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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended August 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURI-
TIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For transition period from to
Commission file number: 1-9244
KING WORLD PRODUCTIONS, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 13-2565808
_______________________________ _____________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12400 Wilshire Boulevard
Suite 1200
Los Angeles, California 90025
________________________ ____________
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: 310-826-1108
____________
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
___________________ _______________________
Common Stock, New York Stock Exchange
$.01 par value
Securities registered pursuant to Section 12(g) of the Act:
None
________________
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports 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 ____
___
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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 Common Stock of the registrant
held by non-affiliates as of November 7, 1997 was approximately $ 1.5
billion.
As of November 7, 1997, there were 36,661,178 outstanding shares
of the registrant's Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant's definitive proxy statement for its 1998 annual
meeting of stockholders (which is to be filed pursuant to Regulation 14A
not later than December 29, 1997) is incorporated by reference into
Part III of this Form 10-K.
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PART I
______
Item 1. BUSINESS
________
GENERAL
King World was founded in 1964 by the late Charles and Lucille
King to distribute or syndicate feature length films and television
programs to television stations. King World currently distributes program-
ming to approximately 400 television stations in over 200 of the 211
designated television markets in the United States (as defined by A.C.
Nielsen Co. ("Nielsen")) and in Canada and a number of other foreign
countries directly and through sales agents and subdistributors. Three of
Mr. and Mrs. King's children, namely Roger King, King World's Chairman of
the Board, Michael King, King World's Vice Chairman and Chief Executive
Officer, and Diana King, a Vice President and the Secretary of King World,
are directors of the Company and are actively involved in its management.
In addition, one other child of King World's founders, Richard King, serves
as a director of the Company and another, Robert King, is Senior Vice
President for Strategic Planning/Acquisitions.
King World Productions, Inc., a Delaware corporation, was
incorporated in October 1984 and is the successor to a corporation incorpo-
rated in 1964 under the laws of the State of New Jersey. King World's
corporate headquarters are located at 12400 Wilshire Boulevard, Suite 1200,
Los Angeles, California 90025. Except as otherwise indicated or as implied
by the context, references to "King World" or the "Company" include King
World Productions, Inc., its consolidated subsidiaries and its predecessor
corporation.
The Company operates in only one business segment: production
and distribution of television programming in the United States, Canada and
a number of other foreign countries, and related operations.
This Report contains certain forward-looking statements covering
the Company's objectives, planned or expected activities and anticipated
financial performance. These forward-looking statements may generally be
identified by words such as "expects", "anticipates", "believes", "plans",
"should", "will", "may", "projects" (or variants of these words or phras-
es), or similar language indicating the expression of an opinion or view
concerning the future with respect to the Company's financial position,
results of operations, prospects or business. The Company's actual results
may differ significantly from the results described in or suggested by such
forward-looking statements.
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PROGRAMMING AND RELATED OPERATIONS
First-run Television Syndication
________________________________
In general terms, television syndication is a process by which a
company, such as King World, sells programming on a market-by-market basis
to television stations (whether network affiliates or independents);
"first-run" refers to programming that airs initially in syndication (in
contrast to "off network programming, which airs initially on a network);
and "strip" refers to programming that airs Monday through Friday at the
same time of day. King World's revenues currently are derived primarily
from the first-run strip syndication of the television series THE OPRAH
WINFREY SHOW, WHEEL OF FORTUNE, JEOPARDY! and INSIDE EDITION. These series
are four of the top ten series in national syndication, as reported in the
July 1997 Nielsen Designated Market Area Ranking Report. WHEEL OF FORTUNE
and JEOPARDY! had the two highest ratings among all syndicated television
shows and THE OPRAH WINFREY SHOW had the highest ratings among all national
television talk shows. According to Nielsen, WHEEL OF FORTUNE has had the
highest ratings among shows in national syndication for the last 55
consecutive sweeps periods, JEOPARDY! has had the second highest ratings
among such shows for each of the last 48 consecutive sweeps periods and THE
OPRAH WINFREY SHOW has had the third highest ratings among such shows for
36 of the last 43 sweeps periods. Based primarily on the success of THE
OPRAH WINFREY SHOW, WHEEL OF FORTUNE and JEOPARDY!, King World's revenues
have grown from $80.6 million in fiscal 1985 to $671 million in fiscal 1997
and its net income has increased from $9.8 million in fiscal 1985 to $143
million in fiscal 1997. Revenues derived from THE OPRAH WINFREY SHOW,
WHEEL OF FORTUNE, JEOPARDY! and INSIDE EDITION (including revenues derived
from the sale of retained advertising time) accounted for approximately 85%
of King World's revenues for the fiscal year ended August 31, 1997.
The United States market for television programming is currently
comprised principally of four components: (i) the major broadcast televi-
sion networks (ABC, CBS, NBC, FOX and two emerging networks, UPN and WB) in
conjunction with their respective affiliated stations; (ii) independent
broadcast television stations (that is, stations that are not affiliated
with such networks); (iii) basic cable services (such as USA Networks, The
Discovery Channel, MTV and Nickelodeon); and (iv) pay cable services (such
as HBO and Showtime). This market currently is dominated by the broadcast
networks, each of which has affiliations with television stations that
enable such network to reach virtually all of the significant television
markets in the United States. The most successful cable networks reach
more than [60%] of all U.S. television households, and cable television
networks as a whole have been achieving increasing ratings in recent years.
Recently developed digital compression technology, combined with fiber
optics or small-sized satellite dishes, may
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in coming years permit cable companies or direct broadcast satellite
systems (which carry, among other programming, many cable television
networks) to expand the domestic television market to hundreds of channels.
During hours commonly referred to as "prime-time" (currently,
with limited exceptions, 8 p.m. to 11 p.m. in the Eastern and Pacific time
zones and 7 p.m. to 10 p.m. in the Central and Mountain time zones),
stations owned and operated by the four major broadcast networks, and
stations affiliated with those networks, broadcast schedules consisting
primarily of programming produced for initial exhibition by the networks.
In non-prime time, such stations broadcast network programming, off-network
programming (reruns), programming produced by the local stations themselves
or by independent producers and first-run syndicated programming (program-
ming produced for initial distribution on a syndicated basis). Independent
television stations, during both prime and non-prime time, broadcast their
own programming, off-network programming and first-run syndicated program-
ming; some of such stations are affiliated with the WB or the UPN, each of
which currently supplies its respective affiliates with prime-time program-
ming three evenings per week and with several hours per week of non-prime-
time programming. Some cable operators, in addition to other services that
they offer, telecast syndicated programming.
At present, King World distributes television programming
primarily to network-owned-and-operated stations and network-affiliated
stations. First-run syndicated programming distributed by the Company
competes for available time periods primarily with other first-run syndi-
cated programming, network reruns and programming produced by local
television stations.
Nielsen divides the United States into 211 designated market
areas and approximately 30 additional special market areas that, on the
basis of size and the other Nielsen criteria, do not qualify as designated
market areas. The 241 Nielsen designated and special market areas are
referred to below as the "Nielsen market areas".
In the 1983-1984 broadcast season, King World introduced a
syndicated version of WHEEL OF FORTUNE, which had premiered on daytime
network television in 1975. For the 1996-1997 broadcast season, WHEEL OF
FORTUNE was licensed to television stations in 201 Nielsen market areas in
the United States, covering approximately 99% of total domestic television
households, and for the current broadcast season has been licensed to
television stations in 204 Nielsen market areas, also covering approximate-
ly 99% of total domestic television households.
For the 1984-1985 broadcast season, the Company introduced
JEOPARDY!, a remake of the successful game show originally
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broadcast on network television between 1964 and 1975. For the 1996-1997
broadcast season, JEOPARDY! was licensed to television stations in 195
Nielsen market areas in the United States, covering approximately 99% of
total domestic television households, and for the current broadcast season
has been licensed to television stations in 197 Nielsen market areas, also
covering approximately 99% of total domestic television households.
For the 1986-1987 broadcast season, King World introduced into
national television syndication THE OPRAH WINFREY SHOW, a talk show hosted
by Oprah Winfrey which, until October 1988, was produced by WLS-TV, an ABC
owned-and-operated station. Commencing in October 1988, Harpo, Inc.
("Harpo"), an entity controlled by Ms. Winfrey, assumed production of the
series. For both the 1996-1997 broadcast season and the current broadcast
season, THE OPRAH WINFREY SHOW was licensed to television stations in 206
Nielsen market areas in the United States, covering more than 99% of total
domestic television households, and for the current broadcast season has
been licensed to television stations in 208 Nielsen market areas, also
covering more than 99% of total domestic television households.
INSIDE EDITION, a half-hour first-run syndicated newsmagazine
series hosted by Deborah Norville that is produced and distributed by King
World, premiered in January 1989. It is the first television series
produced by King World. INSIDE EDITION is produced at the Company's
production facility in New York and has a correspondent bureau in Los
Angeles to enhance the ability of the program to provide nationwide
coverage. For the 1996-1997 broadcast season, INSIDE EDITION was licensed
to television stations in 155 Nielsen market areas, covering approximately
90% of total domestic television households, and for the current broadcast
season, the series has been licensed to television stations in 147 Nielsen
market areas, also covering approximately 90% of total domestic television
households.
AMERICAN JOURNAL, a half-hour first-run syndicated newsmagazine
series that is also produced by King World in New York, premiered in
September 1993. AMERICAN JOURNAL is anchored by Michele Dabney-Perez, a
former correspondent on the show, and her brother Charles Perez. For the
1996-1997 broadcast season, AMERICAN JOURNAL was licensed to television
stations in 122 Nielsen market areas, covering approximately 87% of total
domestic television households, and for the current broadcast season, the
series has been licensed to television stations in 102 Nielsen market
areas, covering approximately 81% of total domestic television households.
ROLONDA, a daytime talk show that was also produced by King World
in New York, premiered in January 1994. It was hosted by Rolonda Watts, a
popular broadcast journalist. For the 1996-1997 broadcast season, ROLONDA
was licensed to television
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stations in 98 Nielsen market areas, covering approximately 76% of total
domestic television households. The distribution of ROLONDA ceased at the
end of that season.
Each of THE OPRAH WINFREY SHOW, WHEEL OF FORTUNE, JEOPARDY!,
INSIDE EDITION, and AMERICAN JOURNAL has been licensed to television sta-
tions for exhibition in the current and in future broadcast seasons, and
THE ROSEANNE SHOW and HOLLYWOOD SQUARES have been licensed for exhibition
in future seasons. The licenses for future seasons commence with the 1998-
1999 broadcast season and extend, in certain cases, as far into the future
as the 2001-2002 broadcast season. Revenues and related expenses under
such license agreements will not be recognized until the license periods
thereunder have begun and certain other conditions are satisfied. As of
October 21, 1997, the gross amount of license fees under such agreements
approximated $1.8 billion, of which approximately $1 billion is payable to
producers and others and is to be recognized as an expense. The recogni-
tion of such amounts in the consolidated financial statements of the
Company in fiscal years subsequent to August 31, 1997 is subject to several
conditions, including the Company's continued distribution of such program-
ming. Such amounts do not include sales of advertising time retained
during the broadcast of such programming or foreign license fees and do not
reflect the production costs to be incurred for programming produced by
King World.
There can be no assurance that any of these programs will be
licensed for additional years through renewal of existing licenses or
issuance of new licenses or, if so licensed, that the terms of the license
agreements will be as favorable to King World as those of the existing
licenses. There can be no assurance that the key personalities on such
programs, such as Oprah Winfrey, Pat Sajak, Vanna White and Alex Trebek,
will continue to participate in the production of their respective pro-
grams. If for any reason they do not do so, there could be a material
adverse effect on the Company's business.
Acquisition and Development of Properties for Distribution
__________________________________________________________
King World's business is dependent on obtaining new television
programs and series for distribution. King World may acquire properties
for domestic, foreign or worldwide television distribution by entering into
distribution agreements with independent producers, by producing its own
programs, by co-producing programs in association with others, or by
purchasing distribution rights.
The terms under which the Company obtains the right to distribute
programming from independent producers vary in each instance. The Company
distributes THE OPRAH WINFREY SHOW pursuant to an agreement with Harpo, the
producer of the series. Under the terms of the agreement currently in
effect, the Company has been granted the exclusive right, and has agreed,
to distribute episodes of THE OPRAH WINFREY SHOW produced through the 1999-
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2000 broadcast season, subject to Harpo's and Ms. Winfrey's right to
decline to produce and host the series in any season after the 1995-1996
season. In October 1995, Harpo and Ms. Winfrey committed to produce and
host the series through the 1997-1998 season, and in September 1997 Harpo
and Ms. Winfrey committed to continue to produce and host the series
through the 1999-2000 season.
The Company's agreement with Harpo establishes, among other
things, the production fees payable to Harpo through the 1996-1997 broad-
cast season and commits the Company to guarantee payments to Harpo at
levels which, commencing with the 1995-1996 season, are substantially
higher than those previously in effect. In addition, at the conclusion of
the 1996-1997 season, the profit-sharing arrangements between Harpo and the
Company terminated; commencing with the 1997-1998 season through the
termination of the agreement (at the conclusion of the 1999-2000 season),
the Company will instead receive distribution fees based on a percentage of
gross revenues derived from the series. As a result of these changes, the
contribution of THE OPRAH WINFREY SHOW to the Company's net profits and
cash flow can be expected to decline. After the 1999-2000 season, Harpo
will not be obligated to distribute the series through the Company, if it
elects to produce the series at all, and Ms. Winfrey will no longer be
subject to any contractual restrictions with the Company on her ability to
appear in television shows with the same or similar format as THE OPRAH
WINFREY SHOW. See Item 7, "Management's Discussion and Analysis of Results
of Operations and Financial Condition -- Liquidity and Capital Resources".
The Company's agreements with Columbia TriStar Television, the
producer of WHEEL OF FORTUNE and JEOPARDY!, provide that King World will be
the exclusive distributor for each such series so long as the Company has
obtained sufficient broadcast commitments to cover the production and
distribution costs of that series and that the Company may not, unless
otherwise agreed by Columbia TriStar Television, distribute other game
shows for first-run strip syndication so long as the Company is distribut-
ing WHEEL OF FORTUNE or JEOPARDY!.
In acquiring new programming, King World has attempted, based on
research concerning television programs currently being broadcast, to
identify programs and series that King World believes will have broad-based
audience appeal and satisfy the programming needs of television stations
for particular time periods. Historically, the Company had relied on
independent producers for new programming. In recent years, however, in
order to satisfy what King World believes to be audience demands and
station programming needs, the Company has, for the most part, been
developing and producing original programming on its own or in cooperation
with others.
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For several years, the Company has been, and is now, in the
process of developing new television shows for syndication that it hopes
will gain widespread audience appeal and generate significant revenues and
income for the Company. The Company has entered into an agreement with
Full Moon & High Tide Productions, Inc., a company controlled by Roseanne,
to co-produce THE ROSEANNE SHOW, an hour-long, strip talk show hosted by
Roseanne and distributed by the Company in first-run syndication. The
series is scheduled to premiere in the Fall of 1998. Under the terms of
the agreement, the Company will have the exclusive right to distribute the
show through the 2003-2004 television season. As of November 12, 1997,
the series had been licensed for the 1998-1999 and 1999-2000 seasons to
televisions stations covering approximately 80% of total domestic televi-
sion viewing households.
In addition, the Company has agreed with Columbia TriStar Televi-
sion to co-produce a new strip version of HOLLYWOOD SQUARES for distribu-
tion by the Company in first-run syndication. This series is also sched-
uled to premiere in the Fall of 1998. As of November 12, 1997, the series
had been licensed for the 1998-1999, 1999-2000 and 2000-2001 seasons to
televisions stations covering approximately 60% of the total domestic
television viewing households.
The introduction of new television programs requires substantial
capital investment to fund programming development costs, the production of
pilot programs and the production, distribution and promotion of the
initial episodes of programming for syndication. The Company has funded
and intends to continue to fund such capital investments out of its
internal cash resources.
License and Distribution Fees
_____________________________
For certain first-run syndicated programs produced by independent
companies for distribution by King World, the Company earns distribution
fees that are based on a percentage of the license fees paid by television
stations for the right to broadcast the program and the amounts paid by
national advertisers for advertising time retained by the Company and sold
in connection with such program. The Company also recoups some or all of
the distribution expenses that it incurs in connection with the distribu-
tion of these series, which consist principally of advertising, promotion,
satellite and tape costs and related expenses. Amounts remaining in excess
of King World's distribution fees and recouped expenses are remitted to the
producers of such series.
In other cases, the Company's fees for distributing first-run
syndicated programming produced by independent companies are based upon a
negotiated percentage of the profits derived from the exploitation of the
programming after recoupment
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of the production, advertising, promotion and other distribution fees and
expenses of the programming. In such cases, the Company generally finances
all or a substantial portion of the production costs and may commit itself
to advancing the producer and/or talent fixed minimum amounts as advances
against their participation fees, irrespective of the amount of license
fees and other revenues that may actually be generated by the programming.
In acquiring distribution rights for new programming from independent
producers, King World has generally tried to limit its risk by not making
major commitments to independent producers until it has obtained commit-
ments from a substantial number of television station licensees.
In recent years, the new shows introduced by the Company in
first-run syndication have been developed and produced by the Company
itself. In such cases, the Company hires a production team, leases
production facilities, engages talent, assumes all of the costs and
expenses of developing, producing, advertising, promoting and distributing
the programming and, after any required payments to the production team and
talent, retains the net profits derived from the exploitation of the
programming.
License fees payable by stations for the rights to broadcast
television programs are payable in the form of cash, retained advertising
time or both. A television station that enters into a license agreement
for a particular program becomes obligated to pay the contracted license
fee (which will often depend on the time period in which the program is
aired by that station) and provide advertising time, if applicable, upon
the delivery by the Company of the program in question. By licensing a
program to television stations throughout the United States, the Company
creates, in effect, an "ad hoc" network of stations that have agreed to
carry the program. The creation of this ad hoc network, typically repre-
senting a penetration of at least 70% of total U.S. television households,
enables the Company to sell the resulting commercial inventory to sponsors
desiring national coverage. (See "Sale of Advertising Time".)
In the 1997 fiscal year, approximately 13% of the Company's
revenues were derived from license fees under contracts with television
stations owned by ABC, Inc. No other television station, broadcast group
or advertiser accounted for ten percent or more of the Company's revenues
in such fiscal year.
Marketing
_________
Sales to domestic television stations are made by the Company
through a sales force that numbered eleven persons as of November 7, 1997.
The Company's marketing strategy concentrates on a select number of
programs that the Company considers to have
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good prospects for high audience ratings and expects will meet television
stations' programming needs for specific time periods.
Although the Company has been dependent upon the active partici-
pation of members of the King family since its formation in 1964, the
Company believes that it has significantly lessened its reliance on certain
key executive officers by adding experienced executive, programming and
marketing personnel. Nevertheless, the loss of key personnel might have an
adverse effect on the Company's operations.
Sale of Advertising Time
________________________
Camelot Entertainment Sales, Inc. ("Camelot"), a wholly-owned
subsidiary of King World, sells advertising time within television pro-
grams. As of November 7, 1997, Camelot employed seven salespersons.
The value of advertising on any particular program varies
significantly depending on the audience ratings and demographics for such
program and conditions in the market for television advertising time in
general. In order for advertising time on a particular syndicated televi-
sion program to be valuable to national advertisers, the program must, as a
general rule, be broadcast in television markets covering at least 70% of
the total domestic television households. For the 1997-1998 broadcast
season, THE OPRAH WINFREY SHOW has been licensed to stations covering more
than 99% of the total domestic television households; WHEEL OF FORTUNE and
JEOPARDY! have each been licensed to stations covering approximately 99% of
the total domestic television households; INSIDE EDITION has been licensed
to stations covering approximately 90% of the total domestic television
households; and AMERICAN JOURNAL has been licensed to stations covering
approximately 80% of the total domestic television households.
Fees for advertising time are established on the basis of
household audience ratings or, more frequently, on the basis of the
delivery of a certain demographic category of the viewing audience. The
desired household rating or demographic delivery, as the case may be, is
negotiated in advance with the advertiser or its agency. If the television
program does not deliver at least the agreed-upon audience coverage,
Camelot is obligated either to make available, at no additional cost,
additional advertising time within the same program or other programs that
are expected to deliver at least the agreed-upon audience coverage, or to
refund that portion of the advertising fee attributable to the
underdelivery.
Generally, a portion of the Company's contracts for the sale of
its advertising time may be canceled by the advertiser upon 90 days'
notice. Each television station is obligated to
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broadcast advertising time retained by King World even if the program or
episode on which the time was retained is preempted by the station.
Historically, Camelot has sold advertising time primarily on
television programs distributed by King World. However, a portion of
Camelot's revenues has in recent years been attributable to commissions
earned on sales of advertising time on television programs distributed by
companies other than King World. Camelot has agreements currently in
effect with, among others, Western International Syndication and Allied
Communications Incorporated to sell advertising time in IT'S SHOWTIME AT
THE APOLLO, a variety program, and the "Film Leader" package of films,
respectively.
Foreign Sales
_____________
The number of outlets for television programming outside the
United States has been increasing with the worldwide proliferation of
broadcast, cable and satellite delivery systems. In recent years, a number
of European governments have privatized television systems. The Company
believes that privatized systems are more likely to broadcast U.S. program-
ming than government-owned networks. In addition, both the number of pay
and satellite television systems in Europe and the number of subscribers to
these systems have increased. Pay television and satellite distribution
systems are also developing in other geographic areas, including many Asian
and South American markets. In some international markets, suppliers of
programming may, however, be subject to local content and quota require-
ments that prohibit or limit the amount of U.S. programming that may be
acquired.
The Company licenses episodes of WHEEL OF FORTUNE, JEOPARDY!, THE
OPRAH WINFREY SHOW and INSIDE EDITION in Canada and certain other English-
speaking foreign territories. The Company also licenses the production of
foreign versions of WHEEL OF FORTUNE and JEOPARDY! in a number of other
major foreign territories. Under licenses from King World, Unilever, N.V.
licenses the production of local versions of WHEEL OF FORTUNE and JEOPARDY!
for broadcast in a number of Western European markets. In addition, the
Company has recently become more active in acquiring rights for the
distribution of television programming solely outside the United States.
Revenues from foreign sales (including Canada) accounted for approximately
7% of King World's revenues in fiscal 1997.
Merchandising and Film Library
______________________________
The Company has granted licenses to others to produce WHEEL OF
FORTUNE and JEOPARDY! boxed board games and to exploit certain of its
merchandising rights in THE LITTLE RASCALS. King World also distributes
its own library of over 60 feature length
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films and over 200 television programs, including 14 Sherlock Holmes, 13
The East Side Kids, 9 Mr. Moto and 11 Charlie Chan feature length films and
episodes from THE LITTLE RASCALS, TOPPER, BRANDED and THE GUNS OF WILL
SONNETT television series. In acquiring feature length films and televi-
sion programs for its own library, the Company has attempted to emphasize
classic programming -- films and television series with broad and enduring
audience appeal. King World holds long-term television and related
distribution rights to the properties in its library. The Company is not
generally required to make any material royalty or similar payments with
respect to the properties in its library. Revenues from merchandising and
the film library accounted for less than 1% of the Company's revenues in
fiscal 1997.
Direct Response Marketing
_________________________
The Company operates King World Direct Inc., a direct response
marketing subsidiary. King World Direct handles key aspects of direct
response marketing campaigns, including production, order fulfillment and
media placement.
King World Direct has developed direct response telemarketing
campaigns for, among others, the WILD AMERICA video series and Sears
Craftsman Robogrip pliers. Revenue from direct response marketing activi-
ties accounted for approximately 4% of the Company's revenues in fiscal
1997.
Competition
___________
The production and distribution of television programming and the
sale of associated advertising time is a highly competitive business. King
World competes with many companies that have resources substantially
greater than those of King World.
The most important competitive factors in television program
distribution are marketing, quality and variety of programming and research
and promotional services. King World's success is highly dependent upon
those factors as well as the continuing availability of writers, performers
and other creative talent and the viewing preferences of television
audiences. King World has attempted to concentrate on the distribution of
programs that it believes will have broad or enduring audience appeal in
order to reduce its exposure to changes in viewer preferences. King World
has also developed an experienced television syndication sales organization
as well as strong programming acquisition, research and advertising and
promotion departments. See "Marketing" above.
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Regulation of the Television Industry
_____________________________________
Prime-Time Access Rule/Financial Interest and Syndication Rule
______________________________________________________________
Until August 1996, a rule promulgated by the Federal Communica-
tions Commission ("FCC") in the 1970's and known as the "prime-time access
rule" prohibited (subject to certain significant exceptions) network-owned
and network-affiliated television stations in the 50 largest television
markets from broadcasting more than a total of three hours per day of
programming supplied by or previously aired on a network during the prime-
time period (defined under the rule as 7-11 p.m. Eastern and Pacific time
and 6-10 p.m. Central and Mountain time). Due to the rule, network-owned
and network-affiliated stations often acquired either one hour or one-half
hour of program material for exhibition during the prime-time access period
from independent television producers and syndicators such as the Company.
In July 1995, following proceedings looking toward reconsidera-
tion or modification of the prime-time access rule, the FCC issued a
decision concluding that the rule no longer served the public interest
because the networks no longer had market power sufficient to foreclose
access by independent producers and syndicators of first-run programming to
the prime-time access period. In order to permit an orderly transition,
the FCC held that programming supplied by or previously aired on a network
may not be aired during the prime-time access period for 12 months from the
August 1995 effective date of its decision, but during such period stations
subject to the rule were permitted to enter into contracts providing for
the airing of such programming in the access period after August 1996.
Pursuant to consent decrees entered into in the mid to late
1970's between the three largest television networks (the ABC Television
Network, the CBS Television Network and the NBC Television Network) and the
United States Department of Justice (the "Consent Decrees"), such networks
were, until mid-November 1993 (when the Decrees were lifted), prohibited
from domestically syndicating television programs and from acquiring
financial interests in such programs or in network programming (other than
the right to network exhibitions) produced by independent production
companies. In the mid 1970's, the FCC implemented rules (the "Rules") that
substantially paralleled the prohibitions of the Consent Decrees. The
Rules enhanced the Company's ability to license its programs to stations
owned and operated by the major television networks (licensees that are, in
most instances, very important to the success of a series distributed
through first-run syndication).
In May 1991, the FCC issued a decision (the "1991 Decision") to
modify, but not to repeal, the Rules. The modified Rules substantially
<PAGE>
<PAGE 13>
relaxed the restrictions upon the ability of a network to acquire financial
interests in, and to syndicate, television programs previously aired by
that network (a sector of programming in which King World has not to date
had substantial involvement). However, the 1991 Decision retained strin-
gent limitations on network involvement in first-run syndication activi-
ties, which remained in place after the FCC further relaxed the Rules in
1993.
In August 1995, upon further review of the remaining Rules, the
FCC held that the Rules, including the restrictions on network entry into
first-run syndication activities, were no longer necessary. Under the
resulting FCC order, the Rules expired in August 1995.
As a result of the repeal of the prime-time access rule and the
elimination of the remaining restrictions of the financial interest and
syndication rules, the Company may have more difficulty licensing its
programming to stations owned and operated by the three major television
networks and anticipates that, even if the Company is able to so license
its programming, the profitability of such programming to the Company may,
as a result of terms imposed by such stations, be likely to be reduced.
Legislation and Other FCC Rules and Proposals Affecting the
Television Industry
___________________________________________________________
The Telecommunications Act of 1996 (the "1996 Act"), signed in
February 1996, among other things, requires the FCC to relax its regulation
(the "Multiple Ownership Rules") limiting the aggregate number of televi-
sion stations that may be under common ownership. Prior to passage of the
1996 Act, the Multiple Ownership Rules permitted common ownership of, in
most circumstances, up to twelve television stations, subject (in the case
of station groups) to certain limitations based upon audience reach. As
required by the 1996 Act, the FCC (in March 1996) eliminated the numerical
limitation on common ownership and relaxed the audience reach limitation.
The 1996 Act also requires the FCC to re-examine provisions of
the Multiple Ownership Rules which prohibit the common ownership of
stations serving the same market. In proceedings now pending before it,
the FCC is considering relaxing the existing restrictions on common
ownership of television stations serving the same market and permitting,
subject to certain restrictions, joint venture (including joint program-
ming) arrangements between independently owned stations in circumstances
where common ownership would otherwise be prohibited. King World is unable
to predict the outcome of these proceedings. King World believes that
increases in the concentration of television station ownership by broadcast
<PAGE>
<PAGE 14>
groups will tend to increase the relative power of the broadcast groups in
the market for television programming and, consequently, could adversely
affect King World's bargaining position vis-a-vis its principal customers.
The 1996 Act requires that (not later than 1998) all television
sets manufactured or imported into the United States be equipped with a
device (the "V-chip") which will enable viewers to block display of certain
programs based upon content. The 1996 Act afforded the program production
and distribution industries a period of twelve months (until February 1997)
within which to establish voluntary rules for identifying and rating video
programming that contains sexual, violent or other indecent material and to
agree to voluntarily transmit such ratings in a format capable of being
read by the V-chip technology. If a voluntary code was not established (or
if such a code was not acceptable to the FCC) within that time frame, then
the FCC was to be required, in consultation with an advisory committee, to
establish and enforce a rating code. In January 1997, the industry
submitted to the FCC its proposal for a voluntary ratings system. In
August 1997, the industry submitted a revised proposal, which added to the
rating categories originally proposed. The revised proposal changed the
descriptions used to identify certain age group categories and, in some
instances, added symbols to indicate the nature of violence or sexual
situations depicted, or language used, in certain programs. The FCC has
requested public comments on the industry proposal. In September 1997, the
FCC initiated a rulemaking to establish technical standards for the V-chip
that would enable blocking of certain programs and ensure that any rating
information provided with video programming is transmitted to viewers along
with the programming itself. The Company has participated actively in
industry efforts to establish the voluntary code. Moreover, the Company
believes that none of its programming contains sexual, violent or indecent
material. However, the Company is unable to predict the outcome of the
pending FCC proceedings. To the extent that any program series (or
episodes of such series) produced or distributed by King World are subject-
ed to restrictive ratings, there may be an adverse effect on viewing of
such program or series.
In June 1995, the FCC initiated two proceedings in which it is
considering repeal or relaxation of certain of its regulations restricting
or forbidding certain contractual arrangements between a network and its
affiliates. Among the matters under examination are: a rule that forbids
a network from entering into a contract with any affiliate that either
enables the network to reserve any time on the affiliate's station before
the network has committed to use the time, or requires the station to make
time available for network programming in substitution for programming
already scheduled by the affiliate ("Time Optioning Rule"); a rule that
<PAGE>
<PAGE 15>
forbids a network from penalizing affiliated stations for rejecting network
programming and substituting programming deemed by the station to be of
greater local or national interest; and a rule that forbids stations from
affiliating with any network organization that operates more than one
network. Separately, the FCC is re-examining a rule that prohibits a
network from directly or indirectly controlling the advertising rates
charged by an affiliate in connection with the broadcast of non-network
programming ("Station Rates Rule") and a rule that forbids a network from
acting as a sales representative for affiliated stations for the sale of
advertising time in connection with non-network programming ("Station Rep
Rule").
The Company is unable to predict the outcome of these proceed-
ings. Although the Company believes that certain of the conduct prohibited
by the FCC's rules, such as the Station Rates Rule, are proscribed or
curtailed under the anti-trust laws, the Company anticipates that repeal or
substantial relaxation of the Time Optioning Rule and the Station Rep Rule
will tend to increase the relative power of the networks in the market for
television programming and for the sale of advertising time and will conse-
quently adversely affect King World's bargaining position vis-a-vis
network-affiliated stations, and the sale of King World's barter time.
Other Regulatory and Legislative Matters
________________________________________
In October 1992, Congress enacted legislation imposing certain
new regulations on the cable television industry (the "1992 Cable Act").
The legislation includes provisions that require each local television
station (as defined) to make an election between demanding carriage on any
cable system within its service area on a "must-carry" basis (for which the
station receives no compensation) or demanding that such cable system
obtain the consent of the station and pay compensation (and/or furnish
other consideration) to the station for the right to carry its signal. The
election made by the station as to each such cable system remains in effect
for three years. In March 1997, the United States Supreme Court, after
protracted litigation and by a 5 to 4 vote, upheld the constitutionality of
the "must carry" rules, against a First Amendment challenge initiated by
cable interests. As a result, stations will be able to elect "must carry"
status effective as of January 1, 1999. Further, since the advent of the
"retransmission consent" provisions, which became operative in October
1993, a small number of cable systems have refused to or failed to reach
carriage agreements with particular local television stations and conse-
quently ceased the carriage of such stations, thus resulting in decreased
audience for King World programming aired on those stations. The Company
has suffered no discernible adverse impact to date from such provisions.
<PAGE>
<PAGE 16>
In April 1997, the FCC adopted comprehensive regulations relating
to the deployment of Advanced Television Technologies ("ATV"), as required
by the 1996 Act. ATV technologies will, among other things, enable
existing television stations to broadcast more than one program at the same
time; and the FCC has concluded that stations will be permitted to use the
additional channel capacity resulting from ATV for entertainment program-
ming purposes, including subscription programming, so long as at least one
of the additional channels is used for free, over-the-air broadcasting.
The rules adopted by the FCC provide that stations owned by or affiliated
with the four major broadcast networks (ABC, CBS, Fox and NBC) in each of
the top ten markets must complete construction of ATV facilities by May 1,
1999, that stations in markets 11-30 affiliated with those four networks
must complete construction of ATV facilities by November 1, 1999 and that
all other commercial television stations must complete construction of ATV
facilities by May 1, 2002. Under the FCC rules, television stations will
not be required to simultaneously broadcast programming on both a conven-
tional analog channel and any ATV channel until 2003; thereafter, each
station will be required to simulcast on its analog channel specified
percentages of programming carried on its ATV channel until the expected
expiration of analog broadcasting, in 2006. The additional channels
resulting from ATV technology will have "must carry"/retransmission consent
rights. These rules and policies are the subject of various proceedings
pending before the FCC and are under examination by both the United States
House of Representatives and the Senate. Because the deployment of ATV
technologies and of television receivers capable of delivering ATV channels
to consumers remains uncertain, the Company is unable to predict the
outcome of these developments or their impact upon the Company, if any.
The 1996 Act repealed provisions of the Communications Act that
prohibited any telephone company from acquiring financial interests in
video programming and from distributing video programming in the same
geographic area in which such telephone company provides telephone service.
Under the 1996 Act, telephone companies are permitted, in most circumstanc-
es, to own and operate cable television systems, in which event they are
subject to all of the requirements applicable to such systems including the
"must carry"/retransmission consent requirements of the 1992 Cable Act.
Alternatively, the 1996 Act permits telephone companies to directly enter
the multi-channel video distribution business on a quasi-common carrier
basis ("Open Video Systems"), pursuant to which the Open Video System
operator leases channel capacity to programmers on a non-discriminatory
basis; each such operator is required to reserve, in cases where demand
exceeds channel capacity, up to two-thirds of its channel capacity for
programmers with which such operator is not affiliated. The statute also
requires that Open Video System operators extend "must carry"/
<PAGE>
<PAGE 17>
retransmission consent rights to over-the-air television stations in the
market served. The FCC has adopted rules to implement these requirements,
but the Company cannot predict the extent or pace of telephone company
entry into the program delivery market. However, to the extent that
telephone company entry into the production and distribution of video
programming weakens the position of over-the-air television stations in the
video marketplace or increases the cost to such stations of access to
audience, this could result in decreased audience for King World program-
ming aired on those stations, or a reduction in the profitability to King
World of such programming.
The 1996 Act, among other requirements, directed the FCC to
establish rules requiring that new programming be closed captioned for the
hearing impaired, and to establish timetables for implementing those
captioning obligations. The FCC adopted closed captioning rules in August
1997, which are scheduled to take effect January 1, 1998. The regulations
will require that all video programming first aired after January 1, 1998,
that is not exempt pursuant to the rules be closed captioned. Legal
responsibility generally falls on the "video programming distributors,"
including television stations. Program producers and distributors,
however, are expected to cooperate in the process, and distributors will be
able to rely on certifications from programming sources indicating that the
programming supplied is either captioned or exempt under the FCC rules.
All of the programming currently produced or distributed by the Company, as
well as all advertising programming produced by King World Direct that is
more than five minutes in length, will be subject to the captioning
requirements. However, the Company does not anticipate that compliance
with these new rules will have a material adverse effect on the profitabil-
ity of this programming to King World.
Employees
_________
As of November 7, 1997, the Company employed approximately 487
persons. Of this number, approximately 313 are involved in the production
of INSIDE EDITION and AMERICAN JOURNAL. Approximately 22 of the Company's
employees are covered by collective bargaining agreements.
