AMFM Operating Inc. until a successor
                  replaces it pursuant to this Indenture and thereafter means
                  such successor and also includes for the purposes of any
                  provision contained herein and required by the TIA any on the
                  Notes.

                           "Guarantor" means each of the Persons named as a
                  Guarantor in Schedule I to this Sixth Supplemental Indenture
                  and their respective successors and assigns.

         Section 2.2 Deleted Sections. Upon the occurrence of the Tender Offer
Completion Event, the following Sections of the Original Indenture shall be
deleted in their entirety: 3.08, 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09,
4.10, 4.11, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 11.01, 11.02, 11.03, 11.04,
11.05, 11.06, 11.07 and 11.08.

         Section 2.3 Certain Modifications. Upon the occurrence to the Tender
Offer Completion Event, the text of each of the following Sections or
subsections of the Original Indenture shall be modified as follows:

         (a)      Section 2.06(i)(ii) shall be amended by deleting the clause
                  ",4.13, 4.14" in its entirety.

         (b)      Section 3.01 shall be amended to delete the second paragraph
                  thereof in its entirety.

         (c)      The first paragraph of Section 4.01 shall be amended and
                  restated in its entirety as follows:

                           "The Company shall pay the principal of, and premium,
                  if any, and accrued and unpaid interest on and Liquidated
                  Damages, if any, with respect to the Notes on the dates and in
                  the manner provided in the Notes. Holders of Notes must
                  surrender their Notes to the Paying Agent to collect principal
                  payments. Principal of, premium, if any, and accrued and
                  unpaid interest, and Liquidated Damages, if any, shall be
                  considered paid on the date due if the Paying Agent (other
                  than the Company or any of its Subsidiaries or any Affiliates
                  thereof), the Global Note Holder or each Holder that has
                  specified an account, holds, as of 12:00 noon New York City
                  time, money the Company deposited in immediately available
                  funds designated for and sufficient to pay in cash all
                  principal, premium, if any, and accrued and unpaid interest
                  on, and

                                        4

<PAGE>   6



                  Liquidated Damages, if any, then due; provided that, to the
                  extent that the Holders have not specified accounts, such
                  amounts shall be considered paid on the date due if the
                  Company mails a check for such amounts on such date. The
                  Paying Agent shall return to the Company, no later than five
                  days following the date of payment, any money (including
                  accrued interest) that exceeds the amount of principal,
                  premium, if any, accrued and unpaid interest, and Liquidated
                  Damages, if any, paid on the Notes. The Company shall pay all
                  Liquidated Damages, if any, in the same manner on the dates
                  and in the amounts set forth in the Registration Rights
                  Agreement. If any Liquidated Damages become payable, the
                  Company shall not later than 3 Business Days prior to the date
                  that any payment of Liquidated Damages is due (i) deliver an
                  Officers' Certificate to the Trustee setting forth the amount
                  of Liquidated Damages payable to Holders and (ii) instruct the
                  Paying Agent to pay such amount of Liquidated Damages to
                  Holders entitled to receive such Liquidated Damages."

         (d)      Section 5.01 shall be amended and restated in its entirety to
                  read as follows:

                  "SECTION 5.01.    MERGER, CONSOLIDATION OR SALE OF ASSETS.

                           The Company shall not consolidate or merge with or
                  into (whether or not the Company is the surviving entity), or
                  sell, assign, transfer, lease, convey or otherwise dispose of
                  all or substantially all of its properties or assets in one or
                  more related transactions to another corporation, Person or
                  entity unless (i) the Company is the surviving corporation or
                  the entity or Person formed by or surviving any such
                  consolidation or merger (if other than the Company) or to
                  which such sale, assignment, transfer, lease, conveyance or
                  other disposition shall have been made is a corporation
                  organized or existing under the laws of the United States, any
                  state thereof or the District of Columbia; and (ii) the entity
                  or Person formed by or surviving any such consolidation or
                  merger (if other than the Company) or the entity or Person to
                  which such sale, assignment, transfer, lease, conveyance or
                  other disposition will have been made assumes all the
                  obligations of the Company under the Notes and this Indenture
                  pursuant to a supplemental indenture in form reasonably
                  satisfactory to the Trustee."

         (e)      Section 6.01 shall be amended and restated in its entirety to
                  read as follows:

                  "SECTION 6.01.    EVENTS OF DEFAULT.

                  (a)      An Event of Default is:

                           (i)      default for 30 days in the payment when due
                                    of interest on, or Liquidated Damages, if
                                    any, with respect to the Notes whether or
                                    not prohibited by Article 10 hereof;

                           (ii)     default in payment when due of principal or
                                    premium, if any, on the

                                        5

<PAGE>   7



                                    Notes at maturity, upon redemption or
                                    otherwise whether or not prohibited by
                                    Article 10 hereof;

                           (iii)    [intentionally left blank];

                           (iv)     [intentionally left blank];

                           (v)      [intentionally left blank];

                           (vi)     [intentionally left blank];

                           (vii)    [intentionally left blank];

                           (viii)   in existence when the Company:

                                    (A)      commences a voluntary case,

                                    (B)      consents to the entry of an order
                                             for relief against it in an
                                             involuntary case,

                                    (C)      consents to the appointment of a
                                             Custodian of it or for all or
                                             substantially all of its property,
                                             or

                                    (D)      makes a general assignment for the
                                             benefit of its creditors, and

                           (ix)     in existence when a court of competent
                                    jurisdiction enters an order or decree under
                                    any Bankruptcy Law that:

                                    (A)      is for relief against the Company,

                                    (B)      appoints a Custodian of the
                                             Company, or

                                    (C)      orders the liquidation of the
                                             Company,

                           and any such order or decree remains unstayed and in
                           effect for 60 days.

                           The term "Custodian" means any receiver, trustee,
                  assignee, liquidator or similar official under any Bankruptcy
                  Law."

         (f)      Section 6.02 shall be amended and restated in its entirety to
                  read as follows:

                  "SECTION 6.02.    ACCELERATION.

