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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1998

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMERICAN TOWER SYSTEMS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 4899 65-0598206
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)

116 HUNTINGTON AVENUE, BOSTON, MASSACHUSETTS 02116, (617) 375-7500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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STEVEN B. DODGE
AMERICAN TOWER SYSTEMS CORPORATION
116 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02116
(617) 375-7500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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COPY TO:
NORMAN A. BIKALES, ESQ. KEITH R. FULLENWEIDER, ESQ.
SULLIVAN & WORCESTER LLP BRUCE C. HERZOG, ESQ.
ONE POST OFFICE SQUARE VINSON & ELKINS L.L.P.
BOSTON, MASSACHUSETTS 02109 1001 FANNIN, SUITE 2300
(617) 338-2800 HOUSTON, TX 70002
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is a compliance
with General Instruction G, check the following box. [_]

If this form is filed to register additional securities for an offering
pursuant to Rule 464(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SECURITY OFFERING PRICE REGISTRATION FEE
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Class A Common Stock,
$.01 par value........ 32,000,000 (2) (2) $10,620(2)

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(1) The Securities registered hereby will be offered pursuant to the Agreement
and Plan of Merger dated December 12, 1997, as may be amended from time to
time, by and between the Registrant and American Tower Corporation (the
"ATC Merger Agreement").
(2) In accordance with Rule 457(f)(2), the registration fee for the Securities
offered pursuant to the ATC Merger is based on the book value of the
securities of ATC as of February 2, 1998 ($36,000,000). Such fee is being
paid herewith.

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT WILL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES
AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.

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AMERICAN TOWER CORPORATION
3411 RICHMOND, SUITE 400
HOUSTON, TEXAS 77046-3401

February ., 1998

Dear ATC Stockholder:

On behalf of the Board of Directors of American Tower Corporation ("ATC"), I
am pleased to inform you that ATC and American Tower Systems Corporation
("ATS") have entered into an Agreement and Plan of Merger dated as of December
12, 1997 (the "ATC Merger Agreement"). Pursuant to the ATC Merger Agreement,
ATC will be merged (the "ATC Merger") with and into ATS, with ATS as the
surviving company. In connection with the consummation of the ATC Merger, ATS'
name will be changed to "American Tower Corporation" and Randall Mays of Clear
Channel Communications, Inc. and I will be nominated to the board of
directors. Upon consummation of the Merger, each outstanding share of ATC's
Series A Redeemable Preferred Stock will be converted into the right to
receive $200 in cash and each outstanding share of common stock of ATC will be
converted into a number of shares of ATS' Class A Common Stock pursuant to a
fixed exchange ratio. The fixed exchange ratio provides that the ATC common
stockholders will receive, as a group, 35% of all of the outstanding shares of
common stock of ATS after taking into account the common stock issued in
connection with the ATC Merger to the ATC stockholders, the conversion of all
outstanding convertible preferred stock of ATS and the exercise of all options
of ATS outstanding as of the effective time of the ATC Merger. We currently
anticipate that an aggregate of approximately 31,100,000 shares of ATS' Class
A Common Stock will be issued to the ATC common stockholders, as a group, with
respect to their ATC common stock holdings. Each common stockholder of ATC
will be entitled to a pro rata share of the aggregate number of shares issued
by ATS upon consummation of the ATC Merger. Such pro rata share shall be
determined by taking into account the number of shares of ATC common stock,
and the number of shares of ATC common stock issuable upon exercise of all ATC
options, outstanding immediately prior to the effective time of the ATC
Merger.

The ATC Merger is subject to a number of conditions including the separation
of ATS, which is currently a majority-owned subsidiary of American Radio
Systems Corporation ("ARS"), from ARS (the "Tower Separation"), and the
approval of the ATS Class A Common Stock for listing on Nasdaq or a national
stock exchange. As more fully described in the Prospectus accompanying this
letter, ARS is party to an Amended and Restated Merger Agreement, dated
December 18, 1997 with CBS Corporation ("CBS") and a wholly-owned subsidiary
of CBS (the "Merger Agreement"), pursuant to which ARS merge with such
subsidiary (the "CBS Merger") and sell its radio broadcasting business to CBS.
The Tower Separation will be effected pursuant to the consummation of the CBS
Merger or, in the event the CBS Merger has not been consummated on or prior to
May 31, 1998 (which date could be extended with the consent of ATC, ATS and
CBS), pursuant to the merger of a newly organized wholly-owned subsidiary of
ARS into ARS (the "Tower Merger"). The ATC Merger is also subject to the
expiration or early termination of the waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended.

The consent of the holders of a majority of ATC's common stock is required
to approve and adopt the ATC Merger Agreement and the transactions
contemplated thereby. ATS has prepared the enclosed Prospectus which provides
important information about ATS and the ATS Merger. ATC has participated in
the preparation of the Prospectus to the extent of the information relating
specifically to ATC. I urge you to read the enclosed Prospectus carefully
before determining whether to give your consent to the ATC Merger Agreement
and the transactions contemplated thereby. ATC will notify you promptly in the
event ATC receives the consent of the holders of a majority of ATC's
outstanding shares of common stock.

After careful consideration, the ATC Board of Directors has unanimously
approved, and recommends that you CONSENT TO, the ATC Merger Agreement and the
transactions contemplated thereby. Accordingly, ATC hereby requests that you
sign, date and return the accompanying Written Consent of Stockholders to
American

Tower Corporation at 3411 Richmond Avenue, Suite 400, Houston, Texas 77046-
3401, or by telecopy at (713) 629-1189.

On or about the time the ATC Merger is expected to be consummated, a letter
of transmittal and instructions for its use will be sent to all holders of ATC
common stock and Series A Redeemable Preferred to enable you to surrender your
stock in exchange for cash (in the case of the stockholders of the Series A
Redeemable Preferred Stock) or ATS common stock, as described above.
Accordingly, you are requested not to surrender your certificates for exchange
until you receive a letter of transmittal and instructions on how to surrender
your shares in connection with the consummation of the ATC Merger.

It has been a pleasure to serve you as an officer and director and I look
forward to continuing to serve your best interests in American Tower Systems.

Sincerely,

Fred R. Lummis,
Chairman of the Board and
Chief Executive Officer

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THE SECURITIES OF AMERICAN TOWER SYSTEMS +
+CORPORATION HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE +
+SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE +
+TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS DOES NOT +
+CONSTITUTE AN OFFER TO SELL NOR SHALL THERE BE ANY SALE OF THESE SECURITIES +
+IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL +
+PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY +
+STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY AND SUBJECT TO COMPLETION, DATED FEBRUARY 10, 1998

AMERICAN TOWER SYSTEMS CORPORATION

This Prospectus is being furnished by American Tower Systems Corporation, a
Delaware corporation ("American Tower Systems" or "ATS"), in connection with
the merger (the "ATC Merger") of American Tower Corporation, a Delaware
corporation ("ATC"), with and into ATS, pursuant to which the ATC common
stockholders (including holders of options to purchase ATC common stock) will
in the aggregate receive approximately 31.1 million shares of ATS Class A
Common Stock which will represent 35% of the aggregate number of shares of ATS
Common Stock which would be outstanding on a pro forms basis.

The ATC Merger has been unanimously approved by the Board of Directors of ATS
and by American Radio Systems Corporation, a Delaware corporation ("American
Radio" or "ARS"), as the then sole stockholder of ATS. The ATC Merger Agreement
has also been unanimously approved by the Board of Directors of ATC which
believes that the approval and adoption of the ATC Merger Agreement is
advisable and in the best interests of ATC and its stockholders and unanimously
recommends that the ATC stockholders vote FOR such approval and adoption.
Consummation of the ATC Merger requires the approval of the holders of a
majority of the outstanding shares of ATC Common Stock and is subject, among
other things, to the expiration or earlier termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
to the creation of a public trading market for the ATS Class A Common Stock.
Subject to the satisfaction of such conditions, the ATC Merger is expected to
be consummated in the spring of 1998. See "Business of American Tower Systems--
Recent Transactions--ATC Merger".

American Radio is party to a merger agreement with CBS Corporation ("CBS")
and a wholly-owned subsidiary of CBS (the "Merger Agreement"), pursuant to
which ARS which will become a subsidiary of CBS (the "Merger"). The Merger
Agreement has been approved by the Boards of Directors of American Radio and
CBS and by the holders of the required majority of ARS Common Stock. Approval
of the CBS stockholders is not required. See "Background of the Merger--General
Background." As a result of the Merger (or the Tower Merger described below),
American Radio will distribute all of the ATS Common Stock owned by it to the
ARS stockholders or optionholders. Following consummation of the Merger or the
Tower Merger, as the case may be, ATS will operate as an independent publicly
owned corporation. Application will be made to list the ATS Class A Common
Stock on the Nasdaq National Market. To date, there has been no trading market
for the ATS Class A Common Stock.

In the event the Merger is not consummated prior to June 1, 1998 (or such
later date as may be approved by ATC and CBS), ARS may elect to effect a merger
with a newly organized wholly-owned subsidiary of ARS (the "Tower Merger") in
order to satisfy the condition to consummation of the ATC Merger with respect
to the ATS Class A Common Stock being publicly traded.

IN REVIEWING THIS PROSPECTUS, STOCKHOLDERS SHOULD CAREFULLY CONSIDER THE
MATTERS DESCRIBED UNDER THE SECTION ENTITLED "RISK FACTORS" ON PAGE 18.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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The date of this Prospectus is February . , 1998.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE ATC
MERGER, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DELIVERY OF ATS COMMON STOCK,
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION CONTAINED HEREIN OR IN THE AFFAIRS OF AMERICAN RADIO
OR AMERICAN TOWER SYSTEMS SINCE THE DATE HEREOF.

AVAILABLE INFORMATION

American Tower Systems has filed with the Securities and Exchange Commission
(the "Commission" or the "SEC") a Registration Statement on Form S-4 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the ATS Class A Common Stock to be offered
pursuant to the ATC Merger. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to American Tower
Systems and the securities offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed therewith.
Statements contained in this Prospectus as to the contents of any contract or
any other document to which reference is made are not necessarily complete,
and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. The Registration
Statement can be inspected without charge and copied at the prescribed rates
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661.

American Tower Systems is not subject to the reporting requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"). By no later than the
consummation of the ATC Merger, American Tower Systems intends to comply with
such reporting requirements including furnishing its stockholders with annual
reports containing consolidated financial statements audited by an independent
public accounting firm and quarterly reports for the first three quarters of
each fiscal year containing interim consolidated financial information.

ARS' and ATS' principal executive offices are located at 116 Huntington
Avenue, Boston, Massachusetts, 02116 and their telephone number is (617) 375-
7500.

FORWARD-LOOKING STATEMENTS

This Prospectus sets forth or incorporates by reference forward-looking
statements within the meaning of Section 27A of the Securities Act.
Discussions containing such forward-looking statements may be found in the
material set forth or referred to under "Summary--American Tower Systems",
"Business of American Tower Systems", "Industry Overview" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
American Tower Systems", as well as within the Prospectus generally. In
addition, when used in this Prospectus, the words "believes," "anticipates,"
"expects," and similar expressions are intended to identify forward-looking
statements. Such statements are subject to a number of risks and
uncertainties. ATS wishes to caution readers that certain important factors
may have affected and could in the future affect ATS's actual results and
could cause ATS's actual results to differ materially from those expressed in
any forward-looking statement made by or on behalf of ATS. These important
factors include, among others, the risk factors set forth herein under "Risk
Factors--Risk Factors Relating to American Tower Systems".

TABLE OF CONTENTS

PAGE
NUMBER
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Available Information.................................................. (i)
Forward-Looking Statements............................................. (ii)
Summary................................................................ 1
American Tower Systems............................................... 1
American Tower Corporation........................................... 7
American Radio....................................................... 7
The Merger and Tower Separation...................................... 8
The ATC Merger....................................................... 12
Risk Factors......................................................... 13
American Tower Systems Dividend Policy............................... 13
Comparative Per Share Market Price Information....................... 14
Comparative Per Share Data........................................... 14
American Tower Systems Selected Financial Data....................... 15
American Radio Selected Combined Financial Data...................... 18
Risk Factors........................................................... 21
Risk Factors Relating to the Merger and the Tower Merger............. 21
Risk Factors Relating to American Tower Systems...................... 22
Market Prices and Dividend Policy...................................... 27
American Tower Systems Capitalization.................................. 28
Unaudited Pro Forma Condensed Consolidated Financial Statements of
American Tower Systems................................................ 30
Management's Discussion and Analysis of Financial Condition and Results
of Operations of American Tower Systems............................... 40
Industry Overview...................................................... 47
Business of American Tower Systems..................................... 50
General.............................................................. 50
Growth Strategy...................................................... 51
Products and Services................................................ 52
Management Organization.............................................. 55
History of ATS....................................................... 55
Recent Transactions.................................................. 55
Sales and Marketing.................................................. 57
Regulatory Matters................................................... 57
Environmental Matters................................................ 58
Competition.......................................................... 58
Properties........................................................... 58
Legal Proceedings.................................................... 59
Employees............................................................ 59
Management of American Tower Systems................................... 60
Executive Officers and Directors..................................... 60
Executive Compensation............................................... 62
Director Compensation................................................ 63
Stock Option Information............................................. 63
Principal Stockholders of American Tower Systems....................... 66
The ATC Merger......................................................... 70
Background of the Merger............................................. 70
Certain Federal Income Tax Consequences of ATC Merger................ 73
Exchange Procedures.................................................. 76

iii

PAGE
NUMBER
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Background of the Merger................................................. 77
General Background..................................................... 77
Recommendation of the ARS Board; ARS' Reasons for the Merger........... 80
Opinion of Financial Advisor to American Radio......................... 82
The Merger and Tower Separation.......................................... 86
General................................................................ 86
Conversion of Securities............................................... 87
Certain Federal Income Tax Consequences of Merger and Tower Merger..... 88
Reasons for the Tower Separation....................................... 90
Tower Merger........................................................... 91
Certificate of Incorporation and Bylaws................................ 92
Directors and Officers................................................. 93
ARS-ATS Separation Agreement........................................... 93
Closing Date Adjustments............................................... 95
Lease Arrangements..................................................... 97
Representations and Warranties......................................... 97
Certain Other Covenants................................................ 98
Conditions to the Merger............................................... 105
Termination............................................................ 107
Amendment.............................................................. 108
Waiver................................................................. 108
Interest of Certain Persons in the Merger.............................. 108
Regulatory Matters..................................................... 109
Other Consents......................................................... 112
ATS Stock Purchase Agreement........................................... 112
Appraisal Rights of ARS Stockholders................................... 113
Expenses............................................................... 116
Description of American Tower Systems Capital Stock...................... 118
General................................................................ 118
Preferred Stock........................................................ 118
Common Stock........................................................... 118
Dividend Restrictions.................................................. 119
Delaware Business Combination Provisions............................... 120
Listing of Class A Common Stock........................................ 120
Transfer Agent and Registrar........................................... 120
Comparison of Rights of Stockholders of ATS and ATC...................... 121
Terms of Common Stock.................................................. 121
Other Stockholder Rights............................................... 122
Existing ATC Securityholders Agreement................................. 124
Shares Eligible for Future Sale.......................................... 125
General................................................................ 125
Validity of the Shares................................................... 126
Experts.................................................................. 126
Definition Cross Reference Sheet......................................... 128
Index to Financial Statements............................................ F-1

Appendix I: Description of American Radio
The Amended and Restated Agreement and Plan of Merger relating
Appendix II: to the Merger
First Amendment to Amended and Restated Agreement and Plan of
Appendix IIB: Merger
Appendix III: Opinion of Credit Suisse First Boston Corporation
Appendix IV: Section 262 of Delaware General Corporation Law
Appendix V: Description of American Tower Corporation
Appendix VI: Agreement and Plan of Merger relating to the ATC Merger

SUMMARY

All information with respect to American Tower Systems Corporation, a
Delaware corporation ("American Tower Systems" or "ATS"), and American Radio
Systems Corporation, a Delaware corporation ("American Radio" or "ARS"), except
as otherwise noted below, gives effect to the consummation of all acquisitions,
dispositions and exchanges of communications sites and related businesses and
radio stations which have been consummated since January 1, 1997 or which are
subject to a binding agreement (the "Recent Transactions"). See "Business of
American Tower Systems--Recent Transactions." The Unaudited Pro Forma Condensed
Consolidated Financial Statements of ATS (and certain other pro forma financial
information) give effect only to the ATS Pro Forma Transactions, which do not
include all of the Recent Transactions but do include consummation of the ATS
Stock Purchase Agreement and the transfer of towers from ARS to ATS in
connection with the Tower Separation. See the "Unaudited Pro Forma Condensed
Consolidated Financial Statements of American Tower Systems".

The term "Tower Separation" as used in this Prospectus refers to the
separation of the communications site business into a separate publicly traded
corporation. The Tower Separation will consist of a sale of the radio
broadcasting business to CBS and the distribution of the ATS Common Stock to
the holders of ARS Common Stock. The Tower Separation will be effected pursuant
to the Merger or, under certain circumstances which management does not
anticipate occurring, the Tower Merger (which, if consummated, will occur prior
to the consummation of the Merger). Whether or not the Tower Merger is
consummated, the holders of ARS Common Stock will receive the identical
aggregate amount of cash and number of shares of American Tower Systems.

The following is a summary of certain information contained in this
Prospectus. This summary is not intended to be complete and is qualified in its
entirety by reference to the more detailed information set forth in this
Prospectus.

AMERICAN TOWER SYSTEMS

General

American Tower Systems is a leading independent owner and operator of
wireless communications towers in the U.S. with over 1,580 towers in 39 states
and the District of Columbia, including approximately 510 towers managed for
third party owners (of which approximately 255 are rooftop towers). Of such
1,580 towers, approximately 810 are presently operated by ATS (approximately
425 of which are owned by it and the balance of which are managed for others),
and approximately 775 are presently operated by American Tower Corporation (of
which approximately 125 are managed for a third party; ATC is a party to
agreements or letters of intent to acquire approximately 125 currently
operating towers). In addition to such 1,580 towers, ATS and ATC have more than
90 and 50 towers, respectively, currently under construction. ATS rents tower
space and provides related services for a diverse range of wireless
communications industries including: personal communications services,
cellular, paging, specialized mobile radio, enhanced specialized mobile radio
and fixed microwave, as well as radio and television broadcasters. ATS has
significant networks of sites throughout the United States with its most
significant tower networks in California, Florida and Texas, and owns and
operates communications sites or is constructing networks of tower sites in
cities such as Albuquerque, Atlanta, Austin, Baltimore, Boston, Dallas,
Jacksonville, Kansas City, Los Angeles, Miami-Ft. Lauderdale, Nashville, New
York, Philadelphia, Sacramento, San Antonio, San Diego, San Francisco, Tucson,
Washington, D.C. and West Palm Beach. On a pro forma basis ATS' customers
(which aggregate more than 2,390) include many of the major companies in the
wireless communications industries, including: AT&T, Arch, Bell Atlantic
Mobile, BellSouth Mobility, GTE Mobilnet, Houston Cellular, Prime Co.,
Metrocall, Nextel, PageMart, PageNet, Pittencrief Communications, SBC
Communications, Southwestern Bell, SNET and Sprint, and in the radio and
television broadcasting industry, including: ABC, American Radio, CBS,
Chancellor Media, Clear Channel, CNN, Fox, Jacor and NBC. While

none of ATS' customers accounted for as much as 10% of its pro forma revenues
for the nine months ended September 30, 1997, most of the named customers
accounted for more than 1% of such revenues and each is considered by ATS to be
an important customer.

ATS' primary business is the leasing of antennae sites on multi-tenant towers
and rooftops, primarily for its own towers and, to a lesser extent, for
unaffiliated communications site owners. In support of its rental business, ATS
also offers its customers network development services, including: site
acquisition, zoning, antennae installation, site construction and network
design. These services are offered on a time and materials or fixed fee basis
or incorporated into build to suit construction contracts. American Tower
Systems is also engaged in the video, voice and data transmission business,
which it currently conducts in the New York City to Washington, D.C. corridor
and in Texas. For the nine months ended September 30, 1997, giving effect to
the ATS Pro Forma Transactions, ATS had revenues and EBITDA of $66.0 million
and $30.4 million, respectively.

Recent Developments

On December 12, 1997, ATS entered into an Agreement and Plan of Merger (the
"ATC Merger Agreement") with American Tower Corporation, an unaffiliated
Delaware corporation ("ATC"), pursuant to which, following the Tower
Separation, ATC will merge with and into ATS, which will be the surviving
corporation (the "ATC Merger"). ATC is a leading independent owner and operator
of wireless communications towers with approximately 775 towers in 31 states.
Pursuant to the ATC Merger, ATS will issue an aggregate of approximately 31.1
million shares of ATS Class A Common Stock (including shares issuable upon
exercise of options). Such number of shares will represent 35% of the number of
shares of ATS Common Stock that would be outstanding, assuming consummation of
the Merger, the ATC Merger, the exercise of all options to acquire ARS Common
Stock, ATC Common Stock and ATS Common Stock proposed to be outstanding, and
the conversion of all shares of ARS Convertible Preferred Stock. Consummation
of the ATC Merger is conditioned on, among other things, the expiration or
earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and consummation of the
Tower Separation and, accordingly, is not expected to take place until the
spring of 1998. On January 28, 1998, the Justice Department issued a formal
request for additional information (a "Second Request"). ATS and ATC are in the
process of compiling the information requested by the Justice Department and
intend to meet with its representatives to address any questions they may have
regarding such information. Upon consummation of the ATC Merger, ATS will be
renamed American Tower Corporation. A description of the business and
management of ATC, as well as certain financial information, is included in
Appendix V to, and ATC's consolidated financial statements are included in,
this Prospectus. See "The ATC Merger".

On January 22, 1998, ATS consummated an agreement to acquire a company
engaged primarily in the site acquisition business for third parties that also
owns or has under construction 40 towers (the "Gearon Transaction"). The merger
price of approximately $80.0 million was paid by delivery of 5,333,333 shares
of ATS Class A Common Stock, and approximately $30.0 million in cash and
assumed liabilities. See "Business of American Tower Systems--Recent
Transactions".

On January 22, 1998, American Tower Systems consummated a stock purchase
agreement (the "ATS Stock Purchase Agreement"), dated as of January 8, 1998,
with Steven B. Dodge, Chairman of the Board, President and Chief Executive
Officer of ARS and ATS, and certain other officers and directors of ARS (or
their affiliates or family members or family trusts), pursuant to which those
persons purchased 8.0 million shares of ATS Common Stock at a purchase price of
$10.00 per share for an aggregate purchase price of $80.0 million, including
4.0 million shares by Mr. Dodge for $40.0 million. See "The Merger and Tower
Separation--ATS Stock Purchase Agreement".

Industry Overview

Communications site owners and operators have benefited in recent years from
a substantial increase in demand for wireless communications services. The
Cellular Telecommunications Industry Association ("CTIA") estimates that the
number of subscribers to wireless telephone services was approximately five
million in 1990. According to The Strategis Group, a telecommunications
marketing research firm, the number of subscribers to cellular and personal
communication services ("PCS") is over 50 million today, and is projected to
increase to over 100 million by the year 2001. This demand has prompted the
issuance of new wireless network licenses and construction of new wireless
networks. ATS believes that the increase in demand for wireless communications
is attributable to a number of factors, including: the increasing mobility of
the U.S. population and the growing awareness of the benefits of mobile
communications, technological advances in communications equipment and
decreasing costs of wireless services, favorable changes in telecommunications
regulations, and business and consumer preferences for higher quality voice and
data transmission. Consequently, more towers will be required to accommodate
the anticipated increase in the demand for higher frequency technologies (such
as PCS and enhanced specialized mobile radio ("ESMR")) which have a reduced
cell range and thus require a more dense network, or "footprint", of towers.
The Personal Communications Industry Association ("PCIA") estimates that over
100,000 additional antennae sites will have to be built to accommodate the
needs of cellular and PCS over the next ten years.

ATS believes that, as the wireless industry has become more competitive, many
carriers are seeking to focus their capital and operational resources primarily
on activities that contribute directly to subscriber growth, such as the
marketing and distribution of products. Management believes that these
carriers, therefore, may seek to preserve capital and to speed access to their
markets through the outsourcing of infrastructure requirements such as
communications site ownership, construction, operation and maintenance. Also,
in order to accelerate network deployment or expansion and to generate
efficiencies, ATS has observed in the course of its operations that many
carriers are increasingly co-locating transmission infrastructure with that of
other network operators. The need for co-location has also been driven by
regulatory restrictions and the growing trend in local municipalities to slow
the proliferation of towers in their communities by requiring that towers
accommodate multiple tenants.

ATS believes that national and other large wireless service providers will
prefer to deal with a company that can meet the majority of such providers'
needs within a particular market or region, rather than, as had been the
historical model, working with a large number of individual tower owners,
construction companies and other service providers. There can be no assurance
that ATS will be able to secure a substantial portion of such potential
business. See "Risk Factors".

While the wireless communications industry is experiencing rapid growth, the
television broadcasting industry, pursuant to a mandated construction timetable
imposed on television broadcast licensees by the Federal Communications
Commission ("FCC"), is actively planning its strategy for the transition from
analog to digital technology. The FCC construction timetable, although subject
to potential revision by the FCC, currently requires a number of television
stations to commence digital service as soon as May 1, 1999, and some stations
have promised to begin such service even earlier. ATS believes that this
transition will require a substantial investment in enhanced broadcast
infrastructure, including the construction or reengineering of broadcast
towers. While ATS expects much of the associated capital requirements will be
borne by the broadcasters, management believes that a significant opportunity
exists to invest profitably in the creation of tower capacity designed to
accommodate digital antennas for television broadcasters. Management believes
that, as with the deployment of towers for the wireless carriers, speed to
market and limited capital resources will cause certain broadcasters to
outsource the construction or reengineering of their towers in order to
accommodate digital technology.

Management believes that, in addition to the favorable growth and outsourcing
trends in the wireless communications and broadcasting industries, the
communications site industry benefits from several favorable characteristics
including: a diversified customer base, a stable and growing revenue stream
based primarily on

long-term leases from substantial companies, low tenant "churn" due to the
costs and disruption associated with reconfiguring a wireless network or
broadcasting location, local government initiatives to reduce the numbers of
towers thereby requiring carriers to co-locate towers, and the opportunity to
consolidate in what is currently a highly fragmented industry, thereby creating
the potential for enhanced levels of customer service and operating efficiency.

Growth Strategy

ATS' objective is to maintain and extend its position as a leading U.S.
provider of communications sites and network development services to the
wireless communications and broadcasting industries. ATS' growth strategy
includes:

Internal Growth through Selling, Service and Capacity
Utilization. Management believes that a substantial opportunity for
profitable growth exists by maximizing the utilization of existing towers
through targeted sales and marketing techniques. Management believes that
the key to the success of this strategy lies in its ability to develop and
consistently deliver a high level of customer service, and to be widely
recognized as a company that makes realistic commitments and then delivers
on them. Since speed to market and reliable network performance are
critical components to the success of wireless service providers, ATS'
ability to assist its customers in meeting these criteria will ultimately
define its marketing success and capacity utilization. ATS targets wireless
providers that are expanding or improving their existing network
infrastructure as well as those deploying new technologies. ATS focuses on
building or acquiring towers engineered to hold as many tenants as possible
and acquiring towers with underutilized capacity because the costs of
operating a site are largely fixed, and increasing tower utilization
results in significantly improved site operating margins. When a specific
tower reaches full antennae attachment capacity, ATS is often able to
construct an additional tower at the same location, thereby further
leveraging its investment in land, related equipment and certain operating
costs, such as taxes, utilities and telephone service.

Growth by Construction (Build to Suit). ATS believes that attractive
investment returns can be achieved by constructing new tower networks
("footprints") in and around markets in which it already has a presence,
along major highways, and in targeted new markets, particularly markets
that have not been significantly built out by carriers or other
communications site companies. By working with one or more "anchor" tenants
(in much the same manner as a shopping mall developer), ATS will seek to
develop an overall master plan for a particular market by locating new
sites in areas identified by its customers as optimal for their network
expansion requirements (build to suit). ATS generally secures commitments
for leasing prior to commencing construction, thereby minimizing, to some
extent, the risks associated with the investment. In certain cases, ATS may
identify and secure all zoning and other regulatory permits for a site in
anticipation of customer demand, with actual construction being delayed
until an anchor tenant is secured on reasonable terms. Strategic
acquisitions are also pursued as a means of filling out or, in certain
cases, initiating a tower network.

American Tower Systems currently has under construction or plans to
construct during 1998 (exclusive of those which ATC is constructing or
plans to construct) approximately 300 towers (most of which are on a build
to suit basis) at an estimated aggregate cost of approximately $60.0
million. In addition, ATS is actively competing for the opportunity to
construct more than 600 towers in 1998 for an estimated cost of
approximately $120.0 million, although there can be no assurance as to how
many, if any, of such towers ATS will be engaged to construct. ATC has
under construction or plans to construct during 1998 approximately 125
towers at an estimated aggregate cost of approximately $28.0 million.

to service the demand for digital television and for tower space for radio
antennae displaced by digital television requirements. Over time,
management believes that more than half of its towers will result from new
construction, with the substantial majority of these designed to serve the
wireless communications industry.

ATS believes that the ability to obtain, and commit to, large new
construction (build to suit) projects will require significant financial
resources. Based on its previous capital market transactions, management
believes that it has a good reputation in the financial community,
including among banks, investment banking firms, institutional investors
and public investors, and that such reputation will help it attract capital
on the favorable terms necessary to finance its growth, although there can
be no assurance that funds will be available to ATS on such terms. Further,
management believes that its cost of capital, relative to the cost of
capital of its competitors, will be an important factor in implementing
this aspect of its growth strategy.

Growth by Acquisition. ATS intends to continue to target strategic
acquisitions in markets or regions where it already owns towers as well as
new markets, including possibly non-U.S. markets. ATS has achieved a
leading industry position primarily through acquisitions. ATS will attempt
to increase revenues and operating margins at acquired communications sites
through expanded sales and marketing efforts, improved customer service,
the elimination of redundant overhead and, in certain instances, increasing
tower capacity. Acquisitions are evaluated using numerous criteria,
including potential demand, tower location, tower height, existing capacity
utilization, local competition, and local government restrictions on new
tower development. ATS also intends to pursue, on a selective basis, the
acquisition of site acquisition companies and providers of video, voice and
data transmission services. ATS may also pursue acquisitions related to the
communications site industry, including companies engaged in the tower
fabrication business.

While to date the majority of ATS' growth has resulted from acquisition
activities, once the remaining Recent Transactions are consummated,
management expects to shift ATS' emphasis more toward build to suit and new
tower construction, where it believes investment returns are more
attractive. It will, however, continue to evaluate numerous acquisition
prospects, and expects to consummate selected acquisitions when the
economics or fit are sufficiently attractive.

Growth through the Negotiation of Lease Escalators. The value of a tower
and its growth prospects are affected by the terms of the leases associated
with it. Most leases have escalator provisions (annual automatic increases
based on specified estimated cost measures or on increases in the consumer
price index) that permit ATS to keep pace with inflation. While these
provisions are not by themselves intended to be a primary source of growth,
they provide a stable and predictable growth component which is then
enhanced by increased tower utilization.

History of ATS

In early 1995, Steven B. Dodge, Chairman of the Board, President and Chief
Executive Officer of American Radio, and other members of American Radio's
management, recognized the opportunity in the communications site industry
through ARS' ownership and operation of broadcast towers. ATS was formed in
July 1995 to capitalize on this opportunity. During 1996, ATS' acquisition
program was modest, entailing the acquisition of companies owning an aggregate
of ten communications sites and managing approximately 250 sites for others,
for an aggregate purchase price of approximately $21.0 million. During that
year, however, ATS entered into several more significant acquisition agreements
that were consummated in 1997.

Since January 1, 1997, ATS has acquired more than 525 communications sites
(including the consummation of acquisition agreements entered into in 1996),
for an aggregate purchase price of approximately $290.0 million. All of such
transactions, as well as the ATC Merger, are included in the Recent
Transactions. As explained elsewhere herein, consummation of the ATC Merger
will result in the acquisition of more than 775 towers by ATS. In addition to
its acquisition program, ATS (including for this purpose companies it acquired
in 1997) will have constructed approximately 120 towers in 1997 at an aggregate
cost of approximately $25.7 million, and has

plans to construct approximately 300 towers in 1998 (exclusive of ATC's
construction plans and exclusive of a bid to construct approximately 600 towers
at a cost of approximately $120.0 million) at a total estimated cost of
approximately $60.0 million. ATS intends to pursue, on a selective basis, the
acquisition of other communications sites and related businesses, although it
is not party to any definitive binding agreements with respect to any material
transactions, except as described in this Prospectus. Although such acquisition
or construction activity will not, except under circumstances in which
consummation of the Merger could be delayed materially (i.e., by more than 15
business days), require the consent of CBS under the Merger Agreement, such
activity may require certain regulatory approvals.

Management

The senior management of American Tower Systems consists of the following
senior executive officers (all of whom, with the exception of Messrs.
Eisenstein and Gearon, will continue to hold positions with American Radio
until the consummation of the Merger): Steven B. Dodge, Chairman of the Board
of Directors, President and Chief Executive Officer; Alan L. Box, Chief
Operating Officer and a director; Joseph L. Winn, Treasurer, Chief Financial
Officer and a director; James S. Eisenstein, Executive Vice President-Corporate
Development; and J. Michael Gearon, Jr., the former principal stockholder and
chief executive officer of Gearon & Co., Inc., Executive Vice President of ATS,
the chief executive officer of ATS' site acquisition business, and a director.
ATS is managed through a central headquarters in Boston, but relies on regional
offices for marketing, operations and site management.

ATS is a holding company whose principal asset is all of the issued and
outstanding capital stock of American Tower Systems (Delaware), Inc. ("ATSI"
or, collectively with ATSLP, the "Tower Operating Subsidiary"). ATSI, which
directly or through two limited liability company subsidiaries had previously
owned all of the assets and conducted all of the business of ATS and its
consolidated subsidiaries, transferred all of its assets and business to
American Tower Systems, L.P., a Delaware limited partnership ("ATSLP"),
immediately prior to the consummation of the Gearon Transaction pursuant to
which Gearon was merged into ATSI. References to ATS include ATS and its
consolidated subsidiaries, unless the context otherwise requires.

AMERICAN TOWER CORPORATION

ATC is a leading independent owner and operator of wireless communications
towers with more than 775 towers in 31 states, including approximately 125
towers managed for a third party owner. ATC has agreed to acquire an additional
125 towers pursuant to letters of intent which are expected to be consummated,
subject to negotiation and execution of definitive agreements and satisfaction
of closing conditions, including, in certain cases, expiration or earlier
termination of the HSR Act waiting period, in the first half of 1998. During
1997, ATC acquired or agreed to acquire 192 towers and constructed or had, at
year end, under construction an aggregate of 64 towers; ATC plans to construct
approximately 125 towers in 1998. ATC rents tower space and provides related
services to wireless communications service providers, as well as operators of
private networks and government agencies, for a diverse range of applications
including paging, cellular, PCS, fixed microwave, SMR and ESMR. ATC owns and
operates towers in 45 of the largest 100 metropolitan statistical areas in the
United States and has clusters of towers in cities such as Albuquerque,
Atlanta, Baltimore, Dallas, Houston, Jacksonville, Kansas City, Nashville, San
Antonio and San Diego. ATC's customers (which aggregate more than 865) include
Bell South Mobility, CSX Transportation, Inc. ("CSX Transportation"), GTE
Mobilnet, Houston Cellular Telephone Company ("Houston Cellular"), Nextel,
PageMart, PageNet, Pittencrief Communications, SBC Communications, Shell
Offshore, and various federal and local government agencies. While none of
ATC's customers accounted for as much as 10% of its pro forma revenues for the
nine months ended September 30, 1997, most of the named customers accounted for
more than 1% of such revenues and each is considered by ATC to be an important
customer.

ATC was organized in October 1994 by an investor group led by Summit Capital
Inc. of Houston and Chase Capital to acquire Bowen-Smith Corp. ("Bowen-Smith").
Bowen-Smith had been in the tower rental business since 1966, initially serving
the communications tower requirements of two-way radio and microwave
transmission users. At the time of the acquisition (the "Bowen-Smith
Acquisition"), Bowen-Smith owned 184 towers on 175 sites located primarily in
Texas, Louisiana and Oklahoma. Within the first year after the Bowen- Smith
Acquisition, ATC acquired or constructed more than 75 communications towers. In
December 1995, ATC acquired 103 towers from CSX Realty Development Corporation
("CSX"), and in October 1996, ATC acquired 154 towers from Prime Communication
Sites Holding, L.L.C. ("Prime").

AMERICAN RADIO

American Radio is a national radio broadcasting company committed to
developing and operating groups of complementary radio stations in major and
growing advertising markets. American Radio is among the five largest radio
groups in the nation, owning and/or programming pursuant to local marketing
agreements ("LMAs") approximately 90 radio stations in 19 markets across the
United States. Consistent with its strategy of operating in the top 60 markets
(as ranked by revenues), American Radio owns or programs pursuant to LMAs
stations in the following markets: Boston, Seattle, St. Louis, Baltimore,
Cincinnati, Portland, Pittsburgh, Sacramento, Charlotte, Kansas City, Hartford,
Austin, Buffalo, Las Vegas, San Jose, West Palm Beach, Rochester, Fresno and
San Bernardino/Riverside. ARS station groups ranked first or second among
station operators in radio advertising revenues in 18 of its 19 markets, based
on the 1997 edition of Duncan's Radio Market Guide (the "Duncan Guide").*

- --------
* The Duncan Guide is published by a company partially owned by James H.
Duncan, Jr., a director of American Radio.

THE MERGER AND TOWER SEPARATION

Tower Separation............ The Board of Directors of ARS (the "ARS Board")
has determined that it was in the best interests
of the holders of ARS Common Stock to dispose of
American Radio's radio broadcasting business and
to separate its communications site business
through the distribution of ATS Common Stock to
the holders of ARS Common Stock. Pursuant to that
decision, it has unanimously approved the Merger
(and, should the Merger not be consummated prior
to May 31, 1998, the Tower Merger) as the means
of effecting those goals. Pursuant to the Tower
Separation, regardless of how effected, holders
of ARS Common Stock will receive approximately
38.8% of the ATS Common Stock, assuming
consummation of the Merger, the ATC Merger, the
exercise of all options to acquire ARS Common
Stock, ATC Common Stock and ATS Common Stock
proposed to be outstanding, and the conversion of
all shares of ARS Convertible Preferred Stock.
See "The Merger and Tower Separation".

The Merger.................. On September 19, 1997, American Radio, CBS and R
Acquisition Corp., a Delaware corporation ("CBS
Sub"), entered into an Agreement and Plan of
Merger (the "Original Merger Agreement"),
pursuant to which CBS Sub will be merged with and
into American Radio and American Radio will
become a subsidiary of CBS. On December 18, 1997,
ARS, CBS and CBS Sub entered into an Amended and
Restated Agreement and Plan of Merger. Pursuant
to the Merger, each holder of ARS Common Stock,
at the effective time (the "Effective Time") of
the Merger, will receive for each share of ARS
Common Stock held by such holder if the Tower
Merger has not then been consummated, $44.00 per
share in cash and, one share of ATS Common Stock
of the same class as the ARS Common Stock to be
surrendered. On December 19, 1997, ARS, CBS and
CBS executed an amendment to the Merger Agreement
reflecting ATS common stockholder approval and
adoption of the Merger Agreement and approval of
the Merger.

The Tower Merger............ In order to facilitate the ATC Merger, ARS has
entered into a merger agreement (the "Tower
Merger Agreement") with a newly organized wholly-
owned subsidiary of ARS which provides for the
Tower Merger, pursuant to which such subsidiary
would be merged with and into ARS. The Tower
Merger will occur only if the Merger has not been
consummated on or prior to May 31, 1998 (or such
later date as may be agreed to by ATC, ARS and
CBS) and then only if the ARS Board has
determined that, in light of all of the facts and
circumstances then existing, such merger is in
the best interests of the ARS common
stockholders. Pursuant to the Tower Merger,
holders of ARS Common Stock would receive the
shares of ATS Common Stock they would have
received had the Merger been consummated, in
exchange for a portion of their ARS Common Stock.
In such event, the amount of cash to be received
per share of ARS Common Stock pursuant to the
Merger would be increased in

proportion to the reduction in the number of
shares of ARS Common Stock outstanding
following the Tower Merger so that each holder
of ARS Common Stock will receive the same
aggregate amount of cash consideration such
holder would have received had the Tower Merger
not occurred (assuming such holder did not
dispose of any shares of ARS Common Stock
between the effective time of the Tower Merger
and the Effective Time). See "The Merger and
Tower Separation--Tower Merger".

Stockholder Approval......... The Merger and the Tower Merger have been
approved by the holders of a majority of the
voting power of ARS Common Stock. Accordingly,
stockholder proxies are not required and are
not being sought from ARS common stockholders.
CBS stockholder approval is not required in
connection with the Merger.
Estimated Merger Effective
Date........................ Subject to the satisfaction or waiver of the
conditions to closing, consummation of the
Merger is expected to occur in the spring of
1998. See "--Regulatory Matters" below.

Reasons for the Tower
Separation.................. The ARS Board has unanimously approved the
Merger Agreement and concluded that its terms
are fair to and in the best interests of the
holders of ARS Common Stock. The ARS Board
determined that, in light of the growing
consolidation of the larger radio broadcasting
companies that had taken place and was being
discussed, it was in the best interests of the
common stockholders of ARS to seek a merger
partner for ARS' radio broadcasting business
before such a possibility became impossible or
was seriously impaired. For a description of
the negotiations leading up to the execution of
the Merger Agreement and related matters and
the reasons for the Merger, see "Background of
the Merger".

The ARS Board has also unanimously approved the
distribution of the ATS Common Stock to the
holders of ARS Common Stock as part of the
Tower Separation, and concluded that its terms
are fair to and in the best interests of such
holders. The ARS Board determined that such
distribution will enable holders of ARS Common
Stock to realize a greater value, in the long
run, than if the communications site business
had been offered for sale as part of the sale
of the radio broadcasting business or
separately at this time.
Opinion of ARS Financial
Advisor..................... American Radio retained Credit Suisse First
Boston Corporation ("Credit Suisse First
Boston") as its financial advisor in connection
with the Merger. Credit Suisse First Boston has
delivered its written opinion to the ARS Board
stating that, as of September 19, 1997, the
date of such opinion, the $44.00 per share in
cash to be received by the holders of ARS
Common Stock for, in effect, their interest in
ARS' radio broadcasting business was fair to
such holders from a financial point of view.
The Credit Suisse First Boston opinion was
based on the procedures and subject to the
assumptions described therein. See "Background
of the Merger--Opinion of Financial Advisor to
American Radio". Since the ARS Board had
determined not to sell the communications site
business but to distribute it to

the holders of ARS Common Stock, the opinion of
Credit Suisse First Boston was limited to the
fairness, from a financial point of view, as of
its date, of the $44.00 per share of ARS Common
Stock to be received by such holders in the
Merger. Stockholders should recognize that the
opinion of Credit Suisse First Boston addressed
only the issue of the fairness of the cash
consideration to be received for the radio
broadcasting business of ARS and did not address
the issue of the fairness of the distribution of
ATS Common Stock as part of the Tower Separation.
The Board of Directors did not seek the opinion
of Credit Suisse First Boston (or any other firm)
as to the fairness of the distribution of ATS
Common Stock as part of the Tower Separation
(whether pursuant to the Merger or the Tower
Merger) because such distribution will be made on
a pro rata basis to ARS common stockholders and
will preserve the relative voting rights of the
ARS common stockholders at the time of the Tower
Separation. In addition, because the
modifications to the Original Merger Agreement
did not affect the amount of cash consideration
to be received by the holders of ARS Common
Stock, no updating of that opinion was considered
necessary by the ARS Board.

Termination of the Merger
Agreement.................. The Merger Agreement may be terminated by
American Radio or CBS under various
circumstances, including the failure to
consummate the Merger on or before December 31,
1998.

Regulatory Matters.......... The receipt of certain federal governmental and
regulatory approvals is required in order to
consummate the Merger, including approvals from
the FCC of the transfer of control to CBS of the
subsidiaries holding ARS' FCC licenses and the
expiration or earlier termination of the waiting
period under the HSR Act. Each of American Radio
and CBS has agreed in the Merger Agreement to use
its best efforts to obtain such regulatory
approvals.

Certain Federal Income Tax
Consequences............... The Tower Separation will result in taxable gain
to American Radio (most of which is required to
be borne by ATS pursuant to the provisions of the
ARS-ATS Separation Agreement to be executed by
ARS and ATS to implement certain provisions of
the Merger Agreement). In the event the Merger
(but not the Tower Merger) is consummated, a
holder of ARS Common Stock holding his or her
shares as a capital asset will recognize gain or
loss equal to the difference between the tax
basis in the ARS Common Stock surrendered
pursuant to the Merger and the sum of (i) the
aggregate cash received and (ii) the fair market
value of the shares of ATS Common Stock received
pursuant to the Merger. In the event both the
Tower Merger and the Merger are consummated,
comparable tax consequences will ensue for such
holders of ARS Common Stock. However, in the
event the Tower Merger were consummated and the
Merger were not, the redemption of shares of ARS
Common Stock pursuant to the Tower Merger would
not meet the applicable requirements of the
Internal Revenue Code of 1986, as amended (the

"Code") for such redemption to qualify for sale
or exchange treatment, and the fair market value
of the shares of ATS Common Stock received
pursuant to the Tower Merger would be taxable as
a dividend. See "The Merger and Tower
Separation--Certain Federal Income Tax
Consequences of Merger and Tower Merger."

Classes of ATS Common
Stock...................... As is the case with the ARS Common Stock, the
Class A Common Stock of ATS (the "ATS Class A
Common Stock") is entitled to one (1) vote per
share, the Class B Common Stock of ATS (the "ATS
Class B Common Stock") is entitled to ten (10)
votes per share, and the Class C Common Stock of
ATS (the "ATS Class C Common Stock") is
nonvoting, except as otherwise provided by
applicable law. The holders of each class of ATS
Common Stock are entitled to identical rights
with respect to cash dividends and upon
liquidation and dissolution of ATS. Except as
otherwise provided by applicable law and except
for the rights of the holders of the ATS Class A
Common Stock to elect two "independent"
directors, the holders of ATS Class A Common
Stock and ATS Class B Common Stock vote together
on all matters requiring the vote of the ATS
common stockholders.

Trading Market.............. ATS intends to seek a Nasdaq National Market
("Nasdaq") listing for the ATS Class A Common
Stock. While ATS believes it currently meets the
financial listing criteria for such listing, no
application for such listing has been filed, and
there can be no assurance that such listing will
be obtained.

Principal ATS
Stockholders............... Assuming consummation of the Merger and the ATC
Merger, and the conversion of all shares of ARS
Convertible Preferred Stock, Steven B. Dodge,
Chairman of the Board of the Directors of ATS
(the "ATS Board") and the ARS Board, President
and Chief Executive Officer of ATS and ARS, and
Thomas H. Stoner, Chairman of the Executive
Committee of the ATS and ARS Boards, together
with their affiliates, owned "beneficially", on
February 1, 1998, approximately 51.4%
(approximately 63.0% prior to the consummation of
the ATC Merger) of the combined votes of the ATS
voting stock. See "Principal Stockholders of
American Tower Systems".

Relationship with ARS after
the Tower Separation....... As a result of the Tower Separation, American
Tower Systems will cease to be a subsidiary of,
or otherwise be affiliated with, American Radio
and will thereafter operate as an independent
publicly held company. However, ARS and ATS have
entered or will enter into certain agreements
providing for, among other things, (i) the
orderly separation of ARS and ATS and the
completion of the Tower Separation, (ii) the
lease of space on certain towers owned or leased
by ATS to ARS, (iii) the allocation of certain
tax and other liabilities between ARS and ATS,
and (iv) certain indemnification obligations of
ATS to ARS. See "The Merger and Tower
Separation--ARS-ATS Separation Agreement".

Market Prices............... On August 19, 1997, the day prior to the
announcement by ARS that management was exploring
ways to maximize stockholder value, the last
reported sale price per share of the ARS Class A
Common Stock on the New York Stock Exchange (the
"NYSE") was $39.125. On September 18, 1997, the
day prior to the announcement by American Radio
of the signing of the Original Merger Agreement
with CBS, the last reported sale price per share
of ARS Class A Common Stock on the NYSE was $51
7/8. On January 30, 1998, the last reported sale
price per share of the ARS Class A Common Stock
on the NYSE was $57 1/2.

THE ATC MERGER

The ATC Merger.............. On December 12, 1997, ATC and ATS entered into an
Agreement and Plan of Merger (the "ATC Merger
Agreement"), pursuant to which ATC will be merged
with and into ATS. Pursuant to the ATC Merger,
each holder of ATC Common Stock, at the effective
time of the ATC Merger, will receive its pro rata
share (assuming the exercise of all options to
acquire ATC Common Stock) of 35% of the number of
shares of ATS Common Stock that would be
outstanding, assuming consummation of the Merger,
the ATC Merger, the exercise of all options to
acquire ARS Common Stock, ATC Common Stock and
ATS Common Stock proposed to be outstanding, and
the conversion of all shares of ARS Convertible
Preferred Stock.

Stockholder Approval........ The ATC Merger has been approved by the ATS Board
and the Board of Directors of ATC (the "ATC
Board") and by American Radio as the holder of a
majority of the voting power of ATS Common Stock.
The ATC Merger requires the approval of the
holders of a majority of the outstanding shares
of ATC Common Stock. The ATC Board has determined
that the ATC Merger is advisable and in the best
interest of the holders of ATC Common Stock and
has recommended that the holders of ATC Common
Stock vote in favor of the ATC Merger Agreement.
ATC intends to obtain stockholder approval of the
ATC Merger by the written consent of stockholders
in lieu of obtaining such approval at a special
meeting of stockholders. Accordingly, ATC is not
asking for a proxy and ATC stockholders are
requested not to send a proxy. See "Comparison of
Rights of Stockholders of ATS and ATC--Other
Stockholder Rights--Special Meetings of
Stockholders; Action by Written Consent".

Appraisal Rights............ Holders of ATS Common Stock will not have
appraisal rights with respect to the ATC Merger.

Estimated Merger Effective
Date....................... Subject to the satisfaction or waiver of the
conditions to closing, consummation of the ATC
Merger is expected to occur in the spring of
1998. See "Regulatory Matters" below.

Termination of the Merger
Agreement.................. The ATC Merger Agreement may be terminated by ATS
and ATC under various circumstances, including
the failure to consummate the ATC Merger on or
before May 31, 1998.

Regulatory Matters.......... The receipt of certain federal governmental and
regulatory approvals is required in order to
consummate the ATC Merger, including the
expiration or earlier termination of the waiting
period under the HSR Act. See "The ATC Merger"
for information with respect to the receipt of a
Second Request from the Justice Department.

Certain Federal Income Tax
Consequences............... No gain or loss will be recognized for federal
income tax purposes by ATS or ATC as a
consequence of the ATC Merger. Except to the
extent of cash received in lieu of fractional
shares, no gain or loss will be recognized by a
U.S. holder of ATC Common Stock who receives ATS
Common Stock pursuant to the ATC Merger. Except
to the extent of the tax basis allocable to cash
received in lieu of fractional shares, the tax
basis of the ATS Common Stock received by a U.S.
holder of ATC Common Stock will be the same as
the aggregate tax basis of the ATC Common Stock
surrendered therefor. The holding period of the
ATS Common Stock received will include the
holding period of the ATC Common Stock
surrendered therefor. See "The ATC Merger--
Certain Federal Income Tax Consequences of ATC
Merger".
Principal ATC
Stockholders............... As of February 1, 1998, directors and executive
officers of ATC and their respective affiliates
may be deemed to be the beneficial owners of
114,132 shares of the outstanding ATC Common
Stock, which constitutes approximately 76.3% of
the total votes entitled to be cast by the
holders of ATC Common Stock. See "Principal
Stockholders of American Tower Corporation" in
Appendix V.

RISK FACTORS

Holders of ARS Common Stock should carefully consider the information set
forth or referred to under the heading "Risk Factors", in addition to the other
information contained in this Prospectus.

AMERICAN TOWER SYSTEMS DIVIDEND POLICY

American Tower Systems currently does not intend to pay cash dividends on ATS
Common Stock for the foreseeable future and any such payments would be limited
by the restrictions set forth in the Tower Loan Agreement. See "Description of
American Tower Systems Capital Stock--Dividend Restrictions" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
American Tower Systems--Liquidity and Capital Resources".

COMPARATIVE PER SHARE MARKET PRICE INFORMATION

On December 12, 1997, ATS and ATC publicly announced the execution of a
definitive merger agreement with respect to the ATC Merger. No established
public trading exists for the ATS Class A Common Stock or the ATC Common Stock,
and, accordingly, no such price information is available with respect thereto.

COMPARATIVE PER SHARE DATA

The following table sets forth as of the date and for the periods indicated
per share data of ATS and ATC, pro forma per share data from continuing
operations of ATS and ATC (giving effect to the ATS Pro Forma Transactions
which includes the ATC Merger in the case of ATS), and pro forma equivalent per
share amounts giving effect to the ATS Pro Forma Transactions which includes
the ATC Merger. The pro forma equivalent information of ATC represents ATS's
pro forma per share information multiplied by 199.2628, the approximate
exchange ratio called for in the ATC Merger Agreement. Neither ATS nor ATC has
ever paid cash dividends on its common stock. The data set forth below should
be read in conjunction with the audited and unaudited consolidated financial
statements of ATS and ATC, including the notes thereto, which are included in
this Prospectus. The data should also be read in conjunction with the unaudited
pro forma condensed financial statements of ATS, including the notes thereto,
included elsewhere in this Prospectus.

YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1996 SEPTEMBER 30, 1997
------------------- -------------------
ATS ATC ATS ATC
-------- --------- -------------------

Historical:
Income (loss) per share from
continuing operations............. $ (0.01) $ 4.61 $ (0.02) $ 8.55
Book value per share............... $ 0.82 $ 153.96 $ 1.39 $ 242.30
Pro Forma:
Loss per share..................... $ (0.34) $ -- $ (0.19) $ --
Book value per share............... -- $ -- $ 7.68 $ --
Pro Forma Equivalent:
Loss per share..................... -- $ (68.59) -- $ (37.69)
Book value per share............... -- -- -- $ 1,531.10

AMERICAN TOWER SYSTEMS SELECTED FINANCIAL DATA

The following Selected Financial Data of American Tower Systems has been
derived from the consolidated financial statements of American Tower Systems
included elsewhere in this Prospectus. The data as of and for the nine months
ended September 30, 1996 is unaudited, but in the opinion of management
contains all adjustments, consisting only of normal recurring accruals,
necessary for a fair presentation of such information. The American Tower
Systems Selected Financial Data should be read in conjunction with American
Tower Systems' audited and unaudited financial statements and the notes thereto
and with "Management's Discussion and Analysis of Financial Condition and
Results of Operations of American Tower Systems". The pro forma financial data
with respect to the year ended December 31, 1996 and the nine months ended
September 30, 1997 included below reflects certain adjustments, as explained
elsewhere in this Prospectus, and therefore any comparison of such pro forma
financial data with the American Tower Systems Selected Financial Data
appearing below for periods prior to 1996 is inappropriate. Such pro forma
financial data for the year ended December 31, 1996 and the nine months ended
September 30, 1997 gives effect to the ATS Pro Forma Transactions and the
Merger, including the Tower Separation, as described in the Notes to Unaudited
Pro Forma Condensed Consolidated Statements of Operations of American Tower
Systems. The ATS Pro Forma Transactions do not include all Recent Transactions
relating to American Tower Systems or pending construction. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
American Tower Systems".

The historical financial data presented below reflects periods during which
American Tower Systems did not operate as an independent company. Therefore,
such data may not reflect the results of operations or the financial condition
which would have resulted if ATS had operated as a separate, independent
company during such periods, and is not necessarily indicative of ATS' future
results of operations or financial condition.

AMERICAN TOWER SYSTEMS CORPORATION(1)

YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1996 SEPTEMBER 30,
------------------- --------------------------
HISTORICAL
JULY 17, 1995 THROUGH PRO --------------- PRO FORMA
DECEMBER 31, 1995 HISTORICAL FORMA(2) 1996 1997 1997(3)
--------------------- ---------- -------- ------ ------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENTS OF OPERATIONS
DATA:
Net revenues............ $ 163 $2,897 $ 65,873 $1,858 $ 7,902 $ 65,981
Operating expenses:
Operating expenses..... 60 1,362 37,633 1,066 3,588 33,186
Depreciation and
amortization.......... 57 990 49,906 614 2,706 38,873
Corporate general and
administrative........ 230 830 2,830 506 919 2,419
----- ------ -------- ------ ------- --------
Total operating
expenses............ 347 3,182 90,369 2,186 7,213 74,478
----- ------ -------- ------ ------- --------
Operating income
(loss)................. (184) (285) (24,496) (328) 689 (8,497)
Interest expense, net... -- 36 (11,726) 18 (1,221) (9,453)
Other income (expense).. -- -- 36 -- (3) (3)
Minority interest in net
earnings of
subsidiaries(4)........ -- (185) (185) (75) (221) (221)
----- ------ -------- ------ ------- --------
Income (loss) before
income taxes........... (184) (434) (36,371) (385) (756) (18,174)
Provision (benefit) for
income taxes........... (74) 46 (9,119) 69 (49) (3,198)
----- ------ -------- ------ ------- --------
Net income (loss)
applicable to common
stockholders........... $(110) $ (480) $(27,252) $ (454) $ (707) $(14,976)
===== ====== ======== ====== ======= ========
Pro forma net income
(loss) per common
share(5)............... $ (.01) $ (0.34) $ (.02) $ (0.19)
====== ======== ======= ========
Pro forma shares
outstanding............ 36,042 79,175 36,042 79,175
====== ======== ======= ========
OTHER OPERATING DATA:
Tower Cash Flow(6)...... $ 103 $1,535 $ 28,240 $ 792 $ 4,314 $ 32,795
EBITDA(6)............... (127) 705 25,410 286 3,395 30,376
EBITDA margin(6)........ (77.9)% 24.3% 38.6% 15.4% 43.0% 46.0%
After-tax cash flow(6).. (53) 510 22,654 160 1,999 23,897
Cash provided by (used
for) operating
activities............. (51) 2,229 -- 980 3,118 --
Cash used for investing
activities............. -- -- -- -- (74,318) --
Cash provided by
financing activities... 63 132 -- 582 71,121 --

SEPTEMBER 30, 1997
-----------------------
HISTORICAL PRO FORMA(3)
---------- ------------
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents............................. $ 2,295 $ 2,759
Working capital deficiency, excluding current portion
of long-term debt.................................... (580) (3,546)
Property and equipment, net........................... 43,941 228,023
Total assets.......................................... 111,340 823,621
Long-term debt, including current portion............. 54,203 173,020
Total stockholders' equity............................ 50,105 608,368

- --------
(1) ATSI was organized on July 17, 1995 and American Radio contributed all of
the issued and outstanding capital stock of ATSI to ATS on September 24,
1996. Year-to-year comparisons are significantly affected by the timing of
acquisitions of communications sites and related businesses and
construction of towers, both of which have been numerous during the period.
See "Business of American Tower Systems--Recent Transactions" and the
consolidated financial statements of American Tower Systems elsewhere in
this Prospectus for a description of the acquisitions made and construction
activity in 1995, 1996 and the first nine months of 1997.
(2) The unaudited pro forma Statement of Operations Data and Other Operating
Data for the year ended December 31, 1996 gives effect to the ATS Pro Forma
Transactions and the Merger, including the Tower Separation, as if each of
the foregoing had occurred on January 1, 1996. The term "ATS Pro Forma
Transactions" includes the Meridian Transaction, the Diablo Transaction,
the MicroNet Transaction, the Tucson Transaction, the Gearon Transaction,
the ATC Merger, consummation of transactions contemplated by the ATS Stock
Purchase Agreement and the transfer of towers from ARS to ATS and does not
include all of the Recent Transactions relating to American Tower Systems
or pending construction. See "Business of American Tower Systems--Recent
Transactions" and "Unaudited Pro Forma Condensed Consolidated Financial
Statements of American Tower Systems".

(3) The unaudited pro forma Statement of Operations Data and Other Operating
Data for the nine months ended September 30, 1997 gives effect to the ATS
Pro Forma Transactions and the Merger, including the Tower Separation, as
if each of the foregoing had occurred on January 1, 1997. The unaudited pro
forma Balance Sheet Data as of September 30, 1997 gives effect to the ATS
Pro Forma Transactions not consummated as of September 30, 1997 and the
Merger, including the Tower Separation, as if each of the foregoing had
occurred on September 30, 1997. See "Business of American Tower Systems--
Recent Transactions" and "Unaudited Pro Forma Condensed Consolidated
Financial Statements of American Tower Systems".
(4) Represents the elimination of the 49.9% member's earnings of ATS Needham,
LLC, in which Tower Operating Subsidiary holds a 50.1% interest and the
elimination of the 30% member's loss of Communications Systems Development
LLC, in which Tower Operating Subsidiary holds a 70% interest.
(5) Pro forma net income (loss) per share has been computed using (a) in the
case of historical information, the number of shares expected to be
outstanding following the Tower Separation and (b) in the case of pro forma
information, the number of shares expected to be outstanding following the
Tower Separation and the transactions discussed in Note 2 to the "American
Tower Systems Selected Financial Data" and the Notes to Unaudited Pro Forma
Condensed Consolidated Statement of Operations.
(6) "Tower Cash Flow" means operating income (loss) before depreciation and
amortization and corporate general and administrative expenses. "EBITDA"
means operating income (loss) before depreciation and amortization. "After-
tax cash flow" means income (loss) before extraordinary items, plus
depreciation and amortization. Tower Cash Flow, EBITDA and after-tax cash
flow should not be considered in isolation from, or as a substitute for,
operating income, net income or cash flow and other consolidated income or
cash flow statement data computed in accordance with generally accepted
accounting principles or as a measure of ATS' profitability or liquidity.
Although these measures of performance are not calculated in accordance
with generally accepted accounting principles, many of them are widely used
in the communications site industry as a measure of a company's operating
performance because they assist in comparing company performance on a
consistent basis without regard to depreciation and amortization, which can
vary significantly depending on accounting methods (particularly where
acquisitions are involved) or non-operating factors such as historical cost
bases. Tower Cash Flow also excludes the effect of corporate general and
administrative expenses, which generally do not relate directly to
communications site performance. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations of American Tower
Systems--Overview" and "--Liquidity and Capital Resources".

AMERICAN RADIO SELECTED COMBINED FINANCIAL DATA

The following Selected Combined Financial Data of American Radio has been
derived from the consolidated financial statements of American Radio and the
Selected Financial Data of the four predecessor entities of American Radio (the
"ARS Predecessor Entities"), which are contained in the American Radio Annual
Report on Form 10-K for the year ended December 31, 1996 (the "ARS 10-K") and
the American Radio Quarterly Report on Form 10-Q for the nine months ended
September 30, 1997 (the "ARS September 199710-Q"). The data as of and for the
nine months ended September 30, 1996 and 1997 is unaudited, but in the opinion
of management contain all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation of such information. The American
Radio Selected Combined Financial Data should be read in conjunction with
American Radio's audited and unaudited financial statements and the notes
thereto and with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contained in the ARS 10-K and the ARS September 1997
10-Q. The following financial data presents the combined operating results of
the ARS Predecessor Entities for periods prior to the date of the formation of
American Radio (November 1, 1993) for 1992 and the ten months ended October 31,
1993 as if such entities had combined effective January 1, 1992 or, if later,
the date of commencement of operations of certain ARS Predecessor Entities. The
data for the two months ended December 31, 1993 and the years ended December
31, 1994, 1995 and 1996 is based on the historical audited American Radio
consolidated financial statements. The pro forma financial data with respect to
the year ended December 31, 1996 and the nine months ended September 30, 1997
included below reflects certain adjustments, as explained elsewhere in this
Prospectus, and therefore any comparison of such pro forma financial data with
the American Radio Selected Combined Financial Data appearing below for periods
prior to 1996 is inappropriate. Such pro forma financial data for the year
ended December 31, 1996 and the nine months ended September 30, 1997 gives
effect to the ARS Pro Forma Transactions, the ATS Pro Forma Transactions and to
the Merger, including the Tower Separation, as described in the Notes to
Unaudited Pro Forma Condensed Consolidated Statement of Operations of American
Radio. The ARS Pro Forma Transactions do not include all of the Recent
Transactions but do include the sale pursuant to the ATS Stock Purchase
Agreement of ATS Common Stock to Steven B. Dodge, Chairman of the Board,
President and Chief Executive Officer of ARS and ATS and certain other officers
and directors of ARS and ATS (or their affiliates, family members or family
trusts) and the transfer of towers from ARS to ATS in connection with the Tower
Separation. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the ARS 10-K and the ARS September 1997 10-Q and
the financial statements of EZ in the EZ Annual Report on Form 10-K for the
year ended December 31, 1996 (the "EZ 10-K").

AMERICAN RADIO SYSTEMS CORPORATION(1)

COMBINED ARS
COMBINED ARS PREDECESSOR
PREDECESSOR ENTITIES AND
ENTITIES(2) ARS ARS(2) YEAR ENDED DECEMBER 31,
------------------------ ------------ ------------ ------------------------------------
TEN TWO COMBINED
MONTHS MONTHS YEAR
YEAR ENDED ENDED ENDED ENDED HISTORICAL PRO
DECEMBER 31, OCTOBER 31, DECEMBER 31, DECEMBER 31, -------------------------- FORMA
1992 1993 1993 1993 1994 1995 1996 1996(3)
------------ ----------- ------------ ------------ ------- ------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF
OPERATIONS
DATA:
Net revenues.... $46,306 $45,010 $8,943 $53,953 $68,034 $97,772 $178,019 $315,905
Station
operating
expenses....... 36,698 37,058 6,493 43,551 50,129 66,448 120,004 209,498
Net local
marketing
agreement
expenses(5).... -- -- -- -- -- 600 8,128 8,128
Depreciation and
amortization... 4,465 5,900 1,415 7,315 9,920 12,364 17,810 59,275
Merger
expenses....... -- -- -- -- -- -- -- --
Corporate
general and
administrative
expenses....... 3,657 2,897 944 3,841 2,229 3,908 5,046 5,216
------- ------- ------ ------- ------- ------- -------- --------
Operating income
(loss)......... 1,486 (845) 91 (754) 5,756 14,452 27,031 33,788
Interest
expense--net... (4,370) (5,517) (801) (6,318) (7,051) (10,062) (16,762) (54,534)
Gains (losses)
on sale of
assets, net.... (964) 3,133 -- 3,133 2,345 11,544 (308) (159)
Other non-
operating
income
(expense),
net............ (3) 42 -- 42 (568) -- -- --
------- ------- ------ ------- ------- ------- -------- --------
Income (loss)
before income
taxes and other
items.......... (3,851) (3,187) (710) (3,897) 482 15,934 9,961 (20,905)
Provision
(benefit) for
income
taxes(6)....... 382 1,690 (263) 1,427 556 6,829 4,826 (10,711)
------- ------- ------ ------- ------- ------- -------- --------
Income (loss)
before
extraordinary
item........... $(4,233) $(4,877) $ (447) $(5,324) (74) 9,105 5,135 (10,194)
======= ======= ====== =======
Extraordinary
loss........... (1,159) (817) -- --
------- ------- -------- --------
Net income
(loss)......... (1,233) 8,288 5,135 (10,194)
Preferred Stock
and Series C
Common Stock
dividends...... (1,887) (815) (4,973) (27,723)
------- ------- -------- --------
Net income
(loss)
applicable to
common
stockholders... $(3,120) $ 7,473 $ 162 $(37,917)
======= ======= ======== ========
Net income
(loss) before
extraordinary
item per common
share.......... $ (0.21) $ 0.65 $ 0.01 $ (1.36)
======= ======= ======== ========
Weighted average
common shares
outstanding.... 9,338 12,646 20,510 27,893
======= ======= ======== ========
OTHER OPERATING
DATA:
Broadcast cash
flow(7)........ $ 9,608 $ 7,952 $2,450 $10,402 $17,905 $31,324 $ 58,015 $106,407
EBITDA(7)....... 5,951 5,055 1,506 6,561 15,676 27,416 52,969 101,191
After-tax cash
flow(7)........ -- -- -- -- 7,959 20,654 17,972 21,358
Cash (used for)
provided by
operating
activities..... 2,312 (531) (404) (935) 2,166 9,724 15,659 --
Cash (used for)
investing
activities..... (1,632) (6,573) (197) (6,770) (92,909) (81,183) (421,885) --
Cash provided by
financing
activities..... 22 6,197 1,977 8,174 89,519 72,180 412,784 --

NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------
HISTORICAL PRO
----------------------- FORMA
1996 1997 1997(4)
----------- ----------- -----------

STATEMENT OF
OPERATIONS
DATA:
Net revenues.... $ 113,582 $ 260,512 $ 274,826
Station
operating
expenses....... 78,171 172,018 184,284
Net local
marketing
agreement
expenses(5).... 4,878 1,914 1,914
Depreciation and
amortization... 10,966 42,974 48,829
Merger
expenses....... -- 300 300
Corporate
general and
administrative
expenses....... 3,615 6,601 6,182
----------- ----------- -----------
Operating income
(loss)......... 15,952 36,705 33,317
Interest
expense--net... (10,474) (38,562) (54,729)
Gains (losses)
on sale of
assets, net.... 172 455 679
Other non-
operating
income
(expense),
net............ -- -- --
----------- ----------- -----------
Income (loss)
before income
taxes and other
items.......... 5,650 (1,402) (20,733)
Provision
(benefit) for
income
taxes(6)....... 2,961 (774) (10,800)
----------- ----------- -----------
Income (loss)
before
extraordinary
item........... 2,689 (628) (9,933)
Extraordinary
loss........... -- (1,639) --
----------- ----------- -----------
Net income
(loss)......... 2,689 (2,267) (9,933)
Preferred Stock
and Series C
Common Stock
dividends...... (2,567) (22,770) (24,666)
----------- ----------- -----------
Net income
(loss)
applicable to
common
stockholders... $ 122 $ (25,037) (34,599)
=========== =========== ===========
Net income
(loss) before
extraordinary
item per common
share.......... $ 0.01 $ (0.88) $ (1.17)
=========== =========== ===========
Weighted average
common shares
outstanding.... 20,031 26,549 29,454
=========== =========== ===========
OTHER OPERATING
DATA:
Broadcast cash
flow(7)........ $ 35,411 $ 88,494 $ 90,542
EBITDA(7)....... 31,796 81,593 84,060
After-tax cash
flow(7)........ 11,088 19,576 14,230
Cash (used for)
provided by
operating
activities..... 18,477 29,594 --
Cash (used for)
investing
activities..... (382,739) (529,246) --
Cash provided by
financing
activities..... 374,926 503,027 --

SEPTEMBER 30, 1997
-----------------------
HISTORICAL PRO FORMA(4)
---------- ------------
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents............................. $ 13,822 $ 11,527
Restricted cash....................................... 34,441 34,441
Working capital, excluding current portion of long-
term debt............................................ 59,879 60,459
Intangible assets--net................................ 1,592,772 1,532,953
Total assets.......................................... 1,962,925 1,847,419
Long-term debt, including current portion............. 809,015 873,412
Cumulative exchangeable preferred stock............... 215,550 215,550
Total stockholders' equity............................ 674,937 502,066

- --------
(1) Year-to-year comparisons are significantly affected by the timing of
acquisitions and dispositions of radio stations, which have been numerous
during the periods shown. See the "Unaudited Pro Forma Condensed
Consolidated Financial Statements of America Radio" in Appendix I and the
consolidated financial statements of American Radio in the ARS 10-K and the
ARS September 1997 10-Q for a description of the acquisitions and
dispositions made in 1995, 1996 and the first nine months of 1997.
(2) The information for the Combined ARS Predecessor Entities includes the
results of operations of the following entities for the following periods:
two entities--the year ended December 31, 1992 and ten months ended October
31, 1993; one entity--the fiscal year ended August 31, 1992 (included in
calendar year 1992) and the sum of (a) eight-twelfths of the fiscal year
ended August 31, 1993 and (b) the historical results for the two months
ended October 31, 1993 (included in the ten months ended October 31, 1993);
and the fourth entity--the one-month period ended December 31, 1992 (in
calendar year 1992) and the ten months ended October 31, 1993 (in that
period). In addition, the 1993 financial information combines the ARS
Predecessor Entities for the ten months ended October 31, 1993 and
historical American Radio financial statements for the two month period
ended December 31, 1993.
(3) The unaudited pro forma Statement of Operations Data and Other Operating
Data for the year ended December 31, 1996 give effect to (i) the ARS Pro
Forma Transactions, (ii) the ATS Pro Forma Transactions, (iii) the offering
and exchange of the 11 3/8% Cumulative Exchangeable Preferred Stock (the
"ARS Cumulative Preferred Stock") and the use of the proceeds thereof, and
(iv) the Tower Separation, as if each of the foregoing had occurred on
January 1, 1996. The term "ARS Pro Forma Transactions" means the EZ Merger,
the BayCom Transaction, the Hartford Transaction, the HBC Merger (excluding
the Omaha stations which have been sold) and the Baltimore Transaction and
does not include all of the Recent Transactions. See "Business of American
Tower Systems--Recent Transactions" and "Unaudited Pro Forma Condensed
Consolidated Financial Statements of American Radio" in Appendix I.
(4) The unaudited pro forma Statement of Operations Data and Other Operating
Data for the nine months ended September 30, 1997 gives effect to (i) the
EZ Merger, (ii) the Baltimore Transaction, (iii) the ATS Pro Forma
Transactions, (iv) the offering and exchange of the ARS Cumulative
Preferred Stock and the use of the proceeds thereof, and (v) the Tower
Separation, as if each of the foregoing had occurred on January 1, 1997.
The unaudited pro forma Balance Sheet Data as of September 30, 1997 gives
effect to (i) the ATS Pro Forma Transactions and (ii) the Tower Separation,
as if each of the foregoing had occurred on September 30, 1997. See
"Business of American Tower Systems--Recent Transactions" and "Unaudited
Pro Forma Condensed Consolidated Financial Statements of American Radio" in
Appendix I.
(5) In connection with a number of Recent Transactions, ARS entered into local
marketing agreements ("LMAs"). Net LMA expense represents the excess of
monthly payments payable by ARS to the station owners over LMA revenue
received by ARS. Net LMA expense is, in effect, a reimbursement to the
station owners of their depreciation and amortization and interest expense
and, upon acquisition of the stations by ARS, will be replaced by such
expenses.
(6) The ARS Predecessor Entities' provision (benefit) for income taxes for the
periods prior to 1994 represents the historical provision (benefit) for one
of such entities. One of the other predecessors was a partnership and one
was an S corporation and, accordingly, taxable income or loss flowed
through to the partners and stockholder, respectively, of those entities.
The fourth predecessor had net operating loss carryforwards available to
reduce future taxable income. As the realization of the benefit of those
losses was not assured, no income tax benefit was recorded. Based on these
circumstances, a combined tax provision for periods prior to 1994 has not
been presented.
(7) "Broadcast cash flow" means operating income (loss) before net LMA
expenses, depreciation and amortization and corporate general and
administrative expenses. "EBITDA" means operating income (loss) before LMA
expenses and depreciation and amortization. LMA expenses are, as explained
in note (5), fees paid by American Radio which permit American Radio to
program stations prior to their acquisition. "After-tax cash flow" means
income (loss) before extraordinary items, plus depreciation and
amortization, less stock dividends. Broadcast cash flow, EBITDA and after-
tax cash flow should not be considered in isolation from, or as a
substitute for, operating income, net income or cash flow and other
consolidated income or cash flow statement data computed in accordance with
generally accepted accounting principles or as a measure of American
Radio's profitability or liquidity. Although these measures of performance
are not calculated in accordance with generally accepted accounting
principles, they are widely used in the broadcasting industry as a measure
of a radio company's operating performance because they assist in comparing
radio station performance on a consistent basis across radio companies
without regard to depreciation and amortization, which can vary
significantly depending on accounting methods (particularly where
acquisitions are involved) or non-operating factors such as historical cost
bases. Broadcast cash flow also excludes the effect of corporate general
and administrative expenses, which generally do not relate directly to
station performance.

RISK FACTORS

The following risk factors should be considered by the holders of ARS Common
Stock in evaluating the Merger and whether to exercise their appraisal rights.
These factors should be considered in conjunction with the other information
included and incorporated by reference in this Prospectus.

RISK FACTORS RELATING TO THE MERGER AND THE TOWER MERGER

MERGER AGREEMENT--CERTAIN CONTINGENT LIABILITIES

The Merger Agreement provides that ATS will be responsible for the tax
consequences of the Tower Separation to the extent that the aggregate amount
of taxes required to be paid by CBS or any of its affiliates (including
without limitation ARS after the Merger) exceeds $20.0 million. The amount of
that tax liability is dependent on the "fair market value" of the ATS Class A
Common Stock at the time of the Tower Separation. Such "fair market value" is
likely to be based on the initial trading levels of such stock for some
reasonable period after the Tower Separation. American Tower Systems estimates
that, assuming such fair market value is $10.00 per share (the price at which
ATS Common Stock was issued pursuant to the consummation of the transactions
contemplated by the ATS Stock Purchase Agreement), the federal tax liability
of American Radio for which ATS will be responsible will be approximately
$66.6 million (after giving effect to the $20.0 million of taxes to be borne
by ARS pursuant to the provisions of the Merger Agreement), and that for each
$1.00 by which such fair market value exceeds or is less than $10.00 per
share, the federal tax liability would increase or decrease by approximately
$14.8 million. In addition, state taxes could be payable by ARS in connection
with the Tower Separation for which ATS would also be responsible. See "The
Merger and Tower Separation--ARS-ATS Separation Agreement--Sharing of Tax and
Other Consequences".

The Merger Agreement also provides for closing date balance sheet
adjustments based upon the working capital and specified debt levels
(including the liquidation preference of the ARS Cumulative Preferred Stock)
of ARS at the Effective Time which may result in payments to be made by either
ARS or ATS to the other party following the Closing Date. ATS will benefit
from or bear the cost of such adjustments. Since the amounts of working
capital and debt are dependent upon future operations and events, including
without limitation cash flow from operations, capital expenditures, and
expenses of the Merger and the Tower Separation, neither ARS nor ATS is able
to state with any degree of certainty what payments, if any, will be owed
following the Closing Date by either ARS or ATS to the other party. However,
as indicated in the pro forma financial information with respect to ATS
included elsewhere in this Prospectus, and based on the assumptions stated
therein, ARS has estimated that the payment, if any, required to be paid or to
be received by ATS will not be material as a result of those provisions. See
"The Merger and Tower Separation--Closing Date Adjustments".

CERTAIN EFFECTS OF THE MERGER

If the Merger is consummated, the present holders of ARS Common Stock will
no longer have the opportunity to share in ARS' radio business' future
earnings and growth. Instead each such holder will have the right to receive
cash consideration and shares of ATS Common Stock pursuant to the Tower
Separation of the same class as the class of ARS Common Stock to be
surrendered.

FEDERAL INCOME TAX CONSEQUENCES OF TOWER MERGER

In the event the Tower Merger were consummated and the Merger were not, the
redemption of shares of ARS Common Stock pursuant to the Tower Merger would
not meet the applicable requirements of the Code for such redemption to
qualify for sale or exchange treatment, and the fair market value of the
shares of ATS Common Stock received pursuant to the Tower Merger would be
taxable as a dividend. Because of these adverse federal income tax
consequences, the ARS Board has not made a final determination of whether to
proceed with the Tower Merger. It intends to evaluate all of the facts and
circumstances existing at the time of any such proposed consummation to
determine whether the Tower Merger is in the best interests of the ARS common

stockholders, notwithstanding such possible adverse consequences. See "The
Merger and Tower Separation--Certain Federal Income Tax Consequences of Merger
and Tower Merger".

ABSENCE OF OPINION ON TOWER SEPARATION

Stockholders should recognize that the opinion of Credit Suisse First Boston
as to the fairness of the Merger addressed only the issue of the fairness of
the cash consideration to be received by ARS common stockholders for the radio
broadcasting business of ARS and did not address the issue of the fairness of
the distribution of ATS Common Stock as part of the Tower Separation. The ARS
Board did not seek the opinion of Credit Suisse First Boston (or any other
firm) as to the fairness of the distribution of ATS Common Stock as part of
the Tower Separation (whether pursuant to the Merger or the Tower Merger)
because such distribution will be made to ARS common stockholders on a pro
rata basis and will preserve the relative voting rights of the ARS common
stockholders existing at the time.

INTERESTS OF CERTAIN ARS PERSONS IN THE MERGER

In reviewing the recommendation of the ARS Board with respect to the Merger,
ARS common stockholders should be aware that certain members of American Radio
management and the ARS Board may have interests in the Merger and the Tower
Separation that may present them with actual or potential conflicts of
interest. See "The Merger and Tower Separation--Interest of Certain Persons in
the Merger".

INTERESTS OF CETAIN ATC PERSONS IN THE MERGER

In reviewing the recommendation of the ATC Board with respect to the ATC
Merger, ATC common stockholders should be aware that certain members of ATC
management and the ATC Board may have interests in the ATC Merger that may
present them with actual or potential conflicts of interest. See "The ATC
Merger--Background of the Merger".

POTENTIAL LOSS OF KEY PERSONNEL

The pendency of the Merger may increase the risk that certain key employees,
including the co-chief operating officers, station general managers, sales
managers and program directors, as well as on-air announcers who are well
recognized and established in the markets in which ARS conducts business,
could decide to seek employment elsewhere.

RISK FACTORS RELATING TO AMERICAN TOWER SYSTEMS

DEPENDENCE ON DEMAND FOR WIRELESS COMMUNICATIONS AND IMPLEMENTATION OF DIGITAL
TELEVISION

The demand for rental space on ATS' towers is dependent on a number of
factors beyond ATS' control, including demand for wireless services by
consumers, the financial condition and access to capital of wireless
providers, the strategy of wireless providers with respect to owning or
leasing their own communications sites, government licensing of broadcast
rights, changes in FCC regulations and general economic conditions. A slowdown
in the growth of wireless communications in the United States would depress
network expansion activities and reduce the demand for ATS' antennae sites. In
addition, a downturn in a particular wireless segment, or of the number of
carriers, nationally or locally, in a particular segment, as a result of
technological or other competition or other factors beyond the control of ATS
could adversely affect the demand for its antennae sites. Finally, advances in
technology could reduce the need for tower-based transmission and reception.
The occurrence of any of these factors could have a material adverse effect on
ATS' financial condition and results of operations. See "Industry Overview".

The demand for rental space on ATS' towers is also dependent on the demand
for tower sites by television and radio broadcasters. Many of the same factors
described above with respect to wireless providers are also applicable to
television and radio broadcasters. Additionally, certain technological
advances, including the

development and implementation of satellite-delivered radio, may reduce the
need for tower-based broadcast transmission. ATS could also be affected
adversely should the development of digital television ("DTV") be delayed or
impaired, particularly should the intensity of demand for DTV service decrease
because of the speed with which the industry implements the changes or because
of regulatory requirements.

ACQUISITION STRATEGY

American Tower Systems has pursued on an aggressive basis, and intends to
continue to pursue on a selective basis, the acquisition of other companies in
the communications site industry. Inherent in such a strategy are certain
risks, such as increasing leverage and debt service requirements, combining
disparate company cultures and facilities, and operating towers in many
geographically diverse markets. Certain of these risks may be increased to the
extent that ATS' acquisitions (including the ATC Merger) are larger and/or
involve communications sites in diverse geographic areas. Accordingly, there
can be no assurance that one or more of ATS' past or future acquisitions may
not have an adverse effect on its business.

ATS competes with certain wireless service providers, site developers and
other independent tower owners and operators, as well as financial
institutions, for acquisitions of towers and potential sites and expects such
competition to increase. Certain of those competitors have greater financial
and other resources than ATS. The success of ATS' growth strategy continues to
be dependent, although to a lesser extent than in the past, on its ability to
identify and complete acquisitions of communications site companies. Increased
competition may result in fewer acquisition opportunities as well as higher
acquisition prices. No assurance can be given that ATS will be able to
identify, finance and complete future acquisitions on acceptable terms. See
"Unaudited Pro Forma Condensed Consolidated Financial Statements of American
Tower Systems" and "Business of American Tower Systems--Recent Transactions".

The ATC Merger Agreement provides for a termination fee to ATC of $15.0
million (together with reimbursement of reasonable out-of-pocket expenses up
to an aggregate of $1.0 million) in the event such agreement is terminated
because of the failure of either the Merger or the Tower Merger to occur or
the failure of American Radio to obtain the approval, if required, of the
holder of ARS Common Stock. Such termination fee and reimbursement would be
the sole and exclusive recourse of ATC in the event of any such termination.
See "The ATC Merger".

CONSTRUCTION OF NEW TOWERS

American Tower Systems currently has under construction, or plans to
construct during 1998 (exclusive of those which ATC is constructing or plans
to construct), an aggregate of approximately 300 towers (most of which are on
a build to suit basis) at an estimated aggregate cost of approximately $60.0
million. In addition, ATS is actively competing for the opportunity to
construct more than 200 towers in 1998 for an estimated cost of approximately
$42.0 million, although there can be no assurance as to how many, if any, of
such towers ATS will be engaged to construct. ATC has under construction or
plans to construct during 1998 an aggregate of approximately 125 towers at an
estimated aggregate cost of approximately $28.0 million. The success of ATS'
growth strategy is highly dependent on its ability to complete new tower
construction. Such construction can be prevented, delayed and/or made more
costly by factors beyond the control of ATS, including zoning and local
permitting requirements, FCC and Federal Aviation Administration ("FAA")
regulations, environmental group opposition, availability of erection
equipment and skilled construction personnel, and adverse weather conditions.
In addition, as the pace of tower construction has increased in recent years,
manpower and equipment needed to erect towers have been in increasing demand.
Such factors could increase costs associated with new tower construction and
could have a material adverse effect on ATS' financial condition or result of
operations. In light of the anticipated increase in construction activity,
both for ATS and the communications site industry generally, these factors
may, in the future, be significantly exacerbated. The construction of towers
for the broadcasting industry could be particularly affected by a potential
shortage of construction capability should a large number of towers be
required to be built in a relatively short period of

time to accommodate the initiation of digital television service. See
"Business of American Tower Systems--Regulatory Matters".

ATS competes for new tower construction site opportunities with wireless
service providers, site developers and other independent tower operating
companies. ATS believes that competition for tower construction sites will
increase and that additional competitors will enter the tower market, certain
of which may have greater financial resources than ATS.

Build to suit activities (such as the 600-tower project described above)
involve certain additional risks. While they do involve at least one "anchor"
tenant, there can be no assurance that a sufficient number of additional
tenants will be secured for all or most of the towers to be constructed
pursuant to such projects (particularly the larger ones such as the 600-tower
project), to ensure that such projects will be profitable. Moreover, ATS may
find that one of the reasons wireless carriers are willing to permit ATS to
build towers for them is that certain or many of such towers may be on sites
that are either expensive or difficult to build on or that they are such that
they are unlikely to attract a sufficient number of other tenants.

