SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to _____________
Commission file number 0-9786
UNITED TELEVISION, INC.
(Exact name of registrant as specified in its charter)
Delaware 41-0778377
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8501 Wilshire Boulevard, Suite 340 90211
Beverly Hills, California (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, inccluding area code: (310) 854-0426
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
(Title of class)
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. [ ]
<PAGE>
The aggregate market value of the voting stock held by non-affiliates of
the registrant, as of February 28, 1994, was approximately $183,898,000.
As of February 28, 1994, there were 10,152,328 shares of the registrant's
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The documents incorporated by reference into this Form 10-K and the Parts
hereof into which such documents are incorporated are listed below:
Document Part
Those portions of the registrant's annual
report to stockholders for the fiscal year
ended December 31, 1993 (the "Annual
Report") that are specifically identified
herein as incorporated by reference into this
Form 10-K. II
Those portions of the registrant's proxy
statement for the registrant's 1994 Annual
Meeting (the "Proxy Statement") that are
specifically identified herein as incorporated
by reference into this Form 10-K. III
<PAGE>
PART I
ITEM 1. BUSINESS.
General
United Television, Inc. ("UTV"), the registrant, was organized in
1956 under the laws of the State of Delaware. UTV is the majority owned
(54.3% at February 28, 1994) subsidiary of BHC Communications, Inc. ("BHC"),
which is a majority owned (71.8% at February 28, 1994) subsidiary of
Chris-Craft Industries, Inc. ("Chris-Craft"). UTV operates five of BHC's
eight television stations that comprise Chris-Craft's Television Division.
At February 28, 1994, UTV had 423 full-time employees and 62
part-time employees.
Television Broadcasting
UTV operates three very high frequency ("VHF") television stations
and two ultra high frequency ("UHF") television stations. Commercial tele-
vision broadcasting in the United States is conducted on 68 channels numbered
2 through 69. Channels 2 through 13 are in the VHF band, and channels 14
through 69 are in the UHF band. In general, UHF stations are at a disad-
vantage relative to VHF stations, because UHF frequencies are more difficult
for households to receive. This disadvantage is eliminated when a viewer
receives the UHF station through a cable system.
Commercial broadcast television stations may be either affiliated
with one of the three national networks (ABC, NBC and CBS) or may be inde-
pendent. In addition, Fox Broadcasting Company has established itself as
a national network by entering into affiliation agreements with independent
stations in many television markets. Chris-Craft, through BHC, is organ-
izing, in partnership with Paramount Communications, Inc., an additional
network, The Paramount Network, which currently plans to commence broad-
casting in January 1995. There can be no assurance that the network will
be viable. Moreover, UTV knows of one other effort to establish a network,
and it is considered unlikely that two additional networks will be viable.
<PAGE>
The following table sets forth certain information with respect to
UTV's stations and their respective markets:
Total
Commercial
DMA TV Stations Commercial
Station and House- DMA Operating Cable
Location(a) Channel holds(b) Rank(b) in Market(c) Penetration(d)
KMSP
Minneapolis/
St. Paul 9 1,389,420 14th 4VHF 47%
3UHF
KTVX
Salt Lake City 4 616,720 38th 4VHF 51%
2UHF
KMOL
San Antonio 4 610,660 40th 3VHF 63%
3UHF
KBHK
San Francisco 44 2,253,220 5th 4VHF 67%
10UHF
KUTP
Phoenix 45 1,097,480 20th 4VHF 53%
4VHF
_______________
(a) All stations are independent, except for KTVX, an ABC affiliate, and
KMOL, an NBC affiliate.
(b) Designated Market Area ("DMA") is an exclusive geographic area
consisting of all counties in which the home-market commercial sta-
tions received a preponderance of total viewing hours. The ranking
shown is the nationwide rank, in terms of television households in
DMA, of the market served by the station. Source: Nielsen Media
Research television households universe estimates.
(c) Additional channels have been allocated by the Federal Communications
Commission ("FCC") for activation as commercial television stations in
certain of these markets. Also, additional stations may be located
within the respective DMAs of UTV stations but outside the greater
metropolitan television markets in which UTV stations operate.
(d) Cable penetration refers to the percentage of DMA television viewing
households receiving cable television service, as estimated by Nielsen
Media Research.
<PAGE>
Television stations derive their revenues primarily from selling
advertising time. The television advertising sales market consists primarily
of national network advertising, national spot advertising and local spot
advertising. An advertiser wishing to reach a nationwide audience usually
purchases advertising time directly from the national networks, from
"superstations" (i.e., broadcast stations carried by cable operators
in areas outside their broadcast coverage area) or from "unwired" networks
(groups of otherwise unrelated stations whose advertising time is
combined for national sale). A national advertiser wishing to reach a
particular regional or local audience usually buys advertising time from
local stations through national advertising sales representative firms
having contractual arrangements with local stations to solicit such
advertising. Local businesses generally purchase advertising from the
stations' local sales staffs.
Television stations compete for television advertising revenue
primarily with other television stations serving the same DMA. There
are 211 DMAs in the United States. DMAs are ranked annually by the
estimated number of households owning a television set within the DMA.
Advertising rates that a television station can command vary in part with
the size, in terms of television households, of the DMA served by the
station.
Within a DMA, the relative advertising rates charged by competing
stations depend primarily on three factors: the stations' program ratings
(number of television households or persons within those households tuned
to a program as a percentage of total television households or persons
within those households in the viewing area); the time of day the
advertising will run; and the demographic qualities of a program's viewers
(primarily age and sex). Ratings data for television markets are measured
by A.C. Nielsen Co. ("Nielsen"). This rating service uses two terms to
quantify a station's audience: rating points and share points. A rating
point represents one percent of all television households in the entire
DMA, and a share point represents one percent of all television households
within the DMA actually using at least one television set at the time of
measurement.
Because the major networks regularly provide first-run programming
during prime time viewing hours (in general, 8:00 P.M. to 11:00 P.M.
Eastern time), their affiliates generally (but do not always) achieve
higher audience shares during those hours than independent stations.
However, independent stations generally have substantially more advertising
time ("inventory") for sale than network affiliates, because the networks
use almost all of their affiliates' inventory during network shows.
Independent stations' smaller audiences and greater inventory during prime
time hours generally result in lower advertising rates charged and more
advertising time sold during those hours, whereas affiliates' larger
audiences and limited inventory generally allow affiliates to charge higher
advertising rates for prime time programming. By selling more advertising
time, an independent station typically achieves a share of advertising
revenues in its market greater than its audience ratings. On the other
hand, because a nonaffiliated station broadcasts more syndicated
programming than a network-affiliated station, total programming costs for
an independent station are generally higher than those of a network
affiliate in the same market.
Programming
UTV's independent stations depend heavily on independent third parties
for programming, as do UTV's network affiliates for their non-network
broadcasts. Recognizing the need to have a more direct influence on the
quality of programming available to its stations, and desiring to
participate in potential profits through national syndication of
programming, UTV has begun to invest directly in the development of
original programming. The aggregate amount invested through December 31,
1993 was not significant to UTV's financial position. BHC's independent
stations currently expect to broadcast, as affiliates of The Paramount
Network, four hours of original prime time programming over two nights per
week, beginning in January 1995. UTV's television stations also produce
programming directed to meet the needs and interests of the area served,
such as local news and events, public affairs programming, children's
programming and sports.
Programs obtained from independent sources consist principally of
syndicated television shows, many of which have been shown previously on a
network, and syndicated feature films, which were either made for network
television or have been exhibited previously in motion picture theatres
(most of which films have been shown previously on network and cable
television). Syndicated programs are sold to individual stations to be
broadcast one or more times. Independent television stations generally
have large numbers of syndication contracts; each contract is a license for
a particular series or program that usually prohibits licensing the same
programming to other television stations in the same market. A single
syndication source may provide a number of different series or programs.
Licenses for syndicated programs are often offered for cash sale
(i.e., without any barter element) to stations; however, some are offered
on a barter or cash plus barter basis. In the case of a cash sale, the
station purchases the right to broadcast the program, or a series of
programs, and sells advertising time during the broadcast. The cash price
of such programming varies, depending on the perceived desirability of the
program and whether it comes with commercials that must be broadcast (i.e.,
on a cash plus barter basis). Bartered programming is offered to stations
without charge, but comes with a greater number of commercials that must be
broadcast, and therefore with less time available for sale by the station.
