<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[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 26, 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 ___________ to _________
Commission File No. 1-6383
MEDIA GENERAL, INC.
(Exact name of registrant as specified in its charter)
Commonwealth of Virginia 54-0850433
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 East Grace Street, Richmond, Virginia 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 649-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Class A Common Stock American Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
------- -------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock held by nonaffiliates of the
registrant was $582,967,486 as of February 28, 1994.
<PAGE> 2
The number of shares of Class A Common Stock outstanding on February 28,
1994, was 25,681,651. The number of shares of Class B Common Stock outstanding
on February 28, 1994, was 557,154.
Part I, Part II and Part IV incorporate information by reference from the
Annual Report to Stockholders for the year ended December 26, 1993. Part III
incorporates information by reference from the proxy statement for the Annual
Meeting of Stockholders to be held on May 20, 1994.
Part I
Item 1. Business
General
For a general description of the Company's business, see Business in Brief
on page 4 of the 1993 Annual Report to Stockholders, which is incorporated
herein by reference. The Company employs approximately 7,300 people on a full
or part-time basis. The Company's businesses are somewhat cyclical; the second
and fourth quarters are typically stronger than the first and third quarters.
Industry Segments
The Company is engaged in three significant industry segments. For
financial information concerning these segments and for information concerning
the Company's foreign operations see pages 18, 31, 32, 50 and 51 of the 1993
Annual Report to Stockholders, which are incorporated herein by reference.
Supplemental information concerning each of the Company's significant industry
segments is included below.
Newspaper Publishing Business
See pages 6, 8, 10 and 48 of the 1993 Annual Report to Stockholders which
are incorporated herein by reference for a description of the business done and
principal products produced by the Company in its newspaper publishing business.
The primary raw material used by the Company in its newspaper operations is
newsprint, which is purchased from various Canadian and United States sources,
including Garden State Paper Company, Inc., a wholly owned subsidiary of the
Company, and Southeast Paper Manufacturing Co., in which the Company owns a one-
third equity interest. The newspaper operations of the Company consumed
approximately 123,000 tons of newsprint in 1993. Management of the Company
believes that newsprint inventory and sources of supply under existing
arrangements will be adequate in 1994.
All of the Company's newspapers compete for circulation and advertising
with other newspapers published nationally and in nearby cities and towns and
for advertising with magazines, radio, television and other promotional media.
All of the newspapers compete for circulation principally on the basis of
performance, service and price. Since 1985, the Company has owned a 40%
interest in Garden State Newspapers, Inc., (GSN) a company established to
acquire and operate medium-sized daily newspapers throughout the United States.
The Company's 1991 operations include a loss of $78.7 million ($78.3 million
after-tax; $3.01 per share) from GSN which largely resulted from GSN
management's decision to write down the carrying value of certain assets, mostly
intangibles, in light of depressed market conditions. The 1991 loss reduced the
Company's investment in GSN to zero. Although GSN's net income for the twelve
months ended September 30, 1992, was $12 million, such net income was due
<PAGE> 3
entirely to a nonrecurring gain from the sale of a newspaper property, net of
operating losses. Consequently, in 1992 the Company did not recognize any
equity in GSN's 1992 net income, nor has it since, because it is unlikely to
realize any dividends or cash distributions from GSN operations.
Subsequent to December 26, 1993, GSN failed to redeem the Series A and
Series C Preferred Stock that previously had been issued to the Company and
which was mandatorily redeemable on January 1, 1994. However, the Company has
signed a Letter Agreement (Agreement) with GSN and a GSN affiliate whereby it
has agreed to a process through which it would sell its 40% common equity
interest in GSN, along with its GSN Series A and Series C Preferred Stock,
for approximately $62.7 million. Under the terms of the
1
Agreement, the Company would simultaneously exchange its
GSN Series B Preferred Stock for the 9% Preferred Stock of Denver Newspapers,
Inc., currently owned by GSN. The Company would continue to hold a warrant to
purchase 40% of the common equity of Denver Newspapers, Inc. The Agreement,
which will terminate if the contemplated transactions have not occurred by April
29, 1994 (unless extended by mutual agreement of the parties), is subject to
various conditions, including the buyer's ability to arrange financing.
Consequently, there is no assurance that the transactions will be consummated
and, in light of these contingencies, the Company continues to evaluate its
options.
Television Business
See pages 12, 14 and 16 of the 1993 Annual Report to Stockholders which are
incorporated herein by reference for a description of the business done by the
Company in its television business.
The television broadcasting and cable television operations of the Company
are subject to the jurisdiction of the Federal Communications Commission (FCC)
pursuant to the Communications Act of 1934, as amended (the Act). The Act
provides, among other things, that television broadcasts may be made only by
persons licensed by the FCC. The Company's television stations operate under
such licenses. The Act authorizes the FCC to grant or modify licenses on a
determination that the "public convenience, interest, or necessity" will be
served thereby, and to revoke licenses for violations of the Act, the terms of
the license, or for certain other reasons. Licenses may also be revoked by
court order or by the FCC if a licensee is found guilty of violations of certain
provisions of the antitrust laws.
The maximum term for which the FCC may grant a broadcasting license for a
television station is five years, and renewals for periods of not more than five
years may be made by the FCC upon considerations similar to those that govern
the granting of original licenses. The licenses of WFLA-TV in Tampa and WJKS-TV
in Jacksonville were most recently renewed in January 1992, and for WCBD-TV in
Charleston in November 1991, and will expire on February 1, 1997, and December
1, 1996, respectively.
FCC rules prohibit further acquisitions which would result in the common
ownership of a daily newspaper and a television station in the same market. The
rules do not apply retroactively to require divestiture of station WFLA-TV which
is under common ownership with the Company's Tampa newspaper.
<PAGE> 4
The FCC has jurisdiction over and has adopted a regulatory program
concerning the cable television industry. The FCC's regulations currently
mandate blackout protection of certain local stations' network programs and
certain sports programs and govern cable television engineering standards,
registration and reporting obligations, and other matters, including rules which
require the blackout of certain syndicated programs owned by television
stations. In 1992, Congress passed, effective December 4, 1992, the Cable
Television Consumer Protection and Competition Act of 1992 (Cable Act). It
contains some provisions that are self-effectuating in that they do not require
further FCC action and other provisions that require the FCC to adopt rules for
their implementation. Examples of the former are provisions that prohibit cable
systems from ownership of certain competitive multichannel video distribution
services, a prohibition on franchise authorities awarding exclusive franchises,
guidelines for awarding franchises and a provision which generally prohibits a
cable operator from selling or otherwise transferring ownership in a cable
system within 36 months following acquisition or initial construction of the
system. Examples of provisions which required the FCC to adopt rules for their
implementation include mandatory cable carriage of local television stations, a
requirement that some television stations consent to carriage of their signals
(retransmission consent), rate regulation, in-home wiring, new equal employment
opportunity reporting requirements, consumer protection and customer service
requirements,
2
provisions prohibiting a cable operator from requiring purchase of particular
program packages (tiers), other than the basic service tier, in order to
purchase premium program services, and restrictions on indecent programming on
access channels. Several of the provisions and the implementing rules may
require changes in the Company's operations, but it is impossible to predict
with certainty the extent of any future adverse impact on the systems of some or
all of these new requirements. Also in 1992, in its video dialtone ruling, the
FCC authorized telephone companies to transmit video programming for programmer-
customers on a common carrier basis without having to obtain a municipal cable
franchise. On February 22, 1994, the FCC announced the adoption of further
rules intended to govern rates which cable operators may charge subscribers.
Although the specific rules have not yet been published, the Company's
preliminary evaluation of the general provisions indicates that the effect will
not be material to the Company. Cable rates are subject to local franchise
authority and FCC review, and further rate regulation is possible. In addition,
many of the rules and regulations described above, particularly those
implementing the Cable Act, are the subject of appeals which are pending in
court. In addition to regulation by the FCC, cable television systems are also
subject to extensive regulation by franchising authorities, and must file semi-
annual Statements of Account and copyright royalty payments with the Copyright
Office of the United States.
The information contained in the preceding discussion does not purport to
be a complete summary of all the provisions of the Act, the Cable Act or of the
rules and regulations of the FCC thereunder, or of pending proposals for other
regulation of broadcasting and related activities.
The Company has cable television franchises to operate its existing systems
in portions of Fairfax County, Virginia, and adjoining cities and towns, and in
Fredericksburg, Virginia, and portions of Spotsylvania and Stafford Counties,
Virginia. At December 26, 1993, the Company's cable television systems served
approximately 220,000 subscribers on a subscriber payment basis.
<PAGE> 5
The primary source of revenues for WFLA-TV, WJKS-TV, and WCBD-TV is the
sale of time to national and local advertisers. Since each of the stations is
network affiliated, additional revenue is derived from the network programming
carried by each. Expiration dates of the network contracts for WFLA-TV-NBC,
WJKS-TV-ABC and WCBD-TV-ABC are April 1995, April 1994 and July 1995,
respectively.
The Company's television stations are in competition for audience and
advertising revenues with other television and radio stations and cable
television systems as well as magazines, newspapers and other promotional media.
A number of cable television systems which operate generally on a subscriber
payment basis are in business in the Company's broadcasting markets and compete
for audience by importing out-of-market television signals or by originating
programming. The Company's cable television systems have substantially the same
competition as its television stations. The television stations and cable
television systems compete for audience on the basis of program content and
quality of reception, and for advertising revenues on the basis of price, share
of market and performance.
Reference is made to page 49 of the 1993 Annual Report to Stockholders
which is incorporated herein by reference for market share and other information
regarding the Company's television stations.
Newsprint Paper Manufacturing Business
For a description of the business done, principal products produced and
sources and availability of raw materials used by the Company in its newsprint
paper manufacturing business, see pages 16 and 18 of the 1993 Annual Report to
Stockholders, which are incorporated herein by reference.
3
In addition to its Garden State Paper Company, Inc., (Garden State) mill in
Garfield, New Jersey, the Company owns a 33 1/3% interest in the Southeast Paper
Manufacturing Co. newsprint mill in Dublin, Georgia, which licenses and utilizes
the Garden State process, a proprietary de-inking technology for the production
of 100 percent recycled newsprint from recovered used newspapers. The Company
earns royalties and fees pursuant to a contract with this venture, in addition
to its share of operating results. The Company also owns a 49% interest in a
Mexican newsprint mill near San Luis Potosi, Mexico, from which the Company
receives option fees based on production. Under the terms of the Company's
Option Agreement with this affiliate, the Company will continue to receive such
fees through October 15, 1994. Unless some other form of divestiture is agreed
to, on that date the affiliate's majority owner is expected to exercise its
option to buy the Company's capital stock investment in the affiliate for $3.6
million, after which no further fees would be paid to the Company.
Garden State owns certain United States patent rights and also has obtained
patents in various foreign countries. Although these have been of value, their
loss would not materially affect the conduct of its business as the Company has
developed substantial proprietary knowledge related to its manufacturing process
which enhances its competitive position.
Garden State competes with approximately twenty Canadian and American
companies in selling newsprint, its sole product, to newspaper publishers.
Distribution from the Garden State mill is primarily by truck transportation.
Competition is based principally on price, quality of product, and service,
<PAGE> 6
although the percentage of recovered fiber contained in manufactured newsprint
is becoming increasingly important to newspaper publishers to meet various
existing and proposed state and federal standards.
Item 2. Properties
The Company's headquarters and Richmond Newspapers, Inc., are located in
Richmond, Virginia, in five adjacent buildings. In addition, Richmond
Newspapers, Inc., completed and placed in service, on June 1, 1992, a 428,000
square foot production and distribution facility, located on an 86 acre site in
Hanover County, Virginia, near Richmond. The Tampa, Florida, newspapers are
published in a single unit production plant and office building located on a six
acre tract in that city. The Winston-Salem, North Carolina, newspapers are also
published in a single unit plant, although a new 140,000 square foot production
and distribution facility, scheduled for completion in mid-1994, is currently
under construction on a 12 acre site located near the present facility. All of
the foregoing properties are Company-owned.
Television facilities for WFLA-TV Tampa, Florida, WJKS-TV Jacksonville,
Florida, and WCBD-TV Charleston, South Carolina, are located on land owned by
the Company in and around these respective cities.
Media General Cable of Fairfax County, Inc., a subsidiary of the Company,
has headquarters located in one building owned by the Company in Chantilly,
Virginia, and two head-ends located in Fairfax County, Virginia, one on property
owned by the Company and adjacent to its production studio and one on leased
property. In addition, Fairfax Cable leases an operations center for its
service maintenance fleet in Springfield, Virginia. The cable system includes a
home subscriber network and a separate institutional network.
Newsprint production facilities of Garden State consist of a mill in
Garfield, New Jersey, housing two paper-making machines adjacent to a power
plant which supplies it with steam and electric power. Both the mill and the
power plant are owned by Garden State. Garden State also owns or leases
substantial storage facilities for waste paper in the general vicinity of the
newsprint mill.
4
Item 3. Legal Proceedings
Certain of the Company's subsidiaries have been identified as potentially
responsible parties, along with many other businesses unrelated to the Company,
in connection with the alleged soil and/or groundwater contamination at a former
commercial waste disposal site, a former industrial drum recycling location and
a former waste oil recycling location. With respect to these matters, these
subsidiaries have contributed, or may in the future be asked to contribute, to
the costs of site assessment and cleanup. In addition, the Company and one of
its subsidiaries are currently involved in environmental assessment and
remediation projects at one facility formerly owned, and one facility currently
owned. While the ultimate costs of the foregoing matters are not presently
determinable, based on information currently available, management believes such
costs will not be material to the Company's financial position or results of
operations.
<PAGE> 7
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of 1993.
<TABLE>
Executive Officers of the Registrant
<CAPTION>
Name Age Position and Office Year First Took Office*
<S> <C> <C> <C>
D. Tennant Bryan 87 Chairman of the Executive Committee 1930
J. Stewart Bryan III 55 Chairman, President,
Chief Executive Officer 1990
Marshall N. Morton 48 Senior Vice President,
Chief Financial Officer 1989
James L. Dillon 65 Vice President 1977
H. Graham Woodlief 49 Vice President 1989
George L. Mahoney 41 General Counsel, Secretary 1993
Stephen R. Zacharias 44 Treasurer 1989
- ---------------
The year indicated is the year in which the officer first assumed an office with the Company or with Richmond Newspapers, Inc.,
the predecessor of the Company, involving essentially the same duties and responsibilities as the office presently held, regardless
of its formal titles at that time. Prior to assuming his present position, J. Stewart Bryan III, had previously served during the
past five years as Chief Operating Officer (1989-90) and as Vice Chairman and Executive Vice President (1985-90) of the Company.
Mr. Mahoney previously served as Assistant General Counsel of Dow Jones & Company, Inc., for more than five years. Mr. Zacharias
assumed executive officer responsibilities as of December 1993.
Officers of the Company are elected at the Annual Meeting of the Board of Directors to serve, unless sooner removed, until the
next Annual Meeting of the Board of Directors and/or until their successors are duly elected and qualified.
</TABLE>
5
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Reference is made to page 47 of the 1993 Annual Report to Stockholders
which is incorporated herein by reference for information required by this item.
<PAGE> 8
Item 6. Selected Financial Data
Reference is made to Note 5 on pages 31 through 32, and to pages 50 and 51
of the 1993 Annual Report to Stockholders which are incorporated herein by
reference for information required by this item.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Reference is made to pages 40 through 46 of the 1993 Annual Report to
Stockholders which are incorporated herein by reference for information required
by this item.
Item 8. Financial Statements and Supplementary Data
Consolidated financial statements of the Company as of December 26, 1993,
and December 27, 1992, and for the fiscal years ended December 26, 1993,
December 27, 1992, and December 29, 1991, and the report of independent auditors
thereon, as well as the Company's unaudited quarterly financial data for the
fiscal years ended December 26, 1993, and December 27, 1992, are incorporated
herein by reference from the 1993 Annual Report to Stockholders pages 23 through
39 and page 47.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders on May 20, 1994, except as to
certain information regarding executive officers included in Part I. Matters
regarding compliance with Section 16(a) of the Securities Exchange Act of 1934
are incorporated by reference from the Company's definitive proxy statement for
the Annual Meeting of Stockholders on May 20, 1994.
Item 11. Executive Compensation
Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders on May 20, 1994.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders on May 20, 1994.
6
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders on May 20, 1994.
<PAGE> 9
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)1. and 2. The financial statements and schedules listed in the
accompanying index to financial statements and financial statement
schedules are filed as part of this annual report.
3.Exhibits
The exhibits listed in the accompanying index to exhibits are filed as part
of this annual report.
(b)Reports on Form 8-K
None
7
Index to Financial Statements and Financial Statement Schedules - Item 14(a)
Annual
Report
Form to
10-K Stockholders
Media General, Inc.
(Registrant)
Report of independent auditors 9 39
Consolidated statements of operations for the
fiscal years ended December 26, 1993,
December 27, 1992, and December 29, 1991 23
Consolidated balance sheets at December 26, 1993,
and December 27, 1992 24-25
Consolidated statements of stockholders' equity
for the fiscal years ended December 26, 1993,
December 27, 1992, and December 29, 1991 26
Consolidated statements of cash flows for the
fiscal years ended December 26, 1993,
December 27, 1992, and December 29, 1991 27
Notes to consolidated financial statements 28-38
Schedules:
V - Property, plant and equipment 10
VI - Accumulated depreciation and amortization of
property, plant and equipment 11
VIII - Valuation and qualifying accounts and reserves 12-13
X - Supplementary income statement information 14
Schedules other than those listed above are omitted since they are not required
or are not applicable, or the required information is shown in the financial
statements or notes thereto.
The consolidated financial statements of Media General, Inc., listed in the
above index which are included in the Annual Report to Stockholders of Media
General, Inc., for the fiscal year ended December 26, 1993, are incorporated
herein by reference. With the exception of the pages listed in the above index
and the information incorporated by reference included in Part I, II, and IV,
the 1993 Annual Report to Stockholders is not deemed filed as part of this
report.
8
<PAGE> 10
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Media General, Inc.
We consent to the incorporation by reference in this Annual Report (Form
10-K) of Media General, Inc., of our report dated January 25, 1994, included in
the 1993 Annual Report to Stockholders of Media General, Inc.
Our audits also included the financial statement schedules of Media
General, Inc., listed in Item 14(a). These schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in (a) the Registration
Statement (Form S-8 No. 2-56905) pertaining to the 1971 Unqualified Stock Option
Plan and the 1976 Qualified and Non-Qualified Stock Option Plans of Media
General, Inc.; (b) the Registration Statement (Form S-8 No. 33-29478) pertaining
to the Media General, Inc., Employees Thrift Plan; (c) the Registration
Statement (Form S-8 No. 33-23698) pertaining to the 1987 Non-Qualified Stock
Option Plan of Media General, Inc.; (d) the Registration Statement (Form S-3 No.
33-26853) pertaining to the Media General, Inc., Automatic Dividend
Reinvestment and Stock Purchase Plan and (e) the Registration Statement (Form S-
8 No. 33-52472) pertaining to the 1987 Non-Qualified Stock Option Plan of Media
General, Inc., amended and restated May 17, 1991, and in the Prospectus related
to each, of our report dated January 25, 1994, with respect to the consolidated
financial statements of Media General, Inc., incorporated herein by reference,
and our report included in the preceding paragraph with respect to the financial
statement schedules of Media General, Inc., included in this Annual Report (Form
10-K) of Media General, Inc., for the fiscal year ended December 26, 1993.
ERNST & YOUNG
Richmond, Virginia
March 22, 1994
9
<PAGE> 11
<TABLE>
Media General, Inc., and Subsidiaries
Schedule V - Property, Plant and Equipment
Fiscal Years Ended December 29, 1991, December 27, 1992, and December 26, 1993
<CAPTION>
Balance at *Other changes
beginning Additions Retirements debit and/ Balance at end
of period at cost and sales or (credit) of period
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1991
Land.............................. $ 14,560,395 $ 911,608 $ --- $ 13,063,038 $ 28,535,041
Buildings......................... 59,014,313 1,658,634 45,233 183,226 60,810,940
Machinery and equipment........... 572,317,206 17,450,634 6,211,995 11,059,242 594,615,087
Construction in progress.......... 63,603,577 95,361,914 --- (24,561,364) 134,404,127
------------ ------------ ------------ ------------ ------------
Totals......................... $709,495,491 $115,382,790(a) $ 6,257,228 $ (255,858) $818,365,195
============ ============ ============ ============ ============
1992
Land.............................. $ 28,535,041 $ 67,087 $ 42,305 $ (6,959,479) $ 21,600,344
Buildings......................... 60,810,940 1,783,999 90,785 69,993,788 132,497,942
Machinery and equipment........... 594,615,087 30,280,258 11,549,173 107,538,147 720,884,319
Construction in progress.......... 134,404,127 60,187,987 --- (185,469,373) 9,122,741
------------ ------------ ------------ ------------ ------------
Totals......................... $818,365,195 $ 92,319,331(b) $ 11,682,263 $(14,896,917)(c) $884,105,346
============ ============ ============ ============ ============
1993
Land.............................. $ 21,600,344 $ 3,980 $ 69,360 $ 269,579 $ 21,804,543
Buildings......................... 132,497,942 2,034,941 47,066 684,294 135,170,111
Machinery and equipment........... 720,884,319 18,743,804 13,774,999 4,696,860 730,549,984
Construction in progress.......... 9,122,741 12,053,848 --- (5,595,429) 15,581,160
------------ ------------ ------------ ------------ ------------
Totals......................... $884,105,346 $ 32,836,573 $ 13,891,425 $ 55,304 $903,105,798
============ ============ ============ ============ ============
* Includes intercompany transfers and reclassifications.
(a) Includes approximately $80.9 million related to the expansion and relocation of the Richmond Newspapers' production facility.
(b) Includes approximately $53.2 million related to the expansion and relocation of the Richmond Newspapers' production facility.
(c) Includes approximately $14.7 million transferred to other assets.
</TABLE>
10
<PAGE> 12
<TABLE>
Media General, Inc., and Subsidiaries
Schedule VI - Accumulated Depreciation and Amortization
of Property, Plant and Equipment
Fiscal Years Ended December 29, 1991, December 27, 1992, and December 26, 1993
<CAPTION>
Balance Retirements, *Other
at beginning Charged to renewals & changes Balance at end
of period income replacements add (deduct) of period
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1991
Buildings......................... $ 24,265,655 $ 1,840,446 $ 24,726 $ --- $ 26,081,375
Machinery and equipment........... 235,367,169 46,128,877 5,995,314 27,199 275,527,931
------------ ------------ ------------ ------------ ------------
Totals......................... $259,632,824 $ 47,969,323 $ 6,020,040 $ 27,199 $301,609,306
============ ============ ============ ============ ============
1992
Buildings......................... $ 26,081,375 $ 2,918,911 $ 29,384 $ (11,035) $ 28,959,867
Machinery and equipment........... 275,527,931 49,755,790 9,903,482 6,996 315,387,235
------------ ------------ ------------ ------------ ------------
Totals......................... $301,609,306 $ 52,674,701 $ 9,932,866 $ (4,039) $344,347,102
============ ============ ============ ============ ============
1993
Buildings......................... $ 28,959,867 $ 3,689,691 $ 6,821 $ --- $ 32,642,737
Machinery and equipment........... 315,387,235 51,274,155 11,423,387 --- 355,238,003
------------ ------------ ------------ ------------ ------------
Totals......................... $344,347,102 $ 54,963,846 $ 11,430,208 $ --- $387,880,740
============ ============ ============ ============ ============
* Includes intercompany transfers and reclassifications.