SUBSTANTIAL CAPITAL REQUIREMENTS AND LEVERAGE

ATS' acquisition and construction activities will create substantial ongoing
capital requirements. During 1997, ATS made capital investments aggregating
approximately $178.0 million in communications site acquisitions and
approximately $25.7 million in new tower construction, including site
upgrades. ATS has financed its capital expenditures through a combination of
bank borrowings, equity investments by American Radio, and cash flow from
operations. As of September 30, 1997, on a pro forma basis, assuming
consummation of the ATS Pro Forma Transactions and all other Recent
Transactions relating to ATS, the Tower Separation and the transactions
contemplated by the ATS Stock Purchase Agreement, ATS would have had aggregate
indebtedness of approximately $323.0 million. Based on the foregoing
assumptions and the estimated current pro forma cash flow, ATS would be able
to borrow an additional $61.5 million under the Tower Loan Agreement; the
total capacity under the Tower Loan Agreement is $400.0 million. ATS expects
that it will continue to be required to borrow funds to finance construction
and, to a lesser extent, acquisitions and to operate with substantial
leverage. If ATS' revenues and cash flow do not meet current expectations, or
if its borrowing base is reduced as a result of operating performance,
American Tower Systems may have limited ability to access necessary capital.
If such cash flow is not sufficient to meet its debt service requirements, ATS
could be required to sell equity or debt securities, refinance its obligations
or dispose of certain of its operating assets in order to make scheduled
payments. There can be no assurance that ATS would be able to effect any such
transactions on favorable terms.

The Tower Operating Subsidiary is a party to a loan agreement (the "Tower
Loan Agreement") providing for maximum borrowing, subject to compliance with
certain financial ratios, of $400.0 million. The Tower Loan Agreement includes
certain financial and operational covenants and other restrictions with which
Tower Operating Subsidiary must comply, including, among others, limitations
on additional indebtedness, capital expenditures, investments in Unrestricted
Subsidiaries (as defined therein) and cash distributions, as well as
restrictions on the use of borrowings and requirements to maintain certain
financial ratios. The obligations of Tower Operating Subsidiary under the
Tower Loan Agreement are collateralized by a pledge of the stock and
partnership interests of each Tower Operating Subsidiary and a first priority
security interest in substantially all of each Tower Operating Subsidiary's
assets.

Assuming consummation of all of the Recent Transactions and the Merger,
management believes that, in light of current construction plans and potential
acquisitions, ATS will require additional financing during 1998. Any such
financing could take the form of an increase in the maximum borrowing levels
under the Tower Loan Agreement, the issuance, publicly or privately, of debt
securities (which could have the effect of increasing its consolidated
leverage ratios) or equity securities (which, in the case of ATS Common Stock
or securities convertible into or exercisable for ATS Common Stock, would have
a dilutive effect on the proportionate

ownership of ATS by its then existing common stockholders). There can be no
assurance that any such debt or equity financing would be available on
favorable terms.

CONTROL BY THE PRINCIPAL STOCKHOLDERS; RESTRICTIONS ON CHANGE OF CONTROL

Assuming consummation of the Merger and the ATC Merger, and the conversion
of all shares of ARS Convertible Preferred Stock, Messrs. Dodge and Stoner,
together with their affiliates (the "ATS Principal Stockholders"), owned
"beneficially", on February 1, 1998, approximately 51.4% (approximately 63.0%
prior to consummation of the ATC Merger) of the combined voting power of the
ATS voting stock. See "Principal Stockholders of American Tower Systems".
Accordingly, the ATS Principal Stockholders may, in effect, be able to control
the vote on all matters submitted to a vote of the holders of the ATS Common
Stock, except with respect to (i) the election of two independent directors,
(ii) those matters which the Restated Certificate of Incorporation of ATS (the
"ATS Restated Certificate") or applicable law requires a 66 2/3% vote, and
(iii) those matters requiring a class vote by law. Control by the ATS
Principal Stockholders may have the effect of discouraging certain types of
transactions involving an actual or potential change of control of ATS. See
"The ATC Merger" and "Description of American Tower Systems Capital Stock--
Common Stock".

The Tower Loan Agreement provides that an "Event of Default" will occur upon
certain changes in the ownership interests and executive positions in American
Tower Systems of Mr. Dodge. In addition, the Communications Act of 1934, as
amended (the "Communications Act"), and the rules of the FCC require the prior
consent of the FCC for any change in control of ATS. In addition to the stock
ownership by the ATS Principal Stockholders and the FCC restrictions, certain
provisions of the Delaware law may have the effect of discouraging a third
party from making an acquisition proposal for ATS and may thereby inhibit a
change of control. See "Description of American Tower Systems Capital Stock--
Delaware Business Combination Provisions".

DEPENDENCE ON KEY PERSONNEL

The implementation of ATS' growth strategy is dependent, to a significant
degree, on the efforts of ATS' Chief Executive Officer and certain other
executive officers. ATS has not entered into employment agreements with any of
its executive officers, other than with J. Michael Gearon, Jr., the former
principal stockholder and chief executive officer of Gearon & Co., Inc. which
was merged into ATSI pursuant to the Gearon Transaction in January 1998. Many
of the executive and other officers have been granted options to purchase
shares of ATS Common Stock that are subject to vesting provisions generally
over a five-year period. However, there can be no assurance that American
Tower Systems will be able to retain such officers, the loss of whom could
have a material adverse effect upon ATS, or that ATS will be able to prevent
them from competing in the event of their departure. ATS does not maintain key
man life insurance of any significance on the lives of any of such officers.

ENVIRONMENTAL MATTERS

Under various federal, state and local environmental laws, ordinances and
regulations, an owner of real estate or a lessee conducting operations thereon
may become liable for the costs of investigation, removal or remediation of
soil and groundwater contaminated by certain hazardous substances or wastes.
Certain of such laws impose cleanup responsibility and liability without
regard to whether the owner or operator of the real estate or operations
thereon knew of or was responsible for the contamination, and whether or not
operations at the property have been discontinued or title to the property has
been transferred. The owner or operator of contaminated real estate also may
be subject to common law claims by third parties based on damages and costs
resulting from off-site migration of the contamination. In connection with its
former and current ownership or operation of its properties, ATS may be
potentially liable for environmental costs such as those discussed above. See
"Business of American Tower Systems--Environmental Matters".

LACK OF DIVIDENDS; RESTRICTIONS ON PAYMENTS OF DIVIDENDS AND REPURCHASE OF
COMMON STOCK

American Tower Systems intends to retain all available earnings, if any,
generated by its operations for the development and growth of its business and
does not anticipate paying any dividends on the ATS Common Stock in the
foreseeable future. In addition, each Tower Operating Subsidiary is and will
be restricted under the Tower Loan Agreement from paying dividends on its
stock (distributions to its partners, in the case of ATSLP) and from
repurchasing, redeeming or otherwise acquiring any shares of ATS Common Stock.
Since ATS has no significant assets other than its ownership of all of the
capital stock of Tower Operating Subsidiary, its ability to pay dividends to
its stockholders in the foreseeable future is restricted.

NO PRIOR MARKET FOR ATS COMMON STOCK

Prior to the Tower Separation, there will be no public market for the ATS
Common Stock, and there can be no assurance that an active trading market will
develop or be sustained in the future. ATS intends to seek listing on Nasdaq
for the ATS Class A Common Stock. While ATS believes it currently meets the
financial listing criteria for such listing, no application has been filed and
such listing will be subject to the discretion of the applicable authorities.
Accordingly, there can be no assurance that any such listing will be obtained.
There also can be no assurance as to the price at which the ATS Class A Common
Stock will trade or as to the liquidity or volatility of any such trading
market. Market prices might also be affected by shares available for future
sale held by certain stockholders who hold freely saleable shares. See "Shares
Eligible for Future Sale."

MARKET PRICES AND DIVIDEND POLICY

Shares of ARS Class A Common Stock were quoted on Nasdaq under the symbol
"AMRD" from the consummation of the ARS Class A Common Stock initial public
offering in June 1995 through February 4, 1997. On February 5, 1997, shares of
ARS Class A Common Stock began trading on the NYSE under the symbol "AFM". The
following table sets forth, for the calendar quarters indicated, the high and
low closing sales prices per share of Class A Common Stock on Nasdaq and the
NYSE for the applicable periods, as reported in published financial sources in
the case of Nasdaq, and thereafter as reported on the NYSE.

HIGH LOW
-------- ---------

1995:
Second Quarter (commencing June 9, 1995).................. $26 $18 1/4
Third Quarter............................................. 29 3/4 23
Fourth Quarter............................................ 28 1/2 19 1/2
1996:
First Quarter............................................. $34 1/2 $25
Second Quarter............................................ 43 1/2 30 1/4
Third Quarter............................................. 43 33
Fourth Quarter............................................ 37 3/4 23 7/8
1997:
First Quarter............................................. $36 1/2 $27
Second Quarter............................................ 39 7/8 25 1/4
Third Quarter............................................. 51 7/8 38 5/16
Fourth Quarter............................................ 53 5/16 47 11/16
1998:
First Quarter (ending February 6, 1998)................... $60 5/8 $52 11/16

On August 19, 1997, the day prior to the announcement by American Radio that
management was exploring ways to maximize stockholder value, the last reported
sale price per share of the ARS Class A Common Stock on the NYSE was $39.125.
On September 18, 1997, the day prior to the announcement by American Radio of
the signing of the Original Merger Agreement with CBS, the last reported sale
price per share of the ARS Class A Common Stock on the NYSE was $51 7/8. On
February 6, 1998, the last reported sale price per share of the ARS Class A
Common Stock on the NYSE was $60 per share. As of January 30, 1998, there were
339 holders of record of the ARS Class A Common Stock.

No established public trading market currently exists for the ATS Class A
Common Stock. As of February 1, 1998, there were 18 holders of record of ATS
Class A Common Stock.

ATS anticipates that it will retain future earnings, if any, to fund the
development and growth of its business and does not anticipate paying cash
dividends on shares of ATS Common Stock in the foreseeable future. In
addition, each Tower Operating Subsidiary is and will be restricted under the
Tower Loan Agreement from paying dividends on the stock (distributions to its
partners, in the case of ATSLP) and repurchasing, redeeming or otherwise
acquiring any shares of ATS Common Stock. Since ATS has no significant assets
other than its ownership of all of the capital stock of ATSI, its ability to
pay dividends to its stockholders in the foreseeable future is restricted. See
"Description of American Tower Systems Capital Stock--Dividend Restrictions"
and "Management's Discussion and Analysis of Financial Condition and Results
of Operations of American Tower Systems--Liquidity and Capital Resources".

AMERICAN TOWER SYSTEMS CAPITALIZATION

Prior to the consummation of the Merger (or the Tower Merger), American
Tower Systems will have been operated as part of American Radio. The following
table sets forth the capitalization of American Tower Systems as of September
30, 1997, and as adjusted to give effect to (a) the ATS Pro Forma Transactions
and (b) the Merger and the related transactions (including the Tower
Separation), and events described in the notes hereto as if all of the
foregoing had been consummated on September 30, 1997. See Notes to the
Unaudited Pro Forma Condensed Consolidated Balance Sheet of American Tower
Systems included in this Prospectus, and "The Merger and Tower Separation--ATS
Stock Purchase Agreement".

Management believes that the assumptions used provide a reasonable basis on
which to present such capitalization. The capitalization table below should be
read in conjunction with the historical financial statements of ATS included
elsewhere in this Prospectus, "Management's Discussion and Analysis of
Financial Condition and Results of Operations of American Tower Systems" and
"Unaudited Pro Forma Condensed Consolidated Financial Statements of American
Tower Systems". The capitalization table below is provided for informational
purposes only and (i) should not be construed to be indicative of ATS'
capitalization or financial condition had the transactions and events referred
to above been consummated on the date assumed, (ii) may not reflect the
capitalization or financial condition which would have resulted had ATS been
operated as a separate, independent company during such period, and (iii) is
not necessarily indicative of ATS' future capitalization or financial
condition.

SEPTEMBER 30, 1997
--------------------
HISTORICAL PRO FORMA
---------- ---------
(IN THOUSANDS)

Cash and cash equivalents................................. $ 2,295 $ 2,759
======== ========
Long term debt, including current portion(1)(2)
Borrowings under the Tower Loan Agreement............... $ 52,500 $171,317
Other long-term debt.................................... 1,703 1,703
-------- --------
Total long-term debt................................ 54,203 173,020
-------- --------
Stockholders' equity(1)(3)
Preferred Stock......................................... -- --
Common Stock(4):
Common Stock........................................... -- --
Class A Common Stock................................... -- 660
Class B Common Stock................................... -- 91
Class C Common Stock................................... -- 33
Additional paid-in capital................................ 51,403 608,882
Accumulated deficit....................................... (1,298) (1,298)
-------- --------
Total stockholders' equity.............................. 50,105 608,368
-------- --------
Total capitalization.................................... $104,308 $781,388
======== ========

- --------
(1) For additional information, see "Unaudited Pro Forma Condensed
Consolidated Financial Statements of American Tower Systems" and
"Management's Discussion and Analysis of Financial Condition and Results
of Operations of American Tower Systems--Liquidity and Capital Resources".
(2) See Notes to Consolidated Financial Statements of American Tower Systems
for additional information regarding the components and terms of ATS'
long-term debt. Approximately $150.0 million of additional long-term debt
borrowings are expected to be required (on a net basis) to finance the
Recent Transactions not included in the ATS Pro Forma Transactions.
(3) Consists, on a pro forma basis, of (a) Preferred Stock, par value $.01 per
share, authorized, 20,000,000 shares, none issued or outstanding; (b) ATS
Class A Common Stock, par value $.01 per share, authorized 200,000,000
shares; shares issued and outstanding: 3,000 (historical) and 66,021,279
(pro forma); (c) ATS

Class B Common Stock, par value $.01 per share, 50,000,000 authorized
shares; shares issued and outstanding: none (historical) and 9,054,454 (pro
forma); and (d) ATS Class C Common Stock, par value $.01 per share,
10,000,000 authorized shares; shares issued and outstanding: none
(historical) and 3,295,518 (pro forma).
(4) The number of outstanding shares does not include, except as otherwise
indicated: (a) shares of ATS Class A Common Stock issuable upon conversion
of ATS Class B Common Stock or ATS Class C Common Stock, or (b) shares
issuable upon exercise of options currently outstanding to purchase an
aggregate of 3,895,300 shares of ATS Common Stock, (of which 2,695,300 are
purchasable at $10.00 per share and 1,200,000 are purchaseable at $13.00
per share), all of which become exercisable, on a cumulative basis, at the
rate of 20% per year, commencing one year from the date of original grant,
or (c) shares of ATS Common Stock issuable upon the exchange of options to
purchase an aggregate of (i) 682,000 shares of Common Stock of ATSI, at
prices ranging from $5.00 to $8.00, which will be exchanged for options to
purchase 938,713 shares of ATS Common Stock, at prices ranging from $3.61
to $5.77, or (ii) 803,916 shares of ARS Common Stock, at prices ranging
from $6.375 to $28.25, which assumes that all options of employees of ATS
will be exchanged (based on assumed relative values of the ARS Common
Stock and ATS Common Stock of $54.00 per share and $10.00 per share,
respectively) for options to purchase 4,341,146 shares of ATS Common
Stock, at prices ranging from $1.18 to $5.23, or (iii) 6,500 shares of ATC
Common Stock, at prices ranging from $100.00 to $475.00, which will be
exchanged for options to purchase 1,295,208 shares of ATS Common Stock, at
prices ranging from $0.50 to $2.38. The number of outstanding shares does,
however, include the 8,000,000 shares issued in connection with the ATS
Stock Purchase Agreement. See the Notes to Consolidated Financial
Statements of American Tower Systems, "Business of American Tower
Systems--Recent Transactions" and "The Merger and Tower Separation--
Certain Other Covenants--ARS Options" and "--ATS Stock Purchase
Agreement".

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OF AMERICAN TOWER SYSTEMS

The following unaudited pro forma condensed consolidated financial
statements of American Tower Systems consist of an unaudited pro forma
condensed consolidated balance sheet as of September 30, 1997 and unaudited
pro forma condensed consolidated statements of operations for the year ended
December 31, 1996 and for the nine months ended September 30, 1997, adjusted
for the ATS Pro Forma Transactions and the Merger, as if such transactions had
been consummated on January 1, 1996. With respect to acquisitions, the pro
forma statements give effect only to the ATS Pro Forma Transactions based on
their significance in relation to all of ATS' acquisitions. The unaudited pro
forma condensed consolidated balance sheet and the unaudited pro forma
condensed consolidated statements of operations should be read in conjunction
with American Tower Systems' consolidated financial statements and notes
thereto, as well as the financial statements and notes thereto of certain
businesses that have been or may be acquired, which are included elsewhere in
this Prospectus. The unaudited pro forma condensed consolidated balance sheet
and the unaudited pro forma condensed consolidated statements of operations
are not necessarily indicative of the financial condition or the results of
operations that would have been reported had such events actually occurred on
the date specified, nor are they indicative of ATS' future results of
operations or of the financial condition or the results of operations which
would have resulted had ATS been operated as a separate, independent company
during such periods, and are not necessarily indicative of ATS' future
financial conditions or results of operations.

In reviewing the unaudited pro forma condensed consolidated financial
statements set forth below, in addition to the assumptions and other matters
noted in the above paragraph and in the notes to the unaudited pro forma
condensed consolidated financial statements, it should be noted that estimated
incremental costs that will be incurred because ATS is an independent company
have been reflected in the pro forma adjustments. However, there can be no
assurance that actual incremental costs for such independent operation will
not exceed such estimated amounts.

AMERICAN TOWER SYSTEMS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 1997
(IN THOUSANDS)

PRO FORMA
HISTORICAL ADJUSTMENTS(A) PRO FORMA
---------- -------------- ---------

ASSETS
Cash and cash equivalents................. $ 2,295 $ 464 $ 2,759
Accounts receivable, net.................. 1,560 976 2,536
Other current assets...................... 710 965 1,675
Notes receivable.......................... 260 260
Property and equipment, net............... 43,941 184,082 228,023
Intangible assets, net.................... 59,819 527,794 587,613
Investment in affiliate................... 322 322
Deposits and other assets................. 2,433 (2,000) 433
-------- -------- --------
Total................................... $111,340 $712,281 $823,621
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities, excluding current
portion of long-term debt................ $ 5,145 $ 5,371 $ 10,516
Deferred income taxes..................... 1,084 29,657 30,741
Other long-term liabilities............... 29 173 202
Long-term debt, including current por-
tion..................................... 54,203 118,817 173,020
Minority interest......................... 774 774
Stockholders' equity...................... 50,105 558,263 608,368
-------- -------- --------
Total................................... $111,340 $712,281 $823,621
======== ======== ========

See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet of
American Tower Systems.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

The unaudited pro forma condensed consolidated balance sheet as of September
30, 1997 gives effect to the Diablo Transaction, the MicroNet Transaction, the
Tucson Transaction, the Gearon Transaction and the ATC Merger (collectively,
with the Meridian Transaction, the transfer of towers from ARS to ATS, and the
consummation of the transactions contemplated by the ATS Stock Purchase
Agreement, the "ATS Pro Forma Transactions") and the Merger, including the
Tower Separation, as if each of the foregoing had occurred on September 30,
1997. See "Business of American Tower Systems--Recent Transactions" for a
description of each of the transactions included in the ATS Pro Forma
Transactions.

(a) The following table sets forth the pro forma balance sheet adjustments
for the ATS Pro Forma Transactions as of September 30, 1997. (In thousands).

TRANSFER TOWER ATS STOCK
DIABLO MICRONET TUCSON GEARON ATC OF SEPARATION PURCHASE
TRANSACTION TRANSACTION TRANSACTION TRANSACTION MERGER TOWERS TAX AGREEMENT TOTAL
----------- ----------- ----------- ----------- -------- -------- ---------- --------- --------

ASSETS
Cash and cash
equivalents........... $ 464 $ 464
Accounts receivable,
net................... 976 976
Other current assets... 965 965
Property and equipment,
net................... $18,215 $40,000 $ 4,700 $ 5,000 112,000 $4,167 184,082
Intangible assets,
net................... 26,785 30,250 7,300 75,000 388,459 527,794
Deposits and other
assets................ (2,000) (2,000)
------- ------- ------- ------- -------- ------ -------- -------- --------
Total................. $43,000 $70,250 $12,000 $80,000 $502,864 $4,167 $ -- $ -- $712,281
======= ======= ======= ======= ======== ====== ======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities,
excluding current
portion of long-term
debt.................. $ 5,371 $ 5,371
Deferred income taxes.. 116,257 $(86,600) 29,657
Other long-term
liabilities........... 173 173
Long-term debt,
including current
portion............... $ 2,500 $29,750 $26,400 72,967 66,600 $(79,400) 118,817
Stockholders' equity... 40,500 40,500 $12,000 53,600 308,096 $4,167 20,000 79,400 558,263
------- ------- ------- ------- -------- ------ -------- -------- --------
Total................. $43,000 $70,250 $12,000 $80,000 $502,864 $4,167 $ -- $ -- $712,281
======= ======= ======= ======= ======== ====== ======== ======== ========

The Diablo Transaction, MicroNet Transaction, Tucson Transaction, Gearon
Transaction and the ATC Merger will be accounted for under the purchase method
of accounting. The anticipated purchase price of each transaction has been
allocated among the assets acquired based upon preliminary appraisals of those
assets' fair values. With the exception of the ATC Merger, working capital of
the acquired companies was not transferred to ATS.

The following table describes the financing of the transactions described
above. In connection with certain of these transactions, ARS consummated the
transactions directly using borrowings against their line of credit and
subsequently contributed the assets (at ARS' cost) to ATS.

BORROWINGS BY
AND
PURCHASE BORROWINGS BY CONTRIBUTIONS COMMON STOCK
PRICE ATS FROM ARS ISSUED BY ATS
-------- ------------- ------------- -------------
(IN THOUSANDS)

Diablo Transaction........... $ 45,000 $ 2,500 $40,500
MicroNet Transaction......... 70,250 29,750 40,500
Tucson Transaction........... 12,000 12,000
Gearon Transaction........... 80,000 26,400 5,600 $ 48,000
ATC Merger................... 500,459 72,967 308,096

In addition, in connection with the ATC Merger, a deferred tax liability of
$116.3 million will be established for the differences in bases for book and
tax purposes resulting from the transaction. The working capital deficiency of
ATC at September 30, 1997 ($3.1 million) has also been recorded as a pro forma
adjustment.

The Transfer of Towers from ARS to ATS will be recorded at the historical
depreciated net book value of such towers on the books of ARS on the date of
transfer.

As a result of the Tower Separation, ATS will be required to bear an
estimated $66.6 million of income tax liabilities (net of $20.0 million to be
borne by ARS pursuant to the provisions of the Merger Agreement.) In addition,
the tax bases of ATS' assets will be increased as a result of the separation;
a deferred tax asset of $86.6 million has been recorded for such increase. The
estimated tax liability of $66.6 million is based on an assumed fair market
value of the ATS Common Stock of $10.00 per share, which is the price at which
shares were issued pursuant to the consummation of the transactions
contemplated by the ATS Stock Purchase Agreement. Such estimated tax liability
would increase or decrease by approximately $14.8 million for each $1.00 per
share increase or decrease in the fair market value of the ATS Common Stock.

The issuance of ATS Common Stock pursuant to the ATS Stock Purchase
Agreement for an aggregate of $80.0 million, $79.4 million net of expenses (of
which approximately $49.4 million was paid in the form of secured notes due
upon consummation of the Merger and the balance in cash).

ATS expects to issue a total of 43,132,691 shares of Common Stock to effect
all of the transactions described above. The following shares will be issued
pursuant to the Gearon Transaction (5,333,333), the ATC Merger (29,799,358),
and the ATS Stock Purchase Agreement (8,000,000).

No adjustment has been included in the pro forma information with respect to
certain adjustment provisions in the Merger Agreement related to the Working
Capital and Debt Amount (each as defined in the Merger Agreement) of ARS at
the time of consummation of the Merger because ARS currently estimates that
the payment, if any, which would be required to be paid or to be received by
ATS would not be material.

The ATS Pro Forma Transactions referred to above do not constitute all of
the Recent Transactions. Since January 1, 1997, ATS has consummated more than
15 acquisitions (four of which are included in the ATS Pro Forma Transactions)
involving more than 525 sites, including sites on which towers are to be
constructed (of which approximately 285 are represented by the ATS Pro Forma
Transactions referred to above), in a variety of regions for an aggregate
purchase price of approximately $290.0 million (of which approximately $207.3
million was represented by the ATS Pro Forma Transactions referred to above).
ATS is a party to two pending transactions, one of which (the ATC Merger) is
included in the ATS Pro Forma Transactions and one of which (the acquisition
of the assets relating to a teleport serving the Washington, D.C. area for
approximately $30.5 million) is not. See "Business of American Tower Systems--
Recent Transactions".

AMERICAN TOWER SYSTEMS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)

PRO FORMA
HISTORICAL ADJUSTMENTS(A) PRO FORMA
---------- -------------- ---------

Net revenues.............................. $2,897 $ 62,976 $ 65,873
Operating expenses........................ 1,362 36,271 37,633
Depreciation and amortization............. 990 48,916 49,906
Corporate general and administrative ex-
penses................................... 830 2,000 2,830
------ -------- --------
Operating loss............................ (285) (24,211) (24,496)
Other (income) expense:
Interest expense, net................... 11,726 11,726
Other (income) expense.................. (36) (36)
Minority interest in net earnings of
subsidiary............................. 185 185
------ -------- --------
Total other (income) expense.......... 149 11,726 11,875
------ -------- --------
Loss before income taxes.................. (434) (35,937) (36,371)
Provision (benefit) for income taxes...... 46 (9,165)(b) (9,119)
------ -------- --------
Net loss.................................. $ (480) $(26,772) $(27,252)
====== ======== ========
Net loss per common share................. $(0.01) $ (0.34)
====== ========
Pro forma common shares outstanding(c).... 36,042 43,133 79,175
====== ======== ========

See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
of American Tower Systems.

NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS

The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 1996 gives effect to the ATS Pro Forma
Transactions and the Merger as if each of the foregoing had occurred on
January 1, 1996.

(a) To record the results of operations for the ATS Pro Forma Transactions.
The results of operations have been adjusted to: (i) reverse historical
interest expense of $4.2 million; (ii) record interest expense of $11.7
million for the year ended December 31, 1996, as a result of approximately
$128.4 million of additional net debt to be incurred in connection with the
ATS Pro Forma Transactions and payment of the estimated tax liability
attributable to the Tower Separation of approximately $66.6 million (net of
the $20.0 million to be borne by ARS pursuant to the provisions of the Merger
Agreement), after giving effect to (x) capital contributions by ARS of $146.1
million, representing the difference between the aggregate amount invested by
ARS in ATS at January 1, 1996 of $3.9 million and the maximum amount ($150.0
million) permitted by the Merger Agreement, and (y) the proceeds from the
issuance of ATS Common Stock pursuant to the ATS Stock Purchase Agreement for
an aggregate purchase price of $80.0 million, $79.4 million net of expenses
(of which approximately $49.4 million was paid in the form of secured notes
which are due upon consummation of the Merger and the balance in cash); and
(iii) the historical depreciated book value of $4.2 million for an aggregate
of 16 towers transferred or to be transferred by American Radio to ATS
representing an additional ARS equity investment in ATS. Each 1/4% change in
the interest rate applicable to the change in floating rate debt would
increase or decrease, as appropriate, the net adjustment to interest expense
by approximately $0.3 million. The estimated tax liability shown in clause (i)
preceding is based on an assumed fair market value of the ATS Common Stock of
$10.00 per share, which is the price at which shares were issued pursuant to
the consummation of the transactions contemplated by the ATS Stock Purchase
Agreement. Such estimated tax liability would increase or decrease by
approximately $14.8 million for each $1.00 per share increase or decrease in
the fair market value of the ATS Common Stock. No adjustment has been included
in the pro forma information with respect to certain adjustment provisions in
the Merger Agreement relating to the Working Capital and Debt Amount (each as
defined in the Merger Agreement) of ARS at the time of the consummation of the
Merger, because ARS estimates that the payment, if any, required by such
provisions to be paid or to be received by ATS will not be material. For
information with respect to such adjustments, see "The Merger and Tower
Separation--Closing Date Adjustments".

The results of operations have also been adjusted to reverse historical
depreciation and amortization expense of $7.7 million for the year ended
December 31, 1996 and record depreciation and amortization expense of $48.7
million for the year ended December 31, 1996 based on estimated allocations of
purchase prices. Depreciation expense for property, plant and equipment
acquired has been determined based on an average life of fifteen years. Costs
of acquired intangible assets for the transactions are amortized over 15
years. The preliminary estimates of the fair value of property, plant and
equipment and intangible assets may change upon final appraisal.

Corporate general and administrative expenses of the prior owners have not
been carried forward into the pro forma condensed financial statements as
these costs represent duplicative facilities and compensation to owners and/or
executives not retained by ATS. Because ATS maintains a separate corporate
headquarters which provides services substantially similar to those
represented by these costs, they are not expected to recur following
acquisition. After giving effect to an estimated $2.0 million of incremental
costs, ATS believes that it has existing management capacity sufficient to
provide such services without incurring additional incremental costs.

(a) continued

The following table sets forth the historical results of operations for the
ATS Pro Forma Transactions for the year ended December 31, 1996. (In
thousands).

MERIDIAN DIABLO MICRONET TUCSON GEARON ATC TRANSFER PRO FORMA
TRANSACTION TRANSACTION TRANSACTION TRANSACTION TRANSACTION MERGER OF TOWERS ADJUSTMENTS TOTAL
----------- ----------- ----------- ----------- ----------- ------- --------- ----------- --------

Net revenues....... $4,498 $7,422 $15,058 $1,438 $21,484 $12,366 $ 710 $ 62,976
Operating
expenses.......... 3,218 5,922 9,867 371 13,302 2,849 742 36,271
Depreciation and
amortization...... 416 417 3,936 164 103 2,709 215 $ 40,956 48,916
Corporate general
and
administrative.... 776 2,049 (825) 2,000
------ ------ ------- ------ ------- ------- ----- -------- --------
Operating income
(loss)............ 864 307 1,255 903 8,079 4,759 (247) (40,131) (24,211)
Other (income)
expense...........
Interest expense,
net............. 70 81 213 3,808 8,536 12,708
Other expense
(income)........ 294 (43) (19) (95) 150 (287)
------ ------ ------- ------ ------- ------- ----- -------- --------
Income (loss) from
operations before
income taxes...... $ 794 $ (68) $ 1,298 $ 709 $ 8,174 $ 801 $(247) $(48,380) $(36,919)
====== ====== ======= ====== ======= ======= ===== ======== ========

(b) To record the tax effect of the pro forma adjustments and impact on ATS'
estimated effective tax rate. The actual effective tax rate may be different
once the final allocation of purchase price is determined.

(c) Consists of shares expected to be issued pursuant to the Tower
Separation (36,042,476, assuming the exercise of all ARS Options prior to the
Merger), the Gearon Transaction (5,333,333), the ATC Merger (29,799,358), and
the ATS Stock Purchase Agreement (8,000,000).

AMERICAN TOWER SYSTEMS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)

PRO FORMA
HISTORICAL ADJUSTMENTS (a) PRO FORMA
---------- --------------- ---------

Net revenues.............................. $ 7,902 $ 58,079 $ 65,981
Operating expenses........................ 3,588 29,598 33,186
Depreciation and amortization............. 2,706 36,167 38,873
Corporate general and administrative ex-
penses................................... 919 1,500 2,419
------- -------- --------
Operating income (loss)................... 689 (9,186) (8,497)
Other (income) expense:
Interest expense, net................... 1,221 8,232 9,453
Other income (expense).................. 3 3
Minority interest in net earnings of
subsidiary............................. 221 221
------- -------- --------
Total other (income) expense.......... 1,445 8,232 9,677
------- -------- --------
Income (loss) before income taxes......... (756) (17,418) (18,174)
Provision (benefit) for income taxes...... (49) (3,149)(b) (3,198)
------- -------- --------
Net income (loss)......................... $ (707) $(14,269) $(14,976)
======= ======== ========
Net loss per common share................. $ (0.02) $ (0.19)
======= ========
Pro forma common shares outstanding(c).... 36,042 43,133 79,175
======= ======== ========

See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
of American Tower Systems.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

The unaudited pro forma condensed consolidated statement of operations for
the nine months ended September 30, 1997 gives effect to the ATS Pro Forma
Transactions and the Merger as if each of the foregoing had occurred on
January 1, 1997.

(a) To record the results of operations for the ATS Pro Forma Transactions.
The results of operations have been adjusted to: (i) reverse historical
interest expense of $4.2 million; (ii) record interest expense of $8.2 million
for the nine months ended September 30, 1997, as a result of approximately
$118.8 million of additional net debt to be incurred in connection with the
ATS Pro Forma Transactions and payment of the estimated tax liability
attributable to the Tower Separation of approximately $66.6 million (net of
the $20.0 million to be borne by ARS pursuant to the provisions of the Merger
Agreement), after giving effect to (x) capital contributions by ARS of $98.6
million, representing the difference between the aggregate amount invested by
ARS in ATS at September 30, 1997 of $51.4 million and the maximum amount
($150.0 million) permitted by the Merger Agreement, and (y) the proceeds from
the issuance of ATS Common Stock pursuant to the ATS Stock Purchase Agreement
for an aggregate purchase price of $80.0 million, $79.4 million net of
expenses (of which approximately $49.4 million was paid in the form of secured
notes which are due upon consummation of the Merger and the balance in cash);
and (iii) the historical depreciated book value of $4.2 million for an
aggregate of 16 towers transferred or to be transferred by American Radio to
ATS representing an additional ARS equity investment in ATS. Each 1/4% change
in the interest rate applicable to the change in floating rate debt would
increase or decrease, as appropriate, the net adjustment to interest expense
by approximately $0.2 million. The estimated tax liability shown in clause (i)
preceding is based on an assumed fair market value of the ATS Common Stock or
$10.00 per share, which was the price at which shares were issued pursuant to
the consummation of the transactions contemplated by the ATS Stock Purchase
Agreement. Such estimated tax liability would increase or decrease by
approximately $14.8 million for each $1.00 per share increase or decrease in
the fair market value of the ATS Common Stock. No adjustment has been included
in the pro forma information to certain adjustment provisions in the Merger
Agreement relating to the Working Capital and Debt Amount (each as defined in
the Merger Agreement) of ARS at the time of the consummation of the Merger,
because ARS estimates that the payment, if any, required to be paid or to be
received by ATS will not be material. For information with respect to such
adjustments, see "The Merger and Tower Separation--Closing Date Adjustments".

The results of operations have also been adjusted to reverse historical
depreciation and amortization expense of $6.8 million for the nine months
ended September 30, 1997 and record depreciation and amortization expense of
$36.0 million for the nine months ended September 30, 1997 based on estimated
allocations of purchase prices. Depreciation expense for property, plant and
equipment acquired has been determined based on an average life of fifteen
years. Costs of acquired intangible assets for the transaction are amortized
over 15 years. The preliminary estimates of the fair value of property, plant
and equipment and intangible assets may change upon final appraisal.

Corporate general and administrative expenses of the prior owners have not
been carried forward into the pro forma condensed financial statements as
these costs represent duplicative facilities and compensation to owners and/or
executives not retained by ATS. Because ATS maintains a separate corporate
headquarters which provides services substantially similar to those
represented by these costs, they are not expected to recur following
acquisition. After giving effect to an estimated $1.5 million of incremental
costs, ATS believes that it has existing management capacity sufficient to
provide such services without incurring additional incremental costs.

(a) continued

The following table sets forth the historical results of operations for the
ATS Pro Forma Transactions for the periods in which they were not owned by
American Radio for the nine months ended September 30, 1997. (In thousands).

MERIDIAN DIABLO MICRONET TUCSON GEARON ATC TRANSFER OF PRO FORMA
TRANSACTION TRANSACTION TRANSACTION TRANSACTION TRANSACTION MERGER TOWERS ADJUSTMENTS TOTAL
----------- ----------- ----------- ----------- ----------- ------- ----------- ----------- --------

Net revenues..... $2,385 $6,930 $13,477 $1,201 $19,062 $14,491 $ 533 $ 58,079
Operating
expenses........ 1,730 3,309 7,900 255 12,922 2,924 558 29,598
Depreciation and
amortization.... 211 393 2,638 123 111 3,369 162 $ 29,160 36,167
Corporate general
and
administrative.. 1,802 88 2,347 (2,737) 1,500
------ ------ ------- ------ ------- ------- ----- -------- --------
Operating income
(loss).......... 444 1,426 2,939 735 6,029 5,851 (187) (26,423) (9,186)
Interest expense,
net............. 80 110 150 3,900 4,782 9,022
Other expense
(income)........ (30) (7) (65) 213 (111)
------ ------ ------- ------ ------- ------- ----- -------- --------
Income (loss)
from operations
before income
taxes........... $ 364 $1,316 $ 2,969 $ 592 $ 6,094 $ 1,738 $(187) $(31,094) $(18,208)
====== ====== ======= ====== ======= ======= ===== ======== ========

(c) Consists of shares issued or expected to be issued pursuant to the Tower
Separation (36,042,476, assuming the exercise of all ARS Options prior to the
Merger), the Gearon Transaction (5,333,333), the ATC Merger (29,799,358) and
the ATS Stock Purchase Agreement (8,000,000).

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF AMERICAN TOWER SYSTEMS

GENERAL

This discussion contains "forward-looking statements" including statements
concerning projections, plans, objectives, future events or performance and
underlying assumptions and other statements which are other than statements of
historical fact. ATS wishes to caution readers that certain important factors
may have affected and could in the future affect ATS' actual results and could
cause ATS' actual results for subsequent periods to differ materially from
those expressed in any forward-looking statement made by or on behalf of ATS.
These important factors include among others, the risk factors set forth
herein under "Risk Factors--Risk Factors Relating to American Tower Systems".
The discussion should be read in conjunction with the American Tower Systems
Consolidated Financial Statements and the notes thereto contained elsewhere in
this Prospectus. As ATS was a wholly-owned subsidiary of American Radio during
the periods presented, the consolidated financial statements may not reflect
the results of operations or financial position of ATS had it been an
independent, public company during the periods. Because of ATS' relatively
brief operating history and the large number of recent acquisitions, the
following discussion, while presented to satisfy certain SEC disclosure
requirements, will not necessarily reveal any significant developing or
continuing trends. See "Business of American Tower Systems--Growth Strategy".

ATS was formed in July 1995 to capitalize on the opportunity in the
communications site industry. ATS is a leading independent owner and operator
of wireless communications towers in the United States. On a pro forma basis,
ATS currently owns and operates in excess of 1,580 towers in 39 states and the
District of Columbia, including approximately 510 towers managed for third
party owners (of which approximately 255 are rooftop towers). ATS' rapid
growth has come from numerous strategic acquisitions during 1996 and 1997.
During 1996, ATS acquired approximately ten communications sites and site
management businesses involving approximately 250 sites for an aggregate
purchase price of approximately $21.0 million. Through September 1997, its
acquisition activity accelerated and ATS acquired approximately 360 sites (and
related site management businesses) for an aggregate purchase price of
approximately $62.8 million.

RESULTS OF OPERATIONS

Management expects that acquisitions consummated to date and the major
acquisition now pending (the ATC Merger) will have a material impact on future
revenues, expenses and income from continuing operations. As indicated in the
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 1996 and the nine months ended September 30, 1997,
there is a dramatic difference between the historical results and the pro
forma results for each of the foregoing items. The notes to the Unaudited Pro
Forma Condensed Consolidated Statement of Operations for the year ended
December 31, 1996 and the nine months ended September 30, 1997 indicate the
effect of certain of the acquisitions, both consummated and pending, and their
impact on revenues, expenses and income from continuing operations. In that
connection, the increase in operating expenses and, to a greater extent,
depreciation and amortization, each as a percentage of net revenues in the pro
forma information compared to the historical information, should be noted. The
effects shown do include all of the ATS Pro Forma Transactions which, as
explained elsewhere herein, do not constitute all of the Recent Transactions.
See "Business of American Tower Systems--Recent Transactions". Since January
1, 1997, ATS has consummated more than 15 acquisitions involving more than 525
communications sites (of which approximately 340 sites are represented by the
ATS Pro Forma Transactions that have been consummated and approximately 60 are
sites on which towers are to be built), in a variety of regions for an
aggregate purchase price of approximately $290.0 million (of which
approximately $240.5 million is represented by ATS Pro Forma Transactions
which have been consummated). In addition, the ATC Merger (which is included
in the ATS Pro Forma Transactions) will represent the acquisition of not less
than an additional 775 communications sites for approximately 35% of the pro
forma ATS Common Stock. Accordingly, the impact of the Recent Transactions
which are not included in the pro forma financial information on revenues,
expenses and income from continuing operations, when compared to those that
are so included, is not likely to prove material. Finally, the impact of

the construction program of ATS is not reflected to any significant extent in
the pro forma information because most of that activity is of more recent
origin and is expected to accelerate in 1998. Management believes that such
activity will have a material effect on future operations, which effect, in
the initial years, will probably be negative until such time, if ever, as the
newly constructed towers approach full or close to full utilization.
Management believes that ARS common stockholders should be aware of the
dramatic changes in the nature and scope of ATS' business in reviewing the
ensuing discussion of comparative historical results.

NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (DOLLARS IN THOUSANDS)

As of September 30, 1997, ATS owned and/or operated approximately 370
wireless communications sites principally in the Northeast and Mid-Atlantic
regions, Florida and California. As of September 30, 1996, ATS owned and/or
operated approximately 250 wireless communications sites, principally in the
Northeast and Mid-Atlantic regions and Florida. See the Notes to the
Consolidated Financial Statements of American Tower Systems for a description
of the acquisitions consummated in 1997 and 1996. These transactions have
significantly affected operations for the nine months ended September 30, 1997
as compared to the nine months ended September 30, 1996.

Net revenues were $7,902 for the nine months ended September 30, 1997
compared to $1,858 for the same nine months in 1996, an increase of $6,044 or
325.3%. This increase was attributable to the impact of communications sites
and related business acquisitions that occurred in the first nine months of
1997.

Tower lease revenues were $4,803 or 60.8% of net revenues for the nine
months ended September 30, 1997 compared to $1,057 or 56.9% of net revenues
for the same nine months in 1996; an increase of $3,746. This increase was
attributable to revenue growth from the communications site acquisitions that
occurred in the first nine months of 1997.

Sublease revenues were $702 or 8.9% of net revenues for the nine months
ended September 30, 1997 compared to $296 or 15.9% of net revenues for the
same period in 1996; an increase of $406. This increase was due to the impact
of revenue growth from the communications site acquisitions that occurred in
the first nine months of 1997.

Management fee revenues were $621 or 7.9% of net revenues for the nine
months ended September 30, 1997 compared to $362 or 19.5% of net revenues for
the same nine months in 1996; an increase of $259. The increase is due to the
increased number of site management agreements ATS assumed in connection with
the communications site acquisitions that occurred in the first nine months of
1997.

Consulting revenues from site acquisition services were $1,436 or 18.2% of
net revenues for the nine months ended September 30, 1997. The revenues are
attributable to the acquisition of a company in May of 1997, which performs
site acquisition professional services to customers in the wireless
communications industry.

Operating expenses excluding depreciation and amortization and corporate
general and administrative expenses were $3,588 for the nine months ended
September 30, 1997 compared to $1,066 for the same period in 1996, an increase
of $2,522. This increase was due to the impact of increased costs associated
with ATS' acquisitions.

Depreciation and amortization was $2,706 and $614 for the nine months ended
September 30, 1997 and 1996, respectively, an increase of $2,092. This
increase was primarily attributable to the increase in depreciable and
amortizable assets resulting from the 1996 and 1997 acquisitions, and to a
lesser extent, completed construction projects.

Corporate general and administrative expenses increased to $919 for the nine
months ended September 30, 1997 from $506 for the nine months ended September
30, 1996, an increase of $413 or 81.6%. This increase was primarily
attributable to the higher personnel costs associated with supporting ATS'
greater number of tower properties and growth strategy.

Interest income was $97 for the nine months ended September 30, 1997
compared to $18 for the nine months ended September 30, 1996, an increase of
$79. The increase is attributable to higher investable cash balances and
interest income earned on a note receivable in 1997 as compared to 1996.

Interest expense net of amounts capitalized was $1,318 for the nine months
ended September 30, 1997 compared to $0 for the 1996 period, an increase of
$1,318. The increase is related to higher borrowing levels under the Tower
Loan Agreement in 1997 as compared to 1996. Such borrowings were used to fund
the 1997 acquisitions.

Minority interest in net earnings of subsidiary was $221 for the nine months
ended September 30, 1997 compared to $75 for the 1996 period, an increase of
$146. This represents the elimination of the minority shareholder's earnings
of consolidated subsidiaries. The increase is related to increased overall
earnings of ATS Needham, LLC, in which ATS holds a 50.1% interest.

The income tax benefit for the nine months ended September 30, 1997 was $49
as compared to an income tax provision of $69 for nine months ended September
30, 1996. The effective tax rate for the nine months ended September 30, 1997
was approximately 6% compared to 18% in 1996. The effective rate in 1997 and
1996 is due to the effect of permanent differences, principally amortization
of non-deductible goodwill, on certain stock acquisitions.

The net loss was $707 for the nine months ended September 30, 1997 compared
to $454 for the nine months ended September 30, 1996, as a result of the
factors discussed above.

Tower Cash Flow for the nine months ended September 30, 1997 was $4,314 as
compared to $792 for the nine months ended September 30, 1996, as a result of
the factors discussed above.

EBITDA for the nine months ended September 30, 1997 was $3,395 as compared
to $286 for the nine months ended September 30, 1996, as a result of the
factors discussed above.

YEAR ENDED DECEMBER 31, 1996 AND PERIOD ENDED DECEMBER 31, 1995 (DOLLARS IN
THOUSANDS)

As of December 31, 1996, ATS owned and/or operated approximately 260
wireless communications sites principally in the Northeast and Mid-Atlantic
regions and Florida. As of December 31, 1995, ATS owned and/or operated one
wireless communications site in Florida. See the Notes to the ATS consolidated
financial statements for a description of the acquisitions consummated in
1996. These transactions have significantly affected operations for the year
ended December 31, 1996 as compared to the period from July 17, 1995 (date of
incorporation) to December 31, 1995.

Net revenues were $2,897 for the year ended December 31, 1996 compared to
$163 for period ended December 31, 1995, an increase of $2,734. This increase
was primarily attributable to the impact of the tower site acquisitions that
occurred in 1996.

Tower lease revenues were $1,804 or 62.3% of net revenues for the year ended
December 31, 1996 compared to $163 or 100% of net revenues for the period
ended December 31, 1995; an increase of $1,641. This increase was attributable
to revenue growth from the communications site acquisitions that occurred
during 1996.

Sublease revenues were $468 for the year ended December 31, 1996 compared to
$0 for the period ended December 31, 1995. This increase was attributable to
revenue growth from the communications site acquisitions that occurred during
1996.

Management fee revenues were $467 for the year ended December 31, 1996
compared to $0 for the period ended December 31, 1995. This increase was
attributable to revenue growth from the communications site acquisitions that
occurred during 1996.

Operating expenses excluding depreciation and amortization and corporate
general and administrative expenses were $1,362 for the year ended December
31, 1996 compared to $60 for the 1995 period, an increase of $1,302. This
increase was due to the impact of increased costs associated with ATS'
acquisitions and revenue growth.

Depreciation and amortization was $990 for the year ended December 31, 1996
and $57 for the 1995 period, an increase of $933. This increase was primarily
attributable to the increase in depreciable and amortizable assets resulting
from the 1996 acquisitions.

Corporate general and administrative expenses were $830 for the year ended
December 31, 1996 and $230 for the 1995 period, an increase of $600. This
increase was primarily attributable to the higher personnel costs associated
with supporting ATS' greater number of tower properties.

Interest income was $36 for the year ended December 31, 1996 and $0 for the
1995 period. The increase is attributable to higher investable cash balances
in 1996 as compared to 1995.

Minority interest in net earnings of subsidiary was $185 for the year ended
December 31, 1996. This represents the elimination of the minority
shareholder's earnings of consolidated subsidiaries. ATS purchased its 50.1%
interest in ATS Needham, LLC, in July 1996.

The income tax provision for the year ended December 31, 1996 was $46 as
compared to a benefit for income taxes of $74 for the 1995 period. The
effective tax rate for the year ended December 31, 1996 was approximately 11%
compared to 40% in 1995. The effective rate in 1996 is due to the effect of
permanent differences, principally amortization of non-deductible goodwill on
certain stock acquisitions. The effective tax rate in 1995 was consistent with
the statutory rate.

The net loss was $480 for the year ended December 31, 1996 compared to $110
for the 1995 period, as a result of the factors discussed above.

Tower Cash Flow was $1,535 for the year ended December 31, 1996 as compared
to $103 for the year ended December 31, 1995, as a result of the factors
discussed above.

EBIDTA was $705 for the year ended December 31, 1996 as compared to a
negative $127 for the year ended December 31, 1995, as a result of the factors
discussed above.

LIQUIDITY AND CAPITAL RESOURCES

ATS' liquidity needs arise from its acquisition-related activities, debt
service, working capital, and capital expenditures. Historically, ATS has met
its operational liquidity needs with internally generated funds and has
financed the acquisition of tower related properties, including related
working capital needs, with a combination of contributions from American Radio
and bank borrowings. For the nine months ended September 30, 1997, cash flow
from operating activities was $3.1 million, as compared to $1.0 million for
the nine months ended September 30, 1996. The change is primarily attributable
to working capital investments related to communications site acquisitions and
growth.

Cash flows used for investing activities were $74.3 million for the nine
months ended September 30, 1997. ARS funded substantially all of the ATS
investing activities during 1996.

Cash provided by financing activities was $71.1 million for the nine months
ended September 30, 1997 as compared to $.6 million for the nine months ended
September 30, 1996. The increase in 1997 is due to the impact of borrowings
under the Tower Loan Agreement, offset somewhat by contributions from American
Radio.

Pending Sale of American Radio Operations and Tower Separation: In September
1997, ARS entered into a merger agreement with CBS, pursuant to which a
subsidiary of CBS will merge with and into ARS, each holder

of ARS Common Stock at the Effective Time of the Merger will receive $44.00
per share in cash and, assuming the Tower Merger has not been consummated, a
share of the same class of ATS Common Stock as the share of ARS Common Stock
surrendered, and ARS will become a subsidiary of CBS. As a result of the Tower
Separation, ATS will cease to be a subsidiary of, or otherwise be affiliated
with, ARS and will thereafter operate as an independent publicly held company.
ARS and ATS will enter into certain agreements pursuant to the Merger
Agreement providing for, among other things, the orderly separation of ARS and
ATS, certain closing date adjustments based on ARS' debt levels and working
capital (current assets less defined liabilities), the transfer of lease
obligations to ATS of leased space on certain towers owned or leased by ARS to
ATS, and the allocation of certain tax liabilities between ARS and ATS and
certain indemnification obligations of ATS to ARS. The Tower Separation will
result in a taxable gain to ARS, of which $20.0 million will be borne by ARS,
and the remaining obligation (currently estimated at approximately $66.6
million, based on an assumed value of ATS Common Stock of $10.00 per share)
will be required to be borne by ATS pursuant to the Merger Agreement. The
liability is expected to be paid with borrowings under the Tower Loan
Agreement.

Prior to the Tower Separation, ARS intends to increase its overall
investment in ATS from $51.4 million at September 30, 1997 to $150.0 million
and to contribute tower properties with a net book value of approximately $4.2
million to ATS; 14 of the 16 towers to be so contributed were transferred in
January 1998. In January 1998, ATS issued 8,000,000 shares of ATS Common Stock
at a purchase price of $10.00 per share, for an aggregate purchase price of
$80.0 million, of which an aggregate of 4,487,500 shares of ATS Class B Common
Stock and 450,000 shares of ATS Class A Common Stock were issued in exchange
for an aggregate of $49.375 million of notes secured by ARS Common Stock
having a market value of not less than 175% of the principal amount and
accrued and unpaid interest on such notes. These transactions will increase
ATS' ability to fund acquisitions and meet its liquidity and capital resource
needs.

Credit Agreements: As of September 30, 1997, ATS had approximately $54.2
million of total long-term debt (including the current portion thereof)
outstanding. This included approximately $52.5 million of borrowings
outstanding under ATS' then credit facility and approximately $1.7 million
outstanding under other obligations. As of such date, assuming consummation of
all of the Recent Transactions relating to ATS, the ATS Stock Purchase
Agreement and the Tower Separation, the aggregate principal amount outstanding
under the Tower Loan Agreement would have been approximately $321.3 million.
In October 1997, ATS entered into the Tower Loan Agreement, which replaced the
previously existing credit facility. All amounts outstanding under the
previous facility ($55.0 million) were repaid with proceeds from the Tower
Loan Agreement. The Tower Loan Agreement provides ATS with a $250.0 million
loan commitment based on ATS maintaining certain operational ratios and an
additional $150.0 million loan at the discretion of ATS, which is available
through June 2005. Following the closing of the Tower Loan Agreement and
repayment of amounts outstanding under the previous agreement, ATS incurred an
extraordinary loss in the fourth quarter of 1997 of approximately $1.2 million
which will be recorded net of the applicable income tax benefit, representing
the write-off of deferred financing fees associated with the previous
facility. The terms of the Tower Loan Agreement are discussed in the Notes to
the Consolidated ATS Financial Statements. In January 1998, the Tower Loan
Agreement was amended to reflect the transfer of substantially all of the
assets and business of ATSI (immediately prior to consummation of the Gearon
Transaction) to ATSLP, as a consequence of which ATSI and ATSLP are co-
borrowers and jointly and severally liable under the Tower Loan Agreement and
various subsidiaries of ATS and ATSI have guaranteed all of the obligations of
ATSI and ATSLP under the Tower Loan Agreement. As of the date of this
Prospectus, approximately $132.5 million of borrowings were outstanding under
the Tower Loan Agreement.

In order to finance acquisitions of tower related properties and for general
corporate purposes, ATS has borrowed and expects to continue to borrow under
the Tower Loan Agreement. A substantial portion of ATS' cash flow from
operations is required for debt service. Accordingly, ATS' leverage could make
it vulnerable to a downturn in the operating performance of its tower
properties or in economic conditions.

ATS believes that its cash flows from operations will be sufficient to meet
its debt service requirements for interest and scheduled payments of principal
under the Tower Loan Agreement. If such cash flow is not sufficient

to meet such debt service requirements, ATS may be required to sell equity
securities, refinance its obligations or dispose of one or more of its
properties in order to make such scheduled payments. There can be no assurance
that ATS would be able to effect any of such transactions on favorable terms.

ATS historically has had sufficient cash from its operations to meet its
working capital needs, apart from needs generated by acquisitions and
construction, and believes that it has sufficient financial resources
available to it, including borrowings under the Tower Loan Agreement, to
finance operations for the foreseeable future.

ATS has entered into several merger and acquisition agreements (see the
Notes to the ATS Consolidated Financial Statements). The consummation of
certain of the transactions contemplated by these agreements is subject to,
among other things, the expiration or earlier termination of the HSR Act
waiting period. Unless otherwise noted, ATS intends to effect all of the
Recent Transactions as soon as the necessary approvals are obtained and any
conditions to closing are satisfied. ATS intends to finance the acquisitions
with contributions from American Radio, available cash, borrowings under the
Tower Loan Agreement, and, in certain cases, issuance of equity securities.

ATS made approximately $7.8 million in capital expenditures in the nine
months ended September 30, 1997, principally related to tower construction.
ATS expects capital expenditures in 1998 to be approximately $60.0 million
(exclusive of ATC which plans to construct approximately 125 towers at a cost
of approximately $28.0 million) and of up to $42.0 million to construct
approximately 200 towers as to which ATS has submitted a bid), consisting
principally of tower site construction and ongoing technical improvements. To
the extent that funds generated from operations, or available cash, are
insufficient to finance non-recurring capital expenditures, ATS would seek to
borrow the necessary funds under the Tower Loan Agreement. The availability of
funds under the Tower Loan Agreement is dependent upon ATS being able to meet
certain leverage ratios. Assuming consummation of all of the Recent
Transactions and the Merger, management believes that, in light of current
construction plans and potential acquisitions, ATS will require additional
financing during 1998. Any such financing could take the form of an increase
in the maximum borrowing levels under the Tower Loan Agreement, the issue,
publicly or privately, of debt securities (which could have the effect of
increasing its consolidated leverage ratios) or equity securities (which, in
the case of ATS Common Stock or securities convertible into or exercisable for
ATS Common Stock, would have a dilutive effect on the proportionate ownership
of ATS by its then existing common stockholders). There can be no assurance
that any such financing would be available on favorable terms.

Management expects that the consummated acquisitions, the consummation of
the ATC Merger and current and future construction activities will have a
material impact on liquidity. As indicated in the Unaudited Pro Forma
Condensed Consolidated Balance Sheet for the nine months ended September 30,
1997, and the foregoing discussion there is a substantial difference in the
historical liquidity and pro forma liquidity of ATS. Management believes that
the acquisition activities once integrated will have a favorable impact on
liquidity and will offset the initial effects of the funding requirements.
Management also believes that the construction activities may initially have
an adverse effect on the future liquidity of ATS as newly constructed towers
will initially decrease the overall liquidity of ATS, although as such sites
become more fully operational and achieve higher utilization, they should
generate cash flow and, in the longer term, increase liquidity. Management
intends to plan its construction activities in a manner designed to ensure
that no violations occur in the Tower Loan Agreement. However, in order to
facilitate such construction activity and to avoid any such violation ATS will
require, as noted above, additional financing during 1998. Any such financing
could take the form of an increase in the maximum borrowing levels under the
Tower Loan Agreement, the issue, publicly or privately, of debt securities
(which could have the effect of increasing its consolidated leverage ratios)
or equity securities (which, in the case of ATS Common Stock or securities
convertible into or exercisable for ATS Common Stock, would have a dilutive
effect on the proportionate ownership of ATS by its then existing common
stockholders). There can be no assurance that any such financing would be
available on favorable terms.

See the Notes to the ATS Consolidated Financial Statements with respect to
acquisition and related construction commitments.

YEAR 2000

ATS is aware of the issues associated with the Year 2000 as it relates to
information systems. The Year 2000 is not expected to have a material impact
on ATS' current information systems because current software is either already
Year 2000 compliant or required changes are not expected to be material. Based
on the nature of ATS' business, ATS anticipates it is not likely to experience
material business interruption due to the impact of Year 2000 compliance on
its customers and vendors. As a result, ATS does not anticipate that
incremental expenditures to address Year 2000 compliance will be material to
ATS' liquidity, financial position or results of operations over the next few
years.

INFLATION

The impact of inflation on ATS' operations has not been significant to date.
However, there can be no assurance that a high rate of inflation in the future
will not have material adverse effect on ATS' operating results.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 1997, the Financial Accounting Standards Board ("FASB") released
Statement of Financial Accounting Standards (FAS) No. 128, "Earnings Per
Share" ("FAS 128"), which ATS will adopt in the fourth quarter of 1997.

In June 1997, the FASB released FAS No. 130 "Reporting Comprehensive Income"
("FAS 130"), and FAS No. 131 "Disclosures about Segments of and Enterprise and
Related Information" ("FAS 131"). These pronouncements will be effective in
1998. FAS 130 establishes standards for reporting comprehensive income items
and will require ATS to provide a separate statement of comprehensive income;
reported financial statement amounts will not be affected by this adoption.
FAS 131 established standards for reporting information about the operating
segments in its annual report and interim reports and will require ATS to
adopt this standard in the first quarter of 1998.

INDUSTRY OVERVIEW

Communications site owners and operators have benefited in recent years from
a substantial increase in demand for wireless communications services. The
CTIA estimates that the number of subscribers to wireless telephone services
was approximately five million in 1990. According to The Strategis Group, a
telecommunications marketing research firm, the number of subscribers to
cellular and PCS is over 50 million today, and is projected to increase to
over 100 million by the year 2001. This demand has prompted the issuance of
new wireless network licenses and construction of new wireless networks. ATS
believes that the increase in demand for wireless communications is
attributable to a number of factors, including: the increasing mobility of the
U.S. population and the growing awareness of the benefits of mobile
communications, technological advances in communications equipment, decreasing
costs of wireless services, favorable changes in telecommunications
regulations, and business and consumer preferences for higher quality voice
and data transmission. Consequently, more towers will be required to
accommodate the anticipated increase in the demand for higher frequency
technologies (such as PCS and ESMR) which have a reduced cell range and thus
require a more dense network, or "footprint", of towers. PCIA estimates that
over 100,000 additional antennae sites will have to be built to accomodate the
needs of cellular and PCS over the next ten years.

ATS believes that, as the wireless industry has become more competitive,
many carriers are seeking to focus their capital and operation resources
primarily on activities that contribute directly to subscriber growth, such as
the marketing and distribution of products. Management believes that these
carriers, therefore, may seek to preserve capital and speed access to their
markets through the outsourcing of infrastructure requirements such as
communications site ownership, construction, operation and maintenance. Also,
in order to accelerate network deployment or expansion and to generate
efficiencies, carriers are increasingly co-locating transmission
infrastructure with that of other network operators. The need for co-location
has also been driven by regulatory restrictions and the growing trend in local
municipalities to slow the proliferation of towers in their communities by
requiring that towers accommodate multiple tenants.

While the wireless communications industry is experiencing rapid growth, the
television broadcasting industry, with strong encouragement from both Congress
and the FCC, is actively planning its strategy for the transition from analog
to digital technology. ATS believes that this transition will require a
substantial investment in enhanced broadcast infrastructure, including the
construction or reengineering of broadcast towers. While ATS expects much of
the associated capital requirements will be borne by the broadcasters,
management believes that a significant opportunity exists to invest profitably
in the creation of tower capacity designed to accommodate digital antennas for
television broadcasters. Management believes that, as with the deployment of
towers for the wireless carriers, speed to market and limited capital
resources will cause certain broadcasters to outsource the construction or
reengineering of their towers in order to accommodate digital technology.

The attractiveness of a communications site is dependent on its location and
the loaded capacity at certain wind speeds of its towers, which determine its
desirability to wireless carriers and the number of antennae that its towers
can support. Virtually all forms of wireless communications depend upon
placing transmitting and receiving antennae at some level of altitude, the
height depending on whether the site is elevated above sea level or not and
what is in the surrounding area. A transmitter's height on a tower and such
tower's location determine the line-of-sight of such transmitter with the
horizon and, consequently, the distance a signal can be transmitted. Some
users, such as paging companies and specialized mobile radio ("SMR") providers
in rural areas, need higher elevations for broader coverage. Other businesses
such as ESMR, PCS and cellular companies in metropolitan areas usually do not
need to place their equipment at the highest tower point to maximize
transmission distance and quality.

A tower can be either self-supported or supported by guy wires. There are
two types of self-supported towers: the lattice and the monopole. A lattice
model is usually tapered from the bottom up and can have three or four legs. A
monopole is a tubular structure that is typically used as a single purpose
tower or in places where there are space constraints or a need to address
aesthetic concerns. Self-supported towers typically range in height from 50-
200 feet for monopoles and up to 1,000 feet for lattices, while guyed towers
can reach 2,000 feet or

more. A typical communications site consists of a compound enclosing the tower
or towers and an equipment shelter (which houses a variety of transmitting,
receiving and switching equipment).

Rooftop or other building top sites are more common in urban downtown areas
where tall buildings are generally available and multiple communications sites
are required due to high traffic density. One advantage of a rooftop site is
that zoning regulations typically permit installation of antennae. In cases of
such population density, neither height nor extended radius of coverage are as
important. Moreover, the installation of a tower structure in urban areas will
often prove to be impossible due to zoning restrictions, land cost and land
availability.

The cost of construction of a tower varies both by site location (which will
determine, among other things, the required height of the tower) and type of
tower. Non-broadcast towers (whether on a rooftop or the ground) generally
cost between approximately $150,000 and $200,000, while broadcasting towers
(which generally are built to bear a greater load) generally cost between
approximately $300,000 and $1.0 million if on an elevated location and between
approximately $1.0 million and $3.5 million if on flat terrain. While the
number of tenants which a tower can accommodate will vary depending on the
nature of the services provided by such tenants, well-constructed non-
broadcast towers generally are capable of housing between five and ten tenants
using an aggregate of between 25 and 50 antennae and broadcasting towers
generally are capable of housing between ten and forty tenants using an
aggregate of between 50 and 100 antennae. Annual rental payments vary
considerably depending upon (i) the type of service being provided; (ii) the
size of the line and the number and weight of the antennae on the tower; (iii)
the existing capacity of the tower; (iv) the location on the tower; and (v)
the competitive environment.

Lease terms vary depending upon the industry user, with television and radio
broadcasters tending to prefer longer term leases (15 to 20 years) than
wireless communications service providers (five to ten years). In either case,
most of such leases contain provisions for multiple renewals at the option of
the tenant. Governmental agencies, because of budgetary restrictions,
generally have one year leases, but tend to renew automatically. Leases tend
to be renewed because of the complications associated with moving antennae. In
the case of a television or radio broadcaster, such a move might necessitate
FCC approval and could entail major dislocations and the uncertainty
associated with building antennae in new coverage areas. In the case of
cellular, PCS and other wireless users, moving one antenna might necessitate
moving several others because of the interlocking grid-like nature of such
systems. In addition, the increasing difficulty of obtaining local zoning
approvals, the environmental activism of community groups, and the
restrictions imposed upon owners and operators by the FAA and upon tenants by
the FCC, tend to reduce significantly the number of alternatives available to
a tower user. Leases generally provide for annual automatic price increases
(escalator provisions) based on specified estimated cost measures or on
increases in the consumer price index. Owners and operators generally also
receive fees for installing customers' equipment and antennae on the
communications site.

Wireless communications towers are owned by a wide range of companies,
including wireless communications providers, regional Bell operating
companies, long distance companies, television and radio broadcasting
companies, independent tower operators, utilities and railroads. Despite the
increasing demand for communications sites, the industry remains highly
fragmented, with few independent operators owning a large number of towers.
ATS estimates that no one independent tower owner and operator (one which owns
and operates communications sites principally for other entities) owns more
than 2% of the towers in the United States. The pace of consolidation has
begun to accelerate, however, as the larger independent operators continue to
acquire small local or regional operators and purchase communications sites
and related assets from wireless communications carriers. Management believes
that a major factor contributing to such consolidation is the emergence of
many major companies seeking to provide increasingly sophisticated wireless
services on a national basis. This, in turn, creates a need for substantial
companies capable of developing and constructing networks of communications
sites and maintaining and servicing the sophisticated support facilities
associated with ongoing operations. ATS believes that the national and other
large wireless service providers will prefer to deal with a company that can
meet the majority of such providers' needs within a particular market or
region, rather than, as has been the historical model, a large number of
individual tower owners, construction companies

and other service providers. There can, of course, be no assurance that ATS
will be able to secure a substantial portion of such potential business. See
"Risk Factors--Factors Relating to American Tower Systems".

ATS believes that there is another significant trend influencing the
wireless service providers that is likely to continue to have important
implications for independent tower operators. In the increasingly competitive
environment, ATS believes that many carriers are seeking to dedicate their
capital and operations primarily to those activities, such as marketing and
distribution of products, that directly contribute to subscriber growth.
Management believes these carriers, therefore, may seek to preserve capital
and to speed access to their markets through the outsourcing of infrastructure
network requirements such as communications site ownership, construction,
operation and maintenance. Previously, carriers typically sourced many of such
services in-house while local non-integrated service contractors focused on
specific segments such as radio frequency engineering, site acquisition and
tower construction. To meet those needs, independent operators have expanded
into a number of associated network and communications site services,
including the selection and acquisition of communications sites (including the
resolution of zoning and permitting issues), the design of wireless and
broadcast sites and networks, and the construction or supervision of
construction of towers.

Unlike the fragmented nature of the communications site business, customers
in all segments of the wireless communications industry and the broadcast
industry tend to be large, financially responsible national companies. As a
consequence of the foregoing factors, as well as the lack of seasonality of
the industry, the communications site industry is characterized by a
predictable and recurring stream of income.

BUSINESS OF AMERICAN TOWER SYSTEMS

GENERAL

American Tower Systems is a leading independent owner and operator of
wireless communications towers in the U.S. with over 1,580 towers in 39 states
and the District of Columbia, including approximately 510 towers managed for
third party owners (of which approximately 255 are rooftop towers). Of such
1,580 towers, approximately 810 are presently operated by ATS (approximately
750 of which are owned by it and the balance of which are managed for others),
and approximately 775 are presently operated by ATC (of which approximately
125 are managed for a third party; ATC is a party to agreements or letters of
intent to acquire approximately 125 currently operating towers). In addition
to such 1,580 towers, ATS and ATC have more than 90 and 50 towers,
respectively, currently under construction. ATS rents tower space and provides
related services to a diverse range of wireless communications service
industries, including PCS, cellular, paging, SMR, ESMR and fixed microwave, as
well as radio and television broadcasters. ATS has significant tower networks
throughout the United States with its most significant networks in California,
Florida and Texas, and owns and operates communications sites or is
constructing networks of tower sites in cities such as Albuquerque, Atlanta,
Austin, Baltimore, Boston, Dallas, Jacksonville, Kansas City, Los Angeles,
Miami-Ft. Lauderdale, Nashville, New York, Philadelphia, Sacramento, San
Antonio, San Diego, San Francisco, Tucson, Washington, D.C. and West Palm
Beach.

ATS' primary business is the leasing of antennae sites on multi-tenant
towers and rooftops, primarily for its own towers and, to a lesser extent, for
unaffiliated communications site owners. In support of its rental business,
ATS also offers its customers network development services, including: site
acquisition, zoning, antennae installation, site construction and network
design. These services are offered on a time and materials or fixed fee basis
or incorporated into build to suit construction contracts. American Tower
Systems is also engaged in the video, voice and data transmission business,
which it currently conducts in the New York City to Washington, D.C. corridor
and in Texas. For the nine months ended September 30, 1997, giving effect to
the ATS Pro Forma Transactions, ATS had revenues and EBITDA of $66.0 million
and $30.4 million, respectively.

On a pro forma basis, ATS' customers (which aggregate more than 2,390)
include many of the major companies in the wireless communications industry,
including: (i) cellular and PCS, including AT&T Corp. ("AT&T"), Bell Atlantic
NYNEX Mobile ("Bell Atlantic Mobile"), BellSouth Mobility, Inc. ("BellSouth
Mobility"), GTE Mobilnet of South Texas ("GTE Mobilnet"), Houston Cellular,
Prime Co. ("Prime"), SBC Communications, Inc. ("SBC Communications"), Southern
New England Telephone ("SNET"), Southwestern Bell Mobile Systems (operating as
Cellular One) ("Southwestern Bell") and Sprint Corp. ("Sprint"); (ii) paging,
including Arch Communications Group Inc. ("Arch"), Metrocall, Inc.
("Metrocall"), PageMart Inc. ("PageMart"), PageNet, Inc. ("PageNet") and
Pittencrief Communications, Inc. ("Pittencrief Communications"); (iii) ESMR,
including Nextel Communications, Inc. ("Nextel"); and (iv) the television and
radio broadcasting industries including American Broadcasting Company ("ABC"),
American Radio, CBS, Chancellor Media Corporation ("Chancellor Media"), Clear
Channel Communications, Inc. ("Clear Channel"), Cable News Network ("CNN"),
The Fox Network ("Fox"), Jacor Communications, Inc. ("Jacor") and the National
Broadcasting Company ("NBC"). ATS' site acquisition activities, which affords
the opportunity to provide additional services such as the construction and
leasing of communications sites, are provided to Bell Atlantic Mobile, SNET
and Southwestern Bell, and ATS has constructed or is constructing towers on a
build to suit basis for companies such as Nextel, Omnipoint and Southwestern
Bell. The principal users of ATS' video, voice and data transmission services
are television broadcasters and other video suppliers such as CBS, CNN, Fox
and Home Box Office ("HBO"). While none of ATS' customers accounted for as
much as 10% of its pro forma revenues for the nine months ended September 30,
1997, most of the named customers accounted for more than 1% of such revenues
and each is considered by ATS to be an important customer.

Giving effect to all ATS Pro Forma Transactions, management estimates that
its site leasing activities, which it believes to generate the highest profit
margin of its businesses, account for approximately 49% of such revenues, site
acquisition activities (including construction for others) account for 31%,
and the video, voice and

data transmission business accounts for 20%. However, in light of management's
intention to focus on construction (build to suit) activities, which will
increase the number of sites available for leasing, it believes that antennae
site leasing is likely to grow at a more rapid rate than other aspects of ATS'
business.

ATS derives its revenue from various industry segments. The percentage of
ATS' revenues derived from the various industry segments is approximately as
follows: PCS--15%; Paging--24%; Cellular--12%; ESMR/SMR--12%; radio and
television broadcasting--9%; Microwave--3%; private industrial users--3%; and
Governmental and others--2%. The remaining approximately 20% of ATS' revenues
are derived from its video, voice and data transmission customers which are
primarily the major television networks, CNN and HBO. Management believes that
the foregoing percentages are not necessarily indicative of future
contributions likely to be made by the various aspects of its business or of
the several different types of wireless providers, particularly in light of
the anticipated growth of PCS and cellular compared to other wireless
providers and management's intended focus on build to suit and other tower
construction activities.

GROWTH STRATEGY

Growth by Construction (Build to Suit). ATS believes that attractive
investment returns can be achieved by constructing new tower networks
("footprints") in and around markets in which it already has a presence,
along major highways, and in targeted new markets, particularly markets
that have not been significantly built out by carriers or other
communications site companies. By working with one or more "anchor" tenants
(in much the same manner as a shopping mall developer), ATS will seek to
develop an overall master plan for a particular market by locating new
sites in areas identified by its customers as optimal for their network
expansion requirements (build to suit). ATS generally secures commitments
for leasing prior to commencing construction, thereby minimizing, to some
extent, the risks associated with the investment. See "Risk Factors--Risk
Factors Relating to American Tower Systems--Construction of New Towers". In
certain cases, ATS may identify and secure all zoning and other regulatory
permits for a site in anticipation of customer demand, with actual
construction being delayed until an anchor tenant is secured on reasonable
terms. Strategic acquisitions will also be pursued as a means of filling
out or, in certain cases, initiating, a tower network.

approximately $42.0 million, although there can be no assurance as to how
many, if any, of such towers ATS will be engaged to construct. ATC has
under construction or plans to construct during 1998 approximately 125
towers at an estimated aggregate cost of approximately $28.0 million.

Because of the relatively attractive initial returns which can be
achieved from new tower construction, and because ATS can design and build
towers to specifications that assure ample future capacity and minimize the
need for future capital expenditures, management intends to place a strong
emphasis on new tower development for the foreseeable future. Management
also intends to pursue new tower construction to service the demand for
digital television and for tower space for radio antennae displaced by
digital television requirements. Over time, management believes that more
than half of its towers will result from new construction, with the
substantial majority of these designed to serve the wireless communications
industry.

ATS believes that the ability to obtain, and commit to, large new
construction (build to suit) projects will require significant financial
resources. Management believes its reputation in the financial community,
including among banks, investment banking firms, institutional investors
and public investors, will attract such capital, on the favorable terms
necessary to finance its growth, although there can be no assurance that
funds will be available to ATS on such terms. Further, management believes
that its cost of capital, relative to the cost of capital of its
competitors, will be an important factor in implementing this aspect of its
growth strategy.

While to date the majority of ATS' growth has resulted from acquisition
activities, once the Recent Transactions are consummated management expects
to shift ATS' emphasis more towards build to suit and new tower
construction, where it believes investment returns are more attractive. It
will, however, continue to evaluate numerous acquisition prospects, and
expects to consummate selected acquisitions when the economics or fit are
sufficiently attractive.

PRODUCTS AND SERVICES

Leasing of Antennae Sites. ATS' primary business is the leasing of antennae
sites on multi-tenant towers to companies in all segments of the wireless
communications and broadcasting industries. ATS' communications site business
(including that of ATC) consists of more than 1,580 towers in 39 states and in
the District of Columbia, including approximately 510 towers managed for third
party owners (of which approximately 255 are rooftop towers). Of such 1,580
towers, approximately 810 are presently operated by ATS (approximately 425 of
which are owned by it and the balance of which are managed for others), and
approximately 775 are presently operated by American Tower Corporation (of
which approximately 125 are managed for a third party; ATC is a party to
agreements or letters of intent to acquire approximately 125 currently
operating towers). In addition to such 1,580 towers, ATS and ATC have more
than 90 and 50 towers, respectively, currently under construction.

ATS rents tower space and provides related services for a diverse range of
wireless communications industries, including: PCS, cellular, paging, SMR,
ESMR, paging, fixed microwave, as well as radio and television broadcasters.
ATS has significant networks of sites throughout the United States with its
most significant clusters in California, Florida and Texas, and owns and
operates communications sites or is constructing networks of tower sites in
cities such as Albuquerque, Atlanta, Austin, Baltimore, Boston, Dallas,
Jacksonville, Kansas City, Los Angeles, Miami-Ft. Lauderdale, Nashville, New
York, Philadelphia, Sacramento, San Antonio, San Diego, San Francisco, Tucson,
Washington, D.C. and West Palm Beach.

ATS' leases, like most of those in the industry, generally vary depending
upon the industry user, with television and radio broadcasters preferring long
term leases (generally from 15 to 20 years), and wireless communications
providers favoring somewhat shorter lease terms (generally from five to ten
years), with multiple renewals at the option of the tenant. Leases contain
escalator provisions based on the consumer price index or a predetermined
minimum increase, and tend to be renewed due to the costs and disruption
associated with reconfiguring a network or broadcast location. The number of
antennae which ATS' towers can accommodate varies depending on the type of
tower (broadcast or non-broadcast) and nature of the services provided by such
antennae, although broadcasting towers generally are capable of holding more
and larger antennae and serving more tenants than non-broadcasting towers.
Annual rental payments vary considerably depending upon (i) the type of
service being provided; (ii) the size of the line and the number and weight of
the antennae on the tower; (iii) the existing capacity of the tower; (iv) the
location on the tower; and (v) the competitive environment. Management
believes that it is not possible to state with any degree of precision the
vacancy or unused capacity of a "typical" tower, group of related towers or
all of its towers for a variety of reasons, including, among others, the
variations that occur depending on the types of antennae placed on the tower,
the types of service being provided by the tower users, the type and location
of the tower or towers, the ability to build other towers so as to configure a
"footprint" of related towers, whether any of the users have imposed
restrictions on competitive users, and whether there are any environmental,
zoning or other restrictions on the number or type of users.

Build to Suit Business. Historically, cellular and other wireless service
providers have constructed a majority of towers for their own use, while
usually outsourcing certain services such as site acquisition and construction
management. More recently, however, service providers have expressed a growing
interest in having independent companies own the towers on which they will
secure space under long-term leases. Management believes this trend is the
result of a need among such providers to preserve capital and to speed access
to their markets, as they seek to focus their capital and operational
resources primarily on activities that contribute to subscriber growth, such
as marketing and distribution of products. ATS has positioned itself as an
attractive choice for this build to suit opportunity. It has done so by
acquiring and developing reputable site acquisition companies with established
client relationships in both site acquisition and construction management, and
by securing the financial resources necessary to participate in the build to
suit arena on a substantial scale. Management believes companies that are able
to demonstrate the ability to successfully locate, acquire, permit, finance
and construct towers in a timely manner will be used by a significant number
of wireless service providers on an expanded basis. ATS is currently engaged
in build to suit efforts for a range of clients including Nextel, Omnipoint,
Prime and Southwestern Bell.

In most cases, well engineered and well located towers built to serve the
specifications of an initial anchor tenant in the wireless communications
sector will attract three or more additional wireless tenants over time,
thereby increasing revenue and enhancing margins. ATS has had only limited
experience, to date, with build to suit projects and those that it has
completed and are operational have been on a much smaller scale than those on
which it is now bidding or considering bidding. Management believes that ATS'
favorable results (occupancy and financial) achieved on completed projects is
not representative of the results likely to be achieved from the larger
projects ATS is currently contemplating and, therefore, has not included
information herein with respect to the typical vacancy rates or financial
results that can be expected to be generated by such build to suit projects.

Although build to suit projects involve at least one "anchor" tenant, there
can be no assurance that a sufficient number of additional tenants will be
secured for all or most of the towers to be constructed pursuant to

such projects (particularly the larger ones such as the 600-tower project on
which ATS is bidding as described elsewhere in this Prospectus), to ensure
that such projects will be profitable. Moreover, ATS may find that one of the
reasons that carriers are willing to permit ATS to build towers for them is
that certain or many of such towers may be on sites that are either expensive
or difficult to build on or that they are such that they are unlikely to
attract a sufficient number of other tenants.

Site Acquisition Business. The site selection and acquisition process begins
with the network design. Highway corridors, population centers and
topographical features are identified within the carrier's existing or
proposed network, and drive tests are performed to monitor all PCS, cellular
and ESMR frequencies to locate the systems then operating in that geographic
area and identify where any holes in coverage may be. Based on this data, the
carrier and ATS develop a "search ring", generally of one-mile radius, within
which the site acquisition department identifies land available either for
purchase or lease. ATS personnel select the most suitable sites, based on
demographics, traffic patterns and signal characteristics. The site is then
submitted to the local zoning/planning board for approval. If the site is
approved, in certain instances ATS will supervise construction of the towers
and other improvements on the various communications sites. ATS' site
acquisition services are provided on a fixed fee or time and materials basis.
Existing users of ATS' site acquisition business, include Bell Atlantic
Mobile, SNET and Southwestern Bell. While ATS will continue to provide site
acquisition services to those customers desiring them, it also intends to
actively market its construction and leasing services as an extension of these
services.

Communications Site Management Business. ATS is a leading manager of
communications sites, principally rooftop sites but also including ground
towers, for other owners. A principal aspect of this business is the
development of new sources of revenue for building owners by effectively
managing all aspects of rooftop telecommunications, including two-way radio
systems, microwave, fiber optics, wireless cable, paging and rooftop
infrastructure construction services. ATS currently manages more than 380
sites in 35 states, exclusive of the approximately 125 sites managed by ATC
for a third party. Management contracts are generally for a period of five
years and contain automatic five-year renewal periods unless terminated by
either party on notice prior to such renewal term or upon an uncured default.
Pursuant to these contracts, ATS is responsible for marketing antennae sites
on the tower, reviewing existing and negotiating future license agreements
with tenant users, managing and enforcing those agreements, supervising
installation of equipment by tenants to ensure, among other things, non-
interference with other users, supervising repairs and maintenance to the
towers, as well as site billing, collections and contract administration. In
addition, ATS handles all calls as well as questions regarding the site so
that the building management team or owner is relieved of this responsibility.
For such services, ATS is entitled to a percentage of lease payments, which is
higher for new tenants than for existing tenants. Upon any termination of a
contract, unless because of its default, ATS is entitled to its percentage
with respect to then existing tenants so long as they remain tenants.

Voice, Video and Data Transmission Business. ATS' voice, video and data
transmission business is operated in the New York City to Washington, D.C.
corridor and in Texas. ATS owns a teleport outside of New York City and has an
agreement to acquire a teleport outside of Washington, D.C., and distributes
video, voice and data over the New York to Washington D.C. corridor through a
fiber and microwave network, including 13 towers. The New York teleport system
is located on a 70-acre owned site which is zoned for 29 microwave dishes of
which 22 are existing, thereby providing significant expansion capacity. The
Washington teleport system is located in Northern Virginia, inside of the
Washington Beltway, on ten acres and houses 40 antennae with the capacity for
an additional ten antennae. The network includes both fiber and microwave
channels, is used by all of the major television broadcast networks, and
accesses all domestic and major international satellites in the operating
region. The system is able to distribute voice, video and data through
satellite or terrestrial distribution. The Texas systems consists of a
teleport outside of Dallas that enables it to distribute video, voice and data
from Dallas to Corpus Christi through a fiber and microwave network including
35 towers. This system includes 15 microwave dishes and covers the most
populated area of Texas, servicing Austin, Corpus Christi, Dallas, Houston and
San Antonio. The system connects to all major sports and convention venues,
video companies and broadcast networks in those cities. The principal users of
ATS' video, voice and data transmission services are television broadcasters
and other video suppliers such as CBS, CNN, Fox and HBO.

MANAGEMENT ORGANIZATION

ATS is organized on a regional basis. Management believes that its regional
operations centers should be capable of responding effectively to the
opportunities and customer needs of its defined geographic area and that these
operations centers should have skilled engineers, construction management and
marketing personnel. Management also believes that over time enhanced customer
service and greater operating efficiencies can be achieved by centralizing
certain operating functions, including accounting and lease administration.
Such centralization, when achieved, will enable key information about each
site, tower lease and customer to become part of a centralized database, with
communications links to regional operating centers.

In conjunction with its acquisition of various companies, management
believes it has obtained the services of key personnel with skills in areas
such as engineering, site acquisition, construction management, tower
operations, marketing, lease administration, and finance. However, as ATS
seeks to expand its size and improve on the quality and consistency of service
delivery, it believes it will need to supplement its current workforce in
certain critical areas and intensify its dedication to customer service.
Accordingly, management is actively recruiting key personnel to complete the
staffing of its regional operations centers and to strengthen and deepen its
corporate group. ATS focuses its efforts on recruiting people from the
industry sectors it serves and in some instances recruiting skilled engineers,
marketing and other personnel from outside the communications site, wireless
communications and broadcasting industries.

HISTORY OF ATS

RECENT TRANSACTIONS

The following transactions constitute the Recent Transactions (of which only
the Meridian Transaction, the Diablo Transaction, the MicroNet Transaction,
the Tucson Transaction, the Gearon Transaction and the ATC Merger all are,
together with the Tower Separation and the ATS Stock Purchase Agreement,
included in the ATS Pro Forma Transactions).

Consummated Acquisitions. Since January 1, 1997, ATS has consummated more
than 15 acquisitions (including those agreed to in 1996) involving more than
525 sites (including sites on which towers are to be constructed), in a
variety of regions for an aggregate purchase price of approximately $290.0
million, certain of which are described below.

In May 1997, ATS consummated, among others, three acquisitions as follows:

. the purchase for approximately $13.0 million of two related companies
engaged in the site acquisition business for unaffiliated third parties
in various locations in the United States;

. the purchase for approximately $5.4 million of 21 tower sites, and a
tower site management business, in Georgia, North Carolina and South
Carolina. The acquisition agreement also provided for additional
payments if the seller is able to arrange for the purchase or management
of tower sites presently owned by an unaffiliated public utility in
South Carolina, which payments are estimated to aggregate up to
approximately $1.2 million; management believes that it is unlikely that
any such arrangement will be entered into; and

. the purchase of a 70% interest in a business that will initially own and
operate communications towers that are to be constructed on 58 sites in
northern California; the remaining 30% of the joint venture is

owned by an unaffiliated party. ATS paid the other party approximately
$0.8 million in cash for its 70% interest and is obligated to provide
equity financing for the construction of those towers (estimated at
approximately $5.0 million) as well as any others that the joint venture
may construct.