Item 2. DESCRIPTION OF PROPERTIES
_________________________
The Company's corporate headquarters were recently moved to Los
Angeles, where the Company has maintained executive offices, its advertis-
ing and promotion department, programming development and direct response
marketing operations and its Western U.S. sales staff. The Company leases
office space in New York City for executive offices, the operations of
Camelot and the Company's Eastern U.S. and foreign sales staff. The Com-
pany's accounting and finance, contract administration and research depart-
<PAGE>
<PAGE 18>
ments are located in leased offices in Short Hills, New Jersey. The
Company also leases office space in Chicago, Boca Raton, Florida and Dallas
for regional sales offices.
The Company leases office and production facilities in New York
and Los Angeles for its internally produced programming.
Item 3. LEGAL PROCEEDINGS
_________________
On September 15, 1997, the Company entered into a settlement
agreement with Sony Pictures Entertainment Inc. terminating the lawsuit
previously instituted by the Company to obtain a declaratory judgement with
respect to its right, under the agreements by which the Company distributes
WHEEL OF FORTUNE and JEOPARDY!, to produce or license others to produce
strip game shows for distribution by others in first-run syndication.
Under the terms of the settlement agreement, the Company and an affiliate
of Sony will co-produce, and the Company will distribute, a new version of
HOLLYWOOD SQUARES in first-run syndication, for launch as a strip series
premiering in the Fall of 1998.
The action had been brought by the Company in California Superior
Court, Los Angeles County in March 1997. The defendants filed an answer
and cross-complaint in May 1997, alleging breach of the distribution
agreements by the Company and seeking damages in an unspecified amount,
termination of the distribution agreements and reformation of the agree-
ments to prohibit the Company from, among other things, producing any strip
game show for first-run syndication. Pursuant to the settlement agreement,
the parties' respective complaints and cross-complaints were dismissed.
The Company is not a party to any legal proceedings other than
routine litigation incidental to the conduct of its business.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
______________________________________
None.
<PAGE>
<PAGE 19>
PART II
Item 5. MARKET FOR THE COMPANY'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS
_____________________________________
King World's Common Stock is listed and traded on the New York
Stock Exchange under the symbol KWP. The following table sets forth, for
the fiscal periods indicated, the range of high and low closing sale prices
for the Common Stock as reported by the New York Stock Exchange.
High Low
_______ ________
Fiscal 1996
First Quarter Ended
November 30, 1995. . . . . . 39 7/8 34 3/8
Second Quarter Ended
February 29, 1996. . . . . . 43 1/4 36 1/8
Third Quarter Ended
May 31, 1996 . . . . . . . . 44 1/2 39 1/4
Fourth Quarter Ended
August 31, 1996. . . . . . . 41 3/4 34 1/4
Fiscal 1997
First Quarter Ended
November 30, 1996. . . . . . 38 3/4 34 3/4
Second Quarter Ended
February 28, 1997. . . . . . 40 36 1/8
Third Quarter Ended
May 31, 1997 . . . . . . . . 38 3/8 35 1/4
Fourth Quarter Ended
August 31, 1997. . . . . . . 40 1/2 34 3/8
As of the close of business on October 20, 1997, there were 572
holders of record of the Company's Common Stock.
On May 16, 1997, a special dividend distribution of $2.00 per
share was paid to stockholders of record on April 25, 1997. The Company
used approximately $74.8 million of its cash and liquid investments to pay
the special dividend. The Company has no present plan to declare addition-
al cash dividends in the foreseeable future. The Company requires capital
resources to fund development, production and promotion costs for its
programming, and intends to use its cash reserves and future earnings to
finance such expenses and the development and expansion of its business.
See Item 7, "Management's Discussion and Analysis of Results of Operations
and Financial Condition -- Liquidity and Capital Resources".
<PAGE>
<PAGE 20>
Item 6. SELECTED FINANCIAL DATA
_______________________
The following selected financial data have been derived from
the consolidated financial statements of King World and its subsidiaries
for the five years ended August 31, 1997, which have been audited and
reported upon by Arthur Andersen LLP, independent public accountants. The
unaudited 1995 and 1994 pro forma information presents selected financial
data assuming that a change in accounting for revenue recognition adopted
prospectively in the fourth quarter of fiscal 1994 had not been made. The
information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Results of Operations and Finan-
cial Condition" and the Consolidated Financial Statements and the Notes
thereto included elsewhere in this Annual Report.
Statements of Income: Year Ended August 31,
1995
1997 1996 19951 Pro forma1
____ ____ _____ __________
(unaudited)
(Dollars in thousands except per share data)
Revenues..................... $671,277 $663,426 $574,186 $575,732
Income from operations....... 192,281 191,585 162,416 162,736
Income before provision
for income taxes........... 221,926 231,6102 183,258 183,578
Net income................... 143,382 150,0002 117,312 117,490
======== ======== ======== ========
Primary earnings
per share.................. $3.82 $3.982 $3.14 $3.15
======== ======== ======== ========
Special dividend
per share.................. $2.00 -- -- --
======== ======== ======== ========
1994
1994 Pro forma1 1993
____ __________ ____
(unaudited)
Revenues..................... $480,659 $541,390 $474,312
Income from operations....... 127,578 148,151 150,950
Income before provision
for income taxes........... 140,839 161,412 162,592
Net income................... 88,300 101,196 101,936
======== ======== ========
Primary earnings
per share.................. $2.33 $2.67 $2.65
======== ======== ========
Special dividend
per share.................. -- -- --
======== ======== ========
Balance Sheets: August 31,
1995
1997 1996 19951 Pro forma1
____ ____ _____ __________
(unaudited)
(Dollars in thousands)
Cash and investments........ $730,049 $644,380 $529,025 $529,025
Working capital............. 586,075 519,613 477,794 477,972
Total assets................ 902,067 854,141 686,786 688,332
Stockholders' equity........ 784,082 737,885 575,737 575,915
======== ======== ======== ========
1994
19941 Pro forma1 1993
_____ __________ ____
(unaudited)
Cash and investments........ $430,048 $430,048 $384,489
Working capital............. 294,336 307,232 286,348
Total assets................ 569,562 630,293 535,546
Stockholders'............... 459,077 471,973 394,173
======== ======== ========
<PAGE>
<PAGE 21>
_______________________
1. The results of operations for fiscal 1995 and 1994 reflect a change in
accounting for revenue recognition adopted prospectively in the fourth
quarter of fiscal 1994. The one-time impact of adopting such change
was to cause revenues, income from operations, income before provision
for income taxes, net income and primary earnings per share in the
fourth quarter of fiscal 1994 to be approximately $60.7 million, $20.6
million, $20.6 million, $12.9 million and $.34 lower, respectively,
than they would have been under the Company's prior revenue recogni-
tion practice. Such revenues were recognized in fiscal 1995 under the
modified accounting practice. The results of operations for fiscal
1995 would have been substantially the same as that actually reported
if the Company's prior revenue recognition practice had been in effect
for all of fiscal 1995. The unaudited 1995 and 1994 pro forma data
are presented for comparison purposes only and represent the results
of operations and balance sheet information assuming the Company's
prior revenue recognition practice had been in effect in the fourth
quarter of fiscal 1994 and in fiscal 1995.
2. Income before provision for income taxes, net income and primary
earnings per share includes a nonrecurring gain of approximately $14.1
million, $10.3 million and $.27, respectively, as a result of the
Company's sale of Buffalo Broadcasting Co. Inc. to LIN Television
Corporation for $95 million in cash which closed in October 1995. See
Note 8 of Notes to Consolidated Financial Statements.
<PAGE>
<PAGE 22>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
_______________________________________________
GENERAL
The Company's revenues consist principally of fees from the
licensing of syndicated television programs and series which may be in the
form of cash, retained advertising time or both. In addition, revenues
include fees from the sale of advertising time on programs distributed to
television stations by others.
The Company typically receives a portion of the fees derived from
the licensing of syndicated television programming in the form of retained
advertising time, which is sold to advertisers by Camelot Entertainment
Sales, Inc. ("Camelot"), a wholly-owned subsidiary of the Company. Such
revenues are recognized at the same time as the cash portion of the license
fees derived from such programming is recognized, in amounts adjusted for
expected ratings. See Note 1 of Notes to Consolidated Financial State-
ments.
The discussion herein contains certain forward-looking statements
covering the Company's objectives, planned or expected activities and
anticipated financial performance. These forward-looking statements may
generally be identified by words such as "expects", "anticipates", "be-
lieves", "plans", "should", "will", "may", "projects" (or variants of these
words or phrases), or similar language indicating the expression of an
opinion or view concerning the future with respect to the Company's
financial position, results of operations, prospects or business. The
Company's actual results may differ significantly from the results de-
scribed in or suggested by such forward-looking statements.
RESULTS OF OPERATIONS
COMPARISON OF FISCAL 1997 AND FISCAL 1996
Revenues
________
Revenues for fiscal 1997 increased by approximately 1% compared
to fiscal 1996. Such increase was primarily due to increased cash license
fees from THE OPRAH WINFREY SHOW, WHEEL OF FORTUNE and, to a lesser extent,
JEOPARDY!, offset by lower revenues derived from the sale of retained
advertising time on INSIDE EDITION, AMERICAN JOURNAL, another first-run
syndicated newsmagazine produced and distributed by the Company and
ROLONDA, a first-run syndicated talk-show produced and distributed by the
Company.
THE OPRAH WINFREY SHOW, WHEEL OF FORTUNE, JEOPARDY! and INSIDE
EDITION accounted for approximately 40%, 20%, 17% and 8%, respectively, of
<PAGE>
<PAGE 23>
the Company's revenues for fiscal 1997 compared to 39%, 19%, 17% and 8%,
respectively, for fiscal 1996. AMERICAN JOURNAL accounted for approxi-
mately 4% of the Company's revenues for each of fiscal 1997 and fiscal
1996, and ROLONDA accounted for approximately 1% of the Company's revenues
for fiscal 1997 and 2% for fiscal 1996. King World Direct, the Company's
wholly-owned direct response subsidiary, accounted for approximately 4% of
the Company's revenues for each of fiscal 1997 and fiscal 1996.
Producers' fees, programming and other direct operating costs
_____________________________________________________________
Producers' fees, programming and other direct operating costs
include primarily the producers' share of both cash license fees from the
sale of programming to television stations and revenues derived from the
sale of retained advertising time to advertisers with respect to program-
ming distributed by the Company; participation payments payable by the
Company to producers and talent; production and distribution costs for
first-run syndicated programming; and the direct operating costs of King
World Direct. That portion of any recognized revenue that is to be paid to
producers and owners of programming is accrued as such revenues are earned.
The share of revenues payable by the Company to producers, talent and
others is generally paid as cash license fees and revenues derived from the
sale of retained advertising time are received from television stations and
advertisers.
Producers' fees, programming and other direct operating costs for
fiscal 1997 were comparable to fiscal 1996, decreasing by less than 1%,
primarily as a result of a significant decrease in operating costs of King
World Direct, offset by a modest increase in revenues generated by THE
OPRAH WINFREY SHOW, WHEEL OF FORTUNE and, to a lesser extent, JEOPARDY! (a
portion of which revenues is payable to the producer of each such series).
Selling, general and administrative expenses
____________________________________________
The Company has entered into employment agreements with its
Chairman of the Board, its Vice Chairman and Chief Executive Officer and
certain other executive officers. Such agreements provide, among other
things, for performance-based bonuses, including bonuses payable upon the
introduction of new shows and bonuses which vary depending on the Company's
net income and Common Stock price during preestablished measurement
periods. As a result, the Company's compensation expense will increase if
the Company introduces a new series in syndication, if the Company's net
income increases or if the Company's Common Stock price exceeds the speci-
fied levels during the applicable measurement periods. The Company has
recognized the impact of certain of these bonuses in its operating results
or fiscal 1997, which
<PAGE>
<PAGE 24>
include all amounts payable in accordance with the terms of such employment
agreements.
Selling, general and administrative expenses for fiscal 1997
increased by approximately 12% from fiscal 1996. Such increase was
primarily due to higher compensation costs associated principally with the
hiring of new executives and additional personnel and a general increase in
advertising and promotion costs. In addition, selling, general and
administrative expenses for fiscal 1997 were impacted by increased activity
with respect to programming under development.
Net income and primary earnings per share
_________________________________________
Due to the factors discussed above, the Company's operating
income for fiscal 1997 was comparable to fiscal 1996, increasing by less
than 1%. Reported net income for fiscal 1997 decreased by approximately
$6.6 million compared to fiscal 1996 as a result of the Company recording a
nonrecurring gain of approximately $14.1 million on the sale of Buffalo
Broadcasting Co. Inc. ("Buffalo") to LIN Television Corporation during the
first quarter of fiscal 1996. Reported primary earnings per share de-
creased for fiscal 1997 to $3.82 per share from $3.98 per share for fiscal
1996 as a result of the nonrecurring gain from the sale of Buffalo.
Absent the nonrecurring gain on the sale of Buffalo, net income
increased by approximately $3.7 million, or 3%, for fiscal 1997 in compari-
son to fiscal 1996, reflecting the slight increase in operating income,
higher interest income earned on the Company's cash and investments and a
marginally lower effective tax rate for fiscal 1997 compared with fiscal
1996. Absent the nonrecurring gain on the sale of Buffalo, primary earn-
ings per share increased by $.11 per share, or approximately 3%, for fiscal
1997 compared to fiscal 1996, as a result of the increase in net income.
The Company's results of operations are highly dependent upon the
viewing preferences of television audiences and the Company's ability to
acquire distribution rights to, or itself produce, television programming
that achieves broad and enduring audience acceptance. The success of the
Company's programming could be significantly affected by changes in viewer
preferences or the unavailability of new programming or talent. Moreover,
the amount of revenue derived from the sale of retained advertising time is
dependent upon a large number of factors, such as household ratings, the
demographic composition of the viewing audience and economic conditions in
general and in the advertising business in particular.
Due to the success of the shows distributed by the Company and in
order to mitigate the influence of some of the factors referred to above,
<PAGE>
<PAGE 25>
the Company has been obtaining multi-year licenses and license renewals
from television stations for its principal distribution properties,
extending as far into the future as the 2001-2002 broadcast season. In
general, these licenses and renewals have been at rates as favorable or
more favorable to the Company than the rates applicable to the 1996-1997
broadcast season. All such licenses and renewals are contingent upon the
continued production of the series by their respective producers through
the broadcast seasons for which the licenses and renewals run.
The Company believes that the impact of inflation on its opera-
tions has not been significant.
COMPARISON OF FISCAL 1996 AND FISCAL 1995
Revenues
________
Revenues for fiscal 1996 increased by approximately 16% compared
to fiscal 1995. Such increase was primarily due to increased cash license
fees from THE OPRAH WINFREY SHOW and a general increase in revenues derived
from the sale of retained advertising time primarily on THE OPRAH WINFREY
SHOW, INSIDE EDITION and AMERICAN JOURNAL, as a result of a 50% increase in
the number of 30-second advertising spots retained by the Company in each
such series commencing with the 1995-1996 television season. In addition,
revenues from King World Direct increased substantially in fiscal 1996
compared with fiscal 1995, due primarily to the successful telemarketing
campaigns for the WILD AMERICA video series and the Sears Craftsman
Robogrip pliers.
THE OPRAH WINFREY SHOW, WHEEL OF FORTUNE, JEOPARDY! and INSIDE
EDITION accounted for approximately 39%, 19%, 17% and 8%, respectively, of
the Company's revenues for fiscal 1996 compared to 37%, 21%, 18% and 8%,
respectively, for fiscal 1995. AMERICAN JOURNAL accounted for approxi-
mately 4% of the Company's revenues for each of fiscal 1996 and fiscal
1995, and ROLONDA accounted for approximately 2% of the Company's revenues
for fiscal 1996 and 3% for fiscal 1995. King World Direct accounted for
approximately 4% of the Company's revenues for fiscal 1996 and 1% for
fiscal 1995.
Producers' fees, programming and other direct operating costs
_____________________________________________________________
Producers' fees, programming and other direct operating costs
increased by approximately 16% in fiscal 1996 compared to fiscal 1995,
primarily as a result of the higher level of revenues generated by THE
OPRAH WINFREY SHOW (a portion of which is payable to the producer),
increased production fees associated with THE OPRAH WINFREY SHOW in the
1995-1996 television season and increased operating expenses for King World
Direct.
<PAGE>
<PAGE 26>
Selling, general and administrative expenses
____________________________________________
In December 1995, the Company entered into new employment
agreements with its Chairman of the Board and its President and Chief
Executive Officer (who is now its Vice Chairman and Chief Executive
Officer), as discussed above. The Company recognized the impact of certain
of these bonuses in its operating results for fiscal 1996, which include
all amounts payable in accordance with the terms of such employment agree-
ments.
Selling, general and administrative expenses for fiscal 1996
increased by approximately 6% from fiscal 1995, but decreased as a percent-
age of revenues from 12% in fiscal 1995 to 11% in fiscal 1996. The
increase in selling, general and administrative expenses was due to higher
advertising and promotion costs for THE OPRAH WINFREY SHOW in the 1995-1996
broadcast season and an increase in executive compensation under the
executive employment agreements discussed above.
Net income and primary earnings per share
_________________________________________
Due to the factors discussed above, the Company's operating
income for fiscal 1996 increased by approximately 18% compared to fiscal
1995. In addition, during the first quarter of fiscal 1996, the Company
recorded a nonrecurring gain of approximately $14.1 million on the sale of
Buffalo.
Net income increased by approximately $32.7 million, or 28%, for
fiscal 1996 compared to fiscal 1995, reflecting the increase in operating
income, the nonrecurring gain on the sale of Buffalo and higher interest
income earned on the Company's cash and investments. In addition, the
Company's effective tax rate for fiscal 1996 was slightly lower than in
fiscal 1995, due principally to the nontaxability of a portion of the
Buffalo gain. Primary earnings per share increased by $.84 per share, or
approximately 27%, to $3.98 per share in fiscal 1996 compared to fiscal
1995, as a result of the increase in net income, offset slightly by the
greater number of shares outstanding. Excluding the nonrecurring gain on
the sale of Buffalo, net income increased by approximately $22.4 million,
or 19%, for fiscal 1996 compared to fiscal 1995, and primary earnings per
share increased by $.57 per share, or approximately 18%, for fiscal 1996 to
$3.71 per share.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital resources to fund development,
production and promotion costs of independently produced programming,
including, in some instances, advances to producers and talent, to produce
its own programs and to acquire distribution rights to new programming. In
acquiring distribution rights from independent producers, King World has
<PAGE>
<PAGE 27>
tried to avoid making significant capital commitments to such producers
until it has obtained broadcast commitments from a substantial number of
television stations. As a result of this strategy and the success of its
existing syndication properties, to date, King World has funded substan-
tially all programming acquisition, development, production and promotion
costs and advances from its operations. The Company is currently funding
the development and production costs of a talk show hosted by Roseanne and
a new version of the game show HOLLYWOOD SQUARES. Both shows are being
distributed by the Company and are scheduled to debut in the Fall of 1998.
The distribution of television programming is highly competitive
and the Company may be obliged to offer, among other things, guarantees and
cash advances to acquire, renew or extend distribution rights. Under the
terms of the Company's agreement with Harpo, Inc. ("Harpo"), the producer
of THE OPRAH WINFREY SHOW, the Company has the exclusive right, and has
agreed, to distribute episodes of THE OPRAH WINFREY SHOW produced through
the 1999-2000 television season. Pursuant to such agreement, Harpo and
Ms. Winfrey have also committed to produce and host the show through the
1999-2000 broadcast season.
Under the terms of its agreement with Harpo, the Company has
agreed, among other things, to pay Harpo production fees and to guarantee
participation payments to Harpo with respect to the 1995-1996 and 1996-1997
seasons at levels which are substantially higher than those that were in
effect prior to the 1995-1996 season. In addition, following the 1996-1997
season, profit sharing arrangements between Harpo and the Company previous-
ly in effect were terminated and, in the 1997-1998 season and thereafter,
the Company will instead receive distribution fees based on a percentage of
gross revenues derived from the series. These arrangements are less favor-
able to the Company than those contained in prior agreements between the
Company and Harpo. As a result of these changes, the contribution of THE
OPRAH WINFREY SHOW to the Company's net profits and cash flow can be
expected to decline.
After the 1999-2000 television season, King World's right to
distribute THE OPRAH WINFREY SHOW, if not renewed, will terminate. For
several years, the Company has been, and is now, in the process of devel-
oping new television shows for syndication that it hopes will gain wide-
spread audience appeal and generate significant revenues and income for the
Company. Two such shows, a talk show hosted by Roseanne and a new version
of the game show HOLLYWOOD SQUARES, are scheduled to premiere in the 1998-
1999 television season. Although the Company hopes to renew its distri-
bution arrangements with Harpo for television seasons following the 1999-
2000 season, there can be no assurance that (a) Harpo and Ms. Winfrey will
<PAGE>
<PAGE 28>
continue to produce and host the show beyond that season; (b) even if they
do continue to produce and host the show beyond that season, that the
Company will be able to obtain the distribution rights for any such future
season on terms favorable to the Company; or (c) that the revenues generat-
ed by these or any other new shows will be sufficient to offset the loss of
revenues and income that would result if such future distribution rights
are not so obtained. The failure to renew such distribution rights on
favorable terms, coupled with the failure of either or both of such new
shows to gain widespread audience appeal, could be expected to have a
material adverse effect on the Company's results of operations and finan-
cial condition after the 1999-2000 television season.
On January 2, 1996, the Company paid Harpo a $65 million advance
against its minimum participation payments for the 1996-1997 broadcast
season, which was fully recouped as of August 31, 1997. In addition, on
January 2, 1996 the Company paid an advance to Harpo of $65 million against
Harpo's minimum participation payments for the 1997-1998 broadcast season,
none of which had been recouped as of August 31, 1997. Subsequent to
August 31, 1997, the Company also made advances to Harpo in the aggregate
amount of $130 million against Harpo's minimum participation payments for
the 1998-1999 and 1999-2000 broadcast seasons. Based on the license agree-
ments in place for such latter three broadcast seasons, the Company
believes that revenues from the series will be sufficient to enable the
Company to recoup the advances for such seasons. All of the advances paid
to Harpo are refundable to the Company by Harpo and Ms. Winfrey if King
World terminates its agreement with Harpo due to Harpo's failure to deliver
episodes of THE OPRAH WINFREY SHOW.
The Company has used its cash reserves to make acquisitions of
and investments in broadcast and related properties in the entertainment
field, to repurchase shares of its Common Stock and to fund the cost of
development, production and promotion of new programming. The Company
continues to evaluate opportunities in these areas, and may seek to raise
capital in public or private securities markets to finance such activities
if it considers it advantageous to do so. The Company recently formed a
new division, King World Ventures, which has primary responsibility for the
Company's investment and acquisition program including analysis of new
business opportunities.
On April 15, 1997, the Company announced that the Board of
Directors had approved a program to repurchase up to 5,000,000 shares of
its Common Stock from time to time in the open market and in privately
negotiated transactions. Through August 31, 1997, 971,000 shares of Common
Stock were repurchased in open market transactions for aggregate consider-
ation of approximately $36.2 million or approximately $37.20 per share.
The Company intends to continue to repurchase shares of Common Stock in the
open market and in privately negotiated transactions if and when it deems
it advantageous to do so. Purchases under the share repurchase program
<PAGE>
<PAGE 29>
will be financed out of the Company's available cash and liquid invest-
ments.
On May 16, 1997, a special dividend distribution of $2.00 per
share was paid to stockholders of record on April 25, 1997. The Company
used approximately $74.8 million of its cash and liquid investments to pay
the special dividend. The Company has no present plan to declare addition-
al cash dividends in the foreseeable future.
The Company has entered into agreements with television stations
for the future distribution of programming commencing with the 1997-1998
broadcast season and extending as far into the future as the 2001-2002
broadcast season, under which the revenues and related expenses will not be
recognized until the license periods thereunder have begun and certain
other conditions are satisfied. As of October 21, 1997, the gross amount
of license fees under such agreements approximated $1.8 billion, of which
approximately $1.0 billion is payable to producers and others and is to be
recognized as an expense. The recognition of such amounts in the consol-
idated financial statements of the Company in fiscal years subsequent to
August 31, 1997 is subject to the Company's continued distribution of such
programming. Such amounts do not include sales of advertising time re-
tained during the broadcast of such programming or foreign license fees and
do not reflect the production costs to be incurred for programming produced
by King World.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
__________________________________________________________
Not applicable.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
___________________________________________
See the Financial Statements listed in the accompanying Index to
Consolidated Financial Statements which appear elsewhere in this Annual
Report. Information required by the schedules called for under Regulation
S-X is either not applicable or is included in the consolidated financial
statements or notes thereto.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
_____________________________________________
None.
<PAGE>
<PAGE 30>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
____
Report of Independent Public Accountants . . . . . . . . 31
Consolidated Balance Sheets as of August 31, 1997
and 1996 . . . . . . . . . . . . . . . . . . . . . . . 32
Consolidated Statements of Income for the years
ended August 31, 1997, 1996 and 1995 . . . . . . . . . 34
Consolidated Statements of Stockholders' Equity for
the years ended August 31, 1997, 1996 and 1995 . . . . 35
Consolidated Statements of Cash Flows for the years
ended August 31, 1997, 1996 and 1995 . . . . . . . . . 36
Notes to Consolidated Financial Statements . . . . . . . 37
<PAGE>
<PAGE 31>
Report of Independent Public Accountants
________________________________________
To King World Productions, Inc.:
We have audited the accompanying consolidated balance sheets of
King World Productions, Inc. (a Delaware corporation) and subsidiaries as
of August 31, 1997 and 1996, and the related consolidated statements of
income, stockholders' equity and cash flows for each of the three years in
the period ended August 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of King
World Productions, Inc. and subsidiaries as of August 31, 1997 and 1996,
and the results of their operations and their cash flows for each of the
three years in the period ended August 31, 1997, in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
New York, New York
October 24, 1997<PAGE>
<PAGE 32>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
August 31,
______________________
1997 1996
________ ________
(Dollars in thousands)
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . $317,782 $344,766
Short-term investments. . . . . . . . . . . 234,677 153,969
Accounts receivable (net of
allowance for doubtful accounts
of $4,101 and $4,196 in 1997
and 1996, respectively) . . . . . . . . . 75,092 60,378
Producer advances and
deferred costs. . . . . . . . . . . . . . 74,652 74,824
Other current assets. . . . . . . . . . . . 1,857 1,932
________ ________
Total current assets. . . . . . . . . . . 704,060 635,869
________ ________
LONG-TERM INVESTMENTS, at cost,
which approximates market value . . . . . 177,590 145,645
________ ________
FIXED ASSETS, at cost:
Office and transportation equipment . . . . 12,522 4,893
Furniture, leaseholds and other
improvements. . . . . . . . . . . . . . . 6,255 5,865
Film and videotape masters. . . . . . . . . 2,678 2,626
________ ________
21,455 13,384
Less-accumulated depreciation and
amortization. . . . . . . . . . . . . . . (11,706) (10,503)
________ ________
9,749 2,881
PRODUCER ADVANCES
AND OTHER ASSETS. . . . . . . . . . . . . . 10,668 69,746
________ ________
$902,067 $854,141
======== ========
The accompanying Notes to Consolidated Financial
Statements are an integral part of these balance sheets.
<PAGE>
<PAGE 33>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
August 31,
----------------------
1997 1996
-------- --------
(Dollars in thousands)
CURRENT LIABILITIES:
Accounts payable and accrued
liabilities . . . . . . . . . . . . . . . $ 18,014 $ 15,237
Payable to producers and others . . . . . . 69,599 71,920
Income taxes payable. . . . . . . . . . . . 30,372 29,099
________ ________
Total current liabilities 117,985 116,256
________ ________
COMMITMENTS AND CONTINGENCIES
(Note 4)
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
5,000,000 shares authorized,
none issued . . . . . . . . . . . . . . . -- --
Common stock, $.01 par value;
75,000,000 shares authorized,
51,039,211 and 50,734,739
shares issued in 1997 and 1996,
respectively. . . . . . . . . . . . . . . 510 507
Paid-in capital . . . . . . . . . . . . . . 124,497 110,666
Retained earnings . . . . . . . . . . . . . 1,001,190 932,651
Treasury stock, at cost; 14,413,594
and 13,442,594 shares in 1997 and
1996, respectively. . . . . . . . . . . . (342,115) (305,939)
________ ________
784,082 737,885
________ ________
$ 902,067 $854,141
========= ========
The accompanying Notes to Consolidated Financial
Statements are an integral part of these balance sheets.
<PAGE>
<PAGE 34>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Year Ended August 31,
-----------------------------
1997 1996 1995
-------- -------- --------
(Dollars in thousands except
per share data)
REVENUES. . . . . . . . . . . . . . . $671,277 $663,426 $574,186
________ ________ ________
EXPENSES:
Producers' fees, programming and
other direct operating costs. . . 395,489 397,494 341,536
Selling, general and admini-
strative expenses . . . . . . . . 83,507 74,347 70,234
________ ________ ________
478,996 471,841 411,770
________ ________ ________
Income from operations. . . . . . . 192,281 191,585 162,416
INTEREST AND DIVIDEND INCOME. . . . . 29,645 25,965 20,842
NONRECURRING GAIN - Sale of
Buffalo Broadcasting Co. Inc. . . . -- 14,060 --
________ ________ ________
Income before provision for
income taxes. . . . . . . . . . . 221,926 231,610 183,258
PROVISION FOR INCOME TAXES. . . . . . 78,544 81,610 65,946
________ ________ ________
Net income. . . . . . . . . . . . . $143,382 $150,000 $117,312
======== ======== ========
PRIMARY EARNINGS PER SHARE. . . . . . $3.82 $3.98 $3.14
======== ======== ========
The accompanying Notes to Consolidated Financial
Statements are an integral part of these statements.
<PAGE>
<PAGE 35>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock Paid-in Retained Treasury
________________
Shares $ Capital Earnings Stock
__________ ____ _______ ________ ________
(Dollars in thousands)
Balance -
August 31, 1994 . . . 49,722,218 $497 $ 82,171 $ 665,339 $(288,930)
Exercise of stock
options . . . . . . 171,527 2 5,457 -- --
Purchase of treasury
stock . . . . . . . -- -- -- -- (6,111)
Net income. . . . . . -- -- -- 117,312 --
___________ ____ ________ __________ _________
Balance -
August 31, 1995 . . . 49,893,745 499 87,628 782,651 (295,041)
Exercise of stock
options . . . . . . 840,994 8 23,038 -- --
Purchase of treasury
stock . . . . . . . -- -- -- -- (10,898)
Net income. . . . . . -- -- -- 150,000 --
___________ ____ ________ __________ _________
Balance -
August 31, 1996 . . . 50,734,739 507 110,666 932,651 (305,939)
Exercise of stock
options . . . . . . 304,472 3 13,831 -- --
Purchase of treasury
stock . . . . . . . -- -- -- -- (36,176)
Special dividend. . . -- -- -- (74,843) --
Net income. . . . . . -- -- -- 143,382 --
___________ ____ ________ __________ _________
Balance -
August 31, 1997 . . . 51,039,211 $ 510 $124,497 $1,001,190 $(342,115)
=========== ==== ======== ========== ==========
The accompanying Notes to Consolidated Financial
Statements are an integral part of these statements.
<PAGE>
<PAGE 36>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended August 31,
_____________________________
1997 1996 1995
___________ _________ ________
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income. . . . . . . . . . . . . . . . .$143,382 $150,000 $117,312
Items not affecting cash:
Gain on sale of Buffalo
Broadcasting Co. Inc.. . . . . . . . -- (14,060) --
Depreciation and amortization. . . . . 1,203 800 606
Change in assets and liabilities:
Accounts receivable. . . . . . . . . .(14,597) (9,022) (10,095)
Producer advances and
deferred costs . . . . . . . . . . . 60,173 (46,740) (6,271)
Accounts payable and accrued
liabilities. . . . . . . . . . . . . 2,777 4,167 (3,710)
Payable to producers and
others . . . . . . . . . . . . . . . (2,321) 1,829 4,702
Income taxes payable . . . . . . . . . 1,273 3,469 (428)
Other, net . . . . . . . . . . . . . . (965) 3,391 (163)
________ ________ ________
Net cash provided by operating
activities. . . . . . . . . . . . . . . . 190,925 93,834 101,953
________ ________ ________
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in investments. . . . .(112,653) (217,485) 6,062
Proceeds from sale of Buffalo
Broadcasting Co. Inc. . . . . . . . . . . -- 9,802 --
Additions to fixed assets . . . . . . . . . (8,071) (429) (2,324)
________ ________ ________
Net cash (used in) provided by
investing activities. . . . . . . . . . .(120,724) (208,112) 3,738
________ ________ ________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
stock . . . . . . . . . . . . . . . . . . 13,834 23,046 5,459
Purchase of treasury stock. . . . . . . . . (36,176) (10,898) (6,111)
Payment of special dividend . . . . . . . . (74,843) -- --
________ ________ ________
Net cash (used in) provided by
financing activities. . . . . . . . . . . (97,185) 12,148 (652)
________ ________ ________
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS. . . . . . . . . . . .(26,984) (102,130) 105,039
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR . . . . . . . . . . . . . 344,766 446,896 341,857
________ ________ ________
CASH AND CASH EQUIVALENTS AT
END OF YEAR . . . . . . . . . . . . . . . . $317,782 $344,766 $446,896
======== ======== ========
The accompanying Notes to Consolidated Financial
Statements are an integral part of these statements.
<PAGE>
<PAGE 37>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of significant accounting policies
Principles of consolidation
The accompanying consolidated financial statements include the
accounts of King World Productions, Inc. and its subsidiaries. All
significant intercompany transactions have been eliminated. Unless the
context suggests otherwise, the "Company", as used herein, means King World
Productions, Inc. ("King World") and its consolidated subsidiaries.
Revenue recognition
License fees from first-run syndicated television properties are
recognized at the commencement of the license period pursuant to noncancel-
able agreements and as each show is made available to the licensee via
satellite transmission. Because transmission to the satellite takes place,
on the average, no more than two to three days prior to the broadcast of
the programming, revenues are recognized on or about the air date.
The Company typically receives a portion of the fees derived from
the licensing of syndicated television programming in the form of retained
advertising time, which is sold to advertisers by Camelot Entertainment
Sales, Inc. ("Camelot"), a wholly-owned subsidiary of the Company. Such
revenues are recognized at the same time as the cash portion of the license
fees derived from such programming is recognized, in amounts adjusted for
expected ratings.
License fees for non-first-run syndicated properties are recog-
nized at the gross contract amount (net of discount to present value for
license periods greater than one year) at the commencement of the license
period and when certain other conditions are satisfied.
<PAGE>
<PAGE 38>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of significant accounting policies (continued)
Principal properties
____________________
The Company's principal properties are licenses to distribute THE
OPRAH WINFREY SHOW, WHEEL OF FORTUNE and JEOPARDY!; and INSIDE EDITION, a
first-run syndicated series produced and distributed by the Company. THE
OPRAH WINFREY SHOW accounted for approximately 40%, 39% and 37% of revenues
in fiscal 1997, 1996 and 1995, respectively. WHEEL OF FORTUNE accounted
for approximately 20%, 19% and 21% of revenues in fiscal 1997, 1996 and
1995, respectively. JEOPARDY! accounted for approximately 17%, 17% and 18%
of revenues in fiscal 1997, 1996 and 1995, respectively. INSIDE EDITION
accounted for approximately 8% of revenues in fiscal 1997, 1996 and 1995.
The Company distributes THE OPRAH WINFREY SHOW pursuant to an
agreement with Harpo, Inc. ("Harpo"), the producer of the series. Under
the terms of the Company's agreement with Harpo, the Company has the
exclusive right, and has agreed, to distribute episodes of THE OPRAH
WINFREY SHOW produced through the 1999-2000 television season. Pursuant to
such agreement, Harpo and Ms. Winfrey have also committed to produce and
host the show through the 1999-2000 broadcast season.
Under the terms of its agreement with Harpo, the Company has
agreed, among other things, to pay Harpo production fees and to guarantee
participation payments to Harpo at levels which are substantially higher
than those that were in effect prior to the 1995-1996 season. In addition,
in the 1997-1998 season and thereafter, profit sharing arrangements between
Harpo and the Company currently in effect will terminate and the Company
will instead receive distribution fees based on a percentage of gross
revenues derived from the series. These arrangements are less favorable to
the Company than those contained in prior agreements between the Company
and Harpo. As a result of these changes, the contribution of THE OPRAH
WINFREY SHOW to the Company's net profits and cash flow can be expected to
decline.