</TABLE>
11
<PAGE> 13
<TABLE>
Media General, Inc., and Subsidiaries
Schedule VIII - Valuation and Qualifying Accounts and Reserves
Fiscal Years Ended December 29, 1991, December 27, 1992, and December 26, 1993
<CAPTION>
Additions
(reductions)
Balance at charged Balance
beginning (credited) to Deductions- at end
of period expense-net net Transfers of period
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1991
Allowance for doubtful accounts... $ 5,322,316 $ 6,192,833 $ 8,096,311 $ --- $ 3,418,838
Allowance for discounts........... 774,562 7,908,106 7,922,541 --- 760,127
Allowance for note
receivable..................... 3,315,000 --- --- 1,825,000 5,140,000
------------ ------------ ------------ ------------ ------------
9,411,878 14,100,939 16,018,852 1,825,000 9,318,965
------------ ------------ ------------ ------------ ------------
Reserve for warranties............ 3,281,531 --- 919,502 --- 2,362,029
Reserve for disposition of
certain operations............. 5,724,022 (990,229) 2,578,229 --- 2,155,564
Reserve for discontinuance
of Broadcast Services.......... 10,496,916 (386,940) (429,105) (1,825,000) 8,714,081
------------ ------------ ------------ ------------ ------------
Totals....................... $ 28,914,347 $ 12,723,770 $ 19,087,478 $ --- $ 22,550,639
============ ============ ============ ============ ============
1992
Allowance for doubtful accounts... $ 3,418,838 $ 5,377,424 $ 5,381,321 $ --- $ 3,414,941
Allowance for discounts........... 760,127 3,433,754 3,877,135 --- 316,746
Allowance for note
receivable..................... 5,140,000 --- --- --- 5,140,000
------------ ------------ ------------ ------------ ------------
9,318,965 8,811,178 9,258,456 --- 8,871,687
------------ ------------ ------------ ------------ ------------
Reserve for warranties............ 2,362,029 2,691,247 708,113 --- 4,345,163
Reserve for disposition of
certain operations............. 2,155,564 (99,497) 325,119 --- 1,730,948
Reserve for discontinuance
of Broadcast Services.......... 8,714,081 (5,457,039) 3,471,345 1,381,302 1,166,999
------------ ------------ ------------ ------------ ------------
Totals....................... $ 22,550,639 $ 5,945,889 $ 13,763,033 $ 1,381,302 $ 16,114,797
============ ============ ============ ============ ============
</TABLE>
12
<PAGE> 14
<TABLE>
Media General, Inc., and Subsidiaries
Schedule VIII - Valuation and Qualifying Accounts and Reserves - Continued
Fiscal Years Ended December 29, 1991, December 27, 1992, and December 26, 1993
<CAPTION>
Additions
(reductions)
Balance at charged Balance
beginning (credited) to Deductions- at end
of period expense-net net Transfers of period
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1993
Allowance for doubtful accounts... $ 3,414,941 $ 3,488,482 $ 3,205,662 $ --- $ 3,697,761
Allowance for discounts........... 316,746 437,720 754,466 --- ---
Allowance for note
receivable..................... 5,140,000 --- --- (5,140,000)(a) ---
------------ ------------ ------------ ------------ ------------
8,871,687 3,926,202 3,960,128 (5,140,000) 3,697,761
------------ ------------ ------------ ------------ ------------
Reserve for warranties............ 4,345,163 --- 544,248 167,091 3,968,006
Reserve for disposition of
certain operations............. 1,730,948 (921,782) 809,166 --- ---
Reserve for discontinuance
of Broadcast Services.......... 1,166,999 --- 382,216 --- 784,783
------------ ------------ ------------ ------------ ------------
Totals....................... $ 16,114,797 $ 3,004,420 $ 5,695,758 $ (4,972,909) $ 8,450,550
============ ============ ============ ============ ============
(a) Amount transferred to other liabilities and deferred credits.
</TABLE>
13
<PAGE> 15
<TABLE>
Media General, Inc., and Subsidiaries
Schedule X - Supplementary Income Statement Information
Fiscal Years Ended December 29, 1991, December 27, 1992, and December 26, 1993
<CAPTION>
Charged to costs
and expenses
-----------------------------------------------
1991 1992 1993
<S> <C> <C> <C>
Maintenance and repairs........... $ 15,939,230 $ 16,930,182 $ 17,391,044
============ ============ ============
Note: Items and amounts not presented are less than 1% of consolidated revenues or are disclosed elsewhere in the consolidated
financial statements or related notes.
</TABLE>
14
<PAGE> 16
Index to Exhibits
Exhibit
Number Description
2 Letter Agreement dated March 16, 1994, by and among Media General,
Inc., Affiliated Newspaper Investment Company, and Garden State
Newspapers, Inc.
3(i) The Amended and Restated Articles of Incorporation of Media General,
Inc., incorporated by reference to Exhibit 3.1 of Form 10-K for the
fiscal year ended December 31, 1989.
3(ii) Bylaws of Media General, Inc., amended as of May 31, 1993.
10.1 1971 Unqualified Stock Option Plan, incorporated by reference to
Exhibit 1 to Post-Effective Amendment No. 2 to Registration Statement
No. 2-38001.
10.2 Amendment to the 1971 Unqualified Stock Option Plan adopted February,
1974, incorporated by reference to Exhibit 1 to Post-Effective
Amendment No. 6 of Registration Statement No. 2-38001.
10.3 Amendment to the 1971 Unqualified Stock Option Plan adopted July 29,
1983, incorporated by reference to Exhibit 10.3 of Form 10-K for the
fiscal year ended December 31, 1983.
10.4 Form of Option granted under the 1971 Unqualified Stock Option Plan
prior to February, 1974, incorporated by reference to Exhibit 2 to
Post-Effective Amendment No. 2 of Registration Statement No. 2-38001.
10.5 Form of Option granted under the 1971 Unqualified Stock Option Plan
subsequent to February, 1974, incorporated by reference to Exhibit 2 to
Post-Effective Amendment No. 6 of Registration Statement No. 2-38001.
10.6 Addendum dated January, 1984, to Form of Option granted under the 1971
Unqualified Stock Option Plan, incorporated by reference to Exhibit
10.7 of Form 10-K for the fiscal year ended December 31, 1983.
10.7 Addendum dated June 19, 1992, to Form of Option granted under the 1971
Unqualified Stock Option Plan, incorporated by reference to Exhibit
10.7 of Form 10-K for the fiscal year ended December 27, 1992.
10.8 The 1976 Non-Qualified Stock Option Plan, incorporated by reference to
Exhibit 1.2 to Registration Statement 2-56905.
10.9 Amendment to the 1976 Non-Qualified Stock Option Plan adopted July 29,
1983, incorporated by reference to Exhibit 10.9 of Form 10-K for the
fiscal year ended December 31, 1983.
10.10 Amendment to the 1976 Non-Qualified Stock Option Plan adopted June 19,
1992, incorporated by reference to Exhibit 10.10 of Form 10-K for the
fiscal year ended December 27, 1992.
10.11 Form of Option granted under the 1976 Non-Qualified Stock Option Plan,
incorporated by reference to Exhibit 2.2 of Registration Statement 2-
56905.
<PAGE> 17
10.12 Amendment to the 1976 Non-Qualified Stock Option Plan, dated December
9, 1978, incorporated by reference to Exhibit 1 to Post-Effective
Amendment No. 3 of Registration Statement 2-56905.
10.13 Additional Form of Option to be granted under the 1976 Non-Qualified
Stock Option Plan, incorporated by reference to Exhibit 2 to Post-
Effective Amendment No. 3 Registration Statement 2-56905.
15
10.14 Addendum dated January, 1984, to Form of Option granted under the 1976
Non-Qualified Stock Option Plan, incorporated by reference to Exhibit
10.13 of Form 10-K for the fiscal year ended December 31, 1983.
10.15 Addendum dated June 19, 1992, to Form of Option granted under the 1976
Non-Qualified Stock Option Plan, incorporated by reference to Exhibit
10.15 of Form 10-K for the fiscal year ended December 27, 1992.
10.16 The 1987 Non-Qualified Stock Option Plan adopted May 15, 1987, and as
amended on August 21, 1987, incorporated by reference to Exhibit 10.14
of Form 10-K for the fiscal year ended December 31, 1987.
10.17 The Media General, Inc., Restricted Stock Plan adopted May 17, 1991,
incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter
ended June 30, 1991.
10.18 Amendment to the 1987 Non-Qualified Stock Option Plan, adopted May 17,
1991, incorporated by reference to Exhibit 10.2 of Form 10-Q for the
quarter ended June 30, 1991.
10.19 Amendment to the 1987 Non-Qualified Stock Option Plan adopted June 19,
1992, incorporated by reference to Exhibit 10.19 of Form 10-K for the
fiscal year ended December 27, 1992.
10.20 Addendum dated June 19, 1992, to Form of Option granted under the 1987
Non-Qualified Stock Option Plan, incorporated by reference to Exhibit
10.20 of Form 10-K for the fiscal year ended December 27, 1992.
10.21 Media General, Inc., Executive Death Benefit Plan effective January 1,
1991, incorporated by reference to Exhibit 10.17 of Form 10-K for the
fiscal year ended December 29, 1991.
10.22 Amendment to the Media General, Inc., Executive Death Benefit Plan
dated July 24, 1991, incorporated by reference to Exhibit 10.18 of Form
10-K for the fiscal year ended December 29, 1991.
10.23 1984 Outside Directors Retirement Agreement, incorporated by reference
to Exhibit 10.16 of Form 10-K for the fiscal year ended December 31,
1984.
10.24 Employment Agreement between Media General, Inc., and D. Tennant Bryan,
dated January 1, 1973, incorporated by reference to Exhibit 10.9 of
Form 8 dated August 3, 1981.
<PAGE> 18
10.25 Amendment dated September 24, 1981, to Employment Agreement between
Media General, Inc., and D. Tennant Bryan dated January 1, 1973,
incorporated by reference to Exhibit 10 of Form 10-Q for the quarter
ended September 30, 1981.
10.26 Shareholders Agreement, dated May 28, 1987, between Mary Tennant Bryan,
Florence Bryan Wisner, J. Stewart Bryan III, and D. Tennant Bryan and
J. Stewart Bryan III as Trustees under D. Tennant Bryan Media Trust,
and Media General, Inc., incorporated by reference to Exhibit 10.50 of
Form 10-K for the fiscal year ended December 31, 1987.
10.27 Amended and Restated Redemption Agreement between Media General, Inc.,
and D. Tennant Bryan, dated January 29, 1988, incorporated by reference
to Exhibit 10.20 of Form 10-K for the fiscal year ended December 31,
1987.
10.28 Employment Contract between Media General, Inc., and Alan S. Donnahoe,
dated January 1, 1977, incorporated by reference to Exhibit 10.15 of
Form 8 dated August 3, 1981.
10.29 Amendment, dated March 22, 1979, to Employment Contract between Media
General, Inc., and Alan S. Donnahoe, dated January 1, 1977,
incorporated by reference to Exhibit 10.16 of Form 8 dated August 3,
1981.
16
10.30 Amendment, dated January 1, 1982, to Employment Contract between Media
General, Inc., and Alan S. Donnahoe, dated January 1, 1977,
incorporated by reference to Exhibit 10.23 of Form 10-K for the fiscal
year ended December 31, 1981.
10.31 Amendment, dated December 1, 1984, to Employment Contract between Media
General, Inc., and Alan S. Donnahoe, dated January 1, 1977,
incorporated by reference to Exhibit 10.22 of Form 10-K for the fiscal
year ended December 31, 1984.
10.32 Amendment, dated December 1, 1989, to Employment Contract between Media
General, Inc., and Alan S. Donnahoe, dated January 1, 1977,
incorporated by reference to Exhibit 10.25 of Form 10-K for the fiscal
year ended December 31, 1989.
10.33 Consulting Agreement between Media General, Inc., and James S. Evans,
dated January 1, 1992, incorporated by reference to Exhibit 10.29 of
Form 10-K for the fiscal year ended December 29, 1991.
10.34 Media General, Inc., Supplemental Thrift Plan dated July 15, 1987,
incorporated by reference to Exhibit 10.27 of Form 10-K for the fiscal
year ended December 31, 1989.
10.35 Amended and Restated Media General, Inc., Executive Supplemental
Retirement Plan adopted as of January 1, 1991, incorporated by
reference to Exhibit 10.32 of Form 10-K for the fiscal year ended
December 29, 1991.
<PAGE> 19
10.36 Deferred Income Plan for Selected Key Executives of Media General,
Inc., and form of Deferred Compensation Agreement thereunder dated as
of December 1, 1984, incorporated by reference to Exhibit 10.29 of Form
10-K for the fiscal year ended December 31, 1989.
10.37 Amended and Restated Deferred Compensation Agreement between Media
General, Inc., and James S. Evans, incorporated by reference to Exhibit
10.30 of Form 10-K for the fiscal year ended December 31, 1989.
10.38 Media General, Inc., Management Performance Award Program, adopted
November 16, 1990, and effective January 1, 1991, incorporated by
reference to Exhibit 10.35 of Form 10-K for the fiscal year ended
December 29, 1991.
10.39 Media General, Inc., Deferred Compensation Plan dated March 28, 1991,
effective July 1, 1991, incorporated by reference to Exhibit 10.38 of
Form 10-K for the fiscal year ended December 29, 1991.
10.40 Media General, Inc., ERISA Excess Benefits Plan effective January 1,
1991, incorporated by reference to Exhibit 10.39 of Form 10-K for the
fiscal year ended December 29, 1991.
10.41 Employment Contract between Media General, Inc., and Basil Snider, Jr.,
dated March 18, 1994
10.42 Amended and Restated Partnership Agreement, dated November 1, 1987, by
and among Virginia Paper Manufacturing Corp., KR Newsprint Company,
Inc., and CEI Newsprint, Inc., incorporated by reference to Exhibit
10.31 of Form 10-K for the fiscal year ended December 31, 1987.
10.43 Amended and Restated License Agreement, dated November 1, 1987, by and
among Media General, Inc., Garden State Paper Company, Inc., and
Southeast Paper Manufacturing Co., incorporated by reference to Exhibit
10.32 of Form 10-K for the fiscal year ended December 31, 1987.
10.44 Amended and Restated Umbrella Agreement, dated November 1, 1987, by and
among Media General, Inc., Knight-Ridder, Inc., and Cox Enterprises,
Inc., incorporated by reference to Exhibit 10.34 of Form 10-K for the
fiscal year ended December 31, 1987.
17
10.45 Amended Newsprint Purchase Contract, dated November 1, 1987, by and
among Southeast Paper Manufacturing Co., Media General, Inc., Knight-
Ridder, Inc., and Cox Enterprises, Inc., incorporated by reference to
Exhibit 10.35 of Form 10-K for the fiscal year ended December 31, 1987.
10.46 Television affiliations agreement, dated March 22, 1989, between
WFLA-TV and National Broadcasting Company, Inc., incorporated by
reference to Exhibit 10.32 of Form 10-K for the fiscal year ended
December 31, 1988.
10.47 Amendments, dated May 27, 1993, to television affiliations agreement,
between WFLA-TV and National Broadcasting Company, Inc., dated
March 22, 1989.
<PAGE> 20
10.48 Franchise Agreements, dated September 30, 1982, between Media General,
Inc., Media General Cable of Fairfax County, Inc., and Fairfax County,
Virginia, as amended January 30, 1984, incorporated by reference to
Exhibit 10.32 of Form 10-K for the fiscal year ended December 31, 1983.
10.49 Agreement dated March 14, 1988, between Media General Cable of Fairfax
County, Inc., and Warner Cable Communications of Reston, Inc.,
partially assigning Franchise Agreements dated September 30, 1982,
incorporated by reference to Exhibit 10.34 of Form 10-K for the fiscal
year ended December 31, 1988.
10.50 Cable Television Franchise Ordinance of the Town of Herndon, Virginia,
accepted January 24, 1984, by Media General, Inc., and Media General
Cable of Fairfax County, Inc., incorporated by reference to Exhibit
10.33 of Form 10-K for the fiscal year ended December 31, 1983.
10.51 Franchise Agreement, dated June 14, 1983, between Media General, Inc.,
Media General Cable of Fairfax County, Inc., and the City of Fairfax,
Virginia, incorporated by reference to Exhibit 10.34 of Form 10-K for
the fiscal year ended December 31, 1983.
10.52 Franchise Agreement, dated April 9, 1983, between Media General Cable
of Fairfax County, Inc., and the Town of Vienna, Virginia, incorporated
by reference to Exhibit 10.35 of Form 10-K for the fiscal year ended
December 31, 1983.
10.53 Franchise Agreement, dated July 12, 1983, between Media General Cable
of Fairfax County, Inc., Media General, Inc., and the City of Falls
Church, Virginia, incorporated by reference to Exhibit 10.36 of Form
10-K for the fiscal year ended December 31, 1983.
10.54 Garden State Newspapers, Inc., Second Amended and Restated Stock
Purchase and Shareholders' Agreement dated as of March 31, 1990,
incorporated by reference to Exhibit 10.45 of Form 10-K for the fiscal
year ended December 31, 1990.
13 Media General, Inc., Annual Report to Stockholders for the fiscal year
ended December 26, 1993.
21 List of subsidiaries of the registrant.
23 Consent of Ernst & Young, independent auditors.
Note: Exhibits 10.1-10.41 are management contracts or compensatory
plans, contracts or arrangements.
18
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MEDIA GENERAL, INC.
Date: March 17, 1994 By /s/ J. Stewart Bryan III
---------------------------------------------
J. Stewart Bryan III, Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ D. Tennant Bryan Chairman of the Executive March 17, 1994
- -----------------------------
D. Tennant Bryan Committee and Director
/s/ James S. Evans Vice Chairman and Director March 17, 1994
- -----------------------------
James S. Evans
/s/ Marshall N. Morton Senior Vice President and March 17, 1994
- -----------------------------
Marshall N. Morton Chief Financial Officer
/s/ Stephen Y. Dickinson Controller March 17, 1994
- -----------------------------
Stephen Y. Dickinson
/s/ Robert P. Black Director March 17, 1994
- -----------------------------
Robert P. Black
/s/ Charles A. Davis Director March 17, 1994
- -----------------------------
Charles A. Davis
/s/ A. S. Donnahoe Director March 17, 1994
- -----------------------------
A. S. Donnahoe
<PAGE> 22
/s/ Robert V. Hatcher, Jr. Director March 17, 1994
- -----------------------------
Robert V. Hatcher, Jr.
/s/ John G. Medlin, Jr. Director March 17, 1994
- -----------------------------
John G. Medlin, Jr.
/s/ Henry L. Valentine, II Director March 17, 1994
- -----------------------------
Henry L. Valentine, II
19
<PAGE> 1
GARDEN STATE NEWSPAPERS, INC.
Loop Central One
4888 Loop Central Drive, suite 525
Houston, TX 77081
March 16, 1994
Mr. J. Stewart Bryan, III
Chairman of the Board of
Directors and President
Media General, Inc.
333 East Grace Street
Richmond, VA 23219
Dear Stewart:
The purpose of this Letter Agreement is to set forth the terms and conditions
pursuant to which Affiliated Newspapers Investment Company ("ANI") and Garden
State Newspapers, Inc. ("GSN") will acquire all, but not less than all, of the
common and preferred stock of GSN held by Media General, Inc. ("Media General").
ANI and GSN propose to effect the purchase on the following terms:
1. ANI and GSN have retained BT Securities Corporation ("BT") and will use
their best efforts to assist BT in completing an underwritten public offering of
senior debt securities to be issued by a newly formed holding company of ANI
(the "ANI Securities") in an amount sufficient to allow ANI to simultaneously
purchase (a) all, but not less than all, of the Class A Common Stock and Series
A and Series C Preferred Stock of GSN held by Media General for $62,695,000 (the
"Purchase Price") and (b) the warrant which Media General holds for the purchase
of ANI's Class A Common Stock for $50,000 (the "Stock and Warrant Purchases").
Simultaneously therewith, GSN is issuing senior debt securities (the "GSN
Securities") pursuant to an underwritten public offering. If the closing of the
Stock and Warrant Purchases occurs after April 15, 1994, the Purchase Price
shall be increased by $10,000 for each day from such date through and including
the day of the closing. The payments for such purchases will be by wire
transfer of same day funds to a bank account designated by Media General. ANI
and GSN will be responsible for and pay all expenses related to the transactions
described herein including, without limitation, BT's fees and any underwriting
discounts or commissions, any Hart-Scott-Rodino Antitrust Improvements Act of
1976 filing fees that may be required due to the Stock and Warrant Purchases and
ANI's and GSN's legal and accounting fees. Media General will be responsible
for and pay any expenses it incurs for legal, accounting and financial services
provided solely for its benefit in considering and consummating the transactions
described herein.
2. Simultaneously with the Stock and Warrant Purchases, Media General will
contribute $4,000,000 in cash to the common equity of Denver Newspapers, Inc.
("Denver").
3. Media General's obligations under paragraphs 1 and 2 of this Agreement
shall be subject to the satisfaction or waiver by it of the following
conditions:
(a) The Singleton/Scudder shareholders of Denver (the "Singleton/Scudder
Shareholders") shall have contributed all of the outstanding shares of Class B
<PAGE> 2
Common Stock of Denver (representing 60% of the equity interest in Denver on a
fully diluted basis after giving effect to the transactions described in
subparagraph (c) below) to ANI.
(b) ANI shall have contributed $6,000,000 in cash to the common equity of
Denver.
(c) Denver shall have repurchased and canceled all of the 8% Cumulative
Preferred Stock of Denver issued to The Times Mirror Company ("Times Mirror")
for no more than $3,835,500, plus accumulated and unpaid dividends not exceeding
$400,000, and purchased all of the Denver Media Holdings, Inc. ("DMHI") warrants
issued to Times Mirror for no more than $7,400,000.
(d) DMHI shall have been merged with and into Denver or DMHI's subsidiary,
The Denver Post Corporation ("DPC"), and, in connection therewith, (i) all of
the outstanding stock and warrants of DMHI shall have been canceled, (ii) the
Denver Post Stockholders' Agreement, dated as of December 10, 1992, among DMHI,
Times Mirror and the Singleton/Scudder Shareholders shall have been terminated
and (iii) the Note Repurchase and Master Agreement dated as of November 10, 1992
by and among DPC, DMHI, Denver, Times Mirror and the other parties thereto (the
"Times Mirror Agreement") shall have been terminated.
(e) either (i) the Series B Preferred Stock of GSN (the "GSN Preferred"),
now held by Media General, shall have been or shall be simultaneously with the
Stock and Warrant Purchases exchanged for the 9% Cumulative Preferred Stock of
Denver (the "Denver Preferred"), including the right to all accumulated and
unpaid dividends, now held by GSN (the "Exchange") or (ii) Media General shall
have received such other inducements that, in its sole discretion, would provide
to Media General no less favorable economic benefits and legal protections than
it would have received from the Exchange.
(f) Denver shall not have declared or paid any dividends on the Denver
Preferred.
(g) All other arrangements between Denver and GSN or Media News Group,
Inc. and the affiliates of either (excluding Media General), including, without
limitation, (i) the Intercreditor Agreement (as defined in the Credit Agreement
dated as of January 12, 1990 and as amended and restated as of December 10, 1992
(the "NJN Credit Agreement") among North Jersey Newspapers Company, NJN Holding
L.P., ANI (the "NJN Credit Parties"), the banks parties thereto (the "NJN
Banks"), and Bankers Trust Company, as agent), and (ii) the Support Documents
(as defined in the Intercreditor Agreement), shall have been terminated (and all
intercompany accounts and indebtedness shall have been settled, all DPC
Collateral (as defined in the Intercreditor Agreement) shall have been released
from the lien of the DPC Security Documents (as defined in the Intercreditor
Agreement) and DPC and DMHI shall have been released from all obligations under
their respective Guarantees); provided, however, the Management Agreement
between Denver and Media News Group, Inc., may continue in effect.
(h) ANI shall have agreed to be bound by the terms and conditions of the
Amended and Restated Stock and Warrant Purchase and Stockholders' Agreement
dated December 10, 1992 among Media General, GSN, Denver and the
Singleton/Scudder Shareholders (the "Denver Shareholders' Agreement") to the
same extent as the Singleton/Scudder Shareholders and shall have further agreed
that, in connection with the Exchange, Media General shall succeed to all of the
rights of GSN under the Denver Shareholders' Agreement in respect of its
ownership of the Denver Preferred.
<PAGE> 3
(i) The Singleton/Scudder interests shall have waived their right to the
$4,500,000 payment required under Section 10 of the Second Amended and Restated
Stock Purchase and Shareholders' Agreement of GSN, dated March 31, 1990 (the
"GSN Shareholders' Agreement").
(j) The Amended and Restated Certificate of Incorporation of Denver shall
have been further amended and restated to (i) remove the authorization of and
all references to the 8% Cumulative Preferred Stock and (ii) amend the
provisions regarding redemption of the Denver Preferred to read as set forth in
Annex A hereto.
(k) Denver shall have entered into a registration rights agreement with
Media General granting Media General customary piggy-back and three demand
registration rights in respect of its interest in Denver and the Denver
Stockholders' Agreement shall have been amended on terms satisfactory to Media
General to permit it to effect the public distribution of its interest in Denver
without regard to the existing transfer restrictions and tag-along rights set
forth in such Agreement but subject to rights of first refusal on the part of
ANI and Denver; provided such rights are no more restrictive then the rights
granted to Denver and NJN under Article XI of the Times Mirror Agreement.
(l) Denver shall have agreed that no new DPC or Denver credit facility
shall have any (a) cross-default or cross-acceleration provisions that would be
triggered by a default on or acceleration of any Debt of ANI or any subsidiary
of ANI (other than Denver and its subsidiaries) or (b) event of default or
change of control provision that would require or permit the acceleration of
DPC's or Denver's obligations thereunder as a result of a change of control of
ANI;
(m) ANI shall have agreed with Denver and Media General that, without
Media General's consent, ANI and its Subsidiaries (other than Denver and its
Subsidiaries) may not, directly or indirectly, issue or suffer to exist any Debt
in respect of Capitalized Lease Obligations exceeding in the aggregate $10.0
million at any one time outstanding (capitalized terms in this paragraph (m)
having the meanings set forth in the ANI registration statement in respect of
the ANI Securities, as filed with the Securities and Exchange Commission on
February 10, 1994 (the "ANI Registration Statement"));
(n) Simultaneously with consummation of the Stock and Warrant Purchases,
the Series A and Series C preferred Stock of GSN shall be contributed by ANI to
GSN and canceled.
(o) Satisfactory clearance shall have been received, if necessary, under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 regarding the
transactions.
(p) Each of the agreements and instruments effecting the foregoing
conditions shall be in form and substance satisfactory to Media General and
Media General shall have received such opinions from counsel to Denver, ANI,
GSN, the Singleton/Scudder Shareholders and the NJN Credit Parties in respect to
the Denver Preferred and such agreements and instruments and the transactions
contemplated hereby as it may reasonably request.