In July 1997, ATS consummated four unrelated acquisitions, including the
purchase for approximately $33.5 million for 56 sites and a tower site
management business in southern California (the "Meridian Transaction").

In October 1997, ATS consummated two unrelated acquisitions as follows:

. the purchase for approximately $45.0 million of 110 sites and a site
management business primarily in northern California (the "Diablo
Transaction"); and

. the purchase for approximately $70.25 million of 128 owned or leased
tower sites, principally in the Mid-Atlantic region, with the remainder
in California and Texas. The acquisition also provided ATS with its
video, voice and data transmission business (the "MicroNet
Transaction").

In January 1998, ATS consummated the acquisition of OPM-USA-INC. ("OPM"), a
company which owned approximately 90 towers at the time of acquisition (the
"OPM Transaction"). In addition, OPM is in the process of developing an
additional approximately 160 towers that are expected to be constructed during
the next 12 to 18 months. The purchase price, which is variable and based on
the number of towers completed and the forward cash flow of the completed OPM
towers, could aggregate up to $105.0 million, of which approximately $21.3
million was paid at the closing. ATS has also agreed to provide the financing
to OPM to enable it to construct the 160 towers in an aggregate amount not to
exceed $37.0 million (less advances as of consummation aggregating
approximately $5.7 million).

In January 1998, ATS consummated the Gearon Transaction pursuant to which
ATSI merged with a company engaged primarily in the site acquisition business
for unaffiliated third parties that also owned or had under construction 40
tower sites. The merger price of approximately $80.0 million was paid by
delivery of 5,333,333 shares of ATS Class A Common Stock, the payment of
approximately $30.0 million in cash and assumed liabilities.

In January 1998, ARS transferred to ATS 14 of the 16 communications sites
currently used by American Radio and various third parties and ARS and ATS
entered into leases or subleases of space on the towers transferred. The
remaining two communications sites will be transferred and leases entered into
following acquisition by ARS of the sites from third parties. See "The Merger
and Tower Separation--Lease Arrangements".

In January 1998, ATS consummated the purchase of a communications site with
six towers in Tucson, Arizona (the "Tucson Transaction") for approximately
$12.0 million.

In February 1998, ATS acquired 11 communications tower sites in northern
California for approximately $11.8 million.

Pending Acquisitions. In January 1998, ATS entered into an agreement to
purchase the assets relating to a teleport serving the Washington, D.C. area
for a purchase price of approximately $30.5 million. The facility is located
in northern Virginia, inside of the Washington Beltway, on ten acres.
Consummation of the transaction, which is subject to certain conditions,
including receipt of FCC approvals and the expiration or earlier termination
of the HSR Act waiting period, is expected to occur in the first half of 1998.

ATC Merger. On December 12, 1997, ATS entered into the ATC Merger Agreement
pursuant to which ATC will merge with and into ATS which will be the surviving
corporation. Pursuant to the ATC Merger, ATS will issue an aggregate of
approximately 31.1 million shares of ATS Class A Common Stock (including
shares issuable upon exercise of options to acquire ATC Common Stock which, to
the extent they are outstanding as of the effectiveness of the ATC Merger,
will become options to acquire ATS Class A Common Stock). The

31.1 million shares of ATS Class A Common Stock will represent 35% of the
aggregate number of shares of ATS Common Stock which would be outstanding on a
pro forma basis, assuming consummation of the ATC Merger, the Merger, the
exercise of all ATS and ATC stock options currently proposed to be outstanding
and the conversion of all ARS Convertible Preferred Stock. See "The ATC
Merger".

Other Transactions. ATS is negotiating and intends to pursue the acquisition
of other communications sites and management and related businesses on a
selective basis, although there are no definitive binding agreements with
respect to any material transaction except as referred to above, and,
accordingly, such transactions are not included in Recent Transactions.
Neither the Recent Transactions nor any such acquisitions (unless they could
delay consummation of the Merger for a period of more than 15 business days)
will require the consent of CBS under the provisions of the Merger Agreement,
although certain regulatory approvals may be required.

ATS Stock Purchase Agreement. In January 1998, American Tower Systems
consummated the transactions contemplated by the ATS Stock Purchase Agreement,
dated as of January 8, 1998, with Steven B. Dodge, Chairman of the Board and
Chief Executive Officer of ARS and ATS, and certain other officers and
directors of ARS (or their affiliates, members of their families or family
trusts), pursuant to which those persons purchased 8.0 million shares of ATS
Common Stock at a purchase price of $10.00 per share for an aggregate purchase
price of $80.0 million, including 4.0 million shares by Mr. Dodge for $40.0
million. See "The Merger and Tower Separation--ATS Stock Purchase Agreement".

SALES AND MARKETING

American Tower Systems' sales and marketing personnel target wireless
carriers expanding their network capabilities as well as carriers entering new
markets. ATS attempts to minimize hurdles to purchasing decisions by offering
master license agreements which correspond to the internal requirements of
wireless operators. ATS also offers standardized system pricing in areas in
which it operates tower networks which enable potential customers to obtain
pricing information for an entire service area rather than on a tower-by-tower
basis. ATS believes customer satisfaction is the key to successful marketing
and that referrals from its current customers are a primary source of new
customers.

REGULATORY MATTERS

Federal Regulations. Both the FCC and the FAA regulate towers used for
wireless communications transmitters and receivers and radio and television
transmitters. Such regulations control the siting, lighting, marking and
maintenance of towers and may, depending on the characteristics of the tower,
require registration of tower facilities. Wireless communications devices
operating on towers are separately regulated and independently licensed by the
FCC based upon the regulation of the particular frequency used. In addition,
the FCC also separately licenses and regulates television and radio broadcast
stations operating on towers. Most proposals to construct new antenna
structures or to modify existing antenna structures are reviewed by both the
FCC and the FAA to ensure that a structure will not present a hazard to
aircraft. Tower owners also may bear the responsibility for notifying the FAA
of any tower lighting failures. ATS generally indemnifies its customers
against any failure to comply with applicable standards. Failure to comply
with applicable requirements may lead to civil penalties.

The introduction and development of digital television also may affect ATS
and some of its largest customers. In addition, the structural and power
requirements for DTV transmission facilities may necessitate the relocation of
many currently co-located FM antennae. The construction and reconstruction of
this substantial number of antenna structures presents a potentially
significant state and local regulatory obstacle to the communications site
industry. As a result, the FCC has solicited comments on whether, and in what
circumstances, the FCC should preempt state and local zoning and land use laws
and ordinances regulating the placement and construction of communications
sites. There can be no assurance as to whether or when any such federal
preemptive regulations may be promulgated or, if adopted, what form they might
take, whether they

would be more or less restrictive than existing state regulation, or whether
the constitutionality of such regulation, if challenged, would be upheld.

Local Regulations. Local regulations include city and other local
ordinances, zoning restrictions and restrictive covenants imposed by community
developers. These regulations vary greatly, but typically require tower owners
to obtain approval from local officials or community standards organizations
prior to tower construction. Local regulations can delay or prevent new tower
construction or site upgrade projects, thereby limiting ATS' ability to
respond to customer demand. In addition, such regulations increase costs
associated with new tower construction. There can be no assurance that
existing regulatory policies will not adversely affect the timing or cost of
new tower construction or that additional regulations will not be adopted
which increase such delays or result in additional costs to ATS. Such factors
could have a material adverse effect on ATS' financial condition or results of
operations.

ENVIRONMENTAL MATTERS

ATS believes it is in compliance in all material respects with all
applicable material environmental laws. ATS has not received any written
notice from any governmental authority or third party asserting, and is not
otherwise aware of, any material environmental non-compliance, liability or
claim relating to hazardous substances or wastes or material environmental
laws. However, no assurance can be given (i) that there are no undetected
environmental conditions for which ATS might be liable in the future or (ii)
that future regulatory action, as well as compliance with future environmental
laws, will not require ATS to incur costs that could have a material adverse
effect on ATS' financial condition and results of operations.

COMPETITION

ATS' competes for antennae site customers with wireless carriers that own
and operate their own tower networks and lease tower space to other carriers,
site development companies that acquire space on existing towers for wireless
providers and manage new tower construction, other national independent tower
companies and traditional local independent tower operators. Wireless service
providers that own and operate their own tower networks generally are
substantially larger and have greater financial resources than ATS. ATS
believes that tower location and capacity, price, quality of service and
density within a geographic market historically have been and will continue to
be the most significant competitive factors affecting owners, operators and
managers of communications sites.

ATS competes for acquisition and new tower construction site opportunities
with wireless service providers, site developers and other independent tower
operating companies, as well as financial institutions. ATS believes that
competition for acquisitions and tower construction sites will increase and
that additional competitors will enter the tower market, certain of which may
have greater financial resources than ATS.

PROPERTIES

ATS' interests in its communications sites are comprised of a variety of fee
interests, leasehold interests created by long-term lease agreements, private
easements, and easements, licenses or rights-of-way granted by government
entities. In rural areas, a communications site typically consists of a three
to five acre tract which

supports towers, equipment shelters and guy wires to stabilize the structure.
Less than 2,500 square feet are required for a self-supporting tower structure
of the kind typically used in metropolitan areas. Land leases generally have
twenty (20) to twenty-five (25) year terms, with three five-year renewals, or
are for five-year terms with automatic renewals unless ATS otherwise
specifies. Some land leases provide "trade-out" arrangements whereby ATS
allows the landlord to use tower space in lieu of paying all or part of the
land rent. As of September 30, 1997, giving effect as of such date to the
Recent Transactions, ATS had more than 1,000 land leases. Pursuant to the
Tower Loan Agreement, the senior lenders have liens on substantially all of
the fee interests, leasehold interests and other assets of the Tower Operating
Subsidiary which owns, directly or, in certain cases, through subsidiaries all
of the assets of the consolidated group.

LEGAL PROCEEDINGS

ATS is occasionally involved in legal proceedings that arise in the ordinary
course of business. While the outcome of these proceedings cannot be predicted
with certainty, management does not expect any pending matters to have a
material adverse effect on ATS' financial condition or results of operations.

EMPLOYEES

As of January 1, 1998, ATS employed approximately 140 full time individuals
and considers its employee relations to be satisfactory. Such number does not
include employees of companies included in Recent Transactions which had not
then been consummated (such as ATC, Gearon and OPM) or members of the
corporate administrative staff of ARS that may be employed by ATS upon
consummation of the Merger. ATS estimates that on a pro forma basis, giving
effect to consummation of all of the Recent Transactions and the Merger, it
will have approximately 450 full time employees.

MANAGEMENT OF AMERICAN TOWER SYSTEMS

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning the executive
officers and directors of American Tower Systems:

NAME AGE POSITIONS
---- --- ------------------------------------------------------------

Steven B. Dodge(1)...... 52 Chairman of the Board, President and Chief Executive Officer
Alan L. Box............. 46 Chief Operating Officer and Director
Arnold L.
Chavkin(1)(2)(3)....... 46 Director
James S. Eisenstein..... 39 Executive Vice President--Corporate Development
J. Michael Gearon, Jr... 32 Executive Vice President and Director
*Fred R. Lummis......... 44 Director
*Randall Mays........... 32 Director
Thomas H.
Stoner(1)(2)(3)........ 63 Director
Joseph L. Winn.......... 46 Treasurer, Chief Financial Officer and Director

- --------
* Director nominee, conditioned on the ATC Merger being consummated.
(1) Member of the Executive Committee; Mr. Stoner is the Chairman of the
Executive Committee.
(2) Member of the Audit Committee; Mr. Chavkin is the Chairman of the Audit
Committee.
(3) Member of the Compensation Committee; Mr. Stoner is the Chairman of the
Compensation Committee.

As of the consummation of the Merger (or the earlier consummation of the
Tower Merger), the ATS Board will be expanded to include two "independent"
directors. Although management has had discussions with certain persons
concerning their willingness to serve as "independent" directors, no decisions
or commitments have been made with respect to filling those positions. The two
"independent" directors will be elected annually, commencing in the year
following consummation of the Merger (or the earlier consummation of the Tower
Merger), by the holders of ATS Class A Common Stock, voting as a separate
class. All directors hold office until the annual meeting of the stockholders
of ATS next following their election or until their successors are elected and
qualified. Each executive officer is appointed annually and serves at the
discretion of the ATS Board.

As a condition to the consummation of the ATC Merger, two nominees of ATC,
Fred R. Lummis, Chairman of the Board, President and Chief Executive Officer
of ATC, and Randall Mays, the Chief Financial Officer and Executive Vice
President of Clear Channel, one of the principal stockholders of ATC, will be
elected as directors of ATS, and Mr. Winn will resign as a director of ATS.

Steven B. Dodge is the Chairman, President and Chief Executive Officer of
American Tower Systems. Mr. Dodge is also the Chairman of the Board, President
and Chief Executive Officer of ARS, a position he has occupied since its
founding on November 1, 1993. ARS completed its initial public offering in
June 1995 at $16.50 per share of ARS Class A Common Stock. Mr. Dodge was the
founder in 1988 of Atlantic Radio, L.P. ("Atlantic") which was one of the
predecessor entities of American Radio. Prior to forming Atlantic, Mr. Dodge
served as Chairman and Chief Executive Officer of American Cablesystems
Corporation ("American Cablesystems"), a cable television company he founded
in 1978 and operated as a privately-held company until 1986 when it completed
a public offering in which its stock was priced at $14.50 per share. American
Cablesystems was merged into Continental Cablevision, Inc. in 1988 in a
transaction valued at more than $750 million, or $46.50 per share. Mr. Dodge
also serves as a director of American Media, Inc., the National Association of
Broadcasters (the "NAB").

Alan L. Box is the Chief Operating Officer and a director of American Tower
Systems. Mr. Box also has been Executive Vice President of ARS since April,
1997. Prior to that date, Mr. Box was employed by EZ Communications, Inc.
("EZ"), starting in 1974 as the General Manager of EZ's Washington, D.C. area
radio station. He became Executive Vice President and General Manager and a
director of EZ in 1979, President of

EZ in 1985 and Chief Executive Officer of EZ in 1995. He serves as a director
of the George Mason Bankshares, Inc. and the George Mason Bank.

Mr. Chavkin is the Chairman of the Audit Committee of the Board of American
Tower Systems. Mr. Chavkin has been the Chairman of the Audit Committee of the
Board of American Radio since its founding. Mr. Chavkin is a general partner
of Chase Capital Partners ("CCP"), previously known as Chemical Venture
Partners ("CVP"), which is a general partner of Chase Equity Associates
("CEA"), one of American Radio's shareholders, and previously a principal
shareholder of Multi Market Communications, Inc. ("Multi-Market"), one of the
predecessors of American Radio. Mr. Chavkin has been a General Partner of CCP
and CVP since January 1992 and has served as the President of Chemical
Investments, Inc. since March 1991. Mr. Chavkin is also a director of R&B
Falcon Drilling Company, Bell Sports Corporation, and Wireless One, Inc. Prior
to joining Chemical Investments, Inc., Mr. Chavkin was a specialist in
investment and merchant banking at Chemical Bank for six years. For the
information with respect to the interests of an affiliate of Mr. Chavkin, CCP
and CEA in ATC, see "The ATC Merger" above and "Principal Stockholders of
American Tower Corporation" in Appendix V.

James S. Eisenstein is the Executive Vice President--Corporate Development
of American Tower Systems. Mr. Eisenstein has overall responsibility for
seeking out acquisition and development opportunities for ATS. Mr. Eisenstein
helped form ATS in the summer of 1995. He was previously Chief Operating
Officer for Amaturo Group Ltd., a broadcast company operating eleven radio
stations and four broadcasting towers from 1990 to 1995, several of which were
purchased by American Radio. Mr. Eisenstein was also General Corporate Counsel
of Home Shopping Network from 1988 to 1990, an Associate with Skadden, Arps,
Slate, Meagher and Flom from 1985 to 1988 and an Associate with Vinson and
Elkins from 1983 to 1985. He has extensive experience in structuring
acquisitions and the operation and management of broadcasting and tower
businesses.

Mr. Gearon was the principal stockholder and Chief Executive Officer of
Gearon & Co., Inc., a position he held since September 1991. As a condition to
consummation of the Gearon Transaction, Mr. Gearon was elected an Executive
Vice President and a director of ATS and the Chief Executive Officer of the
site acquisition business of ATS. See "Business of American Tower Systems--
Recent Transactions".

Fred R. Lummis has served as Chairman, Chief Executive Officer and President
of ATC since its organization in October 1994. Mr. Lummis has been the
President of Summit Capital, a private investment firm, since 1990. Mr. Lummis
served as Senior Vice President of Duncan, Cook & Co., a private investment
firm, from 1986 to 1990 and as Vice President of Texas Commerce Bank Inc. from
1978 to 1986. Mr. Lummis currently serves on the board of several private
companies and is a trustee of the Baylor College of Medicine.

Randall Mays has served as Chief Financial Officer and Executive Vice
President of Clear Channel since February 1997, prior to which he had served
as a Vice President and Treasurer since joining Clear Channel in 1993. Prior
to joining Clear Channel, he was an associate at Goldman Sachs & Co.

Mr. Stoner is the Chairman of the Executive Committee and the Compensation
Committee of the Board of American Tower Systems. Mr. Stoner has been the
Chairman of the Executive Committee and the Compensation Committee of the
Board of American Radio since its founding. Mr. Stoner founded Stoner
Broadcasting Systems, Inc. ("Stoner") in 1965. Stoner, which was one of the
predecessors of American Radio, operated radio stations for over 25 years in
large, medium and small markets. Mr. Stoner is a director of Gaylord Container
Corporation, a trustee of Chesapeake Bay Foundation.

Joseph L. Winn is the Chief Financial Officer, Treasurer and a director of
American Tower Systems. Mr. Winn is also Treasurer, Chief Financial Officer
and has been a director of ARS since its founding. In addition to serving as
Chief Financial Officer of American, Mr. Winn was Co-Chief Operating Officer
responsible for Boston operations until May 1994. Mr. Winn served as Chief
Financial Officer and a director of the general partner of Atlantic after its
organization. He also served as Executive Vice President of the general
partner of Atlantic from its organization until June 1992, and as its
President from June 1992 until the organization of ARS.

Prior to joining Atlantic, Mr. Winn served as Senior Vice President and
Corporate Controller of American Cablesystems after joining that company in
1983.

EXECUTIVE COMPENSATION

All of the executive officers of American Tower Systems are employees of and
have been paid by ARS (or, in the case of Mr. Box, by EZ prior to the EZ
Merger and in the case of Mr. Gearon, by Gearon prior to consummation of the
Gearon Transaction) since the organization of ATS in 1995. During that period
the highest paid executive officers, other than Mr. Dodge, who are employees
of ATS, were Messrs. Box, Winn and Eisenstein. The compensation of each of
those individuals (other than Mr. Eisenstein) was principally for acting as an
executive officer of American Radio (or, in the case of Mr. Box, EZ prior to
the EZ Merger) and, accordingly, information provided with respect to their
executive compensation represents compensation paid by ARS (with the exception
of Mr. Eisenstein).

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------- ------------------------------
NAME AND OTHER ANNUAL SHARES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(3) BONUS COMPENSATION OPTIONS COMPENSATION
------------------ ---- --------- ------ ------------ ----------------- ------------

Steven B. Dodge(1)(2).... 1995 $252,625 -- -- -- --
Chairman of the Board, 1996 $297,250 50,000 -- 40,000 4,910(4)
President and Chief 1997 $502,338 -- -- 100,000 1,716(4)
Executive Officer
Joseph L. Winn(1)(2)..... 1995 $227,859 -- -- 65,000 --
Treasurer and Chief 1996 $257,250 42,500 -- 20,000 11,456(5)
Financial Officer 1997 $352,329 40,000 -- 35,000 12,876(5)
Alan L. Box(1)(2)........ 1997 $264,400(6) -- -- 100,000 1,216(7)
Chief Operating Officer
James S. Eisenstein(2)... 1995 $ 62,109 -- -- 40,000(8) 5,260(9)
Executive Vice Presi-
dent-- 1996 $167,250 19,000 -- 200,000(10) 8,669(9)
Corporate Development 1997 $212,367 -- -- 20,000(10) 12,656(9)

- --------
(1) Represents both annual and long-term compensation paid by ARS.
(2) The Compensation Committee of ATS has approved annual base salaries for
1998 for Mr. Dodge, and each of such four executive officers, at the
following rates: Mr. Dodge: $250,000; Mr. Box: $225,000; Mr. Eisenstein
$200,000; Mr. Gearon: $200,000; and Mr. Winn: $225,000. Such salaries
will commence (in the case of all such officers other than Mr. Gearon)
with the Tower Separation, prior to which such individuals will have been
paid by ARS at their present compensation rates.
(3) Includes American Radio's matching 401(k) plan contributions.
(4) Includes group term life insurance and parking expenses paid by ARS.
(5) Includes group term life insurance, automobile lease and parking expenses
paid by ARS.
(6) Includes $87,500 paid by ATS commencing October 1, 1997.
(7) Includes group term life insurance paid by ARS.
(8) Represents options to purchase shares of ARS Class A Common Stock granted
pursuant to the ARS stock option plan.
(9) Includes group term life insurance and automobile expenses paid by ATS.
(10) Represents options to purchase shares of common stock of ATSI granted
pursuant to the ATSI Plan.

DIRECTOR COMPENSATION

As of the consummation of the Merger, the ATS Board will be expanded to
include two independent directors. Such independent directors will be granted
options to purchase 25,000 shares of common stock, which will be exercisable
in 20% cumulative annual increments commencing one year from the date of grant
and will expire at the end of ten years. The outside directors will also
receive fees of $3,000 for each Board of Directors meeting attended and $1,000
for each committee meeting attended held apart from a board meeting and will
be reimbursed for expenses.

STOCK OPTION INFORMATION

Effective November 5, 1997, ATS instituted the 1997 Stock Option Plan (the
"Plan"), which is administered by the Compensation Committee of the ATS Board.
The Plan was designed to encourage directors, consultants and key employees of
American Tower Systems and its subsidiaries to continue their association with
ATS by providing opportunities for such persons to participate in the
ownership of American Tower Systems and in its future growth through the
granting of stock options, which may be options designed to qualify as
incentive stock options ("ISOs") within the meaning of Section 422 of the
Code, or options not intended to qualify for any special tax treatment under
the Code ("NQOs"). The Plan provides that ATS may not grant options to
purchase more than 5,000,000 shares per year per participant.

The duration of the ISOs and NQOs granted under the Plan may be specified by
the Compensation Committee pursuant to each respective option agreement, but
in no event can any such option be exercisable after the expiration of ten
(10) years after the date of grant. In the case of any employee who owns (or
is considered under Section 424(d) of the Code as owning) stock possessing
more than ten percent of the total combined voting power of all classes of
stock of ATS, no ISO shall be exercisable after the expiration of five (5)
years from the date such option is granted. The option pool under the Plan
consists of an aggregate of 10,000,000 shares of ATS Common Stock, which may
consist of shares of ATS Class A Common Stock, shares of ATS Class B Common
Stock or some combination thereof. It is a condition to consummation of the
ATC Merger that all future grants of options under the Plan must be to
purchase shares of ATS Class A Common Stock.

In July 1996, ATSI adopted its 1996 Stock Option Plan (the "ATSI Plan") and,
pursuant thereto, options were granted to various officers of ATSI (the "ATSI
Options"). In connection with the Merger, those options to purchase the common
stock of ATSI will be converted into options to acquire shares of ATS Class A
Common Stock (the "ATS Options"). In addition, each option to purchase shares
of ARS Common Stock (the "ARS Options") may be exchanged for ATS Options. Both
the ATSI Options and the ARS Options may be exchanged in a manner that will
preserve the spread in such ARS Options between the option exercise price and
the fair market value of ARS Common Stock and the ratio of the spread to the
exercise price prior to such conversion and, to the extent applicable,
otherwise in conformity with the rules under Section 424(a) of the Code and
the regulations promulgated thereunder. See "The Merger and Tower Separation--
Certain Other Covenants--ARS Options".

During the year ended December 31, 1997 the only options granted pursuant to
the ATSI Plan to the individuals referred to in "--Executive Compensation"
above were to Mr. Eisenstein.

OPTION GRANTS IN FISCAL YEAR 1997
INDIVIDUAL GRANTS

POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF STOCK PRICE
SHARES OF APPRECIATION
UNDERLYING EXERCISE FOR OPTION TERMS(b)
OPTIONS PRICE EXPIRATION --------------------
NAME GRANTED(A) PER SHARE DATE 5% 10%
---- ---------- --------- ---------- --------- ----------

James S. Eisenstein..................... 27,732 $5.41 1/2/07 $94,353 $ 239,109

- --------
(a) Assuming the exchange of ATSI Option to purchase 20,000 shares at $7.50
per share for ATS Options.
(b) The potential realizable value at assumed annual rates of stock price
appreciation for the option term of 5% and 10% would be $94,353 and
$239,109, respectively. A 5% and 10% per year appreciation in stock price
from $5.41 per share yields appreciation of $3.40 per share and $8.62 per
share, respectively. The actual value, if any, Mr. Eisenstein may realize
will depend on the excess of the stock price over the exercise price on
the date the option is exercised, so that there is no assurance the value
realized by an executive will be at or near the amounts reflected in this
table.

The only unexercised options granted pursuant to the ATSI Plan to the
individuals referred to in the "--Executive Compensation" above were to Mr.
Eisenstein.

VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
NAME OPTIONS AT DECEMBER 31, 1997 OPTIONS AT DECEMBER 31, 1997(b)
---- ---------------------------- ---------------------------------
EXERCISABLE(a) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------- ------------- -------------- ----------------

James S. Eisenstein..... 116,472 188,576 $734,278 $1,165,061

- --------
(a) In 1996 Mr. Eisenstein was granted options pursuant to the ATSI Plan for
an aggregate of 200,000 shares at $5.00 per share. Such options became
exercisable to the extent of 80,000 shares on July 1, 1997 and become
exercisable in 20% cumulative annual increments commencing on July 1,
1998, and expire September 9, 2006. Assuming the exchange of ATSI Options
for ATS Options, Mr. Eisenstein will have options to purchase 277,316
shares of ATS Class A Common Stock at $3.61 per share, of which 110,926
shares will be exercisable. An additional ten-year option to purchase
20,000 shares of common stock of ATSI at $7.50 per share was granted to
Mr. Eisenstein on January 2, 1997. Assuming the exchange of ATSI Options
for ATS Options, this option will convert into options to purchase 27,732
of shares of ATS Class A Common Stock at $5.41 per share, of which 5,546
shares will be exercisable.
(b) The value of unexercised in-the-money options of Mr. Eisenstein at
December 31, 1997, based on an assumed price of $10.00 per share was
$1,899,339.

In January 1998, the ATS Compensation Committee granted options to purchase
shares of ATS Common Stock to the executive officers of ATS in the amounts
shown (which will be increased by subsequent grants, contingent upon
consummation of the ATC Merger, as shown in parenthesis). All existing options
have an exercise price of $10.00, the price at which shares of ATS Common
Stock were sold pursuant to the ATS Stock Purchase Agreement, are to purchase
ATS Class A Common Stock (ATS Class B Common Stock in the case of Mr. Dodge's
option to purchase 1,700,000 shares) and become exercisable in 20% cumulative
annual increments commencing one year from the grant dates): Mr. Dodge--
1,700,000 shares (an additional 1,300,000 shares); Mr. Box--120,000 shares (an
additional 80,000 shares); Mr. Eisenstein--28,000 shares (an additional 22,000
shares); and Mr. Winn--275,000 shares (an additional 210,000 shares). Pursuant
to options granted as a condition to consummation of the Gearon Transaction,
Mr. Gearon received an option to purchase 234,451 shares of ATS Class A Common
Stock at $13.00 per share, which also becomes exercisable in 20% cumulative
annual increments.

The information set forth above does not include ARS Options held by Messrs.
Dodge, Box, Eisenstein and Winn which, as explained elsewhere in this
Prospectus, may be converted into options to purchase ATS Common Stock at the
election of the optionee. Such individuals have indicated that they intend to
elect to convert their ARS Options as follows: Mr. Dodge--290,000 shares; Mr.
Box--options to purchase 100,000 shares; Mr. Eisenstein--options to purchase
40,000 shares; and Mr. Winn--options to purchase 285,000 shares; however, such
indications are not binding on such individuals and they will not be required
to make a definitive election until shortly before the consummation of the
Tower Separation. See "The Merger and Tower Separation--Certain Covenants--ARS
Options" and "Principal Stockholders of American Tower Systems".

PRINCIPAL STOCKHOLDERS OF AMERICAN TOWER SYSTEMS

The following table sets forth certain information known to ATS as of
February 1, 1998, with respect to the shares of ATS Common Stock that will be
beneficially owned after the Tower Separation, based on the ARS Common Stock
(and, in certain cases, ATS Common Stock) beneficially owned as of such date
by (i) each person known by American Radio to own more than 5% of the
outstanding ARS Common Stock, (ii) each director of American Tower Systems,
(iii) each executive officer of American Tower Systems, and (iv) all directors
and executive officers of American Tower Systems as a group. The table also
sets forth information of a comparable nature giving effect, in addition to
the foregoing, to the consummation of the ATC Merger. The number of shares
beneficially owned by each director or executive officer is determined
according to the rules of the Commission, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares as to which the
individual or entity has sole or shared voting power or investment power and
also any shares which the individual or entity has the right to acquire within
sixty days of February 1, 1998 through the exercise of an option, conversion
feature or similar right. Except as noted below, each holder has sole voting
and investment power with respect to all shares of ATS Common Stock listed as
owned by such person or entity. For information with respect to ownership of
ARS Common Stock, see "Principal Stockholders of American Radio" in Appendix
I.

SHARES OF ATS COMMON STOCK BENEFICIALLY OWNED(1) AFTER ATC MERGER
-------------------------------------------------- -------------------------
PERCENT PERCENT PERCENT OF PERCENT OF PERCENT OF
OF OF COMMON TOTAL VOTING PERCENT OF TOTAL VOTING
NUMBER CLASS A CLASS B STOCK POWER COMMON STOCK POWER
---------- ------- ------- ---------- ------------ ------------ ------------

DIRECTORS AND EXECUTIVE
OFFICERS
Steven B. Dodge(2)...... 6,842,346 * 69.35 13.90 50.60 8.66 41.36
Thomas H. Stoner(3)..... 1,628,817 * 17.32 3.35 12.41 2.08 10.05
Alan L. Box(4).......... 848,428 2.34 -- 1.75 * 1.08 *
James S. Eisenstein(5).. 227,872 * * * * * *
J. Michael Gearon,
Jr.(6)................. 4,711,113 13.01 -- 9.70 3.72 6.01 3.01
Joseph L. Winn(7)....... 987,448 * 9.76 1.99 7.17 1.25 5.88
Arnold L. Chavkin
(CEA)(2)............... 3,327,829 * -- 6.85 * 12.83 4.32
All executive officers
and directors as a
group
(7 persons)(9)......... 18,573,854 16.26 86.96 36.84 69.11 45.16 67.35
DIRECTOR NOMINEES
Fred R. Lummis(10)...... -- -- -- -- -- + +
Randall Mays (Clear
Channel)(11)........... -- -- -- -- -- + +
FIVE PERCENT STOCKHOLD-
ERS
Baron Capital Group,
Inc.(12)............... 5,620,000 15.15 -- 11.58 4.44 7.17 3.59
Wellington Management
Company LLP(13)........ 1,929,676 5.33 -- 3.97 1.52 2.46 1.23
Massachusetts Financial
Services Company(14)... 2,741,774 7.57 -- 5.65 2.17 3.50 1.75
Lehman Brothers Holding
Inc.(15)............... 2,050,000 5.66 -- 4.22 1.62 2.62 1.31
Arthur C. Kellar(16).... 2,473,257 6.83 -- 5.09 1.95 3.16 1.58
Charlton H.
Buckley(17)............ 2,116,957 5.84 -- 4.36 1.67 2.70 1.35

- --------
* Less than 1%.

+ For information regarding the pro forma beneficial ownership of Messrs.
Lummis and Mays, see Notes 10 and 11.
(1) The number of shares of ATS Common Stock that each person or entity will
beneficially own immediately after the Tower Separation has been
calculated assuming that all of the ARS Options held by the directors and
executive officers of ATS (other than ARS Options to purchase an
aggregate of 84,010 shares of ARS Common Stock held by Mr. Box) will have
been exchanged for ATS Options, and that none of the other employees of
ATS entitled to exchange ARS Options for ATS Options exercise such
privilege. For purposes of determining such exchanges, which will be made
with respect to an aggregate of 803,916 shares of ARS Common Stock, the
relative values of ARS Common Stock and ATS Common Stock have been
assumed to be $54.00 and $10.00, respectively. See "Management of
American Tower Systems--Stock Option Information" and "The Merger and
Tower Separation--Certain Other Covenants--ARS Options". To the extent
ARS Options are not exercised or exchanged or have not expired prior to
the

Effective Time, the holders thereof will receive, in the Merger, a number
of shares of ATS Common Stock equal to the number of shares of ARS Common
Stock covered by such options.
(2) Mr. Dodge is Chairman of the Board, President and Chief Executive Officer
of American Tower Systems. His address is 116 Huntington Avenue, Boston,
Massachusetts 02116. Includes 75,950 shares of ATS Class A Common Stock
owned by Mr. Dodge. Does not include an aggregate of 885,600 shares of
ATS Class B Common Stock purchasable under ATS Options to be received in
exchange for ARS Options; includes an aggregate of 680,400 shares of ATS
Class B Common Stock as to which such options will be exercisable.
Includes an aggregate of 25,050 shares of ATS Class A Common Stock and
20,832 shares of ATS Class B Common Stock owned by three trusts for the
benefit of Mr. Dodge's children and 3,000 shares of ATS Class A Common
Stock owned by Mr. Dodge's wife. Mr. Dodge disclaims beneficial ownership
in all shares owned by such trusts and his wife. Does not include an
aggregate of 1,566,000 shares of ATS Class B Common Stock purchasable
under options granted on January 8, 1998 to Mr. Dodge under the Plan and
170 shares of ATS Class A Common Stock held by Thomas S. Dodge, an adult
child of Mr. Dodge, with respect to which Mr. Dodge disclaims beneficial
ownership.
(3) Mr. Stoner is Chairman of the Executive Committee of the ATS Board. His
address is 116 Huntington Avenue, Boston, Massachusetts 02116. Does not
include 21,600 shares of ATS Class A Common Stock purchasable under an
ATS Option to be received in exchange for an ARS Option; includes 5,400
shares of ATS Class A Common Stock as to which such option will be
exercisable. Includes 1,094,158 shares of ATS Class B Common Stock owned
by Mr. Stoner, 46,311 shares of ATS Class B Common Stock owned by his
wife and an aggregate of 424,448 shares of ATS Class B Common Stock and
58,500 shares of ATS Class A Common Stock owned by trusts of which he
and/or certain other persons are trustees. Mr. Stoner disclaims
beneficial ownership of 242,128 shares of ATS Class B Common Stock and
58,500 shares of ATS Class A Common Stock owned by such trusts. Does not
include 61,454 shares of ATS Class B Common Stock and 100,675 shares of
ATS Class A Common Stock owned by Mr. Stoner's adult children.
(4) Mr. Box is a director and Chief Operating Officer of American Tower
Systems. His address is 116 Huntington Avenue, Boston, Massachusetts
02116. Includes 846,358 shares of ATS Class A Common Stock owned by Mr.
Box and 2,070 shares of ATS Class A Common Stock owned by two trusts for
the benefit of Mr. Box's children. Does not include an aggregate of
540,000 shares of ATS Class A Common Stock purchasable under ATS Options
to be received in exchange for ARS Options. Does not include an aggregate
of 120,000 shares of ATS Class A Common Stock purchasable under options
granted on January 8, 1998 to Mr. Box under the Plan.
(5) Mr. Eisenstein is Executive Vice President-Corporate Development of
American Tower Systems. His address is 116 Huntington Avenue, Boston,
Massachusetts 02116. Includes 25,000 shares of ATS Class A Common Stock
owned by Mr. Eisenstein. Does not include an aggregate of 129,600 shares
of ATS Class B Common Stock purchasable under ATS Options to be received
in exchange for ARS Options; includes an aggregate of 86,400 shares of
ATS Class B Common Stock as to which such options will be exercisable.
Does not include an aggregate of 188,576 shares of ATS Class A Common
Stock purchasable under options originally granted by Tower Operating
Subsidiary which will become options to purchase ATS Class A Common Stock
pursuant to the transactions contemplated by the Merger; includes an
aggregate of 116,472 shares of ATS Class A Common Stock as to which such
options will be exercisable. Does not include an aggregate of 28,000
shares of ATS Class A Common Stock purchasable under options granted on
January 8, 1998 to Mr. Eisenstein under the Plan.
(6) Mr. Gearon is an Executive Vice President and director of American Tower
Systems. His address is 116 Huntington Avenue, Boston, Massachusetts
02116. Includes 4,240,002 shares of ATS Class A Common Stock owned by
Mr. Gearon and 471,111 shares of ATS Class A Common Stock held by a trust
for the benefit of Mr. Gearon's son of which J. Michael Gearon, Sr. is
the trustee. Mr. Gearon disclaims beneficial ownership in all shares
owned by such trust. Does not include an aggregate of 234,451 shares of
ATS Class A Common Stock purchasable under options granted on January 22,
1998 to Mr. Gearon under the Plan.
(7) Mr. Winn is a director, Treasurer and Chief Financial Officer of American
Tower Systems. Pursuant to the ATC Merger Agreement, Mr. Winn has agreed
to resign as a director upon the election of the ATC director nominees.
His address is 116 Huntington Avenue, Boston, Massachusetts 02116.
Includes 2,000 shares of

ATS Class A Common Stock and 7,948 shares of ATS Class B Common Stock
owned individually by Mr. Winn and 100 shares of ATS Class A Common Stock
held for the benefit of his children. Does not include an aggregate of
499,738 shares of ATS Class B Common Stock and 34,862 shares of ATS Class
A Common Stock purchasable under ATS Options to be received in exchange
for ARS Options; includes an aggregate of 968,684 shares of ATS Class B
Common Stock and 8,716 shares of ATS Class A Common Stock as to which such
options will be exercisable. Does not include an aggregate of 275,000
shares of ATS Class A Common Stock purchasable under options granted on
January 8, 1998 to Mr. Winn under the Plan.
(8) Mr. Chavkin is a director of American Tower Systems. His address is 116
Huntington Avenue, Boston, Massachusetts 02116. Mr. Chavkin, as a general
partner of CCP, which is the general partner of CEA may be deemed to own
beneficially shares held by CEA and Chase Manhattan Capital Corporation
("Chase Capital"), an affiliate of Mr. Chavkin. Giving effect to the
Tower Separation, CEA would own 26,911 shares of ATS Class A Common Stock
and 3,295,518 shares of ATS Class C Common Stock. Giving effect to the
ATC Merger, Chase Capital would own 5,379,160 shares of ATS Class A
Common Stock and Archery Partners, an affiliate of Chase Capital, would
own 1,345,024 shares of ATS Class A Common Stock. Mr. Chavkin disclaims
such beneficial ownership of such shares. The address of CCP and CEA is
380 Madison Avenue, 12th Floor, New York, New York 10017. Does not
include 21,600 shares of ATS Class A Common Stock purchasable under an
ATS Option to be received in exchange for an ARS Option; includes 5,400
shares of ATS Class A Common Stock as to which such option will be
exercisable. For information with respect to the ownership of shares of
ATC Common Stock by Chase Capital and Archery Partners, see "Principal
Stockholders of American Tower Corporation" in Appendix V.
(9) Includes all shares stated to be owned in the preceding notes and, in the
case of the post-ATC Merger information, that set forth in notes (10) and
(11) following.
(10) Mr. Lummis is the Chairman, Chief Executive Officer and President of ATC.
His address is 3411 Richmond Avenue, Suite 400, Houston, Texas, 77046.
Mr. Lummis beneficially owns 7,155 shares of ATC Common Stock. Giving
effect to the ATC Merger, Mr. Lummis would own 1,874,066 shares of ATS
Class A Common Stock representing 2.81%, 2.37% and 1.19% of the pro forma
ATS Class A Common Stock, ATS Common Stock and Voting Power,
respectively. Includes 14,944 shares of ATS Class A Common Stock that
will be owned by Mr. Lummis, an aggregate of 265,020 shares of ATS Class
A Common Stock owned by trusts of which he is trustee, 996,314 shares of
ATS Class A Common Stock owned by Summit, an affiliate of Mr. Lummis by
reason of Mr. Lummis' 50% ownership of the common stock of Summit, and
597,788 shares of ATS Class A Common Stock purchasable under an option
originally granted by ATC which will become an option to purchase ATS
Class A Common Stock pursuant to the ATC Merger. For information with
respect to his ownership of shares of ATC Common Stock, see "Principal
Stockholders of American Tower Corporation" in Appendix V.
(11) Mr. Mays is Chief Financial Officer and an Executive Vice President of
Clear Channel. His address is P.O. Box 659512, San Antonio, TX 78265-
9512. Clear Channel owns 46,814 shares of ATC Common Stock. Giving effect
to the ATC Merger, Clear Channel would own 9,328,288 shares of ATS Class
A Common Stock representing 14.13%, 11.91% and 5.97% of the pro forma ATS
Class A Common Stock, ATS Common Stock and Voting Power, respectively.
Mr. Mays disclaims beneficial ownership of Clear Channel's ownership of
ATC and ATS. See "Principal Stockholders of American Tower Corporation"
in Appendix V.
(12) The address of Baron Capital Group, Inc. ("Baron") is 767 Fifth Avenue,
New York, New York 10153. On a pro forma basis, based on Baron's
Amendment No. 2 to Schedule 13D dated February 2, 1998, Mr. Baron, the
president of Baron, will have sole voting power over 180,000 shares of
ATS Class A Common Stock, shared voting power over 1,896,600 shares of
ATS Class A Common Stock, sole dispositive power over 180,000 shares of
ATS Class A Common Stock and shared dispositive power over 1,896,600
shares of ATS Class A Common Stock. Mr. Baron disclaims beneficial
ownership of 5,620,000 shares of ATS Class A Common Stock.
(13) The address of Wellington Management Company LLP ("Wellington") is 75
State Street, Boston, Massachusetts 02109. On a pro forma basis, based on
its Schedule 13G (Amendment No. 2) dated August 8, 1997, Wellington will
have shared voting power over 985,313 shares of ATS Class A Common Stock
and shared dispositive power over 1,929,676 shares of ATS Class A Common
Stock.

(14) The address of Massachusetts Financial Services Company ("MFS") is 500
Boylston Street, Boston, Massachusetts 02116-3741. On a pro forma basis,
based on its Schedule 13G (Amendment No. 1) dated October 14, 1997, MFS
will have sole voting power over 2,558,984 shares of ATS Class A Common
Stock and sole dispositive power over 2,741,774 shares of ATS Class A
Common Stock.
(15) The address of Lehman Brothers Holding Inc. ("Lehman") is 3 World
Financial Center, 24th Floor, New York, New York 10285. On a pro forma
basis, based on its Schedule 13D dated January 23, 1998, Lehman will have
shared voting power over 2,050,000 shares of ATS Class A Common Stock and
shared dispositive power over 2,050,000 shares of ATS Class A Common
Stock.
(16) Mr. Kellar is a director of American Radio. His address is 116 Huntington
Avenue, Boston, Massachusetts 02116.
(17) Mr. Buckley is a director of American Radio. His address is 116
Huntington Avenue, Boston, Massachusetts 02116. Does not include 6,053
shares of ATS Class A Common Stock which are held by an adult child of
Mr. Buckley with respect to which Mr. Buckley disclaims beneficial
ownership.

THE ATC MERGER

On December 12, 1997, ATS entered into the ATC Merger Agreement pursuant to
which ATC will merge with and into ATS which will be the surviving
corporation. Pursuant to the ATC Merger, ATS will issue an aggregate of
approximately 31.1 million shares of ATS Class A Common Stock (including
shares issuable upon exercise of options to acquire ATC Common Stock which, to
the extent they are outstanding as of the effectiveness of the ATC Merger,
will become options to acquire ATS Class A Common Stock) and the ATC Preferred
Stock will be converted into the right to receive cash in the amount of
$200.00 per share (the "Preferred Stock Consideration"). The 31.1 million
shares of ATS Class A Common Stock will represent 35% of the aggregate number
of shares of ATS Common Stock which would be outstanding on a pro forma basis,
assuming consummation of the ATC Merger, the Merger, the exercise of all ATS
and ATC stock options currently proposed to be outstanding and the conversion
of all ARS Convertible Preferred Stock.

BACKGROUND OF THE MERGER

The ATS Board and the Board of Directors of ATC each believes that the ATC
Merger Agreement and the transactions contemplated thereby (including the
respective proportions of the combined company to be owned by the ATS common
stockholders and the ATC common stockholders) are fair to, and in the best
interests of, its respective stockholders. ARS, as the then sole ATS
stockholder, has approved the ATC Merger Agreement and the transactions
contemplated thereby. Approval of the holders of a majority of the ATC Common
Stock will be required to approve and adopt the ATC Merger Agreement and
approve the ATC Merger.

The ATC Board of Directors believes that the terms of the ATC Merger are
fair to and in the best interest of ATC and its stockholders. In approving the
ATC Merger Agreement and the transactions contemplated thereby, and in
recommending that the ATC stockholders approve the same, ATC's Board of
Directors consulted with ATC's management, as well as its financial advisors
and considered a number of factors including, but not limited to: (i) the
potential for increasing and accelerating ATC's long-term objective of
establishing a national tower network; (ii) the structure of the transaction
in terms of the ATC Merger Agreement, including the consideration to be
received by ATC's stockholders, which were the result of arm's length
negotiations between ATS and ATC; (iii) the fact that the ATC Merger would
enhance the liquidity of the investment of the holders of ATC common stock by
converting their common stock into a publicly traded security; (iv)
consolidation benefits that would be available to the combined entity after
the ATC Merger; and (v) the expectation that the ATC Merger will afford ATC
stockholders the opportunity to receive ATS Class A Common Stock in a
transaction that is non-taxable for U.S. federal income tax purposes.

In determining that the ATC Merger was fair to and in the best interest of
ATC's stockholders, the ATC Board of Directors considered the factors above as
a whole and did not assign specific or relative weights to such factors. The
ATC Board of Directors believes that the ATC Merger is an opportunity for
ATC's stockholders to participate in a combined enterprise that has
significantly greater business and financial resources than ATC would have
absent the ATC Merger.

The ATS Board, in reaching its conclusions, considered the factors discussed
below. In view of the wide variety of factors considered in connection with
the evaluation of the ATC Merger, the ATS Board did not find it practicable,
nor did it attempt, to quantify or otherwise to assign relative weights to the
specific factors it considered in reaching its determinations.

Amount and Form of ATC Merger Consideration. The ATS Board viewed favorably
the exchange ratio (the "ATC Merger Consideration") and the proportions of the
combined company to be owned by the ATS stockholders and the ATC stockholders.
Such determination was based on all of the factors discussed herein. The ATS
Board also viewed as favorable the fact that the ATC Merger would result in a
decrease in the combined company's leverage ratios, thereby enabling ATS to
continue the construction activities of both companies which were viewed as
essential to the long term growth of ATS.

Other Terms of the ATC Merger Agreement. The ATS Board considered the legal
and other financial terms of the ATC Merger Agreement. The ATS Board gave
consideration to, in addition to the amount and form of

consideration offered to the ATC stockholders, the provisions of the ATC
Merger Agreement that would permit ATS to terminate the agreement, if the
Merger had not occurred and the ATS Board determined that consummation of the
Tower Separation was not in the best interests of the ATS common stockholders,
upon the payment of $15.0 million (together with reimbursement of reasonable
out-of-pocket fees and expenses up to $1.0 million). Finally, the ATS Board
considered the absence of any term or condition in the ATC Merger Agreement
that was unduly onerous or could materially impede or impair the consummation
of the ATC Merger.

Industry Changes and Consolidation. The ATS Board was aware of the changes
that are taking place and will take place in the wireless communications and
broadcasting industries, as well as the consolidation that had been taking
place in the communications site industry. Particularly as a result of the
outsourcing by many wireless carriers and the growth in build to suit
projects, the ATS Board viewed as favorable the increased size and capacity
that the combination with ATC would achieve, and believed that such fact would
enhance its ability to compete effectively in the build to suit market and, of
equal importance, to be able to provide enhanced levels of service to the much
larger carriers, wireless and broadcasting, that dominate the communications
industry.

ATS' and ATC's Business, Conditions and Prospects. In evaluating the terms
of the ATC Merger, the ATS Board reviewed, among other things, information
with respect to the financial condition, results of operations and businesses
of ATS and ATC, on both an historical and prospective basis, and current
industry, economic and market conditions. In evaluating ATS' and ATC's
prospects and the terms of the ATC Merger, the ATS Board considered, among
other things, the strengths and weaknesses of the two companies. Included in
that consideration were the financial, accounting and computer systems and
programs that ATC had available to it, the depth and quality of its employees,
the location and clustering of its communications sites, and the identity of
its stockholders. In this connection, management had prepared and presented to
the ATS Board various financial projections with respect to ATS and had
received comparable projections from ATC. Among the specific financial
information considered were the following: (a) debt levels of the two
companies anticipated to exist at the time of the merger and at December 31,
1998; (b) financial projections of the two companies with respect to operating
cash flow for 1998 and fourth quarter of 1998; (c) revenue per tower
information with respect to ATC; (d) a summary of ATC's acquisitions,
including prices paid (and the then current multiples of annualized revenues)
as compared to current annualized revenues and the multiple thereof
represented by the purchase price; and (e) a summary of construction
opportunities for ATC (potential and expected) and the likely customer or
customers. One of the more significant factors in determining the relative
value of the two companies was the fact that ATC was engaged exclusively in
the ownership and operation of communications sites, an activity that was
considered to command a higher multiple of operating cash flow than certain
aspects of ATS' business (the site acquisition business and the voice, video
and data transmission business).

Depending on the period measured, the multiple applied, and whether such
multiple was, in the case of ATS, applied to its overall business or whether
different multiples were used for the different aspects of ATS' business, the
information considered by the ATS Board indicated a range of comparative
values for the two companies. For example, based on applying the same
multiples (ranging from 12 times to 15 times) to all aspects of ATS' business,
the percentage allocable to ATC ranged from 36.4% to 31.7% annualizing
estimated 1997 fourth quarter EBITDA, 31.2% to 28.0% using estimated 1998
EBITDA, and 31.8% to 29.7% annualizing estimated 1998 fourth quarter EBITDA.
However, using blended multiples (17.2 times for tower rental business, 8.0
times for site acquisition business, and 6.0 for audio, video and data
transmission business, which resulted in a "blended" rate for ATS of 14.0
times EBITDA), the percentage allocable to ATC was 42.5% (based on annualized
1997 fourth quarter EBITDA), 37.2% (based on estimated 1998 EBITDA), and 36.9%
(based on annualized estimated 1998 fourth quarter EBITDA). When an 18.7
(rather than 17.2) multiple (resulting in a "blended" rate for ATS of 15.0
times EBITDA) was applied to tower rental business, ATC's percentage
allocations were 41.4%, 36.4% and 36.4%, respectively.

Other Acquisition Information. The ATS Board also considered the historical
prices that had been paid by it for other communications sites companies,
although this was a factor of less importance given the fact that none of the
prior acquisitions were of companies of a comparable size or state of
development as ATC.

ATS management did not believe that the obtaining of a fairness opinion from
an independent investment banking firm in connection with the ATC Merger was
necessary. ATS management believed that it could evaluate and make a
recommendation to the ATS Board with respect to the fairness of the ATC
Merger, without the need of any such opinion. Among the factors leading to
that conclusion were management's prior experience in acquiring other
companies in the communications site industry, the extensive experience that
management had over twenty years in buying and selling businesses in the cable
and radio broadcasting industries, and the absence of any conflict of interest
on the part of any member of management (and the fact that the one member of
the ATS Board who had a conflict of interest abstained from participating in
any of the negotiations of the terms and conditions of the ATC Merger).

ATC required, as conditions of consummation of the ATC Merger, that (i) the
ATS Class A Common Stock be publicly traded and (ii) the ATC Merger occur on
or prior to May 31, 1998. While management believes that the merger with CBS
(which will result in such a public trading market) will be consummated prior
to that time, since clearance of the Merger by the Justice Department under
the HSR Act and FCC approval of the transfer of ARS' FCC licenses to CBS are
not within the control of either ARS or CBS, ATC was not willing to enter into
the ATC Merger Agreement unless an alternative means of creating such a public
trading market was included. Accordingly, provisions were added to the ATC
Merger Agreement and the Merger Agreement to provide for such separation
through the Tower Merger, which could be effected on June 1, 1998, if the
Merger has not been consummated on or prior to May 31, 1998. See "The Merger
and Tower Separation--Tower Merger". Management believes that the merger with
CBS will be consummated by such time and therefore intends to consummate the
Tower Merger only if required to timely consummate the ATC Merger. However, in
light of the adverse federal income tax consequences to the ARS common
stockholders should the Tower Merger occur and the merger with CBS not occur,
the ARS Board intends to evaluate all of the facts and circumstances existing
at the time of any proposed consummation of the Tower Merger to determine
whether it is in the best interests of the ARS common stockholders,
notwithstanding such adverse tax consequences. In that connection, the ARS
Board will also consider the provision of the ATC Merger Agreement which
provides for a termination fee to ATC of $15.0 million (together with
reimbursement of reasonable out-of-pocket expenses up to an aggregate of $1.0
million) in the event that such agreement is terminated because of the failure
of either the Merger or the Tower Merger to occur on or prior to May 31, 1998.
Such termination fee would be the sole and exclusive recourse of ATC in the
event of any such termination. See "The Merger and Tower Separation--Certain
Federal Income Tax Consequences of ATC Merger".

Consummation of the ATC Merger is also conditioned on, among other things,
the expiration or earlier termination of the HSR Act waiting period. On
January 28, 1998, the Justice Department issued a Second Request with respect
to the ATC Merger. ATS and ATC are in the process of compiling the information
requested by the Justice Department and intend to meet with its
representatives to address any questions they may have regarding such
information. (For information on the effects of a Second Request, see "The
Merger and Tower Separation--Regulatory Matters--Antitrust".)

In light of the fact that ARS management would prefer not to consummate the
Tower Merger (which would occur prior to the consummation of the Merger with
the consequence of two publicly traded companies), the ATC Merger is not
expected to be consummated prior to the spring of 1998, which is the
anticipated timing for consummation of the Merger.

It is a condition of ATC's obligation to consummate the ATC Merger that
Messrs. Dodge and Stoner shall have entered into a voting agreement with ATC
and certain of the ATC common stockholders, pursuant to which Messrs. Dodge
and Stoner will have agreed to vote in favor of the election of each of
Messrs. Lummis and Mays (or any other nominee of Mr. Lummis and Clear Channel
reasonably acceptable to the ATS Board) so long as Messrs. Lummis and Clear
Channel (or their respective affiliates), as the case may be, hold at least
50% of the shares of ATS Class A Common Stock to be received by him or it, as
the case may be, in the ATC Merger.

Chase Capital, which is an affiliate of Chase Equity Associates, a
stockholder of ARS, and of Mr. Chavkin, a director of ARS, owned approximately
18.1% of the ATC common stock as of February 1, 1998 and has a

representative on the ATC Board of Directors. See "Principal Stockholders of
American Tower Systems" below and "Principal Stockholders of American Tower
Corporation" in Appendix V to this Prospectus. Summit Capital, Inc. ("Summit
Capital") is entitled upon closing of the ATC Merger to receive from ATC a
$2.25 million financial advisory fee. Fred Lummis, President and Chief
Executive Officer of ATC, is an affiliate of Summit Capital.

The provisions of the ATC Merger Agreement are comparable to those customary
in similar transactions, including without limitation (a) detailed,
substantially identical representations and warranties of ATS and ATC; (b)
covenants as to the interim conduct of the business of ATS and ATC (including
the necessity of approval of the other party for acquisitions or construction
commitments not therein disclosed and over certain specified amounts); (c)
agreements of ATS to (i) indemnify the officers and directors of ATC and to
maintain officer and director insurance for their benefit, (ii) maintain
employment benefits for a period of one year for officers and employees of
ATC, both on terms and conditions comparable to those which CBS has agreed to
in the Merger Agreement, and (iii) continue the employment of ATC employees at
existing salary levels for a period of one year; (d) closing conditions,
(including (i) the delivery of customary closing opinions, (ii) the receipt of
opinions of counsel as to the federal income tax consequences of the ATC
Merger to the parties and, in the case of ATC, its stockholders, (iii) the
election of Messrs. Lummis and Mays as directors of ATS; and (iv) the
amendment of the ATS Restated Certificate to (A) prohibit future issuances of
ATS Class B Common Stock (except upon exercise of then outstanding options and
pursuant to stock dividends or stock splits), (B) limit transfers of the ATS
Class B Common Stock, (C) limit Steven B. Dodge's voting power to 49.99%,
(less the voting power represented by the shares of Class B Common Stock
acquired by the Stoner purchasers pursuant to the ATS Private Placement and
still owned by them), (D) provide for automatic conversion of the ATS Class B
Common Stock to ATS Class A Common Stock should Mr. Dodge's aggregate voting
power fall below either (i) 50% of his initial aggregate voting power
(immediately after consummation of the ATC Merger) or (ii) 20% of the
aggregate voting power of all shares of ATS Common Stock at the time
outstanding, and (E) require consent of the holders of a majority of ATS Class
A Common Stock for amendments adversely affecting the ATS Class A Common
Stock; (e) the nonsolicitation of employees in the event of termination of the
ATC Merger Agreement; (f) a termination fee of $15.0 million (together with
reimbursement of reasonable out-of-pocket fees and expenses up to $1.0
million) payable to (i) ATS in the event that the ATC stockholders do not
approve the ATC Merger Agreement, and (ii) ATC in the event that (A) neither
the Merger nor the Tower Merger has occurred on or prior to May 31, 1998, or
(B) if required, approval of the ATC Merger by the ARS common stockholders has
not been obtained; and (g) the nonsurvival of the representations and
warranties of both parties. The ATC Merger Agreement provides, among other
conditions of consummation, that there shall not have been any event which
shall have had a Material Adverse Effect (as defined in the ATC Merger
Agreement) on ATS or ATC.

A copy of the ATC Merger Agreement is attached herewith as Appendix VI.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF ATC MERGER

The following discussion summarizes certain federal income tax consequences
of the ATC Merger, including certain consequences to holders of ATC Common
Stock and ATC Preferred Stock who are citizens or residents of the United
States and who hold their shares as capital assets. It does not discuss all
aspects of federal income taxation that may be relevant to a particular holder
of ATC Common Stock or ATC Preferred Stock in light of the holder's personal
circumstances or special federal income tax treatment (such as foreign
persons, insurance companies, regulated investment companies, dealers in
securities, certain retirement plans, financial institutions, tax exempt
organizations, persons subject to the alternative minimum tax, persons that
have a functional currency other than the U.S. dollar, persons who have
received ATC Common Stock or ATC Preferred Stock in connection with the
performance of services or upon exercise of options received in connection
with the performance of services, or persons who hold ATC Common Stock or ATC
Preferred Stock as part of a straddle, hedging transaction or conversion
transaction). In addition, this summary does not address any aspects of state,
local, foreign or other tax laws that may be relevant to holders of ATC Common
Stock or ATC Preferred Stock.

It is the policy of the Internal Revenue Service (the "IRS") not to rule
directly on the tax status of transactions such as the ATC Merger, and no such
ruling will be sought. The obligations of ATS and ATC to effect the ATC Merger
are each conditioned upon receipt by each from its counsel of an opinion dated
as of the effective time of the ATC Merger, in form and substance reasonably
satisfactory to it, regarding certain federal income tax consequences of the
ATC Merger. Such opinions are required to be collectively substantially to the
effect that for federal income tax purposes the ATC Merger constitutes a
reorganization within the meaning of section 368 of the Code, that no gain or
loss will be recognized by ATS or ATC as a result of the ATC Merger and that
no gain or loss will be recognized by United States holders of ATC Common
Stock as a result of the ATC Merger, except that gain or loss will be
recognized in respect of cash received in lieu of a fractional share of ATS
Common Stock. In rendering their opinions, counsel will rely upon, and assume
the factual accuracy of, representations of ATS, ATC, and certain holders of
ATC Common Stock, including a representation that there is no plan or intent
on the part of the holders of ATC Common Stock receiving ATS Common Stock to
engage in a sale or other disposition of such stock that would result in the
reduction of the ownership of shares of ATS Common Stock received by the
holders of ATC Common Stock in the ATC Merger to a number of shares having a
value as of the Effective Time less than 50% of the aggregate fair market
value of all the outstanding shares of ATC Common Stock and ATC Preferred
Stock at such time. Such opinions are not binding on the IRS and would not, in
any event, prevent the IRS from challenging the tax-free nature of the ATC
Merger under the Code.

The following discussion is a general summary of the material United States
federal income tax consequences of the ATC Merger and assumes that the ATC
Merger will qualify as a tax-free reorganization within the meaning of section
368 of the Code. Sullivan & Worcester, tax counsel to ATS, has rendered its
opinion (a copy of which has been filed as an exhibit to the Registration
Statement) that the discussion contained in this section describes the
material federal income tax consequences of the ATC Merger. The discussion is
based upon the Code, regulations proposed or promulgated thereunder, judicial
precedent relating thereto, and current rulings and administrative practice of
the IRS, in each case as in effect as of the date hereof, all of which are
subject to change at any time, possibly with retroactive effect.

Tax Consequences to ATS and ATC. No gain or loss will be recognized for
federal income tax purposes by ATS or ATC as a consequence of the ATC Merger.

Tax Consequences to Holders of ATC Common Stock. Except to the extent of
cash received in lieu of fractional shares (discussed below), no gain or loss
will be recognized by a holder of ATC Common Stock who receives ATS Common
Stock pursuant to the ATC Merger. Except to the extent of tax basis allocable
to cash received in lieu of fractional shares (discussed below), the tax basis
of the ATS Common Stock received by a holder of ATC Common Stock will be the
same as the aggregate tax basis of the ATC Common Stock surrendered therefor.
The holding period of the ATS Common Stock received will include the holding
period of the ATC Common Stock surrendered therefor.

Cash received by a holder of ATC Common Stock in lieu of a fractional share
interest in ATS Common Stock will be treated as received in exchange for such
fractional share interest, and gain or loss will be recognized for federal
income tax purposes, measured by the difference between the amount of cash
received and the portion of the basis of the ATC Common Stock allocable to
such fractional share interest (measured as though such fractional share
interest were actually issued and allocated tax basis pursuant to the above
allocation). Such gain or loss would be capital gain or loss, and will be
long-term if such share of ATC Common Stock had been held for more than one
year at the effective time of the ATC Merger. Amounts treated as long-term
capital gain are subject to taxation of varying rates, depending among other
things on the holding period of the property disposed of and the tax status of
the holder.

Notwithstanding the above, because ATC is a "United States real property
holding corporation" as defined in section 897 of the Code, certain U.S. flow-
through entities such as partnerships, trusts, and estates may have a tax
withholding liability under Section 1445 of the Code in respect of the gain
realized on their ATC Common Stock in the ATC Merger that is allocable to such
flow-through entity's foreign partners or beneficiaries.

Tax Consequences to Holders of ATC Preferred Stock. The treatment accorded
to the exchange of ATC Preferred Stock for cash pursuant to the ATC Merger can
only be determined on the basis of the particular facts of each holder of ATC
Preferred Stock. In general, a holder of ATC Preferred Stock will recognize
gain (but not loss) measured by the difference between the amount of cash
received by the holder for its ATC Preferred Stock pursuant to the ATC Merger
and such holder's adjusted tax basis in the ATC Preferred Stock surrendered.
Such recognized gain will be capital gain if the exchange is "not essentially
equivalent to a dividend" with respect to the holder under section 302(b)(1)
of the Code, and will be taxed as a dividend distribution otherwise to the
extent of such holder's share of ATC's earnings and profits for federal income
tax purposes. In determining whether or not the exchange is "not essentially
equivalent to a dividend" each holder's ownership of ATS Common Stock
following the ATC Merger, as well as any options to acquire any ATS Common
Stock, must be taken into account. A holder of ATS Preferred Stock must also
take into account for these purposes ATS Common Stock that is considered to be
owned by such holder by reason of the constructive ownership rules set forth
in section 318 of the Code.

If a holder of ATC Preferred Stock owns (actually or constructively) only an
insubstantial percentage of the outstanding ATS Common Stock following the ATC
Merger, it is probable that the exchange of the ATC Preferred Stock for cash
pursuant to the ATC Merger will be considered "not essentially equivalent to a
dividend," and hence that the recognized gain from such disposition will
constitute capital gain. Such capital gain will constitute long-term capital
gain if the holder's holding period in the ATC Preferred Stock surrendered
exceeds one year. Amounts treated as long-term capital gain are subject to
taxation at varying rates, depending among other things on the holding period
of the property disposed of and the tax status of the holder.

Backup and FIRPTA Withholding. Under the Code, a holder of ATC Common Stock
or ATC Preferred Stock may be subject, under certain circumstances, to back-up
withholding at a 31% rate with respect to the amount of cash received pursuant
to the ATC Merger unless such holder provides to the exchange agent proof of
an applicable exemption or a correct taxpayer identification number, and
otherwise complies with applicable requirements of the back-up withholding
rules to be described in more detail in the exchange transmittal documents. In
addition, because ATC is a "United States real property holding corporation"
as defined in section 897 of the Code, the total consideration otherwise
issuable to a holder of ATC Common Stock or ATC Preferred Stock pursuant to
the ATC Merger will be subject to withholding of 10% of such total amount,
unless prior to the effective time of the ATC Merger and pursuant to
instructions to be mailed to holders of ATC Common Stock and ATC Preferred
Stock prior to such effective time, such holder certifies to ATS under
penalties of perjury that the holder is a citizen or resident of the United
States, a domestic corporation, a domestic partnership, or other United States
person as defined in Code section 7701(a)(30), and provides such other
customary information as may be required in connection with such
certification. Amounts withheld under the foregoing withholding rules are not
an additional tax and may be refunded or credited against the holder's federal
income tax liability, provided that the required information is furnished to
the IRS.

HOLDERS OF ATC COMMON STOCK OR ATC PREFERRED STOCK SHOULD CONSULT THEIR TAX
ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE ATC MERGER,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY FEDERAL, STATE, LOCAL AND
FOREIGN INCOME AND OTHER TAX LAWS.

THE FOREGOING SECTION IS A SUMMARY DESCRIPTION OF MATERIAL FEDERAL INCOME
TAX CONSEQUENCES OF THE ATC MERGER AND RELATED TRANSACTIONS, WITHOUT
CONSIDERATION OF THE PARTICULAR FACTS AND CIRCUMSTANCES OF ANY HOLDER OF ATC
COMMON STOCK. IN ADDITION, IT DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX
ASPECTS OF THE ATC MERGER AND RELATED TRANSACTIONS. THE DISCUSSION IS BASED ON
CURRENTLY EXISTING PROVISIONS OF THE CODE, EXISTING AND PROPOSED TREASURY
REGULATIONS THEREUNDER AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS.
ALL OF THE FOREGOING ARE SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT
THE CONTINUING VALIDITY OF THE DISCUSSION.

EXCHANGE PROCEDURES

As soon as reasonably practicable after the effective time of the ATC Merger
(the "ATC Merger Effective Time"), an Exchange Agent (the "Exchange Agent"),
selected by ATS and not reasonably disapproved of by ATC, will mail to each
holder of record of a certificate or certificates of ATC which immediately
prior to the ATC Merger Effective Time evidenced outstanding shares of ATC
Common Stock or ATC Preferred Stock (the "Certificates") (i) a letter of
transmittal and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the ATC Merger Consideration, or in the case of
the ATC Preferred Stock, the Preferred Stock Consideration.

Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with the letter of transmittal, duly executed, and such other
documents as ATS or the Exchange Agent may reasonably request, the holder of
such Certificate will be entitled to receive promptly in exchange therefor (i)
the certificates representing that number of shares of ATS Class A Common
Stock (together with any cash in lieu of fractional shares) that such holder
has the right to receive (in each case less the amount of any required
withholding taxes, if any), or (ii) in the case of holders of ATC Preferred
Stock, the Preferred Stock Consideration that such holder has the right to
receive pursuant to the ATC Merger Agreement, and the Certificate so
surrendered shall forthwith be canceled. Until surrendered, each Certificate
will, at any time after the ATC Merger Effective Time, represent only the
right to receive the ATC Merger Consideration or the Preferred Stock
Consideration with respect to the shares of ATC Common Stock or ATC Preferred
Stock formerly represented thereby.

HOLDERS OF ATC COMMON STOCK SHOULD SEND CERTIFICATES TO THE EXCHANGE AGENT
ONLY AFTER THEY RECEIVE, AND IN ACCORDANCE WITH THE INSTRUCTIONS ACCOMPANYING,
THE LETTER OF TRANSMITTAL.

No fractional shares of ATS Class A Common Stock will be issued upon the
surrender for exchange of Certificates. In lieu of any such fractional shares,
the holders thereof will be entitled to receive from the Exchange Agent a cash
payment equal to such fraction multiplied by the closing price per share of
ATS Class A Common Stock on Nasdaq, or, if not then traded on Nasdaq, on the
principal stock exchange on which the ATS Class A Common Stock is admitted to
trading, as reported by the The Wall Street Journal, for the first trading day
immediately following the ATC Merger Effective Date.

No dividends or other distributions declared after the ATC Merger Effective
Time on ATS Common Stock will be paid with respect to any shares of ATS Common
Stock represented by a Certificate until such Certificate is surrendered for
exchange in accordance with the procedures described above.

BACKGROUND OF THE MERGER

GENERAL BACKGROUND

The radio broadcasting industry has undergone significant changes in the
last several years in anticipation and, after February 1996, as a consequence
of a new regulatory structure. The passage of the Telecommunications Act of
1996 (the "Telecommunications Act") fundamentally altered the landscape in the
radio broadcasting industry by dramatically expanding the number of radio
stations that could be owned in a local market and eliminating all FCC
restrictions on the number of stations that could be owned nationwide by a
single entity. In anticipation of those changes, ARS began to pursue, and
after such legislation was enacted pursued even more aggressively, the
acquisition of additional radio stations in new and existing markets, in order
to achieve, among other things, increased size and greater geographic
diversification. ARS intended to increase its presence in these markets
through further acquisitions, as well as to expand into new markets. ARS
concentrated these efforts in markets ranked in the top 60 (with an emphasis
on markets ranked 10 through 50) in terms of radio advertising revenues where
management had believed it could have ultimately achieved a substantial market
position. When evaluating acquisition opportunities in new markets, ARS
assessed the potential to achieve a strong position in audience share and to
generate significant cash flow growth through owning multiple stations and
through improved programming, marketing, sales and operating efficiencies.

Commencing in the spring of 1997, ARS perceived a change in the nature of
the consolidation taking place in the radio broadcasting industry with a shift
from local or regional acquisitions to mergers between more substantial
companies beginning to accelerate. As a consequence, ARS began to consider and
evaluate possible strategic alternatives for ARS, including potential major
transactions with third parties. In August 1997, American Radio announced that
it was exploring ways to maximize stockholder value in the immediate future.
On behalf of ARS, Credit Suisse First Boston contacted thirteen potential
merger or acquisition candidates, eleven of whom were engaged in the radio
broadcasting industry and two of which were leveraged buyout firms or
financial companies. Of these thirteen, eleven signed confidentiality
agreements and received an informational memorandum prepared by ARS. The
informational memorandum contained detailed historical and projected financial
information with respect to ARS' radio broadcasting business distribution of
revenues by stations and markets, station rating information, "value" of
"underdeveloped" stations, and historical and projected financial information
with respect to the communications site business. Management consulted with
Credit Suisse First Boston as to the companies to whom the informational
memorandum should be sent, recognizing that such companies would need to have
the financial resources to be able to consummate a transaction with ARS. The
prospective bidders were advised to submit their best and final bid to ARS no
later than September 19, 1997.

During the course of the due diligence which was conducted by the
prospective bidders, ARS made clear to them that their bids were to relate
solely to ARS' radio broadcasting business and not to the communications site
business. The ARS Board had concluded that the separation of the
communications site business through the distribution of ATS Common Stock to
the ARS common stockholders would enable such stockholders to realize a
greater value, in the long run, than if the communications site business had
been offered for sale as part of the radio broadcasting business. The ARS
Board based such belief on two principal groups of factors: (i) factors
affecting the communications site industry, including that the communications
site business was a new one as far as the market place was concerned, that
there were no publicly traded communications site companies, and that the
amount of information publicly available about such industry was limited,
together with the ARS Board's knowledge with respect to the prices at which
companies in the industry were being bought and sold; and (ii) factors
affecting ATS, including that ATS was in the very early stages of development,
that ATS was engaged in a major acquisition program only a portion of which
had been completed, that ATS had not had the opportunity to consolidate its
acquisitions and to begin to reap the benefits of such acquisition program,
and that ATS' construction activities had been relatively minimal (compared to
its projected program) and therefore the benefits of such program were in the
future. See also the discussion below under "The Merger and Tower Separation--
Reasons for the Tower Separation".

The principal alternatives to a cash sale of the radio broadcasting business
to another radio broadcasting company considered by the ARS Board were (i) an
acquisition by ARS of another radio broadcasting company, including one which
might be larger than ARS, in which management of ARS would be the continuing
management, (ii) a merger of ARS with another radio broadcasting company in
which stock or other securities of the other company would be the principal
consideration and in which management of the other company would be the
continuing management, and (iii) a management cash buyout, financed by a
leverage buyout firm or other financial institutions. All of the alternatives
were ultimately rejected, some (the management leveraged buyout) earlier than
others for the reasons explained in more detail below and which can be
summarized as follows: (a) the ARS Board did not believe ARS had the capacity,
either financially or, equally importantly from management's perspective,
operationally to continue to operate effectively and grow a company which was
engaged, to such a significant extent, in both the radio broadcasting business
and the communications site business, and (b) the ARS Board's evaluation of
the current and long term values of potential stock merger candidates.

On September 12, 1997, one of the prospective bidders, CBS, indicated that
it was not willing to participate in a bidding process and that, if it had not
negotiated and executed a definitive merger agreement prior to the time when
bids were due, it would not submit a bid. No bids had been received by ARS at
the time, although that fact was not revealed to CBS. ARS indicated that it
was willing to enter into negotiations with CBS, but that it would not stop
the bidding process unless and until a satisfactory merger agreement was
executed by ARS and CBS. ARS' willingness to enter into negotiations with CBS
was based on a number of factors: (i) its belief that CBS was the most likely
(and probably the only) all cash purchaser; (ii) ARS' indication to CBS that
it would not (and it did not) terminate the bidding process until after an
agreement had been reached with CBS; and (iii) its belief (based on its
knowledge of what the management of CBS with whom it was negotiating had done
in other similar situations) that CBS was serious in its intention not to
participate in the bidding process and its belief that it was essential that
CBS not be eliminated as a potential purchaser. On September 15, 1997, CBS
advised ARS that it was willing to pay $2.5 billion for ARS' radio
broadcasting business, which amount included the assumption of all ARS
indebtedness as well as the liquidation preference of the ARS Preferred Stock.
Such amount resulted in a per share price for the ARS Common Stock of
approximately $41.30. ARS indicated that such offer was inadequate and further
negotiations ensued. An agreement in principle on a $2.6 billion overall or
$44.00 per share price was reached on September 16, 1997. However, while an
agreement in principle with respect to price had been reached, a number of
material financial and legal issues remained to be resolved, CBS had not
conducted its due diligence investigation and a definitive merger agreement
remained to be negotiated. Thereafter, CBS conducted its due diligence and
representatives of ARS and CBS negotiated the terms and conditions of the
definitive merger agreement. Such negotiations were completed on September 19,
1997.

An informational meeting of the ARS Board took place by telephone conference
on September 17, 1997, at which all of the directors other than Messrs. Kellar
and Primis were present. Also in attendance were representatives of Credit
Suisse First Boston, Sullivan & Worcester LLP, counsel for ARS ("Sullivan &
Worcester") and Sullivan & Cromwell, counsel for Credit Suisse First Boston.
Credit Suisse First Boston presented certain informational material and
analyses (described in detail below under "--Opinion of Financial Advisor to
American Radio"), including an overview of the transaction, the background to
the offer, a list of the persons who had been furnished information concerning
ARS and invited to participate in the bidding process, and the financial terms
of the CBS offer. Also included in the material presented by Credit Suisse
First Boston was its evaluation of the likely form (all or predominantly
stock) of potential bids to be received by those companies that had indicated
they were likely to submit a bid and the likely range of those bids, to the
extent known by it. Among the matters reviewed by the directors were the
market performance of the ARS Common Stock and trading statistics, and various
valuation analyses. The nature of the CBS bid was discussed, including the
risks associated with accepting or not accepting it before determining the
results of the bidding process.

Mr. Dodge then explained in detail the reasons why he was recommending the
sale of the radio broadcasting business at this time and why he favored the
CBS proposal. Among Mr. Dodge's concerns were the high

multiples at which radio companies were trading and his opinion that there
were substantial risks that those multiples may not be sustained. In that
regard, Mr. Dodge considered the factors that might cause such multiples to
decline substantially, including the failure of a leading radio broadcaster to
achieve expected results, an economic or stock market decline, and regulatory
and technological factors. He also advised the directors that he was
concerned, in light of the known discussions that were currently taking place
among the larger companies in the industry, that, in the not too distant
future, if ARS did not act promptly, the number of prospective bidders would
be considerably smaller than at present (and that the antitrust and FCC
regulatory problems most of such bidders would face in merging with ARS would
have been exacerbated) and that perhaps none of them would be able to offer an
all or predominantly cash transaction. Mr. Dodge also believed that once a
"deal" had been reached with CBS, it would be consummated based on CBS' record
of successfully closing large mergers and acquisitions. He then outlined the
history of his negotiations with Mr. Mel Karmazin, who negotiated the
transaction on behalf of CBS and who is the Chairman and Chief Executive
Officer of the CBS Stations Group. With the assistance of Credit Suisse First
Boston, Mr. Dodge advised the ARS Board, based upon discussions between Mr.
Dodge and one of the potential bidders and between representatives of Credit
Suisse First Boston and certain of the other potential bidders, on the
prospects of other bids, who might be making them what form the consideration
might take, and, if known, the amount of such bids, based on the respective
current market prices per share of the potential bidders' common stock. In
that connection, Mr. Dodge and representatives of Credit Suisse First Boston
reported to the ARS Board that based on preliminary indications from potential
bidders to date it appeared likely that a maximum of three bids (other than
the CBS offer) would be received, that all of those bids would be from other
radio broadcasting companies, and that in two, and possibly three cases, the
consideration to be offered would consist solely of common stock (with the
possibility in one case of convertible preferred stock), and that while one
bidder might possibly offer some cash, the amount was not likely to be
significant in light of certain other transactions that bidder had recently
announced. The ARS Board was then advised as to what the amount of each of
such bids was likely to be which in a majority of the cases was approximately
the same as that of CBS (valuing such bids on the current trading levels per
share of the bidders' common stock), although in one case a higher number had
been mentioned. The ARS Board then proceeded to consider at length the merits
of the CBS offer and the potential other bids. Among the factors considered
was the likelihood and timing of consummation of the CBS transaction compared
to those of the other potential bidders. Mr. Dodge expressed the view that he
believed a merger with CBS involved far fewer regulatory problems which could
be resolved far quicker than those with two of the other potential bidders and
that while the regulatory fit with the third bidder was somewhat more
favorable than with CBS, he did not believe the difference was material or
should be considered as an important factor. An extended discussion ensued on
the comparative "value" of the CBS cash offer and those likely to be received
from the other potential bidders. The ARS Board, with the assistance of Mr.
Dodge, considered the management and reputation of the other bidders, the
nature of their respective businesses, including in one case businesses other
than the radio broadcasting business, and each other potential bidder's
ability to digest and operate a potentially much larger radio broadcasting
business. After such discussion, the ARS Board tentatively concluded that it
appeared to be in the best interests of the ARS common stockholders to pursue
the CBS all cash offer, given the trading levels of the common stock of the
other potential bidders, the market risks inherent therein, and its assessment
of the prospects for the potential "stock" bidders.

A meeting of the ARS Board took place by telephone conference on September
18, 1997, at which all of the directors other than Mr. Peebler (who had
indicated his approval of the proposed CBS transaction at the prior day's
meeting) were present. Also in attendance were representatives of Credit
Suisse First Boston, Sullivan & Worcester and Sullivan & Cromwell. The ARS
Board reviewed the substance of the prior days' discussion and materials and
then considered the basic terms of the proposed merger agreement, including
both the financial and legal terms and conditions. Mr. Dodge also presented
more current information concerning the prospects of bids from other parties,
including the fact that the one potential bid that he had been aware of that
was higher than the CBS offer was being substantially reduced. He also
indicated that no bids had, in fact, been received. The directors were also
advised in general terms of the proposed distribution to the ARS stockholders
of the stock of ATS, although it was noted that many of the details of that
transaction needed to be resolved and that a definitive proposal regarding the
separation of ATS would be presented to the directors at a future meeting.
Thereafter, the ARS Board unanimously approved the Merger with CBS pursuant to
the Original Merger Agreement which had been presented to it.

On September 19, 1997, American Radio, CBS and CBS Sub executed and
delivered the Original Merger Agreement. CBS requested that certain
stockholders (who were, in most instances members of the ARS Board: Messrs.
Box (and his wife), Buckley, Dodge, Kellar and Stoner (and certain members of
his family or trusts for their benefit), and a partner of ARS' legal counsel,
Sullivan & Worcester) execute and deliver consents, in accordance with the
Delaware General Corporation Law (the "DGCL") and the proxy rules under the
Exchange Act, approving and adopting the Original Merger Agreement and
approving the Merger. As a result of such requests, holders of shares of ARS
Common Stock representing a majority of the voting power of the shares of the
ARS Common Stock entitled to vote with respect to the Original Merger
Agreement executed and delivered such consents on September 19, 1997, thereby
approving and adopting the Original Merger Agreement and approving the Merger.
CBS advised ARS that its Board of Directors had approved the Original Merger
Agreement on September 18, 1997. On September 18, 1997, ARS and Credit Suisse
First Boston advised the other potential bidders of the agreement with CBS. No
other bids had been or were thereafter received.

During the period from September to early December 1997, management
considered various means of effecting the Tower Separation in order to
increase the likelihood that the distribution of ATS Common Stock to the
holders of ARS Common Stock would be treated as capital gains for federal
income tax purposes. On December 10, 1997, the ARS Board approved the form of
an Amended and Restated Agreement and Plan of Merger (referenced elsewhere
herein as the "Merger Agreement") to provide for such means of effectuating
the Tower Separation. On December 18, 1997, ARS, CBS and CBS Sub executed and
delivered the Merger Agreement, a copy of which is included as Appendix II. As
a result of the request of one of the ARS common stockholders, which was aware
of the tax benefit to holders of ARS Common Stock of the new provision in the
Merger Agreement, holders of ARS Common Stock representing a majority of the
voting power of the shares of the ARS Common Stock entitled to vote with
respect to such matters executed and delivered on December 19, 1997 written
consents approving and adopting the Merger Agreement and the Tower Merger
Agreement and approving the Merger and the Tower Merger, each on the
respective terms set forth therein and in accordance with the DGCL.

On December 19, 1997, ARS, CBS and CBS Sub executed an amendment to the
Merger Agreement reflecting ATS common stockholder approval and adoption of
the Merger Agreement and approval of the Merger, changing all references to
the term "Proxy Statement" to "Information Statement" and to the term "Tower
Proxy Statement" to "Tower Information Statement", deleting the requirement
that a meeting of ARS common stockholders be held to approve and adopt the
Merger Agreement and the Tower Merger Agreement and approve the transactions
contemplated by each of them, and acknowledging that the Merger Agreement
amended and restated the Original Merger Agreement. The amendment also
contained a representation and warranty of ARS to the effect that the
stockholder consents constituted the Required Vote. A copy of such amendment
is included as Appendix IIB to this Prospectus.

RECOMMENDATION OF THE ARS BOARD; ARS' REASONS FOR THE MERGER

The ARS Board believes that the Merger Agreement and the transactions
contemplated thereby are fair to, and in the best interests of, its common
stockholders. Accordingly, the ARS Board unanimously recommended that the ARS
common stockholders vote for the approval of the Merger Agreement and the
transactions contemplated thereby. The ARS Board, in reaching its conclusions,
considered the factors discussed below. In view of the wide variety of factors
considered in connection with the evaluation of the Merger, the ARS Board did
not find it practicable, nor did it attempt, to quantify or otherwise to
assign relative weights to the specific factors it considered in reaching its
determinations.

Amount and Form of Merger Consideration. The ARS Board viewed favorably the
price of $44.00 per share to be received by the holders of ARS Common Stock
for their interest in the ARS radio broadcasting business. The ARS Board
concluded that this price represented, in light of estimated value of ATS, a
significant premium to the trading prices of ARS Class A Common Stock during
the period prior to the announcement that ARS was exploring ways to maximize
stockholder values. Also viewed as extremely favorable to the ARS common
stockholders was the fact that CBS had offered an all cash transaction. The
ARS Board was aware of the other

potential bidders as a result of the due diligence process and concluded,
after advice from Credit Suisse First Boston, that none of such potential
bidders would be financially able to offer an all or principally cash
transaction. Consideration was given to the mix of cash, if any, and
securities and the nature of the securities likely to be offered by other
bidders and how the intrinsic value of such securities compared to the ARS
Common Stock.

Other Terms of the Merger Agreement. The ARS Board considered the legal and
other financial terms of the Merger Agreement. The ARS Board gave
consideration to, in addition to the amount and form of consideration offered
to the ARS common stockholders (i.e., $44.00 cash) for their interest in the
ARS radio broadcasting business, the provisions of the Merger Agreement that
(i) the closing date adjustment provisions (which would not affect the $44.00
per share price but which would benefit or burden ATS); and (ii) permit the
Tower Separation to be implemented on terms favorable to the holders of ARS
Common Stock. Finally, the ARS Board considered the absence of any term or
condition in the Merger Agreement that was unduly onerous or could materially
impede or impair the consummation of the Merger.

Trading History of ARS Common Stock and Other Market Information. The ARS
Board also considered historical market prices and trading volume of the ARS
Class A Common Stock and historical and projected earnings, the premium CBS'
offer represented over the historical trading prices of the ARS Class A Common
Stock during the period prior to the announcement that ARS was exploring ways
to maximize stockholder values, the market prices and financial data relating
to companies engaged in similar businesses to ARS, and prices and premiums
paid in recent acquisitions of similar companies.

Market Consolidation. In light of changes effected by the Telecommunications
Act, ARS and other radio broadcasting companies have aggressively pursued the
acquisition of additional radio stations. More recently, such acquisitions
have taken the form of consolidation among larger companies and the ARS Board
was aware that a number of possible further consolidations were being
discussed. Management had advised the ARS Board that, in light of that
phenomenon, ARS could not continue to rely solely on pursuing the acquisition
of isolated stations or groups of stations, but would have to enter into a
major transaction if it was to remain competitive. The ARS Board was concerned
that were ARS to do nothing in the way of a merger with another large company,
it might be left, in a relatively short period, with no potential or possibly
only one merger candidate. Accordingly, it had retained Credit Suisse First
Boston to seek possible merger candidates.

