SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 1995
0-14871
(Commission File Number)
ML MEDIA PARTNERS, L.P.
(Exact name of registrant as specified in its governing
instruments)
Delaware
(State or other jurisdiction of organization)
13-3321085
(IRS Employer Identification No.)
World Financial Center
South Tower - 14th Floor
New York, New York 10080-6114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 236-6472
N/A
Former name, former address and former fiscal year if changed
since last report
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
<PAGE>
ML MEDIA PARTNERS, L.P.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
TABLE OF CONTENTS
Consolidated Balance Sheets as of June 30, 1995
(Unaudited) and December 30, 1994 (Unaudited)
Consolidated Statements of Operations for the Thirteen and
Twenty-Six Week Periods Ended June 30, 1995 (Unaudited)
and July 1, 1994 (Unaudited)
Consolidated Statements of Cash Flows for the Twenty-Six
Week Periods Ended June 30, 1995 (Unaudited) and July 1,
1994 (Unaudited)
Notes to the Consolidated Financial Statements for the
Twenty-Six Week Period Ended June 30, 1995 (Unaudited)
<PAGE>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1995 (UNAUDITED) AND DECEMBER 30, 1994 (UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 30,
Notes 1995 1994
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents 2 $ 29,159,306 $ 26,682,289
Short-term investments held
by agent - 6,000,000
Accounts receivable (net
of allowance for doubtful
accounts of $818,233 at June
30, 1995 and $808,919 at
December 30, 1994) 10,177,445 11,751,637
Prepaid expenses and
deferred charges (net of
accumulated amortization of
$8,162,511 at June 30,
1995, and $7,782,985 at
December 30, 1994) 3,427,276 3,640,813
Property, plant and
equipment(net of accumulated
depreciation of $129,547,689
at June 30, 1995 and
$120,556,173 at December 30,
1994) 80,528,299 85,053,152
Intangible assets (net
of accumulated amortization
of $127,851,441 at June 30,
1995 and $122,438,628 at
December 30, 1994)
97,275,519 102,344,420
Other assets 2 5,748,106 2,858,047
TOTAL ASSETS 2 $226,315,951 $238,330,358
</TABLE>
(Continued on the following page)
<PAGE>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1995 (UNAUDITED) AND DECEMBER 30, 1994 (UNAUDITED)
(continued)
<TABLE>
<CAPTION>
June 30, December 30,
Notes 1995 1994
<S> <C> <C> <C>
LIABILITIES AND PARTNERS'
DEFICIT:
Liabilities:
Borrowings 2 $211,880,929 $218,170,968
Accounts payable and
accrued liabilities 30,595,963 34,522,652
Subscriber advance payments 2,078,097 1,895,400
Total Liabilities 244,554,989 254,589,020
Commitments and Contingencies
2
Partners' Deficit:
General Partner:
Capital contributions, net of
offering expenses 1 1,708,299 1,708,299
Cumulative loss (1,827,772) (1,807,968)
(119,473) (99,669)
Limited Partners:
Capital contributions, net of
offering expenses (187,994
Units of Limited
Partnership Interest) 1 169,121,150 169,121,150
Tax allowance cash
distribution (6,291,459) (6,291,459)
Cumulative loss (180,949,256) (178,988,684)
(18,119,565) (16,158,993)
Total Partners' Deficit (18,239,038) (16,258,662)
TOTAL LIABILITIES AND
PARTNERS' DEFICIT $226,315,951 $ 238,330,358
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited).
<PAGE>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN AND TWENTY-SIX WEEK PERIODS ENDED JUNE 30, 1995
(UNAUDITED) AND JULY 1, 1994 (UNAUDITED)
<TABLE>
<CAPTION> Thirteen Weeks Twenty-Six Weeks
June 30, 1995 July 1, 1994 June 30, 1995 July 1, 1994
<S> <C> <C> <C> <C>
REVENUES:
Operating
revenue $ 28,356,548 $26,939,095 $ 54,630,490 $52,039,539
Interest 70,139 45,130 139,145 82,264
Gain on sales
of assets
-- 2,600 -- 126,236
Total
revenues 28,426,687 26,986,825 54,769,635 52,248,039
COSTS AND
EXPENSES:
Property
operating 10,339,709 9,741,828 20,330,900 18,939,046
General and
adminis-
trative 5,509,395 5,269,637 11,025,226 10,415,647
Depreciation
and amorti-
zation 7,451,539 7,542,525 14,917,962 15,144,060
Interest
expense 4,906,252 3,734,850 9,680,007 7,156,251
Management
fees 397,958 397,958 795,916 795,916
Total costs
and
expenses $ 28,604,853 $26,686,798 $ 56,750,011 $52,450,920
NET (LOSS)/-
INCOME $ (178,166 $ 300,027 $ (1,980,376) $ (202,881)
)
PER UNIT OF LIMITED PARTNERSHIP INTEREST:
NET (LOSS)/-
INCOME $ (0.94_ $ 1.58 $ (10.43) $ (1.07)
)
Number of
Units 187,994 187,994 187,994 187,994
See Notes to Consolidated Financial Statements (Unaudited).
</TABLE>
<PAGE>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEK PERIODS ENDED JUNE 30, 1995 (UNAUDITED) AND
JULY 1, 1994 (UNAUDITED)
<TABLE>
<CAPTION>
June 30, July 1,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,980,37 $ (202,881)
6)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization 14,917,962 15,038,237
Bad debt expense 291,383 198,578
Gain on sale of assets -- (126,236)
Change in operating assets and
liabilities:
Decrease/(increase) in accounts
receivable 1,282,810 (1,000,566)
Decrease in short-term investments
held by agent 6,000,000 -
Increase in prepaid expenses
and deferred charges (165,989) (140,449)
(Increase)/decrease in other assets (2,890,059) 4,201
Increase/(decrease) in accounts payable
and accrued liabilities (3,506,091) 383,605
Increase in subscriber advance payments 182,697 31,542
Net cash provided by operating
activities 14,132,337 14,186,031
</TABLE>
(Continued on the following page)
<PAGE>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEK PERIODS ENDED JUNE 30, 1995 (UNAUDITED) AND
JULY 1, 1994 (UNAUDITED)
(continued)
<TABLE>
<CAPTION>
June 30, July 1,
1995 1994
<S> <C> <C>
Cash flows from investing activities:
Proceeds from sale of assets -- 247,223
Purchase of property, plant and
equipment (4,991,850) (4,263,341)
Additions to intangible assets (373,431) 1,075,770
Net cash used in investing activities (5,365,281) (2,940,348)
Cash flows from financing activities:
Principal payments on bank loans (6,290,039) (6,175,000)
Net cash used in financing activities (6,290,039) (6,175,000)
Net increase in cash and cash
equivalents 2,477,017 5,070,683
Cash and cash equivalents at
beginning of year 26,682,289 26,916,477
Cash and cash equivalents at end of
period $ 29,159,306 $31,987,160
Cash paid for interest $ 11,771,859 $ 7,370,893
</TABLE>
(Continued on the following page)
Supplemental Disclosure of Non-Cash Investing and Financing
Activities:
The Partnership continues to consolidate its pro rata 50%
interest in the Venture which, effective January 1, 1994, also
includes the operations of C-ML Radio.
