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, 1995
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 1-8411
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.)
132 S. Rodeo Drive, Fourth Floor
Beverly Hills, California 90212
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 281-4844
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. [ X ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant, as of February 29, 1996, was approximately $346,826,000.
As of February 29, 1996 there were 9,652,088 shares of the registrant's
Common Stock outstanding.
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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 II
annual report to stockholders for
the fiscal year ended December 31,
1995 (the "Annual Report") that are
specifically identified heein as
incorporated by reference into this
Form 10-K.
Those portions of the registrant's III
proxy statement for the registrant's
1996 Annual Meeting (the "Proxy
Statement") that are specifically
identified herein as incorporated by
reference into this Form 10-K.
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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
(57.1% at February 29, 1996) subsidiary of BHC Communications, Inc. ("BHC"),
which is a majority owned (74.4% at February 29, 1996) 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 29, 1996, UTV had 517 full-time employees and 72 part-
time employees.
Television Broadcasting
UTV operates three very high frequency ("VHF") television stations
and two ultra high frequency ("UHF") television stations. Commercial
television 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 disadvantage 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 major national networks (ABC, NBC and CBS); three more
recently established national networks (Fox Broadcasting Company ("Fox"),
United Paramount Network ("UPN"), and The WB Network ("WB")), which provide
substantially fewer hours of programming; or may be independent. UPN,
formed by BHC, along with the Paramount Television Group, a unit of Viacom
Inc., began broadcasting a total of four hours of original prime time
programming over two nights per week in January 1995 and expanded to a
third night in March 1996. UTV and BHC stations that had formerly been
independent are now UPN affiliates.
The following table sets forth certain information with respect
to UTV stations and their respective markets:
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<TABLE>
<CAPTION>
Total
Commercial
DMA TV Stations DMA
Station and House- DMA Operating in Cable TV
Location (a) Channel Holds (b) Rank (b) Market (c) Penetration (d)
- ------------ ------- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
KMSP 9 1,412,030 14th 4VHF 50%
Minneapolis/ 3UHF
St. Paul
KTVX 4 656,060 36th 4VHF 54%
Salt Lake City 2UHF
KMOL 4 638,080 37th 3VHF 64%
San Antonio 3UHF
KBHK 44 2,257,210 5th 4VHF 70%
San Francisco 10UHF
KUTP 45 1,169,530 17th 4VHF 57%
Phoenix 4UHF
_______________
(a) All stations are UPN affiliates, 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
stations 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.
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, "superstations" (i.e., broadcast stations carried by cable
operators in areas outside their broadcast coverage area), barter program
syndicators, national basic cable networks, or "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.
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Within a DMA, the advertising rates charged by competing stations
depend primarily on three factors: the stations' program ratings, 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 tuned to a particular station, 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 and tuned to
the station in question.
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/Pacific time), their affiliates generally (but do not always)
achieve higher audience shares, but have substantially less advertising
time ("inventory") to sell, during those hours, than affiliates of the
newer networks or independent stations, since the major networks use almost
all of their affiliates' prime time inventory for network shows.
Although the newer networks generally use the same amount of their
affiliates' inventory during network broadcasts, the newer networks
provide less programming; accordingly, their affiliates, as well as
non-affiliated stations, generally have substantially more inventory for
sale than the major-network affiliates. The newer network affiliates'
and 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, as compared with major
affiliates' larger audiences and limited inventory, which generally allow
the major-network affiliates to charge higher advertising rates for prime
time programming. By selling more advertising time, the new-network or
independent station typically achieves a share of advertising revenues in
its market greater than its audience ratings. On the other hand, total
programming costs for such a station, because it broadcasts more syndicated
programming than a major-network affiliate, are generally higher than
those of a major-network affiliate in the same market. These differences
have been reduced by the growth of the Fox network, which currently
provides 15 weekly hours of programming during prime time and additional
programming in other periods, and would be reduced further if the other
newer networks should be successful in providing expanded schedules of
programming.
In July 1995, the FCC repealed, effective August 30, 1996, its
prime time access rule, which limited broadcasts, by major-network
affiliates in the 50 largest markets, of "off network" entertainment
programming. Among other effects, elimination of this rule is expected to
increase the competition faced by new-network affiliates and independent
stations in bidding for the rights to popular "off network" shows.
Programming
UTV's UPN stations depend heavily on independent third parties for
programming, as do KTVX and KMOL 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 in original programming through December 31, 1995
was not significant to UTV's financial position. UTV 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.
In January 1995, UPN began broadcasting four hours of original
prime time programming per week, of which one hour consists of Star Trek:
Voyager, a science fiction adventure. In March 1996, UPN increased its
weekly prime time programming to six hours. The network also broadcasts
two hours of previously exhibited movies on Saturday afternoons and one
hour of original children's programming on Sunday mornings, which it plans
to increase to two hours, commencing in September 1996. UPN intends, over
the next several years, to expand its prime time programming to five nights
per week, as well as to begin broadcasting in other day parts.
UPN's primary affiliate station agreements have three year terms
and provide commercial time to the stations as consideration for
broadcasting the network's programming.
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Programs obtained from independent sources consist principally of
syndicated television shows, many of which have been shown previously on a
major network, and syndicated feature films, which were either made for
network television or have been exhibited previously in motion picture
theaters (most of which films have been shown previously on network or
cable television). Syndicated programs are sold to individual stations to
be broadcast one or more times. Television stations not affiliated with a
major network 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). Barter programming is offered to stations
for no cash consideration, but comes with a greater number of commercials
that must be broadcast, and therefore, with less inventory.
In recent years, the amount of barter and cash plus barter
programming broadcast both industry-wide and by UTV stations has increased
substantially. Barter and cash plus barter programming reduce both the
amount of cash required for program purchases and the amount of time
available for sale. Although the direct impact on broadcasters' operating
income generally is believed to be neutral, program distributors that
acquire barter air time compete with television stations and broadcasting
networks for sales of air time. UTV believes that the effect of barter on
its television stations is not significantly different from its impact
on the industry as a whole.
UTV television stations are frequently required to make substantial
financial commitments to obtain syndicated programming while such programming
is still being broadcast by another network and before it is available for
broadcast by UTV stations or even 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 initial network airing.
