<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 25, 1994
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. [X]
The aggregate market value of voting stock held by nonaffiliates of the
registrant was $707,106,614 as of February 28, 1995.
<PAGE> 2
The number of shares of Class A Common Stock outstanding on February 28,
1995, was 25,873,718. The number of shares of Class B Common Stock outstanding
on February 28, 1995, was 556,574.
Part I, Part II and Part IV incorporate information by reference from the
Annual Report to Stockholders for the year ended December 25, 1994. Part III
incorporates information by reference from the proxy statement for the Annual
Meeting of Stockholders to be held on May 19, 1995.
Part I
Item 1. Business
General
For a general description of the Company's business, see Business in Brief
section on the inside front cover page of the 1994 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 29, 31, 32, 52 and 53 of the 1994
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 7, 9, 11, 29 and 50 of the 1994 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.
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.
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 126,000 tons of newsprint in 1994. Management of the Company
believes that newsprint inventory and sources of supply under existing
arrangements will be adequate in 1995.
On September 28, 1994, the Company acquired 40% of the common stock of
Denver Newspapers, Inc., (DNI), the parent company of The Denver Post, a Denver,
Colorado, daily newspaper company, through the exercise for $40,000 of a warrant
held since 1987. Beginning with the fourth quarter of 1994, the Company began
<PAGE> 3
recognizing in its earnings 40% of DNI's net income applicable to common
stockholders.
On May 20, 1994, the Company sold its 40% common equity interest (held
since 1985) in Garden State Newspapers, Inc. (GSN), a domestic daily and weekly
newspaper company, along with its GSN Series A and Series C Preferred Stock, for
$63 million in cash. Additionally, in exchange for the GSN Series B Preferred
Stock previously owned by the Company, the Company received 1,200 shares of
$25,000 par, 9% Cumulative Preferred Stock of DNI (previously owned by GSN),
which included accumulated and unpaid dividends of approximately $17.4 million.
The preferred stock was valued at $34 million, net of an unamortized discount of
$27.3 million, based on an imputed discount rate of 12% and a redemption date of
June 30, 1999. The sale of GSN resulted in a gain of $91.5 million ($83.3
million after-tax; $3.17 per share).
1
Television Business
See pages 13, 15 and 17 of the 1994 Annual Report to Stockholders, which
are incorporated herein by reference, for a description of the Company's
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 license of WCBD-TV in Charleston was
most recently renewed in November 1991, and will expire on December 1, 1996.
The licenses of WFLA-TV in Tampa and WJKS-TV in Jacksonville were most recently
renewed in January 1992, and will expire on February 1, 1997.
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 January 2005, April 1996 and July 1997,
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
<PAGE> 4
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.
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.
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. These jurisdictions have enacted extensive regulations governing
cable television systems within their borders. In anticipation of a scheduled
September 1997 expiration date, the Company has given notice to commence renewal
proceedings for its Fairfax County franchises. At December 25, 1994, the
Company's cable television systems served approximately 229,000 subscribers.
The FCC has jurisdiction over and has adopted a regulatory program
concerning the cable television industry. The FCC's regulations govern cable
television engineering
2
standards, registration and reporting obligations and other matters. In 1992,
Congress passed, effective December 4, 1992, the Cable Television Consumer
Protection and Competition Act of 1992 (Cable Act). It contains a number of
provisions affecting and potentially affecting the Company, including service,
programming and equipment mandates and other limitations which impact the
Company's costs and business. Additionally, the 1992 Cable Act established rate
regulation for the cable services (other than premium and pay-per-view services)
which the Company offers to subscribers. Ratemaking authority is divided
between local franchisors and the FCC, and some of the Company's rates are under
review by franchisors and under review by or on appeal to the FCC. While the
Company believes that its rates have been established in compliance with the
applicable FCC regulations and the 1992 Cable Act, it is possible that rate
refunds and/or rate adjustments may be ordered.
Telephone companies operating within the areas served by the Company's
cable systems have taken steps to permit them to offer video services which
would compete with the Company's cable services, and one video "experiment"
within the Company's cable service area has been authorized by the FCC.
Reference is made to page 41 of the 1994 Annual Report to Stockholders, which is
incorporated herein by reference, for information regarding cable competition
and strategic planning alternatives being considered by the Company.
The information contained in the preceding discussion is not intended 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 other pending regulatory
proposals. It is impossible to predict with certainty the extent of any future
impact on the Company's cable systems of some or all of these requirements and
regulatory and competitive developments.
Reference is made to page 51 of the 1994 Annual Report to Stockholders,
which is incorporated herein by reference, for market share and other
information regarding the Company's broadcast and cable television operations.
<PAGE> 5
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 page 19 of the 1994 Annual Report to
Stockholders, which is incorporated herein by reference.
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 licensing fees pursuant to a contract with this venture, in addition to
its share of operating results.
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,
although the percentage of recovered fiber
3
contained in manufactured newsprint is becoming increasingly important to
newspaper publishers to meet various existing and proposed state and federal
standards.
The Company owned a 49% interest in a Mexican newsprint mill near San Luis
Potosi, Mexico, from which the Company received option fees based on production
through October 15, 1994. In October 1994, the Company revised its agreement
with the majority owner of its Mexican newsprint affiliate regarding the sale,
for $3.6 million, of the Company's interest in that affiliate which is accounted
for by the cost method and has a zero basis. Originally scheduled to occur on
October 15, 1994, the date on which the affiliate's option payment obligations
to the Company ceased, the sale was completed in February 1995.
Item 2. Properties
The headquarters of Media General, Inc., and its Richmond Newspapers, Inc.,
subsidiary are located in downtown Richmond, Virginia, in five adjacent
buildings. The Richmond newspapers are printed at a production and distribution
facility located on an 86 acre site in Hanover County, Virginia, near Richmond.
The Tampa, Florida, newspapers are located in a single unit production plant and
office building located on a six acre tract in that city. The Winston-Salem
newspapers are headquartered in one building in downtown Winston-Salem. Its
newspapers are printed at a production and distribution facility, located on a
nearby 12 acre site, which was completed and placed in service in July and
became fully operational in September 1994. All of the foregoing properties are
Company-owned.
<PAGE> 6
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 signal retransmission centers 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 Company-owned
mill in Garfield, New Jersey, housing two paper-making machines adjacent to a
Company-owned power plant which supplies it with steam and electric power.
Garden State leases adequate storage facilities for waste paper in the general
vicinity of the newsprint mill.
Item 3. Legal Proceedings
Certain of the Company's subsidiaries have been identified as potentially
responsible parties (PRPs), along with many other businesses unrelated to the
Company, in connection with 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, the involved subsidiaries have contributed, or may in the future be
asked to contribute, to the costs of site assessment and cleanup. In addition,
one of the Company's subsidiaries is currently involved in an environmental
remediation project at a 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.
4
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 1994.
<PAGE> 7
<TABLE>
Executive Officers of the Registrant
<CAPTION>
Name Age Position and Office Year First Took Office*
<S> <C> <C> <C>
D. Tennant Bryan 88 Chairman of the Executive Committee 1930
J. Stewart Bryan III 56 Chairman, President,
Chief Executive Officer 1990
Marshall N. Morton 49 Senior Vice President,
Chief Financial Officer 1989
James L. Dillon 66 Vice President 1977
H. Graham Woodlief, Jr. 50 Vice President 1989
Stephen Y. Dickinson 48 Controller 1989
George L. Mahoney 42 General Counsel, Secretary 1993
Stephen R. Zacharias 45 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. Dickinson assumed executive officer responsibilities as of May 1994. 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>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Reference is made to page 49 of the 1994 Annual Report to Stockholders,
which is incorporated herein by reference, for information required by this
item.
Item 6. Selected Financial Data
Reference is made to Note 5 on pages 31 and 32, and to pages 52 and 53 of
the 1994 Annual Report to Stockholders, which are incorporated herein by
reference, for information required by this item.
<PAGE> 8
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Reference is made to pages 40 through 48 of the 1994 Annual Report to
Stockholders, which are incorporated herein by reference, for information
required by this item.
5
Item 8. Financial Statements and Supplementary Data
Consolidated financial statements of the Company as of December 25, 1994,
and December 26, 1993, and for the fiscal years ended December 25, 1994,
December 26, 1993, and December 27, 1992, and the report of independent auditors
thereon, as well as the Company's unaudited quarterly financial data for the
fiscal years ended December 25, 1994, and December 26, 1993, are incorporated
herein by reference from the 1994 Annual Report to Stockholders pages 23 through
39 and page 49.
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 19, 1995, except as to
certain information regarding executive officers included in Part I.
Item 11. Executive Compensation
Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders on May 19, 1995.
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 19, 1995.
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 19, 1995.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. and 2. The financial statements and schedule 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.
<PAGE> 9
(b) Reports on Form 8-K
On October 12, 1994, the Company filed a Form 8-K to report the
acquisition, on September 28, 1994, of 40% of the common stock of Denver
Newspapers, Inc., through the exercise for $40,000 of a warrant.
6
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 8 39
Consolidated statements of operations for the
fiscal years ended December 25, 1994,
December 26, 1993, and December 27, 1992 23
Consolidated balance sheets at December 25, 1994,
and December 26, 1993 24-25
Consolidated statements of stockholders' equity
for the fiscal years ended December 25, 1994,
December 26, 1993, and December 27, 1992 26
Consolidated statements of cash flows for the
fiscal years ended December 25, 1994,
December 26, 1993, and December 27, 1992 27
Notes to consolidated financial statements 28-38
Schedule:
II - Valuation and qualifying accounts and reserves 9-10
Schedules other than Schedule II, 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 25, 1994, are incorporated
herein by reference. With the exception of the pages listed in the above index
and the information incorporated by reference included in Parts I, II and IV,
the 1994 Annual Report to Stockholders is not deemed filed as part of this
report.
7
<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 24, 1995, included in
the 1994 Annual Report to Stockholders of Media General, Inc.
Our audits also included the financial statement schedule of Media General,
Inc., listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents 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 24, 1995, 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 schedule of Media General, Inc., included in this Annual Report (Form
10-K) of Media General, Inc., for the fiscal year ended December 25, 1994.
ERNST & YOUNG LLP
Richmond, Virginia
March 21, 1995
8
<PAGE> 11
<TABLE>
Media General, Inc., and Subsidiaries
Schedule II - Valuation and Qualifying Accounts and Reserves
Fiscal Years Ended December 25, 1994, December 26, 1993, and December 27, 1992
<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>
1994
Allowance for doubtful
accounts....................... $ 3,697,761 $ 3,109,329 $ 3,446,918 $ --- $ 3,360,172
Reserve for warranties............ 3,968,006 --- 526,171 --- 3,441,835
Reserve for discontinuance
of Broadcast Services.......... 784,783 --- 259,347 (525,436)(a) ---
------------ ------------ ------------ ------------ ------------
Totals....................... $ 8,450,550 $ 3,109,329 $ 4,232,436 $ (525,436) $ 6,802,007
============ ============ ============ ============ ============
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>
9
<PAGE> 12
<TABLE>
Media General, Inc., and Subsidiaries
Schedule II - Valuation and Qualifying Accounts and Reserves - Continued
Fiscal Years Ended December 25, 1994, December 26, 1993, and December 27, 1992
<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>
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>
10
<PAGE> 13
Index to Exhibits
Exhibit
Number Description
2.1 Letter Agreement dated March 16, 1994, by and among Media General,
Inc., Affiliated Newspapers Investment Company, and Garden State
Newspapers, Inc., incorporated by reference to Exhibit 2 of Form 10-K
for the fiscal year ended December 26, 1993.
2.2 Amendment dated May 3, 1994, to Letter Agreement dated March 16, 1994,
by and among Media General, Inc., Affiliated Newspapers Investment
Company, and Garden State Newspapers, Inc., incorporated by reference
to Exhibit 2 of Form 10-Q for the period ending March 27, 1994.
2.3 Second Amended and Restated Stock and Warrant Purchase and
Shareholders' Agreement dated May 20, 1994, by and among Media General,
Inc., Affiliated Newspapers Investments, Inc., and Denver Newspapers,
Inc., incorporated by reference to Exhibit 2 of Form 8-K dated
September 28, 1994.
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, incorporated
by reference to Exhibit 3(ii) of Form 10-K for the fiscal year ended
December 26, 1993.
10.1 The 1976 Non-Qualified Stock Option Plan, incorporated by reference to
Exhibit 1.2 to Registration Statement 2-56905.
10.2 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.
10.3 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.
10.4 Form of Option granted under the 1976 Non-Qualified Stock Option Plan,
incorporated by reference to Exhibit 2.2 of Registration Statement 2-
56905.
10.5 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.
10.6 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.
10.7 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.
<PAGE> 14
10.8 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.
10.9 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.
11
10.10 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.
10.11 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.
10.12 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.
10.13 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.
10.14 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.
10.15 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.
10.16 1984 Outside Directors Retirement Agreement, incorporated by reference
to Exhibit 10.16 of Form 10-K for the fiscal year ended December 31,
1984.
10.17 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.
10.18 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.
10.19 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.
10.20 Amended and Restated Redemption Agreement between Media General, Inc.,
and D. Tennant Bryan, dated April 7, 1994, incorporated by reference to
Exhibit 10.21 of Form 10-Q for the period ending March 27, 1994.
<PAGE> 15
10.21 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.
10.22 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.
10.23 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.
10.24 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.
10.25 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.
12
10.26 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.
10.27 Media General, Inc., Supplemental Thrift Plan, amended and restated as
of November 17, 1994.
10.28 Media General, Inc., Executive Supplemental Retirement Plan, amended
and restated as of November 17, 1994.
10.29 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.
10.30 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.
10.31 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.
10.32 Media General, Inc., Deferred Compensation Plan, amended and restated
as of November 17, 1994.
10.33 Media General, Inc., ERISA Excess Benefits Plan, amended and restated
as of November 17, 1994.
<PAGE> 16
10.34 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.
10.35 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.
10.36 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.
10.37 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.
10.38 Television affiliation agreement, dated February 10, 1995, between
WFLA-TV and the NBC Television Network.
10.39 Amendments, dated May 17, 1993, to television affiliations agreement,
between WFLA-TV and National Broadcasting Company, Inc., dated March
22, 1989, incorporated by reference to Exhibit 10.47 of Form 10-K for
the fiscal year ended December 26, 1993.
10.40 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.
13
10.41 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.
10.42 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.
10.43 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.
10.44 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.
<PAGE> 17
10.45 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.
13 Media General, Inc., Annual Report to Stockholders for the fiscal year
ended December 25, 1994.
21 List of subsidiaries of the registrant.
23 Consent of Ernst & Young LLP, independent auditors.
27 Financial Data Schedule
Note: Exhibits 10.1-10.33 are management contracts or compensatory
plans, contracts or arrangements.
14
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 16, 1995 By /s/ J. Stewart Bryan III
---------------------------------------------
J. Stewart Bryan III, Chairman, President and
Chief Executive Officer
<PAGE> 18
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
Chairman of the Executive March 16, 1995
/s/ D. Tennant Bryan
-----------------------------
D. Tennant Bryan Committee and Director
Vice Chairman and Director March 16, 1995
/s/ James S. Evans
-----------------------------
James S. Evans
Senior Vice President and March 16, 1995
/s/ Marshall N. Morton
-----------------------------
Marshall N. Morton Chief Financial Officer
Controller March 16, 1995
/s/ Stephen Y. Dickinson
-----------------------------
Stephen Y. Dickinson
Director March 16, 1995
/s/ Robert P. Black
-----------------------------
Robert P. Black
Director March 16, 1995
/s/ Charles A. Davis
-----------------------------
Charles A. Davis
Director March 16, 1995
/s/ A. S. Donnahoe
-----------------------------
A. S. Donnahoe
Director March 16, 1995
/s/ Robert V. Hatcher, Jr.
-----------------------------
Robert V. Hatcher, Jr.
Director March 16, 1995
/s/ John G. Medlin, Jr.
-----------------------------
John G. Medlin, Jr.
Director March 16, 1995
/s/ Henry L. Valentine, II
-----------------------------
Henry L. Valentine, II
15
<PAGE> 19
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16
<PAGE> 1
MEDIA GENERAL, INC.
SUPPLEMENTAL THRIFT PLAN
Amended and Restated as of November 17, 1994
ARTICLE I.
Introduction.
1.01. Purpose of Plan. The purpose of the Plan is to provide
retirement income to Eligible Employees through a program of salary reduction
contributions matched in part by Employer contributions. This Plan is
specifically designed and intended to allow employees whose Basic Contributions
to the Media General, Inc. Employees Thrift Plan (the "Thrift Plan") are limited
by various provisions of the Internal Revenue Code to make contributions by
means of salary reduction and receive the benefit of Employer matching
contributions.
ARTICLE II.
Definitions.
Wherever used herein, the following terms have the following meanings
unless a different meaning is clearly required by context:
2.01. "Administrator" means the Company or other person, entity or
committee appointed to administer the Plan in accordance with Article III.
2.02. "Affiliated Company" means (a) any corporation (other than the
Company) that is a member of a controlled group of corporations (as defined in
Section 414(b) of the Code) with the Company, (b) any trade or business (other
than the Company), whether or not incorporated, that is under common control (as
defined in Section 414(c) of the Code) with the Company, and (c) any trade or
business (other than the Company) that is a member of an affiliated service
group (as defined in Section 414(m) of the Code) of which the Company is also a
member; provided, that the term" Affiliated Company" shall not include any
corporation or unincorporated trade or business prior to the date on which such
corporation, trade or business satisfies the affiliation or control tests of
(a), (b) or (c) above.
2.03. "Beneficiary" mean the person or persons entitled under Article
VIII to receive benefits under the Plan upon the death of the Participant.
2.04. "Board of Directors" means the Board of Directors of the Company.
2.05. "Code" means the Internal Revenue Code of 1986, as amended from
time to time. Reference to any section or subsection of the Code includes
references to any comparable or succeeding provisions of any legislation which
amends, supplements or replaces such section or subsection.
2.06. "Company" means Media General, Inc., a Virginia corporation, and
any successor to all or a major portion of its assets or business which assumes
the obligations of the Company.
2.07. "Compensation" means compensation as defined in the Media
General, Inc. Employees Thrift Plan without regard to any reduction in
compensation by reason of a compensation reduction agreement in effect between
such Participant and the Participating Employer.
2.08. "Computation Period" means an Eligibility Computation Period or a
Vesting Computation Period, as the context requires.
<PAGE> 2
2.09. "Effective Date" means August 1, 1987 and, for the Plan as
amended and restated, November 17, 1994.
2.10. "Matching Contribution" means, in the case of any Participant,
any contribution made for the benefit of the Participant by a Participating
Employer under Section 5.03.
2.11. "Matching Contribution Account" means, for any Participant, the
account described in Section 7.01 to which Matching Contributions for the
Participant's benefit (and earnings attributable thereto) are credited.
2.12. "Normal Retirement Date" means the date on which the Participant
attains age 65.
2.13. "Participant" means each Employee who participates in the Plan in
accordance with Article IV hereof.
2.14. "Participating Employer" means the Company and any Affiliated
Company which has adopted the Plan with the approval of the Board of Directors.
2.15. "Plan" means the Media General, Inc. Supplemental Thrift Plan as
set forth herein, together with any and all amendments and supplements hereto.
2.16. "Plan Year" means the calendar year.
2.17. "Share of the Trust Fund" means, in the case of each Participant,
that portion of the Trust's assets which is allocated to the accounts of the
Participant in accordance with Article VII of the Plan.
2.18. "Stock" means the Class A common stock of the company.
2.19. "Supplemental Contribution" means, in the case of any
Participant, that portion of a Participant's Compensation deferred in accordance
with Section V hereof.
2.20. "Supplemental Contribution Account" means, for any Participant,
the account described in Section 7.01 to which Supplemental Contributions for
the Participant's benefit (and earnings attributable thereto) are credited.
2.21. "Thrift Plan" means the Media General, Inc. Employees Thrift
Plan.
2.22. "Trust" means the trust or trusts that may be established between
the Company and a Trustee in connection with the Plan.
2.23. "Trust Fund" means property held in trust by the Trustee.
2.24. "Trustee" means the person or persons appointed as Trustee
pursuant to Section 6.02, any successor trustee or trustees, and any additional
trustee or trustees.
2.25. "Valuation Date" means the last business day of each March, June,
September and December.
ARTICLE III.
Administration.
<PAGE> 3
3.01. Administrator. The Plan will be administered by the Company or
by any person, entity or committee appointed from time to time by the Board of
Directors to serve at its pleasure. A Participant may be appointed to serve as
Administrator at the discretion of the Board of Directors. Except as may be
directed by the Company, no person serving as Administrator will receive any
compensation for his services as Administrator. The Company shall provide the
Trustee with a written certification stating the name or names of the
Administrator. The Trustee shall be entitled to rely upon such a certification
as to the identity of the Administrator until the Trustee is notified by the
Company otherwise.
3.02. Powers of Administrator. The Administrator will have full power
to administer the Plan in all of its details. For this purpose the
Administrator's power will include, but will not be limited to, the following
authority:
(a) to make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan or required to
comply with applicable law;
(b) to interpret the Plan, its interpretation thereof in good faith
to be final and conclusive on any Employee, former Employee, Participant, former
Participant and Beneficiary;
(c) to decide all questions concerning the Plan;
(d) To compute the amount of benefits which will be payable to any
Participant, former Participant or Beneficiary in accordance with the provisions
of the Plan, and to determine the person or persons to whom such benefits will
be paid;
(e) to authorize the payment of benefits;
(f) to keep such records and submit such filings, elections,
applications, returns or other documents or forms as may be required under the
Code and applicable regulations, or under state or local law and regulations;
and
(g) to appoint such agents, counsel, accountants and consultants as
may be required to assist in administering the Plan.
3.03. Examination of records. The Administrator will make available to
each Participant such of its records as pertain to him, for examination at
reasonable times during normal business hours.
3.04. Nondiscriminatory exercise of authority. Whenever, in the
administration of the Plan, any discretionary action by the Administrator is
required, the Administrator shall exercise his authority in a nondiscriminatory
manner so that all persons similarly situated with receive substantially the
same treatment.
3.05. Reliance on tables, etc. In administering the Plan, the
Administrator will be entitled, to the extent permitted by law, to rely
conclusively on all tables, valuations, certificates, opinions and reports which
are furnished by any accountant, trustee, counsel or other expert who is
employed or engaged by the Administrator or by the Company on the
Administrator's behalf.
3.06. Indemnification of Administrator and Trustee. The Company agrees
to indemnify and defend to the fullest extent of the law any Employee or former
Employee who in good faith serves or has served in the capacity of Administrator
or as a member of a committee designated as Administrator against any
liabilities, damages, costs and expenses occasioned by his having occupied a
fiduciary position in connection with the Plan. The Company agrees to identify
and to defend to the fullest extent of the law any claims against the Trustee
<PAGE> 4
caused by its action pursuant to instructions from the Company or from the
Administrator or, if the Trustee may not act in the absence of such
instructions, its failure to act in the absence of such instructions.
3.07. Costs of administration. All reasonable costs and expenses
incurred by the Administrator and the Trustee in administering the Plan and
Trust will be paid by the Company.
ARTICLE IV.
Participation.
4.01. Participation. An Employee who satisfies criteria established by
the Company in its unfettered discretion may become a Participant on the first
day of any month by delivering an executed compensation reduction agreement, as
described in Section 5.02, which is accepted by the Administrator prior to the
beginning of the month for which such election is to be effective.
4.02. Notice to Participants. The Administrator will inform each
Employee who is eligible to execute a compensation reduction agreement of his
eligibility to participate in the Plan.
ARTICLE V.
Contributions.
5.01. Supplemental Contributions. On behalf of each Participant with
whom there is in effect, for any pay period, a compensation reduction agreement
described in Section 5.02, and who is receiving Compensation from a
Participating Employer during such pay period, such Participating Employer will
contribute, as a Supplemental Contribution, the amount specified as a salary
reduction in such Participant's compensation reduction agreement. Each such
Supplemental Contribution will be credited to the Participant's Supplemental
Contribution Account in accordance with Section 7.02.
5.02. Compensation reduction agreements. For purposes of Section 5.01,
a "compensation reduction agreement" is a written agreement between a
Participant and a Participating Employer which satisfies the requirements of
this Section 5.02. Each such agreement shall provide that the Participant's
Compensation will be reduced by the amount specified, which amount shall not
exceed $30,000 for any calendar year. Each such agreement shall be in a form
prescribed or approved by the Administrator and shall be (a) irrevocable while
the agreement is in effect with respect to Compensation already earned but (b)
revocable as to future pay periods.
A Participant may elect to participate or, for the future, to increase or
decrease the amount by which his Compensation is to be reduced by delivering a
new, executed compensation reduction agreement which is accepted by the
Administrator prior to the beginning of the month for which such election is to
be effective. Notwithstanding the foregoing, the Administrator in its sole
discretion may, at any time with or without notice, permit a change in or a
suspension of the terms of any compensation reduction agreement if it deems such
a change or suspension to be justified by individual circumstances.