ARS' Business, Conditions and Prospects. In evaluating the terms of the
Merger, the ARS Board reviewed, among other things, information with respect
to the financial condition, results of operations and businesses of ARS, on
both a historical and prospective basis, and current industry, economic and
market conditions. In evaluating ARS' prospects and the terms of the Merger,
the ARS Board considered, among other things, the strengths of ARS' radio
broadcasting business, including the markets in which it operates, its
management team, and the state of the development of its stations. The ARS
Board also considered the current industry-specific challenges facing the
business including, among other things, increased review by the Antitrust
Division of acquisitions in local markets, increased capital requirements, and
competition from larger and rapidly growing competitors established pursuant
to the changes effected by the Telecommunications Act.

Opinion of Credit Suisse First Boston. The ARS Board considered as favorable
to its determination the oral opinion delivered by Credit Suisse First Boston
on September 17 and 18, 1997, subsequently confirmed in a written opinion to
the ARS Board, dated September 19, 1997, that, as of such date, the $44.00 per
share to be received by the holders of ARS Common Stock in the Merger for, in
effect, their interest in the ARS radio broadcasting business was fair to such
stockholders from a financial point of view. The ARS Board also considered the
presentation made to it by Credit Suisse First Boston. See "--Opinion of
Financial Advisor to American Radio". Although the Merger Agreement executed
on December 18, 1997 changed the means by which the Tower Separation would be
effected, it did not affect the amount of the aggregate cash consideration
(which had been set forth in the Original Merger Agreement, as executed on
September 19, 1997) to be received by holders of ARS Common Stock for their
interest in ARS' radio broadcasting business. In connection with the adoption
of the Merger Agreement, the ARS Board did not seek an updated fairness
opinion from its financial

advisor. The Credit Suisse First Boston Opinion obtained in connection with
the Original Merger Agreement addressed the fairness of the consideration to
be received for American's radio business and concluded that the $44.00 per
share was fair from a financial point of view to the American common
stockholders. See "--Opinion of Financial Advisor to American Radio" and
Appendix III. The ARS Board determined that, with respect to the Merger
Consideration, the Merger Agreement changed only the form of the Tower
Separation and did not change the net economics of the Merger Consideration.
Accordingly, it concluded that it would not be necessary to incur the expense
of engaging Credit Suisse First Boston to re-issue its opinion in connection
with such modifications to the Merger Agreement.

OPINION OF FINANCIAL ADVISOR TO AMERICAN RADIO

Credit Suisse First Boston was engaged by ARS to act as a financial advisor,
including rendering a fairness opinion letter to the ARS Board in connection
with the cash consideration in payment for ARS' radio broadcasting business to
be received by the holders of ARS Common Stock in connection with the Merger
(but not the distribution of ATS Common Stock as part of the Tower
Separation). At the September 18, 1997 meeting of the ARS Board, Credit Suisse
First Boston delivered its oral opinion to the ARS Board, subsequently
confirmed in a written opinion (the "Credit Suisse First Boston Opinion") to
the ARS Board on September 19, 1997 that, as of such date, the $44.00 per
share of ARS Common Stock to be received by the ARS stockholders in the Merger
for, in effect, their interest in the ARS radio broadcasting business was fair
to such holders from a financial point of view.

The full text of the Credit Suisse First Boston Opinion, which sets forth
the procedures followed, assumptions made, matters considered and limitations
on the review undertaken, is attached hereto as Appendix III, is incorporated
herein by reference and is included with the consent of Credit Suisse First
Boston. ARS common stockholders are urged to, and should, read the Credit
Suisse First Boston Opinion carefully and in its entirety. The Credit Suisse
First Boston Opinion is directed to the ARS Board and relates only to the
fairness of the Cash Consideration (in payment for ARS' radio broadcasting
business) from a financial point of view. It does not address the distribution
of ATS Common Stock as part of the Tower Separation or any other aspect of the
Merger nor does it constitute a recommendation to any ARS stockholder with
respect to the Merger. The summary of the Credit Suisse First Boston Opinion
set forth below is qualified in its entirety by reference to the full text of
such opinion.

In arriving at its opinion, Credit Suisse First Boston: (i) reviewed certain
publicly available business and financial information relating to ARS, as well
as the Merger Agreement; (ii) reviewed certain other information, including
financial forecasts and pro forma financial information provided to it by ARS
concerning ARS, after giving effect to a distribution by ARS of all of the
capital stock of ATS or the net proceeds from the sale thereof to the ARS
stockholders; (iii) discussed the business and prospects of ARS with
management of ARS; (iv) considered certain financial and stock market data of
ARS; (v) compared such data with similar data for other publicly held
companies in similar businesses; (vi) considered the financial terms of
certain other business combinations and other transactions which have recently
been effected; and (vii) considered such other information, financial studies,
analyses and investigations and financial, economic and market criteria as
Credit Suisse First Boston deemed relevant.

In connection with its review, Credit Suisse First Boston did not assume any
responsibility for independent verification of any of the information provided
to or otherwise received by Credit Suisse First Boston and relied on its being
complete and accurate in all material respects. With respect to the financial
forecasts, Credit Suisse First Boston assumed that they had been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of ARS' management as to the future financial performance of ARS. In
addition, Credit Suisse First Boston was not requested to make, and did not
make, an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of ARS nor was Credit Suisse First Boston furnished
with any such evaluations or appraisal. The Credit Suisse First Boston Opinion
was necessarily based upon financial, economic, market and other conditions as
they existed and could be evaluated on the date of its opinion. In connection
with its engagement, Credit Suisse First Boston approached third parties to
solicit indications of interest in a possible

acquisition of ARS and held preliminary discussions with certain of such
parties which discussions, at ARS' request, were not completed, prior to the
date on which its opinion was rendered. Although Credit Suisse First Boston
evaluated the Merger Consideration from a financial point of view, Credit
Suisse First Boston was not requested to, and did not, recommend the specific
consideration payable in the Merger. Interested stockholders are encouraged to
review the Credit Suisse First Boston Opinion in its entirety.

In preparing its opinion to the ARS Board, Credit Suisse First Boston
performed a variety of financial and comparative analyses, including those
described below. The summary of Credit Suisse First Boston's analyses set
forth below does not purport to be a complete description of the analyses
underlying the Credit Suisse First Boston Opinion. The preparation of a
fairness opinion is a complex analytic process involving various
determinations as to the most appropriate and relevant methods of financial
analyses and the application of those methods to the particular circumstances
and, therefore, such an opinion is not readily susceptible to summary
description. In arriving at its opinion, Credit Suisse First Boston made
qualitative judgments as to the significance and relevance of each analysis
and factor considered by it. Accordingly, Credit Suisse First Boston believes
that its analyses must be considered as a whole and that selecting portions of
its analyses and factors, without considering all analyses and factors, could
create a misleading or incomplete view of the processes underlying such
analyses and its opinion. In its analyses, Credit Suisse First Boston made
numerous assumptions with respect to ARS, industry performance, general
business, economic, market and financial conditions and other matters, many of
which are beyond the control of ARS. No company, transaction or business used
in such analyses as a comparison is identical to ARS or the Merger, nor is an
evaluation of the results of such analyses entirely mathematical; rather, such
analyses involve complex considerations and judgments concerning financial and
operating characteristics and other factors that could affect the acquisition,
public trading or other values of the companies, business segments or
transactions being analyzed. The estimates contained in such analyses and the
ranges of valuations resulting from any particular analysis are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than those suggested
by such analyses. In addition, analyses relating to the value of businesses or
securities do not purport to be appraisals or to reflect the prices at which
businesses or securities may actually be sold. Accordingly, such analyses and
estimates are inherently subject to substantial uncertainty. Credit Suisse
First Boston's opinion and financial analyses were only one of many factors
considered by the ARS Board in its evaluation of the Merger and should not be
viewed as determinative of the views of the ARS Board or management with
respect to the Cash Consideration in payment for the interest in ARS' radio
broadcasting business or the Merger.

The summary set forth below does not purport to be a complete description of
the Credit Suisse First Boston Opinion or Credit Suisse First Boston's
analysis related thereto. As used in the following discussion, ARS and
American Radio refer only to American Radio's broadcasting assets and
operations.

Premium to Unaffected Market Price. Credit Suisse First Boston analyzed the
premium to market value of the $44.00 per share price to be received by
holders of ARS Common Stock. Assigning a valuation of ATS of $9.00 (per share
of ARS Common Stock), Credit Suisse First Boston computed the premiums to be
paid over the ARS Class A Common Stock as follows: 35.5% over the $39.125
closing price on August 19, 1997 (the last unaffected trading price) and 6.3%
over the $49.875 closing price on September 15, 1997. The price was also
determined to provide a 221.2% premium over the June 9, 1995 initial public
offering price of ARS of $16.50 and a 17.9% premium over the "unaffected" all-
time high stock price of $44.938 (July 17, 1997).

Discounted Cash Flow Analysis. Credit Suisse First Boston performed a
discounted cash flow analysis of the projected cash flow of ARS for the period
1997 through 2006 based in part upon certain operating and financial
assumptions, forecasts and other information provided by the management of
ARS. Using the financial information set forth by management, Credit Suisse
First Boston calculated the estimated free cash flow based on forecast net
revenues, cash flow margins and cash expenditures. Credit Suisse First Boston
analyzed the financial information provided by management and discounted the
stream of free cash flows provided in such forecast back to September 30, 1997
using discount rates ranging from 10.5% to 11.5%. To estimate the residual
value of ARS at the end of the forecast, Credit Suisse First Boston applied a
range of terminal multiples of 9.5x to 11.0x to the forecasted fiscal 2007
broadcast cash flow ("BCF") and discounted such value estimates back to

September 30, 1997 using discount rates ranging from 10.5% and 11.5%. The
range of discount rates was selected based on a variety of factors including
analysis of the estimated cost of capital and capital structures for companies
operating in businesses similar to that in which ARS operates, and the range
of terminal year multiples was selected based on the trading multiples for
such companies. Credit Suisse First Boston performed this analysis on three
different cases. The first case was based upon management projections. Under
this scenario, revenues grow at approximately 14.25% in 1997, and 1998 and
revenue growth declines to 6.0% (industry average) by 2005. BCF grows at
approximately 22% in 1998 and BCF growth declines to 9% by 2005. In the
"Upside" case, revenue growth declines from 14.25% in 1998 to 7% by 2005 and
BCF growth declines from 22% in 1998 to 10% by 2004. In the "Downside" case,
revenue growth declines from 8% in 1998 to 6% in 1999 and BCF growth remains
constant at 10%. Credit Suisse First Boston then summed the present values of
the free cash flows and the present values of the residual value to derive a
reference range of values for ARS of approximately $2.5 billion to $2.8
billion in the "Management" case, $2.6 billion to $2.875 billion in the Upside
case and $2.05 billion to $2.25 billion in the "Downside" case. This reference
range of values was then adjusted for non-operating assets and liabilities
including (i) total debt and other liabilities of $1,045,622,289 (assuming
conversion of the 7% Convertible Exchangeable Preferred Stock, par value $.01
per share, of ARS (the "ARS Convertible Preferred Stock") and pro forma for
$62.5 million of debt to be spun off with ATS); and (ii) cash and cash
equivalents of $53,557,000 (including $39,088,000 of option proceeds)
(collectively the "Corporate Adjustments") and then divided by 36,697,241
fully diluted shares of ARS Common Stock (including 2,674,078 shares issuable
upon exercise of options and 3,897,059 shares issuable upon conversion of the
ARS Convertible Preferred Stock) outstanding to yield a valuation reference
range for ARS of $41.09 to $49.27 per share in the Management case, $43.82 to
$51.31 in the Upside case and $28.83 to $34.28 in the Downside case.

Comparable Company Analysis. Credit Suisse First Boston reviewed and
compared certain actual and forecasted financial, operating and stock market
information of ARS with selected publicly traded radio broadcasting companies
considered by Credit Suisse First Boston to be reasonably comparable to ARS.
These companies included Chancellor Media (pro forma for the merger of
Chancellor Broadcasting Company and Evergreen Media Corporation), Clear
Channel, Saga Communications, Jacor, Emmis Broadcasting, Cox Radio and Heftel
Broadcasting Corporation (the "Comparable Companies"). Credit Suisse First
Boston calculated a range of market multiples for the Comparable Companies by
dividing the market capitalization (total common shares outstanding plus "in
the money" exercisable options times the closing market price per share on
September 15, 1997 plus latest reported total debt, capitalized leases,
preferred stock and minority interest, minus cash and cash equivalents and
option proceeds of each of the Comparable Companies), by such company's sales,
BCF and operating cash flow ("OFC") for fiscal 1997 and 1998 on the basis of
estimates of selected investment banking firms. This analysis indicated that
the average fiscal 1997 multiples of sales, BCF and OCF for the Comparable
Companies were 5.9x, 15.2x and 16.6x, respectively and that the average fiscal
1998 multiples of sales, BCF and OCF for the Comparable Companies were 5.1x,
12.4x and 13.5x, respectively. Prior to the announcement that American Radio
had retained Credit Suisse First Boston, ARS traded in a range between 12.0x-
13.0x forward year broadcasting cash flow, which is in-line, or slightly
better than most of the Comparable Companies.

Comparable Acquisition Analysis. Credit Suisse First Boston analyzed the
purchase prices and multiples paid or proposed to be paid in selected merger
or acquisition transactions using publicly available information in the radio
broadcasting industry which occurred over the last two years including:
Capstar Broadcasting/SFX, Clear Channel/Paxson, Evergreen & Chancellor/Viacom,
Evergreen/Chancellor, SFX/Secret, Jacor/Regent, Chancellor/Colfax, American
Radio/EZ, Heftel & Clear Channel/Tichenor, CBS/Infinity, Clear Channel/Heftel,
Cox/New City, Chancellor/OmniAmerica, Clear Channel/Equity Radio Partners,
SFX/Multi-Market, ARS/Henry, Infinity/Granum, Jacor/Citicasters, SFX/Prism,
Jacor/Noble, SFX/Liberty, Infinity/Alliance, Chancellor/ Shamrock,
Evergreen/Pyramid and Capstar's acquisitions of Commodore Media, Osborn,
Benchmark, Community Pacific, Madison, Knight Quality and Patterson (the
"Comparable Transactions"). Credit Suisse First Boston selected these
acquisitions based on the comparability of businesses conducted by the
acquired company to that of ARS. Credit Suisse First Boston calculated the
adjusted purchase price (purchase price plus total assumed debt less assumed
cash) as a multiple of BCF for each acquired company.

Credit Suisse First Boston determined that the relevant ranges of multiples
derived from the Comparable Transactions as they applied to ARS were 16.0x to
19.0x 1997 estimated BCF and 13.5x to 16.0x 1998 estimated BCF. Credit Suisse
First Boston then calculated imputed valuation ranges of ARS by applying
projected results for fiscal 1997 and 1998 to the multiples derived from its
analysis of the Comparable Transactions. Using such information, Credit Suisse
First Boston derived a reference range of values for ARS of $2.25 billion to
$2.65 billion. This reference range of values was then adjusted for the
Corporate Adjustments and then divided by 36,550,182 fully diluted shares of
ARS Common Stock outstanding to yield a valuation reference range for ARS of
$34.28 to $45.18 per share.

Credit Suisse First Boston also valued ARS based upon acquisition multiples
appropriate for cash flowing stations, separating out non-cash flowing or
under-performing stations and accounting for such stations on a "stick value"
basis. Credit Suisse First Boston determined that the relevant ranges of
multiples for cash flowing stations, derived from the Comparable Transactions,
were 14.5x to 17.0x 1997 estimated BCF and 12.5x to 15.0x 1998 estimated BCF.
Using such information, Credit Suisse First Boston derived a reference range
of values for ARS of $2.3 billion to $2.675 billion, or $35.64 to $45.86 per
share.

The ARS Board retained Credit Suisse First Boston based upon its experience
and expertise. Credit Suisse First Boston is an internationally recognized
investment banking and advisory firm. Credit Suisse First Boston, as part of
its investment banking business, is continuously engaged in the valuation of
businesses and securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for
corporate and other purposes. Credit Suisse First Boston is a full-service
securities firm engaged in securities trading and brokerage activities, as
well as providing investment banking financing and financial advisory
services. In the ordinary course of its trading and brokerage activities,
Credit Suisse First Boston or its affiliates may at any time hold long or
short positions, and may trade or otherwise effect transactions, for its own
account or the accounts of customers, in securities or senior loans of ARS or
CBS. In the past, Credit Suisse First Boston and its affiliates have provided
financial services to ARS and have received customary fees for rendering these
services.

Pursuant to a letter agreement dated as of August 20, 1997, ARS has agreed
to pay Credit Suisse First Boston a fee of $7.0 million in consideration for
its services. In addition to the foregoing compensation, ARS has agreed to
reimburse Credit Suisse First Boston for its expenses, including reasonable
fees and expenses of its counsel, and to indemnify Credit Suisse First Boston
for liabilities and expenses arising out of its engagement and the
transactions in connection therewith, including liabilities under federal
securities laws.

THE MERGER AND TOWER SEPARATION

The following is a brief summary of the material provisions of the Merger
Agreement, a copy of which is attached as Appendix II to this Prospectus and
is incorporated by reference herein. This summary is qualified in its entirety
by reference to the full and complete text of the Merger Agreement.
Capitalized terms used in this Section describing the provisions of the Merger
Agreement which are not otherwise defined in this Prospectus shall have the
meaning ascribed thereto in the Merger Agreement.

GENERAL

Subject to the terms and conditions of the Merger Agreement, the closing of
the transactions contemplated thereby (the "Closing") will take place on the
date (the "Closing Date") that is the second business day after the date on
which all of the conditions set forth in the Merger Agreement, other than
those which require the delivery of opinions or documents on the Closing Date,
is fulfilled or waived, unless another date is agreed to by CBS and ARS. The
Merger will become effective at the Effective Time, which will be the time at
which a Certificate of Merger is filed with the Secretary of State of the
State of Delaware, or such later time as is specified in such Certificate of
Merger. At such time, CBS Sub will be merged with and into ARS, with ARS
continuing as the surviving corporation and a subsidiary of CBS. As a result
of the Merger, American Tower Systems will become an independent, publicly
owned corporation.

Upon consummation of the Merger, assuming the Tower Merger has not occurred,
each holder of record of shares of ARS Common Stock at the Effective Time will
receive for each share so held: (i) $44.00 per share in cash; and (ii) one
share of ATS Common Stock, with such holders receiving the same class of ATS
Common Stock as they owned of ARS Common Stock. Upon consummation of the Tower
Merger, holders of ARS Common Stock will receive the same number and class of
shares of ATS Common Stock as they would have received had the Merger been
consummated at such time, in exchange for a portion of their ARS Common Stock.
In such event, the amount of cash to be received per share of ARS Common Stock
pursuant to the Merger will be increased in proportion to the reduction in the
number of shares of ARS Common Stock outstanding following the Tower Merger so
that each ARS common stockholder will receive the same aggregate amount of
cash consideration pursuant to the Merger he or she would have received had
the Tower Merger not occurred. The following table indicates how the foregoing
provisions (which are those described below under "--Conversion of
Securities") would operate to increase proportionately the amount of cash
consideration to be received in the Merger if the Tower Merger (and related
redemption of a portion of ARS Common Stock outstanding at the Tower Merger
Effective Time) is effected prior the Merger. Numbers in the table have been
rounded for ease of presentation.

ASSUMED CLOSING SALE
PRICE OF ARS CLASS A
COMMON STOCK ON NYSE ASSUMED VALUE OF PERCENT OF SHARES OF ARS ADJUSTED CASH CONSIDERATION
AT TOWER MERGER ATS COMMON STOCK AT COMMON STOCK REDEEMED IN IN MERGER
EFFECTIVE TIME TOWER MERGER EFFECTIVE TIME TOWER MERGER (IN LIEU OF $44.00 PER SHARE)
- -------------------- --------------------------- ------------------------ -----------------------------

$53.00 $ 9.00 17% $53.00
$54.00 $10.00 18.5% $53.99
$55.00 $11.00 20% $55.00
$56.00 $12.00 21.4% $55.98
$57.00 $13.00 22.8% $56.99

For example, if the closing sale price per share of the ARS Class A Common
Stock was $54.00 at the Tower Merger Effective Time, then a holder of 1,000
shares of ARS Class A Common Stock would have the right to exchange such
shares at the Tower Merger Effective Time for 815 shares of ARS Class A Common
Stock and 1,000 shares of ATS Class A Common Stock. If the Merger is
subsequently consummated, such holder would at the Effective Time have the
right to receive $53.99 per share for his or her 815 shares of ARS Class A
Common Stock (assuming such holder did not dispose of such shares in the
interim). In summary, as a result of the Tower Merger followed by the Merger,
such holder would have the right to receive 1,000 shares of ATS Class A Common
Stock and $44,000 in cash consideration ($53.99 multiplied by 815 shares). If
the Tower Merger had

not occurred prior to the Merger, then such holder at the Effective Time would
receive 1,000 shares of ATS Class A Common Stock and $44,000 in cash ($44 per
share multiplied by 1,000 shares). In the event the Tower Merger were
consummated but the Merger were not, ARS common stockholders would continue to
own their interests in American Radio and such interests, while represented by
a reduced number of shares, would represent the same proportionate interests
as existing immediately prior to the Tower Merger.

CONVERSION OF SECURITIES

Conversion of ARS Common Stock. Upon consummation of the Merger, each share
of ARS Common Stock issued and outstanding immediately prior to the Effective
Time (other than Dissenting Shares) will be converted into the right to
receive the following:

(a) in the event the Tower Merger has not occurred, (i) $44.00 in cash
and (ii) one share of ATS Common Stock of the same class as the shares of
ARS Common Stock surrendered (the "Tower Stock Consideration"); or

(b) in the event the Tower Merger has occurred, (i) an amount in cash
determined by dividing $44.00 by the American Conversion Factor.

The term (i) "Cash Consideration" means (x) if the Tower Merger has not
occurred, $44.00, and (y) if the Tower Merger has occurred, the amount of cash
determined pursuant to the provisions of paragraph (b) preceding, and (ii)
"American Conversion Fraction" means a fraction (x) the numerator of which is
the difference between (A) the denominator and (B) the value (determined as
set forth in the Merger Agreement) of one share of ATS Class A Common Stock
immediately prior to the Tower Merger Effective Time, and (y) the denominator
of which is the value (determined as set forth in the Merger Agreement) of one
share of American Class A Common immediately prior to the Tower Merger
Effective Time. The Merger Agreement provides that for purposes of determining
the value of the American Class A Common and the ATS Class A Common Stock
immediately prior to the Tower Merger Effective Time the following principles
shall apply:

(x) each share of American Class A Common shall be valued at an amount
equal to the average closing sales price of the American Class A Common on
the NYSE, as reported by the Wall Street Journal, for the ten (10)
consecutive trading days immediately preceding the second trading date
prior to the Tower Merger Effective Time; and

(y) each share of ATS Class A Common Stock shall be valued at the amount
determined in good faith by the ARS Board to be its fair market value
immediately prior to the Tower Merger Effective Time.

The term "Merger Consideration" means the Cash Consideration and, if the Tower
Merger Effective Time shall not have occurred, the Tower Stock Consideration.

Conversion of ARS Options. Upon consummation of the Merger, each ARS Option
outstanding immediately prior to the Effective Time will be canceled and the
holders thereof will be entitled to receive (i) one share of ATS Class A
Common Stock and (ii) the difference between $44.00 and the exercise price per
share of the ARS Option so canceled, multiplied, in both cases, by the number
of shares subject to such ARS Option. See "--Certain Other Covenants--ARS
Options" for information concerning exchange of ARS Options held by ARS
employees who will become ATS employees for options to acquire ATS Common
Stock.

ARS Preferred Stock. Upon consummation of the Merger, each share of
Preferred Stock, par value $.01 per share (the "ARS Preferred Stock"), issued
and outstanding immediately prior to the Effective Time will remain issued and
outstanding and will not be changed in any respect by the Merger, except that,
in accordance with its terms, the ARS Convertible Preferred Stock will become
convertible into cash and ATS Class A Common Stock.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF MERGER AND TOWER MERGER

The IRS has not ruled directly on the tax status of the Merger or the Tower
Merger, and no such ruling will be sought. Set forth below is a description of
certain material federal income tax consequences of the Merger and the Tower
Merger which would be applicable to holders of ARS Common Stock. Sullivan &
Worcester, tax counsel to ARS, has rendered its opinion (a copy of which has
been filed as an exhibit to the Registration Statement) that the discussion
contained in this section describes the material federal income tax
consequences of the Merger and Tower Merger. There can be, however, no
assurance that the IRS would agree with the conclusions discussed or refrain
from challenging some or all of the described consequences. Except as
otherwise expressly indicated, the following only describes certain tax
consequences to United States persons (e.g., citizens or residents of the
United States and domestic corporations) who hold shares of ARS Common Stock
as capital assets. It does not discuss the tax consequences that might be
relevant to holders of such stock who may be subject to special rules under
the federal income tax law, such as life insurance companies, regulated
investment companies, tax-exempt organizations, financial institutions,
dealers in securities or foreign currency, persons that have a functional
currency other than the U.S. dollar, persons who acquired ARS Common Stock or
options to acquire such stock in connection with their employment, persons
subject to alternative minimum tax or persons who hold ARS Common Stock as
part of a straddle, hedging transaction or conversion transaction.

Tax Consequences to ARS and ATS. American Radio will recognize gain, but not
loss, in an amount equal to the difference between the fair market value of
the shares of ATS Common Stock distributed in the Merger (or, if applicable,
the fair market value of the shares of ATS Common Stock distributed in the
Tower Merger) and American Radio's basis in such shares. Pursuant to the
Merger Agreement, ATS is obligated to indemnify and hold American Radio
harmless, on an after-tax basis, from any tax liability imposed upon it in
connection with the distribution of ATS Common Stock in the Merger (and, if
applicable, the Tower Merger), or in connection with certain associated
intercompany sales and transfers of property and assets between and among ATS
and other affiliates of American Radio, in excess of $20.0 million. See "--
ARS-ATS Separation Agreement" below.

Tax Consequences to Holders of ARS Common Stock in the Merger. The surrender
of ARS Common Stock for cash and ATS Common Stock in the Merger will be
treated as a sale of such stock. Each holder of ARS Common Stock will
recognize capital gain or loss equal to the difference between (i) the amount
of cash received and the fair market value of ATS Common Stock received, and
(ii) the adjusted tax basis of the shares of ARS Common Stock surrendered. Any
such capital gain or loss will be long-term capital gain or loss if, as of the
effective date of the Merger, the holding period for such shares is more than
one year. Amounts treated as long-term capital gain are subject to taxation at
varying rates, depending among other things on the holding period of the
property disposed of and the tax status of the holder. The holder's basis in
any ATS Common Stock received will equal its fair market value on the date of
the Merger, and the holder's holding period therein will commence on the
following day.

It is possible that circumstances may delay consummation of the Merger
beyond May 31, 1998 and that ATC would be unwilling to extend the termination
date (May 31, 1998) set forth in the ATC Merger Agreement. Under such
circumstances, management may determine to effect the Tower Merger. See "The
ATC Merger--Background of the ATC Merger". The discussion in the following
section below will only be applicable should management determine to pursue
the Tower Merger.

Tax Consequences to Holders of ARS Common Stock of the Tower Merger. The
surrender in the Tower Merger of a number of shares of ARS Common Stock in
exchange for a number of shares of ATS Common Stock (plus cash in lieu of
fractional shares) will be treated as a redemption of such ARS Common Stock
for an amount of consideration equal to the fair market value of any ATS
Common Stock received plus any cash received. Such redemption will be treated
as a sale or exchange of the surrendered ARS Common Stock in which gain or
loss is recognized equal to the difference between the fair market value of
any ATS Common Stock received plus any cash received and the holder's adjusted
tax basis in the ARS Common Stock surrendered (with

such gain or loss constituting long-term capital gain or loss if the holding
period for the surrendered ARS Common Stock exceeded one year), provided the
redemption (i) results in a "complete termination" of the holder's stock
interest in ARS under section 302(b)(3) of the Code, (ii) is "substantially
disproportionate" with respect to the holder under section 302(b)(2) of the
Code, or (iii) is "not essentially equivalent to a dividend" with respect to
the holder under section 302(b)(1) of the Code. A distribution to a holder is
"not essentially equivalent to a dividend" if it results in a "meaningful
reduction" in the holder's stock interest in ARS, but there cannot always be
certainty as to when such a "meaningful reduction" has occurred because the
applicable test is not based on numerical criteria. Satisfaction of the
"complete termination" and "substantially disproportionate" exceptions is
dependent upon compliance with the more objective tests set forth in sections
302(b)(3) and 302(b)(2) of the Code, respectively.

In determining whether any of the tests under sections 302(b)(1)-(3) of the
Code have been met, the holder must take into account not only stock he
actually owns, but also stock he constructively owns within the meaning of
section 318 of the Code, and in addition, a redemption that is part of a firm
and fixed integrated plan is to be tested under Code sections 302(b)(1)-(3) by
taking into account all changes in proportionate stock ownership in ARS that
occur as a result of such overall plan. Accordingly, assuming that the Merger
is consummated, a holder of ARS Common Stock surrendering shares of ARS Common
Stock in the Tower Merger should be treated as subsequently disposing of the
balance of his shares of ARS Common Stock in the Merger (or selling or
exchanging such shares in a sooner disposition) as part of a firm and fixed
integrated plan for a "complete termination" of his interest in ARS or,
alternatively, a "substantially disproportionate" reduction or "meaningful
reduction" thereof. However, whether such a firm and fixed integrated plan
exists is in part a question of fact, and accordingly counsel is unable to
conclude with certainty that such a plan would be considered to exist if the
Merger is ultimately consummated. If the Merger is ultimately not consummated,
the Tower Merger would constitute a pro rata redemption of ARS Common Stock
that, absent a holder's firm and fixed integrated plan to otherwise sell or
exchange a sufficient amount of his remaining ARS Common Stock, would
generally not affect a holder's proportionate ownership of ARS, and
accordingly would not qualify for sale or exchange treatment under any of the
tests under sections 302(b)(1)-(3) of the Code. Because of the absence of any
definitive judicial precedent or regulatory provision, it is not at all clear
that a holder's sale of remaining ARS Common Stock into the market, if the
Merger is ultimately not consummated, would meet the standard of a firm and
fixed integrated plan.

If the redemption is not treated as a sale or exchange to the holder of ARS
Common Stock under the tests of sections 302(b)(1)-(3) of the Code, the
redemption will be treated as a distribution in the amount of the fair market
value of any ATS Common Stock received plus any cash received, which
distribution will be taxable as ordinary dividend income to the extent of the
holder's share of ARS' current or accumulated earnings and profits for federal
income tax purposes. The holder's adjusted tax basis in the redeemed ARS
Common Stock will be transferred to the holder's remaining stock holdings in
ARS, and if the holder has no actual stock interest in ARS remaining (having
only a constructive stock interest), the holder may lose such basis entirely.
To the extent that the foregoing amount of the distribution exceeds the
holder's share of ARS' current or accumulated earnings and profits, such
distribution will be treated first as a return of capital that will be applied
against and reduce the adjusted tax basis of the holder's remaining ARS Common
Stock. Any remaining amount of the distribution after such basis has been
reduced to zero will be taxed as capital gain and will be long-term capital
gain if the holding period for the applicable ARS Common Stock exceeds one
year. For purposes of determining ARS' current or accumulated earnings and
profits for federal income tax purposes, the distribution of shares of ATS
Common Stock in the Tower Merger is deemed to be a taxable sale by ARS of the
shares of ATS Common Stock so distributed and will, therefore, increase such
current earnings and profits to the extent that the value of the ATS Common
Stock exceeds ARS' adjusted tax basis therein at the time of distribution. In
addition, prior transactions that had the effect of causing ATS to cease to be
a member of ARS' consolidated group (i.e., consummation of the Gearon
Transaction and the transactions contemplated by the ATS Stock Purchase
Agreement), also had the effect of triggering any previously deferred
intercompany gains arising from transactions between ATS (or one of its
subsidiaries) and certain members of the ARS consolidated group (including ATS
and its subsidiaries). Such gains will increase ARS' current earnings and
profits for federal income tax purposes. See "Unaudited Pro

Forma Condensed Consolidated Financial Statements of American Tower Systems"
for ARS' estimate of the tax payable by ATS as a result of gain likely to
result as a consequence of such transactions.

Whether or not the tests of sections 302(b)(1)-(3) of the Code are satisfied
in respect of ARS Common Stock surrendered in the Tower Merger, the holder's
basis in any ATS Common Stock received will equal its fair market value on the
date of the Tower Merger, and the holder's holding period therein will
commence on the following day.

Amounts treated as long-term capital gain are subject to taxation at varying
rates, depending among other things on the holding period of the property
disposed of and the tax status of the holder.

Backup Withholding. Under the federal income tax backup withholding rules,
unless an exemption applies, the Exchange Agent will be required to withhold,
and will withhold, 31% of certain payments to which a holder of ARS Common
Stock or other payee is entitled pursuant to the Merger (or the Tower Merger)
and related transactions, unless the holder or other payee provides a tax
identification number (social security number in the case of any individual,
or employer identification number in the case of other ARS stockholders) and
certifies under penalties of perjury that such number is correct. Each holder
of ARS Common Stock, and, if applicable, each other payee, should complete and
sign the substitute Form W-9 which will be included as part of the letter of
transmittal to be returned to the Exchange Agent in order to provide the
information and certification necessary to avoid backup withholding, unless an
applicable exemption exists and is proved in a manner satisfactory to the
Exchange Agent. Certain holders (including, among others, corporations) are
not subject to these backup withholding requirements. Any amounts withheld
will be allowed as a credit against the holder's federal income tax liability
for such year.

HOLDERS OF ARS COMMON STOCK SHOULD CONSULT THEIR TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE MERGER AND TOWER MERGER, INCLUDING
THE APPLICABILITY AND EFFECT OF ANY FEDERAL, STATE, LOCAL AND FOREIGN INCOME
AND OTHER TAX LAWS.

THE FOREGOING SECTION IS A SUMMARY DESCRIPTION OF MATERIAL FEDERAL INCOME
TAX CONSEQUENCES OF THE MERGER, THE TOWER MERGER AND RELATED TRANSACTIONS,
WITHOUT CONSIDERATION OF THE PARTICULAR FACTS AND CIRCUMSTANCES OF ANY HOLDER
OF ARS COMMON STOCK. IN ADDITION, IT DOES NOT ADDRESS THE STATE, LOCAL OR
FOREIGN TAX ASPECTS OF THE MERGER, THE TOWER MERGER AND RELATED TRANSACTIONS.
THE DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE CODE, EXISTING
AND PROPOSED TREASURY REGULATIONS THEREUNDER AND CURRENT ADMINISTRATIVE
RULINGS AND COURT DECISIONS. ALL OF THE FOREGOING ARE SUBJECT TO CHANGE AND
ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF THE DISCUSSION.

REASONS FOR THE TOWER SEPARATION

The Tower Separation has been designed to separate American Radio's
interests in the communications site business from its interests in the radio
broadcasting business. Management had concluded that the continued combination
of the radio broadcasting business and the communications site business was
not, in the long run, in the best interests of the ARS common stockholders.
Among the factors leading to such conclusion was that such businesses are in
management's judgment fundamentally different and require different management
skills. Management's experience in talking to investors and industry analysts
confirmed its judgment that the market place had difficulty in evaluating the
ARS Common Stock given the disparity in the development stages and potential
of ARS' two businesses. Management believes and the ARS Board has concluded
that the separation of ARS' communications site business through the
distribution of ATS Common Stock to the holders of shares of ARS Common Stock
will enable such stockholders to realize a greater value, in the long run,
than if such business had been offered for sale at this time, whether as part
of the radio broadcasting business or separately. Such belief was

based on two groups of factors: (i) factors affecting the industry, including
that the communications site business was a new one as far as the market place
was concerned, that there were no publicly traded communications site
companies, and that the amount of information publicly available about such
industry was limited, together with the ARS Board's knowledge as to the prices
at which what companies in the industry were being bought and sold; and (ii)
factors affecting ATS, including that ATS was in the very early stages of
development, that ATS was engaged in a major acquisition program only a
portion of which had been completed, that ATS had not had the opportunity to
consolidate its acquisitions and to begin to reap the benefits of such
acquisition program, and that ATS' construction activities had been relatively
minimal (compared to its projected program) and therefore the benefits of such
program were in the future.

The communications site business has grown substantially in recent years
and, as a result, the joint valuation and operation of these businesses has,
in management's opinion, become less desirable. ARS' management believed that,
because of the relative size of ATS' business compared to ARS' business on a
consolidated basis, the value of ATS had been largely overlooked by the
investment community. The separation of the communications site business from
its radio broadcasting business will, the ARS Board believes, enable the
market to focus on the individual strengths of ATS and more accurately
evaluate ATS' performance compared to other companies in that business. By
allowing the market to establish a separate valuation for ATS, the Tower
Separation should, in management's opinion, result in an increase in the long-
term value of the ARS current investment in ATS. The Tower Separation will
also give the ARS common stockholders and other potential investors the
opportunity to continue to retain an interest in the communications sites
business. As a separate, publicly traded company, ATS will also have increased
flexibility to raise capital and effect acquisitions by issuing its own
securities.

Finally, the separation of the communications site business from the radio
broadcasting business will permit management of ATS to focus on the
development and expansion of its business in a manner best suited to that
business and its market, without concern for the objectives of, or competitive
effect of such expansion on, ARS' radio broadcasting business. Management will
be able to concentrate its efforts on responding to the operational
characteristics and competitive dynamics of the communications site business,
an industry which is undergoing dramatic change and expansion. ATS' management
will be able to tailor its business strategies and capital investments to the
specific requirements of that industry. Further, as an independent, publicly
traded company, ATS will be able to design more effective incentive
compensation programs for its management and employees by linking their
compensation to the performance of ATS' business, as reflected in the stock
market's evaluation of the ATS Common Stock, thereby enhancing ATS' ability to
attract, motivate and retain high quality employees.

TOWER MERGER

If the Merger has not been consummated on or prior to May 31, 1998 (as such
date may be extended by American Radio with the written consent of CBS, such
consent not to be unreasonably withheld, delayed or conditioned), on June 1,
1998 (or the date following the date, if any, to which the May 31, 1998 has
been so extended), pursuant to the Merger Agreement and the Tower Merger
Agreement, the ARS Board shall, in its sole discretion, elect to consummate or
irrevocably abandon the Tower Merger. If consummated, the Tower Merger will
involve the merger of ATS Merger Corporation, a Delaware corporation and a
wholly-owned subsidiary ARS ("ATS Mergercorp"), with and into ARS which will
be the surviving corporation. Pursuant to the Tower Merger Agreement, a copy
of which is included as Exhibit D as part of Appendix II, each share of ARS
Common Stock issued and outstanding immediately prior to the Tower Merger (the
"Tower Merger Effective Time") will be converted into the right to receive:

(a) one share of ATS Common Stock, with (i) each share of American Class
A Common being converted into the right to receive one share of ATS Class A
Common Stock, (ii) each share of American Class B Common being converted
into the right to receive one share of ATS Class B Common Stock, and (iii)
each share of American Class C Common being converted into the right to
receive one share of ATS Class C Common Stock (collectively, the "Tower
Merger Tower Consideration"); and

(b) a fraction (the "American Conversion Fraction") of a share of ARS
Common Stock of the same class as the class of ARS Common Stock being
converted, (i) the numerator of which is the difference between (A) the
denominator and (B) the value (as described above) of one share of ATS
Class A Common Stock immediately prior to the Tower Merger Effective Time,
and (ii) the denominator of which is the value (as described above) of one
share of American Class A Common immediately prior to the Tower Merger
Effective Time (collectively with the Tower Merger Tower Consideration, the
"Tower Merger Consideration").

No certificates in respect of fractional shares of ARS Common Stock shall be
issued in the Tower Merger, fractional shares otherwise so issuable shall be
satisfied in cash as provided in the Tower Merger Agreement, and the
certificates that immediately prior to the Tower Merger Effective Time
represent outstanding shares of ARS Common Stock shall be deemed, without any
action of the holders thereof, to represent (i) the number of shares of ARS
Common Stock the holder thereof has the right to receive pursuant to paragraph
(b) above, together with cash in lieu of fractional shares as provided in the
Tower Merger Agreement and (ii) the Tower Merger Tower Consideration.

CERTIFICATE OF INCORPORATION AND BY-LAWS

The Certificate of Incorporation of ARS, as in effect immediately prior to
the Effective Time, will be amended as of the Effective Time as read in its
entirety as set forth in Exhibit A to the Merger Agreement and, as so amended,
such Certificate of Incorporation, together with the certificates of
designation for the ARS Cumulative Preferred Stock and the ARS Convertible
Preferred Stock, will be the Certificate of Incorporation of the surviving
corporation in the Merger until thereafter changed or amended as provided
therein or by applicable law. Such amendment will not be deemed to affect in
any manner the Certificate of Designation of (i) the ARS Cumulative Preferred
Stock or (ii) the ARS Convertible Preferred Stock. The by-laws of ARS in
effect at the Effective Time will be the by-laws of the surviving corporation
in the Merger until amended in accordance with Applicable law and the organic
documents of ARS.

The ATS Restated Certificate and the ATS by-laws are identical in all
material respects to those of ARS except as follows:

(i) the authorized number of shares of preferred stock and common stock
are greater in the case of ATS and there will be no preferred stock of ATS
outstanding upon consummation of the Tower Separation (unless authorized
and issued subsequent to the date hereof by the ATS Board);

(ii) dividends and other distributions of securities of Persons other
than ATS (including its subsidiaries) can be made in the form of different
classes of securities of such Persons in a manner designed to preserve the
voting rights of the ATS common stockholders; such distributions are
permitted by the ARS Restated Certificate of Incorporation only in the
context of a merger or consolidation;

(iii) the ATS Class C Common Stock can be converted into ATS Class A
Common Stock with the consent of the ATS Board; no such provision is
contained in the ARS Restated Certificate of Incorporation;

(iv) the definition of "Transferred" in the ATS Restated Certificate of
Incorporation has been clarified to provide that such term does not include
the granting of a proxy or the entering into of a voting agreement, whether
revocable or irrevocable, and whether generally or with respect to a
specific issue or issues; such had been the intent of the provisions of the
ARS Restated Certificate of Incorporation; and

(v) the provisions of the ATS Restated Certificate of Incorporation with
respect to class voting by the ATS common stockholders has been clarified
to provide that there is no such class vote, notwithstanding the provisions
of Delaware law, with respect to increases or decreases in the authorized
number of shares of any class; such had been the intent of the provisions
of the ARS Restated Certificate of Incorporation.

In addition, in order to satisfy a condition to the consummation of the ATC
Merger, if it is consummated, the ATS Restated Certificate will be amended to
(a) prohibit future issuances of ATS Class B Common Stock (except upon
exercise of then outstanding options and pursuant to stock dividends or stock
splits), (b) limit transfers of

ATS Class B Common Stock to a more narrow group than is provided in the ARS
Restated Certificate of Incorporation, (c) limit Mr. Dodge's voting power to
49.99% (less the voting power represented by the shares of Class B Common
Stock acquired by the Stoner purchasers pursuant to the ATS Stock Purchase
Agreement and still owned by them), (d) provide for automatic conversion of
the ATS Class B Common Stock to ATS Class A Common Stock should Mr. Dodge's
aggregate voting power fall below either (i) 50% of his initial aggregate
voting power (immediately after consummation of the ATC Merger) or (ii) 20% of
the aggregate voting power of all shares of ATS Common Stock at the time
outstanding, and (e) require consent of the holders of a majority of ATS Class
A Common Stock for amendments adversely affecting the ATS Class A Common
Stock.

DIRECTORS AND OFFICERS

From and after the Effective Time, until successors are duly elected or
appointed and qualified, or upon their earlier resignation or removal, in
accordance with applicable law and the organic documents of CBS Sub and ARS,
as applicable, (a) the directors of CBS Sub at the Effective Time will be the
directors of the surviving corporation, and (b) the officers of ARS at the
Effective Time will be the officers of the surviving corporation, except that
as explained elsewhere herein, Messrs. Dodge, Box, Winn and certain other ARS
officers who will become ATS officers will resign from their positions with
ARS.

ARS-ATS SEPARATION AGREEMENT

The Merger Agreement requires that American Radio and American Tower Systems
enter into an agreement (the "ARS-ATS Separation Agreement") to provide for
(i) the sharing of various liabilities and obligations, including without
limitation those relating to the taxes payable by American Radio as a
consequence of the Tower Separation, (ii) certain adjustments based on
American Radio's working capital and indebtedness as of the Effective Time of
the Merger, and (iii) the leasing of space to American Radio on certain of
American Tower Systems' towers. The following is a brief summary of the
material provisions of the Merger Agreement, a copy of which is attached as
Appendix II to this Prospectus and is incorporated by reference herein, which
are to be contained in the ARS-ATS Separation Agreement. This summary is
qualified in its entirety by reference to the full and complete text of the
Merger Agreement. Capitalized terms used in this Section describing the
provisions of the Merger Agreement which are not otherwise defined in this
Prospectus shall have the meaning prescribed therefor in the Merger Agreement.

Sharing of Tax and Other Consequences. With respect to the terms and
conditions of the Tower Separation, including the sharing of the tax
consequences thereof, the ARS-ATS Separation Agreement provides as follows:

(a) American Tower Systems is obligated to indemnify American Radio and
its Subsidiaries (other than the Tower Subsidiaries, collectively the "ATS
Group") harmless from and against any liabilities (other than income tax
liabilities) to which American Radio or any of its Subsidiaries (other than
the ATS Group) may be or become subject that relate to or arise from the
assets, business, operations, debts or liabilities of the ATS Group,
including without limitation (i) the assets to be transferred to American
Tower Systems except certain leases listed in the Merger Agreement, (ii)
liabilities (A) in connection with the distribution of the Tower Stock
Consideration as part of the Tower Merger or the Merger, (B) relating to or
arising from any agreement, arrangement or understanding (other than the
Tower Documentation) entered into by American Radio, ATS or any member of
the American Tower Group (x) for the benefit of any member of the American
Tower Group, (y) in contemplation of the Tower Separation, or (z) with
respect to the sale, assignment, transfer or other disposition of shares of
ATS Common Stock, (C) relating to or arising from any untrue statement or
alleged untrue statements of a material fact contained in this Prospectus,
the Information Statement/Prospectus used in connection with the Merger,
any proxy statement used in connection with any ARS stockholder meeting
with respect to approval of the Tower Merger, the Registration Statement or
in any document filed or required to be filed in connection with the
Merger, or in any document filed or required to be filed by American or any
member of the American Tower Group in connection with the preceding clause
(B) or any omission or alleged omission to state therein a material

fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except with respect to information provided by or relating
solely to American Radio (excluding ATS Mergercorp and the American Tower
Group) which is contained in or expressly consistent with the Filed
American SEC Documents or the American Form 10-Q for the nine months ended
September 30, 1997 filed by American Radio with the Commission under the
Exchange Act, or (D) in connection with any action or omission of any Tower
Employee for the benefit of, including without limitation in furtherance of
the business of, any member of the American Tower Group or in connection
with or incident to such employee's duties and responsibilities as a Tower
Employee, (iii) any economic impact related to or arising from the failure
to obtain any government authorizations, private authorizations or other
third party consents, or to make any governmental filings, necessary to
consummate the Tower Separation, as the case may be, and (iv) the rental
and related expenses for the relevant portion of the leased premises
located at 116 Huntington Avenue, Boston Massachusetts in the event of the
failure to obtain the landlord's consent to the assignment of the
obligations relating to, or sublease of, such relevant portion of such
premises.

(b) American Radio is obligated to indemnify the ATS Group harmless from
and against any liabilities (other than income tax liabilities) to which
the ATS Group may be or become subject that relate to or arise from the
assets, business, operations, debts or liabilities of American Radio or its
Subsidiaries (other than the ATS Group) whether arising prior to,
concurrent with or after the Merger.

(c) The allocation of Tax liabilities and deconsolidation of American
Radio and the ATS Group is to be made in accordance with the principles set
forth in the ARS-ATS Separation Agreement, including without limitation
that ATS is obligated to indemnify (and make whole on an after-tax basis)
American for all Taxes imposed by any Taxing Authority on any member of the
American Tax Group or on CBS as a result of or in connection with sale or
transfer of assets to the American Tower Group pursuant to Section 6.17(f)
of the Merger Agreement (or between members of the American Tax Group prior
to the final transfer to a member of the American Tower Group or between
members of the American Tower Group), the Merger, the Tower Merger, the
Tower Separation, any other disposition of stock of ATS contemplated or
permitted by the Merger Agreement, or the merger of ATS with any other
Person as the case may be, including without limitation any Taxes on any
gain to any member of the American Tax Group arising under Section 311 of
the Code, any Taxes on any deferred gain to any member of the American Tax
Group triggered as a result of or upon any such event, any gain
attributable to any excess loss account triggered upon any such event, any
Taxes arising as a result of the election or other transactions
contemplated by clause 6.17(c)(xii) of the Merger Agreement, income or gain
arising as a result of transactions described in Section 3.4(c) or the
second sentence of Section 6.8(a) of the Merger Agreement, and gain on the
conversion of ARS Convertible Preferred Stock into ATS Common Stock, and
any transfer Taxes arising from any such event, all to the extent that the
additional liability for such Taxes payable by the American Tax Group as a
consequence of such events (on a "but for" basis) exceeds $20,000,000.

(d) The ARS-ATS Separation Agreement provides that a member of the ATS
Group shall assume to the extent permitted by the landlord, the obligations
under the lease of 116 Huntington Avenue, Boston, Massachusetts, with
respect to the relevant portion of such leased premises.

(e) American Radio is obligated to transfer, or cause its Subsidiaries to
transfer, to ATS the communications towers agreed upon by CBS and American
Radio prior to the execution of the Merger Agreement (the "Transferred
Towers"), and ATS is obligated to assume all of American Radio's and such
Subsidiaries' obligations with respect to the Transferred Towers to the
extent set forth in the ATS-ARS Separation Agreement.

(f) On the earlier to occur of the Merger or the Tower Merger, certain
employees of American Radio (the "ATS Employees") are to be offered full-
time employment by ATS or one of its Subsidiaries. If the Tower Separation
occurs prior to the Closing Date, such employees shall continue to offer
management services to American Radio and ATS is obligated to make such ATS
Employees available to ARS to provide such services in order to enable ARS
to fulfill its obligations under Section 6.10(i) of the Merger Agreement
(i.e., conduct its business in the ordinary and usual course of business
and consistent with past practice).

For a period of eighteen (18) months following the consummation of the
Tower Separation, members of the ATS Group shall not actively solicit or
seek to hire any employees of American Radio or its Subsidiaries not
engaged in the business of the ATS Group as of the date of the Merger
Agreement, other than the ATS Employees, it being understood and agreed
that such agreement shall not be deemed to prevent members of the ATS Group
from placing general advertisements in publications or on the Internet or
soliciting any such employee who (i) initiates employment discussions with
a member of the ATS Group or (ii) is not employed by American Radio or CBS
or any of their respective Subsidiaries on the date such a member first
solicits such employee.

For a complete description of the material terms and conditions of the ARS-
ATS Separation Agreement relating to the sharing of tax and other liabilities,
see Section 6.17 of the Merger Agreement attached hereto as Appendix II.

The foregoing is a description of the rights and obligations of ARS and ATS
in the event the Merger is consummated. Although the ARS-ATS Separation
Agreement will be effective and operational upon consummation of the Tower
Merger, in the event the Merger were not subsequently consummated, the ARS
Board has reserved the right to alter the terms of that agreement to provide
for a sharing of the rights and obligations in a manner that may be more or
less favorable to ATS. Because the ARS Board believes that the Merger will be
consummated, it has not made any determination of what the rights and
obligations of ARS and ATS should be in the event it were not.

CLOSING DATE ADJUSTMENTS

The Merger Agreement also contains provisions (that are to be included in
the ARS-ATS Separation Agreement) relating to adjustments of the amount
required to be paid by CBS in the Merger, based on American Radio's working
capital and indebtedness as of the Closing Date. Any such adjustments are
required to be paid by or to ATS; they will not, in any event, affect the
Merger Consideration payable to the holders of ARS Common Stock. With respect
to such adjustments, the Merger Agreement provides, among other things, for an
adjustment as follows:

(a) Subject to paragraph (c) below, if Closing Working Capital is less
than (i) $60,000,000 in the event the Closing Date is on or prior to March
31, 1998 or (ii) $70,000,000 in the event the Closing Date is after March
31, 1998 (the "WC Amount"), then ATS shall, and if Closing Working Capital
is greater than the WC Amount, CBS shall, owe the other the amount of such
difference. The term "Working Capital" shall mean Current Assets minus
Liabilities. The terms "Current Assets" and "Liabilities" shall mean the
current assets and liabilities of the Post-Closing American Group
calculated in accordance with GAAP, except that (i) outstanding principal
amount of indebtedness and liquidation preference of preferred stock will
be excluded, (ii) cash will be excluded, (iii) accruals for taxes will be
included except that (A) tax liabilities which ATS is obligated to
indemnify American Radio and its Subsidiaries (other than the American
Tower Group) pursuant to the provisions of the Tower Documentation, and
deferred income Tax assets and liabilities that exist or arise from
differences in basis for Tax and financial reporting purposes attributable
to acquisitions, exchanges and dispositions or attributable to depreciation
and amortization shall not be taken into account, (B) Tax benefits arising
from the exercise or cancellation of options between the date of the
Original Merger Agreement and the Effective Time shall not be taken into
account, and (C) accruals for taxes relating to acquisitions, exchanges or
dispositions will be determined in accordance with ARS' past accounting
practices, (iv) Current Assets will be increased by amount equal to the sum
of (x) the amount derived by multiplying the Cash Consideration by the
number of shares of ARS Common Stock held in its treasury as of the
Effective Date and (y) the aggregate amount of the spread of $44.00 over
the exercise price of each ARS Option outstanding on the date of the
Original Merger Agreement terminated or canceled prior to the Effective
Time or for which the holder has elected to receive an option to acquire
ATS Common Stock in lieu thereof, less the tax benefit that would have been
received with respect to the exercise of such options, (v) Current Assets
will be (A) increased (if the number of shares of ARS Common Stock issuable
upon conversion of the American Convertible Preferred Stock is fewer than
3,750,000 (or if the

Tower Merger Effective Time shall have occurred, 3,750,000 multiplied by
the American Conversion Fraction)) by an amount equal to the amount derived
by multiplying the Cash Consideration by the excess of (I) 3,750,000 (or if
the Tower Merger Effective Time shall have occurred, 3,750,000 multiplied
by the American Conversion Fraction)) less (II) the number of shares of ARS
Common Stock issuable upon conversion of the American Convertible Preferred
Stock or (B) decreased (if the number of shares of ARS Common Stock
issuable upon conversion of the American Convertible Preferred Stock is
greater than 3,750,000 (or if the Tower Merger Effective Time shall have
occurred, 3,750,000 multiplied by the American Conversion Fraction)) by an
amount equal to the amount derived by multiplying the Cash Consideration by
the excess of (I) the number of shares of ARS Common Stock issuable upon
conversion of the American Convertible Preferred Stock less (II) 3,750,000
(or if the Tower Merger Effective Time shall have occurred, 3,750,000
multiplied by the American Conversion Fraction)) (vi) liabilities from the
radio broadcasting rights contracts for St. Louis Rams games will be
limited to $3,300,000, and (vii) amounts owed by American Tower to American
pursuant to Section 9.3(c) shall be excluded from Current Assets and
liabilities with respect to such amounts shall be excluded from
Liabilities.

(b) Subject to paragraph (c) below, if Closing Net Debt is greater than
the Debt Amount minus $50,419,000, minus cash received by the Post-Closing
American Group in respect of options exercised between the date of the
Original Merger Agreement and the Effective Time (the "CD Amount"), ATS
shall, and if Closing Net Debt is less than the CD Amount, CBS shall, owe
the other the amount of such difference. "Debt Amount" shall mean
$1,066,721,000, subject to adjustment for the failure to consummate any of
the Recent Transactions relating to American Radio and for the consummation
of any other acquisitions or dispositions. The term "Net Debt" shall mean
outstanding principal amount of indebtedness (including, without
duplication, guarantees of indebtedness) plus outstanding liquidation
preference of all preferred stock (other than the American Convertible
Preferred Stock) minus cash.

(c) The amounts owed pursuant to the provisions of paragraphs (a) and (b)
above shall be aggregated or netted, as appropriate (the resulting amount,
the "Adjustment Amount"). In the event that the Adjustment Amount minus
$10,000,000 is greater than $0 (the "Final Adjustment Amount"), the party
that owes the Final Adjustment Amount will make payment by wire transfer of
immediately available funds of the Final Adjustment Amount together with
interest thereon at a rate of interest equal to the lesser of (i) 10% per
annum and (ii) if ATS is being charged a rate of interest by a financial
institution, such rate, but in no event lower than the prime rate as
reported in the Wall Street Journal on the date of the Closing Statement
becomes final and binding on the parties, calculated on the basis of the
actual number of days elapsed divided by 365, from the date of the
Effective Time to the date of actual payment.

(d) The scope of the disputes to be resolved by the Accounting Firm is
limited to whether the Closing Statement was prepared in compliance with
the requirements set forth above and the allocation of the costs of dispute
resolution, and the Accounting Firm is not to make any other determination.

(e) During the period of time from and after the delivery of the Closing
Statements to ATS through the date the Closing Statement becomes final and
binding on CBS, ARS and the Tower Entity, CBS will cause the Post-Closing
American Group to afford the Tower Entity and any accountants, counsel or
financial advisors retained by the Tower Entity in connection with the
adjustments described above reasonable access (with the right to make
copies) during normal business hours to the books and records of the Post-
Closing American Group to the extent relevant to the adjustments.

(f) Any adjustment pursuant to Section 6.18 of the Merger Agreement shall
be taken into account in the calculation of Tax liability pursuant to
Section 6.17(c) of the Merger Agreement, and any increase or decrease in
the amount of Taxes that are reimbursable or indemnifiable by the ATS Group
as a result of any such adjustment shall be treated as an adjustment to
Taxes for purposes of Section 6.17(c) of the Merger Agreement.

See Section 6.18 of the Merger Agreement for a complete description of the
Closing Date adjustments.

LEASE ARRANGEMENTS

In connection with the Tower Separation, CBS and ARS will agree on the
definitive documentation ("Tower Leases") to be executed by ARS and ATS with
respect to certain broadcasting towers ("Towers"). The markets in which such
Towers are located and the annual "market price" for each antenna are set
forth in Exhibit B to the Merger Agreement. Subject to certain exceptions, 14
of such Towers were owned or leased by ARS and in January 1998 became the
property of ATS; the balance will be transferred by ARS to ATS prior to the
Tower Separtion. Each of the Tower Leases contains or will contain standard
and customary terms and conditions and CBS and ARS specifically agree to the
inclusion of the following in each of the Tower Leases: (a) except for certain
exceptions, each Tower Lease will be for a term of twenty (20) years with four
(4) renewal periods of five (5) years each; each such renewal to be upon the
same terms and conditions as the original Tower Lease; (b) Prior to the
Effective Time, ARS will use its best efforts to extend the term of each lease
("Land Leases") to a minimum duration of twenty (20) years, inclusive of
renewal periods, if any, and provide CBS with respect to the Towers subject to
the extended Land Leases, tower leases with the equivalent benefits set forth
in clauses (c), (d) and (e) and for a minimum duration of twenty (20) years
("Extended Tower Leases"). With respect to any such Land Lease that is not so
extended (except with respect to the Land Lease for KBAY (FM) (formerly KUFX
(FM)), Gilroy, California which present term of approximately eighteen (18)
remaining years shall be deemed to satisfy the foregoing requirement of a
minimum duration of twenty (20) years), ARS, ATS and CBS will negotiate in
good faith to agree upon definitive documentation to provide CBS with respect
to the Towers subject to such Land Leases, tower leases with the benefits
equivalent of such Extended Tower Leases or mutually agreed to alternative
arrangements providing equivalent value to CBS; (c) each Tower Lease will
provide that no payments will be payable by CBS for a period of three (3)
years from the Effective Time; for the next three (3) years the payments will
be as follows: one-third ( 1/3) of the market price as set forth in Exhibit B
to the Merger Agreement corresponding to each FM antenna (or AM/FM antenna)
for year four (4); two-thirds ( 2/3) for year five (5) and full market price
for year six (6); thereafter, for the balance of the term and any renewals
thereof, the payments will be the market price, together with an annual
increase every year, beginning for year seven (7), of the lesser of five
percent (5%) or the Consumer Price Index for all Urban Consumers over the
previous year's payments (except with respect to (KBAY (FM) (formerly KUFX
(FM)), Gilroy, California and WNFT (AM), Boston, Massachusetts which such
payments will begin at the Effective Time, with respect to CBS, and will begin
on January 1, 1998 as between ARS and ATS). Notwithstanding the foregoing, CBS
acknowledges that Tower Lease payments at the full "market price" indicated on
Exhibit B to the Merger Agreement by ARS to ATS may commence upon such leases
becoming the property of ATS and will continue until the Effective Time; (d)
all expenses for taxes, insurance, maintenance and utilities in respect of
each Tower shall be paid by ATS; and (e) ATS will assume the obligation and
responsibility for complying with all applicable law with respect to the
Towers.

REPRESENTATIONS AND WARRANTIES

The Merger Agreement contains certain customary representations and
warranties relating to, among other things: (a) each of CBS' and ARS'
organization and similar corporate matters; (b) ARS' capital structure; (c)
the authorization, execution, delivery, performance and enforceability of the
Merger Agreement with respect to CBS and ARS; (d) the financial statements and
certain other documents filed by ARS with the Commission and the accuracy of
the information contained therein; (e) the absence of undisclosed material
litigation relating to ARS; (f) the absence of material adverse changes with
respect to the business of ARS; (g) certain tax and employee benefit matters
with respect to ARS; (h) the holding of FCC licenses and other governmental
and private authorizations by CBS and ARS; (i) certain environmental and tax
matters with respect to ARS; (j) the conduct by ARS of its business in the
ordinary and usual course; (k) the absence of litigation or similar
proceedings of CBS and ARS; and (l) that CBS will have sufficient funds to
consummate the Merger. The Merger Agreement provides that the representations
and warranties of the parties do not survive consummation of the Merger.

CERTAIN OTHER COVENANTS

The Merger Agreement contains certain customary covenants and agreements,
including, without limitation, the following:

Certain Efforts; FCC and Antitrust Requirements. Pursuant to the Merger
Agreement, each of ARS and CBS have agreed to use best efforts (x) to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under Applicable Law to consummate the Merger
and the Tower Separation, and (y) to refrain from taking, or cause to be
taken, any action and to refrain from doing or causing to be done, anything
which could impede or impair the consummation of the Merger or the Tower
Separation, including, in all cases, without limitation, using its best
efforts (i) to prepare and file with the applicable Authorities as promptly as
practicable after the execution of the Merger Agreement all requisite
applications and amendments thereto, together with related information, data
and exhibits, necessary to request issuance of orders approving the Merger by
all such applicable Authorities, each of which is required to be obtained or
become final in order to satisfy the condition applicable to it set forth in
the Merger Agreement, (ii) to obtain all necessary or appropriate waivers,
consents and approvals, (iii) to effect all necessary registrations, filings
and submissions, (iv) to defend any suit, action or proceeding, whether
judicial or administrative, challenging the Merger or any of the transactions
contemplated by the Merger Agreement, including seeking to lift any injunction
or other legal bar to the Merger (and, in such case, to proceed with the
Merger as expeditiously as possible), and (v) to obtain the satisfaction of
the conditions specified in the Merger Agreement, including without limitation
the securing of all authorizations, consents, waivers, modifications, orders
and approvals set forth in the Merger Agreement relating to the FCC and the
HSR Act.

ARS and CBS agree to use their best efforts to take such steps as may be
necessary (i) diligently to prosecute the Applications and to prepare and file
any further Applications or amendments as may be necessary to obtain the
consent to the transfer of control to CBS of the licensees that will hold the
FCC licenses for the ARS Brokered Stations that are expected to be acquired by
ARS and (ii) to obtain the FCC Consents, including action by CBS, at its sole
cost and expense (except as provided elsewhere in the Merger Agreement), to
satisfy or cause to be removed all Divestiture Conditions, if any. The failure
by ARS or CBS to use its best efforts to timely file or diligently prosecute
its portion of any Application or, in the case of CBS, the failure to use its
best efforts to make any Required Divestiture or otherwise satisfy or cause to
be removed all Divestiture Conditions on or before the Termination Date, shall
be a material breach by ARS or CBS, as the case may be, of the Merger
Agreement. ARS agrees that any delay in prosecuting the Applications or
obtaining the FCC Consents resulting from CBS' good faith negotiations,
subject to Applicable Law, with the FCC, Antitrust Division or FTC with
respect to the imposition of a Divestiture Condition shall not constitute a
failure by CBS to use its best efforts diligently to prosecute the
Applications or obtain the FCC Consents and so long as such negotiations do
not interfere with satisfaction of all conditions to Closing prior to the
Termination Date. If reconsideration or judicial review is sought with respect
to any FCC Consent, ARS and CBS shall (promptly and with all due efforts)
oppose such efforts to obtain reconsideration or judicial review.

Each of ARS and CBS has agreed to file all applications required under the
HSR Act on a timely basis and to (i) use its best efforts to comply as
expeditiously as possible with all lawful requests of the FTC or the Antitrust
Division for additional information and documents and (ii) not extend any
waiting period under the HSR Act or enter into any agreement with the FTC or
the Antitrust Division not to consummate the transactions contemplated by the
Merger Agreement, except with the prior written consent of the other;
provided, however, that nothing shall limit the ability of CBS to extend the
20-day waiting period under the HSR Act following substantial compliance with
any request for additional information that may be forthcoming, if such
extension is reasonably necessary to allow the continuation of good faith
negotiations intended to remove any objection to the transaction that the FTC
or Antitrust Division may have asserted, and if such extension will expire not
less than 30 days prior to the Termination Date.

Anything in the Merger Agreement, including without limitation Section
6.2(b), to the contrary notwithstanding, CBS is obligated to obtain the FCC
Consents and clearances under the HSR Act and the grant

of any waivers in connection therewith prior to the Termination Date unless
the failure to obtain such FCC Consents, clearances and waivers is primarily
the result of one or more Uncontrollable Events. For purposes of the Merger
Agreement, the term "Uncontrollable Events" shall mean (i) acts or omissions
on the part of ARS or any of its Subsidiaries in conducting its respective
operations other than those relating to the number of ARS FCC Licenses or
amount of revenues in a particular market, (ii) an unremedied or unwaived
material breach by ARS of its obligations under the Merger Agreement, or (iii)
any change in or enactment of Applicable Law by Congress and signed by the
President and which (A) has the effect of decreasing the number of radio
licenses which a Person may own nationally or locally or (B) materially and
adversely relates to the concentration of radio licenses which a Person may
own in a market, and as a result of the change or enactment referred to in
either clause (A) or (B) above, CBS' performance of its obligations under the
Merger Agreement would have a Material Adverse Effect on CBS' radio and
television broadcasting business. CBS is obligated to file with the FCC,
within sufficient time to permit timely grant of the Applications,
applications for consent to assign or transfer, pursuant to trust arrangements
satisfying the FCC's local multiple ownership rules and policies, such radio
broadcast stations as CBS may designate, so that the radio broadcast stations
of CBS and ARS not designated for such trust arrangements may be held by the
Surviving Corporation (i.e., ARS) in compliance with the FCC's local multiple
ownership rules and policies. CBS is obligated, to the extent necessary to
obtain grant of the trust applications, thereafter promptly to file or cause
to be filed any further applications (including applications to assign radio
broadcast stations to third party purchasers for value) that may be required
by the FCC. Notwithstanding the two preceding sentences, with regard to
stations located in the San Jose market, the obligations of CBS to submit
trust or sale applications shall be excused for such stations to the extent
and for the duration of the period that CBS is unable to identify the stations
to be placed in trust or sold because of the failure of ARS to notify CBS of
the resolution of the Antitrust Division impediment impacting the ARS
transactions pending in the San Jose market.

If CBS or any of its Affiliates receives an administrative or other order or
notification relating to any violation or claimed violation of the rules and
regulations of the FCC, or of any other Authority (including without
limitation seeking or relating to a Divestiture Condition), that could affect
CBS' ability to consummate the transactions contemplated hereby, or if CBS or
any of its Affiliates should become aware of any fact relating to the
qualifications of CBS or any of its Affiliates that reasonably could be
expected to cause the FCC to withhold its consent to the assignment of the ARS
FCC Licenses, CBS is required to promptly notify ARS thereof and use its best
efforts, and take such steps as are necessary, in order to satisfy or remove
the Divestiture Condition to enable the Closing to occur prior to the
Termination Date. CBS has covenanted and agreed to keep ARS fully informed as
to all matters concerning all Required Divestitures and promptly to notify ARS
in writing of any and all significant developments relating thereto and ARS
has agreed to do likewise with CBS.

CBS has acknowledged and agreed that certain of the ARS Stations and ARS
Brokered Stations may file or have pending applications for renewal of their
licenses during the time that an application for the FCC Consents is pending
before the FCC. To the extent any such application for renewal may be filed or
remain pending, CBS has agreed to amend the transferee's portion of any
application for the FCC Consents and, as may be required, to amend any license
renewal applications for all of the ARS Stations or ARS Brokered Stations, to
confirm CBS' intention to consummate the Merger Agreement during the pendency
of such license renewal application, and to agree to assume the consequences
associated with succeeding to the place of ARS in such license renewal
applications. The making of this statement shall not be deemed to limit or
waive any other rights that CBS may otherwise have under the Merger Agreement.

CBS and ARS will cooperate with one another in the preparation, execution
and filing of all Tax Returns, questionnaires, applications, or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp Taxes, any transfer, recording,
registration and other fees, and any similar Taxes which become payable in
connection with the Merger that are required or permitted to be filed on or
before the Closing Date.

Subject to Applicable Laws relating to the exchange of information, ARS and
CBS have the right to review in advance, and to the extent practicable each
will consult the other with respect to, all the information relating

to ARS or CBS, as the case may be, and any of their respective Subsidiaries,
that appear in any filing made with, or written materials submitted to, any
Authority and/or other Person in connection with the Merger and the other
transactions contemplated by the Merger Agreement. In exercising the foregoing
right, each of ARS and CBS shall act reasonably and as promptly as
practicable.

Conduct of Business. ARS has agreed that, during the period from September
19, 1997, until the Closing Date or earlier termination of the Merger
Agreement, except as contemplated by the Merger Agreement, unless CBS shall
otherwise consent in writing, ARS will and will cause its Subsidiaries, to:

(i) conduct their respective businesses in the ordinary and usual course
of business and consistent with past practice;

(ii) not (A) amend or propose to amend their respective Organic
Documents, (B) split, combine or reclassify (whether by stock dividend or
otherwise) their outstanding capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of, or in
substitution for shares of its capital stock, or (C) declare, set aside or
pay any dividend or distribution payable in cash, stock, property or
otherwise, except for (x) the payment of dividends or the making of
distributions by a direct or indirect wholly owned Subsidiary of ARS and
(y) the payment of dividends on shares of the ARS Preferred Stock in
accordance with their terms;

(iii) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any shares of ARS Stock, Convertible Securities or
Option Securities, except that ARS may issue shares of ARS Common Stock
upon conversion of Convertible Securities and exercise of Option Securities
outstanding on the date of the Original Merger Agreement and in accordance
with their then existing terms, including any adjustment to the conversion
price of Convertible Securities as a result of the Tower Separation;

(iv) not (A) incur or become contingently liable with respect to any
indebtedness other than (x) short-term borrowings not to exceed $25 million
in the aggregate outstanding at any one time, (y) borrowings to finance
pending acquisitions of certain radio stations and, pursuant to agreements
in effect on the date of the Original Merger Agreement and (z) borrowings
not to exceed $120 million to finance or acquire any shares of its capital
stock, Convertible Securities or Option Securities, except pursuant to the
conversion or exercise thereof, as the case may be, or except to the extent
pursuant to the conversion or exercise thereof, as the case may be, or
except to the extent required by the then existing terms thereof, (C) sell,
lease, license, pledge, dispose of or encumber any properties or assets or
sell any businesses other than pursuant to agreements in effect on the date
of the Original Merger Agreement or Liens arising in accordance with the
provisions of indebtedness in effect on such date and in accordance with
their then existing terms, or (D) make any loans, advances or capital
contributions to, or investments in, any other Person, other than to any
direct or indirect wholly owned Subsidiary of ARS (other than the Tower
Subsidiaries) and, except as provided in clause (z) above, or to officers
and employees of ARS or any of its Subsidiaries for travel, business or
relocation expenses in the ordinary course of business;

(v) use all reasonable efforts to preserve intact their respective
business organizations and goodwill, keep available the services of their
respective present officers and key employees, and preserve the goodwill
and business relationships with customers and others having business
relationships with them and not engage in any action, directly or
indirectly, with the intent to adversely impact the transactions
contemplated by the Merger Agreement;

(vi) confer on a regular and frequent basis with one or more
representatives of CBS to report material operational matters and the
general status of ongoing operations;

(vii) not adopt, enter into, amend or terminate any employment,
severance, special pay arrangement with respect to termination of
employment or other similar arrangements or agreements with any directors,
officers or key employees;

(viii) maintain with financially responsible insurance companies
insurance on their respective tangible assets and their respective
businesses in such amounts and against such risks and losses as are
consistent with past practice;

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(ix) not make any Tax election that could reasonably be likely to have a
Material Adverse Effect on ARS or settle or compromise any material income
Tax liability;

(x) except in the ordinary course of business or except as would not
reasonably be likely to have a Material Adverse Effect on ARS, not modify,
amend or terminate any Material Agreement to which ARS or any Subsidiary is
a party or waive, release or assign any material rights or claims
thereunder;

(xi) not make any material change to its accounting methods, principles
or practices, except as may be required by GAAP;

(xii) not acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any Person or other business organization or
division thereof or (y) any assets that, individually or in the aggregate,
are material to ARS and its Subsidiaries taken as a whole, in each case,
other than pursuant to agreements in effect on the date the Original Merger
Agreement was signed (CBS has agreed not to unreasonably withhold, delay or
condition a consent to any matters described in this paragraph);

(xiii) subject to certain exceptions, (a) not grant to any executive
officer or other key employee of ARS or any of its Subsidiaries any
increase in compensation, except for normal increases in the ordinary
course of business consistent with past practice or as required under
Benefit Arrangements in effect as of June 30, 1997, (b) not grant to any
such executive officer any increase in severance or termination pay, except
as was required under any Benefit Arrangements in effect as of June 30,
1997, or (c) not adopt or amend any Plan or Benefit Arrangement (including
change any actuarial or other assumption used to calculate funding
obligations with respect to any Plan, or change the manner in which
contributions to any Plan are made or the basis on which such contributions
are determined) and (d) except in the ordinary course, not enter into,
amend in any material respect or terminate any Governmental Authorization
(except as would not be reasonably likely to have a Material Adverse Effect
on ARS), material Private Authorization or Contract; and

(xiv) not authorize or enter into any agreement that would violate any of
the foregoing.

Anything in this subsection to the contrary notwithstanding, the provisions
of this subsection, other than clause (ii), will not apply to ATS or any of
its Subsidiaries.

CBS has agreed that, during the period from September 19, 1997, until the
Closing Date or earlier termination of the Merger Agreement, except as
otherwise contemplated by the Merger Agreement or as has been publicly
disclosed prior to the date of the Merger Agreement, unless ARS shall
otherwise agree in writing, with respect to CBS's media business, CBS will and
will cause its Subsidiaries, to:

(i) conduct their respective businesses in the ordinary and usual course
of business and consistent with past practice, which includes the
acquisition of other radio broadcasting stations;

(ii) not amend or propose to amend its Organic Documents in any manner
materially adverse to holders of the ARS Preferred Stock;

(iii) use all best efforts to preserve intact their respective business
organizations and goodwill, keep available the services of their respective
present officers and key employees, and preserve the goodwill and business
relationships with customers and others having business relationships with
them and not engage in any action, directly or indirectly, with the intent
to adversely affect the transactions contemplated by the Merger Agreement;
and

(iv) not authorize or enter into any agreement that would violate any of
the foregoing.

Notwithstanding the foregoing covenants, the Merger Agreement provides that
nothing contained therein shall give to (a) ARS, directly or indirectly,
rights to control or direct CBS' operations prior to the Effective Time, or
(b) CBS, directly or indirectly, rights to control or direct ARS' operations
prior to the Effective Time. The Merger Agreement further provides that prior
to the Effective Time, consistent with the terms and conditions of the Merger
Agreement, (a) CBS shall exercise, complete control and supervision of its
operations, and (b) ARS shall exercise complete control and supervision of its
operations.

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Meetings of Stockholders. ARS has received the written consent of the
holders of shares of ARS Common Stock representing a majority of the votes
entitled to be cast with respect to the approval and adoption of the Original
Merger Agreement, the Merger Agreement and the Tower Merger Agreement and the
approval of the transactions contemplated thereby. Accordingly, no special
meeting of the ARS common stockholders is required in connection with either
the Merger or the Tower Merger. Nevertheless, if for any reason such consent
is not effective with respect to either the Merger or the Tower Merger, ARS
has agreed to call and hold a special meeting of the ARS common stockholders.
Approval of the CBS stockholders of the Merger Agreement and the transactions
contemplated thereby is not required under Applicable Law. CBS, as the sole
stockholder of CBS Sub, has approved and adopted the Merger Agreement and
approved the transactions contemplated thereby.

Indemnification. Directors', Officers' and Employees' Indemnification and
Insurance. The Organic Documents of the Surviving Corporation will contain
provisions no less favorable with respect to indemnification than are set
forth in the Organic Documents of ARS, as in effect on the date of the
Original Merger Agreement, which provisions will not be amended, repealed or
otherwise modified for a period of six (6) years from the Effective Time in
any manner that would affect adversely the rights thereunder of individuals
who at any time prior to the Effective Time were directors, officers or
employees of ARS or any of its Subsidiaries, unless such modification is
required by Applicable Law.

From and after the Effective Time, CBS will indemnify, defend and hold
harmless the present and former officers, directors and employees of ARS or
any of its Subsidiaries (collectively, the "Indemnified Parties") against all
losses, expenses, claims, damages, liabilities or amounts that are paid in
settlement of, or otherwise in connection with any claim, action, suit,
proceeding or investigation (as used in this paragraph, a "claim"), based in
whole or in part on the fact that the Indemnified Party (or the Person
controlled by the Indemnified Party) is or was a director, officer or employee
of ARS or any of its Subsidiaries and arising out of actions or omissions
occurring at or prior to the Effective Time whether asserted or claimed prior
to, at or after the Effective Time, in each case to the fullest extent
permitted under the DCL (and will pay any expenses, as incurred, in advance of
the final disposition of any such action or proceeding to each Indemnified
Party to the fullest extent permitted under the DCL). Without limiting the
foregoing, in the event any such claim is brought against any of the
Indemnified Parties, (i) such Indemnified Parties may retain counsel
(including local counsel) satisfactory to them and which will be reasonably
satisfactory to CBS and they will pay all reasonable fees and expenses of such
counsel for such Indemnified Parties; and CBS will use its best efforts to
assist in the defense of any such claim; provided, however, that CBS will not
be liable for any settlement effected without its written consent, which
consent will not be unreasonably withheld, delayed or conditioned.
Notwithstanding the foregoing, nothing contained in this paragraph shall be
deemed to grant any right to any Indemnified Party which is not permitted to
be granted to an officer, director or employee of CBS under the DCL, assuming
for such purposes that CBS's Organic Documents provided for the maximum
indemnification permitted by the DCL.

CBS will cause to be maintained for a period of not less than six (6) years
from the Effective Time ARS' current directors' and officers' insurance and
indemnification policy to the extent that is provides coverage for events
occurring prior to the Effective Time ("D&O Insurance") for all Persons who
are directors and officers of ARS on the date of the Merger Agreement, so long
as the annual premium therefor would not be in excess of 200% of the last
annual premium therefor paid prior to the date of the Original Merger
Agreement (the "Maximum Premium"); provided, however, that if the annual
premiums of such insurance coverage exceed such amount, CBS will only be
obligated to obtain the greatest coverage available under such policy for a
cost not exceeding such amount, provided further, however, that CBS may, in
lieu of maintaining such existing D&O Insurance as provided above, cause
coverage to be provided under any policy maintained for the benefit of CBS or
any of its Subsidiaries, so long as the terms thereof are no less advantageous
to the intended beneficiaries thereof than the existing D&O Insurance. If the
existing D&O Insurance expires, is terminated or canceled during such six-year
period, CBS will use its best efforts to cause to be obtained as much D&O
Insurance as can be obtained for the remainder of such period for an
annualized premium not in excess of the Maximum Premium, on terms and
conditions no less advantageous to the covered Persons than the existing D&O
Insurance. ARS represented to CBS that the Maximum Premium is not greater than
$500,000.

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In the event CBS or CBS Sub or any or their respective successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to any
person, then and in each such case, proper provisions will be made so that the
successors and assigns of CBS or CBS Sub, as the case may be, will assume the
obligations set forth in this subsection.

The foregoing provisions are intended to be for the benefit of, and will be
enforceable by, the Indemnified Parties, their heirs and personal
representatives and will be binding on CBS, CBS Sub and their respective
successors and assigns.

Employee Benefits. CBS is obligated to maintain, for a period of one (1)
year following the Effective Time, employee benefits plans and programs (other
than equity incentive arrangements) for ARS officers and employees which are
no less favorable in the aggregate than those generally available pursuant to
existing employee benefit plans and programs, except that CBS has the right to
determine the types and levels of specific benefits to be so provided.

Solicitation of Employees. CBS has agreed, in the event the Merger Agreement
is terminated, that for a period of eighteen (18) months following such
termination, it will not solicit or actively seek to hire any key employees
(including without limitation any station manager, sales manager, program
manager or any individual senior to any of such individuals) who during such
period is employed by ARS or any of its Subsidiaries, whether or not such
individual would commit breach of such individual's employment agreement or
contract in leaving such employment; provided, however, that the foregoing
shall not prevent the solicitation of any such key employee who (i) initiates
employment discussions with CBS, (ii) in not employed by ARS or any of its
Subsidiaries on the date CBS first solicits such employee, or (iii) is
solicited through general advertisement or on-going and ordinary course hiring
practices at CBS' broadcasting stations that do not have access to any of the
evaluation material furnished by ARS to CBS in connection with its offer to
merge with ARS.

American Radio Name. All right, title and interest to the name "American
Radio" and all related goodwill trademarks, service marks, logos and the like
are to be transferred, without expense, from ARS to ATS immediately prior to
the Closing and, thereafter, CBS will cause all of its Subsidiaries to cease
using such name as soon as practicable and, in any event, within six (6)
months.

ARS Options. All ARS Options outstanding immediately prior to the Effective
Time, except as provided otherwise in Section 6.8 of the Merger Agreement,
will be canceled by ARS and will be converted into the right to receive, for
each share of ARS Common Stock subject to such option: the Merger
Consideration, or, if the Tower Merger Effective Time shall have occurred, the
cash that the Optionholder would have received pursuant to the Merger and
shares of ATS Common Stock that the Optionholder would have received pursuant
to the Tower Merger, in each case with respect to each share of ARS Common
Stock subject to an unexpired ARS Option of the Optionholder had such ARS
Option been exercised immediately prior to the Tower Merger Effective Time, in
all cases reduced by an amount of cash (and, to the extent necessary, Tower
Common Stock) equal to the exercise price per share of ARS Common Stock
subject to such ARS Option. Except as provided in the preceding sentence, no
other consideration will be paid by ARS to an option holder in respect of his
or her canceled ARS Options. If the Merger is not consummated, the
cancellation of the ARS Options shall be rescinded and the holders shall
continue to hold such ARS Options upon their original terms and conditions. At
the election of any option holder who is a "disqualified individual" (as such
term is defined in proposed Treasury Regulation Section 1.280G-1), Section
6.8(b) of the Merger Agreement will be inoperative with respect to such ARS
Options as he or she may specify to the extent that the acceleration, vesting
cancellation and cash-out of ARS Options at the Effective Time as provided in
the Merger Agreement would constitute an "excess parachute payment" (as such
term is defined in Section 280G(b)(1) of the Code). Any option holder who
makes such election shall forfeit the ARS Options which are subject to such
election and shall receive no consideration therefor.

ATS Employees (which includes, among others, Messrs. Box, Dodge, Eisenstein
and Winn) who hold ARS Options to purchase an aggregate of 710,000 shares of
ARS Common Stock (including Mr. Box: 100,000 shares;

103

Mr. Dodge: 290,000 shares; Mr. Eisenstein: 40,000 shares; and Mr. Winn:
280,000 shares) will be given the opportunity to convert their ARS Options
into ATS Options, such conversion to be effectuated at the time of the Tower
Separation in a manner that will preserve the spread in such ARS Options
between the option exercise price and the fair market value of ARS Common
Stock and the ratio of the spread to the exercise price prior to such
conversion and, to the extent applicable, otherwise in conformity with the
rules under Section 424(a) of the Code and the regulations promulgated
thereunder. Messrs. Box, Dodge, Eisenstein and Winn have advised ARS of the
extent to which they intend to exercise their respective rights to exchange
ARS Options for ATS Options; based on such advice (which they have the right
to change at any time prior to the effectiveness of the Tower Separation, such
individuals will hold ATS Options as follows (assuming a $54.00 and $10.00 per
share value for the ARS Common Stock and ATS Common Stock, respectively): Mr.
Box: 540,000 shares of ATS Class A Common Stock at 5.05 per share; Mr. Dodge:
an aggregate of 1,566,000 shares of ATS Class B Common Stock at prices ranging
between $1.83 and $5.23 per share; Mr. Eisenstein: 216,000 shares of ATS Class
B Common Stock at $4.40 per share; and Mr. Winn: 1,468,422 shares of ATS Class
B Common Stock and an aggregate of 43,578 shares of ATS Class A Common Stock
at prices ranging between $1.18 and $5.23 per share.

ARS will use its best efforts (including best efforts to obtain any consents
of employees or directors of ARS or any of its subsidiaries (each, an
"Optionholder"), if required) to cause the cancelation of all of the ARS
Options immediately prior to the Effective Time.

Notwithstanding the foregoing paragraphs, in the event that any amount
payable under the foregoing provisions to Optionholders in respect of his ARS
Options would fail to be deductible by ARS (or any successor thereto) solely
by reason of (S)162(m) of the Code (after taking into account all amounts paid
or reasonably expected to be payable to the Optionholder in the same taxable
year in which the payments under this subsection are made to the Optionholder
and which are not otherwise exempt from Code (S)162(m) in determining whether
any amount payable to the Optionholder will fail to be deductible thereunder),
then, with respect to such portion of the Optionholder's ARS Options the
cancellation and cash-out of which would be nondeductible under said (S)162(m)
(the "(S)162(m) Options"), such (S)162(m) Options will be canceled in
accordance with the foregoing provisions, but the payments of the excess of
the aggregate Merger Consideration over the aggregate exercise price of each
Optionholder's (S)162(m) Options that the Optionholder would have received in
connection with the Tower Separation and other cash consideration contemplated
in respect of the Optionholder's (S)162(m) Options will be made to the
Optionholder on the 110th day following the Effective Time. ARS will use its
best efforts to obtain the written consent of each Optionholder affected by
this provision.