4. Prior to the consummation of the Stock and Warrant Purchases and the
Exchange, nothing in this Agreement shall diminish the rights of the parties
under the GSN Shareholders' Agreement. Upon consummation of the Stock and
Warrant Purchase and the Exchange, the provisions of the GSN Shareholders'
Agreement shall terminate.
<PAGE> 4
5. Media General shall have the right to disapprove the offering materials
and/or registration statements for the ANI Securities and the GSN Securities,
including the prospectuses forming a part thereof for lack of factual accuracy
including any material misstatement or omission to state a material fact before
any refiling or distribution thereof. In addition, any change to the terms of
the ANI Securities set forth in the ANI Registration Statement shall be subject
to approval by Media General. Notwithstanding any review or right to disapprove
the offering materials, registration statement and/or prospectus by Media
General, ANI and GSN shall indemnify and hold Media General and its officers,
directors and employees and controlling persons harmless from and against any
and all loss, damage, cost or expense (including reasonable attorneys fees) as
incurred, arising out of or related to the offerings of the ANI Securities and
the GSN Securities.
6. ANI shall have (i) until April 22, 1994 to enter into a firm commitment
underwriting agreement and price an offering of not less than $85,000,000 of ANI
Securities and (ii) until April 29, 1994 to close the transactions contemplated
by paragraphs 1 and 2. If (a) the offering has not been priced on or before
April 22, 1994 or (b) the closing of the transactions contemplated by paragraphs
1 and 2 have not occurred on or before April 29, 1994 (unless the parties have
mutually agreed in writing to extend such deadlines), in each case, as of such
respective deadline, this agreement, as amended, shall terminate, with all
expenses related to the transactions described herein to be paid by ANI, GSN and
Media General as set forth in this agreement, and all provisions of the GSN
Shareholders' Agreement shall remain in full force and effect.
7. Subject to the satisfaction or waiver by it of the conditions set forth in
paragraph 3 of this Agreement and the consummation of the Stock and Warrant
Purchases and the Exchange, Media General agrees that, following the redemption
in full of the Denver Preferred, Media General will not unreasonably withhold
its consent to the declaration of dividends on the Common Stock of Denver.
This Agreement and the other writings referred to therein or delivered pursuant
thereto contain the entire agreement among the parties hereto with respect to
the subject matter hereof and supersede all prior and contemporaneous agreements
and understandings with respect thereto, including, without limitation, the
November 16, 1993 Letter Agreement by and between ANI, Garden State and Media
General, as amended on December 24, 1993 and February 9, 1994.
If the foregoing meets with your approval, please indicate your acceptance by
signing and returning this Letter Agreement to me by March 17, 1994. If we do
not receive your response by 5:00 p.m. on such date, the offer expressed in this
Letter Agreement will no longer be outstanding.
<PAGE> 5
Very truly yours,
AFFILIATED NEWSPAPERS INVESTMENT COMPANY
By: W. Dean Singleton
William Dean Singleton
Vice Chairman and President
GARDEN STATE NEWSPAPERS, INC.
By: W. Dean Singleton
William Dean Singleton
Vice Chairman and President
AGREED AND ACCEPTED:
MEDIA GENERAL, INC.
By: J. Stewart Bryan
J. Stewart Bryan III
Chairman and President
<PAGE> 6
ANNEX A
Redemption. On the 9% Cumulative Preferred Stock Redemption Date (as
hereinafter defined) the entire amount of the 9% Cumulative Preferred Stock
issued and outstanding shall be purchased and redeemed, to the extent the
Corporation may legally do so, and the holders of the shares so purchased or
redeemed shall be paid an amount (the "Redemption Amount") in cash equal to (a)
$25,000 per share, the Stated Value thereof (the "Capital Portion of the
Redemption Amount"), plus (b) the unpaid cumulative preferred dividends thereon
accrued from the date of issuance of each share of the 9% Cumulative Preferred
Stock to the Redemption Date whether or not earned or declared (the "Dividend
Portion of the Redemption Amount"). All payments made with respect to the 9%
Cumulative Preferred Stock shall be credited, first, to accrued and unpaid
dividends and, second, to the Capital Portion of the Redemption Amount. The 9%
Cumulative Preferred Stock Redemption Date shall be the earliest of: (a) June
30, 1999, (b) the date on which such redemption shall be permissible under the
Denver Post Credit Agreement, (c) the date on which the Corporation ceases to
own directly at least 51% of all the outstanding capital stock of Denver Post
and (d) the date on which the Corporation, directly or indirectly, causes or
permits the Denver Post to dispose of (by sale, merger, or any other
transaction) or to cease to own, voluntarily or involuntarily, all or
substantially all of the assets of the Denver Post. As used herein, "Denver
Post Credit Agreement" means the Credit Agreement dated as of December 10, 1992
among Bankers Trust Company, Denver Post, Denver Media Holdings Inc., the
Corporation and the other banks parties thereto and all Loan Documents (as
defined therein) as each such agreement may be amended, or supplemented or
otherwise modified or waived from time to time, plus any agreement, instrument
or indenture which refinances or refunds in whole or in part any of the
obligations under any such agreement (including successive refinancings).
<PAGE> 1
MEDIA GENERAL, INC.
By-Laws
As Amended and Restated Through May 31,1993
INDEX
Article I. Meetings of Stockholders.....................1
1. Place of Meetings .................................1
2. Annual Meetings ...................................1
3. Special Meetings ..................................1
4. Notice of Meetings.................................1
5. Quorum.............................................1
6. Voting.............................................1
Article II. Directors
1. General Powers ....................................1
2. Number, Election, Term and Qualification...........1
3. Vacancies .........................................1
4. Removal ...........................................1
5. Compensation.......................................2
6. Advisory Directors ................................2
Article III. Directors Meetings ..........................2
1. Annual Meeting ....................................2
2. Regular Meetings ..................................2
3. Special Meetings ..................................2
4. Notice.............................................2
5. Quorum.............................................2
6. Waiver of Notice ..................................2
7. Action Without a Meeting ..........................2
Article IV. Directors Committees ........................2
1. Executive Committee................................2
2. Other Committees ..................................3
Article V. Officers ....................................3
1. Officers...........................................3
2. Election, Term ....................................3
3. Removal of Officers ...............................3
4. Duties of Chairman of the Board....................3
5. Duties of Chairman of the Executive Committee......3
6. Duties of Vice Chairmen of the Board...............3
7. Duties of President................................3
8. Duties of Vice Presidents..........................3
9. Duties of General Counsel .........................3
10. Duties of Secretary ...............................4
11. Duties of Treasurer ...............................4
12. Duties of Controller ..............................4
13. Duties of Assistant Secretaries ...................4
14. Duties of Assistant Treasurers ....................4
15. Duties of Assistant Controllers ...................4
16. Salaries of Officers ..............................4
17. Bonds .............................................4
Article VI. Certificates of Stock .......................4
1. Form ..............................................4
2. Transfer Agents and Registrars.....................5
3. Lost, Destroyed and Mutilated Certificates.........5
4. Transfer of Stock..................................5
<PAGE> 2
5. Closing of Transfer Books and Fixing Record Date...5
Article VII. Voting of Stock Held ........................5
Article VIII. Miscellaneous ...............................5
1. Checks, Notes, Etc. ...............................5
2. Fiscal Year .......................................5
3. Corporate Seal ....................................5
Article IX. Amendments ..................................5
1. New By-Laws and Alterations .......................5
2. Legislative Amendments ............................5
Article I -- Meetings of Stockholders
Section 1. Place of Meetings -- Meetings of stockholders shall be held at
the principal office of the Corporation in Richmond, Virginia or at such other
place, either within or without the State of Virginia, as from time to time may
be fixed by the Board of Directors.
Section 2. Annual Meetings -- The Annual Meetings of Stockholders shall be
held on the third Friday in May of each year, if not a legal holiday, and if a
legal holiday, on the next business day following.
Section 3. Special Meetings -- Special meetings of the stockholders may be
called by the Chairman of the Board, a Vice Chairman, the President, the Board
of Directors, or in such other manner as is permitted by law.
Section 4. Notice of Meetings -- Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be given not less than ten nor more than
sixty days before the date of the meeting (except as a different time is
specified in these By-laws or by the laws of Virginia) either personally or by
mail, by or at the direction of the Chairman of the Board, a Vice Chairman, the
President, the Secretary, or the officer or persons calling the meeting, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be given when deposited in the United States mail addressed
to the stockholder at his address as it appears on the stock transfer books of
the Corporation, with postage thereon prepaid.
Notice of a stockholders' meeting to act on an amendment of the Articles of
Incorporation, on a plan of merger or exchange of shares, on a sale of all or
substantially all of the assets of the Corporation, or the dissolution of the
Corporation shall be given, in the manner provided above, not less than twenty-
five nor more than sixty days before the date of the meeting. Any such notice
shall be accompanied by such additional documents as may be required by law.
Section 5. Quorum -- A majority of the shares entitled to vote, represented
in person or by proxy, shall constitute a quorum at a meeting of stockholders;
provided however, that when any specified action is required to be voted upon by
a Class of Stock voting as a Class, holders of a majority of the shares of such
Class shall constitute a quorum for the transaction of such specified action. If
a quorum is present, action on a matter is approved if the votes cast in favor
of the action exceeds the votes cast opposing the action, except when a larger
vote or a vote by class is required by the laws of the State of Virginia and
except that in elections of Directors those receiving the greatest number of
votes shall be deemed elected even though not receiving a majority. Less than a
quorum may adjourn, without notice other than by announcement at the meeting,
until a quorum shall attend.
<PAGE> 3
Section 6. Voting -- Each holder of shares of a Class entitled to vote on a
matter coming before a meeting of stockholders shall be entitled to one vote for
each share he holds.
A stockholder may vote either in person or by proxy executed by the stockholder
or by his duly authorized attorney in fact. No proxy shall be valid after eleven
months from its date, unless otherwise provided in the proxy.
Article II -- Directors
Section 1. General Powers -- All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, the Board of Directors, subject to any
requirement of stockholder action.
Section 2. Number, Election, Term and Qualification -- The number of
Directors of the Corporation shall be fixed by the shareholders or by the Board
of Directors, but shall not be fewer than eight nor more than twelve. For the
purpose of election of Directors only, the Directors shall be divided into two
classes; the Directors whom the holders of Class A Common Stock are entitled to
elect shall be designated Class A Directors, and the Directors whom the holders
of Class B Stock are entitled to elect shall be designated Class B Directors.
Directors shall, except as provided in Section 3 of this Article II, be elected
by the classes of shares entitled to elect them, at each annual meeting of
Stockholders, to hold office until the next annual meeting of Stockholders or
until their death, resignation, retirement, removal or disqualification.
Directors need not be residents of the State of Virginia or Stockholders of the
Corporation. Except for a Director who may be or has been an officer of the
Company, all Directors shall be under the age of 73 years, provided however,
that a Director serving at the time he reaches such age shall be permitted to
complete his term of office but shall not thereafter be eligible for reelection,
and provided further, that this sentence shall not apply to any Director in
office as of November 24,1977.
Section 3. Vacancies -- Except as limited by law, any vacancy occurring in
the Board of Directors may be filled by the affirmative vote of a majority of
the remaining Directors though less than a quorum of the Board of Directors.
Section 4. Removal -- At a meeting called expressly for that purpose any
Director may be removed from office, with or without cause, by a vote of the
Stockholders holding a majority of the shares of the Class of Stock which
elected such Director. If any Directors are so removed, new Directors may be
elected at the same meeting.
1
Section 5. Compensation -- The Board of Directors may compensate Directors
for their services as such and may provide for the payment of all expenses
incurred by Directors in attending regular and special meetings of the Board of
Directors.
Section 6. Advisory Directors -- The Directors may, from time to time, by a
majority vote of all Directors, elect one or more persons to serve as advisory
directors for such term(s) as the Directors by resolution shall establish or
until such advisory director's death, resignation, retirement, disqualification
or removal. Advisory directors shall not be Directors of the Corporation and
shall have no rights, privileges or powers of Directors other than those
specifically provided herein or as may be specifically assigned to them by the
Directors. Advisory directors shall attend meetings of the Directors and
<PAGE> 4
meetings of any committees of the Directors to which they may be appointed.
Advisory directors shall not be entitled to vote on any business coming before
the Directors or any Committee thereof and shall not be counted for the purpose
of determining the number of Directors necessary to constitute a quorum, for the
purpose of determining whether a quorum is present or for any other purpose
whatsoever. Any or all advisory directors may be removed at any time with or
without cause by vote of the shareholders or by action of the Directors. The
termination of any person's relationship with the Corporation as an advisory
director shall not be deemed to create a vacancy in the position of advisory
director.
Article III -- Directors Meetings
Section 1. Annual Meetings -- The Annual Meeting of the Board of Directors
(which meeting shall be considered a regular meeting for the purposes of notice)
shall be held on the same day as the Annual Meeting of Stockholders, for the
purpose of electing Officers, unless the Board shall determine otherwise, and
carrying on such other business as may properly come before such meeting.
Section 2. Regular Meetings -- Regular meetings of the Board of Directors
shall be held for the purpose of carrying on such business as may properly come
before the meeting in the months of January, March, May, July, September and
November of each year on such day within such months and at such time and at
such place, within or without the State of Virginia, as may be designated by the
Chairman and specified in the notice of the meeting. Furthermore, regular
meetings of the Board of Directors shall be held immediately following each
special meeting of Stockholders to act upon any matter considered by the
Stockholders and to consider such other business as may properly come before the
meeting. Any such meeting shall be held at the place where the Stockholders'
meeting was held.
Section 3. Special Meetings -- Special meetings of the Board of Directors
shall be held on the call of the Chairman of the Board, a Vice Chairman, the
President, or any four members of the Board of Directors, at the principal
office of the Corporation or at such other place as the President may direct.
Section 4. Notice -- Notice of regular and special meetings of the Board of
Directors shall be mailed to each Director at least two (2) days, or telegraphed
at least twenty-four (24) hours, prior to the time of the meeting. Notice of a
special meeting must set forth the purpose for which the meeting is called.
Section 5. Quorum -- A majority of the Directors shall constitute a quorum
for the transaction of business. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 6. Waiver of Notice -- Notwithstanding any other provisions of these
By-laws, whenever notice of any meeting for any purpose is required to be given
to any Director a waiver thereof in writing signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be the equivalent to the giving of such notice.
A Director who attends a meeting shall be deemed to have had timely and proper
notice thereof unless he attends for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 7. Action Without A Meeting -- Any action which is required to be
taken at a meeting of the Directors or of a Director's Committee may be taken
<PAGE> 5
without a meeting if a consent in writing, setting forth the action so to be
taken, shall be signed before such action by all of the Directors or all of the
members of the committee, as the case may be. Such consent shall have the same
force and effect as a unanimous vote.
Article IV -- Directors Committees
Section 1. Executive Committee -- The Board of Directors, by a resolution
adopted by a majority of the number of Directors, may designate no less than
four (4) nor more than six (6) Directors, including the Chairman of the Board,
the Chairman of the Executive Committee, any Vice Chairman and the President, to
constitute an Executive Committee. Members of the Executive Committee shall
serve until removed, until their successors are designated or until the
Executive Committee is dissolved by the Board of Directors. All vacancies which
may occur in the Executive Committee shall be filled by the Board of Directors.
The Executive Committee, when the Board of Directors is not in session, may
exercise all of the powers
2
of the Board of Directors except as limited by law, and may authorize the seal
of the Corporation to be affixed as required. Regular meetings of the Executive
Committee shall be held six (6) times per year, alternating with the regular
meetings of the full Board of Directors, on such days and at such time and at
such place, within or without the State of Virginia, as may be designated by the
Chairman of the Board or Chairman of the Executive Committee and specified in
the notice of the meeting. The Special Meetings, Quorum, Waiver of Notice, and
Action Without A Meeting provisions applicable to meetings of the Board of
Directors set forth in Article III, Sections 3, 5, 6, and 7, respectively, shall
apply to meetings of the Executive Committee as well, with all references
therein to Directors to refer to the members of the Executive Committee and all
references therein to the Board of Directors to refer to the Executive
Committee. Notice of regular and special Executive Committee meetings of the
Board of Directors shall be telephoned or otherwise given to each member thereof
at least twenty-four (24) hours prior to the time of the meeting. Notice of a
special meeting must set forth the purpose for which the meeting is called.
Section 2. Other Committees -- Other Committees with limited authority may
be designated by a resolution adopted by a majority of the full number of
Directors.
Article V -- Officers
Section 1. Officers -- The officers of the Corporation shall be a Chairman
of the Board, a Chairman of the Executive Committee, one or more Vice Chairmen
of the Board, a President, one or more Vice Presidents (any one or more of whom
may be designated as an Executive Vice President or a Senior Vice President), a
General Counsel, a Secretary, a Treasurer, a Controller and, in the discretion
of the Board of Directors, one or more Assistant Secretaries, Assistant
Treasurers and Assistant Controllers. The Chairman of the Board, the Chairman of
the Executive Committee, the Vice Chairmen of the Board and the President shall
be chosen from the members of the Board of Directors. Any two offices may be
combined in the same person except the offices of President and Secretary.
Section 2. Election, Term -- Officers shall be elected at the regular Annual
Meeting of the Board of Directors or at such other time as the Board of
Directors may determine and shall hold office, unless removed, until the next
Annual Meeting of the Board of Directors or until their successors are elected
and qualified.
<PAGE> 6
Section 3. Removal of Officers -- Any Officer may be removed with or without
cause at any time by the Board of Directors at any duly called meeting.
Section 4. Duties of Chairman of the Board -- The Chairman of the Board
shall be a member of the Executive Committee and, in the absence or incapacity
of the President or vacancy in the office of President, shall perform the duties
of that office until the Board of Directors shall otherwise determine. He shall
preside at all meetings of the Stockholders and Directors, and shall see that
all the orders and resolutions of the Board of Directors are carried into
effect, subject, however, to the rights of the Directors to delegate any
specific powers. He shall, in addition, have such powers and duties as may be
specifically assigned to him by the Board of Directors.
Section 5. Duties of Chairman of the Executive Committee -- The Chairman of
the Executive Committee shall be a member of the Executive Committee, and shall
preside at all meetings of the Executive Committee and shall see that all orders
and resolutions of the Executive Committee are carried into effect, subject,
however, to the rights of the Executive Committee to delegate any specific
powers. He shall, in addition, have such powers and duties as may be
specifically assigned to him by the Board of Directors.
Section 6. Duties of Vice Chairmen of the Board -- Subject to the control of
the Board of Directors and the Chairman of the Board and to the Provisions of
the Articles of Incorporation and By-laws, the Vice Chairmen shall severally
perform such duties as may, from time to time, be assigned to each by the
Chairman of the Board or the Board of Directors.
Section 7. Duties of President -- Subject to the control of the Board of
Directors and the Chairman of the Board and to the Provisions of the Articles of
Incorporation and By-laws, the President shall have general charge, supervision
and control of all the business and affairs of the Corporation, and in the
absence or incapacity of the Chairman of the Board or the Vice Chairmen, shall
perform the duties of the Chairman or the Vice Chairmen until the Board of
Directors shall otherwise determine. He shall make annual reports showing the
condition of the affairs of the Corporation, making such recommendations as he
thinks proper, and shall from time to time submit to the Board of Directors such
information as may be required, relating to the business and property of the
Corporation. He shall further perform all such duties as may from time to time
be assigned or delegated to him by the Board of Directors.
Section 8. Duties of Vice Presidents -- The Vice Presidents shall severally
perform such duties as may, from time to time, be assigned to each by the
Chairman of the Board, the Vice Chairmen, the President or the Board of
Directors.
Section 9. Duties of General Counsel -- The General Counsel shall be the
chief legal officer of the Corporation. He shall, with the help of those whom he
may employ (including any firm of which he may be a member) supervise the
3
handling of all claims made by or against the Corporation, the filing of such
statements, reports or other documents as may be required by state and federal
agencies controlling corporations and their securities, render legal advice to
the Officers and Directors and generally manage all matters of a legal nature
for the Corporation.
<PAGE> 7
Section 10. Duties of Secretary -- The Secretary shall keep a record in
proper books for the purpose of all meetings and proceedings of the Board of
Directors and of the Executive Committee and also the minutes of the
Stockholders' meetings, and record all the votes of the Corporation. He shall
attend to the giving and serving of all notices of the Corporation and shall
notify the Directors and Stockholders of their respective meetings. He shall
have custody of the seal of the Corporation and shall affix the seal or cause it
to be affixed to all documents which are authorized to be executed on behalf of
the Corporation under its corporate seal. He shall have custody of all deeds,
leases, and contracts and shall have charge of the books, records and papers of
the Corporation relating to its organization and management. In addition, he
shall perform such other duties as may from time to time be delegated to him by
the Chairman of the Board, the Vice Chairmen, the President or the Board of
Directors.
Section 11. Duties of Treasurer -- The Treasurer shall have custody of all
the funds and securities of the Corporation and shall dispose of the same as
provided in these By-laws, or as directed by the Board of Directors or the
Executive Committee, if created. He shall have the care and custody of all
securities, books of account, documents and papers of the Corporation except
such as are kept by the Secretary. He shall keep regular and full accounts
showing his receipts and disbursements. He shall at all times submit to the
Board of Directors such statements as to the financial condition of this
Corporation as they may require and shall perform such other duties as may from
time to time be delegated to him by the Chairman of the Board, the Vice
Chairmen, the President or the Board of Directors.
Section 12. Duties of Controller -- The Controller shall be responsible for
all accounting, budgeting, and internal auditing functions of the Corporation,
subject to the direction of the Chairman of the Board, the Vice Chairmen, the
President, the Vice President designated as Principal Accounting Officer, or the
Board of Directors. In addition, he shall perform such other duties as may from
time to time be delegated to him by the Chairman of the Board, the Vice
Chairmen, the President or the Board of Directors.
Section 13. Duties of Assistant Secretaries -- The Assistant Secretaries
shall, jointly or severally, in the absence or incapacity of the Secretary or
vacancy in the office of Secretary, perform the duties of the Secretary. They
shall also perform such other duties as may from time to time be delegated to
them by the Chairman of the Board, the Vice Chairmen, the President, the Board
of Directors or the Secretary.
Section 14. Duties of Assistant Treasurers -- The Assistant Treasurers shall,
jointly and severally, in the absence or incapacity of the Treasurer or vacancy
in the office of Treasurer, perform the duties of the Treasurer. They shall also
perform such other duties as may from time to time be delegated to them by the
Chairman of the Board, the Vice Chairmen, the President, the Board of Directors
or the Treasurer.
Section 15. Duties of Assistant Controllers -- The Assistant Controllers
shall, jointly and severally, in the absence or incapacity of the Controller or
vacancy in the office of Controller, perform the duties of the Controller, and
shall in general assist the Controller in the performance of his duties. They
shall also perform such other duties as may from time to time be delegated to
them by the Chairman of the Board, the Vice Chairmen, the President, the Board
of Directors or the Controller.
Section 16. Salaries of Officers -- The Board of Directors shall fix the
salaries of all of the Officers of the Corporation.
<PAGE> 8
Section 17. Bonds -- The Board of Directors may by resolution require that
any or all Officers, Agents and Employees of the Corporation give bond to the
Corporation, with sufficient sureties, conditioned on the faithful performance
of the duties of their respective offices or positions, and comply with such
other conditions as may from time to time be required by the Board of Directors.
Article VI -- Certificates of Stock
Section 1. Form -- Certificates representing shares of the capital stock of
the Corporation shall be in such form as is permitted by law and prescribed by
the Board of Directors and shall be signed by the President or a Vice President
and the Secretary or an Assistant Secretary or any other Officer authorized by a
resolution of the Board of Directors. They may, but need not, be sealed with the
seal of the Corporation or a facsimile thereof. The signatures of the Officers
upon such certificates may be facsimiles if the certificate is countersigned by
a Transfer Agent or registered by a Registrar other than the Corporation itself
or an employee of the Corporation.
In case any Officer who has signed or whose facsimile signature has been placed
upon a stock certificate shall have ceased to be such Officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer at the date of its issue.
4
Section 2. Transfer Agents and Registrars - Transfer Agents and/or
Registrars for the stock of the Corporation may be appointed by the Board of
Directors and may be required to countersign stock certificates.
Section 3. Lost, Destroyed and Mutilated Certificates -- Holders of the
stock of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion, or any Officer of the Corporation appointed by
the Board of Directors for that purpose may in his or her discretion, cause one
or more new certificates for the same number of shares in the aggregate to be
issued to such Stockholder upon the surrender of the mutilated certificate or
upon satisfactory proof of such loss or destruction and the deposit of a bond in
such form and amount and with such surety as the Board of Directors may require.
Section 4. Transfer of Stock -- The stock of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holders
in person or by attorney on surrender of the certificates for such shares duly
endorsed and, if sought to be transferred by attorney, accompanied by a written
power of attorney to have the same transferred on the books of the Corporation.
Section 5. Closing of Transfer Books and Fixing Record Date -- For the
purposes of determining Stockholders entitled to notice of or to vote at any
meeting of Stockholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of Stockholders for
any other proper purpose, the Board of Directors of this Corporation may fix in
advance a date as the record date for any such determination of Stockholders,
such date in any case to be not more than seventy days prior to the date on
which the particular action requiring such determination of Stockholders is to
be taken. If no record date is fixed for the determination of Stockholders
entitled to notice of or to vote at a meeting of Stockholders, or Stockholders
entitled to receive payment of a dividend, the date on which the notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
<PAGE> 9
for such determination of Stockholders. When a determination of Stockholders has
been made as provided in this section with respect to any meeting, such
determination shall apply to any adjournment thereof.
