THE EXLINECOMPANY MEDIA BROKERS - CONSI!LT.ANTS p February 9,7004 Alfrcdo Plascenaa President I~.azerBroadcasting Corporation 200 South A Street, Suite 400 Oxnard, CA 93030-5717 Dear MI-. Plascencia, Herewith. in narrative forrri, is the review and appnisal of all of the assets, whicli are used and usable in the operatlons of five Radio Slations KAhX-FM, AveIial, KAJP-FM, Firebaugh, KZPE-FM, Ford City, KZPO-FM, Lindsay, and KNCS-FM. Coalinga, all California. I have not personally vislted the subject propernes, have no past 11oI coiiternplale furure interest in them and I have made the necessary investigation and analyses to develop this review and appralsal, subjcct only to the limitations heremafter described. The value determined rhrough this process is that of July 2003. ST-ATEMENT OF PURPOSE AND VALUE The purpose of this appraisal is to estiiiiattr the fair markel value of the aforementioned assets. The assets consisr of leases md personal property wi'th attendant licenses and pcrmits, which provide for the daily operation of the sublect ststioiir serving !he central San Joaquin Valley area of Californian horn FirebaLld7~ iii the north to Ford City in the south (Map enclosed.) This appraisal has been prepared at the specific direction of Mr. Alfred0 Plasceniia. President, Lazer Broadcasting Corporation. Marliet value is defined as the ‘‘hghesf price estimated in terms ofmoiley which a proprny will bring if exposed for sale tn the open market, allowing a reasonable ninc to t-md ;1 purchaser who buys with howledge of all of the uses to which it IS adapted arid for which it is capable of being used.’’ IDENTIFICATION OF FACLLLITIES Ktt9X-FM is a local class A station with 6 ku. of potential power operating 017 95.1 rrH2. It IS licensed to Avmal, California and is currently off the air. KAJP-FM is a local Class h station with 6 kw of power operating on 94.7 mHz horn a rower 66 feet HAAT It is licensed to Firebaugh, California and progains a nustalyc music fonnat. The station has been on the air since 2002. The studioioffice is located on the 2”d floor of the Golden Valley Realty Company in donmtoctii Firebaugh. UPE-FM is a local Class A stahon with 6 kw ofpower operatmg on 102.1 rnFiz It is licensed to Ford Ciry, California and is currently off rhe air. Unclei- test chis statlon had a 60 db (city grade) si,qnal over Bakersfield. 2 KZPO-FM IS a regional Class B 1 station uirh 25 kw pouel- operahng on 105 3 nil-lz. It IS licensed to Lindsay, California and programs a nostalgic foi-rnat fi-om studios/officzs at 1530 S. Mooney Blvd. in Visaha. The station has been 011 the air since 1998 and has a city gade signal over Visalia and Tulare. KNGS-FM is a regional Class B station with 50 h~vof potential power operating or1 100.1 mnHz. It IS licensed to Coalinga, California and is currently offrlie ail-. Undzr rcst, however. the station reportedly had a 60 db signal over Hmford, and a 45 db si@ over Fresiio The five siibject FM stations are permitted to five different entihes according tu FcC hcensmg mformation. MAKKET DATA The current role of the two stations on air are to serve the VisalidTulareiHanford, Califoiiiia, marketplace, metro rank 104, in the case of KZPO-FM and the community of Firebaugh in the case of KAJP-FM. Visalia is the County seat of Tula~eCounty. It is located 1 SS miles noi-th of Los Angeles via Highways 5 and 99, and 225 iiules southeast of San Francisco The climate is falrly modcrate with teniperahires raiiging from 35-55 degees in winter to 100 plus degees in suminel. A~cordmgto BIA Media Access Pro (see enclosed report), the Visalia tot31 market area’s population is 5 16,700. The Retail Trade Zone (RTZ)for the area IS estimated to be $2.8 billion in 2003. The principal industries are air conditiomiig, b&inq,- cmmgand processing, retail senxes, garment manufactunng, woodnorking, printing, and govenment senices, including state and county. Conimercial television is mainly pro\;ided by Comcasr Cable, with 100 plus clianneli availablc. There are 9 FM Radio stations and 5 Ahl Radio stations with a11 esninatzd radio I evenue of% nullion. (See enclosed repon ) The major l‘ulare County newspaper is the Times-Delta,, whch has a daily edition with apprvximatcly 28,000 subscribers, and the Fresno Bee with a circulation oi 191,000, a regional paper for the central San Joaquiii Valley. Firebauugh IS a small farrmrig community of 5000 population approximately 30 rnilcs easi of Fresno. Whde mainly, farm workers, Firebaugh restdeo ts look to Frzsno as their metro area aid it should be