Recently, the amount of bartered and cash plus barter programming broadcast
both industry-wide and by UTV's stations has increased substantially.
UTV television stations are frequently required to make substantial
financial commitments to obtain syndicated programming while such
programming is still being broadcast by a network and before it is
available for broadcast by UTV stations or before it has been produced.
Generally, syndication contracts require the station to acquire an entire
program series, before the number of episodes of original showings that
will be produced has been determined. While analyses of network audiences
are used in estimating the value and potential profitability of such
programming, there is no assurance that a successful network program will
continue to be successful or profitable when broadcast after network
airing.
For many years, the FCC has restricted the ability of television
networks to acquire financial interests in the production of television
shows by independent sources, or to participate in the syndication of
television programs, either on a first-run or an off-network basis. These
rules were based in part on concern that networks engaged in syndication
would have economic incentives to discriminate against independent stations
(such as those owned by UTV) in making programs available in the
syndication market, either by warehousing them or favoring the network's
owned or affiliated stations. Late in 1992, the United States Court of
Appeals for the Seventh Circuit remanded the rules to the FCC with
instructions to revisit the need for them. In 1993, the FCC adopted new
rules which allow networks to acquire financial interests and passive
syndication rights in off-network programs, but bar them from actively
syndicating such programs in the United States or delaying the entry into
syndication of any long-running prime time networked-owned series beyond
the fourth year after its network debut. The new rules also bar networks
from acquiring domestic financial interests or syndication rights in first-
run programs unless the network is the sole producer of the program and
prohibit networks from active domestic syndication of all first- run
programs. However, these rules are scheduled to expire in November 1995,
unless the FCC issues an order to the contrary. A number of petitions for
review of these new regulations have been filed, which have been
consolidated and transferred to the Seventh Circuit, where they remain
pending. UTV cannot predict the outcome of the proceedings in court or
before the FCC.
Pursuant to generally accepted accounting principles, commitments
for programming not available for broadcast are not recorded as liabilities
until the programming becomes available for broadcast, at which time the
related contract right is also recorded as an asset. UTV television
stations had unamortized film contract for programming available for
telecasting and deposits on film contracts for programming not available
for telecasting aggregating $30,320,000 as of December 31, 1993. The
stations were committed for film and sports rights contracts aggregating
$28,497,000 for programming not available for broadcasting as of that date.
License periods for particular programs or films generally run from one to
five years. Long-term contracts for the broadcast of syndicated television
series generally provide for an initial telecast and subsequent reruns for
a period of years, with full payment to be made by the station over a
period of time shorter than the rerun period. See Notes 1(D) and 7 of
Notes to Consolidated Financial Statements.
KTVX and KMOL are primary affiliates of their respective networks.
Network programs are produced either by the networks themselves or by
independent production companies and are transmitted by the networks to
their affiliated stations for broadcast.
In general, network primary affiliation agreements are automatically
renewed for two-year periods, unless advance written notice of termination
is given by either the affiliate or the network. The agreement gives the
affiliate the right to broadcast all programs transmitted by the network.
The affiliate must run in its entirety, together with all network
commercials, any network programming the affiliate elects to broadcast and
is allowed to broadcast a limited number of commercials it has sold. For
each hour of programming broadcast by the affiliate, the network generally
pays the affiliate a fee, specified in the agreement (although subject to
change by the network), which varies in amount depending on the time of day
during which the program is broadcast and other factors. Prime time
programming generally earns the highest fee. A network may, and sometimes
does, designate certain programs to be provided with no compensation to the
station.
An affiliate may accept or reject a program offered by a network and
instead broadcast programming from another source. Rejection of a program
gives the network the right to offer that program to another station in the
area.
Sources of Revenue
The principal source of revenues for UTV stations is the sale of
advertising time to national and local advertisers. Such time sales are
represented by spot announcements purchased to run between programs and
program segments and by program sponsorship. The relative contributions of
national and local advertising to UTV's gross revenues vary from time to
time. During the year ended December 31, 1993, national advertising con-
tributed 46%, and local advertising contributed 46%, of total gross
revenues. Most advertising contracts are short-term. Like that of the
television broadcasting business, generally, UTV's business is seasonal.
In terms of revenues, generally the fourth quarter is strongest, followed
by the second, third and first.
Advertising is generally placed with UTV stations through advertising
agencies, which are allowed a commission generally equal to 15% of the
price of advertising placed. National advertising time is usually sold
through an independent national sales representative, which also receives a
commission, while local advertising time is sold by each station's sales
staff. Practices with respect to sale of advertising time do not differ
markedly between UTV's network and non-network stations, although the
network-affiliated stations have less inventory to sell.
Government Regulation
Television broadcasting operations are subject to the jurisdiction of
the FCC under the Communications Act of 1934, as amended (the
"Communications Act"). The Communications Act empowers the FCC, among
other things, to issue, revoke or modify broadcast licenses, to assign fre-
quencies, to determine the locations of stations, to regulate the
broadcasting equipment used by stations, to establish areas to be served,
to adopt such regulations as may be necessary to carry out the provisions
of the Communications Act and to impose certain penalties for violation of
its regulations. UTV television stations are subject to a wide range of
technical, reporting and operational requirements imposed by the Communi-
cations Act or by FCC rules and policies.
The Communications Act provides that a license may be granted to any
applicant if the public interest, convenience and necessity will be served
thereby, subject to certain limitations, including the requirement that the
FCC allocate licenses, frequencies, hours of operation and power in a man-
ner that will provide a fair, efficient and equitable distribution of
service throughout the United States. Television licenses generally are
issued for five-year terms. Upon application, and in the absence of a con-
flicting application that would require the FCC to hold a hearing, or
adverse questions as to the licensee's qualifications, television licenses
have usually been renewed for additional terms without a hearing by the
FCC. An existing license automatically continues in effect once a timely
renewal application has been filed until a final FCC decision is issued.
KMSP's license renewal was granted on April 15, 1993, and is due
toexpire on April 1, 1998. KTVX's license renewal was granted on
September 29, 1993, and is due to expire on October 1, 1998. KMOL's
license renewal application is currently pending, subject to two petitions
challenging the station's compliance with FCC requirements concerning equal
employment opportunity; UTV has vigorously opposed the petitions, and
believes that they are without merit. KUTP and KBHK have each filed timely
renewal applications, which are pending. No petitions to deny any of those
applications have been filed, no competing applications have been filed,
and the deadlines for filing such petitions and competing applications have
all expired. Pursuant to FCC requirements, each station's application has
reported instances in which the station has exceeded the commercial limits
applicable to children's programs. In the case of KBHK, these instances
have been substantial, and the FCC has recently granted renewals, in such
cases, subject to forfeitures of as much as $80,000. WWOR's license
renewal was granted on January 22, 1992 and expires on June 1, 1994. A
renewal application was timely filed on January 31, 1994. The deadline for
filing petitions to deny or competing applications against that application
has not yet expired.
Under existing FCC regulations governing multiple ownership of
broadcast stations, a license to operate a television or radio station
generally will not be granted to any party (or parties under common
control) if such party directly or indirectly owns, operates, controls or
has an attributable interest in another television or radio station serving
the same market or area. The FCC, however, is favorably disposed to grant
waivers of this rule for certain radio station-television station
combinations in the top 25 television markets, in which there will be at
least 30 separately owned, operated and controlled broadcast licenses, and
in certain other circumstances.
FCC regulations further provide that a broadcast license will not be
granted if that grant would result in a concentration of control of radio
and television broadcasting in a manner inconsistent with the public
interest, convenience or necessity. FCC rules generally deem such con-
centration of control to exist if any party, or any of its officers,
directors or stockholders, directly or indirectly, owns, operates, controls
or has an attributable interest in more than 12 television stations, or in
television stations capable of reaching, in the aggregate, a maximum of 25%
of the national audience. This percentage is determined by the DMA market
rankings of the percentage of the nation's television households considered
within each market. Because of certain limitations of the UHF signal,
however, the FCC will attribute only 50% of a market's DMA reach to owners
of UHF stations for the purpose of calculating the audience reach limits.
Applying the 50% reach attribution rule to UHF stations KBHK and KUTP, the
eight BHC stations are deemed to reach approximately 18% of the nation's
television households. To facilitate minority group participation in radio
and television broadcasting, the FCC will allow entities with attributable
ownership interests in stations controlled by minority group members to
exceed the ownership limits.