See Notes to Consolidated Financial Statements (Unaudited).
<PAGE>
ML MEDIA PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE TWENTY-SIX WEEK PERIOD ENDED JUNE 30, 1995 (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ML Media Partners, L.P. (the "Partnership") was formed and the
Certificate of Limited Partnership was filed under the Delaware
Revised Uniform Limited Partnership Act on February 1, 1985.
Operations commenced on May 14, 1986 with the first closing of
the sale of units of limited partnership interest ("Units").
Subscriptions for an aggregate of 187,994 Units were accepted and
are now outstanding.
Media Management Partners (the "General Partner") is a joint
venture, organized as a general partnership under the laws of the
State of New York, between RP Media Management (a joint venture
organized as a general partnership under the laws of the State of
New York, consisting of The Elton H. Rule Company and IMP Media
Management, Inc.), and ML Media Management Inc., a Delaware
corporation and an indirect wholly-owned subsidiary of Merrill
Lynch & Co., Inc. The General Partner was formed for the purpose
of acting as general partner of the Partnership. The General
Partner's total capital contribution was $1,898,934 which
represents 1% of the total Partnership capital contributions.
Pursuant to the terms of the Amended and Restated Agreement of
Limited Partnership (the "Partnership Agreement"), the General
Partner is liable for all general obligations of the Partnership
to the extent not paid by the Partnership. The limited partners
are not liable for the obligations of the Partnership in excess
of the amount of their contributed capital.
The purpose of the Partnership is to acquire, finance, hold,
develop, improve, maintain, operate, lease, sell, exchange,
dispose of and otherwise invest in and deal with media businesses
and direct and indirect interests therein.
Certain reclassifications were made to the 1994 financial
statements to conform with the current period's presentation.
In the opinion of the General Partner, the financial statements
include all adjustments necessary to reflect fairly the results
of the interim periods presented. All adjustments are of a
normal recurring nature.
Statement of Financial Accounting Standards No. 112
Effective January 1, 1994, the Partnership adopted Statement of
Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits" ("SFAS No. 112"). This
pronouncement establishes accounting standards for employers who
provide benefits to former or inactive employees after
employment, but before retirement. These benefits include, but
are not limited to, salary-continuation, disability related
benefits including workers' compensation, and continuation of
health care and life insurance benefits. The statement requires
employers to accrue the obligations associated with service
rendered to date for employee benefits accumulated or vested
where payment is probable and can be reasonably estimated. The
effect of the adoption of SFAS No. 112 was not material to the
Partnership's financial position or results of operations.
<PAGE>
2. LIQUIDITY
As of June 30, 1995, the Partnership had $29,159,306 in cash and
cash equivalents, of which $24,507,323 was limited for use at the
operating level and the remaining $4,651,983 was the
Partnership's working capital.
On November 28, 1994, the Partnership entered into an agreement
to sell substantially all of the assets used in the operations of
the Partnership's California Cable Systems subject to numerous
conditions to closing (see below).
On May 25, 1995, the Partnership entered into an agreement to
sell substantially all of the assets used in the operations of
the Partnership's television station WREX subject to numerous
conditions to closing. The sale was consummated on July 31, 1995
(see below).
On June 1, 1995, the Partnership entered into an agreement to
sell substantially all of the assets used in the operations of
the Partnership's television station KATC, subject to numerous
conditions to closing (see below).
California Cable
On November 28, 1994, the Partnership entered into an agreement
(the "Asset Purchase Agreement") with Century Communications
Corp. ("Century") to sell to Century substantially all of the
assets used in the operations of the Partnership's California
Cable Systems serving the Anaheim, Hermosa Beach/Manhattan Beach,
Rohnert Park/Yountville and Fairfield communities. The base
purchase price for the systems will be $286 million, subject to
reduction by an amount equal to 11 times the amount by which the
operating cash flow of the systems (as adjusted in accordance
with the Asset Purchase Agreement) is less than $26 million for
the 12-month period prior to the closing, and subject to further
adjustment as provided in the Asset Purchase Agreement. In
addition, the Partnership has the right to terminate the Asset
Purchase Agreement if the purchase price would be less than $260
million based on the formula described above. Consummation of
the transactions provided for in the Asset Purchase Agreement is
subject to the satisfaction of certain conditions, including
obtaining approvals from the Federal Communications Commission
and the municipal authorities issuing the franchises for the
systems.
The Partnership is currently unable to determine the impact of
the February 22, 1994 FCC action and previous FCC actions (see
below) on its ability to consummate the sale of the California
Cable systems or the potential timing and ultimate value of such
sale. However, as discussed below, the FCC actions have had, and
will have, a detrimental impact on the revenues and profits of
the California Cable systems.
As of September 30, 1994 and December 30, 1994, due in part to
the negative impact of rate re-regulation on the operations of
the California Cable Systems, the Partnership was in default of
certain financial covenants contained in the revised ML
California Credit Agreement. In addition, as of December 30,
1994, the Partnership expected to be unable to meet during 1995
the principal payment requirements then contained in the revised
ML California Credit Agreement. These defaults were cured during
the first quarter of 1995.
