<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________________to_________________
Commission File No. 0-9334
TURNER BROADCASTING SYSTEM, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-0950695
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
ONE CNN CENTER 30303
ATLANTA, GEORGIA (Zip Code)
(Address of principal
executive office)
(404) 827-1700
(Registrant's telephone number, including area code)
<PAGE> 2
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Certain information concerning the executive officers of the Company
is set forth in Part I of the Company's Annual Report on Form 10-K for the
year ended December 31, 1993. The following is a brief description of the
business experience of the current members of the Board of Directors of
the Company and former members of the Board of Directors who served in
1993.
Under the terms of the Company's Restated Articles of Incorporation,
so long as at least four million shares of the Company's Class C
Convertible Preferred Stock (the "Class C Preferred Stock") are
outstanding, the Company's Board of Directors shall consist of fifteen
members, except that such number is subject to automatic adjustment under
those circumstances and during those time periods that holders of any
other class or series of the Company's preferred stock have rights to elect
members of the Board of Directors. Other than the Class C Preferred
Stock, there are no classes or series of preferred stock outstanding which
provide a present right to the holders thereof to elect directors.
Holders of the Company's Class A Common Stock (the "Class A Common Stock")
and holders of the Company's Class B Common Stock (the "Class B Common
Stock", and together with the Class A Common Stock, the "Common Stock")
are entitled to vote as a separate class for the election of eight of the
fifteen directors (the "Common Stock Directors"), and holders of the
Class C Preferred Stock are entitled to vote as a separate class for the
election of the remaining seven directors (the "Class C Directors").
R. E. Turner, age 55, has been Chairman of the Board, President and
controlling shareholder of the Company since 1970.
Henry L. (Hank) Aaron, age 60, served as Vice President -- Director of
Player Development of Atlanta National League Baseball Club, Inc. ("ANLBC")
from 1976 until December 1989, at which time he became Senior Vice
President of ANLBC. Mr. Aaron has been Vice President -- Community
Relations and a director of the Company since 1980. He was previously a
professional baseball player.
W. Thomas Johnson, age 52, was appointed as a Common Stock Director in
September 1990. He joined the Company in 1990 as Vice President -- News and
as President of Cable News Network, Inc. Previously, Mr. Johnson was
Chairman of the Los Angeles Times from 1989 until joining the Company, and
also Vice Chairman of the Times Mirror Company from 1987 until joining the
Company. From 1980 until 1989, he served as Publisher and Chief Executive
Officer of the Los Angeles Times.
Rubye M. Lucas, age 58, has been a director of the Company since 1981.
She is President of the William D. Lucas Fund, Inc., established in 1979 to
honor her late husband Bill Lucas, a former general manager of the Atlanta
Braves, by providing college scholarships to high school seniors who plan
to play baseball, and assists in fund raising for the National Association
for the Advancement of Colored People and the United Negro College Fund. In
addition, she serves as Director of the Atlanta Project for the Company.
Previously, she was employed as a teacher by the Atlanta Board of Education
from 1965 to 1990.
Terence F. McGuirk, age 42, has served as Executive Vice President of
the Company since 1990, as a director since 1987 and as President of the
Company's Turner Sports division since 1989. Previously, he was a Vice
President of the Company from 1979 to 1990. Mr. McGuirk joined the Company
in 1972 as an account executive.
Brian L. Roberts, age 34, has been a Common Stock Director of the
Company since January 1989. Mr. Roberts has served as President of Comcast
Corporation ("Comcast") since February 1990 and as a director of Comcast
since June 1988. From June 1987 he had served as Executive Vice President
of Comcast. Prior to becoming Executive Vice President, he served as a Vice
President of Operations for a division of Comcast from November 1984 to May
1987. Mr. Roberts also serves as a director of QVC Network, Inc., Comcast
Cablevision of Philadelphia, Inc. and Storer Communications, Inc.
Scott M. Sassa, age 35, has been a Common Stock Director of the
Company since September 1992. Mr. Sassa has served as Vice
President -- Entertainment Networks of the Company since 1990, having
previously served as Executive Vice President of Turner Network Television,
Inc. from 1988 until 1990. Prior to that time, he served as Vice President
of New Business Development of Ohlmeyer Communications Company from 1987
until 1988.
Robert Shaye, age 54, has been a Common Stock Director of the Company
since April 1994, filling the vacancy created by the resignation of William
C. Bartholomay. Mr. Shaye serves as Chairman and Chief Executive Officer of
New Line Cinema Corporation ("New Line"), a wholly-owned subsidiary of the
Company since January 28, 1994. Mr. Shaye has served as President or
Chairman and Chief Executive Officer of New Line since its inception in
1967.
<PAGE> 3
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
Peter R. Barton, age 43, has served as a Class C Director since April
1994, filling the vacancy created by the resignation of Bob Magness. Mr.
Barton has served as President of Liberty Media Corporation since 1990.
Prior to that time, he served as Senior Vice President of TCI from 1988
until March 1991 and President of Cable Value Network from 1986 to 1988.
Mr. Barton is also a director of QVC Network, Inc. and BET Holdings, Inc.
Joseph J. Collins, age 49, has served as a Class C Director since June
1988. Mr. Collins has served as Chairman of the Board and Chief Executive
Officer of Time Warner Cable, now a division of Time Warner Entertainment
Company, L.P. ("TWE"), since September 1989. TWE is a limited partnership
in which Time Warner Inc. ("TWI") holds an 87.5% equity interest. Mr.