FCC rules limiting the ability of major networks to acquire financial
interests in independently produced programming or prohibiting such networks
from syndicating programs terminated in 1995. Elimination of the restraints
is expected to result in increased competition by the major networks for
production and syndication of first-run programming.
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 rights for programming available for
telecasting and deposits on film contracts for programming not available for
telecasting aggregating $35,286,000 as of December 31, 1995. The stations
were committed for film and sports rights contracts aggregating $40,340,000
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(E), 3 and 9 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.
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Generally, in the past, major network primary affiliation agreements
were automatically renewed for two-year periods (unless advance written
notice of termination was given by either the affiliate or the network).
More recently, however, most networks have begun to enter into affiliation
agreements for terms as long as ten years. UTV is discussing long-term
affiliation agreements for KTVX and KMOL. Current FCC rules do not limit
the duration of such agreements.
An affiliation 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 or is required 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 major networks generally have paid their
affiliates 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 broadcast with no compensation to the
station.
Subject to certain limitations contained in the affiliation
agreement, an affiliate may accept or reject a program offered by the
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 cash advertising revenues
vary from time to time. During the year ended December 31, 1995, national
advertising contributed 37%, and local advertising contributed 63%, of total
gross cash advertising revenues. Most advertising contracts are short-term.
Like that of the television broadcasting business generally, UTV's television
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 a national sales representative, which also receives a
commission, while local advertising time is sold by each station's sales
staff. In July 1995, UTV established a national sales representative
organization, United Television Sales, Inc. ("UTS"), to represent, initially,
all UTV and BHC stations. Practices with respect to sale of advertising
time do not differ markedly between UTV's major network and UPN stations,
although the major-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 frequencies,
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
Communications Act or by FCC rules and policies. The Communications Act
was recently and substantially amended by the Telecommunications Act of 1996
(the "Telecom Act"), some provisions of which have been incorporated into
the FCC's rules and regulations during the past month, and other provisions
of which will be incorporated over the next several months.
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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 manner that will provide a fair, efficient and equitable distribution
of service throughout the United States. Television licenses generally have
been issued for five-year terms, but the Telecom Act permits the FCC to
issue such licenses and their renewals for up to eight years. Upon
application, and in the absence of adverse questions as to the licensee's
qualifications or operations, 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 to
expire on April 1, 1998. KTVX's license renewal was granted on September 29,
1993, and is due to expire on October 1, 1998. KUTP's license renewal was
granted on March 28, 1994, and is due to expire on October 1, 1998. KBHK's
license renewal was granted on October 2, 1995, and is due to expire on
December 1, 1998. KMOL's license renewal was granted on August 18, 1995,
and is due to expire on August 1, 1998. In September 1995, an administrative
appeal of the grant of KMOL's renewal was filed, challenging the FCC staff's
determination that KMOL had complied with FCC requirements concerning equal
employment opportunity. KMOL has vigorously opposed this appeal, which UTV
believes is without merit.
Under existing FCC regulations governing multiple ownership of
broadcast stations, a license to operate a television 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 radio station-television station ownership combinations in the top 25
television markets, in which there will be at least 30 separately owned,
operated and controlled broadcast stations, and in certain other
circumstances. The Telecom Act directs the FCC to extend this waiver policy
to the top 50 markets, consistent with the public interest, and to conduct
a rule-making proceeding to determine whether to retain or modify the
current restriction on same-market multiple television station ownership.
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. Prior to adoption of the Telecom Act,
FCC rules had deemed such concentration of control to exist if any party,
or any of its officers, directors or stockholders, directly or indirectly,
owned, operated, controlled or had 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. The Telecom Act
directed the FCC to eliminate the numerical limitation on television station
ownership and to increase the maximum national audience reach limit to 35%,
and the FCC has adopted such changes. The FCC is also considering whether
to eliminate the 50% attribution reduction under this rule for UHF stations.
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
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such attribution, provided that such entities exercise no control over
the management or policies of the broadcasting company.
The FCC has begun a proceeding to consider modification of the
various TV ownership restrictions described above, as well as changes in
the rules for attributing the licenses held by an enterprise to various
parties. UTV cannot predict the outcome of the FCC proceedings.
FCC regulations currently prevent a national sales representative
organization, such as UTS, which is commonly owned with a national network
such as UPN, from representing affiliates of that network other than
affiliates that are also under common ownership with the network. FCC
regulations also place restrictions on provisions of agreements between
networks and their affiliates relating to network exclusivity, territorial
exclusivity, time optioning, and pre-emption rights. The FCC is conducting
rule-making proceedings to consider whether to retain, modify, or eliminate
these regulations. UTV is unable to predict the outcome of these
proceedings.
As required by the Telecom Act, the FCC recently amended another of
its regulations, the dual network rule, which generally had prohibited
common ownership or control of two television broadcast networks. Ownership
and control of two or more such networks will now be permitted, except for
common ownership or control between two of ABC, NBC, CBS, and Fox, or any
one of those four networks and either UPN or WB.
The Telecom Act directs the FCC to conduct a rule-making proceeding
to require the inclusion, in all television sets 13 inches or larger, of a
feature (commonly referred to as the V-chip) designed to enable viewers to
block display of programs carrying a common rating and authorizes the FCC
to establish an advisory committee to recommend a system for rating video
programming that contains sexual, violent, or other indecent material about
which parents should be informed, before it is displayed to children, if
the television industry does not establish a satisfactory voluntary rating
system of its own. Industry leaders have announced their intention to
establish a voluntary rating system by the end of 1996. The Telecom Act
also directs the FCC to adopt regulations requiring increased closed-
captioning of video programming and to conduct an inquiry into the use of
audio-narrated descriptions of video programming that could increase the
accessibility of such programming to persons with visual impairments.
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 FCC intends to conduct a rule-making proceeding to consider possible
modification of this latter regulation.
The Communications Act limits the amount of capital stock that
aliens (including their representatives, foreign governments, their
representatives, and entities organized under the laws of a foreign country)
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, directly or
indirectly, 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 by aliens of its stock 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 stations, currently ranging as
high as $19,925 per station.
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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, major network
programs achieve higher ratings than programs of other stations.