After the 1999-2000 television season, King World's right to
distribute THE OPRAH WINFREY SHOW, if not renewed, will terminate. For
several years, the Company has been, and is now, in the process of devel-
oping new television shows for syndication that it hopes will gain wide-
spread audience appeal and generate significant revenues and income for the
Company. Two such shows, a talk show hosted by Roseanne and a new version
of the game show HOLLYWOOD SQUARES, are scheduled to premiere in the 1998-
1999 television season. Although the Company hopes to renew its distri-
bution arrangements with Harpo for television seasons following the 1999-
2000 season, there can be no assurance that (a) Harpo and Ms. Winfrey will
continue to produce and host the show beyond that season; (b) even if they
do continue to produce and host the show beyond that season, that the
Company will be able to obtain the distribution rights for any such future
season on terms favorable to the Company; or (c) that the revenues generat-
ed by these or any other new shows will be sufficient to offset the loss of
revenues and income that would result if such future distribution rights
are not so obtained. The failure to renew such distribution rights on
favorable terms, coupled with the failure of either or both of such new
shows to gain widespread audience appeal, could be expected to have a
<PAGE>
<PAGE 39>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of significant accounting policies (continued)
material adverse effect on the Company's results of operations and finan-
cial condition after the 1999-2000 television season.
The Company's agreements with Columbia TriStar Television provide
that the Company shall be the exclusive distributor for WHEEL OF FORTUNE
and JEOPARDY! so long as the Company has obtained sufficient broadcast
commitments to cover such series' respective production and distribution
costs and that the Company may not, unless otherwise agreed by Columbia
TriStar Television, distribute game shows for "strip" first-run syndication
so long as the Company is distributing WHEEL OF FORTUNE or JEOPARDY!. On
September 16, 1997, the Company and Columbia TriStar Television announced
their agreement to co-produce a new version of the game show HOLLYWOOD
SQUARES, which will be distributed by the Company in first-run syndication
for debut in the Fall of 1998.
Producers' fees, programming and other direct operating costs
_____________________________________________________________
Producers' fees, programming and other direct operating costs
include primarily the producers' share of both cash license fees from the
sale of programming to television stations and revenues derived from the
sale of retained advertising time to advertisers with respect to program-
ming distributed by the Company; participation fees payable by the Company
to producers and talent; production and distribution costs for first-run
syndicated programming; and the direct operating costs of King World
Direct, the Company's direct response marketing subsidiary. That portion
of any recognized revenue that is to be paid to producers and owners of
programming is accrued as such revenues are earned. The share of revenues
payable by the Company to such producers and others is generally paid as
cash license fees and revenues derived from the sale of retained advertis-
ing time are received from television stations and advertisers.
Selling, general and administrative expenses
____________________________________________
Selling, general and administrative expenses include advertising
and promotion costs associated with programming distributed by the Company,
which amounted to $33,150,000, $31,329,000 and $28,084,000 in fiscal 1997,
1996 and 1995, respectively. These amounts include the producers' share of
such costs.
<PAGE>
<PAGE 40>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of significant accounting policies (continued)
Cash equivalents and short-term investments
___________________________________________
Cash equivalents and short-term investments are comprised princi-
pally of municipal obligations, money market funds, money market preferred
investments, commercial paper and United States Treasury and other agency
obligations whose maturities are one year or less and are carried at amor-
tized cost, which approximates market value. The Company considers its
highly liquid short-term investments purchased with a maturity of three
months or less to be cash equivalents.
Producer advances and deferred costs
____________________________________
Producer advances and deferred costs include production and
promotion costs, as well as talent and producer participation advances, in
connection with certain first-run syndicated programs distributed by the
Company for broadcast during seasons subsequent to August 31, 1997. Such
costs are charged to expense as the revenues from such programs are earned.
Advances are recouped from the share of revenues payable by the Company to
producers, talent and others.
On January 2, 1996, the Company paid Harpo a $65 million advance
against its minimum participation payments for the 1996-1997 broadcast
season, which was fully recouped as of August 31, 1997. In addition, on
January 2, 1996 the Company paid an advance to Harpo of $65 million against
Harpo's minimum participation payments for the 1997-1998 broadcast season,
none of which had been recouped as of August 31, 1997. Subsequent to
August 31, 1997, the Company also made advances to Harpo in the aggregate
amount of $130 million against Harpo's minimum participation payments for
the 1998-1999 and 1999-2000 broadcast seasons. Based on the license agree-
ments in place for such latter three broadcast seasons, the Company
believes that revenues from the series will be sufficient to enable the
Company to recoup the advances for such seasons. All of the advances paid
to Harpo are refundable to the Company by Harpo and Ms. Winfrey if King
World terminates its agreement with Harpo due to Harpo's failure to deliver
episodes of THE OPRAH WINFREY SHOW.
Long-term investments
_____________________
Long-term investments are comprised principally of intermediate-
term municipal obligations and United States Treasury and other agency
obligations whose maturities are between one and two years and are carried
at amortized cost which approximates market value.
<PAGE>
<PAGE 41>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of significant accounting policies (continued)
Fixed assets
____________
Fixed assets are carried at cost less accumulated depreciation
and amortization. Depreciation and amortization are computed using the
straight-line method for financial reporting purposes and accelerated
methods for tax purposes, with estimated useful lives of 3 to 5 years for
furniture, office and transportation equipment and 5 years for film and
videotape masters. Leaseholds and other improvements are amortized over
the shorter of their useful lives and the lease term. Depreciation and
amortization expense was approximately $1,203,000, $800,000 and $606,000 in
fiscal 1997, 1996 and 1995, respectively. Certain prior period amounts
have been reclassified to conform with current year presentation.
Stockholders' equity
____________________
Primary earnings per share has been computed using the weighted
average number of common shares outstanding of 37,496,000, 37,684,000 and
37,343,000 for the fiscal years ended August 31, 1997, 1996 and 1995,
respectively, which includes the dilative effect from the assumed exercise
of vested and unvested stock options outstanding as of the end of each year
reported. The difference between primary and fully diluted earnings per
share for each such fiscal year was not significant.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
("SFAS 128"). SFAS 128 eliminates the presentation of primary earnings per
share and requires the presentation of basic earnings per share, which
excludes common stock equivalents and their related dilution and diluted
earnings per share, which includes the potential dilution from all common
stock equivalents including options, warrants and convertible securities.
The Company will implement SFAS 128 beginning with the first quarter of
fiscal 1998. The implementation of SFAS 128 is not anticipated to have a
material effect on reported earnings per share of the Company.
The Company is authorized to issue 5,000,000 shares of Preferred
Stock, $.01 par value. The Board of Directors is empowered, without
further stockholder approval, to establish from time to time one or more
series of Preferred Stock and to determine the powers, preferences and
special rights of any unissued series of Preferred Stock, including voting
rights, dividend rights, terms of redemption, liquidation preferences,
conversion rights and the designation of any such series.
<PAGE>
<PAGE 42>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of significant accounting policies (continued)
Industry segments and customers
_______________________________
The Company operates in one business segment, television program-
ming. The Company's major customers and principal facilities are located
within the United States. In the 1997, 1996 and 1995 fiscal years,
approximately 13%, 12% and 14%, respectively, of the Company's revenues
were derived from license fees under contracts with a single broadcast
group.
Use of estimates
________________
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
(2) Pension and profit sharing plans
The Company maintains the King World Productions, Inc. Retirement
Savings Plan with an employee pre-tax salary deferral contribution program
under Section 401(k) of the Internal Revenue Code. Under the plan,
employer matching contributions may not exceed 3% of annual compensation
per employee and employer fixed contributions are limited to 3% of annual
salary per employee, subject to a maximum total employer contribution of
approximately $9,500 per employee for fiscal 1997. The plan covers
substantially all of the Company's employees other than those involved in
the production of programming produced by the Company.
Contributions by the Company to the plan were approximately
$576,000, $491,000 and $372,000 in fiscal 1997, 1996 and 1995, respective-
ly.
<PAGE>
<PAGE 43>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(3) Income taxes
The components of the Company's provision for income taxes are
summarized as follows:
Year Ended August 31,
__________________________________
1997 1996 1995
____ ____ ____
(Dollars in thousands)
Federal:
Current . . . . . . . . . . . . . . . $64,824 $71,525 $56,741
Deferred. . . . . . . . . . . . . . . 1,562 (2,293) (858)
_______ _______ _______
66,386 69,232 55,883
_______ _______ _______
State and local:
Current . . . . . . . . . . . . . . . 12,067 12,511 10,113
Deferred. . . . . . . . . . . . . . . 91 (133) (50)
_______ _______ _______
12,158 12,378 10,063
_______ _______ _______
Total . . . . . . . . . . . . . . $78,544 $81,610 $65,946
======= ======= =======
Deferred income taxes and benefits are provided for any income
and expense items that are recognized in different years for tax return and
financial reporting purposes. No individual temporary difference gives
rise to significant deferred tax assets or liabilities.
The current provision in each period presented above does not
include reductions to income taxes payable attributable to the exercise of
stock options. See Note 5.
Following is a reconciliation of the Company's provision for
income taxes to the tax computed at the U.S. statutory rate:
Year Ended August 31,
_________________________________
1997 1996 1995
(Dollars in thousands)
Tax at U.S. statutory
rate. . . . . . . . . . . . . . . . . $77,674 $81,064 $64,140
State tax provision, net
of Federal benefit. . . . . . . . . . 7,903 8,046 6,541
Tax-exempt interest and
dividend income . . . . . . . . . . . (6,892) (5,370) (4,799)
Other, net. . . . . . . . . . . . . . . (141) (2,130) 64
_______ _______ _______
$78,544 $81,610 $65,946
======= ======= =======
Income taxes paid approximated $73.3 million, $76.8 million and
$64.6 million in fiscal 1997, 1996 and 1995, respectively.
<PAGE>
<PAGE 44>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) Commitments and contingencies
License fees
____________
The Company has entered into agreements with television stations
for the future distribution of programming in television seasons commencing
with the 1997-1998 season and extending as far into the future as the 2001-
2002 broadcast season, under which the revenues and related expenses will
not be recognized until the license periods thereunder have begun and
certain other conditions are satisfied. As of October 21, 1997, the gross
amount of license fees under such agreements approximated $1.8 billion, of
which approximately $1.0 billion is payable to producers and others and is
to be recognized as an expense. The recognition of such amounts in the
consolidated financial statements of the Company in fiscal years subsequent
to August 31, 1997 is subject to the Company's continued distribution of
such programming. Such amounts do not include sales of advertising time
retained during the broadcast of such programming or foreign license fees
and do not reflect the production costs to be incurred for programming
produced by King World.
Operating leases
________________
Rent expense under operating leases covering office facilities,
production studios and equipment amounted to approximately $2,849,000,
$2,559,000 and $2,548,000 for fiscal 1997, 1996 and 1995, respectively.
Office and studio leases are subject to price escalations for certain
costs. Aggregate future minimum rental commitments for these leases as of
August 31, 1997 were as follows:
Year Ending August 31,
______________________
(Dollars in thousands)
1998 . . . . . . . . . . . . . $2,256
1999 . . . . . . . . . . . . . 1,496
2000 . . . . . . . . . . . . . 1,473
2001 . . . . . . . . . . . . . 1,487
2002 . . . . . . . . . . . . . 1,140
<PAGE>
<PAGE 45>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) Commitments and contingencies (continued)
Employment and production agreements
____________________________________
As of August 31, 1997, the Company had entered into employment
agreements and agreements with independent contractors relating to program-
ming being or to be produced by King World which provide for aggregate
minimum annual compensation as follows:
Year Ending August 31,
______________________
(Dollars in thousands)
1998 . . . . . . . . . . . . . $23,500
1999 . . . . . . . . . . . . . 8,670
2000 . . . . . . . . . . . . . 5,588
2001 . . . . . . . . . . . . . 0
2002 . . . . . . . . . . . . . 0
The Company has entered into employment agreements with its
Chairman of the Board, its Vice Chairman and Chief Executive Officer and
certain other executive officers. Such agreements provide, among other
things, for performance-based bonuses, including bonuses payable upon the
introduction of new shows and bonuses which vary depending on the Company's
net income and Common Stock price during preestablished measurement
periods. The Company has recognized the impact of certain of these bonuses
in its operating results for fiscal 1997, which include all amounts payable
in accordance with the terms of such employment agreements.
Legal matters
_____________
The Company is subject to legal proceedings and claims which
arise in the ordinary course of its business. In the opinion of manage-
ment, the amount of ultimate liability, if any, with respect to such
actions will not have a material adverse effect on the results of opera-
tions and financial position of the Company.
(5) Stock plans
In fiscal 1997, the Company adopted the 1996 Amended and Restated
Stock Option and Restricted Stock Purchase Plan (the "Option/Stock Plan"),
which amended and restated the Company's 1995 Amended and Restated Stock
Option and Restricted Stock Purchase Plan and reserved 500,000 additional
shares for grants and awards thereunder. The Option/Stock Plan provides
for grants of incentive stock options ("ISOs") and non-qualified stock
options, as well as awards of shares of restricted stock, subject to
certain conditions. The Option/Stock Plan is currently administered by
<PAGE>
<PAGE 46>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(5) Stock plans (continued)
the Compensation Committee of the Board of Directors.
For ISOs granted pursuant to the Option/Stock Plan, the exercise
price of options may not be less than the fair market value of the shares
on the date of grant and the options may not have a term in excess of ten
years. The Compensation Committee has the power to determine the vesting
periods for options granted under the Option/Stock Plan. Only full-time
employees of the Company and its subsidiaries may be granted ISOs under the
Option/Stock Plan. ISOs granted under the Option/Stock Plan are intended
to qualify as "incentive stock options" within the meaning of Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code").
For non-qualified stock options granted pursuant to the
Option/Stock Plan, the exercise price of options may be more than, less
than or equal to the fair market value of the shares on the date of grant
(in the discretion of the Compensation Committee), and the options may be
immediately exercisable (in the discretion of the Compensation Committee)
and may have a term in excess of ten years. Employees, directors and
officers of, and consultants or suppliers to, the Company and its subsid-
iaries may be granted non-qualified stock options under the Option/Stock
Plan.
Awards of restricted stock may be granted under the Option/Stock
Plan to purchase shares of Common Stock for a price per share that may be
more than, equal to or less than the fair market value of such shares on
the date of the award. The Compensation Committee has the right to
determine vesting provisions, transfer restrictions and other conditions or
restrictions with respect to each award. To date, no awards of restricted
stock have been granted under the Option/Stock Plan or its predecessor
plans.
In fiscal 1997, the Company also adopted the Salesforce Bonus
Plan (the "Salesforce Plan"), and reserved 500,000 shares for grants of
options thereunder. The Salesforce Plan provides for grants of non-
qualified stock options and certain cash bonuses, subject to certain
conditions. The Salesforce Plan is currently administered by the Board of
Directors and by the Chairman of the Board of the Company, who is also the
head of the Company's salesforce. Any person employed by, or performing
services for, the sales department of the Company or any subsidiary of the
Company on a full-time basis (excluding directors and officers of
<PAGE>
<PAGE 47>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(5) Stock plans (continued)
the Company) is eligible to receive stock options and cash bonuses under
the Salesforce Plan.
The exercise price of options granted under the Salesforce Plan
must be equal to the fair market value of the shares on the date of grant,
and the options shall vest at a rate of 20% at the end of each of the first
three years from the date of grant and 40% at the end of the fifth year
from grant and shall expire on the date ten years from the date of grant.
In fiscal 1989, the Company adopted the Incentive Equity Plan for
Senior Executives, pursuant to which an aggregate 2,550,000 shares of
Common Stock were reserved for issuance to the Company's Chairman of the
Board, President and Chief Executive Officer (who is now its Vice Chairman
and Chief Executive Officer), and Executive Vice President and Chief
Operating Officer, upon the exercise of options granted thereunder. Each
of the Chairman of the Board and the President and Chief Executive Officer
was granted non-qualified stock options to purchase 1,200,000 shares of
Common Stock, 975,000 at an exercise price of $15.75 (the approximate fair
market value on the date of grant) and 225,000 at an exercise price of
$.01; the Executive Vice President was granted non-qualified stock options
to purchase 150,000 shares of Common Stock, 120,000 at an exercise price of
$15.75 and 30,000 at an exercise price of $.01. No additional options may
be granted under the Executive Plan.
<PAGE>
<PAGE 48>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(5) Stock plans (continued)
The following table summarizes stock option activity at August 31
and for the fiscal years then ended:
1997 1996 1995
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
_______ ________ ________ ________ _______ ________
Outstanding at
beginning of
year 5,120,987 $35.29 2,220,402 $27.34 2,498,529 $27.52
Granted 1,477,667 $36.10 3,427,500 $39.49 73,000 $36.89
Exercised (299,051) $38.86 (396,415) $40.29 (171,527) $36.89
Canceled (258,000) $40.04 (130,500) $38.05 (179,600) $39.39
_________ _________ _________
Outstanding at
end of year 6,041,603 $35.41 5,120,987 $35.29 2,220,402 $27.34
========= ========= =========
Exercisable at
end of year 2,457,436 $31.82 1,898,687 $29.03 1,311,102 $22.42
========= ========= =========
<PAGE>
The following table summarizes stock options outstanding and
exercisable at August 31, 1997:
Options Outstanding Options Exercisable
___________________ ___________________
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Exercise Life Exercise Exercise
Prices Shares (in years) Price Shares Price
________ ___________ __________ ________ ___________ _________
$.01 to
$15.75 494,436 1.5 $12.73 494,436 $12.73
$15.83 to
$28.50 233,400 3.3 $23.59 232,400 $23.59
$28.63 to
$38.88 2,241,767 8.4 $35.99 510,600 $35.65
$39.19 to
$43.58 3,072,000 8.2 $39.53 1,220,000 $39.52
___________ __________
6,041,603 2,457,436
=========== ==========
In addition, in connection with the extensions of the Company's
rights to distribute THE OPRAH WINFREY SHOW for the 1993-1994, 1994-1995
and 1995-1996 broadcast seasons, the Company granted options to the princi-
pals of Harpo to purchase an aggregate 1.5 million shares of Common Stock.
<PAGE>
<PAGE 49>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(5) Stock plans (continued)
All of such options were fully vested at the time of grant and have a term
of ten years. An aggregate 450,000 options were exercised on March 27,
1996, at an exercise price of $25.50 per share, and as of August 31, 1997,
1.05 million options remained outstanding, of which 550,000 bear exercise
prices of $25.50 per share and 500,000 bear exercise prices of $33.625 per
share (the closing market prices of the Common Stock as of the respective
dates of such grants). On October 6, 1995, in connection with Harpo's and
Ms. Winfrey's commitment to continue to produce and host the show for the
1996-1997 and 1997-1998 broadcast seasons, the Company granted options to
the principals of Harpo to purchase an additional 500,000 shares of Common
Stock. All of such options were fully vested at the time of grant, have a
term of ten years and have an exercise price of $36.00 per share (the
closing market price of the Common Stock on the date of grant). None of
such options have been exercised. On September 15, 1997, in connection
with Harpo's and Ms. Winfrey's commitment to continue to produce and host
the show for the 1998-1999 and 1999-2000 broadcast seasons, the Company
granted options to the principals of Harpo to purchase an additional
500,000 shares of Common Stock. All of such options were fully vested at
the time of grant, have a term of ten years and have an exercise price of
$39.31 per share (the closing market price of the Common Stock on the date
of grant). None of such options have been exercised.
In October 1995, the Financial Accounting Standards Board
released Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS 123"). As permitted under SFAS 123,
the Company accounts for employee stock compensation arrangements in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"). Under APB 25, compensation cost is
recognized only when employee stock options are granted at an exercise
price lower than that of the market price of the stock on the date of
grant. The Company generally does not recognize compensation expense with
respect to stock option grants.
For stock options granted by the Company after August 31, 1995,
SFAS 123 requires that pro forma information regarding net income and
earnings per share be disclosed as if the Company had accounted for its
options under the fair value method outlined in SFAS 123, which requires a
compensation charge to earnings for all options granted during the period.
The fair value of the Company's options was estimated using the Black-
Scholes option valuation model. The Black-Scholes option valuation model
requires the use of highly subjective assumptions, including the expected
stock price volatility and expected life of such options. Because the
Company's stock options granted to employees have characteristics signifi-
cantly different from those of traded options (for which the Black-Scholes
<PAGE>
<PAGE 50>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(5) Stock plans (continued)
model was created) and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the
fair value of Company stock options granted to employees.
The fair value of the Company's stock options granted to employ-
ees was estimated using the following weighted average assumptions at
August 31:
1997 1996
__________ __________
Expected life (in years) 6.5 6.5
Risk-free interest rate 6.5% 6.5%
Volatility 30.0% 30.0%
Dividend yield 0% 0%
The weighted average estimated fair value of employee stock
options granted during fiscal 1997 and fiscal 1996 was $16.25 and $17.59
per share, respectively. For purposes of the pro forma disclosures, the
estimated fair value of the options is generally amortized to compensation
expense over the options' vesting period. The Company's pro forma net
income and earnings per share compared to that actually reported at August
31 are as follows:
1997 1996
________ ________
Net income (in thousands) As reported $143,382 $150,000
Pro forma 134,720 139,762
Earnings per share As reported $3.82 $3.98
Pro forma 3.63 3.76
The effects on the pro forma disclosures of applying SFAS 123 to
fiscal 1997 and fiscal 1996 are not likely to be representative of the
effects on pro forma disclosures of future years. Because SFAS 123 is
applicable only to options granted subsequent to August 31, 1995, and the
estimated fair value of the options is generally amortized over the five-
year vesting period of the Company's employee stock options, the pro forma
effect will not be fully reflected until fiscal 2000.
The Company realizes a tax benefit in respect of non-qualified
stock options based on the difference between the exercise price of the
Common Stock subject to the option and the market price thereof on the date
<PAGE>
<PAGE 51>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(5) Stock plans (continued)
of exercise. Tax deductions related to compensation expense in excess of
that taken for financial reporting purposes are added to paid-in capital in
the period of the tax deduction. The amount of such tax deductions added
to paid-in capital approximated $3,976,000, $1,342,000 and $1,758,000 in
fiscal 1997, 1996 and 1995, respectively.
(6) Special dividend and stock repurchases
On May 16, 1997, a special dividend distribution of $2.00 per
share was paid to stockholders of record on April 25, 1997. The Company
used approximately $74.8 million of its cash and liquid investments to pay
the special dividend.
On April 15, 1997, the Company announced that the Board of Direc-
tors had approved a program to repurchase up to 5,000,000 shares of its
Common Stock from time to time in the open market and in privately negoti-
ated transactions. Through August 31, 1997, 971,000 shares of Common Stock
were repurchased in open market transactions for aggregate consideration of
approximately $36.2 million or approximately $37.20 per share. The Company
intends to continue to repurchase shares of Common Stock in the open market
and in privately negotiated transactions if and when it deems it advan-
tageous to do so. Purchases under the share repurchase program will be
financed out of the Company's available cash and liquid investments.
<PAGE>
<PAGE 52>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(7) Quarterly financial summaries (unaudited)
1st 2nd 3rd 4th Fiscal
Quarter Quarter Quarter Quarter Year
_______ _______ _______ _______ ________
(Dollars in thousands except per share data)
Fiscal 1997:
___________
Revenues. . . . $164,287 $175,169 $166,751 $165,070 $671,277
Revenues less
direct costs. 65,481 71,405 69,006 69,896 275,788
Income before
provision
for income
taxes . . . . 53,923 57,185 54,890 55,928 221,926
Net income. . . 34,967 36,677 35,705 36,033 143,382
Primary earnings
per share . . $.93 $.97 $.95 $.97 $3.82
======================================================
1st 2nd 3rd 4th Fiscal
Quarter Quarter Quarter Quarter Year
_______ _______ _______ _______ ________
(Dollars in thousands except per share data)
Fiscal 1996:
___________
Revenues. . . . $162,139 $176,784 $165,763 $158,740 $663,426
Revenues less
direct costs. 64,048 68,744 67,115 66,025 265,932
Income before
provision
for income
taxes . . . . 66,320(1) 55,393 55,227 54,670 231,610(1)
Net income. . . 43,662(1) 35,162 35,186 35,990 150,000(1)
Primary earnings
per share . . $1.17(1) $.93 $.92 $.95 $3.98(1)
=======================================================
____________________________
(1) Income before provision for income taxes, net income and primary
earnings per share include a nonrecurring gain of approximately $14.1
million, $10.3 million and $.27, respectively, as a result of the Company's
sale of Buffalo Broadcasting Co. Inc. to LIN Television Corporation for $95
million in cash which closed in October 1995. See Note 8.
(8) Buffalo Broadcasting Co. Inc.
In October 1995 the Company closed its agreement to sell WIVB-TV,
the CBS-affiliated VHF television station in Buffalo, New York, to LIN
Television Corporation for $95 million in cash. As a result of this trans-
action, the Company recorded a nonrecurring gain of approximately $14.1
million, of which approximately $9.8 million represents cash proceeds to
the Company from the sale. The remaining $4.3 million of such gain repre-
sents the reversal of previously recognized accounting losses (with no
associated income tax effect) in excess of the Company's original invest-
ment.
The Company acquired Buffalo Broadcasting Co. Inc. ("Buffalo") in
December 1988 in a highly leveraged transaction. In April 1992, the
Company and Buffalo's lenders entered into an agreement providing for a
financial restructuring of Buffalo effective August 4, 1992. As a result
of such restructuring, Buffalo ceased to be a consolidated subsidiary of
King World. The Company's investment in Buffalo subsequent to the restruc-
turing was carried at cost.
<PAGE>
<PAGE 53>
PART III
________
The information required by Part III of Form 10-K is incorporated
by reference from the registrant's definitive proxy statement for its 1998
annual meeting of stockholders, which is to be filed pursuant to Regula-
tion 14A not later than December 29, 1997.
<PAGE>
PART IV
_______
Item 10. EXHIBITS, FINANCIAL STATEMENTS
AND REPORTS ON FORM 8-K
______________________________
(a)(1 and 2) Financial Statements. See Index to Consolidated
Financial Statements which appears on page 30 of this Annual Report.
(3) Exhibits:
________
Exhibit
Number Description
_______ ___________
3.1. Registrant's Restated Certificate of Incorporation (in-
corporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement No. 2-93987).
3.2. Certificate of Amendment to the Registrant's Restated
Certificate of Incorporation (incorporated by reference
to Exhibit 3.3 to the Registrant's Registration State-
ment No. 33-8357).
3.3. Registrant's By-laws, as amended through June 25, 1997.
10.1. Agreement dated July 12, 1984 between Leo A. Gutman,
Inc. and the Registrant with exhibits (incorporated by
reference to Exhibit 10.3 to the Registrant's Registra-
tion Statement No. 2-93987).
10.2. Agreements dated August 6, 1970, July 31, 1970, and
May 29, 1969, between Hal Roach Studios, Inc. and the
Registrant, with amendment dated June 8, 1983 and
exhibits (incorporated by reference to Exhibit 10.5 to
the Registrant's Registration Statement No. 2-93987).
10.3.* Distribution Agreement dated December 15, 1982, between
Califon Productions, Inc. and the Registrant, with
amendment dated July 8, 1983 (incorporated by reference
______________________
* Certain information in this exhibit is deleted pursuant to an order of
the Securities and Exchange Commission granting confidential treatment.
<PAGE>
<PAGE 54>
to Exhibit 10.7 to the Registrant's Registration State-
ment No. 2-93987).
10.4.* Amendment, dated April 23, 1990, to the Distribution
Agreement dated December 15, 1982, between Califon Pro-
ductions, Inc. and the Registrant (incorporated by
reference to Exhibit 10.4 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended August
31, 1995).
10.5.* Distribution Agreement dated November 1, 1983, between
Califon Productions, Inc. and the Registrant, with
amendment dated March 26, 1984 (incorporated by refer-
ence to Exhibit 10.9 to the Registrant's Registration
Statement No. 2-93987).
10.6. Employment Agreement, dated December 20, 1995, between
Mr. Roger King and the Registrant (incorporated by ref-
erence to Exhibit 10.1 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended Febru-
ary 29, 1996).
10.7. Employment Agreement, dated December 20, 1995, between
Mr. Michael King and the Registrant (incorporated by
reference to Exhibit 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended Febru-
ary 29, 1996).
10.8. Employment Agreement, date as of June 6, 1997 between
Jules Haimovitz and the Registrant (incorporated by
reference to Exhibit 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended
May 31, 1997).
______________________
* Certain information in this exhibit is deleted pursuant to an order of
the Securities and Exchange Commission granting confidential treatment.
<PAGE>
10.9. Employment Agreements between the Registrant and the
individuals named below:
Name of Employee
or Consultant Date of Agreement
________________ _________________
Steven Hirsch . . . . . September 3, 1996
Jonathan Birkhahn . . . September 1, 1996
Michael Spiessbach. . . September 3, 1996
Robert V. Madden. . . . September 3, 1996
<PAGE 55>
(incorporated by reference to Exhibit 10.9
to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 31, 1996).
10.10. King World Productions, Inc. Retirement Savings Plan
dated September 17, 1992 (incorporated by reference to
Exhibit 10.7 to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1993).
10.11. 1996 Amended and Restated Stock Option and Restricted
Stock Purchase Plan of the Registrant.
10.12. Incentive Equity Compensation Plan for Senior Exec-
utives of the Registrant (incorporated by reference to
Exhibit 4.1 to the Registrant's Registration Statement
No. 33-30695).
10.13. Form of Indemnification Agreement between the Regis-
trant and the Registrant's directors (incorporated by
reference to Exhibit 10.15 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
August 31, 1992).
10.14.* Agreement dated January 30, 1987 between the Registrant
and Harpo, Inc. and amendment thereto dated July 29,
1988 (incorporated by reference to Exhibit 10.12 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended August 31, 1993).
10.15.* Amendment dated as of October 15, 1989 to the Agreement
dated January 30, 1987 between the Registrant and
Harpo, Inc. (incorporated by reference to Exhibit 10.13
to the Registrant's Annual report on Form 10-K for the
fiscal year ended August 31, 1995).
______________________
* Certain information in this exhibit is deleted pursuant to an order of
the Securities and Exchange Commission granting confidential treatment.
10.16.* Agreement dated as of March 17, 1994 between the Regis-
trant and Harpo, Inc. (incorporated by reference to 8-
K/A dated May 18, 1994).
10.17.* Agreement dated as of October 6, 1995 between the
Registrant and Harpo, Inc. (incorporated by reference
to Exhibit 10.3 to the Registrant's Quarterly Report on
Form 10-Q/A for the fiscal quarter ended February 29,
1996).
10.18. Stock Option Agreement dated as of January 28, 1991
between the registrant and Oprah Winfrey (incorporated
by reference to Exhibit 10.2 to the Registrant's Regis-
tration Statement No. 33-71696).
10.19. Stock Option Agreement dated as of January 28, 1991
between the registrant and Jeffrey D. Jacobs (incor-
porated by reference to Exhibit 10.3 to the
Registrant's Registration Statement No. 33-71696).
10.20. Form of Stock Option Agreement between the registrant
and Oprah Winfrey (incorporated by reference to Exhibit
10.19 to the Registrant's Annual report on Form 10-K
for the fiscal year ended August 31, 1995).
10.21. Form of Stock Option Agreement between the registrant
and Jeffrey D. Jacobs (incorporated by reference to
Exhibit 10.20 to the Registrant's Annual report on Form
10-K for the fiscal year ended August 31, 1995).
10.22.** Settlement Agreement, dated as of September 15, 1997,
by and among Califon Productions, Inc. on Jeopardy
Productions, Inc., Sony Pictures Entertainment Inc.,
The Game Show Network, L.P. and the Registrant.
10.23.* Letter Agreement, dated October 1, 1991, between Orion
Pictures Corporation and the Registrant, under which
Orion Picture Corporation transferred to the Registrant
trademark, copyright and other property rights as more
fully described therein to the television series enti-
tled "Hollywood Squares" with accompanying Security
Agreement and Assignment.
10.24** Agreement made and entered into on the 14th day of May,
1997, by and between K.W.M., Inc. and Full Moon & High
Tide Productions, Inc., providing the services of
Roseanne.
__________________________
* Certain information in this exhibit is deleted pursuant to an order of
the Securities and Exchange Commission granting confidential treatment.
** Certain information in this exhibit is deleted pursuant to a request
to the Securities and Exchange Commission for confidential treatment.
<PAGE>
<PAGE 57>
10.25.* Agreement dated as of June 2, 1988 between King World
F.S.C. Corporation and Unilever N.V. and amendment
thereto dated as of June 13, 1989 (incorporated by
reference to Exhibit 10.20 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended August
31, 1994).
10.26.* Amendment dated as of September 19, 1991 to the Agree-
ment dated as of June 2, 1988 between King World F.S.C.
Corporation and Unilever N.V.
10.27** Amendment dated June 13, 1994 to the Agreement dated
June 2, 1988, as amended as of June 13, 1989 and Sep-
tember 19, 1991, between King World F.S.C. Corporation
and Unilever N.V. (incorporated by reference to Exhibit
10.22 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 31, 1994).
10.28** Amendment dated as of July 11, 1995 to the Agreement
dated June 2, 1988, as amended as of June 13, 1989,
September 19, 1991 and as of June 13, 1994 between King
World F.S.C. Corporation and Unilever N.V. (incorporat-
ed by reference to Exhibit 10.24 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
August 31, 1995).
10.29* Amendment dated as of September 1, 1996 to the Agree-
ment dated June 2, 1988, as amended as of June 13,
1989, September 19, 1991, June 13, 1994 and July 11,
1995 between King World F.S.C. Corporation and Unilever
N.V. (incorporated by reference to Exhibit 10.28 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended August 31, 1996).
21.1. List of Subsidiaries of the Registrant.
23.1. Consent of Independent Public Accountants.
__________________________
* Certain information in this exhibit is deleted pursuant to an order of
the Securities and Exchange Commission granting confidential treatment.
** Certain information in this exhibit is deleted pursuant to a request
to the Securities and Exchange Commission for confidential treatment.
<PAGE>
<PAGE 58>
(b) Reports on Form 8-K filed during the last quarter of the
fiscal year ended August 31, 1997:
None.
For the purposes of complying with the amendments to the
rules governing Form S-8 under the Securities Act of 1933, as amended,
the undersigned registrant hereby undertakes as follows, which under-
taking shall be incorporated by reference into registrant's Registra-
tion Statement on Form S-8 No. 33-30695 (filed August 24, 1990):
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, offi-
cers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has
been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforce-
able. In the event that a claim for indemnification against
such liabilities (other than for the payment by the regis-
trant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection
with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemni-
fication by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such
issue.
<PAGE>
<PAGE 59>
SIGNATURES
__________
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 24, 1997 KING WORLD PRODUCTIONS, INC.
By /s/ Steven A. LoCascio
Steven A. LoCascio
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
_________ _____ ____
/s/ Michael King Vice Chairman and November 24, 1997
Michael King Chief Executive Officer
and Director (principal
executive officer)
/s/ Roger King Director November 18, 1997
Roger King
/s/ Diana King Director November 18, 1997
Diana King
/s/ Richard King Director November 18, 1997
Richard King
/s/ Ronald S. Konecky Director November 21, 1997
Ronald S. Konecky
/s/ James M. Rupp Director November 23, 1997
James M. Rupp
<PAGE>
<PAGE 60>
/s/ Joel Chaseman Director November 19, 1997
Joel Chaseman
/s/ Steven A. LoCascio Senior Vice President November 24, 1997
Steven A. LoCascio and Chief Financial
Officer (principal
financial and accounting
officer)
<PAGE>
<PAGE #>
EXHIBIT INDEX
_____________
Exhibit
No. Description Page
_______ ___________ ____
3.1. Registrant's Restated Certificate of Incorporation (in-
corporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement No. 2-93987).
3.2. Certificate of Amendment to the Registrant's Restated
Certificate of Incorporation (incorporated by reference
to Exhibit 3.3 to the Registrant's Registration State-
ment No. 33-8357).
3.3. Registrant's By-laws, as amended through June 25, 1997.
10.1. Agreement dated July 12, 1984 between Leo A. Gutman,
Inc. and the Registrant with exhibits (incorporated by
reference to Exhibit 10.3 to the Registrant's Registra-
tion Statement No. 2-93987).
10.2. Agreements dated August 6, 1970, July 31, 1970, and
May 29, 1969, between Hal Roach Studios, Inc. and the
Registrant, with amendment dated June 8, 1983 and
exhibits (incorporated by reference to Exhibit 10.5 to
the Registrant's Registration Statement No. 2-93987).