Article VII -- Voting of Stock Held
Unless otherwise provided by the vote of the Board of Directors, the Chairman of
the Board, a Vice Chairman, the President, or the Secretary may from time to
time appoint an attorney or attorneys or agent or agents of this Corporation to
cast the votes which this Corporation may be entitled to cast as a stockholder
or otherwise in any other corporation, any of whose stock or securities may be
held by this Corporation, at meetings of the holders of the stock or other
securities of such other corporation, or to consent in writing to any action by
any other such corporation, and may instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent, and may execute
or cause to be executed on behalf of this Corporation such written proxies,
consents, waivers or other instruments as he may deem necessary or proper in the
premises; or the Chairman of the Board, a Vice Chairman, the President, or the
Secretary may himself attend any meeting of the holders of stock or other
securities of such other corporation and thereat vote or exercise any powers of
this Corporation as the holder of such stock or other securities of such other
corporation.
Article VIII -- Miscellaneous
Section 1. Checks, Notes, Etc. -- All checks and drafts on the Corporation's
bank accounts and all bills of exchange, promissory notes, acceptances and other
instruments of a similar character shall be signed by such officer or officers
or agent or agents of the Corporation as shall be thereunto authorized from time
to time by the Board of Directors.
Section 2. Fiscal Year -- The fiscal year of the Corporation shall be
determined in the discretion of the Board of Directors, but in the absence of
any such determination it shall be the calendar year.
Section 3. Corporate Seal -- The Corporate Seal shall be circular and shall have
inscribed thereon, within and around the circumference, the words "Media
General, Inc., Richmond, VA." In the center shall be the word "Seal."
Article IX -- Amendments
Section 1. New By-laws and Alterations -- These By-laws may be amended or
repealed and new By-laws may be made at any regular or special meeting of the
Board of Directors by a majority of the Board. However, By-laws made by the
Board of Directors may be repealed or changed and new By-laws may be made by the
Stockholders and the Stockholders may prescribe that any By-law made by them
shall not be altered, amended, or repealed by the Directors.
Section 2. Legislative Amendments -- In event any portion of these By-laws
is subsequently altered by act of the General Assembly of Virginia those
portions thereof which are not affected by such legislation shall remain in full
force and effect until and unless altered or repealed in accordance with the
other terms hereof.
5
<PAGE> 1
John Stewart Bryan III
Chairman and President
Media General, Inc.
P.O. Box C-32333
Richmond, Virginia 23293-0001
March 18, 1994
Mr. Basil Snider, Jr.
13901 Turnberry Court
Midlothian, Virginia 23113
Dear Bas:
This will summarize the terms for the continuation of your part-time employment
by Media General in 1994.
1. February 28, 1993, completed the initial year of your part-time status at a
compensation rate of $125,000 annually for approximately 120 days of work.
2. During the period March 1 through December 31, 1994, you have agreed to work
65 days for compensation of $65,000, plus business travel and expenses and
continuance of a car, club dues, etc., just as in 1993. We will continue to
issue you a W-2, reflecting your part-time status.
3. You will continue to focus on the general newsprint area, with specific
oversight and monitoring of Garden State Paper Company and our Pronapade
interest.
4. Your responsibilities also will include legislative issues in the paper
recycling area as well as AFPA activities, with input and assistance in other
areas as we may request.
5. As previously agreed, your part-time status allows you to continue as an
"employee" through December 31, 1994, for purposes of the Company's 1987 Non-
Qualified Stock Option Plan and its Restricted Stock Plan. However, since your
full-time employment ceased on February 28, 1993, that will be the date utilized
for the calculation of your Death Benefit under the Company's Executive Death
Benefit Plan.
Please indicate your acceptance of these terms by signing the enclosed copy
of this letter.
Yours sincerely,
J. Stewart Bryan III
JSB:cc
ACCEPTED AND AGREED:
Basil Snider, Jr.
<PAGE> 1
30 Rockafeller Plaza A Division of
New York, NY 10112 National Broadcasting
212 664-4444 Company, Inc.
NBC
TV NETWORK
May 27, 1993
TAMPA TELEVISION, INC.
TAMPA, FLORIDA
Re: WFLA-TV
Gentlemen:
The following shall constitute an amendment to the television network
affiliation agreement (the "Agreement") between the licenses of Station WFLA-TV
("Station") and National Broadcasting Company, Inc. ("NBC"), effective as of
April 01, 1989.
1. During the term of the Agreement, Station shall, by the terms of this
amendment, be entitled to invoke protection against the simultaneous duplication
of NBC's network programming as carried by Station imported within a radius from
Station's designated community of license as defined in Section 73.606 of the
Rules of the Federal Communications Commission ("FCC") to the maximum geographic
extent from said community of license permitted under the present Sections 76.92
and 73.658(m) of the FCC's Rules and in accordance with the terms and conditions
of said Rules.
2. Either party shall have the right to terminate this amendment (a) on
December 31, 1996, by written notice to the other on or before June 30, 1996,
for any reason whatsoever; or (b) at any other time during the term of the
Agreement, by written notice to the other given at least 60 days prior to the
effective date of such termination, but only in the event of the following:
(i) Station grants consent to the retransmission of its broadcast signal
by any cable television system or, except as provided in subparagraph 2(b)(ii)
below, to any other multichannel video program distributor ("MVPD"), as defined
in Section 76.64(d) of the FCC Rules, whose carriage of broadcast signals
requires retransmission consent, and such cable system or MVPD is located
outside the Area of Dominant Influence ("ADI"), as defined by Arbitron, to which
Station is assigned, unless Station's signal is actually carried by such cable
system or MVPD as of April 1, 1993, or, with respect to such cable system, is
"significantly viewed" (as determined by the FCC) as of April 1, 1993; provided,
however, that at each renewal of the Agreement, in the event Station can
demonstrate to NBC that it is "significantly viewed" (as determined by the FCC)
in areas in addition to those in which it was "significantly viewed" as of April
1, 1993 ("Additional Viewing Areas"), NBC agrees that it will negotiate in good
faith with Station regarding a possible extension of Station's grant of the
right to retransmit its broadcast signal to cable systems in the Additional
Viewing Areas; or
<PAGE> 2
(ii) Station grants consent to the retransmission of its broadcast signal
by any MVPD that provides such signal to any home satellite dish user, unless
such user is located within Station's own ADI or is an "unserved household" as
defined in Section 119(d) or any successor provision of Title 17 of the United
States Code.
Any notice of termination under paragraph 2(b) hereof given by either party may
be withdrawn by such party if, as of the effective date provided therein, the
circumstances giving rise to such party's right of termination no longer exist.
To the extent that any term of the Agreement is inconsistent with the terms of
this amendment, this amendment shall prevail. Except as modified by this
amendment, the Agreement shall remain in full force and effect.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
BY: Robert J. Niles
AGREED AND ACCEPTED:
TAMPA TELEVISION, INC.
BY: James A. Zimmerman
<PAGE> 3
30 Rockafeller Plaza A Division of
New York, NY 10112 National Broadcasting
212 664-4444 Company, Inc.
NBC
TV NETWORK
May 27, 1993
TAMPA TELEVISION, INC.
TAMPA, FLORIDA
Re: WFLA-TV
Gentlemen:
The following shall constitute an amendment to the television network
affiliation agreement (the "Agreement") between the licenses of Station WFLA-TV
("Station") and National Broadcasting Company, Inc. ("NBC"), effective as of
April 01, 1989.
1. In consideration of the grant by NBC to Station of the non-duplication
protection provided in the amendment to the Agreement dated as of the date
hereof, Station hereby agrees as follows:
(a) Station shall not grant consent to the transmission of its broadcast
signal by any cable television system, or, except as provided in subparagraph
1(b) below, to any other multichannel video program distributor ("MVPD"), as
defined in Section 76.64(d) of the FCC Rules, whose carriage of broadcast
signals requires retransmission consent, if such cable system or MVPD is located
outside the Area of Dominant Influence ("ADI"), as defined by Arbitron, to which
Station is assigned, unless Station's signal is actually carried by such cable
system or MVPD as of April 1, 1993, or, with respect to such cable system, is
"significantly viewed" (as determined by the FCC) as of April 1, 1993; provided,
however, that at each renewal of the Agreement, in the event Station can
demonstrate to NBC that it is "significantly viewed" (as determined by the FCC)
in areas in addition to those in which it was "significantly viewed" as of April
1, 1993 ("Additional Viewing Areas"), NBC agrees that it will negotiate in good
faith with Station regarding a possible extension of Station's grant of the
right to retransmit its broadcast signal to cable systems in the Additional
Viewing Areas; and
(b) Station shall not grant consent to the retransmission of its broadcast
signal by any MVPD that provides such signal to any home satellite dish user,
unless such user is located within Station's own ADI or is an "unserved
household" as defined in Section 119(d) or any successor provision of Title 17
of the United States Code.
2. Paragraph 5(f) of the Agreement shall be deleted, and the following shall
be inserted in its place:
(f) NBC reserves the right to reevaluate and change at any time by written
notice to Station (i) the network station rate set forth in subparagraph 5(a)(i)
above ("Network Station Rate"), (ii) the percentages set forth in the
<PAGE> 4
compensation matrix table attached hereto ("Compensation Table"), or (iii) the
percentage set forth in subparagraph 5(c) above ("Waiver Percentage"). Any
increase in the Network Station Rate or in the percentages in the Compensation
Table, or any decrease in the Waiver Percentage, shall become effective on the
date specified in NBC's notice to Station. If NBC decreases the Network Station
Rate or the percentages in the Compensation Table, or increases the Waiver
Percentage, NBC shall notify Station in writing at least ninety (90) days prior
to the effective date of such change, and Station may, if Station so elects,
terminate this Agreement as of the effective date by giving NBC written
notification within forty-five (45) days after the date of NBC's notice.
Notwithstanding the foregoing, if any reduction in compensation hereunder is
part of a general rate revision on the NBC Television Network, NBC may notify
Station in writing at least thirty (30) days prior to the effective date of such
change, and Station may, if Station so elects, terminate this Agreement as of
the effective date by giving NBC written notification within fifteen (15) days
after the date of NBC's notice. If, however, such general rate revision is
attributable to a substantial increase in the network's music performance rights
payments, Station shall not be entitled to terminate this Agreement as provided
herein. Station agrees that a general rate revision on the NBC Television
Network may be expressed as a modification of the Network Station Rate, the
percentages in the Compensation Table and/or the Waiver Percentage.
3. Paragraph 14 of the Agreement shall be deleted, and the following shall be
inserted in its place:
14. Station shall not authorize, cause, or permit, without NBC's consent,
any television program, motion picture film, recording or other
material furnished to Station hereunder to be recorded, duplicated,
rebroadcast or otherwise transmitted or used for any purpose other
than broadcasting by Station as provided herein. Notwithstanding the
foregoing, Station shall not be restricted in the exercise of its
signal carriage rights pursuant to any applicable rule or regulation
of the FCC with respect to retransmission of its broadcast signal by
any cable system or multichannel video program distributor (as defined
in Section 76.64(d) of the FCC Rules) (a) located within the ADI in
which Station is located, or (b) actually carrying Station's signal as
of April 1, 1993, or (c) with respect to cable systems, serving an
area in which Station is "significantly viewed" (as determined by the
FCC in accordance with its Rules) as of April 1, 1993 or at any time
thereafter; provided, however, that any such exercise pursuant to FCC
Rules with respect to NBC programs shall not be deemed to constitute a
license by NBC. NBC reserves the right to restrict such signal
carriage with respect to NBC programs in the event of a change in
applicable law.
4. If Station violates any of the provisions set forth in Paragraphs 1 and 3
of this amendment, NBC may, in addition to any other of its rights or remedies
at law or in equity under the Agreement or any amendment thereto, terminate the
Agreement by written notice to Station given at least 90 days prior to the
effective date of such termination.
To the extent that any term of the Agreement is inconsistent with the terms
of this amendment, this amendment shall prevail. Except as modified by this
amendment, the Agreement shall remain in full force and effect.
<PAGE> 5
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
BY: Robert J. Niles
AGREED AND ACCEPTED:
TAMPA TELEVISION, INC.
BY: James A. Zimmerman
<PAGE> 1
BUSINESS IN BRIEF
Media General is a diversified communications company with major interests in
newspapers, broadcast television and cable television, newsprint production,
commercial printing and publications.
Newspapers
Wholly owned newspaper operations include morning and Sunday newspapers in
Richmond, Virginia; Tampa, Florida; and Winston-Salem, North Carolina, with a
combined average daily circulation approaching 575,000. The Company also holds
a 40 percent interest in a group of 12 medium-sized daily newspapers totaling
460,000 in circulation in addition to a number of weekly newspapers.
Television
The television division operates three network-affiliated television stations in
the Southeastern Sun Belt: Tampa and Jacksonville, Florida, and Charleston,
South Carolina; two growing cable networks in Northern Virginia with more than
220,000 subscribers; and a cable advertising agency.
Newsprint
The newsprint division is a major producer of 100 percent recycled newsprint,
with a wholly owned mill in Garfield, New Jersey, and a jointly owned mill in
Dublin, Georgia. An affiliated mill is in Mexico.
Auxiliary
Auxiliary operations include financial publishing products drawn from a
comprehensive database of more than 10,000 stocks, bonds, mutual funds and
financial markets; a statewide business magazine; and commercial printing -- all
three located in Richmond, Virginia.
4
<PAGE> 2
NEWSPAPERS
Media General's wholly owned newspaper operations consist of daily and Sunday
newspapers in Richmond, Virginia; Tampa, Florida; and Winston-Salem, North
Carolina. These newspapers had a combined average daily circulation of 573,800
in 1993 and combined average Sunday circulation exceeding 723,700.
In addition, Media General publishes 14 weekly and semiweekly newspapers and
shoppers covering the Tampa and West Central Florida region. Newspaper revenues
increased to $307.1 million in 1993 from $299 million in 1992. Operating profit
was $19.6 million for the year, up from $16.4 million in 1992.
Since the beginning of the recession in 1989, the newspaper industry has
encountered a series of challenges unparalleled in recent history. Widespread
consolidations and mergers in the retail industry, the emergence of mass
discounters, direct-response video shopping and mail order businesses have
combined to put pressure on the traditional retail advertising base long enjoyed
by newspapers.
Corporate downsizing and plant closings have additionally changed the retail
landscape as consumers have altered -- at least temporarily -- their buying
patterns with a shift from goods to services.
Media General's newspapers have responded to these and other challenges on
several fronts:
We have sharply refined our efforts to make newspaper advertising more
productive to advertisers in terms of cost-effectiveness and in the
products and services we provide.
From a news and editorial standpoint, Media General's newspapers have
increased coverage through expanded zones and special sections with
particular emphasis on local news coverage.
With the completion of Winston-Salem's new press facility in mid-1994,
the Company's newspapers will have some of the most modern production
facilities in the world.
While the modernization programs have been capital intensive, they also have
been essential long-term investments which will provide operating efficiencies,
lower costs and improved profit margins.
As indicated in the Chairman's letter, the Company's newspapers continue to
develop new, non-traditional sources of revenues. Because many of the ventures
will not require the addition of full-time staff, profit margins should benefit.
With the digital convergence of all media rapidly becoming a reality, the vast
potential of the Company's newspapers' databases is being explored. Projects
include a joint venture with Cox Newspapers and BellSouth to produce local,
interactive classified advertising, as well as an agreement with the Prodigy
computer network to develop electronic access to The Tampa Tribune in 1994 and,
eventually, to the Richmond Times-Dispatch and the Winston-Salem Journal.
While it is difficult to determine precisely what the electronic future will
bring, the outlook for Media General's newspapers remains bright.
Tampa
<PAGE> 3
The past year was a transitional one for The Tampa
Tribune, a year in which cost-cutting, tighter Picture contained
budgetary controls and the planned elimination of here in lower right
inefficient and unprofitable circulation bases corner. See Appendix
resulted in significant improvement in the to this document.
newspaper's operating profits. The Tribune's 17-
zoned editions
6
were reduced to 13, increasing concentration on the paper's 11-county area of
dominant influence.
After eliminating zones and home delivery in some areas, circulation declined as
expected and caused at least a temporary pause in The Tribune's record as
Florida's fastest-growing newspaper over the last five years. A comprehensive
subscriber renewal/retention program was implemented by year-end, and a special
payment program was initiated allowing subscribers to pay monthly rather than
for the typical three-month period.
The Tribune's promotional efforts were expanded and in 1993 involved annual
sponsorship of more than 280 Tampa Bay events. The Tribune also entered into
multi-year marketing agreements with various sports organizations, including the
Tampa Bay Buccaneers, the Tampa Bay Lightning, the Hall of Fame Bowl, the GTE
Suncoast Seniors Golf Classic, the Gasparilla Distance Marathon, the University
of South Florida and the University of Tampa.
New technology also played a larger role in bringing new revenues to The
Tribune. Databased marketing and address-specific delivery were merged
effectively with the successful test of the delivery of a major local retailer's
catalog to six Hillsborough County ZIP codes.
As The Tribune enters its centennial year, prospects for both the newspaper and
the Tampa Bay area appear to be increasingly positive.
Richmond
Paced by strong gains in the classified and circulation categories, revenues at
the Richmond Times-Dispatch in 1993 increased five percent from those of 1992, a
year that included five months of revenues from The Richmond News Leader, which
was merged into the Times-Dispatch on June 1, 1992.
A series of changes occurred in the Richmond market in 1993 as several retail
advertisers said good-bye and others moved in. Hess's, Hechingers and Ames
closed their doors, and locally owned Standard Drug was sold to a national
chain. Safeway groceries also exited the market, and one of two area Builders
Square stores closed. In addition, two Herman's Sporting Goods stores announced
their Richmond departure effective early in 1994.
Fortunately, other major retailers either moved into the market or expanded
their existing operations.
Richmond Sports and Sports Town, both sporting goods "megastores", opened
outlets. Hecht's opened a new store in Richmond's newest mall and its Richmond
advertising schedule continued on par with its larger Washington and Baltimore
markets.
Leggett added another store in 1993, filling a space vacated by Hess's, and
Proffitt's, based in Knoxville, Tennessee, took over the two remaining locations
left by Hess's.
<PAGE> 4
Newcomer Service Merchandise moved into the Richmond market with two stores and
additional openings are planned in 1994 by Wal-Mart, J.C. Penney and Sears.
From a production standpoint, the color, speed and cost-effectiveness of the new
presses installed in mid-1992 have produced the anticipated results. The
suburban Hanover County production facility began printing 220,000 inserts
weekly for a major electronics retailer, as well as a weekly four-page, four-
color section for an advertiser who formerly used direct mail. Other printing
jobs included work ranging from the Virginia State lottery to the United Way,
and these efforts will be expanded in 1994.
Based upon fourth quarter 1993 operations, it
appears that the Richmond economy may be on the Picture contained
mend as advertising revenues reflected growth in here in lower right
essentially all categories in last year's final corner. See Appendix
quarter, including a more than five percent gain to this document.
in the retail sector.
8
Winston-Salem
Winston-Salem's economy began to show indications of improvement in 1993,
sparked by several announcements of industrial growth and job creation.
In early spring, Pepsi-Cola said some 1,000 jobs may result from a new
telemarketing operation to be located in the former headquarters building of RJR
Nabisco.
That announcement was followed in the summer by the move to Winston-Salem of two
Sara Lee divisions, which created 340 additional jobs. Siecor, which
manufactures fiber-optic cable, intends to build a $30 million plant employing
over 200 people, and Chesapeake Display will construct a new facility with some
110 jobs.
While these economic development successes bode well for the future, they have
not yet been realized fully in the retail economy. Adjusted for inflation,
retail sales in the Winston-Salem market have been down or flat four of the last
five years, and this lack of retail growth has had a significant impact on the
Winston-Salem Journal.
Run-of-press retail advertising declined at the Journal in 1993, the result of
overall retail sluggishness and the decision by a major advertiser to switch to
preprints.
Revenues from the classified and general advertising categories improved from
year-earlier levels, however, and circulation revenues rose nearly nine percent.
The sharpest revenue gains resulted from the Journal's targeted niche product
publications. Included in this category is the Journal's "Star Watch"
publication, which was launched late in 1992 and now is being syndicated in 26
other newspapers across the country with a combined weekly circulation of more
than 1.3 million.
Progress was made also on the Journal's database marketing effort to produce and
deliver targeted print information through niche products, other publishers'
magazines, product catalogs, samples and related information. One such example,
launched in 1993, was "K-12," a publication strictly for homes with children in
<PAGE> 5
the public schools. "K-12" is popular with both readers and advertisers and is
indicative of the potential for such custom sections to be expanded in 1994.
Construction of the Journal's new production and distribution facility continued
on schedule during the year. At a cost of $44 million, the 140,000-square-foot
plant will house a new press, mailing room, circulation distribution center and
newsprint storage space. Production is scheduled to begin at the new plant in
mid-1994.
The improved press capacity and mail room capability and a more positive
advertising climate should result in revenue gains at the Journal in 1994.
In summarizing the year, we would indeed be remiss in failing to acknowledge the
achievements of three individuals who retired in 1993 and whose careers have
contributed substantially to the success of Media General's newspapers.
H. Doyle Harvill, chairman and publisher of The Tampa Tribune; Joseph C. Doster,
Jr., president and publisher of the Winston-Salem Journal; and Alf Goodykoontz,
senior vice president and executive editor of the Richmond Times-Dispatch, all
made 1993 their last year in helping to guide their respective newspapers to new
levels of success. Their vision, leadership and advice have been invaluable.
Fortunately for Media General we have highly
qualified and able successors in Jack Butcher, Picture contained
Jonathon H. Witherspoon and William H. Millsaps, here in lower right
Jr., who, respectively, have assumed the critical corner. See Appendix
leadership positions vacated by their to this document.
predecessors.
10
TELEVISION
Revenues and operating profit in Media General's television segment improved in
1993, as revenues increased 5.6 percent to $179.5 million, from $169.9 million
in 1992, and operating income rose 35.8 percent to $35.2 million in 1993, from
$25.9 million in 1992.
Media General's television operations consist of network-affiliated television
stations in Tampa and Jacksonville, Florida, and Charleston, South Carolina,
along with two cable television systems in Virginia, one in Fairfax County and
another in Fredericksburg.
BROADCAST TELEVISION
For the Company's broadcast television operations, the year's beginning was not
encouraging. National advertising was particularly weak, and local advertisers
also assumed a wait-and-see attitude with respect to President Clinton's
proposed budget and economic recovery package. But as the second quarter
progressed, prospects began to brighten. Some local advertisers returned to
television and others stepped up their schedules. This trend continued through
the remainder of the year, and revenues were further buoyed with the return of
much-needed national advertising during the second half.
As a result, the year ended with overall revenue improvement at the Company's
stations, despite the absence of more than $1.3 million in political advertising
the stations had enjoyed in 1992.
<PAGE> 6
WFLA-TV, Tampa
At WFLA-TV in Tampa, 1993 resulted in significant progress in implementing an
ambitious strategic program to increase the station's audience share and
demographic performance.
Improved national time sales were realized, in part, through the
selection of MMT Sales, Inc., the station's national sales
representative.
WFLA's "Live at Five News Hour" was reformatted into two separate
half-hour programs, which produced immediate audience gains.
Its news set and graphics look were updated and station identity
reinforced.
Joint efforts with The Tampa Tribune resulted in expanded marketing
and new business development opportunities.
NBC's 1994 carriage of the Super Bowl, its continued carriage of National
Basketball Association games, and the return of Major League Baseball to the
network, combined with a strengthening national and local economy, augur well
for continued growth at WFLA-TV.
WCBD-TV, Charleston
In 1993 the Base Realignment and Closure Commission announced the closing of the
Charleston Naval Shipyard and the Charleston Navy Base. Initial reports
suggested that the projected loss in military-related jobs could be potentially
catastrophic to the area's economy -- possibly as high as one-fourth of the
entire local workforce.
Although the effect of the closings now appears to have been substantially
overstated, the impact on local advertising spending was both real and
immediate.
At WCBD-TV, Media General's ABC affiliate in Charleston, local advertising
billings trailed those of 1992's by 4.4 percent during the first three quarters
before rebounding in the year's last quarter.
Despite an overall decline in local time sales,
strong national advertising revenues, coupled with Picture contained
effective cost cutting, produced a positive year- here in lower right
to-year revenue gain and a four-fold improvement corner. See Appendix
in operating results. The station also made to this document.
important progress in terms of both ratings and
revenues in several time periods and ended the
year as number one in virtually every local time
period.
12
Emphasis continued to be placed on WCBD-TV's news operations, resulting in the
receipt of nine major broadcast news awards, including "The Best of Show Award"
involving every major Southeast television market.
With renewed local economic growth, WCBD-TV's revenue base and operating income
should continue to improve this year.
<PAGE> 7
WJKS-TV, Jacksonville
By whatever measure -- revenues, profits, or expense controls -- 1993 was a
highly successful year for WJKS-TV, Media General's ABC affiliate in
Jacksonville.
Paced by a strong return of the automotive business, revenues at WJKS-TV in 1993
rose more than nine percent, and solid gains were made in both national and
local advertising time sales.