The FCC's multiple ownership rules require the attribution of the
licenses held by a broadcasting company to its officers, directors and
certain of its stockholders, so there would ordinarily be a violation of
FCC regulations where an officer, director or such a stockholder and a
television broadcasting company together hold interests in more than the
permitted number of stations or more than one station that serves the same
area. In the case of a corporation controlling or operating television
stations, such as UTV, there is attribution only to stockholders who own 5%
or more of the voting stock, except for institutional investors, including
mutual funds, insurance companies and banks acting in a fiduciary capacity,
which may own up to 10% of the voting stock without being subject to such
attribution, provided that such entities exercise no control over the
management or policies of the broadcasting company.
The Communications Act and FCC regulations prohibit the holder of an
attributable interest in a television station from having an attributable
interest in a cable television system located within the predicted coverage
area of that station. FCC regulations also prohibit the holder of an
attributable interest in a television station from having an attributable
interest in a daily newspaper located within the predicted coverage area of
that station.
The Communications Act limits the amount of capital stock that aliens
may own in a television station licensee or any corporation directly or
indirectly controlling such licensee. No more than 20% of a licensee's
capital stock and, if the FCC so determines, no more than 25% of the
capital stock of a company controlling a licensee, may be owned or voted by
aliens or their representatives. Should alien ownership exceed this limit,
the FCC may revoke or refuse to grant or renew a television station license
or approve the assignment or transfer of such license. UTV believes the
ownership of its stock by aliens to be below the applicable limit.
The Communications Act prohibits the assignment of a broadcast license
or the transfer of control of a licensee without the prior approval of the
FCC. Legislation was introduced in the past that would impose a transfer
fee on sales of broadcast properties. Although that legislation was not
adopted, similar proposals, or a general spectrum licensing fee, may be
advanced and adopted in the future. Recent legislation has imposed annual
regulatory fees applicable to UTV's stations, currently ranging as high as
$18,000 per station.
The foregoing does not purport to be a complete summary of all the
provisions of the Communications Act or regulations and policies of the FCC
thereunder. Reference is made to the Communications Act, such regulations
and the public notices promulgated by the FCC for further information.
Other Federal agencies, including principally the Federal Trade
Commission, also impose a variety of requirements that affect the business
and operations of broadcast stations. Proposals for additional or revised
requirements are considered by the FCC, other Federal agencies or Congress
from time to time. UTV cannot predict what new or revised Federal
requirements may result from such consideration or what impact, if any,
such requirements might have upon the operation of UTV television stations.
Competition
UTV television stations compete for advertising revenue in their
respective markets, primarily with other broadcast television stations and
cable television channels, and compete with other advertising media, as
well. Such competition is intense.
In addition to programming, management ability and experience,
technical factors and television network affiliations are important in
determining competitive position. Competitive success of a television
station depends primarily on public response to the programs broadcast by
the station in relation to competing entertainment, and the results of this
competition affect the advertising revenues earned by the station from the
sale of advertising time.
Audience ratings provided by Nielsen have a direct bearing on the
competitive position of television stations. In general, network programs
achieve higher ratings than independent station programs.
There are at least five other commercial television stations in each
market served by a UTV station. UTV believes that, in Minneapolis/St.
Paul, KMSP generally attracts a smaller viewing audience than the three VHF
network-affiliated stations, but a larger viewing audience than the other
independent stations, all of which are UHF stations. In Salt Lake City,
KTVX generally ranks first of the six television stations in terms of
audience share. In San Antonio, KMOL ranks third of the six stations in
terms of audience share. KBHK generally ranks fifth in terms of audience
share, behind the one independent and three network-affiliated VHF
television stations, of the 14 commercial television stations in San
Francisco. KUTP ranks sixth in terms of audience share, of the eight
commercial stations in the Phoenix market.
UTV stations may face increased competition in the future from
additional television stations that may enter their respective markets.
See note (c) to the table under Television Broadcasting.
Cable television has become a major competitor of television
broadcasting stations. Because cable television systems operate in each
market served by a UTV station, the stations are affected by rules
governing cable operations. If a station is not widely accessible by cable
in those markets having strong cable penetration, it may lose effective
access to a significant portion of the local audience. Even if a
television station is carried on a local cable system, an unfavorable
channel position on the cable system may adversely affect the station's
audience ratings and, in some circumstances, a television set's ability to
receive the station being carried on an unfavorable channel position. Some
cable system operators may be inclined to place broadcast stations in
unfavorable channel locations.
FCC regulations requiring cable television stations to carry or
reserve channels for retransmission of local broadcast signals have twice
been invalidated in Federal court. In October 1992, Congress enacted
legislation designed to provide television broadcast stations the right to
be carried on cable television stations (and to be carried on specific
cable channel positions), or (at the broadcaster's election) to prohibit
cable carriage of the television broadcast station without its consent.
This legislation is currently being challenged in the United States Supreme
Court, and UTV cannot predict the outcome. While Federal law now generally
prohibits local telephone companies from providing video programming to
subscribers in their service areas, this restriction has been invalidated
by one federal district court and is currently being challenged in other
federal courts; legislation eliminating or relaxing the law has been
proposed.
"Syndicated exclusivity" rules allow television stations to prevent
local cable operators from importing distant television programming that
duplicates syndicated programming in which local stations have acquired
exclusive rights. In conjunction with these rules, network nonduplication
rules protect the exclusivity of network broadcast programming within the
local video marketplace. The FCC is also reviewing its "territorial
exclusivity" rule, which limits the area in which a broadcaster can obtain
exclusive rights to video programming. UTV believes that the competitive
position of UTV stations would likely be enhanced by an expansion of
broadcasters' permitted zones of exclusivity.
Alternative technologies could increase competition in the areas
served by UTV stations and, consequently, could adversely affect their
profitability. Direct broadcast satellite ("DBS") systems and subscription
television ("STV"), recognized as potential competitors a few years ago,
have thus far failed to materialize as such. However, at least two DBS
operators are scheduled to begin service in 1994. An additional challenge
is now posed by multichannel multipoint distribution services ("MMDS").
Two four-channel MMDS licenses have been granted in most television
markets. MMDS operation can provide commercial programming on a paid
basis. A similar service can also be offered using the instructional
television fixed service ("ITFS"). The FCC now allows the educational
entities that hold ITFS licenses to lease their "excess" capacity for
commercial purposes. The multichannel capacity of ITFS could be combined
with either an existing single channel MDS or a new MMDS to increase the
number of available channels offered by an individual operator. The
emergence of home satellite dish antennas has also made it possible for
individuals to receive a host of video programming options via satellite
transmission.
Technological developments in television transmission have created
the possibility that one or more of the broadcast and nonbroadcast television
media will provide enhanced or "high definition" pictures and sound to the
public of a quality that is technically superior to that of the pictures
and sound currently available. It is not yet clear when and to what extent
technology of this kind will be available to the various television media;
whether and how television broadcast stations will be able to avail
themselves of these improvements; whether all television broadcast stations
will be afforded sufficient spectrum to do so; what channels will be
assigned to each of them to permit them to do so; whether viewing audiences
will make choices among services upon the basis of such differences; or, if
they would, whether significant additional expense would be required for
television stations to provide such services. Many segments of the
television industry are intensively studying enhanced and "high definition"
television technology, and both Congress and the FCC have initiated
proceedings and studies on its potential and its application to television
service in the United States.
The broadcasting industry is continuously faced with technological
changes, competing entertainment and communications media and governmental
restrictions or actions of Federal regulatory bodies, including the FCC.
These technological changes may include the introduction of digital
compression by cable systems that would significantly increase the number
and availability of cable program services with which BHC stations compete
for audience and revenue, the establishment of interactive video services,
and the offering of multimedia services that include data networks and
other computer technologies. Such factors have affected, and will continue
to affect, the revenue growth and profitability of UTV.
ITEM 2. PROPERTIES.
Physical facilities consisting of offices and studio facilities are
owned by UTV in Minneapolis, San Antonio and Phoenix and are leased in Salt
Lake City and San Francisco. The Salt Lake City lease agreement expires in
1999 and is renewable, at an increased rental, for two five-year periods.
The San Francisco lease expires in 2007.
The Minneapolis facility includes approximately 49,700 square feet of
space on a 5.63-acre site. The Salt Lake City facility is approximately
30,400 square feet on a 2.53-acre site. The San Antonio facility is
approximately 41,000 square feet on a .92-acre site. The San Francisco
facility is approximately 27,700 square feet in downtown San Francisco.