Effective February 23, 1995, the Partnership and the banks
entered into a first amendment (the "First Amendment") to the
revised ML California Credit Agreement that provided for reduced
principal payments and less restrictive covenants during the
first three quarters of 1995. In exchange, the Partnership paid
an amendment fee of $322,969 to the banks and agreed to allow the
banks to charge a higher interest rate on outstanding borrowings
under the revised ML California Credit Agreement. (A further fee
will be due to the lenders if the sale of the California Cable
Systems is not consummated prior to December 29, 1995.) Certain
other terms of the revised ML California Credit Agreement were
also affected by the First Amendment.
The Partnership currently expects that it will be able to remain
in compliance with the terms of the revised ML California Credit
Agreement, as amended, until December 29, 1995, during which
period the Partnership will seek to consummate the sale of the
California Cable Systems to Century. The Partnership currently
expects that if the sale of the California Cable Systems is not
consummated prior to December 29, 1995, the Partnership will be
unable to meet the scheduled December 29, 1995 principal payment
due to the banks pursuant to the revised ML California Credit
Agreement, as amended. As of June 30, 1995 the Partnership was
in compliance under the revised ML California Credit Agreement
and the outstanding principal debt balance was $125,292,500.
At June 30, 1995, the Partnership had funds in an escrow account
totaling $798,302, which funds were included in other assets on
the accompanying consolidated balance sheets. The funds were
deposited in such account during 1994 in accordance with the
Partnership's agreement with Cable Telecommunications Joint
Powers Agency ("CTJPA") to be held for the benefit of CTJPA's
subscribers pending determination of the Partnership's potential
need to make refunds to the subscribers in connection with rate
re-regulation.
At June 30, 1995, the Partnership had funds in an escrow account
totaling $694,797, which funds were included in other assets on
the accompanying consolidated balance sheet. The funds were
deposited in such account during the first quarter of 1995 to be
held for the benefit of the City of Fairfield's subscribers
pending determination of the Partnership's potential need to make
refunds to the subscribers in connection with rate re-regulation.
The FCC has not yet made a decision on the CTJPA rate appeal.
However, the FCC's decision on the most material issues in the
Partnership's other rate cases have been decided in a manner
predominantly favorable to the Partnership. The FCC decision on
the Fairfield rate appeal was predominantly favorable to the
Partnership. The escrow account is expected to be substantially
reduced as soon as the city has revised the rate structure to be
in compliance with the conditions of the FCC's decision.
WREX-KATC
On June 1, 1995, the Partnership entered into an agreement (the
"Asset Purchase Agreement") with KATC Communications, Inc. (the
"Buyer") to sell to the Buyer substantially all of the assets
used in the operations of the Partnership's television station
KATC-TV other than cash and accounts receivable. The purchase
price for the assets is $24,500,000. It is expected that the
entire proceeds of the sale, together with the proceeds of the
sale of WREX-TV (see below), after application to the expenses
and liabilities relating to the sales, will be applied to repay
bank indebtedness under the WREX-KATC Loan and to pay other debts
and obligations of the Partnership, as provided in the
Partnership's Partnership Agreement, and any remaining proceeds
will be distributed to the partners of the Partnership. The
Buyer is not assuming the accounts payable or other liabilities
of KATC-TV. Consummation of the sale pursuant to the Asset
Purchase Agreement is subject to the satisfaction of certain
conditions, including obtaining approvals from the Federal
Communications Commission.
On July 31, 1995, the Partnership completed the sale to Quincy
Newspapers, Inc. ("Quincy") of substantially all of the assets
used in the operations of the Partnership's television station
WREX-TV, other than cash and accounts receivable. The purchase
price for the assets was $18,370,500, subject to certain
adjustments. A reserve of approximately $2.3 million was
established to cover certain purchase price adjustments and
expenses and liabilities relating to the sale, and the balance of
approximately $16.1 million was applied to repay a portion of the
bank indebtedness under the WREX-KATC Loan. Any unused funds
from the $2.3 million reserve will also be applied to repay a
portion of the WREX-KATC loan. The remaining balance of the
indebtedness will continue to be secured by the assets of KATC-
TV. Quincy did not assume the accounts payable or other
liabilities of WREX-TV. The Partnership expects to recognize a
gain on the sale of WREX and KATC in the third quarter of 1995.
During the first and second quarters of 1995 and during 1994,
1993 and 1992, the Partnership defaulted on the majority of its
quarterly principal payments due under its WREX-KATC Loan. As of
June 30, 1995, WREX-KATC was in default of $6.4 million in
principal, after giving effect to $867,007 in payments made
during 1993 and 1994 and $982,993 in payments made in the second
quarter of 1995 from cash generated by the operations of WREX and
KATC. The Partnership is not in default of any regularly
scheduled interest payments under the WREX-KATC Loan. In
addition, as of December 28, 1990 and continuing through June 30,
1995, the Partnership was in default of financial covenants under
its WREX-KATC Loan. The lender granted waivers for the defaults
as of December 28, 1990. However, the lender has not granted
waivers for any subsequent defaults. As required by the terms of
the WREX-KATC Loan, subsequent to entering into the WREX-KATC
Loan in 1989, the Partnership advanced a total of $1.0 million to
WREX-KATC, including $10,000 in 1993.
The Partnership expects to experience future principal payment
and covenant defaults under the WREX-KATC Loan. The Partnership
sought unsuccessfully to restructure the WREX-KATC Loan and, as
previously discussed, decided to sell WREX and KATC. The
Partnership does not intend to, nor is it obligated to, advance
any further working capital to its remaining station, KATC. The
lender to WREX-KATC has informed the Partnership that it reserves
all of its rights and remedies under the WREX-KATC Loan
agreement, including the right to accelerate the maturity of the
indebtedness under the WREX-KATC Loan and to foreclose on, or
otherwise force a sale of, the assets of KATC (but not the other
assets of the Partnership). Borrowings under the WREX-KATC Loan
are nonrecourse to the Partnership. The outstanding principal
debt balance of the WREX-KATC Loan was $22,400,000 at June 30,
1995.
WINCOM-WEBE-WICC
The Partnership was in compliance with all terms of its Wincom-
WEBE-WICC Loan and the Restructuring Agreement at June 30, 1995.
The outstanding principal debt balance was $14,188,428 at June 30,
1995.
Impact of Cable Legislation and Regulation
The future liquidity of the Partnership's cable operations,
California Cable and C-ML Cable, is likely to be negatively
affected by recent and ongoing changes in legislation and
regulation governing the cable industry. The potential impact of
such legislation and regulation on the Partnership is described
below.