Concurrently, the station maintained its aggressive cost-control programs, which
produced expense reductions of more than three percent for the year.
For the past two years, WJKS has produced a 10 p.m. weekday newscast for the
local Fox network affiliate. The newscast's profitability increased
significantly following substantial ratings improvements in the first half of
1993, and the program subsequently has been expanded to seven nights a week.
In 1993 WJKS renewed efforts to create additional revenues and profits from its
existing asset base. These programs included marketing its satellite uplink
truck for teleconferencing, leasing its computerized editing suite during off-
hours, and aggressively selling space on its transmitting tower.
With a resurgence in the Jacksonville economy, the as-yet-undetermined benefits
of being a new National Football League franchise city, and continued attention
to expense controls, 1994 should be another year of growth.
CABLE TELEVISION
Despite the cumbersome time and administrative burdens imposed by the
reregulation of cable television, Media General's two Northern Virginia
franchises registered continued growth in 1993.
Combined cable-related revenues rose nearly seven percent in 1993 to $125.4
million, with accompanying sharp gains in operating profitability. Subscriber
growth also continued, and the two systems served 220,400 customers at year-end,
with a joint penetration percentage rate of 68.1.
Media General Cable of Fairfax County
Revenues, operating income, total subscriber count and penetration levels rose
to record highs in 1993 at Media General's flagship cable system in Fairfax
County.
Revenues rose to $115.3 million, from $108.9 million in 1992.
Year-end subscriber count was 206,228, up from 201,789 a year earlier.
Monthly revenue per home passed was $30.39, compared with $29.47 in
1992, and monthly average revenue per subscriber increased to $45.15
from $44.18 in 1992.
Faced with new regulations that impose significant restrictions on so-called
basic tier pricing, Fairfax Cable reemphasized efforts to expand the unregulated
segments of its business.
Pay-per-view revenue increased more than 16 percent during the year,
representing nearly 900,000 transactions for movies, concerts and special
events.
<PAGE> 8
To increase the sales of premium units to subscribers, Fairfax Cable negotiated
agreements with Cinemax, The Movie Channel, Disney and Home Team Sports to
market those channels at reduced prices, while maintaining overall pay-per-view
profit margins.
As 1993 drew to a close, Fairfax Cable began
conducting a test which could lead to further pay- Picture contained
per-view gains. By using the cable system's here in lower right
unique two-way capabilities, a test group of corner. See Appendix
subscribers is able to order pay-per-view through to this document.
their television remote con-
14
trols. This program is expected to be expanded to other customers in 1994.
Fairfax's Media General Productions also enjoyed a strong year. Developed
initially to provide for Fairfax Cable's own production needs, the unit has
grown into a successful stand-alone operation, producing video projects for a
number of major clients, including National Geographic and GTE Spacenet.
Cable programming activities also were accelerated as Fairfax launched "Prevue
Guide" and "The Dating Network," both new advertising-supported channels.
Additionally, ethnic group target marketing was expanded with the addition of
"The International Channel" to full-service subscribers and "HBO en Espanol" to
the premium lineup.
Mega Advertising successfully expanded its rapidly growing sales interconnect
program during the year. Now representing five Washington-area cable companies
with more than 520,000 total subscribers, Mega is ranked ninth nationally among
other interconnects in gross billings.
Media General Cable of Fredericksburg
Media General Cable of Fredericksburg also turned in a successful year.
Revenues increased more than 14 percent from 1992, and operating profit jumped
sharply.
Subscribers at the Fredericksburg system increased to more than 14,100, a gain
of nearly six percent, and year-end penetration rose to 75.7 percent.
Pay-per-view revenues grew more than 42 percent during the year, and buying
rates doubled to 22 percent from 11 percent of addressable subscribers the
previous year.
Outlook
Media General Cable of Fairfax plans to launch an aggressive three-year plan to
further upgrade its system with the latest fiber-optic technology.
Beginning in 1994, Fairfax Cable also will begin providing interactive services
with the activation of 75,000 converter boxes already installed in subscribers'
homes, enabling Fairfax County subscribers to be among the first in the world to
"interact" and communicate through their television sets.
NEWSPRINT
<PAGE> 9
Media General's newsprint operations include Garden State Paper Company's wholly
owned recycling mill in Garfield, New Jersey, with a rated annual capacity of
235,000 short tons, and minority interests in two affiliated recycling newsprint
mills. Those include a one-third interest in Southeast Paper Manufacturing
Company in Dublin, Georgia, with a rated capacity of more than 460,000 short
tons, and a 49 percent interest in Pronapade, located in San Luis Potosi,
Mexico, a joint affiliate with the Mexican government, with a capacity of
155,000 short tons.
Newsprint revenue increased to $100.4 million in 1993 from $96.5 million in
1992, and operating income rose to $5.7 million from $1.3 million the previous
year. Despite the improvement, prices remained under pressure throughout much
of the year.
Newsprint industry pricing had grown in a fairly predictable pattern for a
number of years, but prices peaked in 1988 and then began a general decline
after several new newsprint machines -- with their attendant higher production
levels -- came on line just as the economy and newsprint demand began to weaken.
Newsprint selling prices then began to erode
almost steadily until late October 1992, when Picture contained
customer inventories began to increase in here in lower right
anticipation of a Canadian newsprint industry corner. See Appendix
strike. Inventories rose for nine consecutive to this document.
months before peaking in mid-1993.
In line with the inventory build-up, selling
prices for Media General's
16
newsprint improved gradually during the first half of 1993, then began to
decline almost monthly as newspapers were able to take advantage of the
oversupply position throughout the newsprint industry. While the resultant
effect on newsprint profitability was substantial, the potential impact was
significantly reduced because of continued cost-reduction efforts at Garden
State Paper (GSP).
Of particular benefit was the continuing contribution of GSP's fiber fuel
project, which was essentially completed in mid-1992. The system captures a
significant portion of the 100 tons of fiber daily that are not usable in the
production of fresh newsprint, and the recaptured material is then thickened and
burned as an alternate fuel. Burning the material, rather than disposing of it
through the regional sewer system, resulted in effluent disposal costs savings
in 1993 of approximately $4 million compared with 1992 charges. Recovery of the
fuel value from the fiber mix also aided fuel costs.
Affiliated Operations
Media General, Knight-Ridder, Inc., and Cox Enterprises are the three partners
in Southeast Paper Manufacturing Company.
Southeast Paper, which sells its recycled newsprint principally in 10
Southeastern states, was also affected by the roller coaster pricing which
characterized the newsprint industry in 1993.
Looking toward a period of renewed price stability and increased demand,
Southeast Paper announced in mid-year a $25 million expansion program that would
boost its production of newsprint by 20,000 tons annually, to a total of 480,000
<PAGE> 10
tons. Financing for the expansion will be facilitated through tax-exempt
industrial revenue bonds.
During the second half of 1993, the Mexican government announced its intention
to privatize the newsprint operation in which Media General has a 49 percent
interest. The Company anticipates that such a sale or some other form of
divestiture will end Media General's involvement at Pronapade in 1994 as
previously planned.
Outlook
It now appears that the newsprint oversupply situation will shrink over the
course of 1994, but not to the degree that newsprint producers should anticipate
a return to sharply higher profits.
In the longer term, however, increased newspaper advertising linage and
accompanying newsprint demand, coupled with the ongoing shutdown of older
newsprint machines or their conversion to the production of other paper grades,
should once again presage improved newsprint profitability.
AUXILIARY
Media General operates three relatively small companies related to its major
businesses of information and communications. Each of these operations --
commercial printing, targeted regional business publishing, and an electronic
financial database publishing unit -- experienced solid revenue gains in 1993
and shares the potential for improved longer-term growth and profitability.
Financial Publishing
Media General Financial Services (MGFS) had a record year in 1993, the result of
growth and stability in its existing businesses as well as the successful
introduction of two new products during the year.
Media General Financial Services is a diversified
financial data publisher with more than 20 years Picture contained
of experience in serving the information needs of here in lower right
institutional investors, corporations, corner. See Appendix
universities, publications and others. to this document.
Its first new product opportunity in 1993 occurred
when the Securities and Exchange Commission
introduced regulations that
18
required publicly held companies to provide detailed performance graphs in their
proxy material. The new graph was required to show a five-year return
comparison of the company stock against a related peer group and a broad equity
market index. With the depth of its database, MGFS quickly notified 7,000
companies of its capability. Of the six firms offering this service today, MGFS
is one of the principal providers.
Another successful new product offering involved the American Association of
Individual Investors (AAII) and the joint development of Stock Investor, a
quarterly software/data product provided on diskettes. MGFS provides financial
data on 7,000 companies and AAII markets, produces and distributes the product.
The product was introduced in June 1993, and sales were brisk throughout the
rest of the year.
<PAGE> 11
Additionally, The Associated Press began developing a lineup of facsimile-
delivered financial information services designed for private investors. MGFS
data are at the heart of the new service, which is marketed by newspapers.
Other new products and joint ventures are planned this year to complement and
expand MGFS's successes in 1993.
Business Publishing
Media General Business Communications, publisher of Virginia Business magazine,
made a substantial improvement in its operating performance in 1993.
Revenues increased eight percent which, in combination with a nearly four
percent expense reduction, resulted in a significant year-over-year improvement.
Since its founding eight years ago, Virginia Business has strengthened its
market position among readers and advertisers. The magazine has been a leader
in covering the state's economic policy, the economics of health care and other
business issues of statewide importance. The Virginia Press Association
recognized its efforts this past year with five awards for editorial and
graphics excellence.
A series of in-depth reports on regions and industries within Virginia has
bolstered the magazine's normal editorial content while generating strong
advertising support.
Virginia Business is well-positioned to benefit from an economic recovery.
Costs are under control, and the advertising base is increasingly diversified.
Commercial Printing
Against a national backdrop of increased competition and static pricing in the
commercial printing industry, Beacon Press had a highly successful year in 1993.
Boosted by several new accounts, sales increased 15.6 percent during the year,
and operating profit doubled.
Periodicals accounted for some 65 percent of Beacon's revenues during the year,
and new customers ranged from a gospel music publication to an art catalog.
Increasingly, there is a trend for Beacon's customers to provide their material
on a computer disk. Customers representing 56 percent of Beacon's sales now
supply all or part of their material by this process, which was virtually non-
existent in 1991. The result was a four-fold increase in Beacon's desktop
publishing sales in 1993.
For the fourth consecutive time, Beacon was selected to print the daily
newspaper for the National Boy Scout Jamboree at Fort A. P. Hill, Virginia. The
newspaper was provided nightly to Beacon on a computer disk. Beacon then
printed 40,000 copies for distribution the following morning.
Beacon continued to implement a series of cost-reduction and productivity
improvements during the year, and successfully negotiated new two-year pressroom
and bindery employee contracts.
<PAGE> 12
Looking forward, there appear to be opportunities
for additional revenue growth in 1994, but, Picture contained
because of sharp price competition in the here in lower right
industry, profit gains will again be determined corner. See Appendix
largely by increased productivity and expense to this document.
reductions.
20
<PAGE> 13
<TABLE>
Media General, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<CAPTION>
Fiscal Years Ended
December 26, December 27, December 29,
1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $600,824 $577,659 $585,900
Operating costs:
Production costs 321,422 316,477 325,208
Selling, distribution and
administrative 162,252 164,019 163,108
Depreciation and amortization 56,847 54,550 49,943
Special charges --- --- 11,300
- ------------------------------------------------------------------------------------------
Total operating costs 540,521 535,046 549,559
- ------------------------------------------------------------------------------------------
Operating income 60,303 42,613 36,341
- ------------------------------------------------------------------------------------------
Other income (expense):
Interest expense (21,274) (17,559) (16,056)
Equity in net loss of unconsolidated
affiliates (990) (4,926) (75,640)
Other, net 835 6,131 2,659
- ------------------------------------------------------------------------------------------
Total other income (expense) (21,429) (16,354) (89,037)
- ------------------------------------------------------------------------------------------
Income (loss) before income taxes and cumulative
effect of changes in accounting principles 38,874 26,259 (52,696)
- ------------------------------------------------------------------------------------------
Income taxes 13,166 7,946 9,395
- ------------------------------------------------------------------------------------------
Income (loss) before cumulative effect of
changes in accounting principles 25,708 18,313 (62,091)
Cumulative effect of changes in accounting
principles:
Income taxes --- 15,066 ---
Postretirement benefits (net of $8,434
income tax benefit) --- (14,379) ---
- ------------------------------------------------------------------------------------------
Net income (loss) $ 25,708 $ 19,000 $(62,091)
==========================================================================================
Earnings (loss) per common share and equivalent:
Before cumulative effect of changes in
accounting principles $ 0.98 $ 0.70 $ (2.39)
Cumulative effect of changes in
accounting principles --- 0.03 ---
- ------------------------------------------------------------------------------------------
Net income (loss) $ 0.98 $ 0.73 $ (2.39)
==========================================================================================
Notes to Consolidated Financial Statements begin on page 28. Weighted average common shares and equivalents were 26,152, 26,056 and
25,996 for 1993, 1992 and 1991, respectively.
</TABLE>
23
<PAGE> 14
<TABLE>
Media General, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares)
ASSETS
<CAPTION>
December 26, December 27,
1993 1992
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash $ 2,942 $ 2,791
Accounts receivable (less allowances for
discounts and doubtful accounts
1993 -- $3,698; 1992 -- $3,732) 62,122 58,733
Inventories 10,290 9,222
Other 17,003 19,052
--------- ---------
Total current assets 92,357 89,798
- ------------------------------------------------------------------------------------------
Investments in unconsolidated affiliates 46,675 50,515
- ------------------------------------------------------------------------------------------
Other assets 45,561 60,358
- ------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 21,805 21,600
Buildings 135,170 132,498
Machinery and equipment 730,550 720,885
Construction in progress 15,581 9,122
Accumulated depreciation (387,881) (344,347)
--------- ---------
Net property, plant and equipment 515,225 539,758
- ------------------------------------------------------------------------------------------
Excess of cost of businesses acquired over equity
in net assets (less accumulated amortization
1993 -- $7,593; 1992 -- $7,143) 45,424 46,996
- ------------------------------------------------------------------------------------------
Total assets $745,242 $787,425
==========================================================================================
Notes to Consolidated Financial Statements begin on page 28.
</TABLE>
24
<PAGE> 15
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
December 26, December 27,
1993 1992
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 20,994 $ 23,066
Accrued expenses and other liabilities 60,560 57,032
Income taxes payable 746 43
Current portion of long-term debt 506 ---
--------- ---------
Total current liabilities 82,806 80,141
- ------------------------------------------------------------------------------------------
Long-term debt 261,250 320,506
- ------------------------------------------------------------------------------------------
Deferred income taxes 88,679 94,380
- ------------------------------------------------------------------------------------------
Other liabilities and deferred credits 87,073 82,457
- ------------------------------------------------------------------------------------------
Commitments (note 10)
- ------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock ($5 cumulative convertible),
par value $5 per share:
Authorized 5,000,000 shares; none outstanding
Common stock, par value $5 per share:
Class A, authorized 75,000,000 shares; issued
25,695,000 and 25,541,413 shares 128,475 127,707
Class B, authorized 600,000 shares; issued
557,154 shares 2,786 2,786
Additional paid-in capital 5,967 4,052
Unearned compensation (3,108) (1,744)
Retained earnings 91,314 77,140
--------- ---------
Total stockholders' equity 225,434 209,941
- ------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $745,242 $787,425
==========================================================================================
Notes to Consolidated Financial Statements begin on page 28.
</TABLE>
25
<PAGE> 16
<TABLE>
Media General, Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except shares and per share amounts)
<CAPTION>
Additional Unearned
Common Stock Paid-in Compen- Retained
Class A Class B Capital sation Earnings
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1990 $126,585 $ 2,787 $ 1,297 $ --- $143,149
Net loss ($2.39 per share) --- --- --- --- (62,091)
Cash dividends ($0.44 per share) --- --- --- --- (11,440)
Exercise of options on 31,652
Class A shares 158 --- (80) --- ---
Issuance of 158,400 Class A shares
under restricted stock plan 792 --- 2,406 (3,198) ---
Income tax benefits relating to
restricted share dividends and
exercised options --- --- 195 --- ---
Issuance of 6,308 Class A shares
under dividend reinvestment plan 32 --- 91 --- ---
Amortization of unearned
compensation --- --- --- 1,185 ---
--------- --------- --------- --------- ---------
Balance at December 29, 1991 127,567 2,787 3,909 (2,013) 69,618
Net income ($0.73 per share) --- --- --- --- 19,000
Cash dividends ($0.44 per share) --- --- --- --- (11,478)
Exercise of options on 25,000
Class A shares 125 --- (62) --- ---
Income tax benefits relating to
restricted share dividends and
exercised options --- --- 179 --- ---
Issuance of 7,153 Class A shares
under dividend reinvestment plan 36 --- 92 --- ---
Exchange of 200 Class B shares
for Class A shares 1 (1) --- --- ---
Amortization and forfeitures
of unearned compensation (22) --- (66) 269 ---
--------- --------- --------- --------- ---------
Balance at December 27, 1992 127,707 2,786 4,052 (1,744) 77,140
Net income ($0.98 per share) --- --- --- --- 25,708
Cash dividends ($0.44 per share) --- --- --- --- (11,534)
Exercise of options on 57,632
Class A shares 288 --- 169 --- ---
Issuance of 107,600 Class A shares
under restricted stock plan 538 --- 1,520 (2,058) ---
Income tax benefits relating to
restricted share dividends and
exercised options --- --- 392 --- ---
Issuance of 4,995 Class A shares
under dividend reinvestment plan 25 --- 87 --- ---
Amortization and forfeitures
of unearned compensation (83) --- (253) 694 ---
--------- --------- --------- --------- ---------
Balance at December 26, 1993 $128,475 $ 2,786 $ 5,967 $ (3,108) $ 91,314
==========================================================================================
Notes to Consolidated Financial Statements begin on page 28.
</TABLE>
26
<PAGE> 17
<TABLE>
Media General, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
Fiscal Years Ended
------------------------------------------
December 26, December 27, December 29,
1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 25,708 $ 19,000 $(62,091)
Adjustments to reconcile net income (loss):
Depreciation and amortization 56,847 54,550 49,943
Deferred income taxes 473 (20,922) (4,246)
Change in accounting for post-
retirement benefits --- 22,813 ---
Provision for doubtful accounts 3,488 5,377 6,193
Equity in net loss of unconsolidated
affiliates 990 4,926 75,640
Distributions from unconsolidated
newsprint affiliate --- --- 5,000
Special charges --- --- 11,300
Change in assets and liabilities:
Accounts receivable and inventories (7,946) (261) (2,294)
Other current assets 2,015 6,347 (1,237)
Accounts payable, accrued expenses
and other liabilities 1,320 (14,964) (2,758)
Other, net 2,270 (8,296) (4,892)
--------- --------- ---------
Net cash provided by operating activities 85,165 68,570 70,558
- ------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (32,837) (92,319) (115,383)
Change in restricted bond proceeds held
in trust 4,115 (10,699) ---
Collection of note receivable 8,918 750 500
Proceeds from dispositions --- --- 3,030
Other, net 3,905 (2,868) 9,474
--------- --------- ---------
Net cash used in investing activities (15,899) (105,136) (102,379)
- ------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net cash proceeds from long-term borrowings --- 47,000 43,000
Payment of long-term debt (58,750) (3,696) (363)
Cash dividends paid (11,534) (11,478) (11,440)
Other, net 1,169 2,986 2,050
--------- --------- ---------
Net cash provided (used) by financing activities (69,115) 34,812 33,247
- ------------------------------------------------------------------------------------------
Net increase (decrease) in cash 151 (1,754) 1,426
Cash at beginning of year 2,791 4,545 3,119
--------- --------- ---------
Cash at end of year $ 2,942 $ 2,791 $ 4,545
==========================================================================================
Notes to Consolidated Financial Statements begin on page 28.
</TABLE>
27
<PAGE> 18
Media General, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Principles of Consolidation
- --------------------------------------------------------------------------------
The accompanying financial statements include the accounts of the Company and
subsidiaries more than 50% owned. All significant intercompany balances and
transactions have been eliminated.
The Company's fiscal year ends on the last Sunday in December.
Cost in excess of net assets acquired through 1970 is not amortized unless there
is evidence of diminution in value; such excess cost incurred after 1970 is
being amortized by the straight-line method over periods not exceeding 40 years.
Note 2: Inventories
- --------------------------------------------------------------------------------
Inventories, principally raw materials, are valued at the lower of cost or
market. The cost of raw material used in the production of newsprint is
determined on the basis of average cost. The cost of newsprint inventories is
determined on the first-in, first-out method.
Note 3: Investments in Unconsolidated Affiliates
- --------------------------------------------------------------------------------
The Company has a one-third partnership interest in Southeast Paper
Manufacturing Company (SEPCO), a domestic newsprint manufacturer which pays
licensing and other fees to the Company. The Company also has a 40% interest in
Garden State Newspapers (GSN), a domestic daily and weekly newspaper company.
Summarized financial information for these investments accounted for by the
equity method follows:
<TABLE>
Southeast Paper Manufacturing Company:
<CAPTION>
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current assets $ 71,503 $ 69,219 $ 79,102
Noncurrent assets 378,414 380,956 407,359
Current liabilities 55,238 40,744 45,087
Noncurrent liabilities 255,947 263,874 284,889
==========================================================================================
Net sales $185,784 $178,253 $205,700
==========================================================================================
Gross profit $ 33,403 $ 27,778 $ 54,225
==========================================================================================
Net income (loss) $ (6,436) $(10,928) $ 9,096
==========================================================================================
Company's equity in net income (loss) $ (990) $ (4,926) $ 3,032
==========================================================================================
</TABLE>
<PAGE> 19
The 1993 net loss of SEPCO includes a charge of approximately $3.6 million
relating to its adoption of Statement of Financial Accounting Standards No. 106
(SFAS 106), "Employers' Accounting for Postretirement Benefits Other Than
Pensions." The Company's share of this charge was included in the Company's
equity in the net loss of SEPCO in 1992, the year in which the Company adopted
SFAS 106.
In addition to the equity in net income (loss) from SEPCO, the Company also
recognized license and other fees from another newsprint company and the above
affiliate aggregating $3.9 million in 1993, $3.6 million in 1992, and $5.9
million in 1991. Retained earnings at December 26, 1993, includes $10.6 million
related to undistributed earnings of SEPCO.
28
<TABLE>
Garden State Newspapers:
<CAPTION>
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current assets $ 35,513 $ 34,300 $ 33,683
Noncurrent assets 220,079 213,398 261,465
Current liabilities 28,404 22,390 37,021
Noncurrent liabilities 238,421 226,538 271,392
Redeemable preferred stock 97,553 91,281 85,009
==========================================================================================
Net sales $181,490 $163,155 $179,203
==========================================================================================
Gross profit $ 63,037 $ 56,948 $ 43,063
==========================================================================================
Net income (loss) $(10,649) $ 12,036 $(90,384)
==========================================================================================
Company's equity in net income (loss) $ --- $ --- $(78,672)
==========================================================================================
</TABLE>
The above summarized information for GSN includes results for the twelve months
ended September 30 of each year. The prior years' information has been revised
to conform with the current year's presentation. The redeemable preferred stock
of GSN is owned by the Company.
The Company's 1991 operations include a loss of $78.7 million ($78.3 million
after-tax; $3.01 per share) from GSN which largely resulted from GSN
management's decision to write down the carrying value of certain assets, mostly
intangibles, in light of depressed market conditions. The 1991 loss reduced the
Company's investment in GSN to zero. Although GSN's net income for the twelve
months ended September 30, 1992, was $12 million, such net income was due
entirely to a nonrecurring gain from the sale of a newspaper property, net of
operating losses. Consequently, in 1992 the Company did not recognize any
equity in GSN's 1992 net income, nor has it since, because it is unlikely to
realize any dividends or cash distributions from GSN operations.
Subsequent to December 26, 1993, GSN failed to redeem the Series A and Series C
Preferred Stock that previously had been issued to the Company and which was
mandatorily redeemable on January 1, 1994. However, the Company has signed a
Letter Agreement (Agreement) with GSN and a GSN affiliate whereby it has agreed
to a process through which it would sell its 40% common equity interest in GSN,
<PAGE> 20
along with its GSN Series A and Series C Preferred Stock, for approximately
$62.7 million. Under the terms of the Agreement, the Company would
simultaneously exchange its GSN Series B Preferred Stock for the 9% Preferred
Stock of Denver Newspapers, Inc., currently owned by GSN. The Company would
continue to hold a warrant to purchase 40% of the common equity of Denver
Newspapers, Inc. The Agreement, which will terminate if the contemplated
transactions have not occurred by April 29, 1994 (unless extended by mutual
agreement of the parties), is subject to various conditions, including the
buyer's ability to arrange financing. Consequently, there is no assurance that
the transactions will be consummated and, in light of these contingencies, the
Company continues to evaluate its options.
Note 4: Long-term Debt
- --------------------------------------------------------------------------------
<TABLE>
Long-term debt at December 26, 1993, and December 27, 1992, was as follows:
<CAPTION>
(In thousands) 1993 1992
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Revolving credit agreements $ 70,000 $110,000
9.27% notes due annually through 1996 106,250 125,000
8.62% senior notes due annually from 1998 to 2002 65,000 65,000
7.125% revenue bonds due 2022 20,000 20,000
Other 506 506
--------- --------------
261,756 320,506
Less current portion of long-term debt 506 ---
--------- --------------
Long-term debt $261,250 $320,506
==========================================================================================
</TABLE>
29
The Company has revolving credit agreements which commit five banks and
financial institutions to lend the Company up to $160 million. In general, the
agreements bear interest at current market rates, none of which exceeds prime.