10.3.* Distribution Agreement dated December 15, 1982, between
Califon Productions, Inc. and the Registrant, with
amendment dated July 8, 1983 (incorporated by reference
to Exhibit 10.7 to the Registrant's Registration State-
ment No. 2-93987).
10.4.* Amendment, dated April 23, 1990, to the Distribution
Agreement dated December 15, 1982, between Califon Pro-
ductions, Inc. and the Registrant (incorporated by
reference to Exhibit 10.4 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended August
31, 1995).
10.5.* Distribution Agreement dated November 1, 1983, between
Califon Productions, Inc. and the Registrant, with
amendment dated March 26, 1984 (incorporated by refer-
ence to Exhibit 10.9 to the Registrant's Registration
Statement No. 2-93987).
___________________________
* Certain information in this exhibit is deleted pursuant to an order of
the Securities and Exchange Commission granting confidential treatment.
<PAGE>
<PAGE #>
Exhibit
No. Description Page
_______ ___________ ____
10.6. Employment Agreement, dated December 20, 1995, between
Mr. Roger King and the Registrant (incorporated by ref-
erence to Exhibit 10.1 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended Febru-
ary 29, 1996).
10.7. Employment Agreement, dated December 20, 1995, between
Mr. Michael King and the Registrant (incorporated by
reference to Exhibit 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended Febru-
ary 29, 1996).
10.8. Employment Agreement, date as of June 6, 1997 between
Jules Haimovitz and the Registrant (incorporated by
reference to Exhibit 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended May
31, 1997).
10.9. Employment Agreements between the Registrant and the
individuals named below:
Name of Employee
or Consultant Date of Agreement
________________ _________________
Steven Hirsch . . . . . September 3, 1996
Jonathan Birkhahn . . . September 1, 1996
Michael Spiessbach. . . September 3, 1996
Robert V. Madden. . . . September 3, 1996
(incorporated by reference to Exhibit 10.9
to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 31, 1996).
10.10. King World Productions, Inc. Retirement Savings Plan
dated September 17, 1992 (incorporated by reference to
Exhibit 10.7 to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1993).
10.11. 1996 Amended and Restated Stock Option and Restricted
Stock Purchase Plan of the Registrant.
<PAGE>
<PAGE #>
Exhibit
No. Description Page
_______ ___________ ____
10.12. Incentive Equity Compensation Plan for Senior Exec-
utives of the Registrant (incorporated by reference to
Exhibit 4.1 to the Registrant's Registration Statement
No. 33-30695).
10.13. Form of Indemnification Agreement between the Regis-
trant and the Registrant's directors (incorporated by
reference to Exhibit 10.15 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
August 31, 1992).
10.14.* Agreement dated January 30, 1987 between the Registrant
and Harpo, Inc. and amendment thereto dated July 29,
1988 (incorporated by reference to Exhibit 10.12 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended August 31, 1993).
10.15.* Amendment dated as of October 15, 1989 to the Agreement
dated January 30, 1987 between the Registrant and
Harpo, Inc. (incorporated by reference to Exhibit 10.13
to the Registrant's Annual report on Form 10-K for the
fiscal year ended August 31, 1995).
10.16.* Agreement dated as of March 17, 1994 between the Regis-
trant and Harpo, Inc. (incorporated by reference to 8-
K/A dated May 18, 1994).
10.17.* Agreement dated as of October 6, 1995 between the
Registrant and Harpo, Inc. (incorporated by reference
to Exhibit 10.3 to the Registrant's Quarterly Report on
Form 10-Q/A for the fiscal quarter ended February 29,
1996).
10.18. Stock Option Agreement dated as of January 28, 1991
between the registrant and Oprah Winfrey (incorporated
by reference to Exhibit 10.2 to the Registrant's Regis-
tration Statement No. 33-71696).
10.19. Stock Option Agreement dated as of January 28, 1991
between the registrant and Jeffrey D. Jacobs (incor-
porated by reference to Exhibit 10.3 to the
Registrant's Registration Statement No. 33-71696).
___________________________
* Certain information in this exhibit is deleted pursuant to an order of
the Securities and Exchange Commission granting confidential treatment.
<PAGE>
<PAGE #>
Exhibit
No. Description Page
_______ ___________ ____
10.20. Form of Stock Option Agreement between the registrant
and Oprah Winfrey (incorporated by reference to Exhibit
10.19 to the Registrant's Annual report on Form 10-K
for the fiscal year ended August 31, 1995).
10.21. Form of Stock Option Agreement between the registrant
and Jeffrey D. Jacobs (incorporated by reference to
Exhibit 10.20 to the Registrant's Annual report on Form
10-K for the fiscal year ended August 31, 1995).
10.22.** Settlement Agreement, dated as of September 15, 1997,
by and among Califon Productions, Inc. on Jeopardy
Productions, Inc., Sony Pictures Entertainment Inc.,
The Game Show Network, L.P. and the Registrant.
10.23** Letter Agreement, dated October 1, 1991, between Orion
Pictures Corporation and the Registrant, under which
Orion Picture Corporation transferred to the Registrant
trademark, copyright and other property rights as more
fully described therein to the television series enti-
tled "Hollywood Squares" with accompanying Security
Agreement and Assignment.
10.24** Agreement made and entered into on the 14th day of May,
1997, by and between K.W.M., Inc. and Full Moon & High
Tide Productions, Inc., providing the services of
Roseanne.
10.25.* Agreement dated as of June 2, 1988 between King World
F.S.C. Corporation and Unilever N.V. and amendment
thereto dated as of June 13, 1989 (incorporated by
reference to Exhibit 10.20 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended August
31, 1994).
___________________________
* Certain information in this exhibit is deleted pursuant to an order of
the Securities and Exchange Commission granting confidential treatment.
** Certain information in this exhibit is deleted pursuant to a request
to the Securities and Exchange Commission for confidential treatment.
<PAGE>
<PAGE #>
Exhibit
No. Description Page
_______ ___________ ____
10.26.* Amendment dated as of September 19, 1991 to the Agree-
ment dated as of June 2, 1988 between King World F.S.C.
Corporation and Unilever N.V.
10.27* Amendment dated June 13, 1994 to the Agreement dated
June 2, 1988, as amended as of June 13, 1989 and Sep-
tember 19, 1991, between King World F.S.C. Corporation
and Unilever N.V. (incorporated by reference to Exhibit
10.22 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 31, 1994).
10.28* Amendment dated as of July 11, 1995 to the Agreement
dated June 2, 1988, as amended as of June 13, 1989,
September 19, 1991 and as of June 13, 1994 between King
World F.S.C. Corporation and Unilever N.V. (incorporat-
ed by reference to Exhibit 10.24 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
August 31, 1995).
10.29* Amendment dated as of September 1, 1996 to the Agree-
ment dated June 2, 1988, as amended as of June 13,
1989, September 19, 1991, June 13, 1994 and July 11,
1995 between King World F.S.C. Corporation and Unilever
N.V. (incorporated by reference to Exhibit 10.28 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended August 31, 1996).
21.1. List of Subsidiaries of the Registrant.
23.1. Consent of Independent Public Accountants.
___________________________
* Certain information in this exhibit is deleted pursuant to an order of
the Securities and Exchange Commission granting confidential treatment.
<Page 1> Exhibit 3.3
BY-LAWS
OF
KING WORLD PRODUCTIONS, INC.
(Amended and Restated as of June 25, 1997)
ARTICLE I
Stockholders
Section 1.1 ANNUAL MEETINGS. (a) An annual meeting of stock-
holders shall be held for the election of directors at such date, time and
place either within or without the State of Delaware as may be designated
by the Board of Directors from time to time. At any such annual meeting
any business properly brought before the meeting may be transacted.
(b) To be properly brought before an annual meeting, business
must be (i) specified in the notice of the meeting (or any supplement
thereto) given by or at the direction of the chairman of the meeting or the
Board of Directors, (ii) otherwise properly brought before the meeting by
or at the direction of the chairman of the meeting or the Board of Direc-
tors or (iii) otherwise properly brought before the meeting by a stockhold-
er. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given written notice thereof, either
by personal delivery or by United States mail, postage prepaid, to the
Secretary of the Corporation, not more than 120 days or less than 90 days
in advance of the anniversary date of the immediately preceding annual
meeting. Any such notice shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (i) a brief description of the
business desired to be brought before the meeting and the reasons for
conducting such business at the meeting and in the event that such business
includes a proposal to amend either the Certificate of incorporation or By-
laws of the Corporation, the language of the proposed amendment, (ii) the
name and address of the stockholder proposing such business, (iii) a
representation that the stockholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to propose such business, (iv) any
material interest of the stockholder in such business and (v) if the stock-
holder intends to solicit proxies in support of such stockholder's propos-
al, a representation to that effect. No business shall be conducted at an
annual meeting of stockholders except in accordance with this Section
1.1(b), and chairman of the meeting may refuse to permit any business to be
brought before an annual meeting without compliance with the foregoing
procedures or if the stockholder solicits proxies in support of such
stockholder's proposal without such stockholder having made the representa-
tion required by clause (v) of the preceding sentence."
<Page 2>
Section 1.2 SPECIAL MEETINGS. Except as otherwise required by law
and subject to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquida-
tion, special meetings of the stockholders for any purpose or purposes may
be called only by the Chairman of the Board, the President, or a majority
of the entire Board of Directors. Only such business as is specified in
the notice of any special meeting of the stockholders shall come before
such meeting.
Section 1.3 NOTICE OF MEETINGS. Whenever stockholders are
required or permitted to take any action at a meeting, a written notice of
the meeting shall be given which shall state the place, date and hour of
the meeting, and, in the case of a special meeting, the purpose or purposes
for which the meeting is called. Unless otherwise provided by law, the
written notice of any meeting shall be given not less than ten nor more
than sixty days before the date of the meeting to each stockholder entitled
to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed
to the stockholder at such stockholder's address as it appears on the
records of the Corporation.
Section 1.4 ADJOURNMENTS. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some
other place, and notice need not be given of any such adjourned meeting if
the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the Corporation may
transact any business which
might have been transacted at the original meeting. If the adjournment is
for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 1.5 QUORUM. At each meeting of stockholders, except where
otherwise provided by law or the certificate of incorporation or these By-
laws, the holders of a majority of the outstanding shares of each class of
stock entitled to vote at the meeting, present in person or represented by
proxy, shall constitute a quorum. For purposes of the foregoing, two or
more classes or series of stock shall be considered a single class if the
holders thereof are entitled to vote together as a single class at the
meeting. In the absence of a quorum the stockholders so present may, by
majority vote, adjourn the meeting from time to time in the manner provided
by Section 1.4 of these By-laws until a quorum shall attend. Shares of its
own capital stock belonging on the record date for the meeting to the
Corporation or to another corporation, if a majority of the shares entitled
to vote in the election of directors of such other corporation is held,
directly or indirectly, by the Corporation, shall neither be entitled to
vote nor be counted for quorum purposes; provided, however, that the
foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary
capacity.
<Page 3>
Section 1.6 ORGANIZATION. Meetings of stockholders shall be
presided over by the Chairman of the Board, if any, or in the absence of
the Chairman of the Board by the Vice Chairman of the Board, if any, or in
the absence of the Vice Chairman of the Board by the President, or in the
absence of the President by a Vice President, or in the absence of the
foregoing persons by a chairman designated by the Board of Directors, or in
the absence of such designation by a chairman chosen at the meeting. The
Secretary, or in the absence of the Secretary an Assistant Secretary, shall
act as secretary of the meeting, but in the absence of the Secretary and
any Assistant Secretary the chairman of the meeting may appoint any person
to act as secretary of the meeting.
Section 1.7 VOTING; PROXIES. Unless otherwise provided in the
Certificate of Incorporation, each stockholder entitled to vote at any
meeting of stockholders shall be entitled to one vote for each share of
stock held by such stockholder which has voting power upon the matter in
question. Each stockholder entitled to vote at a meeting of stockholders
may authorize another person or persons to act for such stockholder by
proxy, but no such proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and
if, and only as long as, it is coupled with an interest sufficient in law
to support an irrevocable power. A stockholder may revoke any proxy which
is not irrevocable by attending the meeting and voting in person or by
filing an instrument in writing revoking the proxy or another duly executed
proxy bearing a later date with the Secretary of the Corporation. Unless
required by law or determined by the chairman of the meeting to be advis-
able, the vote on any matter, including the election of directors, need not
be by written ballot. In the case of a vote by written ballot, each ballot
shall be signed by the stockholder voting, or by such stockholder's proxy,
and shall state the number of shares voted. Either the Board of Directors
or, in the absence of a designation of inspectors by the Board, the
chairman of any meeting of stockholders may, in its or such person's
discretion, appoint two or more inspectors to act at any meeting of
stockholders. Such inspectors shall perform such duties as shall be
specified by the Board or the chairman of the meeting. Inspectors need not
be stockholders. No director or nominee for the office of director shall be
appointed such inspector. At all meetings of stockholders for the election
of directors a plurality of the votes cast shall be sufficient to elect.
With respect to other matters, unless otherwise provided by law or by the
Certificate of Incorporation or these By-laws, the affirmative vote of the
holders of a majority of the shares of all classes of stock present in
person or represented by proxy at the meeting and entitled to vote on the
subject matter shall be the act of the stockholders. Where a separate vote
by class is required, the affirmative vote of the holders of a majority of
the shares of each class present in person or represented by proxy at the
meeting shall be the act of such class, except as otherwise provided by law
or by the Certificate of Incorporation or these By-laws.
Section 1.8 ACTION BY WRITTEN CONSENT. (a) Unless otherwise
provided in the Certificate of Incorporation, any action required to be
<Page 4>
taken at any annual or special meeting of stockholders of the Corporation,
or any action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and
without a vote if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing.
(b) Consents to corporate action shall be valid for a maximum of
60 days after the date of the earliest dated consent delivered to the
Corporation in the manner provided in Section 228(c) of the Delaware
General Corporation Law. Consents may be revoked by written notice (i) to
the Corporation, (ii) to the stockholder or stockholder soliciting consents
or soliciting revocations in opposition to action by consent (the "Solicit-
ing Stockholders"), or (iii) to a proxy solicitor or other agent designated
by the Corporation or the Soliciting Stockholders.
(c) Within ten business days after receipt of the earliest dated
consent delivered to the Corporation in the manner provided in Section
228(c) of the Delaware General Corporation Law or the determination by the
Board of Directors of the Corporation that the Corporation should seek
corporate action by written consent, as the case may be, the Secretary of
the Corporation shall engage nationally recognized independent inspectors
of elections for the purpose of performing a ministerial review of the
validity of the consents and revocations. The cost of retaining inspectors
of elections shall be borne by the Corporation.
(d) Following appointment of the inspectors, consents and
revocations shall be delivered to the inspectors upon receipt by the
Corporation, the Soliciting Stockholder or their proxy solicitors or other
designated agents. As soon as practicable following the earlier of (i) the
receipt by the inspectors, a copy of which shall be delivered to the
Corporation, of any written demand by the Soliciting Stockholders, or (ii)
60 days after the date of the earliest dated consent delivered to the
Corporation in the manner provided in Section 228(c) of the Delaware
General Corporation Law, the inspectors shall issue a preliminary report to
the Corporation and the Soliciting Stockholders stating the number of valid
and unrevoked consents and whether, based on their preliminary count, the
requisite number of valid and unrevoked consents has been obtained to
authorize or take the action specified in the consents.
(e) Unless the Corporation and the Soliciting Stockholders shall
agree to a shorter or longer period, the Corporation and the Soliciting
Stockholders shall have 48 hours to review the consents and revocations and
to advise the inspectors and the opposing party in writing as to whether
they intend to challenge the preliminary report of the inspectors. If no
written notice of an intention to challenge the preliminary report is
<PAGE>5
received within 48 hours after the inspectors' issuance of the preliminary
report, the inspectors shall issue to the Corporation and the Soliciting
Stockholders their final report containing the information from the
inspectors' determination with respect to whether the requisite number of
valid and unrevoked consents was obtained to authorize and take the action
specified in the consents. If the Corporation or the Soliciting Stockhold-
ers issue written notice of an intention to challenge the inspectors'
preliminary report within 48 hours after the issuance of that report, a
challenge session shall be scheduled by the inspectors as promptly as
practicable. Following completion of the challenge session, the inspectors
shall as promptly as practicable issue their final report to the Soliciting
Stockholders and the Corporation, which report shall contain the informa-
tion included in the preliminary report, plus any change in the vote total
as a result of the challenge and a certification of whether the requisite
number of valid and unrevoked consents was obtained to authorize or take
the action specified in the consents.
Section 1.9 FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF
RECORD. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than
ten days before the date of such meeting, nor more than sixty days prior to
any other action. If no record date is fixed, (1) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding
the day on which notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held,
and (2) the record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board adopts the
resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board may
fix a new record date for the adjourned meeting.
Notwithstanding any inconsistent provision which may be contained
in these By-Laws, in order that the Corporation may determine the stock-
holders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date
shall not precede the date on which the resolution fixing the record date
is adopted by the Board of Directors, and which date shall not be more than
ten days after the date upon which the resolution fixing the record date is
adopted by the Board of Directors. Any stockholder of record seeking to
have the stockholders authorize or take corporate action by written consent
shall, by written notice to the Secretary of the Corporation, request the
Board of Directors to fix a record date. The Board of Directors shall
thereafter promptly, but in all events within ten days after the date on
which such a request is received, adopt a resolution fixing the record
date. If no record date has been fixed by the Board of Directors within
ten days of the date upon which such a request is received, the record date
for determining stockholders entitled to consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors
is required by applicable law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the
State of Delaware, its principal place of business, or any officer or agent
of the Corporation having custody of the book in which proceedings of
<Page 6>
stockholders' meetings are recorded, to the attention of the Secretary of
the Corporation. Delivery shall be by hand or by certified a or registered
mail, return receipt requested. If no record date has been fixed by the
Board of Directors and prior action by the Board of Directors is required
by applicable law, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the
close of business on the date on which the Board of Directors adopts the
resolution taking such prior action."
Section 1.10 LIST OF STOCKHOLDERS ENTITLED TO VOTE. The Secre-
tary shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockhold-
er, for any purpose germane to the meeting, during ordinary business hours,
for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof and
may be inspected by any stockholder who is present.
ARTICLE II
Board of Directors
Section 2.1 GENERAL POWERS. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors, which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by law or by the certificate of
incorporation of the corporation directed or required to be exercised or
done by the stockholders.
Section 2.2 NUMBER, QUALIFICATION AND ELECTION. Except as
otherwise fixed by or pursuant to the provisions of Article IV of the
Certificate of Incorporation of the Corporation relating to the rights of
the holders of any class or series of stock having preference over the
Common Stock as to dividends or upon liquidation, the number of the
directors of the Corporation shall be seven (7), but, by vote of a majority
of the entire Board of Directors, the number thereof may be increased
without limit, or decreased to not less than three (3), by amendment to
this Section 2.2.
The directors, other than those who may be elected by the holders
of shares of any class or series of stock having a preference over the
Common Stock of the Corporation as to dividends or upon liquidation
<Page 7>
pursuant to the terms of Article IV of the Certificate of Incorporation or
any resolution or resolutions providing for the issuance of such stock
adopted by the Board, shall be classified, with respect to the time for
which they severally hold office, into three classes as follows: one class
of two (2) directors shall be originally elected for a term expiring at the
annual meeting of stockholders to be held in 1986, another class of two (2)
directors shall be originally elected for a term expiring at the annual
meeting of stockholders to be held in 1987 and another class of three (3)
directors shall be originally elected for a term expiring at the annual
meeting of stockholders to be held in 1988, with each class to hold office
until its successors are elected and qualified. At each annual meeting of
the stockholders of the Corporation, the successors of the class of
directors whose term expires at that meeting shall be elected to hold
office for a term expiring at the annual meeting of stockholders held in
the third year following the year of their election.
Each director shall be a least 21 years of age. Directors need
not be stockholders of the Corporation.
Subject to the rights of the holders of any class or series of
stock having a preference over the Common Stock of the Corporation as to
dividends or upon liquidation, at each annual meeting of the stockholders
there shall be elected the directors of the class the term of office of
which shall then expire.
Section 2.3 NOTIFICATION OF NOMINATIONS. Subject to the rights
of the holders of any class or series of stock having a preference over the
Common Stock as to dividends or upon liquidation, nominations for the
election of directors may be made by the Board of Directors or by any
stockholder entitled to vote for the election of directors. Any stockhold-
er entitled to vote for the election of directors at a meeting may nominate
persons for election as directors only if written notice of such
stockholders' intent to make such nomination is given, either by personal
delivery or by United States mail, Postage prepaid, to the Secretary of the
Corporation not later than (i) with respect to an election to be held at an
annual meeting of stockholders, not more than 120 days or less than 90 days
in advance of the anniversary date of the immediately preceding annual
meeting, and (ii) with respect to an election to be held at a special
meeting of stockholders for the election of directors, the close of
business an the seventh day following the date on which notice of such
meeting is first given to stockholders. Each such notice shall set forth
(a) the name and address of the stockholder who intends to make the
nomination and of the person or, persons to be nominated, (b) a representa-
tion that the stockholder is a holder of record of stock of the Corporation
entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the
notice, (c) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to
be made by the stockholder, (d) such other information regarding each
<Page 8>
nominee proposed by such stockholder as would have been required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had each nominee be nominated, or
intended to be nominated, by the Board of Directors; (e) the consent of
each nominee to serve as a director of the corporation if so elected and
(f) if the stockholder intends to solicit proxies in support of such
stockholder's nominee(s), a representation to that effect. The chairman of
the meeting may refuse to acknowledge the nomination of any person which
was not made in accordance with the foregoing procedure or if the stock-
holder solicits proxies in support of such stockholder's nominee(s) without
such stockholder having made the representation required by clause (f) of
the preceding sentence.
Section 2.4 REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such places within or without the State of
Delaware and at such times as the Board may from time to time determine,
and if so determined notice thereof need not be given.
Section 2.5 SPECIAL MEETINGS. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, if any, by the Vice
Chairman of the Board, if any, by the President or by a majority of the
members of the Board. Reasonable notice thereof shall be given by the
person or persons calling the meeting.
Section 2.6 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE
PERMITTED. Unless otherwise restricted by the Certificate of Incorporation
or these By-laws, members of the Board of Directors, or any committee
designated by the Board, may participate in a meeting of the Board or of
such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participat-
ing in the meeting can hear each other, and participation in a meeting
pursuant to this By-law shall constitute presence in person at such
meeting.
Section 2.7 QUORUM; VOTE REQUIRED FOR ACTION. Except as other-
wise provided by law, the Certificate of Incorporation or these By-laws, at
any meeting of the Board of Directors a majority of the entire Board shall
constitute a quorum for the transaction of business and, except as so
provided, the vote of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board. In case at any
meeting of the Board a quorum shall not be present, the members of the
Board present may adjourn the meeting from time to time until a quorum
shall attend. At any adjourned meeting at which a quorum is present, any
business may be transacted which might have been transacted at the meeting
originally called.
Section 2.8 ORGANIZATION. Meetings of the Board of Directors
shall be presided over by the Chairman of the Board, if any, or in the
absence of the Chairman of the Board by the Vice Chairman of the Board, if
any, or in the absence of the Vice Chairman of the Board by the President,
<Page 9>
or in their absence by a chairman chosen at the meeting. The Secretary, or
in the absence of the Secretary an Assistant Secretary, shall act as
secretary of the meeting, but in the absence of the Secretary and any
Assistant Secretary the chairman of the meeting may appoint any person to
act as secretary of the meeting.
Section 2.9 ACTION BY DIRECTORS WITHOUT A MEETING. Any action
required or permitted to be taken at any meeting of the Board of Directors,
or of any committee thereof, may be taken without a meeting if all members
of the Board or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceed-
ings of the Board or committee.
Section 2.10 RESIGNATIONS. Any director of the Company may at
any time resign by giving written notice to the Board of Directors, the
Chairman of the Board, the President or the Secretary of the Corporation.
Such resignation shall take effect at the time specified therein or, if the
time be not specified, upon receipt thereof; and, unless otherwise speci-
fied therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 2.11 VACANCIES. Subject to the rights of the holders of
any class or series of stock having a preference over the Common Stock of
the Corporation as to dividends or upon liquidation, any vacancies on the
Board of Directors resulting from death, resignation, removal or other
cause shall only be filled by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the
Board of Directors, or by a sole remaining director, and newly created
directorships resulting from any increase in the number of directors shall
be filled by the Board, or if not so filled, by the stockholders at the
next annual meeting thereof or at a special meeting called for that purpose
in accordance with 1.2 of these By-laws. Any director elected in accor-
dance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall
have been elected and qualified.
Section 2.12 COMPENSATION OF DIRECTORS. The Board of Directors
shall have the authority to fix the compensation of directors.
ARTICLE III
Committees
Section 3.1 COMMITTEES. The Board of Directors may, by resolu-
tion passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors of
the Corporation. The Board may designate one or more directors as alter-
nate members of any Committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification
of a member of a committee, the member or members thereof present at any
<Page 10>
meeting and not disqualified from voting, whether or not such member or
members constitute a quorum, may unanimously appoint another member of the
Board to act at the meeting in place of any such absent or disqualified
member. Any such committee, to the extent
provided in the resolution of the Board, shall have and may exercise all
the powers and authority of the Board in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation
to be affixed to all papers which may require it; but no such committee
shall have power or authority in reference to amending the certificate of
incorporation, adopting an agreement of merger or consolidation, recom-
mending to the stockholders the sale, lease or exchange of all or substan-
tially all the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of dissolu-
tion, removing or indemnifying directors or amending these By-laws; and,
unless the resolution expressly so provides, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance
of stock. The Board shall have power at any time to change the membership
of any committee, to fill all vacancies in it and to discharge it, either
with or without cause.
Section 3.2 COMMITTEE RULES. Unless the Board of Directors
otherwise provides, each committee designated by the Board may adopt, amend
and repeal rules for the conduct of its business. In the absence of a
provision by the Board or a provision in the rules of such committee to the
contrary, a majority of the entire authorized number of members of such
committee shall constitute a quorum for the transaction of business, the
vote of a majority of the members present at a meeting at the time of such
vote if a quorum is then present shall be the act of such committee, and in
other respects each committee shall conduct its business in the same manner
as the Board conducts its business pursuant to Article II of these By-laws.
ARTICLE IV
Officers
Section 4.1 OFFICERS; ELECTION. As soon as practicable after the
annual meeting of stockholders in each year, the Board of Directors shall
elect a President and a Secretary, and it may, if it so determines, elect
from among its members a Chairman of the Board and a Vice Chairman of the
Board. The Board may also elect one or more Vice Presidents, one or more
Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer
and one or more Assistant Treasurers and such other officers as the Board
may deem desirable or appropriate and may give any of them such further
designations or alternate titles as it considers desirable. Any number of
offices may be held by the same person.
Section 4.2 TERM OF OFFICE; RESIGNATION; REMOVAL; VACANCIES.
Except as otherwise provided in the resolution of the Board of Directors
electing any officer, each officer shall hold office until the first
meeting of the Board after the annual meeting of stockholders next succeed-
ing his or her election and until his or her successor is elected and
<Page 11>
qualified or until his or her earlier resignation or removal. Any officer
may resign at any time upon written notice to the Board or to the President
or the Secretary of the Corporation. Such resignation shall take effect at
the time specified therein, and unless otherwise specified therein no
acceptance of such resignation shall be necessary to make it effective.
The Board may remove any officer with or without cause at any time. Any
such removal shall be without prejudice to the contractual rights of such
officer, if any, with the Corporation, but the election of an officer shall
not of itself create contractual rights. Any vacancy occurring in any
office of the Corporation by death, resignation, removal or otherwise may
be filled for the unexpired portion of the term by the Board at any regular
or special meeting.
Section 4.3 CHAIRMAN OF THE BOARD. The Chairman of the Board, if
any, shall preside at all meetings of the Board of Directors and of the
stockholders at which he or she shall be present and shall have and may
exercise such powers as may, from time to time, be assigned to him or her
by the Board and as may be provided by law.
Section 4.4 VICE CHAIRMAN OF THE BOARD. In the absence of the
Chairman of the Board, the Vice Chairman of the Board, if any, shall
preside at all meetings of the Board of Directors and of the stockholders
at which he or she shall be present and shall have and may exercise such
powers as may, from time to time, be assigned to him or her by the Board
and as may be provided by law.
Section 4.5 PRESIDENT. In the absence of the Chairman of the
Board and Vice Chairman of the Board, the President shall preside at all
meetings of the Board of Directors and of the stockholders at which he or
she shall be present. The President shall be the chief executive officer
and shall have general charge and supervision of the business of the
Corporation and, in general, shall perform all duties incident to the
office of president of a corporation and such other duties as may, from
time to time, be assigned to him or her by the Board or as may be provided
by law.
Section 4.6 VICE PRESIDENTS. The Vice President or Vice Presi-
dents, at the request or in the absence of the President or during the
President's inability to act, shall perform the duties of the President,
and when so acting shall have the powers of the President. If there be
more than one Vice President, the Board of Directors may determine which
one or more of the Vice Presidents shall perform any of such duties; or if
such determination is not made by the Board, the President may make such
determination; otherwise any of the Vice Presidents may perform any of such
duties. The Vice President or Vice Presidents shall have such other powers
and shall perform such other duties as may, from time to time, be assigned
to him or her or them by the Board or the President or as may be provided
by law.
Section 4.7 SECRETARY. The Secretary shall have the duty to
record the proceedings of the meetings of the stockholders, the Board of
<Page 12>
Directors and any committees in a book to be kept for that purpose, shall
see that all notices are duly given in accordance with the provisions of
these By-laws or as required by law, shall be custodian of the records of
the Corporation, may affix the corporate seal to any document the execution
of which, on behalf of the Corporation, is duly authorized, and when so
affixed may attest the same, and, in general, shall perform all duties
incident to the office of secretary of a corporation and such other duties
as may, from time to time, be assigned to him
or her by the Board or the President or as may be provided by law.
Section 4.8 TREASURER. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust
companies or other depositories as shall, from time to time, be selected by
or under authority of the Board of Directors. If required by the Board,
the Treasurer shall give a bond for the faithful discharge of his or her
duties, with such surety or sureties as the Board may determine. The
Treasurer shall keep or cause to be kept full and accurate records of all
receipts and disbursements in books of the Corporation, shall render to the
President and to the Board, whenever requested, an account of the financial
condition of the Corporation, and, in general, shall perform all the duties
incident to the office of treasurer of a corporation and such other duties
as may, from time to time, be assigned to him or her by the Board or the
President or as may be provided by law.
Section 4.9 OTHER OFFICERS. The other officers, if any, of the
Corporation shall have such powers and duties in the management of the
Corporation as shall be stated in a resolution of the Board of Directors
which is not inconsistent with these By-laws and, to the extent not so
stated, as generally pertain to their respective offices, subject to the
control of the Board. The Board may require any officer, agent or employee
to give security for the faithful performance of his or her duties.
ARTICLE V
Stock
Section 5.1 CERTIFICATES. Every holder of stock in the Corpora-
tion shall be entitled to have a certificate signed by or in the name of
the Corporation by the Chairman or Vice Chairman of the Board of Directors,
if any, or the President or a Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary, of the
Corporation, certifying the number of shares owned by such holder in the
Corporation. Any of the signatures on the certificate may be a facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to
be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of issue.
<Page 13>
Section 5.2 LOST, STOLEN OR DESTROYED STOCK CERTIFICATES;
ISSUANCE OF NEW CERTIFICATES. The Corporation may issue a new certificate
of stock in the place of any certificate theretofore issued by it, alleged
to have been lost, stolen or destroyed, and the Corporation may require the
owner of the lost, stolen or destroyed certificate, or such owner's legal
representative, to give the Corporation a bond in such sum and with such
surety or sureties as the Corporation may direct sufficient to indemnify
the Corporation and its transfer agents or registrars against any claim
that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certifi-
cate.
Section 5.3 TRANSFER OF SHARES. Transfers of shares of stock of
each class of the Corporation shall be made only on the books of the
Corporation by the holder thereof, or by such holder's attorney thereunto
authorized by a power of attorney duly executed and filed with the Secre-
tary of the Corporation or a transfer agent for such stock, if any, and on
surrender of the certificate or certificates for such shares properly
endorsed or accompanied by a duly executed stock transfer power and the
payment of all taxes thereon. The person in whose name shares stand on the
books of the Corporation shall be deemed the owner thereof for all purposes
as regards the Corporation; provided, however, that whenever any transfer
of shares shall be made for collateral security and not absolutely, and
written notice thereof shall be given to the Secretary or to such transfer
agent, such fact shall be stated in the entry of the transfer. No transfer
of shares shall be valid as against the Corporation, its stockholders and
creditors for any purpose, except to render the transferee liable for the
debts of the Corporation to the extent provided by law, until it shall have
been entered in the stock records of the Corporation by an entry showing
from and to whom transferred.
ARTICLE VI
Miscellaneous
Section 6.1 FISCAL YEAR. The fiscal year of the Corporation
shall be determined by the Board of Directors.
Section 6.2 SEAL. The Corporation may have a corporate seal
which shall have the name of the Corporation inscribed thereon and shall be
in such form as may be approved from time to time by the Board of Direc-
tors. The corporate seal may be used by causing it or a facsimile thereof
to be impressed or affixed or in any other manner reproduced.
Section 6.3 WAIVER OF NOTICE OF MEETINGS OF STOCKHOLDERS,
DIRECTORS AND COMMITTEES. Whenever notice is required to be given by law
or under any provision of the certificate of incorporation or these By-
laws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent
to notice. Attendance of a person at a meeting shall constitute a waiver
<Page 14>
of notice of such meeting, except when the person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the stockholders, directors, or members
of a committee of directors need be specified in any written waiver of
notice unless so required by the certificate of incorporation or these By-
laws.
Section 6.4 INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES.
The Corporation shall indemnify to the full extent authorized by law any
person made or threatened to be made a party to any action, suit or
proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that such person or such person's testator or intestate
is or was a director, officer or employee of the Corporation or serves or
served at the request of the Corporation any other enterprise as a direc-
tor, officer or employee. For purposes of this By-law, the term "Corpora-
tion" shall include any predecessor of the Corporation and any constituent
corporation (including any constituent of a constituent) absorbed by the
Corporation in a consolidation or merger; the term "other enterprise" shall
include any corporation, partnership, joint venture, trust or employee
benefit plan; service "at the request of the Corporation" shall include
service as a director, officer or employee of the Corporation which imposes
duties on, or involves services by, such director, officer or employee with
respect to an employee benefit plan, its participants or beneficiaries; any
excise taxes assessed on a person with respect to an employee benefit plan
shall be deemed to be indemnifiable expenses; and action by a person with
respect to an employee benefit plan which such person reasonably believes
to be in the interest of the participants and beneficiaries of such plan
shall be deemed to be action not opposed to the best interests of the
Corporation.
Section 6.5 INTERESTED DIRECTORS; QUORUM. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partner-
ship, association or other organization in which one or more of its
directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the
meeting of the Board of Directors or committee thereof which authorizes the
contract or transaction, or solely because his or her or their votes are
counted for such purpose, if: (1) the material facts as to his or her
relationship or interest and as to the contract or transaction are dis-
closed or are known to the Board or the committee, and the Board or commit-
tee in good faith authorizes the contract or transaction by the affirmative
votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (2) the material facts as
to his or her relationship or interest and as to the contract or transac-
tion are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good
faith by vote of the stockholders; or (3) the contract or transaction is
<Page 15>
fair as to the Corporation as of the time it is authorized, approved or
ratified, by the Board, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum
at a meeting of the Board or of a committee which authorizes the contract
or transaction.
Section 6.6 FORM OF RECORDS. Any records maintained by the
Corporation in the regular course of its business, including its stock
ledger, books of account and minute books, may be kept on, or be in the
form of, punch cards, magnetic tape, photographs, microphotographs or any
other information storage device, provided that the records so kept can be
converted into clearly legible form within a reasonable time. The Corpora-
tion shall so convert any records so kept upon the request of any person
entitled to inspect the same.
Section 6.7 AMENDMENT OF BY-LAWS. These By-laws may be amended
or repealed, and new By-laws adopted, by the Board of Directors at any
meeting thereof, provided that such proposed action in respect thereof
shall be stated in the notice of such meeting. The stockholders entitled to
vote shall have the power to adopt additional By-laws and may amend or
repeal any By-law, whether or not adopted by them, only to the extent and
in the manner provided in the Certificate of Incorporation.
<PAGE #> Exhibit 10.11
KING WORLD PRODUCTIONS, INC.