Collins previously served as Chairman of the Board and Chief Executive
Officer of American Television and Communications Corporation, a TWI
subsidiary which was a predecessor of Time Warner Cable, from June 1988
until November 1992. He formerly served as President of Home Box Office
("HBO"), a former TWI subsidiary and now a division of TWE, from October
1984 until June 1988. Mr. Collins also served as a Vice President of TWI
from December 1982 to 1988.
Michael J. Fuchs, age 48, joined HBO in 1976, and has served as
Chairman and Chief Executive Officer of HBO since October 1984. Mr. Fuchs
is also a director of Marvel Entertainment Group, Inc.
Gerald M. Levin, age 54, has served as a Class C Director since
February 1992. Mr. Levin has served as Chairman, President and Chief
Executive Officer of TWI since January 1993, having served as President and
Co-Chief Executive Officer of TWI from February 1992 until assuming his
present positions. He had previously served as the Vice Chairman of the
Board of TWI since July 1988 and as Chief Operating Officer of TWI since
May 1991. Mr. Levin served as the Executive Vice President of TWI from
April 1984 until July 1988. Mr. Levin has served as a director of TWI since
1983.
Bob Magness, age 69, served as a director of the Company from June
1992 until April 1994. Mr Magness has served as a director of
Tele-Communications, Inc. ("TCI") since 1968 and as Chairman of the Board
of TCI since 1973, and he also serves as Chairman of the Board of a
number of TCI's subsidiaries. He previously served as President of TCI
and its predecessors from 1958 to 1973. Mr. Magness is also a director
of Liberty Media Corporation and Republic Pictures Corporation.
John C. Malone, age 53, has served as President and Chief Executive
Officer and as a director of TCI since 1973. Mr. Malone also serves as a
director of The Bank of New York Company, Inc., BET Holdings, Inc. and The
Discovery Channel.
Timothy P. Neher, age 46, has served as Vice Chairman of the Board of
Continental Cabelvision, Inc. ("Continental") since January 1991 and as a
director of Continental since 1982. Previously, he had served as
President and Chief Operating Officer of Continental from 1985 through
1990, as Executive Vice President from 1982 to 1985 and as Vice President
and Treasurer from 1980 to 1982.
Fred A. Vierra, age 62, has served as a Class C Director since January
1992. Mr. Vierra has served as the Executive Vice President of TCI since
December 1991. Prior to that time, he served as the President and Chief
Operating Officer of United Artists Entertainment Company from May 1989
through December 1991, and as President and Chief Operating Officer of
United Cable Television Corporation from 1982 to May 1989. Mr. Vierra is
also a director of Boettcher Venture Capital, L.P.
William C. Bartholomay, age 65, was a director of the Company from
1976 until April 1994 and has served as Chairman of the Board of ANLBC
since 1976. He is also President of Near North National Group, which is
an insurance brokerage firm, and a director of WMS Industries, Inc.
<PAGE> 4
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
compensation of the Company's Chief Executive Officer and each of the other four
most highly compensated executive officers of the Company serving as of December
31, 1993 (these individuals, collectively, the "named executive officers"), for
the fiscal years ended December 31, 1993, 1992 and 1991.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION ALL OTHER
------------ COMPEN-
ANNUAL COMPENSATION SECURITIES SATION
NAME AND ----------------------- UNDERLYING ($)
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) (1)(2)
- - ----------------------------------------- ---- ---------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
R. E. Turner............................. 1993 925,096 471,685 0 141,621
Chairman of the Board, President and 1992 765,554 341,921 0 136,631
Chief Executive Officer 1991 666,923 331,546 0 --
Terence F. McGuirk....................... 1993 770,913 1,388,230(3) 500,000 111,555
Executive Vice President 1992 683,779 252,723 40,000 112,022
1991 582,346 232,930 40,000 --
Scott M. Sassa........................... 1993 513,942 1,000,445(4) 500,000(5) 71,467
Vice President -- Entertainment 1992 432,365 127,057 25,000 65,006
Networks 1991 365,096 110,363 20,000 --
W. Thomas Johnson........................ 1993 456,431 813,115(6) 300,000 63,057
Vice President -- News 1992 434,553 127,511 25,000 66,100
1991 411,442 124,091 25,000 --
William H. Grumbles...................... 1993 411,153 128,429 100,000 55,476
Vice President -- Worldwide 1992 346,651 70,178 15,000 43,134
Distribution 1991 273,269 26,923 30,000 --
</TABLE>
- - ---------------
(1) In accordance with the revised rules of the Securities and Exchange
Commission (the "SEC") applicable to the disclosure of executive officer
and director compensation, amounts of All Other Compensation are not
provided for years prior to 1992.
(2) The amounts shown in this column for 1993 represent Company contributions in
1993 to the Retirement Savings Plan, the Supplemental Benefit Plan (ERISA
excess plan under which accruals are made to offset Internal Revenue Code
imposed limitations under the Retirement Savings Plan), the Supplemental
Executive Retirement Plan (defined contribution plan for a select group of
management and highly compensated individuals), and the Life Insurance
Program, respectively, as follows: Mr. Turner -- $14,115, $70,204, $56,096
and $1,206; Mr. McGuirk -- $14,115, $52,164, $44,070 and $1,206; Mr.
Sassa -- $14,115, $28,111, $28,035 and $1,206; Mr. Johnson -- $14,115,
$23,065, $24,671 and $1,206; and Mr. Grumbles -- $14,115, $18,517, $21,638
and $1,206.