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
major VHF network-affiliated stations, but a larger viewing audience than
the other three 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 generally ranks first of the six
stations in terms of audience share. Of the 14 commercial television
stations in San Francisco, KBHK generally ranks fifth in terms of audience
share, behind the three major network-affiliated VHF television stations,
and the VHF Fox affiliate. KUTP generally 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.
Similar competitive effects may be expected from video delivery systems
offered by local telephone companies, as permitted by the provisions of
the Telecom Act.
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 law is currently being challenged in the Federal courts, and UTV
cannot predict the outcome. The Telecom Act extends the must-carry
requirements to the video delivery systems of local
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telephone companies, and these extended requirements may also be affected
by the pending court challenge. While Federal law has until recently
generally prohibited local telephone companies from providing video
programming to subscribers in their service areas, this restriction has been
held constitutionally invalid by eight federal district courts. Two such
rulings have been affirmed by the United States Court of Appeals, one by the
Fourth Circuit and one by the Ninth Circuit, and the Supreme Court has heard
oral argument with respect to the Fourth Circuit case. This prohibition
has been substantially eliminated by the Telecom Act, and the Supreme Court
has consequently remanded the case to the Circuit Court for further
consideration. The FCC has also initiated a rule-making proceeding to
consider rules for "Open Video Systems" -- a new structure of video delivery
system authorized by the Telecom Act for provision by local telephone
companies and, if permitted by the FCC, others. UTV is unable to predict
the outcome or effect of these developments.
"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 major-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. Two direct broadcast satellite ("DBS") systems currently
provide service, and others are expected to begin service later in 1996.
The number of subscribers to DBS services more than doubled during 1995,
from approximately 600,000 at the end of 1994, to approximately 1.7 million.
An additional challenge is now posed by wireless cable systems, including
multichannel distribution services ("MDS"). At the end of 1994, wireless
cable systems served about 800,000 subscribers. Two four-channel MDS
licenses have been granted in most television markets. MDS 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 newer multichannel multi-point distribution service 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. A proceeding is under way at the
FCC regarding policies concerning advanced television service, including
"high definition" service. The Telecom Act, as well as proposed federal
legislation, addresses several of these issues, and some members of Congress
support auctioning or otherwise charging broadcasters for use of spectrum
designated for "high definition" television use. The Telecom Act, in
particular, authorizes the FCC, if it chooses, to issue the initial
licenses for new advanced television broadcast stations exclusively to
existing television station licensees and permittees, provided that they
are required to surrender either their old or new licenses after a period
of time to be specified by the FCC. The Telecom Act also directs the FCC
to adopt regulations regarding ancillary uses of such new licenses and the
collection of fees for certain ancillary uses. UTV is unable to predict
the outcome of these legislative proposals or rule-making proceedings.
11
<PAGE>
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 UTV 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 2005 and is renewable for two
five year periods.
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.
12
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT.
The executive officers of UTV, as of February 29, 1996, are as
follows:
Positions with UTV; Has served
principal occupation; as officer
Name and age as of February 29, 1996 since
Herbert J. Siegel Chairman of the Board; Chairman 1982
of the Board and President, Chris-
Craft and BHC; 67
Evan C Thompson President and Chief Executive 1983
Officer; Executive Vice President
and President, Television Division,
Chris-Craft; 53
Laurey J. Barnett Vice President and Director of 1987
Programming; 36
Garth S. Lindsey Executive Vice President, Chief 1977
Financial Officer and Secretary; 51
Thomas L. Muir Treasurer and Controller; 47 1981
John C. Siegel President, UTV of San Francisco, 1983
Inc., which owns KBHK; Senior Vice
President, Chris-Craft; 43 1983
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.
13
<PAGE>
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, DIVIDEND 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 DATA 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.
14
<PAGE>
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 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.
15
<PAGE>
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 schedule 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
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.
16
<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.
Dated: March 29, 1996
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, 1996
-----------------
Herbert J. Siegel
Chairman and Director
EVAN C THOMPSON March 29, 1996
---------------
Evan C Thompson
President, Chief Executive
Officer and Director
(principal executive
officer)
GARTH S. LINDSEY March 29, 1996
----------------
Garth S. Lindsey
Executive Vice President,
Chief Financial Officer
and Secretary (principal
financial and accounting
officer)
LAWRENCE R. BARNETT March 29, 1996
-------------------
Lawrence R. Barnett
Vice Chairman and Director
17
<PAGE>
JOHN L. EASTMAN March 29, 1996
---------------
John L. Eastman
Director
JAMES D. HODGSON March 29, 1996
----------------
James D. Hodgson
Director
NORMAN PERLMUTTER March 29, 1996
-----------------
Norman Perlmutter
Director
ABRAHAM A. RIBICOFF March 29, 1996
-------------------
Abraham A. Ribicoff
Director
HOWARD F. ROYCROFT March 29, 1996
------------------
Howard F. Roycroft
Director
ROCCO C. SICILIANO March 29, 1996
------------------
Rocco C. Siciliano
Director
JOHN C. SIEGEL March 29, 1996
--------------
John C. Siegel
Director
18
<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, 1995 and 1994
Consolidated Statements of Income - For the Years
Ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows - For the Years
Ended December 31, 1995, 1994 and 1993
Consolidated Statements of Shareholders' Investment - For
the Years Ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
SCHEDULES:
Report of Independent Accountants on Financial Statement Schedule
II. Valuation and Qualifying Accounts
Schedules other than that listed above have been omitted since the
information is not applicable, not required, or is included in the respective
financial statements or notes thereto.
19
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of
United Television, Inc.
Our audits of the consolidated financial statements referred to in our
report dated February 12, 1996 appearing on page 19 of the 1995 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
Schedule as of December 31, 1995 and 1994, and the years then ended,
listed in Item 14(a) of this Form 10-K. In our opinion, the Financial
Statement Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.