1996 AMENDED AND RESTATED STOCK OPTION
AND RESTRICTED STOCK PURCHASE PLAN
SECTION 1. PURPOSE. The purpose of the King World Productions,
Inc. 1996 Amended and Restated Stock Option and Restricted Stock Purchase
Plan (the "Plan") is to promote the interests of King World Productions,
Inc., a Delaware corporation (the "Company"), and any Subsidiary thereof,
and its stockholders, by providing an opportunity to selected employees,
officers and directors of the Company or any Subsidiary thereof as of the
date of the adoption of this Plan or at any time thereafter to purchase
Common Stock of the Company. By encouraging such stock ownership, the
Company seeks to attract, retain and motivate such employees and persons
and to encourage such employees and persons to devote their best efforts to
the business and financial success of the Company. It is intended that
this purpose will be effected by the granting of "non-qualified stock
options" and/or "incentive stock options" to acquire the common stock of
the Company and/or by the granting of rights to purchase the common stock
of the Company on a "restricted stock" basis. Under the Plan, the Board of
Directors (or the Committee) shall have the authority (in its sole discre-
tion) to grant "incentive stock options" within the meaning of Section
422(b) of the Code, "nonqualified stock options" as described in Treasury
Regulation Section 1.83-7 or any successor regulation thereto, or "re-
stricted stock" awards. The Plan amends and restates the Company's 1989
Amended and Restated Stock Option and Restricted Stock Purchase Plan (the
"1989 Stock Plan"), adopted by the Company on May 4, 1989, as amended and
restated by the Company on January 24, 1994 and January 19, 1996. The 1989
Stock Plan amended and restated, and incorporated into one document, the
Incentive Stock Option Plan and the Non-Qualified Stock Option Plan, both
adopted by the Company on October 24, 1984 (collectively, the "1985 Stock
Plans").
SECTION 2. DEFINITIONS. For purposes of this Plan, the following
terms used herein shall have the following meanings, unless a different
meaning is clearly required by the context.
"AWARD" shall mean an award of the right to purchase Common Stock
granted under the provisions of Section 7 of the Plan.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
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"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean the committee of the Board of Directors
referred to in Section 5 hereof.
"COMMON STOCK" shall mean the Common Stock, $.01 par value, of the
Company.
"EMPLOYEE" shall mean (i) with respect to an ISO, any person
including an officer or director of the Company, who, at the time an ISO is
granted to such person hereunder, is employed on a full-time basis by the
Company or any Subsidiary of the Company, and (ii) with respect to a
Non-Qualified Option and/or an Award, any person employed by, or performing
services for, the Company or any Subsidiary of the Company, including,
without limitation, directors and officers.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"ISO" shall mean an Option granted under the Plan which consti-
tutes and shall be treated as an "incentive stock option" as defined in
Section 422(b) of the Code.
"NON-EMPLOYEE DIRECTOR" shall mean any director who is not an
employee of the Company or any of its subsidiaries, including any
"non-employee director" within the meaning of Rule 16b-3 of the Exchange
Act.
"NON-QUALIFIED OPTION" shall mean an Option granted to a Partici-
pant pursuant to the Plan which is intended to be, and qualifies as, a
"non-qualified stock option" as described in Treasury Regulation Section
1.83-7 and which shall not constitute or be treated as an ISO.
"OPTION" shall mean any ISO or Non-Qualified Option granted to a
Participant pursuant to this Plan.
"PARTICIPANT" shall mean any Employee (including a Non-Employee
Director) to whom an Award and/or an Option is granted under this Plan.
"PARENT OF THE COMPANY" shall have the meaning set forth in
Section 424(e) of the Code.
"SUBSIDIARY OF THE COMPANY" shall have the meaning set forth in
Section 424(f) of the Code.
SECTION 3. ELIGIBILITY. Awards and/or Options may be granted to
any Employee. The Board of Directors (or the Committee) shall have the
sole authority to select the persons to whom Awards and/or Options are to
be granted hereunder, and to determine whether a person is to be granted a
Non-Qualified Option, an ISO or an Award or any combination thereof. No
person shall have any right to participate in the Plan. Any person
selected by the Board of Directors (or the Committee) for participation
during any one period will not by virtue of such participation have the
right to be selected as a Participant for any other period.
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SECTION 4. COMMON STOCK SUBJECT TO THE PLAN.
4.1 The total number of shares of Common Stock for which Options
and/or Awards may be granted under this Plan shall not exceed in the
aggregate eight million three hundred thousand (8,300,000) shares of Common
Stock, including shares of Common Stock reserved under the 1989 Stock Plan
and the 1985 Stock Plans.
4.2 The shares of Common Stock that may be subject to Options
and/or Awards granted under this Plan may be either authorized and unissued
shares or shares reacquired at any time and now or hereafter held as
treasury stock as the Board of Directors may determine. In the event that
any outstanding Option or Award expires, is terminated or is forfeited for
any reason, the shares allocable to the unexercised portion of such Option
or Award may again be subject to an Option and/or Award granted under this
Plan, except that the shares allocable to the forfeited portion of any such
Award shall not again be subject to an Option and/or Award granted under
this Plan if the Participant received any of the benefits of ownership of
the Common Stock underlying the unexercised or forfeited portion of such
Award.
4.3. SPECIAL ISO LIMITATIONS.
(a) The aggregate fair market value (determined as of the date
an ISO is granted) of the shares of Common Stock with respect to which ISOs
are exercisable for the first time by an Employee during any calendar year
(under all Incentive Stock Option Plans of the Company or any Parent or
Subsidiary of the Company) shall not exceed $100,000.
(b) No ISO shall be granted to an Employee who, at the time the
ISO is granted, owns (actually or constructively under the provisions of
Section 424(d) of the Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Parent
or Subsidiary of the Company, unless the option price is at least 110% of
the fair market value (determined as of the time the ISO is granted) of the
shares of Common Stock subject to the ISO and the ISO by its terms is not
exercisable more than five years from the date it is granted.
4.4. Notwithstanding any other provision of the Plan, the
provisions of Sections 4.3(a) and (b) shall not apply, nor shall they be
construed to apply, to any Non-Qualified Option or Award granted under the
Plan.
4.5. Notwithstanding any other provision of this Plan, no person
shall be granted Options and/or Awards for more than 1,500,000 shares of
Common Stock in any period of five fiscal years.
SECTION 5. ADMINISTRATION OF THE PLAN.
5.1 The Plan shall be administered by (i) the Board of Directors
or (ii) by a committee of two or more directors (the "Committee"), each of
whom is a Non-Employee Director, established by the Board of Directors.
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The Committee shall be appointed from time to time by, and shall serve at
the pleasure of, the Board of Directors.
5.2. (a) OPTIONS. The Board of Directors (or the Committee)
shall have the sole authority and discretion under this Plan (i) to select
the Participants who are to be granted Options hereunder; (ii) to designate
whether any Option to be granted hereunder is to be an ISO or a
Non-Qualified Option; (iii) to establish the number of shares of Common
Stock that may be issued under each Option; (iv) to determine the time and
the conditions subject to which Options may be exercised in whole or in
part; (v) to determine the form of the consideration that may be used to
purchase shares of Common Stock upon exercise of any Option (including the
circumstances under which the Company's issued and outstanding shares of
Common Stock may be used by a Participant to exercise an Option); (vi) to
impose restrictions and/or conditions with respect to shares of Common
Stock acquired upon exercise of an Option; (vii) to determine the circum-
stances under which shares of Common Stock acquired upon exercise of any
Option may be subject to repurchase by the Company; (viii) to determine the
circumstances and conditions subject to which shares acquired upon exercise
of an Option may be sold or otherwise transferred, including, without
limitation, the circumstances and conditions subject to which a proposed
sale of shares of Common Stock acquired upon exercise of an Option may be
subject to the Company's right of first refusal (as well as the terms and
conditions of any such right of first refusal); (ix) to establish a vesting
provision for any Option relating to the time (or the circumstance) when
the Option may be exercised by a Participant, including vesting provisions
which may be contingent upon the Company meeting specified financial goals;
(x) to accelerate the time when outstanding Options may be exercised,
PROVIDED, HOWEVER, that any ISOs shall be "accelerated" within the meaning
of Section 424(h) of the Code; and (xi) to establish any other terms,
restrictions and/or conditions applicable to any Option not inconsistent
with the provisions of this Plan.
(b) AWARDS. The Board of Directors (or the Committee) shall have
the sole authority and discretion under this Plan (i) to select the
Participants who are to be granted Awards hereunder; (ii) to determine the
amount to be paid by a Participant to acquire shares of Common Stock
pursuant to an Award, which amount may be equal to, more than or less than
100% of the fair market value of such shares on the date the Award is
granted (but in no event less than the par value of such shares); (iii) to
determine the time or times and the conditions subject to which Awards may
be made; (iv) to determine the time or times and the conditions subject to
which the shares of Common Stock subject to an Award are to become vested
and no longer subject to repurchase by the Company; (v) to establish
transfer restrictions and the terms and conditions on which any such
transfer restrictions with respect to an Award shall lapse; (vi) to
establish vesting provisions with respect to any shares of Common Stock
subject to an Award, including vesting provisions which may be contingent
upon the Company meeting specified financial goals; (vii) to determine the
circumstances under which shares of Common Stock acquired pursuant to an
Award may be subject to repurchase by the Company; (viii) to determine the
time or times and the conditions subject to which any shares of Common
Stock subject to an Award may be repurchased by the Company (as well as the
terms and conditions of any such repurchase); (ix) to determine the
circumstances and conditions subject to which a proposed sale of shares of
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Common Stock subject to an Award may be subject to the Company's right of
first refusal (as well as the terms and conditions of any such right of
first refusal); (x) to determine the form of consideration that may be used
to purchase shares of Common Stock pursuant to an Award (including the
circumstances under which the Company's issued and outstanding shares of
Common Stock may be used by a Participant to purchase the Common Stock
subject to an Award); (xi) to accelerate the time at which any or all
restrictions imposed with respect to any shares of Common Stock subject to
an Award will lapse or otherwise remove any and all such restrictions; and
(xii) to establish any other terms, restrictions and/or conditions applica-
ble to any Award not inconsistent with the provisions of this Plan.
5.3. The Board of Directors (or the Committee) shall be autho-
rized to interpret the Plan and may, from time to time, adopt such rules
and regulations, not inconsistent with the provisions of the Plan, as it
may deem advisable to carry out the purpose of this Plan.
5.4. The interpretation and construction by the Board of Direc-
tors (or the Committee) of any provision of the Plan, any Option and/or
Award granted hereunder or any agreement evidencing any such Option and/or
Award shall be final and conclusive upon all parties.
5.5. Directors (or members of the Committee, if established) may
vote on any matter affecting the administration of the Plan or the granting
of Options or Awards under the Plan.
5.6. All expenses and liabilities incurred by the Board of
Directors (or the Committee) in the administration of the Plan shall be
borne by the Company. The Board of Directors (or the Committee) may employ
attorneys, consultants, accountants or other persons in connection with the
administration of the Plan. The Company, and its officers and directors,
shall be entitled to rely upon the advice, opinions or valuations of any
such persons. No member of the Board of Directors (or the Committee) shall
be liable for any action, determination or interpretation taken or made in
good faith with respect to the Plan or any Option and/or Award granted
hereunder.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
6.1. ISOS. The terms and conditions of each ISO granted under
the Plan shall be specified by the Board of Directors (or the Committee)
and shall be set forth in an ISO agreement between the Company and the
Participant in such form as the Board of Directors (or the Committee) shall
approve. The terms and conditions of each ISO shall be such that each ISO
issued hereunder shall constitute and shall be treated as an "incentive
stock option" as defined in Section 422 of the Code. The terms and
conditions of any ISO granted hereunder need not be identical to those of
any other ISO granted hereunder.
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The terms and conditions of each ISO shall include the following:
(a) The option price shall be fixed by the Board of Director
(or the Committee) but shall in no event be less than 100% (or 110% in
the case of an Employee referred to in Section 4.3(b) hereof) of the
fair market value of the shares of Common Stock subject to the ISO on
the date the ISO is granted. For purposes of this Plan, the fair
market value per share of Common Stock as of any day shall mean the
average of the closing prices of sales of shares of Common Stock on
all national securities exchanges on which the Common Stock may at the
time be listed or, if there shall have been no sales on any such day,
the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day the Common Stock
shall not be so listed, the average of the representative bid and
asked prices quoted in the NASDAQ system as of the 3:30 p.m., New York
time, on such day, or, if on any day the Common Stock shall not be
quoted in the NASDAQ system, the average of the high and low bid and
asked prices on such day in the over-the-counter market as reported by
National Quotation Bureau Incorporated, or any similar successor
organization. If at any time the Common Stock is not listed on any
national securities exchange or quoted in the NASDAQ system or the
over-the-counter market, the fair market value of the shares of Common
Stock subject to an Option on the date the ISO is granted shall be the
fair market value thereof determined in good faith by the Board of
Directors (or the Committee).
(b) ISOs, by their terms, shall not be transferable otherwise
than by will or the laws of descent and distribution, and, during an
Optionee's lifetime, an ISO shall be exercisable only by the Optionee.
(c) The Board of Directors (or the Committee) shall fix the
term of all ISOs granted pursuant to the Plan (including the date on
which such ISO shall expire and terminate), PROVIDED, HOWEVER, that
such term shall in no event exceed ten years from the date on which
such ISO is granted (or, in the case of an ISO granted to an Employee
referred to in Section 4.3(b) hereof, such term shall in no event
exceed five years from the date on which such ISO is granted). Each
ISO shall be exercisable in such amount or amounts, under such condi-
tions and at such times or intervals or in such installments as shall
be determined by the Board of Directors (or the Committee) in its sole
discretion.
(d) In the event that the Company or any Parent or Subsidiary
of the Company is required to withhold any Federal, state or local
taxes in respect of any compensation income realized by the Partici-
pant as a result of any "disqualifying disposition" of any shares of
Common Stock acquired upon exercise of an ISO granted hereunder, the
Company shall deduct from any payments of any kind otherwise due to
such Participant the aggregate amount of such Federal, state or local
taxes required to be so withheld or, if such payments are insufficient
to satisfy such Federal, state or local taxes, such Participant will
be required to pay to the Company, or make other arrangements satis-
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factory to the Company regarding payment to the Company of, the aggre-
gate amount of any such taxes. A Participant may use issued and
outstanding Common Stock for the payment of taxes. All matters with
respect to the total amount of taxes to be withheld in respect of any
such compensation income shall be determined by the Board of Directors
in its sole discretion.
(e) In the sole discretion of the Board of Directors (or the
Committee), the terms and conditions of any ISO may (but need not)
include any of the following provisions:
(i) In the event a Participant shall cease to be employed
by the Company or any Parent or Subsidiary of the Company on a
full-time basis for any reason other than as a result of his
death or "disability" (within the meaning of Section 22(e)(3) of
the Code), the unexercised portion of any ISO held by such
Participant at that time may only be exercised within one month
after the date on which the Participant ceased to be so employed,
and only to the extent that the Participant could have otherwise
exercised such ISO as of the date on which he ceased to be so
employed.
(ii) In the event a Participant shall cease to be employed
by the Company or any Parent or Subsidiary of the Company on a
full-time basis by reason of his "disability" (within the meaning
of Section 22(e)(3) of the Code), the unexercised portion of any
ISO held by such Participant at that time may only be exercised
within one year after the date on which the Participant ceased to
be so employed, and only to the extent that the Optionee could
have otherwise exercised such ISO as of the date on which he
ceased to be so employed.
(iii) In the event a Participant shall die while in the
full-time employ of the Company or a Parent or Subsidiary of the
Company (or within a period of one month after ceasing to be an
Employee for any reason other than such "disability" or within a
period of one year after ceasing to be an Employee by reason of
such "disability"), the unexercised portion of any ISO held by
such Participant at the time of his death may only be exercised
within one year after the date of such Participant's death, and
only to the extent that the Participant could have otherwise
exercised such ISO at the time of his death. In such event, such
ISO may be exercised by the executor or administrator of the
Participant's estate or by any person or persons who shall have
acquired the ISO directly from the Participant by bequest or
inheritance.
6.2. NON-QUALIFIED OPTIONS. Except as otherwise provided in
Section 8, the terms and conditions of each Non-Qualified Option granted
under the Plan shall be specified by the Board of Directors (or the
Committee), in its sole discretion, and shall be set forth in a written
option agreement between the Company and the Participant in such form as
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the Board of Directors (or the Committee) shall approve. The terms and
conditions of each Option will be such that each Option issued hereunder
shall not constitute or be treated as an "incentive stock option", as
defined in Section 422 of the Code, and will be a "non-qualified stock
option" for Federal income tax purposes. The terms and conditions of any
Option granted hereunder need not be identical to those of any other Option
granted hereunder.
The terms and conditions of each Non-Qualified Option Agreement
shall include the following:
(a) The option (exercise) price shall be fixed by the Board of
Directors (or the Committee) and may be equal to more than or less
than 100% of the fair market value of the shares of Common Stock
subject to the Non-Qualified Option on the date such Non-Qualified
Option is granted.
(b) The Board of Directors (or the Committee) shall fix the
term of all Non-Qualified Options granted pursuant to the Plan (in-
cluding the date on which such Non-Qualified Option shall expire and
terminate). Such term may be more than ten years from the date on
which such Non-Qualified Option is granted. Each Non-Qualified Option
shall be exercisable in such amount or amounts, under such conditions
and at such times or intervals or in such installments as shall be
determined by the Board of Directors (or the Committee) in its sole
discretion.
(c) Non-Qualified Options shall not be transferable otherwise
than by will or the laws of descent and distribution, and during a
Participant's lifetime a Non-Qualified Option shall be exercisable
only by the Participant.
(d) In the event that the Company is required to withhold any
Federal, state or local taxes in respect of any compensation income
realized by the Participant in respect of a Non-Qualified Option
granted hereunder or in respect of any shares of Common Stock acquired
upon exercise of a Non-Qualified Option, the Company shall deduct from
any payments of any kind otherwise due to such Participant the aggre-
gate amount of such Federal, state or local taxes required to be so
withheld or, if such payments are insufficient to satisfy such Feder-
al, state or local taxes, or if no such payments are due or to become
due to such Participant then such Participant will be required to pay
to the Company, or make other arrangements satisfactory to the Company
regarding payment to the Company of, the aggregate amount of any such
taxes. All matters with respect to the total amount of taxes to be
withheld in respect of any such compensation income shall be deter-
mined by the Board of Directors in its sole discretion.
SECTION 7. TERMS AND CONDITIONS OF AWARDS.
The terms and conditions of each Award granted under the Plan
shall be specified by the Board of Directors (or the Committee), in its
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sole discretion, and shall be set forth in a written agreement between the
Participant and the Company, in such form as the Board of Directors (or the
Committee) shall approve. The terms and provisions of any Award granted
hereunder need not be identical to those of any other Award granted
hereunder.
The terms and conditions of each Award shall include the follow-
ing:
(a) The amount to be paid by a Participant to acquire the
shares of Common Stock pursuant to an Award shall be fixed by the
Board of Directors (or the Committee) and may be equal to more than or
less than 100% of the fair market value of the shares of Common Stock
subject to the Award on the date the Award is granted.
(b) Each Award shall contain such vesting provisions, such
transfer restrictions and such other restrictions and conditions as
the Board of Directors (or the Committee), in its sole discretion, may
determine, including, without limitation, the circumstances under
which the Company shall have the right and option to repurchase shares
of Common Stock acquired pursuant to an Award.
(c) Stock certificates representing Common Stock acquired
pursuant to an Award shall bear a legend referring to the restrictions
imposed on such Stock and such other matters as the Board of Directors
may determine.
(d) In the event that the Company is required to withhold any
Federal, state or local taxes in respect of any compensation income
realized by the Participant in respect of an Award granted hereunder,
or in respect of any shares acquired pursuant to an Award, or in
respect of the vesting of any such shares of Common Stock, then the
Company shall deduct from any payments of any kind otherwise due to
such Participant the aggregate amount of such Federal, state or local
taxes required to be so withheld, or, if such payments are insuffi-
cient to satisfy such Federal, state or local taxes, or if no such
payments are due or become due to such Participant, then such Partici-
pant will be required to pay to the Company, or make other arrange-
ments satisfactory to the Company regarding payment to the Company of,
the aggregate amount of any such taxes. All matters with respect to
the total amount of taxes to be withheld in respect of any such
compensation income shall be determined by the Board of Directors in
its sole discretion.
SECTION 8. NON-EMPLOYEE DIRECTOR STOCK OPTIONS.
(a) On the third business day following approval of this Plan by
the stockholders of the Company at the 1997 Annual Meeting of Stockholders,
each Non-Employee Director then serving as such (including but not limited
to Non-Employee Directors elected or re-elected at such meeting) shall
automatically, and without further action by the Board of Directors or the
Committee, be granted (i) a Non-Qualified Option to purchase 5,000
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shares of Common Stock, and (ii) a Non-Qualified Option to purchase a
number of shares of the Common Stock equal to the product of (x) 5,000 and
(y) a fraction, the numerator of which is the number of years remaining in
such Non-Employee Director's then-current term as a director (counting as
the first year the year commencing immediately after the 1997 Annual
Meeting of Stockholders), and the denominator of which is three;
(b) On the third business day following his or her first
appointment or election as a director of the Company, each person who
becomes a Non-Employee Director shall automatically, and without further
action by the Board of Directors or the Committee, be granted (i) a
Non-Qualified Option to purchase 5,000 shares of Common Stock and (ii) a
Non-Qualified Option to purchase a number of shares of the Common Stock
equal to the product of (x) 5,000 and (y) a fraction, the numerator of
which is the number of years or partial years remaining in the term to
which such Non-Employee Director was appointed or elected, and the denomi-
nator of which is three;
(c) On the third business day following the 1998 annual meeting
of the stockholders of the Company and each Annual Meeting of Stockholders
thereafter at which a Non-Employee Director is re-elected as a member of
the Board of Directors, such Non-Employee Director shall automatically, and
without further action by the Board of Directors or the Committee, be
granted a Non-Qualified Option to purchase 5,000 shares of Common Stock;
(d) Notwithstanding the provisions of Subsections 6.2 (a) and
(b) hereof, the terms and conditions of each Non-Qualified Option granted
pursuant to this Section 8 shall be as follows:
(i) Each such Non-Qualified Option shall have an option
price equal to 100% of the fair market value of the shares of Common
Stock subject to such Non-Qualified Option on the date such Non-
Qualified Option is granted.
(ii) Subject to the provisions of Subsection (d) below, the
term of each such Non-Qualified Option shall be ten years from the
date on which such Non-Qualified Option is granted.
(iii) Each Non-Employee Director will become entitled to
exercise (x) each Non-Qualified Option granted pursuant to clause
(a)(i) or (b)(i) hereof commencing six months after the date of grant,
(y) each Non-Qualified Option granted pursuant to clause (c) hereof
with respect to one-third (1/3) of the shares of Common Stock subject
thereto on the first, second and third anniversaries of the grant
thereof, and (z) each Option granted pursuant to clause (a)(ii) or
(b)(ii) hereof shall become exercisable ratably over the remaining
directorship term during which such Non-Qualified Option was granted,
on the date of each Annual Meeting of Stockholders following such
grant, but in any event not before the expiration of six months from
the date of grant.
(iv) In the event that the Company is required to withhold
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any Federal, state or local taxes in respect of any compensation
income realized by the Non-Employee Director in respect of a Non-
Qualified Option granted hereunder or in respect of any shares of
Common Stock acquired upon exercise of any such Non-Qualified Option,
the Company shall deduct from any payments of any kind otherwise due
to such Non-Employee Director the aggregate amount of such Federal,
state or local taxes required to be so withheld or, if such payments
are insufficient to satisfy such Federal, state or local taxes, or if
no such payments are due or to become due to such Non-Employee Direc-
tor, then such Non-Employee Director will be required to pay to the
Company, or make other arrangements satisfactory to the Company
regarding payment to the Company of, the aggregate amount of any such
taxes. All matters with respect to the total amount of taxes to be
withheld in respect of any such compensation income shall be deter-
mined by the Board of Directors in its sole discretion.
(e) In the determination of the Board of Directors, exercised in
its sole discretion (the Non-Employee Directors abstaining from participa-
tion in any such determination), the terms and conditions of any Non-Quali-
fied Option granted to Non-Employee Directors shall include the following
provisions:
(i) In the event a Non-Employee Director shall cease to
serve as a director of the Company or any Parent or Subsidiary of
the Company for any reason other than as a result of his death or
"disability" (within the meaning of Section 22(e)(3) of the
Code), the unexercised portion of any Non-Qualified Option held
by such Non-Employee Director at that time may only be exercised
within one month after the date on which such Non-Employee
Director ceased to serve as a director of the Company or any
Parent or Subsidiary of the Company, and only to the extent that
such Non-Employee Director could have otherwise exercised such
Non-Qualified Option as of the date on which he ceased to serve
as such.
(ii) In the event a Non-Employee Director shall cease to
serve as a director of the Company or any Parent or Subsidiary of
the Company by reason of his "disability" (within the meaning of
Section 22(e)(3) of the Code), the unexercised portion of any
Non-Qualified Option held by such Non-Employee Director at that
time may only be exercised within one year after the date on
which the Non-Employee Director ceased to serve as such, and only
to the extent that the Non-Employee Director could have otherwise
exercised such Non-Qualified Option as of the date on which he
ceased to be so employed.
(iii) In the event a Non-Employee Director shall die while
serving as a Non-Employee Director of the Company or any Parent
or Subsidiary of the Company (or within a period of one month
after ceasing to serve as such for any reason other than such
"disability" or within a period of one year after ceasing to be
an Employee by reason of such "disability"), the unexercised
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portion of any Non-Qualified Option held by such Non-Employee
Director at the time of his death may only be exercised within
one year after the date of such Non-Employee Director's death,
and only to the extent that such Non-Employee Director could have
otherwise exercised such Non-Qualified Option at the time of his
or her death. In such event, such Non-Qualified Option may be
exercised by the executor or administrator of the Non-Employee
Director's estate or by any person or persons who shall have
acquired such Non-Qualified Option directly from such Non-Employ-
ee Director by bequest or inheritance.
(iv) Such Non-Qualified Options shall not be transferable
otherwise than by will or the laws of descent and distribution,
and during a Non-Employee Director's lifetime such Non-Qualified
Option shall be exercisable only by such Non-Employee Director.
(f) All Non-Qualified Options granted to a Non-Executive Direc-
tor shall be confirmed by an agreement between the Company and such
grantee.
(g) Notwithstanding the appointment of a Committee to administer
the Plan, all administrative, interpretive and discretionary powers with
respect to the Non-Qualified Options granted pursuant to this Section 8
shall be exercised by the Board of Directors (the Non-Employee Directors
abstaining).
SECTION 9. ADJUSTMENTS. In the event that, after the adoption of
the Plan by the Board of Directors, the outstanding shares of the Company's
Common Stock shall be increased or decreased or changed into or exchanged
for a different number or kind of shares of stock or other securities of
the Company or of another corporation through reorganization, merger or
consolidation, recapitalization, reclassification, stock split, split-up,
combination or exchange of shares or declaration of any dividends payable
in Common Stock or other corporate transaction, the Board of Directors
shall appropriately adjust (i) the number of shares of Common Stock (and
the option price per share) subject to the unexercised portion of any
outstanding Option (to the nearest possible full share), PROVIDED, HOWEVER,
that the limitations of Section 424 of the Code shall apply with respect to
adjustments made to ISOs; (ii) the number of shares of Common Stock to be
acquired pursuant to an Award; and (iii) the number of shares of Common
Stock for which Options and/or Awards may be granted under this Plan, as
set forth in Sections 4.1 and 4.5 hereof, and such adjustments shall be
effective and binding for all purposes of this Plan.
SECTION 10. EFFECT OF THE PLAN ON EMPLOYMENT RELATIONSHIP.
Neither this Plan nor any Option and/or Award granted hereunder to
a Participant shall be construed as conferring upon such Participant any
right to continue in the employ of the Company or the service of the
Company or any Subsidiary, as the case may be, or limit in any respect the
right of the Company or any Subsidiary to terminate such Participant's
employment or other relationship with the Company or any Subsidiary, as the
<PAGE>
<PAGE #>
case may be, at any time.
SECTION 11. AMENDMENT OF THE PLAN. The Board of Directors may
amend the Plan from time to time as it deems desirable; PROVIDED, HOWEVER,
that, without the approval of the holders of a majority of the shares of
Common Stock present or represented and entitled to vote thereon at a
meeting of stockholders, the Board of Directors may not amend the Plan (i)
to increase (except for increases due to adjustments in accordance with
Section 9 hereof) the aggregate number of shares of Common Stock for which
Options and/or Awards may be granted hereunder, (ii) to decrease the
minimum exercise price specified by the Plan in respect of ISOs, or (iii)
to change the class of Employees eligible to receive ISOs under the Plan.
Notwithstanding the foregoing, if stockholder approval is required in order
to comply with (a) Section 422 of the Code in respect of ISOs, or (b) rules
promulgated under Section 16(b) of the Exchange Act, the Board of Directors
may not amend the Plan without stockholder approval.
SECTION 11. TERMINATION OF THE PLAN. The Board of Directors may
terminate the Plan at any time. Unless the Plan shall theretofore have
been terminated by the Board of Directors, the Plan shall terminate on May
3, 1999. No Option and/or Award may be granted hereunder after termination
of the Plan. The termination or amendment of the Plan shall not alter or
impair any rights or obligations under any Option and/or Award theretofore
granted under the Plan.
SECTION 12. EFFECTIVE DATE OF THE PLAN. This 1996 Amended and
Restated Stock Option and Restricted Stock Plan, and any amendments thereof
requiring stockholder approval, shall become effective as of the date on
which the Plan is approved by affirmative vote of the holders of a majority
of the shares of Common Stock present or represented and entitled to vote
at a meeting of stockholders of the Company at which the approval of the
Plan (or of any such amendment) is considered.
EXHIBIT 10.13
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made this day of , 19 between
KING WORLD PRODUCTIONS, INC., a Delaware corporation (the "Corporation"),
and (the "Director").
WITNESSETH THAT:
WHEREAS, the Director is a member of the Board of Directors of
the Corporation and in such capacity is performing a valuable service for
the Corporation; and
WHEREAS, the stockholders of the Corporation have adopted the By-
laws of the Corporation (the "By-laws") which provide for the indemnifica-
tion of the officers, directors and employees of the Corporation to the
full extent authorized by law;
WHEREAS, Section 145(f) of the Delaware General Corporation Law
(the "Delaware Statute") provides that the provisions of Section 145
empowering the Corporation to indemnify directors, officers, employees and
agents of the Corporation in certain circumstances are not exclusive, and
contemplates that agreements may be entered into between the Corporation
and the members of its Board of Directors with respect to indemnification
of such directors;
WHEREAS, in accordance with the authorization provided by the
Delaware Statute, the Corporation presently maintains a policy or policies
of Directors' and Officers' Liability Insurance ("D & O Insurance"),
covering certain liabilities which may be incurred by its directors and
officers in the performance of their services for the Corporation;
WHEREAS, recent developments with respect to the terms and
availability of D&O Insurance and with respect to the application, amend-
ment and enforcement of statutory and by-law indemnification provisions
generally have raised questions concerning the adequacy and reliability of
the protection afforded to directors thereby; and
WHEREAS, in order to resolve such questions and thereby induce
the Director to continue to serve as a member of the Board of Directors of
the Corporation, the Corporation has determined and agreed to enter into
this contract with the Director.
NOW, THEREFORE, in consideration of the Director's continued
service as a director of the Corporation (or continued service at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture trust of other enterprise),
the parties hereto agree as follows:<PAGE>
11. MAINTENANCE OF INSURANCE AND SELF INSURANCE.
(a) The Corporation represents that it presently maintains in
force and effect policies of D&O Insurance written by the following
insurance companies and in the following amounts (the "Insurance Poli-
cies"):
Insurer Amount Deductible
------- ------ ----------
The Chubb Group $2,000,000 $5,000*
__________________
* $5,000 per director, per claim; $25,000 for all directors, per claim.
_______________________
Subject to the provisions of Section 1(b) hereof, the Corporation
hereby agrees that, so long as the Director shall continue to serve as a
director of the Corporation (or shall continue at the request of the
Corporation to serve as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and
thereafter so long as the Director shall be subject to any possible claim
or threatened, pending or completed action, suit or proceeding, whether
civil, criminal or investigative by reason of the fact that the Director
was a director of the Corporation (or served in any of said other capaci-
ties), the Corporation will purchase and maintain in effect for the benefit
of the Director one or more valid, binding and enforceable policy or
policies of D&O Insurance providing coverage at least comparable to that
currently provided pursuant to the Insurance Policies.
(b) The Corporation shall not be required to maintain said
policy or policies of D&O Insurance in effect if (i) said insurance is not
reasonably available or (ii) in the reasonable business judgment of the
then directors of the Corporation, either (x) the premium cost for such
insurance is substantially disproportionate to the amount of coverage
provided or (y) the coverage provided by such insurance is so limited by
exclusions that there is insufficient benefit from such insurance.
(c) In the event that the Corporation does not purchase and
maintain in effect said policy of policies of D&O Insurance pursuant to the
provisions of Section 1(b) hereof, the Corporation agrees to hold harmless
and indemnify the Director to the full extent of the coverage which would
otherwise have been required to be provided for the benefit of the Director
pursuant to Section 1(a) hereof.
12. ADDITIONAL INDEMNITY OF THE DIRECTOR. To the extent of any
losses incurred or suffered by the Director in excess of the amounts reim-
bursed or indemnified pursuant to the provisions of Section 1 hereof, the
Corporation further agrees to hold harmless and indemnify the Director to
<PAGE>
the full extent permitted by the provisions of the Delaware Statute, as in
effect from time to time, or by any other statutory provisions authorizing
or permitting such indemnification which are adopted after the date hereof.
13. LIMITATION OF INDEMNITIES. The Company shall not be obli-
gated to pay any indemnify pursuant to Section 1 or Section 2 hereof or
make payment or reimbursement to the Director pursuant to any of the
provisions of this Agreement in the event and to the extent that it shall
have been finally determined by a court of competent jurisdiction that the
payment of such indemnity or the making of such other or payment or
reimbursement by the Corporation is unlawful.
14. CONTINUATION OF INDEMNITY. All agreements and obligations
of the Corporation contained herein shall continue during the period the
Director is a director, officer, employee or agent of the Corporation (or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise) and shall continue thereafter so long as the Director
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether, civil, criminal or investigative, by
reason of the fact that the Director was a director of the Corporation or
serving in any other capacity referred to herein.
15. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt
by the Director of notice of the commencement of any action, suit or
proceeding, the Director will, if a claim in respect thereof is to be made
against the Corporation under this Agreement, notify the Corporation of the
commencement thereof, but the failure so to notify the Corporation will not
relieve it from any liability which it may have to the Director other wise
than under this Agreement. With respect to any such action, suit or
proceeding as to which the Director notifies the Corporation of the com-
mencement thereof:
(a) The Corporation will be entitled to participate therein
at its own expense; and,
(b) Except as otherwise provided below, to the extent that
it may wish, the Corporation jointly with any other indemnifying
party similarly notified will be entitled to assume the defense
thereof, with counsel satisfactory to the Director. After notice
from the Corporation to the Director of its election so to assume
the defense thereof, the Corporation will not be liable to the
Director under this Agreement for any legal or other expenses
subsequently incurred by the Director in connection with the
defense thereof other than reasonable costs of investigation or
as otherwise provided below. The Director shall have the right
to employ its own counsel in such action, suit or proceeding but
the fees and expenses of such counsel incurred after notice from
the Corporation of its assumption of the defense thereof shall be
at the expense of the Director unless (i) the employment of
counsel by the Director has been authorized by the Corporation,
(ii) the Director shall have reasonably concluded that there may
<PAGE>
be a conflict of interest between the Corporation and the Direc-
tor in the conduct of the defense of such action or (iii) the
Corporation shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and
expenses of counsel shall be at the expense of the Corporation.
The Corporation shall not be entitled to assume the defense of
the Director in any action, suit or proceeding brought by or on
behalf of the Corporation or as to which the Director shall have
made the conclusion provided for in (ii) above.
(c) The Corporation shall not be liable to indemnify the
Director under this Agreement for any amounts paid in settlement
of any action or claim effected without its written consent. The
Corporation shall not settle any action or claim in any manner
which would impose any penalty or limitation on the Director
without the Director's written consent. Neither the Corporation
nor the Director will unreasonably withhold its consent to any
proposed settlement.
