SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 15, 1994
MULTIMEDIA, INC.
(Exact name of registrant as specified in its charter)
South Carolina
(State or other jurisdiction of incorporation)
0-6265 57-0173540
Commission File Number (IRS Employer Identification No.)
305 South Main Street, Greenville, South Carolina 29601
(Address of principal executive offices) Zip Code
(803) 298-4373
Registrant's Telephone Number, Including Area Code
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ITEM 5. OTHER EVENTS.
On February 15, 1994, Walter E. Bartlett, Chairman and Chief
Executive Officer of Multimedia, Inc. announced that the Company is
beginning a series of strategic initiatives outlined in the
attached Press Release, which press release is incorporated herein
by reference thereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
20. Press release dated February 15, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
MULTIMEDIA, INC.
Dated: February 16, 1994 By:_________________________________
Robert E. Hamby, Jr.
Senior Vice President and
Chief Financial Officer
Dated: February 16, 1994 By:_________________________________
Thomas L. Magaha
Vice President-Controller
MULTIMEDIA, INC. ANNOUNCES PLANS FOR INFORMATION
SUPERHIGHWAY PLATFORM, ADDITIONAL PROGRAMMING AND
DISTRIBUTION INITIATIVES
GREENVILLE, S.C. -- Feb. 15, 1994 -- Walter Bartlett,
Chairman, President and Chief Executive Officer of Multimedia,
Inc., today announced that the Company is beginning a series of
strategic initiatives intended to strengthen its competitive
position, enhance the value of its assets, and take advantage of
opportunities that have resulted from the success of its core
businesses of newspaper publishing, broadcasting, entertainment
programming and cable television.
"These initiatives, which include a five-year $150 million
investment in the technological upgrade of our cable operations,
represent an important part of Multimedia's plan to optimize its
long-term growth and profitability in the rapidly converging
communications universe. Multimedia's solid earnings and cash
flow history, including profitability margins that have been
among the best in the media business, has placed it in a position
where it can finance these investments in programming and
distribution from internal cash flow and existing credit lines,"
Bartlett said.
"The $150 million cable upgrade will give our systems the
capacity they need for the 500-channel future, as well as provide
us access to the information superhighway," he continued.
"We will invest approximately $45 million in each of the
next two years to replace the coaxial wire in our cable systems
with fiber. As we complete each part of the upgrade, we will be
able to offer increasing numbers of our cable customers up to 110
channels of cable programming, compared to a current average of
40 channels in most of our systems. These will include a wider
selection of premium channels already available as well as the
new home shopping channels and video games that are due to be
launched.
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"The last portion of the $150 million program will include
digital compression and the installation of interactive converter
boxes in the homes of the 50% of our customers that we expect
will want the new interactive services. Industry standards are
now being developed for these boxes, which are due to become
available in 1995. Following that phase of the upgrade, we will
be ready to offer
our customers all of the proposed new interactive video services.
The most significant of these is expected to be video on demand,
which will allow customers to order and view movies, sports, news
and other programming at will. Other services could include more
sophisticated, interactive versions of video games and home
shopping channels, as well as electronic Yellow Pages and other
classified advertising."
Bartlett noted, "The strategic investment we're making in
our cable systems between now and the end of 1997 will enable us
to fully participate in the additional revenue streams resulting
from potentially hundreds of new cable channels.
"We're also pleased to announce that we have signed a
definitive agreement for the acquisition of 50,000 cable
subscribers in areas contiguous to Wichita, Kansas. The
transaction will fulfill our goal of obtaining cable access to
virtually every household in the Wichita MSA (metropolitan
statistical area). This continues our long-term strategy of
concentrating cable acquisitions in areas where we already have
strong presence."
The Company said that the transaction involves the exchange
of approximately 39,000 Multimedia subscribers in Illinois and
northern Oklahoma for a similar number of Tele-Communications,
Inc. subscribers, plus the payment of an undisclosed amount of
cash to TCI for the additional subscribers.
"By building our cable operations in geographic clusters, we
have developed excellent operating and advertising economies of
scale over the past 10 years. Clustering has also given us
opportunities for ancillary businesses that we wouldn't have had
otherwise, which is why we believe it will be even more important
to the value of cable systems in the future," Bartlett said.