PRICE WATERHOUSE LLP
Century City, California
February 12, 1996
20
<PAGE>
Schedule II
UNITED TELEVISION, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994
(In Thousands of Dollars)
</TABLE>
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Additions
----------------------
Balance at Charged to Charged Balance
Beginning Costs and to Other at End of
Description of Period Expenses Accounts Deductions Period
- ----------- ---------- ---------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Year ended
December 31,
1995:
Allowance for
doubtful
accounts $ 1,994 $ 232 $ --- $ (536)(a) $ 1,690
Year ended
December 31,
1994:
Allowance for
doubtful
accounts $ 1,998 $ 275 $ --- $ (279)(a) $ 1,994
Year ended
December 31,
1993:
Allowance for
doubtful
accounts $ 1,716 $ 551 $ --- $ (269)(a) $ 1,998
</TABLE>
(a) Accounts written off, net of recoveries.
21
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Incorporated by
Reference to: Exhibit No. Exhibit
- --------------- ----------- -------
<S> <C> <C>
Exhibit 3(a) [1] 3.1 Restated Certificate
of Incorporation
Exhibit 3(b) [2] 3.2 Restated By-Laws
Exhibit A to registrant's 10.1 1988 Stock Option Plan
Proxy Statement dated
March 23, 1988 (File
No. 0-9786)
Exhibit 10(a)(1) [7] 10.2 Amendment No. 1 thereto
Exhibit 10(i) [3] 10.3 Employment Agreement, dated
January 1, 1981, between
registrant and Garth S. Lindsey,
as amended
Exhibit 10(m) [3] 10.4 Employment Agreement, dated
January 1, 1981, between
registrant and Thomas L. Muir,
as amended
Exhibit 10(t) [4] 10.5 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] 10.6 Revision and Extension Agreement
dated as of December 19, 1988
from Garth S. Lindsey, as maker,
to registrant, as payee
Exhibit 10(u) [4] 10.7 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] 10.8 Revision and Extension Agreement
dated as of December 20, 1988
from Thomas L. Muir, as maker, to
registrant, as payee
Exhibit 10(s) [6] 10.9 Benefit Equalization Plan of
registrant
22
<PAGE>
10.10 UTV and BHC have entered into
a state tax sharing agreement,
relating to joint tax liabilities
for state income taxes due re-
specting tax returns filed on
a combined basis, pursuant to
which UTV's total payments to
a taxing authority or BHC will
will be equal to the tax UTV
would have paid had it filed
as a stand-alone entity.
* 13 Portions of the Annual Report
incorporated by reference
* 21 Subsidiaries of registrant
* 23 Consent of Price Waterhouse LLP
* 27 Financial Data Schedule
_______________________
* 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.
23
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS
OF INCOME
UNITED TELEVISION, INC. AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 1994 1993
- ----------------------------------------------------------------------
<S> <C> <C> <C>
NET REVENUES $165,559 $150,980 $130,338
-------- -------- --------
EXPENSES:
Operating 62,865 59,809 59,507
Selling, general and administrative 51,812 38,934 34,458
-------- -------- --------
114,677 98,743 93,965
-------- -------- --------
OPERATING INCOME 50,882 52,237 36,373
-------- -------- --------
OTHER INCOME:
Interest and other income 10,290 7,084 6,126
Income associated with
Time Warner Inc. securities --- --- 31,125
-------- -------- --------
10,290 7,084 37,251
-------- -------- --------
INCOME BEFORE PROVISION
FOR INCOME TAXES 61,172 59,321 73,624
-------- -------- --------
Provision for income taxes 24,300 24,150 29,800
-------- -------- --------
NET INCOME $ 36,872 $ 35,171 $ 43,824
-------- -------- --------
-------- -------- --------
NET INCOME PER SHARE $ 3.78 $ 3.50 $ 4.31
-------- -------- --------
-------- -------- --------
AVERAGE COMMON SHARES OUTSTANDING 9,757 10,058 10,157
-------- -------- --------
-------- -------- --------
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THESE STATEMENTS.
Page 10
<PAGE>
CONSOLIDATED STATEMENTS
OF CASH FLOWS
UNITED TELEVISION, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 36,872 $ 35,171 $ 43,824
Adjustments to reconcile net income to
net cash provided from operating activities:
Film contract payments (25,023) (33,744) (40,925)
Film contract amortization 27,732 25,179 29,653
Depreciation and other amortization 4,655 4,776 5,052
Gain on dispositions of Time Warner securities --- --- (27,164)
(Gain) loss on dispositions of other
marketable securities (738) 230 (162)
Changes in assets and liabilities:
Accounts receivable (2,913) (5,205) (6,114)
Prepaid and other assets (1,491) 15 (7,273)
Accounts payable and accrued expenses 5,051 3,311 2,558
Income taxes payable (3,463) 3,348 4,493
-------- -------- --------
Net cash provided from operating
activities 40,682 33,081 3,942
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Disposition of Time Warner securities --- --- 117,083
Sales of marketable securities 49,874 80,224 401,465
Purchases of marketable securities (82,004) (68,244) (516,557)
Capital expenditures (2,807) (3,615) (2,092)
-------- -------- --------
Net cash (used in) provided from
investing activities (34,937) 8,365 (101)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividend paid (4,911) --- ---
Proceeds from exercise of employee
stock options 2,009 997 2,428
Purchases of treasury stock (30,449) (9,901) (11,188)
-------- -------- --------
Net cash used in financing activities (33,351) (8,904) (8,760)
-------- -------- --------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (27,606) 32,542 (4,919)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 44,494 11,952 16,871
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 16,888 $ 44,494 $ 11,952
-------- -------- --------
-------- -------- --------
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS.