On October 5, 1992, Congress overrode the President's veto of the
Cable Consumer Protection and Competition Act of 1992 (the "1992
Cable Act") which imposed significant new regulations on the
cable television industry. The 1992 Cable Act required the
development of detailed regulations and other guidelines by the
Federal Communications Commission ("FCC"), most of which have now
been adopted but remain subject to petitions for reconsideration
before the FCC and/or court of appeals.
Rate Regulation
The 1992 Cable Act completely supplanted the rate regulation
provisions of the 1984 Cable Act. The 1992 Act establishes that
rate regulation applies to rates charged for the basic tier of
service by any cable system not subject to "effective
competition," which is, in turn, deemed to exist if (1) fewer
than 30 percent of the households in the service area subscribe
to the system, (2) at least 50 percent of the households in the
franchise area are served by two multichannel video programming
distributors ("MVPD") and at least 15 percent of the households
in the franchise area subscribe to any MVPD other than the
dominant cable operator, or (3) a franchising authority for that
franchise area itself serves as a multichannel video programming
distributor offering service to at least 50 percent of the
households in the franchise area. Under this new statutory
definition, the Partnership's systems, like most cable systems in
most areas, are not presently subject to effective competition.
The basic tier must include all signals required to be carried
under the 1992 Cable Act's mandatory carriage provisions, all PEG
channels required by the franchise, and all broadcast signals
other than "superstations."
Acting pursuant to the foregoing statutory mandate, the FCC, on
May 3, 1993, released a Report and Order ("Rate Order")
establishing a new regulatory scheme governing the rates for
certain cable television services and equipment. The new rules,
among other things, set certain benchmarks enabling local
franchise authorities to require rates for "basic service" (as
noted, essentially, local broadcast and access channels) and the
FCC (upon receipt of individual complaints) to require rates for
certain satellite program services (excluding premium channels)
to fall approximately 10% from September 30, 1992 levels, unless
the cable operator is already charging rates that are at a so-
called "competitive" benchmark level or it can justify a higher
rate based on a cost-of-service showing. Rates of all regulated
cable systems are then subject to a price cap that governs the
extent to which rates can be raised in the future without a cost-
of-service showing. The rules announced in May 1993, became
effective on September 1, 1993.
On February 22, 1994, the FCC adopted a series of additional
measures that expanded and substantially altered its cable rate
regulations. The FCC's major actions included the following:
(1) a modification of its benchmark methodology in a way which
effectively required cable rates to be reduced, on average, an
additional 7% (i.e., beyond the 10% reduction previously ordered
in 1993) from their September 30, 1992 level, or to the new
benchmark, whichever is less; (2) the issuance of new standards
and requirements to be used in making cost-of-service showings by
cable operators who seek to justify rates above the levels
determined by the benchmark approach; and (3) the clarification
and/or reaffirmation of a number of "going forward" issues that
had been the subject of various petitions for reconsideration of
its May 3, 1993 Rate Order.
In deciding to substantially revise its benchmark methodology for
regulated cable rates, the FCC actually created two benchmark
systems. Thus, whereas the modified rate regulations adopted on
February 22, 1994 became effective as of May 15, 1994, regulated
rates in effect before that date continue to be governed by the
old benchmark system.
Under the FCC's revised benchmark regulations, systems not facing
"effective competition" that have become subject to regulation
were required to set their rates at a level equal to their
September 30, 1992 rates minus a revised "competitive
differential" of 17 percent (a "differential" which, as noted,
was set at 10 percent in the FCC's May 1993 Rate Order). Cable
operators who seek to charge rates higher than those produced by
applying the competitive differential may elect to invoke new
cost-of-service procedures (discussed below).
In addition to revising the benchmark formula and the competitive
differential used in setting initial regulated cable rates, the
FCC adopted rules to simplify the calculations used to adjust
those rates for inflation and external costs in the future. The
FCC also concluded that it will treat increases in compulsory
copyright fees incurred by carrying distant broadcast signals as
external costs in a fashion parallel to increases in the
contractual costs for nonbroadcast programming. It will not,
however, accord external cost treatment to pole attachment fees.
In its May 1993 Rate Order the FCC exempted from rate regulation
the price of packages of "a la carte" channels if certain
conditions were met. Upon reconsideration, however, the FCC on
February 22, 1994 effectively tightened its regulatory treatment
of "a la carte" packages by establishing more elaborate criteria
designed to ensure that such practices are not employed so as to
unduly evade rate regulation. When assessing the appropriate
regulatory treatment of "a la carte" packages, the FCC stated it
will consider, inter alia, the following factors as possibly
suggesting that such packages do not qualify for non-regulated
treatment: whether the introduction of the package avoids a rate
reduction that otherwise would have been required under the FCC's
rules; whether an entire regulated tier has been eliminated and
turned into an "a la carte" package; whether a significant number
or percentage of the "a la carte" channels were removed from a
regulated service tier; whether the package price is deeply
discounted when compared to the price of an individual channel;
and whether the subscriber must pay significant equipment or
other charges to purchase an individual channel in the package.
In addition, the FCC considers factors that will reflect in favor
of non-regulated treatment such as whether the channels in the
package have traditionally been offered on an "a la carte" basis
or whether the subscriber is able to select the channels that
comprise the "a la carte" package. "A la carte" packages which
are found to evade rate regulation rather than enhance subscriber
choice are treated as regulated tiers, and operators engaging in
such practices may be subject to forfeitures or other sanctions
by the FCC.
In another action, the FCC adopted a methodology for determining
rates when channels are added to or deleted from regulated tiers
and announced that it will treat programming costs as external
costs and that operators may recover the full amount of
programming expenses associated with added channels. Operators
may also recover a mark-up on their programming expenses. These
adjustments and calculations are made on a new FCC form.
On November 10, 1994, the FCC adopted new "going forward" rules
and further tightened its regulation of a la carte packages.