All amounts payable to an Optionholder pursuant to the foregoing provisions
will be reduced by any applicable withholding taxes.

Notwithstanding anything to the contrary in the Merger Agreement, ARS will
have the right in its sole and absolute discretion, to accelerate, on such
terms and conditions as it shall determine, in whole or in part, the vesting
of any or all of the ARS Options outstanding on the date hereof so that such
ARS Options are exercisable in full prior to the Effective Date.

To the extent that Tower Employees elect to convert their ARS Options into
options to acquire ATS Common Stock, ARS is obligated to contribute (without
the payment of any amount or the issuance of any securities by ATS) to the
capital of ATS at the earlier to occur of the Tower Merger Effective Time and
the Effective Time a number of shares of ATS Common Stock equal to the excess,
if any, of (i) the number of shares of ATS Common Stock owned by ARS
immediately prior to the Tower Merger Effective Time or the Effective Time, as
the case may be, over (ii) the number of shares of ATS Common Stock required
to be delivered (x) to the holders of shares of ARS Common Stock, (y) to
holders of ARS Options pursuant to the provisions of Section 6.8(a) of the
Merger Agreement, and (z) upon conversion of the ARS Convertible Preferred
Stock.

Information Statement/Registration Statements. ARS is obligated to, and to
cause ATS to, prepare and file with the Commission an information statement
and a registration statement on Form S-4 complying with the applicable rules
and regulations of the Commission and the DGCL, to correct promptly any false
or misleading

104

information therein, and take all steps necessary to file with and have
cleared by the Commission any amendment or supplement thereto so as to correct
it and cause the same to be disseminated to the ARS common stockholders to the
extent required by Applicable Law. Such registration statement is required to
cover the registration under the Securities Act of the shares of Tower Common
Stock to be delivered as the Tower Stock Consideration or Tower Merger
Consideration to the holders of shares of ARS Common Stock and to holders of
ARS Options at the Effective Time or the Tower Merger Effective Time, as the
case may be.

ATS is also required to file with, and cause to be declared effective by,
the Commission prior to the Effective Time, (i) a registration statement on
Form S-8 to register under the Securities Act the shares of Tower Common Stock
subject to all ARS Options which have been converted into ATS Options, and
(ii) a registration statement to permit the delivery of shares of Tower Common
Stock by ARS upon conversion of the ARS Convertible Preferred Stock following
the Effective Time and to maintain, on customary terms, the effectiveness of
such registration statement under the Securities Act until such time as ATS
shall deliver to ARS an opinion of legal counsel reasonably satisfactory to
ARS and CBS that such registration statement is no longer required to permit
such delivery in accordance with the Securities Act.

Affiliate Agreements. ARS is obligated to use its best efforts to cause each
principal executive officer, each director and each other person who is an
"affiliate" of ARS for purposes of Rule 145 under the Securities Act at the
time each of the Merger Agreement and the Tower Merger Agreement was approved
by written consents of the ARS common stockholders to deliver to ATS, on or
prior to the earlier of Effective Time and the Tower Merger Effective Time, a
written agreement, reasonably satisfactory in form, scope and substance to ARS
and CBS, to the effect that such person will not offer to sell, assign,
transfer or otherwise dispose of any shares of ATS Common Stock issued in the
Merger or the Tower Merger, as the case may be, except, in each case, pursuant
to an effective registration statement or in compliance with Rule 145, or in a
transaction which, in the opinion of legal counsel reasonably satisfactory to
ARS and CBS, is exempt from the registration requirements of the Securities
Act.

Certain Other Covenants. Both CBS and ARS have also agreed, among other
things: (a) to consult with each other prior to issuing any press release or
public statement; and (b) that CBS and its representatives be granted access
to the management, accounts, books, records, contracts, and other materials,
as well as to the directors, officers, employees and independent accountants,
of ARS. ARS has agreed, to the extent permitted by its debt instruments and by
the ARS Cumulative Preferred Stock, to pay dividends on the ARS Cumulative
Preferred Stock in the form of cash.

No Material Delay. ARS has agreed that it will not, and will not permit any
of its Subsidiaries to, take any action or enter into any agreement, plan or
arrangement to take any action that could reasonably be expected to materially
delay the date of the Effective Time (it being provided that any delay in
excess of fifteen (15) business days which would arise as a result of any such
action shall be deemed "material" for purposes of such provision).

CONDITIONS TO THE MERGER

Joint Conditions. The obligations of ARS, CBS and CBS Sub to consummate the
Merger are subject to the satisfaction of the following conditions, any or all
of which may be waived, in whole or in part, to the extent permitted by
Applicable Law:

(a) The Required Vote shall have been obtained;

(b) The FCC shall have issued the FCC Order approving the applications
for transfer of control of ARS' FCC Licenses in connection with the
transactions contemplated herein, and the FCC Order shall have been
obtained without the imposition of conditions that would have a Material
Adverse Effect on CBS' television and radio broadcasting business; provided
that without triggering CBS' right to approve such conditions or
restrictions, the FCC Order (i) may condition consummation of the Merger on
CBS complying with the numerical limits on local multiple radio ownership
imposed by 47 C.F.R. (S)73.3555(a) by affording

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CBS a period of at least six (6) months following the Effective Time within
which to comply with such rule through the use of divestiture trusts on
terms and conditions required by the FCC, provided further, however, that
to the extent that the FCC authority for such divestiture trusts provides
for a period of less than six (6) months, (A) ARS has the right to postpone
the Effective Time (and, to the extent necessary, the Termination Date), so
that CBS is afforded the six (6) month divestiture period, whether before
or after the Effective Time and (B) if ARS exercises such right, CBS' right
to approve such condition will not be triggered, and (ii) may grant CBS
temporary, rather than permanent, waivers of the One-to-a-Market Rule, so
long as such temporary waivers shall remain in effect until at least six
(6) months following the effective date of FCC action concluding the
ongoing rulemaking proceeding with respect to such Rule, all as set forth
in Section 7.1(b) of the Merger Agreement and described under "--Regulatory
Matters" below;

(c) No Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law (whether temporary, preliminary or
permanent) that remains in effect and restraints, enjoins or otherwise
prohibits consummation of the Merger; and

(d) The waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated.

CBS Conditions. The obligations of CBS and CBS Sub to consummate the Merger
are also subject to the satisfaction of the following additional conditions,
any or all of which may be waived, in whole or in part, to the extent
permitted by Applicable Law:

(a) ARS shall have furnished CBS with an opinion, dated the Closing Date,
of Dow, Lohnes & Albertson, PLLC, FCC counsel for ARS, substantially in the
form attached to the Merger Agreement as Exhibit C;

(b) (i) The representations and warranties of ARS contained in the Merger
Agreement (other than those relating to capital stock, voting requirements
and capitalization of ATS and certain related matters) shall be true and
correct as of the date of the Original Merger Agreement and as of the
Closing Date as though made on and as of such date except (x) to the extent
such representations and warranties speak as of an earlier date (in which
case such representations and warranties shall be true and correct as of
such earlier date) and (y) to the extent that the failure of such
representations and warranties to be true and correct, individually or in
the aggregate, would not have a Material Adverse Effect on ARS; provided,
however, that for the purposes of this clause (y), representations and
warranties that are qualified as to materiality (including by reference to
"Material Adverse Effect") shall not be deemed to be so qualified, and (ii)
the representations and warranties relating to capital stock, voting
requirements and capitalization of ATS and certain related matters shall be
true and correct in all material respects as of the date of the Original
Merger Agreement and as of the Closing Date;

(c) ARS shall have performed in all material respects all obligations to
be performed by it under the Merger Agreement at or prior to the Closing
Date; and

(d) Between the date of the Original Merger Agreement and the Closing
Date, except as contemplated by the Merger Agreement, including without
limitation the Tower Separation, and except as set forth in Section 4.3 of
the American Disclosure Schedule, there shall not have occurred and be
continuing any Material Adverse Change in ARS.

ARS Conditions. The obligations of ARS to consummate the Merger are also
subject to the satisfaction of the following additional conditions, any or all
of which may be waived, in whole or in part, to the extent permitted by
Applicable Law:

(a) The representations and warranties of CBS contained in the Merger
Agreement shall be true and correct as of the date of the Original Merger
Agreement and as of the Closing Date as though made on and as of such date
except (i) to the extent such representations and warranties speak as of an
earlier date (in which case such representations and warranties shall be
true and correct as of such earlier date) and (ii) to the extent that the
failure of such representations and warranties to be true and correct,
individually or in the aggregate, would not have a Material Adverse Effect
on CBS; provided, however, that for the purposes

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of this clause (ii), representations and warranties that are qualified as
to materiality (including by reference to "Material Adverse Effect") shall
not be deemed to be so qualified; and

(b) CBS shall have performed in all material respects all obligations to
be performed by it under the Merger Agreement at or prior to the Closing
Date.

TERMINATION

Termination Events. The Merger Agreement may be terminated at any time prior
to the Closing Date, whether before or after approval by the stockholders of
ARS:

(a) by mutual consent of CBS, CBS Sub and ARS;

(b) by either ARS or CBS if any Authority of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any Law that shall
have become final and nonappealable and that restraints, enjoins or
otherwise prohibits consummation of the Merger, unless the party seeking
such restraint, injunction or prohibition or any Affiliate thereof was the
terminating party;

(c) by either ARS or CBS if the Merger shall not have been consummated by
the Termination Date for any reason; provided, however, that the right to
terminate the Merger Agreement under this provisions shall not be available
to any party whose action or failure to act (or the action of failure to
act of any Affiliate) has been a principal cause of or resulted in the
failure of the Merger to occur on or before such date and such action or
failure to act constitutes a breach of the Merger Agreement;

(d) by either ARS or CBS of the Required Vote shall not have been
obtained;

(e) by ARS in the event (i) ARS is not in material breach of the Merger
Agreement and none of its representations or warranties shall have been or
become and continue to be untrue in any manner that would cause the
condition in Section 7.2(b) (i.e., paragraph (b) under "--Conditions to the
Merger--CBS Conditions" above) not to be satisfied, and (ii) CBS is in
material breach of the Merger Agreement or any of its representations or
warranties shall have been or become and continue to be untrue in any
manner that would cause the condition in Section 7.3(a) (i.e., paragraph
(c) under "--Conditions to the Merger--ARS Conditions" above) not to be
satisfied, and such a breach or untruth exists and is not capable of being
cured by and will prevent or delay consummation of the Merger by or beyond
the Termination Date; or

(f) by CBS in the event (i) CBS is not in material breach of the Merger
Agreement and none of its representations or warranties shall have been or
become and continue to be untrue in any manner that would cause the
condition in Section 7.3(a) (i.e., paragraph (c) under "--Conditions to the
Merger--ARS Conditions" above) not to be satisfied, and (ii) ARS is in
material breach of the Merger Agreement or any of its representations or
warranties shall have become and continue to be untrue in any manner that
would cause the condition in Section 7.2(b) (i.e., paragraph (b) under "--
Conditions to the Merger--CBS Conditions" above) not to be satisfied, and
such a breach or untruth exists and is not capable of being cured by and
will prevent or delay consummation of the Merger by or beyond the
Termination Date.

"Termination Date" means December 31, 1998 or such other date may from time to
time be extended pursuant to the provisions of Section 7.1(b) (i.e., paragraph
(b) under "--Conditions to the Merger--Joint Conditions" above) or by mutual
agreement of the parties. The right of ARS or CBS to terminate the Merger
Agreement as described above shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of either party,
any Person controlling any such party or any of their respective
Representatives, whether prior to or after the execution of the Merger
Agreement.

Effect of Termination. Except as specifically provided in the Merger
Agreement, in the event of the termination of the Merger Agreement as
described above, or in the event the Merger shall not have become effective
prior to the end of business on the day prior to the Termination Date, the
Merger Agreement shall forthwith become void, there shall be no liability on
the part of either party, or any of their respective stockholders, officers or
directors, to the other; provided, however, that such termination shall not
relieve either party from liability for any misrepresentation or breach of any
of its warranties, covenants or agreements set

107

forth in the Merger Agreement. The Merger Agreement provides that in the event
the Merger Agreement is terminated by any party pursuant to the provisions of
paragraph (d) under "--Termination Events" above, then ARS shall pay to CBS a
fee equal to $35.0 million, together with the reasonable and reasonably
documented out-of-pocket fees and expenses incurred or paid by or behalf of
CBS in connection with the Merger or the consummation of the transactions
contemplated by the Merger Agreement, including all fees and expenses of its
counsel, commercial banks, investment banking firms, accountants, experts and
consultants in an aggregate amount not to exceed $5.0 million.

AMENDMENT

The Merger Agreement may be amended from time to time by the parties at any
time prior to the Closing Date but only by an instrument in writing signed by
the parties and, after receipt of the Required Vote, subject, in the case of
ARS, to Applicable Law.

WAIVER

At any time prior to the Closing Date, except to the extent not permitted by
Applicable Law, CBS or ARS may, either generally or in a particular instance
and either retroactively or prospectively, extend the time for the performance
of any of the obligations or other acts of the other, subject, however, to the
above under "--Termination--Termination Events", waive any inaccuracies in the
representations and warranties of the other contained within the Merger
Agreement or in any document delivered pursuant to the Merger Agreement, and
waive compliance by the other with any of the agreements, covenants,
conditions or other provision contained within the Merger Agreement. Any such
extension or waiver will be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.

INTEREST OF CERTAIN PERSONS IN THE MERGER

In reviewing the recommendation of the ARS Board with respect to the Merger,
ARS stockholders should be aware that certain members of ARS' management and
the ARS Board have certain interests in the Merger that may present them with
actual or potential conflicts of interest.

ARS Stock Options. The directors and officers who are or will become ATS
Employees, including without limitation Messrs. Box, Dodge, Eisenstein and
Winn, will be entitled to convert their ARS Options into options to purchase
ATS Common Stock, as described under "--Certain Other Covenants--ARS Options"
above. See "Principal Stockholders of American Tower Systems" for information
with respect to ARS Options held by the directors and executive officers of
ARS who will become directors and executive officers of ATS.

Indemnification. The directors and officers of ARS will be indemnified by
CBS and CBS is obligated, subject to certain conditions, to provide insurance
for such directors and officers as described under "--Certain Covenants--
Indemnification" above.

Benefit Arrangements. The officers of ARS who will remain with it (which
does not include Messrs. Dodge, Box and Winn) will receive the benefit of the
arrangements described under "--Certain Covenants--Employee Benefits". In
addition, ARS' three Chief Co-Operating Officers (Messrs. Bouloukos, Gehron
and Pearlman) may be granted severance arrangements, for which no definite
agreements have been reached.

ATS Stock Purchase Agreement. Certain officers and directors (or their
affiliates, family members or trusts for the benefit of family members) of ARS
entered into the ATS Stock Purchase Agreement pursuant to which they purchased
shares of ATS Common Stock at $10.00 per share, which had been determined by
the Special Committee of the ARS Board to be "fair" from a financial point of
view to ARS common stockholders. See "-- ATS Stock Purchase Agreement" below.

108

REGULATORY MATTERS

The receipt of certain federal and state governmental or regulatory
approvals is required in order to consummate the Merger, including the
approval of the FCC, and the expiration or termination of the waiting period
under the HSR Act. ARS and CBS have agreed in the Merger Agreement to use best
efforts to obtain such approvals or waivers, but there can be no assurance as
to when or if such approvals or waivers will be obtained.

FCC Approvals. On October 24, 1997, ARS and CBS filed an application (the
"Transfer Application") with the FCC requesting the FCC's consent to transfer
control of the subsidiaries of ARS holding the FCC licenses for each of the
ARS broadcast Stations, from the holders of ARS Common Stock to CBS. As a
result of the transfer and giving effect to the Recent Transactions, the
Transfer Application demonstrates that CBS and its subsidiaries would have
attributable interests that would (a) exceed the numerical limits on local
multiple radio station ownership (the "Multiple Ownership Limit") in the
Boston, Baltimore and San Francisco/San Jose markets, and (b) violate the
limits on common ownership of television and radio stations serving the same
market (the "One-to-a-Market Rule") in Boston, Baltimore, Pittsburgh and San
Francisco/San Jose. CBS has requested temporary waivers of any obligation to
divest itself of stations as follows: (a) with respect to the Multiple
Ownership Limit, CBS has indicated that it would divest the necessary number
of stations in the appropriate markets prior to the consummation of the Merger
Agreement, or, if divestiture could not be completed in a timely manner, it
would place certain stations in insulated trusts to comply with the Multiple
Ownership Limit; and (b) with respect to the One-to-a-Market Rule, CBS has
requested that the FCC issue temporary waivers of such Rule to permit CBS to
retain all of its radio and television stations which would otherwise be in
violation of such Rule until at least six (6) months following the effective
date of final FCC action concluding the ongoing rulemaking proceeding in MM
Docket Nos. 91-221, 87-8 (FCC 94-322) or a successor rulemaking proceeding
pending at the time of the grant of the FCC Order, that considers the One-to-
a-Market Rule.

The Merger Agreement provides, among other things, that, as a condition of
the obligation of the parties to consummate the Merger, the FCC shall have
issued the FCC Order approving the applications for transfer of control of the
ARS FCC Licenses, and that the FCC Order shall have been obtained without the
imposition of conditions that would have a Material Adverse Effect on CBS'
television and radio broadcasting business. However, without triggering CBS'
right to approve such conditions or restrictions, the FCC Order (i) may
condition consummation of the Merger on CBS complying with the Multiple
Ownership Limitation by affording CBS a period of at least six (6) months
following the Effective Time within which to comply with such rule through the
use of divestiture trusts on terms and conditions required by the FCC,
provided that to the extent that the FCC authority for such divestiture trusts
provides for a period of less than six (6) months, (x) ARS has the right to
postpone the Effective Time (and, to the extent necessary, the Termination
Date), so that CBS is afforded the six (6) month divestiture period, whether
before or after the Effective Time and (y) if ARS exercises such right, CBS'
right to approve such condition shall not be triggered, and (ii) may grant CBS
temporary, rather than permanent, waivers of the One-to-a-Market Rule, so long
as such temporary waivers shall remain in effect until at least six (6) months
following the effective date of FCC action concluding the ongoing rulemaking
proceeding in MM Docket Nos. 91-221, 87-8 (FCC 94-322), or a successor
rulemaking proceeding pending at the time of the grant of the FCC Order, that
considers the One-to-a-Market Rule. "FCC Order" is defined in the Merger
Agreement to mean an action by the FCC approving the transfer of the ARS FCC
Licenses with respect to which, except as may be waived in writing by CBS in
its sole discretion, (i) no timely request for stay, petition for
reconsideration or appeal or sua sponte action of the FCC with comparable
effect is pending, or (ii) if any of the foregoing is pending, in the judgment
of CBS it lacks any substantial merit or is contrary to established FCC
precedent, or (iii) if it were to be so granted, it would not have a Material
Adverse Effect on CBS' televisions and radio broadcasting business and as to
which the thirty (30) day time period specified in 47 U.S.C. (S)405(a) for
initiating a petition for reconsideration of the grant of the FCC Order has
expired.

CBS is obligated under the terms of the Merger Agreement to obtain the
required FCC Consents except as described above under "--Certain Other
Covenants--Certain Efforts; FCC and Antitrust Requirements" above.

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On August 13, 1997, a petition to deny alleging multiple ownership
violations, assertion of excessive control by American Radio, and lack of
candor with respect to radio stations in the West Palm Beach market was filed
against American Radio's FCC application to acquire WTPX(FM), Jupiter,
Florida, submitted in FCC File No. BALH-970703GM (the "WTPX(FM) Application").
On September 16, 1997, American Radio and the current FCC licensee of WTPX(FM)
jointly requested the dismissal of the WTPX(FM) Application. The FCC granted
the request without prejudice to whatever further actions, if any, the
Commission may deem appropriate with respect to the matters raised in the
petition, and dismissed the petition as moot. American Radio is reviewing the
alleged course of conduct to ensure compliance with the Communications Act and
FCC rules. In December 1997, an objection was lodged at the FCC against the
license renewal application of WAAF(FM), Worcester, Massachusetts, claiming
that the station aired allegedly indecent programming. American Radio is
investigating the allegations.

On November 3, 1997, the FCC issued a public notice accepting the Transfer
Application for filing. Pursuant to the Communications Act and the FCC's
rules, interested third parties had until December 3, 1997 to file petitions
to deny the Transfer Application, and thereafter may file informal objections
until the Transfer Application is granted. On October 27, 1997, a letter was
filed alleging improprieties in CBS' employment practices at WLIF(FM) in
Baltimore, Maryland and objecting to the grant of the application for FCC
consent to the transfer of control of the subsidiaries holding ARS' FCC
licenses. CBS opposed the letter on November 10, 1997, and the opposing party
thereafter filed an undated reply. By letter dated January 22, 1998, the FCC's
staff dismissed this letter on procedural grounds, and the allegations to set
forth therein were otherwise denied. On December 3, 1997, an objection was
filed against the merger application alleging that KMJ(AM), Fresno, California
had broadcast advertisements that were false and deceptive and defamed a local
business. A similar objection to the KMJ(AM) renewal application was filed
November 3, 1997, by the same parties. On December 18, 1997, ARS filed a
consolidated opposition to both pleadings, and, on January 7, 1998, the
petitioners filed a consolidated reply to both pleadings. A letter opposing
the Merger was filed with the FCC, on behalf of a former ATS employee, but the
FCC has notified the complainant that, in light of procedural deficiencies,
the letter will not be considered in connection with the FCC's review of the
merger application. In addition, a former American Radio consulting engineer
wrote to the FCC complaining about a debt he claims is owed to him by American
Radio stations in Fresno. The FCC has sent a letter to the engineer stating
that his claim is a private dispute that is not relevant to the Merger.

On December 24, 1997, applications were filed with the FCC seeking authority
to place certain stations in insulated trusts so as to permit CBS to achieve
compliance with the Multiple Ownership Limit at the time of consummation of
the Merger Agreement (the "Trust Applications"). The Trust Applications were
amended at the request of the FCC's staff on January 28, 1998.

In evaluating any opposition to the Transfer Application or the Trust
Applications, the FCC will determine on the basis of the petitions or informal
responses, objections that may be filed by ARS and/or CBS, and such other
facts as it may officially notice, whether there are substantial and material
issues of fact that will require an evidentiary hearing to resolve. In the
absence of issues requiring an evidentiary hearing, and upon a finding that a
grant of the Transfer Application (and the associated waivers noted above) and
the Trust Applications would serve the public interest, convenience and
necessity, the FCC, or the FCC's staff acting by delegated authority, will
grant the Transfer Application and the Trust Applications. In the unlikely
event that there are any issues of fact which cannot be resolved without an
evidentiary hearing, the FCC must designate the Transfer Application or the
Trust Applications for such a hearing, and the consummation of the Merger
could be jeopardized due to the length of time ordinarily required to complete
such proceedings.

Within thirty (30) days following FCC public notice of a grant of the
Transfer Application or Trust Applications, parties in interest may file a
petition for reconsideration requesting that the FCC (or the FCC's staff in
the case of a staff grant, which, nonetheless, is unlikely in the case of a
transfer of control or assignment involving an unusual waiver request),
reconsider its action. Alternatively, in the case of a staff grant, parties in
interest may within the same thirty-day period file an "Application for
Review" requesting that the FCC review and set aside the staff grant. In the
event of a staff grant, a party in interest could take both actions, by first
filing

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a petition for reconsideration with the staff and later, within thirty (30)
days following public notice of denial of that petition, filing an Application
for Review. In the case of a staff grant, the FCC may also review the staff
action on its own motion within forty (40) days following public notice of the
staff's action. The FCC may review any of its own actions on its own motion
within thirty (30) days following public notice of the action.

Within thirty (30) days of public notice of an action by the FCC (i)
granting the Transfer Application or the Trust Applications, (ii) denying a
petition for reconsideration of such a grant or (iii) denying an Application
for Review of a staff grant, parties in interest may appeal the FCC's action
to the U.S. Court of Appeals for the District of Columbia Circuit.

In the event that the Transfer Application or the Trust Applications should
be denied or the requested waivers in the Transfer Application not granted by
the FCC or its staff, ARS and CBS would have the same rights to seek
reconsideration or file an appeal as set forth above with respect to adverse
parties.

If the FCC does not, on its own motion, or upon a request by an interested
party for reconsideration or review, review a staff grant or its own action
within the time periods set forth above, an action by the FCC or its staff
granting the Transfer Application and the Trust Applications would become
final. The Merger Agreement provides that the parties are not obligated to
consummate the Merger upon the issuance of an FCC grant of the Transfer
Application, until such grant has become final.

When the FCC considers a proposed transfer of control of an FCC licensee
that holds multiple FCC licenses, some of which licenses are subject to
pending renewal applications, the FCC's recently adopted policy provides that
so long as there are no unresolved issues pertaining to the qualifications of
the transferor or the transferee and so long as the transferee is willing to
substitute itself as the renewal applicant, the FCC will grant a transfer
application for a licensee holding applications for one or several of the
licensee's stations. This new policy should permit the parties to consummate
the Merger (assuming satisfaction or waiver of all other conditions and the
FCC's grant of the Transfer Application) during those periods when renewal
applications are pending for one or more of ARS' stations. CBS has
acknowledged and agreed that certain of the ARS Stations and ARS Brokered
Stations may file or have pending applications for renewal of license during
the time that an application for the FCC Consents is pending before the FCC.
To the extent any such application for renewal may be filed or remain pending,
CBS has agreed to amend the transferee's portion of any application for the
FCC Consents and, as may be required, to amend any license renewal
applications for the ARS Stations or ARS Brokered Stations, to confirm CBS'
intention to consummate the Merger Agreement during the pendency of such
license renewal application, and to agree to assume the consequences
associated with succeeding to the place of ARS in such license renewal
applications. The making of this statement shall not be deemed to limit or
waive any other rights that CBS may otherwise have under the Merger Agreement.

Antitrust. Under the HSR Act and the rules promulgated thereunder, the
Merger may not be consummated until notifications have been given and certain
information has been furnished to the Antitrust Division of the United States
Department of Justice (the "Antitrust Division") and the Federal Trade
Commission (the "FTC") and the FTC and specified waiting period requirements
have been satisfied. ARS and CBS intend to file in due course with the
Antitrust Division and the FTC a Notification and Report Form with respect to
the Merger.

The Antitrust Division and the FTC determine between themselves which agency
is to review a proposed transaction. The Antitrust Division or the FTC, as the
case may be, may then issue a formal request for additional information (the
"Second Request"). Under the HSR Act, if a Second Request is issued, the
waiting period then would be extended and would expire at 11:59 p.m., on the
twentieth calendar day after the date of substantial compliance by both
parties with such Second Request. Only one extension of the waiting period
pursuant to a request for additional information is authorized by the HSR Act.
Thereafter, such waiting period may be extended only by court order or with
the consent of the parties. In practice, complying with a request for
additional information or material can take a significant amount of time. In
addition, if the Antitrust Division or the FTC raises substantive issues in
connection with a proposed transaction, the parties frequently engage in

111

negotiations with the relevant governmental agency concerning possible means
of addressing those issues and may agree to delay consummation of the
transaction while such negotiations continue.

The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Merger. In light of the
continuing consolidation occurring in the radio broadcasting industry, the
Antitrust Division and the FTC may be expected to give increased attention to
the Merger. Moreover, divestures required to comply with the Multiple
Ownership Limit may not necessarily be sufficient to meet the requirements of
the Antitrust Division and the FTC. At any time before or after the
consummation of the Merger, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the Merger or seeking the
divesture of substantial assets of ARS or CBS.

In addition, state antitrust authorities may also bring legal action under
the antitrust laws. Such action could include seeking to enjoin the
consummation of the Merger or seeking divestiture of certain assets of ARS or
CBS. No state authorities have indicated that they will undertake an
investigation of the Merger. Private parties may also seek to take legal
action under the antitrust laws under certain circumstances. There can be no
assurance that a challenge to the Merger on antitrust grounds will not be made
or, if such a challenge is made, what the result of such challenge may be.

OTHER CONSENTS

Consummation of the Merger will require the consent of the lenders under the
ARS Credit Agreement. ARS believes that such consent will be obtained or CBS
will repay all outstanding indebtedness thereunder. The consent of the holders
of ARS' other debt is not required for consummation of the Merger. CBS is
obligated under the terms of the Merger Agreement to obtain all such consents.
ARS does not anticipate any problem in CBS obtaining the necessary consents.
Holders of the requisite majority of the ARS Cumulative Preferred Stock have
consented to the Tower Separation, whether pursuant to the Merger or the Tower
Merger, on terms satisfactory to CBS. Consummation of the Tower Merger will
also require the consent of the banks under ARS' Credit Agreements. CBS has no
obligation to assist ARS in obtaining such consent and there can be no
assurance that such consent will be obtained.

ATS STOCK PURCHASE AGREEMENT

ATS recently consummated the transactions contemplated by the ATS Stock
Purchase Agreement, dated as of January 8, 1998, with certain officers and
directors of ARS (or their affiliates or members of their family or family
trusts), pursuant to which those persons purchased shares of ATS Common Stock
at $10.00 per share, as follows: Mr. Dodge: 4,000,000 (Class B); Mr. Box:
450,000 (Class A); Mr. Buckley: 300,000 (Class A); each of Messrs. Eisenstein
and Steven J. Moskowitz: 25,000 (Class A); Mr. Kellar: 400,000 (Class A); Mr.
Stoner, his wife and certain family trusts: 649,950 (Class B); other Stoner
family and trust purchasers: 150,050 (Class A); and Chase Equity Associates:
2,000,000 (Class C). Messrs. Buckley and Kellar are directors of ARS, and Mr.
Chavkin, a director of ARS and ATS, is an affiliate of Chase Equity
Associates. See "Principal Stockholders of ARS" in Appendix I. Mr. Moskowitz
is a newly recruited Vice President of ATS, responsible for the Northeast
Region.

Payment of the purchase price was in the form of cash in the case of Chase
Equity Associates, all members of Mr. Stoner's family and the family trusts
(but not Mr. Stoner and his wife) and Messrs. Buckley, Eisenstein, Kellar and
Moskowitz, and, in the case of Messrs. Dodge, Box and Stoner (and his wife) in
the form of a note due on the earlier of the consummation of the Merger or, in
the event the Merger Agreement is terminated, December 31, 2000. The notes
bear interest at the six-month London Interbank Rate, from time to time, plus
1.5% per annum, and are secured by shares of ARS Common Stock having a fair
market value of not less than 175% of the principal amount of and accrued and
unpaid interest on the note. The notes are prepayable at any time at the
option of the obligor and will be due and payable, at the option of American
Tower Systems, in the event of certain defaults as described therein.

112

The ARS Board appointed a special committee (the "Special Committee")
consisting of Messrs. Duncan, Peebler and Primis, with Mr. Peebler acting as
chairman, to determine the fairness to ARS from a financial point of view of
the terms and conditions of the ATS Stock Purchase Agreement. None of the
members of the Special Committee was a party to the ATS Stock Purchase
Agreement. No limitations were imposed on the activities of the Special
Committee by the ARS Board. The Special Committee retained Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") to act as its exclusive
financial advisor in connection with the transactions contemplated by the ATS
Stock Purchase Agreement. No limitations were placed on the activities of
Merrill Lynch. Merrill Lynch delivered its written opinion, dated January 8,
1998, to the Special Committee that, as of such date and based upon and
subject to the matters set forth therein, the purchase price of $10.00 per
share to be received by ATS pursuant to the ATS Stock Purchase Agreement was
fair from a financial point of view to ARS. Based upon such opinion, and its
own evaluation of the terms and conditions of the ATS Stock Purchase
Agreement, the Special Committee approved the ATS Stock Purchase as fair to
and in the best interests of ARS.

Pursuant to an Engagement Letter, dated November 20, 1997, ARS has agreed to
pay Merrill Lynch a fee of $500,000 in consideration for its services. ARS has
also agreed to reimburse Merrill Lynch for its expenses, including reasonable
fees and expenses of its counsel, and to indemnify Merrill Lynch for
liabilities and expenses arising out of its engagement and the transactions in
connection therewith, including liabilities under the federal securities laws.
ATS has agreed to pay to ARS immediately following the Effective Time all such
fees and expenses which ARS has incurred to Merrill Lynch.

APPRAISAL RIGHTS OF ARS STOCKHOLDERS

Certain holders of ARS Common Stock immediately prior to the Effective Time
have the right to dissent from the Merger and demand and perfect appraisal
rights in accordance with the conditions established by Section 262 of the
DGCL ("Section 262"). The ARS stockholders who have executed the consent
pursuant to which the Merger Agreement was approved and adopted have, in
effect, waived their appraisal rights with respect to their shares of ARS
Common Stock. No such appraisal rights are applicable to the Tower Merger.

SECTION 262 IS REPRINTED IN ITS ENTIRETY AS APPENDIX IV TO THIS PROSPECTUS.
THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW RELATING TO
APPRAISAL RIGHTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO APPENDIX IV.
THIS DISCUSSION AND APPENDIX III SHOULD BE REVIEWED CAREFULLY BY ANY HOLDER
WHO WISHES TO EXERCISE STATUTORY APPRAISAL RIGHTS OR WHO WISHES TO PRESERVE
THE RIGHT TO DO SO, AS FAILURE TO COMPLY WITH THE PROCEDURES SET FORTH HEREIN
OR THEREIN WILL RESULT IN THE LOSS OF APPRAISAL RIGHTS. A PERSON HAVING A
BENEFICIAL INTEREST IN SHARES OF ARS COMMON STOCK HELD OF RECORD IN THE NAME
OF ANOTHER PERSON, SUCH AS A BROKER OR NOMINEE, MUST ACT PROMPTLY TO CAUSE THE
RECORD HOLDER TO FOLLOW THE STEPS SUMMARIZED BELOW PROPERLY AND IN A TIMELY
MANNER TO PERFECT APPRAISAL RIGHTS.

A holder of record of shares of ARS Common Stock who makes the demand
described below with respect to such shares, who continuously is the record
holder of such shares through the Effective Time, who otherwise complies with
the statutory requirements of Section 262 and who neither votes in favor of
the Merger Agreement nor consents thereto in writing may be entitled to an
appraisal by the Delaware Court of Chancery (the "Delaware Court") of the fair
value of his or her shares of stock. All references in this summary of
appraisal rights to a "stockholder" is to the record holder of shares of ARS
Common Stock.

Under Section 262, where a merger has been approved by written consent
pursuant to the provisions of Section 228 of the DGCL, as in the case of
adoption of the Merger by the ARS common stockholders, each constituent
corporation must notify each of the holders of its stock for which appraisal
rights are available, either before the Effective Time or within ten days
thereafter, that such appraisal rights are available and include in each such
notice a copy of Section 262. This Prospectus shall constitute such notice to
the record holders of ARS Common Stock.

113

Holders of ARS Common Stock immediately prior to the Effective Time who
desire to exercise their appraisal rights must not vote in favor of the Merger
Agreement or the Merger and must deliver a separate written demand for
appraisal to ARS within twenty (20) days after the date this Prospectus is
first mailed to common stockholders of American Radio. A demand for appraisal
must be executed by or on behalf of the stockholder of record fully and
correctly, as his, hers or its name appears on his, hers or its stock
certificates and must state that such person intends to demand appraisal of
his, hers or its shares of ARS Common Stock issued and outstanding immediately
prior to the Effective Time. A person having beneficial interests in shares of
ARS Common Stock that are held of record in the name of another person, such
as a broker, fiduciary or other nominee, must act promptly to cause the record
holder to follow the steps summarized herein properly and in a timely manner
to perfect whatever appraisal rights are available. If the shares of ARS
Common Stock are owned of record by a person other than the beneficial owner,
including a broker, fiduciary (such as a trustee, guardian or custodian) or
other nominee, such demand must be executed by or for the record owner. If the
shares of ARS Common Stock are owned of record by more than one person, as in
a joint tenancy or tenancy in common, such demand must be executed by or for
all joint owners. An authorized agent, including an agent for two or more
joint owners, may execute the demand for appraisal for a stockholder of
record; however, the agent must identify the record owner and expressly
disclose the fact that, in exercising the demand, such person is acting as
agent for the record owner.

A record owner, such as a broker, fiduciary or other nominee, who holds
shares of ARS Common Stock as a nominee for others, may exercise appraisal
rights with respect to the shares held for all or less than all beneficial
owners of shares as to which such person is the record owner. In such case,
the written demand must set forth the number of shares covered by such demand.
Where the number of shares is not expressly stated, the demand will be
presumed to cover all shares of ARS Common Stock outstanding in the name of
such record owner. Former stockholders who held their shares of ARS Common
Stock in brokerage accounts or other nominee forms and who wish to exercise
appraisal rights are urged to consult with their brokers to determine the
appropriate procedures for the making of a demand for appraisal by such a
nominee.

A stockholder who elects to exercise appraisal rights, if available, should
mail or deliver his or her written demand to: American Radio Systems
Corporation, 116 Huntington Avenue, Boston, Massachusetts 02116, Attention:
Secretary.

The written demand for appraisal should specify the stockholder's name and
mailing address, the number of shares of ARS Common Stock owned, and that the
stockholder is thereby demanding appraisal of his or her shares. Within ten
(10) days after the Effective Time, the Surviving Corporation must provide
notice of the Effective Time to all stockholders who have complied with
Section 262.

Within one hundred and twenty (120) days after the Effective Time, but not
thereafter, either the Surviving Corporation or any former holders of ARS
Common Stock who has complied with the required conditions of Section 262 may
file a petition in the Delaware Court, with a copy served on the Surviving
Corporation in the case of a petition filed by a stockholder, demanding a
determination of the fair value of the shares of all dissenting stockholders.
The Surviving Corporation is under no obligation to and has no present
intention to file such a petition. Accordingly, ARS stockholders immediately
prior to the Effective Time who desire to have their shares appraised should
initiate any petitions necessary for the perfection of their appraisal rights
within the time periods and in the manner prescribed in Section 262. Within
one hundred and twenty (120) days after the Effective Time, any former ARS
stockholder who has theretofore complied with the applicable provisions of
Section 262 will be entitled, upon written request, to receive from the
Surviving Corporation a statement setting forth the aggregate number of shares
of ARS Common Stock not voting in favor of the Merger Agreement and with
respect to which demands for appraisal were received by ARS and the number of
holders of such shares. Such statement must be mailed within 10 days after the
written request therefor has been received by the Surviving Corporation or
within ten days after the expiration of the period for delivery of demands for
appraisal, whichever is later.

If a petition for an appraisal is timely filed and assuming appraisal rights
are available by a former ARS stockholder and a copy thereof is served on the
surviving corporation, the surviving corporation will then be

114

obligated within 20 days to file with the Delaware Register in Chancery a duly
verified list containing the names and addresses of all former stockholders
who have demanded appraisals of their shares and with whom agreements as to
the value of their shares have not been reached. After such notice to such
former stockholders as required by the Delaware Court prepared to conduct a
hearing on such is empowered to conduct a hearing on such petition. At the
hearing on such petition, the Delaware Court will determine which
stockholders, if any, are entitled to appraisal rights. The Delaware Court may
require the stockholders who have demanded an appraisal for their shares and
who hold stock represented by certificates to submit their certificates of
stock to the Register in Chancery for notation thereon of the pendency of the
appraisal proceedings; and if any stockholder fails to comply with such
direction, the Delaware Court may dismiss the proceedings as to such
stockholder. Where proceedings are not dismissed, the Delaware Court will
appraise the shares of ARS Common Stock owned by such stockholders,
determining the fair value of such shares exclusive of any element of value
arising from the accomplishment or expectation of the Merger, together with a
fair rate of interest, if any, to be paid upon the amount determined to be the
fair value. Former holders of ARS Common Stock considering seeking appraisal
should be aware that the fair value of their shares of ARS Common Stock as
determined by Section 262 could be more than, the same as or less than the
consideration they would receive pursuant to the Merger if they did not seek
appraisal of their shares of ARS Common Stock and that the investment banking
opinions as to the fairness from a financial point of view are not necessarily
opinions as to the fair value under Section 262. In determining fair value,
the Delaware Court is to take into account all relevant factors. In Weinberger
v. UOP Inc., the Delaware Supreme Court discussed the factors that could be
considered in determining fair value in an appraisal proceeding, stating that
"proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court"
should be considered, and that "fair price obviously requires consideration of
all relevant factors involving the value of a company." The Delaware Supreme
Court stated that in making this determination of fair value the court must
consider market value, asset value, dividends, earnings prospects, the nature
of the enterprise and any other facts ascertainable as of the date of the
Merger that throw light on future prospects of the merged corporation. In
Weinberger, the Delaware Supreme Court stated that "elements of future value,
including the nature of the enterprise, which are known or susceptible of
proof as of the date of the Merger and not the product of speculation, may be
considered." Section 262, however, provides that fair value is to be
"exclusive of any element of value arising from the accomplishment or
expectation of the Merger." In addition, Delaware courts have decided that the
statutory appraisal remedy, depending on factual circumstances, may or may not
be a dissenter's exclusive remedy.

The Delaware Court will also determine the amount of interest, if any, to be
paid upon the amounts to be received by persons whose shares of ARS Common
Stock have been appraised. The cost of the appraisal proceeding may be
determined by the Delaware Court and taxed against the parties as the Delaware
Court deems equitable in the circumstances. Upon application of a dissenting
stockholder of ARS, the Delaware Court may order that all or a portion of the
expenses incurred by any dissenting stockholder in connection with the
appraisal proceeding, including, without limitation, reasonable attorney's
fees and the fees and expenses of experts, be charged pro rata against the
value of all shares of stock entitled to appraisal.

Any holder of shares of ARS Common Stock who has duly demanded appraisal in
compliance with Section 262 will not, after the Effective Time, be entitled to
vote for any purpose any shares subject to such demand or to receive payment
of dividends or other distributions on such shares, except for dividends or
distributions payable to stockholders of record at a date prior to the
Effective Time.

If no petition for appraisal is filed with the Delaware Court within one
hundred and twenty (120) days after the Effective Time, stockholders' rights
to appraisal shall cease. Any stockholder may withdraw such stockholder's
demand for appraisal by delivering to the Surviving Corporation a written
withdrawal of his or her demand for appraisal and acceptance of the Merger,
except that (i) any such attempt to withdraw made more than 60 days after the
Effective Time will require written approval of the Surviving Corporation and
(ii) no appraisal proceeding in the Delaware Court will be dismissed as to any
stockholder without the approval of the Delaware Court, which may be
conditioned upon such terms as the Delaware Court deems just. If any former
stockholder who demands appraisal of his, hers, or its shares of ARS Common
Stock under Section 262 fails to

115

perfect, or effectively withdraw or losses his, hers or its right to appraisal
as provided by the DGCL, the shares of ARS Common Stock of such stockholders
will be converted into the right to receive the consideration of the Merger
(without interest).

If the Tower Merger Effective Time shall not have occurred and the Delaware
Court of Chancery (the "Court") conducts an appraisal proceeding pursuant to
Section 262 of the DCL relating to an obligation to pay the appraised value
per share of ARS Common Stock ("Appraised Total Value") to the holders of the
Dissenting Shares, American Tower shall promptly pay to American Radio the
portion of the Appraised Total Value attributable to the Tower Stock
Consideration (the "Tower Stock Payment") and American Radio shall contribute
(without the payment of any other amount or the issuance of any securities by
American Tower) to the capital of American Tower such shares of Tower Common
Stock owned by American Radio that the holders of the Dissenting Shares would
have been entitled to receive had they not exercised their appraisal rights.
The Tower Stock Payment shall be determined pursuant to the following
provisions:

(i) American Radio shall request the Court to determine in writing the
Tower Stock Payment. If the Court shall make such determination the Tower
Stock Payment shall be the amount so determined; and

(ii) If the Court shall not make such determination within a thirty (30)
day period following such request (at which time such request shall be
withdrawn) (the "Determination Deadline"), American Radio, ATS and CBS
shall submit to an arbitrator (the "Arbitrator") for review and resolution
the determination of the Tower Stock Payment. The Arbitrator shall be a
nationally recognized investment banking firm which shall be agreed upon by
American Radio, CBS and ATS in writing. The Arbitrator shall be requested
to render a decision resolving the amount of the Tower Stock Payment within
thirty (30) days following the date of its selection. If the parties cannot
agree on the firm to be selected as Arbitrator within fifteen (15) days
following the Determination Deadline, then American Radio and CBS, on the
one hand, and ATS, on the other hand, shall each choose one such firm
within ten (10) days following the expiration of such fifteen (15) day
period to review, resolve and agree on the determination of the Tower Stock
Payment, which determination, once agreed to in writing by both such firms,
shall be final, conclusive and binding on the parties. If such two firms
cannot agree on the amount of the Tower Stock Payment within thirty (30)
days following the date on which the second of such firms is selected, then
such two firms shall promptly select a third such firm to make such
determination, which determination shall be made by such third firm within
thirty (30) days of the date on which such third firm is selected. The
determination of such third firm of the amount of the Tower Stock Payment
shall be final, conclusive and binding on the parties. The cost of any such
arbitration (including the fees of the Arbitrator and any other firm
selected hereunder) shall be borne 50% by American Radio and 50% by ATS.
ATS shall promptly pay to American Radio the amount of the Tower Stock
Payment once such amount is determined in accordance with this clause (ii).

FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 FOR PERFECTING APPRAISAL
RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS (IN WHICH EVENT A FORMER
STOCKHOLDER OF ARS COMMON STOCK WILL BE ENTITLED TO RECEIVE THE MERGER
CONSIDERATION FOR EACH SHARE OF ARS COMMON STOCK ISSUED AND OUTSTANDING
IMMEDIATELY PRIOR TO THE EFFECTIVE TIME OWNED BY HIM, HER OR IT).

EXPENSES

Each of the parties will pay its own fees and expenses, except that the
Merger Agreement provides that (a) ATS is obligated to indemnify and hold
harmless ARS with respect to certain liabilities, and (b) the Merger Agreement
provides for an adjustment (the cost or benefit of which is borne or inures to
the benefit of ATS) based on the working capital and aggregate debt of ARS at
the Closing Date. See "The Merger and Tower Separation--ARS-ATS Separation
Agreement". The Merger Agreement also provides that in the event the Merger
Agreement is terminated by any party pursuant to the provisions of paragraph
(d) under "--Termination--Termination Events" above, then ARS shall pay to CBS
a fee equal to $35.0 million, together with the reasonable and reasonably
documented out-of-pocket fees and expenses incurred or paid by or on behalf of
CBS in connection with the Merger or the consummation of the transactions
contemplated by the Merger Agreement, including all fees and expenses of its
counsel, commercial banks, investment banking firms, accountants, experts

116

and consultants in an aggregate amount not to exceed $5.0 million. Estimated
fees and expenses of ARS in connection with the Merger and related
transactions (including the Tower Separation and assuming the consummation
thereof) are as follows (in millions):

Financial advisory fees and expenses............................... $ 7.5
Consent solicitation fees and expenses ............................ 2.3
Legal and accounting fees and expenses............................. 2.3
Printing and mailing to stockholders............................... 0.4
SEC fees........................................................... 0.4
Bonus and severance arrangements payable to officers and
employees......................................................... 1.1
Miscellaneous...................................................... 0.3
-----
Total Fees and Expenses.......................................... $14.3
=====

Promptly following the Effective Time, ATS is obligated to pay to ARS in
immediately available funds (and make ARS whole on an after-tax basis under
the principles set forth in Section 6.17(c)(iv) of the Merger Agreement) an
amount equal to the aggregate costs and expenses incurred by ARS in connection
with any agreement, arrangement or understanding (other than the Tower
Documentation) entered into by ARS, ATS Mergercorp or any member of the
American Tower Group following the date of the Original Merger Agreement (x)
for the benefit of any member of the American Tower Group, (y) in
contemplation of the Tower Separation or (z) in connection with the sale,
assignment, transfer or other disposition of shares of ATS Common Stock,
including without limitation such costs and expenses incurred by ARS to
Merrill Lynch and any such costs and expenses incurred by ARS to Credit Suisse
First Boston in excess of those set forth in the engagement letter between ARS
and Credit Suisse First Boston provided by ARS to CBS.

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DESCRIPTION OF AMERICAN TOWER SYSTEMS CAPITAL STOCK

GENERAL

The authorized capital stock of American Tower Systems consists of
20,000,000 shares of Preferred Stock, $.01 par value per share (the "Preferred
Stock") 200,000,000 shares of ATS Class A Common Stock, $.01 par value per
share, 50,000,000 shares of ATS Class B Common Stock, $.01 par value per
share, and 10,000,000 shares of ATS Class C Common Stock, $.01 par value per
share. The outstanding shares of ATS Common Stock (there being no Preferred
Stock outstanding) as of February 1, 1998 were as follows: ATS Class A Common
Stock--36,351,265; ATS Class B Common Stock--9,320,576; and ATS Class C Common
Stock--3,295,518. The Restated Certificate of Incorporation of ATS is
identical to the Restated Certificate of Incorporation of ARS. Accordingly,
the rights of the holders of ATS Common Stock are identical to the respective
rights of the holders of the ARS Common Stock.

PREFERRED STOCK

The 20,000,000 authorized and unissued shares of Preferred Stock may be
issued with such designations, preferences, limitations and relative rights as
the ATS Board may authorize, including, but not limited to: (i) the
distinctive designation of each series and the number of shares that will
constitute such series; (ii) the voting rights, if any, of shares of such
series; (iii) the dividend rate on the shares of such series, any restriction,
limitation or condition upon the payment of such dividends, whether dividends
shall be cumulative, and the dates on which dividends are payable; (iv) the
prices at which, and the terms and conditions on which, the shares of such
series may be redeemed, if such shares are redeemable; (v) the purchase or
sinking fund provisions, if any, for the purchase or redemption of shares of
such series; (vi) any preferential amount payable upon shares of such series
in the event of the liquidation, dissolution or winding-up of ATS or the Tower
Separation of its assets; and (vii) the price or rates of conversion at which,
and the terms and conditions on which the shares of such series may be
converted into other securities, if such shares are convertible. Although ATS
has no present intention to issue shares of Preferred Stock, the issuance of
Preferred Stock, or the issuance of rights to purchase such shares, could
discourage an unsolicited acquisition proposal.

COMMON STOCK

Dividends. Holders of record of shares of ATS Common Stock on the record
date fixed by the ATS Board are entitled to receive such dividends as may be
declared by the ATS Board out of funds legally available for such purpose. No
dividends may be declared or paid in cash or property on any share of any
class of ATS Common Stock, however, unless simultaneously the same dividend is
declared or paid on each share of the other classes of ATS Common Stock,
except that in the event of any such dividend in which shares of stock of any
company (including American Tower Systems or any of its Subsidiaries) are
distributed, such shares may differ as to voting rights to the extent that
voting rights now differ among the different classes of ATS Common Stock. In
the case of any dividend payable in shares of ATS Common Stock, holders of
each class of ATS Common Stock are entitled to receive the same percentage
dividend (payable in shares of that class) as the holders of each other class.

Voting Rights. Except as otherwise required by law and in the election of
directors, holders of shares of ATS Class A Common Stock and ATS Class B
Common Stock have the exclusive voting rights and will vote as a single class
on all matters submitted to a vote of the stockholders, with each share of ATS
Class A Common Stock entitled to one vote and each share of ATS Class B Common
Stock entitled to ten votes. The holders of the ATS Class A Common Stock,
voting as a separate class, have the right to elect two independent directors.
The ATS Class C Common Stock is nonvoting except as otherwise required by the
DGCL.

Under Delaware law, the affirmative vote of the holders of a majority of the
outstanding shares of any class of common stock is required to approve, among
other things, a change in the designations, preferences and limitations of the
shares of such class of common stock. Under the ATS Restated Certificate, the
affirmative vote of the holders of not less than 66 2/3% of the ATS Class A
Common Stock and ATS Class B Common Stock,

118

voting as a single class, is required in order to amend most of the provisions
of the ATS Restated Certificate, including those relating to the provisions of
the various classes of ATS Common Stock, indemnification of directors,
exoneration of directors for certain acts, and such super-majority provision.

Conversion Provisions. Shares of ATS Class B Common Stock and, except as
hereinafter noted, ATS Class C Common Stock are convertible, at any time at
the option of the holder, on a share for share basis into shares of ATS Class
A Common Stock. The present owner of ATS Class C Common Stock can convert such
stock only in the event of a Conversion Event (as defined in the ATS Restated
Certificate) or with the consent of the ATS Board. Shares of ATS Class B
Common Stock automatically convert into shares of ATS Class A Common Stock
upon any sale, transfer, assignment or other disposition other than to
Permitted Transferees (as defined in the ATS Restated Certificate) which term
presently includes certain family members, trusts and other family entities
and charitable organizations and upon pledges but not to the pledgee upon
foreclosure.

It is a condition of consummation of the ATC Merger Agreement that the ATS
Restated Certificate be amended to (i) limit the aggregate voting power of
Steven B. Dodge (and his Controlled Entities as to be defined therein) to
49.99% of the aggregate voting power of all shares of capital stock entitled
to vote generally from the election of directors (less the voting power
represented by the shares of ATS Class B Common Stock acquired by the Stoner
purchasers pursuant to the ATS Stock Purchase Agreement and owned by them at
such time), (ii) prohibit future issuances of ATS Class B Common Stock (except
upon exercise of then outstanding options and pursuant to stock dividends or
stock splits), (iii) limit transfers of ATS Class B Common Stock to a more
narrow group than is provided in the ATS Restated Certificate, (iv) provide
for automatic conversion of the ATS Class B Common Stock to ATS Class A Common
Stock at such time as the aggregate voting power of Mr. Dodge (and his
Controlled Entities) falls below either (x) 50% of Mr. Dodge's aggregate
voting power (immediately after consummation of the ATC Merger) or (y) 20% of
the aggregate voting power of all shares of ATS Common Stock at the time
outstanding, and (v) require consent of the holders of a majority of ATS Class
A Common Stock for amendments adversely affecting the ATS Class A Common
Stock.

Liquidation Rights. Upon liquidation, dissolution or winding-up of ATS, the
holders of each class of ATS Common Stock are entitled to share ratably (based
on the number of shares held) in all assets available for distribution after
payment in full of creditors and payment in full to any holders of the
Preferred Stock then outstanding of any amount required to be paid under the
terms of the Preferred Stock.

Other Provisions. The holders of ATS Common Stock are not entitled to
preemptive or subscription rights. The shares of ATS Common Stock presently
outstanding are validly issued, fully paid and nonassessable. In any merger,
consolidation or business combination, the consideration to be received per
share by holders of each class of ATS Common Stock must be identical to that
received by holders of the other class of ATS Common Stock, except that in any
such transaction in which shares of ATS Common Stock (or any other company)
are distributed, such shares may differ as to voting rights to the extent that
voting rights now differ among the different classes of ATS Common Stock. No
class of ATS Common Stock may be subdivided, consolidated, reclassified or
otherwise changed unless, concurrently, the other classes of ATS Common Stock
are subdivided, consolidated, reclassified or otherwise changed in the same
proportion and in the same manner.

DIVIDEND RESTRICTIONS

ATSI is prohibited under the terms of the Tower Loan Agreement from paying
cash dividends on its capital stock (including Preferred Stock) except that,
beginning on April 15, 2000, Tower Operating Subsidiary may pay cash dividends
if (a) no Default exists or would be created thereby under the Tower Loan
Agreement, and (b) (ii) the ratio of Total Debt to Annualized Operating Cash
Flow is less than 4.0 after giving effect to certain payments required under
the Tower Loan Agreement out of the proceeds of any equity offering, and (c)
then only to the extent that Restricted Payments do not exceed (i)(x) 50% of
Excess Cash Flow for the preceding calendar year minus (y) any portion thereof
used to invested in Unrestricted Subsidiaries, or (ii) (x) 50% of the net
proceeds of any equity offering minus (y) any portion thereof used to invested
in Unrestricted Subsidiaries (as each such term is defined in the Tower Loan
Agreement). Comparable restrictions are imposed on the ability

119

of ATSLP to make distributions to its partners. Since American Tower Systems
has no other assets other than its ownership of all of the capital stock of
the Tower Operating Subsidiary, its ability to pay dividends to its
stockholders in the foreseeable future is restricted.

DELAWARE BUSINESS COMBINATION PROVISIONS

Under the DGCL, certain "business combinations" (including the issuance of
equity securities) between a Delaware corporation and any person who owns,
directly or indirectly, 15% or more of the voting power of the corporation's
shares of capital stock (an "Interested Stockholder") must be approved by the
holders of at least 66 2/3% of the voting stock not owned by the Interested
Stockholder if it occurs within three years of the date such person became an
Interested Stockholder unless prior to such date the ATS Board approved either
the business combination or the transaction which resulted in the stockholder
becoming an Interested Stockholder. The Tower Separation and the ATS Stock
Purchase Agreement were approved by the ATS Board.

LISTING OF CLASS A COMMON STOCK

There has been no trading market for the ATS Class A Common Stock, and there
can be no assurances as to the establishment or continuity of any such market.
However, it is expected that a "when-issued" trading market may develop on or
about the consummation of the Merger. ATS intends to seek a Nasdaq listing for
the ATS Class A Common Stock. While ATS believes it currently meets the
financial listing criteria for Nasdaq listing, no application has been filed,
any such listing is subject to the distribution of the relevant exchange and
there can be no assurance that a Nasdaq or other listing will be obtained. If
a listing is not obtained, the ATS stock would trade in the over-the-counter
market which is generally less liquid.

Prices at which the ATS Class A Common Stock may trade after the Merger
cannot be predicted. Prices at which trading in shares of ATS Class A Common
Stock occurs may fluctuate significantly. See "Risk Factors--Risk Factors
Relating to American Tower Systems--No Prior Market for ATS Common Stock". The
prices at which the ATS Class A Common Stock trades will be determined by the
marketplace and may be influenced by many factors, including, among others,
quarter to quarter variations in the actual or anticipated financial results
of ATS or other companies in the communications site industry or the markets
served by ATS. These and other factors may adversely affect the market price
of the ATS Class A Common Stock.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the ATS Common Stock is Harris Trust
and Savings Bank, 311 West Monroe Street, Chicago, Illinois 60606 (telephone
number (312) 461-4600).

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COMPARISON OF RIGHTS OF STOCKHOLDERS OF ATS AND ATC

Upon consummation of the ATC Merger, the ATC common stockholders will become
common stockholders of ATS. Set forth below is a comparison of the terms of
the ATS Class A Common Stock and the terms of the ATC Common Stock, as well as
a summary of other material differences between the rights of holders of ATS
Class A Common Stock and the rights of holders of ATC Common Stock. This
summary does not purport to be complete and is qualified in its entirety by
reference to the ATS Restated Certificate, ATS' Bylaws (the "ATS Bylaws"), the
ATC Certificate of Incorporation, as amended (the "ATC Certificate"), the ATC
Bylaws (the "ATC Bylaws") and the more detailed description of the ATS Common
Stock contained herein. The description gives effect to the amendment of the
terms of the ATS Common Stock required as a condition to the consummation of
the ATC Merger. See "Business of American Tower Systems--Recent Transactions--
ATC Merger" and "Description of American Tower Systems Capital Stock--Common
Stock".

TERMS OF COMMON STOCK

ATS COMMON STOCK ATC COMMON STOCK
------------------------------------ ------------------------------------

BUSINESS: All businesses of ATS. All business of ATC.
LISTING: Application will be made to Nasdaq. Not publicly traded.
DIVIDENDS: ATS currently does not pay dividends ATC currently does not pay dividends
on the ATS Common Stock. Dividends on the ATC Common Stock. Dividends
on the ATS Common Stock may be paid on the ATC Common Stock may be paid
in the discretion of the ATS Board in the discretion of the ATC Board
based primarily upon the financial based primarily upon the financial
condition, results of operations and condition, results of operations and
business requirements of ATS. business requirements of ATC.
Dividends, if any, are payable out Dividends, if any, are payable out
of the funds of ATS legally of the funds of ATC legally
available for the payment of available for the payment of
dividends, subject to restrictions dividends, subject to restrictions
contained in the Tower Loan contained in its bank credit
Agreement. agreement.
VOTING RIGHTS: Except as otherwise required by the Except as otherwise required by the
DGCL, holders of the ATS Class A DGCL, and the rights of holders of
Common Stock and ATS Class B Common the Series A Redeemable Preferred
Stock vote together as a single Stock, $.01 par value (the "ATC
class. The ATS Class A Common Stock Preferred Stock"), holders of the
has one vote per share and the ATS ATC Common Stock have the sole
Class B Common Stock has ten votes voting rights. ATC has a class of
per share. The ATS Class C Common nonvoting common stock authorized,
Stock does not have any voting none of which is issued.
rights except as otherwise required
by the DGCL. The holders of ATS
Class A Common Stock have the right
to elect two independent directors.
PREEMPTIVE RIGHTS: The holders of ATS Common Stock do The holders of ATC Common Stock do
not have any preemptive rights. not have any preemptive rights.
CONVERSION: Shares of ATS Class B Common Stock None
will automatically convert into
shares of ATS Class A Common Stock
upon any transfer of such shares of
ATS Class B Common Stock, unless the
transferee is a Permitted Transferee
(an entity controlled by such
transferor a family member (so long
as voting control is retained by the
transferor) or is a holder of ATS
Class B Common Stock.

121

ATS COMMON STOCK ATC COMMON STOCK
------------------------------------ ------------------------------------

A holder of shares of ATS Class B
Common Stock or of ATS Class C
Common Stock (subject to certain
restrictions in the case of the
present Class C holder) may at any
time, at such holder's election,
convert such shares into shares of
ATS Class A Common Stock.
All of the Class B Common Stock will
automatically convert into ATS Class
A Common Stock should Mr. Dodge's
aggregate voting power fall below
either (i) 50% of his initial
aggregate voting power (immediately
after consummation of the ATC
Merger) or (ii) 20% of the aggregate
voting power of all shares of ATS
Common Stock at the time
outstanding.
LIQUIDATION: In the event of a liquidation of In the event of a liquidation of
ATS, holders of ATS Common Stock ATC, holders of ATC Common Stock
will be entitled to receive the net will be entitled to receive the net
assets of ATS, if any, remaining for assets of ATC, if any, remaining for
distribution to holders of ATS distribution to holders of ATC
Common Stock. Common Stock.

OTHER STOCKHOLDER RIGHTS

Amendments to the Certificate of Incorporation

Under the ATS Restated Certificate, amendments to the ATS Restated
Certificate must be adopted by the holders of a majority of the voting power
of the ATS Voting Stock, except that amendments to the provisions relating to
(i) the number, rights and powers of any class of stock; (ii) the composition
and powers of the ATS Board; (iii) release of directors' liability; (iv)
indemnification of directors as a result of a breach of fiduciary duties,
officers, employees and agents; (v) amendments to the ATS Bylaws; and (vi)
amendments to foregoing provisions, require adoption by the holders of 66 2/3%
of the total number of the voting power of the outstanding shares of ATS
Voting Stock.

Under the ATC Certificate, amendments to the ATC Articles must be adopted by
a majority of the votes cast on such amendment by the holders of ATC Common
Stock entitled to vote on such amendment at a meeting at which a quorum of
such votes exists, except that without the affirmative vote or written consent
of the holders of more than 50% of the outstanding shares of ATC Series A
Preferred Stock, no amendment shall be effective to: (i) amend or repeal any
provision of, or add any provision to, the ATC Certificate or ATC Bylaws if
such action would alter or change the preferences, rights, privileges or
powers of, or the restrictions provided for the benefit of, the ATC Series A
Preferred Stock, or increase or decrease the authorized number of shares of
the ATC Series A Preferred Stock; (ii) authorize or issue shares of any class
of stock, or any class of bonds, debentures, notes or other obligations
convertible into or exchangeable for, or having option rights to purchase, any
shares of any other class or series of stock of ATC, having any preference or
priority as to assets superior to or on a parity with the ATC Series A
Preferred Stock; or (iii) reclassify any Junior Stock (as defined in the ATC
Certificate) into shares having any preference or priority as to assets
superior to or on a parity with any preference or priority of the ATC Series A
Preferred Stock. The ATC Series A Preferred Stock will be redeemed as part of
the consummation of the ATC Merger.

122

Amendments to Bylaws

The ATS Restated Certificate and the ATS Bylaws provide that bylaws may be
adopted, amended, altered, changed or repealed by either the affirmative vote
of the holders of 66 2/3% of the outstanding shares of ATS Voting Stock or by
the affirmative vote of a majority of the entire ATS Board.

The ATC Bylaws may be amended or repealed by the affirmative vote of a
majority of the members of the ATC Board present at any meeting at which a
quorum is present or by the ATC stockholders, except as described above under
"--Amendments to the Certificate of Incorporation".

Directors

Under the ATS Bylaws, the number of directors is determined by the ATS Board
from time to time, but can not be less than three. The ATS Bylaws do not
provide for a classified board. The ATS Restated Certificate provides that the
holders of the ATS Class A Common Stock shall be entitled to vote as a class
to elect two directors, all other directors are elected by the holders of the
ATS Class A Common Stock and the ATS Class B Common Stock, voting together as
a single class, with each share of ATS Class A Common Stock entitled to one
vote and each share of the ATS Class B Common Stock entitled to ten votes. See
"The ATC Merger" for information with respect to voting agreement to be
executed by Messrs. Dodge and Stoner relating to the election of two nominees
of certain ATC common stockholders.

Under the ATC Bylaws, the number of directors is determined by the ATC Board
of Directors from time to time, but can not be less than three. The ATC
Securityholders Agreement provides that the Board should consist of not more
than nine members. The ATC Bylaws do not provide for a classified board. The
holders of ATC Common Stock are entitled to elect all of the members of the
ATC Board of directors, subject to the rights of the holders of the ATC
Preferred Stock outstanding from time to time and provision of the ATC
Securityholders Agreement. See "Business of American Tower Systems--Recent
Transactions--ATC Merger" for information with respect to voting agreement to
be executed by Messrs. Dodge and Stoner relating to the election of two
nominees of certain ATC common stockholders.

Removal of Directors

Under the ATS Restated Certificate and Bylaws, (a) directors elected by the
ATS common stockholders may be removed, with or without cause, by vote of the
holders of a majority of the ATS Voting Stock; and (b) any directors elected
by the holders of ATS Class A Common Stock may be removed, with or without
cause, by a vote of the holders of the ATS Class A Common Stock holding not
less than a majority of the issued and outstanding shares of ATS Class A
Common Stock. Under the ATC Certificate, subject to restrictions in the ATC
Securityholders Agreement, directors may be removed, with or without cause, by
a vote of the holders of ATC Common Stock holding not less than a majority of
the issued and outstanding shares of ATC Common Stock.

Newly Created Directorships and Vacancies

Under the ATS Restated Certificate and the ATS Bylaws, vacancies in the ATS
Board and newly created directorships may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. If there are no directors in office, the DGCL provides that any
officer or stockholder may call a special meeting of stockholders in
accordance with the ATS Restated Certificate and ATS Bylaws, at which meeting
such vacancies shall be filled.

Under the ATC Certificate and the ATC Bylaws, except as provided in ATC's
existing security holders agreement vacancies in the ATC Board of Directors
and newly created directorships may be filled by a majority of the directors
then in office, even if less than a quorum, or by the sole remaining director.
If there are no

123

directors in office, any officer or stockholder may call a special meeting of
stockholders in accordance with the ATC Certificate and ATC Bylaws, at which
meeting such vacancies shall be filled.

Special Meetings of Stockholders; Action by Written Consent

Under the ATS Bylaws, special meetings of the stockholders may be called for
any purpose or purposes by the Chairman of the ATS Board or, if there be none,
the President, or by the ATS Board, and shall be called by the President or
Secretary of ATS at the request in writing of the stockholders holding of
record a majority in interest of the voting power of the shares of stock of
ATS issued and outstanding and entitled to vote. Under the DGCL, any action
required or permitted by law or the ATS Restated Certificate to be taken at
any meeting of stockholders may be taken without a meeting, without prior
notice, and without a vote, if a written consent, setting forth the action so
taken, is signed by the number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present or present by proxy and voted.

Under the ATC Bylaws, special meetings of stockholders may be called for any
purpose or purposes any time by the Chairman of the Board, the President or a
majority of the ATC Board. Under the DGCL, any action required or permitted by
law or the ATC Certificate to be taken at any meeting of stockholders may be
taken without a meeting, without prior notice, and without a vote, if a
written consent, setting forth the action so taken, is signed by the number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present or present by proxy and
voted.

Stockholder Proposals and Nominations

The ATS Bylaws do not contain specific requirements which must be met in
order for a stockholder to present a proposal for action at an annual meeting
of stockholders or to nominate an individual for election to the ATS Board.

The ATC Bylaws do not contain specific requirements which must be met in
order for a stockholder to present a proposal for action at an annual meeting
of stockholders or to nominate an individual for election to the ATC Board of
Directors.

Business Combinations Following a Change in Control

Each of ATS and ATC is a Delaware corporation and is subject to Section 203
of the DGCL, which governs business combinations with interested stockholders.
See "Description of American Tower Systems Capital Stock--Delaware Business
Combination Provisions".

EXISTING ATC SECURITYHOLDERS AGREEMENT

ATC and its securityholders are parties to a Securityholders Agreement dated
October 12, 1995, as amended (the "ATC Securityholders Agreement") that
provides for, among other things:

(i) a Board of Directors consisting of not more than nine individuals,
including nominees of certain of ATC's stockholders or representatives of
ATC's stockholders, which nominees may be removed, and the vacancy created
by any such removal filled, by those entitled to make such nomination;

(ii) rights of first refusal triggered upon the proposed sale of any ATC
common stock, preferred stock or certain warrants to any third party, or
upon death, divorce or bankruptcy;

(iii) piggy-back registration rights;

(iv) co-sale provisions including (a) the rights of ATC securityholders
to participate in or "tag along" in certain stock sales, and (b) the
obligations of ATC securityholders to participate in or be "dragged along"
in certain sales of ATC's capital stock;

(v) the right of Clear Channel, ATC's largest stockholder, to subscribe
for additional shares of ATC Common Stock to prevent its aggregate
percentage interest from falling below 25%;

124

(vi) standstill provisions that require the consent of the ATC Board or a
supermajority of securityholders before any securityholder or its
affiliates could acquire more than 33% of the fully-diluted capital stock
of ATC;

(vii) provisions restricting certain securityholders form pursuing
business opportunities until ATC elects not to pursue such opportunities;

(viii) a 180-day lock-up period following an initial public offering;

(ix) rights of securityholders to participate in certain issuances of ATC
Common Stock; and

(x) provisions requiring ATC to provide periodic financial statements.

The ATC Securityholders Agreement will be terminated upon consummation of
the ATC Merger.

SHARES ELIGIBLE FOR FUTURE SALE

GENERAL

Upon completion of the ATS Pro Forma Transactions and the Merger, there will
be an aggregate of approximately 80.0 million shares of ATS Common Stock
outstanding. All of such shares, other than an aggregate of 5,333,333 shares
issued in connection with the Gearon Transaction, will be freely transferable
without restriction or future registration under the Securities Act, unless
held by an "affiliate" (as that term is defined under the Securities Act) of
ATS. Persons who may be deemed to be affiliates of ATS after the Merger
generally include individuals or entities that directly, or indirectly through
one or more intermediaries, control, are controlled by, or are under common
control with, ATS. Person who are affiliates of ATS will be permitted to sell
their ATS Common Stock received pursuant to the Merger only pursuant to an
effective registration statement under the Securities Act or pursuant to an
exemption from registration under the Securities Act, such as the exemption
afforded by Rule 144 thereunder.

In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated) who has beneficially owned restricted shares of
ATS Common Stock for at least one year is entitled to sell, within any three-
month period, a number of such shares which does not exceed the greater of 1%
of the then outstanding shares of ATS Class A Common Stock (approximately
362,000 shares immediately after the Merger and prior to the consummation of
the ATC Merger, approximately 660,000 shares thereafter) or the average weekly
public trading volume of the ATS Class A Common Stock during the four calendar
weeks preceding the date on which notice of the sale is filed with the
Commission. Sales under Rule 144 are also subject to certain manner of sale
provisions, notice requirements and the availability of current public
information about ATS. Any person (or persons whose shares are aggregated) who
has not been an affiliate of ATS at any time during the past three months
preceding a sale and who has owned shares of ATS Common Stock for at least two
years is entitled to sell such shares under Rule 144(k) without regard to the
volume limitations, manner of sale provisions, public information or notice
requirements of Rule 144. In February 1997, the Commission solicited comments
regarding certain proposed amendments to Rule 144, including reducing the
aforementioned one year and two year holding periods.

Options to purchase an aggregate of approximately 12.6 million shares of ATS
Common Stock will be outstanding immediately following the consummation of the
ATS Pro Forma Transactions and the Merger. Shares of ATS Common Stock issued
upon exercise of such options will be registered on Form S-8 under the
Securities Act and will, therefore, be freely transferable under the
securities laws. American Tower Systems has entered into agreements to
register shares of ATS Common Stock under the Securities Act issued pursuant
to the ATS Stock Purchase Agreement, the ATC Merger and the Gearon Transaction
and shares held by certain affiliates of ATS.

American Tower Systems cannot make any predictions as to the effect, if any,
sales of shares of ATS Common Stock, or the availability of shares for future
sale, will have on the market price of the ATS Class A Common Stock prevailing
from time to time.

125

VALIDITY OF THE SHARES

The validity of the ATS Common Stock to be issued in the Merger will be
passed upon by Sullivan & Worcester LLP, Boston, Massachusetts. Norman A.
Bikales, a member of the firm of Sullivan & Worcester LLP, is the owner of
9,000 shares of ARS Class A Common Stock and 41,490 shares of ARS Class B
Common Stock and has an option to purchase 20,000 shares of ATS Class A Common
Stock at $10.00 per share. Mr. Bikales and/or associates of that firm serve as
secretary or assistant secretaries of American Radio and certain of its
subsidiaries.

EXPERTS

The following financial statements incorporated by reference or included
herein in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are incorporated by
reference or included herein, and have been so incorporated or included herein
in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing:

(1) The consolidated financial statements of American Radio Systems
Corporation as of December 31, 1995 and 1996 and for each of the three
years in the period ended December 31, 1996 and the related financial
statement schedule (incorporated by reference from American Radio Systems
Corporation's Annual Report on Form 10-K for the year ended December 31,
1996);

(2) The consolidated financial statements of American Tower Systems
Corporation as of December 31, 1996 and September 30, 1997, for the nine
months ended September 30, 1997, for the year ended December 31, 1996 and
for the period July 17, 1995 (Incorporation) to December 31, 1995;

(3) The consolidated financial statements of EZ Communications, Inc. as
of December 31, 1996 and for the year then ended and the related financial
statement schedule (incorporated by reference from EZ Communication's
Annual Report on Form 10-K for the year ended December 31, 1996);

(4) The combined financial statements of Meridian Communications as of
December 31, 1995 and 1996 and for each of the two years then ended;

(5) The financial statements of Diablo Communications, Inc. as of
December 31, 1995 and 1996 and for each of the two years then ended; and

(6) The financial statements of Gearon & Co., Inc as of December 31, 1996
and September 30, 1997 and for the year ended December 31, 1996 and the
nine months ended September 30, 1997.

The combined financial statements of CBC of Baltimore, Inc. (d/b/a WOCT-FM)
and WWMX-FM, Inc. (wholly-owned subsidiaries of Capitol Broadcasting Company,
Inc.) as of December 31, 1995 and 1996 and for the years then ended,
incorporated in this Prospectus by reference to American Radio's Current
Report on Form 8-K/A (Amendment No. 1) dated April 17, 1997, have been so
incorporated in reliance on the reports of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

The consolidated financial statements and schedule of EZ Communications,
Inc. as of and for the two years in the period ended December 31, 1995 have
been audited by Ernst & Young LLP, independent auditors, as stated in their
report incorporated by reference in this Prospectus and have been so included
in reliance upon the report of such firm as experts in accounting and
auditing.

The combined financial statements of net assets of MicroNet, Inc. and
Affiliates to be sold to ATS as of December 31, 1996 and for the year then
ended have been audited by Pressman Ciocca Smith LLP, independent certified
public accountants, as stated in their report appearing in this Prospectus and
have been so included in reliance upon the report of such firm as experts in
accounting and auditing.

The financial statements of Diablo Communications of Southern California,
Inc. for the year ended December 31, 1996 have been audited by Rooney, Ida,
Nolt & Ahern, independent auditors, as stated in their report appearing in
this Prospectus and have been so included in reliance upon the report of such
firm as experts.

126

The financial statements of Tucson Communications Company at December 31,
1996 and for the year then ended have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein in this Registration Statement and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

The consolidated financial statements of American Tower Corporation and
subsidiaries as of December 31, 1996 and 1995, and for each of the years in
the two year period ended December 31, 1996, the period from October 15, 1994
to December 31, 1994 (Successor) and the period from January 1, 1994 to
October 14, 1994 (Predecessor), have been included herein and in this
Prospectus in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants appearing elsewhere herein, and upon the
authority of such firm as experts in accounting and auditing.

127

DEFINITION CROSS REFERENCE SHEET

Set forth below is a list of certain defined terms used in this Prospectus
and the page on which such terms are defined. Terms designated with I, II,
III, IV, and VI are found on the pages indicated in Appendix I, Appendix II,
Appendix III Appendix IV, Appendix V and Appendix VI respectively.

DEFINED TERM PAGE
------------ ----

ABC....................................................................... 50
Acquiror.................................................................. III-1
Adjustment Amount......................................................... 95
After-tax cash flow....................................................... 17
American Cablesystems..................................................... 60
American Conversion Fraction.............................................. 86
American Radio............................................................ Cover
American Tower Systems.................................................... Cover
Antitrust Division........................................................ 110
APB....................................................................... F-83
Appraised Total Value..................................................... 114
Arbitrator................................................................ 114
Arch...................................................................... 50
ARS....................................................................... Cover
ARS-ATS Separation Agreement.............................................. 90
ARS Board................................................................. 8
ARS Common Stock.......................................................... Cover
ARS Convertible Preferred Stock........................................... 82
ARS Cumulative Preferred Stock............................................ 19
ARS Form 8-A.............................................................. i
ARS Options............................................................... 63
ARS Predecessor Entities.................................................. 18
ARS Preferred Stock....................................................... 86
ARS Pro Forma Transactions................................................ 19
ARS September 1997 10-Q................................................... 18
ARS 10-K.................................................................. 18
AT&T...................................................................... 50
ATC....................................................................... 1
ATC Board................................................................. 12
ATC Bylaws................................................................ 119
ATC Certificate........................................................... 119
ATC Common Stock.......................................................... V-10
ATC Credit Facility....................................................... V-8
ATC Merger................................................................ 2
ATC Merger Agreement...................................................... 2
ATC Merger Consideration.................................................. 70
ATC Merger Effective Time................................................. 75
ATC Securityholder Agreement.............................................. 122
Atlantic.................................................................. 60
ATS....................................................................... Cover
ATS Board................................................................. 11
ATS Bylaws................................................................ 119
ATS Class A Common Stock.................................................. 10
ATS Class B Common Stock.................................................. 10
ATS Class C Common Stock.................................................. 10
ATS Common Stock.......................................................... Cover

DEFINED TERM PAGE
------------ ----

ATS Employees............................................................. 93
ATS Group................................................................. 92
ATS Mergercorp............................................................ 90
ATS Options............................................................... 63
ATS Principal Stockholders................................................ 25
ATS Pro Forma Transactions................................................ 16
ATS Restated Certificate.................................................. 24
ATS Stock Purchase Agreement.............................................. 2
ATSI...................................................................... 6
ATSI Options.............................................................. 63
ATSI Plan................................................................. 63
ATSLP..................................................................... 6
Baltimore Transaction..................................................... I-7
Baron..................................................................... 68
BayCom Transaction........................................................ I-7
BCF....................................................................... 82
Bell Atlantic Mobile...................................................... 50
Bell South Mobility....................................................... 50
Bowen-Smith............................................................... 7
Bowen-Smith Acquisition................................................... 7
Broadcast cash flow....................................................... 20
Business Combination Statute.............................................. V-12
Cash Consideration........................................................ 86
CBS....................................................................... Cover
CBS Sub................................................................... Cover
CCP....................................................................... 61
CD Amount................................................................. 94
CEA....................................................................... 61
Certificates.............................................................. 75
Chancellor Media.......................................................... 50
Chase Capital............................................................. 68
Clear Channel............................................................. 50
Closing................................................................... 85
Closing Date.............................................................. 85
CNN....................................................................... 50
Code...................................................................... 10
Commission................................................................ i
Communications Act........................................................ 25
Company's Parent.......................................................... F-25
Comparable Companies...................................................... 83
Comparable Transactions................................................... 83
Corporate Adjustments..................................................... 82
Court..................................................................... 114
Credit Suisse First Boston................................................ 9
Credit Suisse First Boston Opinion........................................ 80
CSFB...................................................................... III-1
CSX....................................................................... 7

128

DEFINED TERM PAGE
------------ ----

CSX Transportation........................................................ 7
CTIA...................................................................... 2
Current Assets............................................................ 94
CVP....................................................................... 61
Debt Amount............................................................... 94
Delaware Court............................................................ 112
Determination Deadline.................................................... 114
DGCL...................................................................... 78
Diablo Transaction........................................................ 56
Distribution.............................................................. III-1
DTV....................................................................... 23
Duncan Guide.............................................................. 7
D & O Insurance........................................................... 101
EBITDA.................................................................... 17;20
Effective Time............................................................ 8
ESMR...................................................................... 3
Exchange Act.............................................................. i
Exchange Agent............................................................ 75
Extended Tower Leases..................................................... 95
EZ........................................................................ 60
EZ 10-K................................................................... 18
EZ Merger................................................................. ii
FAA....................................................................... 23
FASB...................................................................... 46
FAS 121................................................................... F-65
FAS 128................................................................... 46
FAS 130................................................................... 46
FAS 131................................................................... 46
FCC....................................................................... Cover
FCC Order................................................................. 108
Final Adjustment Amount................................................... 95
Fox....................................................................... 50
FTC....................................................................... 110
Gearon Transaction........................................................ 2
GTE Mobilnet.............................................................. 50
Hartford Transaction...................................................... I-7
HBC....................................................................... I-7
HBC Merger................................................................ I-7
HBO....................................................................... 50
Houston Cellular.......................................................... 7
HSR Act................................................................... Cover
Incorporation............................................................. F-3
Indemnified Parties....................................................... 100
Interested Stockholder.................................................... 118
IRS....................................................................... 83
ISOs...................................................................... 63
Jacor..................................................................... 50
Land Leases............................................................... 95
LCI....................................................................... F-25
Lehman.................................................................... 69
Liabilities............................................................... 94
LMAs...................................................................... 7

DEFINED TERM PAGE
------------ ----

Loan Agreement............................................................ F-12
Material Adverse Effect................................................... 105
Maximum Premium........................................................... 101
MCN....................................................................... F-55
Merger.................................................................... Cover
Merger Agreement.......................................................... Cover
Merger Consideration...................................................... 86
Meridian Transaction...................................................... 56
Merrill Lynch............................................................. 111
Metrocall................................................................. 50
MFS....................................................................... 68
MicroNet Transaction...................................................... 56
MRS....................................................................... F-55
MSSC...................................................................... F-55
Multi-Market.............................................................. 61
Multiple Ownership Limit.................................................. 107
NAB....................................................................... 60
NBC....................................................................... 50
Nasdaq.................................................................... Cover
Net Assets................................................................ F-25
Net Debt.................................................................. 93
Nextel.................................................................... 50
NOLs...................................................................... F-88
NQOs...................................................................... 63
NYSE...................................................................... 12
OFC....................................................................... 83
One-to-a-Market Rule...................................................... 107
Original Merger Agreement................................................. 8
OPM....................................................................... 56
OPM Transaction........................................................... 56
Optionholder.............................................................. 102
PageMart.................................................................. 50
PageNet................................................................... 50
Parent.................................................................... F-8
Partnership............................................................... F-60
PCIA...................................................................... 3
PCS....................................................................... 2
Pittencrief Communications................................................ 50
Plan...................................................................... 63
Preferred Stock........................................................... 116
Preferred Stock Consideratoin............................................. 70
Prime..................................................................... 47
Recent Transactions....................................................... 1
Registration Statement.................................................... i
SBC Communications........................................................ 50
Second Request............................................................ 2
Section 262............................................................... 112
Securities Act............................................................ ii
SEC....................................................................... i
Series A Preferred Stock.................................................. F-89
SMR....................................................................... 47
SNET...................................................................... 50

129

DEFINED TERM PAGE
------------ ----

Southwestern Bell........................................................ 50
Special Committee........................................................ 111
Sprint................................................................... 50
Stoner................................................................... 61
Sub...................................................................... III-1
Suburban................................................................. F-25
Sullivan & Worcester..................................................... 77
Summit Capital........................................................... 72
TCI...................................................................... F-30
Telecommunications Act................................................... 76
Termination Date......................................................... 106
Tower Cash Flow.......................................................... 17
Tower Leases............................................................. 95
Tower Loan Agreement..................................................... 24
Towers................................................................... 95
Tower Merger............................................................. 8
Tower Merger Agreement................................................... 8

DEFINED TERM PAGE
------------ ----

Tower Merger Consideration................................................. 90
Tower Merger Effective Time................................................ 90
Tower Merger Tower Consideration........................................... 90
Tower Separation........................................................... 1
Tower Stock Consideration.................................................. 86
Tower Stock Payment........................................................ 114
Transfer Application....................................................... 107
Transferred Towers......................................................... 93
Trust Applications......................................................... 109
Tucson Transaction......................................................... 56
Uncontrollable Events...................................................... 97
VEBA....................................................................... F-30
WC Amount.................................................................. 94
Wellington................................................................. 68
Working Capital............................................................ 94
WTPX(FM) Application....................................................... 108
(S)162(m) Options.......................................................... 102

130

INDEX TO FINANCIAL STATEMENTS

PAGE
----

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
Independent Auditors' Report............................................. F-3
Consolidated Balance Sheets as of December 31, 1996 and September 30,
1997.................................................................... F-4
Consolidated Statements of Operations for the period from July 17, 1995
("Incorporation") to December 31, 1995, the year ended December 31, 1996
and the nine months ended September 30, 1997 and 1996 (unaudited)....... F-5
Consolidated Statements of Stockholder's Equity for the period from July
17, 1995 ("Incorporation") to December 31, 1995, the year ended December
31, 1996 and the nine months ended September 30, 1997................... F-6
Consolidated Statements of Cash Flows for the period from July 17, 1995
("Incorporation") to December 31, 1995, the year ended December 31, 1996
and nine months ended September 30, 1997 and 1996 (unaudited)........... F-7
Notes to Consolidated Financial Statements............................... F-8
MICRONET, INC. AND AFFILIATES
Report of Independent Certified Public Accountants....................... F-22
Combined Statements of Net Assets To Be Sold as of December 31, 1996 and
September 30, 1997 (unaudited).......................................... F-23
Combined Statements of Income Derived From Net Assets To Be Sold for the
year ended December 31, 1996 and nine months ended September 30, 1996
and 1997 (unaudited).................................................... F-24
Combined Statements of Cash Flows Derived from Net Assets To Be Sold for
the year ended December 31, 1996 and nine months ended September 30,
1996 and 1997 (unaudited)............................................... F-25
Notes to Combined Financial Statements................................... F-26
DIABLO COMMUNICATIONS, INC.
Independent Auditors' Report............................................. F-32
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997
(unaudited)............................................................. F-33
Statements of Income for the years ended December 31, 1995 and 1996 and
nine months ended September 30, 1996 and 1997 (unaudited)............... F-34
Statements of Stockholders' Equity for the years ended December 31, 1995
and 1996 and nine months ended September 30, 1996 and 1997 and 1996
(unaudited)............................................................. F-35
Statements of Cash Flows for years ended December 31, 1995 and 1996 and
nine months ended September 30, 1996 and 1997 (unaudited)............... F-36
Notes to Financial Statements............................................ F-37
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
Independent Auditors' Report............................................. F-41
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997
(unaudited)............................................................. F-42
Statements of Operations for the period from September 1, 1995
(inception) to December 31, 1995, year ended December 31, 1996, and nine
months ended September 30, 1996 and 1997 (unaudited).................... F-43
Statements of Stockholders' Equity for the period from September 1, 1995
(inception) to December 31, 1995, year ended December 31, 1996 and nine
months ended September 30, 1997 (unaudited)............................. F-44
Statements of Cash Flows for the period from September 1, 1995
(inception) to December 31, 1995, year ended December 31, 1996 and nine
months ended September 30, 1996 and 1997 (unaudited).................... F-45
Notes to Financial Statements............................................ F-46

F-1

PAGE
----

MERIDIAN COMMUNICATIONS
Independent Auditors' Report............................................ F-51
Combined Balance Sheets as of December 31, 1995 and 1996 and June 30,
1997 (unaudited)........................................................ F-52
Combined Statements of Operations for the years ended December 31, 1995
and 1996 and six months ended June 30, 1996 and 1997 (unaudited)........ F-53
Combined Statements of Stockholder's Equity for the years ended December
31, 1995 and 1996 and six months ended June 30, 1997 (unaudited)........ F-54
Combined Statements of Cash Flows for years ended December 31, 1995 and
1996 and six months ended June 30, 1996 and 1997 (unaudited)............ F-55
Notes to Combined Financial Statements.................................. F-56
TUCSON COMMUNICATIONS COMPANY
Report of Independent Auditors.......................................... F-61
Balance Sheets as of December 31, 1996 and September 30, 1997 (unau-
dited).................................................................. F-62
Statements of Income for the year ended December 31, 1996 and September
30, 1997 and 1996 (unaudited)........................................... F-63
Statements of Partners' Deficit for the year ended December 31, 1996 and
September 30, 1997 and 1996 (unaudited)................................. F-64
Statements of Cash Flows for the year ended December 31, 1996 and Sep-
tember 30, 1997 and 1996 (unaudited).................................... F-65
Notes to Financial Statements........................................... F-66
GEARON & CO., INC.
Independent Auditors' Report............................................ F-69
Balance Sheets as of December 31, 1996 and September 30, 1997........... F-70
Statements of Income for the year ended December 31, 1996 and the nine
months ended September 30, 1997 and 1996 (unaudited).................... F-71
Statements of Stockholder's Equity for the year ended December 31, 1996
and the nine months ended September 30, 1997............................ F-72
Statements of Cash Flows for the year ended December 31, 1996 and the
nine months ended September 30, 1997 and 1996 (unaudited)............... F-73
Notes to Financial Statements........................................... F-74
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
Independent Auditors' Report............................................ F-78
Consolidated Balance Sheets as of December 31, 1995 and 1996............ F-79
Consolidated Statements of Operations--Predecessor for the period from
January 1, 1994 to October 14, 1994 and--Successor for the period from
October 15, 1994 to December 31, 1994 and the years ended December 31,
1995 and 1996........................................................... F-80
Consolidated Statements of Stockholders' Equity (Deficit)--Predecessor
for the period from January 1, 1994 to October 14, 1994 and--Successor
for the period from October 15, 1994 to December 31, 1994 and the years
ended December 31, 1995 and 1996........................................ F-81
Consolidated Statements of Cash Flows--Predecessor for the period from
January 1, 1994 to October 14, 1994 and--Successor for the period from
October 15, 1994 to December 31, 1994 and the years ended December 31,
1995 and 1996........................................................... F-82
Notes to Consolidated Financial Statements.............................. F-83

F-2

INDEPENDENT AUDITORS' REPORT

To the Board of Directors ofAmerican Tower Systems Corporation:

We have audited the accompanying consolidated balance sheets of American
Tower Systems Corporation and subsidiaries (the "Company"), a wholly owned
subsidiary of American Radio Systems Corporation, as of September 30, 1997 and
December 31, 1996 and the related consolidated statements of operations,
stockholder's equity and cash flows for the nine months ended September 30,
1997, the year ended December 31, 1996 and the period from July 17, 1995
("Incorporation") to December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of the companies as
of September 30, 1997 and December 31, 1996, and the results of their
operations and their cash flows for the nine months ended September 30, 1997,
the year ended December 31, 1996 and the period from Incorporation to December
31, 1995 in conformity with generally accepted accounting principles.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
Boston, Massachusetts
November 7, 1997

F-3

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

1997 1996
------------ -----------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................... $ 2,294,934 $ 2,373,360
Accounts receivable, net of allowance for doubtful
accounts of $80,000 in 1997 and $47,000 in 1996
................................................. 1,560,144 236,990
Prepaid and other current assets.................. 269,402 79,657
Deferred income taxes............................. 440,522
------------ -----------
Total current assets............................ 4,565,002 2,690,007
PROPERTY AND EQUIPMENT, net......................... 43,941,330 19,709,523
UNALLOCATED PURCHASE PRICE, net..................... 52,438,342 12,954,959
OTHER INTANGIBLE ASSETS, net........................ 7,379,837 1,336,361
INVESTMENT IN AFFILIATE............................. 322,243 325,000
NOTE RECEIVABLE..................................... 259,542
DEPOSITS AND OTHER LONG-TERM ASSETS................. 2,433,382 101,803
------------ -----------
TOTAL............................................... $111,339,678 $37,117,653
============ ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt................. $ 108,457 $ 117,362
Accounts payable.................................. 1,617,891 1,058,822
Accrued expenses.................................. 2,022,596 715,322
Accrued interest.................................. 452,825
Unearned income................................... 1,051,262 252,789
------------ -----------
Total current liabilities....................... 5,253,031 2,144,295
------------ -----------
LONG-TERM DEBT...................................... 54,094,507 4,417,896
DEFERRED INCOME TAXES............................... 1,084,052 279,218
OTHER LONG-TERM LIABILITIES......................... 28,500 18,950
------------ -----------
Total long-term liabilities..................... 55,207,059 4,716,064
------------ -----------
MINORITY INTEREST IN SUBSIDIARIES................... 774,317 528,928
------------ -----------
COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDER'S EQUITY:
Common stock, $.01 par value, 3,000 shares autho-
rized, issued and outstanding in 1997 and 1996.. 30 30
Additional paid-in capital........................ 51,403,212 30,318,420
Accumulated deficit............................... (1,297,971) (590,084)
------------ -----------
Total stockholder's equity...................... 50,105,271 29,728,366
------------ -----------
TOTAL............................................... $111,339,678 $37,117,653
============ ===========

See notes to consolidated financial statements.