Don Sbarra, Multimedia Senior Vice President of Operations,
said that one ancillary business that has already resulted from
Multimedia Cablevision's strong presence in Wichita is an
alternate access system. The Company has signed a partnership
agreement with Hyperion Telecommunications, Inc., a subsidiary of
Adelphia Cable Communications, to offer alternate access to long
distance networks such as AT&T, MCI and Sprint for commercial
customers in that area.
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Sbarra added, "We have completed the electronic nerve center
of this new alternate access system, and have begun construction
of a network of fiber-optic loops around Wichita using our cable
right-of-ways. We believe our excellent
reputation for cable customer service in Wichita will facilitate
our entry into this
business, which has previously been dominated by regional
telephone companies. Customers have been particularly
enthusiastic about the network's full-redundancy feature, which
means a series of back-up systems providing virtually fail-proof
reliability.
"This is an excellent example of the way we can explore new
revenue-producing businesses with strategic partners that have
expertise complementary to our own. In the case of Multimedia
Hyperion Telecommunications, Hyperion has both technical and
marketing expertise for alternate access systems, and Multimedia
has a strong reputation in cable networks and customer service.
Our first alternate access system customers are going on-line
late in the first quarter, and we expect to continue to add
customers as our network reaches more office buildings," Sbarra
continued.
Bartlett also announced that Multimedia's largest daily
newspapers, located in Greenville, S.C., Asheville, N.C., and
Montgomery, Ala., have agreed to join a consortium being formed
by BellSouth Enterprises Inc. and Cox Enterprises Inc. The
consortium will market telephonic classified and Yellow Page
advertising throughout BellSouth's service area using data from
the newspapers in the consortium. The agreement fits
Multimedia's objective of solidifying its newspapers' positions
as primary providers of information and advertising to their
markets, using different formats or means of access.
Multimedia's television station in Knoxville, Tennessee,
top-rated WBIR-TV, has also entered a similar strategic venture -
- - planning the launch of a local news and talk cable channel in
partnership with Scripps Howard Cable TV of Knoxville. Other
area cable operators have also agreed to carry the channel, so
that it will be accessible to at least 180,000 homes or about 70%
of Knoxville's cable households by its launch in the spring of
1994.
The channel will offer three hours of original programming
each weekday, in addition to rebroadcasts of WBIR newscasts and
other programs. A half-hour program, alternating between
cooking, health care, computers, pets and lifestyles, will be
featured during the day. A one-hour call-in talk show will be
offered each evening during primetime. The channel will also
offer two half-hour original weather programs and a half-hour
original newscast each weekday.
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Bartlett said, "We will continue to explore strategic
partnerships such as the ones we have formed with Hyperion,
BellSouth, Cox Enterprises and Scripps Howard."
Bartlett noted that Multimedia's newspaper division is
beginning a $15 million upgrade in its Montgomery, Ala.,
newspaper plant. The printing facility will be replaced and a
more efficient, up-to-date printing press acquired for a total of
$15 million, with $4 million of that to be invested in 1994. The
new press will enable the Montgomery paper to produce more
custom-printed pieces for advertisers that it cannot currently do
because of lack of capacity and limited format. The press will
also make more efficient use of newsprint and will improve the
color advertising capabilities of the newspaper.
The security operation, Bartlett said, will also be
increasing its capital investments in 1994. In January, the
division opened its seventh sales office, in St. Louis, and it
plans to open another sales office in a to-be-determined city
later during 1994. The continued expansion should help
Multimedia to solidify a market position in an industry offering
much opportunity. The division currently monitors more than
52,000 security customers from a central monitoring station in
Wichita, Kansas. During 1993 the Company opened its fifth and
sixth security sales offices, located in Chicago and Houston, and
aggressive marketing has enabled it to almost triple security
revenues over the last two years.