16. REPAYMENT OF EXPENSES. The Director agrees that the
Director will reimburse the Corporation for all reasonable expenses paid by
the Corporation in defending any civil or criminal action, suit or pro-
ceeding against the Director in the event and only to the extent that it
shall be ultimately determined that the Director is not entitled to be
indemnified by the Corporation for such expenses under the provisions of
the Delaware Statute, the By-laws, this Agreement or otherwise.
17. ENFORCEMENT.
(a) The Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on the
Corporation hereby in order to induce the Director to continue as a
director of the Corporation, and acknowledges that the Director is relying
upon this Agreement in continuing in such capacity.
(b) In the event the Director is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is
successful in such action, the Corporation shall reimburse the Director for
all of the Director's reasonable fees and expenses in bringing and pursuing
such action.
18. SEVERABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others so that if
any provision hereof shall be held to be valid or unenforceable, such
invalidity or unenforceability shall not effect the validity or unenforcea-
bility of the other provisions hereof.
19. GOVERNING LAW; BINDING EFFECT; AMENDMENT AND TERMINATION.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
<PAGE>
(b) This Agreement shall be binding upon the Director and upon
the Corporation, its successors and assigns, and shall inure to the benefit
of the Director, the Director's heirs, personal representatives, executors
and assigns and to the benefit of the Corporation, its successors and
assigns.
(c) No amendment, modification, termination or cancellation of
this Agreement shall be effective unless in writing signed by both parties
hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
KING WORLD PRODUCTIONS, INC.
By: __________________________
______________________________
Director
Exhibit 10.22
CONFIDENTIAL TREATMENT REQUESTED
SETTLEMENT AGREEMENT dated as of September 15, 1997, by and among
CALIFON PRODUCTIONS, INC. ("Califon") and JEOPARDY PRODUCTIONS, INC.
("Jeopardy") (collectively referred to hereinafter as "Owner"), SONY
PICTURES ENTERTAINMENT INC. ("SPE"), THE GAME SHOW NETWORK, L.P. and KING
WORLD PRODUCTIONS, INC. ("KW").
WHEREAS, there is an agreement between Califon and KW dated as of
December 15, 1982, and amendments thereto (the "WOF Agreement"), relating
to the television series entitled "Wheel of Fortune";
WHEREAS, there is an agreement between Califon and KW dated as of
November 1, 1983, and amendments thereto (the "Jeopardy Agreement"),
relating to the television series entitled "Jeopardy!";
WHEREAS, Califon has assigned and delegated its rights and
obligations under the Jeopardy Agreement to Jeopardy and KW has consented
to this assignment and delegation;
WHEREAS, The Game Show Network, L.P. owns and operates a cable
television network named "Game Show Network" ("GSN");
WHEREAS, there are certain disputes among the parties with
respect to the WOF Agreement and the Jeopardy Agreement that have resulted
in the filing of the pending action, King World Productions, Inc. v.
Califon Productions, Inc., et al., Case No.:<PAGE>
<PAGE>
BC 168 059, in the Superior Court of the State of California for the County
of Los Angeles (the "Court"), including a cross-complaint therein (the
"Action"); and
WHEREAS, the parties desire, subject to the terms and conditions
set forth hereinafter, to settle and resolve the disputes raised in the
Action and to discontinue the Action;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. KW shall dismiss, without prejudice, its complaint in the
Action; Owner shall dismiss, with prejudice, its cross-complaint in the
Action, it being understood that Owner does not hereby waive or abandon any
of its defenses pled in its answer to KW's complaint. However, these
dismissals shall not affect or limit KW's or Owner's rights or claims with
respect to how the WOF Agreement and the Jeopardy Agreement are to be
interpreted, including whether and the extent to which the WOF Agreement
and the Jeopardy Agreement prohibit KW from producing and licensing for
distribution by others a strip game show in first-run syndication. The
parties shall, within one week of executing this Settlement Agreement, file
the necessary requests for dismissal with the Court.
2. HOLLYWOOD SQUARES. Owner And KW disagree with respect to
whether anything in the WOF Agreement or the Jeopardy
<PAGE>
<PAGE>
Agreement prohibits KW from producing and licensing for distribution by
others a strip game show in first-run syndication. Without waiving either
party's rights or claims, if any, under the WOF Agreement or the Jeopardy
Agreement with respect thereto, the parties agree, on a one-time non-
precedential basis, to the following with respect to the television series
"Hollywood Squares" (hereinafter referred to as the "Series"):
(a) Owner hereby waives its rights, if any, to prohibit KW
from producing or distributing a strip game show series for first-run
syndication, solely and only to the extent necessary to allow KW to produce
and distribute the Series in first-run strip syndication, for initial
telecast no later than September 30, 1998, provided that said waiver shall
expire upon the conclusion of the final consecutive broadcast season during
which KW so distributes the Series.
(b) KW has sole ownership and, as among the parties hereto,
KW shall solely fund the production and distribution of the Series.
Without limitation of the foregoing, KW shall have final and definitive
control and authority with regard to all elements of the production and
distribution of the Series.
(c) SPE shall render services as a co-producer of the SPE
Participation Episodes (as hereinafter defined), and SPE, or an affiliate
designated by SPE, shall be entitled to a logo
<PAGE>
<PAGE>
credit (animated, if KW's production credit is animated) to that effect and
on a separate card, in the end credits of each such episode and similar
credit, when KW receives credit, on all publicity, press releases (the
press release announcing this Settlement Agreement to be mutually approved
by SPE and KW) and advertising issued in connection with such episodes.
Subject in all events to paragraph 2(b) of this Settlement Agreement, SPE
may, in its sole discretion, but only at KW's request and in accordance
with the production schedule as determined by KW, participate in the
principal elements of the production of the SPE Participation Episodes,
including significant creative decisions, casting and staffing, and SPE
may, in its sole discretion, but only upon KW's request, assist, inter
alia, in securing talent, writers and other creative personnel therefor.
(d) [****]
(e) SPE shall be entitled to a participation in the amount
of [****] of all of the episodes of the Series produced (x) for initial
distribution in first-run syndication in the United States, or (y) for
initial first-run network broadcast in the United States, provided however,
that sums from any such episodes produced for initial network broadcast
shall be included within Gross Receipts only if such episodes are produced
during a broadcast season in which the Series is distributed by KW in
<PAGE>
<PAGE>
first-run strip syndication (the episodes described in clauses (x) and (y)
are collectively referred to herein as the "SPE Participation Episodes").
(i) In the case of subdistribution of any of the rights
hereunder on a percentage basis, the gross amount received by such
subdistributor shall be included in Gross Receipts and there shall be no
deduction for any subdistribution fees, commissions or expenses. Where
subdistribution is on an outright basis, the actual amount received by KW
shall be included in Gross Receipts. Advance payments and security
deposits shall not be included in Gross Receipts until earned by, forfeited
or otherwise applied to any of the SPE Participation Episodes (unless such
advance payments or security deposits are nonrefundable, in which case such
amounts shall be included in Gross Receipts upon receipt), nor shall Gross
Receipts include receipts of radio or television broadcasters or others who
actually use or exhibit to the public any of the SPE Participation Epi-
sodes.
(ii) SPE's participation in Gross Receipts shall be paid and
accounted for as provided in the annexed Schedule A.
(f) SPE shall be entitled to a one-time nonrefundable
advance of its participation [****] payable upon execution of this Settle-
ment Agreement, which amount shall be recoupable by KW from, [****]
<PAGE>
<PAGE>
(g) [****]
3. This Settlement Agreement has been negotiated and executed,
is made and is to be performed in the State of California, and shall be
governed by and construed in accordance with the internal, substantive laws
of the State of California.
4. This Settlement Agreement may be executed in any number of
counterparts, each of which for all purposes shall be deemed to be original
and all of which taken together shall constitute one and the same instru-
ment.
5. All prior or contemporaneous agreements, contracts, promis-
es, representations and statements, if any, among the parties hereto and
their representatives as to the Series are merged into this Settlement
Agreement, and this Settlement Agreement constitutes the entire agreement
among the parties with respect thereto. This Settlement Agreement may not
be modified, waived, changed, discharged or terminated, except by an
agreement in writing signed by the party against which such modification,
waiver, change, discharge or termination is sought to be enforced.
6. The parties agree that this Settlement Agreement shall be
deemed to have been jointly drafted and composed by the parties hereto.
The terms of this Settlement Agreement shall not be interpreted or con-
strued in favor of or against any party on the ground that one party was
the purported drafter hereof.
<PAGE>
<PAGE>
7. Except as specified herein, nothing in this Settlement
Agreement, whether express or implied, is intended to confer any rights or
remedies under or by reason of this Settlement Agreement on any persons
other than the parties hereto and their respective successors and assigns,
nor is anything in this Settlement Agreement intended to relieve or
discharge the obligations or liabilities of any third parties to any party
to this Settlement Agreement, nor shall any provision give any third
parties any right of subrogation or action over or against any party to
this Settlement Agreement.
8. The parties hereto shall keep confidential and shall not
disclose to third parties the terms and provisions of sub-paragraphs 2(d),
(e), (f) and (g) of this Settlement Agreement or that the waiver in sub-
paragraph 2(a) of this Settlement Agreement is limited to an initial
telecast of the Series no later than September 30, 1998, except as it may
be required by law.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Settlement Agreement as of the date first above set forth.
CALIFON PRODUCTIONS, INC.
By:_____________________________
JEOPARDY PRODUCTIONS, INC.
By:_____________________________
SONY PICTURES ENTERTAINMENT INC.
By:_____________________________
THE GAME SHOW NETWORK, L.P.
By: TGSC MANAGEMENT, INC.
By:___________________________
KING WORLD PRODUCTIONS, INC.
By:_____________________________
<PAGE>
<PAGE>
SCHEDULE A
ACCOUNTINGS AND REMITTANCES
1. KW'S RECORDS: KW shall keep complete and accurate books of
account and records with respect to the distribution of the SPE Participa-
tion Episodes. SPE shall have the right, during reasonable business hours
on reasonable advance written notice, to examine the same or cause the same
to be examined and audited at its expense by any reputable firm of certi-
fied public accountants or by SPE's internal audit department.
2. STATEMENTS AND REMITTANCES: Commencing three (3) months
after the first domestic television exhibition of the Series pursuant to
this Settlement Agreement, KW shall account to SPE for the Gross Receipts
(a) on a monthly basis while KW is distributing the Series in first-run
syndication and (b) on a quarterly basis thereafter.
(a) Within twenty (20) days after the close of each applicable
accounting period, KW shall submit to SPE a written statement showing the
Gross Receipts in reasonable detail and shall pay SPE the amount, if any,
shown in such statement to be due.
(b) Accountings may be on a billings or collection basis. KW
shall have the right to change the method from time to time, but each
statement shall specify the basis. If statements are made on a billings
basis, KW has the right to make adjustments in subsequent statements to
reflect uncollected billings.
<PAGE 1>
[* Deleted pursuant to a request for confidential treatment]
Exhibit 10.23
CONFIDENTIAL TREATMENT REQUESTED
KING WORLD PRODUCTIONS, INC.
1700 BROADWAY
NEW YORK, NEW YORK 10019
Dated as of October 1, 1991
Mr. William Bernstein, President
Orion Pictures Corporation
1325 Avenue of the Americas
New York, New York 10019
Re: "Hollywood Squares"
_________________
Dear Bill:
This letter, when executed on behalf of Orion Pictures Corpora-
tion ("Orion") and King World Productions, Inc. ("KW"), shall constitute an
agreement between Orion and KW in connection with the rights in and to the
television series entitled "Hollywood Squares", on the following terms and
conditions:
1. (a) As used herein, the "Rights" shall mean all trademarks,
service marks, copyrights, underlying rights, and all right, title, and
interest of any kind whatsoever in and to the property known as "Hollywood
Squares" (the "Series"), including, without limitation, the content,
format, title, set, set design, components, game rules, scripts, and all
appearances and depictions thereof and all of such rights necessary or
desirable to create and exploit new episodes and/or properties based in
whole or in part thereon and to advertise, promote and market same, by any
and all means, as well as all rights ancillary thereto, throughout the
world in any and all media.
(b) Orion hereby sells, grants and transfers to KW all of
the Rights throughout the world exclusively and irrevocably (subject to the
provisions of Paragraph 8 below). At KW's request, Orion shall execute a
copyright assignment and such other documents as reasonably required to
evidence the transfer hereunder and both parties shall execute whatever
further instruments are reasonably necessary to effectuate the intent of
this agreement including, without limitation, a security agreement in the
form attached hereto as Exhibit A, granting Orion a security
<PAGE>
<PAGE 2>
[* Deleted pursuant to a request for confidential treatment]
interest in the Rights to the extent of (i) KW's obligations to pay Orion a
share of Net Profits in accordance with Paragraph 3 below and (ii) the
possible reversion of the Rights to Orion in accordance with Paragraph 8
below. Promptly upon execution of this agreement, Orion shall arrange, at
its sole expense, to deliver to KW (at a place within the United States
designated by KW) all existing elements of the Series necessary or desir-
able for KW to exercise the Rights, including without limitation, all
available promotional materials and scripts, relevant contracts, game
questions, residual schedules, and the Series set. The Series set shall be
made available to KW where it is presently stored and KW shall be responsi-
ble for all costs of the transportation from such location, as well as, if
KW so elects, insurance and rehabilitation of the Series set (which costs
shall be recoupable by KW as a development cost pursuant to Paragraph 4(c)
below).
(c) Notwithstanding anything to the contrary contained
herein, the Rights shall not include the rights to distribute, in whole or
in part, the negatives and/or mastertapes (or copies made therefrom) of the
television episodes of the Series existing as of the date hereof (the
"Existing Episodes"), but such rights in and to the Existing Episodes shall
not be exploited in any manner or media by Orion anywhere in the world
except for Orion's issuance of licenses for the use of photographs from the
Existing Episodes and except for an existing license from Orion to USA
Network ("USA") for basic cable broadcast of the Existing Episodes in the
United States for a term expiring December 31, 1992, subject to USA's
options as set forth in those provisions of the USA license annexed hereto
as Exhibit B. Orion warrants and represents that: (i) such license to USA
is the only existing license agreement with respect to the Existing
Episodes, and (ii) USA is not entitled, as a matter of contract, to
injunctive relief of any nature in the event Orion, is in breach of the USA
license. Orion shall use its best efforts to negotiate an agreement with
USA giving Orion the option, in exchange for a reasonable payment consis-
tent with industry standards (the "Option Payment"), to terminate USA's
exclusivity (but not necessarily USA's telecast rights) with respect to
telecasts of the Series, as of August 15, 1992 (the "USA Termination
Option"). Orion shall consult with KW regarding such negotiations and
agreement and, if such agreement is concluded, then at KW's election, Orion
shall exercise the USA Termination Option; provided, however, that upon
such exercise, KW shall reimburse Orion for the Option Payment.
(d) Orion warrants and represents that it has entered into
the following existing license agreements with respect to format rights in
the Series (the "Existing Format
<PAGE>
<PAGE 3>
[* Deleted pursuant to a request for confidential treatment]
Licenses") and that such Existing Format Licenses are the only format
licenses existing for the Series:
(i) license to Fremantle International Inc.
("Fremantle") for television broadcast in Spain for a term expiring March
4, 1993;
(ii) license to Fremantle for television broadcast in
Italy for a term expiring September 30, 1993; and
(iii) license to Reg Grundy Productions, Inc. ("RGP")
as set forth in a letter from Irwin Moss of Orion to RGP's attorney,
Richard Barovick, dated May 1, 1990 and a letter from Barovick to Moss
dated June 13, 1990 (the "RGP Agreement") pursuant to which, inter alia,
RGP is authorized for a period of two years from the date thereof to enter
into format arrangements for the Series on behalf of Orion throughout the
world excluding the United States, Canada, Spain and Italy.
Notwithstanding anything to the contrary contained herein, the Rights shall
not include the rights granted to Fremantle and RGP pursuant to the
Existing Format Licenses during their respective terms set forth above.
Upon termination of each such Existing Format License, the rights granted
by Orion therein shall revert to KW and constitute part of the Rights
hereunder; provided, however, that the Rights shall include all of Orion's
rights with respect to the Series under the RGP Agreement as of the date
hereof, and Orion hereby assigns to KW all of its right, title, and
interest in the RGP Agreement to the extent relating to the series.
(e) With respect to Series game questions, KW shall be
entitled to utilize only game questions available to Orion from the
Existing Episodes produced between 1986 through 1989 (the "Existing
Questions"). The rights in and to all other Series game questions shall be
frozen and shall not be exploited by Orion. KW acknowledges that its use
of the Existing Questions might be subject to KW's payment of residuals (in
no greater amounts than Writers Guild of America scale payments) in accor-
dance with the residuals summary schedule prepared by Orion and annexed as
Exhibit C hereto. KW further acknowledges that pursuant to the IJE License
(as defined in Paragraph 1(g) below), Orion has made certain Series game
questions available to IJE.
(f) KW acknowledges that in the event it produces new
episodes of the Series for exploitation in the United States, KW shall pay
a royalty in the amount of [****] per strip of five original new Series
<PAGE>
<PAGE 4>
[* Deleted pursuant to a request for confidential treatment]
episodes to Four Star International ("Four Star"), pursuant to an agreement
between Four Star and Orion dated March 11, 1970 and annexed as Exhibit D
hereto.
(g) With respect to merchandising rights in and to the
Series, Orion warrants and represents that its exclusive merchandising
agent, Creative Licensing Corporation ("CLC"), has entered into an existing
license agreement for electronic games with I.J.E. (the "IJE License", a
copy of which is annexed as Exhibit E hereto), that the IJE License is the
only existing license with respect to merchandising of any rights in the
Series, and that the IJE License expires in September 1993. The Rights
shall include, without limitation, all of Orion's rights with respect to
the IJE License as of the date hereof, and Orion hereby assigns to KW all
of its right, title and interest in the IJE License. KW accepts such
assignment and agrees to assume Orion's obligations commencing on the date
hereof pursuant to the IJE License. KW acknowledges that pursuant to an
oral agreement between CLC and Orion, CLC is entitled to a commission equal
to [30%] of Orion's revenue pursuant to the IJE License, and KW agrees that
CLC shall be entitled to deduct such commission from the revenues it
receives pursuant to the IJE License, prior to remittance to KW of the
balance of such revenues.
(h) With respect to the theme music for the Existing
Episodes produced between 1986 through 1989 (the "Theme"), Orion warrants
and represents that the Theme was composed by Stormy Sacks ("Composer") as
a work-for-hire for Orion, and that pursuant to the agreement between Orion
and Composer (the "Theme Agreement", a copy of which is attached hereto as
Exhibit F), in the event KW utilizes the Theme in the production of new
episodes of the Series, Composer is entitled to receive credit for such
use, public performance fees (payable through the applicable performing
rights society from the telecaster), and the composer's share (fifty
percent) of a fair and reasonable synchronization fee for such use. The
publisher's share (fifty percent) of such synchronization fee is owned by
Orion Music Publishing ("OMP"). The Rights shall include, without limita-
tion, all of OMP's rights in the Theme and Orion hereby assigns same to KW,
along with all of Orion's and OMP's right, title and interest in the Theme
Agreement.
2. Orion acknowledges, warrants and represents that the Rights
transferred hereunder shall include, without limitation, all rights (except
as otherwise specifically excluded from the Rights and/or subject to
restriction, all as set forth in Paragraph 1 above) in and to the Series
necessary for KW, as it determines in its sole discretion, (a) based on the
Series and/or the elements thereof, to create, produce, and/or manufacture
new Series episodes and/or productions, programs, merchandising, <PAGE>
<PAGE 5>
[* Deleted pursuant to a request for confidential treatment]
commercial tie-ins, and properties, as well as advertising, marketing and
promotion thereof, in any and all media now known or hereafter existing
throughout the world (individually and collectively, the "Series Product"),
and (b) to exploit the Series Product, including without limitation,
selling, licensing, exhibiting and/or arranging for the exploitation of any
and all Series Product in any territories throughout the world in any
manner or media now known or hereafter existing, including, without
limitation, on all forms of television or similar transmissions, video
disc, cassette, theatrically, non-theatrically and through merchandising
(the "Distribution Rights").
3. As full consideration for the rights granted, agreements,
warranties and representations made, and the full performance hereof by
Orion, KW shall pay Orion an amount equal to [****] of KW's "Net Profits"
(as defined below) from its exploitation of the Rights. KW shall pay
Orion, as a non-refundable advance against Orion's share of KW's Net
Profits, the amount of [****], which shall be payable on full execution of
this agreement (the "Advance"). Orion warrants and represents that it has
negotiated this agreement as an arm's-length transaction and that, to the
best of its knowledge after a thorough assessment of the market for the
Rights, the consideration to be paid by KW hereunder represents at least
the fair market value of the Rights.
4. "Net Profits" as used herein shall mean all sums or other
consideration actually received by or credited to KW (or its
subdistributors and subsidiaries) from the exploitation of the Rights from
all sources (including, without limitation, recoveries from claims,
lawsuits or proceedings against third parties, net of the costs and
expenses thereof), less refunds and security or deposits subject to refund
("Gross Receipts") and after deduction of the following: (a) the amount of
[****] of such receipts as a distribution fee to KW in all media (except
that if KW engages a non-affiliated subdistributor with respect to home
video distribution, the distribution fee shall be the distribution fee
charged by such subdistributor plus an override to KW of [****] of the
applicable receipts on which such subdistributor's fees is calculated),
which distribution fee shall be inclusive of fees payable to any
subdistributors engaged by KW, (b) the amount of direct out-of-pocket
distribution expenses paid by KW or incurred by KW and which KW reasonably
anticipates to be paid within six months following the issuance of the
accounting statement on which such expense is deducted, including, without
limitation, direct out-of-pocket advertising, promotion and other third
party distribution expenses and residuals, reuse fees, royalties or other
compensation payable by KW to third parties on account of such <PAGE>
<PAGE 6>
[* Deleted pursuant to a request for confidential treatment]
exploitation, and (c) the amount of the development and production costs
paid by KW to produce Series Product in any format (but not including any
overhead or production fees to KW), together with interest thereon from the
time expended, at the prime rate from time to time in effect at The Bank of
New York, New York, all applied on a cross-collateralized basis among
Distribution Rights for all Series Product hereunder. In no event shall KW
be required to include in Gross Receipts any revenue of its subdistributors
unless and until KW is actually paid with respect thereto. With respect to
revenue received by KW's subdistributors, the amount of KW's distribution
fee shall be based on revenues collected by such subdistributors at their
source.
5. Within sixty (60) days after the close of each quarterly
period in which KW receives Gross Receipts ending on November 30, February
28, May 31, and August 31 of each year, commencing with the first exploita-
tion by KW of the Rights hereunder, KW shall furnish to Orion a written
statement which reflects in reasonable detail the amounts, if any, payable
to Orion pursuant to Paragraph 4 above, and following recoupment by KW of
the Advance from Orion's share of such Net Profits, KW shall send Orion
with such statements a check payable to Orion in the appropriate amount of
any such share of Net Profits. Each statement shall be deemed accepted by
Orion unless Orion notifies KW in writing within two years from the date of
such statement setting forth its specific objections thereto. Any such
objections shall be deemed waived unless within three years following the
date of the applicable statement such objections are settled or Orion
commences a lawsuit to contest such statement. Orion or its designated
representative shall have the right, at KW's usual place of business,
during business hours and on reasonable notice to KW (but in no event more
than once annually), to audit KW's books and records to confirm the
accuracy of any such statements not otherwise deemed accepted or with
respect to which any objections are not waived as set forth above. Orion
shall promptly furnish KW with a copy of any audit report and KW shall pay
the reasonable costs of such audit if such audit reveals an error of at
least 10% in KW's favor.
6. Orion warrants and represents that: (a) it is duly autho-
rized, and it has the requisite right, power, and authority, to enter into
and to perform this agreement, and it owns or controls all of the Rights
hereunder; (b) to the extent of KW's rights in the elements thereof, the
Existing Episodes were produced in accordance with all applicable laws and
agreements, and all contracts, and rules and regulations of labor organiza-
tions having jurisdiction thereover; (c) except as specifically provided
herein, no residuals, reuse fees, or other payments or compensation shall
<PAGE>
<PAGE 7>
[* Deleted pursuant to a request for confidential treatment]
be due or payable, arising out of the exploitation by KW of the Rights
hereunder; (d) the exploitation of the Rights by KW hereunder shall not
violate or infringe the copyright, trademark, patent, literary, intellec-
tual or similar rights, or rights of privacy or publicity, or any other
rights whatsoever, of any party; (e) there are no existing claims or, to
the best of its knowledge, threatened claims by any party affecting the
Rights hereunder; (f) except as specifically set forth in Paragraph 1
above, there are no liens or encumbrances to the Rights hereunder; (g)
except as specifically set forth in Paragraph 1 above, it has not taken any
action or granted any rights adversely affecting and/or in any way encum-
bering the Rights hereunder and it will not take any action or grant any
rights inconsistent with the grant of rights hereunder; and (h) except as
specifically excluded from the Rights pursuant to Paragraph 1 above, the
Rights hereunder constitute all rights, title and interest in and to the
Series. Without limitation of the warranties and representations made
above, Orion has advised KW that Orion granted Manufacturers Hanover Trust
Company ("MHTC"), as agent for Hanover Trust Co. ("HTC"), a security
interest (the "Security Interest") on various properties of Orion including
the Series pursuant to, without limitation, a security agreement dated
December 17, 1987 and a so-called "Second Amended and Restated Credit
Agreement" dated as of July 27, 1990 (such documents, together with any
other documents relating to the Security Interest, to be referred to
collectively as the "MHTC Security Agreement"). Orion represents and
warrants to KW that pursuant to the MHTC Security Agreement (i) Orion has
the right to sell and transfer the Rights to KW as provided in this agree-
ment, free and clear of the Security Interest, (ii) upon the sale and
transfer of the Rights to KW pursuant to this Agreement, the Security
Interest will attach solely to Orion's rights pursuant to this agreement
and the proceeds herefrom payable to Orion, and (iii) MHTC's and HTC's
rights thereunder, even in the event of a default by Orion of its obliga-
tions to MHTC and/or HTC, shall not adversely affect or in any way encumber
KW's rights pursuant to this agreement.
7. KW warrants and represents that: (a) it is duly authorized,
and it has the requisite right, power and authority to enter into and to
perform this agreement, (b) with respect to its production and exploitation
of Series Product, it shall assure compliance with those obligations as
specifically set forth in Paragraphs 1(e), 1(f), 1(g), and 1(h) above and
(c) as between it and Orion, it shall be solely responsible for all costs
and obligations in connection with its production and/or exploitation of
Series Product; provided, however, that such costs and obligations shall
not include any costs or obligations assumed or created by or under the
authority of Orion, unless KW has specifically agreed to same in this
agreement.
<PAGE>
<PAGE 8>
[* Deleted pursuant to a request for confidential treatment]
8. KW shall use its best endeavors in accordance with its sole
business judgment to exploit the Rights. Nothing contained in this
agreement, however, shall require KW to exploit the Rights or to create any
Series Product and KW makes no guarantee as to the amount of Net Profits,
if any, payable to Orion hereunder. Notwithstanding the foregoing, in the
event KW does not exploit any Series Product in the television medium prior
to the date seven years following the date hereof, or following such
initial exploitation, during any consecutive six year period thereafter,
then upon written notice from Orion, and provided that at the time of such
written notice KW has not commenced or resumed the exploitation of any
Series Product in the television medium, Orion shall have the right to
terminate KW's rights hereunder. In the event of such termination, KW
shall not produce any new Series Product nor shall KW engage in any further
exploitation of Distribution Rights, and the Rights shall revert to Orion;
provided, however, that such termination shall not affect KW's rights to
collect and retain revenue in accordance with this agreement (and subject
to KW's obligation to account to Orion pursuant to Paragraph 5 above) from
any prior existing exploitation of Distribution Rights (so long as the
duration of the terms thereof are within customary industry parameters) and
Orion shall not thereby acquire any rights in or to any Series Product
produced or created by KW pursuant to this agreement.
9. Each party hereto (the "indemnitor") shall indemnify and
hold harmless the other (the "indemnitee") from and against any and all
loss, damage, liability, cost and expense (including reasonable attorneys'
fees and court costs) incurred by the indemnitee as a result of, arising
out of, or in connection with a breach by the indemnitor of any representa-
tion or warranty contained in this agreement or the failure by the indemni-
tor to perform any agreement, act or other obligation, required to be
performed by the indemnitor pursuant to this agreement. KW's indemnifica-
tion of Orion shall extend, without limitation, (i) to any new materials
added to the Series or the Rights hereunder, and (ii) to breaches by KW of
the third party obligations it is assuming pursuant to Paragraphs 1(e),
1(f), 1(g) and 1(h) above.
10. This agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements
to be wholly performed therein, and the parties hereby submit to the
exclusive jurisdiction of the Federal and State courts located in New York
City to adjudicate any dispute hereunder. Orion acknowledges that the
rights granted to KW hereunder are of a unique and special nature, such
that orion's breach of this agreement would cause irreparable harm to KW
<PAGE>
<PAGE 9>
[* Deleted pursuant to a request for confidential treatment]
which could not be compensated solely by money damages and, therefore,
without limitation of any rights or remedies otherwise available, KW shall
have the right to obtain injunctive and other equitable relief to prevent
such breach by Orion. In the event of a breach of the agreement by KW,
other than a breach following termination by Orion pursuant to Paragraph 8
above, Orion agrees that it shall be limited to recovery of money damages.
11. This agreement constitutes the full and binding agreement of
the parties and may not be amended or modified without a writing signed by
the party to be charged. Nothing contained herein shall be deemed to
create a partnership or joint venture between the parties, their relation-
ship being independent contractors. Neither Orion nor KW shall disclose to
any third party (other than its respective employees, directors, and
officers, in their capacity as such, on a need-to-know basis), any informa-
tion with respect to the financial terms and conditions of this agreement
except: (i) to the extent necessary to comply with law, public reporting
obligations, or the valid order of a court of competent jurisdiction, in
which event the party making such disclosure shall so notify the other as
promptly as practicable (if possible, prior to making such disclosure) and
shall seek confidential treatment of such information, (ii) as part of its
normal reporting or review procedure to its parent company, auditors and
its attorneys, provided, however, that such parent company, auditors and
attorneys agree to be bound by the provisions of this paragraph, (iii) in
order to enforce its rights pursuant to this agreement, (iv) to banks
making loans or actively considering making loans to such party provided
that such party instructs each such bank not to disseminate such informa-
tion unless required by law or regulatory authorities, or in order to
enforce its rights against such party, and (v) to prospective financiers of
such party and their respective investment bankers, attorneys, accountants
and other experts (as said term is commonly used for U.S. securities law
purposes) provided that such financiers, investment bankers, attorneys,
accountants and other experts have agreed in writing to be bound by these
provisions.
12. All notices hereunder shall be sent by telecopy, personal
delivery, receipted overnight or certified mail to the parties at the
address first set forth above or to such other addresses as the parties so
designate. Copies of notices to KW shall be sent to the attention of Vice
President, Business Affairs and General Counsel. Copies of notices to
Orion shall be sent to the attention of Senior Vice President of Business
Affairs, Home Entertainment and copies of accounting statements to Orion
<PAGE>
<PAGE 10>
[* Deleted pursuant to a request for confidential treatment]
shall be sent as well to the attention of Vice President, Producer Account-
ing; the address for such copies to Orion being 1888 Century Park East, Los
Angeles, California 90067.
Very truly yours,
KING WORLD PRODUCTIONS, INC.
By:__________________________
ACCEPTED AND AGREED TO:
ORION PICTURES CORPORATION
By:__________________________
<PAGE>
[* Deleted pursuant to a request for confidential treatment]
EXHIBIT A
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of October __, 1991 (the "Security
Agreement") between King World Productions, Inc., a Delaware corporation
(the "Debtor"), and Orion Pictures Corporation, a Delaware corporation (the
"Secured Party").
W I T N E S S E T H:
WHEREAS, the Secured Party and the Debtor have entered into that
certain letter agreement dated as of October 1, 1991 (the "King World
Production Agreement"), under which the Secured Party has agreed to
transfer to the Debtor certain trademark, copyright and other property
rights as more fully described in the King World Production Agreement (the
"Rights") in and to the television series entitled "Hollywood Squares" (the
"Series") to enable the Debtor to create and exploit new episodes of the
Series;
WHEREAS, pursuant to Section 3 of the King World Production
Agreement, the Secured Party will receive [****] of the Debtor's "Net
Profits" (as defined therein) from its exploitation of the Rights, and
pursuant to Section 8 of the King World Production Agreement, the Secured
Party has retained an automatic reversion right in the Rights;
WHEREAS, pursuant to the King World Production Agreement, the
Debtor has agreed to grant to the Secured Party a security interest in the
Rights, as provided herein, to secure the Secured Party's payment and
reversion rights under Sections 3 and 8 of the King World Production
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and for other good and valuable consideration,
the receipt of which is hereby acknowledged, as a condition to the effec-
tiveness of, and in order to induce the Secured Party to enter into, the
King World Production Agreement, the parties hereto hereby agree as
follows:
<PAGE>
[* Deleted pursuant to a request for confidential treatment]
1. GRANT OF SECURITY INTEREST.
__________________________
(a) GRANT: The Debtor hereby mortgages, hypothecates, grants
and assigns to the Secured Party as security for the Secured obligations
(as such term is defined in subparagraph 1(b) below) a continuing first
priority security interest in and to all of the Debtor's rights, title, and
interest of every kind and nature in and to (but none of the Debtor's
obligations with respect to) all of the items listed in subparagraph 1(c)
below, which items are hereinafter collectively referred to as the "Collat-
eral".
(b) PURPOSE OF GRANT: The security interest in the Collateral
granted to the Secured Party pursuant hereto is being granted to secure the
Secured Obligations. The term "Secured Obligations" shall mean and include
the Debtor's obligation to (A) assign to the Secured Party the Rights
in accordance with the terms of the reversion right retained by the Secured
Party under Section 8 of the King World Production Agreement, (B) pay the
Secured Party the amounts required to be paid by the Debtor pursuant to
Section 3 of the King World Production Agreement and (C) fully and timely
pay to the Secured Party all damages incurred by Secured Party arising from
the Debtor's failure to perform its agreements, obligations, representa-
tions, warranties and covenants hereunder and under the King World Produc-
tion Agreement.
(c) COLLATERAL: The term "Collateral" as used herein shall mean
all the Debtor's right, title and interest of every kind and nature in and
to the Rights granted to the Debtor under Section 1(a) of the King World
Production Agreement.
(d) RIGHTS OF SECURED PARTY: With respect to the security
interest hereby granted to the Secured Party and granted to the Secured
Party pursuant to the other Security Documents (as hereinafter defined),
the Secured Party and any of its successors or assigns shall at all times
be entitled to exercise in respect of the Collateral all the rights,
remedies, powers and privileges available to a secured party under all
applicable laws, including, without limitation, the United States Copyright
Act and the New York Uniform Commercial Code in effect at the time, which
shall be applicable for the purpose of establishing the relative rights of
the Secured Party and of the Debtor, and to those procedures to be followed
thereunder in the event this subparagraph 1(d) shall become operative,
including the right to sell the Collateral or any portion thereof, and, in
addition thereto, to the rights and remedies provided for herein and under
the King World Production Agreement and to such other rights and remedies<PAGE>
[* Deleted pursuant to a request for confidential treatment]
as may be provided by law or in equity. Any proceeds received by the
Secured Party in respect of any sale of, collection from or other realiza-
tion upon all or any part of the Collateral pursuant to the exercise of its
remedies as a secured creditor shall be held by the Secured Party and
applied first to the payment of the costs and expenses, of such sale,
collection or other realization, including the expenses, liabilities and
advances made or incurred by the Secured Party in connection therewith, and
second to the payment of the Secured Obligations.
(e) EXERCISE OF RIGHTS; EVENTS OF DEFAULT. The Secured Party or
any of its successors or assigns shall be entitled to exercise all or any
of the rights granted hereunder with respect to the Collateral in the event
the Debtor or its successors or assigns (i) breaches or defaults in the
Debtor's obligation to make payments to the Secured Party under Section 3
of the King World Production Agreement, and such breach or default contin-
ues for five business days after written notice thereof to the Debtor
specifying such breach or default, (ii) breaches or defaults in the
Debtor's obligation to assign to the Secured Party the Rights pursuant to
Section 8 of the King World Production Agreement, or (iii) breaches or
defaults, in any material respect, in the performance of any of the
Debtor's obligations hereunder, and such breach or default continues for 20
days after written notice thereof to the Debtor specifying such breach or
default. Any of such breaches or defaults shall constitute an "Event of
Default" hereunder. After and during the continuance of an Event of
Default, the Secured Party, after giving notice of its intention to do so,
may take any reasonable action which it may deem necessary for the mainte-
nance, preservation and protection of any of the Collateral or its security
interest therein.