Page 11
<PAGE>
CONSOLIDATED
BALANCE SHEETS
UNITED TELEVISION, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31, 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 16,888 $ 44,494
Marketable securities 174,478 137,549
Accrued interest receivable 2,147 2,005
Accounts receivable, less allowance for doubtful accounts
of $1,690 and $1,994, respectively 38,934 36,021
Film contract rights 27,343 21,555
Deferred tax benefit 3,679 3,393
Prepaid expenses and other current assets 1,773 1,760
-------- --------
Total current assets 265,242 246,777
-------- --------
NONCURRENT MARKETABLE SECURITIES 29,538 20,099
-------- --------
FILM CONTRACT RIGHTS, INCLUDING DEPOSITS, LESS
ESTIMATED PORTION TO BE USED WITHIN ONE YEAR 7,943 8,506
-------- --------
PROPERTY AND EQUIPMENT, AT COST:
Land, buildings and improvements 12,339 12,201
Equipment 51,720 50,244
-------- --------
64,059 62,445
Less - Accumulated depreciation and amortization 48,634 45,742
-------- --------
15,425 16,703
-------- --------
INTANGIBLE ASSETS 21,981 21,981
Less - Accumulated amortization 9,607 8,997
-------- --------
12,374 12,984
-------- --------
OTHER ASSETS 465 607
-------- --------
$330,987 $305,676
-------- --------
-------- --------
</TABLE>
Page 12
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Film contracts payable $ 25,617 $ 21,535
Accounts payable 3,199 3,256
Accrued expenses 19,477 15,728
Income taxes payable 8,885 12,753
-------- --------
Total current liabilities 57,178 53,272
-------- --------
FILM CONTRACTS PAYABLE AFTER ONE YEAR 25,489 23,153
-------- --------
OTHER LIABILITIES 7,851 1,330
-------- --------
COMMITMENTS AND CONTINGENCIES (NOTE 9)
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 9,609,037 and 9,975,338 shares, respectively 961 998
Additional paid-in capital 133 133
Retained earnings 232,839 228,181
Adjustment to reflect marketable
securities at fair value 6,536 (1,391)
-------- --------
240,469 227,921
-------- --------
$330,987 $305,676
-------- --------
-------- --------
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THESE BALANCE SHEETS.
Page 13
<PAGE>
CONSOLIDATED STATEMENTS
OF SHAREHOLDERS' INVESTMENT
UNITED TELEVISION, INC. AND SUBSIDIARIES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
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, 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
Net income --- --- --- 35,171 --- 35,171
Adjustment to reflect marketable
securities at fair value --- --- --- --- (1,391) (1,391)
Exercise of options, including
tax benefit 36,597 4 1,277 --- --- 1,281
Purchase/retirement of
treasury stock (206,422) (21) (1,277) (8,603) --- (9,901)
---------- ------ ------- -------- ------- --------
BALANCE AT
DECEMBER 31, 1994 9,975,338 998 133 228,181 (1,391) 227,921
Net income --- --- --- 36,872 --- 36,872
Cash dividend --- --- --- (4,911) --- (4,911)
Adjustment to reflect marketable
securities at fair value --- --- --- --- 7,927 7,927
Exercise of options, including
tax benefit 66,867 6 3,103 --- --- 3,109
Purchase/retirement of
treasury stock (433,168) (43) (3,103) (27,303) --- (30,449)
---------- ------ ------- -------- ------- --------
BALANCE AT
DECEMBER 31, 1995 9,609,037 $ 961 $ 133 $232,839 $ 6,536 $240,469
---------- ------ ------- -------- ------- --------
---------- ------ ------- -------- ------- --------
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THESE STATEMENTS.
Page 14
<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 (57.3% at December
31, 1995) subsidiary of BHC Communications, Inc. (BHC), a majority owned
subsidiary of Chris-Craft Industries, Inc. (Chris-Craft). 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; United
Television Sales, Inc. (UTS), a national sales representative organization which
currently represents UTV's five stations and the three stations owned by BHC;
and United Entertainment Group, Inc., which with BHC jointly produces first-run
programming for national distribution to television stations. UTV's revenues are
derived entirely from television broadcasting and are, therefore, subject to the
vagaries of the advertising industry.
Effective January 1, 1995, UTV entered into a state tax sharing agreement
with BHC under which agreement UTV continues to provide taxes on a separate
company basis.
The acquisition of programming from third parties is frequently negotiated
for UTV and BHC stations simultaneously.
(B) BASIS OF PRESENTATION. The accompanying consolidated financial statements
include the accounts of UTV and its subsidiaries, after elimination of all
significant intercompany accounts and transactions. Preparation of financial
statements in accordance with generally accepted accounting principles requires
the use of management estimates. Certain amounts for 1994 and 1993 have been
reclassified to conform with the 1995 presentation.
(C) CASH AND CASH EQUIVALENTS. Cash and cash equivalents consist of cash and
U.S. Government securities having maturities at time of purchase not exceeding
three months. The fair value of cash equivalents approximates carrying value,
reflecting their short maturities.
(D) INVESTMENTS IN DEBT AND EQUITY SECURITIES. Effective January 1, 1994, UTV
adopted Statement of Financial Accounting Standards No. 115 (SFAS 115),
"Accounting for Certain Investments in Debt and Equity Securities." Under SFAS
115, all of UTV's marketable securities have been categorized as available for
sale and are carried at fair market value.
(E) 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
anticipated costs of the programming and management's estimate of the flow of
revenues. In the opinion of management, future revenue related to the airing of
remaining film contract rights will be sufficient to recover unamortized costs
at December 31, 1995. 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.
(F) 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 acquisition.
(G) REVENUE RECOGNITION AND BARTER TRANSACTIONS. Revenue is recognized upon
broadcast of television advertising. The estimated fair value of goods or
services received in barter (nonmonetary) transactions, most of which relate to
the acquisition of programming, is recognized as revenue when the air time is
used by the advertiser. Barter revenue was $12,114,000, $11,155,000 and
$9,580,000 in 1995, 1994 and 1993, respectively, and barter expense was
$12,025,000, $11,328,000 and $9,642,000 in the three years, respectively.
(H) NET INCOME PER SHARE. Per share amounts were computed by dividing net income
by the weighted average number of common shares outstanding, taking into
consideration, when dilutive, common stock equivalents (stock options).
Page 15
<PAGE>
(I) SUPPLEMENTAL CASH FLOW INFORMATION. Cash paid for income taxes totaled
$27,763,000 in 1995, $20,802,000 in 1994 and $29,966,000 in 1993.