(3) This bonus amount includes 22,000 shares of Class B Common Stock valued at
$27.125 per share granted in connection with Mr. McGuirk's execution of an
employment agreement with the Company and a special cash bonus to defray
the tax liability associated with such stock grant. See "Executive
Compensation -- Employment Agreements".
(4) This bonus amount includes 16,700 shares of Class B Common Stock valued at
$27.125 per share granted in connection with Mr. Sassa's execution of an
employment agreement with the Company and a special cash bonus to defray
the tax liability associated with such stock grant. See "Executive
Compensation -- Employment Agreements".
(5) Mr. Sassa was granted these stock options in connection with his execution
of an employment agreement with the Company which was intended to be
executed in 1993 at the time that Messrs. McGuirk and Johnson also entered
into employment agreements with the Company. Mr. Sassa's employment
agreement was executed as of January 1, 1994. See "Executive
Compensation -- Employment Agreements".
(6) This bonus amount includes 13,800 shares of Class B Common Stock valued at
$27.125 per share granted in connection with Mr. Johnson's execution of an
employment agreement with the Company and a special cash bonus to defray
the tax liability associated with such stock grant. See "Executive
Compensation -- Employment Agreements".
<PAGE> 5
ITEM 11. EXECUTIVE COMPENSATION (Continued)
STOCK OPTION GRANTS IN 1993
The following table sets forth information concerning stock option grants
during 1993 to the named executive officers.
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEES PRICE EXPIRATION GRANT DATE
NAME (#)(1) IN 1993 ($/SH)(1) DATE PRESENT VALUE ($)(2)
- - ---------------------------------- --------- ----------- --------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
R. E. Turner...................... 0 -- -- --
Terence F. McGuirk................ 500,000 19.85 27.125 12/20/03 5,332,100(3)
Scott M. Sassa.................... 500,000(4) 19.85 27.125 01/01/04 5,998,350(5)
W. Thomas Johnson................. 300,000 11.91 27.125 12/20/03 3,199,260(3)
William H. Grumbles............... 100,000 3.97 25.625 12/23/03 1,126,000(6)
</TABLE>
- - ---------------
(1) These grants were made pursuant to the 1988 Stock Option Plan. Grants to
Messrs. McGuirk, Sassa and Johnson were approved by the Stock Option and
Compensation Committee and the Board of Directors of the Company on
November 15, 1993, subject to the execution by each such officer of an
employment agreement with the Company. Grants were made to Messrs. McGuirk
and Johnson on December 20, 1993 and to Mr. Sassa on January 1, 1994. Such
grants vest annually, commencing on the first anniversary of the grant
date, at a rate of 25% of the grant. The exercise price is the closing
price of the Class B Common Stock on the American Stock Exchange on
November 15, 1993, which was higher than the closing price of the Class B
Common Stock on the American Stock Exchange on the respective dates of
grant. The grant to Mr. Grumbles was made on December 23, 1993 and vests
annually, commencing on the second anniversary of the grant date, at a rate
of 33 1/3% of the grant. The exercise price is the closing price of the
Class B Common Stock on the American Stock Exchange on the date of grant.
(2) This calculation is based on the Black-Scholes option pricing model adapted
for use in valuing stock options. The actual value, if any, an executive
officer may realize ultimately depends on the market value of the Class B
Common Stock at a future date. There is no assurance that the value
realized by an executive will be at or near the value estimated by the
Black-Scholes model. The estimated values under that model are based on the
assumptions described in footnotes 3, 5 and 6 to the above table.
(3) The estimated value of the options granted to Messrs. McGuirk and Johnson
were based upon a grant date of December 20, 1993, using both the exercise
price of $27.125 and the market value of the Class B Common Stock on the
date of grant of $25.375. The following assumptions were used in such
calculation: expected stock volatility of 0.3288 based upon the weekly
closing prices of the Class B Common Stock over the two-year period ending
on the date of grant, a dividend yield of 0.27% based upon the annualized
dividend divided by the stock price of the Class B Common Stock on the date
of grant, a risk free interest rate of 5.63% based upon the yield as of the
date of grant on a U.S. Government Zero Coupon Bond with a maturity equal
to the term of the option, and an expected time of exercise of seven years
after the date of grant and a 3% per year forfeiture rate, both based upon
the Company's experience over the last six years.
(4) Mr. Sassa was granted stock options in connection with his execution of an
employment agreement with the Company which was intended to be executed in
1993 at the time that Messrs. McGuirk and Johnson also entered into
employment agreements with the Company. Mr. Sassa's employment agreement
was executed as of January 1, 1994. See "Executive
Compensation -- Employment Agreements".
(5) The estimated value of the options granted to Mr. Sassa was based upon a
grant date of January 1, 1994, using both the exercise price of $27.125 and
the market value of the Class B Common Stock on January 1, 1994 of
$27.00. The following assumptions were used in such calculation: expected
stock volatility of 0.3296 based upon the weekly closing prices of the
Class B Common Stock over the two-year period ending on the date of grant,
a dividend yield of 0.25% based upon the annualized dividend divided by the
stock price of the Class B Common Stock on the date of grant, a risk free
interest rate of 5.76% based upon the yield as of the date of grant on a
U.S. Government Zero Coupon Bond with a maturity equal to the term of the
option, and an expected time of exercise of seven years after the date of
grant and a 3% per year forfeiture rate, both based upon the Company's
experience over the last six years.