                           If any Event of Default occurs and is continuing
                           (other than an Event of

                                        6

<PAGE>   8



                  Default under Section 6.01(a)(viii) or (ix) hereof), the
                  Trustee or the Holders of at least 25% in principal amount of
                  the then outstanding Notes may declare all the Notes to be due
                  and payable by notice in writing to the Company and the
                  Trustee specifying the respective Event of Default and that it
                  is a "notice of acceleration" (the "Acceleration Notice"), and
                  the same (i) shall become immediately due and payable or (ii)
                  if there are any amounts outstanding under the Credit
                  Agreement, shall become immediately due and payable upon the
                  first to occur of an acceleration under the Credit Agreement
                  or five Business Days after receipt by the Company and the
                  Representative under the Credit Agreement of such Acceleration
                  Notice but only if such Event of Default is then continuing.
                  Notwithstanding the foregoing, in the case of an Event of
                  Default arising from Section 6.01(a)(viii) or (ix) hereof, all
                  outstanding Notes will become due and payable without further
                  action or notice."

         (g)      Section 8.01 shall be amended and restated in its entirety to
                  read as follows:

                  "SECTION 8.01.    OPTION TO EFFECT LEGAL DEFEASANCE OR
                                    COVENANT DEFEASANCE.

                           The Company may, at the option of its Board of
                  Directors evidenced by a resolution set forth in an Officers'
                  Certificate, at any time, elect to have either Section 8.02 or
                  8.03 hereof be applied to all outstanding Notes upon
                  compliance with the conditions set forth below in this Article
                  8."

         (h)      Section 8.02 shall be amended and restated in its entirety to
                  read as follows:

                  "SECTION 8.02.    LEGAL DEFEASANCE AND DISCHARGE.

                           Upon the Company's exercise under Section 8.01 hereof
                  of the option applicable to this Section 8.02, the Company
                  shall, subject to the satisfaction of the conditions set forth
                  in Section 8.04 hereof, be deemed to have been discharged from
                  its obligations with respect to all outstanding Notes on the
                  date the conditions set forth below are satisfied
                  (hereinafter, "Legal Defeasance"). For this purpose, Legal
                  Defeasance means that the Company shall be deemed to have paid
                  and discharged the entire Indebtedness represented by the
                  outstanding Notes, which shall thereafter be deemed to be
                  "outstanding" only for the purposes of Section 8.05 hereof and
                  the other Sections of this Indenture referred to in (a) and
                  (b) below, and to have satisfied all its other obligations
                  under such Notes and this Indenture (and the Trustee, on
                  demand of and at the expense of the Company, shall execute
                  proper instruments acknowledging the same), except for the
                  following provisions which shall survive until otherwise
                  terminated or discharged hereunder: (a) the rights of Holders
                  of outstanding Notes to receive payments in respect of the
                  principal of, premium, if any, and interest and Liquidated
                  Damages, if any, on such Notes when such payments are due or
                  on the redemption date, as the case may be, from the trust
                  referred to in Section 8.04(a); (b) the Company's obligations
                  with respect to such Notes under Sections 2.02, 2.03, 2.04,
                  2.05, 2.06, 2.07, 2.10 and 4.12 hereof; (c) the rights,
                  powers, trusts, duties and immunities of the Trustee including
                  without limitation thereunder Section 7.07, 8.05 and 8.07
                  hereunder and the Company's obligations in connection
                  therewith; (d) the Company's rights to redeem Notes under
                  Section 3.07 hereof; and (e) the provisions of this Article 8.
                  Subject to compliance with this Article 8, the Company may
                  exercise its option under this Section 8.02 notwithstanding
                  the prior exercise of its option under Section 8.03 hereof."

                                        7

<PAGE>   9




         (i) Section 8.03 shall be amended and restated in its entirety to read
as follows:

                  "SECTION 8.03.    COVENANT DEFEASANCE

                           Upon the Company's exercise under Section 8.01 hereof
                  of the option applicable to this Section 8.03, the Company
                  shall, subject to the satisfaction of the conditions set forth
                  in Section 8.04 hereof, be released from its obligations under
                  the covenants contained in Section 5.01 hereof with respect to
                  the outstanding Notes on and after the date the conditions set
                  forth below are satisfied (hereinafter, "Covenant
                  Defeasance"), and the Notes shall thereafter be deemed not
                  "outstanding" for the purposes of any direction, waiver,
                  consent or declaration or act of Holders (and the consequences
                  of any thereof) in connection with such covenants, but shall
                  continue to be deemed "outstanding" for all other purposes
                  hereunder (it being understood that such Notes shall not be
                  deemed outstanding for accounting purposes). For this purpose,
                  Covenant Defeasance means that, with respect to the
                  outstanding Notes, the Company or its Subsidiaries may omit to
                  comply with and shall have no liability in respect of any
                  term, condition or limitation set forth in any such covenant,
                  whether directly or indirectly, by reason of any reference
                  elsewhere herein to any such covenant or by reason of any
                  reference in any such covenant to any other provision herein
                  or in any other document and such omission to comply shall not
                  constitute a Default or an Event of Default under Section 6.01
                  hereof, but, except as specified above, the remainder of this
                  Indenture and such Notes shall be unaffected thereby. In
                  addition, upon the Company's exercise under Section 8.01
                  hereof of the option applicable to this Section 8.03 hereof,
                  subject to the satisfaction of the conditions set forth in
                  Section 8.04 hereof, Sections 6.01(a)(i) through 6.01(a)(vii)
                  hereof shall not constitute Events of Default."

         (j) The first sentence of Section 8.04 shall be amended and restated in
its entirety to read as follows:

                           "The following shall be the conditions to the
                  application of either Section 8.02 or 8.03 hereof to the
                  outstanding Notes:"

         (k) The first paragraph of Section 9.01 shall be amended and restated
in its entirety to read as follows:

                           "Notwithstanding Section 9.02 hereof, the Company and
                  the Trustee may amend or supplement this Indenture or the
                  Notes without the consent of any Holder: (a) to cure any
                  ambiguity, defect or inconsistency; (b) to provide for
                  uncertificated Notes in addition to or in place of
                  certificated Notes; (c) to provide for the assumption by a
                  successor corporation of the Company's Obligations to the
                  Holders in the event of a disposition pursuant to Article 5;
                  (d) to comply with SEC's requirements to effect or maintain
                  the qualification of this Indenture under the TIA; (e) to make
                  any change that does not materially adversely affect any
                  Holder's legal rights under this Indenture; (f) to evidence
                  and provide for a successor Trustee; (g) to add additional
                  covenants or Events of Default; or (h) to secure the Notes."

                                        8

<PAGE>   10



         (l) Section 9.02 shall be amended and restated in its entirety to read
as follows:

                  "SECTION 9.02.    AMENDMENTS AND SUPPLEMENTS REQUIRING CONSENT
                                    OF HOLDERS.