These new rules allow operators to pass through the costs, plus a
20 cent per channel mark-up, for channels newly added to
regulated tiers. Through 1996, however, operators will be
subject to an aggregate cap of $1.50 on the amount they may
increase cable program service tier rates due to channel
additions. The FCC also established a "new products tier"
intended to provide operators unregulated pricing and packaging
flexibility, particularly for newer services, so long as they
preserve the fundamental nature of their preexisting regulated
tiers. Outside of the "new products" approach, however, the
Commission reversed its approach to a la carte packages and ruled
that all (non-premium) packages of services -- even if also
available on an a la carte basis -- would be treated as a
regulated tier.
In June of 1995, a federal appeals court rejected a number of
challenges to the FCC's rate regulations, holding that the 17%
rate roll back is lawful. However, this decision also eased the
second test for "effective competition" (as described above) and
permitted cable operators to recover external costs during the
gap period from the enactment of the Cable Act to the initial
date of regulation.
In a separate action on February 22, 1994, the FCC adopted
interim rules to govern cost of service proceedings initiated by
cable operators. Operators who elect to pursue cost of service
proceedings will have their rates based on their allowable costs,
in a proceeding based on principles similar to those that govern
cost-based rate regulation of telephone companies. Under this
methodology, cable operators may recover, through the rates they
charge for regulated cable service, their normal operating
expenses and a reasonable return on investment. The FCC has, for
these purposes, established an interim industry-wide rate of
return of 11.25%. It has also determined that acquisition costs
above book value are presumptively excluded from the rate base.
At the same time, certain intangible, above-book costs, such as
start-up losses (limited to losses actually incurred during a two-
year start-up period) and the costs of obtaining franchise rights
and some start-up organizational costs such as customer lists,
may be allowed. There are no threshold requirements limiting the
cable systems eligible for a cost of service showing, except
that, once rates have been set pursuant to a cost of service
approach, cable operators may not file a new cost of service
showing to justify new rates for a period of two years. Finally,
the FCC notes that it will, in certain individual cases, consider
a special hardship showing (or the need for special rate relief)
where an operator demonstrates that the rates set by a cost of
service proceeding would constitute confiscation of investment
and that some higher rate would not represent exploitation of
customers. In considering whether to grant such a request, the
FCC emphasizes that, among other things, it would examine the
overall financial condition of the operator and whether there is
a realistic threat of termination of service. These interim
rules remain the subject of both a further FCC rulemaking and a
pending appeal in the U.S. Court of Appeals for the D.C. Circuit,
which is being held in abeyance pending the completion of the
FCC's rules.
In 1995, the FCC has adopted and Congress has proposed measures
that may mitigate the effect of the FCC's rate regulations. In
May, the FCC announced a decision expanding the number of small
cable systems and small companies that qualify for special rate
relief. Systems serving 15,000 or fewer subscribers owned by
small companies of 400,000 or fewer subscribers may elect a new
simplified and possibly more permissive rate mechanism. Pursuant
to this mechanism, small systems may use a new formula to
calculate a per-channel rate that shall be considered
presumptively reasonable if it is below $1.24 per channel. In
addition, bills have passed in both the House and Senate that
would, if ultimately enacted into law, pare back rate regulation
of satellite program services and end cable rate regulation
altogether when a telephone company provides video programming
services directly to subscribers in a cable operator's franchise
area.
The Partnership is currently unable to assess the full impact of
the FCC's further rate regulation decisions and the 1992 Cable
Act generally upon its business prospects or future financial
results. However, the rate reductions mandated by the FCC in May
of 1993 and February of 1994 have had, and will most likely
continue to have, a detrimental impact on the revenues and
profits of the Partnership's cable television operations.
Although the impact of the 1992 Cable Act and the recent FCC
actions cannot yet be ascertained precisely, once fully
implemented, certain aspects of the new law may have an
additional negative impact on the financial condition, liquidity,
and value of the Partnership. The rate reductions and limits on
the pricing of a-la-carte tiers are principally responsible for
the occurrence of since-cured and possible future defaults under
the revised ML California Credit Agreement.
In addition, the Partnership is currently unable to determine the
impact of the February 22, 1994 and the November 10, 1994 FCC
actions and previous FCC actions on its ability to consummate the
sale of the California Cable Systems or the potential timing and
ultimate value of such sale. However, as discussed below, the
FCC actions have had, and will have, a detrimental impact on the
revenues and profits of the California Cable Systems.
As an example of the effects of the 1992 Cable Act, in complying
with the benchmark regulatory scheme without considering the
effect of any future potential cost-of-service showing, the
Partnership's California Cable Systems, on a franchise by
franchise basis, were required to reduce present combined basic
service rates (broadcast tier and satellite service tier)
effective September 1, 1993, and again effective July 14, 1994.
In addition, pursuant to the 1992 Cable Act, revenue from
secondary outlets and from remote control units was eliminated or
reduced significantly. At that time, the Partnership began
instituting charges for converters, as permitted by the 1992
Cable Act, offering programming services on an a-la-carte basis,
which services are not subject to rate regulation, and
aggressively marketing unregulated premium services to those
subscribers benefiting from decreased basic rates. Despite the
institution of these actions by the California Cable Systems, the
May, 1993 and February, 1994 rate regulations enacted pursuant to
the 1992 Cable Act had a detrimental impact on the revenues and
profits of the California Cable Systems. For example, in the
first half of 1995 the revenues of the California Cable Systems
increased marginally compared to the first half of 1994 after far
greater increases in every previous year.
The Partnership is currently unable to ascertain the full impact
of the February 22, 1994 and the November 10, 1994 actions and
previous FCC actions on the C-ML Cable Systems. While the impact
of a September 1, 1993 rate and tier restructuring to comply with
the 1992 Cable Act did not have a significant negative impact on
the revenues and profits of C-ML Cable, the February 22, 1994 FCC
action had a detrimental impact on the revenues and profits of C-
ML Cable. However, the Partnership does not presently anticipate
that this reduced rate of revenue growth will result in any
defaults under the C-ML Notes or the C-ML Revolving Credit
Agreement during 1995. There were no defaults under the C-ML
Notes or the C-ML Revolving Credit Agreement at June 30, 1995.
Summary
Based upon a review of the current financial performance of the
Partnership's investments, the Partnership continues to monitor
its working capital level. The Partnership does not have
sufficient cash to meet all of the contractual debt obligations
of all of its investments, nor is it obligated to do so. The
Partnership does not currently expect to, nor is it obligated to,
advance any of its unrestricted working capital to KATC.