(6) The estimated value of the options granted to Mr. Grumbles was based upon a
grant date of December 23, 1993, using both the exercise price and market
value of the Class B Common Stock on December 23, 1993 of $25.625. The
following assumptions were used in such calculation: stock volatility of
0.3288 based upon the weekly closing prices of the Class B Common Stock
over the two-year period ending on the date of grant, a dividend yield of
0.27% based upon the annualized dividend divided by the stock price of the
Class B Common Stock on the date of grant, a risk free interest rate of
5.51% based upon the yield as of the date of grant on a U.S. Government
Zero Coupon Bond with a maturity equal to the term of the option, and an
expected time of exercise of seven years after the date of grant and a 3%
per year forfeiture rate, both based upon the Company's experience over the
last six years.
<PAGE> 6
ITEM 11. EXECUTIVE COMPENSATION (Continued)
AGGREGATED STOCK OPTION EXERCISES IN 1993 AND YEAR-END OPTION VALUES
The following table sets forth information concerning options exercised
during 1993 by the named executive officers and the value of unexercised options
held by them as of December 31, 1993.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED
SHARES OPTIONS AT FISCAL OPTIONS AT
ACQUIRED YEAR-END (#) FISCAL YEAR-END ($)(2)
ON VALUE ---------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - --------------------- ------------ --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. E. Turner......... 0 -- 0 0 -- --
Terence F. McGuirk... 0 -- 113,333 616,667 1,482,998 1,206,503
Scott M. Sassa....... 25,000 230,125 6,667 563,333 50,003 642,623
W. Thomas Johnson.... 0 -- 88,333 381,667 1,168,898 875,078
William H.
Grumbles........... 30,000 249,990 33,336(3) 184,667(4) 419,795 964,377
</TABLE>
- - ---------------
(1) These amounts represent the excess of the fair market value of the Class B
Common Stock at the time of exercise above the exercise price of the
options.
(2) These amounts represent the excess of the fair market value of the Class B
Common Stock of $27.00 per share as of December 31, 1993, above the
exercise price of the options.
(3) Includes options with respect to 3,336 shares of Class B Common Stock owned
by Mr. Grumbles's wife, as to which shares Mr. Grumbles disclaims
beneficial ownership.
(4) Includes options with respect to 39,667 shares of Class B Common Stock owned
by Mr. Grumbles's wife, as to which shares Mr. Grumbles disclaims
beneficial ownership.
LONG-TERM INCENTIVE PLANS-AWARDS IN 1993
The following table sets forth information concerning the long-term
incentive plan awards made to the named executive officers under the Company's
Long-Term Incentive Plan ("LTIP") during 1993.
<TABLE>
<CAPTION>
NUMBER ESTIMATED FUTURE
OF SHARES, PAYOUTS UNDER NON-STOCK
UNITS OR PERFORMANCE OR PRICE-BASED PLANS(2)
OTHER RIGHTS OTHER PERIOD UNTIL ------------------------------------------
NAME (#)(1) MATURATION OR PAYOUT THRESHOLD ($) TARGET ($) MAXIMUM ($)
- - --------------------- ------------ ----------------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
R. E. Turner......... 550,000 3 Yrs. Ending 12/31/94 412,500 550,000 825,000
Terence F. McGuirk... 475,000 3 Yrs. Ending 12/31/94 356,250 475,000 712,500
Scott M. Sassa....... 230,000 3 Yrs. Ending 12/31/94 172,500 230,000 345,000
W. Thomas Johnson.... 310,000 3 Yrs. Ending 12/31/94 232,500 310,000 465,000
William H. Grumbles.. 125,000 3 Yrs. Ending 12/31/94 93,750 125,000 187,500
</TABLE>
- - ---------------
(1) A performance unit is a method of assigning a dollar value to a performance
award opportunity. The actual number of units granted to a participant is
determined such that, when taken together with a participant's stock option
grants under the Company's 1988 Stock Option Plan, the performance award
will provide the participant with a total long-term incentive award
commensurate with that participant's responsibilities.
(2) The threshold, target and maximum value of a unit is $.75, $1.00 and $1.50,
respectively, and can vary based on the Company's attainment of operating
income and revenue objectives, as specified in the plan, over the
three-year cycle. If a participant's employment is terminated during a
three-year cycle (for reasons other than approved retirement, death or
disability), that participant is not entitled to any cash payment under the
plan for that cycle. To date, no benefits have been distributed under the
plan.
<PAGE> 7
ITEM 11. EXECUTIVE COMPENSATION (Continued)
EMPLOYMENT AGREEMENTS
The Company has entered into four-year employment agreements with Messrs.
McGuirk, Sassa and Johnson. Under Mr. McGuirk's employment agreement dated
December 20, 1993, he will serve as Executive Vice President of the Company for
a minimum annual base salary of $855,000 and a minimum annual bonus of $645,000
under the Turner Incentive Plan (provided certain Company performance targets
are met). Under Mr. Sassa's employment agreement dated January 1, 1994, he will
serve as Vice President-Entertainment Networks of the Company for a minimum
annual base salary of $805,000 and a minimum annual bonus of $645,000 under the
Turner Incentive Plan (provided certain Company performance targets are met).
Under Mr. Johnson's employment agreement dated December 20, 1993, he will serve
as Vice President-News of the Company for a minimum annual base salary of
$700,000 and a minimum annual bonus of $350,000 under the Turner Incentive Plan
(provided certain Company performance targets are met). In connection with the
execution of his employment agreement, Mr. McGuirk was granted 22,000 shares of
Class B Common Stock, a special bonus of $476,000 to defray tax liability
associated with such stock grant and stock options for 500,000 shares of Class B
Common Stock. In connection with the execution of his employment agreement, Mr.