                           Subject to Section 6.07 hereof and Section 10.13, the
                  Company and the Trustee may amend or supplement this Indenture
                  or the Notes with the consent of the holders of at least a
                  majority in principal amount of the Notes then outstanding
                  (including, without limitation, consents obtained in
                  connection with a purchase of, or tender offer or exchange
                  offer for Notes), and any existing Default or Event of Default
                  (other than a payment Default) or compliance with any
                  provision of the Indenture or the Notes may be waived with the
                  consent of the holders of a majority in principal amount of
                  the then outstanding Notes (including consents obtained in
                  connection with a tender offer or exchange offer for Notes).

                           Upon the Company's request and after receipt by the
                  Trustee of a resolution of the Board of Directors authorizing
                  the execution of any supplemental indenture, evidence of the
                  Holders' consent, and the documents described in Section 9.06
                  hereof, the Trustee shall join with the Company in the
                  execution of such amended or supplemental indenture unless
                  such amended or supplemental indenture affects the Trustee's
                  own rights, duties or immunities under this Indenture or
                  otherwise, in which case the Trustee may in its discretion,
                  but not be obligated to, enter into such amended or
                  supplemental indenture.

                           It shall not be necessary for the consent of the
                  Holders under this Section 9.02 to approve the particular form
                  of any proposed amendment or waiver, but it shall be
                  sufficient if such consent approves the substance thereof.
                  However, without the consent of each Holder affected, an
                  amendment, supplement or waiver may not (with respect to any
                  Notes held by a non-consenting Holder): (i) reduce the
                  principal amount of Notes whose holders must consent to an
                  amendment, supplement or waiver, (ii) reduce the principal of
                  or change the fixed maturity of any Note or alter the
                  provisions with respect to the redemption of the Notes in a
                  manner adverse to Holders, (iii) reduce the rate of or change
                  the time for payment of interest on any Note, (iv) waive a
                  Default or Event of Default in the payment of principal of or
                  premium, if any, or interest on the Notes (except a rescission
                  of acceleration of the Notes by the holders of at least a
                  majority in aggregate principal amount of the Notes and a
                  waiver of the payment default that resulted from such
                  acceleration), (v) make any Note payable in money other than
                  that stated in the Notes, (vi) make any change in the
                  provisions of the Indenture relating to waivers of past
                  Defaults or the rights of holders of Notes to receive payments
                  of principal of or premium, if any, or interest on the Notes,
                  (vii) waive a redemption payment with respect to any Note or
                  (viii) make any change in the foregoing amendment and waiver
                  provisions. In addition, any amendment to the provisions of
                  Article 10 hereof will require the consent of the holders of
                  at least 75% in aggregate principal amount of the Notes then
                  outstanding if such

                                        9

<PAGE>   11



                  amendment would adversely affect the rights of holders of
                  Notes."

         (m) Section 10.01 shall be amended and restated in its entirety to read
as follows:

                  "SECTION 10.01. AGREEMENT TO SUBORDINATE.

                           The Company agrees, and each Holder by accepting a
                  Note agrees, that the payment of principal of, premium,
                  interest and Liquidated Damages, if any, on the Notes shall be
                  subordinated in right of payment, to the extent and in the
                  manner provided in this Article 10, to the prior payment in
                  full in cash or Marketable Securities of all Senior Debt,
                  whether outstanding on the date hereof or thereafter
                  incurred."

         (n) The second paragraph of Section 10.09 shall be amended and restated
in its entirety to read as follows:

                           "Without in any way limiting the generality of the
                  foregoing paragraph, the holders of the Senior Debt may, at
                  any time and from time to time, without the consent of or
                  notice to the Trustee or the Holders, without incurring
                  responsibility to the Holders and without impairing or
                  releasing the subordination provided in this Article or the
                  obligations hereunder of the Holders to the holders of Senior
                  Debt, do any one or more of the following: (a) change the
                  manner, place or terms of payment or extend the time or
                  payment of, or renew or alter, Senior Debt or any instrument
                  evidencing the same or any agreement under which Senior Debt
                  is outstanding; provided, however, that any such alteration
                  shall not increase the amount of Senior Debt outstanding in a
                  manner prohibited by this Indenture; (b) sell, exchange,
                  release or otherwise deal with any property pledged, mortgaged
                  or otherwise securing Senior Debt; (c) release any Person
                  liable in any manner for the collection of Senior Debt; and
                  (d) exercise or refrain from exercising any rights against the
                  Company or any other Person; provided, however, that in no
                  event shall any such actions limit the right of the Holder to
                  take any action to accelerate the maturity of the Notes in
                  accordance with the provisions set forth in Article 6 or to
                  pursue any rights or remedies against the parties to the
                  Indenture under the Indenture or under applicable laws if the
                  taking of such action does not otherwise violate the terms of
                  this Article."

         (o) Section 12.08 shall be amended and restated in its entirety to read
as follows:

                  "SECTION 12.08. NO RECOURSE AGAINST OTHERS.

                           No officer, employee, director, incorporator or
                  stockholder of the Company shall have any liability for any
                  Obligations of the Company under the Notes or this Indenture,
                  or for any claim based on, in respect of, or by reason of,
                  such Obligations or the creation of any such Obligation. Each
                  Holder by accepting a Note waives and releases all such
                  liability, and such waiver and

                                       10

<PAGE>   12



                  release is part of the consideration for the issuance of the
                  Notes."

         Section 2.4 Guarantees. The Guarantors are hereby released from any and
all obligations they have or may have with respect to any Guarantee contemplated
by the Indenture as the Indenture existed before giving effect to the amendments
herein.

                                  ARTICLE THREE

                            MISCELLANEOUS PROVISIONS

         Section 3.1 Execution as Supplemental Indenture. This Sixth
Supplemental Indenture is executed and shall be construed as an indenture
supplemental to the Original Indenture and, as provided in the Original
Indenture, this Sixth Supplemental Indenture forms a part thereof. Except as
herein expressly otherwise defined, the use of the terms and expressions herein
is in accordance with the definitions, uses and constructions contained in the
Original Indenture.

         Section 3.2 Responsibility for Recitals, etc. The recitals herein shall
be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no representations
as to the validity or sufficiency of this Sixth Supplemental Indenture.

         Section 3.3 Provisions Binding on Company's Successors. All of the
covenants, stipulations, promises and agreements made in this Sixth Supplemental
Indenture by the Company, the Guarantors and the Trustee shall bind their
respective successors and assigns whether so expressed or not.