(f) FURTHER DOCUMENTS. The Debtor hereby agrees to execute and
deliver to the Secured Party all such financing statements or similar
documentation for all jurisdictions designated by the Secured Party
(collectively, the "Financing Statements"), one or more copyright mortgages
and assignments in form reasonably satisfactory to the Secured Party
(including the Copyright Mortgage, as hereinafter defined) and such other
documents, agreements or instruments as the Secured Party shall reasonably
request and are reasonably required to better perfect, protect, evidence,
renew and/or continue the security interest in the Collateral granted
hereunder and/or to effectuate the purposes and intents of this Security
Agreement (collectively, the "Security Documents"), and to file, register
and/or record the same under the Uniform Commercial Code and all other
similar applicable laws of the States of California and New York and under
the laws of any other jurisdiction where such filing,<PAGE>
[* Deleted pursuant to a request for confidential treatment]
registration and/or recordation may reasonably be required by the Secured
Party concurrently with the execution and delivery of this
Security Agreement and under the United States Copyright Act. Concurrently
with the execution hereof, the Debtor will deliver to the Secured Party a
copyright mortgage (the "Copyright Mortgage") in form and substance
satisfactory to the Secured Party, duly executed and notarized and in
proper form for recordation in the United States Copyright Office or other
applicable governmental authority. If after the occurrence and during the
continuance of an Event of Default, the Debtor fails to execute and deliver
to the Secured Party any of the Financing Statements or any other Security
Document on request of the Secured Party, the Debtor hereby appoints the
Secured Party its irrevocable attorney-in-fact to sign any such document
for the Debtor, and agrees that such appointment constitutes a power
coupled with an interest and is irrevocable throughout the term of the King
World Production Agreement and this Security Agreement. Whether or not an
Event of Default has occurred, the Debtor hereby authorizes the Secured
Party to file one or more continuation statements, and amendments to
previously filed financing statements of a technical nature (other than a
description of the Collateral), relative to all or any part of the Collat-
eral without the signature of the Debtor where permitted by law. A carbon,
photographic or other reproduction of this Security Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(g) TERM OF SECURITY INTEREST. The security interest created
hereunder and under the Copyright Mortgage shall commence as of the date of
this Security Agreement and shall terminate upon the expiration of the last
to expire of Secured Party's rights under the King World Production
Agreement and payment and performance by the Debtor of all of its obliga-
tions thereunder, at which time the Secured Party, on the Debtor's request
and at the Secured Party's expense, shall execute and deliver to the Debtor
termination statements releasing and terminating the Financing Statements,
and the other Security Documents, and with filing thereof at the sole cost
and expense of the Secured Party.
(h) PRIORITY OF SECURITY INTEREST. The security interest
granted by the Debtor to the Secured Party in and to the Collateral shall
be a first priority security interest.
(i) CONTINUING SECURITY INTEREST. This Security Agreement shall
create a continuing security interest in the Collateral and shall (a) be
binding upon the Debtor, its succes-<PAGE>
[* Deleted pursuant to a request for confidential treatment]
sors and assigns, and (b) inure to the benefit of the Secured Party and its
successors, transferees and assigns.
2. DEBTOR'S CONFIRMATIONS, REPRESENTATIONS, WARRANTIES AND COVE-
NANTS: The Debtor warrants and represents that it is duly authorized, and
it has the requisite right, power and authority to enter into and perform,
this Security Agreement. Without the Secured Party's prior written
consent, the Debtor may not during the term hereof (a) grant any first
priority security interest in or lien on all or any of the Collateral, or
(b) convey, transfer or otherwise dispose of an interest in all or any of
the Collateral except to a transferee who shall acknowledge in writing in
advance, and agree to be bound by, this Security Agreement and the terms
and conditions hereof and the security interest provided for herein.
Anything herein to the contrary notwithstanding, the Rights shall be as-
signable to the Secured Party, and shall automatically revert to the
Secured Party as provided in Section 8 of the King World License Agreement.
3. GOVERNING LAW: THIS SECURITY AGREEMENT AND EACH OTHER
SECURITY DOCUMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS WHOLLY EXECUTED AND PERFORMED THEREIN, AND WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OR CHOICE OF LAWS THEREOF.
4. ANY LEGAL ACTION: THE DEBTOR AND THE SECURED PARTY (A)
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS SECURITY AGREEMENT OR ANY OTHER
SECURITY DOCUMENT, (B) AGREE THAT ANY LEGAL SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER SECURITY
DOCUMENT SHALL BE INSTITUTED IN A STATE OR FEDERAL COURT IN THE CITY OF NEW
YORK, STATE OF NEW YORK, (C) WAIVE ANY OBJECTION WHICH THEY MAY HAVE NOW OR
HEREAFTER TO THE COUNTY OF NEW YORK AS THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING, AND (D) IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, OR
ANY COURT OF THE STATE OF NEW YORK LOCATED IN THE CITY OF NEW YORK IN ANY
SUCH SUIT, ACTION OR PROCEEDING, AND ANY SUMMONS, ORDER TO SHOW CAUSE,
WRIT, JUDGMENT, DECREE, OR OTHER PROCESS WITH RESPECT TO ANY SUCH SUIT,
ACTION OR PROCEEDING MAY BE DELIVERED TO THE DEBTOR PERSONALLY OUTSIDE THE
STATE OF NEW YORK, AND WHEN SO DELIVERED, THE DEBTOR SHALL BE SUBJECT TO
THE JURISDICTION OF SUCH COURT, AND AMENABLE TO THE PROCESS SO DELIVERED AS
THOUGH THE SAME HAD BEEN SERVED WITHIN THE STATE OF NEW YORK, BUT OUTSIDE
THE COUNTY IN WHICH SUCH SUIT, ACTION OR PROCEEDING IS PENDING.
5. NOTICES: Any notice or other communication herein required,
permitted or desired to be given hereunder shall be<PAGE>
[* Deleted pursuant to a request for confidential treatment]
given in the manner provided in Section 12 of the King World Production
Agreement.
6. AMENDMENTS AND WAIVERS: No amendment or waiver of any
provision of this Security Agreement nor consent to any departure by the
Debtor herefrom shall in any event be effective unless the same shall be in
writing and signed by the Secured Party, and then such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given.
7. DEBTOR'S OFFICES: The Debtor's chief executive office and
chief place of business is located at 830 Morris Turnpike, Short Hills, New
Jersey 07078. The Debtor shall give Secured Party prompt written notice
(and shall use its best efforts to give 30 days' advance notice) of any
change in the location of its principal place of business and its books and
records.
8. SECURED PARTY'S DUTIES AND LIABILITIES: Except as provided
in the Uniform Commercial Code, the Secured Party shall have no duties as
to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collat-
eral.
9. INDEMNITY AND EXPENSES: The Debtor agrees to indemnify the
Secured Party from and against any and all claims, losses and liabilities
growing out of or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except for claims, losses or
liabilities resulting from the Secured Party's gross negligence or willful
misconduct. Upon the occurrence of an Event of Default, the Debtor agrees
to pay to the Secured Party the amount of any and all expenses, including
the reasonable fees and disbursements of its counsel, and of any experts
and agents, that the Secured Party may incur in connection with, (i) the
sale of, collection from, or other realization upon any of the Collateral,
(ii) the exercise or enforcement of any of the rights of the Secured Party
hereunder or (iii) the failure by the Debtor to perform or observe any of
the material provisions hereof. The Secured Party agrees to indemnify the
Debtor for the Debtor's claims, losses and liabilities arising from the
gross negligence or willful misconduct of the Secured Party in the exercise
or enforcement other than in a commercially reasonable manner of any of the
rights of the Secured Party hereunder.
10. ENTIRE AGREEMENT; AMENDMENT; HEADINGS: This Agreement and
the King World Production Agreement contain the entire understanding of the
parties with respect to the subject matter hereof. This Agreement super-
sedes all prior agreements<PAGE>
[* Deleted pursuant to a request for confidential treatment]
and may only be modified by a writing signed by all of the parties hereto.
The section headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
By signing in the spaces provided below, the parties hereto have
agreed to all of the terms and conditions of this Security Agreement.
ORION PICTURES CORPORATION
Secured Party
By:_________________________
Title:___________________
Address:_________________
KING WORLD PRODUCTIONS, INC.
Debtor
By:_________________________
Title:___________________
Address:_________________
<PAGE>
[* Deleted pursuant to a request for confidential treatment]
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On ________________, 19__, before me, the undersigned, a Notary
Public in and for said State, personally appeared ________________________,
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who executed the within instrument as
_______________ on behalf of King World Productions, Inc., the corporation
therein named, and acknowledged to me that the corporation executed it.
Witness my hand and official seal.
____________________________
<PAGE>
[*Deleted pursuant to a request for confidential treatment]
ASSIGNMENT
__________
The undersigned, Orion Pictures Corporation ("Orion"), for One
Dollar in hand paid and for other valuable consideration received, hereby
sells forever, to King World Productions, Inc. ("KWP") all right, title,
and interest of any kind whatsoever in and to the original property known
as "Hollywood Square" (the Property"), including, without limitation, all
trademarks, service marks, copyrights (and any renewals or extensions
thereof), underlying rights, content, format, title, set design, compo-
nents, game rules, scripts, and all appearances and depictions thereof, and
all of such sole and exclusive rights necessary or desirable to create and
exploit new episodes and/or properties based in whole or in part thereon,
to copyright same in KWP's name, and to advertise, promote and market same,
by any and all means, as well as all rights ancillary thereto and deriva-
tive therefrom, throughout the world in any and all media (the "Rights").
This Assignment is subject to the terms and conditions of that
certain agreement between the parties dated as of October 1, 1991 (the
"Agreement"), including, without limitation, the exclusion from the Rights
of distribution rights in and to the television episodes of the Property
existing as of October 1, 1991.
Orion agrees, insofar as it now or later may have the power or
authority to do so, to cause renewals or extensions of any copyrights in
the Property duly to be obtained, and the Rights herein granted are now
assigned to KWP for the current term and the renewal or extended term of
copyright and after such renewal or extension, further or like documents of
confirmation of assignment will be given to KWP, if requested. Orion
appoints KWP as its irrevocable attorney-in-fact, with the right, but not
the obligation, to execute and file all such documents and to do all acts
necessary for the obtaining of such extensions or renewals and evidencing
the continuation of the Rights in KWP for such renewal or extended terms as
are now vested in KWP.
KWP, and its successors and assigns, are hereby empowered to
bring, prosecute, defend and appear in suits, actions and proceedings of
any kind or nature under or concerning the Rights, including without
limitation, said copyrights or their renewals or extensions, or concerning
any infringement thereof, and particularly infringement of or interference
with any of the<PAGE>
[*Deleted pursuant to a request for confidential treatment]
Rights now granted under said copyrights or renewals or extensions, in
KWP's name.
Dated: As of October 1, 1991
ORION PICTURES CORPORATION
By:___________________________
Its:__________________________
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of October, 1991, before me personally came
___________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of Orion Pictures Corpora-
tion, the corporation described in and which executed the foregoing
Assignment; that he knows the seal of said corporation; that the seal
affixed to said Assignment is such corporate seal; that it was so affixed
pursuant to authorization of the board of directors of said corporation,
and that he signed his name thereto by like authority.
_________________________________
Notary Public
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Exhibit 10.24
CONFIDENTIAL TREATMENT REQUESTED
THIS AGREEMENT is made and entered into this ____ day of May,
1997, by and between K.W.M., Inc., 1700 Broadway, New York, New York 10019
("KW") and Full Moon & High Tide Productions, Inc. ("Lender"), c/o Michael
Adler, Esq., Lichter, Grossman, Nichols & Adler, 90200 Sunset Boulevard,
Suite 530, Los Angeles, California 90069, providing the services of
Roseanne ("Roseanne").
1. The Series: The "Series" shall mean a possible strip
(Monday - Friday) entertainment/talk show television series presently
intended to be telecast initially in one-hour episodes in first-run
syndication commencing with the 1998-1999 broadcast season (i.e., the 12-
month period commencing on or about September 1, 1998, but in any event
commencing between August 15 and September 20, 1998) (the "'98-'99 Broad-
cast Season") and featuring Roseanne as the host. Commencing on the date
hereof, KW shall attempt to license the Series to television stations in
the U.S. and elsewhere throughout the world for telecast commencing with
the '98-'99 Broadcast Season. The Series shall be co-produced by KW and
Lender and distributed by KW, all in accordance with the terms of this
Agreement.
2. Series Production and Distribution:
(a) In the event that KW elects to produce the Series, KW shall
co-produce and fund production of the Series and shall have the exclusive
distribution rights in and to the episodes of the Series produced during
the Employment Period (as defined below), forever and throughout the world
in all media now or hereafter known, all in accordance with this Agreement.
KW will consult with Lender regarding KW's distribution activities with
respect to the Series, but, except as otherwise set forth herein, KW shall
have the sole right to make all business decisions with respect to the
Series, including without limitation regarding the annual Series budget
(and any changes therein) and all distribution decisions with respect to
the Series (including, without limitation, the right at any time to abandon
the effort to license the Series). Notwithstanding the foregoing, KW
acknowledges that it shall supply production funding for the Series in an
amount commensurate with the production values of other nationally distrib-
uted first-run syndicated series similar to the Series. Lender acknowledg-
es that KW may simultaneously act as the producer or co-producer and/or
distributor of any other productions. Lender acknowledges that KW distrib-
utes "The Oprah Winfrey Show", and that, without limiting the generality of
the foregoing sentence, KW shall have the right, in its sole discretion,
not to license the Series for telecast in any market or territory in a time
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period against the telecast of "The Oprah Winfrey Show" in that market or
territory, and Lender specifically waives any claims that it might have
based on any exercise of such right by KW. Nothing contained herein shall
require KW to produce or distribute the Series or to continue such produc-
tion or distribution if commenced; KW's only obligation to Lender and
Roseanne shall be payment of the compensation set forth herein, in accor-
dance with and subject to the terms contained herein with respect to such
payment.
(b) KW and Lender shall consult with each other on a regular and
meaningful basis with respect to all creative elements of the Series and
shall have mutual approval of all such creative elements, such approvals to
be exercised by each of KW and Lender in a reasonable and timely fashion,
in a manner consistent with the budget for the Series, and so as not to
frustrate the production, distribution or promotion of the Series.
Notwithstanding the foregoing, KW acknowledges that Lender shall have the
right to designate Jeff Wald ("Wald") to be an executive producer of the
Series. If Lender so designates Wald to be an executive producer, KW and
Lender shall negotiate with Wald on an arm's length basis with respect to
the terms of Wald's executive producing agreement, including without
limitation Wald's compensation, it being agreed that Wald's specific duties
shall be commensurate with his title and compensation. KW and Lender agree
that, if the Series is produced, it will be produced in Los Angeles.
3. Services: In the event that the Series is produced,
then:
(a) Lender shall co-produce the Series and shall cause Roseanne
to render her services as a day-to-day senior production executive and the
host of all Series episodes produced pursuant to this Agreement during the
period commencing on the date hereof and continuing through the date of
completion of production of the last Series episode produced for initial
telecast during the '98-'99 Broadcast Season (the "Initial Period"), unless
such period is extended by KW pursuant to Paragraph 3(c) below (the Initial
Period, as it may be extended, is sometimes referred to hereinafter as the
"Employment Period"). The parties acknowledge that, unless otherwise
agreed upon by the parties, the production schedule for each broadcast
season of the Series will consist of [****] Series episodes. Lender shall
cause Roseanne to perform diligently, faithfully and competently such
services as are customarily and reasonably rendered by a host and a senior
production executive of an entertainment/talk show series and to devote
diligently and faithfully her time, skill and attention to the performance
of such services, including, without limitation, and for no additional
compensation, the rendering of her services, from time to time, in promo-
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tional activities for the Series (including, without limitation, attending
NATPE during January, 1998 and the subsequent NATPEs preceding each
subsequent broadcast season for which KW extends the Employment Period
pursuant to Paragraph 3(c) below). Lender shall cause Roseanne to be
available, consistent with her first priority services to KW hereunder and
with customary requirements for promotional activities for stars of series
similar to the Series, to render such promotional activities. As a
condition to Lender's and Roseanne's engagement hereunder, Lender hereby
affirms and represents that neither Lender nor Roseanne is under any
obligation to any current or former employer or other party which is in any
way inconsistent with, or which imposes any restriction upon, any of
Lender's and Roseanne's services and obligations hereunder, or any of
Lender's and Roseanne's undertakings under this Agreement. Notwithstanding
any other provision of this Agreement to the contrary, Lender and KW
acknowledge that Lender and Roseanne have granted to ABC a "first look" at
the next prime time Roseanne-starring television series, which option shall
run for an 18-month period, commencing upon the broadcast of the final
episode of the "Roseanne" series for the 1996/97 broadcast season.
Accordingly, the terms, conditions and rights of KW's Sitcom Option (as
defined in Paragraph 16 below) will be subject to compliance by Lender and
Roseanne with the aforesaid ABC first-look option.
(b) During the Initial Period, if KW requests, Lender and KW
shall co-produce either a presentation tape or a pilot for the Series, and
Lender shall cause Roseanne to render her on-camera services as a host
thereof, for no additional compensation.
(c) KW shall have a series of five (5) successive, dependent
options, each to extend the Employment Period for an additional period of
one (1) subsequent broadcast season (each, a "One Year Option Period"). KW
shall exercise each such option, if at all, to extend the Employment Period
for the subsequent One Year Option Period by written notice to Lender no
later than May 1 of the then-current Employment Period (for purposes of
clarification, the first option exercise date shall be May 1, 1999, for the
1999/2000 broadcast season (the "'99-'00 Broadcast Season"). In the event
KW elects to so extend the Employment Period, the terms and provisions of
this Agreement shall remain in effect and shall apply during the Employment
Period, which shall be deemed so extended.
4. Fixed Compensation:
(a) KW shall pay Lender, and Lender shall accept from KW, for
Lender's and Roseanne's services during the Initial
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Period, an amount equal to [****], payable upon the complete execution
hereof, [****].
(b) If and to the extent KW exercises its option to extend the
Employment Period for any One Year Option Period, KW shall pay Lender, and
Lender shall accept from KW, for Lender's and Roseanne's services during
the applicable One Year Option Period, the following amounts: (i) [****]
with respect to the first such One Year Option Period; (ii) [****] with
respect to the second such One Year Option Period; and (iii) [****] which
amounts shall be payable on commencement of production of the Series
episodes produced for initial telecast during the broadcast season (i.e.,
the 12-month period commencing on or about September 1) to which the
applicable option relates, [****].
(c) For purposes of any applicable collective bargaining
agreements, including, without limitation, AFTRA, all compensation payable
to Lender hereunder shall be at the minimum rates, and to the extent that
the compensation payable hereunder exceeds (i) [****] during each of the
Initial Period and the first One Year Option Period (if any), (ii) [****]
during the second One Year Option Period (if any); or (iii) [****] during
each of the third, fourth and fifth One Year Option Periods (if any), KW
shall be entitled to credit such excess against any additional fees to
which Lender may become entitled for all services rendered by Roseanne
hereunder, including entitlements by virtue of any applicable collective
bargaining agreements, and the balance of any payments hereunder shall be
allocated to Lender's co-production services and Roseanne's services as a
senior production executive. All such additional fees shall be determined
at minimum rates in accordance with the applicable collective bargaining
agreement.
(d) If Roseanne delivers promotional announcements (whether live
or by means of recording) on behalf of the Series or participates in "lead
ins" or "lead outs" of commercial announcements, Lender shall cause
Roseanne to perform said services at no additional compensation.
(e) KW shall pay directly to the AFTRA health, pension and
welfare funds the amounts required to be paid with respect to Roseanne's
AFTRA-covered services hereunder based on payment to Lender for AFTRA-
covered services in the amount, notwithstanding any other provision of this
Agreement, of (i) [****] during each of the Initial Period and the first
One Year Option Period (if any), (ii) [****] during the second One Year
Option Period (if any); and (iii) [****] during each of the third, fourth
and fifth One Year Option Periods (if any).
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(f) Subject to the provisions of this Paragraph 4(f), as soon as
practicable after the execution of this Agreement, Lender will be granted a
"non-qualified stock option" (the "Stock Option"), under the 1996 Amended
and Restated Stock Option and Restricted Stock Purchase Plan (the "Plan")
of KW, to purchase 100,000 shares of KW's Common Stock, $.01 par value (the
"Common Stock"), at an exercise price per share equal to the price per
share of the Common Stock on the New York Stock Exchange at the close of
trading on the date of this Agreement. Lender's right to exercise the
Stock Option shall vest 100% on September 7, 1999. Lender agrees to limit
its sales of shares of Common Stock purchased pursuant to its exercise of
the Stock Option so that its sales of such shares do not exceed 10,000
shares in any consecutive 30-day period. The foregoing terms shall be set
forth in a definitive stock option agreement in KW's standard form which
shall be entered into by Lender and KW. Lender's rights as an optionee
shall be governed by the terms and conditions of such agreement and the
Plan.
(g) During the Employment Period, whenever KW requests Roseanne
to travel to a place beyond fifty (50) miles from her residence in Los
Angeles (or her then-current location if closer to the place for which KW
requests her services), (i) KW shall provide Roseanne, her husband and up
to four (4) other companions with, or reimburse such persons for (provided
KW is furnished with evidence of expenses reasonably satisfactory to KW),
first-class hotel accommodations during the period Roseanne is requested by
KW to remain at such place and (ii) KW shall provide Roseanne, her husband
and up to four (4) other companions with air transportation to and from
such place and Roseanne's Los Angeles residence (or her then-current
location if closer) on KW's corporate jet if KW owns a corporate jet at
such time; otherwise KW will provide such persons with a charter jet air-
plane (G-2 or better) for such purposes.
(h) All payments hereunder are subject to any and all withhold-
ings and deductions required by law.
5. Contingent Compensation: [****] of the Net Profits of
the Series as defined herein. For purposes of this Paragraph 5 and
Paragraph 6 below, KW shall include King World Productions, Inc.
(a) "Gross Receipts" shall mean all sums actually received by or
credited to KW and the subsidiaries of KW at any time from the following:
(i) all exploitation of any and all episodes of the Series in perpetuity,
any format rights in the Series, or any other rights whatsoever in or to
the Series (e.g., subsidiary and ancillary rights, such as literary
publishing rights and sound recordings and music publishing); (ii) all
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recoveries for the unauthorized use or exploitation of any of KW's rights
in the Series or the infringement of any of KW's rights in the Series (it
being agreed that, notwithstanding anything to the contrary in Paragraph
5(b) below, KW shall not be entitled to any distribution fee on any Gross
Receipts pursuant to this subdivision (ii)); and (iii) all net insurance
recoveries from the Series. Advertising or other rebates or discounts
obtained by KW or its subsidiaries and affiliated subdistributors with
respect to the advertising and promotion of the Series shall be credited
against the "Distribution Expenses" (as defined below) incurred with
respect to such advertising and promotion. In the case of subdistribution
of any of the rights hereunder on a percentage basis, the gross amount
received by such subdistributor shall be included in Gross Receipts and
there shall be no deduction for any subdistribution fees or commissions.
Where subdistribution is on an outright basis, the actual amount received
by KW shall be included in Gross Receipts. Advance payments and security
deposits shall not be included in Gross Receipts until earned by, forfeited
or otherwise applied to the Series (unless such advance payments or
security deposits are non-refundable, in which case such amounts shall be
included in Gross Receipts upon receipt), and interest on any such advance
payments and security deposits shall also be included in Gross Receipts
(calculated at the prime rate from time to time in effect at the Bank of
New York, New York, New York, from the date of KW's receipt of any such
advance or security deposit until the date of its inclusion in Gross
Receipts (if ever)), nor shall Gross Receipts include receipts of radio or
television broadcasters or others who actually use or exhibit to the public
any of the Series programs (it being agreed that any agreement with a
broadcaster or any other company owning or controlling KW, owned or
controlled by KW, or under common ownership or control with KW, shall be on
an arm's-length basis).
(b) "KW's Distribution Fee" shall mean an amount equal to [****]
of Gross Receipts; [****] "KW's Distribution Fee" shall mean an amount
equal to [****] of Gross Receipts from that territory. In the event that
KW engages a third-party distributor anywhere in the world, KW shall absorb
within the applicable KW Distribution Fee any distribution fees payable to
such third party.
(c) "Distribution Expenses": KW will advance all marketing,
promotional and other distribution expenses relating to the Series.
Marketing, promotional and other distribution expenses ("Distribution
Expenses") shall mean all direct (i.e., non-overhead), out-of-pocket costs
and expenses paid in connection with the exhibition, distribution, adver-
tising, promotion, marketing, turning to account and other exploitation of
the Series, including, without limiting the generality of any of the
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foregoing, any costs or expenses paid in connection with any of the
following:
(i) The making or obtaining of prints, negatives, preprint
material, sound records, and storage and shipment of prints, satellite
charges, transportation charges, costs of reels, containers, screening
expenses and censorship charges; all costs of trailers, transcriptions,
still photographs and the like; and insurance premiums on distributor's
errors and omissions insurance policies;
(ii) Advertising, publicizing, promoting and otherwise
exploiting the Series by such means and to such extent as KW may deem
appropriate;
(iii) Making foreign language versions, cut-in versions,
superimposed versions, synchronized versions, and manufacturing home video
versions;
(iv) All royalties and similar payments for the recording,
synchronizing or performing of music in any Series programs or the sound-
tracks thereof (including all royalties and similar payments to manufactur-
ers of sound equipment, cartridges, cassettes and the like) to the extent
not included in the cost of production of any Series programs;
(v) Sales, use, receipts, income, excise, remittance,
value added and other taxes (however denominated) to any governmental or
taxing authority assessed upon, or with respect to, the negatives, dupli-
cate negatives, prints or sound recordings of any Series programs, or upon
the use or distribution of any Series programs, or upon the revenues
derived therefrom, or any part thereof, or upon the remittance of such
revenues, or any part thereof; any and all sums paid or accrued on account
of duties, customs, imposts or permits required or imposed by any authority
to secure the entry, licensing, exhibition, performance, use or televising
of any Series programs in any country or part thereof, regardless of
whether such payments or accruals are in the form of an assessment against
any Series programs, or the proceeds thereof, or against a group of televi-
sion programs in which any Series programs may be included or the proceeds
thereof. Notwithstanding the foregoing, neither KW nor Lender shall be
required to pay or participate in any other party's own United States
federal, state or local income taxes or franchise taxes based on that other
party's net income; provided, however, that to the extent that KW or any of
its subsidiaries or affiliates receives a benefit (hereinafter referred to
as "Tax Benefit"), in the form of a tax refund, tax deduction or tax credit
with respect to its (or any of its subsidiaries' or affiliates') United
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States Federal income taxes with respect to any payment to any government
or taxing authority, in any territory outside the United States, of any
income or similar taxes, including foreign withholding taxes, relating to
the use, distribution or other exploitation of the Series, then the amount
of such Tax Benefit will be added to Gross Receipts as defined herein
below; further provided that, if such Tax Benefit is subsequently disal-
lowed in whole or in part, for any reason whatsoever, KW shall be reim-
bursed from Gross Receipts in the amount of the Tax Benefit so disallowed;
provided further that Lender acknowledges that, notwithstanding any other
provision of this Agreement that may be to the contrary, in no event shall
Lender be entitled to examine, or otherwise have any access to, any of KW's
tax returns;
(vi) Transmitting to the United States any funds accruing
to KW from any Series programs in foreign countries, such as wire transfer
expenses, or any discounts from such funds taken to convert such funds
directly or indirectly into the United States dollars; all costs of
contesting any of the matters described in this subparagraph (vi) with a
view to reducing the same, which costs shall be fairly apportioned to any
Series programs if done on an industry-wide basis (e.g., through AGICOA)
or with respect to television programs distributed by KW generally;
(vii) Claims and lawsuits involving any Series programs, and
protection thereof; costs of copyright searches and registrations, and the
investigation, prosecution and defense of such claims and lawsuits,
including reasonable outside counsel fees, subject to the provisions of
Paragraph 13(c) below;
(viii) Collecting Gross Receipts (including reasonable
outside attorneys' fees), auditing and checking costs; costs incurred in
preventing unauthorized exhibitions or other uses of any Series programs
and collecting damages for copyright or other infringements thereof (the
net collections therefrom to be included in Gross Receipts hereunder);
(ix) To the extent not included in the production budget,
all residual (and associated pension and health) and other payments made
pursuant to collective bargaining agreements or other agreements by reason
of the exhibition of any of the programs produced hereunder by television
or otherwise or by the exercise of any rights therein; and
(x) All other out-of-pocket distribution, marketing and
promotional expenses for which distributors of television programs are
customarily reimbursed.
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(d) "Production Costs" shall mean the direct out-of-pocket costs
of production of the Series actually paid by KW, including, without
limitation, all development costs and the costs of producing a pilot or
presentation tape, if KW produces same.
(e) "Net Profits" shall mean Gross Receipts, less the following
amounts deducted in the following order: (i) KW's Distribution Fee, (ii)
Distribution Expenses and Production Costs (and interest on all the
foregoing from the time actually paid, calculated at the prime rate from
time to time in effect at the Bank of New York, New York, New York) and
(iii) any contingent compensation of any nature payable on account of the
exploitation of the Series to any person or entity. For purposes of
calculating Net Profits, all episodes of the Series and all worldwide
exploitation of the Series in all media shall, notwithstanding any provi-
sion of this agreement that may be to the contrary, be cross-collateralized
and form a single accounting unit on a cumulative basis from inception
forward.
6. Accounting and Audit Rights:
(a) KW shall render to Lender periodic statements pursuant to
this Agreement prepared in accordance with KW's customary format showing in
reasonable detail Gross Receipts, Production Costs, Distribution Fees and
Distribution Expenses permitted by this Agreement. Statements shall be
rendered quarterly through the conclusion of the broadcast season following
the final broadcast season during which KW distributes the Series on a
first-run syndication strip basis and thereafter on a semi-annual basis,
provided that no statement need be rendered by KW for any period in which
no receipts are received or charges incurred by KW. Each statement shall
be rendered within forty-five (45) days after the close of the period for
which the statement is rendered. Statements rendered may be amended from
time to time to give effect to items overlooked, to correct errors and for
similar purposes. Any United States dollars due and payable pursuant to
any statement shall be paid simultaneously with the rendering of such
statement.
(b) KW shall keep full and complete records of all transactions
had by it in connection with the production, distribution and exploitation
of the Series, including without limitation any subdistributor accountings
(hereinafter referred to as "records"). Lender may, at its own expense,
audit KW's applicable records to verify statements rendered hereunder. Any
such audit shall be conducted only at the offices of KW during normal
business hours by a firm of certified public accountants. Lender shall not
have the right to examine any matters or items after the expiration of
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three (3) years from and after the date of the rendition of the statement
in which such matters or items are first accounted for, it being understood
that statements not questioned by Lender by notice in writing within said
three (3) year period shall be final and conclusive upon Lender, and shall
constitute a final and conclusive account stated even though the material
therein may later be contained or referred to in a subsequent statement.
Lender shall be forever barred from maintaining or instituting any action
or proceeding based upon or concerning any transactions had by KW, its
divisions, subsidiary corporations or other affiliates in connection with
the production, distribution and/or exploitation of the Series and the
accounting embraced in any statement delivered hereunder or the accuracy of
any item appearing therein, unless a written objection to such statement
(whether or not as a result of a formal audit) shall have been delivered to
KW within the three (3) year period above referred to and unless such
action or proceeding is commenced within one (1) year after delivery of
such written objection to KW, time being of the essence to the time periods
set forth in this paragraph. The aforesaid right to examine records is
limited to the production, distribution and/or exploitation of the Series,
and under no circumstances shall Lender have the right to examine records
relating to KW's business or television programs generally or with respect
to any other television program for the purposes of comparison or other-
wise. In the event that any audit hereunder reveals that KW has under-
reported any payment due to Lender by two and one-half percent (2-1/2%) or
more for the audit period in question, then, in addition to the payment of
the appropriate amount due, KW shall reimburse Lender for all of its
reasonable audit costs for that audit (but not in an amount exceeding the
amount of the recovery) and any and all reasonable collection costs to
recover the unpaid amounts.
(c) As to monies not freely remittable to the United States by
reason of governmental restriction, such monies as may be due to Lender
shall be segregated from other monies of KW and shall, to the extent
permitted by law, and, at the request of Lender, be transferred to such
accounts in the applicable country as Lender may designate or be deposited
in an interest-bearing account.
(d) Any Gross Receipts, net proceeds, working capital, deferred
payments or other sums received or held by KW may be commingled with KW's
general funds and Lender shall not have any right to interest thereon nor
any right to participate in any profit or other income derived from use of
the sums so received or held.
7. Grant of Rights:
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(a) KW and Lender shall jointly own the copyright and all other
proprietary rights in the Series (it being acknowledged that KW shall not
own any right in Roseanne's persona), subject to KW's distribution rights
as set forth in Paragraph 2(a) above. All ideas, creations, improvements
and other works of authorship created, performed, developed, written or
conceived by Lender and/or Roseanne in connection with the production of
the Series and/or the Hollywood Squares Series (as defined in Paragraph 15
below) ("Materials") are works for hire within the scope of their services
for the Series and/or the Hollywood Squares Series, as applicable, specifi-
cally commissioned by KW for an audiovisual work for copyright purposes.
Without limitation of the foregoing, KW shall have the right to exploit
such Materials in connection with the Series and/or the Hollywood Squares
Series, as applicable, throughout the world in perpetuity in any and all
media now known or hereafter developed without payment of any additional
compensation or other consideration of any kind except as set forth herein.
Lender and Roseanne acknowledge that, in the event that said work-for-hire
status is deemed unenforceable for any reason, they have assigned all
Materials, upon their creation, to KW for use in connection with the Series
and/or the Hollywood Squares Series, as applicable, all to the full extent
set forth above. [****]
(b) Lender grants KW and its authorized representatives the
right to photograph, film and otherwise record Roseanne (the "Recordings"),
alone or together with others, to exclusively own such Recordings, and to
utilize, edit, add to, arrange and exploit such Recordings and Roseanne's
name, likeness and biography (which biography and any likeness not taken
from the Recordings shall be subject to Roseanne's reasonable approval) in
perpetuity in any media now known or hereafter devised desired by KW
throughout the world in connection with publicity, promotion, advertising,
marketing and other distribution in any and all media of the Series and/or
the Hollywood Squares Series, as applicable, and KW, so long as no such use
constitutes a direct endorsement by Lender or Roseanne of any other product
or service. KW shall have the sole right to issue any and all such
publicity, but KW shall consult with Roseanne regarding the use of her name
or likeness in connection with such publicity, provided that Roseanne shall
have the right to mention the Series and/or the Hollywood Squares Series in
interviews, talk-show appearances and the like.
8. Exclusivity: During the Employment Period, Lender
shall cause Roseanne to render her services on a first priority basis to KW
with respect to all media and to be exclusive to KW as a recurring perform-
er in all reality-based programming, and in a recurring role in all
fictional (as opposed to reality-based) series, produced for any form of
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television now or hereafter known (including, without limitation, broadcast
and cable television). The parties acknowledge and agree that (i)
Roseanne's role as a day-to-day senior production executive and the host of
the Series will preclude her from rendering regular services during the
Employment Period as a recurring on-camera performer or day-to-day produc-
tion executive for any other television series, and (ii) subject to the
scheduling of Series production and related Series activities requiring
Roseanne's services hereunder, as well as to Roseanne's other obligations
to KW hereunder, Roseanne shall be entitled to render services on an
occasional basis for non-recurring guest appearances on other television
series, as an on-camera performer in, without limitation, mini-series or
movies-of-the-week, or as a non-day-to-day executive or other producer of a
mini-series, movie-of-the-week or series, so long as none of the foregoing
services in any way interferes with the rendition of Roseanne's services to
KW on a first priority basis.