Sassa was granted 16,700 shares of Class B Common Stock, a special bonus of
$383,555 to defray tax liability associated with such stock grant and stock
options for 500,000 shares of Class B Common Stock. In connection with the
execution of his employment agreement, Mr. Johnson was granted 13,800 shares of
Class B Common Stock, a special bonus of $299,000 to defray tax liability
associated with such stock grant and stock options for 300,000 shares of Class B
Common Stock. During the term of their respective employment with the Company,
each of Messrs. McGuirk, Sassa and Johnson will be eligible to participate in
the Company's LTIP, Retirement Savings Plan, Supplemental Benefit Plan,
Supplemental Executive Retirement Plan and health benefit plans. Under each such
employment agreement, the executive officer's employment with the Company may
not be terminated except for "cause" as defined therein. Upon a change of
control of the Company, each of Messrs. McGuirk, Sassa and Johnson will be
entitled to terminate his employment with the Company and receive all earned and
vested compensation (including annual bonus and payments under the Company's
LTIP) as of the date of such termination. Under their respective employment
agreements, Messrs. McGuirk, Sassa and Johnson have agreed not to compete with
the Company for 12 months following the termination of their respective
employment under certain circumstances.
<PAGE> 8
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT
The following table contains certain information as of March 31, 1994
concerning shares of the Class A Common Stock and Class B Common Stock owned by
(i) the current members of the Board of Directors of the Company and former
members of the Board of Directors who were serving as of such date, (ii) the
named executive officers listed in the Summary Compensation Table, and (iii)
all such directors and executive officers of the Company as a group. Under the
rules of the SEC, generally a person is deemed to be a "beneficial owner" of a
security if he or she has or shares the power to vote or direct the voting of
such security, or the power to dispose or to direct the disposition of such
security. Thus, more than one person may be deemed a beneficial owner of the
same security. Because holders of the Class A Common Stock, holders of the
Class B Common Stock and holders of the Class C Preferred Stock generally vote
together on matters other than the election of directors, with each share of
Class A Common Stock having one vote, each share of Class B Common Stock having
one-fifth vote and each share of Class C Preferred Stock having one and
one-fifth votes, the percentages of such combined voting power held by the
persons listed in the table below are reflected in a separate column. Except as
otherwise noted, the persons referred to below had sole voting and investment
power with respect to the shares set forth as beneficially owned by them.
<TABLE>
<CAPTION>
% OF
SHARES COMBINED
TITLE OF BENEFICIALLY % OF VOTING
NAME OF BENEFICIAL OWNER SECURITIES OWNED CLASS POWER
- - ------------------------------------------------- ---------- ------------ ----- --------
<S> <C> <C> <C> <C>
R. E. Turner..................................... Class A 55,224,754(1) 80.8 49.9
Class B 30,529,968(1) 22.2 5.5
Henry L. Aaron................................... NA NA NA NA
William C. Bartholomay (2)....................... Class A 458,865 * *
Class B 322,764 * *
Peter R. Barton.................................. Class A 600 * *
Class B 300 * *
Joseph J. Collins................................ NA NA NA NA
Michael J. Fuchs................................. NA NA NA NA
William H. Grumbles.............................. Class B 38,336(3) * *
W. Thomas Johnson................................ Class B 102,133(4) * *
Gerald M. Levin.................................. NA NA NA NA
Rubye M. Lucas................................... Class A 400 * *
Class B 53 * *
Bob Magness (5).................................. NA NA NA NA
John C. Malone................................... NA NA NA NA
Terence F. McGuirk............................... Class B 150,800(6) * *
Timothy P. Neher................................. Class A 5,000 * *
Class B 10,000 * *
Brian L. Roberts................................. NA NA NA NA
Scott M. Sassa................................... Class B 23,396(7) * *
Robert Shaye..................................... Class B 4,572,579(8) 3.3 *
Fred A. Vierra................................... Class A 950 * *
All directors and executive officers as a group
(25 persons)................................... Class A 55,690,815 81.5 50.3
Class B 35,874,890(9) 26.1 6.5
</TABLE>
- - ---------------
* Indicates beneficial ownership of less than 1.0%.
(1) Includes 559,962 shares owned by Turner Outdoor, Inc., an affiliated
corporation which is wholly-owned by Mr. Turner, 3,000,000 shares of Class
B Common Stock as to which Mr. Turner has voting control but not
dispository control and 2,353,000 shares of Class B Common Stock held by a
charitable remainder unitrust, as to which shares Mr. Turner shares voting
and dispositive control. Also includes 500,000 shares of Class B Common
Stock owned by Mr. Turner's wife, as to which shares Mr. Turner disclaims
beneficial ownership, and 540,000 shares of Class B Common Stock held by
the Turner Foundation, Inc., as to which shares Mr. Turner disclaims
beneficial ownership.
(2) Mr. Bartholomay served as a director of the Company during 1993 and until
April 15, 1994.
(3) Consists of shares which are subject to purchase upon exercise of options
and includes options with respect to 3,336 shares owned by Mr. Grumbles's
wife, as to which shares Mr. Grumbles disclaims beneficial ownership.
(4) Includes 88,333 shares which are subject to purchase upon exercise of
options.
(5) Mr. Magness served as a director of the Company during 1993 and until April
15, 1994.
(6) Includes 113,333 shares which are subject to purchase upon exercise of
options.
(7) Includes 6,667 shares which are subject to purchase upon exercise of
options.