5.03. Matching Contributions. The Participating Employer shall
contribute to each Participant's Matching Contribution Account for each Plan
Year an amount equal to the lesser of: (a) the Participant's Supplemental
Contribution or; (b) three percent (3%) of the Participant's Compensation for
the Plan Year reduced by Employer matching contributions made on behalf of such
Participant to the Thrift Plan. The Administrator shall estimate the Matching
Contributions that will be made for the Participant during the Plan Year and
shall divide the Matching Contribution for the Plan Year by the number of pay
<PAGE> 5
periods in the Plan Year. The pro-rata portion of the annual Matching
Contribution so determined will be paid in cash to the Trustee and credited to
the Participant's Matching Contribution Account at the same time that the
Participant's Supplemental Contributions are paid and credited. The
Administrator shall adjust each Participant's Matching Contributions to the
proper amount for the prior Plan Year by making a withdrawal from or an
additional contribution to such Participant's Matching Contribution Account on
each January 31 or on the last day of the first month following the termination
of a Participant's employment.
ARTICLE VI.
Trust Fund.
6.01. "Unfunded Plan". The Plan shall be unfunded for federal income
tax purposes and for purposes of Title I of ERISA. The Plan constitutes a mere
promise by the Employer to make future benefit payments. Nevertheless, for the
convenience of the Company, a trust fund may be established to segregate certain
assets for the purpose of paying benefits under the Plan. The Company shall be
the beneficial owner of such assets, and no Participants or Beneficiary shall
have any right, title, or interest in or to any such assets.
6.02 Appointment of Trustee. The Company may appoint by written
notice one or more individuals or corporations to act as Trustee under the Plan,
and at any time may remove and appoint a successor to any such person or
persons. The Trustee, and any Successor Trustee, shall be entitled to written
notice from the Company stating the date on which the removal is effective.
Written notice of removal, resignation or appointment shall be provided to all
Trustees under the Plan. The Company may enter into a separate trust agreement
with the Trustee and make such amendments to such trust agreement or such
further agreements as the Company in its sole discretion may deem necessary or
desirable to carry out the Plan.
6.03. Investment funds within the Trust Fund. All contributions to the
Trust and all investments thereunder shall be held by the Trustee in the Trust
Fund. The Trust Fund shall consist of all Stock held by the Trustee and all
cash held by the Trustee resulting from the receipt of dividends or other
distributions on Stock held in the Company Stock Fund, and from Supplemental
Contributions and Matching Contributions paid in cash, all of which cash is to
be invested in Stock as soon as practicable. The Trustee, as directed by the
Company, shall have the right to vote stock held in the Trust Fund personally or
by proxy and to delegate the Trustee's powers and discretions with respect to
stock to a proxy.
6.04. Acquisition of Stock. The Stock required to be purchased by the
Trustee for purposes of the Plan shall be purchased by the Trustee from such
sources and at such prices as the Trustee in its sole discretion may determine.
6.05. Investment of contributions and earnings. All amounts credited
to a Participant's Supplemental Contribution Account and his Matching
Contribution Account shall be invested by the Trustee in Company Stock. Amounts
credited to such accounts in cash shall be invested in Company Stock as soon as
reasonably possible.
6.06. Protection of Trustee and Limitation of Liability. The Trustee
shall be fully protected in acting upon any instrument, certificate, or document
believed by it to be genuine. The Trustee agrees to hold in trust and
administer the Fund subject to all the terms and conditions of the Plan. The
Trustee's responsibility shall be limited to holding, investing and reinvesting
<PAGE> 6
the assets of the Fund from time to time in its possession.
ARTICLE VII.
Participant Accounts.
7.01. Accounts. The Administrator shall maintain on its books for each
Participant a Supplemental Contribution Account and a Matching Contribution
Account. The Trustee may establish and maintain such sub-accounts as it deems
necessary or desirable to fulfill the provisions of the Plan.
7.02. Adjustment of accounts. The Administrator shall, as of each
Valuation Date,
(a) First, with respect to each Participant, reduce, first, the
balance of his Supplemental Contribution Account until exhausted, and second,
the balance of his Matching Contribution Account, by the aggregate amount of all
distributions and withdrawals made to the Participant since the preceding
Valuation Date;
(b) Second, credit each Participant's Supplemental Contribution
Account with the sum of the Supplemental Contributions made for his benefit for
the quarterly period ending on such Valuation Date; and
(c) Third, credit and each Participant's Matching Contribution
Account with the Matching Contribution made for his benefit for the quarterly
period ending on such Valuation Date.
(d) Fourth, adjust the balances of each Participant's Supplemental
Contribution Account and Matching Contribution Account to reflect the current
fair market value of the assets in the Trust Fund allocable to such Accounts;
In adjusting each account under (d) above to reflect the current value of the
assets in the Fund in which the account is invested, the Administrator will
allocate to each of the accounts, in proportion to the balances therein
immediately prior to such adjustment, an amount equal to the income and expenses
of the Fund and of the gain and loss (realized and unrealized) on the assets of
the Fund, valued at their fair market value. In the case of each Participant
(including for purposes of this sentence any former Participant), the Trustee
shall continue to maintain the accounts described herein, and to adjust such
accounts in the manner set forth above, until such Participant's accounts are
distributed to their entirety.
ARTICLE VIII.
Distribution of Benefits.
8.01. Termination of Employment. Upon the termination of his
employment for any reason, each Participant or his designated Beneficiary will
receive a cash distribution in an amount equal to the balance of his
Supplemental Contribution Account and his Matching Contribution Account,
determined as of the Valuation Date coinciding with or immediately following the
date his employment terminates. Any payment required under this Section shall
be made no later than thirty (30) days from the Valuation Date coinciding with
or immediately following the date his employment terminates.
8.02. Payments to Beneficiary. In the event the Participant dies prior
to receiving all payments due him under the Plan, the Company shall pay all
payments then due the Participant to the Participant's Beneficiary at the time
and in the amount that such payments would have been made to the Participant had
he survived.
8.03. Beneficiary Designation. The Participant may, from time to time,
by signing a form approved by the Administrator, designate any legal or natural
person or persons (who may be designed contingently or successively) to whom
<PAGE> 7
payments are to be made if the Participant dies before receiving payment of all
amounts due hereunder. A beneficiary designation form will be effective only
after the signed form is filed with the Company while the Participant is alive
and will cancel all beneficiary designation forms signed and filed earlier. If
the Participant fails to designate a Beneficiary as provided above, or if all
designated Beneficiaries of the Participant die before the Participant or before
complete payment of all amounts due hereunder, the Company shall pay the unpaid
amounts to the Participant's estate.
8.04. Unsecured Contractual Obligation. The Company's obligation to
make payments to any person under this Agreement is purely contractual, and the
parties do not intend that the amounts payable hereunder be held by the Company
in trust for the Participant or as a segregated fund. Participants and
Beneficiaries have the status of unsecured creditors of the Company.
8.05. Benefits Non-Assignable. Benefits payable to or for the benefit of
a Participant or Beneficiary shall not be assignable and shall not be subject to
the claims of creditors of such participant or beneficiary.
8.06 Claims Procedure. Any claim by a Participant or his Beneficiary
(hereafter "Claimant") for benefits shall be submitted to the Administrator.
The Administrator shall be responsible for deciding whether such claim is within
the scope provided by the Plan (a "Covered Claim") and for providing full and
fair review of the decision with respect to such claim. In addition, the
Administrator shall provide a full and fair review in accordance with the
procedures described below.
Each Claimant or other interested person shall file with the Administrator
such pertinent information as the Administrator may specify, and in such manner
and form as the Administrator may specify and provide, and such person shall not
have any rights or be entitled to any benefits or further benefits hereunder, as
the case may be, unless such information is filed by the Claimant or on behalf
of the Claimant. Each Claimant shall supply at such times and in such manner as
may be required, written proof that the benefit is covered under the Plan. If
it is determined that a Claimant has not incurred a Covered Claim or if the
Claimant shall fail to furnish such proof as is requested, no benefits or no
further benefits hereunder, as the case may be, shall be payable to such
Claimant.
Notice of a decision by the Administrator with respect to a claim shall be
furnished to the Claimant within ninety (90) days following the receipt of the
claim by the Administrator (or within ninety (90) days following the expiration
of the initial ninety (90) day period, in a case where there are special
circumstances requiring extension of time for processing the claim). If special
circumstances require and extension of time for processing the claim, written
notice of the extension shall be furnished by the Administrator to the Claimant
prior to the expiration of the initial ninety (90) day period. The notice of
extension shall indicate the special circumstances requiring the extension and
the date by which the notice of decisions with respect to the claim shall be
furnished. Commencement of benefit payments shall constitute notice of approval
of a claim to the extent of the amount of the approved benefit. If such claim
is wholly or partially denied, such notice shall be in writing and shall set
forth (i) the specific reason or reasons for the denial; (ii) specific reference
to pertinent provisions of the Plan on which the denial is based; (iii) a
description of any additional material or information necessary for the Claimant
to perfect the claim and an explanation of why such material or information is
necessary; and (iv) an explanation of the Plan's claims review procedure. If
the Administrator fails to notify the Claimant of the decision regarding his or
her claim in accordance with these "Claims Procedure" provisions, the claim
shall be deemed denied and the Claimant shall then be permitted to proceed with
<PAGE> 8
the claims review procedure provided herein.
Within sixty (60) days following receipt by the Claimant of notice of the
claim denial, or within sixty (60) days following the close of the ninety (90)
day period referred to herein, or if the Administrator fails to notify the
Claimant of the decision within such ninety (90) day period, the Claimant may
appeal denial of the claim by filing a written application for review with the
Administrator. Following such request for review, the Administrator shall fully
and fairly review the decision denying the claim. Prior to the decision of the
Administrator, the Claimant shall be given an opportunity to review pertinent
documents and to submit issues and comments to the Administrator in writing.
The decision of the Administrator shall be made within sixty (60) days following
receipt by the Administrator of the request for review (or within one hundred
and twenty (120) days after such receipt, in a case where there are special
circumstances requiring extension of time for reviewing such denied claim). The
Administrator shall deliver its decision to the Claimant in writing. If the
decision on review is not furnished within the prescribed time, the claim shall
be deemed denied on review.
For all purposes under the Plan, the decision with respect to a claim if no
review is requested and the decision with respect to a claim if review is
requested shall be final, binding and conclusive on all interested parties as to
matters relating to the Plan.
ARTICLE IX
Amendment and Termination.
9.01. Amendment. The Company reserves the right at any time to amend,
modify or terminate the Plan, in whole or in part. Any such amendment,
modification or termination of the Plan shall be made by a resolution adopted by
the Board of Directors and communicated to Participants within a reasonable time
from the later of the date of adoption or the effective date of such action;
provided, however, that the Company shall not amend the Plan or Trust
retroactively in such a manner as to reduce any benefit payable to Participant
or Beneficiary to the extent that such benefit was accrued and vested prior to
the amendment, modification or termination.
9.02. Distributions upon termination of the Plan. Upon termination of
the Plan, the Trustee as directed by the Administrator in writing will make
distributions to each Participant in an amount equal to the entire balance of
his Supplemental Contribution Account and Matching Contribution Account
determined as of the termination date. Upon the completion of such distribution
to all Participants, the Plan will terminate, the Administrator will be relieved
from all liability under the Plan, and no Participant or other person will have
any claims thereunder.
ARTICLE X
Applicable Law.
This Plan shall be construed in accordance with applicable federal law and,
to the extent otherwise applicable, the laws of Virginia.
IN WITNESS WHEREOF, Media General, Inc. has caused this instrument to be
signed by its duly authorized officer this 17th day of November, 1994.
MEDIA GENERAL, INC.
By:/s/ J.Stewart Bryan III
--------------------------
J. STEWART BRYAN III
Chairman
<PAGE> 1
MEDIA GENERAL, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
Amended and Restated November 17, 1994
Media General, Inc., hereby amends and restates the Media General, Inc.
Executive Supplemental Retirement Plan for the benefit of the eligible officers
and executive employees of Media General, Inc., and its wholly owned
subsidiaries (collectively the "Company") that was originally adopted on May 24,
1979 and amended and restated as of January 1, 1989 (the "Plan").
1. Purpose. The Plan is intended to advance the interests of the Company
by providing certain of its officers and other key executive employees with
supplemental retirement benefits and thus an additional incentive to promote the
success of the Company and to encourage the employees to remain employed by the
Company.
2. Administration of Plan. The Plan shall be administered by the
Compensation and Stock Option Committee of the Board of Directors of the Company
(the "Committee").
3. Eligibility and Participation. Any salaried executive employee of the
Company shall be eligible to participate in the Plan.
From the employees eligible to participate in the Plan, the Committee may
from time to time select those employees whom the Committee shall recommend to
the Board for participation in the Plan. In selecting those employees who shall
be recommended at any time, the Committee shall consider the position and
responsibilities of the eligible employees, the value of their services to the
Company and such other factors as the Committee deems pertinent.
As promptly as practicable after the Committee shall have made
recommendations to the Board, the Board shall review the recommendations of the
Committee and in the Board's discretion designate all or any number of those
employees as shall have been recommended by the Committee as participants in the
Plan. Set forth in Exhibit A and Exhibit B attached hereto are the Participants
and Special Participants who have been designated as of August 1, 1994.
4. Supplemental Retirement Benefit.
(a) The Company shall pay a supplemental retirement benefit to each
Participant upon his retirement after attaining age fifty-five (55). Upon the
death of a Participant, a death benefit will be paid to his spouse or designated
beneficiary in accordance with the provisions of paragraph 6 hereof.
(b) Subject to the provisions of (c), (d), (e) and (f) of this
paragraph 4, the amount of the supplemental retirement benefit payable to a
Participant shall be equal to the difference between the amounts determined
under (1) and (2), as follows:
(1) An amount equal to 55% of the Participant's average annual
compensation for the five calendar years of his employment by the Company prior
to his death or retirement during which his compensation was the highest. If
the Participant has been employed by the Company for less than five years, the
average compensation for such number of years shall be used in this computation.
<PAGE> 2
(2) An amount equal to the total of the annual retirement
benefits the Participant is entitled to receive under the Employee's Retirement
Plan of the Participating Companies of Media General, Inc. and all other
retirement plans or benefit arrangements providing for a pension payable with
respect to the Participant's employment by the Company or any other employer
(the "Pension Plans"). For purposes of this Plan, the joint and survivor
annuity provided under such Employees' Retirement Plan and the comparable form
of benefit under any other retirement plan or benefit arrangement taken into
account in this computation shall be deemed to be the applicable form of
benefit. Distributions under the Media General, Inc. Employees Thrift Plan
shall not be taken into account in this computation, and in the case of
Participants who are admitted to the Plan on or after January 1, 1991, benefits
provided under a plan or arrangement that is sponsored by an employer other than
the Company shall not be included in the determination of the amount under this
paragraph 4(b)(2).
No benefit shall be payable if the amount computed under (2) equals or exceeds
the amount computed under (1).
For purposes of the Plan, a Participant's compensation for a calendar
year shall mean the sum of (i) a Participant's highest base rate salary that is
payable during the calendar year and (ii) the Incentive Bonus that is payable to
such Participant with respect to the prior calendar year. The determination of
compensation shall be made for each calendar year during which a Participant is
employed by the Company irrespective of the number of days during each such
calendar year that the Participant is actually employed by the Company. In the
case of a Participant who is entitled to receive supplemental disability
payments under paragraph 5, the benefit payable under paragraph 5 shall be
treated as compensation for purposes of paragraph 4.
(c) The benefit payments provided in paragraph 4(b) shall be reduced
if such payments commence upon the Participant's retirement prior to attaining
age sixty-three (63). If a Participant retires prior to attaining age sixty-
three (63), the benefit payment shall be an amount equal to the amount of the
benefit payment computed as provided in paragraph 4(b) multiplied by the
applicable factor in the table set forth below:
Age at Retirement Reduced Benefit Factor
---------------- ----------------------
62 92.3%
61 84.6%
60 76.9%
59 70.7%
58 64.6%
57 58.4%
56 53.8%
55 49.2%
The reduction of any benefit payment required by this paragraph 4(c) can be
waived by the Committee in its sole discretion.
(d) If a Participant who enters the Plan on or after January 1, 1991,
terminates his employment with the Company, other than on account of his death
or disability, prior to completing 15 full years of service to the Company after
his admission to the Plan, the percentage of average annual compensation used to
determine the amount in paragraph 4(b)(1) shall be reduced to the following
<PAGE> 3
percentage:
Years of Service (in Plan) Benefit Percentage
------------------------- ------------------
14 54%
13 53%
12 52%
11 51%
10 50%
9 45%
8 40%
7 35%
6 30%
5 25%
4 20%
3 15%
2 10%
1 5%
0 0%
(e) If a Participant who entered the Plan prior to January 1, 1991
terminates his employment with the Company prior to January 1, 1996, other than
on account of his death or disability, the percentage of average annual
compensation provided in paragraph 4(b)(1) shall be reduced to the following
percentage:
Year Employment Terminates Benefit Percentage
-------------------------- ------------------
1995 54%
1994 53%
1993 52%
1992 51%
1991 50%
(f) The benefit payment computed under paragraph 4(b), as reduced by
paragraphs 4(c) and 4(d), shall be an annual amount which shall be payable in
monthly installments commencing on the first day of the first month following
the termination of the Participant's employment by the Company and terminating
with the last installment paid prior to the Participant's death.
(g) At the Participant's option, he may elect, at the time benefit
payments are first payable hereunder, to receive reduced benefit payments in
exchange for the Company's agreement to make one hundred and twenty (120)
monthly payments under the Plan irrespective of the death of the Participant
and/or his spouse. The amount of the reduction of the benefit to be paid to the
Participant and to his spouse upon his death will be determined by an actuarial
consulting firm selected by the Company. The Participant shall designate who
shall be the recipient of the guaranteed payments upon the death of the survivor
of the Participant and his spouse. In the absence of such designation, payments
shall be made to the Participant's estate.
<PAGE> 4
(h) Notwithstanding the foregoing provisions, Special Participants shall
be entitled to receive only those supplemental retirement benefits specified on
Exhibit B.
5. Supplemental Disability Benefit.
(a) In the event a Participant terminates his employment by the
Company on account of his disability, which for purposes of the Plan is defined
as the inability to perform the services required by his position with the
Company by reason of any medically determinable, physical or mental impairment
which can be expected to be of long-continued and indefinite duration, he will
not be treated as having retired from the Company during the period of his
disability for purposes of paragraph 4, and he will be paid a supplemental
disability benefit until the earlier of (i) the date he resumes his employment
with the Company in his former position, or (ii) the date he attains the age of
sixty three (63).
(b) The supplemental disability benefit shall be an amount equal to
the difference between the amounts determined under (1) and (2) below as
follows:
(1) An amount equal to the Participant's base compensation for
the year in which he becomes disabled plus an amount equal to the incentive
bonus, if any, that is payable to such Participant with respect to the calendar
year next preceding the year in which he becomes disabled. Such amount will be
increased or decreased for each subsequent calendar year by a factor that is
equal to the increase or decrease in the average covered compensation of all
participants in the Employees Retirement Plan of Media General, Inc., from year
to year.
(2) An amount equal to the aggregate amount of compensation
received by the Participant with respect to services performed by the
Participant for the Company and any other employer (including the Participant
himself in the case of self-employment income) during the period he is receiving
supplemental disability payments hereunder plus an amount equal to the Social
Security benefits, if any, that such Participant is entitled to receive during
the period.
(c) The supplemental disability benefit payment provided in paragraph
5(b) shall be an annual amount which shall be payable in monthly installments
commencing on the first day of the first month following the suspension of the
Participant's employment by the Company on account of his disability and
continuing until he resumes his employment with the Company in his former
position or until he attains the age of sixty-three (63).
(d) If a Participant attains the age of sixty-three
(63) while he is entitled to receive supplemental disability benefit payments
under the Plan, he will be deemed to have retired from the Company for purposes
of paragraph 4 as of such date, and such supplemental disability benefit
payments will cease and he will be entitled to receive the benefit payment
computed under paragraph 4 commencing on the first day of the first month
following such date.
(e) Notwithstanding the foregoing provisions, Special Participants
shall not be entitled to any disability benefits.
<PAGE> 5
6. Death Benefit.
(a) Upon the death of a Participant receiving or entitled to receive
benefit payments under the Plan, the Company shall pay a death benefit as
hereinafter provided.
(b) A spouse's benefit shall be payable only in the event the
Participant was married to the spouse at the time of the termination of the
Participant's employment by the Company.
(c) The benefit payable to a Participant's spouse shall be an amount
equal to the difference between the amounts computed under (1) and (2) as
follows:
(1) An amount equal to 80% of the amount determined under
paragraph 4(b)(1).
(2) An amount equal to the total of the benefits the
Participant's spouse is entitled to receive under the Pension Plans taken in
account in computing the amount under paragraph 4(b)(2).
No benefit shall be payable hereunder if the amount computed under (2) equals or
exceeds the amount computed under (1). If the Participant has made an election
to receive a reduced benefit pursuant to paragraph 4(g), the amount of the
spouse's benefit will be determined by an actuarial consulting firm selected by
the Company at the time such election is made.
(d) The spouse's benefit shall be paid to the surviving spouse in
monthly installments commencing on the first day of the first month following
the Participant's death and continuing until the death or remarriage of the
surviving spouse.
(e) In the event of the death of a Participant prior to the
termination of his employment by the Company, the spouse's benefit shall
nevertheless be payable as provided herein.
(f) Upon the death of a Participant who has not retired and who is
not married at the time of his death, the Company shall pay to the estate of
such Participant a lump sum payment equal to the present value of the benefit
payments that would have been made to such Participant pursuant to paragraph 4
during the 10 year period following his death determined as if such Participant
had retired at age sixty-three (63) and lived for ten (10) years. In
determining such present value, the discount rate shall be a rate equal to the
yield on 10 year government obligations determined on the last day of the month
next preceding the lump sum payment hereunder, which payment shall be made
within ninety (90) days of the date of the Participant's death.
(g) Notwithstanding the foregoing provisions, a surviving spouse of a
Special Participant shall be entitled to a spousal benefit only in accordance
with the schedule on Exhibit B. No other benefit shall be payable to any other
person.
7. Non-Compete Provision. A Participant shall not, without the written
consent of the Company, directly or indirectly enter into or in any manner take
part in any business, profession or other endeavor which shall be in competition
with the business of the Company, either as an employee, agent, independent
contractor, owner or otherwise in any state in which the Company is conducting
business.
<PAGE> 6
8. Miscellaneous Provisions.
(a) No Participant or spouse shall have any right to receive benefits
under the Plan prior to the termination of the Participant's employment by the
Company.
(b) In the event of the termination of a Participant's employment by
the Company prior to his death, disability or retirement, or in the event a
Participant breaches the noncompete provision in paragraph 7, all rights of the
Participant and his spouse and all obligations of the Company under the Plan
shall cease.
(c) The Plan shall be unfunded for federal income tax purposes and
for purposes of Title I of ERISA. The Plan constitutes a mere promise by the
Company to make future benefit payments. Nevertheless, for the convenience of
the Company, a trust fund may be established to segregate certain assets for the
purpose of paying benefits under the Plan. The Company shall be the beneficial
owner of such assets, and no Participants or Beneficiary shall have any right,
title, or interest in or to any such assets.
(d) Benefits payable to or for the benefit of a Participant or
Beneficiary shall not be assignable and shall not be subject to the claims of
creditors of such Participant or Beneficiary.
(e) The Company reserves the right at any time to amend, modify or
terminate the Plan, in whole or in part. Any such amendment, modification or
termination of the Plan shall be made by a resolution adopted by the Board of
Directors and distributed to Participants within sixty (60) days from the later
of the date of adoption or the effective of such action; provided, however, that
the Company shall not amend the Plan retroactively in such a manner as to
deprive any Participant or Beneficiary of any benefit to the extent that such
benefit was accrued and vested prior to the amendment, modification or
termination.
9. Waiver of Vesting and Benefit Accrual Limitations. The
Board may, in its sole discretion, waive, modify or amend all or any portion of
the provisions of the Plan that have the effect of limiting the amount or the
timing of payments that are to be made under the Plan. Such action by the Board
may be made on a case by case basis or may be made with respect to all
Participants.
10. Claims Procedure. Any claim by a Participant or his Beneficiary
(hereafter "Claimant") for benefits shall be submitted to the Committee. The
Committee shall be responsible for deciding whether such claim is within the
scope provided by the Plan (a "Covered Claim") and for providing full and fair
review of the decision with respect to such claim. In addition, the Committee
shall provide a full and fair review in accordance with ERISA, including without
limitation Section 503 thereof.
Each Claimant or other interested person shall file with the Committee such
pertinent information as the Committee may specify, and in such manner and form
as the Committee may specify and provide, and such person shall not have any
rights or be entitled to any benefits or further benefits hereunder, as the case
may be, unless such information is filed by the Claimant or on behalf of the
Claimant. Each Claimant shall supply at such times and in such manner as may be
required, written proof that the benefit is covered under the Plan. If it is
determined that a Claimant has not incurred a Covered Claim or if the Claimant
shall fail to furnish such proof as is requested, no benefits or no further
<PAGE> 7
benefits hereunder, as the case may be, shall be payable to such Claimant.