The Phoenix facility is approximately 26,400 square feet on a 3.03-acre
site. Smaller buildings containing transmission equipment are owned by UTV
at sites separate from the studio facilities.
UTV owns a 55-acre tract in Shoreview, Minnesota, of which 40 acres
are used by KMSP for transmitter facilities and tower.
KTVX's transmitter facilities and tower are located at a site on Mt.
Nelson, close to Salt Lake City, under a lease that expires in 2004. KTVX
also maintains back-up transmitter facilities and tower at a site on nearby
Mt. Vision under a lease that expires in 2002 and is renewable, at no
increase in rental, for a 50-year period.
KMOL's transmitter facilities are located at a site near San Antonio
on land and on a tower owned by Texas Tall Tower Corporation, a corporation
owned in equal shares by UTV and another television station that also
transmits from the same tower.
KBHK's transmitter is located on Mt. Sutro, as part of the Sutro Tower
complex, which also houses equipment for other San Francisco television
stations and many of its FM radio stations. The lease for the Mt. Sutro
facilities expires in February 1995.
KUTP's transmitter facilities and tower are located on a site within
South Mountain Park, a communications park owned by the City of Phoenix,
which also contains transmitter facilities and towers for the other
television stations in Phoenix as well as facilities for several FM radio
stations. The license for this space expires in 2012.
UTV believes its properties are adequate for their present uses.
ITEM 3. LEGAL PROCEEDINGS.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of UTV, as of February 28, 1994, are as
follows:
Positions with UTV;
principal occupation; Has served
and age as of February as officer
Name 28, 1994 since
Herbert J. Siegel Chairman of the Board; 1982
Chairman of the Board
and President, Chris-Craft
and BHC; 65
Evan C Thompson President and Chief Executive 1983
Officer; Executive Vice Presi-
dent, and President, Tele-
vision Division, Chris-Craft; 51
Garth S. Lindsey Executive Vice President, Chief 1977
Financial Officer and Secre-
tary; 49
Thomas L. Muir Treasurer and Controller; 45 1981
John C. Siegel President, UTV of San Fran- 1983
cisco, Inc., which owns KBHK;
Senior Vice President, Chris-
Craft; 41
Chris-Craft, through its majority ownership of BHC, is principally
engaged in television broadcasting. The principal occupation of each of
the individuals for the past five years is stated in the foregoing table.
All officers hold office until the meeting of the Board following the next
annual meeting of stockholders or until removed by the Board.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The information appearing in the Annual Report under the caption
STOCK PRICE, DIVIDENDS AND RELATED INFORMATION is incorporated herein by
this reference.
ITEM 6. SELECTED FINANCIAL DATA.
The information appearing in the Annual Report under the caption
SELECTED FINANCIAL INFORMATION is incorporated herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The information appearing in the Annual Report under the caption
Management's Discussion and Analysis of Financial Condition and Results
of Operations is incorporated herein by this reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements, notes thereto, report of
independent accountants thereon and quarterly financial information
(unaudited) appearing in the Annual Report are incorporated herein by this
reference. Except as specifically set forth herein and elsewhere in this
Form 10-K, no information appearing in the Annual Report is incorporated by
reference into this report nor is the Annual Report deemed to be filed, as
part of this report or otherwise, pursuant to the Securities Exchange Act
of 1934.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information appearing in the Proxy Statement under the captions
ELECTION OF DIRECTORS--Nominees of the Board of Directors and ELECTION OF
DIRECTORS-- Compliance with Section 16(a) of the Securities Exchange Act of
1934 is incorporated herein by this reference. Information relating to
UTV's executive officers is set forth in Part I under the caption EXECUTIVE
OFFICERS OF THE REGISTRANT.
ITEM 11. EXECUTIVE COMPENSATION.
The information appearing in the Proxy Statement under the caption
ELECTION OF DIRECTORS--Executive Compensation is incorporated herein by
this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
The information appearing in the Proxy Statement under the caption
ELECTION OF DIRECTORS--Voting Securities of Certain Beneficial Owners and
Management is incorporated herein by this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information appearing in the Proxy Statement under the caption
ELECTION OF DIRECTORS--Certain Relationships and Related Transactions is
incorporated herein by this reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
1. The financial statements and quarterly financial information
incorporated by reference from the Annual Report pursuant to
Item 8.
2. The report of predecessor independent public accountants and
the schedules and report of independent accountants thereon,
listed in the Index to Consolidated Financial Statements and
Schedules.
3. Exhibits listed in the Exhibit Index, including the
following compensatory plans listed below:
Benefit Equalization Plan
1988 Stock Option Plan
(b) No reports on Form 8-K were filed by the registrant during the
last quarter of the period covered by this report.
<PAGE>
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.
Date: March 29, 1994
UNITED TELEVISION, INC.
(Registrant)
By EVAN C THOMPSON
Evan C Thompson
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature and Title Date
HERBERT J. SIEGEL March 29, 1994
Herbert J. Siegel
Chairman and Director
EVAN C THOMPSON March 29, 1994
Evan C Thompson
President, Chief Executive
Officer and Director
(Principal Executive
Officer)
GARTH S. LINDSEY March 29, 1994
Garth S. Lindsey
Executive Vice President,
Chief Financial Officer
and Secretary (Principal
Financial and Accounting
Officer)
LAWRENCE R. BARNETT March 29, 1994
Lawrence R. Barnett
Vice Chairman and Director
JOHN L. EASTMAN March 29, 1994
John L. Eastman
Director
JAMES D. HODGSON March 29, 1994
James D. Hodgson
Director
NORMAN PERLMUTTER March 29, 1994
Norman Perlmutter
Director
ABRAHAM A. RIBICOFF March 29, 1994
Abraham A. Ribicoff
Director
HOWARD F. ROYCROFT March 29, 1994
Howard F. Roycroft
Director
ROCCO C. SICILIANO March 29, 1994
Rocco C. Siciliano
Director
JOHN C. SIEGEL March 29, 1994
John C. Siegel
Director
<PAGE>
UNITED TELEVISION, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Accountants
Consolidated Balance Sheets -- December 31, 1993 and 1992
Consolidated Statements of Income -- For the Three Years Ended
December 31, 1993
Consolidated Statements of Cash Flows -- For the Three Years Ended
December 31, 1993
Consolidated Statements of Shareholders' Investment -- For the
Three Years Ended December 31, 1993
Notes to Consolidated Financial Statements
SCHEDULES:
Report of Predecessor Independent Public Accountants
Report of Independent Accountants on Financial Statement Schedules
I. Marketable Securities - Other Investments
II. Amounts Receivable from Related Parties, Underwriters,
Promoters and Employees other than Related Parties
VIII. Valuation and Qualifying Accounts
X. Supplementary Income Statement Information
Schedules other than those listed above have been omitted since the
information is not applicable, not required or is included in the respective
financial statements or notes thereto.
<PAGE>
REPORT OF PREDECESSOR INDEPENDENT PUBLIC ACCOUNTANTS
To United Television, Inc.:
We have audited the consolidated statements of income, share-
holders'investment and cash flows of United Television, Inc. (a Delaware
corporation) and subsidiaries (UTV) for the year ended December 31, 1991.
These financial statements and the schedules referred to below are the
responsibility of UTV's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our audit.
We conducted our audit in accordance with generally accepted audit-
ing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the results of operations
and cash flows of United Television, Inc. and subsidiaries for the year
ended December 31, 1991, in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedules listed in the
index to consolidated financial statements and schedules for the year ended
December 31, 1991 are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in
our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN & CO.
Los Angeles, California
February 10, 1992
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of
United Television, Inc.
Our audits of the consolidated financial statements referred to in our
report dated February 4, 1994 appearing on page 21 of the 1993 Annual
Report to Shareholders of United Television, Inc. (which report and
consolidated financial statements are incorporated by reference in this
Annual Report on Form 10-K) also included audits of the Financial Statement
Schedules as of December 31, 1993 and 1992, and the years then ended,
listed in Item 14(a) of this Form 10-K. In our opinion, these Financial
Statement Schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.