F-4

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED), YEAR ENDED DECEMBER
31, 1996 AND PERIOD FROM JULY 17, 1995 (INCORPORATION) TO DECEMBER 31, 1995

NINE MONTHS ENDED PERIOD ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------ ---------------------
1997 1996 1996 1995
----------- ----------- ---------- ---------
(UNAUDITED)

REVENUES:
Tower revenues (includes
revenue from related parties
of $255,000 and $70,000 in
1997 and 1996).............. $ 4,802,508 $1,056,862 $1,803,854 $ 162,933
Sublease revenues............ 702,194 295,582 468,356
Management fees.............. 621,004 361,669 466,851
Consulting revenues.......... 1,436,083
Other........................ 340,042 143,555 157,817 186
----------- ---------- ---------- ---------
Total operating revenues... 7,901,831 1,857,668 2,896,878 163,119
----------- ---------- ---------- ---------
OPERATING EXPENSES:
Operating expenses excluding
depreciation and
amortization and corporate
general and administrative
expenses ................... 3,588,340 1,066,402 1,362,284 59,417
Depreciation and amortiza-
tion........................ 2,706,119 613,293 989,936 57,428
Corporate general and admin-
istrative expense........... 919,010 505,711 830,248 230,109
----------- ---------- ---------- ---------
Total operating expenses... 7,213,469 2,185,406 3,182,468 346,954
----------- ---------- ---------- ---------
INCOME (LOSS) FROM OPERATIONS.. 688,362 (327,738) (285,590) (183,835)
OTHER INCOME (EXPENSE):
Interest income.............. 96,991 18,508 36,204
Interest expense............. (1,318,334)
Gain (loss) on sale of as-
sets, net................... (2,757)
Minority interest in net
earnings of subsidiary...... (221,188) (75,812) (184,897)
----------- ---------- ---------- ---------
TOTAL OTHER EXPENSE............ (1,445,288) (57,304) (148,693)
----------- ---------- ---------- ---------
LOSS BEFORE BENEFIT (PROVISION)
FOR INCOME TAXES.............. (756,926) (385,042) (434,283) (183,835)
BENEFIT (PROVISION) FOR INCOME
TAXES......................... 49,039 (69,308) (45,390) 73,424
----------- ---------- ---------- ---------
NET LOSS....................... $ (707,887) $ (454,350) $ (479,673) $(110,411)
=========== ========== ========== =========
PRO FORMA LOSS PER SHARE....... $ (0.02) $ (0.01)
=========== ==========
PRO FORMA OUTSTANDING SHARES... 36,042,046 36,042,046
=========== ==========

See notes to consolidated financial statements.

F-5

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 1997, YEAR ENDED DECEMBER 31, 1996 AND PERIOD
FROM JULY 17, 1995 (INCORPORATION) TO DECEMBER 31, 1995

COMMON STOCK
------------------ ADDITIONAL
OUTSTANDING PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
----------- ------ ----------- ----------- -----------

Issuance of common stock
to parent.............. 10
Contributions from par-
ent:
Cash................... $ 242,215 $ 242,215
Non-cash............... 3,816,445 3,816,445
Cash transfers to par-
ent.................... (179,426) (179,426)
Net loss................ $ (110,411) (110,411)
----- ----------- ----------- -----------
BALANCE, DECEMBER 31,
1995................... 10 3,879,234 (110,411) 3,768,823
Issuance of common stock
to parent.............. 2,990 $30 (30)
Contributions from par-
ent:
Cash................... 2,548,557 2,548,557
Non-cash............... 29,856,885 29,856,885
Transfers to parent:
Cash................... (4,866,226) (4,866,226)
Non-cash............... (1,100,000) (1,100,000)
Net loss................ (479,673) (479,673)
----- --- ----------- ----------- -----------
BALANCE, DECEMBER 31,
1996................... 3,000 30 30,318,420 (590,084) 29,728,366
Cash contributions from
parent................. 25,959,792 25,959,792
Transfers to parent:
Cash................... (4,150,000) (4,150,000)
Non-cash............... (725,000) (725,000)
Net loss................ (707,887) (707,887)
----- --- ----------- ----------- -----------
BALANCE, SEPTEMBER 30,
1997................... 3,000 $30 $51,403,212 $(1,297,971) $50,105,271
===== === =========== =========== ===========

See notes to consolidated financial statements.

F-6

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED),
YEAR ENDED DECEMBER 31, 1996 AND PERIOD FROM JULY 17, 1995
(INCORPORATION) TO DECEMBER 31, 1995

NINE MONTHS ENDED
SEPTEMBER 30, PERIOD ENDED DECEMBER 31,
------------------------ ---------------------------
1997 1996 1996 1995
----------- ----------- ------------- ------------
(UNAUDITED)

CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss................ $ (707,887) $ (454,350) $ (479,673) $ (110,411)
Adjustments to reconcile
net loss to cash
provided by (used in)
operating activities:
Depreciation and
amortization.......... 2,706,119 613,293 989,936 57,428
Minority interest in
net earnings of
subsidiary............ 221,188 75,812 184,897
Amortization of
deferred financing
costs................. 120,187
Deferred income taxes.. 364,312 223,325 108,715
Changes in assets and
liabilities, net of
acquisitions:
Accounts receivable.. (1,345,336) (99,156) (199,823) (37,167)
Prepaid and other
current assets...... (47,084) (94,647) (226,814) (54,499)
Accounts payable and
accrued expenses.... 1,817,334 715,659 1,833,073 93,860
Other long-term
liabilities......... (10,450) 18,950
----------- ----------- ------------- -----------
Cash provided by (used
in) operating
activities.............. 3,118,383 979,936 2,229,261 (50,789)
----------- ----------- ------------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Payments for purchase
of property and
equipment and
intangible assets..... (8,925,939)
Payments for tower
related acquisitions.. (62,803,880)
Advances of notes
receivable............ (259,542)
Deposits and other
long-term assets...... (2,328,822)
-----------
Cash used for investing
activities............ (74,318,183)
-----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings under credit
facility.............. 50,000,000 2,500,000
Borrowings under other
notes payable......... 11,550 231,115
Repayments of other
notes payable......... (332,294) (4,119) (106,697)
Contributions from
parent................ 25,959,792 1,911,418 2,548,557 242,215
Cash transfers to
parent................ (4,150,000) (1,232,127) (4,866,226) (179,426)
Distributions to
minority interest..... (314,370) (104,790) (174,650)
Additions to deferred
financing costs....... (41,754)
----------- ----------- ------------- -----------
Cash provided by
financing activities.... 71,121,374 581,932 132,099 62,789
----------- ----------- ------------- -----------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS............. (78,426) 1,561,868 2,361,360 12,000
CASH AND CASH
EQUIVALENTS, BEGINNING
OF PERIOD............... 2,373,360 12,000 12,000
----------- ----------- ------------- -----------
CASH AND CASH
EQUIVALENTS, END OF
PERIOD.................. $ 2,294,934 $ 1,573,868 $ 2,373,360 $ 12,000
=========== =========== ============= ===========

See notes to consolidated financial statements.

F-7

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business and Corporate Structure--American Tower Systems Corporation and
subsidiaries (formerly American Tower Systems Holding Corporation)
(collectively, ATS or the Company) is a wholly-owned subsidiary of American
Radio Systems Corporation (ARS or the Parent). American Tower Systems
(Delaware), Inc. (ATSI) is a wholly-owned subsidiary of the Company which
holds substantially all the operating assets and liabilities of the business.

ATSI was incorporated on July 17, 1995 (Incorporation) for the purpose of
acquiring, developing, marketing, managing and operating wireless
communications tower sites throughout the United States, for use by
communications related businesses, such as paging companies, cellular
telephone providers, fixed microwave transmission companies, specialized
mobile radio companies, and television and radio broadcasters. As of September
30, 1997, the Company owned and/or operated approximately 370 wireless
communication sites, principally in the Northeast and Mid-Atlantic regions,
Florida and California.

In September 1997, ARS entered into a merger agreement (the Merger
Agreement) with a subsidiary of CBS Corporation (formerly Westinghouse
Electric Corporation) (CBS), pursuant to which a subsidiary of CBS will merge
with and into ARS, each holder of ARS common stock at the effective time of
the merger will receive $44.00 per share in cash, and ARS will become a
subsidiary of CBS (the Merger). As part to the Merger, ARS will distribute all
of its outstanding shares of ATS common stock owned by ARS to the holders of
record of ARS common stock at or about the time of the Merger (the Tower
Separation). As a result of the Tower Separation, ATS will cease to be a
subsidiary of, or otherwise be affiliated with ARS, and will thereafter
operate as an independent publicly held company. ARS and ATS will enter into
certain agreements pursuant to the Merger Agreement providing for, among other
things, the orderly separation of ARS and ATS, the transfer of lease
obligations to ATS of leased space on certain towers owned or leased by ARS to
ATS, and the allocation of certain tax liabilities between ARS and ATS. The
Tower Separation will result in a taxable gain to ARS, of which approximately
$20.0 million will be borne by ARS and the remaining obligation (currently
estimated at approximately $66.6 million) will be required to be paid by ATS
pursuant to provisions of the Merger Agreement. The estimated tax liability
shown in the preceding sentence is based on an assumed fair market value of
the ATS Common Stock of $10.00 per share, which is the price at which shares
were issued pursuant to the consummation of the transactions contemplated by
the ATS Stock Purchase Agreement. This liability is expected to be paid with
borrowings under ATS' loan agreement. (See Note 12).

To facilitate the Tower Separation, the Company's common stock will be
divided into three classes, A, B, and C, consistent with the capital structure
of ARS. Each holder of ARS stock will receive a share of ATS stock with the
same designation and rights and privileges as the related ARS share. (See Note
12).

Prior to the Tower Separation, ARS intends to increase its overall
investment in ATS to approximately $150.0 million, contribute tower properties
with a net book value of approximately $4.2 million and ATS intends to sell
shares of common stock for an aggregate purchase price of approximately $80.0
million to certain of the stockholders of ARS, of which approximately $50.0
million will be issued in exchange for promissory notes, secured by ARS Common
Stock. In addition, following the Merger, ATS will assume ARS' lease
obligation with respect to ARS' corporate headquarters in Boston,
Massachusetts and certain senior executives of ARS will become employees of
ATS. Future lease payments required under the lease agreement assumed
aggregate approximately $1.6 million through July 2006. (See Note 12).

The Merger has been approved by the stockholders of ARS who hold sufficient
voting power to approve such action. Consummation of the Merger is subject to,
among other things, the expiration or earlier termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (HSR Act)

F-8

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

and the approval by the Federal Communications Commission (FCC) of the
transfer of control of ARS' FCC licenses with respect to its radio stations to
CBS. Subject to the satisfaction of such conditions, the Merger is expected to
be consummated in the spring of 1998.

Principles of Consolidation and Basis of Presentation--The accompanying
consolidated financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. Investments in affiliates, where ATS owns more than 20 percent of
the voting power of the affiliate but not in excess of 50 percent, are
accounted for using the equity method. Separate financial information
regarding equity method investees is not significant. The Company also
consolidates its 50.1% interest and its 70.0% interest in two other tower
communications limited liability companies, with the other members'
investments reflected as minority interest in subsidiaries in the accompanying
financial statements.

Through September 30, 1997, ATS effectively operated as a stand-alone
entity, with its own corporate staff and headquarters, and received minimal
assistance from personnel of the Parent. Accordingly, the accompanying
consolidated financial statements do not include any cost allocations from the
Parent. However, the consolidated financial statements may not reflect the
results of operations or financial position of ATS had it been an independent
public company during the periods presented.

Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results may differ from those estimates, and
such differences could be material to the financial statements.

Revenue Recognition--Tower and sublease revenues are recognized when earned.
Escalation clauses and other incentives present in lease agreements are
recognized on a straight-line basis over the term of the leases. Management
fee revenues are recognized when earned. Consulting revenues are recognized as
such services are provided. Amounts billed or received prior to services being
performed are deferred until such time as the revenue is earned.

Corporate General and Administrative Expense--Corporate general and
administrative expense consists of corporate overhead costs not specifically
allocable to any of the Company's individual business properties.

Concentration of Credit Risk--The Company extends credit to customers on an
unsecured basis in the normal course of business. The Company has policies
governing the extension of credit and collection of amounts due from
customers.

Derivative Financial Instruments--The Company uses derivative financial
instruments as a means of managing interest-rate risk associated with current
debt or anticipated debt transactions that have a high probability of being
executed. The Company's interest rate protection agreements generally consist
of interest rate swap agreements and interest rate cap agreements. These
instruments are matched with either fixed or variable rate debt and payments
thereon, are recorded on a settlement basis as an adjustment to interest
expense. Premiums paid to purchase interest rate cap agreements are amortized
as an adjustment of interest expense over the life of the contract. Derivative
financial instruments are not held for trading purposes. (See Note 4).

Cash and Cash Equivalents--Cash and cash equivalents include cash on hand,
demand deposits and short-term investments with remaining maturities when
purchased of three months or less.

Property and Equipment and Intangible Assets--Property and equipment are
recorded at cost, or at estimated fair value in the case of acquired
properties. Cost includes expenditures for communications sites and related
assets and the net amount of interest cost associated with significant capital
additions. Approximately

F-9

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

$258,000 and $120,000 of interest was capitalized for the nine months ended
September 30, 1997 and the year ended December 31, 1996, respectively.
Depreciation is provided using the straight-line method over estimated useful
lives ranging from three to fifteen years.

The excess of purchase price over the estimated fair value of net assets
acquired has been preliminarily recorded as unallocated purchase price and is
being amortized over an estimated aggregate useful life of fifteen years using
the straight-line method. Accumulated amortization aggregated approximately
$2,025,000 at September 30, 1997 and $356,000 at December 31, 1996. The
consolidated financial statements reflect the preliminary allocation of
certain purchase prices as the appraisals for some acquisitions have not yet
been finalized. The Company is currently conducting studies to determine the
purchase price allocations and expects that upon final allocation the average
estimated useful life will approximate fifteen years. The final allocation of
purchase price is not expected to have a material effect on the Company's
results of operations, liquidity or financial position. Other intangible
assets consist principally of a noncompetition agreement, deferred financing
costs and deferred acquisition costs and are being amortized over their
estimated useful lives, generally five years. (See Note 3).

Note Receivable--In connection with an acquisition described in Note 11, the
Company agreed to advance the sellers an amount not to exceed $1,400,000 of
which an aggregate of approximately $260,000 was advanced. The advance bore
interest at 8.5%, was unsecured, and was due in full at the earlier of the
consummation of the acquisition or June 30, 2000. The note was repaid upon
consummation of the acquisition in October 1997.

Income Taxes--Deferred taxes are provided to reflect temporary differences
in basis between book and tax assets and liabilities, and net operating loss
carryforwards. Deferred tax assets and liabilities are measured using
currently enacted tax rates. ATS files as part of a consolidated filing group
with ARS; there are no significant differences between the tax provision or
benefit recorded and the amounts measured on a separate return basis. (See
Note 7).

Pro forma Loss Per Share--The pro forma loss per share for the nine months
ended September 30, 1997 and the year ended December 31, 1996 has been
computed using the number of ATS shares expected to be distributed to ARS
shareholders as part of the Tower Separation. (See Note 12).

Impairment of Long-Lived Assets--Recoverability of long-lived assets is
determined by periodically comparing the forecasted undiscounted net cash
flows of the operations to which the assets relate to the carrying amount,
including associated intangible assets of such operations. Through September
30, 1997, no impairments requiring adjustment have occurred.

Stock-Based Compensation--Compensation related to equity grants or awards to
employees is measured using the intrinsic value method prescribed by
Accounting Principles Board Opinion No. 25. (See Note 8).

Fair Value of Financial Instruments--The Company believes that the carrying
value of all financial instruments, excluding the interest rate protection
agreements, is a reasonable estimate of fair value as of September 30, 1997
and December 31, 1996. The fair value of the interest rate protection
agreements are obtained from independent market quotes. These values represent
the amount the Company would receive or pay to terminate the agreements taking
into consideration current market interest rates. The Company would expect to
pay approximately $15,000 to settle these agreements at September 30, 1997.
(See Note 4).

Retirement Plan--Employees of the Company are eligible for participation in
a 401(k) plan sponsored by ARS, subject to certain minimum age and length-of-
employment requirements. Administrative expenses of the Plan are borne by ARS
and are not significant to ATS. Under the plan, the Company matches 30% of the
participants' contributions up to 5% of compensation. The Company contributed
approximately $10,800 and $6,000 for the nine months ended September 30, 1997
and the year ended December 31, 1996, respectively. The

F-10

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

Company's contributions for the nine months ended September 30, 1996 and for
the period from Incorporation to December 31, 1995 were not material.

Unaudited Interim Financial Information--In the opinion of management, the
financial statements and related footnote disclosures for the unaudited 1996
period presented include all adjustments necessary for a fair presentation in
accordance with generally accepted accounting principles, consisting solely of
normal recurring accruals and adjustments. The results of operations and cash
flows for the nine months ended September 30, 1997 and 1996 are not
necessarily indicative of results that would be expected for a full year.

Recent Accounting Pronouncements--In February 1997, the Financial Accounting
Standards Board (FASB) released Statement of Financial Accounting Standards
(FAS) No. 128, "Earnings Per Share" which ATS will adopt in the fourth quarter
of 1997.

In June 1997, the FASB released FAS No. 131 "Disclosures about Segments of
an Enterprise and Related Information" (FAS 131). This pronouncement will be
effective in 1998. FAS 131 established standards for reporting information
about the operating segments in its annual report and interim reports. ATS
will adopt this statement in the first quarter of 1998.

Reclassifications--Certain reclassifications have been made to the 1995 and
1996 financial statements to conform with the 1997 presentation.

2. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------

Land and improvements........................... $ 6,054,675 $ 4,081,011
Towers and buildings............................ 32,717,305 11,473,259
Technical equipment............................. 81,378 53,124
Transmitter equipment........................... 151,954 13,550
Office equipment, furniture, fixtures and other
equipment...................................... 811,438 317,025
Construction in progress-tower properties....... 5,636,007 4,276,410
----------- -----------
Total....................................... 45,452,757 20,214,379
Less accumulated depreciation and amortization.. (1,511,427) (504,856)
----------- -----------
Property and equipment, net..................... $43,941,330 $19,709,523
=========== ===========

3. OTHER INTANGIBLE ASSETS

Other intangible assets consisted of the following:

SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------

Non-compete agreement............................. $5,530,000
Deferred financing costs.......................... 1,297,227 $1,255,474
Deferred acquisition costs........................ 917,208 93,965
---------- ----------
Total.......................................... 7,744,435 1,349,439
Less accumulated amortization..................... (364,598) (13,078)
---------- ----------
Other intangible assets, net...................... $7,379,837 $1,336,361
========== ==========

F-11

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

4. FINANCING ARRANGEMENTS

Outstanding amounts under the Company's long-term financing arrangements
consisted of the following:

SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------

Loan Agreement.................................... $52,500,000 $2,500,000
Note payable--other............................... 1,490,207 1,557,701
Other obligations................................. 212,757 477,557
----------- ----------
Total............................................. 54,202,964 4,535,258
Less current portion.............................. (108,457) (117,362)
----------- ----------
Long-term debt.................................... $54,094,507 $4,417,896
=========== ==========

Loan Agreements--In October 1997, ATSI entered into a new loan agreement
with a syndicate of banks (the Loan Agreement), which replaced the previously
existing credit agreement. All amounts outstanding under the previous
agreement were repaid with proceeds from the Loan Agreement; the following
discussion, with the exception of the information regarding interest rates and
availability under the agreements, is based on the terms and conditions of the
Loan Agreement. Collectively, the previous loan agreement and the 1997 loan
agreement are referred to as the Loan Agreements.

The Loan Agreement provides ATSI with a $250.0 million loan commitment based
on ATSI maintaining certain operational ratios, and an additional $150.0
million loan at the discretion of ATSI. The Loan Agreement may be borrowed,
repaid and reborrowed without reducing the availability until June 2005 except
as specified in the Loan agreement; thereafter, availability decreases in an
amount equal to 50% of excess cash flow, as defined in the Loan Agreement, for
the fiscal year immediately preceding the calculation date. In addition, the
Loan Agreement requires commitment reductions in the event of sale of ATSI's
common stock or debt instruments, and/or permitted asset sales, as defined in
the Loan Agreement.

Outstanding amounts under the Loan Agreements bear interest at either LIBOR
(5.72% as of September 30, 1997 and 5.78% as of December 31, 1996) plus 1.0%
to 2.25% or Base Rate, as defined in the Loan Agreements, plus 0.00% to 1.00%.
The spread over LIBOR and the Base Rate varies from time to time, depending
upon the Company's financial leverage. Under certain circumstances, the
Company may request that rates be fixed or capped. For the nine months ended
September 30, 1997 and year ended December 31, 1996 the weighted average
interest rate of the Loan Agreements was 7.23% and 8.75%, respectively.

There was $37.5 million, and $67.5 million available under the Loan
Agreements at September 30, 1997 and December 31, 1996, respectively. ATSI
pays quarterly commitment fees ranging from .375% to .50%, based on ATSI's
financial leverage and the aggregate unused portion of the aggregated
commitment. Commitment fees paid related to the Loan Agreements aggregated
approximately $196,000, and $24,000 for the nine months ended September 30,
1997 and year ended December 31, 1996, respectively.

The Loan Agreement contains certain financial and operational covenants and
other restrictions with which ATSI must comply, whether or not any borrowings
are outstanding, including among others, maintenance of certain financial
ratios, limitations on acquisitions, additional indebtedness and capital
expenditures, as well as restrictions on cash distributions unless certain
financial tests are met, and the use of borrowings. The obligations of ATSI
under the Loan Agreement are collateralized by a first priority security
interest in substantially all of the assets of ATSI. ATS has pledged all of
its stock to the banks as security for ATSI's obligations under the Loan
Agreement. The Loan Agreement is expected to be amended to provide for the
Tower Separation.

F-12

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

Following the closing of the Loan Agreement in October 1997, ATSI incurred
an extraordinary loss of approximately $1,156,000 (approximately $694,000 net
of the applicable income tax benefit) representing the write-off of deferred
financing fees associated with the previous agreement.

Derivative Positions--Under the terms of the Loan Agreement, ATSI is
required, under certain conditions, to enter into interest rate protection
agreements. There were no such agreements outstanding at December 31, 1996. As
of September 30, 1997, ATSI maintained a swap agreement, expiring in January
2001, under which the interest rate is fixed with respect to $7.3 million of
notional principal amount at approximately 6.4%. ATSI also maintained a cap
agreement, expiring in July 2000, under which the interest rate is fixed with
respect to $21.6 million of notional principal amount at approximately 9.5%.
ATSI's exposure under these agreements is limited to the impact of variable
interest rate fluctuations and the periodic settlement of amounts due under
these agreements if the other parties fail to perform.

Note Payable--Other--A limited liability company, which is under majority
control of the Company, has a note secured by the minority shareholder's
interest in the limited liability company. Interest rates under this note are
determined, at the option of the corporation, at either the Floating Rate (as
defined in the note agreement), the Federal Home Loan Bank of Boston rate plus
2.35% or the Treasury Fixed Rate plus 3%. As of September 30, 1997 and
December 31, 1996, the effective interest rate on borrowings under this note
was 8.02%. The note is payable in equal monthly principal payments with
interest through 2008.

Other Obligations--In connection with various acquisitions, the Company has
assumed certain long-term obligations of the acquired entities. These
obligations bear interest at rates ranging from 9% to 10% and are payable in
various monthly installments through 2007. Substantially all of these
obligations were repaid during 1997, with the remaining unpaid obligation
bearing interest at 9% and payable in monthly installments through 2007.

Future principal payments required under the Company's financing
arrangements at September 30, 1997 are approximately:

Period Ending:
Three months ending December 31, 1997........................... $ 26,000
Year ending December 31, 1998................................... 110,000
Year ending December 31, 1999................................... 119,000
Year ending December 31, 2000................................... 128,000
Year ending December 31, 2001................................... 137,000
Year ending December 31, 2002................................... 148,000
Thereafter...................................................... 53,535,000
-----------
Total......................................................... $54,203,000
===========

5. COMMITMENTS AND CONTINGENCIES

Lease Obligations--The Company leases space for its existing offices in
Florida and Virginia and space on various communications towers and land under
operating leases that expire over various terms. The Company also subleases
space on communications towers under substantially the same terms and
conditions, including cancellation rights, as those found in its own lease
contracts. Most leases allow cancellation at will or under certain technical
circumstances. Many of the leases also contain renewal options with specified
increases in lease payments upon exercise of the renewal option.

F-13

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

Future minimum rental payments under noncancelable leases in effect at
September 30, 1997 are approximately as follows:

Period Ending:
Three months ending December 31, 1997........................... $ 398,000
Year ending December 31, 1998................................... 1,557,000
Year ending December 31, 1999................................... 1,450,000
Year ending December 31, 2000................................... 1,248,000
Year ending December 31, 2001................................... 908,000
Year ending December 31, 2002................................... 603,000
Thereafter...................................................... 5,595,000
-----------
Total......................................................... $11,759,000
===========

Aggregate rent expense under operating leases for the nine months ended
September 30, 1997 and 1996, and the years ended December 31, 1996 and 1995
approximated $945,000, $78,000, $420,000, and $5,000, respectively.

Customer Leases--As described in Note 1, the Company leases space on its
various tower properties (both owned and managed) to customers. Leases are
typically for set periods of time, although some leases are cancellable at the
customers' option and others are automatically renewed and have no fixed term.
Long-term leases typically contain provisions for renewals and specified rent
increases over the lease term.

Future minimum rental receipts expected to be received from customers under
noncancelable lease agreements in effect at September 30, 1997 are
approximately as follows:

Period Ending:
Three months ending December 31, 1997........................... $ 3,277,000
Year ending December 31, 1998................................... 8,257,000
Year ending December 31, 1999................................... 7,288,000
Year ending December 31, 2000................................... 6,515,000
Year ending December 31, 2001................................... 5,492,000
Year ending December 31, 2002................................... 3,399,000
Thereafter...................................................... 11,157,000
-----------
Total......................................................... $45,385,000
===========

See Notes 9, 11 and 12 for information with respect to acquisition and
related commitments.

Litigation--ATS periodically becomes involved in various claims and lawsuits
that are incidental to its business. In the opinion of management, there are
no matters currently pending which would, in the event of adverse outcome,
have a material impact on the Company's consolidated financial position, the
results of operations or liquidity.

6. RELATED PARTY TRANSACTIONS

The Company received revenues of approximately $255,000 and $70,000 from ARS
for tower rentals at Company-owned sites for the nine months ended September
30, 1997 and the year ended December 31, 1996, respectively.

ARS has contributed all of the Company's capitalization and had funded,
through December 1996, substantially all of the acquisitions described in Note
9.

F-14

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

During January 1996, ARS contributed a tract of undeveloped land of
approximately two acres to the Company. The transfer was recorded at ARS' book
value of approximately $425,000.

In March 1996, ARS contributed approximately 200 acres of undeveloped land
to the Company. The transfer was recorded at ARS' book value of approximately
$2.3 million.

In November 1996, the Company transferred a tract of land to ARS. The
transfer was recorded at ATS' book value of approximately $1.1 million.

In December 1996, ARS contributed a tower site and related assets in
Peabody, Massachusetts to the Company at ARS' book value, which aggregated
approximately $1.1 million.

In December 1996, ARS contributed a tower site and related assets located in
Philadelphia, Pennsylvania, to the Company. These assets were contributed at
their initial estimated fair value of approximately $1.5 million, based on a
preliminary appraisal. In June 1997, the fair value of the tower site and
related assets was determined to be approximately $775,000 based on a final
independent appraisal. The net book value and contributions from parent
balance was adjusted by approximately $725,000 to reflect the change in
estimate. This change in estimate did not have a material effect on the
consolidated financial position or the results of operations of ATS.

7. INCOME TAXES

Effective October 15, 1996, the Company entered into a tax sharing agreement
with ARS. In accordance with this agreement, the Company's share of the
consolidated federal income tax benefit (liability) is calculated as a portion
of ARS' consolidated income tax benefit (liability). Any income tax benefit
(provision) attributable to the Company is payable to (due from) ARS. The
Company's reported provision or benefit is not significantly different from
what would have been recorded on a separate return basis.

The income tax benefit (provision) was comprised of the following:

NINE MONTHS ENDED
SEPTEMBER 30, PERIOD ENDED DECEMBER 31,
-------------------- -------------------------
1997 1996 1996 1995
--------- --------- ------------- ------------

Current:
Federal................ $ 319,922 $ 130,914 $ 53,907 $ 62,503
State.................. 93,429 23,103 9,418 10,921
Deferred:
Federal................ (310,196) (182,738) (92,547)
State.................. (54,116) (40,587) (16,168)
--------- --------- ------------- ------------
Income tax benefit (pro-
vision)................. $ 49,039 $ (69,308) $ (45,390) $ 73,424
========= ========= ============= ============

A reconciliation between the U.S. statutory rate and the effective rate was
as follows for the periods presented:

NINE MONTHS
ENDED PERIOD ENDED
SEPTEMBER 30, DECEMBER 31,
---------------- ----------------
1997 1996 1996 1995
------ ------ ------ ------

Statutory tax rate................... (34)% (34)% (34)% (34)%
State taxes, net of federal benefit.. (6) (6) (6) (6)
Nondeductible intangible amortiza-
tion................................ 34 58 57
Other................................ 1
------ ------ ------ ------
Effective tax rate................... (6)% 18 % 18 % (40)%
====== ====== ====== ======

F-15

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

Significant components of the Company's deferred tax assets and liabilities
were composed of the following:

SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------

Assets:
Allowances for financial reporting purposes
which are currently nondeductible............. $ 440,522
Net operating loss carryforwards............... $ 2,071
Valuation allowances........................... (2,071)
Liabilities:
Property and equipment and intangible assets... (939,661) (168,125)
Partnership investments........................ (77,648)
Long-term rental agreements.................... (144,391) (33,445)
--------- ---------
Net deferred tax liabilities.................... $(643,530) $(279,218)
========= =========

8. STOCKHOLDER'S EQUITY

Stock Option Plan--ATSI has a stock option plan which provides for the
granting of options to employees to acquire up to 1,000,000 shares of the
common stock of ATSI. These options are expected to be converted into options
to acquire stock of ATS, as part of the Tower Separation. Exercise prices in
the case of incentive stock options are not less than the fair value of the
underlying common stock on the date of grant. Exercise prices in the case of
non-qualified stock options are set at the discretion of the Board of
Directors. Options vest ratably over various periods, generally five years,
commencing one year from the date of grant. There have been no option grants
at exercise prices different from fair value.

The following table summarizes the option activity for the periods
presented:

WEIGHTED
EXERCISE NUMBER AVERAGE
PRICE CURRENTLY REMAINING
OPTIONS PER SHARE EXERCISABLE LIFE (YEARS)
------- ----------- ----------- ------------

Granted during 1996 and
outstanding at December 31,
1996....................... 550,000 $5.00 160,000 8.91
Granted..................... 167,000 $7.50-$8.00 9.47
Cancelled................... (40,000) $5.00
------- ----------- ------- ----
Outstanding as of September
30, 1997................... 677,000 160,000 9.09
======= ======= ====

As described in Note 1, the intrinsic value method is used to determine
compensation associated with stock option grants. No compensation cost has
been recognized to date for grants under the Plan. Had compensation cost for
the Company's stock option plan been determined based on the fair value of the
grant date for awards in 1996 and 1997 consistent with the provisions of SFAS
123, the Company's net loss would have been approximately $882,000 for the
nine months ended September 30, 1997 and approximately $568,000 for the year
ended December 31, 1996.

The "fair value" of each option grant is estimated on the date of grant
using the minimum value method based on the following key assumptions: risk-
free interest rate of 6.53% and expected lives of 5 years. In accordance with
the provisions of SFAS 123, since the Company's stock is not publicly traded,
expected volatility in stock price has been omitted in determining the fair
value for options granted.

F-16

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

In November 1997, ATS instituted the 1997 Stock Option Plan which provides
for the granting of options to employees to acquire up to 10,000,000 shares of
ATS Class A and Class B Common Stock. The Plan is expected to be amended in
connection with the ATC Merger, described in Note 12, to limit future grants
to Class A Common Stock.

9. ACQUISITIONS

1997 Acquisitions--

In September 1997, the Company acquired nine tower sites in Massachusetts
and Rhode Island for approximately $7.2 million and land in Oklahoma for
approximately $0.6 million.

In August 1997, the Company acquired six tower sites in Connecticut and
Rhode Island for approximately $1.5 million.

In July 1997, the Company, in individual transactions, acquired the
following:

(i) the assets of three affiliated entities which owned and operated
approximately fifty towers and a tower site management business in
southern California for an aggregate purchase price of
approximately $33.5 million;

(ii) the assets of one tower site in Washington, D.C. for
approximately $0.9 million;

(iii) the assets of six tower sites in Pennsylvania for approximately
$0.3 million and

(iv) the rights to build five tower sites in Maryland for
approximately $0.5 million.

In May 1997, the Company acquired 21 tower sites and a tower site management
business in Georgia, North Carolina and South Carolina for approximately $5.4
million. The agreement also provides for additional payments by the Company if
the seller is able to arrange for the purchase or management of tower sites
presently owned by an unaffiliated public utility in South Carolina, which
payments could aggregate up to approximately $1.2 million.

In May 1997, the Company acquired the assets of two affiliated companies
engaged in the site acquisition business in various locations in the United
States for approximately $13.0 million.

In May 1997, the Company and an unaffiliated party formed a limited
liability company to own and operate communication towers which will be
constructed on over 50 tower sites in northern California. The Company
advanced approximately $0.8 million to this entity and currently owns a 70%
interest in the entity, with the remaining 30% owned by an unaffiliated party.
The Company is obligated to provide additional financing for the construction
of these and any additional towers it may approve; the obligation for such 50
tower sites is estimated to be approximately $5.3 million. The accounts of the
limited liability company are included in the consolidated financial
statements with the other party's investment reflected as minority interest in
subsidiary.

In May 1997, the Company acquired three tower sites in Massachusetts for
approximately $0.26 million.

1996 Acquisitions--

In February 1996, the Company acquired Skyline Communications and Skyline
Antenna Management in exchange for an aggregate of 26,989 shares of ARS Class
A common stock, having a fair value of approximately $774,000, $2.2 million in
cash, and the assumption of approximately $300,000 of long-term debt which was
paid at closing. Skyline Communications owned eight towers, six of which are
in West Virginia and the remaining two in northern Virginia. Skyline Antenna
Management managed more than 200 antenna sites, primarily in the northeast
region of the United States.

F-17

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

In April 1996, the Company acquired BDS Communications, Inc. and BRIDAN
Communications Corporation for 257,495 shares of ARS Class A common stock
having a fair value of approximately $7.4 million and $1.9 million in cash of
which approximately $1.5 million was paid at closing. BDS Communications owned
three towers in Pennsylvania and BRIDAN Communications managed or had sublease
agreements on approximately forty tower sites located throughout the mid-
Atlantic region.

In July 1996, the Company entered into a limited liability corporation
agreement with an unaffiliated party relating to the ownership and operation
of a tower site in Needham, Massachusetts, whereby the Company acquired a
50.1% interest in the corporation for approximately $3.8 million in cash. The
accounts of the limited liability corporation are included in the consolidated
financial statements with the other party's investment reflected as minority
interest in subsidiary.

In October 1996, the Company acquired the assets of tower sites in Hampton,
Virginia and North Stonington, Connecticut for approximately $1.4 million and
$1.0 million in cash, respectively.

Substantially all of the 1996 acquisitions were consummated by ARS and the
net assets were subsequently contributed to the Company. The following
schedule summarizes the above-described 1996 acquisitions:

BDS/
SKYLINE BRIDAN NEEDHAM HAMPTON STONINGTON TOTAL
---------- ---------- ---------- ---------- ---------- -----------

Cash paid by Parent..... $2,453,761 $1,906,629 $3,843,559 $1,368,791 $1,008,712 $10,581,452
Stock issued by Parent.. 773,505 7,379,807 8,153,312
Liabilities assumed..... 519,637 100,000 1,600,000 2,219,637
---------- ---------- ---------- ---------- ---------- -----------
Purchase price of net
assets acquired........ $3,746,903 $9,386,436 $5,443,559 $1,368,791 $1,008,712 $20,954,401
========== ========== ========== ========== ========== ===========

The acquisitions consummated during 1996 and 1997 have been accounted for by
the purchase method of accounting. The purchase price has been allocated to
the assets acquired, principally intangible and tangible assets, and the
liabilities assumed based on their estimated fair values at the date of
acquisition. The excess of purchase price over the estimated fair value of the
net assets acquired has been recorded as unallocated purchase price. The
financial statements reflect the preliminary allocation of certain purchase
prices as the appraisals of the assets acquired have not been finalized. The
Company does not expect any changes in depreciation and amortization as a
result of such appraisals to be material to the statement of operations.

Unaudited Pro Forma Operating Results--The operating results of these
acquisitions have been included in the Company's consolidated results of
operations from the date of acquisition. The following unaudited pro forma
summary presents the consolidated results of operations as if the acquisitions
had occurred as of January 1, 1996 after giving effect to certain adjustments,
including depreciation and amortization of assets and interest expense on debt
incurred to fund the acquisitions. These unaudited pro forma results have been
prepared for comparative purposes only and do not purport to be indicative of
what would have occurred had the acquisitions been made as of January 1, 1996
or results which may occur in the future.

NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
------------------------ DECEMBER 31,
1997 1996 1996
----------- ----------- ------------

Net revenues......................... $12,877,000 $ 9,875,000 $13,530,000
Loss from operations................. (983,000) (2,827,000) (3,744,000)
Net loss............................. (4,077,000) (6,743,000) (9,266,000)

F-18

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

10. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information and noncash investing and financing
activities are as follows:

NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED
----------------------- DECEMBER 31,
1997 1996 1996
---------- ----------- ------------

Supplemental cash flow information:
Cash paid during the period for
interest (including amounts
capitalized).......................... $1,002,387 $ 51,267 $ 90,539
Cash paid during the period for income
taxes................................. 67,616
Noncash investing and financing activi-
ties:
Property and equipment transferred from
(to) Parent........................... (725,000) 6,524,518 11,103,352
Land transferred to Parent............. (1,100,000)
Deferred financing costs paid by Par-
ent................................... 1,255,474
Investment in affiliate paid by Par-
ent................................... 325,000
Details of acquisitions financed by Par-
ent:
Purchase price of net assets acquired.. 18,576,298 20,954,401
Liabilities assumed.................... (2,219,637) (2,219,637)
Stock issued by Parent................. (8,153,312) (8,153,312)
----------- -----------
Cash paid by Parent.................... 8,203,949 10,581,452
Less: cash acquired.................... (1,600,000) (1,600,000)
----------- -----------
Net cash paid by Parent for acquisi-
tions................................. $ 6,603,949 $ 8,981,452
=========== ===========

11. SUBSEQUENT EVENTS

Pending Transactions:

In October 1997, the Company entered into an agreement to acquire the
outstanding stock of a company operating in Florida (OPM-USA-INC. or OPM) for
a maximum purchase price of approximately $105.0 million. By December 31, 1997
such company is expected to own approximately ninety towers. The final
purchase price is contingent upon the actual number of towers that have been
built, and sites permitted and the actual cashflows generated from those
towers. The Company has also agreed to provide financing to the seller on
identified sites which are in various stages of receiving site permits to
enable the seller to construct additional towers; the aggregate amount of such
financing cannot exceed $37.0 million. (See Note 12).

In October 1997, the Company entered into an agreement to acquire a
communications site with six towers in Tucson, Arizona for approximately $12.0
million. (See Note 12).

Consummation of these transactions is conditioned on various matters,
including, in the case of the OPM transaction, the expiration or earlier
termination of the HSR Act waiting period. Subject to the satisfaction of such
conditions, the acquisitions are expected to be consummated in the first
quarter of 1998.

The Company is also pursuing the acquisitions of tower properties and tower
businesses in new and existing locations, although there are no definitive
purchase agreements with respect thereto. (See Note 12).

Consummated Transactions:

In October 1997, the Company acquired two affiliated entities operating
approximately 110 tower sites and a tower site management business located
principally in northern California for approximately $45.0 million. In

F-19

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

connection therewith, the Company had also agreed to loan up to $0.65 million
to the sellers on an unsecured basis, of which approximately $0.26 million had
been advanced through September 30, 1997 and was re-paid at closing.

In October 1997, the Company acquired tower sites and certain video, voice
and data transport operations for approximately $70.25 million. The acquired
business owned or leased approximately 128 tower sites, principally in the
Mid-Atlantic region, with the remainder in California and Texas.

12. EVENTS SUBSEQUENT TO DATE OF INDEPENDENT AUDITORS' REPORT (UNAUDITED)

Authorized Shares:

In November 1997, the Company restated its certificate of incorporation to
increase the aggregate number of shares of all classes of stock which it is
authorized to issue to 280,000,000 shares as follows: 20,000,000 shares of
preferred stock $.01 par value per share, 260,000,000 shares of common stock
$.01 par value per share, of which 200,000,000 is Class A, 50,000,000 is Class
B and 10,000,000 is Class C.

Consummated Transactions:

In November 1997, the Company entered into an agreement to acquire all of
the outstanding stock of a company based in Atlanta, Georgia for an aggregate
purchase price of approximately $80.0 million consisting of approximately
$32.0 million in cash and assumed liabilities and the issuance of
approximately 5.3 million shares of ATS Class A common stock. The company
acquired is engaged in site acquisition, development, construction and
facility management of wireless network communication facilities on behalf of
its customers and owns or has under construction approximately 40 tower sites.
Consummation of the transaction occurred in January 1998. Following
consummation, the Company granted options to acquire up to 1,200,000 shares of
Class A Common Stock at an exercise price of $13 to employees of the acquired
company.

In December 1997, the Company entered into a merger agreement with American
Tower Corporation (ATC) pursuant to which ATC will merge with and into ATS
which will be the surviving corporation. Pursuant to the merger, ATS expects
to issue an aggregate of approximately 31.1 million shares of ATS class A
common stock (including shares issuable upon exercise of options to acquire
ATC common stock which will become options to acquire ATS class A common
stock). ATC is engaged in the business of acquiring, developing, and leasing
wireless communications sites to companies using or providing cellular
telephone, paging, microwave and specialized mobile radio services. ATC
currently owns and operates approximately 775 communications towers located in
31 states primarily in the Western, Eastern and Southern United States.
Consummation of the transaction is subject to, among other things, the
expiration or earlier termination of the HSR Act waiting period, and is
expected to occur in the spring of 1998.

In January 1998, ATS consummated the acquisition of OPM, a company which
owned approximately 90 towers at the time of acquisition. In addition, OPM is
in the process of developing an additional approximately 160 towers that are
expected to be constructed during the next 12 to 18 months. The purchase
price, which is variable and based on the number of towers completed and the
forward cash flow of the completed OPM towers, could aggregate up to $105.0
million, of which approximately $21.3 million was paid at the closing. ATS has
also agreed to provide the financing to OPM to enable it to construct the 160
towers in an aggregate amount not to exceed $37.0 million (less advances as of
consummation aggregating approximately $5.7 million).

In January 1998, ATS consummated the purchase of a communications site with
six towers in Tucson, Arizona for approximately $12.0 million.

F-20

AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

In January 1998, ARS transferred to ATS 14 of the 16 communications sites
currently used by ARS and various third parties, and ARS and ATS entered into
leases or subleases of space on the towers transferred. The remaining two
communications sites will be transferred and leases entered into following
acquisition by ARS of the sites from third parties.

In February 1998, ATS acquired 11 communications tower sites in northern
California for approximately $11.8 million.

Pending Transactions:

In January 1998, ATS entered into an agreement to purchase the assets
relating to a teleport serving the Washington, D.C. area for a purchase price
of approximately $30.5 million. The facility is located in northern Virginia,
inside of the Washington Beltway, on ten acres. Consummation of the
transaction, which is subject to certain conditions, including receipt of FCC
approvals and the expiration or earlier termination of the HSR Act waiting
period, is expected to occur in the first half of 1998.

ATS Stock Purchase Agreement:

On January 22, 1998, ATS consummated a stock purchase agreement (the ATS
Stock Purchase Agreement), dated as of January 8, 1998, with Steven B. Dodge,
Chairman of the Board, President and Chief Executive Officer of ARS and ATS,
and certain other officers and directors of ARS (or their affiliates or family
members or family trusts), pursuant to which those persons purchased 8.0
million shares of ATS Common Stock at a purchase price of $10.00 per share for
an aggregate purchase price of $80.0 million, including 4.0 million shares by
Mr. Dodge for $40.0 million. Payment of the purchase price was in the form of
cash aggregating approximately $30.6 million and in the form of notes
aggregating approximately $49.4 million due on the earlier of the consummation
of the Merger or, in the event the Merger Agreement is terminated, December
31, 2000. The notes bear interest at the six-month London Interbank Rate, from
time to time, plus 1.5% per annum, and are secured by shares of ARS Common
Stock having a fair market value of not less than 175% of the principal amount
of and accrued and unpaid interest on the note. The notes are prepayable at
any time at the option of the obligor and will be due and payable, at the
option of the Company, in the event of certain defaults as described herein.

Tower Separation:

Based on the $10.00 per share price paid pursuant to the ATS Stock Purchase
Agreement, the Tower Separation will result in a taxable gain to ARS, of which
approximately $20.0 million will be borne by ARS and the remaining obligation
(currently estimated at approximately $66.6 million) will be required to be
paid by ATS pursuant to provisions of the Merger Agreement. This liability is
expected to be paid with borrowings under ATS' loan agreement. The estimated
tax liability shown in the preceding sentence is based on an assumed fair
market value of the ATS Common Stock of $10.00 per share, which is the price
at which shares were issued pursuant to the consummation of the transactions
contemplated by the ATS Stock Purchase Agreement. Such estimated tax liability
would increase or decrease by approximately $14.8 million for each $1.00 per
share increase or decrease in the fair market value of the ATS Common Stock.

The Merger Agreement also provides for closing date balance sheet
adjustments based upon the working capital and specified debt levels
(including the liquidation preference of the ARS Cumulative Preferred Stock)
of ARS at the effective time of the Merger which may result in payments to be
made by either ARS or ATS to the other party following the closing date of the
Merger. ATS will benefit from or bear the cost of such adjustments. Since the
amounts of working capital and debt are dependent upon future operations and
events, including without limitation cash flow from operations, capital
expenditures, and expenses of the Merger and the Tower Separation, neither ARS
nor ATS is able to state with any degree of certainty what payments, if any,
will be owed following the closing date by either ARS or ATS to the other
party. However, based on certain assumptions, ARS has estimated that the
payment, if any, required to be paid or to be received by ATS will not be
material as a result of those provisions.

F-21

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

MicroNet, Inc. and Affiliates and
American Tower Systems, Inc.

We have audited the accompanying combined statement of net assets of
MicroNet, Inc. and affiliates to be sold to American Tower Systems, Inc. (the
"Company") as of December 31, 1996, and the related combined statements of
income and cash flows derived from those assets for the year ended December
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, such combined financial statements present fairly, in all
material respects, the net assets of MicroNet, Inc. and affiliates to be sold
to American Tower Systems, Inc. as of December 31, 1996, and the results of
operations related to those assets, and cash flows generated from those assets
for the year ended December 31, 1996, in conformity with generally accepted
accounting principles.

The accompanying combined financial statements have been prepared from the
separate records maintained by the Company and may not be indicative of the
conditions that would have existed or the results of operations had the net
assets to be sold been operated as an unaffiliated company. Certain expenses
represent allocations made by the Company's Parent, and, as discussed in Note
A, no provision for income taxes has been made in the combined statement of
income derived from the net assets to be sold.

Pressman Ciocca Smith LLP

/S/ PRESSMAN CIOCCA SMITH LLP

Hatboro, Pennsylvania
November 3, 1997

F-22

MICRONET, INC. AND AFFILIATES

COMBINED STATEMENTS OF NET ASSETS TO BE SOLD

DECEMBER 31, 1996 AND SEPTEMBER 30, 1997

DECEMBER 31, SEPTEMBER
1996 30, 1997
------------ ------------
(UNAUDITED)

ASSETS
Current Assets
Prepaid expenses.................................. $ 301,942 $ 218,927
------------ ------------
Total Current Assets............................ 301,942 218,927
Property and Equipment.............................. 39,564,758 40,541,672
Less accumulated depreciation..................... (22,486,975) (24,537,837)
------------ ------------
17,077,783 16,003,835
Goodwill, net of amortization....................... 4,120,276 3,734,000
Intangible Assets, net of amortization.............. 902,227 717,272
Other Assets........................................ 183,087 167,341
------------ ------------
$ 22,585,315 $ 20,841,375
============ ============
LIABILITIES AND NET ASSETS TO BE SOLD
Current Liabilities
Customer service prepayments...................... $ 459,638 $ 447,910
------------ ------------
Total Current Liabilities....................... 459,638 447,910
Commitments and Contingencies
Net Assets To Be Sold............................... 22,125,677 20,393,465
------------ ------------
$ 22,585,315 $ 20,841,375
============ ============

See accompanying notes.

F-23

MICRONET, INC. AND AFFILIATES

COMBINED STATEMENTS OF INCOME DERIVED FROM NET ASSETS TO BE SOLD

YEAR ENDED DECEMBER 31, 1996, AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997

NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER ------------------------
31, 1996 1996 1997
----------- ----------- -----------
(UNAUDITED)

Net Revenues........................... $15,058,305 $10,367,871 $13,476,827
Operating Expenses
Service.............................. 5,955,270 4,366,311 4,802,939
Selling and marketing................ 488,857 316,721 262,962
General and administrative........... 3,422,581 2,665,724 2,833,965
Depreciation......................... 3,199,495 2,086,786 2,066,405
Amortization......................... 736,025 546,593 571,231
----------- ----------- -----------
13,802,228 9,982,135 10,537,502
----------- ----------- -----------
Operating Income....................... 1,256,077 385,736 2,939,325
Other Income--Net...................... 42,904 24,395 30,013
----------- ----------- -----------
Net Income Derived from Net Assets To
Be Sold............................... 1,298,981 410,131 2,969,338
Net Assets To Be Sold, Beginning of
Period................................ 22,563,349 22,563,349 22,125,677
Distributions To Parent................ (1,736,653) (348,471) (4,701,550)
----------- ----------- -----------
Net Assets To Be Sold, End of Period... $22,125,677 $22,625,009 $20,393,465
=========== =========== ===========

See accompanying notes.

F-24

MICRONET, INC. AND AFFILIATES

COMBINED STATEMENTS OF CASH FLOWS DERIVED FROM NET ASSETS TO BE SOLD

YEAR ENDED DECEMBER 31, 1996, AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997

NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER ------------------------
31, 1996 1996 1997
----------- ----------- -----------
(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES
Income derived from net assets to be
sold.................................. $ 1,298,981 $ 410,131 $ 2,969,338
Adjustments to reconcile income derived
from net assets to be sold to cash
provided by operating activities:
Depreciation and amortization........ 3,935,520 2,633,379 2,637,636
Loss (gain) on disposal of property
and equipment....................... (400) 643 12,063
Write off assets to net realizable
value............................... 65,313 -- --
Change in assets and liabilities:
Prepaid expenses................... (49,781) (1,104) 83,015
Other assets....................... 15,396 26,661 15,746
Customer service prepayments....... 149,642 123,594 (11,728)
----------- ----------- -----------
CASH PROVIDED BY OPERATING ACTIVITIES.. 5,414,671 3,193,304 5,706,070
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment..... (3,678,418) (2,844,833) (1,004,520)
Proceeds from sale of property......... 400 -- --
----------- ----------- -----------
CASH USED FOR INVESTING ACTIVITIES..... (3,678,018) (2,844,833) (1,004,520)
----------- ----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS
BEFORE ADJUSTMENT..................... 1,736,653 348,471 4,701,550
ADJUSTMENT FOR NET ASSETS NOT SOLD..... (1,736,653) (348,471) (4,701,550)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS...................... $ -- $ -- $ --
=========== =========== ===========

See accompanying notes.

F-25

MICRONET, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 1996 AND SEPTEMBER 30, 1997
(INFORMATION AS OF SEPTEMBER 30, 1997, AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 AND 1997, IS UNAUDITED)

NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of MicroNet, Inc. and
affiliates (the "Company") is presented to assist in understanding its
combined financial statements. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the
preparation of the combined financial statements.

Basis of Presentation and Combination

The accompanying combined statements of net assets to be sold to American
Tower Systems, Inc. ("ATS") are intended to present the assets and liabilities
of the Company expected to be transferred to ATS (the "Net Assets") pursuant
to an asset purchase agreement between ATS and Suburban Cable TV Co. Inc.
("Suburban") and the income and cash flows derived from such assets and
liabilities. MicroNet is a wholly owned subsidiary of Suburban (the "Company's
Parent"), which is a wholly owned subsidiary of Lenfest Communications, Inc.
("LCI"). As of July 8, 1997, the Company agreed to sell substantially all of
the operating assets of its communication towers, satellite transmission and
microwave video and data signal transmission businesses to ATS for
approximately $70.25 million. The accompanying combined statements include 128
operating tower sites of the Company, including 28 tower sites operated by
Suburban and other cable TV operating subsidiaries of LCI. The transaction
closed as of October 31, 1997.

The combined financial statements include the accounts of MicroNet, Inc. and
those of all wholly owned subsidiaries, excluding the assets, liabilities and
results of operations of assets not sold to ATS. The combined financial
statements also include the assets, liabilities and results of operations of
the 28 tower sites included in the sale that are operated by Suburban and
other cable TV operating subsidiaries of LCI.

Business Activity and Concentrations of Credit Risk

The Company provides satellite and microwave transmission of video, voice
and data communications and tower site rental throughout the United States.
The Company grants credit to broadcast and cable networks and cellular and
paging companies throughout the nation. Consequently, the Company's ability to
collect the amounts due from customers is affected by economic fluctuations in
these industries.

Unaudited Interim Financial Information

The interim financial statements as of September 30, 1997, and for the nine
months ended September 30, 1996 and 1997, are unaudited; however, in the
opinion of the management of the Company, all adjustments (consisting solely
of normal recurring adjustments) necessary for a fair presentation of the
combined financial statements on the same basis as the audited combined
financial statements for these interim periods have been made. The results for
the interim periods ended September 30, 1996 and 1997, are not necessarily
indicative of the results to be obtained for a full fiscal year.

Use of Estimates

The preparation of the combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the combined
financial statements and

F-26

MICRONET, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

reported amounts of revenues and expenses during the reporting period. Actual
results may differ from those estimates, and such differences could be
material to the combined financial statements.

Property and Equipment

Property and equipment are stated at cost. For acquired communication
networks and facilities, the purchase price has been allocated to net assets
on the basis of appraisal reports issued by an independent appraiser.
Depreciation is provided using the accelerated and straight-line methods of
depreciation for financial reporting purposes at rates based on estimated
useful lives ranging from 3 to 33 years.

Expenditures for renewals and betterments that extend the useful lives of
property and equipment are capitalized. Expenditures for maintenance and
repairs are charged to expense as incurred.

Capitalization of Costs

All costs properly attributable to capital items, including that portion of
employees' compensation allocable to installation, engineering, design,
construction and various other capital projects are capitalized.

Goodwill and Intangible Assets

Goodwill and intangible assets acquired in connection with the purchases of
communications networks and facilities have been valued at acquisition cost on
the basis of the allocation of the purchase price on a fair market value basis
to net assets as determined by an independent appraiser. Additions to these
assets are stated at cost. Intangible assets consist of FCC licenses,
organization costs and covenants not to compete. The intangible assets are
being amortized on the straight-line method over their legal or estimated
useful lives to a maximum of forty (40) years. Goodwill represents the cost of
an acquired partnership interest in excess of amounts allocated to specific
assets based on their fair market values. Goodwill is amortized on the
straight-line method over ten years. In accordance with Statement of Financial
Accounting Standards No. 121"Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of", the Company assesses on
an on-going basis the recoverability of intangible assets based on estimates
of future undiscounted cash flows for the applicable business acquired
compared to net book value. If the future undiscounted cash flow estimate is
less than net book value, net book value is then reduced to the undiscounted
cash flow estimate. The Company also evaluates the amortization periods of
intangible assets to determine whether events or circumstances warrant revised
estimates of useful lives. As of September 30, 1997, management believes that
no revisions to the remaining useful lives or writedowns of deferred charges
are required.

Revenue Recognition

The Company bills certain customers in advance; however, revenue is
recognized as services are provided. Credit risk is managed by discontinuing
services to customers who are delinquent.

Income Taxes

The Company, as a participating subsidiary, joins in the filing of a
consolidated Federal tax return with LCI. Current and deferred Federal income
taxes are allocated among LCI and its consolidated subsidiaries based upon the
respective net income (loss) and timing differences of each company. The
Company files separate state tax returns. No provision for income taxes has
been made in the combined financial statements. Deferred tax assets and
liabilities are excluded from net assets to be sold.

F-27

MICRONET, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Advertising

The Company follows the policy of charging the costs of advertising to
expense as incurred.

Fair Value of Financial Instruments

The Company believes that the carrying value of all financial instruments is
a reasonable estimate of fair value at December 31, 1996 and September 30,
1997.

NOTE B--SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

ATS did not assume any debt of the Company. There is no interest expense
paid reflected in the accompanying financial statements. The Company did not
make any income tax payments to LCI.

In 1996, the Company wrote down $65,313 of property and equipment to net
realizable value. (See Note C).

NOTE C--PROPERTY AND EQUIPMENT

The schedule of property and equipment at December 31, 1996 and September
30, 1997, is as follows:

ESTIMATED
DECEMBER 31, SEPTEMBER USEFUL LIVES
1996 30, 1997 IN YEARS
------------ ------------ ------------
(UNAUDITED)

Land................................... $ 3,027,303 $ 3,027,303
Building and improvements.............. 1,799,553 1,812,512 15-33
Computer equipment..................... 291,002 299,976 5
Furniture, fixtures and office
equipment............................. 616,678 619,028 7
Tower, head-end equipment and microwave
equipment............................. 32,289,707 33,239,792 7-15
Land improvements...................... 188,195 205,537 7-15
Leasehold improvements................. 278,430 278,430 5-15
Radio equipment........................ 9,360 9,360 5-7
Test equipment......................... 584,458 588,305 7
Vehicles............................... 480,072 461,429 3-5
------------ ------------
$ 39,564,758 $ 40,541,672
============ ============

During 1996, the Company recognized an impairment loss in connection with a
failed project to rebuild a tower. The township denied the Company's request
to tear-down and rebuild a larger tower on an existing tower site. Legal and
engineering costs associated with the project in the amount of $65,313,
previously capitalized, were written off. This impairment loss is included in
general and administrative expenses in the 1996 combined statement of income.

NOTE D--GOODWILL

The excess of the purchase price paid over the acquired net assets has been
allocated to goodwill. Accumulated amortization at December 31, 1996 and
September 30, 1997, was $1,030,069 and $1,416,345, respectively.

F-28

MICRONET, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

NOTE E--INTANGIBLE ASSETS

A schedule of intangible assets and accumulated amortization at December 31,
1996 and September 30, 1997, is as follows:

DECEMBER 31, 1996
----------------------------------
ACCUMULATED
DESCRIPTION AMOUNT AMORTIZATION NET
----------- ----------- ------------ ---------

FCC licenses............................ $ 326,163 $ 49,238 $ 276,925
Organization costs and covenants not to
compete................................ 1,928,336 1,303,034 625,302
----------- ----------- ---------
$ 2,254,499 $ 1,352,272 $ 902,227
=========== =========== =========

SEPTEMBER 30, 1997 (UNAUDITED)
----------------------------------
ACCUMULATED
DESCRIPTION AMOUNT AMORTIZATION NET
----------- ----------- ------------ ---------

FCC licenses............................ $ 326,163 $ 55,626 $ 270,537
Organization costs and covenants not to
compete................................ 1,941,800 1,495,065 446,735
----------- ----------- ---------
$ 2,267,963 $ 1,550,691 $ 717,272
=========== =========== =========

NOTE F--LEASES

The Company leases office space from an individual who is a shareholder,
chairman of the board and chief executive officer of LCI. The lease began on
May 24, 1990, and is classified as an operating lease. The initial lease term
assumed by ATS expires October 31, 1998.

Future minimum lease payments under all non-cancelable operating leases with
initial terms of one year or more consisted of the following at December 31,
1996:

RELATED
YEAR ENDING DECEMBER 31, PARTY OTHER
------------------------ --------- -----------

1997............................................. $ 81,874 $ 901,084
1998............................................. 68,228 814,674
1999............................................. -- 674,389
2000............................................. -- 356,820
2001............................................. -- 296,001
Thereafter........................................ -- 870,036
--------- -----------
Total minimum lease payments....................... $ 150,102 $ 3,913,004
========= ===========

Rental expense for all operating leases, principally head-end land and
building facilities, amounted to $1,149,855 for the year ended December 31,
1996 and $833,215 and $868,154 for the nine months ended September 30, 1996
and 1997, respectively. In addition, the Company made total payments to the
related party for office space of $81,874 for the year ended December 31,
1996, and $61,405 in each of the nine month periods ended September 30, 1996
and 1997.

In addition to fixed rentals, certain leases require payment of maintenance
and real estate taxes and contain escalation provisions based on future
adjustments in price indices. It is expected that, in the normal course of
business, expiring leases will be renewed or replaced by leases on other
properties; thus, it is anticipated that future minimum operating lease
commitments will not be less than the amount shown for 1996.

F-29

MICRONET, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

NOTE G--LESSOR OPERATING LEASES

The Company is the lessor of tower and head-end equipment and microwave
equipment under operating leases expiring in various years through 2005. Rental
income from operating leases amounted to $5,909,260 for the year ended December
31, 1996, and $4,074,175 and $6,725,321 for the nine months ended September 30,
1996 and 1997, respectively.

Following is a summary of property held for lease at December 31, 1996 and
September 30, 1997:

DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(UNAUDITED)

Tower, head-end equipment and microwave
equipment................................. $ 32,289,707 $ 33,239,792
Less accumulated depreciation.............. (20,271,612) (22,329,026)
------------ ------------
$ 12,018,095 $ 10,910,766
============ ============

Minimum future rentals to be received on non-cancelable leases consisted of
the following as of December 31, 1996:

YEAR ENDING DECEMBER 31,
------------------------

1997....................................................... $ 5,915,803
1998....................................................... 4,733,229
1999....................................................... 3,636,045
2000....................................................... 3,032,860
2001....................................................... 1,768,802
Thereafter.................................................. 550,001
------------
$ 19,636,740
============

NOTE H--OTHER INCOME (EXPENSE)

The schedules of other income (expense) for the year ended December 31, 1996,
and nine months ended September 30, 1996 and 1997 are as follows:

NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, -------------------
1996 1996 1997
------------ -------- ---------
(UNAUDITED)

Interest income.......................... $ 42,504 $ 25,038 $ 42,076
Gain (loss) on disposal of property and
equipment............................... 400 (643) (12,063)
-------- -------- ---------
$ 42,904 $ 24,395 $ 30,013
======== ======== =========

F-30

MICRONET, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

NOTE I--EMPLOYEE HEALTH BENEFIT PLAN

As a subsidiary of LCI, the Company participates in the Lenfest Group
Employee Health Plan (a trust) in order to provide health insurance for its
employees. This trust is organized under Internal Revenue Code Section
501(c)(9)--Voluntary Employee Beneficiary Association (VEBA). Benefits are
prefunded by contributions from the Company and all other participating LCI
subsidiaries. Insurance expense is recognized as incurred. The Company does
not provide postretirement benefits to its employees. Therefore, Statement of
Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other than Pensions, does not have an impact on the
Company's financial statements.

NOTE J--401(K) PLAN

LCI provides a 401(k) retirement plan to the employees of its subsidiaries.
The Company, as an indirect wholly owned subsidiary, is entitled to
participate. The Company matches the entire amount contributed by an eligible
employee up to 5% of their salary, subject to regulatory limitations. For the
year ended December 31, 1996, the Company matched $112,033 of contributions.
For the nine months ended September 30, 1996 and 1997, the Company matched
$79,735 and $86,144, respectively.

NOTE K--RELATED PARTY TRANSACTIONS

The Company does business and generates revenue with subsidiaries of Tele-
Communications, Inc. (TCI) (a stockholder of LCI, through an indirect, wholly
owned subsidiary). The amount of revenues generated was $1,225,000 for the
year ended December 31, 1996, and $863,000 and $1,330,000 for the nine months
ended September 30, 1996 and 1997, respectively. An additional $69,000 and
$74,000 received from TCI was included in customer service prepayments as of
December 31, 1996 and September 30, 1997, respectively.

All services provided to related parties were at standard billing rates.

Certain management services are provided to the Company by Suburban. Such
services include legal, tax, treasury, risk management, benefits
administration and other support services. Included in selling, general and
administrative expenses for the year ended December 31, 1996, and the nine
months ended September 30, 1996 and 1997 were allocated expenses of $108,000,
$81,000 and $81,000, respectively, related to these services. Allocated
expenses are based on Suburban's estimate of expenses related to the services
provided to the Company in relation to those provided to other affiliates of
Suburban. Management believes that these allocations were made on a reasonable
basis. However, the allocations are not necessarily indicative of the level of
expenses that might have been incurred had the Company contracted directly
with third parties. Management has not made a study or any attempt to obtain
quotes from third parties to determine what the cost of obtaining such
services from third parties would have been. The fees and expenses charged by
Suburban are subject to change.

The Company entered into a lease agreement with a principal stockholder of
LCI (See Note F).

F-31

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and
Stockholders of Diablo
Communications, Inc. (A California
S Corporation):

We have audited the accompanying balance sheets of Diablo Communications,
Inc. (the "Company"), as of December 31, 1995 and 1996, and the related
statements of income, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1995 and
1996, and the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
San Francisco, California
November 4, 1997

F-32

DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)

BALANCE SHEETS

DECEMBER 31,
------------------------ SEPTEMBER 30,
1995 1996 1997
----------- ----------- -------------
(UNAUDITED)

ASSETS
CURRENT ASSETS:
Cash................................. $ 515,896 $ 708,434 $ 554,201
Accounts receivable:
Trade, net of allowance for doubt-
ful accounts of $10,000 at each
date.............................. 292,971 334,926 398,844
Affiliates......................... 440,532 560,813 1,231,952
Prepaid and other current assets..... 242,436 160,678 199,702
----------- ----------- ----------
Total current assets............. 1,491,835 1,764,851 2,384,699
PROPERTY AND EQUIPMENT, net............ 1,720,423 2,952,926 2,992,593
INVESTMENT IN AFFILIATE................ 4,158 10,053 7,757
DEPOSITS AND OTHER ASSETS.............. 224,338 182,984 293,617
----------- ----------- ----------
TOTAL.................................. $ 3,440,754 $ 4,910,814 $5,678,666
=========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable..................... $ 191,258 $ 246,579 $ 188,624
Accrued expenses..................... 164,211 232,691 178,000
Deferred revenue..................... 340,556 364,865 250,056
Current portion of long-term debt.... 303,045 420,875 505,129
----------- ----------- ----------
Total current liabilities........ 999,070 1,265,010 1,121,809
----------- ----------- ----------
LONG-TERM DEBT......................... 925,002 1,786,410 1,732,390
----------- ----------- ----------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY:
Common stock, no par value,
10,000,000 shares authorized,
202,000 shares issued and outstand-
ing................................. 3,465,242 3,465,242 3,465,242
Accumulated deficit.................. (1,948,560) (1,605,848) (640,775)
----------- ----------- ----------
Total stockholders' equity....... 1,516,682 1,859,394 2,824,467
----------- ----------- ----------
TOTAL.................................. $ 3,440,754 $ 4,910,814 $5,678,666
=========== =========== ==========

See notes to financial statements.

F-33

DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)

STATEMENTS OF INCOME

YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------- ----------------------
1995 1996 1996 1997
---------- ---------- ---------- ----------
(UNAUDITED)

REVENUES:
Tower revenues............ $5,925,022 $6,337,292 $4,778,569 $5,878,022
Sublease revenues--related
party.................... 414,000 365,500 253,500 337,940
Management fees--related
party.................... 96,968 97,513 70,531 80,621
Insurance proceeds........ -- 213,000 -- --
---------- ---------- ---------- ----------
Total revenues.......... 6,435,990 7,013,305 5,102,600 6,296,583
---------- ---------- ---------- ----------
OPERATING EXPENSES:
General and administra-
tive..................... 1,229,313 1,414,136 1,036,774 968,071
Depreciation and amortiza-
tion..................... 283,023 416,883 359,184 359,856
Rent expense.............. 1,875,527 2,039,302 1,512,615 1,829,720
Technical................. 1,422,267 1,618,722 1,144,103 1,244,912
Sales and promotional..... 433,443 530,447 393,685 430,846
---------- ---------- ---------- ----------
Total operating ex-
penses................. 5,243,573 6,019,490 4,446,361 4,833,405
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS...... 1,192,417 993,815 656,239 1,463,178
OTHER INCOME (EXPENSE),
NET........................ (120,388) (144,257) (90,335) 133,704
---------- ---------- ---------- ----------
NET INCOME.................. $1,072,029 $ 849,558 $ 565,904 $1,596,882
========== ========== ========== ==========

See notes to financial statements.

F-34

DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)

STATEMENTS OF STOCKHOLDERS' EQUITY

COMMON STOCK
----------------------
OUTSTANDING ACCUMULATED
SHARES AMOUNT DEFICIT TOTAL
----------- ---------- ----------- -----------

BALANCE, DECEMBER 31, 1994.... 202,000 $3,465,242 $(1,689,475) $ 1,775,767
Cash and noncash
distributions to
stockholders............... (1,331,114) (1,331,114)
Net income.................. 1,072,029 1,072,029
------- ---------- ----------- -----------
BALANCE, DECEMBER 31, 1995.... 202,000 3,465,242 (1,948,560) 1,516,682
Cash distributions to stock-
holders.................... (506,846) (506,846)
Net income.................. 849,558 849,558
------- ---------- ----------- -----------
BALANCE, DECEMBER 31, 1996.... 202,000 3,465,242 (1,605,848) 1,859,394
Cash distributions to stock-
holders (unaudited)........ (631,809) (631,809)
Net income (unaudited)...... -- -- 1,596,882 1,596,882
------- ---------- ----------- -----------
BALANCE, SEPTEMBER 30, 1997
(unaudited).................. 202,000 $3,465,242 $ (640,775) $ 2,824,467
======= ========== =========== ===========

See notes to financial statements.

F-35

DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)

STATEMENTS OF CASH FLOWS

YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
----------------------- ----------------------
1995 1996 1996 1997
---------- ----------- ---------- ----------
(UNAUDITED)

CASH FLOWS FROM OPERAT-
ING ACTIVITIES:
Net income............. $1,072,029 $ 849,558 $ 565,904 $1,596,882
Adjustments to recon-
cile net income to net
cash provided by oper-
ating activities:
Depreciation and amor-
tization............. 283,023 416,883 359,184 359,856
Changes in assets and
liabilities:
Accounts receivable--
trade............... (163,273) (30,000) (213,355) (63,918)
Accounts receivable--
Affiliates.......... (244,175) (132,236) (74,543) (671,139)
Prepaid and other
current assets...... (178,370) 81,758 (16,395) (39,024)
Deposits and other
assets.............. (37,181) 22,778 65,703 (108,337)
Accounts payable and
accrued expenses.... 115,175 123,801 (265,136) (112,646)
Deferred revenue..... 67,287 24,309 69,329 (114,809)
---------- ----------- ---------- ----------
Net cash provided by
operating activi-
ties............... 914,515 1,356,851 490,691 846,865
---------- ----------- ---------- ----------
CASH FLOW FROM INVESTING
ACTIVITIES--Purchases
of property and
equipment.............. (948,781) (1,636,705) (1,219,152) (399,523)
---------- ----------- ---------- ----------
CASH FLOWS FROM FINANC-
ING ACTIVITIES:
Long-term borrowings.. 500,000 1,250,000 1,250,000 217,075
Repayments of long-
term debt............ (50,469) (270,762) (192,775) (186,841)
Cash distributions to
stockholders......... (880,193) (506,846) (362,171) (631,809)
---------- ----------- ---------- ----------
Net cash provided by
(used in) financing
activities......... (430,662) 472,392 695,054 (601,575)
---------- ----------- ---------- ----------
NET INCREASE (DECREASE)
IN CASH................ (464,928) 192,538 (33,407) (154,233)
CASH, BEGINNING OF PERI-
OD..................... 980,824 515,896 515,896 708,434
---------- ----------- ---------- ----------
CASH, END OF PERIOD..... $ 515,896 $ 708,434 $ 482,489 $ 554,201
========== =========== ========== ==========
SUPPLEMENTAL INFORMA-
TION:
Cash paid for inter-
est.................. $ 92,384 $ 140,970 $ 91,988 $ 90,335
Noncash distribution
to stockholders...... 450,921 -- -- --

See notes to financial statements.

F-36

DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)

NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business and Corporate Structure--Diablo Communications, Inc. (the
"Company") is engaged in acquiring, developing and operating communications
towers, for use by radio operators as well as other communication related
businesses. As of December 31, 1996, the Company owned and/or operated 81
towers and rooftops throughout Northern California.

Sale of the Company--On October 9, 1997, substantially all of the Company's
assets were sold to American Tower Systems, Inc. ("ATS"). ATS also assumed the
Company's operating lease agreements and certain of the Company's liabilities
on that date. The sale price was approximately $40,000,000. Subsequent to the
sale, the Company changed its name and will pursue other business
opportunities as Tyris Corporation.

Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from these estimates.

Unaudited Interim Information--The financial information with respect to the
nine-month periods ended September 30, 1996 and 1997 is unaudited. In the
opinion of management, such information contains all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of the
results of such periods. The results of operations for the nine months ended
September 30, 1997 are not necessarily indicative of the results to be
expected for the full year.

Impairment of Long-Lived Assets--In March 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of ("FAS 121"). FAS 121 addresses the accounting for the
impairment of long-lived assets, certain intangibles and goodwill when events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. The Company adopted this statement during 1996 and the
impact on the Company's results of operations, liquidity or financial position
was not material.

Property and Equipment--Property and equipment are recorded at cost.
Depreciation is provided using the double-declining method over estimated
useful lives ranging from 3 to 15 years.

Investment in Affiliate--The Company owns a 25% interest in New Loma
Communications, Inc. which is accounted for using the equity method of
accounting.

Revenue Recognition--Tower and sublease revenues are recognized when earned
over the lease terms. Management fee revenues are recognized when earned over
the terms of the management contracts. Deferred revenue represents advance
payments by customers where related revenue is recognized when services are
provided.

S Corporation Election--The accompanying financial statements do not include
any provision for federal or state income taxes since the Company is treated
as a partnership under Subchapter S of the Internal Revenue Code and under
similar state income tax provisions. Accordingly, income or loss is allocated
to the shareholders and included in their tax returns.

Retirement Plan--Employees of the Company are eligible for participation in
a 401-K plan managed by the Company, subject to certain minimum age and
length-of-employment requirements. Under the plan, the Company does not match
the participants' contributions.

F-37

DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)

2. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

DECEMBER 31,
---------------------- SEPTEMBER 30,
1995 1996 1997
---------- ---------- -------------
(UNAUDITED)

Land and improvements................ $ 674,574 $1,017,949 $1,135,034
Towers............................... 533,175 1,342,178 1,543,206
Technical equipment.................. 387,451 508,212 510,097
Office equipment, furniture, fixtures
and other equipment................. 378,290 478,285 506,172
Construction in progress............. 209,592 473,163 631,241
---------- ---------- ----------
Total.............................. 2,183,082 3,819,787 4,325,750
Less accumulated depreciation and am-
ortization.......................... (462,659) (866,861) (1,333,157)
---------- ---------- ----------
Property and equipment, net.......... $1,720,423 $2,952,926 $2,992,593
========== ========== ==========

Technical and office equipment include assets under capital leases of
$285,749, $285,749 and $288,698 at September 30, 1997, December 31, 1996 and
1995, respectively with related accumulated depreciation of $223,980, $199,588
and $167,065, respectively.

3. LONG-TERM DEBT

Outstanding amounts under the Company's financing arrangements consisted of
the following:

DECEMBER 31,
---------------------- SEPTEMBER 30,
1995 1996 1997
---------- ---------- -------------
(UNAUDITED)

Advances on bank term loan ap-
proved up to $1,500,000, varying
interest rates at 9.44% to
9.85%............................ $1,250,000 $1,250,000
Notes payable to banks at interest
rates of prime plus 1.5%......... $ 858,333 658,333 525,000
Other notes payable to banks...... 212,107 202,302 419,377
Capital lease obligations......... 157,607 96,650 43,142
---------- ---------- ----------
Total........................... 1,228,047 2,207,285 2,237,519
Less scheduled current maturi-
ties............................. (303,045) (420,875) (505,129)
---------- ---------- ----------
Long-term debt.................... $ 925,002 $1,786,410 $1,732,390
========== ========== ==========

In October 1997, the Company's long-term debt was either assumed by ATS or
repaid by the Company with proceeds from the sale of assets to ATS (see Note
1--"Sale of the Company").

F-38

DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)

4. COMMITMENTS AND CONTINGENCIES

The Company leases various technical and office equipment under capital
leases and certain office space and other real property under noncancelable
operating leases. Future minimum lease payments under these operating and
capital leases are as follows:

OPERATING CAPITAL
LEASES LEASES
---------- --------

Year ending December 31:
1997................................................ $ 662,260 $ 73,529
1998................................................ 613,607 31,161
1999................................................ 608,642
2000................................................ 567,817
2001................................................ 510,557
Thereafter.......................................... 2,808,872
---------- --------
Total............................................. $5,771,755 104,690
==========
Less interest portion................................... (8,040)
--------
Present value of minimum lease payments................. $ 96,650
========

5. RELATED PARTY TRANSACTIONS

New Loma Communications, Inc., is a corporation in which the Company owns
25% of the outstanding capital stock.

Drake Industrial Park, Inc. and Diablo Communications of Southern
California, Inc. are corporations under common ownership as that of the
Company.

During the nine months ended September 30, 1996 and 1997 and the years ended
December 31, 1995 and 1996, the Company received income from New Loma
Communications, Inc., as follows:

YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
----------------- -----------------
1995 1996 1996 1997
-------- -------- -------- --------
(UNAUDITED)

Sublease revenues........................ $414,000 $365,500 $253,500 $337,940
Management services...................... 96,968 97,513 70,531 80,621
-------- -------- -------- --------
Total.................................. $510,968 $463,013 $324,031 $418,561
======== ======== ======== ========

The Company had the following accounts receivable from affiliates:

DECEMBER 31,
----------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- -------------
(UNAUDITED)

Diablo Communications of Southern Califor-
nia, Inc................................. $391,872 $517,400 $1,214,622
New Loma Communications................... 48,660 27,859 176
Drake Industrial Park, Inc................ 15,554 17,154
-------- -------- ----------
Total................................... $440,532 $560,813 $1,231,952
======== ======== ==========

F-39

DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)

6. SPIN-OFF OF SOUTHERN CALIFORNIA OPERATION--NONCASH DISTRIBUTION TO
STOCKHOLDERS

In order to establish a separate company under which to conduct Southern
California business, on September 1, 1995, all of the Company's Southern
California communication site leases, customer contracts, affiliated
receivables, communication site equipment, vehicles, vehicle obligations,
office lease and contracts, and office equipment were distributed to the
Company's stockholders at net book value according to their pro rata
ownership. The net book value of such distribution was $450,921.

The Company's 1995 statement of income includes a net loss from the Southern
California operations of $318,291 for the eight months ended August 31, 1995.