Notice of a decision by the Committee with respect to a claim shall be
furnished to the Claimant within ninety (90) days following the receipt of the
claim by the Committee (or within ninety (90) days following the expiration of
the initial ninety (90) day period, in a case where there are special
circumstances requiring extension of time for processing the claim). If special
circumstances require and extension of time for processing the claim, written
notice of the extension shall be furnished by the Committee to the Claimant
prior to the expiration of the initial ninety (90) day period. The notice of
extension shall indicate the special circumstances requiring the extension and
the date by which the notice of decisions with respect to the claim shall be
furnished. Commencement of benefit payments shall constitute notice of approval
of a claim to the extent of the amount of the approved benefit. If such claim
is wholly or partially denied, such notice shall be in writing and worded in a
manner calculated to be understood by the Claimant, and shall set forth (i) the
specific reason or reasons for the denial; (ii) specific reference to pertinent
provisions of the Plan on which the denial is based; (iii) a description of any
additional material or information necessary for the Claimant to perfect the
claim and an explanation of why such material or information is necessary; and
(iv) an explanation of the Plan's claims review procedure. If the Committee
fails to notify the Claimant of the decision regarding his or her claim in
accordance with these "Claims Procedure" provisions, the claim shall be deemed
denied and the Claimant shall then be permitted to proceed with the claims
review procedure provided herein.
Within sixty (60) days following receipt by the Claimant of notice of the
claim denial, or within sixty (60) days following the close of the ninety (90)
day period referred to herein, or if the Committee fails to notify the Claimant
of the decision within such ninety (90) day period, the Claimant may appeal
denial of the claim by filing a written application for review with the
Committee. Following such request for review, the Committee shall fully and
fairly review the decision denying the claim. Prior to the decision of the
Committee, the Claimant shall be given an opportunity to review pertinent
documents and to submit issues and comments to the Committee in writing. The
decision of the Committee shall be made within sixty (60) days following receipt
by the Committee of the request for review (or within one hundred and twenty
(120) days after such receipt, in a case where there are special circumstances
requiring extension of time for reviewing such denied claim). The Committee
shall deliver its decision to the Claimant in writing. If the decision on
review is not furnished within the prescribed time, the claim shall be deemed
denied on review.
For all purposes under the Plan, the decision with respect to a claim if no
review is requested and the decision with respect to a claim if review is
requested shall be final, binding and conclusive on all interested parties as to
matters relating to the Plan.
<PAGE> 8
IN WITNESS WHEREOF, the Plan has been duly amended, restated and effective
as of the 17 day of November, 1994.
MEDIA GENERAL, INC.
By /s/ J. Stewart Bryan III
---------------------------
J. Stewart Bryan, III
Chairman
<PAGE> 9
Exhibit A
MEDIA GENERAL, INC.
Executive Supplemental Retirement Plan
Participants - August 1, 1994
J. S. EVANS*
J. S. BRYAN, III*
B. SNIDER*
J. L. BURKE*
R. T. CLIGGOTT*
J. C. DOSTER*
J. F. URBANSKI*
T. W. WALDROP*
A. J. BRENT*
J. M. PORTER*
J. L. DILLON*
D. L. JORDAN*
M. D. JENSEN*
H. D. HARVILL*
M. N. MORTON
H. G. WOODLIEF
J. A. ZIMMERMAN
A. T. AUGUST, III
J. BUTCHER
T. M. HAHN
G. L. MAHONEY
J. H. WITHERSPOON
*admitted prior to January 1, 1991
<PAGE> 10
Exhibit B
MEDIA GENERAL, INC.
Executive Supplemental Retirement Plan
Participants - August 1, 1994
Special Participants -- Effective as of August 1, 1994.
Monthly Benefit Monthly Benefit
Participant Name to Participant to Survivor
---------------- --------------- ---------------
J. ALEXANDER $ 1,644.20 Deceased
C. BOVENDER 622.38 Deceased
J. W. CARROLL 570.95 $ 285.45
C. CROWDER Deceased 202.62
A. S. DONNAHOE $10,075.08 11,037.54
W. B. FABER 1,293.33 5,195.73
C. GOODYKOONTZ 783.47 522.57
G. HARVEY Deceased 509.98
M. V. MCDOWELL 1,250.00 1,000.00
J. D. RICH 2,456.06 1,964.85
R. SNEAD 394.91 197.46
<PAGE> 1
MEDIA GENERAL, INC.
DEFERRED COMPENSATION PLAN
Amended and Restated as of November 17, 1994
Preamble
THIS DEFERRED COMPENSATION PLAN (hereinafter referred to as the "Plan" and
known as the Media General, Inc., Deferred Compensation Plan) is amended and
restated, by Media General, Inc., a Virginia corporation (hereinafter
"Employer").
WHEREAS, the purpose of the Plan is to provide the select group of
employees who become covered under the Plan the opportunity to enhance their
retirement security by permitting them to enter into agreements with the
Administrator to defer compensation and receive benefits at retirement, death,
separation from service, and for financial hardships due to unforeseeable
emergencies.
NOW, THEREFORE, the Administrator does hereby adopt the Plan as set forth
in the following pages.
SECTION 1. DEFINITIONS
The following terms when used herein shall have the following meaning,
unless a different meaning is clearly required by the context.
1.01 Administrator. "Administrator" means the Employer or such person,
entity or committee as it may designate from time to time.
1.02 Beneficiary. "Beneficiary" means the person(s) or estate entitled to
receive benefits under this Plan after the death of a Participant.
1.03 Code. "Code" means the Internal Revenue Code of 1986, as amended and
including all regulations promulgated pursuant thereto.
1.04 Compensation. "Compensation" means the total remuneration earned by
an employee for personal services rendered to the Employer for the Plan Year
including amounts deferred under this Plan and any other Deferred Compensation
Plan.
1.05 Deferral. "Deferral" means the amount of Compensation that a
Participant elects to defer pursuant to a properly executed Voluntary Salary
Deferral Agreement.
1.06 Effective Date. "Effective Date" of the original Plan means July 1,
1991 and of the amended and restated Plan, November 17, 1994.
1.07 Eligible Employee. "Eligible Employee" means any employee who is
approved for participation in the Plan by the Administrator.
1.08 Employer. "Employer" means Media General, Inc., and any wholly owned
subsidiary of Media General, Inc.
1.09 Normal Retirement Age. "Normal Retirement Age" means age 65.
<PAGE> 2
1.10 Open Enrollment Period. "Open Enrollment Period" means the month
(December, March, June and September) preceding each calendar quarter and any
period designated by the Employer during which eligible employees may enter into
or modify Voluntary Salary Deferral Agreements.
1.11 Participant. "Participant" means an employee or former employee who
is or has been enrolled in the Plan and who retains the right to benefits under
the Plan.
1.12 Plan. "Plan" means this Media General, Inc., Deferred Compensation
Plan either in its present form or as amended from time to time.
1.13 Plan Year. "Plan Year" means the period beginning on the Effective
Date and ending on December 31, 1991, and the twelve-month period beginning each
January 1 and ending December 31 thereafter.
1.14 Voluntary Salary Deferral Agreement. "Voluntary Salary Deferral
Agreement" means the agreement between a Participant and the Employer to defer
receipt by the Participant of Compensation not yet earned or payable. Such
agreement shall state the Deferral amount to be withheld from a Participant's
paycheck and shall become effective no earlier than the first day of any month
after it is executed by the Participant and accepted by the Administrator. Such
Agreement shall remain in effect until terminated or modified.
SECTION 2. PARTICIPATION
2.01 Eligibility for Participation. Each Eligible Employee shall become a
Participant in this Plan on the first day of the calendar quarter next following
enrollment pursuant to Section 2.02.
2.02 Enrollment. Eligible Employees may enroll in the Plan by completing a
Voluntary Salary Deferral Agreement during an Open Enrollment Period.
SECTION 3. DEFERRAL OF COMPENSATION
3.01 Deferral Procedure. Pursuant to a Voluntary Salary Deferral
Agreement, each Participant may elect to defer a portion of his base
compensation which shall be deducted from his paychecks in approximately equal
increments throughout the year. If a Participant elects to defer any portion of
his annual Incentive Bonus, the amount of such deferral shall be deducted from
such Incentive Bonus Payment. The Deferral amount shall not be included as
gross income on a Participant's federal income tax withholding statement (W-2
Form).
3.02 Deferral Amount.
(a) The Deferral amount for any taxable year shall not exceed the sum
of:
(i) 50% of a Participant's base compensation, and
(ii) 100% of a Participant's Incentive Bonus.
(b) The Deferral Amount for any taxable year shall not be less than
one thousand dollars ($1,000) per calendar quarter.
3.03 Changing Deferrals. Subject to the provisions of Section 3.02, a
Participant may change or cancel Deferrals with respect to Compensation not yet
<PAGE> 3
earned by executing a new Voluntary Salary Deferral Agreement only during Open
Enrollment Periods or within thirty days of receiving notice of a Plan
amendment, by executing a new Voluntary Salary Deferral Agreement or written
notice of cancellation. The change or cancellation shall be effective on the
first day of the month coinciding with or following completion of a new
Voluntary Salary Deferral Agreement.
3.04 Suspension of Deferrals. Deferrals shall automatically be suspended
for any pay period in which there are insufficient monies available to make the
entire deduction agreed upon, and automatically reinstated in the next month
that Compensation is sufficient to make the agreed upon Deferral.
SECTION 4. TIME OF BENEFIT PAYMENT
4.01 Eligibility for Payment. Payments from the Plan shall be made only
upon the termination of the Participant's employment by the Employer or an
approved financial Hardship that results from an unforeseeable emergency.
(a) Separation from Service. "Separation from Service" means the
severance of a Participant's employment with the Employer.
(b) Hardship Withdrawal.
(1) Procedure. A Participant may request a withdrawal for
hardship (as defined below) by submitting a written request to the
Administrator, accompanied by evidence that his financial condition warrants an
advance release of funds and results from an unforeseeable emergency which is
beyond the Participant's control. The Administrator shall review the request
and determine whether payment of any amount is justified. If payment is
justified, the amount shall be limited to an amount reasonably needed to meet
the emergency. The Administrator shall determine the amount and form of
payment. Any money remaining in the account after Hardship withdrawal shall be
distributed in accordance with the provisions of this Plan.
(2) Hardship Defined. "Hardship" means an unforeseeable emergency caused
by an event beyond the control of the Participant or Beneficiary and one which
would cause severe financial hardship, such as a sudden and unexpected illness
or accident of the Participant or a dependent of the Participant, loss of the
Participant's property due to casualty, or other similar extraordinary and
unforeseeable circumstances, arising from events beyond the Participant's
control. Whether circumstances constitute an unforeseeable emergency depends on
the facts of each case, but, in any case, payment may not be made to the extent
that such hardship is or may be relieved:
(i) through reimbursement or compensation by insurance or
otherwise;
(ii) by liquidation of the Participant's assets, to the extent
that liquidation itself would not cause severe financial
hardship; or
(iii) by cessation of Deferrals under the Plan.
4.02 Benefit Commencement Date. Except for a Hardship withdrawal pursuant
to Section 4.01(b), benefit payments to a Participant shall begin within thirty
(30) days after the date of the termination of a Participant's employment by the
Employer.
<PAGE> 4
SECTION 5. FORM OF BENEFIT PAYMENT
5.01 Form of Payment. A Participant or Beneficiary shall receive a lump
sum payment of the entire balance in the Participant's Account (defined in
Section 7.03) or at the Participant's election, the balance of the Account,
including interest on the unpaid balance, shall be paid in one hundred and
twenty (120) installments.
SECTION 6. BENEFICIARIES
6.01 Designation. A Participant shall have the right to designate a
Beneficiary, and amend or revoke such designation at any time, in writing. Such
designation, amendment or revocation shall be effective upon receipt by the
Administrator.
6.02 Failure to Designate a Beneficiary. If no designated Beneficiary
survives the Participant and benefits are payable following the Participant's
death, the Administrator shall direct that payment of benefits be made to the
Participant's estate.
SECTION 7. PLAN ADMINISTRATION
7.01 Plan Administrator. The Plan shall be administered by the
Administrator which shall have responsibility for the operation and
administration of the Plan and shall direct payment of Plan benefits. The
Administrator shall have the power and authority to adopt, interpret, alter,
amend or revoke rules and regulations necessary to administer the Plan and to
delegate ministerial duties and employ such outside professionals as may be
required for prudent administration of the Plan. The Administrator shall also
have authority to enter agreements on behalf of the Administrator necessary to
implement this Plan.
7.02 Ownership of Assets. All amounts deferred under this Plan, all
property and rights purchased with such amounts, and all income attributable to
such amounts, property or rights shall remain (until made available to the
Participant or to the Beneficiary) solely the property and rights of the
Employer (without being restricted to the provision of benefits under the Plan)
and shall be subject to the claims of the Employer's general creditors.
7.03 Accounts. The Administrator shall establish and maintain an account
on behalf of each Participant (the "Account"). Each Account shall be valued at
least once each Plan Year and each Participant shall receive written notice of
his Account balance following such valuation. Account balances shall reflect
the Deferral and any earnings attributable to such amount. Earnings shall be
credited to each Participant's Account monthly in an amount equal to the amount
of interest that would have been payable on the balance of such Account from
time to time, computed using the average rate of interest paid by the Employer
with respect to its debt obligations having a maturity of more than one year.
During such periods that the Employer does not have debt obligations outstanding
with a maturity of more than one year, interest shall be computed by using the
applicable rate of interest established from time to time by the Internal
Revenue Service for short-term obligations.
<PAGE> 5
SECTION 8. AMENDMENT AND TERMINATION
8.01 Amendment or Termination. The Employer reserves the right at any time
to amend, modify or terminate the Plan, in whole or in part. Any such
amendment, modification or termination of the Plan shall be made by a resolution
adopted by the Board of Directors and communicated to Participants within a
reasonable time from the later of the date of adoption or the effective of such
action; provided, however, that the Employer shall not amend the Plan
retroactively in such a manner as to reduce any benefit payable to any
Participant or Beneficiary to the extent that such benefit was accrued and
vested prior to the amendment, modification or termination. Upon Plan
termination, all Deferrals shall cease. The Employer shall retain all Deferrals
until each Participant terminates his employment with the Employer or incurs a
Hardship and benefits are payable in accordance with Section 4.
SECTION 9. CLAIMS PROCEDURE
9.01 Filing Claim. Any claim by a Participant or his Beneficiary
(hereafter "Claimant") for benefits shall be submitted to the Administrator.
The Administrator shall be responsible for deciding whether such claim is within
the scope provided by the Plan (a "Covered Claim") and for providing full and
fair review of the decision with respect to such claim. In addition, the
Administrator shall provide a full and fair review in accordance with the
procedures described below.
Each Claimant or other interested person shall file with the Administrator
such pertinent information as the Administrator may specify, and in such manner
and form as the Employer may specify and provide, and such person shall not have
any rights or be entitled to any benefits or further benefits hereunder, as the
case may be, unless such information is filed by the claimant or on behalf of
the Claimant. Each Claimant shall supply at such times and in such manner as
may be required, written proof that the benefit is covered under the Plan. If
it is determined that a Claimant has not incurred a Covered Claim or if the
Claimant shall fail to furnish such proof as is requested, no benefits or no
further benefits hereunder, as the case may be, shall be payable to such
Claimant.
9.02 Notice of Decision. Notice of a decision by the Employer with respect
to a claim shall be furnished to the Claimant within ninety (90) days following
the receipt of the claim by the Administrator (or within ninety (90) days
following the expiration of the initial ninety (90) day period, in a case where
there are special circumstances requiring extension of time for processing the
claim). If special circumstances require and extension of time for processing
the claim, written notice of the extension shall be furnished by the
Administrator to the Claimant prior to the expiration of the initial ninety (90)
day period. The notice of extension shall indicate the special circumstances
requiring the extension and the date by which the notice of decisions with
respect to the claim shall be furnished. Commencement of benefit payments shall
constitute notice of approval of a claim to the extent of the amount of the
approved benefit. If such claim is wholly or partially denied, such notice
shall be in writing and shall set forth (i) the specific reason or reasons for
the denial; (ii) specific reference to pertinent provisions of the Plan on which
the denial is based; (iii) a description of any additional material or
information necessary for the Claimant to perfect the claim and an explanation
of why such material or information is necessary; and (iv) an explanation of the
Plan's claims review procedure. If the Administrator fails to notify the
<PAGE> 6
Claimant of the decision regarding his or her claim in accordance with these
"Claims Procedure" provisions, the claim shall be deemed denied and the Claimant
shall then be permitted to proceed with the claims review procedure provided
herein.
9.03 Review. Within sixty (60) days following receipt by the Claimant of
the notice of the claim denial, or within sixty (60) days following the close of
the ninety (90) day period referred to herein, or if the Administrator fails to
notify the Claimant of the decision within such ninety (90) day period, the
Claimant may appeal denial of the claim by filing a written application for
review with the Administrator. Following such request for review, the Committee
shall fully and fairly review the decision denying the claim. Prior to the
decision of the Administrator, the Claimant shall be given an opportunity to
review pertinent documents and to submit issues and comments to the
Administrator in writing. The decision of the Administrator shall be made
within sixty (60) days following receipt by the Administrator of the request for
review (or within one hundred and twenty (120) days after such receipt, in a
case where there are special circumstances requiring extension of time for
reviewing such denial claim). The Administrator shall deliver its decision to
the Claimant in writing. If the decision on review is not furnished within the
prescribed time, the claim shall be deemed denied on review.
SECTION 10. MISCELLANEOUS
10.01 Limitation of Rights; Employment Relationship: Neither the
establishment of this Plan nor any modification thereof, nor the creation of any
fund or account, nor the payment of any benefits, shall be construed as giving a
Participant or other person any legal or equitable right against the Employer
except as provided in the Plan. In no event shall the terms of employment of
any employee be modified or in any way be affected by the Plan.
10.02 Limitation on Assignment. Benefits under this Plan may not be
assigned, sold, transferred, or encumbered, and any attempt to do so shall be
void. A Participant's or Beneficiary's interest in benefits under the Plan
shall not be subject to debts or liabilities of the Participant of any kind and
shall not be subject to attachment, garnishment or other legal process of the
Participant.
10.03 Unfunded Plan. The Plan shall be unfunded for federal income tax
purposes and for purposes of Title I of ERISA. The Plan constitutes a mere
promise by the Employer to make future benefit payments. Nevertheless, for the
convenience of the Employer, a trust fund may be established to segregate
certain assets for the purpose of paying benefits under the Plan. The Employer
shall be the beneficiary owner of such assets, and no Participants or
Beneficiary shall have any right, title or interest in or to any such assets.
10.04 Representations. The Employer does not represent or guarantee
that any particular federal or state income, payroll, personal property or other
tax consequence will result from participation in this Plan.
10.05 Severability. If a court of competent jurisdiction holds any
provisions of this Plan to be invalid or unenforceable, the remaining provisions
of the Plan shall continue to be fully effective.
10.06 Applicable Law. This Plan shall be construed in accordance with
applicable federal law and, to the extent otherwise applicable, the laws of
Virginia.
<PAGE> 7
IN WITNESS WHEREOF, the Employer has caused this Plan to be executed by its
duly authorized representative this 17th day of November, 1994.
MEDIA GENERAL, INC.
By:/s/ J. Stewart Bryan III
-------------------------
J. Stewart Bryan III
Chairman
<PAGE> 1
MEDIA GENERAL, INC.
ERISA EXCESS BENEFIT PLAN
Amended and Restated as of November 17, 1994
Media General, Inc., a corporation organized and existing under the laws of
the Commonwealth of Virginia, hereby adopts this Media General, Inc., ERISA
Excess Plan to provide supplemental retirement benefits to certain employees
whose benefits under the Media General, Inc., Retirement Plan may be limited
under Section 415 of the Internal Revenue Code, by the limit on covered
compensation under Section 401 of the Internal Revenue Code, and as a result of
participation in the Media General, Inc. Deferred Compensation Plan.
Article I. Definitions
1.01 "Act" shall mean the Employee Retirement Income Security Act of 1974
("ERISA"), as from time to time amended.
1.02 "Pension Plan" shall mean the Employees Retirement Plan of Media
General, Inc.
1.03 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
1.04 "Company" shall mean Media General, Inc. and any of its subsidiaries
or affiliated business entities participating in the Pension Plan.
1.05 "Effective Date" of the original Plan shall mean January 1, 1991 and
of the amended and restated Plan, November 17, 1994.
1.06 "Pension Benefit" shall mean the monthly benefit paid to a Participant
(or his spouse) of the Pension Plan.
1.07 "Participant" shall mean any employee of the Company who is an active
Participant in the Pension Plan on or after the Effective date and whose pension
benefits determined on the basis of the provisions of such Pension Plan, without
regard to the limitations of the Code and including deferrals made under the
Media General, Inc. Deferred Compensation Plan, exceed the benefit payable to
such Participant whose benefits are limited under the Pension Plan.
1.08 "Plan" shall mean the Media General, Inc., ERISA Excess Benefit Plan,
as from time to time amended or restated, which shall be an unfunded plan for
the benefit of highly compensated or management employees.
1.09 "Unrestricted Benefit" shall mean the Pension Benefit that would have
been payable to a Participant if the determination of such Pension Benefit was
made without regard to (i) the limit on covered compensation contained in
Section 401 of the Code, and (ii) the limit on benefits payable under Section
415 of the Code, and by treating the amount of any compensation that is deferred
by the Participant under the Media General, Inc. Deferred Compensation Plan as a
component of covered compensation in the year in which such deferrals occur.
1.10 "Unrestricted Spousal Benefit" shall mean the Pension Benefit that
would have been payable to a Participant's spouse if the determination of such
Pension Benefit was made without regard to (i) the limit on covered compensation
contained in Section 401 of the Code, and (ii) the limit on benefits payable
<PAGE> 2
under Section 415 of the Code, and by treating the amount of any compensation
that is deferred by the Participant under the Media General, Inc. Deferred
Compensation Plan as a component of covered compensation in the year in which
such deferrals occur.
Article II. Benefits
2.01 Normal Retirement Benefit. Upon the Normal Retirement of a
Participant, as provided under the Pension Plan, such Participant shall be
entitled to a monthly benefit equal in amount to his Unrestricted Benefit less
his Pension Benefit.
2.02 Early Retirement Benefit. Upon the Early Retirement of a Participant,
as provided under the Pension Plan, such Participant shall be entitled to a
monthly benefit equal to his Unrestricted Benefit less his Pension Benefit.
2.03 Spouse's Pension Benefit. Subject to Section 2.04 below, upon the
death of a Participant whose spouse is eligible for a Pre- or Post-retirement
surviving spouse benefit under the Pension Plan, the Participant's Surviving
Spouse shall be entitled to a monthly benefit equal in amount to the
Unrestricted Spousal Benefit less the Pension Benefit payable to such spouse.
Article III. Administration of the Plan
3.01 Administrator. The Plan shall be administered by the Company, or such
person, entity or committee as it may appoint from time to time, which shall
have the authority to interpret the Plan and issue such regulations as it deems
appropriate. The Administrator shall have the duty and responsibility of
maintaining records, making the requisite calculations and disbursing the
payments hereunder. The Administrator's interpretations, determinations,
regulations and calculations shall be final and binding on all persons and
parties concerned.
3.02 Amendment and Termination. The Company reserves the right at any time
to amend, modify or terminate the Plan, in whole or in part. Any such
amendment, modification or termination of the Plan shall be made by a resolution
adopted by the Board of Directors and communicated to Participants within a
reasonable time from the later of the date of adoption or the effective of such
action; provided, however, that the Company shall not amend the Plan
retroactively in such a manner as to reduce any benefit payable to any
Participant or Beneficiary to the extent that such benefit was accrued and
vested prior to the amendment, modification or termination, unless such
Participant consents in writing to such reduction.
3.03 Payments. The Company will pay all benefits arising under this Plan
and all costs, charges and expenses relating thereto.
3.04 Non-assignability of Benefits. The benefits payable hereunder or the
right to receive future benefits under the Plan may not be anticipated,
alienated, pledged, encumbered, or subjected to any charge or legal process and
if any attempt is made to do so, or a person eligible for any benefits becomes
bankrupt, the interest under the Plan of the person affected may be terminated
by the Administrator which, in its sole discretion, may cause the same to be
held or applied for the benefit of one or more of the dependents of such person
or make any other disposition of such benefits that it deems appropriate.
3.05 Unfunded Plan. The Plan shall be unfunded for federal income tax
purposes and for purposes of Title I of ERISA. The Plan constitutes a mere
<PAGE> 3
promise by the Company to make future benefit payments. Nevertheless, for the
convenience of the Company, a trust fund may be established to segregate certain
assets for the purpose of paying benefits under the Plan. The Company shall be
the beneficial owner of such assets, and no Participant or Beneficiary shall
have any right, title or interest in or to any such assets.
3.06 Claims Procedure. Any claim by a Participant or his Beneficiary
(hereafter "Claimant") for benefits shall be submitted to the Administrator.
The Administrator shall be responsible for deciding whether such claim is within
the scope provided by the Plan (a "Covered Claim") and for providing full and
fair review of the decision with respect to such claim. In addition, the
Administrator shall provide a full and fair review in accordance with the
procedures described below.
Each Claimant or other interested person shall file with the Administrator
such pertinent information as the Administrator may specify, and in such manner
and form as the Administrator may specify and provide, and such person shall not
have any rights or be entitled to any benefits or further benefits hereunder, as
the case may be, unless such information is filed by the Claimant or on behalf
of the Claimant. Each Claimant shall supply at such times and in such manner as
may be required, written proof that the benefit is covered under the Plan. If
it is determined that a Claimant has not incurred a Covered Claim or if the
Claimant shall fail to furnish such proof as is requested, no benefits or no
further benefits hereunder, as the case may be, shall be payable to such
Claimant.