PRICE WATERHOUSE
Century City, California
February 4, 1994
<PAGE>
SCHEDULE I
UNITED TELEVISION, INC. AND SUBSIDIARIES
MARKETABLE SECURITIES - OTHER INVESTMENTS
DECEMBER 31, 1993
(Columns C, D, and E in Thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Amount at Which
Number of Each Portfolio of
Shares or Market Equity Security
Principal Value of Issues and Each
Amount of Cost of Each Issue Other Security
Name of Issuer and Title Bonds and Each at Balance Carried in the
of Each Issue Notes Issue Sheet Date Balance Sheet
<S> <C> <C> <C> <C>
Current marketable
securities:
United States Government
Securities $148,130,000 $148,798 $147,823 $148,798
Payden & Rygel Global 1,000,386 10,493 10,404 10,493
Fixed Income Fund
$159,291 $158,227 $159,291
Noncurrent marketable
securities:
BHC Communications, Inc.
Common Stock 226,503 $ 11,325 $ 18,573 $ 11,325
Nynex Common Stock 30,000 1,317 1,203 1,317
AT&T Common Stock 5,000 270 263 270
$ 12,912 $ 20,039 $ 12,912
</TABLE>
<PAGE> SCHEDULE II
UNITED TELEVISION, INC. AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES,
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
(In Thousands of Dollars)
Column A Column B Column C Column D Column E
Balance at Deductions
Beginning Amounts Amounts Balance at End of Period
Name of Debtor of Period Additions Collected Written Off Current Noncurrent
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Garth S. Lindsey (Officer) $100 $ - $ 20 $ - $ 20 $ 60
Year ended December 31, 1992:
Garth S. Lindsey (Officer) $120 $ - $ 20 $ - $ 20 $ 80
Year ended December 31, 1991:
Garth S. Lindsey (Officer) $140 $ - $ 20 $ - $ 20 $100
</TABLE>
The loan was made for the purpose of assisting Mr. Lindsey in relocating
his home in connection with the relocation of UTV's executive offices from
Minneapolis to Los Angeles. The loan was represented by a non-interest bear-
ing five-year note, with no payment due before maturity. In December 1988,
the note was revised and extended. Under the Revision and Extension Agree-
ment, 10% of the original balance is due and payable December 31 of each
year through December 31, 1997. Such installments will be forgiven on each
such December 31 if the borrower is still employed by UTV on each such for-
giveness date. The note is secured by a deed of trust on the borrower's
home and provides that at the option of the holder the loan will become
due and payable upon sale or further encumbrance of the borrower's home
without the consent of the holder or upon the borrower's voluntary termin-
ation of employment with UTV.
<PAGE>
Schedule VIII
UNITED TELEVISION, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Additions
Balance at Charged Charged Balance at
Beginning to Costs to Other End of
Description of Period and Expenses Accounts Deductions Period
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Allowance for doubtful accounts $ 1,716 $ 551 $ --- $ (269)(a) $ 1,998
Year ended December 31, 1992:
Allowance for doubtful accounts $ 1,460 $ 740 $ --- $ (484)(a) $ 1,716
Year ended December 31, 1991:
Allowance for doubtful accounts $ 1,770 $ 881 $ --- $ (1,191)(a) $ 1,460
<FN>
(a) Accounts written off, net of recoveries.
</TABLE>
<PAGE>
SCHEDULE X
UNITED TELEVISION, INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
(In Thousands of Dollars)
Column A Column B
Item 1993 1992 1991
Amortization of Intangible Assets $ 610 $ 610 $ 610
Advertising Costs $4,682 $4,194 $4,442
<PAGE>
EXHIBIT INDEX
Incorporated by Exhibit
Reference to: No. Exhibit
Exhibit 3(a)[1] 3(a) Restated Certificate
of Incorporation
Exhibit 3(b)[2] (b) Restated By-Laws
Exhibit A to
registrant's
Proxy Statement
dated March 23,
1988 (File No.
0-9786) 10(a) 1988 Stock Option Plan
Exhibit
10(a)(1)[7] (a)(1) Amendment No. 1 thereto
Exhibit
10(i)[3] (b) Employment Agreement,
dated January 1, 1981,
between registrant
and Garth S. Lindsey,
as amended
Exhibit
10(m)[3] (c) Employment Agreement,
dated January 1, 1981,
between registrant
and Thomas L. Muir,
as amended
Exhibit
10(t)[4] (d)(1) Note, dated as of
January 6, 1984 in
the original principal
amount of $200,000 from
Garth S. Lindsey, as
maker, to registrant,
as payee
Exhibit
10(n)(2)[5] (d)(2) Revision and Extension
Agreement, dated as of
December 19, 1988,
from Garth S. Lindsey,
as maker, to registrant,
as payee
Exhibit
10(u)[4] (e)(1) Note dated as of
January 25, 1984
in the original
principal amount
of $100,000 from
Thomas L. Muir, as
maker, to registrant,
as payee
Exhibit
10(o)(2)[5] (e)(2) Revision and Extension
Agreement, dated as of
December 20, 1988,
from Thomas L. Muir,
as maker to registrant,
as payee
Exhibit
10(s)[6] (f) Benefit Equalization Plan
of registrant
* 13 Portions of the Annual Report
incorporated by reference
* 22 Subsidiaries of registrant
* 24(a) Consent of Price Waterhouse
* (b) Consent of Arthur Andersen
& Co.
__________
* Filed herewith
[1] Registrant's Annual Report on Form 10-K for the year ended
December 31, 1987.
[2] Registrant's Annual Report on Form 10-K for the year ended
December 31, 1984.
[3] Registrant's Annual Report on Form 10-K for the year ended
December 27, 1981.
[4] Registrant's Annual Report on Form 10-K for the year ended
December 31, 1983.
[5] Registrant's Annual Report on Form 10-K for the year ended
December 31, 1988.
[6] Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989.
[7] Registrant's Annual Report on Form 10-K for the year ended
December 31, 1991.
EXHIBIT 13
<PAGE>
Consolidated Statements of Income
United Television, Inc. and Subsidiaries
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year ended December 31, 1993 1992 1991
<S> <C> <C> <C>
Net Revenues $130,338 $115,127 $112,902
Expenses:
Operating 59,507 74,430 87,154
Selling, general
and administrative 34,458 32,844 33,026
93,965 107,274 120,180
Operating income (loss) 36,373 7,853 (7,278)
Other Income:
Income associated with
Time Warner Inc. securities 31,125 10,828 9,527
Interest and other income, net 6,126 4,274 3,252
37,251 15,102 12,779
Income before provision
for income taxes 73,624 22,955 5,501
Provision for Income Taxes 29,800 6,800 350
Net income $ 43,824 $ 16,155 $ 5,151
Net Income per Share $ 4.31 $ 1.54 $ .48
Average Common Shares
Outstanding 10,157 10,488 10,635
</TABLE>
The accompanying notes to consolidated financial statements are an inte-
gral part of these statements.
<PAGE>
Consolidated Statements of Cash Flows
United Television, Inc. and Subsidiaries
(In thousands of dollars)
<TABLE>
<CAPTION>
Year ended December 31, 1993 1992 1991
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 43,824 $ 16,155 $ 5,151
Adjustments to reconcile net
income to net cash provided from
operating activities:
Film contract payments (40,925) (36,918) (37,801)
Film contract amortization 29,653 43,314 56,239
Depreciation and other
amortization 5,052 4,904 4,379
Gain on dispositions of Time
Warner securities:
Cash (14,951) - -
Noncash (12,213) - -
Noncash dividend income - (6,130) (4,830)
Changes in assets and liabilities:
Accounts receivable (6,114) 1,216 281
Prepaid expenses and other assets (7,273) (397) 2,563
Accounts payable and accrued expenses 2,558 (888) 677
Income taxes payable 4,493 5,445 (700)
Net cash provided from
operating activities 4,104 26,701 25,959
Cash Flows from Investing Activities:
Disposition of Time Warner securities 117,083 - -
Purchase of marketable securities, net (115,254) (17,556) (2,562)
Capital expenditures (2,092) (5,925) (6,442)
Net cash used in
investing activities (263) (23,481) (9,004)
Cash Flows from Financing Activities:
Proceeds from exercise of
employee stock options 2,428 263 857
Purchase of treasury stock (11,188) (4,608) (4,210)
Net cash used in
financing activities (8,760) (4,345) (3,353)
Net Increase (Decrease) in Cash and
Cash Equivalents (4,919) (1,125) 13,602
Cash and Cash Equivalents at Beginning
of Year 16,871 17,996 4,394
Cash and Cash Equivalents at End of Year $ 11,952 $ 16,871 $ 17,996
</TABLE>
The accompanying notes to consolidated financial statements are an inte-
gral part of these statements.