         Section 3.4 Governing Law. This Sixth Supplemental Indenture shall be
deemed to be a contract made under the laws of the State of New York and, for
all purposes, shall be construed in accordance with the laws of said State.

         Section 3.5 Execution and Counterparts. This Sixth Supplemental
Indenture may be executed in any number of counterparts, each of which shall be
an original, but such counterparts shall together constitute but one and the
same instrument.

         Section 3.6 Trustee Disclaimer. The Trustee accepts the amendment of
the Indenture effected by this Sixth Supplemental Indenture and agrees to
execute the trust created by the Indenture as hereby amended, but on the terms
and conditions set forth in the Indenture, including the terms and provisions
defining and limiting the liabilities and responsibilities of the Trustee, which
terms and provisions shall in like manner define and limit its liabilities and
responsibilities in the performance of the trust created by the Indenture as
hereby amended, and without limiting the generality of the foregoing, the
Trustee shall not be responsible in any manner whatsoever for or with respect to
any of the recitals or statements contained herein, all of which recitals or
statements are made solely by the Company and the Guarantors, or for or with
respect to (i) the validity or sufficiency of this Sixth Supplemental Indenture
or any of the terms

                                       11

<PAGE>   13



or provisions hereof, (ii) the proper authorization hereof by the Company and
the Guarantors by corporate action or otherwise, (iii) the due execution hereof
by the Company and the Guarantors or (iv) the consequences (direct or indirect
and whether deliberate or inadvertent) of any amendment herein provided for, and
the Trustee makes no representation with respect to any such matters.

         Section 3.7 Trust Indenture Act to Control. If and to the extent that
any provision of this Sixth Supplemental Indenture limits, qualifies, or
conflicts with another provision included in the Original Indenture or in this
Sixth Supplemental Indenture which is required to be included in or is or is
deemed to be applicable to this Sixth Supplemental Indenture by any of Sections
310 to 317, inclusive, of the Trust Indenture Act of 1939, such required or
other applicable provision shall control.

                  [Remainder of page intentionally left blank]

                                       12

<PAGE>   14



         IN WITNESS WHEREOF, the parties hereto have caused this Sixth
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the date first written above.

                              AMFM OPERATING INC.
                              as Obligor



                              By:      /s/ W. Schuyler Hansen
                                  ---------------------------
                                       W. Schuyler Hansen
                                       Senior Vice President and
                                       Chief Accounting Officer


Attest:    /s/
        ----------------------


                              ON BEHALF OF EACH OF THE GUARANTORS LISTED ON
                              SCHEDULE I HERETO



                              By:       /s/ Kathy Archer
                                  ---------------------------
                                       Kathy Archer
                                       Senior Vice President


Attest:   /s/
        ----------------------


                              AMERICAN STOCK TRANSFER & TRUST
                              COMPANY, as Trustee



                              By:       /s/
                                  ---------------------------
                                       Name:
                                       Title:


Attest:    /s/
        ----------------------




                                       13

<PAGE>   15



                                   SCHEDULE I

         AMFM OPERATING INC. 10 1/2% SENIOR SUBORDINATED NOTES DUE 2007



<TABLE>
<CAPTION>
                                                                                STATE OF
                           GUARANTORS                                         ORGANIZATION
                           ----------                                         ------------
<S>                                                                           <C>
Amcast Radio Sales, Inc.                                                        Delaware
AMFM Air Services, inc.                                                         Delaware
AMFM Broadcasting, Inc.                                                         Delaware
AMFM Houston, Inc.                                                              Delaware
AMFM LA, LLC                                                                    Delaware
AMFM Massachusetts, Inc.                                                        Delaware
AMFM Michigan, Inc.                                                             Delaware
AMFM New York, Inc.                                                             Delaware
AMFM Ohio, Inc.                                                                 Delaware
AMFM Pennsylvania, Inc.                                                         Delaware
AMFM Radio Group, Inc.                                                          Delaware
AMFM Radio Licenses, LLC                                                        Delaware
AMFM/Riverside Broadcasting, Inc.                                               Delaware
AMFM San Diego, Inc.                                                            Delaware
AMFM Shamrock Texas, Inc.                                                         Texas
AMFM Systems, Inc.                                                              Delaware
AMFM Texas, LLC                                                                 Delaware
AMFM Texas Broadcasting, LP                                                     Delaware
AMFM Texas Licenses, LP                                                         Delaware
AMFM Washington DC, Inc.                                                        Delaware
AMFM/WAXQ, Inc.                                                                 Delaware
Broadcast Architecture, Inc.                                                  Massachusetts
Capstar Acquisition Company, Inc.                                               Delaware
Capstar Radio Operating Company                                                 Delaware
Capstar TX Limited Partnership                                                  Delaware
Chancellor Marketing Group, Inc.                                                Virginia
Christal Radio Sales, Inc.                                                      Delaware
Cleveland Radio Licenses, LLC                                                   Delaware
Eastman Radio Sales, Inc.                                                       Delaware
Jamboree in the Hills, Inc.                                                     Delaware
Katz Cable Corporation                                                          Delaware
Katz Communications, Inc.                                                       Delaware
Katz Media Corporation                                                          Delaware
Katz Millennium Marketing, Inc.                                                 Delaware
Katz Millennium Sales & Marketing, Inc.                                         Delaware
Osborn Entertainment Enterprises Corporation                                    Delaware
Radio 100, LLC                                                                  Delaware
</TABLE>


                                       14

<PAGE>   16



<TABLE>
<CAPTION>
                                                                                STATE OF
                           GUARANTORS                                         ORGANIZATION
                           ----------                                         ------------
<S>                                                                           <C>
The AMFM Radio Networks, Inc.                                                   Delaware
The National Payroll Company, Inc.                                              Delaware
WAXQ License Corp.                                                              Delaware
WLTW License Corp.                                                              Delaware
WPYX, Inc.                                                                      New York
Zebra Broadcasting Corporation                                                    Ohio
</TABLE>


                                       15



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4.3
<SEQUENCE>3
<FILENAME>ex10-4_3.txt
<DESCRIPTION>2ND AMENDMENT TO 1994 DIRECTOR STOCK OPTION PLAN
<TEXT>

<PAGE>   1
                                                                  EXHIBIT 10.4.3



                                    AMFM INC.