Notice of a decision by the Administrator with respect to a claim shall be
furnished to the Claimant within ninety (90) days following the receipt of the
claim by the Administrator (or within ninety (90) days following the expiration
of the initial ninety (90) day period, in a case where there are special
circumstances requiring extension of time for processing the claim). If special
circumstances require and extension of time for processing the claim, written
notice of the extension shall be furnished by the Administrator to the Claimant
prior to the expiration of the initial ninety (90) day period. The notice of
extension shall indicate the special circumstances requiring the extension and
the date by which the notice of decisions with respect to the claim shall be
furnished. Commencement of benefit payments shall constitute notice of approval
of a claim to the extent of the amount of the approved benefit. If such claim
is wholly or partially denied, such notice shall be in writing and shall set
forth (i) the specific reason or reasons for the denial; (ii) specific reference
to pertinent provisions of the Plan on which the denial is based; (iii) a
description of any additional material or information necessary for the Claimant
to perfect the claim and an explanation of why such material or information is
necessary; and (iv) an explanation of the Plan's claims review procedure. If
the Administrator fails to notify the Claimant of the decision regarding his or
her claim in accordance with these "Claims Procedure" provisions, the claim
shall be deemed denied and the Claimant shall then be permitted to proceed with
the claims review procedure provided herein.
Within sixty (60) days following receipt by the Claimant of notice of the
claim denial, or within sixty (60) days following the close of the ninety (90)
day period referred to herein, or if the Administrator fails to notify the
Claimant of the decision within such ninety (90) day period, the Claimant may
appeal denial of the claim by filing a written application for review with the
Administrator. Following such request for review, the Administrator shall fully
and fairly review the decision denying the claim. Prior to the decision of the
Administrator, the Claimant shall be given an opportunity to review pertinent
<PAGE> 4
documents and to submit issues and comments to the Administrator in writing.
The decision of the Administrator shall be made within sixty (60) days following
receipt by the Administrator of the request for review (or within one hundred
and twenty (120) days after such receipt, in a case where there are special
circumstances requiring extension of time for reviewing such denied claim). The
Administrator shall deliver its decision to the Claimant in writing. If the
decision on review is not furnished within the prescribed time, the claim shall
be deemed denied on review.
For all purposes under the Plan, the decision with respect to a claim if no
review is requested and the decision with respect to a claim if review is
requested shall be final, binding and conclusive on all interested parties as to
matters relating to the Plan. To the extent a Participant or any other person
acquires a right to receive benefits under the Plan, such right shall be no
greater than the right of any unsecured general creditor of the Company.
3.07 Nonguarantee of Employment. Nothing contained in this Plan shall be
construed as a contract of employment between the Company and any Participant,
or as a right of any Participant to be continued in employment of the Company,
or as a limitation on the right of the Company to discharge any of its
employees, with or without cause.
3.08 Applicable Law. This Plan shall be construed in accordance with
applicable federal law and, to the extent otherwise applicable, the laws of
Virginia.
IN WITNESS WHEREOF, the Plan has been duly adopted and executed as of the
17th day of November, 1994.
MEDIA GENERAL, INC.
By:/s/ J. Stewart Bryan III
-------------------------
J. Stewart Bryan III
Chairman
<PAGE> 1
30 Rockefeller Plaza A Division of
New York, NY 10112 National Broadcasting
212-664-4444 Company, Inc.
NBC
TV NETWORK
February 10, 1995
Tampa Television, Inc.
905 E. Jackson Street
Tampa, Florida 33602
RE: WFLA-TV
Gentlemen:
The following shall comprise the agreement between us for the
affiliation of your television broadcasting station WFLA-TV, Tampa, Florida (you
and WFLA-TV collectively herein called "Station") with the NBC Television
Network (herein called "NBC") and shall supersede and replace our prior
agreement dated March 22, 1989, except for the most recent amendment with
respect to network non-duplication protection under Federal Communications
Commission ("FCC") Rules Section 76.92.
1. Term. This Agreement shall be deemed effective as of 3:00 AM, New
York City time on the first (1st) day of January, 1995, and, unless sooner
terminated as provided in this Agreement, it shall remain in effect for a period
of ten (10) years thereafter. It shall then be renewed on the same terms and
conditions for a further period of five (5 ) years and for successive further
periods of five (5) years each, unless and until either party shall, at least
twelve (12) months prior to the expiration of the then current term, give the
other party written notice that it does not desire to have this Agreement
renewed for a further period.
2. NBC Programming.
(a) NBC shall deliver to Station for free, over-the-air television
broadcasting all programming which NBC makes available for
broadcasting in the community to which Station is presently licensed
by the FCC, except as otherwise expressly provided herein.
(b) NBC commits to supply sufficient programming throughout the term
of this Agreement for the hours presently programmed by it (the
"Programmed Time Periods"), which Programmed Time Periods are as
follows (the specified times are all local time in Station's community
of license):
Prime Time: Monday thru Saturday - 8:00-11:00 P.M.
Sunday - 7:00-11:00 P.M.
<PAGE> 2
Late Night: Monday thru Thursday - 11:35 P.M.-2:05 A.M.
Friday - 11:35 P.M.-2:35 A.M.
Saturday - 11:30 P.M.-1:00 A.M.
News: Monday thru Friday - 7:00-9:00 A.M. and 6:30-7:00 P.M.
Saturday - 7:00-9:00 A.M. and 6:30-
7:00 P.M.
Sunday - 8:00-9:00 A.M., 11:00 A.M.-
12:00 Noon and 6:30-7:00 P.M.
Daytime: Monday thru Friday - 11:00 A.M. -
12:00 Noon and 1:00-3:00 P.M.
Saturday - 10:00-11:30 A.M.
The selection, scheduling, substitution and withdrawal of any program
or portion thereof delivered to Station during the Programmed Time
Periods shall at all times remain within the sole discretion and
control of NBC. The parties acknowledge that local and network
programming needs may change during the term of this Agreement, and
each party agrees throughout the term to negotiate in good faith with
the other party any proposed modification of the Programmed Time
Periods.
(c) In addition to the programming supplied pursuant to Paragraph
2(b) above, NBC shall offer Station throughout the term of this
Agreement a variety of sports, special events and overnight news
programming for television broadcast at times other than the
Programmed Time Periods. Station shall have the right of first
refusal with respect to any such programming good for seventy-two (72)
hours as against any other television station located in Station's
community of license or any television program transmission service
furnishing a television signal to Station's community of license,
including, but not limited to, any community antennae television
system, subscription television service, multipoint distribution
system and satellite transmission service. Station shall notify NBC
of its acceptance or rejection of NBC's offer of such programming as
promptly as possible. Station's acceptance of NBC's offer shall
constitute Station's agreement to broadcast such programming in
accordance with the terms of such offer and this Agreement.
Notwithstanding any other provision in this Agreement, no pre-existing
acceptance of NBC programming shall be superseded or otherwise
affected by this Agreement, and those acceptances shall remain in full
force and effect. With respect to NBC programs outside the Programmed
Time Periods (either offered or already contracted for pursuant to
this Agreement), nothing herein contained shall prevent or hinder NBC
from (i) substituting one or more sponsored or sustaining programs, in
which event NBC shall offer such substituted program or programs to
Station in accordance with the provisions of this Paragraph 2(c), or
(ii) canceling one or more such NBC programs; provided, however, that
NBC shall exercise all reasonable efforts to give Station at least
three (3) weeks prior written notice of such substitution or
cancellation. Station shall not be obligated to broadcast, and NBC
shall not be obligated to continue to deliver, subsequent to the
termination of this Agreement, any programs which NBC may have offered
and which Station may have accepted during the term hereof.
<PAGE> 3
3. Station Carriage in Programmed Time Periods.
(a) Station agrees that, subject only to the preemption rights
contained in Paragraph 4(c) below, including Station's unqualified
right to preempt for local live coverage of news events, Station shall
broadcast over Station's facilities all NBC programming supplied to
Station for broadcast in the Programmed Time Periods on the dates and
at the times the programs are scheduled by NBC, except to the extent
that Station is actually broadcasting programming pursuant to (and
within the specified limits of) a commitment contemplated by Paragraph
3(b) below.
(b) As an inducement for NBC to enter into this Agreement, Station
covenants, represents and warrants to NBC that during any Broadcast
Year (as hereinafter defined) during the term hereof, Station shall
preempt no more than thirty (30) hours in the aggregate of NBC
programs during the Prime Time Programmed Time Period for any reason
other than for the live coverage of news events. For the purposes of
this Agreement, a "Broadcast Year" shall mean a twelve (12) month
period during the term hereof which commences on any September 1
during the term hereof and which ends on August 31 of the immediately
following year. Station hereby confirms that its rights and
obligations under this Paragraph 3(b) are consistent with its rights
and obligations referred to in Paragraph 4(c) below.
(c) The Station hereby agrees to accept and clear all sports
programming offered to the Station by NBC outside the Programmed Time
Periods ("NBC Sports Programming"), except for NBC sports programming
which directly conflicts with Station's coverage of sports events and
special events of particular local interest (collectively, such
coverage of such sports events and special events are referred to
below as "Special Programs"). Station acknowledges the substantial
investment in network sports programming to be incurred during the
term of this Agreement in order to provide Station with network-
quality sports programming. Station further acknowledges that in view
of NBC's substantial investment in network sports programming and
Station's rights under this Paragraph 3(c), Station does not foresee
any need to substitute programming of any kind for NBC Sports
Programming, except as follows with respect to Special Programs.
Station agrees not to broadcast more than thirty-five (35) hours of
Special Programs outside the Programmed Time Periods in the aggregate
during any Broadcast Year during the term of this Agreement which
would conflict with NBC Sports Programming outside the Programmed Time
Periods (the "Sports Preemption Amount").
(d) Notwithstanding the foregoing provisions of subparagraphs (b) and
(c) above and without limiting the provisions thereof, Station agrees
that, in any three (3) month period during a Broadcast Year, Station's
preemptions of NBC Prime Time programs and NBC Sports Programming
shall not exceed 50% of, respectively, the Prime Time Preemption
Amount and the Sports Preemption Amount, unless otherwise consistent
with Station's programming practice.
(e) The Station hereby agrees to accept and clear the following
additional NBC programming:
<PAGE> 4
(i) At such time as NBC provides a 5:00 A.M. feed of NBC's
"Sunrise" news program, Station shall broadcast such news program each
weekday morning, Monday through Friday, from 5:00-5:30 A.M., and such
program time period shall become part of the Daytime Programmed Time
Period; and
(ii) Upon the expiration or termination (without giving effect
to any renewal term) of any of Station's existing contractual
commitments for non-NBC programs currently broadcast by Station
between the hours of 9:00 A.M.-1:00 P.M., Monday through Friday,
Station agrees to clear, at NBC's request, one additional hour of NBC
daytime programming (the "Fourth Daytime Hour") in such time period as
mutually agreed to by NBC and Station in the hour made available by
the expiration or termination of such commitment, which program time
period shall then become part of the Daytime Programmed Time Period;
provided, however that Station shall not be obligated to clear such
Fourth Daytime Hour if, at the conclusion of the then most recent May
"sweep" period, (A) the average of the Nielsen ratings, Women 25-54,
during the most recent November, February and May "sweep" periods
(collectively, the "Average Nielsen Ratings") for such NBC programming
in the broadcast television markets which are the next ten (10) larger
such markets (as compared to Station's DMA) and broadcast television
markets which are the next ten (10) smaller such markets (as compared
to Station's DMA), excluding in each case stations which are owned and
operated by National Broadcasting Company, Inc., in which such
programming is cleared during the daytime daypart is less than (B) the
Average Nielsen Ratings (without rounding) for the non-network program
broadcast by Station during the applicable time period. At such time
as Station clears the Fourth Daytime Hour and for so long as Station
continues such clearance (provided that at such time Station is also
in compliance with its other clearance obligations as required
pursuant to the terms hereof), NBC agrees to increase the Daytime
Percentage set forth in the Compensation Table to 25.98%. If, as a
result of any such ratings shortfall, Station is not required to clear
the Fourth Daytime Hour and Station enters into a contractual
commitment for renewal of the non-NBC programming broadcast during the
applicable time period or otherwise for substitute non-NBC
programming, then upon expiration or termination of such commitment
(and each subsequent contractual commitment, as applicable) Station
shall have the continuing obligation to clear the Fourth Daytime Hour
in the same manner, and subject to the same condition, described in
the preceding sentence.
4. Preemptions.
(a) In the event that Station, for any reason, fails to
broadcast or advises NBC that it will not broadcast any NBC
programming as provided herein, then, in each case, Station, upon
notice from NBC to Station, shall broadcast such omitted programming
and the commercial announcements contained therein (or any replacement
programming and the commercial announcements contained therein)
during a time period or periods which the parties shall promptly and
mutually agree upon and which shall, to the extent possible, be of a
quality and rating value comparable to that of the time period or
periods at which such omitted programming was not broadcast as
provided herein. In the event that the parties do not promptly agree
upon a time period or periods as provided in the preceding sentence,
then, without limitation to any other rights of NBC under this
Agreement or otherwise, NBC shall have the right to license the
<PAGE> 5
broadcast rights to the applicable omitted programming (or replacement
programming) to another television station located in Station's
community of license.
(b) For the purposes of this Agreement, an "Authorized Preemption"
shall mean: any failure to broadcast due to force majeure as provided
for in Paragraph 12 below, any preemption permitted by Paragraphs
3(b), 3(c) or 3(d) above, and any preemption permitted by Paragraph
4(c) below. Any other preemption or failure to broadcast any NBC
programming shall be deemed an "Unauthorized Preemption" and, without
limiting any other rights of NBC under this Agreement or otherwise,
upon NBC's request, Station shall pay NBC, or NBC may deduct or offset
from any amounts payable to Station hereunder, or under any other
agreement between Station and NBC (or an entity controlling,
controlled by, or under common control with NBC), an amount equivalent
to NBC's loss in net advertising revenues attributable to the failure
of Station to broadcast such program in Station's market as scheduled
by NBC, which amount shall be calculated in accordance with Exhibit A
hereto. Any failure by Station to pay any amount due under this
Paragraph 4(b) shall be deemed a material breach of this Agreement,
and NBC shall have the option, exercisable in its sole discretion upon
thirty (30) days written notice to Station, to either (i) terminate
Station's right to broadcast any one or more series or other NBC
programs, as NBC shall elect, and, to the extent and for the period(s)
that NBC elects, thereafter license the broadcast rights to such
series or other NBC program(s) to any other television station or
stations located in Station's community of license or (ii) unless the
breach is cured within such 30-day period, terminate this Agreement.
(c) With respect to programs offered or already contracted for
pursuant to this Agreement, nothing herein contained shall be
construed to prevent or hinder Licensee from: (i) rejecting or
refusing any NBC program which Station reasonably believes to be
unsatisfactory or unsuitable or contrary to the public interest, or
(ii) substituting a program which, in Station's opinion, is of greater
local or national importance; provided, however, that Station shall
give NBC written notice of each such rejection, refusal or
substitution, and the justification therefor, at least three (3) weeks
in advance of the scheduled broadcast, or as soon thereafter as
possible (including an explanation of the cause for any lesser
notice). Programming shall be deemed to be unsatisfactory or
unsuitable or contrary to the public interest only if it: (A) is
delivered in a form which does not meet accepted standards of good
engineering practice; (B) does not comply with the rules and
regulations of the FCC; or (C) differs substantially in style and
content from NBC programming which Station has broadcast previously
and which Station reasonably believes would not meet prevailing
contemporary standards of good taste in its community of license.
Station confirms that no NBC programming shall be deemed to be
unsatisfactory, unsuitable or contrary to the public interest based on
programming performance or ratings, advertiser reaction or the
availability of alternative programming (including, but not limited
to, sporting events, program length commercials and infomercials, and
other paid programming) which Station believes to be more profitable
or more attractive. Station acknowledges the substantial investment
in network programming to be incurred during the term of this
Agreement in order to provide Station with network-quality news,
public affairs, entertainment, sports, children's and other
programming during the Programmed Time Periods. Station further
<PAGE> 6
acknowledges that in view of NBC's substantial investment in network
programming and the amount of broadcast time available to Station
outside the Programmed Time Periods and Station's rights under
Paragraph 3(b) above, Station does not foresee any need to substitute
programming of any kind for NBC programming, except in those
circumstances requiring local live coverage of news events.
5. Station Compensation. In further consideration of Station's performance
of its obligations under this Agreement NBC shall compensate Station as follows:
(a) (i) NBC shall pay Station for Station's broadcast of each network
sponsored program or portion thereof (except those specified in
Paragraph 5(b) below) which is broadcast during the Live Time Period
therefor the amount resulting from multiplying the following:
(A) Station's Network Station Rate, which is Three Thousand One
Hundred Ten Dollars ($3,110.00); by
(B) The percentage set forth in the compensation matrix table
attached hereto as Exhibit B (the "Compensation Table") opposite
the applicable time period; by
(C) The fraction of an hour substantially occupied by such program or
portion thereof; by
(D) The fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof occupied by
Network Commercial Announcements.
As used herein, "Live Time Period" shall mean the time period or
periods as specified by NBC for the broadcast of a program by Station;
"Commercial Availability" shall mean a period of time made available
by NBC during a network sponsored program for one or more Network
Commercial Announcements; and "Network Commercial Announcement" shall
mean a commercial announcement broadcast over Station during a
Commercial Availability and paid for by or on behalf of one or more of
NBC's network advertisers, not including, however, announcements
consisting of billboards, credits, public service announcements,
promotional announcements and announcements required by law.
(ii) For each network sponsored program or portion thereof (except
those specified in Paragraph 5(b) below) which is broadcast by Station
during a time period other than the Live Time Period therefor, NBC
reserves the right, in its sole discretion, to withhold payment of
compensation for such program.
If NBC does not withhold payment of compensation for such program, NBC
shall pay Station as if Station had broadcast the program or portion
thereof during such Live Time Period, except that if the percentage
set forth in the Compensation Table opposite the time period during
which Station broadcasts the program or portion thereof is less than
that set forth opposite such Live Time Period, NBC shall pay Station
on the basis of the time period during which Station broadcasts the
program or portion thereof.
(b) NBC shall pay Station such amounts as NBC and Station shall
agree upon for all network sponsored programs broadcast by Station
consisting of:
<PAGE> 7
(i) Sports programs;
(ii) Special events programs; and
(iii) Programs for which NBC specifies a Live Time Period
which straddles any of the time period categories in the Compensation
Table.
(c) (i) On or about the fifteenth day of the last month of each calendar
quarter during the term hereof, subject to the timely receipt of
reports requested under Paragraph 10 below, NBC shall pay Station, by
electronic transfer or such other means as NBC shall determine, an
estimate of the amounts due hereunder for such calendar quarter. NBC
shall make the appropriate adjustment for the payment actually due for
such calendar quarter in the payment of the estimated amount due for
the next calendar quarter. NBC shall calculate the amounts due
hereunder on a weekly basis and shall report such amounts to Station
within a reasonable period of time after the close of each month
during the term.
(ii) From the amounts otherwise payable to Station hereunder, NBC
shall deduct for each calendar quarter during the term hereof a sum
equal to Two Hundred Seventeen Percent (217%) of Station's Network
Station Rate (the "Waiver Percentage"). This deduction shall be
calculated on a weekly basis, with 4.2857 as the agreed number of
weeks per month, and shall be reported to Station with the monthly
reports due under subparagraph 5(c)(i) above. NBC shall make other
deductions from the amounts otherwise payable to Station hereunder for
additional services made available by NBC and utilized by Station such
as, but not limited to, NBC News Channel.
(d) (i) NBC reserves the right as part of a general rate revision to
reevaluate and change at any time: (A) the Network Station Rate set
forth in subparagraph 5(a)(i)(A) above; (B) the percentages set forth
in the Compensation Table; or (C) the Waiver Percentage set forth in
subparagraph 5(c)(ii) above, by giving written notice to Station at
least thirty (30) days prior to the effective date of such change;
provided, however, that NBC agrees that it shall not decrease such
Network Station Rate prior to January 1, 1998. Station shall have the
right to terminate this Agreement by giving at least thirty (30) days
prior written notice to NBC if NBC decreases Station's Network Station
Rate as part of any general rate revision by more than five percent
(5%) in any calendar year during the term of this Agreement or by more
than an aggregate of twenty-five percent (25%) throughout the term
hereof (provided that nothing contained in this sentence shall limit
or modify NBC's agreement pursuant to the foregoing proviso), or if
the number of prime time hours for which compensation is payable in
any Broadcast Year hereunder is less than ninety percent (90%) of such
prime time hours in the Broadcast Year commencing September 1, 1993
and ending August 31, 1994, except as such number may be reduced by
Olympic coverage or other special programming scheduled by NBC.
(ii) The parties acknowledge that the payment of compensation to
Station hereunder is in consideration of certain commitments by
Station, including commitments regarding Station's local news program
schedule and promotion of NBC programming as respectively set forth in
Exhibits C and D attached hereto, which Exhibits are incorporated
herein by this reference. In the event that Station does not fulfill
(A) the commitments set forth in Exhibit C or (B) such commitments as
<PAGE> 8
are set forth in Exhibit D in all years during the term of this
Agreement, NBC reserves the right to decrease Station's Network
Station Rate and the percentages in the Compensation Table and to
increase Station's Waiver Percentage by notifying Station in writing
at least ninety (90) days prior to the effective date of such change;
in such event, Station shall not be entitled to the termination rights
set forth in subparagraph 5(d)(i) above.
6. Local Commercial Announcements. Station shall at all times
during the term of this Agreement be entitled to the same number of local
commercial announcements in and adjacent to NBC programming as are made
available to NBC affiliates generally at such time. In the event of a material
reduction in the total aggregate duration in minutes of all local commercial
announcements available to Station in any Broadcast Year (as compared with the
prior Broadcast Year) in and adjacent to regularly scheduled NBC programming
then offered (not including national sports programming and other special
events), the effects of which reduction are not offset by comparable economic
benefit to the Station, Station's sole remedy shall be the right to terminate
this Agreement upon ninety (90) days' written notice, which notice may be served
by Station within sixty (60) days after the end of any Broadcast Year in which
such material reduction occurs. The parties agree, however, that if such
comparable economic benefit is received by Station prior to the end of such
ninety (90) day notice period, such termination shall not become effective.
7. Promotional Payments. In exchange for Station's covenants,
representations, and warranties set forth in this Agreement, and as a further
inducement to Station to enter into this Agreement, NBC shall provide to Station
the promotional payments specified in Exhibit E hereto.
8. Delivery. NBC shall transmit the programming hereunder by satellite
and shall notify Station as to both the satellite and transponder being used for
such transmission, and the programming shall be deemed delivered to Station when
transmitted to the satellite. Where, in the opinion of NBC, it is impractical
or undesirable to furnish a program over satellite facilities, NBC may deliver
the program to Station in any other manner, including but not limited to, in the
form of motion picture film, video tape or other recorded version, postage
prepaid, in sufficient time for Station to broadcast the program at the time
scheduled. Such recordings shall be used only for a single television broadcast
over Station, and Station shall comply with all NBC instructions concerning the
disposition to be made of each such recording received by Station hereunder.
9. Conditions of Station's Broadcast. Station's broadcast of
NBC programming shall be subject to the following terms and
conditions:
(a) Station shall not make any deletions from, or additions or
modifications to, any NBC program furnished to Station hereunder or
any commercial, NBC identification, program promotional or production
credit announcements or other interstitial material contained therein,
nor broadcast any commercial or other announcements (except emergency
bulletins) during any such program, without NBC's prior written
authorization. Station may, however, delete announcements promoting
any NBC program which is not to be broadcast by Station, provided that
such deletion shall be permitted only in the event and to the extent
that Station substitutes for any such deleted promotional
announcements other announcements promoting NBC programs to be
broadcast by Station.
<PAGE> 9
(b) For purposes of identification of Station with the NBC programs,
and until written notice to the contrary is given by NBC, Station may
superimpose on various Entertainment programs, where designated by
NBC, a single line of type, not to exceed fifty (50) video lines in
height and situated in the lower eighth raster of the video screen,
which single line shall include (and be limited to) Station's call
letters, community of license or home market, channel number, and the
NBC logo. No other addition to any Entertainment program is
contemplated by this consent, and the authorization contained herein
specifically excludes and prohibits any addition whatsoever to News
and Sports programs, except identification of Station as provided in
the preceding sentence as required by the FCC.
(c) The placement and duration of station-break periods provided for
locally originated announcements between NBC programs or segments
thereof shall be designated by NBC. Station shall broadcast each NBC
program delivered to Station hereunder from the commencement of
network origination until the commencement of the terminal station
break.
(d) In the event of the confirmation by NBC of any violation by
Station of any of the provisions of this Paragraph 9, NBC may, in its
reasonable discretion, withhold an amount of compensation otherwise
due Station under Paragraph 5 above which is appropriate in view of
the nature of the specific violation, it being understood that the
amount withheld for any violation shall not exceed the total
compensation due Station for the week in which such violation occurs.
Nothing herein contained shall limit the rights of Station under
Paragraph 4(c) above.
10. Station Reports. Station shall submit to NBC in writing, upon forms
provided by NBC, such reports as NBC may request covering the broadcast by
Station of programs furnished to Station hereunder.