2. MARKETABLE SECURITIES.
Marketable securities include the following:
FAIR
(IN THOUSANDS) VALUE COST
- ----------------------------------------------------------------
CURRENT ASSETS:
December 31, 1995
U.S. Government securities $166,617 $164,701
Global government bond fund 10,008 10,000
-------- --------
$176,625 $174,701
-------- --------
-------- --------
December 31, 1994
U.S. Government securities $129,464 $134,131
Global government bond fund 10,090 10,883
-------- --------
$139,554 $145,014
-------- --------
-------- --------
NONCURRENT ASSETS:
December 31, 1995
BHC Class A common stock $ 21,404 $ 11,325
Other marketable equity securities 8,134 6,836
-------- --------
$ 29,538 $ 18,161
-------- --------
-------- --------
December 31, 1994
BHC Class A common stock $ 16,648 $ 11,325
Other marketable equity securities 3,451 3,650
-------- --------
$ 20,099 $ 14,975
-------- --------
-------- --------
The following table provides certain additional information related to
UTV's marketable securities as of and for the year ended December 31, 1995:
DEBT EQUITY
(IN THOUSANDS) SECURITIES SECURITIES
- ------------------------------------------------------------------
Maturing within two years $151,727 $ ---
Maturing in two to three years 12,743 ---
Gross unrealized holding gains 484 11,442
Gross unrealized holding losses 707 65
Sales proceeds 45,374 4,500
Realized gains 31 729
Realized losses 22 ---
For purposes of computing realized gains and losses, cost was determined
using the specific identification method.
3. FILM CONTRACTS PAYABLE.
The approximate future maturities of film contracts payable classified as
noncurrent liabilities at December 31, 1995 are $15,204,000, $7,309,000,
$1,930,000, $600,000 and $446,000 in 1997, 1998, 1999, 2000 and thereafter,
respectively. The net present value at December 31, 1995 of such payments,
discounted at 8.5%, was approximately $21,500,000.
4. 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 1995, UTV purchased and retired 433,168 shares of its common stock
at an aggregate cost of $30,449,000. During 1994 and 1993, UTV purchased and
retired 206,422 and 352,186 shares of its common stock, respectively. At
December 31, 1995, purchase of 1,192,249 additional shares of common stock
had been authorized by the Board of Directors.
5. STOCK OPTIONS.
Under the UTV 1988 Stock Option Plan, options (including Incentive Stock
Options) to purchase shares of common stock may be granted from time to time
to employees of UTV and its parent and subsidiaries, at prices not less than
fair market value at date of grant. Options are exercisable in cumulative
annual installments of 33 1/3% commencing one year from date of grant, and
expire over a period determined by the Plan Committee, which may not exceed
ten years (five years in the case of ISO's) from date of grant. Options
currently outstanding expire five years from date of grant.
The Plan permits the Plan Committee to award stock appreciation rights to
holders of options granted under the Plan. Such rights entitle the holders,
in lieu of exercising their options, to receive payment from UTV in cash,
stock or a combination thereof, equal to the greater of the appreciation in
market value or book value of the shares covered by exercisable options. No
stock appreciation rights have been awarded under the Plan. The Plan permits
grants to purchase an aggregate of 800,000 shares. Transactions under the
Plan during the two years ended December 31, 1995 were as follows:
Page 16
<PAGE>
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS, SHARES OPTION PRICE
EXCEPT PER SHARE DATA) UNDER OPTION PER SHARE TOTAL
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
OUTSTANDING,
DECEMBER 31, 1993 208,500 $27.25 - $31.625 $ 5,725
Granted 217,500 $53.50 11,636
Exercised (36,597) $27.25 (997)
Canceled (3,000) $27.25 (81)
------- --------------- -------
OUTSTANDING,
DECEMBER 31, 1994 386,403 $27.25 - $53.50 16,283
Granted --- --- ---
Exercised (66,867) $27.25 - $53.50 (2,009)
------- --------------- -------
OUTSTANDING,
DECEMBER 31, 1995 319,536 $27.25 - $53.50 $14,274
------- --------------- -------
------- --------------- -------
</TABLE>
At December 31, 1995, options outstanding under the Plan were exercisable
for 174,536 shares at prices ranging from $27.25 to $53.50 per share and
options for 277,267 shares were available for grant. Options outstanding
expire at various dates from April 1996 through December 1999.
In addition to options granted under the Plan, during 1995 UTV granted a
stock option to purchase 100,000 shares at $88.75 per share (the fair market
value at date of grant), on terms essentially similar to those of the 1988
Plan.
Under the 1995 Director Stock Option Plan, adopted by UTV shareholders in
April 1995, a fixed number of immediately exercisable options to purchase
shares of common stock are granted annually to each nonemployee director of
UTV at prices equal to fair market value at date of grant. In 1995, prior
service options for 40,500 shares, at a price per share of $58.00, and
current service options for 7,000 shares, at a price per share of $62.25,
were granted to directors. At December 31, 1995, options for all such shares
were outstanding and 132,500 shares were available for 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.
UTV expects to adopt Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," in 1996 and intends to retain the
intrinsic value method of accounting for stock-based compensation which it
currently uses.
6. INCOME TAXES.
Income tax expense consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
(IN THOUSANDS) 1995 1994 1993
- --------------------------------------------------------------
<S> <C> <C> <C>
Federal:
Current $19,425 $17,702 $27,325
Deferred 375 1,623 (3,900)
------- ------- -------
19,800 19,325 23,425
------- ------- -------
State:
Current 4,450 4,868 6,450
Deferred 50 (43) (75)
------- ------- -------
4,500 4,825 6,375
------- ------- -------
Total $24,300 $24,150 $29,800
------- ------- -------
------- ------- -------
</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:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
(IN THOUSANDS) 1995 1994 1993
- ---------------------------------------------------------------
<S> <C> <C> <C>
Statutory federal income
taxes $21,410 $20,762 $25,768
State income taxes, net
of federal income tax
benefit 2,957 3,127 4,136
Dividend exclusion (108) (36) (467)
Goodwill amortization 102 102 166
Other, net (61) 195 197
------- ------- -------
Total $24,300 $24,150 $29,800
------- ------- -------
------- ------- -------
</TABLE>
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 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
(IN THOUSANDS) 1995 1994
- --------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
State taxes $ 1,644 $ 1,618
SFAS 115 adjustment --- 989
Bad debt reserve 699 842
Vacation accrual 416 388
Benefits program 950 667
Other 616 8
------- -------
4,325 4,512
------- -------
Deferred tax liabilities:
Depreciation (1,758) (1,796)
Intangibles amortization (583) (519)
SFAS 115 adjustment (4,618) ---
Other (179) (134)
------- -------
(7,138) (2,449)
------- -------
$(2,813) $ 2,063
------- -------
------- -------
</TABLE>
Page 17
<PAGE>
7. 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
expected to be earned in the future.