                               SECOND AMENDMENT TO
                            CHANCELLOR HOLDINGS CORP.
                         1994 DIRECTOR STOCK OPTION PLAN

         THIS SECOND AMENDMENT TO THE CHANCELLOR HOLDINGS CORP. 1994 DIRECTOR
STOCK OPTION PLAN (this "Amendment") is made and adopted by AMFM Inc., a
Delaware corporation (the "Company"), effective as of July 5, 2000.

                                    RECITALS

         WHEREAS, the Company is the successor in interest to the obligations of
Chancellor Holdings Corp. under the Chancellor Holdings Corp. 1994 Director
Stock Option Plan (the "Plan");

         WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a wholly-owned subsidiary of Clear
Channel Communications, Inc., a Texas corporation, with and into the Company,
the Board of Directors of the Company approved this Amendment to amend the terms
and provisions of the Plan; and

         WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.

                                    AMENDMENT

         NOW, THEREFORE, the Plan is amended as follows:

         1. Section 6(f) is amended by adding the following proviso at the end
of the last sentence thereof:

         ; provided, further, that anything in the Plan or the terms of any
         Option to the contrary notwithstanding, any Option held by a Director
         Participant who held office as a non-employee director of the Company
         on or after October 2, 1999 shall vest and become fully exercisable at
         the effective time of the Clear Channel Merger or at such earlier time
         at which such Director Participant no longer holds office as a director
         of the Company by reason of death, resignation, retirement,
         disqualification, removal from office, or otherwise, and such Director
         Participant shall have the right to exercise such Options for the full
         amount of the shares underlying the Options until the termination of
         the Options in accordance with their terms, without regard, however, to
         any provisions contained therein that otherwise would have the effect
         of terminating the Options prior to the expiration of the full term of
         the Options.

         2. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.



<PAGE>   2


         IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.


                                        AMFM INC.


                                        By:         /s/ W. Schuyler Hansen
                                                 -------------------------
                                        Name:    W. Schuyler Hansen
                                        Title:   Senior Vice President and
                                                 Chief Accounting Officer


                                       -2-


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5.3
<SEQUENCE>4
<FILENAME>ex10-5_3.txt
<DESCRIPTION>2ND AMENDMENT TO 1995 STOCK OPTION PLAN
<TEXT>

<PAGE>   1
                                                                  EXHIBIT 10.5.3




                                    AMFM INC.

                               SECOND AMENDMENT TO
                           1995 STOCK OPTION PLAN FOR
                     EXECUTIVE OFFICERS AND KEY EMPLOYEES OF
                           EVERGREEN MEDIA CORPORATION

         THIS SECOND AMENDMENT TO THE 1995 STOCK OPTION PLAN FOR EXECUTIVE
OFFICERS AND KEY EMPLOYEES OF EVERGREEN MEDIA CORPORATION (this "Amendment") is
made and adopted by AMFM Inc., a Delaware corporation (the "Company"), effective
as of July 5, 2000.

                                    RECITALS

         WHEREAS, the Company is the successor in interest to the obligations of
Evergreen Media Corporation under the 1995 Stock Option Plan for Executive
Officers and Key Employees of Evergreen Media Corporation (the "Plan");

         WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a wholly-owned subsidiary of Clear
Channel Communications, Inc., a Texas corporation, with and into the Company,
the Board of Directors of the Company approved this Amendment to amend the terms
and provisions of the Plan; and

         WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.

                                    AMENDMENT

         NOW, THEREFORE, the Plan is amended as follows:

         1. Section 4.3(c) of the Plan is amended and restated in its entirety
to read as follows:

                  (c) No portion of an Option which is unexercisable at
         Termination of Employment shall thereafter become exercisable;
         provided, however, that anything in the Plan or the terms of any Option
         to the contrary notwithstanding, with respect to any Options
         outstanding immediately after the Clear Channel Merger, if on or before
         the second anniversary of the Clear Channel Merger, (i) the employment
         of any Optionee terminates for any reason other than death, disability
         or cause, or (ii) an Optionee who is an Employee resigns after any
         action by the Company or any parent or Subsidiary of the Company which
         results in a material diminution in the position, compensation,
         authority, duties or responsibilities of the Optionee or requires the
         Optionee to relocate to another city which is more than 50 miles from
         the Optionee's then current location of employment, then the Options of
         such Optionee shall vest and become fully exercisable and such Optionee
         shall have the right to exercise his or her Options for the full amount
         of shares underlying the Options until the termination of the Options
         in accordance with their terms without regard, however, to any
         provisions regarding Termination of Employment contained therein.


<PAGE>   2



         2. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.

                [Remainder of this page intentionally left blank]

                                       -2-

<PAGE>   3


         IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.


                                       AMFM INC.


                                       By:         /s/ W. Schuyler Hansen
                                                -------------------------
                                       Name:    W. Schuyler Hansen
                                       Title:   Senior Vice President and
                                                Chief Accounting Officer


                                       -3-



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6.3
<SEQUENCE>5
<FILENAME>ex10-6_3.txt
<DESCRIPTION>2ND AMENDMENT TO STOCK AWARD PLAN
<TEXT>

<PAGE>   1
                                                                  EXHIBIT 10.6.3




                                    AMFM INC.

                               SECOND AMENDMENT TO
                         CHANCELLOR BROADCASTING COMPANY
                                STOCK AWARD PLAN

         THIS SECOND AMENDMENT TO THE CHANCELLOR BROADCASTING COMPANY STOCK
AWARD PLAN (this "Amendment") is made and adopted by AMFM Inc., a Delaware
corporation (the "Company"), effective as of July 5, 2000.

                                    RECITALS

         WHEREAS, the Company is the successor in interest to the obligations of
Chancellor Broadcasting Company under the Chancellor Broadcasting Company Stock
Award Plan (the "Plan");

         WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a wholly-owned subsidiary of Clear
Channel Communications, Inc., a Texas corporation, with and into the Company,
the Board of Directors of the Company approved this Amendment to amend the terms
and provisions of the Plan; and

         WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.

                                    AMENDMENT

         NOW, THEREFORE, the Plan is amended as follows:

         1. Section 7(c) of the Plan is amended and restated in its entirety to
read as follows:

                  (c) Vesting. Subject to the provisions of Sections 7(g), the
         Committee shall, in its sole discretion, determine a vesting schedule
         upon which each Stock Option shall become exercisable and remain
         exercisable; provided, however, that if the Committee does not
         determine such vesting schedule, such Stock Option shall become
         exercisable as follows: 20 percent on the first anniversary of the date
         of grant and the remaining 80 percent shall vest pro rata on a monthly
         basis over the four-year period following the first anniversary of the
         date of grant.