<PAGE>
Consolidated Balance Sheets
United Television, Inc. and Subsidiaries
<TABLE>
<CAPTION>
(In thousands of dollars)
December 31, 1993 1992
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 11,952 $ 16,871
Marketable securities 159,291 91,524
Accounts receivable, less allowance
for doubtful accounts of $1,988
and $1,716, respectively 30,816 24,702
Film contract rights 19,993 23,106
Deferred tax benefit 4,659 -
Prepaid expenses and other current
assets 4,633 3,971
Total current assets 231,344 160,174
Noncurrent Marketable Securities 12,912 55,344
Film Contract Rights, including
deposits, less estimated
portion to be used within one year 10,327 9,888
Property and Equipment, at cost:
Land, buildings and improvements 12,188 12,921
Equipment 47,867 48,854
60,055 61,775
Less - Accumulated depreciation
and amortization 42,797 42,166
17,258 19,609
Intangible Assets 21,981 21,981
Less - Accumulated amortization 8,388 7,779
13,593 14,202
Other Assets 471 504
$285,905 $259,721
Liabilities and Shareholders' Investment
Current Liabilities:
Film contracts payable $ 31,484 $ 41,038
Accounts payable 2,522 4,063
Accrued expenses 13,151 9,052
Income taxes payable 11,372 7,272
Total current liabilities 58,529 61,425
Film Contracts Payable after One Year 22,748 29,125
Other Liabilities 1,867 1,474
Commitments and Contingencies (Note 7)
Shareholders' Investment:
Preferred stock $1 par value;
authorized 1,000,000 shares; none
issued - -
Common stock $.10 par value;
authorized 25,000,000 shares;
outstanding 10,145,163 and
10,407,447 shares, respectively 1,015 1,041
Additional paid-in capital 133 133
Retained earnings 201,613 166,523
202,761 167,697
$285,905 $259,721
</TABLE>
The accompanying notes to consolidated financial statements are an inte-
gral part of these balance sheets.
<PAGE>
Consolidated Statements of Shareholders' Investment
United Television, Inc. and Subsidiaries
<TABLE>
<CAPTION>
(In thousands of Dollars) Common Stock Additional Market
Shares Dollar Paid-in Retained Valuation
Outstanding Amount Capital Earnings Account Total
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1990 10,675,568 $ 1,068 $ 133 $152,763 $ (5,464) $148,500
Net income _ _ _ 5,151 _ 5,151
Increase to reflect
noncurrent marketable
securities at cost _ _ _ _ 5,464 5,464
Exercise of options,
including tax benefit 40,533 4 978 _ _ 982
Purchase/retirement of
treasury stock (144,321) (15) (978) (3,217) _ (4,210)
Balance at
December 31, 1991 10,571,780 1,057 133 154,697 _ 155,887
Net income _ _ _ 16,155 _ 16,155
Exercise of options,
including tax benefit 13,167 1 262 _ _ 263
Purchase/retirement of
treasury stock (177,500) (17) (262) (4,329) _ (4,608)
Balance at
December 31, 1992 10,407,447 1,041 133 166,523 _ 167,697
Net income _ _ _ 43,824 _ 43,824
Exercise of options,
including tax benefit 89,902 9 2,419 _ _ 2,428
Purchase/retirement of
treasury stock (352,186) (35) (2,419) (8,734) _ (11,188)
Balance at
December 31, 1993 10,145,163 $ 1,015 $ 133 $201,613 _ $202,761
</TABLE>
The accompanying notes to consolidated financial statements are an inte-
gral part of these statements.
</page>
Notes To Consolidated Financial Statements
United Television, Inc. and Subsidiaries
1. Summary of Significant Accounting Policies.
A) Organization and Related Parties. UTV is a majority owned (54.3% at De-
cember 31, 1993) subsidiary of BHC Communications, Inc. (BHC), a majority
owned subsidiary of Chris-Craft Industries, Inc. UTV owns and operates
five television stations: KBHK in San Francisco, KMSP in Minneapolis/St.
Paul, KUTP in Phoenix, KTVX in Salt Lake City and KMOL in San Antonio.
The acquisition of programming from third parties is frequently negotiated
for UTV and BHC stations simultaneously. Also, UTV and BHC each incurred
costs of $357,000 and $1,849,000 in 1993 and 1992, respectively, for the
joint production with third parties of original programming.
B) Principles of Consolidation. The accompanying consolidated financial
statements include the accounts of UTV and its subsidiaries, after elimi-
nation of all significant intercompany accounts and transactions.
C) Financial Instruments. Cash and cash equivalents totaled $11,952,000 at
December 31, 1993 and $16,871,000 at December 31, 1992. Cash equivalents
are money market securities having maturities at time of purchase not
exceeding three months. All are U.S. Government securities. The fair value
of cash equivalents approximates carrying value, reflecting their short
maturities.
Marketable securities are carried at cost, and related fair values are based
on quoted market prices. Current marketable securities totaled $159,291,000
at December 31, 1993 and $91,524,000 at December 31, 1992, and at December
31, 1993 consisted of (i) $148,130,000 aggregate face value U.S. Government
securities carried at $148,798,000 and (ii) mutual fund shares carried at
$10,493,000. At December 31, 1992, current marketable securities consisted
of (i) $43,345,000 aggregate face value U.S. Government securities carried
at $43,476,000, (ii) 1,117,000 shares of Time Warner Inc. Series D 11% pay
in kind convertible preferred shares carried at $46,010,000, and (iii)
mutual fund shares carried at $2,038,000.
In February 1993, Time Warner redeemed its outstanding Series D convertible
preferred stock, and UTV recognized a pretax capital gain of $14,185,000.
In April 1993, Time Warner redeemed its outstanding Series C 8-3/4% convert-
ible exchangeable preferred stock, and UTV recognized a pretax capital gain
of $12,213,000.
Noncurrent marketable securities totaled $12,912,000 at December 31, 1993
and $55,344,000 at December 31, 1992. At December 31, 1993 these securities
primarily consisted of 226,503 shares of BHC Class A common stock. At De-
cember 31, 1992 these securities consisted of 1,073,641 shares of Time War-
ner Series C 8 3/4% convertible exchangeable preferred stock and 226,503
shares of BHC Class A common stock. The fair value of noncurrent marketable
securities totaled $20,039,000 at December 31, 1993 and $67,406,000 at De-
cember 31, 1992.
Dividends on UTV's Time Warner and BHC shares, including dividends paid in
kind, totaled $1,819,000 in 1993, $11,281,000 in 1992 and $9,527,000 in 1991.
D) Film Contract Rights and Film Contracts Payable. UTV owns film contract
rights which allow limited showings of films and syndicated programs. Film
contract rights and related liabilities are recorded at the contractual
amounts when the programming becomes available for telecasting.
Contract values are amortized over management's estimate of the number of
showings, using primarily an accelerated method, which considers total anti-
cipated costs of the programming and management's estimate of the flow of
revenues. The estimated costs of recorded film contract rights to be charged
to income within one year are included in current assets; payments on such
contracts due within one year are included in current liabilities.
E) Depreciation and Amortization. Depreciation of property and equipment is
provided using the straight-line method over the estimated useful lives of
the assets, except that leasehold improvements are amortized over the term
of the lease if shorter.
Intangible assets represent the excess of cost over the net identifiable
tangible assets at the respective dates of acquisition and are being
amortized using the straight-line method over 17 to 40 years from acqui-
sition.
F) Barter Transactions. UTV records all barter (nonmonetary) transactions.
The estimated fair value of goods or services received is recognized as
revenue when the air time is used by the advertiser.
G) Income per Share. Per share amounts were computed by dividing income by the
weighted average number of common shares outstanding, taking into consider-
ation, when dilutive, common stock equivalents (stock options).
H) Supplemental Cash Flow Information. Cash paid for income taxes totaled
$29,966,000 in 1993, $1,354,000 in 1992 and $2,222,000 in 1991.
I) Reclassifications. Certain amounts for 1992 and 1991 have been reclas-
sified to conform to the 1993 presentation.
2. Film Contracts Payable.
The approximate future maturities of film contracts payable classified as
long-term liabilities at December 31, 1993 are $11,457,000, $6,352,000,
$2,779,000, $1,127,000 and $1,033,000 in 1995, 1996, 1997, 1998 and there-
after, respectively. The net present value at December 31, 1993 of such
payments, discounted at 6.0%, was approximately $19,800,000.