(8) Includes (a) 107,349 shares owned by trusts for Mr. Shaye's family which are
subject to voting control by Mr. Shaye, (b) 214,698 shares held in trust by
Mr. Shaye for his children, (c) 176,544 shares owned by Mr. Shaye's spouse,
(d) 96,614 shares owned by Mr. Shaye's children, (e) 49,638 shares held by
a private foundation, (f) 31,295 shares held by the 401(k) defined
contribution plan of New Line in which Mr. Shaye has a vested interest and
(g) 1,658,088 shares which are subject to purchase upon exercise of
options. Mr. Shaye disclaims beneficial ownership of those shares which
are held of record by his spouse, his children, by trusts for the
benefit of family members and the private foundation.
(9) Includes an aggregate of 2,024,392 shares which are subject to purchase upon
the exercise of options held by directors and executive officers of the
Company.
Except as discussed below under the caption "Security Ownership of Certain
Beneficial Owners," the Company knows of no person other than Mr. Turner who, as
of March 31, 1994, owns beneficially more than 5% of any class of the Company's
outstanding Common Stock. Mr. Turner's address is One CNN Center, Atlanta,
Georgia 30303.
<PAGE> 9
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(Continued)
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table contains certain information as of March 31, 1994
concerning shares of the Company's Class C Preferred Stock and Class B Common
Stock beneficially owned by each person (other than the person set forth in the
preceding table under the caption "Security Ownership of Management") known to
the Company to be the beneficial owner of more than 5% of the outstanding
shares of either of these classes of securities, and reflects information
presented in each such person's Schedule 13D or Schedule 13G and amendments (if
any) thereto as filed with the SEC and provided to the Company. Because holders
of the Class C Preferred Stock generally vote together with the holders of the
Common Stock on matters other than election of directors, the percentages of
the combined voting power represented by the persons listed in the table below
are reflected in a separate column. Because the Class C Preferred Stock is
convertible into Class B Common Stock at a present conversion rate of six
shares of Class B Common Stock for each share of Class C Preferred Stock, the
percentages of Class B Common Stock which would be held by the persons listed
below if their presently outstanding shares of Class C Preferred Stock were
presently converted are reflected in a separate column. Except as otherwise
noted, the persons referred to below had sole voting and investment power with
respect to the shares set forth as beneficially owned by them.
<TABLE>
<CAPTION>
CLASS C CLASS B % OF
PREFERRED STOCK COMMON STOCK CLASS B % OF
------------------- -------------------- COMMON COMBINED
BENEFICIAL % OF BENEFICIAL % OF UPON VOTING
ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS OWNERSHIP CLASS CONVERSION POWER
- - ----------------------------------- --------- ----- ---------- ----- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Tele-Communications, Inc.(1)....... 5,889,551(2) 47.5 % 29,723,758(2) 21.7 % 30.7% 11.8%
5619 DTC Parkway
Englewood, Colorado 80111
Time Warner Inc.(1)................ 4,890,457(3) 39.4 % 25,349,085(4) 18.5 % 25.8% 10.1%(5)
Time & Life Bldg.
Rockefeller Center
New York, New York 10022
The Capital Group, Inc............. -- -- 12,979,320(6) 9.5 % NA 2.3%
333 South Hope Street
Los Angeles, California 90071
</TABLE>
- - ---------------
(1) These entities are parties to certain agreements entered into in
connection with the offering by the Company in 1987 of units of securities
comprised of shares of the Company's Class B Cumulative Preferred Stock and
the Class C Preferred Stock (the "Units Offering"), including (a) a
Shareholders' Agreement, which provides for certain voting and disposition
arrangements with respect to the parties' respective equity interests in
the Company, and (b) an Investors' Agreement, which provides for certain
conversion and disposition arrangements with respect to the Class C
Preferred Stock held by the investors in the Units Offering. By
virtue of such agreements and certain other agreements hereinafter
referenced in this footnote, such entities may be deemed, together with the
other parties to such respective agreements, to constitute "groups" (within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) for purposes of determining beneficial ownership of the Class C
Preferred Stock and the Class B Common Stock. Except as set forth in the
table above and as otherwise acknowledged in these footnotes, each of the
above entities disclaims beneficial ownership of the shares owned by any
other persons in such "groups." These entities may also be deemed to
constitute a group for purposes of Section 13(d)(3) by virtue of an
agreement entered into by these and certain other parties in connection
with the Units Offering, which contains provisions relating to the
acquisition, disposition and voting of the Company's securities. In
addition, by virtue of a Voting Agreement entered into in connection with
the Units Offering among subsidiaries of these entities and certain other
investors in the Units Offering, such companies might constitute a group
for the purposes of Section 13(d)(3).
(2) Consists of shares (Class C Preferred Stock and Class B Common Stock,
respectively) held by entities in which TCI claims beneficial ownership,
including United Artists Investments, Inc. (5,820,452 and 5,355,882),
Communication Capital Corporation (none and 23,806,257), Heritage
Communications, Inc. (34,854 and 113,376), TCI Turner Preferred, Inc.
(34,245 and none), TCI TKR of Southern Kentucky, Inc. (none and 372,711),
and WestMarc Development Joint Venture (none and 75,532).
(3) Consists of shares held by entities in which TWI claims beneficial
ownership, including Time TBS Holdings, Inc. (4,221,619) and Warner Cable
Communications, Inc. (668,838).
(4) Consists of shares held by entities in which TWI claims beneficial
ownership, including American Television and Communications Corporation
(15,678,147), Capital Cablevision Systems Inc. (291,532), Memphis CATV,
Inc. (902,606), Peoples Cable Corp. (138,604), SIFTA Milwaukee Cable Corp.