9. AFTRA: Lender shall cause Roseanne to become and to remain a
member of any applicable labor organization with which KW has entered into
a collective bargaining agreement having jurisdiction over her services
hereunder. Lender acknowledges that Roseanne is a member of AFTRA and that
KW shall be entitled to the maximum benefits available to KW from
Roseanne's services with respect to the Series and the Hollywood Squares
Series and the engagement hereunder arising out of the AFTRA basic agree-
ment (the "Basic Agreement"). Without limiting the generality of any other
provisions of this Agreement, insofar as AFTRA-covered services hereunder
are concerned, KW shall have the right to use and reuse recordings of the
Series and the Hollywood Squares Series or portions thereof throughout the
world to the fullest extent permitted (or not forbidden) by the Basic
Agreement, including, without limitation, in connection with free televi-
sion replays, foreign exhibition, video cassette and other supplemental
markets exploitation, and use of excerpts pursuant to Paragraphs 73(d)(8)
and 73(d)(10) of the Basic Agreement, no payments shall be due to Lender in
connection therewith unless required by the Basic Agreement, and such
payments shall be at the minimum rates applicable, as the case may be, and,
to the extent permitted (or not forbidden) by the Basic Agreement, KW shall
have the right to credit any such payments as set forth in Paragraph 4(c)
above. In the event that KW is required by the terms of any applicable
collective bargaining agreement to pay Lender on a basis other than that
set forth herein, Lender agrees, to the extent permissible, that such
payments shall be credited against the compensation payable to Lender
hereunder.
10. Confidentiality: Except as required in connection with the
performance of Lender's and Roseanne's services hereunder, neither Lender
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nor Roseanne shall, during or after the termination of the Employment
Period, use or disclose to any party any confidential business information
or trade secrets of KW's obtained or learned by Lender or Roseanne during
the Employment Period.
11. Non-Compete: Neither Lender nor Roseanne shall, for a period of
one (1) year following the termination of the Employment Period, (a)
induce, directly or indirectly, any person, partnership or corporation from
whom or from which KW (which for purposes of this paragraph shall include
KW's subsidiary and affiliated companies) acquires television programming
during the Employment Period, to terminate its agreement with KW with
respect to such programming or to refuse to enter into any agreement with
KW with respect to the development or production of any programming, (b)
induce, directly or indirectly, any employee of KW's to terminate his or
her employment.
12. Force Majeure; Death or Disability:
(a) In the event of Roseanne's death, the Employment Period
shall automatically terminate, effective upon the date of Roseanne's death.
(b) In the event that by reason of disability, Roseanne is
unable to fully perform hereunder for a period in excess of (i) [****]
consecutive days at any time during the Employment Period or (ii) [****] in
the aggregate during (x) the Initial Period or (y) any One Year Option
Period, KW shall have the right to terminate the Employment Period forth-
with. For purposes of this subparagraph (b), the term "disability" shall
mean any physical, mental or other impairment (including, without limita-
tion, illness) rendering Roseanne incapable of performing all the material
services required to be performed by Roseanne pursuant to the terms of this
Agreement.
(c) In the event KW is unable to utilize Roseanne's services due
to any of the following reasons: act of God; unavoidable accident; fire;
blackout; act of public enemy; war, riot or civil commotion; enactment,
rule, order or act of government or governmental instrumentality; strike,
lockout or other labor dispute; failure of technical facilities; or other
similar or dissimilar cause beyond KW's control, KW may suspend the
Employment Period during the continuation of such inability to use
Roseanne's services, the Employment Period and all option exercise dates
shall be deemed extended by all such periods of suspension (but in no event
shall the Employment Period be extended past the date seven (7) years after
the date hereof), and KW shall not be obligated to make any payment to
Lender with respect to any period of any such suspension. Either KW or
Lender shall have the right upon written notice to the other to
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terminate the Employment Period if any such suspension period continues
beyond [****]; provided, however, that in the event that Lender so elects
to terminate the Employment Period, such termination shall not be effective
if, within three (3) business days following KW's receipt of such termina-
tion notice from Lender, KW ends such suspension period and reinstates the
Employment Period.
13. Representations, Warranties and Indemnification:
(a) Each of KW and Lender separately warrants and represents to
the other party that it has the right to enter into and to perform this
Agreement.
(b) Lender further warrants and represents that, except as based
on materials KW assigns Roseanne or as are in the public domain, all
Materials created by Lender and/or Roseanne hereunder shall, to the best of
her knowledge, be original and not violative of any third party's rights.
(c) Each of KW and Lender (the "indemnifying Party") shall
indemnify the other party as follows:
(i) The Indemnifying Party shall indemnify the other
party (and its shareholders, directors, officers, employees, agents,
affiliates, subsidiaries, licensees, successors and assigns), its licensees
and its sponsors and their advertising agencies, against and hold them
harmless from all loss, costs, liabilities and expense (including judg-
ments, settlements and reasonable attorneys' fees) (collectively, "Expens-
es") suffered, incurred or imposed by reason of any breach, or any claim of
breach (but with respect to Lender, only claims which are reduced to a
final non-appealable judgment in a court of competent jurisdiction or
settled with Lender's written consent (provided that if Lender refuses to
approve any settlement, Lender shall post a bond for the benefit of KW in
an amount reasonably related to KW's potential liability), by the Indemni-
fying Party of any of its representations, warranties or undertakings
hereunder. KW's indemnification of Lender shall extend to any and all
Expenses incurred by Lender by reason of a third-party claim in connection
with the production, distribution or other exploitation of the Series or
the Hollywood Squares Series, other than a claim covered by Lender's
indemnification pursuant to this Paragraph 13.
(ii) The party seeking indemnification shall give the
Indemnifying Party prompt written notice of any claim or action which is or
may be covered by this Paragraph and which comes to the indemnitee's
attention; provided, however, failure to provide notification as required
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by this paragraph shall limit the applicable indemnity solely to the extent
that such failure prejudices the Indemnifying Party.
(iii) On the Indemnifying Party's request, the indemnified
party shall from time to time advise the Indemnifying Party or its counsel
of any developments as to any claim or action which is or may be covered by
this section and shall consult with the Indemnifying Party or its counsel
as to the determination of major decisions of defense and settlement, but
the Indemnifying Party shall have dispositive control over the defense of
and the right to settle any such claim, although the indemnified party may
cooperate in the defense thereof at its own expense. It is agreed,
however, that the Indemnifying Party may not settle any claim or action
without the indemnified party's prior written consent, if such settlement
would result in any manner of injunctive-like relief against the indemni-
fied party or would in any way impair the indemnified party's rights
hereunder. The Indemnifying Party shall not be in default hereunder if a
given action or claim is being defended in good faith and/or if an insur-
ance carrier has assumed the defense of such claim (whether or not with
reservations).
(d) Notwithstanding the foregoing indemnification, each of
Roseanne and Lender shall be included as additional insureds on any errors
and omissions and general liability insurance policies obtained by KW with
respect to the Series.
14. Credits: With respect to the Series, (i) Roseanne shall be
accorded an "Executive Producer" credit (a) on a separate card on the
screen (unless credits are in the form of a crawl), followed by executive
producer credits accorded to up to two individuals designated by KW,
including, if KW so elects, Roger King and/or Michael King, in a size of
type not less than the size of type of the credit accorded to any other
producer or executive producer and (b) in all paid advertising issued by KW
or under KW's control in which any other executive producer or producer
receives credit, and (ii) Lender shall be accorded a "produced in associa-
tion with" credit (a) on a separate card on the screen immediately before
or after, in KW's discretion, any production credit accorded to KW, such
credit to be in a size of type not less than the size of type of any other
institutional production credit and (b) in all paid advertising issued by
KW's or under KW's control in which KW's production credit appears (it
being acknowledged that KW shall be entitled to production and distribution
credits in connection with the Series). No casual or inadvertent failure
by KW to accord Lender or Roseanne such credits in accordance with this
provision, and no breach by any third party, shall be deemed a breach of
this Agreement. Upon KW's receipt of written notice from Lender or
Roseanne of any failure by KW to comply with these credit provisions, KW
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shall use reasonable efforts to cure prospectively any such failure to
comply with respect to Series episodes produced after receipt of such
notice.
15. Hollywood Squares: In addition to Roseanne's services described
in Paragraph 3 above, Lender shall, if KW so requests, cause Roseanne to
render her on-camera services for up to [****] days during each broadcast
season (if any) during the period commencing with the '98-'99 Broadcast
Season and ending the later of (i) the end of the '99-'00 Broadcast Season
and (ii) the expiration of the Employment Period, as a "square" (but not
the "center square") on a "Hollywood Squares" series (the "Hollywood
Squares Series") possibly to be produced by KW or an affiliate thereof, if
and to the extent that KW or any such affiliate actually produces the
Hollywood Squares Series. Lender shall cause Roseanne to render such
services for the Hollywood Squares Series in accordance with a schedule
reasonably determined by KW in consultation with Roseanne and subject to
her reasonable professional availability, it being acknowledged and agreed
that the episodes in which Roseanne appears are intended to be telecast
initially during so-called "ratings sweeps" periods. KW shall pay Lender
the minimum scale amounts required by the Basic Agreement for Roseanne's
services on the Hollywood Squares Series.
16. KW Option: Subject to the ABC first-look option referred to in
Paragraph 3(a) above, KW shall have the exclusive option (the "KW Sitcom
Option") to co-produce with Lender and Roseanne, to co-own the copyright in
equal shares with Lender/Roseanne (to the extent Lender/Roseanne will own
or co-own the copyright) and to obtain exclusive distribution rights in the
next (that is, following "Roseanne") fictional (as opposed to reality-
based) television series (the "Sitcom") in which Roseanne is proposed to be
a principal on-camera performer and which is proposed to be telecast
initially at any time during the period commencing upon the conclusion of
the Employment Period and ending eighteen (18) months following the end of
the final broadcast season during which KW distributes the Series in first-
run syndication (the "18 Month End Date"). If the Series is not produced
for any reason, then, for purposes of the foregoing sentence, the final
broadcast season during which KW distributes the Series shall be deemed to
have ended on April 30, 1998. If Roseanne elects to be a principal on-
camera performer in a Sitcom, Lender shall send written notice thereof to
KW, whereupon KW shall have 30 business days to exercise its option, if at
all, by written notice to Lender thereof within such 30 business day
period. If KW exercises such option, KW and Lender shall negotiate with
each other (and with any network, if applicable) with respect to mutually
agreeable terms and conditions regarding the production and distribution of
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the Sitcom ("KW Sitcom Negotiations"), which shall in any event include the
following terms: (i) Roseanne shall render services as a principal on-
camera performer for all episodes produced of the Sitcom; (ii) Roseanne
shall receive a fee equal to [****] per episode for the first broadcast
season of the Sitcom (reducible, in good faith, to accommodate the fee
payable to any other co-star of comparable stature to Roseanne), which fee
shall be increased for each subsequent broadcast season of the Sitcom on a
cumulative basis by [****]; and (iii) [****] of the "net profits" of the
Sitcom (the definition of which shall be the same as that used to determine
"Net Profits" from the Series (provided that "Series" as used in that
definition shall be deemed replaced with "Sitcom"), with the exceptions
that (x) KW shall not be entitled to any Distribution Fee from the initial
network television broadcast of the Sitcom, and (y) no Distribution
Expenses (other than KW's out-of-pocket costs of manufacturing home video
versions) shall be deducted by KW before the determination of such "net
profits." KW's and Lender's/Roseanne's participation in "net profits" from
any Sitcom shall be measured separately from, and shall not be cross-
collateralized with, any revenue from the Series or any Development Project
(as defined below). If the KW Sitcom Negotiations result in an agreement,
the parties hereto will endeavor to adapt this Agreement as it relates to
the Series (other than with respect to Paragraphs 4(a) and 4(b) of this
Agreement) to fit the agreed-upon terms with respect to the Sitcom. If for
any reason the KW Sitcom Negotiations for any proposed Sitcom do not result
in an agreement, or the Sitcom that is the subject of such Negotiations is
for any reason not produced, the provisions of this Paragraph 16 shall
continue to apply to the next proposed Sitcom. Notwithstanding anything to
the contrary in this Paragraph 16, KW shall not be entitled to exercise the
KW Sitcom Option if KW has exercised all five (5) of its options pursuant
to Paragraph 3(c) above to extend the Employment Period through the
2003/2004 broadcast season.
17. First Look Option:
(a) During the Employment Period, Lender shall submit exclusive-
ly to KW all ideas, literary material and/or proposed projects, other than
the Sitcom (which shall be governed by the terms of the KW Sitcom Option)
and the "Packaged Projects" (as defined in Paragraph 18(c) below), that
Lender and Roseanne are interested in developing for Lender and/or Roseanne
as an on-air performer, producer or both, for initial exploitation on any
form of television now or hereafter known (including, without limitation,
broadcast or cable television) ("Development Projects") prior to submitting
such Development Projects to any other party. KW will have an exclusive
period of fifteen (15) days after submission to KW of any Development
Project to consider such Development Project (provided, however, that such
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period shall be reduced to five (5) days if there is active interest from
one or more third parties in developing and/or acquiring such Development
Project (a "Hot Development Project") and the circumstances reasonably
require such reduced period). If KW is interested in pursuing such
Development Project, KW shall send written notice thereof to Lender within
such fifteen (15) day (or five (5) day, if applicable) period, whereupon KW
and Lender shall negotiate for a period of twenty (20) days (provided,
however, that such period shall be reduced to five (5) days with respect to
any Hot Development Project) with respect to mutually agreeable terms and
conditions regarding the development, production and exploitation of such
Development Project, which will in any event include the following terms:
(i) KW shall have the exclusive distribution rights in such Development
Project, if produced, in all media now or hereafter known throughout the
world in perpetuity, (ii) KW will co-own the copyright in such Development
Project [****] Lender/Roseanne (to the extent Lender/ Roseanne will own or
co-own the copyright in such Development Project); (iii) as between KW and
Lender, KW shall be responsible for advancing any required funding of such
Development Project and KW will co-produce with Lender and Roseanne such
Development Project (if produced); (iv) fees to Lender/Roseanne for
producer and on-camera services shall be set on an arm's-length basis
commensurate with their duties and the budget of such Development Project;
(v) [****] of the "net profits" of the Development Project, if produced
(the definition of which shall be the same as that used to determine "Net
Profits" from the Series (provided that "Series" as used in that definition
shall be deemed replaced with "Development Project"), [****] KW's and
Lender's/Roseanne's participation in "net profits" from any Development
Project shall be measured separately from, and shall not be cross-collater-
alized with, any revenue from the Series or any other Development Project.
If the negotiations regarding a Development Project result in an agreement,
the parties hereto will endeavor to adapt this Agreement as it relates to
the Series (other than with respect to Paragraphs 4(a) and 4(b) of this
Agreement) to fit the agreed-upon terms with respect to such Development
Project.
(b) If KW does not notify Lender of its interest in pursuing a
Development Project within the fifteen (15) day (or five (5) day, if
applicable) period referred to in subdivision (a) above, or if KW and
Lender are unable to agree to mutually agreeable terms (other than those
agreed upon terms as set forth in Paragraph 17 (a) above) regarding the
development, production and exploitation of such Development Project within
the twenty (20) day (or five (5) day, if applicable) period referred to in
subdivision (a) above (in either event, such Development Project shall be
deemed a "Passed Project"), then Lender shall have the right to negotiate
with third parties with respect to the development, production and exploi-
tation of the Passed Project;
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provided, however, that with respect to any Passed Project for which KW and
Lender negotiated but were unable to agree to mutually agreeable terms,
Lender shall not enter into an agreement with any such third party on terms
equal to or less favorable to Lender than the terms last offered by Lender
to KW unless Lender first re-offers such Passed Project to KW, for a period
of three (3) business days, on the terms and conditions which Lender is
then prepared to accept from such third party (it being agreed that the
terms required to be accepted by KW shall not include any term which cannot
be reasonably and readily performed by KW and that any such financial terms
shall be expressed as determinable sums of money or as a percentage of net
profits or gross receipts in a readily calculable manner). If KW does not
within such five (5) business days period notify Lender that it wishes to
enter into an agreement on such terms and conditions (with silence being
deemed a rejection), Lender shall be free to enter into an agreement with
such third party on such terms and conditions. If Lender does not accept
such third party offer, the last refusal provisions of this paragraph shall
continue to apply to any third party offers on terms equal to or less
favorable to Lender than the terms last offered by Lender to KW which
Lender wishes to accept with respect to such Passed Project. Furthermore,
in the event there is any material change to the basic creative elements of
any Passed Project prior to Lender's entering into an agreement with a
third party with respect to such Passed Project in accordance with the
terms of this paragraph, Lender shall resubmit such Passed Project with
such changes to KW, and KW shall again have the right of first negotia-
tion/last refusal with respect thereto in accordance with the provisions of
this paragraph. If Lender enters into an agreement with a third party with
respect to a Passed Project, Lender will pay to KW, over the course of the
first broadcast season of such Passed Project, an amount equal to the
aggregate amount of all KW's direct, out-of-pocket expenses (other than as
part of the Development Fund, as defined below) incurred by KW in connec-
tion with developing such Passed Project, plus interest on the total amount
thereof at the prime rate charged from time to time by the Bank of New
York, New York, New York, computed from the date such payments were made
through the date of repayment to KW.
(c) During the Employment Period, KW shall either furnish Lender
and Roseanne with [****] at KW's offices in Los Angeles, or, if no office
space is available there, arrange for Lender and Roseanne to have such
exclusive offices at other office space in Los Angeles. During each year
of the Employment Period and continuing each year thereafter until the 18
Month End Date, KW shall provide a development and related overhead fund
from which KW shall fund Lender's and Roseanne's development and related
overhead activities under this Paragraph 17 on an "as used" basis, not to
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exceed [****] (the "Development Fund"), including without limitation for
the salaries of a development executive and a secretary, rent for office
space outside of KW's offices (or, if office space is provided in KW's
offices, a reasonable allocation of KW's rent and overhead) and use in
acquiring options and/or engaging writers. The Development Fund shall, in
determining the "net profits" from Development Projects, be allocated by
KW, as appropriate, to particular Development Projects. Any portion of the
Development Fund that is not so allocated and recouped by KW from a
particular Development Project shall be recoupable by KW from any other
Development Projects.
18. Miscellaneous:
(a) Any and all notices or other papers which either party shall
be required or shall desire to give to or serve upon the other party shall
be in writing and shall be served by mail, by overnight delivery or by
telecopier. Service of any notice or other paper shall be deemed complete
if and when the same is deposited in the mail, or with an overnight
delivery company, postage or toll prepaid, addressed to (i) KW at 1700
Broadway, New York, New York 10019 or telecopied to (212) 974-0310, or (ii)
Lender at Lichter, Grossman, Nichols & Adler, 90200 Sunset Boulevard, Suite
530, Los Angeles, California 90069, Attn: Michael Adler, Esq., telecopier
(310) 205-6999, or to such other address as may be designated in writing by
either party hereto in a notice to the other.
(b) Nothing herein contained shall constitute a partnership
among, or joint venture by, the parties hereto or constitute any party the
agent, trustee or pledgeholder of the other or place any party in the
position of fiduciary with respect to the other party. No party shall hold
itself out contrary to the terms of this Agreement as respecting the
distribution and other exploitation of the Series and no party shall become
liable by reason of any representation, act or omission of the contrary to
the provisions hereof. This Agreement is not for the benefit of any third
party and shall not be deemed to give any right or remedy to any such party
whether referred to herein or not.
(c) Lender and Roseanne warrant and represent that they have not
entered into, and that they will not enter into, any agreement with a
talent agency or other representative applicable to the Series, the Sitcom
or, except to the extent that Lender otherwise advises KW within thirty
(30) days following the execution of this Agreement (the "Packaged Pro-
jects"), any Development Project that would require payment of any package
commission (or other payment of a similar nature) to such agency
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or other representative (a "Package Commission"), and Lender's/Roseanne's
indemnification of KW as set forth in Paragraph 13 above shall extend to
the payment of any such Package Commission.
(d) Each party shall from time to time, upon request, execute,
acknowledge and deliver such documents as may, in the reasonable judgment
of the requesting party, be necessary and proper to evidence, maintain,
effectuate or defend any and all of the rights of such requesting party
under any provision of this Agreement. In the event the party receiving
such a request should fail to execute and deliver the requested document
within a reasonable period of time (allowing for review by legal counsel),
then the requesting party shall be authorized as the attorney-in-fact of
the other party to execute, deliver, record and file any such document.
(e) The headings of the paragraphs of this agreement are for
convenience only, and they shall not be of any effect in construing the
contents hereof.
(f) If any party hereto (a "Breaching Party") shall breach any
of the material terms of this Agreement, including, without limitation, a
failure or refusal by such Breaching Party to perform any of her or its
obligations hereunder, then the party affected by such breach (the "Non-
Breaching Party") shall have the right, upon written notice to the Breach-
ing Party, to suspend such Non-Breaching Party's obligations to the
Breaching Party until such Breaching Party has cured such breach (and if
Lender and/or Roseanne are the Breaching Party, KW shall have the right,
without limitation, to suspend the Employment Period during the period of
such breach and the Employment Period and all option exercise dates shall
be deemed extended by all such periods of suspension, but in no event shall
the Employment Period be extended past the date seven (7) years after the
date hereof. In addition to the foregoing rights, the Non-Breaching Party
shall have the right to terminate the Employment Period and its obligations
hereunder to the Breaching Party following the occurrence of such breach,
if the Breaching Party has not cured such breach within ten (10) days
following the Non-Breaching Party's written notice of same to the Breaching
Party; provided, however, that if by the nature of such breach, such breach
is incurable, the Non-Breaching Party shall not be required to accord the
Breaching Party any cure period prior to exercising its right to terminate
its obligations to the Breaching Party hereunder. Any such actions taken
by the Non-Breaching Party pursuant to this provision shall be without
prejudice to any and all remedies to which the Non-Breaching Party is
entitled, in law or in equity, for breach of this Agreement. No waiver of
any breach of any provision hereof shall be deemed a waiver of any preced-
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ing or succeeding breach of such provision. This Agreement expresses the
entire understanding of the parties hereto with respect to the subject
matter hereof and any and all prior agreements, understandings or represen-
tations relating in any way to the subject matter hereof have been merged
herein. No modification, alteration or amendment of this Agreement shall
be valid or binding unless in writing and signed by the party to be charged
therewith.
(g) This agreement shall be interpreted and construed under the
laws of the State of California applicable to contracts to be wholly
performed therein. Any controversy, dispute or claim under, arising out
of, or in connection with or relating to, this Agreement, including, but
not limited to, the negotiation, execution, interpretation, construction,
coverage, scope, performance, breach, termination, validity or enforceabil-
ity of this Agreement shall be settled, at the request of any party, by
reference to a judge in accordance with the procedures of SECTION 638
et seq. of the California Code of Civil Procedure. The site of any such
proceeding shall be in Los Angeles County.
(h) Lender and Roseanne agree that the services to be furnished
by them hereunder and the rights granted by them hereunder are of a
special, unique, extraordinary, artistic and intellectual character which
gives them a peculiar value, the loss of which cannot reasonably or
adequately be compensated for in damages in an action at law, and that the
breach by either of them of the provisions contained in this Agreement will
cause KW irreparable injury and damage. KW shall be entitled to seek
injunctive and other equitable relief to prevent the violation of any of
the provisions of this Agreement in addition to any other rights which it
may have to damages or otherwise. Roseanne's and Lender's only remedy for
a breach of any provision of this Agreement by KW shall be an action for
damages, if any, incurred as a result of such breach, and in no event shall
Roseanne or Lender have the right to injunctive or other equitable relief
or to enjoin or otherwise interfere with the distribution, broadcast or
other exploitation of the Series.
(i) Neither KW, Roseanne nor Lender shall have the right
to delegate her or its obligations under this Agreement, except that (i) to
the extent that such obligations are not personal in nature, such obliga-
tions may be delegated to an entity that is wholly owned by the assignor or
that acquires all or substantially all of the assignor's assets and (ii) KW
shall have the right to assign this Agreement to a subsidiary or parent of
KW which is controlling production of the Series.
(ii) Nothing contained in this Agreement shall be con-
strued so as to require the commission of any act contrary to law, and
whenever there is any conflict between any provision
<PAGE>
<PAGE 23>
[* Deleted pursuant to a request for confidential treatment]
of this Agreement and any statute, law, ordinance, order or regulation
contrary to which the parties have no legal right to contract, the latter
shall prevail, but in such event any provision of this Agreement so
affected shall be curtailed and limited only to the extent necessary to
bring it within the legal requirements (and if such modification is not
possible, such clause shall be deemed deleted); provided, however, that no
other provision of this Agreement shall be affected thereby and such other
provisions shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
K.W.M., INC.
By:_______________________________
FULL MOON & HIGH TIDE PRODUCTIONS, INC.
By:_______________________________
<PAGE>
<PAGE 24>
[* Deleted pursuant to a request for confidential treatment]
In order to induce K.W.M., Inc. to enter into the foregoing Agreement,
I agree that Full Moon & High Tide Productions, Inc. ("Lender") has the
right to enter into the Agreement and to perform and grant the rights
therein on my behalf. I agree to be personally bound by all terms and
conditions of the Agreement as they relate to me; I hereby join jointly and
severally in all warranties, representations and indemnities made by Lender
therein; and I agree to perform to the best of my ability all services that
the Agreement requires to be performed by me. I agree that I will look
solely to Lender for payment of all compensation and other consideration to
me. In the event Lender or I fail to perform pursuant to the Agreement, I
agree to be personally bound as if I were a direct party to the Agreement
in the first instance, and you shall not be required to exhaust your
remedies against Lender prior to commencing an action against me.
__________________________________
Roseanne
<PAGE>
<PAGE 25>
[* Deleted pursuant to a request for confidential treatment]
As an inducement to Full Moon & High Tide Productions, Inc. ("Lender")
to enter into and perform the foregoing Agreement, King World Productions,
Inc. ("KWP") agrees (i) to guarantee the performance by K.W.M., Inc.
("K.W.") of all of the duties to Lender under the Agreement, including the
payment of all fixed and contingent compensation thereunder, and (ii) that
in the event of any breach by KW of any of the terms which are the subject
of this guarantee, Lender shall have the right to proceed directly against
KWP without first exhausting its remedies against KW prior to commencing an
action against KWP.
KING WORLD PRODUCTIONS, INC.
By:______________________________
<PAGE 1>
[* Deleted pursuant to a request for confidential treatment]
Exhibit 10.26
CONFIDENTIAL TREATMENT REQUESTED
KING WORLD F.S.C. CORPORATION
830 Morris Turnpike
Short Hills, New Jersey 07078
Dated as of September 19, 1991
Unilever NV
c/o Mr. Doug Gluck
Senior Vice President
E.C. Television Inc.
Greendon House
7 C-D Bayham Street
London NW1 OEY
England
Dear Doug:
Reference is made to the agreement between Unilever NV
("Unilever"), through its then agent Lintas International Limited
("Lintas"), and King World F.S.C. Corporation ("KW") through its then agent
Buena Vista International, Inc. ("BVI"), dated June 2, 1988, as amended as
of June 13, 1989 (the "Original Agreement"). KW and Unilever acknowledge
that E.C. Television Inc. ("ECTV") has replaced Lintas as Unilever's agent
and liaison with KW in this matter and that BVI no longer is acting as KW's
agent in the matter of the renewal. Unless otherwise specified, all
defined terms herein shall have the meanings set forth in the Original
Agreement. Except as otherwise specified herein, the amendments to the
Original Agreement hereunder shall become effective on the commencement of
the Renewal Period (as defined in Paragraph A below). Unilever and KW
agree to amend the Original Agreement as follows:
A. The License Term shall be extended for the period January 1,
1993 through December 31, 1994 (the "Renewal Period").
B. As used herein, the "Eastern European Territories" shall
mean Albania, Bulgaria, Czechoslovakia, Hungary, Poland, Romania, Union of
Soviet Socialist Republics, and Yugoslavia (including all of the constitu-
ent republics of the foregoing countries as of January 1, 1991). The
Eastern European Territories shall not be included in Territory A, and all
rights in such Eastern European Territories shall revert to KW.
<PAGE>
<PAGE 2>
[* Deleted pursuant to a request for confidential treatment]
C. The guaranteed minimum license fee during each calendar year
of the Renewal Period shall be [****] (the "Minimum License Fee"). To the
extent that during each year of the Renewal Period, the royalty payments to
KW for such year hereunder do not at least equal the Minimum License Fee,
the difference between the Minimum License Fee and such royalty payments to
KW with respect to such year shall be paid to KW (the "Shortfall Payment")
on or before the first January 31 following the end of such year. The
second sentence of Paragraph 4(d) of the Original Agreement shall be
deleted and the parties acknowledge that during the Renewal Period,
Unilever shall not be entitled to credit any cumulative excess in royalty
payments from any one year against the Minimum License Fee for any other
year.
D. In place of the basic royalty rates and adjustments referred
to in Paragraphs 4(c), 9 and 10 of the Original Agreement, the royalties
payable to KW by Unilever for each episode per telecast of each of the
Series shall be at the base rates in each country set forth on Schedule A
attached hereto (each, a "Royalty Rate"), subject to the following adjust-
ments:
(i) The Royalty Rate shall be increased by [****] for any
episode telecast in which [****.]
(ii) The Royalty Rate shall be increased by [****] for any
episode [****]. The method, time and source used to determine the [****]
shall be determined on a country-by-country basis and by using local
customary audience measurement methods subject to KW's and Unilever's
mutual approval. (The escalations pursuant to this clause (ii) and the
foregoing clause (i) are additive and not cumulative.)
(iii) With respect to repeat telecasts of an episode
[****], the royalty for each such repeat telecast shall be [****] of the
otherwise applicable Royalty Rate.
(iv) With respect to repeat telecasts of an episode
[****], the otherwise applicable Royalty Rate shall be [****] (the basis of
calculation for which Unilever shall promptly furnish to KW); provided,
however, that such adjusted royalty shall in no event be less than [****]
of such otherwise applicable Royalty Rate.
(v) With respect to telecasts of the Series in Italy,
[****].
E. In calculating royalties to KW hereunder, (i) Unilever shall
allocate license fees for each Series for [****].
<PAGE>
<PAGE 3>
[* Deleted pursuant to a request for confidential treatment]
F. The Accounting Periods set forth in Paragraph 6 of the
Original Agreement shall be calendar months rather than calendar quarters.
G. As of the date hereof, Paragraph 16 of the Original Agree-
ment is deleted in its entirety and replaced with the following:
"16. CREDITS. The Series shall be
_______
exploited with a separate credit reading: "Based upon WHEEL
OF FORTUNE (or JEOPARDY! as the case may be) produced in the
United States by MERV GRIFFIN ENTERPRISES, a unit of SONY
PICTURES ENTERTAINMENT, INC. and Distributed by KING WORLD
in association with BUENA VISTA INTERNATIONAL, INC." (or
such other similar legend as KW may from time to time advise
Unilever), in an adequate translation."
H. As of the date hereof, Paragraph 26 of the Original Agree-
ment is deleted in its entirety and replaced with the following:
"26. RENEWAL. Following the expiration
_______
of the Renewal Period, and provided that KW then re-
tains the right to distribute the Series, Unilever
shall have a series of successive dependent, annual
options to extend the License Term hereunder for peri-
ods each of one calendar year (each, a "Renewal Year"),
which options Unilever shall exercise, if at all, by
written notice to KW on or before the March 31st imme-
diately preceding the applicable Renewal Year. In the
event Unilever exercises its option with respect to
each Renewal Year, the terms and conditions of this
agreement, as amended, shall apply to such Renewal
Year, subject to the following:
(a) The Minimum License Fee for such
Renewal Year shall be equal to the greater amount of
[****].
(b) The base Royalty Rate for each Series
for each Renewal Year (i.e., prior to any adjustment
pursuant to this agreement, as amended) shall be
<PAGE>
<PAGE 4>
[* Deleted pursuant to a request for confidential treatment]
increased on a per episode basis in each country within
Territory A by the greatest of:
[****]
In the event Unilever does not exercise its option to extend the
License Term for any Renewal Year as set forth herein, KW shall
have the right to license such rights to any third party without
any further obligation of any nature to Unilever; provided,
however, that KW shall offer Unilever the right to match, by
written notice to KW within five (5) business days following
Unilever's receipt of notice from KW to such effect, any third-
party offer that is less favorable to KW than the terms hereunder
as applied to such Renewal Year. The parties specifically
acknowledge that the foregoing option and matching right shall be
exercisable as to the entire Territory only and not on a country-
by-country basis."
I. Unilever acknowledges that, because BVI will no longer be
KW's agent in this matter, the following provisions of the Original
Agreement shall be modified:
(i) Accounting Statements pursuant to Paragraph 6 shall
be sent directly to KW, with no copy to BVI;
(ii) Paragraph 13(a)(ii) is deleted;
(iii) The phrase "in association with BUENA VISTA INTERNA-
TIONAL, INC." shall be deleted from the credit provision set forth in
Paragraph 16; and
(iv) Notices to KW pursuant to Paragraph 22 shall be sent
directly to KW, with no copy to BVI.
In the event KW so notifies Unilever in writing prior to the
commencement of the Renewal Period, the provisions of clause (i) above
shall be effective as of the date set forth in such notice; provided,
however, that in the event KW so notifies Unilever, KW shall indemnify
Unilever and ECTV from and against any claim by BVI that Unilever has
breached the Original Agreement by failing to send Accounting Statements to
BVI following the date of the KW notice. Unilever shall immediately notify
KW of any such claim or threatened claim by BVI and KW shall have the right
to control the defense and settlement of any claim to which this indemnity
applies.
<PAGE>
<PAGE 5>
[* Deleted pursuant to a request for confidential treatment]
J. The parties acknowledge that, without limitation, the
royalty payments paid by Unilever to KW hereunder are in consideration of
the copyright licenses granted to Unilever hereunder.
Except as modified hereunder, the Original Agreement shall remain
in full force and effect.
Very truly yours,
KING WORLD F.S.C. CORPORATION
By:__________________________
ACCEPTED AND AGREED TO:
UNILEVER NV
By: E.C. TELEVISION INC.
By:______________________
<PAGE>
<PAGE 6>
[* Deleted pursuant to a request for confidential treatment]
ATTACHMENT A
WHEEL OF FORTUNE AND JEOPARDY! LICENSE FEE SCHEDULE
(Royalty Payment in U.S. Dollars Per Episode Per Telecast)
Per Calendar Year
TERRITORIES 1993 1994
____ ____
WHEEL JEOPARDY! WHEEL JEOPARDY!
_____ _________ _____ _________
Belgium [****] [****] [****] [****]
Denmark [****] [****] [****] [****]
Finland [****] [****] [****] [****]
France [****] [****] [****] [****]
German-speaking [****] [****] [****] [****]
Greece [****] [****] [****] [****]
Italy [****] [****] [****] [****]
Netherlands [****] [****] [****] [****]
Portugal [****] [****] [****] [****]
Spain [****] [****] [****] [****]
Sweden & Norway [****] [****] [****] [****]
United Kingdom [****] [****] [****] [****]
TBD TERRITORIES
_______________
Andorra
Iceland
Ireland
Liechtenstein
Luxembourg
Malta
Monaco
Switzerland
EXHIBIT 21.1
List of Subsidiaries of the Registrant
______________________________________
American Journal Inc., a New York corporation
Camelot Entertainment Sales, Inc., a Delaware corporation
Four Crowns Inc., a Delaware corporation
Inside Edition Inc., a New York corporation
K.W.M., Inc., a Delaware corporation
King World Corporation, a Delaware corporation
King World Direct Inc., a Delaware corporation
King World FSC Corporation, a Virgin Islands corporation
King World/GSN Inc., a Delaware corporation
King World/LR Inc., a California corporation
King World/LBS Inc., a New York corporation
King World Merchandising, Inc., a Delaware corporation
King World/RWS Inc., a New York corporation
Quickstead Inc., a California corporation
Topper Productions Inc., a California corporation
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated October 24, 1997 included in this Form 10-K, into the
Company's previously filed Registration Statements File No. 33-30695, No.
333-8969 and No. 333-11363.
/s/ARTHUR ANDERSEN LLP
New York, New York
November 24, 1997
<TABLE> <S> <C>
<S><C>
<ARTICLE>5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statements of Operations and Consolidated Balance Sheets of
King World Productions, Inc. and its Subsidiaries and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> AUG-31-1997
<CASH> 317,782
<SECURITIES> 0
<RECEIVABLES> 79,193
<ALLOWANCES> 4,101
<INVENTORY> 0
<CURRENT-ASSETS> 704,060
<PP&E> 21,455
<DEPRECIATION> (11,706)
<TOTAL-ASSETS> 902,067
<CURRENT-LIABILITIES> 117,985
<BONDS> 0
0
0
<COMMON> 510
<OTHER-SE> 783,572
<TOTAL-LIABILITY-AND-EQUITY> 902,067
<SALES> 0
<TOTAL-REVENUES> 671,277
<CGS> 0
<TOTAL-COSTS> 395,489
<OTHER-EXPENSES> 83,507
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 221,926
<INCOME-TAX> 78,544
<INCOME-CONTINUING> 143,382
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 143,382
<EPS-PRIMARY> 3.82
<EPS-DILUTED> 3.82
</TABLE>