Multimedia Entertainment, known for its long-running talk
show hits, DONAHUE and SALLY JESSY RAPHAEL, is launching a new
show, SUSAN POWTER, in September. Based on enthusiastic response
at the National Association of Television Program Executives
(NATPE) convention in January, the Company expects SUSAN POWTER
to appear in at least 80% of the country and 90% of the major
markets when it debuts in September. The Powter show, said
Bartlett, represents a totally different kind of talk show hosted
by one of the fastest-rising media personalities today. The host
is the author of a best-selling motivational book and the star of
a very successful infomercial, both titled "Stop the Insanity."
In addition, Bartlett said Multimedia is developing a half-
hour talk show to be hosted by Dennis Prager, a well-known Los
Angeles radio personality. Although marketing of the show began
only recently, the Company has already received offers to
purchase the show from many major stations, including several in
New York, Los Angeles and Chicago. The Prager show would expand
Multimedia's presence in late-night programming, which began with
its launch of RUSH LIMBAUGH, THE TELEVISION SHOW in September
1992.
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Bartlett added that Multimedia has decided to limit its
involvement in production of movies for television in favor of
allocating resources to the
development of programming that offers more long-term profit
potential. It
continues to work on the development of a Talk Channel for cable,
which has been announced previously.
Multimedia is currently finalizing negotiations with the
country's major cable operators for carriage of the channel and
anticipates a September 1994 launch. Bartlett explained that the
Talk Channel will provide cable with a 24-hour news-based format
offering interaction between the programs and the viewers.
The Talk Channel, Bartlett said, represents an important
opportunity to transfer Multimedia Entertainment's talk show
expertise and an excellent industry-wide reputation to a growing
medium. The company believes that the Talk Channel will increase
the value of its Entertainment division and programming
franchise, and create a potentially significant source of
revenues and future profit.
Bartlett said, "We're very proud that the talk show genre,
which we started 26 years ago with DONAHUE, continues to grow in
audience share. However, one result of that growth in popularity
has been a proliferation of daytime talk shows -- from six to 15
in the last four years. To protect the popularity of our
existing shows and to help launch our new programs, Multimedia
will increase its investments in production and promotion during
1994. This will have the effect of holding our entertainment
division's operating profit to approximately the level achieved
in 1993.
"Capital expenditures for 1994 will total $89 million, up
from $47 million in 1993," Bartlett said. "These investments will
affect 1994 results in two ways. Depreciation and amortization
will increase by about $9 million. Because most of the capital
investment and therefore the increased depreciation will be in
Multimedia Cablevision, we expect operating profit in that
division to decrease from the 1993 level.
In addition, the amount of cash available to reduce debt
will be approximately $30 million, compared to $80 million repaid
last year. Therefore, we expect our 1994 interest expense to be
only slightly lower than the 1993 level," Bartlett explained.
He continued, "We expect good improvement in results from
our newspaper and broadcasting divisions in 1994. However, the
short-term effect of the investments we're making will be to
temporarily slow the growth rate of Multimedia's earnings per
share, which have increased at a compound annual rate
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of 21% over the last five years. Based on our early
projections, we believe that
1994 operating cash flow* will increase approximately 5%, and
earnings from continuing operations will increase less than 5%
over the 1993 level of $1.88 per share.
"The capital and operating initiatives we've announced today
will lay important groundwork for the company's future success.
Multimedia will go forward with these investments using the same
conservative but decisive operating philosophy and strategic goal
of maximizing long-term shareholder value that have made us one
of the most profitable businesses in the media industry,"
Bartlett concluded.
Multimedia, Inc. is a diversified media company
headquartered in Greenville, S.C., which publishes 11 daily and
49 non-daily newspapers, owns and operates five television and
five radio stations, operates more than 125 cable franchises in
five states, monitors approximately 52,000 security alarm
subscribers and produces and syndicates quality television
programming, including DONAHUE, SALLY JESSY RAPHAEL, JERRY
SPRINGER and RUSH LIMBAUGH, THE TELEVISION SHOW.
*Operating cash flow, as defined by the Company, is operating
profit plus depreciation and amortization, and amortization of
stock awards and stock options.
Contact: Markeeta McNatt
Vice President - Investor Relations
and Corporate Communications
(803) 298-4819
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