11. Music Performance Rights. All programs delivered to Station pursuant
to this Agreement shall be furnished with all music performance rights necessary
for broadcast by Station included. Station shall have no responsibility for
obtaining such rights from ASCAP, BMI or other music licensing societies insofar
as the programs delivered by NBC to Station for broadcasting are concerned. As
used in this paragraph, "programs" shall include, but shall not be limited to,
program and promotional material and commercial and public service announcements
furnished by NBC. Station shall be responsible for all music license
requirements for any commercial and public service announcements or other
material inserted by Station within or adjacent to the programs as permitted
under the terms of this Agreement, except for cut-ins produced by or on behalf
of NBC and inserted by Station at NBC's direction.
12. Force Majeure. Neither Station nor NBC shall incur any liability
hereunder because of NBC's failure to deliver, or the failure of Station to
broadcast, any or all programs due to failure of facilities, labor disputes,
government regulations or causes beyond the reasonable control of the party so
failing to deliver or to broadcast. Without limiting the generality of the
foregoing, NBC's failure to deliver a program for any of the following reasons
shall be deemed to be for causes beyond NBC's reasonable control: cancellation
of a program because of the death, illness or refusal to appear or perform of a
star or principal performer thereon, or because of such person's failure to
conduct himself or herself with due regard to social conventions and public
morals and decency, or because of such person's commission of any act or
<PAGE> 10
involvement in any situation or occurrence tending to degrade him or her in
society, or bringing him or her into public disrepute, contempt, scandal or
ridicule, or tending to shock, insult or offend the community, or tending to
reflect unfavorably upon NBC or the program sponsor.
13. Indemnification. NBC shall indemnify, defend and hold Station, its
parent, subsidiary and affiliated companies, and their respective directors,
officers and employees, harmless from and against all claims, damages,
liabilities, costs and expenses (including reasonable attorneys' fees) arising
out of the use by Station, in accordance with this Agreement, of any program or
other material as furnished by NBC hereunder, provided that Station promptly
notifies NBC of any claim or litigation to which this indemnity shall apply, and
that Station cooperates fully with NBC in the defense or settlement of such
claim or litigation. Similarly, Station shall indemnify, defend and hold NBC,
its parent, subsidiary and affiliated companies, and their respective directors,
officers and employees, harmless with respect to material added to or deleted
from any program by Station, except for cut-ins produced by or on behalf of NBC
and inserted by Station at NBC's direction. These indemnities shall not apply
to litigation expenses, including attorneys' fees, which the indemnified party
elects to incur on its own behalf. Except as otherwise provided herein, neither
Station nor NBC shall have any rights against the other for claims by third
persons, or for the non-operation of facilities or the non-furnishing of
programs for broadcasting, if such non-operation or non-furnishing is due to
failure of equipment, actions or claims by any third person, labor disputes, or
any cause beyond such party's reasonable control.
14. Station's Right of First Negotiation. Throughout the term of this
Agreement, NBC shall give Station prompt notice of any determination by NBC to
engage in new over-the-air broadcast ventures within Station's community of
license (whether or not involving the transmission of television programs, but
excluding any acquisition of an ownership interest in any broadcast television
station) (a "Broadcast Venture"). NBC shall negotiate exclusively with Station
in good faith, for a period of time following such notice to Station as shall be
determined by NBC to be appropriate to the circumstances and as shall be
specified in such notice, with respect to Station's participation on a financial
and/or operational basis in any such Broadcast Venture within Station's
community of license before NBC may enter into any such negotiations with a
Third Party (as defined below) within such community of license. "Third Party"
shall mean any person or entity other than an NBC Party; "NBC Party" shall mean
any of NBC, National Broadcasting Company, Inc. or their respective parent,
subsidiary, affiliated, related or successor entities.
15. Change in Operations. Station represents and warrants that it holds a
valid license granted by the FCC to operate the Station as a television
broadcast station; such representation and warranty shall constitute a
continuing representation and warranty by Station. In the event that Station's
transmitter location, power, frequency, programming format or hours of operation
are materially changed at any time so that Station is of less value to NBC as a
broadcaster of NBC programming than at the date of this Agreement, then NBC
shall have the right to terminate this Agreement upon thirty (30) days prior
written notice to Station.
16. Assignment.
(a) This Agreement shall not be assigned without the prior written
consent of NBC, and any permitted assignment shall not relieve Station
of its obligations hereunder. Any purported assignment by Station
<PAGE> 11
without such consent shall be null and void and not enforceable
against NBC.
(b) Station agrees to include as a condition of any proposed
assignment, sale or transfer of Station (including any assignment or
transfer referred to in Paragraph 16(c) below) a contractually binding
provision that the assignee or transferee shall assume and become
bound by this Agreement for (i) the remainder of the then-current term
of this Agreement or (ii) two (2) years from the date of said
assignment or transfer, whichever period is greater. Station
acknowledges that any such assignment or transfer which does not so
provide for such assumption and for NBC's right to extend the term of
this Agreement will cause NBC irreparable injury for which damages are
not an adequate remedy. Therefore, Station agrees that NBC shall be
entitled to an injunction or similar relief from any court of
competent jurisdiction restraining Station from committing any
violation of this Paragraph 16(b).
(c) Station agrees that if any application is made to the FCC
pertaining to an assignment or a transfer of control of Station's
license, or any interest therein, Station shall immediately notify NBC
in writing of the filing of such application. Except as to "short
form" assignments or transfers of control made pursuant to Section
73.3540(f) of the FCC Rules, NBC shall have the right to terminate
this Agreement in the event of any assignment or transfer. Station
agrees, except in the case of "short form" assignments or transfers of
control, that promptly following Station's notice to NBC, Station (i)
shall arrange for a meeting between NBC and the proposed assignee or
transferee to review the financial and operating plans of the proposed
assignee or transferee, and (ii) shall procure and deliver to NBC, in
form satisfactory to NBC, the agreement of the proposed assignee or
transferee that, upon consummation of the assignment or transfer of
control of the Station's license, the assignee or transferee will
assume and perform this Agreement in its entirety without limitation
of any kind. If Station complies with its obligations set forth in
the preceding sentence and NBC does not terminate this Agreement upon
written notice to Station within the thirty (30) day period following
the later of the meeting with the proposed assignee or transferee or
the delivery to NBC of a satisfactory assumption agreement, NBC shall
be deemed to have consented to the assignment or transfer of control.
(d) NBC agrees that in the event of a sale or transfer of all or
substantially all of the assets or business of NBC (whether structured
as a sale or transfer of equity or assets of NBC), NBC agrees to
assign this Agreement to the purchaser or transferee and to cause such
purchaser or transferee to assume NBC's obligations hereunder and
become bound by this Agreement; provided that the foregoing agreement
shall not apply in the event that this Agreement becomes an obligation
of such purchaser or transferee by operation of law. Upon such
assignment and assumption, NBC shall have no liability to Station
under this Agreement with respect to obligations arising after the
effective date of such assignment and assumption.
17. Unauthorized Copying and Transmission. Station shall not authorize,
cause, or permit, without NBC's consent, any program 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
<PAGE> 12
regulation of the FCC with respect to retransmission of its broadcast signal by
any cable system or multichannel video program distributor ("MVPD"), as defined
in Section 76.64(d) of the FCC Rules, which (a) is located within the Area of
Dominant Influence ("ADI"), as defined by Arbitron, in which Station is located,
or (b) was 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) as of April 1, 1993; 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; and provided, further, that at such
time as NBC adopts a term in substitution for the term "ADI" by reason of any
similar action by the FCC or other appropriate authority, such substitute term
shall replace the references to "ADI" herein. NBC reserves the right to
restrict such signal carriage with respect to NBC programming in the event of a
change in applicable law, rule or regulation.
18. Limitations on Retransmission Consent. In consideration of the grant
by NBC to Station of the non-duplication protection provided in the most recent
amendment to this Agreement, Station hereby agrees as follows:
(a) Station shall not grant consent to the retransmission of its
broadcast signal by any cable television system, or, except as
provided in Paragraph 18(b) below, to any other MVPD whose carriage of
broadcast signals requires retransmission consent, if such cable
system or MVPD is located outside the ADI to which Station is
assigned, unless Station's signal was 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.
(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 ll9(d) or any
successor provision of Title 17 of the United States Code.
19. Remedies for Unauthorized Copying and Transmission. If Station
violates any of the provisions set forth in Paragraphs 17 and 18 above, NBC may,
in addition to any other of its rights or remedies at law or in equity under
this Agreement or any amendment thereto, terminate this Agreement by written
notice to Station given at least ninety (90) days prior to the effective date of
such termination.
20. Applicable Law. The obligations of Station and NBC under this
Agreement are subject to all applicable federal, state, and local laws, rules
and regulations (including, but not limited to, the Communications Act of 1934,
as amended, and the rules and regulations of the FCC), and this Agreement and
all matters or issues collateral thereto shall be governed by the law of the
State of New York applicable to contracts negotiated, executed and performed
entirely therein.
<PAGE> 13
21. Waiver. A waiver by either of the parties hereto of a breach of any
provision of this Agreement shall not be deemed to constitute a waiver of any
preceding or subsequent breach of the same provision or any other provision
hereof.
22. Notices. Any notices hereunder shall be in writing and shall be
given by personal delivery, overnight courier service, or registered or
certified mail, addressed to the respective addresses set forth on the first
page of this Agreement or at such other address or addresses as may be specified
in writing by the party to whom the notice is given. Such notices shall be
deemed given when personally delivered, delivered to an overnight courier
service or mailed, except that notice of change of address shall be effective
only from the date of its receipt.
23. Captions. The captions of the paragraphs in this Agreement are for
convenience only and shall not in any way affect the interpretation hereof.
24. Entire Agreement. The foregoing constitutes the entire agreement
between Station and NBC with respect to the subject matter hereof, all prior
understandings being merged herein, except for the most recent amendment with
respect to network non-duplication protection under FCC Rules Section 76.92.
This Agreement may not be changed, modified, renewed, extended or discharged,
except as specifically provided herein or by an agreement in writing signed by
the parties hereto.
25. Confidentiality. The parties agree to use their best efforts to
preserve the confidentiality of this Agreement and of the terms and conditions
set forth herein, and the exhibits annexed hereto, to the fullest extent
permissible by law. The parties recognize that Section 73.3613 of the FCC's
Rules and Regulations requires the filing with the FCC of television network
affiliation agreements by each affiliate, but are unaware of any requirement for
the filing of exhibits annexed to such affiliation agreements. In the event
that the FCC should request either party to file said exhibits, that party shall
give prompt notice to the other, and shall submit said exhibits to the FCC with
a request that said exhibits be withheld from public inspection pursuant to
Section 0.459 of the FCC's Rules and Regulations on the grounds that said
exhibits contain confidential commercial or financial information that would
customarily be guarded from competitors and not be released to the public.
<PAGE> 14
26. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature to each such counterpart
were upon the same instrument.
If the foregoing is in accordance with your understanding, please
indicate your acceptance on the copy of this Agreement enclosed
for that purpose and return that copy to NBC.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By:/s/ Robert J. Niles
AGREED:
TAMPA TELEVISION, INC.
By:/s/ James A. Zimmerman
<PAGE> 1
Contents
1 Financial Highlights 2 To Our Stockholders 5 Operating
Locations 6 Newspapers 12 Television 18 Newsprint
20 Auxiliary 22 Financials 54 Directors & Officers
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 570,000. The Company also holds a
40 percent interest in Denver Newspapers, Inc., which publishes The Denver Post
in Denver, Colorado, with average daily circulation of 303,000. Media General
also owns a group of weekly and semiweekly newspapers and shoppers in West
Central Florida.
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 229,000 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.
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.
The cover montage illustrates Media General's diversified businesses.
Inside Front Cover
Picture of the front pages of the
Richmond Times-Dispatch, The Tampa
Tribune and the Winston-Salem Journal
newspapers contained here.
Media General's wholly owned daily and Sunday newspapers are located in
Richmond, Virginia; Tampa, Florida; and Winston-Salem, North Carolina. Combined
average daily and Sunday circulation for the newspaper group in 1994 was 568,000
and 719,000, respectively.
<PAGE> 2
The Company also owns a 40 percent interest in Denver Newspapers, Inc.,
which publishes The Denver Post in Denver, Colorado, with average 1994 daily and
Sunday circulation of 303,000 and 450,000, respectively.
Additionally, Media General owns a group of 15 weekly and semiweekly
newspapers and shoppers in the Tampa and West Central Florida region. Combined
average weekly circulation for this group in 1994 was 390,000.
1994 Operations
The Company's wholly owned newspapers recorded a strong performance in 1994:
Revenues rose to $324.4 million from $307.1 million a year ago, and,
Operating income rose sharply to $31.5 million from $19.6 million in
1993.
Classified advertising revenues remained the driving force behind the
newspaper segment's revenue growth, paced by The Tampa Tribune which posted
nearly 16 percent year-over-year gains in this increasingly important category.
The Tribune also reported growth in retail, general and circulation
revenues, which, when combined with strict cost controls, produced
year-over-year profit improvement of more than 80 percent.
In Richmond, the Times-Dispatch also produced gains in classified
advertising and circulation revenues for the year, but retail and general
advertising remained essentially flat.
The Winston-Salem Journal benefited from double-digit classified and general
advertising revenue growth. Retail advertising revenue grew by nearly two
percent in 1994, but circulation revenues were essentially flat compared with
1993.
Tampa Tribune
Tribune readers were introduced to a series of innovative news and
entertainment offerings in 1994.
The news department added new daily entertainment and personal finance
pages, as well as a weekly science and technology page.
The newsroom also planned and executed a 140 page, seven-section special
edition that chronicled 100 years of Tampa history. It was the largest edition
ever published by The Tampa Tribune.
Additionally, The Tribune's Tampa Bay Online service with PRODIGY won
plaudits for its graphics format and depth. Since its launch last August, Tampa
Bay Online has attracted nearly 6,000 subscribers, a number well ahead of
original projections. As expected, our WFLA-TV's Doppler Radar weather updates
were a particularly popular feature of the new on-line service.
Richmond Times-Dispatch
In Richmond, the Times-Dispatch also enjoyed a successful 1994, and
experienced continued growth in the increasingly important area of
non-traditional revenue sources.
Richmond Newspapers' supplementary publications section introduced four new
books during the year, including the award-winning Virginia Fairways, as well as
<PAGE> 3
Parents FYI, and Insiders' Guides to Washington, D.C., and The Eastern Theatre
of The Civil War.
Two new sections were introduced in the Times-Dispatch: The first, inSync,
is a weekly publication targeted at 11 to 18 year olds; and a weekly Health and
7
Picture of the front pages of Winston-
Salem Journal's syndicated Star Watch
publication, the Richmond Times-
Dispatch's Metro Jobs Weekly publication
and the centennial edition of The Tampa
Tribune newspaper contained here.
Science section, which met with overnight success from readers and advertisers
alike.
Winston-Salem Journal
Winston-Salem's new $44 million production and distribution center became
fully operational in September. Reaction to the improved appearance of the
Journal was immediate. Advertisers began using more color and reported that
response to their advertisements improved measurably.
The Journal also expanded its efforts to reach nonsubscribers with targeted
niche product publications. "Star Watch," which was introduced in 1992,
continued to gain in popularity with publishers of daily newspapers, and that
product was joined in 1994 by its weekly newspaper cousin, "Spotlight."
Combined, the two publications are syndicated in 51 newspapers with
aggregate circulation of 3.2 million.
The Journal's alternate delivery service also continued to expand last year.
Its Piedmont Delivery Service (PDS) sells its delivery skills to other mailers
and delivers magazines, catalogs, samples and BellSouth phone books.
With volume growth, PDS will be structured as a weekly delivery operation,
with carriers passing virtually every door in the newspaper's home county.
West Central Florida
Media General's weekly, semiweekly and shopper publications serving Tampa
and the West Central Florida region recorded solid progress in 1994.
For the fifth straight year, Hernando Today was selected as "Best Weekly
Newspaper" in its circulation area by the Florida Press Association.
In mid-November, the South Tampa News made its debut with a 40 page issue.
This publication serves a distinct geographical market and will further expand
our strategy of providing news products in combination with total market
coverage preprints.
These West Central Florida weeklies and The Tampa Tribune continued to seek
opportunities to reduce costs and to increase market coverage. The Tribune's
circulation department now has delivery responsibility for several of the weekly
publications, and joint advertising sales efforts also have been successful.
<PAGE> 4
Additional cost-saving joint ventures have been targeted for 1995.
Strategic Focus
While 1994 demonstrated the inherent strength and profit potential of our
newspaper group, we continued to refine our sense of mission and to focus on
current and future demands throughout our markets where we have unique
capabilities.
These strengths include:
Information and news gathering: No other organization can provide more
detailed coverage of each local market. Our database of information is a
valuable asset not easily duplicated.
Interpretation and editorial: Our newspapers' ability and resources to
report and interpret news for the benefit of the local community is
unmatched.
Marketing: The scale of our newspapers' sales organizations and their
sophistication with regard to mass delivery, as well as targeted
products, is unique to each local market.
Distribution: The size, scope and timeliness of our distribution force
adds a valuable dimension to our ability to disseminate news.
Production: Our modern facilities represent the latest in production and
distribution technology.
9
Picture of the front pages of The Tampa
Tribune's Tampa Bay Apartments Plus
publication; Media General Florida Newspapers'
Discover The Nature Coast publication; The
Winston-Salem Journal's PAWS, K-12 and
syndicated Entertainment Spotlight
publications; and The Richmond Times-Dispatch
inSync publication contained here.
And, finally, Innovation: Our newspapers have worked extensively to
provide readers and advertisers with targeted, controlled content and
distribution publications to complement our broader-based daily
offerings.
1994 Journalistic Review
Journalistic excellence continued to be the standard for Media General's
newspapers in 1994.
Our reporters and editors identified major areas of local importance, and
provided relevant facts and information to enable readers and lawmakers to
better serve their communities. These subjects included:
A look at why so many young people continue to flow into the pipeline of
criminal behavior, despite law enforcement efforts, longer prison terms and the
death penalty. In "Seeds of Violence--the Perils of Childhood," 17 Richmond
Times-Dispatch staffers tried to provide some answers. They looked in-depth at
the lives of children most prone to violence and what was - and was not - being
<PAGE> 5
done to reverse the disturbing trend. The seven-day series drew a positive
response from readers.
In Winston-Salem, the Journal published a three-part series which detailed
efforts to reclaim certain city neighborhoods from drug dealers, crime and urban
decay. In the series, "Block By Block--Saving Our Neighborhoods," Journal
reporters interviewed a number of courageous women who led the fight. The
leaders did not have financial or political clout, but their determination and
the help of police and other city agencies resulted in progress in winning the
fight for their streets.
In "The New Segregation," The Tampa Tribune examined how poverty affects
education and how technology, such as computers, is unevenly distributed
throughout Hillsborough County, one of the nation's largest school districts.
The series also explored the impact of that allocation upon students' education.
These examples are but a few of the many serious and provocative issues
addressed by Media General's newspapers and their staffers in 1994.
Outlook
Prospects for Media General's newspapers in 1995 are mixed. Advertising
revenue growth opportunities remain generally favorable, despite some signs that
overall economic activity may begin to slow.
Of major concern, however, is the potential impact of continuing newsprint
price increases. Early indications are that newsprint expenses in 1995 will
exceed those of 1994 by a minimum of 35 percent.
While cost reductions and newsprint conservation strategies are being
further intensified, it appears unlikely that we can escape the effect of such
dramatic price increases.
We will continue to take appropriate measures to soften the overall impact
on profitability, but we will take no short-term actions which will diminish the
long-term value of our newspapers for readers and advertisers alike.
11
Picture of the Company's broadcast
television stations' channel number
logos: WFLA-TV Channel 8, WJKS-TV
Channel 17 and WCBD-TV Channel 2
contained here.
Media General's television operations include three network-affiliated
broadcast television stations in Tampa and Jacksonville, Florida, and
Charleston, South Carolina, as well as cable television systems in Fairfax
County and Fredericksburg, Virginia.
Influenced by double-digit growth at our broadcast stations, television
segment revenues in 1994 rose to $185.7 million from $179.5 million in 1993.
Operating income slipped to $34.3 million from $35.2 million in 1993, however,
as cable reregulation continued to depress profit margins.
BROADCAST TELEVISION
The past year was an exceptional one for Media General's three television
stations. Buoyed by particularly strong automotive advertising and record levels
<PAGE> 6
of political time sales, combined revenues at our stations rose by more than 15
percent in 1994, and the group's profit jumped by 40 percent.
Importantly, each of the Company's stations participated in the
year-over-year revenue and profit growth.
Tampa
At WFLA-TV Channel 8, the Company's flagship NBC affiliate in Tampa,
advertising revenues exceeded those of the previous year in every significant
category.
While automotive advertising remained the largest single category of growth
in both local and national time sales, significant growth also occurred in
appliances, insurance, health, newspaper and radio.
Political advertising for the year was even stronger than expected, aided by
a tight gubernatorial race, a controversial casino issue and record spending
levels for statewide congressional offices.
Competitively, 1994 brought with it a major realignment in the Tampa
television market. A May 1994 announcement that New World Communications would
sever its relationship with the traditional "Big Three" networks in favor of its
stations becoming FOX affiliates set off a domino effect in Tampa: Former CBS
affiliate WTVT-TV announced its switch to FOX; WFTS-TV lost its FOX affiliation
and signed with ABC; and WTSP-TV, formerly with ABC, moved to CBS.
By retaining its 40-year affiliation with NBC, WFLA-TV was an immediate
beneficiary, and following the affiliation switches that occurred on December
12, 1994, WFLA-TV has been the highest rated station in the market through the
February 1995 rating period.
Jacksonville
ABC affiliate WJKS-TV Channel 17 in Jacksonville also enjoyed a banner year
in 1994.
Although the year began with depressed local advertising sales, a
second-half resurgence resulted in a strong year-over-year local revenue gain,
paced by automotive advertising.
National and political revenues also rose sharply from 1993, and WJKS ended
1994 with a 13 percent revenue gain and profit growth of more than 60 percent.
WJKS continued to produce a 10 p.m. newscast for the FOX affiliate in
Jacksonville. The show's ratings increased again in 1994, and associated profits
have nearly tripled since 1993.
Charleston
In Charleston, South Carolina, our ABC affiliate WCBD-TV Channel 2, also
enjoyed an excellent year. Revenues increased by nearly 12 percent, paced by
strong national time sales and record-breaking political advertising.
Local advertising sales remained essentially flat with those of 1993,
however, largely the result of concerns over the economic impact of the closure
in 1995 of the Charleston Navy Base and Charleston Naval Shipyard.
13
<PAGE> 7
Picture of the broadcast television
stations' newscast logos: WFLA-TV
Channel 8, Eight's Army; WJKS-TV Channel
17, First Coast News and WCBD-TV Channel
2, Action News contained here.
The station continued to emphasize its strong news and community oriented
programming during the year and, in addition to numerous other honors, received
the Edward R. Murrow Award for Best Newscast in America for the small market
category.
1994 Journalistic Review
Media General's television stations continued their tradition of broadcast
news excellence in 1994.
In Tampa, WFLA-TV's 1994 election efforts began with a three-month-long
"VoteVan" voter registration project, crested with Florida's only statewide
gubernatorial debate, and concluded with strong election night coverage. WFLA
teamed with the League of Women Voters to televise the debate, which won its
time slot in every Florida market. Lawton Chiles trailed Jeb Bush prior to the
meeting, but pulled ahead just afterwards and ultimately won the election with
51 percent of the vote. During the last seven days of the campaign, WFLA-TV was
the only Florida television station to provide live coverage of the candidates'
final campaign swings.
In Jacksonville, WJKS-TV continued its commitment to issues affecting
families through its "Children First" campaign. The effort included special
weekly news segments and the production of four documentaries.
One of the documentaries, "Bang... Bang... You're Dead!" won an Emmy for
children's programming. The program profiled families that had lost children to
gunfire. The purpose was to help youngsters understand the dangers of playing
with guns by showing a family's suffering when a child is killed.
Concerns by several local groups that weapons violations in Charleston
County schools were being covered-up prompted WCBD-TV's investigative staff to
produce a series called "Administrative Silence on Schoolyard Violence." The
report indicated that district schools were not accurately reporting the full
quantities of weapons detected.
Following the series, law enforcement officials said the accuracy of the
schools' reports of weapons on campus immediately improved.
Outlook
Although 1994's strong level of political advertising will be missed, we
expect continued revenue growth at our broadcast operations in 1995.
After a decade of declining audience shares, network audiences increased
last year and this trend could translate into additional gains in 1995.
To further expand our stations' viewership, Media General's broadcast
operations are committed to a basic strategy:
Provide the most informative newscasts that the markets and competitive
considerations will allow.
<PAGE> 8
Acquire the best syndicated programming available.
Produce high quality local programming to attract and retain new
audiences.
The achievement of these goals in 1995 will help build the foundation for
even greater growth in the years to follow.
CABLE TELEVISION
For Media General's cable television subsidiaries, 1994 was a year of mixed
results.
Combined cable revenues were $123.4 million, compared with $125.4 million in
1993, and operating income also declined, largely the result of an inability
15
Picture of a satellite dish and the front
cover of the Cable Edition, Fairfax
Cable's program guide, contained here.
to increase rates, and lower premium pay revenues.
Demonstrating its inherent strength, however, subscriber growth continued
apace at both systems, as did penetration levels and pay-to-basic percentages.
Fairfax
Media General Cable of Fairfax operates a 120-channel, 900 megahertz system
which serves more than 214,000 homes. Some 4,000 miles of two-way dual cable
passes more than 311,000 Fairfax homes.