         2. Section 7(g) of the Plan is amended by adding the following sentence
immediately after the last sentence thereof:

         Anything in the Plan or the terms of any Stock Option to the contrary
         notwithstanding, with respect to any Stock Options outstanding
         immediately after the


<PAGE>   2



         Clear Channel Merger, if on or before the second anniversary of the
         Clear Channel Merger (i) the employment of any recipient of a Stock
         Option pursuant to the Plan is terminated for any reason other than for
         death, disability or cause, or (ii) an employee recipient of a Stock
         Option pursuant to the Plan resigns after any action by the Company or
         any parent or subsidiary of the Company which results in a material
         diminution in the position, compensation, authority, duties or
         responsibilities of such employee or requires the employee to relocate
         to another city which is more than 50 miles from the employee's then
         current location of employment, then the Stock Options of such
         participant shall vest and become fully exercisable and such
         participant shall have the right to exercise his or her Stock Options
         for the full amount of shares underlying the Stock Options until the
         termination of the Stock Options in accordance with their terms without
         regard, however, to any termination of employment provisions contained
         therein.

         3. Section 9(c) of the Plan is amended and restated in its entirety to
read as follows:

                  (c) If a Nonemployee Director ceases to be a director of the
         Company for any reason other than due to death or disability, each
         Initial Director Stock Option shall remain exercisable only for the
         three-month period following the date the Nonemployee Director ceases
         to be a director of the Company; provided, however, that anything in
         the Plan or the terms of any Initial Nonemployee Stock Option to the
         contrary notwithstanding, any Initial Nonemployee Stock Option held by
         a participant who held office as a Nonemployee Director on or after
         October 2, 1999, shall vest and become fully exercisable at the
         effective time of the Clear Channel Merger or at such earlier time as
         such participant no longer holds office as a Nonemployee Director by
         reason of death, resignation, retirement, disqualification, removal
         from office, or otherwise, and such participant shall have the right to
         exercise such Initial Nonemployee Stock Option for the full amount of
         the shares underlying the Initial Nonemployee Stock Option until the
         termination of the Initial Nonemployee Stock Option in accordance with
         its terms, without regard, however, to any provisions contained therein
         that otherwise would have the effect of terminating the Initial
         Nonemployee Stock Option prior to the expiration of the full term
         thereof.

         4. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.

                [Remainder of this page intentionally left blank]


                                        2

<PAGE>   3


         IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.


                                       AMFM INC.


                                       By:         /s/ W. Schuyler Hansen
                                                -------------------------
                                       Name:    W. Schuyler Hansen
                                       Title:   Senior Vice President and
                                                Chief Accounting Officer




                                        3



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7.4
<SEQUENCE>6
<FILENAME>ex10-7_4.txt
<DESCRIPTION>3RD AMENDMENT TO AMENDED/RESTATED STOCK OPTION
<TEXT>

<PAGE>   1
                                                                  EXHIBIT 10.7.4




                                    AMFM INC.

                               THIRD AMENDMENT TO
                         AMENDED AND RESTATED AMFM INC.
                  STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

         THIS THIRD AMENDMENT TO THE AMENDED AND RESTATED CHANCELLOR MEDIA
CORPORATION STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS (this "Amendment") is
made and adopted by AMFM Inc., a Delaware corporation (the "Company"), effective
as of ________, 2000.

                                    RECITALS

         WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a wholly-owned subsidiary of Clear
Channel Communications, Inc., a Texas corporation, with and into the Company,
the Board of Directors of the Company approved this Amendment to amend the terms
and provisions of the Amended and Restated Chancellor Media Corporation Stock
Option Plan for Non-Employee Directors (the "Plan"); and

         WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.

                                    AMENDMENT

         NOW, THEREFORE, the Plan is amended as follows:

         1. Section 4.4(b) of the Plan is amended and restated to read in its
entirety as follows:

                  (b) No Portion of an Option which is unexercisable at
         Termination of Directorship shall thereafter become exercisable, except
         as may be otherwise provided by the Board either in the Option
         Agreement or by action of the Board following grant of the Option;
         provided, however, that notwithstanding anything in the Plan or the
         terms of any Option to the contrary, any Option (other than Options
         granted on April 26, 2000) held by an Optionee who either held office
         as a non-employee Director of the Company on or after October 2, 1999
         or holds an Option on behalf or at the direction of an individual who
         held office as a non-employee Director of the Company on or after
         October 2, 1999, shall vest and become fully exercisable at the
         effective time of the Clear Channel Merger or at such earlier time at
         which such non-employee Director no longer holds office as a director
         of the Company by reason of death, resignation, retirement,
         disqualification, removal from office or otherwise, and such Optionee
         shall have the right to exercise such Options for the full amount of
         the shares underlying the


<PAGE>   2



         Options until the termination of the Options in accordance with their
         terms, without regard, however, to any provisions contained therein
         regarding Termination of Directorship or that otherwise would have the
         effect of terminating the Options prior to the expiration of the full
         term of the Options.

         2. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.

                [Remainder of this page intentionally left blank]

                                       -2-

<PAGE>   3



         IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.


                                    AMFM INC.


                                    By:        /s/ W. Schuyler Hansen
                                             ------------------------
                                    Name:    W. Schuyler Hansen
                                    Title:   Senior Vice President and
                                             Chief Accounting Officer




                                       -3-



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8.4
<SEQUENCE>7
<FILENAME>ex10-8_4.txt
<DESCRIPTION>3RD AMENDMENT TO 1998 STOCK OPTION PLAN
<TEXT>

<PAGE>   1
                                                                  EXHIBIT 10.8.4




                                    AMFM INC.

                             THIRD AMENDMENT TO THE
                        CAPSTAR BROADCASTING CORPORATION
                             1998 STOCK OPTION PLAN


         THIS THIRD AMENDMENT TO THE CAPSTAR BROADCASTING CORPORATION 1998 STOCK
OPTION PLAN (this "Amendment") is made and adopted by AMFM Inc., a Delaware
corporation (the "Company"), effective as of July 5, 2000.