(34,172), TA Milwaukee Cable Co., Inc. (72,614), Time Warner Operations,
Inc. (4,881,687), WCCI (1,735,650), Warner Cable of NY Inc. (148,874) and
Warner Cable Operating Inc. (1,465,199).
(5) The percentage of combined voting power includes 254,100 shares of
Class A Common Stock held by Warner Communications Inc.
(6) The number of shares in the table is based upon a Schedule 13G, dated
February 23, 1994, filed by The Capital Group, Inc. Certain operating
subsidiaries of The Capital Group, Inc. exercised investment discretion
over various institutional accounts which held, as of December 31, 1993,
12,979,320 shares of the Company's Class B Common Stock. Capital Guardian
Trust Company, a bank, and one of such operating companies, exercised
investment discretion over 4,303,220 of said shares. Capital Research and
Management Company and Capital International, Inc., registered investment
advisers, and Capital International Limited and Capital International,
S.A., other operating subsidiaries, had investment discretion with respect
to 7,572,880, 15,140, 1,059,080 and 29,000, respectively, of the
above-referenced shares.
<PAGE> 10
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to certain relationships and related party
transactions involving entities with which members of the Company's Stock Option
and Compensation Committee are affiliated is set forth below under the caption
"Compensation Committee Interlocks and Insider Participation," and comparable
information with respect to entities with which other members of the Company's
Board of Directors are affiliated is set forth below under the caption "Other
Transactions."
Compensation Committee Interlocks and Insider Participation
The Stock Option and Compensation Committee is currently comprised of four
Class C Directors and one Common Stock Director. The members of the Committee,
as well as the three other Class C Directors, are affiliated with entities which
were investors in the Company's 1987 Units Offering and which have ongoing
business relationships with the Company, primarily as operators, directly or
through affiliates, of cable television systems which receive and distribute to
their subscribers programming provided by the Company's cable television
operations. For purposes of the following discussion, Comcast, Continental, and
the other entities previously reflected in the table set forth under the
caption "Security Ownership of Certain Beneficial Owners" are collectively
referred to as the "Affiliated Holders."
The present members of the Stock Option and Compensation Committee have the
following relationships with the Affiliated Holders: Joseph J. Collins is
Chairman of the Board and Chief Executive Officer of Time Warner Cable, a
division of TWE, which is 87.5% owned by TWI; Michael J. Fuchs is Chairman of
the Board and Chief Executive Officer of HBO, another division of TWE; Timothy
P. Neher is Vice Chairman of the Board of Directors of Continental; Brian L.
Roberts is President of Comcast; and Fred A. Vierra is the Executive Vice
President of TCI.
During 1993, the Company recorded subscription fees from the Affiliated
Holders (directly or through affiliated entities) for their receipt of the
Company's cable services (Cable News Network ("CNN"), Turner Network Television
("TNT"), Headline News and the Cartoon Network), before deductions for
advertising allowances, as follows: TCI -- $103,099,000; TWI -- $62,223,000;
Continental -- $21,128,000; and Comcast -- $18,619,000. These amounts
constituted approximately 38% of the Company's total subscription fees recorded
during 1993. Advertising revenues received by the Company during 1993 were also
indirectly dependent to a substantial degree on cable television systems
operated by the Affiliated Holders or their affiliates since subscribers to
those systems constitute approximately 67%, 66%, 66%, 67% and 63% of the current
cable audience coverage for TBS SuperStation, TNT, CNN, Headline News and the
Cartoon Network, respectively.
Pursuant to a film license agreement entered into in February 1985 and
running through 1997, HBO may select and exhibit on its cable programming
services certain of the motion pictures in the Turner Entertainment Co. ("TEC")
film library owned by the Company. The Company received approximately $3,460,000
during each year ended December 31, 1993, 1992 and 1991 under this agreement.
In 1992, the Company entered into a reciprocal advertising agreement with
TWI that has a fair value of approximately $3,550,000. The Company provided
advertising time on certain of its networks in exchange for advertising in TWI's
magazines during the period July 1992 through June 1993. Also, pursuant to an
agreement entered into in October 1986, Lorimar Telepictures Corporation,
a wholly-owned subsidiary of TWI, has an eight-year commitment with the
Company to purchase $4,500,000 per year in advertising time on the Company's
networks. In addition, TWI placed advertising on the Company's networks which
was not pursuant to any of the agreements discussed above. In total, the Company
recorded advertising revenues, excluding reciprocal advertising agreements, of
approximately $7,516,000, $9,388,000 and $8,830,000 in the years ended December
31, 1993, 1992 and 1991, respectively, for advertising placed on the Company's
services by related parties.
Pursuant to a 1986 agreement with the predecessor of Metro-Goldwyn-Mayer,
Inc. ("MGM"), MGM became the designated distributor in the home video market of
most MGM and pre-1950 Warner Bros. films in the TEC film library, both
domestically and internationally, and certain RKO films internationally. The
distribution agreement (the "Home Video Agreement") provides for a fifteen-year
term commencing June 6, 1986 with distribution fees payable based primarily on
the suggested retail price of the films sold. In November 1990, MGM entered into
an agreement with Warner Home Video ("WHV"), a former subsidiary of TWI and now
a division of TWE, wherein WHV agreed to service certain of MGM's obligations
under the Home Video Agreement. Revenues recorded in 1993, 1992 and 1991
pursuant to this agreement were $81,723,000, $105,729,000 and $36,500,000,
respectively.