Fairfax Cable carries 93 full service channels--among the largest selection
of cable channels in the nation. In addition, eleven premium channels and eight
pay-per-view channels are available.
To more fully utilize the unique two-way capabilities of its system, Fairfax
Cable accelerated its efforts in 1994 to move beyond traditional cable
television into the world of interactive services. More than 90,000 two-way
converter boxes have been installed in customers' homes. Fairfax began testing
impulse pay-per-view capabilities as well as other interactive services.
In addition, a project is underway to convert a segment of the system's
two-way bandwidth into a high-speed network to provide personal computer users
in Fairfax with access to PRODIGY and other on-line services at speeds 50 times
faster than are currently available through conventional telephone lines.
Media General Cable also is involved with nonregulated revenue generating
businesses. Wholly owned Mega Advertising is the nation's ninth largest cable
advertising interconnect, providing advertising sales and service for five
Washington area cable systems. Mega is one of the industry's fastest growing
interconnects and revenues in 1994 increased by 20 percent.
Fredericksburg
Media General Cable of Fredericksburg serves more than 14,700 households in
that city and in parts of neighboring Stafford and Spotsylvania counties.
<PAGE> 9
Subscriber growth increased by more than four percent in 1994, and year-end
penetration rose to 77.2 percent.
Media General Cable of Fredericksburg offers its subscribers 55 channels,
including six premium and three pay-per-view channels.
Outlook
Since implemented in 1993, the cumbersome and restrictive burdens imposed by
the reregulation of cable television have sharply curtailed the industry's
traditional rates of growth and profitability. As the largest cable operator in
Virginia, Media General also has been affected, as evidenced by 1994's cable
results.
We believe that 1994 will prove to be the low-water mark for our cable
operations, however, and that 1995 will be a year of renewed revenue and profit
growth.
There are several essential standards which ultimately will determine a
cable operator's long-term success. Among them:
A sophisticated two-way interactive communications physical plant.
Access to robust consumer and business markets which will support
advanced communications systems.
A critical mass of customers to maximize operating efficiencies.
Acquisition and packaging of the best programming content available.
Superior customer service.
Creation of steady new revenue streams.
At Media General, these features are largely in place.
17
Picture of the recycling logo and a roll
of Garden State Paper Company's
newsprint contained here.
Media General's newsprint operations consist of wholly owned Garden State
Paper Company's newsprint mill in Garfield, New Jersey, with a rated annual
capacity of 235,000 short tons, and a one-third interest in Southeast Paper
Manufacturing Company in Dublin, Georgia, with a rated capacity of more than
460,000 short tons.
Both facilities utilize the Company's proprietary deinking technology to
produce 100 percent recycled, high quality newsprint from recovered old
newspapers (ONP).
Media General's share of the two mills' combined annual capacity of 695,000
short tons is approximately 390,000 short tons, which ranks the Company first in
the nation in production of 100 percent recycled newsprint.
<PAGE> 10
Revenues from newsprint operations increased modestly to $102.4 million in
1994 from $100.4 million in 1993. Operating income fell to $.5 million from $5.7
million the year earlier, however, the result of lower average selling prices
and substantially higher ONP costs.
Historical Perspective
Newsprint historically has been a cyclical industry. Profits peaked at
Garden State Paper Company in 1988 and began declining as U.S. newsprint
consumption also stalled and demand fell. Even as overall demand for newsprint
continued to slip, the North American newsprint industry brought 12 new
newsprint machines on-line. Although older, less efficient machines were shut
down, available supply far exceeded demand; and, at the low point in 1991,
Canadian mills operated at only 87 percent of capacity while U.S. mills fared
only somewhat better at 91 percent of capacity.
This imbalance remained fairly constant until late 1992 when a threatened
Canadian newsprint strike resulted in a short period of customer inventory build
up--and somewhat improved newsprint prices--until mid-1993, when supply again
exceeded demand.
Newsprint demand again began to increase by mid-1994, followed by higher
selling prices toward year-end and operating rates which rose to 96-97 percent
of capacity at most mills.
Fiber Supply and Price
During 1994 ONP prices rose dramatically. In addition, virgin fiber supply
also became more expensive.
Because virgin fiber is the primary resource of paper-making, legislative
actions concerning conservation and forest harvesting techniques have served to
reduce fiber available for the paper and wood products industries, thereby
driving fiber costs upwards.
Similarly, legislative responses to perceived waste disposal problems have
led to distorted supply and demand for recovered paper fibers. This is
particularly important for Media General's newsprint operations because our
fiber is derived solely from old newspapers which are currently being recovered
in the United States at a level of more than 60 percent--a recycling rate second
only to aluminum.
Consequently, environmentally driven legislation, which has encouraged the
use of recycled paper at a time when practical limits of recovery are close to
being realized, has resulted in accelerating ONP costs.
Media General's strategically located and cost effective recycling
facilities help assure adequate ONP supplies, however, and the Company's
long-standing expertise in this very specialized market should help to moderate
the impact of these costs on overall newsprint profitability.
Outlook
As we enter 1995 it appears that demand for newsprint will be firm. In
keeping with increased demand, additional selling price improvements seem likely
this year, which could significantly increase profitability at both Garden State
Paper Company and our Southeast Paper Manufacturing Company affiliate.
19
<PAGE> 11
Picture of the front cover of a
publication printed by Beacon Press, the
front cover of Virginia Business
magazine and Financial Services'
MegaInsight CD-ROM contained here.
All located in Richmond, Virginia, Media General's auxiliary operations
include commercial printing, targeted regional business publishing, and a
sophisticated financial database electronic publishing unit.
Commercial Printing
Beacon Press is a medium-size commercial printer which specializes in
publications, newspaper inserts, direct mail and catalogs.
Despite intense competition and industry-wide excess capacity, revenues at
Beacon Press rose to record levels in 1994, and operating income showed
significant gains.
While magazine printing accounts for nearly two-thirds of Beacon's volume,
the company successfully expanded its newspaper insert business during the year
by attracting additional printing from a major national furniture retailer and
from a warehouse home goods chain.
The majority of Beacon's business is small to medium-size customers who
focus on price and delivery along with quality and service.
These elements will take on particular importance in 1995 as the printing
industry faces the double impact of soaring paper prices--up 30 percent from
mid-1994--and postal increases of approximately 14 percent and 17 percent,
respectively, for second and third class mail.
To help offset the potential impact of these two factors on 1995 revenues
and profitability, Beacon is exploring new printing technology to reach
essentially untapped markets with relatively low capital investments.
Electronic Financial Publishing
Media General Financial Services, Inc. (MGFS), is a diversified electronic
financial data publisher which serves the needs of a broad range of users,
including institutional and individual investors, publications, corporations and
universities.
MGFS set revenue and operating income records in 1994; and, equally
important, began implementing plans for significant longer-term expansion and
profitability.
To become a larger competitor in the professional and institutional
financial data services market, MGFS has established a new institutional
services department and developed new products.
To be marketed under the brand name "MegaInsight," the first new product is
a CD-ROM containing the entire MGFS common stock database, and related
application software, which will be available in early 1995. The CD-ROM product
will be updated monthly.
Other new products in development-planning include a PC-resident database
research system. This product will be updated daily, and is aimed at key
financial professionals in research and money management.
<PAGE> 12
These new projects, in combination with the ongoing expansion of traditional
lines of business, will be the foundation for significant revenue and profit
growth for MGFS in the years ahead.
Business Publishing
For Virginia Business, a four-color monthly magazine, 1994 was the best year
in its nine-year history.
Total revenues increased by 15 percent, while expenses remained generally
flat with the year-earlier levels.
Virginia Business continued to successfully develop special
advertising-driven sections in 1994 which focused on specific industries,
professions, universities and regions of the state. Advertising growth also came
from the addition of editorial topics which drew strong support.
Significant growth also occurred in the number of run-of-book ads not
associated with any specific editorial inducement. Several new projects are
anticipated to provide additional sources of revenue growth in 1995 and beyond.
21
<PAGE> 13
<TABLE>
Media General, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<CAPTION>
Fiscal Years Ended
December 25, December 26, December 27,
1994 1993 1992
<S> <C> <C> <C>
Revenues $626,247 $600,824 $577,659
Operating costs:
Production costs 332,557 321,422 316,477
Selling, distribution and administrative 171,989 162,252 164,019
Depreciation and amortization 55,450 56,847 54,550
------------------------------------------------------------------------------------------
Total operating costs 559,996 540,521 535,046
------------------------------------------------------------------------------------------
Operating income 66,251 60,303 42,613
Other income (expense):
Interest expense (16,948) (21,274) (17,559)
Investment income (loss) -
unconsolidated affiliates:
Southeast Paper Manufacturing Co. (1,647) (990) (4,926)
Denver Newspapers, Inc.:
Equity in net income 2,037 --- ---
Preferred stock income 2,545 --- ---
Gain on sale of Garden State
Newspapers investment 91,520 --- ---
Other, net (789) 835 6,131
------------------------------------------------------------------------------------------
Total other income (expense) 76,718 (21,429) (16,354)
------------------------------------------------------------------------------------------
Income before income taxes and cumulative effect
of changes in accounting principles 142,969 38,874 26,259
------------------------------------------------------------------------------------------
Income taxes 25,960 13,166 7,946
------------------------------------------------------------------------------------------
Income before cumulative effect of
changes in accounting principles 117,009 25,708 18,313
Cumulative effect of changes in accounting
principles:
Income taxes --- --- 15,066
Postretirement benefits (net of $8,434
income tax benefit) --- --- (14,379)
------------------------------------------------------------------------------------------
Net income $117,009 $ 25,708 $ 19,000
==========================================================================================
Earnings per common share and equivalent:
Before cumulative effect of changes in
accounting principles $ 4.45 $ 0.98 $ 0.70
Cumulative effect of changes in
accounting principles --- --- 0.03
------------------------------------------------------------------------------------------
Net income $ 4.45 $ 0.98 $ 0.73
==========================================================================================
Notes to Consolidated Financial Statements begin on page 28. Weighted average common
shares and equivalents were 26,283, 26,152 and 26,056 for 1994, 1993 and 1992, respectively.
</TABLE>
23
<PAGE> 14
<TABLE>
Media General, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares)
ASSETS
<CAPTION>
December 25, December 26,
1994 1993
------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 11,663 $ 2,942
Accounts receivable (less allowance for doubtful
accounts 1994 -- $3,360; 1993 -- $3,698) 68,901 62,122
Inventories 11,360 10,290
Other 22,738 17,003
--------- ---------
Total current assets 114,662 92,357
------------------------------------------------------------------------------------------
Investments in unconsolidated affiliates 83,249 46,675
------------------------------------------------------------------------------------------
Other assets 28,105 45,561
------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 21,516 21,805
Buildings 148,760 135,170
Machinery and equipment 771,965 730,550
Construction in progress 7,041 15,581
Accumulated depreciation (432,238) (387,881)
--------- ---------
Net property, plant and equipment 517,044 515,225
------------------------------------------------------------------------------------------
Excess of cost of businesses acquired over equity
in net assets (less accumulated amortization
1994 -- $8,009; 1993 -- $7,593) 44,105 45,424
------------------------------------------------------------------------------------------
Total assets $787,165 $745,242
==========================================================================================
Notes to Consolidated Financial Statements begin on page 28.
</TABLE>
24
<PAGE> 15
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
December 25, December 26,
1994 1993
------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 26,981 $ 20,994
Accrued expenses and other liabilities 61,973 60,560
Income taxes payable 1,875 746
Current portion of long-term debt 9,000 506
--------- ---------
Total current liabilities 99,829 82,806
------------------------------------------------------------------------------------------
Long-term debt 163,500 261,250
------------------------------------------------------------------------------------------
Deferred income taxes 97,012 88,679
------------------------------------------------------------------------------------------
Other liabilities and deferred credits 93,461 87,073
------------------------------------------------------------------------------------------
Commitments and contingencies (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
25,739,732 and 25,695,000 shares 128,699 128,475
Class B, authorized 600,000 shares; issued
556,574 and 557,154 shares 2,783 2,786
Additional paid-in capital 6,787 5,967
Unearned compensation (1,676) (3,108)
Retained earnings 196,770 91,314
--------- ---------
Total stockholders' equity 333,363 225,434
------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $787,165 $745,242
==========================================================================================
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 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
------------------------------------------------------------------------------------------
Net income ($4.45 per share) --- --- --- --- 117,009
Cash dividends ($0.44 per share) --- --- --- --- (11,553)
Exercise of options on 55,554
Class A shares 278 --- 684 --- ---
Income tax benefits relating to
restricted share dividends and
exercised options --- --- 270 --- ---
Issuance of 4,629 Class A shares
under dividend reinvestment plan 23 --- 100 --- ---
Exchange of 580 Class B shares for
Class A shares 3 (3) --- --- ---
Amortization and forfeitures
of unearned compensation (80) --- (234) 1,432 ---
--------- --------- --------- --------- ---------
Balance at December 25, 1994 $128,699 $ 2,783 $ 6,787 $ (1,676) $196,770
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 25, December 26, December 27,
1994 1993 1992
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $117,009 $ 25,708 $ 19,000
Adjustments to reconcile net income:
Depreciation and amortization 55,450 56,847 54,550
Deferred income taxes 4,704 473 (20,922)
Change in accounting for post-
retirement benefits --- --- 22,813
Provision for doubtful accounts 2,690 3,488 5,377
Investment (income) loss -
unconsolidated affiliates (2,935) 990 4,926
Gain on sale of Garden State Newspapers
investment (91,520) --- ---
Change in assets and liabilities:
Accounts receivable and inventories (10,539) (7,946) (261)
Other current assets 8,010 2,015 6,347
Accounts payable, accrued expenses
and other liabilities 10,042 1,320 (14,964)
Other, net 9,923 2,270 (8,296)
--------- --------- ---------
Net cash provided by operating activities 102,834 85,165 68,570
------------------------------------------------------------------------------------------
Cash flows from investing activities:
Net proceeds from sale of Garden State
Newspapers investment 57,520 --- ---
Capital expenditures (56,919) (32,837) (92,319)
Change in restricted bond proceeds held
in trust 3,365 4,115 (10,699)
Collection of note receivable --- 8,918 750
Other, net 1,645 3,905 (2,868)
--------- --------- ---------
Net cash provided (used) by investing activities 5,611 (15,899) (105,136)
------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net cash proceeds from long-term borrowings --- --- 47,000
Payment of long-term debt (89,256) (58,750) (3,696)
Cash dividends paid (11,553) (11,534) (11,478)
Other, net 1,085 1,169 2,986
--------- --------- ---------
Net cash provided (used) by financing activities (99,724) (69,115) 34,812
------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 8,721 151 (1,754)
Cash and cash equivalents at beginning of year 2,942 2,791 4,545
--------- --------- ---------
Cash and cash equivalents at end of year $ 11,663 $ 2,942 $ 2,791
==========================================================================================
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 Media General,
Inc., and subsidiaries more than 50% owned (the Company). 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 fees to the Company. The Company acquired on September 28, 1994, a
40% interest in Denver Newspapers, Inc. (DNI), the parent company of The Denver
Post, a Denver, Colorado, daily newspaper company, by exercising a warrant, held
since 1987, for $40,000.
On May 20, 1994, the Company sold its 40% common equity interest in Garden State
Newspapers, Inc. (GSN), a domestic daily and weekly newspaper company, along
with its GSN Series A and Series C Preferred Stock, for $63 million in cash.
Additionally, in exchange for the GSN Series B Preferred Stock previously owned
by the Company, the Company received 1,200 shares of $25,000 par, 9% Cumulative
Preferred Stock of DNI (previously owned by GSN), which included accumulated and
unpaid dividends of approximately $17.4 million. The preferred stock was valued
at $34 million, net of an unamortized discount of $27.3 million, based on an
imputed discount rate of 12% and a redemption date of June 30, 1999. The sale
of GSN resulted in a gain of $91.5 million ($83.3 million after-tax; $3.17 per
share).
Summarized financial information for these investments accounted for by the
equity method follows:
<PAGE> 19
<TABLE>
Southeast Paper Manufacturing Company:
<CAPTION>
(In thousands) 1994 1993
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current assets $ 61,847 $ 71,503
Noncurrent assets 350,700 378,414
Current liabilities 60,528 55,238
Noncurrent liabilities 218,229 255,947
------------------------------------------------------------------------------------------
(In thousands) 1994 1993 1992
------------------------------------------------------------------------------------------
Net sales $195,599 $185,784 $178,253
==========================================================================================
Gross profit $ 29,497 $ 33,403 $ 27,778
==========================================================================================
Net loss $ (5,331) $ (6,436) $(10,928)
==========================================================================================
Company's equity in net loss $ (1,647) $ (990) $ (4,926)
==========================================================================================
</TABLE>
28
<TABLE>
Denver Newspapers, Inc.:
<CAPTION>
(In thousands) 1994 1993
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current assets $ 34,898 $ 35,537
Noncurrent assets 80,914 74,649
Current liabilities 27,438 22,954
Noncurrent liabilities 34,300 48,604
Mandatorily redeemable preferred stock 48,900 50,592
------------------------------------------------------------------------------------------
<CAPTION>
(In thousands) 1994 1993 1992
------------------------------------------------------------------------------------------
Net sales $140,625 $132,611 $123,519
==========================================================================================
Gross profit $ 70,377 $ 60,477 $ 54,147
==========================================================================================
Income (loss) before extraordinary items
and cumulative effect of a change in
accounting principle $ 12,560 $ 6,251 $(22,900)
==========================================================================================
Net income applicable to common stock $ 7,117 $ 3,234 $ 44,873
==========================================================================================
Company's equity in net income $ 2,037 $ --- $ ---
==========================================================================================
</TABLE>
<PAGE> 20
The above summarized information for DNI includes its operating results for the
11 month period ended November 30, 1994, and the 12 month periods ended December
31, 1993, and 1992. Effective with the fourth quarter of 1994, the Company
began recognizing, on a one month lag, 40% of DNI's net income applicable to
common stockholders. The carrying value of the Company's investment in the DNI
mandatorily redeemable preferred stock at December 25, 1994, was $36.5 million,
net of an unamortized discount of $24.7 million and is included in investments
in unconsolidated affiliates. The fair value of the preferred stock, which the
Company intends to hold until maturity, approximated its carrying value at
December 25, 1994.
Other:
GSN operating results for the 12 month periods ended September 30, 1993, and
1992, respectively, were (in thousands): net sales- $181,490 and $163,155; gross
profit- $63,037 and $56,948; and net (loss) income - ($10,649) and $12,036.
Summary balance sheet information for GSN at September 30, 1993, was (in
thousands): current assets- $35,513; noncurrent assets- $220,079; current
liabilities- $28,404; noncurrent liabilities- $238,421; and redeemable preferred
stock- $97,553.
In 1991, the Company's investment in GSN was reduced to zero as a result of GSN
management's decision to write down the carrying value of certain assets, mostly
intangibles, in light of depressed market conditions. Although GSN's net income
for the 12 month period 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 did it recognize any further
equity through the date of the GSN sale, because it was unlikely to (and did
not) receive any dividends or cash distributions from GSN operations.
Retained earnings of the Company at December 25, 1994, includes $11.8 million
related to undistributed earnings of unconsolidated affiliates.
In October 1994, the Company revised its agreement with the majority owner of
its Mexican newsprint affiliate regarding the sale, for $3.6 million, of the
Company's interest in that affiliate which is accounted for by the cost method
and has a zero basis. Originally scheduled to occur on October 15, 1994, the
date on which the affiliate's royalty payment obligation to the Company ceased,
the sale was rescheduled to occur in February 1995. The Company will be paid
$3.6 million plus interest from the originally scheduled sale date under an
irrevocable letter of credit. Income from this affiliate was $2.9 million in
1994, $3.5 million in 1993 and $3.3 million in 1992.
29
Note 4: Long-term Debt
--------------------------------------------------------------------------------
<TABLE>
Long-term debt at December 25, 1994, and December 26, 1993, was as follows:
<PAGE> 21
<CAPTION>
(In thousands) 1994 1993
------------------------------------------------------------------------------------------
<S> <C> <C>
Revolving credit agreements $ --- $ 70,000
9.27% notes due annually through 1996 87,500 106,250
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
--------- ---------
172,500 261,756
Less current portion of long-term debt 9,000 506
--------- ---------
Long-term debt $163,500 $261,250
==========================================================================================
</TABLE>
In December 1994, the Company replaced its revolving credit agreements
aggregating $160 million with a five-year revolving credit facility, committing
six banks to lend the Company up to $180 million at competitive interest rates
based typically on the London Interbank Offered Rate. No borrowings were
outstanding under this facility at December 25, 1994.
In early 1995, the Company entered into a three-year agreement with an insurance
company which permits the Company to borrow up to an additional $150 million
under senior notes on an uncommitted basis. The notes can have a maximum
maturity of 15 years with interest rates determined by market conditions at the
time of issuance.
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 25, 1994, and December 26,
1993, $3.2 million and $6.6 million, respectively, of unused restricted bond
proceeds held in trust were invested in U.S. Treasury instruments classified in
other noncurrent assets. The carrying amount of these investments approximated
fair value at those dates.
The Company's debt covenants contain a minimum net worth requirement ($294
million at December 25, 1994), and require the maintenance of certain debt to
equity ratios and debt to cash flow ratios, as defined. At December 25, 1994,
$34.8 million of the 9.27% notes due in 1995 was classified as long-term debt in
accordance with the Company's intention and ability to refinance the obligation
on a long-term basis. 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. The
repayment of $18.8 million was made in 1994 with long-term borrowings.
Excluding the $34.8 million of 9.27% notes referred to above, long-term debt
maturities during the five years subsequent to December 25, 1994, aggregating
$78,750,000, are as follows: 1995 - $9,000,000; 1996 - $43,750,000; 1997 -
none; 1998 - $13,000,000 and 1999 - $13,000,000.
<PAGE> 22
The Company has an interest rate swap agreement of $50 million which, combined
with the favorable effect of the 1991 termination of a counter swap agreement,
effectively converted the variable interest rate on $50 million of revolving
debt to a fixed interest rate which approximated 8% through the second quarter
of 1994. To the extent that variable interest rates were below 9%, the Company
was unable to take advantage of such lower rates on the above-mentioned $50
million. In 1994, the Company recorded this swap, which expires in June 1995,
at its fair value, since the associated debt was retired in 1994. In 1992, the
Company entered into interest rate swap agreements totaling $65 million which
effectively converted the $65 million senior notes with a fixed rate of 8.62%
into variable rate debt. These swaps were terminated in 1993, at a gain, which
is being amortized over the original lives of the terminated swaps, 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
30
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%.
<TABLE>
Estimated fair values of the Company's financial instruments are as follows:
<CAPTION>
(In thousands) 1994 1993
------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents (note 10) $ 11,663 $ 11,663 $ 2,942 $ 2,942
Restricted bond proceeds held in trust 3,219 3,219 6,584 6,584
Investment in DNI
Preferred Stock (note 3) 36,545 36,545 --- ---
Liabilities:
Interest rate swap agreement 550 550 --- 3,193
Long-term debt:
Revolving credit agreements --- --- 70,000 70,000
9.27% notes 87,500 90,803 106,250 116,039
8.62% senior notes 65,000 65,461 65,000 73,502
7.125% revenue bonds 20,000 20,190 20,000 23,521
------------------------------------------------------------------------------------------
</TABLE>
Fair values of restricted bond proceeds held in trust are based on market
quotations or valuations reported by the trustee. The fair value of the
Company's investment in DNI Preferred Stock, which is not publicly traded, was
estimated by discounting expected future cash flows using a current market rate
applicable to the yield, credit quality and maturity of the investment. The
fair values of the interest rate swap are based on the estimated cost to the
Company to terminate the swap. Fair values of the Company's long-term debt are
estimated using discounted cash flow analyses based on the Company's incremental
borrowing rates for similar types of borrowings.
<PAGE> 23
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 15 weekly, semiweekly and triweekly newspapers and
shoppers, ten of which were acquired in December 1990. Television operations
consist of three television stations, two cable television operations and a
cable advertising unit. The Newsprint segment includes the Company's recycled
newsprint operations. Intersegment sales (principally newsprint) comprise less
than 1% of consolidated totals and are not shown separately. Corporate assets
are principally property, plant and equipment and investments in unconsolidated
affiliates.
Operations for 1994 include recognition of a gain of $91.5 million ($83.3
million after-tax; $3.17 per share) related to the sale of the Company's
investment in Garden State Newspapers, Inc., for $63 million in cash and Denver
Newspapers, Inc., preferred stock valued at $34 million. See Note 3 for a
further discussion of the GSN sale.
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 certain 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 dur-
31
ing the first-half of 1991, of certain recycling center, publishing and other
assets.