considered an “ex-urb” of that MSA Kank 65 (see enclosed rrport). Coahnga and Avena1 are sm11 conmunities of approximately 10,000 population each near the Ketrleman Hills 45-50 nules east of Visalia. While both fanning and ranching comniunities, Coalinga offers jobs in the oil indiistry as well. Ford City is 30 nules east of Bakersfield and is a sister city of Taft. The two citirs coiiibined have a population of 10.000 and look to Bakersfield as their metro ;uea MSA Rank 87 (see report). Bakersfield FMs have sold for as much as 52.5 nnllion 3 uhch would give KZPE-FM a greater potential value than either KUX-FM 01 KNGS-FM. APPROACHES TO ESTlWLATlNG VALUE In davrloping an appraisal of a conventional broadcast faciJity the appraiser looks to a multiple of gross revenues (GR), a mulnple of cash flow (CF), cornpal-able salcs in the area and, in ccrtam circumstances, the so-called “franchise value.” MULTIPLES No fiiiaricials were provided to use this approach. COMPARABLES Inasmuch as developing comparable sale informatioil can be most useful in detemnuig the 1-elahve value of broadcast facilities, it appears more and more difficult to find cntz comparable siluations. Not only are the market variables wide rangng; but roday’s creative fiinancing denlands are creanng Lmique pricing, certainly not the land ofpricmg one can look to wthout extensive detailed howledge of the purchase stmcture. For example, thc vanations jn published sale piices may be attributable to the fact that this purchase is of stock rather than assets with the subsequent major dollar remion for tlic assuinphon of ta?ces and other liabilities. Three developed Visalia area FM stntlorx KIII,~I, suld within the last four years, ale as fol\ows CAJ-LS CITY OF LICENSE PRICE KCRZ-FM Tipron $SSO Thoiisand KMQA-FM P orrerv ill e 1 Million KSLK-FM Visalia 2.2 Million FRANCHISE VALUE Perhaps the most subjecnvc of the appraisal techniques is to attempt a dcterminclhon of franchise value. Franchise value, simply stated, is the piice a laiowledgeablc broadcasrzr would pay to do business in a giveii market. History has shown that buyers will pay 25% 01‘ rhe developed value of a broadcast facility for the franchise value. Ths method will he used for KAAX-FM, KZPE-FM and KNGS-FM. TRENDS A!!D CORRELATION OF VALUE l’he present state of the broadcast economy is active and healthy. Tradins and sales of stations continues at a steady volume. Marly- of the current sales are being made on an “offer” basis to owners who are not “for sale.” Due to the Telecoiii Act of 1996 goups of stations across the iianon have foinied clusters. This has dnven the value of stations upwards, mchdmg smaller markets such as those whch a-e discussed herein. Aftel reviewmg all of the penlnent informatlon, this appralser has elected to use tliz coniparable and fianchsse valuc methods to determine the group of sMtions current value to an experienced soup owner. 6 With all of the aforementioned informanon considered, this appraiser values thz cuiTcnt assets ofthe subject stations as follows: Station LMarket Value KAAX-EM Avena1 S90 Thousand KAJP-FM Fir-ebaugh $590 Thousand KZPE-FM Foi~dCity $980 Thousand KZPO-FM Lindsay $2.450 Million KNGS-FM Coalinga $440 Thousand Total $4.550 Million TlLls presumes the assets would be offered on the open market for a reasonablc period of nnie by a competent broadcast broker. Plzase call if you have any quesnons. hdrmP. McClure Presidcnt 7 BIA Radio Market #1 Print Screen Report BIKs Estimated call LenerS KSRZ AMlFM FM Rank 104 Local Commercial Share Market Revenue AM FM Total Home Market VisaliaTularE-Hanford. CA RevRank 238 (SOOO) I 01s" 00 00 5': I Growth 97 1.200 98 01Fa 36 216 ZiZ 97 02 07 9742 02Q7 4.300 I 99 4.600 02Wi 00 00 '32 478 9 516 7 562 6 1.5 17 Pop (0005) - 00 5,700 02sp 2 0 X.3 25 j 149 7 161 2 0.8 1.5 143 6 01 5.700 02% 00 0G US NIA" 42 6,ooa 02 02Fa OB 30 ' ?.U3 26 37 03 6,300 03WI 00 00 O'.) 04 6.700 03sp 27 1 :qr -. 14 05 7.100 13 Medlan Illcoma $ 30.157 #AM stns a 06 7,500 - .. I 7,900 Revenue 9741 f - '0 AV~ Income S 37,338 Total Sms 07 HH 22 Growth 02-07 53 %. 1 Confidence 2 I Whlle 5G 1 % ClasA FMs 3 Black 34 % ClarSB FMS 11 3 3% ClassC FMs 0 H8spanlc Origin 50 5 % Vlable FMs 12 I % Local Rev 30 %Cable 49 Selected Market Vlsalia-TulaiE~Hailfard,CA ~ % Nail Rev 20 ! I~ ~~ _- 'nl.<'mdicate5 ratlnga far rhos sratton's market have not yet been posred A R6Idil 58185 not available far historic perlod - EBI estimates are for previous year from column headel Pr#nte<l02/09l2004 Dat, 08/11/2003 IC) BIA Financlal Nelwork, Inc.