Under the agreements, the Company is obligated to pay commitment fees equal to
1/4 of 1% per annum on unused balances. The agreements remain in effect until
13 months notice is given by the lenders.
In 1992, the Company issued $20 million of New Jersey Economic Development
Authority tax-exempt revenue bonds. The bonds are secured by a letter of
credit, under which the Company pays an annual fee equal to 3/4 of 1% per annum
on outstanding bond principal and interest payable. The bonds contain certain
optional and mandatory redemption provisions, and the bond proceeds are
restricted for capital expenditures related to the Company's Garden State Paper
newsprint operations in New Jersey. At December 26, 1993, and December 27,
1992, $6.6 million and $10.7 million, respectively, of unused restricted bond
proceeds held in trust were invested in U.S. Treasury bills classified in other
noncurrent assets. The carrying amount of these investments approximated fair
value at those dates.
<PAGE> 21
In December 1991, the Company entered into an agreement with an insurance
company to issue senior notes under a three year $150 million shelf facility.
The notes can have average lives and maturities of three to fifteen years with
interest rates determined by market conditions at the time of issuance. In
March 1992, the Company issued $65 million of its senior notes, at a fixed
interest rate of 8.62%.
The Company's bond, note and credit agreements require the maintenance of a
minimum net worth of $180 million and impose certain limitations on debt to
equity ratios or debt to earnings ratios, as defined, subject to certain
exceptions. At December 27, 1992, $18.8 million due in 1993 under the 9.27%
notes was classified as long-term debt in accordance with the Company's
intention and ability to refinance the obligation on a long-term basis. The
repayment of $18.8 million was made in 1993 and was funded with borrowings from
the revolving credit agreements. At December 26, 1993, $18.8 million due in
1994 under the 9.27% notes was classified as long-term debt in accordance with
the Company's intention and ability to refinance such obligation on a long-term
basis. Excluding the $70 million of borrowings under revolving credit
agreements and the $18.8 million of 9.27% notes referred to above, long-term
debt maturities during the five years subsequent to December 26, 1993,
aggregating $101,006,000, are as follows: 1994 - $506,000; 1995 - $43,750,000;
1996 - $43,750,000; 1997 - none; and 1998 - $13,000,000.
At December 26, 1993, the Company had an interest rate swap agreement of $50
million which, combined with the favorable effect of the 1991 termination of a
counter swap agreement, effectively converts the variable interest rate on $50
million of revolving debt to a fixed interest rate approximating 8%. To the
extent that variable interest rates are below 9%, the Company is unable to take
advantage of such lower rates on the above-mentioned $50 million. The swap
agreement expires in June 1995. In 1992, the Company entered into interest rate
swap agreements of $65 million which effectively convert the $65 million senior
notes with a fixed rate of 8.62% into variable rate debt. This swap was
terminated in 1993, at a gain, which is being amortized over the original life
of the terminated swap, effectively lowering the interest rate of the 8.62%
senior notes to 8.4%. Also in 1992, the Company entered into interest rate swap
agreements in amounts which matched the maturities of the Company's 9.27% notes.
These swaps were terminated in 1992, at a gain, which is being amortized over
the remaining life of the 9.27% notes, likewise lowering their interest rate to
8.4%.
The following information is provided solely in connection with the provisions
of Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments." The borrowings under the Company's revolving
credit agreements approximate their fair value. The fair value of the Company's
remaining debt of $191.8 million at December 26, 1993, and $210.5 million at
December 27, 1992, was approximately $214 million and $228 million,
respectively. The fair value of this remaining debt was estimated using
discounted cash flow analyses based on the Company's incremental borrowing rates
for similar types of borrowings. The fair value of the $50 million swap at
December 26, 1993, and the $50 million and $65 million swaps at December 27,
1992, approximated $3 million and $5 million, respectively, based on the
estimated cost to the Company to terminate these swaps.
30
<PAGE> 22
Note 5: Business Segments
- --------------------------------------------------------------------------------
The Company is a diversified communications company with three principal
business segments. The Newspaper segment currently includes three daily (four,
prior to the June 1992, merger of The Richmond News Leader into the Richmond
Times-Dispatch), and 14 weekly, semiweekly and triweekly newspapers and
shoppers, ten of which were acquired in December 1990. Prior to their sale in
April 1990, the Newspaper segment also included 30 weekly newspapers located on
the West Coast. Television operations consist of three television stations, two
cable television operations, and a cable advertising interconnect. The
Newsprint segment includes the Company's recycled newsprint operations.
Intersegment sales (principally newsprint) comprise less than 2% of consolidated
totals and are not shown separately. Corporate assets are principally property,
plant and equipment and investments in unconsolidated affiliates.
Other income, net, for 1992 includes $2.9 million of insurance proceeds related
to a 1991 fire at the Company's Garden State Paper newsprint mill in Garfield,
New Jersey, and $2.1 million resulting from the termination of obligations
previously established upon the disposition of certain operations.
Operations for 1991 include special charges of $11.3 million ($7.1 million
after-tax), $10.6 million of which relates to the Newspaper segment, for costs
associated with the Company's 1991 early retirement program ($8.8 million) and
the planned merger, which was consummated in June 1992, of the Company's two
Richmond newspapers ($2.5 million).
Newspaper segment revenues and operating profit for 1990 include a $5.3 million
pretax gain from the sale of the Company's West Coast weekly newspapers.
Television segment operating profit for 1990 includes a $5.3 million favorable
impact of reductions to loss estimates provided in connection with the 1988
discontinuance of media placement operations. The 1990 operating profits of the
Newsprint and Auxiliary segments include losses of $1.9 million and $5.7
million, respectively, accrued in connection with the sales, concluded during
the first-half of 1991, of certain recycling center, publishing and other
assets.
Operations for 1989 include a $10.3 million ($6.5 million after-tax) special
charge involving the write-off of unrecovered costs and expenses relating to the
Company's lawsuit against William B. Tanner and others.
<TABLE>
Information as to revenues, profitability and assets is as follows:
<CAPTION>
(In thousands) 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Newspaper $307,058 $299,038 $299,173 $302,010 $298,138
Television 179,477 169,946 159,596 153,427 139,399
Newsprint 100,371 96,540 116,717 132,915 131,310
Auxiliary 13,918 12,135 10,414 25,315 26,285
- ------------------------------------------------------------------------------------------
Total $600,824 $577,659 $585,900 $613,667 $595,132
==========================================================================================
<PAGE> 23
(In thousands) 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating profit
Newspaper $ 19,610 $ 16,382 $ 681 $ 26,760 $ 24,725
Television 35,178 25,912 18,406 24,622 16,181
Newsprint 5,725 1,277 18,527 21,109 18,179
Auxiliary (210) (958) (1,273) (8,666) (4,671)
- ------------------------------------------------------------------------------------------
60,303 42,613 36,341 63,825 54,414
Interest expense (21,274) (17,559) (16,056) (19,831) (25,385)
Equity in net income (loss) of
unconsolidated affiliates (990) (4,926) (75,640) (1,303) 10,562
Other, net 835 6,131 2,659 814 684
Corporate special charge --- --- --- --- (10,275)
- ------------------------------------------------------------------------------------------
Income(loss) before income taxes $ 38,874 $ 26,259 $(52,696) $ 43,505 $ 30,000
==========================================================================================
31
Identifiable assets
Newspaper $330,613 $344,255 $306,754 $240,347 $206,162
Television 228,952 243,382 262,349 274,109 278,676
Newsprint 84,329 86,315 81,495 76,534 83,276
Auxiliary 24,592 24,606 23,954 15,108 19,805
Corporate 77,090 89,587 88,059 170,218 195,018
Segment eliminations (334) (720) (300) (372) (280)
- ------------------------------------------------------------------------------------------
Total assets $745,242 $787,425 $762,311 $775,944 $782,657
==========================================================================================
Capital expenditures
Newspaper $ 12,259 $ 63,631 $ 90,165 $ 38,800 $ 30,038
Television 15,337 13,314 14,352 26,595 28,032
Newsprint 4,413 14,899 10,558 7,815 8,793
Auxiliary 226 59 95 94 477
Corporate 602 416 213 382 1,777
- ------------------------------------------------------------------------------------------
Total $ 32,837 $ 92,319 $115,383 $ 73,686 $ 69,117
==========================================================================================
Depreciation and amortization
Newspaper $ 21,623 $ 19,337 $ 14,528 $ 11,874 $ 11,716
Television 25,969 26,701 27,465 26,927 25,124
Newsprint 6,837 6,161 5,638 6,215 6,276
Auxiliary 859 864 880 1,063 1,080
Corporate 1,559 1,487 1,432 1,468 1,439
- ------------------------------------------------------------------------------------------
Total $ 56,847 $ 54,550 $ 49,943 $ 47,547 $ 45,635
==========================================================================================
</TABLE>
<PAGE> 24
Note 6: Income Taxes
- --------------------------------------------------------------------------------
In 1992, the Company adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" (SFAS 109), which requires recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns.
Under this "liability" method, deferred tax liabilities and assets are
determined based on the temporary differences between the financial statement
and tax bases of assets and liabilities by applying enacted statutory tax rates
applicable to future years in which the differences are expected to reverse.
The cumulative effect (for years prior to 1992) of SFAS 109, which was adopted
at the beginning of fiscal 1992, was to increase 1992 net income by $15.1
million ($0.58 per share), which represents the net decrease in the Company's
deferred tax liability as of that date.
In accordance with SFAS 109, the Company recognized an increase in the deferred
tax liability in 1993 to reflect the increase in the federal statutory tax rate,
from 34% to 35%. At the date of enactment, the cumulative effect of the
increased tax rate, which was made retroactively to January 1, 1993, was a
decrease in 1993 net income of $2.3 million ($0.09 per share). This decrease in
net income was substantially offset by the effects of resolving various tax
examinations.
Prior to 1992, the provision for income taxes was determined under the
"deferred" method, based on income and expenses included in the consolidated
statements of operations. Differences between taxes so computed and taxes
payable under applicable statutes and regulations were classified as deferred
taxes arising from timing differences.
Investment tax credits are accounted for as a reduction of income taxes in the
year realized. Prior to January 1, 1983, federal investment tax credits were
deferred and are being amortized over the estimated useful lives of related
assets.
32
<PAGE> 25
<TABLE>
Significant components of income taxes are as follows:
<CAPTION>
Deferred
Liability Method Method
---------------- ------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 10,956 $ 4,015 $ 11,158
State 1,990 1,601 3,272
Investment tax credits -- flow-through
method (253) (248) (789)
--------- --------- ---------
12,693 5,368 13,641
--------- --------- ---------
Deferred:
Federal (1,697) 3,323 (3,185)
Change in enacted tax rates 2,262 --- ---
Investment tax credits amortized (579) (601) (614)
State 487 (144) (447)
--------- --------- ---------
473 2,578 (4,246)
--------- --------- ---------
$ 13,166 $ 7,946 $ 9,395
==========================================================================================
Temporary differences which give rise to significant components of the Company's
deferred tax liabilities and assets as of December 26, 1993, and December 27,
1992, are as follows:
<CAPTION>
(In thousands) 1993 1992
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Tax over book depreciation $126,367 $119,366
Other 13,111 21,809
--------- ---------
Total deferred tax liabilities 139,478 141,175
--------- ---------
Deferred tax assets:
Employee benefits (27,112) (25,110)
Alternative minimum tax credit (14,892) (12,119)
Other (15,435) (14,866)
--------- ---------
Total deferred tax assets (57,439) (52,095)
--------- ---------
Deferred tax liabilities, net 82,039 89,080
Deferred tax assets included in other
current assets 6,640 5,300
--------- ---------
Deferred tax liabilities $ 88,679 $ 94,380
==========================================================================================
<PAGE> 26
The components of deferred income taxes are as follows:
<CAPTION>
Deferred
Method
(In thousands) 1991
- ------------------------------------------------------------------------------------------
<S> <C>
Excess of tax over book depreciation $ 3,141
Alternative minimum tax (1,600)
Deferred costs (785)
Asset dispositions 953
Employee benefits (1,508)
Special charges and related adjustments (3,976)
Tax reform adjustments (538)
Deferred interest 2,150
Insurance reserves (1,841)
Other (242)
---------
$ (4,246)
==========================================================================================
33
Reconciliation of income taxes computed at the federal statutory tax rate to actual income tax expense is as follows:
<CAPTION>
Deferred
Liability Method Method
---------------- ------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income taxes computed at federal statutory
tax rate $ 13,606 $ 8,928 $(17,917)
Increase (reduction) in income taxes
resulting from:
State income taxes, net of federal
income tax benefit 1,446 798 1,344
Equity in net loss of unconsolidated
affiliates --- --- 26,314
Life insurance plans (1,756) (1,820) (654)
Change in enacted tax rates 2,068 --- ---
Tax examination adjustments and settlements (2,085) --- ---
Other (113) 40 308
--------- --------- ---------
$ 13,166 $ 7,946 $ 9,395
==========================================================================================
</TABLE>
<PAGE> 27
Income taxes paid during 1993, 1992 and 1991, net of refunds from prior years,
were $11.6 million, $7.2 million and $30.1 million, respectively. In 1991, the
Company paid $20.4 million of contested tax and interest in connection with
certain adjustments proposed by the Internal Revenue Service (IRS) relating to
an examination of the Company's income tax returns for the years 1982 through
1985. In 1992, the Company reached a settlement with the IRS concerning the
contested deficiency. In 1993, the Company reached a settlement with the IRS
relating to examinations of the Company's income tax returns for the years 1986
through 1989. As a result of these two settlements with the IRS, the Company
will receive refunds of approximately $10 million.
The Company's income tax returns for the years 1990 and 1991 are currently under
examination by the IRS. The Company believes that adjustments, if any, arising
from this examination will not be material to its results of operations or
financial position.
Note 7: Common Stock and Stock Options
- --------------------------------------------------------------------------------
Holders of the Class A common stock are entitled to elect 30% of the Board of
Directors and, with the holders of Class B common stock, also are entitled to
vote on the reservation of shares for stock awards and on certain specified
types of major corporate reorganizations or acquisitions. Class B common stock
can be converted into Class A common stock on a share-for-share basis at the
option of the holder. Both classes of common stock receive the same dividends
per share.
The Company has two nonqualified stock option plans under which options to
purchase Class A common stock may be granted to key employees. The plans are
administered by the Compensation & Stock Option Committee of the Board of
Directors. The Committee sets option prices and determines when options become
exercisable. The option price for the 1976 plan is presently not less than
$2.50 per share, while the 1987 plan stipulates option prices equal to the fair
market value on the date of grant. Every option must become exercisable on or
before the fifth anniversary of its grant. In general, portions
of the options vest and become exercisable in each of the first three to five
years after their grant. Options under the plans are then exercisable during
the continued employment of the optionee, and for a period of not greater than
three years after termination of employment, but not for a period greater than
ten years after the date of grant for options granted subsequent to the 1991
amendment to the 1987 plan. The plans continue until terminated by the Company.
34
<PAGE> 28
<TABLE>
<CAPTION>
Price
Nonqualified Option Shares Outstanding Exercisable Per Share
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1990 593,522 373,802 $ 2-46
Became exercisable --- 75,280 32-46
Exercised (31,652) (31,652) 2
Issued 242,100 97,500 20
Canceled/forfeited (50,400) (20,400) 2-46
--------- ---------
Balance at December 29, 1991 753,570 494,530 2-46
Became exercisable --- 113,480 20-46
Exercised (25,000) (25,000) 2
Issued 165,000 --- 19
--------- ---------
Balance at December 27, 1992 893,570 583,010 2-46
Became exercisable --- 152,134 19-32
Exercised (57,632) (57,632) 2-20
Issued 200,000 --- 19
Canceled/forfeited (87,355) (74,144) 2-46
--------- ---------
Balance at December 26, 1993 948,583 603,368 2-46
==========================================================================================
Number of shares reserved for future grants:
At December 29, 1991 987,970
At December 27, 1992 765,350
At December 26, 1993 584,385
</TABLE>
Under the terms of the Company's restricted stock plan, adopted in 1991, certain
key employees were granted 107,600 and 158,400 restricted shares of the
Company's Class A stock in 1993 and 1991, respectively. Shares were awarded in
the name of each of the participants, who have all the rights of other Class A
stockholders, subject to certain restrictions and forfeiture provisions.
Restrictions on the shares expire no more than ten years after the date of
award, or earlier if certain performance targets are met.
Unearned compensation was recorded at the date of award based on the market
value of shares. Unearned compensation, which is shown as a separate component
of stockholders' equity, is being amortized to expense over the ten year vesting
period, or in certain circumstances upon normal retirement. The amount
amortized to expense in 1993, 1992 and 1991 was $358,000, $181,000 and
$1,185,000, respectively. Shares reserved for future grants at the end of 1993,
1992 and 1991 were 155,000, 245,900 and 241,600, respectively.
Note 8: Retirement Plans
- --------------------------------------------------------------------------------
The Company has a non-contributory defined benefit retirement plan which covers
substantially all employees. Benefits are based on salary and years of service.
The Company's funding policy is to contribute annually the tax-deductible
amounts required by statute. Plan assets include marketable securities, U.S.
government obligations and cash equivalents. The Company also has a non-
contributory unfunded executive supplemental retirement plan which supplements
<PAGE> 29
the coverage available to certain executives under the defined benefit
retirement plan.
Certain employees of the Company's newsprint operations participate in multi-
employer defined benefit and contribution pension plans. The plans provide
benefits to substantially all union employees.
Net pension cost for 1993, 1992 and 1991 is summarized below. The increase in
1991 pension expense resulted from early retirement arrangements.
35
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Benefits earned during the year $ 3,786 $ 3,408 $ 4,076
Interest cost on projected benefit
obligations 10,507 9,703 8,141
Actual return on plan assets (18,103) (10,700) (23,980)
Net amortization and deferral 2,857 (3,811) 10,552
Early retirement cost --- --- 8,795
--------- -------------- --------------
Defined benefit plan expense (credit) (953) (1,400) 7,584
Supplemental retirement plan expense 1,814 1,923 2,506
Multi-employer plans expense 623 622 599
--------- -------------- --------------
Total expense $ 1,484 $ 1,145 $ 10,689
==========================================================================================
The non-contributory defined benefit retirement plan's status was as follows:
<CAPTION>
December 26, December 27, December 29,
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested $113,896 $ 86,646 $ 77,959
Non-vested 4,379 2,807 5,472
--------- -------------- --------------
Total accumulated benefit obligations $118,275 $ 89,453 $ 83,431
- ------------------------------------------------------------------------------------------
Plan assets at fair value $154,555 $145,119 $142,092
Projected benefit obligations 145,623 113,683 109,268
--------- -------------- --------------
Plan assets in excess of projected
benefit obligations 8,932 31,436 32,824
Unrecognized net gain (20,047) (43,223) (45,574)
Unrecognized prior service costs 6,702 7,278 7,853
Unrecognized net asset from transition (7,085) (8,098) (9,110)
--------- -------------- --------------
Net pension liability $(11,498) $(12,607) $(14,007)
==========================================================================================
<PAGE> 30
Assumptions used in determining the funded status of the non-contributory defined benefit retirement plan are as follows:
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.25% 9.00% 9.00%
Average rate of increase in compensation levels 4.75% 6.50% 6.50%
Expected long-term rate of return on plan assets 10.00% 10.00% 10.00%
</TABLE>
At December 26, 1993, and December 27, 1992, the projected benefit obligation of
the supplemental retirement plan totaled $12 million, of which $10.4 million and
$10 million in 1993 and 1992, respectively, was included as a liability in the
accompanying balance sheet.
The Company also sponsors a thrift plan covering substantially all employees.
Company contributions represent a partial matching of employee contributions up
to a maximum of 3.3% of the employee's salary. Contributions charged to expense
under the plan were $3.5 million, $3.4 million and $3.5 million in 1993, 1992
and 1991, respectively.
Note 9: Postretirement Benefits
- --------------------------------------------------------------------------------
The Company provides certain health and life insurance benefits for retired
employees. Substantially all of the Company's full-time employees hired before
1992 may become eligible for all or a portion of those benefits if they retire
after age 55 with at least ten years of service. Employees hired after 1991 are
not eligible for Company paid health care and life insurance benefits at
retirement. The postretirement health care plan for participants retiring after
December 31, 1991, is contributory and contains cost-sharing features. The
annual health care benefit paid by the Company is fixed and determined by years
of service and retirement age and is limited to $4,500 per employee. Company
paid life insurance benefits are based on age and compensation, with a maximum
insurance coverage limitation of $50,000 for post-1991 retirees. The Company's
policy is to fund postretirement benefits as claims and premiums are paid.
36
In 1992, the Company adopted Statement of Financial Accounting Standards No. 106
(SFAS 106), "Employers' Accounting for Postretirement Benefits Other Than
Pensions." SFAS 106 requires the cost of providing postretirement health care
and life insurance benefits to be accrued over the service period of employees.
The Company recognized, at the beginning of fiscal 1992, the accumulated
postretirement benefit obligation related to prior service costs of $22.8
million ($14.4 million after-tax; $0.55 per share) as the cumulative effect of a
change in accounting principle. The effect of adopting the new standard
increased 1992 net periodic postretirement benefit cost by approximately $.6
million and decreased net income by approximately $.4 million. Postretirement
benefit cost for 1991 approximated $1 million based on annual claims incurred
and insurance premiums.
The following table sets forth components of the accumulated postretirement
benefit obligation included in the accompanying balance sheet at December 26,
1993, and December 27, 1992:
<PAGE> 31
<TABLE>
<CAPTION>
Medical Life Insurance
(In thousands) Plans Plans
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 1992 1993 1992
---- ---- ---- ----
Retirees $ 12,589 $ 11,961 $ 5,860 $ 5,444
Fully eligible plan participants 158 169 142 136
Other active plan participants 5,510 4,295 1,688 1,434
--------- --------- --------- ---------
Accumulated postretirement benefit
obligation 18,257 16,425 7,690 7,014
Unrecognized accumulated net loss 1,478 --- 524 ---
--------- --------- --------- ---------
Accrued postretirement benefit cost $ 16,779 $ 16,425 $ 7,166 $ 7,014
==========================================================================================
Net periodic postretirement benefit cost for 1993 and 1992 includes the following components:
<CAPTION>
Medical Life Insurance
(In thousands) Plans Plans
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 1992 1993 1992
---- ---- ---- ----
Service cost $ 333 $ 303 $ 133 $ 117
Interest cost 1,359 1,334 573 525
--------- --------- --------- ---------
Net periodic postretirement benefit cost $ 1,692 $ 1,637 $ 706 $ 642
==========================================================================================
</TABLE>
The annual assumed rate of increase in the health care cost trend rate is 14.25%
for 1994 (15% for 1993), and is assumed to decrease gradually to 6.25% in 2009
and thereafter for pre-65 benefits, and to 5.25% in 2011 and thereafter for
post-65 benefits. Increasing the health care cost trend rate assumption by one
percentage point in each year would increase the accumulated postretirement
benefit obligation at December 26, 1993, and December 27, 1992, by $1.1 million,
and the aggregate of the service and interest cost components of net periodic
postretirement benefit cost for 1993 and 1992 by $.1 million.
The discount rate used to determine the accumulated postretirement benefit
obligation was 7.25% and 8.0% for 1993 and 1992, respectively. The average rate
of increase in compensation levels used to determine life insurance benefits was
4.75% and 6.0% for 1993 and 1992, respectively.
Note 10: Other
- --------------------------------------------------------------------------------
Interest
- --------
The Company incurred interest costs of $21.6 million, $22.3 million and $22.1
million in 1993, 1992 and 1991. Included in these amounts is interest
<PAGE> 32
capitalized in those years of $.3 million, $4.7 million and $6 million.
Interest payments, net of amounts capitalized, made during 1993, 1992 and 1991
were $23.5 million, $19.6 million and $16.6 million, respectively.
Depreciation and amortization
- -----------------------------
Plant and equipment are depreciated over their estimated useful lives primarily
by use of the straight-line method. Depreciation deductions are computed by
accelerated methods for income tax purposes.
37
Amortization of excess of cost of businesses acquired over equity in net assets
and other intangibles was $1,883,000, $1,875,000 and $1,974,000 in 1993, 1992
and 1991, respectively.
Revenue recognition
- -------------------
Advertising revenue is recognized when ads are published or aired, or when
related advertising services are rendered. Subscription revenue is recognized
on a pro-rata basis over the term of the subscription. Newsprint revenue is
recognized upon shipment of newsprint.