3. Shareholders' Investment.
UTV has authorized 1,000,000 shares of preferred stock, $1 par value, that
may be issued without further shareholder approval, in one or more series,
the terms and provisions of which shall be set by the Board of Directors.
During 1993, UTV purchased and retired 352,186 shares of its common stock
at an aggregate cost of $11,188,000. During 1992 and 1991, UTV purchased
and retired 177,500 and 144,321 shares of its common stock, respectively.
At December 31, 1993, purchase of 831,839 additional shares of common stock
had been authorized by the Board of Directors.
4. Stock Options.
UTV's 1988 stock option plan permits grants of options to purchase an ag-
gregate of 800,000 shares of common stock at prices not less than the fair
market value of the common stock at the time the option is granted. The
plan also permits the grant of stock appreciation rights in tandem with
options granted under the plan and also permits options to be designated as
incentive stock options within the meaning of the Internal Revenue Code. As
of December 31, 1993, approximately 434 persons were eligible to parti-
cipate in the plan, 25 of whom were participating.
Options to purchase 329,000 shares have been granted under the plan. No
stock appreciation rights have been granted. Options for 20,767 shares have
terminated unexercised, and options for 99,733 shares have been exercised,
leaving options to purchase 208,500 shares outstanding, as follows:
<TABLE>
<CAPTION>
Year Number of Option
of Grant Shares Price
<S> <C> <C>
1991 10,000 $31.625
1992 198,500 $27.250
</TABLE>
The options are exercisable in cumulative annual installments of 33-1/3%,
commencing one year from the date of grant, and expire five years from the
date of grant.
Proceeds from the exercise of options are credited to common stock to the
extent of par value, and the remainder is credited to additional paid-in
capital. Income tax benefits which accrue to UTV are credited to additional
paid-in capital.
5. Income Taxes.
Income tax expense consists of the following (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31, 1993 1992 1991
<S> <C> <C> <C>
Federal:
Current $27,325 $4,475 $(2,600)
Deferred (3,900) 100 2,125
23,425 4,575 (475)
State:
Current 6,450 2,075 775
Deferred (75) 150 50
6,375 2,225 825
Total $29,800 $6,800 $350
</TABLE>
The provisions for income taxes differed from the amounts computed by applying
the federal income tax rate to income before income taxes. The elements of
these differences were as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31, 1993 1992 1991
<S> <C> <C> <C>
Statutory federal
income taxes $25,768 $7,805 $1,870
State income taxes,
net of federal income
tax benefit 4,136 1,469 545
Dividend exclusion (467) (2,685) (2,268)
Goodwill amortization 166 161 161
Other, net 197 50 42
$29,800 $6,800 $ 350
</TABLE>
Effective January 1, 1993, UTV adopted Statement of Financial Accounting
Standards No. 109 (SFAS 109), "Accounting for Income Taxes." The cumulative
effect of adoption of SFAS 109, the amount of which was immaterial, was
recorded in the first quarter of 1993.
Deferred taxes reflect timing differences in the recognition of certain
income and expense items for financial accounting and income tax purposes.
The components of deferred tax assets and liabilities at December 31, 1993
were as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
State taxes $3,402
Bad debt reserve 845
Benefits program 566
Other 432
5,245
Deferred tax liabilities:
Depreciation (1,817)
Intangibles amortization (439)
Other (335)
(2,591)
$2,654
</TABLE>
6. Pension Plans.
UTV maintains noncontributory defined benefit plans covering substantially
all employees. Benefits under the plans are based upon years of service and
compensation, as defined. UTV's funding policy is to contribute annually an
amount sufficient to fund current service costs and to amortize the unfunded
accrued liability over 25 years. Contributions are intended to provide not
only for benefits attributed to service to date, but also for benefits ex-
pected to be earned in the future.
The following table sets forth the estimated funded status of the plans
(in thousands):
<TABLE>
<CAPTION>
December 31,
1993 1992
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $(9,662) $(8,036)
Nonvested benefit obligation (702) (565)
Accumulated benefit obligation (10,364) (8,601)
Effect of projected
compensation increases (3,421) (3,045)
Projected benefit obligation (13,785) (11,646)
Plan assets at fair value, primarily
listed securities and U.S.
Government securities 13,523 11,468
Deficit (262) (178)
Unrecognized loss 1,032 784
Unrecognized prior service cost (19) (271)
Unrecognized net obligation
remaining from initial
application, January 1, 1987 125 143
Prepaid pension obligation $ 876 $ 478
</TABLE>
Pension expense, including amounts accrued in a UTV nonqualified retirement
plan for pension benefits in excess of statutory limitation, is as follows
(in thousands):
<TABLE>
<CAPTION>
Year Ended December 31, 1993 1992 1991
<S> <C> <C> <C>
Service cost $ 748 $ 677 $ 730
Interest cost on projected
benefit obligation 903 802 744
Actual return on
plan assets (1,298) (850) (1,429)
Net amortization and
deferral 397 49 903
Net periodic pension cost $ 750 $ 678 $ 948
</TABLE>
Assumptions used in determining the actuarial present value of the pro-
jected benefit obligation were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Discount rate 7.25% 7.75% 7.75%
Rate of increase in future
compensation levels 4.50% 5.00% 5.00%
Expected long-term rate
of return on assets 7.75% 7.75% 7.75%
</TABLE>
The unrecognized net obligation is amortized over a 15-year period.
UTV also maintains other retirement plans for its employees, including stock
purchase and profit sharing plans and an unqualified plan. The aggregate
costs of such other plans for 1993, 1992, and 1991 were $2,172,000,
$1,653,000 and $771,000, respectively.
7. Commitments and Contingencies.
The aggregate amount payable by UTV under contracts for programming not
currently available for telecasting and, accordingly, not included in film
contracts payable and the related contract rights in the accompanying Consol-
idated Balance Sheet, totaled $28,497,000 at December 31, 1993.
At December 31, 1993, UTV was obligated under several noncancelable leases
on real property and equipment that expire between 1994 and 2004. Rental
expense was $1,268,000, $1,879,000 and $1,747,000 for 1993, 1992, and 1991,
respectively. Aggregate future minimum payments under such leases at December
31, 1993 are $11,374,000 with amounts of $1,261,000, $857,000, $778,000,
$763,000 and $819,000 due in 1994, 1995, 1996, 1997, and 1998, respectively.
In the opinion of management, after taking into account the opinion of
counsel with respect thereto, the ultimate resolution of pending legal
proceedings against UTV, to the extent not covered by insurance,
should not have a material effect on UTV's consolidated financial position
or results of operations.
<PAGE>
United Television, Inc.
Report of Independent Accountants
To the Board of Directors and Shareholders of United Television, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' investment and cash flows
present fairly, in all material respects, the financial position of United
Television, Inc. and its subsidiaries at December 31, 1993 and 1992, and
the results of their operations and their cash flows for each of the two
years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles. These financial statements are the responsi-
bility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally ac-
cepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion ex-
pressed above. The financial statements of United Television, Inc. for the
year ended December 31, 1991 were audited by other independent accountants
whose report dated February 10, 1992 expressed an unqualified opinion on
those statements.
/s/Price Waterhouse
Price Waterhouse
Century City, California
February 4, 1994
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results
of Operations
United Television, Inc. and Subsidiaries
Liquidity and Capital Resources
UTV's operating cash flow is generated primarily by its television
broadcasting operations and generally parallels the earnings of UTV's
television stations, adjusted to reflect the difference between film contract
payments and film contract amortization. The relationship between such
payments and amortization varies greatly between years (payments exceeded
amortization by $11,272,000 in 1993 while amortization exceeded payments by
$6,396,000 in 1992), and is dependent upon the mix of programs aired and
payment terms of the stations' contracts. UTV's stations generated substan-
tial cash flow in 1993 and are expected to do the same in 1994. With its
considerable cash and marketable securities balances, UTV continues to be
well positioned to deal with the uncertainties and opportunities presented
by current business conditions.
UTV's cash flow is augmented by interest and dividend income as-
sociated with its cash and marketable securities and was enhanced in 1993
by dispositions of securities. During 1993, Time Warner redeemed its
convertible preferred shares held by UTV for cash and subordinated debentures.
Such debentures subsequently were partially redeemed by Time Warner, and
the balance was sold. The proceeds from the Time Warner dispositions, which
produced 1993 pretax gains of $27,164,000, have been placed primarily in U.S.