7. MT. DIABLO COMMUNICATION SITE DAMAGE

On December 12, 1995, a severe wind destroyed the tower at the Company's Mt.
Diablo communication facility. The Company received insurance proceeds
totalling approximately $434,000 in 1996. Of these proceeds, $126,000 was
capitalized in property and equipment, $213,000 was recorded as revenue and
$95,000 was recorded as a reduction of operating expenses.

8. FUTURE LEASE INCOME

The Company has long-term, non-cancelable agreements under operating leases
for license fee income. Future minimum annual lease income at December 31,
1996 is as follows:

Year ending December 31:
1997..................................................... $ 3,263,693
1998..................................................... 2,786,793
1999..................................................... 1,935,638
2000..................................................... 1,493,622
2001..................................................... 964,394
Thereafter............................................... 593,206
-----------
Total.................................................. $11,037,346
===========

F-40

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Diablo Communications of Southern California, Inc.

We have audited the balance sheets of Diablo Communications of Southern
California, Inc. (a California S Corporation) (the "Company") as of December
31, 1995 and December 31, 1996 and the related statements of operations,
stockholders' equity and cash flows for the period from September 1, 1995
(inception) to December 31, 1995 and for the year ended December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.

In our opinion, the financial statements referred to above, present fairly,
in all material respects, the financial position of Diablo Communications of
Southern California, Inc. as of December 31, 1995 and December 31, 1996, and
the results of its operations and its cash flows for the period from September
1, 1995 (inception) to December 31, 1995 and the year ended December 31, 1996
in conformity with generally accepted accounting principles.

As emphasized in Note 9 to the financial statements, during October 1997,
the Company sold substantially all of its assets to an outside party.

Rooney, Ida, Nolt & Ahern
/s/ ROONEY, IDA, NOLT & AHERN Certified Public Accountants

Oakland, California
February 7, 1997
October 9, 1997 as to note 9
to the financial statements

F-41

DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.

BALANCE SHEETS

DECEMBER 31,
---------------------- SEPTEMBER 30,
1995 1996 1997
--------- ----------- -------------
(UNAUDITED)

ASSETS
CURRENT ASSETS:
Cash............................... $ 204,781 $ 61,043 $ 15,094
Accounts receivable, trade......... 7,591 27,245 12,914
Prepaid expenses................... 1,272 2,462 24,990
--------- ----------- -----------
Total current assets............. 213,644 90,750 52,998
--------- ----------- -----------
PROPERTY AND EQUIPMENT--net.......... 441,105 1,013,434 1,667,418
--------- ----------- -----------
OTHER ASSETS:
Prepaid expenses--net.............. 2,348 7,970 6,468
Deposits........................... 6,976 10,776 11,146
--------- ----------- -----------
Total other assets............... 9,324 18,746 17,614
--------- ----------- -----------
TOTAL................................ $ 664,073 $ 1,122,930 $ 1,738,030
========= =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
CURRENT LIABILITIES:
Notes and contracts payable........ $ 283,544 $ 310,522 $ 382,494
Accounts payable................... 148,438 447,232 1,242,179
Customer fees advanced............. 1,707 12,839 17,426
Accrued liabilities................ 5,419 16,023 11,634
--------- ----------- -----------
Total current liabilities........ 439,108 786,616 1,653,733
--------- ----------- -----------
LONG-TERM DEBT....................... 21,139 930,617 1,065,417
--------- ----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock, no par value,
10,000,000 shares authorized,
1,000,000 issued and outstanding.. 450,921 450,921 450,921
Accumulated deficit................ (247,095) (1,045,224) (1,432,041)
--------- ----------- -----------
Total stockholders' equity
(deficiency).................... 203,826 (594,303) (981,120)
--------- ----------- -----------
TOTAL................................ $ 664,073 $ 1,122,930 $ 1,738,030
========= =========== ===========

See notes to financial statements.

F-42

DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.

STATEMENT OF OPERATIONS

SEPTEMBER 1, NINE MONTHS ENDED
(INCEPTION) TO YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, -----------------------
1995 1996 1996 1997
-------------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)

NET REVENUES............... $ 45,445 $ 408,555 $ 251,733 $ 660,195
OPERATING EXPENSES:
Operating expenses,
excluding depreciation
and amortization and
corporate general and
administrative
expenses................ 49,488 319,011 196,377 402,945
Depreciation and
amortization............ 8,459 29,405 22,123 32,886
Corporate general and
administrative.......... 226,528 776,063 604,853 500,014
--------- ---------- --------- ---------
Total operating
expenses.............. 284,475 1,124,479 823,353 935,845
--------- ---------- --------- ---------
OPERATING LOSS............. (239,030) (715,924) (571,620) (275,650)
--------- ---------- --------- ---------
OTHER INCOME (EXPENSES):
Interest expense......... (8,656) (85,911) (54,096) (113,643)
Interest income.......... 1,391 4,506 3,461 3,276
--------- ---------- --------- ---------
Total other income
(expenses)............ (7,265) (81,405) (50,635) (110,367)
--------- ---------- --------- ---------
LOSS FROM OPERATIONS BEFORE
INCOME TAXES.............. (246,295) (797,329) (622,255) (386,017)
INCOME TAX PROVISION....... 800 800 800 800
--------- ---------- --------- ---------
NET LOSS................... $(247,095) $ (798,129) $(623,055) $(386,817)
========= ========== ========= =========

See notes to financial statements.

F-43

DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

ACCUMULATED
COMMON STOCK DEFICIT TOTAL
------------ ----------- ---------

BALANCES, SEPTEMBER 1, 1995 (inception)... $450,921 $ -0- $ 450,921
Net loss................................ (247,095) (247,095)
-------- ----------- ---------
BALANCES, DECEMBER 31, 1995............... 450,921 (247,095) 203,826
Net loss................................ (798,129) (798,129)
-------- ----------- ---------
BALANCES, DECEMBER 31, 1996............... 450,921 (1,045,224) (594,303)
Net loss (unaudited).................... (386,817) (386,817)
-------- ----------- ---------
BALANCES, SEPTEMBER 30, 1997.............. $450,921 $(1,432,041) $(981,120)
======== =========== =========

See notes to financial statements.

F-44

DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.

STATEMENT OF CASH FLOWS

SEPTEMBER 1 NINE MONTHS ENDED
(INCEPTION) TO YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, -----------------------
1995 1996 1996 1997
-------------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)

CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss.................. $(247,095) $ (798,129) $(623,055) $(386,817)
--------- ---------- --------- ---------
Adjustments to reconcile
net loss to cash used by
operating activities:
Depreciation and
amortization............ 8,459 29,405 21,517 32,886
Changes in assets and
liabilities:
Accounts receivable.... (7,591) (19,654) (23,386) 14,331
Prepaid expenses....... (1,151) (1,190) (4,129) (22,528)
Deposits............... (4,096) (3,800) (3,800) (370)
Accounts payable and
accrued expenses...... 153,857 309,398 119,535 790,558
Customer fees
advanced.............. 1,707 11,132 (1,707) 4,587
--------- ---------- --------- ---------
Total adjustments........ 151,185 325,291 108,030 819,464
--------- ---------- --------- ---------
Cash provided (used) by
operating activities...... (95,910) (472,838) (515,025) 432,647
--------- ---------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Collection on note
receivable.............. 81,310
Purchase of property and
equipment............... (50,449) (599,856) (371,191) (685,368)
Organization costs....... (2,516)
Loan fees................ (7,500) (7,500)
--------- ---------- --------- ---------
Cash provided (used) by
investing activities...... 28,345 (607,356) (378,691) (685,368)
--------- ---------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from debt....... 275,000 1,000,000 750,000 248,751
Repayment of debt........ (2,654) (63,544) (47,523) (41,979)
--------- ---------- --------- ---------
Cash provided by financing
activities................ 272,346 936,456 702,477 206,772
--------- ---------- --------- ---------
INCREASE (DECREASE) IN
CASH...................... 204,781 (143,738) (191,239) (45,949)
CASH, BEGINNING OF PERIOD.. -0- 204,781 204,781 61,043
--------- ---------- --------- ---------
CASH, END OF PERIOD........ $ 204,781 $ 61,043 $ 13,542 $ 15,094
========= ========== ========= =========

See notes to financial statements.

F-45

DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of business:

The Company develops and operates telecommunications sites in Southern
California. The Company has a broad customer base which includes specialized
mobile radio companies, paging companies, cellular telephone providers,
broadcasters, emergency services, various private and governmental two-way
radio users, and other entities with wireless communications needs.

Revenues are generated primarily from individual license agreements which
entitle a customer to use an antenna system or antenna tower space, and to use
on-site space in a climate controlled building for their transmitters,
receivers, and related equipment.

For most of its sites, the Company holds a long-term lease interest. As a
recognized full service site manager, the Company also manages sites for
outside site owners.

Allowances for doubtful accounts:

The Company uses the allowance method for accounting for bad debts. An
allowance for bad debts has not been provided currently since the Company's
bad debt experience indicates that the amount would not be material.

Leases:

Leases meeting certain criteria are treated as capital leases requiring
related assets and lease obligations to be recorded at their present value in
the financial statements. Other leases, not qualifying under these criteria,
are treated as operating leases for which rentals are charged to expense.

S Corporation election:

The Company has elected, by unanimous consent of its stockholders, to have
its income taxed directly to the stockholders. Accordingly, provision for
income taxes, except for an $800 minimum state franchise taxes, has not been
made. Deferred income taxes have not been recorded because such amounts are
immaterial.

Property and equipment:

Property and equipment are recorded at cost and depreciation is computed
using a combination of straight-line and accelerated methods of accounting
over useful lives of 5 to 15 years.

Organization costs and loan fees:

Organization costs and loan fees are amortized using the straight-line
method of accounting over 5 years.

Unaudited interim financial information:

In the opinion of management, the financial statements for the unaudited
periods presented include all adjustments necessary for a fair presentation in
accordance with generally accepted accounting principles, consisting solely of
normal recurring accruals and adjustments. The results of operations and cash
flows for the nine months ended September 30, 1996 and September 30, 1997 are
not necessarily indicative of results which would be expected for a full year.

F-46

DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Use of estimates:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of disclosures. Accordingly,
actual results could differ from those estimates.

Concentration of Credit Risk:

The Company extends credit to customers on an unsecured basis in the normal
course of business. No individual customer is significant to the Company's
customer base. The Company has policies governing the extension of credit and
collection of amounts due from customers.

Recognition of Revenues:

Tower and sublease revenues are recognized when earned over the lease terms.
Management fee revenues are recognized when earned over the terms of the
management contracts.

Corporate general and administrative expenses:

Corporate general and administrative expenses consists of corporate overhead
costs not specifically allocable to any of the Company's direct operating
profit centers.

Impairment of long-lived assets:

In accordance with Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of ", the company assesses on an on-going basis the
recoverability of intangible assets based on estimates of future undiscounted
cash flows for the applicable business acquired compared to net book value. If
the future undiscounted cash flow estimate is less than net book value, net
book value is then reduced to the undiscounted cash flow estimate. The Company
also evaluates the amortization periods of intangible assets to determine
whether events or circumstances warrant revised estimates of useful lives. As
of September 30, 1997, management believes that no revisions to the remaining
useful lives or writedowns of deferred charges are required.

Fair value of financial instruments:

The Company believes that the carrying value of all financial instruments is
a reasonable estimate of fair value as of December 31, 1996 and September 30,
1997.

Retirement plan:

Employees of the Company, through its affiliate Diablo Communications, Inc.,
are eligible for participation in a 401(k) plan, subject to certain minimum
age and length-of-employment requirements. The plan does not provide for any
Company contributions.

Supplemental cash flow information:

For financial statement purposes of the statements of cash flows, the
Company issued capital stock in exchange for $450,921 in net assets, primarily
property and equipment on September 1, 1995.

Cash payments for interest approximated $8,656, $71,256, $50,653 and
$116,663 for period September 1, 1995 to December 31, 1995, for the year ended
December 31, 1996 and the nine months ended September 30, 1996 and 1997,
respectively.

F-47

DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Cash payments for income taxes was $800 for the period September 1, 1995 to
December 31, 1995, for the year ended December 31, 1996 and the nine months
ended September 30, 1996 and 1997, respectively.

NOTE 2. COMPANY ORGANIZATION:

In order to establish a separate company under which to conduct business in
Southern California, on September 1, 1995, Diablo Communications, Inc.
distributed all of its Southern California communication site leases, customer
contracts, affiliated receivables, communication site equipment, vehicles,
vehicle obligations, office lease and contracts, and office equipment to its
stockholders according to their pro rata ownership. The stockholders then
contributed these assets in exchange for 1,000,000 shares of capital stock.
The net value of this contribution was $450,921.

NOTE 3. PROPERTY AND EQUIPMENT:

Property and equipment consist of the following:

DECEMBER 31,
------------------- SEPTEMBER 30,
1995 1996 1997
-------- ---------- -------------
(UNAUDITED)

Land improvements.......................... $ 8,276 $ 48,770 $ 48,770
Towers and wiring.......................... 6,261 31,815 205,269
Equipment.................................. 19,190 26,477 26,477
Office furniture and equipment............. 27,729 27,729 27,729
Computers and software..................... 23,718 24,746 24,746
Vehicles................................... 27,546 27,546 27,546
Construction in progress................... 355,276 880,769 1,392,684
-------- ---------- ----------
Total.................................... 467,996 1,067,852 1,753,221
-------- ---------- ----------
Less accumulated depreciation............ 26,891 54,418 85,803
-------- ---------- ----------
Property and equipment, net.............. $441,105 $1,013,434 $1,667,418
======== ========== ==========

NOTE 4. RELATED PARTY TRANSACTIONS:

Richard D. Spight and the Mary C. Spight Family Trust are the majority
stockholders of Diablo Communications of Southern California, Inc. and Diablo
Communications, Inc.

At the end of each period, the Company owed the following amounts to Diablo
Communications, Inc:

DECEMBER 31,
----------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- -------------
(UNAUDITED)

Note payable at 8.68%....................... $275,000 $220,000 $ 183,333
Accounts payable............................ 116,872 297,400 1,214,622

After the sale of the Company's assets on October 9, 1997, these related
note and accounts payable were paid in full.

Interest expense on this related party note payable was $4,776, $22,424,
$17,335 and $13,290 for the period September 30, 1995 (inception) to December
31, 1995, year ended December 31, 1996 and for the nine month periods ended
September 30, 1996 and September 30, 1997, respectively.

F-48

DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 5. NOTES PAYABLE:

The Company has taken advances against a bank term loan approved for
$1,500,000. The Company pays interest only on the advances at rates ranging
from 9.44% to 9.85%. The line of credit requires that certain financial
covenants be maintained. The note is secured by a blanket lien on all of the
Company's assets.

During March 1997, the Company entered into an unsecured credit agreement
with American Tower Systems, Inc., that provides the Company with a $650,000
unsecured loan commitment of which $248,751 was outstanding at September 30,
1997. The Company pays interest only on the advances at prime, currently 8.5%.
The note matures at the earlier of consummation of the sale or June 30, 2000.

The Company repaid all advances on both of these notes after the sale of
substantially all its assets.

NOTE 6. LONG-TERM DEBT:

Maturities of long-term debt for the years subsequent to December 31, 1996,
are as follows:

YEAR ENDING
DECEMBER 31,
------------

1997.......................................................... $ 87,689
1998.......................................................... 204,759
1999.......................................................... 205,199
2000.......................................................... 201,841
2001.......................................................... 200,000
Thereafter..................................................... 116,666
----------
Totals........................................................ $1,016,154
==========

NOTE 7. COMMITMENTS:

Capital leases:

The future minimum lease payments under capital leases for communications
equipment and certain office equipment in effect at December 31, 1996 are as
follows:

YEAR ENDING
DECEMBER 31,
------------

1997............................................................ $ 3,422
1998............................................................ 2,282
-------
Total........................................................... 5,704
Less interest portion........................................... 719
-------
Present value of minimum lease payments......................... 4,985
Less current installments....................................... 2,833
-------
Long-term obligations under capital leases...................... $ 2,152
=======
Cost of equipment under capital leases.......................... $12,946
Less accumulated depreciation to December 31, 1996.............. 7,625
-------
Net............................................................. $ 5,321
=======
Current depreciation expense.................................... $ 2,129
=======

F-49

DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Operating leases:

At December 31, 1996, the Company was liable for various leases of office
space and other real and personal property which require future minimum annual
rental payments as follows:

YEAR ENDING
DECEMBER 31,
------------

1997............................... $231,937
1998............................... 211,661
1999............................... 216,298
2000............................... 193,998
2001............................... 62,950
Thereafter.......................... -0-
--------
Total.............................. $916,844
========

In addition, the Company is liable for various real property leases based on
percentages of gross income ranging from 25% to 70%.

Rental expenses for these operating leases were $35,611, $271,419, $173,407
and $344,987, for the period September 1, 1995 (inception) to December 31,
1995, the year ended December 31, 1996 and for the nine month periods ended
September 30, 1996 and September 30, 1997, respectively.

NOTE 8. FUTURE LEASE INCOME:

At December 31, 1996, the Company has long-term, non-cancelable agreements
under operating-type leases for license fee income. Future minimum annual
lease income is as follows:

YEAR ENDING
DECEMBER 31,
------------

1997............................. $ 659,445
1998............................. 585,155
1999............................. 434,161
2000............................. 287,430
2001............................. 193,657
Thereafter........................ -0-
----------
Total............................ $2,159,848
==========

NOTE 9. SUBSEQUENT EVENT:

On October 9, 1997 the Company, along with Diablo Communications, Inc., a
related company, sold substantially all of its assets to American Tower
Systems, Inc. (ATS) for a combined purchase price of approximately $46.5
million. DCSC's allocable share of the purchase price is approximately $5.4
million. Some of DCSC's liabilities were included in the transaction.

F-50

INDEPENDENT AUDITORS' REPORT

To the Board of Directors, Stockholders and Partners of
Meridian Communications
Calabasas, California:

We have audited the accompanying combined balance sheets of Meridian
Communications (the "Company") as of December 31, 1995 and 1996, and the
related combined statements of income, partners' capital and stockholders'
equity, and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

In our opinion, such combined financial statements present fairly, in all
material respects, the financial position of the Company as of December 31,
1995 and 1996, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
Long Beach, California
October 31, 1997

F-51

MERIDIAN COMMUNICATIONS

COMBINED BALANCE SHEETS

DECEMBER 31, 1995 AND 1996 AND JUNE 30, 1997

DECEMBER 31,
--------------------- JUNE 30,
1995 1996 1997
---------- ---------- -----------
(UNAUDITED)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................. $ 30,897 $ 63,665 $ 21,168
Accounts receivable:
Trade, net of allowance for doubtful ac-
counts of $1,244 and $10,118 in 1995 and
1996, respectively, and $17,720 (unau-
dited) at June 30, 1997................... 60,961 80,190 103,709
Other accounts receivable (Note 8)......... 19,461 25,889 2,260,295
Prepaid expenses and other current assets.. 79,044 77,108 122,366
---------- ---------- ----------
Total current assets..................... 190,363 246,852 2,507,538
PROPERTY AND EQUIPMENT, Net (Note 2)......... 2,523,929 2,917,751 3,147,692
INTANGIBLES, Net............................. 22,000 141,948 112,292
OTHER ASSETS................................. 1,859 2,259 6,299
---------- ---------- ----------
TOTAL........................................ $2,738,151 $3,308,810 $5,773,821
========== ========== ==========
LIABILITIES AND PARTNERS' CAPITAL AND
STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Current maturities of long-term loans pay-
able to shareholder and partner (Note 7).. $ 119,121 $ 234,607 $ 477,388
Accounts payable and accrued expenses...... 175,627 182,441 286,803
Security and other deposits................ 128,208 231,154 131,611
---------- ---------- ----------
Total current liabilities................ 422,956 648,202 895,802
---------- ---------- ----------
LONG-TERM LOANS PAYABLE TO SHAREHOLDER AND
PARTNER (Note 7)............................ 553,533 1,012,681 918,808
DEFERRED REVENUE............................. 214,918 279,641 186,413
COMMITMENTS AND CONTINGENCIES (Note 3)
PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY:
Common stock; $1.00 par value; 75,000
shares authorized; 4,000 shares issued and
outstanding............................... 4,000 4,000 4,000
Additional paid-in capital................. 16,632 16,632 16,632
Partners' capital.......................... 631,690 507,245 2,734,202
Retained earnings.......................... 894,422 840,409 1,017,964
---------- ---------- ----------
Total partners' capital and stockholders'
equity.................................. 1,546,744 1,368,286 3,772,798
---------- ---------- ----------
TOTAL........................................ $2,738,151 $3,308,810 $5,773,821
========== ========== ==========

SEE ACCOMPANYING NOTES TO COMBINED FINANCIAL STATEMENTS.

F-52

MERIDIAN COMMUNICATIONS

COMBINED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND SIX MONTHS ENDED JUNE 30, 1996 AND
1997

YEARS ENDED
DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------- --------------------------
1995 1996 1996 1997
---------- ---------- ------------ ------------
(UNAUDITED)

REVENUES:
Site use................. $3,918,420 $4,165,919 $ 2,103,614 $ 2,278,612
Site management.......... 72,337 125,348 51,355 52,178
Repeater service......... 140,945 206,556 67,319 54,087
---------- ---------- ------------ ------------
Total revenues......... 4,131,702 4,497,823 2,222,288 2,384,877
EXPENSES:
Operating expenses,
excluding depreciation
and amortization........ 3,034,285 3,217,369 1,543,333 1,730,211
Depreciation and
amortization............ 303,197 416,369 202,154 210,983
---------- ---------- ------------ ------------
OPERATING INCOME........... 794,220 864,085 476,801 443,683
OTHER INCOME (EXPENSE):
Interest and other income
(expense)............... 5,155 3,581 23,311 (17,741)
Interest expense to
shareholder and
partner (Note 6)........ (36,111) (73,126) (36,712) (61,968)
Gain on sale of business
(Note 8)................ 3,080,563
---------- ---------- ------------ ------------
Total other income (ex-
pense)................ (30,956) (69,545) (13,401) 3,000,854
---------- ---------- ------------ ------------
INCOME BEFORE INCOME TAX-
ES........................ 763,264 794,540 463,400 3,444,537
INCOME TAXES............... 800 800 3,145 2,526
---------- ---------- ------------ ------------
NET INCOME................. $ 762,464 $ 793,740 $ 460,255 $ 3,442,011
========== ========== ============ ============

See accompanying notes to combined financial statements.

F-53

MERIDAN COMMUNICATIONS

COMBINED STATEMENTS OF PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1995 AND 1996 AND SIX MONTHS ENDED JUNE 30, 1997

ADDITIONAL
COMMON PAID-IN PARTNERS' RETAINED
STOCK CAPITAL CAPITAL EARNINGS TOTAL
------ ---------- ----------- ---------- -----------

BALANCE, DECEMBER 31,
1994................... $4,000 $16,632 $ 630,902 $ 987,093 $ 1,638,627
Net income (loss)....... 855,135 (92,671) 762,464
Cash distributions...... (854,347) (854,347)
------ ------- ----------- ---------- -----------
BALANCE, DECEMBER 31,
1995................... 4,000 16,632 631,690 894,422 1,546,744
Net income (loss)....... 847,753 (54,013) 793,740
Cash distributions...... (972,198) (972,198)
------ ------- ----------- ---------- -----------
BALANCE, DECEMBER 31,
1996................... 4,000 16,632 507,245 840,409 1,368,286
Net income (Unaudited).. 3,264,456 177,555 3,442,011
Cash distributions (Un-
audited)............... (1,037,499) (1,037,499)
------ ------- ----------- ---------- -----------
BALANCE, JUNE 30, 1997
(Unaudited)............ $4,000 $16,632 $ 2,734,202 $1,017,964 $ 3,772,798
====== ======= =========== ========== ===========

See accompanying notes to combined financial statements.

F-54

MERIDIAN COMMUNICATIONS

COMBINED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1995 AND 1996 AND SIX MONTHS ENDED JUNE 30, 1996 AND
1997

YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
---------------------- ----------------------
1995 1996 1996 1997
---------- ---------- --------- -----------
(UNAUDITED)

CASH FLOWS FROM OPERATING AC-
TIVITIES:
Net income.................... $ 762,464 $ 793,740 $ 460,255 $ 3,442,011
Adjustments to reconcile net
income to net cash
provided by operating activi-
ties:
Depreciation and amortiza-
tion......................... 303,197 416,369 202,154 210,983
Provision for doubtful ac-
counts....................... (907) 8,874 1,955 7,748
Loss (gain) on disposal of
property and equipment....... 7,315 8,954 (2,922,335)
Changes in operating assets
and liabilities:
Accounts receivable--trade... 45,358 (28,108) (5,500) (31,266)
Accounts receivable--other... 10,136 (6,428) 11,962 15,594
Prepaid expenses and other
current assets.............. (23,359) 1,936 (76,357) (45,258)
Other assets................. (59) (400) (4,200) (4,040)
Accounts payable and accrued
expenses.................... 47,801 (23,185) 255,826 153,552
Security and other depos-
its......................... 9,679 2,946 (400) 457
Deferred revenue............. 28,628 64,723 5,500 (93,228)
---------- ---------- --------- -----------
Net cash provided by operat-
ing activities............. 1,182,938 1,237,782 860,149 734,218
---------- ---------- --------- -----------
CASH FLOWS FROM INVESTING AC-
TIVITIES:
Purchase of property and
equipment.................... (716,932) (857,562) (312,264) (508,699)
Proceeds from sale of property
and equipment................ 42,609 29,175 750,575
Purchase of intangibles....... (122,500)
Receipt of deposits for re-
peater services.............. 130,000
Application of deposits for
repeater services............ (130,000)
---------- ---------- --------- -----------
Net cash provided by (used
in) investing activities... (716,932) (807,453) (283,089) 111,876
---------- ---------- --------- -----------
CASH FLOWS FROM FINANCING AC-
TIVITIES:
Borrowings from shareholder
and partner.................. 400,000 655,000 100,000 219,000
Repayments on loans from
shareholder and partner...... (37,346) (80,366) (26,432) (70,092)
Cash distributions............ (854,347) (972,195) (486,101) (1,037,499)
---------- ---------- --------- -----------
Net cash provided by (used
in) financing activities... (491,693) (397,561) (412,533) (888,591)
---------- ---------- --------- -----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS.............. (25,687) 32,768 164,527 (42,497)
CASH AND CASH EQUIVALENTS, BE-
GINNING OF PERIOD............. 56,584 30,897 30,897 63,665
---------- ---------- --------- -----------
CASH AND CASH EQUIVALENTS, END
OF PERIOD..................... $ 30,897 $ 63,665 $ 195,424 $ 21,168
========== ========== ========= ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION--
Cash paid during the period
for:
Interest...................... $ 36,111 $ 72,673 $ 13,087 $ 33,168
Income taxes.................. $ 0 $ 900 $ 900 $ 800

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
-- During December 1996, the Company acquired equipment by incurring accrued
expenses in the amount of $19,191.
-- During February 1997, the Company received a non-trade account receivable
in the amount of $2,250,000 from the sale of a repeater system.

See accompanying notes to combined financial statements.

F-55

MERIDIAN COMMUNICATIONS

NOTES TO COMBINED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1995 AND 1996 AND SIX MONTHS ENDED JUNE 30, 1996 AND
1997
(INFORMATION PERTAINING TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General--The combined financial statements include the accounts of Meridian
Sales and Services Company ("MSSC"), a California S corporation, Meridian
Communications North ("MCN"), a general partnership, and Meridian Radio Sites
("MRS"), a general partnership (referred to collectively as Meridian
Communications or the "Company") which share common ownership and management.
All significant intercompany balances and transactions have been eliminated in
combination.

Meridian Communications develops and manages telecommunication antenna site
facilities and repeater (mobile relay) equipment throughout Southern
California.

Cash and Cash Equivalents--Cash and cash equivalents include cash in the
bank as well as short-term investments with an original maturity of three
months or less.

Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Property and Equipment--Property and equipment are stated at cost less
accumulated depreciation. Major renewals or betterments are capitalized and
depreciated over their estimated useful lives. Repairs and maintenance are
charged to expense in the period incurred.

Depreciation for financial statements purposes is computed using the
straight-line method over the estimated useful lives of the assets. Buildings
and leasehold improvements are depreciated over a period of 20 years, antenna
site equipment over a period of 7 years, and office furniture, equipment, and
automobiles over a period of 5 years.

Intangibles--Intangible assets are primarily comprised of the rights to a
site lease acquired in 1996 and, to a lesser extent, an FCC license. The FCC
license was sold in February 1997 with the sale of the assets used in
connection with the repeater business for $3,000,000 (see Note 8). The site
lease rights are amortized on a straightline basis over the remainder of the
lease term of 8 years.

F-56

MERIDIAN COMMUNICATIONS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)

Long-Lived Assets--The Company records impairment losses on long-lived
assets when events and circumstances indicate that the assets might be
impaired and the undiscounted cash flows estimated to be generated by those
assets are less than the carrying amounts of those assets.

Concentration of Credit Risk--The Company performs ongoing credit evaluation
of its customers' financial condition and generally requires a one-month
security deposit from its customers. As of December 31, 1996, the Company had
no significant concentrations of credit risk.

Revenue Recognition and Deferred Revenue--Revenue is recorded when services
are provided, according to rates set forth in customer contracts. Deferred
revenue is recorded when services are paid in advance of performance.

Income Taxes--The Company is comprised of an S corporation and two
partnerships for federal and state income tax purposes. The stockholders and
partners report any income or loss of the Company directly on their personal
tax returns. State income tax expense is computed using statutory tax rates
applicable to S corporations.

Interim Financial Statements--The accompanying combined balance sheet as of
June 30, 1997 and the combined statements of income, partners' capital and
stockholders' equity, and cashflows for the six months ended June 30, 1997 and
1996 are unaudited. In the opinion of management, such unaudited financial
statements include all adjustments necessary to present fairly the information
set forth therein. These adjustments consist of normal recurring adjustments.
The results of operations for such interim periods are not necessarily
indicative of results for the full year.

2. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

DECEMBER 31,
----------------------- JUNE 30,
1995 1996 1997
----------- ---------- -----------
(UNAUDITED)

Land.............................. $ 28,839 $ 28,839 $ 28,839
Antenna site equipment............ 2,258,476 2,518,713 2,315,813
Buildings and leasehold improve-
ments............................ 1,767,261 1,793,290 1,793,290
Office furniture, equipment and
automobiles...................... 259,586 247,260 248,342
Construction in progress.......... 195,787 687,006 1,167,466
----------- ---------- -----------
4,509,949 5,275,108 5,553,750
Less accumulated depreciation and
amortization..................... (1,986,020) (2,357,357) (2,406,058)
----------- ---------- -----------
$ 2,523,929 $2,917,751 $ 3,147,692
=========== ========== ===========

F-57

MERIDIAN COMMUNICATIONS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)

3. LEASE COMMITMENTS

The Company leases office and antenna site facilities under operating lease
agreements through the year 2009. One of the facilities is leased from a
shareholder of MSSC for $28,800 annually. This lease expires December 31,
1997. The Company is committed to minimum rental payments under leases
(exclusive of real estate taxes, maintenance and other related charges) at
December 31, 1996, as follows:

Years Ended December 31:

1997............................................................ $ 512,706
1998............................................................ 495,449
1999............................................................ 441,866
2000............................................................ 319,169
2001............................................................ 275,987
Thereafter...................................................... 2,100,576
----------
$4,145,753
==========

Rent expense charged to operations for the years ended December 31, 1995 and
1996 amounted to $629,242 and $727,427, respectively, of which $20,400 and
$28,800, respectively, was paid to the shareholder. Rent expense charged to
operations for the six months ended June 30, 1996 and 1997 amounted to
$311,266 and $414,990, respectively, of which $14,400 was paid to the
shareholder in both periods.

4. INCOME TAXES

The Company's provision for income taxes for the years ended December 31,
1995 and 1996 consists of a minimum state liability of $800 for each year
which is assessed to MSSC.

The Company does not pay federal corporate income taxes on its taxable
income. Instead, the stockholders and partners are liable for individual
federal and state income taxes on their respective shares of the Company's
taxable income. The Corporation continues to pay a California surtax of 1.5%
of taxable income or the minimum state tax, whichever is greater.

5. PROFIT SHARING PLAN

MSSC has a profit sharing plan (the "Plan") which covers all employees who
have accumulated a minimum amount of hours of service during a year. MSSC's
contribution to the Plan is determined annually by the Board of Directors.
Provisions for contributions to the profit sharing plan of $22,578 and
$21,457, respectively, were made for the years ended December 31, 1995 and
1996.

Effective July 1, 1997, there will be no additional contributions to the
Plan. Additionally, the Plan will be terminated and all assets distributed to
the participants as defined in the Plan.

6. RELATED PARTY TRANSACTIONS

The Company engages in transactions with a shareholder and partner whereby
working capital funds are loaned to the Company and repaid over terms agreed
to by both parties (see Note 7). Interest expense incurred on these loans
amount to $36,111 and $73,126 for the years ended December 31, 1995 and 1996,
respectively, and $36,712 and $61,968 for the six months ended June 30, 1996
and 1997, respectively.

Certain of the Company's buildings and equipment are regularly repaired and
maintained by Lee's Two-Way Radio, a California corporation owned and
controlled by Norman Kramer, a general partner. Payments to Lee's Two-Way
Radio for the years ended December 31, 1995 and 1996 were $31,369 and $34,765,
respectively.

Payments for administrative services in the amount of $16,194 and $14,466
for the years ended December 31, 1995 and 1996, respectively, were paid to
Norman Kramer, a general partner.

F-58

MERIDIAN COMMUNICATIONS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)

7. LONG-TERM LOANS PAYABLE TO SHAREHOLDER AND PARTNER

DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997
-------- ---------- -----------
(UNAUDITED)

Unsecured loan payable to shareholder in the
original amount of $310,000, payable in sixty
monthly installments of $6,857, including
interest at the rate of 10% per annum. Final
installment is due March 31, 2000............ $272,654 $ 218,440 $ 189,240
Unsecured loan payable to shareholder in the
original amount of $400,000 at December 31,
1995 and increased to $500,000 during 1996,
payable in sixty monthly installments of
$10,624 per month, including interest at the
rate of 10% per annum. Final installment due
August 31, 2001.............................. 400,000 473,848 432,956
Unsecured loan payable to shareholder in the
original amount of $55,000, interest payable
at the rate of 10% per annum, due November
27, 2001..................................... 55,000 55,000
Unsecured loan payable to shareholder in the
original amount of $500,000, interest payable
at the rate of 10% per annum, due December
31, 2001..................................... 500,000 500,000
Unsecured temporary loans payable to share-
holder and partner, at the rate of 10% per
annum, payable upon demand................... 219,000
-------- ---------- ----------
672,654 1,247,288 1,396,196
Less current maturities....................... 119,121 234,607 477,388
-------- ---------- ----------
$553,533 $1,012,681 $ 918,808
======== ========== ==========

All loans to the shareholder and partner were paid in full following the
sale of the Company's assets and business to ATS (see Note 9).

8. SALE OF THE REPEATER BUSINESS

Effective December 1, 1996, the Company entered into a ten-year agreement
with an unrelated party granting the party the right to manage a repeater
system and granting the party an option to purchase the system. Under the
agreement, the Company received a non-refundable $300,000 option fee in the
first quarter of 1997 from the party. In addition, the Company receives
repeater service fees quarterly from the party. As of June 30, 1997, the
system is still being managed by the party and the purchase option has not
been exercised.

Effective February 19, 1997, the Company sold a repeater system to an
unrelated party for $3,000,000. As of June 30, 1997, the uncollected portion
of the purchase price, $2,250,000, was included in non-trade accounts
receivable. This amount was received during August 1997.

Effective February 28, 1997, the balance of the repeater business was sold
to a separate buyer for the assumption of certain liabilities regarding the
business.

Revenues for the repeater business which were transferred as a result of
these transactions are $140,945, $206,556 and $54,087 for the years and period
ended December 31, 1995 and 1996, and June 30, 1997, respectively.

F-59

MERIDIAN COMMUNICATIONS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)

9. SUBSEQUENT EVENT (UNAUDITED)

Effective July 1, 1997, the Company sold substantially all of its assets and
the business related to these assets to American Tower Systems, Inc. ("ATS").
The combined purchase price was $32,121,638 plus construction adjustments of
$581,042 for the acquisition and construction of certain new sites from June
14, 1996 through the date of the sale. Assets which were not sold to ATS
include cash, accounts receivable, and assets related to the repeater business
which were sold to unrelated buyers (see Note 8).

F-60

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
American Tower Systems, Inc.

We have audited the accompanying balance sheet of Tucson Communications
Company (the "Partnership") as of December 31, 1996, and the related
statements of income, partners' deficit, and cash flows for the year then
ended. The financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Tucson Communications
Company at December 31, 1996, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

/s/ Ernst & Young LLP

Ernst & Young LLP
San Diego, California
October 24, 1997

F-61

TUCSON COMMUNICATIONS COMPANY

BALANCE SHEETS

(IN THOUSANDS)

DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(UNAUDITED)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......................... $ 389 $ 591
PROPERTY AND EQUIPMENT, net.......................... 836 766
OTHER ASSETS......................................... 18 17
------- ------
TOTAL................................................ $ 1,243 $1,374
======= ======
LIABILITIES AND PARTNERS' DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt.................. $ 180 $ 192
Accrued expenses................................... 18 16
------- ------
Total current liabilities........................ 198 208
LONG-TERM DEBT....................................... 2,065 1,919
OTHER LONG-TERM LIABILITIES.......................... 47 22
------- ------
Total long-term liabilities...................... 2,112 1,941
PARTNERS' DEFICIT.................................... (1,067) (775)
------- ------
TOTAL................................................ $ 1,243 $1,374
======= ======

See accompanying notes to financial statements.

F-62

TUCSON COMMUNICATIONS COMPANY

STATEMENTS OF INCOME

(IN THOUSANDS)

NINE MONTHS
ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, --------------
1996 1997 1996
------------ ------ ------
(UNAUDITED)

REVENUES:
Tower revenues, including reimbursed expenses of
$116, $91 and $84, respectively................ $1,438 $1,201 $1,171
OPERATING EXPENSES:
Tower operations................................ 287 255 222
Depreciation and amortization................... 164 123 123
General and administrative...................... 84 88 70
------ ------ ------
Total operating expenses...................... 535 466 415
------ ------ ------
INCOME FROM OPERATIONS............................ 903 735 756
OTHER INCOME...................................... 19 7 16
INTEREST EXPENSE.................................. (213) (150) (161)
------ ------ ------
NET INCOME........................................ $ 709 $ 592 $ 611
====== ====== ======

See accompanying notes to financial statements.

F-63

TUCSON COMMUNICATIONS COMPANY

STATEMENTS OF PARTNERS' DEFICIT

(IN THOUSANDS)

BALANCE, DECEMBER 31, 1995............................................ $(1,151)
Net income............................................................ 709
Distributions......................................................... (625)
-------
BALANCE, DECEMBER 31, 1996............................................ (1,067)
Net income (Unaudited)................................................ 592
Distributions (Unaudited)............................................. (300)
-------
BALANCE, SEPTEMBER 30, 1997 (Unaudited)............................... $ (775)
=======

See accompanying notes to financial statements.

F-64

TUCSON COMMUNICATIONS COMPANY

STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

NINE MONTHS
ENDED
SEPTEMBER
YEAR ENDED 30,
DECEMBER 31, ------------
1996 1997 1996
------------ ----- -----
(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................... $ 709 $ 592 $ 611
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 164 123 123
Changes in assets and liabilities:
Accrued expenses................................ 12 (2) 11
Other long-term liabilities..................... (9) (26) (8)
----- ----- -----
Net cash provided by operating activities..... 876 687 737
----- ----- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment............... (12) (51) --
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt....................... (183) (134) (141)
Distributions..................................... (625) (300) (600)
----- ----- -----
Net cash used in financing activities......... (808) (434) (741)
----- ----- -----
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS........................................ 56 202 (4)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD...... 333 389 333
----- ----- -----
CASH AND CASH EQUIVALENTS, END OF PERIOD............ $ 389 $ 591 $ 329
===== ===== =====

See accompanying notes to financial statements.

F-65

TUCSON COMMUNICATIONS COMPANY

NOTES TO FINANCIAL STATEMENTS

YEAR ENDED DECEMBER 31, 1996 AND
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1997 (UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business and Partnership Structure--Tucson Communications Company (the
"Partnership") was organized as a limited partnership in the state of
California on October 6, 1983 for the purpose of developing, managing and
leasing a communications site located in the Tucson Mountains near Tucson,
Arizona. Income allocations and cash distributions are in accordance with the
partnership agreement.

Concentration of Credit Risk--The Partnership extends credit to customers on
an unsecured basis in the normal course of business. The Partnership has
policies governing the extension of credit and collection of amounts due from
customers.

Impairment of Long-Lived Assets--In March 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of ("FAS 121"). FAS 121 addresses the accounting for the
impairment of long-lived assets when events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The
Partnership adopted this statement during 1996 and the impact on the
Partnership's results of operations, liquidity or financial position was not
material.

Cash and Cash Equivalents--Cash and cash equivalents includes cash on hand,
demand deposits, and short-term investments with original maturities of three
months or less.

Property and Equipment--Property and equipment are recorded at cost. Cost
includes expenditures for tower and related assets. Depreciation is provided
using the double-declining balance method on equipment and straight-line
method on buildings over estimated useful lives ranging from seven to 31.5
years.

Fair Value of Financial Instruments--The Partnership believes that the
carrying value of all financial instruments is a reasonable estimate of fair
value as of December 31, 1996 and September 30, 1997.

Recognition of Revenues--Tower revenues are recognized when earned over the
lease terms.

Income Taxes--The financial statements contain no provision for income taxes
since the income or loss of the Partnership flows through to the Partners, who
are responsible for including their share of the taxable results of operations
on their respective tax returns.

Unaudited Interim Financial Information--The accompanying unaudited
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Article 10 of Regulations S-X. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the nine-
month periods ended September 30, 1997 and 1996 are not necessarily indicative
of the results that may be expected for the year ended December 31, 1997.

F-66

TUCSON COMMUNICATIONS COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

2. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following (in thousands):

DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(UNAUDITED)

Land and improvements........................... $ 591 $ 591
Towers and buildings............................ 1,635 1,635
Technical equipment............................. 1,293 1,310
Construction in progress........................ 12 46
------- -------
Total......................................... 3,531 3,582
Less accumulated depreciation................... (2,695) (2,816)
------- -------
Property and equipment, net..................... $ 836 $ 766
======= =======

The Partnership's property and equipment are generally leased to customers
under noncancelable operating leases with remaining terms ranging from one to
18 years. However, the leases allow cancellation under certain technical
circumstances as specified in the respective lease agreements. Many of the
leases also contain renewal options with specified increases in lease payments
upon exercise of the renewal option.

Future minimum tower revenues required to be paid by lessees under all
noncancelable leases in effect at December 31, 1996 are as follows (in
thousands):

YEAR ENDING DECEMBER 31:
------------------------

1997.......................................................... $ 1,349
1998.......................................................... 1,362
1999.......................................................... 1,401
2000.......................................................... 1,444
2001.......................................................... 1,489
Thereafter.................................................... 9,066
-------
Total....................................................... $16,111
=======

The amounts for the following customer accounted for greater than 10% of
total operating revenues (in thousands):

NINE MONTHS
ENDED
SEPTEMBER 30,
-------------
YEAR ENDED
DECEMBER 31,
1996 1997 1996
------------ ------ ------
(UNAUDITED)

Motorola........................................ $442 $ 436 $ 425

3. OTHER ASSETS

Other assets consisted of the following (in thousands):

DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(UNAUDITED)

Prepaid loan fees............................... $ 31 $ 31
Less accumulated amortization................... (14) (15)
Deposits........................................ 1 1
---- ----
Other assets.................................... $ 18 $ 17
==== ====

F-67

TUCSON COMMUNICATIONS COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

4. LONG-TERM DEBT

On May 31, 1990, the Partnership entered into a loan agreement with a
financial institution to borrow $3,100,000. Every twelve months the loan bears
a new interest rate based on the one-year Constant Maturities, plus 3.5%. At
December 31, 1996, September 30, 1997 and 1996, the interest rates in effect
were 9.29%, 9.15% and 9.29%, respectively. The loan is secured by land and
equipment located on Tucson Mountain. Interest and principal payments are
payable monthly and the loan matures on July 1, 2005. Cash paid for interest
during the year ended December 31, 1996 and the nine months ended September
30, 1997 and 1996 was $214,000, $152,000 and $161,000, respectively.

Future principal payments required under the Company's financing agreement
at December 31, 1996 are approximately (in thousands):

YEAR ENDING DECEMBER 31:
------------------------

1997........................................................... $ 180
1998........................................................... 197
1999........................................................... 216
2000........................................................... 237
2001........................................................... 260
Thereafter..................................................... 1,155
------
Total........................................................ $2,245
======

5. RELATED PARTY TRANSACTIONS

The Partnership pays an affiliated company for salaries, rent and utilities.
During the year ended December 31, 1996 and the nine months ended September
30, 1997 and 1996, the Partnership paid $65,000, $54,000 and $47,000,
respectively. In addition, the Partnership pays an affiliate of the general
partner on an hourly basis for management services. During the year ended
December 31, 1996 and the nine months ended September 30, 1997 and 1996, the
Partnership paid $29,000, $26,000 and $20,000, respectively.

6. PENDING TRANSACTION

In October 1997, the Partnership entered into an agreement with American
Tower Systems, Inc. to sell substantially all of the assets of the Partnership
for approximately $12,000,000.

7. CONTINGENCY

Subsequent to December 31, 1996, the Partnership received notification of a
matter involving threatened litigation relating to an on-site injury suffered
by an individual during 1996. The party has requested a settlement payment of
$800,000. Management of the Partnership believes any liability arising from
this matter will be covered by insurance and will not have a material impact
on the Partnership's financial statements.

F-68

INDEPENDENT AUDITORS' REPORT

The Stockholder
Gearon & Co., Inc.:

We have audited the accompanying balance sheets of Gearon & Co., Inc. (the
"Company") as of September 30, 1997 and December 31, 1996, and the related
statements of income, changes in stockholder's equity, and cash flows for the
nine months ended September 30, 1997 and for the year ended December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at September 30, 1997 and
December 31, 1996, and the results of its operations and its cash flows for
the nine months ended September 30, 1997 and for the year ended December 31,
1996, in conformity with generally accepted accounting principles.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
Atlanta, Georgia
December 12, 1997 (January 22, 1998 as to the second,
third and fourth paragraphs of Note 1)

F-69

GEARON & CO., INC.

BALANCE SHEETS

SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................... $ 1,792,242 $ 813,182
Accounts receivable--trade, net of allowance for
doubtful accounts of $216,686 and $129,650 in
1997 and 1996, respectively...................... 4,903,801 7,132,363
Unbilled receivables.............................. 3,008,163 515,688
Accounts receivable--other........................ 242,298 6,390
Receivable from related party..................... -- 200,000
----------- ----------
Total current assets............................ 9,946,504 8,667,623
PROPERTY AND EQUIPMENT, net......................... 1,871,731 561,028
OTHER ASSETS........................................ 141,772 27,530
----------- ----------
TOTAL............................................... $11,960,007 $9,256,181
=========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable.................................. $ 916,617 $ 27,587
Accrued expenses.................................. 80,007 37,193
Deferred revenue.................................. 163,500 2,500
----------- ----------
Total current liabilities....................... 1,160,124 67,280
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDER'S EQUITY
Common stock, no par value, 10,000 shares
authorized;
7,500 issued and outstanding..................... 750 750
Retained earnings................................. 10,799,133 9,188,151
----------- ----------
Total stockholder's equity...................... 10,799,883 9,188,901
----------- ----------
TOTAL............................................... $11,960,007 $9,256,181
=========== ==========

See notes to financial statements.

F-70

GEARON & CO., INC.

STATEMENTS OF INCOME

NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
----------------------- DECEMBER 31,
1997 1996 1996
----------- ----------- ------------
(UNAUDITED)

REVENUES:
Fees and bonuses........................ $15,980,502 $11,050,147 $15,613,655
Pass-through revenues................... 2,760,271 3,425,276 5,349,795
Tower rentals........................... 105,623 30,850 53,200
Other................................... 215,546 150,502 467,785
----------- ----------- -----------
Total revenues........................ 19,061,942 14,656,775 21,484,435
OPERATING EXPENSES:
Operating expenses...................... 8,739,784 4,720,527 6,644,143
Pass-through expenses................... 2,760,271 3,425,276 5,349,795
----------- ----------- -----------
Total operating expenses.............. 11,500,055 8,145,803 11,993,938
----------- ----------- -----------
GROSS PROFIT.............................. 7,561,887 6,510,972 9,490,497
General and administrative expenses....... 1,532,485 864,021 1,411,569
----------- ----------- -----------
INCOME FROM OPERATIONS.................... 6,029,402 5,646,951 8,078,928
OTHER INCOME AND EXPENSES, NET............ 64,521 88,118 94,822
----------- ----------- -----------
NET INCOME................................ $ 6,093,923 $ 5,735,069 $ 8,173,750
=========== =========== ===========

See notes to financial statements.

F-71

GEARON & CO., INC.

STATEMENTS OF STOCKHOLDER'S EQUITY

COMMON STOCK
------------------
OUTSTANDING RETAINED
SHARES AMOUNT EARNINGS TOTAL
----------- ------ ----------- -----------

Balance, January 1, 1996........... 7,500 $750 $ 8,783,131 $ 8,783,881
Distributions to stockholder..... (7,768,730) (7,768,730)
Net income....................... 8,173,750 8,173,750
----- ---- ----------- -----------
Balance, December 31, 1996......... 7,500 750 9,188,151 9,188,901
Distributions to stockholder..... (4,482,941) (4,482,941)
Net income....................... 6,093,923 6,093,923
----- ---- ----------- -----------
Balance, September 30, 1997........ 7,500 $750 $10,799,133 $10,799,883
===== ==== =========== ===========

See notes to financial statements.

F-72

GEARON & CO., INC.

STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
------------------------ DECEMBER 31,
1997 1996 1996
----------- ----------- ------------
(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVI-
TIES:
Net income........................ $ 6,093,923 $ 5,735,069 $ 8,173,750
Adjustments to reconcile net in-
come to net cash provided by op-
erating activities:
Provision for doubtful ac-
counts......................... 87,036 97,238 129,650
Depreciation.................... 110,527 77,883 103,283
Changes in assets and liabili-
ties;
Decrease (increase) in ac-
counts receivable trade...... 2,141,526 501,666 (3,434,228)
Decrease (increase) in
unbilled receivables......... (2,492,475) (89,604) 782,867
(Increase) decrease in ac-
counts receivable other...... (235,908) (49,016) 20,307
(Increase) in other assets.... (114,242) (23,278) (21,748)
Increase (decrease) in ac-
counts payable............... 889,030 157,958 (35,463)
Increase (decrease) in accrued
expenses..................... 42,814 299,133 (25,023)
Increase in deferred revenue.. 161,000 2,500
----------- ----------- -----------
Net cash provided by operating ac-
tivities......................... 6,683,231 6,707,049 5,695,895
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVI-
TIES;
Acquisition of property and equip-
ment............................. (173,788) (73,894) (134,910)
Construction of towers............ (1,247,442) (336,242) (336,242)
----------- ----------- -----------
Net cash used in investing
activities................. (1,421,230) (410,136) (471,152)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVI-
TIES:
Distributions to stockholder...... (4,482,941) (7,693,726) (7,768,730)
Repayments from (loans to) related
party............................ 200,000 (40,000) (170,000)
Loan from stockholder............. 500,000
Repayment to stockholder.......... (500,000)
----------- ----------- -----------
Net cash used in financing
activities................. (4,282,941) (7,733,726) (7,938,730)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS................... 979,060 (1,436,813) (2,713,987)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD.......................... 813,182 3,527,169 3,527,169
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF
PERIOD............................. $ 1,792,242 $2,090,356 $ 813,182
=========== =========== ===========

See notes to financial statements.

F-73

GEARON & CO., INC.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business and Corporate Structure--Gearon & Co., Inc. (the "Company"), a
Georgia corporation, was incorporated on September 6, 1991 and is engaged in
the site acquisition, development, construction and facility management, of
wireless network communication facilities on behalf of its customers. The
Company operates in markets throughout the United States. In addition, as of
September 30, 1997, the Company owned and operated four communications towers
with an additional twenty-seven towers in varying stages of development. The
towers are located in Georgia, Florida, and Tennessee.

On January 22, 1998, the Company merged into and became a part of American
Tower Systems, Inc. (ATSI) a subsidiary of American Radio Systems Corporation
(ARS), pursuant to an Agreement and Plan of Merger ("the Merger Agreement")
executed on November 21, 1997. Under the Merger Agreement, the holders' of the
Company's common stock at the effective date of the merger received a total of
$32,000,000 in cash and liabilities assumed by ATSI and 5,333,333 shares of
ATSI stock with an agreed-upon fair value of $48,000,000.

Prior to the closing of the merger, the Company awarded a total of 56,338
shares of Class B common stock valued at $5,600,000 (based on the share price
paid by ATSI in the merger) to certain key employees, paid cash bonuses
totaling approximately $7,667,000 to certain employees, and incurred
approximately $580,000 in other merger related expenses.

In addition, pursuant to the Merger Agreement, the Company borrowed a total
of $10,000,000 from ATSI in two $5,000,000 installments to fund working
capital and merger related expenses. Such borrowing was repaid at closing.

Unaudited Interim Information--In the opinion of management, the financial
statements for the unaudited period presented include all adjustments
necessary for a fair presentation in accordance with generally accepted
accounting principles, consisting solely of normal recurring accruals and
adjustments. The results of operations and cash flows for the nine months
ended September 30, 1997 are not necessarily indicative of results which would
be expected for a full year.

Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk--The Company extends credit to customers on an
unsecured basis in the normal course of business. Credit risk is limited due
to the financial reputation of the customers comprising the Company's customer
base. The Company has policies governing the extension of credit and
collection of amounts due from customers.

The following represents a summary of fees and bonuses earned from
individual customers in excess of 10% of total fees and bonuses:

NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
--------------------- DECEMBER 31,
1997 1996 1996
---------- ---------- ------------

Customer A.............................. $3,697,000 $3,557,000 $4,773,000
Customer B.............................. 5,018,000
Customer C.............................. 3,304,000
Customer D.............................. 1,922,000
Customer E.............................. 3,385,000 4,423,000
Customer F.............................. 1,691,000 1,752,000

F-74

GEARON & CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)
for Long-Lived Assets to be Disposed Of ("FAS 121"). FAS 121 addresses the
accounting for the impairment of long-lived assets, certain intangibles and
goodwill when events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The Company adopted this statement
during 1996 and the impact on the Company's results of operations, liquidity
or financial position was not material.

Cash and Cash Equivalents--Cash and cash equivalents includes cash on hand,
demand deposits and short-term investments with original maturities of three
months or less.

Property and Equipment--Property and equipment are recorded at cost.
Ordinary repairs and maintenance are expensed as incurred; major replacements
and improvements are capitalized and depreciated over their estimated useful
lives. Depreciation is provided using the straight-line method over the
estimated useful lives of the assets ranging from three to fifteen years.

Construction in Progress--The Company's tower construction expenditures are
recorded as construction in progress until the assets are placed in service.
When the assets are placed in service, they are transferred to the appropriate
property and equipment category and depreciated. The Company also capitalizes
subcontractor and employee labor and overhead costs incurred in connection
with the construction of towers.

Revenue Recognition--Revenues from fees and bonuses are recognized based
upon the completion of certain activities as defined by the respective
contracts with individual customers. Several of the contracts provide for
reimbursement by customers of certain costs in addition to fees earned. Such
costs are recognized on the accrual basis and are reflected as pass-through
revenues and expenses in the statements of income. Tower and sublease revenues
are recognized when earned over the terms of the related leases.

Income Taxes--At inception, the Company elected to be treated as a
Subchapter S Corporation (S Corporation) for income tax purposes. Accordingly,
no recognition has been given to income taxes in the financial statements
since the income is reportable on the individual tax return of the
stockholder. Two states in which the Company does business do not recognize S
Corporations for tax purposes and therefore the Company is liable for income
taxes in those states. The amounts paid or accrued for income taxes were not
material in relation to the financial statements.

Deferred Revenue--Deferred revenue represents advance payments from a
customer which will be applied to future billings upon the attainment of
certain billing milestones.

2. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------

Land......................................... $ 25,813 $ --
Leasehold improvements....................... 66,307 60,902
Furniture and fixtures....................... 97,435 81,694
Machinery and equipment...................... 459,347 306,705
Cellular towers leased to unrelated third
parties..................................... 473,668 336,242
Construction in progress..................... 1,084,203 --
---------- ---------
Property and equipment, at cost.............. 2,206,773 785,543
Accumulated depreciation..................... (335,042) (224,515)
---------- ---------
Property and equipment--net.................. $1,871,731 $ 561,028
========== =========

F-75

GEARON & CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

3. COMMITMENTS AND CONTINGENCIES

Lease Obligations--The Company currently leases office space, office
equipment and land for communications towers under operating leases that
expire at varying dates through 2002. The tower ground leases' contain options
for the Company to renew, at its discretion, for five-year periods up to a
maximum term of twenty-five years. The leases require the Company to maintain
certain insurance coverage and provide for maintenance and repairs. Future
minimum lease payments for noncancelable office, equipment and ground leases
are as follows for the periods ending December 31:

1997............................................................. $ 70,054
1998............................................................. 218,899
1999............................................................. 203,142
2000............................................................. 187,372
2001............................................................. 95,299
2002............................................................. 78,741
--------
Total............................................................ $853,507
========

Aggregate rent expense under all operating leases for the nine months ended
September 30, 1997 and 1996 and for the year ended December 31, 1996
approximated $189,000, $35,800 and $50,800, respectively.

Customer Leases--The Company owns communications towers which it leases to
third parties. The leases which are noncancelable and expire at various dates
through 2002, contain options for the lessees to renew, at their discretion,
for five year periods up to a maximum term of twenty-five years.

Future minimum rental receipts expected to be received from customers under
noncancelable leases are as follows for the periods ending December 31:

1997............................................................. $ 40,557
1998............................................................. 164,184
1999............................................................. 166,849
2000............................................................. 169,592
2001............................................................. 89,207
2002............................................................. 12,033
--------
Total............................................................ $642,422
========

Purchase Commitments--At September 30, 1997, the Company had entered into an
agreement to acquire land for a communications tower for a purchase price of
$100,000.

Employment Agreement--In August 1997, the Company entered into an employment
agreement with an officer of the Company. The Agreement is for a term of one
year and is renewable for successive one-year terms. The agreement contains
provisions for compensation in the event of termination or a change in control
of the Company.

F-76

GEARON & CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

Legal Matters--The Company is a party to certain legal matters arising in
the ordinary course of business. In the opinion of management, none of these
matters are expected to have a material effect on the financial position,
results of operations, or cash flows of the Company.

4. RETIREMENT PLAN

On September 1, 1996, the Company established the Gearon & Co., Inc.
Employee Savings and Retirement Plan (the "Plan"), a 401(k) plan. Employees of
the Company are eligible for participation in the Plan subject to certain
minimum age and length of employment requirements. Plan participants can
contribute from 2% to 15% of their compensation, as defined. The Company
matches 25% of the participants' contributions up to 10% of compensation. The
Plan's assets are invested in equity, bond, balanced, and money market mutual
funds. The Company contributed approximately $56,000 and $24,000 for the nine
months ended September 30, 1997 and for the year ended December 31, 1996. No
contributions were made by the Company for the nine months ended September 30,
1996.

5. COMMON STOCK

Effective October 23, 1997, the Company authorized the issuance of 10,000
shares of Class A common stock and 1,000,000 shares of Class B common stock.
Class A has voting privileges while Class B common stock is nonvoting. On
October 23, 1997, all 7,500 shares of common stock previously outstanding were
exchanged for 7,500 shares of Class A common stock and 742,500 shares of Class
B common stock which were transferred to the sole stockholder and a trust
related to the sole stockholder.

6. RELATED PARTY TRANSACTIONS

The receivable from a related party totaling $200,000 at December 31, 1996
was repaid in full in January 1997.

F-77

INDEPENDENT AUDITORS' REPORT

The Board of Directors
American Tower Corporation:

We have audited the accompanying consolidated balance sheets of American
Tower Corporation and Subsidiaries as of December 31, 1995 and 1996, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows -- Predecessor for the period from January 1, 1994 to October
14, 1994 -- Successor for the period from October 15, 1994 to December 31,
1994 and the years ended December 31, 1995 and 1996. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American
Tower Corporation and Subsidiaries as of December 31, 1995 and 1996 and the
results of their operations and their cash flows -- Predecessor for the period
from January 1, 1994 to October 14, 1994 -- Successor for the period from
October 15, 1994 to December 31, 1994 and the years ended December 31, 1995
and 1996 in conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

/s/ KPMG PEAT MARWICK LLP

Houston, Texas
January 17, 1997

F-78

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

ASSETS

DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(UNAUDITED)

Current assets:
Cash and cash equivalents............. $ 1,905 $ 92 $ 464
Accounts receivable, net of allowance
for doubtful accounts
of $30, $104 and $53, respectively... 598 816 976
Prepaid expenses and other current
assets............................... 682 793 965
Assets held for resale................ -- 700 --
------- ------- --------
Total current assets................. 3,185 2,401 2,405
Land................................... 4,177 5,301 6,124
Rental towers and related fee based
assets, net of accumulated
depreciation of $1,729, $3,984 and
$7,365, respectively.................. 42,056 61,556 105,106
Other assets, net of accumulated
amortization of $486, $836 and $1,670,
respectively.......................... 4,364 6,269 6,563
------- ------- --------
Total assets.......................... $53,782 $75,527 $120,198
======= ======= ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable...................... $ 489 $ 720 $ 1,652
Accrued interest payable.............. 539 598 977
Deferred revenues and other current
liabilities.......................... 1,395 978 1,742
Current portion of long-term debt..... 1,580 1,075 1,000
------- ------- --------
Total current liabilities............. 4,003 3,371 5,371
Long-term debt, less current portion... 31,875 49,771 67,817
Other liabilities...................... 541 450 173
Deferred income taxes.................. 6,306 6,337 6,601
------- ------- --------
Total liabilities..................... 42,725 59,929 79,962
------- ------- --------
Commitments and contingencies (Note 11)
Redeemable preferred stock, $.01 par
value. Authorized 5,000,000 shares,
issued and outstanding, 22,500
shares................................ 3,633 4,000 4,000
Stockholders' equity:
Common stock, $.01 par value.
Authorized 250,000 shares; 67,500,
75,331 and 149,548 shares issued and
outstanding, respectively............ 1 1 2
Additional paid-in capital............ 7,924 12,051 36,204
Retained earnings (accumulated
deficit)............................. (501) (454) 30
------- ------- --------
Total stockholders' equity........... 7,424 11,598 36,236
------- ------- --------
Total liabilities and stockholders'
equity.............................. $53,782 $75,527 $120,198
======= ======= ========

See accompanying notes to consolidated financial statements.

F-79

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

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

PREDECESSOR SUCCESSOR
----------- -------------------------------------------------
JANUARY 1, OCTOBER 15,
1994 1994 YEAR ENDED NINE MONTHS ENDED
THROUGH THROUGH DECEMBER 31, SEPTEMBER 30,
OCTOBER 14, DECEMBER 31, --------------- -------------------
1994 1994 1995 1996 1996 1997
----------- ------------ ------ ------- -------- ---------
(UNAUDITED)

Total revenues.......... $ 5,218 $1,948 $8,277 $12,366 $ 8,356 $ 14,491
Operating expenses:
Direct tower costs..... 1,151 402 1,868 2,849 1,968 2,924
Selling, general and
administrative........ 2,137 380 1,601 2,049 1,485 2,347
Depreciation and amor-
tization.............. 2,106 403 1,908 2,709 1,839 3,369
-------- ------ ------ ------- -------- ---------
Total operating ex-
penses............. 5,394 1,185 5,377 7,607 5,292 8,640
-------- ------ ------ ------- -------- ---------
Operating income
(loss)................. (176) 763 2,900 4,759 3,064 5,851
Interest expense........ 2,117 576 3,068 3,808 2,630 3,900
Other expenses.......... 93 66 414 150 113 213
-------- ------ ------ ------- -------- ---------
Income (loss) before
taxes and extraordinary
items.................. (2,386) 121 (582) 801 321 1,738
Income tax (expense)
benefit................ -- (50) 217 (303) (121) (660)
-------- ------ ------ ------- -------- ---------
Income (loss) before ex-
traordinary items...... (2,386) 71 (365) 498 200 1,078
Extraordinary loss, net
of tax benefit of $117,
$272 and $395
respectively........... -- -- (207) (451) -- (594)
-------- ------ ------ ------- -------- ---------
Net income (loss)....... $ (2,386) $ 71 $ (572) $ 47 $ 200 $ 484
======== ====== ====== ======= ======== =========

See accompanying notes to consolidated financial statements.

F-80

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

PREDECESSOR
-------------------------------------------
ADDITIONAL TOTAL
COMMON PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK CAPITAL DEFICIT DEFICIT
------ ---------- ----------- -------------

Balances at December 31, 1993...... $ -- $ -- $(1,716) $(1,716)
Net loss........................... -- -- (2,386) (2,386)
---- ---- ------- -------
Balances at October 14, 1994....... $ -- $ -- $(4,102) $(4,102)
==== ==== ======= =======

SUCCESSOR
--------------------------------------------
RETAINED
ADDITIONAL EARNINGS TOTAL
COMMON PAID-IN (ACCUMULATED STOCKHOLDERS'
STOCK CAPITAL DEFICIT) EQUITY
------ ---------- ------------ -------------

Beginning balances at October 15,
1994............................. $-- $ -- $ -- $ --
Sale of 67,500 shares of common
stock............................ 1 6,749 -- 6,750
Allocation of warrant value to
equity........................... -- 675 675
Net income........................ -- -- 71 71
--- ------- ----- -------
Balances at December 31, 1994..... 1 7,424 71 7,496
Allocation of warrant value to eq-
uity............................. -- 500 -- 500
Net loss.......................... -- -- (572) (572)
--- ------- ----- -------
Balances at December 31, 1995..... 1 7,924 (501) 7,424
Common stock issued in connection
with acquisition, 6,481 shares .. -- 4,127 -- 4,127
Conversion of warrants to 1,350
shares of common stock........... -- -- -- --
Net income........................ -- -- 47 47
--- ------- ----- -------
Balances at December 31, 1996..... 1 12,051 (454) 11,598
Conversion of warrants to 24,084
shares of common stock
(unaudited)...................... -- -- -- --
Conversion of warrants with put
feature to 12,642 shares of com-
mon stock (unaudited)............ -- 174 -- 174
Sale of 36,049 shares of common
stock, net of issuance costs (un-
audited)......................... 1 22,979 -- 22,980
Common stock issued in connection
with tower acquisition, 1,442
shares (unaudited)............... -- 1,000 -- 1,000
Net income (unaudited)............ -- -- 484 484
--- ------- ----- -------
Balances at September 30, 1997
(unaudited)...................... $ 2 $36,204 $ 30 $36,236
=== ======= ===== =======

See accompanying notes to consolidated financial statements.

F-81

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

PREDECESSOR SUCCESSOR
----------- -----------------------------------------------
JANUARY 1, OCTOBER 15, NINE MONTHS
1994 1994 YEAR ENDED ENDED
THROUGH THROUGH DECEMBER 31, SEPTEMBER 30,
OCTOBER 14, DECEMBER 31, --------------- -----------------
1994 1994 1995 1996 1996 1997
----------- ------------ ------ ------- ------- --------
(UNAUDITED)

Cash flows from operat-
ing activities:
Net income (loss)...... $(2,386) $ 71 $ (572) $ 47 $ 200 $ 484
Adjustments to recon-
cile net income (loss)
to net cash provided
by operating activi-
ties:
Depreciation and amor-
tization.............. 2,106 403 1,908 2,709 1,839 3,369
Accretion of dis-
counts................ -- 41 202 808 606 339
Deferred income tax-
es.................... -- 50 (334) 31 121 (132)
Deferred loan costs
written-off........... -- -- 324 -- -- 990
Increase in accounts
receivable, net....... (47) (14) (203) (218) (155) (160)
(Increase)/decrease in
prepaid expenses and
other current as-
sets.................. (142) (143) (109) (111) 68 (172)
Increase in accounts
payable............... 51 23 59 231 479 932
Increase (decrease) in
accrued interest pay-
able.................. (81) 380 14 59 102 379
Increase (decrease) in
deferred revenues and
other................. 235 (469) 332 (417) (131) 955
Accrual for imputed
interest on Predeces-
sor subordinated
debt.................. 2,000 -- -- -- -- --
------- -------- ------ ------- ------- --------
Total adjustments.... 4,122 271 2,193 3,092 2,929 6,500
------- -------- ------ ------- ------- --------
Net cash provided by
operating activi-
ties................ 1,736 342 1,621 3,139 3,129 6,984
------- -------- ------ ------- ------- --------
Cash flows from invest-
ing activities:
Payment for purchase of
towers and related as-
sets.................. (999) (444) (7,351) (14,249) (6,240) (46,140)
Proceeds from the sale
of land............... 48 -- 24 -- --
Purchases of land...... -- (55) (500) (1,124) -- (921)
Payment for acquisition
of predecessor........ -- (9,692) -- -- -- --
------- -------- ------ ------- ------- --------
Net cash used in in-
vesting activities.. (951) (10,191) (7,827) (15,373) (6,240) (47,061)
------- -------- ------ ------- ------- --------
Cash flows from financ-
ing activities:
Proceeds from
borrowings on long-
term debt............. -- 21,000 4,646 39,850 2,365 40,100
Net payments on Prede-
cessor revolving line
of credit............. (440) -- -- -- -- --
Proceeds from Predeces-
sor expansion loan.... 486 -- -- -- -- --
Proceeds from issuance
of Successor common
stock................. -- 6,750 -- -- -- 22,980
Proceeds from issuance
of preferred stock.... -- -- 4,133 367 368 --
Payments of long-term
debt.................. -- -- (1,680) (28,736) (1,063) (21,667)
Payments of deferred
loan costs and inter-
est rate cap.......... -- (496) (98) (1,060) (164) (964)
Payments of Predecessor
long-term debt........ (1,116) (14,699) -- -- -- --
Payment of Predecessor
employment contracts.. -- (941) -- -- -- --
Payment of Predecessor
selling costs......... -- (744) -- -- -- --
------- -------- ------ ------- ------- --------
Net cash provided by
(used in) financing
activities.......... (1,070) 10,870 7,001 10,421 1,506 40,449
------- -------- ------ ------- ------- --------
Net increase (de-
crease) in cash and
cash equivalents.... (285) 1,021 795 (1,813) (1,605) 372
Cash and cash equiva-
lents at beginning of
period................. 374 89 1,110 1,905 1,905 92
------- -------- ------ ------- ------- --------
Cash and cash equiva-
lents at end of peri-
od..................... $ 89 $ 1,110 $1,905 $ 92 $ 300 $ 464
======= ======== ====== ======= ======= ========
Supplemental disclosure
of cash flow
information-- cash paid
during the period for
interest............... $ 197 $ -- $2,915 $ 2,925 $ 1,846 $ 3,032
======= ======== ====== ======= ======= ========

See accompanying notes to consolidated financial statements.

F-82

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1994, 1995 AND 1996 AND SEPTEMBER 30, 1996 AND 1997 (UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Formation and Organization

The accompanying consolidated financial statements reflect the financial
position, results of operations, and cash flows of American Tower Corporation
and its wholly-owned subsidiaries, collectively referred to as ATC or the
Company. All significant intercompany transactions and balances have been
eliminated.

ATC was created for the purpose of acquiring 100% of the outstanding common
stock of Bowen-Smith Holdings, Inc., which was completed in October 1994. This
acquisition was accounted for as a purchase. The cost of the acquisition was
allocated on the basis of the estimated fair values of the assets acquired and
the liabilities assumed. The financial information for the period from January
1, 1994 to October 14, 1994 reflects Bowen-Smith Holdings, Inc.'s historical
cost of the assets and liabilities. As a result of the acquisition and
different cost basis with respect to the assets and liabilities of the
Company, financial information for periods before and after October 15, 1994
is not comparable. For purposes of identification and description, Bowen-Smith
Holdings, Inc. is referred to as the "Predecessor" for the period prior to the
acquisition; ATC is the "Successor" for the period subsequent to the
acquisition.

(b) Description of Business

The primary business of the Company is the leasing of antenna and
transmitter space on communication towers to companies using or providing
cellular telephone, paging, microwave and specialized mobile radio services.
ATC currently owns and operates communication tower sites located primarily in
the western, eastern and southern United States.

The unaudited financial statements for the nine months ended September 30,
1996 and 1997 are presented for comparative purposes only and have been
prepared on a basis substantially consistent with that of the audited
financial statements included herein. In the opinion of management, such
unaudited financial statements include all adjustments, which are of a normal
and recurring nature, considered necessary for a fair presentation. Operating
results for the nine-month periods ended September 30, 1997 and 1996 are not
necessarily indicative of the results that may be expected for a full year.

(d) Cash Equivalents

Cash equivalents consist of short-term investments with an original maturity
of three months or less. Cash equivalents include an interest-bearing money
market account with a balance of approximately $1,834,000 at December 31, 1995
and $12,000 at December 31, 1996.

(e) Rental Towers and Related Fee Based Assets

Rental towers and related fee based assets are stated at cost. Depreciation
on rental towers and related fee based assets is calculated on the straight-
line method over the estimated useful lives of the assets which range from 3
to 25 years.

(f) Other Assets

Other assets include licenses and permits which are amortized on a straight-
line basis over their expected period of benefit, 25 years, and a noncompete
agreement with the Predecessor majority stockholder which is amortized on a
straight-line basis over its seven year term. Also included are deferred loan
costs associated with various debt issuances which are amortized over the
terms of the related debt based on the amount of outstanding debt using the
interest method.

F-83

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994, 1995 AND 1996 AND SEPTEMBER 30, 1996 AND 1997 (UNAUDITED)

(g) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

The Company adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
on January 1, 1996. This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or the fair
value less costs of disposal. Adoption of this Statement did not have a
material impact on the Company's financial position, results of operations, or
liquidity.

(h) Income Taxes

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years which those temporary
differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.

(i) Fair Value of Financial Instruments

In December 1991, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards 107, Disclosure about Fair Value of
Financial Instruments. This Statement requires the Company to disclose
estimated fair values for its financial instruments.

Fair value estimates are made at discrete points in time based on relevant
market information. These estimates may be subjective in nature and involve
uncertainties and matters of significant judgment and therefore, cannot be
determined with precision.

The Company believes that the carrying amounts of its current assets and
current liabilities approximate the fair value of such items due to their
short-term nature. The carrying amount of long-term debt approximates its fair
value because the interest rates approximate market.

(j) Revenue Recognition

Revenues are recognized as tower services are provided. Amounts billed or
received prior to services being performed are deferred until such time as the
revenue is earned.

(k) Stock Option Plan

Prior to January 1, 1996, the Company accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations.
On January 1, 1996, the Company adopted SFAS No. 123, Accounting for Stock-
Based Compensation, which permits entities to recognize as expense over the
vesting period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro
forma earnings per share disclosures for employee stock option grants made in
1995 and future years as if the fair-value-based method defined in SFAS No.
123 had been applied. The Company has elected to continue to apply the
provisions of APB Opinion No. 25 and provide the pro forma disclosure
provisions of SFAS No. 123.

F-84

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994, 1995 AND 1996 AND SEPTEMBER 30, 1996 AND 1997 (UNAUDITED)

(l) Interest Rate Cap Agreements

The Company is party to a financial instrument to reduce its exposure to
fluctuations in interest rates. The purchase price of the interest rate cap
agreements is capitalized and included in prepaid expenses in the accompanying
consolidated balance sheets and amortized over the life of the agreements
using the straight-line method.

(m) Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

(n) Reclassifications

Certain reclassifications have been made to prior period amounts in order to
conform to the current presentation.

(2) RENTAL TOWERS AND RELATED FEE BASED ASSETS

Asset Acquisitions

In December 1995, the Company acquired in a single transaction substantially
all of the tower sites and locations of CSX Realty Development Corporation
(CSX) for $9,750,000 which was funded through cash and seller financed debt.
In addition during 1995, the Company acquired 81 other tower sites in several
unrelated transactions.

In October 1996, the Company acquired in a single transaction substantially
all of the tower sites and locations of Prime Communications Sites Holding,
L.L.C. and its subsidiary (Prime) for approximately $15.3 million which was
funded through borrowings under the Company's credit facility, seller financed
debt and the issuance of common stock of the Company to the seller. In
addition, during 1996 the Company acquired four other tower sites in two
unrelated transactions. The purchase price for all acquisitions has been
allocated to the land, towers and related fee based assets and licenses and
permits based on their respective estimated fair values.

The following unaudited proforma consolidated results of operations give
effect to the above acquisitions as though the 1995 and 1996 acquisitions had
occurred on January 1, 1995:

1995 1996
------- -------
(IN THOUSANDS,
EXCEPT PER
SHARE DATA)

Rental revenues............................................ $10,575 $13,565
Operating income........................................... $ 3,737 $ 4,855
Net loss................................................... $(1,492) $ (346)

F-85

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994, 1995 AND 1996 AND SEPTEMBER 30, 1996 AND 1997 (UNAUDITED)

During the nine months ended September 30, 1997, the Company acquired in a
single transaction 32 tower sites for approximately $11.8 million. In
addition, during 1997 the Company acquired 45 tower sites in several unrelated
transactions.

Tower Disposal

On January 13, 1997, the Company entered into a binding letter agreement
with a related shareholder and director to sell 45 communication towers for a
purchase price of $700,000. The closing of this transaction occurred during
March 1997. At the closing, the Company sold the communication towers to the
shareholder in exchange for a $700,000 reduction in payments owed under the
subordinated note payable issued in October 1994. See Note 6 for further
discussion. Due to the agreement, the related assets have been reflected as
assets held for resale on the December 31, 1996 balance sheet.

(3) PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following:

DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(IN THOUSANDS)

Prepaid land leases................. $474 $619 $778
Materials and supplies.............. 52 -- --
Other current assets................ 156 174 187
---- ---- ----
$682 $793 $965
==== ==== ====

(4) OTHER ASSETS

Other assets consisted of the following:

DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(IN THOUSANDS)

Deferred loan costs, net............. $ 145 $1,009 $ 778
Licenses and permits, net............ 3,366 4,428 4,944
Non-compete costs, net............... 823 623 573
Other assets......................... 30 209 268
------ ------ ------
$4,364 $6,269 $6,563
====== ====== ======

(5) DEFERRED REVENUES AND OTHER CURRENT LIABILITIES

Deferred revenues and other current liabilities consisted of the following:

DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(IN THOUSANDS)

Deferred revenues................... $ 447 $201 $ 886
Deferred compensation contracts..... 525 300 150
Accrued expenses and other.......... 423 477 706
------ ---- ------
$1,395 $978 $1,742
====== ==== ======

F-86

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994, 1995 AND 1996 AND SEPTEMBER 30, 1996 AND 1997 (UNAUDITED)

(6) LONG-TERM DEBT

On June 30, 1997, the Company entered into a new senior credit agreement
(credit agreement). The credit agreement includes a $100 million revolving
line of credit, which included a sub-allotment for letters of credit and a $25
million term loan facility. In connection with entering into the credit
agreement, the Company expensed $594,000, net of taxes, of deferred loan and
other financing costs associated with the prior credit facility. These
deferred loan and other financing costs written off in 1997 have been
reflected as extraordinary loss in the consolidated statements of operations.

On October 11, 1996, the Company entered into a senior credit facility
(credit facility) in connection with the acquisition of the communication
towers from Prime as discussed in Note 2.

The credit facility included a $23 million revolving line of credit, which
included a sub-allotment for letters of credit, and a $37 million term loan
facility. The Company utilized the proceeds of the term loan to (i) repay
$21.6 million of principal and interest to its existing senior lenders, (ii)
prepay in full $6.1 million of principal and interest to its senior
subordinated lender, and (iii) to fund $8.6 million of the purchase price for
the Prime acquisition. The Company had borrowed an additional $2.8 million
under the revolving credit facility as of December 31, 1996.

The credit facility incurred interest at LIBOR plus 275 basis points for
interest periods ranging up to five months; thereafter, the credit facility
incurred interest at LIBOR plus an applicable margin, not to exceed 275 basis
points, based upon a defined leverage ratio, for interest periods of one,
three or six months. The term loan portion of the credit facility required
principal amortization with quarterly payments totaling $5.6 million in 1999,
$7.4 million in 2000 and 2001, $9.3 million in 2002 and $7.3 million in 2003.
The revolving credit facility required the maximum amount outstanding to be
reduced quarterly beginning in January 1999. The maximum amount allowed to be
outstanding under the revolving credit facility in 1999 is $22.4 million, in
2000 is $19.6 million, in 2001 is $15.0 million, in 2002 is $10.4 million, in
2003 is $4.6 million with a final maturity of October 2003. The credit
facility contained restrictions on payment of dividends, and set forth minimum
operating cash flows, as defined, to be attained by the Company.

Immediately prior to entering into the credit facility in October 1996, the
Company owed its senior lenders $21.5 million under a term loan, revolving
line of credit and acquisition line of credit facilities which had been
amended and extended in December 1995. The outstanding balance of the prior
senior agreement bore interest at LIBOR plus 275 basis points. In connection
with entering into the credit facility, the Company expensed $451,000, net of
taxes, of deferred loan and other financing costs associated with prior credit
facilities. In connection with the amendment of the Company's senior credit
agreement in December 1995, the Company expensed $207,000, net of taxes, of
deferred loan and other financing costs associated with prior credit
facilities. Such deferred loan and other financing costs written off in 1996
and 1995 have been reflected as extraordinary losses in the consolidated
statements of operations.

Seller Acquisition Financing

In connection with the acquisition of the towers and related sites in
October 1996 as more fully discussed in Note 2 and above, the Company issued
an aggregate of $2.5 million of subordinated term notes to certain sellers.
Payment terms require (i) a single installment on October 11, 2004 or (ii)
immediate payment upon an initial public offering. The subordinated term notes
bear interest at 11% payable quarterly commencing January 1997. During 1997
these notes were fully repaid.

F-87

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994, 1995 AND 1996 AND SEPTEMBER 30, 1996 AND 1997 (UNAUDITED)

Long-term debt consisted of the following:

DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(IN THOUSANDS)

Term note payable, due in quarterly
payments beginning in September
1999, interest at a base rate, as
defined........................... $ -- $ -- $63,300
Term note payable, due in quarterly
payments beginning in January
1999, interest at 8.38% until May
1997 at which time interest is
LIBOR plus a maximum of 2.75%..... 18,480 39,850 --
Seller financing, noninterest
bearing secured note payable, due
in annual installments commencing
December 20, 1996 through December
20, 2000.......................... 7,313 6,313 6,313
Senior subordinated note, interest
payable in quarterly installments
at 12.75% per annum; principal
payments due and payable in
prescribed amounts beginning on
April 1, 2001; original principal
reduced by value of stock warrant
(see Note 9)...................... 6,000 -- --
Subordinated note payable to
shareholder, interest payable in
quarterly installments at 10.5%
per annum; payment of principal
due in annual installments
beginning November 15, 2001;
original principal reduced by
value of stock warrant (see Note
9)................................ 3,000 3,000 --
Subordinated notes payable,
interest payable in quarterly
installments at 11.0% per annum;
single installment due October
2004, or immediately upon an
initial public offering........... -- 2,561 --
Noninterest bearing unsecured note
payable, maturing in 1999......... 500 500 500
Noninterest bearing unsecured note
payable, due in two installments
on July 1, 1995 and January 1,
1996.............................. 500 -- --
Note payable, due in quarterly
installments commencing January 1,
1995 bearing interest at 10.0%.... 400 300 --
Other.............................. 129 43 43
Discounts associated with
noninterest bearing obligations... (2,221) (1,671) (1,339)
Discount assigned to stock warrants
(see Note 9)...................... (646) (50) --
------- ------- -------
Total long-term debt........... 33,455 50,846 68,817
Less current portion............... 1,580 1,075 1,000
------- ------- -------
Long-term debt excluding current
portion.......................... $31,875 $49,771 $67,817
======= ======= =======

The Company is a party to a financial instrument in order to reduce its
exposure to fluctuations in interest rates. The agreement provides for the
third parties to make payments to the Company whenever a defined floating
interest rate exceeds 10 percent per annum. No such payments were made in 1995
or 1996. Payments on the interest rate cap agreements are based on the
notional principal amount of the agreements; no funds were actually borrowed
or are to be repaid as of December 31, 1996. The unamortized portion of the
purchase price was

F-88

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994, 1995 AND 1996 AND SEPTEMBER 30, 1996 AND 1997 (UNAUDITED)

approximately $107,000 and $50,000 at December 31, 1995 and 1996,
respectively. $5,000,000 under this interest rate cap agreement expired in
1995 and the remaining $9,000,000 agreement expires in December 1997.

The aggregate annual maturities of long-term debt (not reduced for discount
rates on non-interest bearing obligations) as of September 30, 1997 are as
follows:

YEAR ENDING
DECEMBER 31, (IN THOUSANDS)
------------ --------------

1997.............................. $ 1,000
1998.............................. 1,007
1999.............................. 2,757
2000.............................. 4,134
2001.............................. 6,010
Thereafter........................ 55,248
-------
$70,156
=======

(7) FEDERAL INCOME TAXES

Income tax expense for the successor period ended December 31, 1994, and the
years ended December 31, 1995 and 1996 consisted of the following:

1994 1995 1996
---- ----- ----
(IN THOUSANDS)

Current..................................................... $-- $ -- $--
Deferred.................................................... 50 (217) 303
---- ----- ----
$ 50 $(217) $303
==== ===== ====

Income tax expense at December 31, 1994, 1995 and 1996 differed from the
amounts computed by applying the U.S. federal income tax rate of 34% to income
before taxes and extraordinary items as follows:

1994 1995 1996
---- ----- ----
(IN THOUSANDS)

Computed "expected" tax expense (benefit).................. $41 $(198) $272
State taxes................................................ 2 29 28
Other...................................................... 7 (48) 3
--- ----- ----
Total...................................................... $50 $(217) $303
=== ===== ====

At December 31, 1996, the Company had net operating loss carryforwards
(NOLs) of approximately $9,258,000 for U.S. Federal income tax purposes. The
NOLs, if unused, will expire between 2004 and 2008. The portion of the NOLs
which existed prior to October 15, 1994 are subject to annual limitations
imposed by the Internal Revenue Code under Section 382.

F-89

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994, 1995 AND 1996 AND SEPTEMBER 30, 1996 AND 1997 (UNAUDITED)

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1995 and 1996 are as follows:

1995 1996
------ ------
(IN
THOUSANDS)

Deferred tax assets:
Operating loss and alternative minimum tax credit
carryforward................................................ $1,968 $3,472
Accrued liabilities.......................................... 400 64
Other........................................................ 27 72
------ ------
Deferred tax assets......................................... 2,395 3,608
Deferred tax liability - rental towers and related fee based
assets,
principally due to differences in basis for financial
reporting purposes and tax purposes.......................... 8,701 9,945
------ ------
Net deferred tax liability................................... $6,306 $6,337
====== ======

There is no valuation allowance at December 31, 1995 and 1996 recorded
against the deferred tax assets. It is the opinion of management that the
scheduled reversal of deferred tax liabilities, projected future taxable
income, and tax planning strategies will more likely than not result in the
realization of the deferred tax assets.