Accrued expenses and other liabilities
- --------------------------------------
<TABLE>
Accrued expenses and other liabilities consist of the following:
<CAPTION>
(In thousands) 1993 1992
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Payroll $ 14,301 $ 13,385
Advances from unconsolidated newsprint affiliate 6,667 6,667
Unearned revenue 5,323 5,027
Employee medical claims 4,290 3,456
Other 29,979 28,497
--------- ---------
Total $ 60,560 $ 57,032
==========================================================================================
</TABLE>
Lease obligations
- -----------------
The Company and its subsidiaries rent certain facilities and equipment under
operating leases. These leases extend for varying periods of time up to 11
years and in most cases contain renewal options. Total rental expense amounted
to $7 million in 1993, $7.1 million in 1992 and $7.2 million in 1991. Minimum
rental commitments under operating leases with noncancelable terms in excess of
one year are as follows:
<PAGE> 33
<TABLE>
<CAPTION>
Machinery
Land and and
(In thousands) Buildings Equipment Total
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1994 $ 4,894 $ 1,599 $ 6,493
1995 3,737 1,232 4,969
1996 2,926 1,058 3,984
1997 2,598 1,054 3,652
1998 2,323 258 2,581
Subsequent years 5,167 --- 5,167
--------- --------- ---------
Total minimum required $ 21,645 $ 5,201 $ 26,846
==========================================================================================
</TABLE>
Concentration of credit risk
- ----------------------------
Media General is a diversified communications company which sells products and
services to a wide variety of customers located principally in the eastern
United States. The Company's trade receivables result primarily from its
newspaper, television and newsprint operations. The Company routinely assesses
the financial strength of significant customers, and this assessment, combined
with the large number and geographic diversity of its customer base, limits its
concentration of risk with respect to trade receivables.
Commitments
- -----------
The Company has outstanding commitments for capital expenditures of
approximately $36 million at December 26, 1993, approximately $34 million of
which relates to the acquisition of new presses and the construction of a new
production facility for the Winston-Salem Journal. The construction is expected
to be completed in 1994.
The Company entered into a stock redemption agreement in November 1985, which
was amended in January 1988, with Mr. D. Tennant Bryan, Chairman of the
Executive Committee of the Board of Directors. Under the terms of the
agreement, the Company will purchase some of the Class A shares of the Company
which are owned by Mr. Bryan at his death. The number of shares covered by this
agreement is determined by reference to certain taxes and other expenses which
would be incurred by Mr. Bryan's estate. The price for shares purchased under
this agreement would be 90% of the market price of the shares during a period
immediately preceding the date of death. At December 26, 1993, the Company
would have been obligated to purchase approximately 1,459,000 Class A shares,
and the discounted price per share would have been $25.26.
38
<PAGE> 34
Media General, Inc.
Management Statement
Primary responsibility for the integrity and objectivity of the Company's
financial statements rests with Management. The financial statements report on
Management's stewardship of Company assets. They are prepared in conformity
with generally accepted accounting principles and accordingly include amounts
that are based on Management's best estimates and judgments. Nonfinancial
information included in the annual report has also been prepared by Management
and is consistent with the financial statements.
Media General, Inc., maintains an accounting system and related controls
designed to provide reasonable assurance that there is proper authorization and
accounting for all transactions, that financial records are reliable for
preparing financial statements, and that assets are safeguarded against loss or
unauthorized use. The system is supported by written policies and guidelines, a
program of internal audit and the selection and training of qualified personnel.
The Audit Committee of the Board of Directors is composed of outside directors.
The Committee meets periodically with Management, internal auditors and the
independent auditors.
January 25, 1994
J. Stewart Bryan III Marshall N. Morton
Chairman, President and Senior Vice President and
Chief Executive Officer Chief Financial Officer
- --------------------------------------------------------------------------------
Media General, Inc.
Report of Independent Auditors
The Board of Directors and Stockholders, Media General, Inc.:
We have audited the accompanying consolidated balance sheets of Media General,
Inc., as of December 26, 1993, and December 27, 1992, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three fiscal years in the period ended December 26, 1993. 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.
<PAGE> 35
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Media
General, Inc., at December 26, 1993, and December 27, 1992, and the consolidated
results of its operations and its cash flows for each of the three fiscal years
in the period ended December 26, 1993, in conformity with generally accepted
accounting principles.
In 1992, the Company adopted new methods of accounting for income taxes and
postretirement benefits other than pensions to comply with the accounting
provisions of Statements of Financial Accounting Standards Nos. 109 and 106,
respectively. See Notes 6 and 9 to the accompanying consolidated financial
statements.
January 25, 1994 Ernst & Young
Richmond, Virginia
39
<PAGE> 36
FINANCIAL REVIEW AND MANAGEMENT ANALYSIS
This discussion, which addresses the principal factors affecting the Company's
operations during the past three years, should be read in conjunction with the
Company's financial statements, the Ten Year Summary, and discussions of
operations for the Company's major operating segments which appear elsewhere in
this report.
RESULTS OF OPERATIONS
---------------------
REVENUES
- --------
1993 Compared to 1992
Consolidated revenues for 1993 rose 4% to $600.8 million from $577.7 million in
1992. Led by its Television and Newspaper operations, all of the Company's
business segments contributed to the revenue growth.
Newspaper Segment revenues for 1993 were $307.1 million, up 2.7% from $299
million in 1992. Within the three daily newspapers (four, prior to the June
1992 merger of The Richmond News Leader into the Richmond Times-Dispatch) which
comprise the Company's metropolitan newspaper group, advertising revenues
increased 1.8%, reflecting a 5.8% average rate increase which more than offset a
3.8% decline in advertising inches. Classified advertising revenues,
particularly in the automotive and employment categories, improved meaningfully
from 1992 levels. However, retail advertising declined from the prior year due
to persistent weakness in the department store category, combined with a
continued trend toward the use of preprinted newspaper inserts by retail
advertisers. Circulation revenues rose 5.4% in 1993, the result of an 11.5%
average rate increase which more than offset a 5.5% combined decrease in
circulation volume. The volume decline was primarily attributable to the
previously mentioned 1992 merger of the Company's Richmond newspapers; to the
selective pull-back of circulation by The Tampa Tribune in the more distant
districts it serves; and to the effect of rate increases implemented by all
three daily newspapers during the year.
Television Segment revenues increased to $179.5 million in 1993, up 5.6% from
$169.9 million in 1992. All of the Company's broadcast and cable TV operations
experienced revenue growth from 1992 levels. The Company's Fairfax County,
Virginia, cable system (Fairfax Cable) generated 1993 revenue growth of $6.4
million, up 5.9% from 1992. Most of the growth was attributable to the effect
of the 2.2% increase in the number of subscribers, to 206,200 at December 26,
1993, combined with a 16.1% ($.8 million) increase in pay-per-view revenue. The
growth in revenue per subscriber (excluding pay-per-view) moderated
significantly during the current year, increasing only 1.8% in 1993, compared to
a 5.2% rise in 1992, evidencing the impact of the Cable Television Consumer
Protection Act of 1992 (Cable Act). On September 1, 1993, Fairfax Cable
implemented new rates to comply with the rate regulation provisions of the Cable
Act. The new rates resulted in increased bills for some subscribers, and
decreased bills for others, but had an essentially revenue-neutral effect when
viewed in terms of the total average monthly rate charged all subscribers as a
group. On February 22, 1994, the Federal Communications Commission (FCC)
announced the adoption of further rules intended to govern rates which cable
operators may charge subscribers. Although the specific rules have not yet been
<PAGE> 37
published by the FCC, the Company's preliminary evaluation of the general
provisions indicates that the effect should not be material to the Company's
financial position or results of operations. Cable rates are subject to local
franchise authority and Federal Communications Commission (FCC) review, and
further rate regulation by the FCC is possible. Revenues for the Company's
three broadcast TV stations rose $1.5 million (2.9%) in 1993. Local and
national advertising revenues increased 8.8% and 4.7%, respectively, during the
year, aided in large part by expanded automotive advertising. Together, these
increases more than offset the 1993 decline in political advertising revenues,
down due to the absence of any significant political campaign activity in the
Company's franchise areas. Pursuant to the Cable Act, during 1993, all of the
Company's broadcast and cable TV operations successfully negotiated "must
carry/retransmission consent" agreements which provide for continued carriage of
local broadcast TV station programming on cable TV systems within their
respective markets. The combined financial effect of these agreements on the
Company is expected to be negligible.
40
Newsprint Segment revenues increased to $100.4 million in 1993, up 4% from $96.5
million in 1992. The increase was primarily attributable to the Company's
Garden State Paper newsprint mill, located in Garfield, New Jersey, where a 3.8%
increase in the 1993 average realized selling price per ton of newsprint more
than offset a .9% (1,900 ton) decline in tons sold. Average newsprint selling
prices moved through a broad range throughout 1993, beginning the year at an
average of $414 per ton, rising to a high of $430 per ton during the second
quarter on the combined effect of announced selling price discount reductions
and increased demand by newspaper customers in anticipation of a Canadian
newsprint strike, and falling to $397 per ton by December, when the anticipated
Canadian shortage did not occur and customers worked-down their inventory
levels. Despite the year-end low in realized prices, the average realized
price for 1993 improved to $416 per ton from $400 per ton in 1992. Realized
newsprint prices are expected to remain soft during the early part of 1994.
Even though newsprint supply and demand may not come back into balance in 1994,
there are indications that the severity of the oversupply situation is
lessening. The average realized selling price for 1994 is not, however,
expected to rise to the level achieved in 1993. Newsprint Segment revenues for
1993 include $3.5 million ($3.3 million in 1992) of license and other fees
received from a Mexican newsprint affiliate. Under the terms of the Company's
Option Agreement with that affiliate, the Company will continue to receive such
fees (expected to aggregate $2.9 million in 1994) through October 15, 1994.
Unless some other form of divestiture is agreed to, on that date, the
affiliate's majority owner is expected to exercise its option to buy the
Company's capital stock investment in the affiliate for $3.6 million, after
which no further fees would be paid to the Company.
1992 Compared to 1991
Consolidated revenues for 1992 decreased 1.4% to $577.7 million from $585.9
million in 1991. The decrease was wholly attributable to the Company's
Newsprint Segment, where the steep newsprint price decline experienced in 1992
more than offset increased revenues in the Company's cable TV operations.
Newspaper and broadcast television revenues in 1992 were essentially level with
1991.
Newspaper Segment revenues for 1992 were $299 million, down nominally from
$299.2 million in 1991. Within the three daily newspapers (four, prior to the
June 1, 1992, merger of The Richmond News Leader into the Richmond Times-
<PAGE> 38
Dispatch) which comprise the Company's metropolitan newspaper group, advertising
revenues decreased .2%, reflecting a 6.5% decline in advertising inches which
more than offset the effect of a 6.6% average rate increase. Classified
advertising revenues improved from 1991 levels, particularly in the automotive
and, to a lesser degree, in the employment categories. Retail advertising
revenues declined from the prior year, however, the result of continued weakness
in that segment of the nation's economy, as well as the effect on revenues of
the merger of the Company's two Richmond newspapers and the continued trend
toward the use of preprints by retail advertisers. Circulation revenues
increased 1% in 1992, the result of a 1.5% average rate increase which more than
compensated for a .5% drop in circulation. Among the members of the group,
circulation revenues at the Company's Tampa and Winston-Salem newspapers rose
6.2% and 4.0%, respectively, from 1991, while those of the Company's Richmond
newspaper declined 4.6%, principally the result of the previously mentioned
merger.
Television Segment revenues of $169.9 million in 1992 were up $10.3 million
(6.5%) from $159.6 million in 1991. Revenues of the Company's Fairfax County,
Virginia, cable system reflected a 3.3% growth in subscribers to 201,800 at
December 27, 1992. This increase in subscribers, combined with a 5.2% growth in
revenue per subscriber, resulted in a 1992 Fairfax revenue increase of $8.8
million, up 8.8% from 1991. Approximately 51% of the increase resulted from
subscriber growth and the balance from a January 1992 rate increase. Revenues
for the Company's three broadcast TV stations rose slightly (.5%) in 1992.
Increased political advertising revenues more than offset declines, due to the
sluggish national economy, in the local and national retail advertising and
network compensation categories.
Newsprint Segment revenues decreased to $96.5 million in 1992 from $116.7
million in 1991. This $20.2 million (17.3%) decline, $2.5 million of which
resulted from reduced management and other fees earned by the Company from its
unconsolidated newsprint affiliate, was the direct result of the precipitous
newsprint price decreases experienced throughout the industry during the year.
At the Company's Garden State Paper newsprint mill, located in Garfield, New
Jersey, newsprint prices fell to the lowest levels since 1980, beginning the
year averaging $422 per ton, but dropping to a 1992 low of $390 per ton in May.
Although the average selling price recovered somewhat later in the year, to $408
per ton in December 1992, the full-year 1992 average selling price of $400 per
ton was 16.2% less than that realized in 1991. During 1992, the mill produced a
record 235,886 tons, up 2.4%
41
from the previous record production of 230,291 tons in 1991. Tons sold rose a
similar 2.3%, to 235,014 tons in 1992, also a new record, thus mitigating to
some extent the effect of the decline in average selling price. While
significant competitive price discounting continued as a result of weak demand
nationally, user demand for Garden State's 100% recycled newsprint remained high
at year end, and the mill continued to operate at full capacity.
OPERATING COSTS
- ---------------
1993 Compared to 1992
Total 1993 operating costs of $540.5 million increased $5.5 million (1%) from
the previous year (excluding the cumulative effect of changes in accounting
principles related to postretirement benefits and income taxes discussed in the
<PAGE> 39
following 1992 to 1991 comparison). The following discussion focuses on the
direct operating costs of each of the Company's significant business segments,
excluding consolidated depreciation and amortization expense which is addressed
separately.
Newspaper Segment operating costs increased $1.6 million (.6%) in 1993 from the
comparable 1992 amount. Contributing to the increase were employee compensation
and benefit cost increases of $2.3 million, up 1.9%; the cost of newsprint, up
$1.4 million (2.8%) due to average 1993 price increases of 5.6% (which more than
offset a 2.7% decrease in tons consumed); and a $.4 million increase in
property taxes and utility costs. Together, these increases more than offset
the benefit of decreased bad debt expense, down $1.5 million (37.1%) as a result
of improved collection experience and receivables aging, and reduced circulation
promotion incentives of $1.5 million, down 9.7% relating primarily to The Tampa
Tribune.
Operating costs for the Television Segment rose $1.2 million (1.1%) in 1993 over
1992. While 1993 costs at the Company's three broadcast TV stations declined by
$1.1 million (3.1%), operating costs for the Company's cable TV operations,
including its cable advertising interconnect, rose by $2.3 million, or 3.1%.
For the Segment as a whole, employee compensation and benefit costs rose $2
million (4.8%), reflecting normal compensation increases as well as moderate
growth in the employee complement at the Company's cable advertising
interconnect due to expanded operations. In addition, franchise fees,
insurance, and repairs and maintenance costs increased $.4 million, $.4 million
and $.2 million, respectively, in 1993, principally the result of the expanded
subscriber base and support services at the Company's Fairfax Cable system, and
$.3 million of new costs were incurred (principally legal and consulting) in
connection with the provisions of the Cable Act. Together, these increases were
offset somewhat by a $2.1 million decline in overall programming costs, the
result of program line-up changes and lower program rates at both the Company's
broadcast and cable TV operations.
Newsprint Segment operating costs declined $1.6 million (1.9%) in 1993 from the
comparable 1992 amount. At the Company's Garden State Paper subsidiary, a $4.3
million (41%) decrease in waste treatment expense, primarily attributable to the
Garfield mill's new (in August 1992) fiber fuel burning system, more than offset
increases in energy costs, up $1.3 million (9%) due to both fuel price and
consumption increases, insurance costs, up $.8 million principally as a result
of increased worker compensation claims, repairs and maintenance, up $.7 million
primarily as a result of increased first-half repairs to certain power house
equipment, replaced later in 1993, and employee compensation and benefit costs,
up $.2 million.
Consolidated depreciation and amortization expense increased $2.3 million (4.2%)
in 1993 from the comparable 1992 amount. Increased depreciation of $2.9 million
at Richmond Newspapers' production facility, which was placed in service in June
1992, and of $.7 million at the Company's Garfield newsprint mill (principally
attributable to the fiber fuel burning system), more than offset depreciation
declines in the Company's television and other newspaper operations, the result
of a reduced level of new capital assets placed in service combined with the
effect of certain assets, particularly electronic broadcast equipment, becoming
fully depreciated during the year.
1992 Compared to 1991
Total 1992 operating costs of $535 million (which exclude the cumulative effect
of changes in accounting principles relating to postretirement benefits and
income taxes discussed later) decreased $14.5 million (2.6%) from 1991.
<PAGE> 40
Operating costs for 1991 included special charges of $11.3 million for costs
associated with an early retirement program ($8.8 million) and the merger, which
was consummated in June 1992, of the Company's two Richmond newspapers ($2.5
million). Excluding the effects of the 1991 special charges, consolidated
operating costs decreased $3.2 million (.6%) in 1992 when compared to 1991. The
following discussion focuses on the direct operating costs of each of the
Company's significant business segments, excluding both the 1991 special charges
and the consolidated depreciation and amortization expense which is discussed
separately.
42
Newspaper Segment operating costs decreased $6.2 million (2.4%) in 1992 from the
comparable 1991 amount. Contributing to the decrease were broadly based expense
reductions at the Company's Richmond Newspapers, Inc., subsidiary, which
resulted from the merger of its two newspapers in June 1992, an $8.3 million
decrease in the cost of newsprint ($11.1 million of which was due to an average
20% newsprint price decrease, offset by $2.8 million due to a 6.2% rise in
consumption) at the Company's metropolitan newspapers, and the continuation of
extensive cost control measures. Together, these reductions more than offset
promotion and circulation expense increases (up $1.6 million) related primarily
to The Tampa Tribune's circulation growth, and increases in insurance, fuel and
utilities, and employee benefit costs, up $.6 million, $.5 million and $1
million, respectively.
Operating costs for the Television Segment rose 5.7% in 1992 over 1991. While
operating costs at the Company's three broadcast TV stations rose nominally
(2.2%), a large increase was experienced at the Company's Fairfax County,
Virginia, cable system. That system, which had a growth of 6,500 subscribers
during 1992, experienced increases in program costs of $1.9 million, in payroll
and employee benefit costs of $.7 million, in insurance costs of $.5 million,
and in municipal franchise fees of $.4 million. These cost increases were
primarily the result of the growth in subscribers, programming rate increases,
and expansion of the system and its support services during the year.
Newsprint Segment operating costs declined $.9 million (1.1%) in 1992 from the
comparable 1991 amount. At the Company's Garfield mill, a $1.3 million (11.7%)
increase in waste treatment costs and a $.3 million increase in energy costs was
more than offset by lower negotiated chemical and waste news costs, down 17.3%
and 6% in the year, respectively. During the latter half of 1992 the mill's new
fiber fuel burning system became operational, serving to moderate the
significant waste treatment cost increases experienced during the previous two
years.
Total depreciation and amortization expense increased $4.6 million (9.2%) in
1992. The majority of the increase ($4.2 million) was attributable to the new
Richmond Newspapers' production facility which was placed in service in June
1992.
OTHER INCOME (EXPENSE)
- ----------------------
The principal components of other income (expense) are interest on Company
indebtedness, the Company's equity in the net income or loss of its
unconsolidated affiliates, and income from other sources.
1993 Compared to 1992
<PAGE> 41
Interest expense increased $3.7 million (21.2%) to $21.3 million in 1993 from
$17.6 million in 1992. The increase was primarily attributable to a $4.4
million comparative decrease in the amount of interest capitalized, principally
the result of the June 1992 completion of the Richmond Newspapers' production
facility. Offsetting this somewhat were the beneficial effects of a $14 million
decrease in average debt outstanding during 1993, and a slight drop in the
Company's average 1993 borrowing rate.
The Company's equity in the net loss of unconsolidated affiliates declined to $1
million in 1993 from $4.9 million in 1992. The decline was wholly attributable
to the decreased current year loss of the Company's affiliate, Southeast Paper
Manufacturing Company (SEPCO). The improvement in SEPCO's performance was
primarily the result of the increased average newsprint selling price realized
for the year, up 5.3% from 1992, which more than offset a 4,700 ton (1%)
reduction in tons sold. SEPCO's realized newsprint selling price, which
averaged $398 per ton at the beginning of 1993, rose to $422 per ton in the
second quarter. However, for reasons similar to those mentioned previously in
connection with Garden State Paper, SEPCO's realized newsprint prices declined
to $390 per ton in late 1993, and are expected to remain soft in early 1994. As
discussed more fully in Note 3 to the accompanying consolidated financial
statements, the Company's investment in its 40% owned Garden State Newspapers
(GSN) affiliate was reduced to zero in 1991, and the Company has not recognized
any further equity in that affiliate's operating results since then. As also
discussed more fully in Note 3, subsequent to the Company's 1993 year-end, GSN
failed to redeem certain preferred stock owned by the Company which was
mandatorily redeemable on January 1, 1994. Although a Letter Agreement has been
signed by the parties agreeing to a process through which the Company would sell
its interest in GSN for $62.7 million, that sale is subject to various
conditions including the buyer's ability to arrange financing. There is no
assurance that the transaction will be consummated.
Other income, net, decreased to $.8 million in 1993 from $6.1 million in 1992.
The decline was primarily due to comparative year-to-year decreases in fire
insurance proceeds recognized (down $2.2 million), adjustments of
43
estimated obligations relating to disposed operations (down $2.1 million) and
interest income (down $.9 million).
1992 Compared to 1991
Interest expense rose $1.5 million (9.4%) in 1992 from the prior year's level.
The increase was primarily attributable to a $61 million rise in average
outstanding borrowings during the year, and to a $1.3 million comparative
decrease in the amount of interest capitalized. Together, these more than
offset the reduction in the Company's average annual borrowing rate, which
decreased by .5% (to 7.3%) in 1992, and the comparative increase in interest
rate swap income of $1.1 million earned during the year and reflected as a
reduction of interest expense.
The Company's equity in the net loss of unconsolidated affiliates declined
sharply in 1992, to $4.9 million from $75.6 million in 1991. As discussed more
fully in Note 3 to the accompanying consolidated financial statements, the 1991
loss included $78.7 million attributable to the Company's share of the net loss
of Garden State Newspapers (GSN), due principally to a GSN management decision
to write down the carrying value of certain assets, mostly intangibles, in light
of depressed market conditions. The loss reduced the Company's investment in
GSN to zero, but without impacting its liquidity or cash flow. The Company's
<PAGE> 42
share of the loss of its Southeast Paper Manufacturing Company (SEPCO) affiliate
was $4.9 million in 1992, compared to income of $3 million in 1991. The 1992
loss was primarily attributable to the reduced average newsprint selling price
realized by SEPCO during the year (down 16.8% from 1991), which more than offset
a 3.9% increase in tons sold, and included $1.3 million relating to accounting
for postretirement benefits other than pensions.
Other income, net, increased to $6.1 million in 1992 from $2.7 million in 1991.
The increase resulted from $2.9 million of insurance proceeds received in 1992
(versus $.8 million received in 1991) related to a 1991 fire at the Company's
Garden State Paper newsprint mill in Garfield, New Jersey, and $2.1 million
resulting from the termination of previously recognized obligations relating to
disposed operations. Together, these more than offset a $.8 million net
reduction in income from interest, fixed asset dispositions, and other
miscellaneous items.
NET INCOME
- ----------
1993 Compared to 1992
Net income for 1993 was $25.7 million ($0.98 per share), up 35.3% from $19
million ($0.73 per share) in 1992. Net income for 1992 included a $.7 million
($0.03 per share) increase resulting from the (net) cumulative effect of changes
in accounting principles related to postretirement benefits and income taxes.
See Notes 6 and 9 to the accompanying consolidated financial statements for
additional information regarding the 1992 changes in accounting principles.
Following is a discussion and comparison of pretax operating income for each
significant business segment, excluding the cumulative effect of the accounting
changes discussed above.
Newspaper Segment operating income rose 19.7% in the current year, to $19.6
million from $16.4 million in 1992. The increase resulted from combined growth
in both advertising and circulation revenues, up 1.8% and 5.4%, respectively,
the effect of which was only slightly offset by a moderate (1.4%) increase in
operating costs. A decline in 1993 operating income of the Company's Winston-
Salem newspaper was more than offset by improved results of the Company's other
metropolitan daily newspapers in Tampa and Richmond, aided largely, in the case
of The Tampa Tribune, by circulation cost reductions.
Television Segment operating income increased $9.3 million (35.8%) in 1993, to
$35.2 million from $25.9 million in 1992. Though led by the Company's Fairfax
Cable system, all of the Company's cable and broadcast TV operations registered
increases in both revenues and operating income during 1993. At Fairfax Cable,
operating profits rose, principally as a result of an increase in subscribers
(up 2.2%, to 206,200 in December 1993), and increased pay-per-view revenue.
Revenue per subscriber grew by only 1.8% in 1993 (versus 5.2% in 1992), however,
primarily the result of rate regulation imposed by the Cable Act of 1992,
discussed previously. Broadcast TV operating income improved as a result of
both increased revenues, up a combined 2.9% primarily on the strength of the
local and national advertising categories, as well as decreased operating costs,
down 3.5%, largely the result of lower program costs.
Operating income for the Newsprint Segment increased to $5.7 million in 1993
from $1.3 million in the prior year. The increase was primarily attributable to
the performance of the Company's Garden State newsprint mill, where the average
newsprint price realized during the year increased by $16 per ton (to $416 per
<PAGE> 43
ton in 1993 from $400 per ton in 1992), and where operating costs declined 1%,
principally the result of significantly reduced waste treatment expense.