Government obligations having significantly lower yields than the securities
disposed. UTV's 1993 cash flow from operations, net of tax payments related
to gains on dispositions of marketable securities, totaled $4,104,000, and
cash and marketable securities increased $20,416,000, to $184,155,000 at
December 31, 1993.
Working capital increased $74,066,000 during 1993 to $172,815,000
at December 31, 1993, primarily reflecting the gain on disposition of Time
Warner shares, the redemption of $15,943,000 face amount of, and subsequent
sale of, the remaining Time Warner 8 3/4% convertible subordinated deben-
tures. These increases were in part offset by treasury stock repurchases.
Working capital at December 31, 1993 remains substantially in excess of UTV's
normal operating requirements.
UTV is engaged in an ongoing review of business opportunities in
media, entertainment, communications and other industries. UTV currently
has no outstanding debt and believes it is capable of raising significant
additional capital to augment its already substantial liquid assets, if
desired, to fund any expansion.
UTV regularly makes current commitments for programming that will
not be available for telecasting until future dates and had commitments for
payments for such programming totaling $28,497,000 at December 31, 1993.
UTV expects to continue to satisfy these commitments in the ordinary course
of business.
UTV's Board of Directors has from time to time authorized the
purchase of UTV common shares. At December 31, 1993, purchase of an addi-
tional 831,839 shares was so authorized. From January 1, 1991 through
December 31, 1993, 674,007 shares were purchased for an aggregate cost of
$20,006,000, of which 352,186 shares were purchased during 1993 for an
aggregate cost of $11,188,000.
UTV's commitments for capital expenditures at December 31, 1993
were not material in relation to UTV's financial position. Funds for capital
expenditures have generally been provided from operations. UTV expects that
future capital expenditures for its present business will be funded from
operations or current cash balances. UTV has no present requirement for
additional capital.
Results of Operations
1993 versus 1992.
UTV's primary source of revenue is the sale to advertisers of time on
its five television stations. UTV's 1993 net income increased 171% to
$43,824,000, or $4.31 per share, from $16,155,000, or $1.54 per share, in
1992. Per share earnings for the year increased 180%, as purchases of com-
mon stock under UTV's stock repurchase program reduced the average number
of common shares outstanding by 3%.
The significant earnings increase reflects record operating results
at UTV's stations and substantial gains on dispositions of UTV's remaining
Time Warner securities. Net revenues for the year increased 13% to a record
$130,338,000, from $115,127,000 in 1992, reflecting improved demand for tele-
vision advertising at UTV's stations. Operating income rose more than four-
fold to $36,373,0000, from $7,853,000 in 1992. The improvement in operating
income resulted from the increase in net revenue and a 23% decline in
programming expenses.
The 1993 reduction in programming expenses primarily reflects a
significant decline in program amortization. Such decline is attributable
to (i) airing certain syndicated programs for periods longer than originally
estimated, reflecting their sustained success, (ii) the acquisition of
fewer replacement programs, (iii) final determination that certain contract
costs would be less than previously estimated, and (iv) generally lower
costs of programming. These favorable factors are expected to moderate.
However, it is anticipated that program amortization will again decrease
in 1994.
Income associated with UTV's former holdings of Time Warner secur-
ities increased to $31,125,000 in 1993, from $10,828,000 in 1992, as 1993
disposition gains aggregated $27,164,000. Other nonoperating income totaled
$6,126,000, up from $4,274,000 in 1992, primarily reflecting the placement
of Time Warner proceeds in U.S. Government securities.
UTV's effective tax rate rose to 41% in 1993 from 30% last year.
The increase in the effective rate reflects a reduction in the propor-
tionate amount of dividend income, which is not fully taxable, included
in pretax income.
1992 versus 1991.
UTV's net income for 1992 increased 214% to $16,155,000, or $1.54 per
share, from $5,151,000, or $.48 per share in 1991. Reflecting generally slug-
gish demand for television advertising, except for Olympics and political
advertising, net revenue for the year increased only a modest 2% to
$115,127,000, from $112,902,000 in 1991. After a 17% decrease in program-
ming expenses, operating income totaled $7,853,000, reversing an operating
loss of $7,278,000 in 1991.
The 1992 reduction in programming expenses described above primarily
reflects a significant decline in program amortization. The decline is
attributable to the same factors as were applicable in 1993.
Income associated with Time Warner securities rose to $10,828,000
from $9,527,000 reflecting increased dividend income. Interest and other
income, net rose to $4,274,000 from $3,252,000 reflecting higher levels of
invested cash and a special dividend paid on UTV's BHC common shares.
Selected Financial Data
United Television, Inc. and Subsidiaries
(In thousands of dollars, except per share data)
<TABLE>
<CAPTION>
As of and for the year ended December 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Net revenues $130,338 $115,127 $112,902 $118,985 $106,864
Operating income (loss) $ 36,373 $ 7,853 $ (7,278) $ 6,719 $ 3,539
Income associated with Time
Warner and, in 1990 and
1989, Warner securities 31,125 10,828 9,527 71,476 109,250
Interest and other income, net 6,126 4,274 3,252 3,106 3,542
Interest expense _ _ _ _ (8,029)
Income taxes (29,800) (6,800) (350) (32,775) (45,700)
Net income $ 43,824 $ 16,155 $ 5,151 $ 48,526 $ 62,602
Net income per share $ 4.31 $ 1.54 $ .48 $ 4.48 $ 5.72
Cash and current
marketable securities 171,243 108,395 45,954 29,790 49,153
Total assets 285,905 259,721 252,954 240,296 204,035
Working capital 172,815 98,749 59,604 55,529 68,276
Long-term debt _ _ 179 205 228
Shareholders' investment $202,761 $167,697 $155,887 $148,500 $113,157
</TABLE>
Quarterly Financial Information (Unaudited)
United Television, Inc. and Subsidiaries
(In thousands of dollars, except per share data)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Net revenues $ 28,098 $ 34,527 $ 28,950 $ 38,763 $130,338
Operating income 3,961 10,213 9,763 12,436 36,373
Net income 13,167 14,368 7,253 9,036 43,824
Net income per share $ 1.28 $ 1.42 $ .72 $ .89 $ 4.31
Year Ended December 31, 1992
Net revenues $ 24,923 $ 30,625 $ 26,070 $ 33,509 $115,127
Operating income (loss) (6,155) 2,840 3,617 7,551 7,853
Net income (loss) (2,127) 4,948 5,180 8,154 16,155
Net income (loss) per share $ (.20) $ .47 $ .49 $ .78 $ 1.54
</TABLE>
Stock Price, Dividend and Related Information
United Television, Inc. common stock is traded in the over-the-counter
market (NASDAQ symbol: UTVI) and transactions are reported in the NASDAQ
National Market System. The high and low sales prices as reported by
NASDAQ for the periods indicated were:
<TABLE>
<CAPTION>
1993 1992
Quarter High Low High Low
<S> <C> <C> <C> <C>
First $31.625 $27.000 $27.500 $23.750
Second 35.000 31.250 28.000 25.250
Third 37.000 33.250 27.500 24.000
Fourth 43.250 36.500 29.250 25.750
</TABLE>
No cash dividend has been paid during the two most recent years. The
present policy of UTV is to retain earnings for expansion of its business.
There is no intention to pay cash dividends in the foreseeable future.
As of February 28, 1994, there were approximately 4,100 holders of
record of common stock.
EXHIBIT 22
The following were the registrant's subsidiaries as of
December 31, 1993, other than subsidiaries that, if considered in
the aggregate as a single subsidiary, would not constitute a
significant subsidiary at such date:
Name Jurisdiction
of of
Subsidiary Incorporation
UTV of San
Francisco, Inc. California
UTV of San Antonio,
Inc. Texas
EXHIBIT 24(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (Nos. 33-35353 and 33-21903)
of United Television, Inc. of our report dated February 4, 1994
appearing on page 21 of the Annual Report to Shareholders of
United Television Inc. which is incorporated by reference in this
Annual Report on Form 10-K. We also consent to the incorporation
by reference of our report on the Financial Statement Schedules,
which appears on page 21 of this Form 10-K.
PRICE WATERHOUSE
Century City, California
March 29, 1994
EXHIBIT 24(b)
CONSENT OF PREDECESSOR INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report (dated February 10, 1992) included in
this Form 10-K, into the Company's previously filed Registration
Statements on Form S-8 File Nos. 33-35353 and 33-21903.
ARTHUR ANDERSEN & CO.
Los Angeles, California
March 29, 1994