As previously reported, the Partnership has deferred certain
general partner management fees since the second quarter of 1989
and certain general partner reimbursements of out-of-pocket
expenses since the third quarter of 1989. The Partnership will
pay these deferred amounts due to the General Partner from net
sales proceeds it receives from the disposition of its
investments, including the pending sale of its remaining
television station, KATC-TV, and any remaining proceeds from each
disposition will be distributed to the partners of the
Partnership.
As of June 30, 1995, the balance of such deferred amounts totaled
approximately $15.3 million.
3. ADDITIONAL INFORMATION
Additional information, including the audited year-end 1994
Financial Statements and the Summary of Significant Accounting
Policies, is included in the Partnership's filing on Form 10-K
for the year ended December 30, 1994 on file with the Securities
and Exchange Commission.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
As of June 30, 1995, Registrant had $29,159,306 in cash and cash
equivalents, of which $24,507,323 was limited for use at the
operating level and the remaining $4,651,983 was Registrant's
working capital.
On November 28, 1994, Registrant entered into an agreement to
sell substantially all of the assets used in the operations of
Registrant's California Cable Systems subject to numerous
conditions to closing (see below).
On May 25, 1995, Registrant entered into an agreement to sell
substantially all of the assets used in the operations of
Registrant's television station WREX subject to numerous
conditions to closing (see below). The sale was consummated on
July 31, 1995.
On June 1, 1995, Registrant entered into an agreement to sell
substantially all of the assets used in the operations of
Registrant's television station KATC, subject to numerous
conditions to closing.
California Cable
On November 28, 1994, Registrant entered into an agreement (the
"Asset Purchase Agreement") with Century Communications Corp.
("Century") to sell to Century substantially all of the assets
used in the operations of Registrant's California Cable Systems
serving the Anaheim, Hermosa Beach/Manhattan Beach, Rohnert
Park/Yountville and Fairfield communities. The base purchase
price for the systems will be $286 million, subject to reduction
by an amount equal to 11 times the amount by which the operating
cash flow of the systems (as adjusted in accordance with the
Asset Purchase Agreement) is less than $26 million for the 12-
month period prior to the closing, and subject to further
adjustment as provided in the Asset Purchase Agreement. In
addition, Registrant has the right to terminate the Asset
Purchase Agreement if the purchase price would be less than $260
million based on the formula described above. Consummation of
the transactions provided for in the Asset Purchase Agreement is
subject to the satisfaction of certain conditions, including
obtaining approvals from the Federal Communications Commission
and the municipal authorities issuing the franchises for the
systems.
Registrant is currently unable to determine the impact of the
February 22, 1994 FCC action and previous FCC actions on its
ability to consummate the sale of the California Cable Systems or
the potential timing and ultimate value of such sale. However,
the FCC actions have had, and will have, a detrimental impact on
the revenues and profits of the California Cable Systems.
As of September 30, 1994 and December 30, 1994, due in part to
the negative impact of rate re-regulation on the operations of
the California Cable Systems, Registrant was in default of
certain financial covenants contained in the revised ML
California Credit Agreement. In addition, as of December 30,
1994, Registrant expected to be unable to meet during 1995 the
principal payment requirements then contained in the revised ML
California Credit Agreement. These defaults were cured during
the first quarter of 1995.
Effective February 23, 1995, Registrant and the banks entered
into a first amendment (the "First Amendment") to the revised ML
California Credit Agreement that provided for reduced principal
payments and less restrictive covenants during the first three
quarters of 1995. In exchange, Registrant paid an amendment fee
of $322,969 to the banks and agreed to allow the banks to charge
a higher interest rate on outstanding borrowings under the
revised ML California Credit Agreement. (A further fee will be
due to the lenders if the sale of the California Cable Systems is
not consummated prior to December 29, 1995.) Certain other terms
of the revised ML California Credit Agreement were also affected
by the First Amendment.
Registrant currently expects that it will be able to remain in
compliance with the terms of the revised ML California Credit
Agreement, as amended, until December 29, 1995, during which
period Registrant will seek to consummate the sale of the
California Cable Systems to Century. Registrant currently
expects that if the sale of the California Cable Systems is not
consummated prior to December 29, 1995, Registrant will be unable
to meet the scheduled December 29, 1995 principal payment due to
the banks pursuant to the revised ML California Credit Agreement,
as amended. As of June 30, 1995 Registrant was in compliance
under the revised ML California Credit Agreement and the
outstanding principal debt balance was $125,292,500.
At June 30, 1995, Registrant had funds in an escrow account
totaling $798,302, which funds were included in other assets on
the accompanying consolidated balance sheets. The funds were
deposited in such account in accordance with Registrant's
agreement with Cable Telecommunications Joint Powers Agency
("CTJPA") to be held for the benefit of CTJPA's subscribers
pending determination of Registrant's potential need to make
refunds to the subscribers in connection with rate re-regulation.
At June 30, 1995, Registrant had funds in an escrow account
totaling $694,797, which funds were included in other assets on
the accompanying consolidated balance sheet. The funds were
deposited in such account during the first quarter of 1995 to be
held for the benefit of the City of Fairfield's subscribers
pending determination of Registrant's potential need to make
refunds to the subscribers in connection with rate re-regulation.
The FCC has not yet made a decision on the CTJPA rate appeal.
However, the FCC's decision on the most material issues in
Registrant's other rate cases have been decided in a manner
predominantly favorable to Registrant. The FCC decision on the
Fairfield rate appeal was predominantly favorable to Registrant.
The escrow account is expected to be substantially reduced as
soon as the city has revised the rate structure to be in
compliance with the conditions of the FCC's decision.
WREX-KATC
On June 1, 1995, Registrant entered into an agreement (the "Asset
Purchase Agreement") with KATC Communications, Inc. (the "Buyer")
to sell to the Buyer substantially all of the assets used in the
operations of Registrant's television station KATC-TV, other than
cash and accounts receivable. The purchase price for the assets
is $24,500,000. It is expected that the entire proceeds of the
sale, together with the proceeds of the sale of WREX-TV (see
below), after application to the expenses and liabilities
relating to the sales, will be applied to repay bank indebtedness
under the WREX-KATC Loan and to pay other debts and obligations
of Registrant, as provided in Registrant's Partnership Agreement,
and any remaining proceeds will be distributed to the partners of
Registrant. The Buyer is not assuming the accounts payable or
other liabilities of KATC-TV. Consummation of the sale pursuant
to the Asset Purchase Agreement is subject to the satisfaction of
certain conditions, including obtaining approvals from the
Federal Communications Commission.