Newsprint prices dropped to their lowest level of the 1993 year (to $397 per
ton) in December, and
44
are expected to remain soft during the first half of 1994. As mentioned
previously, option fees received by the Company from its Mexican newsprint
affiliate are expected to decline by approximately $.6 million (to $2.9 million)
in 1994, and to zero thereafter. Unless some other form of divestiture is
agreed to, the affiliate's majority owner is expected to exercise an option to
buy back the Company's capital stock investment in the affiliate for $3.6
million in late-1994.
Income tax expense for 1993 increased $5.2 million (65.7%) from the prior year,
principally the result of the $12.6 million (48%) rise in pretax income. 1993
income taxes include $2.3 million of additional tax expense related to the
cumulative effect of the corporate tax rate increase (from 34% to 35%) imposed
by the Omnibus Budget Reconciliation Act of 1993, which was signed into law on
August 10, 1993. Approximately $2.1 million of the additional tax expense
resulted from the application of the increased tax rate to existing deferred tax
liabilities in accordance with the provisions of SFAS No. 109, "Accounting For
Income Taxes", which was adopted by the Company in 1992. The impact of the tax
rate increase was substantially offset by the effects of resolving various tax
examinations. The increase in the Company's effective tax rate, to 33.9% in
1993 from 30.3% in 1992 (excluding the effects of the postretirement benefit and
income tax accounting changes adopted in that year), resulted principally from
the newly enacted corporate tax rate increase and from a comparative decrease in
the favorable tax effect of certain insurance programs, net of the effects of
resolving various tax examinations. For additional information regarding income
taxes, see Note 6.
1992 Compared to 1991
Net income for 1992 was $19 million ($0.73 per share) compared to a net loss of
$62.1 million ($2.39 per share) in 1991. Net income for 1992 included a $.7
million ($0.03 per share) increase resulting from the (net) cumulative effect of
changes in accounting principles related to the Company's adoption of Statement
of Financial Accounting Standards (SFAS) Nos. 106 and 109. SFAS No. 106
"Employers' Accounting for Postretirement Benefits Other Than Pensions",
requires that the cost of providing postretirement health care and life
insurance benefits be accrued over the service period of employees. The Company
recognized, at the beginning of fiscal 1992, the accumulated postretirement
benefit obligation related to prior service costs of $22.8 million ($14.4
million after-tax, or $0.55 per share) as the cumulative effect of a change in
accounting principle. SFAS No. 109 "Accounting for Income Taxes", requires that
deferred tax liabilities be determined based on the statutory income tax rates
in effect at the balance sheet date. The cumulative effect of this change in
accounting principle, also recognized by the Company at the beginning of fiscal
1992, was an increase in net income of $15.1 million ($0.58 per share), which
represents the net decrease in the Company's deferred tax liability as of that
date. See notes 6 and 9 to the accompanying consolidated financial statements
for additional information regarding the 1992 changes in accounting principles.
The net loss for 1991 included after-tax amounts of $78.3 million ($3.01 per
share) attributable to the Company's share of losses from its unconsolidated
affiliate, Garden State Newspapers, a charge of $5.5 million ($0.21 per share)
for costs associated with an early retirement program, and a $1.6 million ($0.06
per share) charge accrued in connection with the merger of the Company's two
<PAGE> 44
Richmond newspapers. Excluding the previously mentioned cumulative effect of
the 1992 accounting changes and the 1991 nonrecurring charges, net income from
continuing comparable operations declined approximately 21% in 1992 from the
comparable 1991 level.
Following is a discussion and comparison of pretax operating income for each
significant business segment, excluding the cumulative effect of accounting
changes and nonrecurring items discussed above.
Newspaper Segment operating income rose 46% in 1992. While revenues were
essentially unchanged from the prior year, operating expenses declined,
reflecting the results of continued and extensive cost control measures,
efficiencies achieved as a result of the Richmond Newspapers' merger, and the
reduced cost of newsprint. Operating profits at all three of the Company's
metropolitan daily newspapers increased from the prior year as a consequence of
these factors.
Television Segment operating income increased $7.1 million (38%) in 1992, on the
strength of the Company's cable operations. The significant rise in cable
income was primarily attributable to the Company's Fairfax County, Virginia,
cable system, which added 6,500 new subscribers during the year and experienced
a 5.2% rise in revenue per subscriber. The small decrease in broadcast TV
profitability resulted from a 2.2% increase in operating expenses which more
than offset a .5% revenue gain. Among the three broadcast TV stations within
the group, results of the Jacksonville, Florida (WJKS-TV) and the Charleston,
South Carolina (WCBD-TV) stations improved, while those of WFLA-TV in Tampa,
Florida, declined.
45
Newsprint Segment operating income in 1992 decreased sharply (by $17.3 million,
or 93.1%) from 1991. At the Company's Garfield mill the average sales price
realized during the year declined 16.2%, reflecting the intensified newsprint
price discounting experienced throughout the industry during 1992. The price
decline had the effect of reducing the mill's realized operating profit per ton
by approximately 97% from the 1991 level, despite achieving a production cost
decrease of $6 per ton for the year. The steep competitive price discounting
did abate somewhat during the last quarter of 1992: the realized sales price
rose to $408 per ton in December from its May 1992 low of $390 per ton.
Income tax expense for 1992 (which excludes the effects of the 1992 changes in
accounting principles) declined $1.4 million (15.4%) from 1991. However, absent
the 1991 GSN loss from which the Company derived virtually no tax benefit, the
Company's effective tax rate on normal operations declined from 39.2% in 1991 to
28.1% in 1992. The decrease in effective rate was primarily attributable to the
favorable tax effect of certain insurance programs.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Funds generated by operating activities during 1993 totaled $85.2 million, up
$16.6 million from 1992. The increase was due principally to improved
profitability and to the comparative reduction in funds applied to reduce
accrued expenses and other current liabilities. Together, these more than
offset the effect of comparative increases in accounts receivable and
inventories which rose in 1993 as a result of increased sales and production
demands. The $85.2 million of funds generated by operating activities in 1993,
along with a combined $18.1 million from other sources, was used to curtail
<PAGE> 45
$58.8 million of long-term debt, and to fund capital expenditures and dividends
to stockholders of $32.8 million and $11.5 million, respectively.
Capital expenditures of $32.8 million made during 1993 included $10.4 million
for the continued growth and expansion of the Fairfax Cable system, and $8.7
million for the new Winston-Salem Journal production facility. That facility is
expected to be completed in mid-1994, as planned, at a total cost of
approximately $44 million.
During 1993, the Company applied excess cash generated from operations and other
sources toward the reduction of debt. As a consequence, total debt outstanding
declined to $261.8 million at December 26, 1993, a reduction of $58.8 million
from the year-ago level of $320.5 million. Although capital expenditures are
expected to increase during 1994, to approximately $69 million (including $33
million for the Winston-Salem production facility) from the 1993 level of $32.8
million, barring unforeseen circumstances the Company anticipates that it will
be able to reduce its debt level further during 1994. At December 26, 1993, the
Company had available unused credit lines of $90 million under revolving credit
agreements with five banks. The Company also had an uncommitted credit facility
with an insurance company which provides for additional borrowings of up to $85
million at prevailing interest rates. However, the Company anticipates that
internally generated funds provided by operations during the coming fiscal year
will be more than adequate to finance projected capital expenditures, dividends
to stockholders, and working capital needs, and that excess funds will be
utilized to pay down debt.
OUTLOOK FOR 1994
- ----------------
Fourth quarter 1993 results indicate that overall economic prospects for 1994
are more favorable than they have been for the past several years, except
perhaps with respect to newsprint pricing. The Company enters the new year in a
solid financial position, with modern, productive facilities, and with
encouraging prospects for growth.
46
<PAGE> 46
<TABLE>
Media General, Inc.
Quarterly Review
(In thousands, except per share amounts)
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993
Revenues $ 144,190 $ 152,583 $ 147,527 $ 156,524
Operating income 9,853 16,299 12,611 21,540
Net income 3,409 8,144 5,095 9,060
Net income per share 0.13 0.31 0.20 0.34
- ------------------------------------------------------------------------------------------
Shares traded 1,298 1,096 2,148 2,728
Stock price range $16.88-21.38 $18.50-22.00 $20.63-25.25 $24.88-30.63
Quarterly dividend $ 0.11 $ 0.11 $ 0.11 $ 0.11
- ------------------------------------------------------------------------------------------
1992
Revenues $ 141,667 $ 147,093 $ 139,967 $ 148,932
Operating income 7,106 12,268 6,932 16,307
Net income 3,337 6,279 1,803 7,581
Net income per share 0.13 0.24 0.07 0.29
- ------------------------------------------------------------------------------------------
Shares traded 1,475 1,023 981 2,393
Stock price range $17.25-22.63 $17.25-20.25 $16.38-20.50 $14.50-19.00
Quarterly dividend $ 0.11 $ 0.11 $ 0.11 $ 0.11
- ------------------------------------------------------------------------------------------
* Media General, Inc., Class A common stock is listed on the American Stock Exchange under the symbol MEG.A. The
approximate number of equity security holders of record at December 26, 1993, was: Class A common - 2,900, Class B common - 19.
* First quarter 1993 includes $.8 million ($.4 million after-tax; $0.02 per share) of insurance proceeds related to a 1992
fire at the Company's Garden State Paper newsprint mill in Garfield, N.J.
* Second quarter 1993 includes nonoperating income of $.6 million ($.4 million after-tax; $0.01 per share) resulting
principally from the termination of obligations previously established upon the disposition of certain operations.
* Third quarter 1993 includes a charge of $2.3 million ($0.09 per share) to income tax expense for the effect of the
increase in the federal income tax rate from 34% to 35%. This adjustment was substantially offset by the effects of resolving
various tax examinations.
* Second quarter 1992 includes approximately $1.5 million ($.9 million after-tax; $0.03 per share) of income from insurance
proceeds related to a 1991 fire at the Company's Garden State Paper newsprint mill.
* Fourth quarter 1992 includes approximately $1.4 million ($.8 million after-tax; $0.03 per share) of income from insurance
proceeds related to a 1991 fire at the Company's Garden State Paper newsprint mill, and $1.3 million ($.9 million after-tax; $0.03
per share) resulting from the termination of obligations previously established upon the disposition of certain operations.
</TABLE>
47
<PAGE> 47
<TABLE>
Media General, Inc.
Operating Information
(Dollar amounts in thousands)
Media General Metropolitan Newspapers
- -------------------------------------
<CAPTION>
Richmond (a) Tampa Winston-Salem
------------------------------ ------------------------------ ----------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average
Circulation
Daily 212,805 228,272 240,074 269,496 289,091 287,272 91,513 91,515 91,735
Sunday 253,537 254,636 252,105 364,864 377,249 373,566 105,380 107,417 104,946
- ------------------------------------------------------------------------------------------------------------------------
ROP full run
(inches)
Retail 781,884 904,090 1,177,101 662,952 729,879 871,630 719,606 767,869 775,590
General 58,637 73,533 104,819 74,606 81,212 82,578 34,916 29,841 37,450
Classified 684,856 774,626 936,249 840,680 827,537 847,347 754,332 734,715 661,592
----------------------------------------------------------------------------------------------------------
Total 1,525,377 1,752,249 2,218,169 1,578,238 1,638,628 1,801,555 1,508,854 1,532,425 1,474,632
ROP part run
(inches) 202,610 241,638 122,687 4,500,283 4,963,129 2,694,867 131,099 138,668 149,964
Preprints
(inches)
Full run 693,560 819,130 865,029 846,584 708,385 739,038 359,909 358,102 330,198
Part run 55,055 71,030 99,404 999,444 1,120,102 1,006,939 674,860 600,194 555,695
----------------------------------------------------------------------------------------------------------
Total 748,615 890,160 964,433 1,846,028 1,828,487 1,745,977 1,034,769 958,296 885,893
- ------------------------------------------------------------------------------------------------------------------------
Advertising
Revenue
Retail $ 41,566 $ 42,089 $ 45,957 $ 60,632 $ 62,105 $ 62,624 $ 17,446 $ 17,913 $ 18,166
General 6,167 6,036 6,084 11,184 11,265 11,612 1,970 1,777 2,007
Classified 29,967 27,605 25,910 45,205 42,308 41,728 10,527 10,056 9,078
Other 4,052 3,458 2,372 4,006 3,807 3,604 1,165 1,379 1,195
----------------------------------------------------------------------------------------------------------
Total $ 81,752 $ 79,188 $ 80,323 $ 121,027 $ 119,485 $ 119,568 $ 31,108 $ 31,125 $ 30,446
- ------------------------------------------------------------------------------------------------------------------------
Circulation
Revenue $ 26,038 $ 23,423 $ 24,562 $ 23,436 $ 23,736 $ 22,357 $ 7,562 $ 6,948 $ 6,680
- ------------------------------------------------------------------------------------------------------------------------
Population 721,700 712,600 702,500 871,500 866,700 853,500 273,000 270,700 267,800
Households 283,000 278,500 273,900 340,500 338,000 332,700 110,900 109,600 108,200
Retail Sales $6,853,367 $5,845,873 $6,102,674 $6,806,996 $6,602,012 $6,646,071 $2,700,871 $2,457,880 $2,454,546
- ------------------------------------------------------------------------------------------------------------------------
(a) Data for 1991 and the first five months of 1992 includes figures for The Richmond News Leader which was merged into the
Richmond Times-Dispatch on June 1, 1992.
</TABLE>
48
<PAGE> 48
<TABLE>
Media General Broadcast Television Group
- ----------------------------------------
<CAPTION>
(Dollar amounts in thousands) 1993 1992 1991
---------- ---------- -----------
<S> <C> <C> <C>
WFLA (NBC) - Tampa, Fla. (a)
Market Gross Time Sales (b) $ 169,675 $ 163,400 $ 157,900
Population 3,173,000 3,150,000 3,133,000
Homes with TV 1,384,150 1,374,300 1,366,000
Market Rank 15 14 14
Audience % Share* 18 17 18
Station Rank* 2 2 2
WJKS (ABC) - Jacksonville, Fla. (c)
Market Gross Time Sales (b) $ 65,300 $ 57,900 $ 57,000
Population 1,226,100 1,235,200 1,223,300
Homes with TV 487,300 475,700 471,500
Market Rank 54 54 54
Audience % Share* 11 11 13
Station Rank* 3 3 3
WCBD (ABC) - Charleston, S.C. (c)
Market Gross Time Sales (b) $ 26,968 $ 26,000 $ 24,100
Population 635,500 624,100 616,300
Homes with TV 230,100 225,700 223,100
Market Rank 106 105 105
Audience % Share* 21 22 23
Station Rank* 2 2 2
(a) Source: November Nielsen Rating Books
(b) Includes local, national
and political time sales only
(c) Source: November Arbitron Rating Books
* Sign On To Sign Off.
Media General Cable of Fairfax
- ------------------------------
(Dollar amounts in thousands except
per home and subscriber amounts)
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Population, Fairfax County 867,442 856,200 844,600
Subscribers 206,228 201,789 195,290
Homes passed 304,936 298,785 292,044
Penetration % 67.6 67.5 66.9
Pay to basic ratio .89 .94 .96
Cumulative miles of cable installed 3,939 3,862 3,770
Revenue $ 115,315 $ 108,898 $ 100,103
Monthly revenue per home passed (in dollars) 30.39 29.47 27.87
Monthly average revenue 45.15 44.18 42.56
per subscriber (in dollars)
Capital expenditures 12,658 12,313 13,977
</TABLE>
49
<PAGE> 49
<TABLE>
Media General, Inc.
Ten Year Financial Summary
(In thousands, except per share amounts)
Certain of the following data were compiled from the consolidated financial statements of Media General, Inc., and should be read in
conjunction with those statements and the financial review and management analysis which appear elsewhere in this report.
<CAPTION>
1993 1992 1991 1990
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Summary of Operations
Operating revenues:
Newspaper $307,058 $299,038 $299,173 $302,010
Television (d) 179,477 169,946 159,596 153,427
Newsprint (d) 100,371 96,540 116,717 132,915
Auxiliary 13,918 12,135 10,414 25,315
--------- --------- --------- ---------
Total operating revenues $600,824 $577,659 $585,900 $613,667
- ------------------------------------------------------------------------------------------
Operating income (a)(d) $ 60,303 $ 42,613 $ 36,341 $ 63,825
Interest expense (21,274) (17,559) (16,056) (19,831)
Equity in net income (loss) of
unconsolidated affiliates (990) (4,926) (75,640) (1,303)
Other, net 835 6,131 2,659 814
--------- --------- --------- ---------
Income (loss) before income taxes
and cumulative effect of changes
in accounting principles 38,874 26,259 (52,696) 43,505
Income taxes (13,166) (7,946) (9,395) (18,025)
Cumulative effect of changes in
accounting principles (b) --- 687 --- ---
--------- --------- --------- ---------
Net income (loss) $ 25,708 $ 19,000 $(62,091) $ 25,480
==========================================================================================
Per Share Data: (b)(c)
Income (loss) before cumulative effect
of changes in accounting principles $ 0.98 $ 0.70 $ (2.39) $ 0.98
Cumulative effect of changes in
accounting principles --- 0.03 --- ---
- ------------------------------------------------------------------------------------------
Net income (loss) 0.98 0.73 (2.39) 0.98
Cash dividends 0.44 0.44 0.44 0.44
Common stock price
High 30.63 22.63 22.88 31.63
Low 16.88 14.50 16.63 15.38
Stockholders' equity 8.59 8.04 7.74 10.58
==========================================================================================
Other Financial Data:
Total assets $745,242 $787,425 $762,311 $775,944
Working capital 9,551 9,657 3,668 21,333
Capital expenditures 32,837 92,319 115,383 73,686
Total debt 261,756 320,506 277,202 234,565
Stockholders' equity 225,434 209,941 201,868 273,818
Total debt/total capital ratio 53.7% 60.4% 57.9% 46.1%
Shares outstanding at fiscal
year-end 26,252 26,099 26,071 25,874
==========================================================================================
<PAGE> 50
(a) Operating income includes the following pretax special charges: 1991-$11,300 for an early retirement program and newspaper
merger costs; 1989-$10,275 for the write-off of unrecovered costs related to a lawsuit against William B. Tanner and others; 1988-
$66,316 primarily related to the Company's discontinuance of Broadcast Services operations; 1986-$30,849 related to the write-off of
certain newspaper, broadcast television and other assets.
(b) See notes 6 and 9 for information regarding changes in accounting principles.
(c) Per share data is restated for 1987 and 1986 stock splits.
(d) In December 1988, the Company discontinued its Broadcast Services operations and sold its media placement division, and agreed
to dispose of its West Coast newsprint mill and related operations. Television segment information includes revenues of the
disposed broadcast operation totaling $62.4 million and operating losses totaling $59.3 million for the year ended December 31,
1988. Newsprint segment information includes revenues of the disposed newsprint operations totaling $74.3 million and operating
profits totaling $14.8 million for the year ended December 31, 1988.
</TABLE>
50
<PAGE> 51
<TABLE>
Media General, Inc.
Ten Year Financial Summary - Continued
(In thousands, except per share amounts)
<CAPTION>
1989 1988 1987 1986 1985 1984
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Operating revenues:
Newspaper $298,138 $298,915 $285,767 $264,136 $251,636 $240,023
Television (d) 139,399 198,201 193,544 167,062 128,710 97,589
Newsprint (d) 131,310 216,142 194,026 164,621 161,206 170,916
Auxiliary 26,285 25,613 29,811 30,054 30,496 30,811
--------- --------- --------- --------- --------- ---------
Total operating revenues $595,132 $738,871 $703,148 $625,873 $572,048 $539,339
- -------------------------------------------------------------------------------------------------------------------
Operating income (a)(d) $ 44,139 $ 15,412 $ 77,638 $ 28,959 $ 55,036 $62,151
Interest expense (25,385) (18,089) (15,780) (13,026) (11,424) (6,303)
Equity in net income (loss) of
unconsolidated affiliates 10,562 16,507 11,898 8,339 6,404 4,319
Other, net 684 369 265 415 108 4,003
--------- --------- --------- --------- --------- ---------
Income (loss) before income taxes
and cumulative effect of changes
in accounting principles 30,000 14,199 74,021 24,687 50,124 64,170
Income taxes (9,280) (5,380) (31,100) (7,580) (17,300) (24,410)
Cumulative effect of changes in
accounting principles (b) --- --- --- --- --- ---
--------- --------- --------- --------- --------- ---------
Net income (loss) $ 20,720 $ 8,819 $ 42,921 $ 17,107 $ 32,824 $ 39,760
===================================================================================================================
Per Share Data: (b)(c)
Income (loss) before cumulative effect
of changes in accounting principles $ 0.80 $ 0.31 $ 1.50 $ 0.60 $ 1.15 $ 1.40
Cumulative effect of changes in
accounting principles --- --- --- --- --- ---
- -------------------------------------------------------------------------------------------------------------------
Net income (loss) 0.80 0.31 1.50 0.60 1.15 1.40
Cash dividends 0.42 0.39 0.34 0.30 0.29 0.27
Common stock price
High 40.00 49.00 48.25 24.69 21.63 16.35
Low 30.38 33.75 21.31 18.00 15.88 13.07
Stockholders' equity 10.02 9.80 12.34 11.15 10.17 9.34
===================================================================================================================
Other Financial Data:
Total assets $782,657 $852,764 $823,094 $740,485 $688,092 $563,278
Working capital 62,210 55,488 60,439 52,459 64,342 43,603
Capital expenditures 69,117 77,717 80,593 100,314 90,621 89,681
Total debt 275,928 274,985 234,348 203,711 183,074 112,339
Stockholders' equity 258,637 252,419 348,431 314,459 305,351 278,105
Total debt/total capital ratio 51.6% 52.1% 40.2% 39.3% 37.5% 28.8%
Shares outstanding at fiscal
year-end 25,806 25,751 28,233 14,101 7,509 7,447
===================================================================================================================
</TABLE>
51
<PAGE> 52
APPENDIX
Page 6 picture - Richmond Newspapers employee Donna Pinnix at her desk
Page 8 picture - Tampa Tribune employee Ben Strakos standing beside press
Page 10 picture - Winston-Salem employee Michelle Lowe at her desk
Page 12 picture - WFLA-TV, Tampa employee Roger Girson at computer terminal
Page 14 picture - WCBD-TV, Charleston employee Monica Simmons at her desk
Page 16 picture - Media General Cable of Fairfax employee Mickey Frey at his
desk
Page 18 picture - Garden State Paper employee Ernie Rosolen standing next to
fire pump house
Page 20 picture - Media General Financial Services employee Jim Barron at his
desk
<PAGE> 1
Subsidiaries of the Registrant
Listed below are the major subsidiaries of the Company, including equity
investees, each of which is in the consolidated financial statements of the
Company and its Subsidiaries, and the percentage of ownership by the Company (or
if indented, by the subsidiary under which it is listed). Subsidiaries omitted
from the list would not, if aggregated, constitute a significant subsidiary:
Jurisdiction of Securities
Name of Subsidiary Incorporation Ownership
Charleston Television, Inc. South Carolina 100%
Garden State Newspapers, Inc. (a) Delaware 40%
Garden State Paper Company, Inc. Virginia 100%
Jacksonville Television, Inc. Florida 100%
Media General Cable of Fairfax
County, Inc. Virginia 100%
Piedmont Publishing Company, Inc. North Carolina 100%
Richmond Newspapers, Inc. Virginia 100%
Tampa Television, Inc. Florida 100%
The Tribune Company Florida 100%
Virginia Paper Manufacturing Corp. Virginia 100%
Southeast Paper Manufacturing Co.
(Partnership) Georgia 33.33%
(a) Prior to 1992, the Company consistently followed the policy of recording
its share of Garden State Newspapers' (GSN) net income or loss before its
investment in GSN was reduced to zero in 1991. The Company has not
recognized any equity in GSN's, 1992 net income, nor has it since, because
it is unlikely it will realize any dividends or cash distributions from GSN
operations.
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Media General, Inc.
We consent to the incorporation by reference in this Annual Report (Form
10-K) of Media General, Inc., of our report dated January 25, 1994, included in
the 1993 Annual Report to Stockholders of Media General, Inc.
Our audits also included the financial statement schedules of Media
General, Inc., listed in Item 14(a). These schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in (a) the Registration
Statement (Form S-8 No. 2-56905) pertaining to the 1971 Unqualified Stock Option
Plan and the 1976 Qualified and Non-Qualified Stock Option Plans of Media
General, Inc.; (b) the Registration Statement (Form S-8 No. 33-29478) pertaining
to the Media General, Inc., Employees Thrift Plan; (c) the Registration
Statement (Form S-8 No. 33-23698) pertaining to the 1987 Non-Qualified Stock
Option Plan of Media General, Inc.; (d) the Registration Statement (Form S-3 No.
33-26853) pertaining to the Media General, Inc., Automatic Dividend
Reinvestment and Stock Purchase Plan and (e) the Registration Statement (Form S-
8 No. 33-52472) pertaining to the 1987 Non-Qualified Stock Option Plan of Media
General, Inc., amended and restated May 17, 1991, and in the Prospectus related
to each, of our report dated January 25, 1994, with respect to the consolidated
financial statements of Media General, Inc., incorporated herein by reference,
and our report included in the preceding paragraph with respect to the financial
statement schedules of Media General, Inc., included in this Annual Report (Form
10-K) of Media General, Inc., for the fiscal year ended December 26, 1993.
ERNST & YOUNG
Richmond, Virginia
March 22, 1994
9