                                    RECITALS

         WHEREAS, the Company assumed all of the obligations of Capstar
Broadcasting Corporation ("CBC") under the Capstar Broadcasting Corporation 1998
Stock Option Plan, as amended (the "Plan"), upon the merger of CBC with CBC
Acquisition Company, Inc., a Delaware corporation and wholly-owned subsidiary of
the Company;

         WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a Delaware corporation and
wholly-owned subsidiary of Clear Channel Communications, Inc., a Texas
corporation, with and into the Company, the Board of Directors of the Company
approved this Amendment to amend the terms and provisions of the Plan; and

         WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.

                                    AMENDMENT

         NOW, THEREFORE, the Plan is hereby amended as follows:

         1. Subsection 6(h) of the Plan is amended by adding the following
sentence immediately after the last sentence thereof:

         Anything in the Plan or the terms of any Option to the contrary
         notwithstanding, with respect to any Options outstanding immediately
         after the Clear Channel Merger, if on or before the second anniversary
         of the Clear Channel Merger (i) the employment of an optionee of the
         Company or a Related Entity terminates for any reason other than those
         specified in subsections 6(e), (f) or (g) above, or (ii) an optionee of
         the Company or a Related Entity resigns after any action by the Company
         or a Related Entity which results in a material diminution in the
         position, compensation, authority, duties or responsibilities of the
         optionee or requires the optionee to relocate to another city which is
         more than 50 miles from the optionee's then current location of
         employment, then the Option shall vest and become fully exercisable and
         such


<PAGE>   2



         optionee shall have the right to exercise his or her Option for the
         full amount of shares underlying the Option until the termination of
         the Option in accordance with its terms without regard, however, to any
         termination of employment provisions contained therein.

         2. Subsection 7(b)(ii) is amended by adding the following sentence at
the end thereof:

         Anything in the Plan or the terms of any Option to the contrary
         notwithstanding, any Option held by an optionee who held office as a
         non-employee director of the Company on or after October 2, 1999 shall
         vest and become fully exercisable at the effective time of the Clear
         Channel Merger or at such earlier time at which such optionee no longer
         holds office as such non-employee director of the Company by reason of
         death, resignation, retirement, disqualification, removal from office,
         or otherwise, and such optionee shall have the right to exercise such
         Options for the full amount of the shares underlying the Options until
         the termination of the Options in accordance with their terms, without
         regard, however, to any provisions contained therein that otherwise
         would have the effect of terminating the Options prior to expiration of
         the full term of the Options.

         3. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.

                [Remainder of this page intentionally left blank]

                                       -2-

<PAGE>   3


         IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.


                                          AMFM INC.


                                          By:         /s/ W. Schuyler Hansen
                                                   -------------------------
                                          Name:    W. Schuyler Hansen
                                          Title:   Senior Vice President and
                                                   Chief Accounting Officer




                                       -3-



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9.4
<SEQUENCE>8
<FILENAME>ex10-9_4.txt
<DESCRIPTION>3RD AMENDMENT TO 1998 STOCK OPTION PLAN
<TEXT>

<PAGE>   1
                                                                  EXHIBIT 10.9.4




                                    AMFM INC.

                           THIRD AMENDMENT TO THE 1998
                           AMFM INC. STOCK OPTION PLAN

         THIS THIRD AMENDMENT TO THE 1998 CHANCELLOR MEDIA CORPORATION STOCK
OPTION PLAN (this "Amendment") is made and adopted by AMFM Inc., a Delaware
corporation (the "Company"), effective as of July 5, 2000.

                                    RECITALS

         WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a Delaware corporation and
wholly-owned subsidiary of Clear Channel Communications, Inc., a Texas
corporation, with and into the Company, the Board of Directors of the Company
approved this Amendment to amend the terms and provisions of The 1998 AMFM Inc.
Stock Option Plan (the "Plan"); and

         WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.

                                    AMENDMENT

         NOW, THEREFORE, the Plan is hereby amended as follows:

         1. Section 4.4(b) is amended and restated to read in its entirety as
follows:

                  (b) Subject to the provisions of Section 4.7 of the Plan, no
         portion of an Option which is unexercisable at Termination of
         Employment or Termination of Consultancy, as applicable, shall
         thereafter become exercisable, except as may be otherwise provided by
         the Committee either in the Option Agreement or by action of the
         Committee following the grant of the Option.

         2. Article IV of the Plan is amended by adding the following new
Section 4.7 thereto:

                  4.7 Clear Channel Merger. Anything in the Plan or any Option
         Agreement to the contrary notwithstanding, (i) with respect to any
         Options outstanding immediately after the Clear Channel Merger, if on
         or before the second anniversary of the Clear Channel Merger (x) the
         employment of an Optionee of the Company or a Subsidiary of the Company
         terminates for any reason other than death, disability or cause, or (y)
         an Optionee who is an Employee resigns after any action by the Company
         or any parent or Subsidiary of the Company which results in a material
         diminution in the position, compensation, authority, duties or
         responsibilities of the Optionee or requires the Optionee to relocate
         to another city


<PAGE>   2



         which is more than 50 miles from the Optionee's then current location
         of employment, then the Options of such Optionee shall vest and become
         fully exercisable and such Optionee shall have the right to exercise
         his or her Options for the full amount of shares underlying the Options
         until the termination of the Options in accordance with their terms
         without regard, however, to any provisions regarding Termination of
         Employment contained therein; and (ii) any Option held by an Optionee
         who held office as a non-employee Director of the Company on or after
         October 2, 1999, shall vest and become fully exercisable at the
         effective time of the Clear Channel Merger or at such earlier time at
         which such Optionee no longer holds office as a Director of the Company
         by reason of death, resignation, retirement, disqualification, removal
         from office, or otherwise, and such Optionee shall have the right to
         exercise such Options for the full amount of the shares underlying the
         Options until the termination of the Options in accordance with their
         terms, without regard, however, to any provisions contained therein
         that otherwise would have the effect of terminating the Options prior
         to expiration of the full term of the Options.

         3. Section 7.3(b) is amended by replacing the clause "Subject to
Sections 7.3(b)(vi) and 7.3(d)" located at the beginning of the first sentence
thereof with the clause "Subject to Sections 4.7, 7.3(b)(vi) and 7.3(d)".

         4. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.

                [Remainder of this page intentionally left blank]

                                        2

<PAGE>   3


         IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.


                                         AMFM INC.