On July 31, 1995, Registrant completed the sale to Quincy
Newspapers, Inc. ("Quincy") of substantially all of the assets
used in the operations of Registrant's television station WREX-
TV, other than cash and accounts receivable. The purchase price
for the assets was $18,370,500, subject to certain adjustments.
A reserve of approximately $2.3 million was established to cover
certain purchase price adjustments and expenses and liabilities
relating to the sale, and the balance of approximately $16.1
million was applied to repay a portion of the bank indebtedness
under the WREX-KATC Loan. Any unused funds from the $2.3 million
reserve will also be applied to repay a portion of the WREX-KATC
Loan. The remaining balance of the indebtedness will continue to
be secured by the assets of KATC-TV. Quincy did not assume the
accounts payable or other liabilities of WREX-TV.
During the first and second quarters of 1995 and during 1994,
1993 and 1992, Registrant defaulted on the majority of its
quarterly principal payments due under its WREX-KATC Loan. As of
June 30, 1995, WREX-KATC was in default of $6.4 million in
principal, after giving effect to $867,007 in payments made
during 1993 and 1994 and $982,993 in payments made in the second
quarter of 1995 from cash generated by the operations of WREX and
KATC. Registrant is not in default of any regularly scheduled
interest payments under the WREX-KATC Loan. In addition, as of
December 28, 1990 and continuing through June 30, 1995,
Registrant was in default of financial covenants under its WREX-
KATC Loan. The lender granted waivers for the defaults as of
December 28, 1990. However, the lender has not granted waivers
for any subsequent defaults. As required by the terms of the
WREX-KATC Loan, subsequent to entering into the WREX-KATC Loan in
1989, Registrant advanced a total of $1.0 million to WREX-KATC,
including $10,000 in 1993.
Registrant expects to experience future principal payment and
covenant defaults under the WREX-KATC Loan. Registrant sought
unsuccessfully to restructure the WREX-KATC Loan and, as
previously discussed, decided to sell WREX and KATC. Registrant
does not intend to, nor is it obligated to, advance any further
working capital to its remaining station, KATC. The lender to
WREX-KATC has informed Registrant that it reserves all of its
rights and remedies under the WREX-KATC Loan agreement, including
the right to accelerate the maturity of the indebtedness under
the WREX-KATC Loan and to foreclose on, or otherwise force a sale
of, the assets of KATC (but not the other assets of Registrant).
Borrowings under the WREX-KATC Loan are nonrecourse to
Registrant. The outstanding principal debt balance of the WREX-
KATC Loan was $22,400,000 at June 30, 1995.
WINCOM-WEBE-WICC
Registrant was in compliance with all terms of its Wincom-WEBE-
WICC Loan and the Restructuring Agreement at June 30, 1995. The
outstanding principal debt balance was $14,188,428 at June 30,
1995.
Impact of Cable Legislation and Regulation
Refer to discussion in Item 1. Financial Statements (Note 2).
Summary
Based upon a review of the current financial performance of
Registrant's investments, Registrant continues to monitor its
working capital level. Registrant does not have sufficient cash
to meet all of the contractual debt obligations of all of its
investments, nor is it obligated to do so. Registrant does not
currently expect to, nor is it obligated to, advance any of its
unrestricted working capital to KATC.
As previously reported, Registrant has deferred certain general
partner management fees since the second quarter of 1989 and
certain general partner reimbursements of out-of-pocket expenses
since the third quarter of 1989. Registrant will pay these
deferred amounts due to the General Partner from net sales
proceeds it receives from the disposition of its investments,
including the pending sale of its remaining television station,
KATC-TV, and any remaining proceeds from each disposition will be
distributed to the partners of Registrant.
As of June 30, 1995, the balance of such deferred amounts totaled
approximately $15.3 million.
Results of Operations
For the thirteen week periods ended June 30, 1995 and July 1,
1994:
During the thirteen week periods ended June 30, 1995 and July 1,
1994, Registrant had total operating revenues of approximately
$28.4 million and $26.9 million, respectively. The approximate
$1.5 million increase was primarily due to increased revenue at
all media properties with the exception of KORG-KEZY where
revenues declined slightly from the second quarter of 1994 to the
second quarter of 1995.
Revenues for the second quarter of 1995 increased over the same
period in 1994 by approximately $0.3 million at California Cable
and $0.4 million at C-ML Cable. The relatively small increase in
revenue at California Cable resulted primarily from the negative
impact of the second round of rate regulation imposed by the FCC
in July 1994. The negative impact of rate regulation was offset
by revenues generated from the increase in the number of basic
subscribers from 133,700 at the end of the second quarter 1994 to
137,833 at the end of the second quarter of 1995. While premium
subscribers increased slightly from 72,583 at the end of the
second quarter of 1994 to 73,589 at the end of the second quarter
of 1995, premium subscriber revenue decreased slightly as a
result of discount promotions. The increase in the number of
basic subscribers from year to year was a result of increased
marketing efforts, particularly in the second quarter of 1995.
The number of basic subscribers at June 30, 1995 increased since
the beginning of the year. Pay-per-view revenue remained flat
from the second quarter of 1994 to the second quarter of 1995.
The increase in revenues at C-ML Cable reflects an increase in
the number of basic subscribers from 109,976 at the end of the
second quarter of 1994 to 114,980 at the end of the second
quarter of 1995, and an increase in premium subscribers from
66,896 at the end of the second quarter of 1994 to 69,993 at the
end of the second quarter 1995, both due to successful marketing
efforts.
Television stations KATC and WREX reported a combined increase of
approximately $0.3 million in revenue primarily as a result of
stronger national advertising and network revenues at KATC, in
addition to increased regional revenues at WREX. The Wincom-WEBE-
WICC radio group reported an increase in revenues of
approximately $0.4 million as a result of stronger local and
national advertising revenues resulting from improved market
conditions.