<TABLE>
Information as to revenues, profitability and assets is as follows:
<CAPTION>
(In thousands) 1994 1993 1992 1991 1990
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Newspaper $324,366 $307,058 $299,038 $299,173 $302,010
Television 185,748 179,477 169,946 159,596 153,427
Newsprint 102,411 100,371 96,540 116,717 132,915
Auxiliary 13,722 13,918 12,135 10,414 25,315
------------------------------------------------------------------------------------------
Total $626,247 $600,824 $577,659 $585,900 $613,667
==========================================================================================
<PAGE> 24
<CAPTION>
(In thousands) 1994 1993 1992 1991 1990
------------------------------------------------------------------------------------------
Operating profit
Newspaper $ 31,543 $ 19,610 $ 16,382 $ 681 $ 26,760
Television 34,338 35,178 25,912 18,406 24,622
Newsprint 470 5,725 1,277 18,527 21,109
Auxiliary (100) (210) (958) (1,273) (8,666)
------------------------------------------------------------------------------------------
66,251 60,303 42,613 36,341 63,825
Interest expense (16,948) (21,274) (17,559) (16,056) (19,831)
Equity in net income (loss) of
unconsolidated affiliates 390 (990) (4,926) (75,640) (1,303)
Preferred stock income 2,545 --- --- --- ---
Gain on sale of Garden State
Newspapers investment 91,520 --- --- --- ---
Other, net (789) 835 6,131 2,659 814
------------------------------------------------------------------------------------------
Income (loss) before
income taxes $142,969 $ 38,874 $ 26,259 $(52,696) $ 43,505
==========================================================================================
Identifiable assets
Newspaper $343,804 $330,613 $344,255 $306,754 $240,347
Television 221,918 228,952 243,382 262,349 274,109
Newsprint 84,042 84,329 86,315 81,495 76,534
Auxiliary 23,538 24,592 24,606 23,954 15,108
Corporate 114,163 77,090 89,587 88,059 170,218
Segment eliminations (300) (334) (720) (300) (372)
------------------------------------------------------------------------------------------
Total $787,165 $745,242 $787,425 $762,311 $775,944
==========================================================================================
Capital expenditures
Newspaper $ 34,413 $ 12,259 $ 63,631 $ 90,165 $ 38,800
Television 18,223 15,337 13,314 14,352 26,595
Newsprint 3,797 4,413 14,899 10,558 7,815
Auxiliary 297 226 59 95 94
Corporate 189 602 416 213 382
------------------------------------------------------------------------------------------
Total $ 56,919 $ 32,837 $ 92,319 $115,383 $ 73,686
==========================================================================================
Depreciation and amortization
Newspaper $ 21,263 $ 21,623 $ 19,337 $ 14,528 $ 11,874
Television 25,338 25,969 26,701 27,465 26,927
Newsprint 6,472 6,837 6,161 5,638 6,215
Auxiliary 857 859 864 880 1,063
Corporate 1,520 1,559 1,487 1,432 1,468
------------------------------------------------------------------------------------------
Total $ 55,450 $ 56,847 $ 54,550 $ 49,943 $ 47,547
==========================================================================================
</TABLE>
32
<PAGE> 25
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 represented the net decrease in the Company's
deferred tax liability at 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
increase, which was made retroactively to January 1, 1993, was to decrease 1993
net income by $2.3 million ($0.09 per share). This decrease in net income was
substantially offset by the effects of resolving various tax examinations
covering prior fiscal years.
Investment tax credits are accounted for as a reduction of income tax 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.
<TABLE>
Significant components of income taxes are as follows:
(In thousands) 1994 1993 1992
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 18,996 $ 10,956 $ 4,015
State 2,301 1,990 1,601
Investment tax credits -- flow-through
method (41) (253) (248)
--------- --------- ---------
21,256 12,693 5,368
--------- --------- ---------
Deferred:
Federal 4,185 (1,697) 3,323
Change in enacted tax rates --- 2,262 ---
Investment tax credits amortized (540) (579) (601)
State 1,059 487 (144)
--------- --------- ---------
4,704 473 2,578
--------- --------- ---------
$ 25,960 $ 13,166 $ 7,946
==========================================================================================
Temporary differences which give rise to significant components of the Company's deferred tax liabilities and assets at December 25,
1994, and December 26, 1993, are as follows:
<PAGE> 26
<CAPTION>
(In thousands) 1994 1993
------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Tax over book depreciation $128,715 $126,367
Other 11,854 13,111
--------- ---------
Total deferred tax liabilities 140,569 139,478
--------- ---------
Deferred tax assets:
Employee benefits (31,921) (27,112)
Alternative minimum tax credit (9,511) (14,892)
Other (12,206) (15,435)
--------- ---------
Total deferred tax assets (53,638) (57,439)
--------- ---------
Deferred tax liabilities, net 86,931 82,039
Deferred tax assets included in other
current assets 10,081 6,640
--------- ---------
Deferred tax liabilities $ 97,012 $ 88,679
==========================================================================================
33
Reconciliation of income taxes computed at the federal statutory tax rate to actual income tax expense is as follows:
<CAPTION>
(In thousands) 1994 1993 1992
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income taxes computed at federal statutory
tax rate $ 50,039 $ 13,606 $ 8,928
Increase (reduction) in income taxes
resulting from:
State income taxes, net of federal
income tax benefit 2,261 1,446 798
Investment income - unconsolidated
affiliates (1,283) --- ---
Life insurance plans (1,525) (1,756) (1,820)
Gain on sale of investment in
Garden State Newspapers (24,422) --- ---
Change in enacted tax rates --- 2,068 ---
Tax examination adjustments and settlements --- (2,085) ---
Other 890 (113) 40
--------- --------- ---------
$ 25,960 $ 13,166 $ 7,946
==========================================================================================
</TABLE>
The Company's federal income tax returns for years through 1991 have been
examined by the Internal Revenue Service (IRS), and the Company reached
settlements with the IRS concerning all years examined. As a result of these
settlements with the IRS, in 1994 the Company received refunds of previously
paid assessments of approximately $10.8 million.
<PAGE> 27
In 1994, the Company paid income taxes of $20 million ($9.2 million net of
refunds). Income taxes paid during 1993 and 1992, net of refunds from prior
years, were $11.6 million and $7.2 million, respectively.
The Company's federal income tax returns for the years 1992 and 1993, and
various state income tax returns, are currently under examination by the IRS and
state tax authorities, respectively. The Company believes that adjustments, if
any, arising from these examinations will not be material to the results of its
operations, financial position or cash flows.
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.
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 a vesting period not
exceeding ten years, based upon meeting certain performance targets. The amount
amortized to expense in 1994, 1993 and 1992 was $1,118,000, $358,000 and
$181,000, respectively. Shares reserved for future grants at the end of 1994,
1993 and 1992 were 171,000, 155,000 and 245,900, respectively.
34
<PAGE> 28
<TABLE>
<CAPTION>
Price
Nonqualified Option Shares Outstanding Exercisable Per Share
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
Became exercisable --- 183,407 19-32
Exercised (55,554) (55,554) 2-20
Issued 149,400 --- 28
Forfeited (19,780) (19,780) 32-46
---------- ---------
Balance at December 25, 1994 1,022,649 711,441 2-46
==========================================================================================
Number of shares reserved for future grants:
At December 27, 1992 765,350
At December 26, 1993 584,385
At December 25, 1994 434,985
</TABLE>
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
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.
<PAGE> 29
Net pension cost for 1994, 1993 and 1992 is summarized below.
<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Benefits earned during the year $ 4,632 $ 3,786 $ 3,408
Interest cost on projected benefit
obligations 10,462 10,507 9,703
Actual return on plan assets (1,179) (18,103) (10,700)
Net amortization and deferral (13,647) 2,857 (3,811)
--------- --------- ---------
Defined benefit plan expense (credit) 268 (953) (1,400)
Supplemental retirement plan expense 2,040 1,814 1,923
Multi-employer plans expense 593 623 622
--------- --------- ---------
Total expense $ 2,901 $ 1,484 $ 1,145
==========================================================================================
35
The non-contributory defined benefit retirement plan's status was as follows:
<CAPTION>
December 25, December 26,
(In thousands) 1994 1993
------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested $109,642 $113,896
Non-vested 4,092 4,379
--------- ---------
Total accumulated benefit obligations $113,734 $118,275
------------------------------------------------------------------------------------------
Plan assets at fair value $144,012 $154,555
Projected benefit obligations 137,504 145,623
--------- ---------
Plan assets in excess of projected
benefit obligations 6,508 8,932
Unrecognized net gain (18,203) (20,047)
Unrecognized prior service costs 6,420 6,702
Unrecognized net asset from transition (6,073) (7,085)
--------- ---------
Net pension liability $(11,348) $(11,498)
==========================================================================================
Assumptions used in determining the funded status of the non-contributory defined benefit retirement plan are as follows:
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Discount rate 8.00% 7.25% 9.00%
Average rate of increase in compensation levels 5.00% 4.75% 6.50%
Expected long-term rate of return on plan assets 10.00% 10.00% 10.00%
</TABLE>
<PAGE> 30
At December 25, 1994, and December 26, 1993, the projected benefit obligation of
the supplemental retirement plan totaled $11.4 million and $12 million, of which
$11.4 million and $10.4 million in 1994 and 1993, 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 $3.7 million, $3.5 million and $3.4 million in 1994, 1993
and 1992, 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 hired before
1992 and 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.
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 following table sets forth components of the accumulated postretirement
benefit obligation included in the accompanying balance sheet at December 25,
1994, and December 26, 1993:
36
<PAGE> 31
<TABLE>
<CAPTION>
Medical Life Insurance
(In thousands) Plans Plans
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994 1993 1994 1993
---- ---- ---- ----
Retirees $ 13,425 $ 12,589 $ 5,780 $ 5,860
Fully eligible plan participants 179 158 179 142
Other active plan participants 4,828 5,510 1,496 1,688
--------- --------- -------- --------
Accumulated postretirement benefit
obligation 18,432 18,257 7,455 7,690
Unrecognized accumulated net gain (loss) (1,757) (1,478) 340 (524)
--------- --------- -------- --------
Accrued postretirement benefit cost $ 16,675 $ 16,779 $ 7,795 $ 7,166
==========================================================================================
</TABLE>
<TABLE>
Net periodic postretirement benefit cost for 1994, 1993 and 1992 includes the following components:
<CAPTION>
Medical Life Insurance
(In thousands) Plans Plans
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1994 1993 1992 1994 1993 1992
---- ---- ---- ---- ---- ----
Service cost $ 388 $ 333 $ 303 $ 133 $ 133 $ 117
Interest cost 1,410 1,359 1,334 573 573 525
-----------------------------------------------------
Net periodic postretirement
benefit cost $ 1,798 $ 1,692 $ 1,637 $ 706 $ 706 $ 642
==========================================================================================
</TABLE>
The annual assumed rate of increase in the health care cost trend rate is 11.25%
for 1995 (11.75% for 1994), and is assumed to decrease gradually to 6.25% in
2005 and thereafter for pre-65 benefits, and to 5.25% in 2007 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 25, 1994, and December 26, 1993, by approximately
$1 million, and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for 1994 and 1993 by approximately $.1
million.
The discount rate used to determine the accumulated postretirement benefit
obligation was 8% and 7.25% for 1994 and 1993, respectively. The average rate
of increase in compensation levels used to determine life insurance benefits was
5% and 4.75% for 1994 and 1993, respectively.
<PAGE> 32
Note 10: Other
--------------------------------------------------------------------------------
Interest
--------
In 1994, 1993 and 1992, the Company's interest expense was $16.9 million, $21.3
million and $17.6 million, respectively, which is net of $.8 million, $.3
million and $4.7 million of interest costs capitalized for those years.
Interest payments, net of amounts capitalized, made during 1994, 1993 and 1992
were $19.5 million, $23.5 million and $19.6 million, respectively.
Depreciation and amortization
-----------------------------
Plant and equipment are depreciated, primarily on a straight-line basis, over
their estimated useful lives which are generally 40 years for buildings and
range from 3 to 20 years for machinery and equipment. Depreciation deductions
are computed by accelerated methods for income tax purposes.
Amortization of the excess of cost of businesses acquired over equity in net
assets received and other intangibles was $1,764,000, $1,883,000 and $1,875,000
in 1994, 1993 and 1992, 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.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents include highly liquid investments with original
maturities of three months or less and the carrying amount approximates fair
value.
Accrued expenses and other liabilities
--------------------------------------
<TABLE>
Accrued expenses and other liabilities consist of the following:
37
<CAPTION>
(In thousands) 1994 1993
------------------------------------------------------------------------------------------
<S> <C> <C>
Payroll $ 15,520 $ 14,301
Advances from unconsolidated newsprint affiliate 6,667 6,667
Unearned revenue 5,555 5,323
Employee medical claims 4,320 4,290
Other 29,911 29,979
--------- ---------
Total $ 61,973 $ 60,560
==========================================================================================
</TABLE>
<PAGE> 33
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 10
years and in most cases contain renewal options. Total rental expense amounted
to $7.2 million in 1994, $7 million in 1993 and $7.1 million in 1992. Minimum
rental commitments under operating leases with noncancelable terms in excess of
one year are as follows:
<TABLE>
<CAPTION>
Machinery
Land and and
(In thousands) Buildings Equipment Total
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1995 $ 4,539 $ 1,234 $ 5,773
1996 3,655 1,055 4,710
1997 3,340 1,054 4,394
1998 3,001 258 3,259
1999 2,265 --- 2,265
Subsequent years 3,270 --- 3,270
--------- --------- ---------
Total minimum required $ 20,070 $ 3,601 $ 23,671
==========================================================================================
</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 and contingencies
-----------------------------
The Company has outstanding commitments for capital expenditures of $3 million
at December 25, 1994. The Company is committed to purchase approximately $34
million of program rights over the next six years which currently are not
available for broadcast, including programs not yet produced. If such programs
are not produced the Company's commitment would expire without obligation.
The Company entered into a stock redemption agreement in November 1985, which
was amended in January 1988, and April 1994, with Mr. D. Tennant Bryan, Chairman
of the Executive Committee of the Board of Directors. The amended agreement
provides that upon Mr. Bryan's death, his estate has the option to sell and the
Company has a separate option to buy the lesser of (a) 15% of the Company's
Class A stock owned by Mr. Bryan at his death and (b) a sufficient number of
shares of Class A stock to fund estate taxes and certain funeral and
administrative expenses. The purchase price for each share redeemed under the
amended agreement will equal 90% of the average daily closing price for a share
of Class A stock during the 91 days preceding the date that is 30 days after the
date of death. If the Company or the estate had exercised an option,
respectively, to buy or sell, the maximum cost to the Company of the redemption
would have approximated $8 million at December 25, 1994.
<PAGE> 34
Pursuant to the provisions of the Cable Television Consumer and Competition Act
of 1992 (the "1992 Cable Act"), the rates charged to subscribers by the
Company's Fairfax Cable subsidiary are subject to regulation and review by local
franchising authorities and the Federal Communications Commission (FCC). The
FCC is currently reviewing certain of the rates charged to subscribers. The
Company believes that it has complied with all provisions of the 1992 Cable Act,
including its rate setting provisions. However, since the Company's rates for
regulated services are subject to review, the Company may be subject to a refund
liability if its rates are successfully challenged.
38
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 24, 1995
J. Stewart Bryan III Marshall N. Morton
Chairman, President and Senior Vice President and
Chief Executive Officer Chief Financial Officer
--------------------------------------------------------------------------------
<PAGE> 35
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 25, 1994, and December 26, 1993, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three fiscal years in the period ended December 25, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Media
General, Inc., at December 25, 1994, and December 26, 1993, and the consolidated
results of its operations and its cash flows for each of the three fiscal years
in the period ended December 25, 1994, 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 Statement of Financial Accounting Standards Nos. 109 and 106,
respectively. See Notes 6 and 9 to the accompanying consolidated financial
statements.
Ernst & Young LLP
January 24, 1995
Richmond, Virginia
39
<PAGE> 36
MEDIA GENERAL, INC.
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 Financial Summary and
discussions of operations for the Company's major operating segments which
appear elsewhere in this report.
During 1994, the Company completed two significant transactions related to
unconsolidated affiliates and announced plans for another, which was completed
in early 1995. On May 20, 1994, the Company sold its investment in Garden State
Newspapers, Inc. (GSN), for cash of $63 million and preferred stock of Denver
Newspapers, Inc., with a fair value of $34 million. This disposition ended the
Company's nine-year ownership position in GSN. On September 28, 1994, the
Company acquired 40% of the common stock of Denver Newspapers, Inc. (DNI),
through the exercise, for $40,000, of a warrant held since 1987. Beginning with
the fourth quarter of 1994, the Company began recognizing in its earnings 40% of
DNI's net income applicable to common stockholders. Finally, in October the
Company announced an agreement with the majority owner of its Mexican newsprint
affiliate for the sale of the Company's investment in that affiliate for $3.6
million in early 1995. The sale was completed in February 1995, concluding the
Company's 20-year relationship with that venture. Additional information
regarding each of these transactions is included in the appropriate areas of
this review and analysis, as well as elsewhere in this report.
RESULTS OF OPERATIONS
REVENUES
1994 Compared to 1993
Consolidated revenues for 1994 rose 4.2% to $626.2 million from $600.8
million in 1993. Led by its Newspaper operations, all of the Company's
significant business segments contributed to the revenue growth.
Newspaper Segment revenues for 1994 of $324.4 million were up 5.6% from $307.1
million in 1993. Within the three daily newspapers which comprise the Company's
metropolitan newspaper group, advertising revenues increased 6%, reflecting the
combined effects of a 3.2% average rate increase and a 2.7% increase in
advertising inches. Classified advertising was the primary contributor to the
overall revenue growth paced, as in the previous year, by the automotive and
employment categories. Retail advertising revenues reflected a small increase in
1994, reversing three consecutive years of declines. The turnaround was
primarily the result of some stabilization in the department store category and
increased rates. Circulation revenues rose 3.3% in 1994, the result of a 4.3%
average rate increase which more than offset a slight combined decrease in
circulation volume. In August 1994, the Company launched its entry into
electronic publishing with The Tampa Tribune's introduction of Tampa Bay Online
(TBO). In conjunction with Prodigy Services, and with Doppler radar weather
pictures and news support from the Company's WFLA-TV station, TBO is the first
interactive, local news and entertainment service in the Tampa Bay area, and
currently serves nearly 6,000 subscribers. In mid-1995, the Company's Richmond
Times-Dispatch, again in partnership with Prodigy Services, and with
distribution support from the Company's Fairfax Cable system, plans the
introduction of a similar service named Gateway Virginia. These types of
ventures, although initially small in terms of revenue contribution, represent a
logical extension of the Company's in-place news gathering capabilities, and the
Company will continue to explore additional projects to expand its revenue base.
<PAGE> 37
Television Segment revenues increased to $185.7 million in 1994, up 3.5%
from $179.5 million in 1993. All three of the Company's broadcast television
stations generated revenue growth in 1994, led by WFLA-TV, the Company's
flagship station in Tampa, Florida. On a combined basis, television station
revenues rose $8.3 million (15.3%) in 1994 on strength in the local, national
and political advertising categories. Local and national benefited from strong
automotive and electronics advertising during the
40
year, while national and state elections fueled the growth in political
advertising revenues. In December, three of the Tampa market's four major
broadcast television stations changed their network affiliations. In that market
only WFLA-TV, the Company's NBC affiliate, retained its historical network
affiliation. As anticipated, the early impact of those affiliation changes on
WFLA-TV's viewership has been very positive; the challenge will be to retain
these new viewers over the longer term.
Revenues of the Company's cable television operations declined 1.6% in 1994 due,
in large measure, to the impact of the Cable Television Consumer Protection Act
of 1992 (Cable Act) on the Company's Fairfax County, Virginia, cable system
(Fairfax Cable). Despite a 3.9% increase in the number of subscribers during the
year, to 214,300 at December 25, 1994, average revenue per subscriber (excluding
pay-per-view) declined 7% in 1994. The decrease in average revenue per
subscriber reflects a decline in the percentage of subscribers taking expanded
cable service. To a significant degree, this is attributable to Cable Act
provisions which now enable subscribers who take basic cable service to
subscribe directly to premium channels. Also, Fairfax Cable's overall rates for
its regulated services were essentially frozen during the 23-month period from
February 1,1993, through December 31, 1994, again largely the result of the
Cable Act. These factors, together with a small 1994 decline in pay-per-view
revenues (the result of fewer popular special event and movie offerings during
the year), more than offset increased installation revenues from subscriber
growth. Unlike its smaller Fredericksburg Cable system, which based its rates
for regulated cable services on the Federal Communications Commission's (FCC's)
"benchmark" rates, the Company's Fairfax Cable system based its regulated cable
service rates on the FCC's "cost-of-service" rules which, subject to certain
limitations, allow a cable operator to base its rates on its normal operating
expense rather than on an average industry rate. The Company believes it has
complied with all applicable provisions of the Cable Act, including its rate
setting provisions. However, rates charged for its regulated cable services are
subject to review by local franchising authorities and the FCC, and some of the
Company's rates are under review by franchisors and under review by or on appeal
to the FCC. The Company may be subject to a refund liability and/or rate
adjustments if its rates are successfully challenged. In the competitive arena,
two telephone companies operating within areas served by the Company's cable
operations have obtained rulings from the United States District Court for the
Eastern District of Virginia which effectively open the way for them to provide
video services. Both have applied to the FCC for authority to provide video
services via video dial-tone, and one has been separately granted authority to
conduct an "experiment" in which such services will be provided to a limited
population. In light of these events, the Company is developing several
strategic planning alternatives, including entry into the commercial and
residential telephone market, for the future operation of its cable systems. The
Company estimates that the capital investment required for it to compete
effectively in the telephony market could exceed $200 million over a ten-year
period.
<PAGE> 38
Newsprint Segment revenues increased 2% in 1994, to $102.4 million from
$100.4 million in 1993. The increase was attributable to the Company's Garden
State Paper newsprint mill, located in Garfield, New Jersey, where a 1.5% (3,400
ton) rise in finished newsprint sold, together with increased outside sales of
waste paper (principally corrugated), more than offset the effect of a 1.5%
decline in the 1994 average realized selling price per ton of finished
newsprint. In general, average newsprint selling prices rose during the course
of 1994, beginning the year at $385 per ton as customers worked-off excess
inventories built-up in 1993, and rising to $407 per ton in June and $455 per
ton in December when discount reductions of 7% and 6% announced in March and
September became fully implemented in June and December. On January 1, 1995, a
further discount reduction of 7% became effective, and is expected to be fully
implemented in March 1995. Although newsprint selling prices rose during the
course of the year, the average realized price for all of 1994 declined to $410
per ton from $416 per ton in 1993. However, continued strong demand, driven by
increased newspaper advertising linage, should permit additional upward
newsprint price flexibility in 1995. The Garden State mill is operating at full
capacity, and is sold-out through the end of 1995. Despite the im-
41
pact of rising newsprint prices on the Company's own newspaper operations, such
price increases result in an overall benefit to the Company on a consolidated
basis because it sells more newsprint in the marketplace than it consumes
internally. Newsprint Segment revenues for 1994 include $2.9 million ($3.5
million in 1993) of option fees from a Mexican newsprint affiliate. As
previously mentioned, during the fourth quarter of 1994 the Company revised its
agreement with the majority owner of the Mexican newsprint affiliate regarding
the sale of the Company's interest in the affiliate. Originally scheduled to
occur on October 15, 1994 (the date on which the affiliate's obligation to pay
option fees to the Company ceased), the sale instead became effective in
February 1995, for $3.6 million plus interest from the originally scheduled sale
date. The sale concluded a 20-year relationship with that venture under which
the Company introduced to Mexico its process of producing 100% recycled
newsprint from old newspapers.
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
<PAGE> 39
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.
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 was negligible.
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
42
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. In addition to
those of its wholly owned newsprint operations, Newsprint Segment revenues for
1993 included $3.5 million ($3.3 million in 1992) of option fees received from
the Company's Mexican newsprint affiliate.
OPERATING COSTS
1994 Compared to 1993
Total operating costs in 1994 of $560 million rose $19.5 million (3.6%) from
$540.5 million in 1993. The following discussion focuses on the direct operating
<PAGE> 40
costs of each of the Company's significant business segments, excluding
consolidated depreciation and amortization expense which is addressed
separately.
Operating costs for the Newspaper Segment rose $4 million (1.6%) in 1994
from the comparable 1993 amount. Virtually all of the increase was attributable
to employee compensation and benefit costs which rose $4 million (3.2%) in the
year. Other increases of $.5 million (3.6%) in circulation promotion incentives
and $.4 million (10.7%) in repairs and maintenance costs, together with lesser
increases in production supplies, advertising, utilities and other cost
categories, were offset by reductions in insurance costs, down $1.8 million
principally as a result of reduced workers' compensation costs, bad debt
expense, down $.7 million (28.1 %) as a result of improved collection experience
and receivables aging, and newsprint expense, down $.3 million as a result of a
3% average price decline partially offset by a 2.4% increase in tons consumed.
Although the full-year average cost per ton of newsprint declined in 1994 from
the year-ago period, the cost of newsprint that will be consumed by the
Company's newspapers in 1995 is expected to rise significantly (perhaps 35% or
more) as a result of newsprint price increases.
Television Segment operating costs increased $6.7 million (6%) in 1994
over 1993. Of the total increase, $4.7 million (representing a 6.2% rise from
1993) occurred at the Company's cable TV operations and $2 million (representing
a 5.7% increase above 1993 costs) occurred at its broadcast TV stations. Total
employee compensation and benefit costs for the Segment increased $1.9 million
(4.3%) reflecting compensation increases. Maintenance and repair costs increased
$1.2 million (30.1%) during the year, virtually all of which was attributable to
increased line maintenance and converter repair costs at the Company's cable TV
operations. Overall programming costs rose $1.1 million (3.9%), principally the
result of the addition of new cable programming together with a rise in
programming rates and increases in the number of cable subscribers. Together
with other increases in operating costs, including increased legal expenses
associated primarily with cable reregulation and related compliance matters,
these increases more than offset reduced insurance expense reflecting decreased
worker's compensation costs.