(8) REDEEMABLE PREFERRED STOCK

In December 1995, the Company commenced a private placement offering to its
existing security holders to sell up to 22,500 newly created shares of Series
A Redeemable Preferred Stock, $0.01 par value (Series A Preferred Stock), at
$200 per share. Net proceeds to the Company were approximately $4,500,000. As
of December 31, 1995, the Company had received $4,133,000 in cash for the
offering. The remaining $367,000 was received in January 1996.

The shares of Series A Preferred Stock were sold together with 10-year
warrants to purchase a total of 22,500 shares of Common Stock at a nominal
exercise price. The Company determined the warrants to have an estimated fair
value of $500,000 at the offering date which was recorded as additional paid-
in capital and a reduction of the outstanding Series A Preferred Stock. As of
September 30, 1997, all of these warrants had been exercised.

Each share of Series A Preferred Stock has a liquidation preference of $200
per share. The Company at its option can redeem any or all the outstanding
shares of preferred stock for $200 per share. The Company is required to
redeem all such shares at a price of $200 per share upon the occurrence of (i)
a public offering or (ii) a change of control. The preferred shares have no
voting or dividend rights.

(9) STOCKHOLDERS' EQUITY

In June 1997, the Company completed a private placement offering of common
stock with Clear Channel Communications, Inc. whereby the Company raised net
proceeds of $23 million. The Company utilized the private placement proceeds
in connection with securing the new senior credit agreement described in Note
6.

In conjunction with the purchase of the common stock of the predecessor, the
Company issued warrants to the senior subordinated debt holder for 12,642
shares of common stock with an exercise price of $.01 per share. This warrant
is immediately exercisable into common stock of the Company. The Company
determined this warrant to have an estimated value of $600,000 at the
acquisition date which was recorded as additional paid-in

F-90

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994, 1995 AND 1996 AND SEPTEMBER 30, 1996 AND 1997 (UNAUDITED)

capital and a reduction of the outstanding principal of the senior
subordinated note payable. The Company recorded accretion of the debt discount
of $16,000, $75,000 and $59,000 for the successor period ended December 31,
1994, and the years ended December 31, 1995 and 1996, respectively. As
discussed further in Note 6, the Company prepaid the senior subordinated debt
holder in connection with the October 1996 amendment and extension of the
Company's senior credit facility. The remaining unamortized debt discount of
$450,000 was included as an extraordinary loss on the consolidated statement
of operations for the year ended December 31, 1996. The senior subordinated
warrant holder can require the Company to purchase the stock warrants
beginning in October 2002 (put right). The put amount is defined in the
warrant agreement with the senior subordinated lender. At December 31, 1995
and 1996, the accompanying consolidated financial statements include an
accrual for $115,000 and $174,000, respectively, related to the put feature of
the warrants granted to the senior subordinated lender. These warrants were
exercised on June 30, 1997.

A warrant was also issued to one of the previous sellers for 3,115 shares of
common stock with a nominal exercise price. Due to certain restrictions as to
the exercisability of this warrant, it was determined to have a value of
$75,000. This amount is reduced against the principal amount of the seller
note. The Company recorded accretion of the debt discount of $12,000 for each
of the years ended December 31, 1995 and 1996. This warrant was exercised in
1997 in connection with the retirement of the subordinated note payable to
shareholder.

(10) STOCK OPTION PLAN

In 1995, the Company adopted a stock option plan (the Plan) pursuant to
which the Company's Board of Directors may grant stock options to officers and
key employees. The Plan authorizes grants of options to purchase up to 9,231
shares of common stock. Stock options are granted with an exercise price equal
to the stock's fair market value at the date of grant. All stock options have
10-year terms and vest and become fully exercisable after a range of 3 to 4
years from the date of grant.

At December 31, 1996, there were 2,981 additional shares available for grant
under the Plan. The per share weighted-average value of stock options granted
during 1995 and 1996 was $37 and $192, respectively, on the date of grant,
using the Black Scholes model with the following assumptions: risk-free
interest rate of 5.71% for the 1995 options and 6.58% for the 1996 options,
expected life of 8 years, expected volatility of 0%, and an expected dividend
yield of 0%.

The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock options in
the consolidated financial statements. Had the Company determined compensation
cost based on the fair value at the grant date for its stock options under
SFAS No. 123, the Company's net income would have been reduced to the pro
forma amounts indicated below:

1995 1996
----- -----
(IN
THOUSANDS,
EXCEPT PER
SHARE DATA)

Net income(loss)
As reported................................................... $(572) $ 47
Pro forma..................................................... (579) (231)

F-91

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994, 1995 AND 1996 AND SEPTEMBER 30, 1996 AND 1997 (UNAUDITED)

At December 31, 1996 the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $100-$475 and 3.7 years,
respectively. Stock option activity during the periods indicated is as
follows:

NUMBER
OF WEIGHTED-AVERAGE
SHARES EXERCISE PRICE
------ ----------------

Balance at December 31, 1994........................ -- $--
Granted............................................ 1,100 100
----- ----
Balance at December 31, 1995........................ 1,100 100
Granted............................................ 5,650 475
Forfeited.......................................... (500) 100
----- ----
Balance at December 31, 1996........................ 6,250 $439
===== ====

At December 31, 1996, the number of options exercisable was 166 and the
weighted-average exercise price of these options was $100 per share. During
the first quarter of 1997, the Company granted an additional 250 options at an
exercise price of $475.

(11) RELATED PARTY TRANSACTIONS AND COMMITMENTS

Leases

In the ordinary course of business the Company leases land and buildings
under long-term (ranging from one to ten years) operating leases. Total rent
expense relating to land and building leases was approximately $112,000,
$459,000, $665,000 and $946,000 for the successor period ended December 31,
1994 and the years ending December 31, 1995 and 1996 and the nine months ended
September 30, 1997, respectively.

Minimum future lease payments for the years ending December 31, are as
follows:

1997.......................... $1,107,000
1998.......................... 787,000
1999.......................... 677,000
2000.......................... 600,000
2001.......................... 623,000
Thereafter.................... 2,738,000
----------
Total minimum lease
payments................... $6,532,000
==========

Related Party Transactions

The Company has entered into consulting agreements with three shareholders.
The total management payments under these agreements was approximately $38,000
for the successor period ended December 31, 1994, $300,000 for each of the
years ended December 31, 1995 and 1996, respectively, and $225,000 for the
nine months ended September 30, 1997, and future minimum payments required by
these management agreements are $300,000, $300,000 and $262,500 for the years
ended December 31, 1997, 1998 and 1999, respectively.

The Company has entered into a management agreement with a private
investment firm which is a significant shareholder of the Company. The Company
paid $121,000, $127,000 and $341,000 to this investment firm during the years
ended December 31, 1995 and 1996 and the nine months ended September 30, 1997,
respectively. In addition, the Company paid the investment firm a financial
advisory fee of $600,000 in

F-92

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994, 1995 AND 1996 AND SEPTEMBER 30, 1996 AND 1997 (UNAUDITED)

connection with the Bowen-Smith Holdings, Inc. acquisition in October 1994.
The Company's president and chairman, as well as another director are the
principal executive officers in the private investment firm.

The Company leases land for certain of its tower sites from an entity owned
by a shareholder. During the period from October 15 to December 31, 1994 and
the years ended December 31, 1995 and 1996, rental expense relating to these
land leases totaled $12,500, $33,000 and $35,000, respectively. Additionally,
prior to 1997, the Company leased its office facility from the same entity.
Annual expense for the office facility approximated $48,000 per year. The same
shareholder is President of a tower fabrication and construction company. The
Company has acquired the majority of its new towers from this entity at prices
and on terms it considers no less favorable than could have been obtained from
other vendors. During the years ended 1995 and 1996 and the nine months ended
September 30, 1997, the Company made payments of $304,000, $1,710,000 and
$2,124,000, respectively, to this entity.

(12) SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES

The Company had the following noncash financing and investing activities:

1994 1995 1996
------ ------ ------
(IN THOUSANDS)

Note payable issued for CSX acquisition................ $ -- $7,664 $ --
Notes payable issued for tower acquisitions............ -- 500 2,361
Common stock issued for Prime acquisition.............. -- -- 4,127
Notes payable issued for noncompete agreements......... 1,000 160 --
Accrued acquisition costs.............................. -- 150 --
Accrued debt refinancing costs......................... -- 100 --
Note payable issued in acquisition..................... 3,000 -- --
Note payable to employee trust assumed................. 500 -- --
Deferred compensation contracts assumed................ 846 -- --

(13) SUBSEQUENT EVENTS (UNAUDITED)

In December 1997, the Company entered into a Merger Agreement with American
Tower Systems Corporation (ATS), which subject to certain significant
conditions, will result in the merger of the Company into ATS. The merger is
scheduled to be completed during the first half of 1998.

F-93

APPENDIX I

BUSINESS OF AMERICAN RADIO

GENERAL

American Radio is a national radio broadcasting company committed to
developing and operating clusters of complementary radio stations in major and
growing advertising markets. ARS is among the five largest radio groups in the
nation owning and/or programming approximately 90 radio stations in 19 markets
across the United States. Consistent with its strategy of operating in the top
60 markets, American Radio owns or programs pursuant to LMAs stations in the
following markets: Boston/Worcester, Seattle, St. Louis, Baltimore,
Cincinnati, Portland, Pittsburgh, Sacramento, Charlotte, Kansas City,
Hartford, Austin, Buffalo, Las Vegas, San Jose, West Palm Beach, Rochester,
Fresno and Riverside/San Bernardino. American Radio station groups ranked
first or second among station operators in radio advertising revenues in 18 of
its 19 markets, based on the Duncan Guide.

The following table sets forth certain information regarding ARS and its
markets, assuming all of the Recent Transactions had been consummated as of
January 1, 1996.

NUMBER OF
MARKET ARS STATIONS
RANKING BY REVENUE ---------
REVENUE RANK FM AM
---------- ------- ---- ----

Boston(1)........................................ 9 2 3 4
Seattle.......................................... 13 2 4 1
St. Louis........................................ 18 1 4 0
Cincinnati....................................... 20 2 3 --
Baltimore........................................ 21 1 3 2
Portland......................................... 22 1 5 1
Pittsburgh....................................... 24 2 3 --
Sacramento....................................... 25 1 5 2
Charlotte........................................ 27 1 5 2
Kansas City...................................... 29 2 4 1
Hartford......................................... 35 1 3 1
Austin........................................... 37 4 3 1
Las Vegas........................................ 39 1 4 2
Buffalo.......................................... 42 2 3 1
San Jose(2)...................................... 43 1 4 --
West Palm Beach.................................. 49 2 2 --
Rochester........................................ 53 1 4 --
Fresno........................................... 62 1 5 2
Riverside/San Bernardino/Sun City................ 64 1 3 --

- --------
(1) Includes one AM station and one FM station in Worcester, MA. This includes
stations in a regional market that do not necessarily constitute a
"market" under the definition of overlapping principal community contours
of the FCC.
(2) Includes one FM station in the Fremont/San Francisco area and one FM
station in the Monterey area. This includes stations in a regional market
that does not necessarily constitute a "market" under the definition of
overlapping principal community contours of the FCC.

RECENT TRANSACTIONS

Since January 1, 1997, American Radio has consummated transactions relating
to the acquisition of approximately 50 stations (before giving effect to
subsequent exchanges and dispositions) for an aggregate

I-1

acquisition price of approximately $1.1 billion. For additional information
with respect to recent acquisitions, see the ARS 10-K and the ARS September
1997 10-Q.

Other Transactions. American Radio may, from time to time, pursue the
acquisition, exchanges and disposition of other stations, although there are
no definitive binding agreements with respect to any such transactions, except
as reflected in Recent Transactions. Any such acquisitions, exchanges or
dispositions will require the approval of CBS under the provisions of the
Merger Agreement as well as that of the FCC.

I-2

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS OF AMERICAN RADIO

The following unaudited pro forma condensed consolidated financial
statements of American Radio consist of an unaudited pro forma balance sheet
as of September 30, 1997 and unaudited pro forma condensed consolidated
statements of operations for the year ended December 31, 1996 and for the nine
months ended September 30, 1997. With respect to acquisitions, the pro forma
statements give effect only to the ARS Pro Forma Transactions and the ATS Pro
Forma Transactions (as defined in the Notes hereto) based on their
significance in relation to all of ARS' acquisitions, including the Recent
Transactions. The unaudited pro forma balance sheet and the unaudited pro
forma condensed consolidated statements of operations should be read in
conjunction with ARS' consolidated financial statements and notes thereto, as
well as the consolidated financial statements and notes thereto of EZ and
certain businesses that have been or may be acquired, which are incorporated
by reference in this Prospectus. For purposes of presenting the unaudited pro
forma balance sheet and the unaudited pro forma condensed statements of
operations, the pro forma amounts included for EZ do not give effect to
acquisitions consummated during 1996 or 1997. See Note 3 to the consolidated
financial statements of EZ in the EZ 10-K incorporated herein by reference.
The unaudited pro forma condensed consolidated balance sheet and the unaudited
pro forma condensed consolidated statements of operations are not necessarily
indicative of the financial condition or the results that would have been
reported had such events actually occurred on the date specified, nor are they
indicative of ARS' future results of operations.

I-3

AMERICAN RADIO SYSTEMS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 1997
(IN THOUSANDS)

ADJUSTMENTS
FOR ARS
AND ATS ADJUSTMENTS
PRO FORMA ARS FOR THE TOWER
HISTORICAL TRANSACTIONS(A) PRO FORMA SEPARATION(B) PRO FORMA
---------- --------------- ---------- ------------- ----------

ASSETS
Cash and cash
equivalents............ $ 13,822 $ 464 $ 14,286 $ (2,759) $ 11,527
Accounts receivable,
net.................... 84,159 976 85,135 (2,536) 82,599
Other current assets.... 9,640 965 10,605 (1,675) 8,930
Property and equipment,
net.................... 180,657 179,916 360,573 (228,023) 132,550
Restricted cash......... 34,441 34,441 34,441
Station investment
notes.................. 25,756 25,756 25,756
Intangible assets, net.. 1,592,772 527,794 2,120,566 (587,613) 1,532,953
Deposits and other
assets................. 21,678 (2,000) 19,678 (1,015) 18,663
---------- -------- ---------- --------- ----------
Total................. $1,962,925 $708,115 $2,671,040 $(823,621) $1,847,419
========== ======== ========== ========= ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities,
excluding current
portion of long-term
debt................... $ 47,742 $ 5,371 $ 53,113 $ (10,516) $ 42,597
Deferred income taxes... 203,835 29,657 233,492 (30,741) 202,751
Other long-term
liabilities............ 11,072 173 11,245 (202) 11,043
Long-term debt,
including current
portion................ 809,015 266,817 1,009,232 (202,420) 873,412
Minority interest....... 774 78,200 78,974 (78,974) 0
Cumulative Preferred
Stock.................. 215,550 215,550 215,550
Stockholders' equity.... 674,937 327,897 1,069,434 (500,768) 502,066
---------- -------- ---------- --------- ----------
Total................. $1,962,925 $708,115 $2,671,040 $(823,621) $1,847,419
========== ======== ========== ========= ==========

See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet of
American Radio.

I-4

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

(a) The ARS Pro Forma Transactions and ATS Pro Forma Transactions will be
accounted for under the purchase method of accounting. The following
adjustments have been recorded as of September 30, 1997: (i) ARS borrowed
approximately $118.8 million, net and used currently outstanding escrow
deposits to finance the ATS Pro Forma Transactions; (ii) ARS borrowed
approximately $107.6 million, net and used currently outstanding escrow
deposits to finance the ARS Pro Forma Transactions relating to American Radio;
and (iii) minority interests attributable to the ATS Common Stock issued upon
consummation of the Gearon Transaction (valued at $48.0 million) and for cash
($30.2 million) upon consummation of the ATS Stock Purchase Agreement (the
remaining proceeds of the ATS Stock Purchase Agreement represent secured notes
of $49.4 million and have been recorded as credit to stockholders' equity).
The preliminary estimates of fair value of property, plant and equipment and
FCC licenses may change upon final appraisal.

(b) The accounts of ATS and its subsidiaries have been eliminated pursuant
to the assumed consummation of the Tower Separation. The Tower Separation
reflects the recapitalization of ATS prior to the Tower Separation, as if the
Tower Separation occurred on September 30, 1997, including: (i) a capital
contribution of $98.6 million (including the $118.8 million referred to in
clause (i) of (a) above), representing the difference between the aggregate
amount invested by ARS in ATS at September 30, 1997 of $51.4 million and the
maximum amount ($150.0 million) permitted by the Merger Agreement; (ii)
payment of the $49.4 million of secured notes referred to in clause (iii) of
note (a) above; and (iii) a tax liability attributed to the Tower Separation
of $20.0 million which is the maximum amount required to be borne by ARS
pursuant to the provisions of the Merger Agreement. The table above reflects
elimination of the intercompany balance through an ARS capital contribution
and the incurrence by ATS of external borrowings.

I-5

AMERICAN RADIO SYSTEMS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)

ADJUSTMENTS ADJUSTMENTS
FOR ARS FOR THE
AND ATS PRO FORMA ARS TOWER
HISTORICAL TRANSACTIONS(A)(B) PRO FORMA SEPARATION(B) PRO FORMA
---------- ------------------ --------- ------------- ---------

Net revenues............ $178,019 $203,759 $381,778 $(65,873) $315,905
Operating expenses...... 120,004 127,127 247,131 (37,633) 209,498
Net LMA expenses........ 8,128 8,128 8,128
Depreciation and
amortization........... 17,810 91,371 109,181 (49,906) 59,275
Corporate general and
administrative
expenses............... 5,046 1,000 6,046 (830) 5,216
-------- -------- -------- -------- --------
Operating income
(loss)................. 27,031 (15,739) 11,292 22,496 33,788
-------- -------- -------- -------- --------
Other (income) expense:
Interest expense,
net.................. 16,762 47,743 64,505 (9,971) 54,534
(Gains) losses on sale
of assets, net....... 308 308 (149) 159
-------- -------- -------- -------- --------
Total other
expense............ 17,070 47,743 64,813 (10,120) 54,693
-------- -------- -------- -------- --------
Income (loss) before
income taxes........... 9,961 (63,482) (53,521) 32,616 (20,905)
Provision (benefit) for
income taxes(c)........ 4,826 (23,117)(c) (18,291) 7,580 (10,711)
-------- -------- -------- -------- --------
Net income (loss)....... 5,135 (40,365) (35,230) 25,036 (10,194)
Preferred stock
dividends.............. (4,973) (22,750) (27,723) (27,723)
-------- -------- -------- -------- --------
Net income (loss)
applicable to common
stockholders........... $ 162 $(63,115) $(62,953) $ 25,036 $(37,917)
======== ======== ======== ======== ========
Net income (loss) per
common share........... $ 0.01 $ (2.26) $ (1.36)
======== ======== ========
Weighted average common
shares outstanding..... 20,510 7,383 27,893 27,893
======== ======== ======== ========

See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
of American Radio.

I-6

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS

The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 1996 gives effect to (i) the EZ Merger, the
Hartford Transaction, the HBC Merger (excluding the Omaha stations all of
which have been sold), the BayCom Transaction and the Baltimore Transaction
(collectively, the "ARS Pro Forma Transactions"); (ii) the ATS Pro Forma
Transactions; and (iii) the Tower Separation, as if each of the foregoing had
occurred on January 1, 1996. See the Unaudited Pro forma Condensed
Consolidated Financial Statements of ATS in the Information Statement for
information with respect to the ATS Pro Forma Transactions.

ARS PRO FORMA TRANSACTIONS

EZ Merger: Pursuant to the consummation of the EZ Merger on April 4, 1997,
ARS acquired 18 FM and six AM stations in eight markets: Seattle, St. Louis,
Pittsburgh, Sacramento, Charlotte, Kansas City, New Orleans and Philadelphia,
assumed approximately $222.4 million of long-term debt, paid approximately
$108.9 million and issued approximately 8.3 million shares of ARS Class A
Common Stock to the EZ stockholders. The foregoing station information does
not give effect to the consummation of certain then prospective EZ
transactions which were subsequently consummated. The aggregate purchase price
was approximately $830.0 million, including goodwill, assumed liabilities and
transaction costs.

Baltimore Transaction: In February 1997, ARS acquired WWMX-FM and WOCT-FM
serving Baltimore (the "Baltimore Transaction") for approximately $90.0
million. ARS began programming and marketing the stations pursuant to an LMA
in November 1996.

HBC Merger: In July 1996, ARS consummated a merger (the "HBC Merger")
pursuant to which Henry Broadcasting Company ("HBC") merged into ARS. Pursuant
to the HBC Merger, ARS issued an aggregate of 1,879,034 shares of ARS Class A
Common Stock valued at $64.0 million, paid approximately $10.4 million in
cash, and assumed long-term debt of approximately $37.3 million which was paid
in full at closing. As part of a related transaction, ARS acquired certain
real estate used in the business of HBC for approximately $2.0 million and
obtained a five-year option to acquire certain other real estate for
approximately $1.0 million. HBC owned an aggregate of 12 stations, of which
nine were included as part of the HBC Merger as follows: KUFO-FM and KUPL-AM
in Portland, Oregon, KYMX-FM and KCTC-AM in Sacramento, KGOR-FM and KFAB-AM in
Omaha and KSKS-FM, KRNC-FM and KMJ-AM in Fresno.

Hartford Transaction: In May 1996, ARS consummated the acquisition of WTIC-
FM and WTIC-AM in Hartford. In August 1995, ARS had entered into a series of
transactions (the "Hartford Transaction") with the owner of those stations and
certain affiliates, pursuant to which, among other things, ARS agreed to
purchase the assets of those stations for approximately $39.0 million,
including approximately $1.1 million of working capital and an obligation to
make payments aggregating $8.5 million pursuant to a consulting and non-
competition agreement with an affiliate of the owner of the stations. Also as
part of the Hartford Transaction, ARS paid $1.0 million for a two-year option
to purchase for $1.00 the New England Weather Service (which provides weather
information to subscribers). ARS exercised its option and consummated the
acquisition in the fourth quarter of 1997. Because ARS was prevented under the
then current FCC regulations from acquiring these stations, it loaned an
aggregate of $35.5 million to the owner of such stations and an affiliate
thereof and made a $2.0 million escrow deposit. A portion of the loans was
used to finance the acquisition of the stations and the balance was used to
satisfy ARS' obligations under the consulting and non-competition agreement.
ARS also paid $3.5 million to purchase the tower of one of the stations in
October 1995.

BayCom Transaction: In August 1996, ARS acquired KUPL-FM and KKJZ-FM,
serving Portland, Oregon, and KSJO-FM and KUFX-FM, serving San Jose (the
"BayCom Transaction"), for an aggregate purchase price of approximately $103.0
million.

I-7

ATS PRO FORMA TRANSACTIONS

Meridian Transaction: In July 1997, ATS acquired 56 sites and a tower site
management business in southern California for an aggregate purchase price of
approximately $33.5 million.

Diablo Transaction: In October 1997, ATS acquired 110 sites and a site
management business primarily in northern California for an aggregate purchase
price of approximately $45.0 million.

Tucson Transaction: In October 1997, ATS entered into an agreement to
purchase six towers in Tucson for approximately $12.0 million. Consummation of
the transaction, which is subject to certain conditions, is expected to occur
in the first quarter of 1998.

MicroNet Transaction: In October 1997, ATS acquired 128 owned or leased
tower sites, principally in the Mid-Atlantic region, with the remainder in
California and Texas for an aggregate purchase price of approximately $70.25
million. The acquisition also included ATS' video, voice and data transmission
business.

Gearon Transaction: In January 1997, ATS acquired (through a merger with
American Tower Systems (Delaware), Inc., a wholly-owned subsidiary of ATS) a
company engaged primarily in the site acquisition business for unaffiliated
third parties that also owns or has under construction approximately 40 tower
sites. The merger price of approximately $80.0 million was paid by delivery of
5.3 million shares of ATS Class A Common Stock and approximately $32.0 million
in cash and assumed liabilities.

ATC Merger: In December 1997, ATS entered into an agreement to acquire
(through the ATC Merger) a company which is a leading independent owner and
operator of wireless communications towers with more than 650 towers on
approximately 618 sites in 31 states. Pursuant to the ATC Merger, ATS will
issue an aggregate of approximately 31.1 million shares of ATS Common Stock
(including shares issuable upon exercise of options). Consummation of the ATC
Merger, is conditioned on, among other things, the expiration or earlier
termination of the waiting period under the HSR Act, and consummation of the
Tower Separation and, accordingly is not expected to take place until the
spring of this year.

Tower Separation: ARS will distribute all of the ATS Common Stock owned by
it to the holders of ARS Common Stock, to the holders of options to acquire
ARS Common Stock and to the holders of ARS Convertible Preferred Stock upon
conversion of ARS Convertible Preferred Stock, pursuant to either the Merger
or the Tower Merger.

(a) To record the results of operations for the ARS Pro Forma Transactions.
The results of operations have been adjusted to (i) reverse historical
interest expense of $25.9 million and $1.3 million of interest income recorded
on the Hartford Transaction station investment notes, (ii) record interest
expense of $41.0 million for the year ended December 31, 1996, as a result of
approximately $162.8 million of additional debt and the refunding of
approximately $72.4 million of existing EZ debt, both bearing interest at an
assumed rate of 8.75%, and the assumption of $150.0 million principal amount
of notes bearing interest at 9.75%, all to be incurred in connection with the
ARS Pro Forma Transactions. Weighted average common shares outstanding have
been adjusted to reflect approximately 8.3 million shares issued in the EZ
Merger; because the pro forma adjustments result in a loss, approximately
900,000 common equivalent shares have been excluded from pro forma earnings
per share as they become anti-dilutive. Each 1/4% change in the interest rate
applicable to the change in floating rate debt would increase or decrease, as
appropriate, the net adjustment to interest expense by approximately $0.6
million.

The results of operations have also been adjusted to reverse historical
depreciation and amortization expense of $13.4 million for the year ended
December 31, 1996 and record depreciation and amortization expense of $42.6
million for the year ended December 31, 1996 based on estimated allocations of
purchase prices. Depreciation expense for property, plant and equipment
acquired has been determined based on an average life of ten years. Costs of
acquired FCC licenses and goodwill for the transactions are amortized over 25
and 40 years, respectively. The preliminary estimates of the fair value of
property, plant and equipment, FCC licenses and goodwill may change upon final
appraisal.

I-8

owners and/or executives not retained by ARS. Because ARS maintains a separate
corporate headquarters which provides services substantially similar to those
represented by these costs, they are not expected to recur following
acquisition. After giving effect to an estimated $1.0 million of incremental
costs, ARS believes that it has existing management capacity sufficient to
provide such services without incurring additional incremental costs.

The following table sets forth the historical results of operations for the
ARS Pro Forma Transactions for the periods in which they were not owned by ARS
for the year ended December 31, 1996.

EZ HARTFORD HBC BAYCOM BALTIMORE PRO FORMA
MERGER TRANSACTION MERGER TRANSACTION TRANSACTION ADJUSTMENTS TOTAL
-------- ----------- ------ ----------- ----------- ----------- --------

Net revenues............ $105,963 $4,117 $8,371 $ 9,789 $13,253 $141,493
Operating expenses...... 68,084 2,594 4,762 7,358 8,800 91,598
Depreciation and
amortization........... 9,104 129 374 2,012 1,829 $ 29,222 42,670
Merger costs............ 10,433 (10,433)
Corporate general and
administrative......... 3,808 1,913 441 1,943 (7,105) 1,000
-------- ------ ------ ------- ------- -------- --------
Operating income
(loss)................. 14,534 1,394 1,322 (22) 681 (11,684) 6,225
Other (income) expense
Interest expense, net.. 20,360 1,395 4,105 16,536 42,396
Other expense (income).. 450 7 (22) 104 (539)
-------- ------ ------ ------- ------- -------- --------
Income (loss) from
operations before
income taxes........... $ (6,276) $1,387 $ (73) $(4,105) $ 577 $(27,681) $(36,171)
======== ====== ====== ======= ======= ======== ========

Merger costs of EZ have not been carried forward into the pro forma
condensed financial statements as these costs represent direct costs incurred
by EZ as a result of the EZ Merger. Such costs consist primarily of
professional fees, compensation to employees of EZ and regulatory related
costs, including $4.5 million that was paid to settle a license renewal
proceeding; satisfactory arrangements with respect to the station involved
were a condition precedent to closing.

(b) To record the results of operations for the ATS Pro Forma Transactions.
The results of operations have been adjusted to: (i) reverse historical
interest expense of $4.2 million; (ii) record interest expense of $11.7
million for the year ended December 31, 1996, as a result of approximately
$128.4 million of additional net debt to be incurred in connection with the
ATS Pro Forma Transactions and payment of the estimated tax liability
attributable to the Tower Separation of approximately $66.6 million (net of
the $20.0 million to be borne by ARS pursuant to the provisions of the Merger
Agreement), after giving effect to (x) capital contributions by ARS of $146.1
million, representing the difference between the aggregate amount invested by
ARS in ATS at January 1, 1996 of $3.9 million and the maximum amount ($150.0
million) permitted by the Merger Agreement, and (y) the proceeds from the
issuance of ATS Common Stock pursuant to the ATS Stock Purchase Agreement for
an aggregate purchase price of $80.0 million, $79.4 million net of expenses
(of which $49.4 million was paid in the form of secured notes and the balance
in cash); (iii) and the historical depreciated book value of $4.2 million of
an aggregate of 16 towers transferred or to be transferred by American to ATS
representing an additional ARS equity investment in ATS. Each 1/4% change in
the interest rate applicable to the change in floating rate debt would
increase or decrease, as appropriate, the net adjustment to interest expense
by approximately $0.3 million. The estimated tax liability shown in clause (i)
preceding is based on an assumed fair market value of the ATS Common Stock of
$10.00 per share which is the price at which shares were issued pursuant to
the consummation of the transactions contemplated by the ATS Stock Purchase
Agreement. Such estimated tax liability would increase or decrease by
approximately $14.8 million for each $1.00 per share increase or decrease in
the fair market value of the ATS Common Stock. No adjustment has been included
in the pro forma information with respect to certain adjustment provisions in
the Merger Agreement relating to the Working Capital and Debt Amount (each as
defined in the Merger Agreement) of ARS at the time of the consummation of the
Merger, because ARS estimates that the payment, if any, required by such
provisions to be paid or received by ATS will not be material. For information
with respect to such adjustments, see "The Merger and Tower Separation--ARS-
ATS Separation Agreement--Closing Date Adjustments."

I-9

The results of operations have also been adjusted to reverse historical
depreciation and amortization expense of $7.7 million for the year ended
December 31, 1996 and record depreciation and amortization expense of $48.7
million for the year ended December 31, 1996 based on estimated allocations of
purchase prices. Depreciation expense for property, plant and equipment
acquired has been determined based on an average life of fifteen years. Costs
of acquired intangible assets for the transactions are amortized over 15
years. The preliminary estimates of the fair market value of property, plant
and equipment and intangible assets may change upon final appraisal.

Corporate general and administrative expenses of the prior owners have not
been carried forward into the pro forma condensed financial statements as
these costs represent duplicative facilities and compensation to owners and/or
executives not retained by ATS. Because ATS maintains a separate corporate
headquarters that provides services substantially similar to those represented
by these costs, they are not expected to recur following acquisition. After
giving effect to an estimated $2.0 million of incremental costs, ATS believes
that it has existing management capacity sufficient to provide such services
without incurring additional incremental costs.

The following table sets forth the historical results of operations for the
ATS Pro Forma Transactions for the periods in which they were not owned by ATS
for the year ended December 31, 1996.

Net revenues..... $4,498 $7,422 $15,058 $1,438 $21,484 $12,366 $ 710 $ 62,976
Operating
expenses........ 3,218 5,922 9,867 371 13,302 2,849 742 36,271
Depreciation and
amortization.... 416 417 3,936 164 103 2,709 215 $ 40,956 48,916
Corporate general
and
administrative.. 776 2,049 (825) 2,000
------ ------ ------- ------ ------- ------- ------ -------- --------
Operating income
(loss).......... 864 307 1,255 903 8,079 4,759 (247) (40,131) (24,211)
Other (income)
expense.........
Interest
expense, net... 70 81 213 3,808 8,536 12,708
Other expense
(income)....... 294 (43) (19) (95) 150 (287)
------ ------ ------- ------ ------- ------- ------ -------- --------
Income (loss)
from operations
before income
taxes........... $ 794 $ (68) $ 1,298 $ 709 $ 8,174 $ 801 $(247) $(48,380) $(36,919)
====== ====== ======= ====== ======= ======= ====== ======== ========

(c) To record the tax effect of the pro forma adjustments and impact on the
estimated effective tax rate. The actual effective tax rate may be different
once the final allocation of purchase price is determined.

I-10

AMERICAN RADIO SYSTEMS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)

ADJUSTMENTS ADJUSTMENTS
FOR ARS FOR THE
AND ATS PRO FORMA ARS TOWER
HISTORICAL TRANSACTIONS(a)(b) PRO FORMA SEPARATION(b) PRO FORMA
---------- ------------------ --------- ------------- ---------

Net revenues............ $260,512 $ 80,295 $340,807 $(65,981) $274,826
Operating expenses...... 172,018 45,452 217,470 (33,186) 184,284
Net LMA expenses........ 1,914 1,914 1,914
Depreciation and
amortization........... 42,974 44,728 87,702 (38,873) 48,829
Merger Expenses......... 300 300 300
Corporate general and
administrative
expenses............... 6,601 500 7,101 (919) 6,182
-------- -------- -------- -------- --------
Operating income
(loss)................. 36,705 (10,385) 26,320 6,997 33,317
Other (income) expense:
Interest expense,
net.................. 38,562 24,385 62,947 (8,218) 54,729
(Gains) losses on sale
of assets, net....... (455) (455) (224) (679)
-------- -------- -------- -------- --------
Total other
expense............ 38,107 24,385 62,492 (8,442) 54,050
Income (loss) before
income taxes........... (1,402) (34,770) (36,172) 15,439 (20,733)
Provision (benefit) for
income taxes(c)........ (774) (12,103) (12,877) 2,077 (10,800)
-------- -------- -------- -------- --------
Net income (loss)....... (628) (22,667) (23,295) 13,362 (9,933)
Preferred stock
dividends.............. (22,770) (1,896) (24,666) (24,666)
-------- -------- -------- -------- --------
Loss applicable to
common stockholders.... $(23,398) $(24,563) $(47,961) $ 13,362 $(34,599)
======== ======== ======== ======== ========
Loss before
extraordinary loss per
common share........... $ (.88) $ (1.63) $ (1.17)
======== ======== ========
Weighted average common
shares outstanding..... 26,549 2,905 29,454 29,454
======== ======== ======== ========

See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
of American Radio.

I-11

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS

The unaudited pro forma condensed consolidated statement of operations for
the nine months ended September 30, 1997 gives effect to (i) the EZ Merger and
the Baltimore Transaction; (ii) the ATS Pro Forma Transactions; and (iii) the
Tower Separation, as if they had occurred on January 1, 1997.

(a) To record the results of operations for the EZ Merger. The Baltimore
Transaction has not been given pro forma effect for any items other than
depreciation and amortization, interest expense and income taxes as the
revenues and operating expenses are included in the historical numbers
pursuant to the pre-existing LMA. The results of operations have been adjusted
to record interest expense of $10.1 million for the nine months ended
September 30, 1997, as a result of approximately $200.9 million of additional
debt and the refunding of approximately $72.4 million of existing EZ debt,
both bearing interest at an assumed rate of 8.25%, and the assumption of
$150.0 million principal amount of notes bearing interest at 9.75%, incurred
in connection with the EZ Merger. Weighted average common shares outstanding
have been adjusted to reflect 8.3 million shares issued in the EZ Merger. Each
1/4% change in the interest rate applicable to the change in floating rate
debt would increase or decrease, as appropriate, the net adjustment to
interest expense by approximately $0.34 million.

The results of operations have also been adjusted to reverse historical
depreciation and amortization expense of $2.5 million for the nine months
ended September 30, 1997 and record depreciation and amortization expense of
$8.7 million for the nine months ended September 30, 1997 based on estimated
allocations of purchase prices. Depreciation expense for property, plant and
equipment acquired has been determined based on an average life of ten years.
Costs of acquired FCC licenses and goodwill for the transactions are amortized
over 25 and 40 years, respectively. The preliminary estimates of the fair
value of property, plant and equipment, FCC licenses and goodwill may change
upon final appraisal.

Corporate general and administrative expenses of the prior owners have not
been carried forward into the pro forma condensed financial statements as
these costs represent duplicative facilities and compensation to owners and/or
executives not retained by ARS. Because ARS maintains a separate corporate
headquarters that provides services substantially similar to those represented
by these costs, they are not expected to recur following acquisition. After
giving effect to an estimated $0.5 million of incremental costs, ARS believes
that it has existing management capacity sufficient to provide such services
without incurring additional incremental costs.

The following table sets forth the historical results of operations for the
ARS Pro Forma Transactions for the periods in which they were not owned or
operated by ARS for the nine months ended September 30, 1997.

EZ PRO FORMA
MERGER ADJUSTMENTS TOTAL
------- ----------- --------

Net revenues................................... $22,748 $ 22,748
Operating expenses............................. 16,411 16,411
Depreciation and amortization.................. 2,549 $ 6,173 8,722
Corporate general and administrative........... 756 (256) 500
------- -------- --------
Operating income (loss)........................ 3,032 (5,917) (2,885)
Interest expense, net........................ 5,186 4,883 10,069
Other expense (income)....................... (88) 88
------- -------- --------
Income (loss) from operations before income
taxes......................................... $(2,066) $(10,888) $(12,954)
======= ======== ========

I-12

(b) To record the results of operations for the ATS Pro Forma Transactions.
The results of operations have been adjusted to: (i) reverse historical
interest expense of $4.2 million; (ii) record interest expense of $8.2 million
for nine months ended September 30, 1997, as a result of approximately $118.8
million of additional net debt to be incurred in connection with the ATS Pro
Forma Transactions, and payment of the estimated tax liability attributable to
the Tower Separation of approximately $66.6 million (net of $20.0 million to
be borne by ARS pursuant to the provisions of the Merger Agreement) after
giving effect to (x) capital contributions by ARS of $98.6 million,
representing the difference between the aggregate amount invested by ARS in
ATS at September 30, 1997 of $51.4 million and the maximum amount ($150.0
million) permitted by the Merger Agreement, and (y) the proceeds from the
issuance of ATS Common Stock pursuant to the ATS Stock Purchase Agreement for
an aggregate purchase price of $80.0 million, $79.4 million net of expenses
(of which $49.4 million was be paid in the form of secured notes and balance
in cash); and (iii) the historical depreciated book value of $4.2 million of
an aggregate of 16 towers transferred or to be transferred by American to ATS
representing an additional ARS equity investment in ATS. Each 1/4% change in
the interest rate applicable to the change in floating rate debt would
increase or decrease, as appropriate, the net adjustment to interest expense
by approximately $0.2 million. The estimated tax liability shown in clause (i)
preceding is based on an assumed fair market value of the ATS Common Stock of
$10.00 per share which is the price at which shares are proposed to be issued
pursuant to the consummation of the transactions contemplated by the ATS Stock
Purchase Agreement. Such estimated tax liability would increase or decrease by
approximately $14.8 million for each $1.00 per share increase or decrease in
the fair market value of the ATS Common Stock. No adjustment has been included
in the pro forma information with respect to certain adjustment provisions in
the Merger Agreement relating to the Working Capital and Debt Amount (each as
defined in the Merger Agreement) of ARS at the time of the consummation of the
Merger, because ARS estimates that the payment, if any, required by such
provisions to be paid or received by ATS will not be material. For information
with respect to such adjustments, see "The Merger and Tower Separation--ARS-
ATS Separation Agreement--Closing Date Adjustments."

The results of operations have also been adjusted to reverse historical
depreciation and amortization expense of $6.8 million for the year ended
September 30, 1997 and record depreciation and amortization expense of $36.0
million for the year ended September 30, 1997 based on estimated allocations
of purchase prices. Depreciation expense for property, plant and equipment
acquired has been determined based on an average life of fifteen years. Costs
of acquired intangible assets for the transactions are amortized over 15
years. The preliminary estimates of the fair market value of property, plant
and equipment and intangible assets may change upon final appraisal.

Corporate general and administrative expenses of the prior owners have not
been carried forward into the pro forma condensed financial statements as
these costs represent duplicative facilities and compensation to owners and/or
executives not retained by ATS. Because ATS maintains a separate corporate
headquarters which provides services substantially similar to those
represented by these costs, they are not expected to recur following
acquisition. After giving effect to an estimated $1.5 million of incremental
costs, ATS believes that it has existing management capacity sufficient to
provide such services without incurring additional incremental costs.

The following table sets forth the historical results of operations for the
ATS Pro Forma Transactions for the periods in which they were not owned by ATS
for the nine months ended September 30, 1997.

TRANSFER
MERIDIAN DIABLO MICRONET TUCSON GEARON ATC OF PRO FORMA
TRANSACTION TRANSACTION TRANSACTION TRANSACTION TRANSACTION MERGER TOWERS ADJUSTMENTS TOTAL
----------- ----------- ----------- ----------- ----------- ------- -------- ----------- --------

Net revenues......... $2,385 $6,930 $13,477 $1,201 $19,062 $14,491 $ 533 $ 58,079
Operating expenses... 1,730 3,309 7,900 255 12,922 2,924 558 29,598
Depreciation and
amortization........ 211 393 2,638 123 111 3,369 162 $ 29,160 36,167
Corporate general and
administrative...... 1,802 88 2,347 (2,737) 1,500
------ ------ ------- ------ ------- ------- ----- -------- --------
Operating income
(loss).............. 444 1,426 2,939 735 6,029 5,851 (187) (26,423) (9,186)
Other (income)
expense.............
Interest expense,
net................ 80 110 150 3,900 4,782 9,022
Other expense
(income)........... (30) (7) (65) 213 (111)
------ ------ ------- ------ ------- ------- ----- -------- --------
Income (loss) from
operations before
income taxes........ $ 364 $1,316 $ 2,969 $ 592 $ 6,094 $ 1,738 $(187) $(31,094) $(18,208)
====== ====== ======= ====== ======= ======= ===== ======== ========

(c) To record the tax effect of the pro forma adjustments and impact on ARS'
estimated effective tax rate. The actual effective tax rate may be different
once the final allocation of purchase price is determined.

I-13

PRINCIPAL STOCKHOLDERS OF AMERICAN RADIO

The following table sets forth certain information known to American Radio
as of February 1, 1998, with respect to the shares of ARS Common Stock
beneficially owned by (i) each person known by American Radio to own more than
5% of the outstanding ARS Common Stock, (ii) each director of American Radio,
(iii) each executive officer of American Radio, and (iv) all directors and
executive officers of American Radio as a group. The number of shares
beneficially owned by each director or executive officer is determined
according to the rules of the Commission, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares as to which the
individual or entity has sole or shared voting power or investment power and
also any shares which the individual or entity has the right to acquire within
sixty days of February 1, 1998 through the exercise of an option, conversion
feature or similar right. Except as noted below, each holder has sole voting
and investment power with respect to all shares of ARS Common Stock listed as
owned by such person or entity.

SHARES OF ARS COMMON STOCK BENEFICIALLY OWNED
-----------------------------------------------------
PERCENT OF
PERCENT OF TOTAL
PERCENT OF PERCENT OF COMMON VOTING
NUMBER CLASS A CLASS B STOCK POWER
--------- ---------- ---------- ---------- ----------

DIRECTORS AND EXECUTIVE
OFFICERS
Steven B. Dodge(1)....... 2,287,946 * 60.17 7.71 35.95
Thomas H. Stoner(2)...... 915,967 * 26.12 3.10 15.31
Don P. Bouloukos(3)...... 22,000 * -- * *
Alan L. Box(4)........... 398,428 1.61 -- 1.35 *
John R. Gehron(5)........ 237,650 * 5.66 * 3.44
David Pearlman(6)........ 264,520 * 6.93 * 4.19
Joseph L. Winn(7)........ 191,048 * 5.09 * 3.05
Charlton H. Buckley(8)... 1,811,957 7.33 -- 6.14 3.03
Arnold Chavkin/CEA(9).... 1,323,429 * -- 4.48 *
James H. Duncan,
Jr.(10)................. 14,878 * * * *
Arthur C. Kellar(11)..... 2,068,257 8.33 -- 6.98 3.46
Charles D. Peebler,
Jr.(12)................. 10,200 * * * *
Lance R. Primis(13)...... -- -- -- -- --
All executive officers
and directors as a group
(13 persons)(14)........ 9,707,280 18.45 87.98 31.62 62.32
FIVE PERCENT STOCKHOLDERS
Baron Capital Group,
Inc.(15)................ 5,620,000 22.72 -- 19.03 9.40
Wellington Management
Company LLP(16)......... 1,929,676 7.80 -- 6.53 3.23
Massachusetts Financial
Services Company(17).... 2,741,774 11.10 -- 9.28 4.59
Lehman Brothers Holding
Inc.(18)................ 2,050,000 8.29 -- 6.94 3.43

- --------
* Less than 1%.
(1) Mr. Dodge is Chairman of the Board, President and Chief Executive Officer
of American Radio. His address is 116 Huntington Avenue, Boston,
Massachusetts 02116. Includes 75,950 shares of ARS Class A Common Stock
owned by Mr. Dodge. Does not include 60,000 shares of ARS Class B Common
Stock purchasable under an option granted on October 1, 1994, 24,000
shares ARS Class B Common Stock purchasable under an option granted on
January 18, 1996 and 80,000 shares of ARS Class B Common Stock
purchasable under an option granted on January 2, 1997; includes 90,000
shares as to which the October option, 16,000 shares as to which the
January 18 option and 20,000 shares as to which the January 2 option are
exercisable. Includes an aggregate of 25,050 shares of ARS Class A Common
Stock and 20,832 shares of ARS Class B Common Stock owned by three trusts
for the benefit of Mr. Dodge's children and 3,000 shares of ARS Class A
Common Stock owned by Mr. Dodge's wife. Mr. Dodge disclaims beneficial
ownership in all shares owned by such trusts and his wife. Does not
include 170 shares of ARS Class A Common Stock held by Thomas S. Dodge,
an adult child of Mr. Dodge, with respect to which Mr. Dodge disclaims
beneficial ownership.

I-14

(2) Mr. Stoner is Chairman of the Executive Committee of the ARS Board. His
address is 116 Huntington Avenue, Boston, Massachusetts 02116. Does not
include 4,000 shares of ARS Class A Common Stock purchasable under an
option granted on January 2, 1997. Includes 1,000 shares purchasable
under the January option and 23,811 shares of ARS Class B Common Stock
owned by his wife, an aggregate of 261,998 shares of ARS Class B Common
Stock owned by trusts of which he and/or certain other persons are
trustees. Mr. Stoner disclaims beneficial ownership of 160,540 shares of
ARS Class B Common Stock owned by such trusts. Does not include 61,454
shares of ARS Class B Common Stock and 9,125 shares of ARS Class A Common
Stock owned by Mr. Stoner's adult children.
(3) Mr. Bouloukos is Co-Chief Operating Officer of American Radio. His
address is 116 Huntington Avenue, Boston, Massachusetts 02116. Includes
182,000 shares of ARS Class A Common Stock purchasable under an option
granted on December 31, 1996.
(4) Mr. Box is a director and Executive Vice President of American Radio. His
address is 116 Huntington Avenue, Boston, Massachusetts 02116. Does not
include 100,000 shares of ARS Class A Common Stock purchasable under an
option granted on April 22, 1997. Includes 84,010 shares of ARS Class A
Common Stock purchasable under options.
(5) Mr. Gehron is Co-Chief Operating Officer of American Radio. His address
is 116 Huntington Avenue, Boston, Massachusetts 02116. Includes 7,650
shares of ARS Class A Common Stock owned by Mr. Gehron. Includes 160,000
shares of ARS Class B Common Stock purchasable under an option granted on
May 23, 1994, 40,000 shares of ARS Class B Common Stock purchasable under
an option granted on February 15, 1995, 10,000 shares of ARS Class B
Common Stock purchasable under an option granted on January 18, 1996 and
20,000 shares of ARS Class A Common Stock purchasable under an option
granted on January 2, 1997.
(6) Mr. Pearlman is Co-Chief Operating Officer of American Radio. His address
is 116 Huntington Avenue, Boston, Massachusetts 02116. Includes 3,000
shares of ARS Class A Common Stock owned individually by Mr. Pearlman and
520 shares of ARS Class A Common Stock held for the benefit of his
children. Includes 156,000 shares of ARS Class B Common Stock purchasable
under an option granted on December 16, 1993, 50,000 shares of ARS Class
B Common Stock purchasable under an option granted on February 15, 1995,
5,000 shares of ARS Class B Common Stock purchasable under an option
granted on May 18, 1995, 30,000 shares of ARS Class B Common Stock
purchasable under an option granted on June 15, 1995 and 20,000 shares of
ARS Class B Common Stock purchasable under an option granted on January
18, 1996.
(7) Mr. Winn is a director, Treasurer and Chief Financial Officer of American
Radio. His address is 116 Huntington Avenue, Boston, Massachusetts 02116.
Includes 2,000 shares of ARS Class A Common Stock and 7,948 shares of ARS
Class B Common Stock owned individually by Mr. Winn and 100 shares of ARS
Class A Common Stock held for the benefit of his children. Does not
include 32,000 shares of ARS Class B Common Stock purchasable under an
option granted on December 16, 1993, 24,000 shares of ARS Class B Common
Stock purchasable under an option granted on February 15, 1995, 3,000
shares of ARS Class B Common Stock purchasable under an option granted on
May 18, 1995, 12,000 shares of ARS Class B Common Stock purchasable under
an option granted on January 18, 1996 and 21,544 shares of ARS Class B
Common Stock and 8,070 shares of ARS Class A Common Stock purchasable
under options granted on January 2, 1997; includes 128,000 shares as to
which the December option, 36,000 shares as to which the February option,
2,000 at to which the May option, 8,000 shares as to which the January 18
option and 5,386 shares as to which the January 2 option are exercisable.
(8) Mr. Buckley is a director of American Radio. His address is 116
Huntington Avenue, Boston, Massachusetts 02116. Does not include 4,000
shares of ARS Class A Common Stock purchasable under

I-15

an option granted on January 2, 1997. Does not include 6,053 shares of ARS
Class A Common Stock which are held by an adult child of Mr. Buckley and
in which Mr. Buckley disclaims beneficial ownership. Includes 1,000 shares
purchasable under the January option.
(9) Mr. Chavkin is a director of American Radio. His address is 116
Huntington Avenue, Boston, Massachusetts 02116. Mr. Chavkin, as a general
partner of CCP, which is the general partner of CEA, may be deemed to own
beneficially shares held by CEA. Mr. Chavkin disclaims such beneficial
ownership. CEA is the sole holder of ARS Class C Common Stock and owns
26,911 shares of ARS Class A Common Stock. The address of CCP and CEA is
380 Madison Avenue, 12th Floor, New York, New York 10017. Does not
include 4,000 shares of ARS Class A Common Stock purchasable under an
option granted on January 2, 1997. Includes 1,000 shares purchasable
under the January option.
(10) Mr. Duncan is a director of American Radio. His address is 116 Huntington
Avenue, Boston, Massachusetts 02116. Does not include 2,000 shares of ARS
Class B Common Stock purchasable under an option granted on December 16,
1993, 1,600 shares of ARS Class B Common Stock purchasable under an
option granted on February 15, 1995, 1,800 shares of ARS Class B Common
Stock purchasable under an option granted on January 18, 1996 and 4,000
shares of ARS Class A Common Stock purchasable under an option granted on
January 2, 1997; includes 4,000 shares as to which the December option,
1,600 shares as to which the February option, 1,200 shares as to which
the January 18 option and 1,000 shares as to which the January 2 option
are exercisable. Includes (a) 3,500 shares of ARS Class A Common Stock
and 6,578 shares of ARS Class B Common Stock owned directly and (b) 400
shares of ARS Class A Common Stock owned as follows: (i) 200 shares of
ARS Class A Common Stock held by Mr. Duncan's spouse, (ii) 100 shares of
ARS Class A Common Stock held by one of his daughters, and (iii) 100
shares of ARS Class A Common Stock held by his spouse for his stepson.
Mr. Duncan has disclaimed beneficial ownership of these shares.
(11) Mr. Kellar is a director of American Radio. His address is 116 Huntington
Avenue, Boston, Massachusetts 02116. Mr. Kellar owns ARS Class A Common
Stock. Does not include 5,000 shares of ARS Class A Common Stock
purchasable under an option granted April 15, 1997. Includes 84,010
shares of ARS Class A Common Stock purchasable under options.
(12) Mr. Peebler is a director of American Radio. His address is 116
Huntington Avenue, Boston, Massachusetts 02116. Includes 2,000 shares of
ARS Class A Common Stock owned by Mr. Peebler. Does not include 4,000
shares of ARS Class B Common Stock purchasable under an option granted
February 15, 1995, 1,800 shares of ARS Class B Common Stock purchasable
under an option granted on January 18, 1996 and 6,000 shares of ARS Class
A Common Stock purchasable under an option granted January 2, 1997;
includes 4,000 shares as to which the February option, 1,200 shares as to
which the January 18 option and 1,000 shares as to which the January 2
option are exercisable.
(13) Mr. Primis is a director of American Radio. His address is 116 Huntington
Avenue, Boston, Massachusetts 02116. Does not include 4,000 shares of ARS
Class A Common Stock purchasable under an option granted April 15, 1997.
Includes 1,000 shares purchasable under the January option.
(14) Includes all shares stated to be owned in the preceding notes.
(15) The address of Baron Capital Group, Inc. is 767 Fifth Avenue, New York,
New York 10153. Based on Baron's Amendment No. 2 to Schedule 13D dated
February 2, 1998 Mr. Baron, the president of Baron, has sole voting power
over 180,000 shares of ARS Class A Common Stock, shared voting power over
1,896,000 shares of ARS Class A Common Stock, sole dispositive power over
180,000 shares of ARS Class A Common Stock and shared dispositive power
over 1,896,000 shares of ARS Class A Common Stock. Mr. Baron disclaims
beneficial ownership of 5,620,000 shares of ARS Class A Common Stock.
(16) The address of Wellington Management Company LLP is 75 State Street,
Boston, Massachusetts 02109. Based on its Schedule 13G (Amendment No. 2)
dated August 8, 1997, Wellington has shared voting power over 985,313
shares of ARS Class A Common Stock and shared dispositive power over
1,929,676 shares of ARS Class A Common Stock.
(17) The address of Massachusetts Financial Services Company is 500 Boylston
Street, Boston, Massachusetts 02116-3741. Based on its Schedule 13G
(Amendment No. 1) dated October 14, 1997, MFS has sole voting power over
2,558,984 shares of ARS Class A Common Stock and sole dispositive power
over 2,741,774 shares of ARS Class A Common Stock.

I-16

(18) The address of Lehman Brothers Holding Inc. is 3 World Financial Center,
24th Floor, New York, New York 10285. Based on its Schedule 13D dated
January 23, 1998, Lehman has shared voting power over 2,050,000 shares of
ARS Class A Common Stock and shared dispositive power over 2,050,000
shares of ARS Class A Common Stock.

I-17

APPENDIX II

AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

BY AND AMONG

AMERICAN RADIO SYSTEMS CORPORATION,

CBS CORPORATION

AND

R ACQUISITION CORP.

DATED AS OF

DECEMBER 18, 1997

TABLE OF CONTENTS

ARTICLE 1 DEFINED TERMS............................................... II-1
ARTICLE 2 THE MERGER.................................................. II-1
2.1 The Merger............................................ II-1
2.2 Closing............................................... II-2
2.3 Effective Time........................................ II-2
2.4 Effect of the Merger.................................. II-2
2.5 Certificate of Incorporation.......................... II-2
2.6 Bylaws................................................ II-2
2.7 Directors and Officers................................ II-2
ARTICLE 3 CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES.............. II-2
3.1 Conversion of Capital Stock........................... II-2
3.2 Exchange of Certificates.............................. II-3
3.3 Closing of American's Transfer Books.................. II-5
3.4 Dissenting Shares..................................... II-5
3.5 Tower Merger.......................................... II-6
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF AMERICAN................. II-7
4.1 Organization and Business; Power and Authority; Effect
of Transaction........................................ II-7
4.2 Financial and Other Information....................... II-10
4.3 Changes in Condition.................................. II-10
4.4 Properties............................................ II-10
4.5 Compliance with Private Authorizations................ II-10
4.6 Compliance with Governmental Authorizations and
Applicable Law; Litigation............................ II-11
4.7 Related Transactions.................................. II-12
4.8 Taxes and Tax Matters................................. II-12
4.9 Employee Retirement Income Security Act of 1974....... II-13
4.10 Insurance............................................. II-15
4.11 Authorized Capital Stock.............................. II-15
4.12 Employment Arrangements............................... II-16
4.13 Voting Requirements................................... II-16
4.14 Brokers............................................... II-16
4.15 Information Supplied.................................. II-17
4.16 Ordinary Course of Business........................... II-17
4.17 Environmental Matters................................. II-18
4.18 Opinion of Financial Advisor.......................... II-18
4.19 Contracts; Debt Instruments........................... II-18
4.20 State Takeover Statutes............................... II-19
4.21 Appraisal Rights...................................... II-19
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF MERGEPARTY............... II-19
5.1 Organization and Business; Power and Authority; Effect
of Transaction........................................ II-19
5.2 Compliance with Governmental Authorizations and
Applicable Law; Litigation............................ II-20
5.3 Mergeparty Financing.................................. II-20
ARTICLE 6 COVENANTS.................................................. II-20
6.1 Access to Information; Confidentiality................ II-20
6.2 Agreement to Cooperate................................ II-21
6.3 Public Announcements.................................. II-23
6.4 Notification of Certain Matters....................... II-23
6.5 Stockholder Approval.................................. II-24

6.6 Proxy Statement; Registration Statement............... II-24
6.7 Miscellaneous......................................... II-25
6.8 Option Plans.......................................... II-25
6.9 Conduct of Business by Mergeparty Pending the Merger.. II-26
6.10 Conduct of Business by American Pending the Merger.... II-26
6.11 Control of Operations................................. II-28
6.12 Directors', Officers' and Employees' Indemnification
and Insurance......................................... II-28
6.13 Solicitation of Employees............................. II-29
6.14 Change of Name........................................ II-29
6.15 Benefit Plans......................................... II-29
6.16 American Cumulative Preferred Stock................... II-30
6.17 American Tower Transaction............................ II-30
6.18 Purchase Price Adjustment............................. II-35
6.19 Tower Leases.......................................... II-37
6.20 Affiliates of American................................ II-38
ARTICLE 7 CLOSING CONDITIONS.......................................... II-38
7.1 Conditions to Obligations of Each Party to Effect the
Merger................................................ II-38
7.2 Conditions to Obligations of Mergeparty............... II-39
7.3 Conditions to Obligations of American................. II-39
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER........................... II-40
8.1 Termination........................................... II-40
8.2 Effect of Termination................................. II-40
ARTICLE 9 GENERAL PROVISIONS......................................... II-41
9.1 Amendment............................................. II-41
9.2 Waiver................................................ II-41
9.3 Fees, Expenses and Other Payments..................... II-41
9.4 Notices............................................... II-41
9.5 Specific Performance; Other Rights and Remedies....... II-42
9.6 Survival of Representations, Warranties, Covenants and
Agreements............................................ II-42
9.7 Severability.......................................... II-43
9.8 Counterparts.......................................... II-43
9.9 Section Headings...................................... II-43
9.10 Governing Law......................................... II-43
9.11 Further Acts.......................................... II-43
9.12 Entire Agreement; No Other Representations or
Agreements............................................ II-43
9.13 Assignment............................................ II-44
9.14 Parties in Interest................................... II-44
9.15 Mutual Drafting....................................... II-44
9.16 Obligations of American and of Mergeparty............. II-44
9.17 Mergeparty Agent for Mergeparty Subsidiary............ II-44
9.18 Original Merger Agreement............................. II-44

APPENDIX A: Definitions
EXHIBITS:
EXHIBIT A: Restated Certificate of Incorporation
EXHIBIT B: Market Fee Schedule
EXHIBIT C: Form of Opinion of FCC Counsel to American
EXHIBIT D: Tower Merger Agreement
SCHEDULES: Schedule 4.1(e)

AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

Amended and Restated Agreement and Plan of Merger, dated as of December 18,
1997, by and among American Radio Systems Corporation, a Delaware corporation
("American"), CBS Corporation (formerly, Westinghouse Electric Corporation), a
Pennsylvania corporation ("Mergeparty"), and R Acquisition Corp., a Delaware
corporation ("Mergeparty Subsidiary").

W I T N E S S E T H:

WHEREAS, American, Mergeparty and Mergeparty Subsidiary are parties to an
Agreement and Plan of Merger, dated as of September 19, 1997 (the "Original
Merger Agreement"), providing for the merger of Mergeparty Subsidiary with and
into American on the terms and conditions set forth therein; and

WHEREAS, American, Mergeparty and Mergeparty Subsidiary desire to amend and
restate the Original Merger Agreement in its entirety to make certain changes
to the Original Merger Agreement; and

WHEREAS, American, Mergeparty and Mergeparty Subsidiary have entered into
this Amended and Restated Agreement and Plan of Merger (this "Agreement")
providing that Mergeparty Subsidiary shall be merged with and into American,
which shall be the surviving corporation, on the terms and conditions set
forth in this Agreement (the "Merger").

NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained and other valuable
consideration, the receipt and adequacy whereof are hereby acknowledged, the
parties hereto hereby, intending to be legally bound, represent, warrant,
covenant and agree as follows:

ARTICLE 1

Defined Terms

As used herein, unless the context otherwise requires, the terms defined in
Appendix A shall have the respective meanings set forth therein. Terms defined
in the singular shall have a comparable meaning when used in the plural, and
vice versa, and the reference to any gender shall be deemed to include all
genders. Unless otherwise defined or the context otherwise clearly requires,
terms for which meanings are provided in this Agreement shall have such
meanings when used in either Disclosure Schedule and each Collateral Document
executed or required to be executed pursuant hereto or thereto or otherwise
delivered, from time to time, pursuant hereto or thereto. References to
"hereof," "herein" or similar terms are intended to refer to the Agreement as
a whole and not a particular section, and references to "this Section" or
"this Article" are intended to refer to the entire section or article and not
a particular subsection thereof. The term "either party" shall, unless the
context otherwise requires, refer to American, on the one hand, and Mergeparty
and Mergeparty Subsidiary, on the other hand.

ARTICLE 2

The Merger

2.1 The Merger. (a) Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware General Corporation Law
(the "DCL"), at the Effective Time, Mergeparty Subsidiary shall be merged with
and into American. As a result of the Merger, the separate corporate existence
of Mergeparty Subsidiary shall cease and American shall continue as the
surviving corporation in the Merger (sometimes referred to, as such, as the
"Surviving Corporation").

II-1

2.2 Closing. Unless this Agreement shall have been terminated pursuant to
Section 8.1 and subject to the satisfaction or, to the extent permitted by
Applicable Law, waiver of the conditions set forth in Article 7, the closing
of the Merger (the "Closing") will take place, at 10:00 a.m., on the Closing
Date, at the offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York,
New York 10019, on the date that is the second (2nd) day after the date on
which all of the conditions set forth in Article 7 (other than those which
require delivery of opinions or documents at the Closing) shall have been
satisfied or waived, unless another date, time or place is agreed to in
writing by the parties. The date on which the Closing occurs is herein
referred to as the "Closing Date."

2.3 Effective Time. Subject to the provisions of this Agreement, as promptly
as practicable after the Closing, the parties hereto shall cause the Merger to
be consummated by filing a certificate of merger (the "Certificate of Merger")
and any related filings required under the DCL with the Secretary of State of
the State of Delaware. The Merger shall become effective at such time as such
documents are duly filed with the Secretary of State of the State of Delaware,
or at such later time as is specified in such documents (the "Effective
Time").

2.4 Effect of the Merger. The Merger shall have the effects provided for
under the DCL.

2.5 Certificate of Incorporation. The Certificate of Incorporation of
American, as in effect immediately prior to the Effective Time, shall be
amended as of the Effective Time to read in its entirety as set forth in
Exhibit A and, as so amended, such Certificate of Incorporation, together with
the Certificates of Designation of (i) 11 3/8% Series B Cumulative
Exchangeable Preferred Stock, par value $.01 per share, of American ("American
Cumulative Preferred Stock") and (ii) 7% Convertible Exchangeable Preferred
Stock, par value $.01 per share, of American ("American Convertible Preferred
Stock" and, collectively with American Cumulative Preferred Stock, "American
Preferred Stock"), shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
Applicable Law. Such amendment shall not be deemed to affect in any manner the
Certificates of Designation of American Preferred Stock.

2.6 Bylaws. The bylaws of American in effect at the Effective Time shall be
the bylaws of the Surviving Corporation until amended in accordance with
Applicable Law and the Organic Documents of the Surviving Corporation.

2.7 Directors and Officers. From and after the Effective Time, until
successors are duly elected or appointed and qualified, or upon their earlier
resignation or removal, in accordance with Applicable Law and the Organic
Documents of the Surviving Corporation, (a) the directors of Mergeparty
Subsidiary at the Effective Time shall be the directors of the Surviving
Corporation, and (b) the officers of American at the Effective Time shall be
the officers of the Surviving Corporation.

ARTICLE 3

Conversion of Shares; Exchange of Certificates

3.1 Conversion of Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of Mergeparty, Mergeparty Subsidiary
or American or their respective stockholders:

(a) Each share of Common Stock, par value $1.00 per share, of Mergeparty
Subsidiary issued and outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the
Surviving Corporation;

(b) Each share of American Cumulative Preferred Stock issued and
outstanding immediately prior to the Effective Time shall remain
outstanding;

(c) Each share of American Convertible Preferred Stock issued and
outstanding immediately prior to the Effective Time shall remain
outstanding;

II-2

(d) Subject to paragraph (e) below, each share of Class A Common Stock,
par value $.01 per share ("American Class A Common"), each share of Class B
Common Stock, par value $.01 per share ("American Class B Common"), and
each share of Class C Common Stock, par value $.01 per share ("American
Class C Common" and, collectively with American Class A Common and American
Class B Common, "American Common Stock"), of American issued and
outstanding immediately prior to the Effective Time (other than Dissenting
Shares) shall be converted into the right to receive the following:

(i) if the Tower Merger Effective Time shall not have occurred, (A)
$44.00 in cash and (B) one share of Tower Common Stock, with (x) each
share of American Class A Common being converted into the right to
receive one share of Class A Common Stock, par value $.01 per share
("Tower Class A Common"), of American Tower Systems Corporation, a
Delaware corporation and a wholly-owned Subsidiary of American
("American Tower"), (y) each share of American Class B Common being
converted into the right to receive one share of Class B Common Stock,
par value $.01 per share ("Tower Class B Common"), of American Tower,
and (z) each share of American Class C Common being converted into the
right to receive one share of Class C Common Stock, par value $.01 per
share ("Tower Class C Common" and, collectively with Tower Class A
Common and Tower Class B Common, "Tower Common Stock"), of American
Tower (collectively, the "Tower Stock Consideration"); or

(ii) if the Tower Merger Effective Time shall have occurred, an
amount in cash determined by dividing $44.00 by the American Conversion
Fraction.

The term "Cash Consideration" shall mean the following: (x) if the Tower
Merger Effective Time shall not have occurred, $44.00, and (y) if the Tower
Merger Effective Time shall have occurred, the amount of cash determined
pursuant to the provisions of clause (ii) preceding. The term "Merger
Consideration" shall mean the Cash Consideration and, if the Tower Merger
Effective Time shall not have occurred, the Tower Stock Consideration.

(e) Each share of American Common Stock owned by American or any of its
Subsidiaries or Mergeparty or any of its Subsidiaries immediately prior to
the Effective Time shall automatically be canceled and extinguished without
any conversion thereof and no payment shall be made with respect thereto.

As a result of the Merger and without any action on the part of the holder
thereof, at the Effective Time all shares of American Common Stock shall cease
to be outstanding and shall be canceled and retired and shall cease to exist,
and each holder of any certificates formerly representing such shares shall
thereafter cease to have any rights with respect to such shares, except,
subject to paragraph (e) above, the right to receive, without interest, the
Merger Consideration, or, in the case of a holder of Dissenting Shares, the
right to perfect the right to receive payment for Dissenting Shares pursuant
to Section 262 of the DCL.

3.2 Exchange of Certificates.

(a) From time to time, on or prior to or after the Effective Time,
Mergeparty shall deposit or cause to be deposited with an exchange agent
selected by Mergeparty and not reasonably disapproved of by American (the
"Exchange Agent") in trust for the benefit of the holders of American Common
Stock cash in amounts and at times necessary for the prompt payment of the
Cash Consideration, and American shall deposit or cause to be deposited with
the Exchange Agent in trust for the benefit of the holders of American Common
Stock shares of Tower Common Stock in amounts and at times necessary for the
prompt delivery of the Tower Stock Consideration, if any, upon the surrender
of Certificates.

(b) Not more than five (5) business days subsequent to the Effective Time,
the Exchange Agent shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding shares of American Common Stock (the "Certificates") (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon actual delivery of
the Certificates to the Exchange Agent and shall be in such form and have such
other provisions as American and Mergeparty may agree) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange

II-3

for the Merger Consideration. Upon surrender of Certificates for cancellation
to the Exchange Agent, together with a duly executed letter of transmittal and
such other documents as the Exchange Agent shall reasonably require, the
holder of such Certificate shall receive in exchange therefor the Merger
Consideration multiplied by the number of shares of American Common Stock
formerly represented by such Certificates. The amount of Cash Consideration
paid to the holder of Certificates shall be in the form of a wire transfer of
immediately available funds if so requested by any holder entitled to receive
not less than $500,000 in cash, and the cost of such wire transfers shall be
borne by the Surviving Corporation. Such letter of transmittal and
instructions shall be available at the Closing for holders of American Common
Stock. Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to a holder of shares of American Common Stock for any
Merger Consideration delivered to a public official pursuant to applicable
abandoned property, escheat or similar Laws.

(c) Promptly following the date which is six (6) months after the Closing
Date, the Exchange Agent shall deliver to Mergeparty all cash and any shares
of Tower Common Stock in its possession relating to the transactions described
in this Agreement that remain unclaimed, and the Exchange Agent's duties shall
terminate. Thereafter, each holder of a Certificate may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar Laws) receive in exchange therefor the aggregate
Merger Consideration to which such holder is entitled, without any interest
thereon, but together with dividends and distributions, if any, paid by
American Tower on or with respect to the Tower Common Stock in accordance with
the provisions of Section 3.2(d).

(d) Notwithstanding any other provisions of this Agreement, no dividends or
other distributions declared after the earlier to occur of the Tower Merger
Effective Time or the Effective Time on Tower Common Stock shall be paid with
respect to any shares of Tower Common Stock represented by a Certificate until
such Certificate is surrendered for exchange as provided herein or, if the
Tower Merger Effective Time shall have occurred, as provided in the Tower
Merger Agreement. Subject to the effect of Applicable Laws, following
surrender of any such Certificate, there shall be paid to the holder of the
shares of Tower Common Stock issued in exchange therefor, without interest,
(i) at the time of such surrender, the amount of dividends or other
distributions with a record date after the earlier to occur of the Tower
Merger Effective Time or the Effective Time theretofore payable with respect
to such shares of Tower Common Stock and not paid, less the amount of any
withholding taxes which may be required thereon, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record
date after the earlier to occur of the Tower Merger Effective Time or the
Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such shares of Tower Common Stock, less the
amount of any withholding taxes which may be required thereon.

(e) If the Merger Consideration (or any portion thereof) is to be delivered
to a Person other than the Person in whose name the Certificate surrendered in
exchange therefor is registered, it shall be a condition to the delivery of
the Merger Consideration that the Certificate so surrendered shall be properly
endorsed or accompanied by appropriate stock powers (with signatures
guaranteed in accordance with the transmittal letter) and otherwise in proper
form for transfer, that such transfer otherwise be proper and that the Person
requesting such transfer pay to the Exchange Agent any transfer or other Taxes
payable by reason of the foregoing or establish to the satisfaction of the
Exchange Agent that such Taxes have been paid or are not required to be paid.

(f) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and subject to such other
reasonable conditions as the Exchange Agent may impose, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration (to the extent applicable) deliverable in respect thereof
as determined in accordance with this Article. When authorizing such issue of
the Merger Consideration in exchange therefor, the Exchange Agent may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificate (if other than a
recognized financial institution) to give the Exchange Agent a bond or other
surety in such sum as it may reasonably direct as indemnity against any Claim
that may be made against the Exchange Agent with respect to the Certificate
alleged to have been lost, stolen or destroyed.

II-4

(g) At and after the Effective Time, the holder of a Certificate shall cease
to have any rights as a holder of shares of American Common Stock, except for
the right to surrender Certificates in the manner prescribed by Section 3.2 in
exchange for delivery of the Merger Consideration, or, in the case of a holder
of Dissenting Shares, the right to perfect the right to receive payment for
Dissenting Shares pursuant to Section 262 of the DCL.

(h) The Surviving Corporation shall be entitled to, or shall be entitled to
cause the Exchange Agent to, deduct and withhold from the consideration
otherwise deliverable pursuant to this Agreement to any holder of shares of
American Common Stock such amounts as are required to be deducted and withheld
with respect to the making of such payment under the Code, or any provision of
state, local or foreign Tax Law. To the extent that amounts are so withheld by
the Surviving Corporation or the Exchange Agent, as the case may be, such
withheld amounts shall be treated for all purposes of this Agreement as having
been delivered to the holder of the shares of American Common Stock in respect
of which such deduction and withholding was made by the Surviving Corporation
or the Exchange Agent.

(i) The Exchange Agent shall invest any funds held by it for purposes of
this Section 3.2 as directed by Mergeparty, on a daily basis. Any interest and
other income resulting from such investments shall be paid to Mergeparty and
any risk of loss resulting from such investments shall be borne by Mergeparty.

3.3 Closing of American's Transfer Books. At the Effective Time, the stock
transfer books of American relating to American Common Stock shall be closed
and no transfer of shares of American Common Stock which were outstanding
immediately prior to the Effective Time shall thereafter be made. If, after
the Effective Time, subject to the terms and conditions of this Agreement,
Certificates formerly representing American Common Stock are presented to the
Surviving Corporation, they shall be canceled and exchanged for the Merger
Consideration in accordance with the provisions of this Article.

3.4 Dissenting Shares.

(a) Notwithstanding any other provision of this Agreement to the contrary,
shares of American Common Stock that are outstanding immediately prior to the
Effective Time and which are held by American stockholders who shall have not
voted in favor of the Merger or consented thereto in writing and who shall be
entitled to and shall have demanded properly in writing appraisal rights for
such shares of American Common Stock in accordance with Section 262 of the DCL
and who shall not have withdrawn such demand or otherwise have forfeited
appraisal rights (collectively, the "Dissenting Shares"), shall not be
converted into or represent the right to receive the Merger Consideration
payable in respect of each share of American Common Stock represented thereby.
Such American stockholders shall be entitled to receive payment of the
appraised value of such shares of American Common Stock held by them in
accordance with the provisions of the DCL; provided, however, that all
Dissenting Shares held by American stockholders who shall have failed to
perfect or who effectively shall have withdrawn, forfeited or lost their
appraisal rights with respect to such shares of American Common Stock under
the DCL shall thereupon be deemed to have been converted into and to have
become exchangeable for, as of the Effective Time, the right to receive,
without any interest thereon, the Merger Consideration upon surrender, in the
manner provided in Section 3.2, of the Certificates with respect to such
shares.

(b) American shall give Mergeparty prompt notice of any demands for
appraisal rights received by it, withdrawals of such demands, and any other
instruments served pursuant to the DCL and received by American and relating
thereto. American shall give Mergeparty the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal rights
under the provisions of the DCL. American shall not, except with the prior
written consent of Mergeparty, make any payment with respect to any demands
for appraisal rights, or offer to settle, or settle, any such demands.

(c) If the Tower Merger Effective Time shall not have occurred and the
Delaware Court of Chancery (the "Court") conducts an appraisal proceeding
pursuant to Section 262 of the DCL relating to an obligation to pay the
appraised value per share of American Common Stock ("Appraised Total Value")
to the holders of the Dissenting Shares, American Tower shall promptly pay to
American the portion of the Appraised Total Value

II-5

attributable to the Tower Stock Consideration (the "Tower Stock Payment") and
American shall contribute (without the payment of any amount or the issuance
of any securities by American Tower) to the capital of American Tower such
shares of Tower Common Stock owned by American that the holders of the
Dissenting Shares would have been entitled to receive had they not exercised
their appraisal rights. The Tower Stock Payment shall be determined pursuant
to the following provisions:

(i) American shall request the Court to determine in writing the Tower
Stock Payment. If the Court shall make such determination the Tower Stock
Payment shall be the amount so determined; and

(ii) If the Court shall not make such determination within a 30-day
period following such request (at which time such request shall be
withdrawn) (the "Determination Deadline"), American, American Tower and
Mergeparty shall submit to an arbitrator (the "Arbitrator") for review and
resolution the determination of the Tower Stock Payment. The Arbitrator
shall be a nationally recognized investment banking firm which shall be
agreed upon by American, Mergeparty and American Tower in writing. The
Arbitrator shall be requested to render a decision resolving the amount of
the Tower Stock Payment within 30 days following the date of its selection.
If the parties cannot agree on the firm to be selected as Arbitrator within
15 days following the Determination Deadline, then American and Mergeparty,
on the one hand, and American Tower, on the other hand, shall each choose
one such firm within 10 days following the expiration of such 15-day period
to review, resolve and agree on the determination of the Tower Stock
Payment, which determination, once agreed to in writing by both such firms,
shall be final, conclusive and binding on the parties. If such two firms
cannot agree on the amount of the Tower Stock Payment within 30 days
following the date on which the second of such firms is selected, then such
two firms shall promptly select a third such firm to make such
determination, which determination shall be made by such third firm within
30 days of the date on which such third firm is selected. The determination
of such third firm of the amount of the Tower Stock Payment shall be final,
conclusive and binding on the parties. The cost of any such arbitration
(including the fees of the Arbitrator and any other firm selected
hereunder) shall be borne 50% by American and 50% by American Tower.
American Tower shall promptly pay to American the amount of the Tower Stock
Payment once such amount is determined in accordance with this clause (ii).

3.5 Tower Merger. Anything in this Agreement to the contrary
notwithstanding, if the Effective Time shall not have occurred by May 31, 1998
(as such date may be extended by American with the written consent of
Mergeparty, such consent not to be unreasonably withheld, delayed or
conditioned), on June 1, 1998 (or the date following the date, if any, to
which the May 31, 1998 date shall have been so extended), the Board of
Directors of American shall, in its sole discretion, either (i) consummate the
merger of ATS Merger Corporation, a Delaware corporation and a wholly-owned
subsidiary of American ("ATS Mergercorp"), with and into American, which will
be the surviving corporation (the "Tower Merger"), pursuant to the agreement
and plan of merger between American and ATS Mergercorp dated as of the date
hereof and set forth as Exhibit D hereto (the "Tower Merger Agreement"), or
(ii) irrevocably elect to abandon the Tower Merger. Pursuant to the Tower
Merger Agreement, each share of ATS Mergercorp Common Stock issued and
outstanding immediately prior to the effective time of the Tower Merger (the
"Tower Merger Effective Time") shall, by virtue of the Tower Merger and
without any action on the part of the holder thereof, be automatically
canceled and extinguished and each share of American Common Stock issued and
outstanding immediately prior to the Tower Merger Effective Time shall be
converted into the right to receive:

(a) one share of Tower Common Stock, with (i) each share of American
Class A Common being converted into the right to receive one share of Tower
Class A Common, (ii) each share of American Class B Common being converted
into the right to receive one share of Tower Class B Common, and (iii) each
share of American Class C Common being converted into the right to receive
one share of Tower Class C Common (collectively, the "Tower Merger Tower
Consideration"); and

(b) a fraction (the "American Conversion Fraction") of a share of
American Common Stock of the same class as the class of American Common
Stock being converted, (i) the numerator of which is the difference between
(A) the denominator and (B) the value (determined as set forth below) of
one share of Tower Class A Common immediately prior to the Tower Merger
Effective Time, and (ii) the denominator of which is the value (determined
as set forth below) of one share of American Class A Common

II-6

immediately prior to the Tower Merger Effective Time (collectively with the
Tower Merger Tower Consideration, the "Tower Merger Consideration").

For purposes of determining the value of the American Class A Common and the
Tower Class A Common immediately prior to the Tower Merger Effective Time the
following principles shall apply:

(y) each share of Tower Class A Common shall be valued at the amount
determined in good faith by the American Radio Board of Directors to be its
fair market value immediately prior to the Tower Merger Effective Time.

No certificates in respect of fractional shares of American Common Stock
shall be issued in the Tower Merger, and cash shall be paid in lieu thereof as
provided in the Tower Merger Agreement. The certificates that immediately
prior to the Tower Merger Effective Time represented outstanding shares of
American Common Stock shall be deemed, without any action of the holders
thereof, to represent that number of shares of American Common Stock that the
holder thereof has the right to receive pursuant to clause 3.5(b), together
with cash in lieu of fractional shares as provided in the Tower Merger
Agreement.

Immediately prior to the Tower Merger Effective Time, American shall
contribute to ATS Mergercorp a number of shares of Tower Common Stock equal to
the Tower Merger Tower Consideration.

ARTICLE 4

Representations and Warranties of American

Except as set forth with respect to specifically identified representations
and warranties in the American Disclosure Schedule or as otherwise
contemplated by this Agreement, American hereby represents and warrants to
Mergeparty and Mergeparty Subsidiary as follows:

4.1 Organization and Business; Power and Authority; Effect of Transaction.

(a) American is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
power and authority (corporate and other) to own or hold under lease its
properties and to conduct its business as now conducted and as presently
proposed to be conducted. American is duly qualified and in good standing as a
foreign corporation in each other jurisdiction (as shown on Section 4.1(a) of
the American Disclosure Schedule) in which the character of the property owned
or leased by it or the nature of its business or operations requires such
qualification, with full power and authority (corporate and other) to carry on
the business in which it is engaged, except in such jurisdictions where the
failure to be so qualified or in good standing, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect on
American.

(b) Each of American and its Subsidiaries has all requisite power and
authority (corporate and other) to execute, deliver and perform its
obligations under this Agreement and each Collateral Document executed or
required to be executed by such party pursuant hereto or thereto and to
consummate the Merger and the other transactions contemplated hereby and
thereby, and the execution, delivery and performance of this Agreement and
each Collateral Document executed or required to be executed pursuant hereto
or thereto have been duly authorized by all requisite corporate or other
action on the part of American and its Subsidiaries, other than the approval
of the holders of shares of American Common Stock contemplated by Section
4.13, and no other corporate proceedings on the part of American or any of its
Subsidiaries are necessary to authorize this Agreement or the transactions
contemplated hereby or to consummate the Merger or the other transactions so
contemplated (other than, with respect to the Merger, the Required Vote and
with respect to the Tower Merger,

II-7

the Required Tower Vote). This Agreement has been duly executed and delivered
by American and constitutes, and each Collateral Document executed or required
to be executed by American and its Subsidiaries pursuant hereto or to
consummate the Merger when executed and delivered by American and its
Subsidiaries, as applicable, will constitute, a valid and binding obligation
of American and its Subsidiaries, as applicable, enforceable in accordance
with their respective terms, except as such enforceability may be limited by
bankruptcy, moratorium, insolvency and similar laws affecting the rights and
remedies of creditors and obligations of debtors generally and by general
principles of equity. As of the date hereof, the Board of Directors of
American, at a meeting duly called and held at which a quorum was present
throughout, has approved the Merger and this Agreement, and the Tower Merger
and the Tower Merger Agreement, and has recommended that the holders of shares
of American Common Stock approve and adopt this Agreement, the Tower Merger
Agreement and the transactions contemplated hereby and thereby, including
without limitation the Merger and the Tower Merger.

(c) The execution, delivery and performance by American and its
Subsidiaries, as applicable, of this Agreement and any Collateral Document
executed or required to be executed by such parties pursuant hereto or thereto
do not, and the consummation by American of the Merger and the other
transactions contemplated hereby and thereby, and compliance with the terms,
conditions and provisions hereof or thereof by such parties will not:

(i) (A) Except as set forth in Section 4.1(c) of the American Disclosure
Schedule, conflict with, or result in a breach or violation of, or
constitute a default under, any Organic Document of American or its
Subsidiaries, as applicable, or (B) conflict with, or result in a breach or
violation of, or constitute a default under, or permit the termination,
cancellation or acceleration of any obligation or liability in, or but for
any requirement of the giving of notice or passage of time or both would
constitute such a conflict with, breach or violation of, or default under,
or permit any such termination, cancellation or acceleration of, any
agreement, arrangement, contract, undertaking, understanding, Applicable
Law or other obligation or Private Authorization of American or its
Subsidiaries, as applicable, except, in the case of clause (B), for such
conflicts, breaches, violations, terminations, cancellations, defaults or
accelerations that would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect on American; or

(ii) result in or permit the creation or imposition of any Lien upon any
property now owned or leased by American except for such Liens that would
not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect on American; or

(iii) require any Governmental Authorization or Governmental Filing
except for (A) the FCC Consents, (B) filings under the Hart-Scott-Rodino
Act, (C) the filing with the Commission of (I) the Proxy Statement, (II)
the Tower Proxy Statement, (III) the Registration Statement and (IV) such
reports under Section 13(a) or 15(d) of the Exchange Act as may be required
in connection with this Agreement and the transactions contemplated by this
Agreement, (D) the filing of the Certificate of Merger and a certificate of
merger relating to the Tower Merger with the Delaware Secretary of State
and appropriate documents with the relevant authorities of other states in
which American is qualified to do business and (E) such other Governmental
Authorizations and Governmental Filings the failure of which to be made or
obtained would not be individually or in the aggregate, reasonably likely
to have a Material Adverse Effect on American.

(d) American does not have any direct or indirect Subsidiaries other than
those set forth on Section 4.1(d) of the American Disclosure Schedule (read
without the last three lines of the first page thereof) (and other than ATS
Mergercorp, American Tower, American Tower Systems (Delaware), Inc., ATS
Needham, LLC, Tower, LLC and Communications Systems Development, LLC). Each
direct or indirect Subsidiary of American (and other than ATS Mergercorp,
American Tower, American Tower Systems (Delaware), Inc., ATS Needham, LLC,
Tower, LLC and Communications Systems Development, LLC) is (i) wholly-owned
unless noted otherwise in Section 4.1(d) of the American Disclosure Schedule,
(ii) a corporation which is duly organized, validly existing and in good
standing under the laws of the respective state of incorporation set forth
opposite its name on Section 4.1(d) of the American Disclosure Schedule,