                                         By:        /s/ W. Schuyler Hansen
                                                  ------------------------
                                         Name:    W. Schuyler Hansen
                                         Title:   Senior Vice President and
                                                  Chief Accounting Officer




                                        3



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10.4
<SEQUENCE>9
<FILENAME>ex10-10_4.txt
<DESCRIPTION>3RD AMENDMENT TO 1999 STOCK OPTION PLAN
<TEXT>

<PAGE>   1
                                                                 EXHIBIT 10.10.4




                                    AMFM INC.

                             THIRD AMENDMENT TO THE
                        AMFM INC. 1999 STOCK OPTION PLAN

         THIS THIRD AMENDMENT TO THE AMFM INC. 1999 STOCK OPTION PLAN (this
"Amendment") is made and adopted by AMFM Inc., a Delaware corporation (the
"Company"), effective as of July 5, 2000.

                                    RECITALS

         WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a Delaware corporation and
wholly-owned subsidiary of Clear Channel Communications, Inc., a Texas
corporation, with and into the Company, the Board of Directors of the Company
approved this Amendment to amend the terms and provisions of the AMFM Inc. 1999
Stock Option Plan, as amended (the "Plan"); and

         WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.

                                    AMENDMENT

         NOW, THEREFORE, the Plan is hereby amended as follows:

         1. Subsection 6(h) of the Plan is amended by adding the following
sentence immediately after the last sentence thereof:

         Anything in the Plan or the terms of any Option to the contrary
         notwithstanding, (i) with respect to any Options (other than Options
         granted on March 10, 2000) outstanding immediately after the Clear
         Channel Merger, if on or before the second anniversary of the Clear
         Channel Merger (x) the employment of an optionee of the Company or a
         Related Entity terminates for any reason other than those specified in
         subsections 6(e), (f) or (g) above, or (y) an optionee of the Company
         or a Related Entity resigns after any action by the Company or a
         Related Entity which results in a material diminution in the position,
         compensation, authority, duties or responsibilities of the optionee or
         requires the optionee to relocate to another city which is more than 50
         miles from the optionee's then current location of employment, then the
         Options of such optionee (other than Options granted on March 10, 2000)
         shall vest and become fully exercisable and such optionee shall have
         the right to exercise his or her Options for the full amount of shares
         underlying the Options until the termination of the Options in
         accordance with their terms without regard, however, to any termination
         of employment provisions contained therein; and (ii) any Option (other
         than Options granted on April 26, 2000) held by an optionee who held
         office as a non-employee director of the Company on or after October 2,
         1999 shall vest and become fully


<PAGE>   2



         exercisable at the effective time of the Clear Channel Merger or at
         such earlier time at which such optionee no longer holds office as a
         director of the Company by reason of death, resignation, retirement,
         disqualification, removal from office, or otherwise, and such optionee
         shall have the right to exercise such Options for the full amount of
         the shares underlying the Options until the termination of the Options
         in accordance with their terms, without regard, however, to any
         provisions contained therein that otherwise would have the effect of
         terminating the Options prior to the expiration of the full term of the
         Options.

         2. Subsection 7(i) of the Plan is amended by adding the following
sentence immediately after the last sentence thereof:

         Anything in the Plan or the terms of any Value Option to the contrary
         notwithstanding, (i) with respect to any Value Options (other than
         Value Options granted on March 10, 2000) outstanding immediately after
         the Clear Channel Merger, if on or before the second anniversary of the
         Clear Channel Merger (x) the employment of an optionee of the Company
         or a Related Entity terminates for any reason other than those
         specified in subsections 7(f), 7(g) or 7(h) above or (y) an optionee of
         the Company or a Related Entity resigns after any action by the Company
         or any of its subsidiaries which results in a material diminution in
         the position, compensation, authority, duties or responsibilities of
         the optionee or requires the optionee to relocate to another city which
         is more than 50 miles from the optionee's then current location of
         employment, then the Value Options of such optionee (other than Value
         Options granted on March 10, 2000) shall vest and become fully
         exercisable in full and such optionee shall have the right to exercise
         his or her Value Options for the full amount of shares underlying the
         Value Options until the termination of the Value Options in accordance
         with their terms without regard, however, to any termination of
         employment provisions contained therein; and (ii) any Value Option
         (other than Value Options granted on April 26, 2000) held by an
         optionee who held office as a non-employee director of the Company on
         or after October 2, 1999 shall vest and become fully exercisable as of
         the effective time of the Clear Channel Merger or at such earlier time
         at which such optionee no longer holds office as a director of the
         Company by reason of death, resignation, retirement, disqualification,
         removal from office, or otherwise, and such optionee shall have the
         right to exercise such Value Options for the full amount of the shares
         underlying the Value Options until the termination of the Value Options
         in accordance with their terms, without regard, however, to any
         provisions contained therein that otherwise would have the effect of
         terminating the Value Options prior to expiration of the full term of
         the Value Options.

         3. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.

                                        2

<PAGE>   3


         IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.

                                        AMFM INC.


                                        By:         /s/ W. Schuyler Hansen
                                                 -------------------------
                                        Name:    W. Schuyler Hansen
                                        Title:   Senior Vice President and
                                                 Chief Accounting Officer


                                        3



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.1
<SEQUENCE>10
<FILENAME>ex27-1.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 6/30/00
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-START>                             JAN-01-2000
<PERIOD-END>                               JUN-30-2000
<CASH>                                          76,900
<SECURITIES>                                         0
<RECEIVABLES>                                  574,935
<ALLOWANCES>                                    27,000
<INVENTORY>                                          0
<CURRENT-ASSETS>                               686,637
<PP&E>                                         559,729
<DEPRECIATION>                                 114,558
<TOTAL-ASSETS>                              12,325,508
<CURRENT-LIABILITIES>                          277,494
<BONDS>                                      5,742,027
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                         2,176
<OTHER-SE>                                   4,622,924
<TOTAL-LIABILITY-AND-EQUITY>                12,325,508
<SALES>                                      1,159,171
<TOTAL-REVENUES>                             1,159,171
<CGS>                                                0
<TOTAL-COSTS>                                  626,573
<OTHER-EXPENSES>                               519,578
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                             242,677
<INCOME-PRETAX>                              (181,564)
<INCOME-TAX>                                  (20,516)
<INCOME-CONTINUING>                          (204,827)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                 12,349
<CHANGES>                                            0
<NET-INCOME>                                 (217,497)
<EPS-BASIC>                                     (1.01)
<EPS-DILUTED>                                   (1.01)


</TABLE>
</TEXT>
</DOCUMENT>
</SUBMISSION>