Newsprint Segment operating costs rose $7.2 million (8.4%) in 1994 from the
comparable 1993 amount. Approximately $3.3 million of the increase was directly
attributable to the rise in the cost of this Segment's principal raw material,
recovered newspapers (ONP). During 1994, increased domestic and foreign market
demand for ONP resulted in dramatic price rises which, for the Company's
newsprint operations, had the effect of increasing the average monthly cost per
ton of ONP from $44 in January to $70 in December. For the full year the average
annual cost per ton of ONP rose by nearly 22%, to $52 in 1994. In addition,
employee compensation and benefit costs rose $.7 million (3%), and energy costs
increased a similar $.7 million (3%) on both fuel price and consumption
increases. Together, these and other operating cost increases more than offset
the effect of declines in insurance expense (principally worker's compensation).
43
Consolidated depreciation and amortization expense declined $1.4 million
(2.5%), to $55.5 million in 1994. Declines occurred in each of the Company's
principal business segments and were attributable to certain newspaper press,
broadcast and other equipment becoming fully depreciated. The broad-based
declines in depreciation expense more than offset $1 million of depreciation
related to the new Winston-Salem Journal production facility which was completed
and placed in service in July and became fully operational in September 1994.
<PAGE> 41
1993 Compared to 1992
Total 1993 operating costs of $540.5 million increased $5.5 million (1%)
from the previous year. 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.
<PAGE> 42
OTHER INCOME (EXPENSE)
The principal components of other income (expense) are interest on Company
indebtedness, investment income or (loss) from the Company's unconsolidated
affiliates and, in 1994, the gain on sale of the Company's investment in Garden
State Newspapers, Inc. (GSN).
44
1994 Compared to 1993
Interest expense decreased 20.3% in 1994, to $16.9 million from $21.3
million in 1993. The decrease was primarily attributable to the significant
decline in outstanding debt, which averaged $204 million in 1994 compared to
$292 million in 1993. The effect of this 30% decrease in average outstanding
debt, together with a comparative increase of $.5 million in the amount of
interest capitalized (primarily related to the new Winston-Salem production
facility), more than offset the effect of a two percentage point increase in the
Company's effective borrowing rate, which rose to 9.2% in 1994 from 7.2% in
1993. The decrease in average debt outstanding was directly attributable to
increased cash flow and net income, both of which benefited significantly from
the sale of the Company's GSN investment (see following discussion).
The Company's investment income from unconsolidated affiliates rose to $2.9
million in 1994 from a loss of $1 million in 1993. Two significant events
concerning the Company's unconsolidated affiliates occurred in 1994. First, on
May 20, 1994, the Company sold its investment in GSN for cash of $63 million and
the 9% cumulative preferred stock ($30 million par value) of Denver Newspapers,
Inc. (DNI), which had a fair value on that date of $34 million. Second, on
September 28, 1994, the Company exercised an option, for $40,000, to purchase
40% of the common stock of DNI, the parent company of The Denver Post.
Consequently, during the second quarter of 1994 the Company began to recognize
investment income from its DNI preferred stock and, effective with the fourth
quarter of 1994, the Company began recognizing in its earnings 40% of DNI's net
income applicable to common stockholders.
The increase in investment income from unconsolidated affiliates was wholly
attributable to the recognition, beginning in 1994, of income from the Company's
investment in the common and preferred stock of DNI, which more than offset the
increased year-over-year loss from Southeast Paper Manufacturing Company
(SEPCO). Investment income earned on the DNI preferred stock investment, which
has an effective yield of 12%, amounted to $2.55 million. Combined with an
additional $2.04 million recognized in the fourth quarter of 1994, representing
the Company's 40% equity in DNI's earnings applicable to common stockholders,
total pretax income from its DNI investment in 1994 approximated $4.6 million.
DNI's revenues and net income for the one-quarter period ended December 25,
1994, rose 16.1% and 68.6%, respectively, from the prior comparable period (a
period during which the Company had no DNI ownership position), aided by strong
retail and classified advertising revenues. Circulation revenue declined 7% from
the comparable year-ago period, largely the result of selective, competitive
rate reductions which more than offset the effect of daily and Sunday average
volume increases of 3.7% and .25%, respectively. DNI's newsprint cost is
expected to rise significantly in 1995 as a result of newsprint price increases.
For the third consecutive year the Company's SEPCO newsprint affiliate reported
a net loss, although a reduction in its fourth quarter loss, to $.8 million from
a $2.8 million loss in the comparable 1993 period, reflected significant
improvement. As was the case with the Company's wholly owned newsprint
operations, the beginning of 1994 at SEPCO was characterized by weak demand and
steeply discounted newsprint selling prices. However, demand firmed-up during
<PAGE> 43
the year enabling SEPCO to decrease its selling price discounts, with the most
recent discount reduction becoming effective in December. For the year, SEPCO's
average realized selling price approximated $406 per ton, compared to $407 per
ton in 1993, and sales volume increased by 12,900 tons, up 2.8%. The resulting
volume-generated revenue increase was insufficient to return SEPCO to
profitability in 1994 as increased costs for ONP and other raw materials,
together with increased energy and repair and maintenance costs, had an
essentially offsetting effect. See Note 3 to the accompanying consolidated
financial statements for additional information regarding the Company's
investments in unconsolidated affiliates.
1993 Compared to 1992
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, princi-
45
pally 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 remained soft in early 1994.
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 estimated
obligations relating to disposed operations (down $2.1 million) and interest
income (down $.9 million).
NET INCOME
1994 Compared to 1993
Net income for 1994 was $117 million ($4.45 per share) compared to $25.7
million ($0.98 per share) in 1993. Net income for 1994 included a gain of $83.3
million ($3.17 per share) from the sale, in the second quarter of 1994, of the
Company's investment in GSN (see Note 3 to the accompanying consolidated
financial statements for a further discussion of the GSN sale). Excluding the
GSN gain, 1994 net income was $33.7 million ($1.28 per share), up 31.3% from net
income of $25.7 million in 1993.
The following discussion focuses on the pretax operating income of each of
the Company's significant business segments, and on income taxes.
Operating income for the Newspaper Segment rose 60.9% in 1994, to $31.5
million from $19.6 million in 1993. All three of the Company's metropolitan
newspapers contributed to the improvement, led by The Tampa Tribune where
<PAGE> 44
operating income rose 84% from the prior year. On a combined basis, newspaper
advertising and circulation revenues increased 6% and 3.3%, respectively, the
effect of which more than offset a 1.4% increase in operating costs, which
included approximately $1 million of increased 1994 depreciation expense related
to the new Winston-Salem production facility.
Television Segment operating income declined 2.4% in 1994, to $34.3
million from $35.2 million in 1993. Within the Segment, combined operating
income of the Company's three broadcast TV stations, paced by WFLA-TV in Tampa,
rose $6.4 million. The improvement resulted primarily from a combined revenue
increase of 15.3% on strong local, national and political advertising growth.
Broadcast TV operating expenses increased 4.4% in the year. The operating income
growth attributable to the Company's broadcast TV stations was more than offset
by a decline in profitability at the Company's cable TV operations. The combined
effects of the Cable Act, including a 23-month rate freeze (since February 1,
1993) at the Company's Fairfax Cable system, together with increases in
programming and other direct costs which could not be recouped through regulated
rates, resulted in reduced gross margins and a $7.2 million decline in combined
cable TV operating income. On January 1, 1995, Fairfax Cable implemented its
first rate adjustment allowable under the Cable Act, increasing its basic and
program service tier rates by approximately 2.1% and 4.5%, respectively. The new
rates should result in improved cable profitability in 1995, albeit only
modestly.
Newsprint Segment operating income declined to $.5 million in 1994 from
$5.7 million in 1993. The decrease was primarily attributable to the results of
the Company's Garden State Paper newsprint mill and, to a lesser extent, to the
1994 reduction in option fee income from the Company's Mexican newsprint
affiliate. At Garden State, the decline was principally attributable to a 7.4%
increase in operating expenses, largely the result of the increased cost of its
primary raw material, ONP, the effect of which more than offset a 2%
46
increase in revenues. Additionally, the scheduled termination, in October 1994,
of option fees from the Company's Mexican newsprint affiliate, which resulted in
a $.6 million decrease in 1994 option fee income (to $2.9 million from $3.5
million in 1993), was also a contributing factor to the decline in operating
income. As previously mentioned, the Company sold its investment in its Mexican
newsprint affiliate in February 1995.
Income tax expense for 1994 increased $12.8 million (97.2%), to $26 million
in the current year compared to $13.2 million in 1993. The increase was
attributable to two factors: the $91.5 million (pretax) gain on the sale of the
Company's investment in GSN which resulted in $8.2 million of income tax expense
and the improved operating income for the year. Excluding the effect of the GSN
sale, 1994 pretax income approximated $51.4 million and associated income tax
expense was $17.7 million, resulting in a 1994 effective income tax rate of
34.4%. This compares with 1993 pretax income of $38.9 million, associated income
tax expense of $13.2 million, and a 1993 effective tax rate of 33.9%. The slight
rise in the 1994 effective tax rate resulted principally from a decrease in the
favorable tax effect of certain insurance programs. See Note 6 to the
accompanying consolidated financial statements for additional information
regarding income taxes.
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
<PAGE> 45
($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.
Newspaper Segment operating income rose 19.7% in 1993, 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 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.
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.
Income taxes in 1993 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 ex-
47
pense 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.
<PAGE> 46
LIQUIDITY AND CAPITAL RESOURCES
Funds generated by operating activities during 1994 rose $17.7 million
(20.7%), to $102.8 million. The rise was attributable to increased net income
and to the reduced level of funds applied to accounts payable and other current
liabilities. Together, these more than offset the effect of comparative
increases in accounts receivable and inventories which rose in 1994 as a result
of increased sales and production demands. The $102.8 million of funds generated
by operating activities in 1994, along with $57.5 million of net cash proceeds
from the sale of GSN and a combined $6.2 million from other sources, were used
to curtail $89.3 million of long-term debt, and to fund capital expenditures and
dividends to stockholders of $56.9 million and $11.6 million, respectively. The
remaining excess funds ($9 million) were invested in short-term cash equivalent
securities at December 25, 1994. These funds, together with funds generated by
operations during the first-half of 1995 and, to the extent necessary, long-term
borrowings under an existing credit facility, will be used to curtail $43.8
million of 9.27% notes due in July 1995. Capital expenditures of $56.9 million
made during 1994 included approximately $30 million for the new Winston-Salem
Journal production facility (completed in July 1994, at a total cost of
approximately $44 million) and approximately $11 million for the continued
growth and expansion of the Fairfax Cable system.
During 1994, the Company applied excess cash generated from operations and
other sources, including the majority of the cash proceeds from the sale of GSN,
toward the reduction of debt. As a consequence, total debt outstanding declined
to $172.5 million at December 25, 1994, a reduction of $89.3 million from the
year-ago level of $261.8 million. Although capital expenditures are expected to
increase during 1995 to approximately $80 million from the 1994 level of $56.9
million, barring unexpected funds requirements the Company anticipates that it
will be able to reduce its debt level further in 1995. At December 25, 1994, the
Company had available unused credit lines of $180 million under a five-year
revolving credit facility with six banks. To ensure continued flexibility should
unexpected needs arise, including growth opportunities through internal
expansion or by acquisition, the Company also entered into a three-year
agreement in early 1995 with an insurance company which makes available to the
Company the opportunity to borrow up to $150 million under senior notes at
prevailing interest rates.
OUTLOOK FOR 1995
The Company enters 1995 on a positive note. The economy continues to be
strong and the Company's newspaper and broadcast television units are performing
well. All indications are that a strong recovery now underway in newsprint
selling prices will more than offset the adverse effect of such price increases
on the Company's newspapers. While cable television's earnings growth will
continue to be restrained by regulatory dictates, the Company remains confident
that its cable operations are poised to resume positive growth and improved
profit margins. Overall, the Company looks to continued growth and profitability
in 1995.
48
<PAGE> 47
<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>
------------------------------------------------------------------------------------------
1994
Revenues $ 149,390 $ 154,608 $ 155,192 $ 167,057
Operating income 12,439 18,452 15,632 19,728
Net income 3,949 92,889 8,022 12,149
Net income per share 0.15 3.54 0.30 0.46
------------------------------------------------------------------------------------------
Shares traded 1,481 1,073 1,051 1,554
Stock price range $24.88-29.38 $21.75-28.50 $25.63-29.88 $27.50-29.88
Quarterly dividend paid $ 0.11 $ 0.11 $ 0.11 $ 0.11
------------------------------------------------------------------------------------------
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 paid $ 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 25, 1994, was: Class A common -
2,672, Class B common - 18.
* Second quarter 1994 includes a gain of $91.5 million ($83.3 million
after-tax; $3.17 per share) related to the sale of the Company's
investment in Garden State Newspapers, Inc., in May 1994, for $63 million
in cash and Denver Newspapers, Inc., preferred stock valued at $34
million.
* 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.
</TABLE>
49
<PAGE> 48
<TABLE>
Media General, Inc.
Operating Information
(Dollar amounts in thousands)
Media General Metropolitan Newspapers
-------------------------------------
<CAPTION>
Richmond (a) Tampa Winston-Salem
------------------------------ ------------------------------ ----------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average
Circulation
Daily 212,189 212,805 228,272 265,616 269,496 289,091 90,275 91,513 91,515
Sunday 254,971 253,537 254,636 361,147 364,864 377,249 102,975 105,380 107,417
------------------------------------------------------------------------------------------------------------------------
ROP full run
(inches)
Retail 769,510 781,884 904,090 728,972 662,952 729,879 665,894 719,606 767,869
General 62,546 58,637 73,533 91,698 74,606 81,212 45,472 34,916 29,841
Classified 718,612 684,856 774,626 934,831 840,680 827,537 827,202 754,332 734,715
----------------------------------------------------------------------------------------------------------
Total 1,550,668 1,525,377 1,752,249 1,755,501 1,578,238 1,638,628 1,538,568 1,508,854 1,532,425
ROP part run
(inches) 197,362 202,610 241,638 3,813,876 4,500,283 4,963,129 88,159 131,099 138,668
Preprints
(inches)
Full run 668,685 693,560 819,130 852,831 846,584 708,385 396,385 359,909 358,102
Part run 192,050 139,017 129,971 962,442 999,444 1,120,102 708,180 674,860 600,194
----------------------------------------------------------------------------------------------------------
Total 860,735 832,577 949,101 1,815,273 1,846,028 1,828,487 1,104,565 1,034,769 958,296
------------------------------------------------------------------------------------------------------------------------
Advertising
Revenue
Retail $ 41,832 $ 41,566 $ 42,089 $ 61,281 $ 60,632 $ 62,105 $ 17,775 $ 17,446 $ 17,913
General 6,193 6,167 6,036 11,991 11,184 11,265 2,318 1,970 1,777
Classified 32,221 29,967 27,605 52,401 45,205 42,308 12,266 10,527 10,056
Other 4,250 4,052 3,458 4,016 4,006 3,807 1,328 1,165 1,379
----------------------------------------------------------------------------------------------------------
Total $ 84,496 $ 81,752 $ 79,188 $ 129,689 $ 121,027 $ 119,485 $ 33,687 $ 31,108 $ 31,125
------------------------------------------------------------------------------------------------------------------------
Circulation
Revenue $ 27,230 $ 26,038 $ 23,423 $ 24,184 $ 23,436 $ 23,736 $ 7,495 $ 7,562 $ 6,948
------------------------------------------------------------------------------------------------------------------------
Population 733,200 721,700 712,600 875,300 871,500 866,700 276,000 273,000 270,700
Households 288,700 283,000 278,500 342,800 340,500 338,000 112,500 110,900 109,600
Retail Sales $7,575,185 $6,853,367 $5,845,873 $7,347,861 $6,806,996 $6,602,012 $2,291,496 $2,700,871 $2,457,880
------------------------------------------------------------------------------------------------------------------------
(a)Data for 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>
50
<PAGE> 49
<TABLE>
Media General Broadcast Television Group
----------------------------------------
(Dollar amounts in thousands)
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
WFLA (NBC) - Tampa, Fla. (a)
Market Gross Time Sales (b) $ 201,477 $ 169,348 $ 163,752
Population 3,177,000 3,173,000 3,150,000
Homes with TV 1,390,370 1,384,150 1,374,300
Market Rank 15 15 14
Audience % Share* 17 18 17
Station Rank* 2 2 2
WJKS (ABC) - Jacksonville, Fla. (a)
Market Gross Time Sales (b) $ 73,754 $ 65,296 $ 57,000
Population 1,241,000 1,227,000 1,223,300
Homes with TV 487,890 484,220 471,500
Market Rank 55 54 55
Audience % Share* 12 12 12
Station Rank* 3 3 3
WCBD (ABC) - Charleston, S.C. (a)
Market Gross Time Sales (b) $ 30,707 $ 26,968 $ 26,000
Population 628,000 618,000 607,000
Homes with TV 233,720 229,740 225,180
Market Rank 105 105 106
Audience % Share* 18 22 20
Station Rank* 3 2 2
(a) Source: November Nielsen Rating Books
(b) Includes gross local, national
and political time sales only
* Sign On To Sign Off.
Media General Cable of Fairfax
------------------------------
(Dollar amounts in thousands except
per home and subscriber amounts)
<CAPTION>
1994 1993 1992
-------- ------- --------
<S> <C> <C> <C>
Population, Fairfax County 881,247 867,442 856,200
Subscribers 214,259 206,228 201,789
Homes passed 311,506 304,936 298,785
Penetration % 68.8 67.6 67.5
Pay to basic ratio 1.55 .89 .94
Cumulative miles of cable installed 4,008 3,939 3,862
Revenue $ 112,194 $ 115,315 $ 108,898
Monthly revenue per home passed (in dollars) 28.65 30.39 29.47
Monthly average revenue
per subscriber (in dollars) 42.50 45.15 44.18
Capital expenditures 15,310 12,658 12,313
</TABLE>
51
<PAGE> 50
<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>
1994 1993 1992 1991
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Summary of Operations
Operating revenues:
Newspaper $324,366 $307,058 $299,038 $299,173
Television (d) 185,748 179,477 169,946 159,596
Newsprint (d) 102,411 100,371 96,540 116,717
Auxiliary 13,722 13,918 12,135 10,414
--------- --------- --------- ---------
Total operating revenues $626,247 $600,824 $577,659 $585,900
------------------------------------------------------------------------------------------
Operating income (a)(d) $ 66,251 $ 60,303 $ 42,613 $ 36,341
Interest expense (16,948) (21,274) (17,559) (16,056)
Investment income (loss) -
unconsolidated affiliates 2,935 (990) (4,926) (75,640)
Gain on sale of Garden State
Newspapers investment 91,520 --- --- ---
Other, net (789) 835 6,131 2,659
--------- --------- --------- ---------
Income (loss) before income taxes
and cumulative effect of changes
in accounting principles 142,969 38,874 26,259 (52,696)
Income taxes (25,960) (13,166) (7,946) (9,395)
Cumulative effect of changes in
accounting principles (b) --- --- 687 ---
--------- --------- --------- ---------
Net income (loss) $117,009 $ 25,708 $ 19,000 $(62,091)
==========================================================================================
Per Share Data: (b)(c)
Income (loss) before cumulative effect
of changes in accounting principles $ 4.45 $ 0.98 $ 0.70 $ (2.39)
Cumulative effect of changes in
accounting principles --- --- 0.03 ---
------------------------------------------------------------------------------------------
Net income (loss) 4.45 0.98 0.73 (2.39)
Cash dividends 0.44 0.44 0.44 0.44
Common stock price
High 29.88 30.63 22.63 22.88
Low 21.75 16.88 14.50 16.63
Stockholders' equity 12.68 8.59 8.04 7.74
==========================================================================================
Other Financial Data:
Total assets $787,165 $745,242 $787,425 $762,311
Working capital 14,833 9,551 9,657 3,668
Capital expenditures 56,919 32,837 92,319 115,383
Total debt 172,500 261,756 320,506 277,202
Stockholders' equity 333,363 225,434 209,941 201,868
Total debt/total capital ratio 34.1% 53.7% 60.4% 57.9%
Shares outstanding at fiscal
year-end 26,296 26,252 26,099 26,071
==========================================================================================
<PAGE> 51
(a) Operating income includes the following pretax special charges: 1991-$11.3 million for an early retirement program and
newspaper merger costs; 1989-$10.3 million for the write-off of unrecovered costs related to a lawsuit against William
B. Tanner and others; 1988-$66.3 million primarily related to the Company's discontinuance of Broadcast Services
operations; 1986-$30.8 million 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.
52
</TABLE>
<PAGE> 52
<TABLE>
Media General, Inc. Ten-Year Financial Summary - Continued
(In thousands, except per share amounts)
<CAPTION>
1990 1989 1988 1987 1986 1985
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Operating revenues:
Newspaper $302,010 $298,138 $298,915 $285,767 $264,136 $251,636
Television (d) 153,427 139,399 198,201 193,544 167,062 128,710
Newsprint (d) 132,915 131,310 216,142 194,026 164,621 161,206
Auxiliary 25,315 26,285 25,613 29,811 30,054 30,496
--------- --------- --------- --------- --------- ---------
Total operating revenues $613,667 $595,132 $738,871 $703,148 $625,873 $572,048
------------------------------------------------------------------------------------------------------------------
Operating income (a)(d) $ 63,825 $ 44,139 $ 15,412 $ 77,638 $ 28,959 $ 55,036
Interest expense (19,831) (25,385) (18,089) (15,780) (13,026) (11,424)
Investment income (loss) -
unconsolidated affiliates (1,303) 10,562 16,507 11,898 8,339 6,404
Gain on sale of Garden State
Newspapers investment --- --- --- --- --- ---
Other, net 814 684 369 265 415 108
--------- --------- --------- --------- --------- ---------
Income (loss) before income taxes
and cumulative effect of changes
in accounting principles 43,505 30,000 14,199 74,021 24,687 50,124
Income taxes (18,025) (9,280) (5,380) (31,100) (7,580) (17,300)
Cumulative effect of changes in
accounting principles (b) --- --- --- --- --- ---
--------- --------- --------- --------- --------- ---------
Net income (loss) $ 25,480 $ 20,720 $ 8,819 $ 42,921 $ 17,107 $ 32,824
==================================================================================================================
Per Share Data: (b)(c)
Income (loss) before cumulative effect
of changes in accounting principles $ 0.98 $ 0.80 $ 0.31 $ 1.50 $ 0.60 $ 1.15
Cumulative effect of changes in
accounting principles --- --- --- --- --- ---
------------------------------------------------------------------------------------------------------------------
Net income (loss) 0.98 0.80 0.31 1.50 0.60 1.15
Cash dividends 0.44 0.42 0.39 0.34 0.30 0.29
Common stock price
High 31.63 40.00 49.00 48.25 24.69 21.63
Low 15.38 30.38 33.75 21.31 18.00 15.88
Stockholders' equity 10.58 10.02 9.80 12.34 11.15 10.17
==================================================================================================================
Other Financial Data:
Total assets $775,944 $782,657 $852,764 $823,094 $740,485 $688,092
Working capital 21,333 62,210 55,488 60,439 52,459 64,342
Capital expenditures 73,686 69,117 77,717 80,593 100,314 90,621
Total debt 234,565 275,928 274,985 234,348 203,711 183,074
Stockholders' equity 273,818 258,637 252,419 348,431 314,459 305,351
Total debt/total capital ratio 46.1% 51.6% 52.1% 40.2% 39.3% 37.5%
Shares outstanding at fiscal
year-end 25,874 25,806 25,751 28,233 14,101 7,509
==================================================================================================================
53
</TABLE>
<PAGE> 1
Exhibit 21
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 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%
Denver Newspapers, Inc. Delaware 40%
Virginia Paper Manufacturing Corp. Virginia 100%
Southeast Paper Manufacturing Co.
(Partnership) Georgia 33.33%
<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 24, 1995, included in
the 1994 Annual Report to Stockholders of Media General, Inc.
Our audits also included the financial statement schedule of Media General,
Inc., listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents 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 24, 1995, 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 schedule of Media General, Inc., included in this Annual Report (Form
10-K) of Media General, Inc., for the fiscal year ended December 25, 1994.
ERNST & YOUNG LLP
Richmond, Virginia
March 21, 1995
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDIA
GENERAL, INC.'S CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF
OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-25-1994
<PERIOD-END> DEC-25-1994
<CASH> 11,663
<SECURITIES> 0
<RECEIVABLES> 72,261
<ALLOWANCES> 3,360
<INVENTORY> 11,360
<CURRENT-ASSETS> 114,662
<PP&E> 949,282
<DEPRECIATION> 432,238
<TOTAL-ASSETS> 787,165
<CURRENT-LIABILITIES> 99,829
<BONDS> 163,500
<COMMON> 131,482
0
0
<OTHER-SE> 201,881
<TOTAL-LIABILITY-AND-EQUITY> 787,165
<SALES> 626,247
<TOTAL-REVENUES> 626,247
<CGS> 332,557
<TOTAL-COSTS> 332,557
<OTHER-EXPENSES> 55,450
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,948
<INCOME-PRETAX> 142,969
<INCOME-TAX> 25,960
<INCOME-CONTINUING> 117,009
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 117,009
<EPS-PRIMARY> 4.45
<EPS-DILUTED> 4.45
</TABLE>