The following table sets forth the funded status of the plans:
<TABLE>
<CAPTION>
DECEMBER 31,
(IN THOUSANDS) 1995 1994
- ----------------------------------------------------------------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $(11,989) $(10,804)
Nonvested benefit obligation (832) (735)
-------- --------
Accumulated benefit obligation (12,821) (11,539)
Effect of projected
compensation increases (4,314) (3,546)
-------- --------
Projected benefit obligation (17,135) (15,085)
Plan assets at fair value, primarily
listed securities and U.S.
Government securities 17,707 13,800
-------- --------
Surplus (deficit) 572 (1,285)
Unrecognized (gain) loss (172) 1,781
Unrecognized prior service cost (187) (219)
Unrecognized net obligation remaining
from initial application, January 1,
1987 95 111
-------- --------
Prepaid pension obligation $ 308 $ 388
-------- --------
-------- --------
</TABLE>
The unrecognized net obligation is being amortized over a 15-year period.
Pension expense, including amounts accrued in a UTV nonqualified
retirement plan for benefits in excess of statutory limitations, is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
(IN THOUSANDS) 1995 1994 1993
- -----------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 913 $ 805 $ 748
Interest cost on projected
benefit obligation 1,111 979 903
Actual return
on plan assets (3,417) (450) (1,298)
Net amortization
and deferral 2,414 (606) 397
------- ----- -------
Net periodic pension cost $ 1,021 $ 728 $ 750
------- ----- -------
------- ----- -------
</TABLE>
Assumptions used in determining the actuarial present value of the
projected benefit obligation were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7.25% 7.25% 7.25%
Rate of increase in future
compensation levels 4.50% 4.50% 4.50%
Expected long-term rate of
return on assets 7.75% 7.75% 7.75%
</TABLE>
UTV also maintains defined contribution retirement plans for its employees:
a contributory stock purchase plan and a noncontributory profit sharing plan.
The aggregate costs of such plans for 1995, 1994, and 1993 were $3,876,000,
$2,538,000 and $2,172,000, respectively, including accruals in the
nonqualified plan referenced above.
8. RELATED PARTY TRANSACTIONS.
Included in net revenues are commissions earned by UTS for the sale of
national advertising on BHC's three television stations of $2,074,000 in 1995.
Included in selling, general and administrative expenses are management
and directors' fees UTV paid Chris-Craft of $570,000, $570,000 and $549,000
in 1995, 1994 and 1993, respectively, and a management fee UTV paid BHC of
$2,200,000 in 1995 and $1,750,000 in 1994.
UTV and BHC each incurred costs of $571,000, $3,312,000 and $357,000 in
1995, 1994 and 1993, respectively, for the joint production and distribution
with third parties of original programming.
9. 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
Consolidated Balance Sheets, totaled $40,430,000 at December 31, 1995.
At December 31, 1995, UTV was obligated under several noncancelable leases
on real property and equipment that expire between 1996 and 2010. Rental expense
was $1,928,000, $1,546,000 and $1,268,000 for 1995, 1994 and
Page 18
<PAGE>
1993, respectively. Aggregate future minimum rental payments under such
leases at December 31, 1995 are $12,397,000, with amounts of $1,410,000,
$1,381,000, $1,426,000, $1,361,000 and $1,015,000 due in 1996, 1997, 1998,
1999 and 2000, respectively.
At December 31, 1995, UTV was committed to invest over time up to
$40,000,000 in a management buyout limited partnership.
In the opinion of management, after taking into account opinions of
counsel with respect thereto, the ultimate resolution of pending legal
proceedings against UTV, to the extent not covered by insurance, will not
have a material effect on UTV's consolidated financial position or results of
operations.
REPORT OF INDEPENDENT ACCOUNTANTS
UNITED TELEVISION, INC. AND SUBSIDIARIES
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, 1995 and 1994, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1995, in conformity with generally accepted
accounting principles. 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 of
these financial statements in accordance with generally accepted 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 expressed above.
/s/ Price Waterhouse LLP
Century City, California
February 12, 1996
Page 19
<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
television stations, adjusted to reflect the difference between film contract
payments and film contract amortization. The relationship between such
payments and amortization may vary greatly between years (amortization
exceeded payments by $2,709,000 in 1995, while payments exceeded amortization
by $8,565,000 in 1994), and is dependent upon the mix of programs aired and
payment terms of the stations' contracts. UTV stations generated substantial
cash flow in 1995 and are expected to do the same in 1996. With its
considerable cash and marketable securities balances, UTV continues to be
well positioned to pursue new opportunities or deal effectively with
uncertainties that may arise in the television broadcasting industry or
economic environment.
UTV's cash flow is augmented by interest and dividend income associated
with its cash and marketable securities. UTV's 1995 cash flow from operations
totaled $40,682,000, and cash and marketable securities increased $18,762,000
to $220,904,000 at December 31,1995. UTV has a commitment to invest over time
up to $40,000,000 in a management buyout limited partnership.
Working capital increased $14,559,000 during 1995 to $208,064,000 at
December 31, 1995, primarily reflecting cash from operations partially offset
by treasury stock repurchases. Working capital at December 31,1995 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 $40,430,000 at December 31, 1995. 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, 1995, purchase of an additional 1,192,249
shares was so authorized. From January 1, 1993 through December 31, 1995,
991,776 shares were purchased for an aggregate cost of $51,538,000, of which
433,168 shares were purchased during 1995 for an aggregate cost of
$30,449,000.
UTV's commitments for capital expenditures at December 31, 1995 were not
material in relation to UTV's financial position. Funds for capital
expenditures have
Page 20
<PAGE>
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
1995 VERSUS 1994. UTV's primary source of revenue is the sale to
advertisers of time on its five television stations. UTV's 1995 net income
increased 5% to $36,872,000, or $3.78 per share, from $35,171,000, or $3.50
per share, in 1994. Per share earnings for the year increased 8%, as
purchases of common stock reduced the average number of common shares
outstanding.