TWI and its subsidiaries have entered into license agreements with the
Company pursuant to which the Company has acquired broadcast rights to certain
television and theatrical product. The Company paid an aggregate of
approximately $13,933,000, $13,196,000 and $6,800,000 for license fees during
1993, 1992 and 1991, respectively, under these agreements and is committed to
pay $37,417,000 through 2001 under these agreements. TWI also has an investment
in n-tv, a 24-hour German language news channel in which the Company owned a
25.8% limited partnership interest as of December 31, 1993.
In February 1989, the Company entered into a joint venture arrangement with
HBO to purchase satellite transponders. The joint venture is structured so that
the purchased transponders are allocated by agreement between the Company and
HBO, and the Company's obligations are limited solely to those transponders and
ancillary service arrangements which are to be allocated to and used by the
Company and its subsidiaries.
Pursuant to a lease agreement entered into in 1993 relating to a satellite
transponder, the Company received approximately $1,920,000 from HBO in 1993. HBO
is committed to pay approximately $160,000 through 1994 under such lease. In
addition, pursuant to a lease agreement entered into in 1992 relating to a
satellite transponder, the Company received from Liberty Media Corporation
$1,826,000 and $1,163,000 in 1993 and 1992, respectively. Liberty Media
Corporation is committed to pay approximately $12,616,000 through 2000 under
such lease.
The Company received approximately $654,000 in licensing fees in 1993 from
Liberty Broadcast Corporation for the exhibition of certain of the motion
pictures in the TEC film library owned by the Company.
Other Transactions
Mr. Henry L. Aaron, Vice President -- Community Relations and a director of
the Company since 1980, is indebted to the Company for a non-interest bearing
advance secured by and payable out of deferred compensation, payable in 240
monthly installments which began in January 1983. The largest amount of such
indebtedness outstanding since January 1, 1993 was approximately $128,000, with
a balance of $112,000 remaining outstanding on December 31, 1993.
Mr. Shaye has entered into an employment agreement with New Line, a
subsidiary of the Company, with a term which began on January 28, 1994 and
expires on December 31, 1998. Mr. Shaye's employment agreement provides for,
among other things, a minimum annual base salary of $1.5 million, annual bonus
compensation ranging from a minimum of 25% of base salary to a maximum bonus of
125% of base salary, determined on the basis of the achievement of certain
performance goals by New Line and the Company, and a grant of 50,000 shares of
Class B Common Stock and stock options for 2.1 million shares of Class B Common
Stock (1.1 million of which vest on the basis of the achievement by New Line of
certain performance goals). Prior to the execution of such employment agreement,
New Line had lent to Mr. Shaye $750,000 in connection with the purchase and
renovation of a residence in California. Such loan is unsecured and does not
bear interest. Under the terms of the Mr. Shaye's employment agreement with New
Line, the loan shall be repaid in four equal installments on December 31, 1994,
1995, 1996 and June 30, 1997, provided that if the residence is sold or if Mr.
Shaye's employment agreement is terminated for any reason, then the remaining
unpaid indebtedness under the loan shall become immediately due and payable.
The TBS SuperStation signal is retransmitted by a common carrier, Southern
Satellite Systems, Inc. ("Southern"), which is controlled by an indirect
wholly-owned subsidiary of Liberty Media Corporation. Mr. Peter R. Barton is
President of Liberty Media Corporation. Mr. Bob Magness, who was a director of
the Company from 1992 until April 1994, and Mr. John C. Malone hold shares
representing approximately 23.1% and 60.7%, respectively, of the voting power of
that corporation, which is a former subsidiary of TCI. The Company does not have
a contract with Southern and does not receive compensation for such
transmission. This retransmission of the TBS SuperStation signal by Southern
could be discontinued by the carrier, subject to Southern's contracts with the
local cable systems. In view of the substantial aggregate fees received by
Southern from the local cable systems for the TBS SuperStation signal, the
Company considers voluntary discontinuance of such retransmission by Southern to
be unlikely.
Turner Sports Programming, Inc., a wholly-owned subsidiary of the Company,
has a 44% interest in SportSouth Network, Ltd. ("SportSouth"), a limited
partnership in which Liberty Media Corporation also has an interest. SportSouth
operates SportSouth Network, a regional sports network serving the Southeast
United States, the revenues of which are principally derived from the sale of
advertising time and the subscription sale of its service to cable operators.
All of the Affiliated Holders and Liberty Media Corporation have interests
in cable programming services which compete with the services offered by the
Company for cable system viewers, for channel space on low channel capacity
cable systems and, in several cases, for advertising funds. Among the
significant competing services are HBO and Cinemax, which are operated by an
affiliate of TWI, The Discovery Channel, in which TCI has an interest, and
American Movie Classics and The Black Entertainment Network, in which Liberty
Media Corporation has interests.
In addition to the relationships of the members of the Stock Option and
Compensation Committee with the Affiliated Holders, as previously described (see
"Compensation Committee Interlocks and Insider Participation"), the remaining
Class C Directors have the following relationships with the Affiliated Holders:
Gerald M. Levin is the Chairman, President and Chief Executive Officer of TWI;
John C. Malone is the President and Chief Executive Officer and a director of
TCI; and Peter R. Barton is the President of Liberty Media Corporation.
<PAGE> 11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereto duly authorized.
TURNER BROADCASTING SYSTEM, INC.
(Registrant)
Date: April 29,1994 By: /s/ William S. Ghegan
----------------------
Name: William S. Ghegan
Title: Vice President and Controller and
Chief Accounting Officer