The earnings increase reflects record operating results at the television
station group, offset by approximately $3,700,000 of one-time costs
associated with the start-up of UTV's national sales representative
subsidiary, which began operations in the third quarter of 1995. Station
group net revenues rose 7% for the year. Consolidated net revenues rose 10%
to a record $165,559,000, from $150,980,000 last year, after giving effect to
the sales representative subsidiary. The increase in station revenues
reflects improved demand for television advertising at UTV stations during
the first nine months of 1995 followed by slowing in demand during the fourth
quarter, a trend which appears to be continuing in the 1996 first quarter.
The increase in station revenues was in large measure offset by an
increase in station operating expenses, which rose 7%, reflecting a 6%
increase in programming costs and increased selling and administrative
expenses. While television station operating earnings increased slightly in
1995, the one-time costs of $3,700,000 resulted in a decline in operating
income to $50,882,000, from last year's $52,237,000.
1994 VERSUS 1993. UTV's 1994 net income increased 42% to $35,171,000, or
$3.50 per share, from $24,749,000, or $2.44 per share, in 1993 (before income
associated with interests in Time Warner Inc.). Including Time Warner income,
1993 net income was $43,824,000, or $4.31 per share.
The significant earnings increase reflects record operating results at
UTV stations. Net revenues for the year increased by 16% to a record
$150,980,000, from $130,338,000 in 1993, reflecting improved demand for
television advertising at UTV stations. Operating income rose 44% to a record
$52,237,000, from $36,373,000 in 1993. The improvement in operating income
mainly reflected the increase in net revenue. Programming expenses, which had
been declining in recent years, rose just 1% in 1994.
Page 21
<PAGE>
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, 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET REVENUES $165,559 $150,980 $130,338 $115,127 $112,902
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
OPERATING INCOME (LOSS) $ 50,882 $ 52,237 $ 36,373 $ 7,853 $ (7,278)
Interest and other income 10,290 7,084 6,126 4,274 3,252
Income associated with Time Warner
securities -- -- 31,125 10,828 9,527
Income taxes (24,300) (24,150) (29,800) (6,800) (350)
-------- -------- -------- -------- --------
Net income $ 36,872 $ 35,171 $ 43,824 $ 16,155 $ 5,151
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
NET INCOME PER SHARE $ 3.78 $ 3.50 $ 4.31 $ 1.54 $ .48
CASH AND CURRENT MARKETABLE SECURITIES 191,366 182,043 171,243 108,395 45,954
TOTAL ASSETS 330,987 305,676 285,905 259,721 252,954
WORKING CAPITAL 208,064 193,505 172,815 98,749 59,604
LONG-TERM DEBT -- -- -- -- 179
SHAREHOLDERS' INVESTMENT $240,469 $227,921 $202,761 $167,697 $155,887
</TABLE>
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
UNITED TELEVISION, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
YEAR ENDED DECEMBER 31, 1995 QUARTER QUARTER QUARTER QUARTER YEAR
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET REVENUES $36,932 $42,113 $39,075 $47,439 $165,559
OPERATING INCOME 10,859 16,241 8,333 15,449 50,882
NET INCOME 7,726 11,314 6,334 11,498 36,872
NET INCOME PER SHARE $ .78 $ 1.15 $ .65 $ 1.20 $ 3.78
YEAR ENDED DECEMBER 31, 1994
- ----------------------------------------------------------------------------------------------------
NET REVENUES $32,107 $37,773 $34,426 $46,674 $150,980
OPERATING INCOME 9,392 13,010 10,374 19,461 52,237
NET INCOME 6,375 8,815 7,479 12,502 35,171
NET INCOME PER SHARE $ .63 $ .87 $ .75 $ 1.25 $ 3.50
</TABLE>
Page 22
<PAGE>
STOCK PRICE, DIVIDEND AND RELATED INFORMATION
United Television, Inc. common stock trades on the Nasdaq National
Market tier of the Nasdaq Stock Market under the symbol: UTVI.
The high and low sales prices as reported by Nasdaq for the periods
indicated were:
<TABLE>
<CAPTION>
1995 1994
---------------- -----------------
Quarter High Low High Low
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
First $62.000 $51.875 $43.750 $40.000
Second 72.000 61.000 49.000 40.500
Third 89.250 72.000 54.000 47.000
Fourth 90.250 84.500 54.750 51.250
</TABLE>
No dividend was paid during 1994. In 1995, UTV paid its first dividend
of $.50 per share. In February 1996, UTV declared a dividend of $.50 per
share. The Board of Directors intends each year to consider declaration of a
cash dividend.
As of February 29, 1996, there were approximately 3,700 holders of
record of common stock.
Page 23
Exhibit 21
The following were the registrant's subsidiaries as of December 31,
1995, 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
24
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (Nos. 33-59277 and 33-21903) of
United Television, Inc. of our report dated February 12, 1996
which appears on page 19 of the 1995 Annual Report to Shareholders of United
Television, Inc., which is incorporated by reference in this Annual
Report on Form 10-K for the year ended December 31, 1995. We also consent
to the incorporation by reference of our report on the Financial Statement
Schedule, which appears on page 20 of such Annual Report on Form 10-K.
PRICE WATERHOUSE LLP
Century City, California
March 29, 1996
25
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS INCORPORATED BY REFERENCE INTO
REGISTRANT'S ANNUAL REPORT ON FORM 10-K
FOR YEAR ENDED 31 DECEMBER 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 16,888
<SECURITIES> 174,478
<RECEIVABLES> 38,934
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 265,242
<PP&E> 64,059
<DEPRECIATION> 48,634
<TOTAL-ASSETS> 330,987
<CURRENT-LIABILITIES> 57,178
<BONDS> 0
<COMMON> 961
0
0
<OTHER-SE> 239,508
<TOTAL-LIABILITY-AND-EQUITY> 330,987
<SALES> 165,559
<TOTAL-REVENUES> 165,559
<CGS> 114,677
<TOTAL-COSTS> 114,677
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 61,172
<INCOME-TAX> 24,300
<INCOME-CONTINUING> 36,872
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,872
<EPS-PRIMARY> 3.78
<EPS-DILUTED> 3.78
</TABLE>