During the second quarter of 1995 and 1994, Registrant incurred
property operating expenses of approximately $10.3 million and
$9.7 million, respectively, in connection with the operation of
its cable, radio and television properties. Registrant's total
property operating expenses increased by approximately $0.6
million from year to year as a result of: an increase of
approximately $0.1 million at the combined cable and radio
operations of the Revised Venture, due primarily to increases in
certain sales-related expenses; an increase of approximately $0.2
million at California Cable due primarily to higher programming
costs; an increase of approximately $0.2 million at the Wincom-
WEBE-WICC radio group due to increases in commissions and other
revenue related expenses, as well as increased advertising costs;
and an increase of approximately $0.1 million at KATC and WREX
due primarily to increased sales promotion and the expansion of
the news departments at both stations.
The remaining increases or decreases in property operating
expenses at Registrant's other properties were immaterial, either
individually or in the aggregate.
During the second quarter of 1995 and 1994, Registrant incurred
general and administrative expenses of approximately $5.5 million
and $5.3 million, respectively. Registrant's total general and
administrative expenses increased by approximately $0.2 million
from year to year as a result of: an increase at California Cable
of approximately $0.1 million due primarily to costs related to
the pending disposition of the California Cable Systems; an
increase at C-ML Cable of approximately $0.2 million due
primarily to increased administrative costs related to an
increase in the overall subscriber base; and an increase at KATC
and WREX of approximately $0.1 million, due primarily to expenses
relating to the sale of the TV stations and an increase in
insurance expense.
The remaining increases or decreases in general and
administrative expenses at Registrant's other properties were
immaterial, either individually or in the aggregate.
Registrant earned interest income of approximately $70,000 and
$45,000 during the second quarter of 1995 and 1994, respectively
on its working capital balance. The increase is due primarily to
an increase in its working capital balance.
Interest expense of approximately $4.9 million and $3.7 million
in the second quarter of 1995 and 1994, respectively, represents
the cost incurred for borrowed funds utilized to acquire various
media properties. The approximate $1.2 million increase in
interest expense is due primarily to an increase of approximately
$1.0 million related to the revised ML-California Credit
Agreement resulting both from higher floating interest rates from
year to year and the increased rate incorporated in the First
Amendment to the loan. Interest also increased under the Wincom-
WEBE-WICC loan ($0.1 million) and the WREX-KATC loan ($0.1
million) due to higher floating interest rates.
Registrant's depreciation and amortization expense totaled
approximately $7.4 million and $7.5 million in the second quarter
of 1995 and 1994, respectively. Registrant's total depreciation
and amortization expense decreased by approximately $0.1 million
from year to year due to a decrease of approximately $0.2 million
at KATC reflecting fully depreciated equipment, partially offset
by an increase of approximately $0.1 million at California Cable
due to capital expenditures.
The remaining increases or decreases in depreciation and
amortization expense at Registrant's other properties were
immaterial, either individually or in the aggregate.
For the twenty-six week periods ended June 30, 1995 and July 1,
1994:
During the twenty-six week periods ended June 30, 1995 and July 1,
1994, Registrant had total operating revenues of approximately
$54.6 million and $52.0 million, respectively. The approximate
$2.6 million increase was due to increased revenues at all media
properties with the exception of radio station KORG-KEZY where
revenues declined slightly from year to year.
Revenues for the first half of 1995 increased over the same
period in 1994 by approximately $0.3 million at California Cable
and $0.7 million at C-ML Cable. The relatively small increase in
revenue at California Cable resulted primarily from the negative
impact of the second round of rate regulation imposed by the FCC
in July 1994. The negative impact of rate regulation was offset
by revenues generated from the increase in the number of basic
subscribers from 133,700 at the end of the second quarter 1994,
to 137,833 at the end of the second quarter of 1995. While
premium subscribers increased slightly from 72,583 at the end of
second quarter of 1994 to 73,589 at the end of the second quarter
of 1995, premium subscriber revenues decreased slightly as a
result of discount promotions. The increase in the number of
basic subscribers from year to year was a result of increased
marketing efforts, particularly in the second quarter of 1995.
The number of basic subscribers at June 30, 1995 increased since
the beginning of the year. Pay-per-view revenue in the first
half of 1995 decreased over the first half of 1994 due to the
lack of high profile special events in the first quarter of 1995.
The increase in revenues at C-ML Cable reflects an increase in
the number of basic subscribers from 109,976 at the end of the
second quarter of 1994 to 114,980 at the end of the second
quarter of 1995, and an increase in premium subscribers from
66,896 at the end of the second quarter of 1994 to 69,993 at the
end of the second quarter of 1995, both due to successful
marketing efforts.
Television stations KATC and WREX reported a combined increase of
approximately $0.5 million in revenue, primarily as a result of
stronger national advertising and network revenues at KATC, in
addition to slightly increasing regional revenues at WREX. The
Wincom-WEBE-WICC radio group reported a net increase in revenue
of approximately $1.0 million, primarily as a result of stronger
local and national advertising revenues resulting from improved
market conditions.
During the first twenty-six weeks of 1995 and 1994, Registrant
incurred property operating expenses of approximately $20.3
million and $18.9 million, respectively, in connection with the
operation of its cable, radio and television properties.
Registrant's total property operating expenses increased by
approximately $1.4 million from year to year due primarily to:
increased programming costs of $0.5 million at California Cable;
an increase of approximately $0.1 million at the combined cable
and radio operations of the Revised Venture due primarily to
increases in certain sales-related expenses; a $0.4 million
increase at the Wincom-WEBE-WICC radio group due to increases in
commissions and other revenue related expenses, as well as
increased advertising cost; and an increase of approximately $0.3
million at KATC and WREX primarily due to increased sales
promotions and expansion of the news departments at both
stations.
The remaining increases or decreases in property operating
expenses at Registrant's other properties were immaterial, either
individually or in the aggregate.
During the first twenty-six weeks of 1995 and 1994, Registrant
incurred general and administrative expenses of approximately
$11.0 million and $10.4 million, respectively. Registrant's
total general and administrative expenses increased by
approximately $0.6 million from year to year as a result of: an
increase at California Cable of approximately $0.4 million due
primarily to increased costs in relation to the pending
disposition of the California Cable System; an increase at C-ML
Cable of approximately $0.2 million due primarily to increased
administrative costs related to an increase in the overall
subscriber base; an increase at KATC and WREX of approximately
$0.1 million due primarily to expenses relating to the sale of
the TV stations and an increase in insurance expense; and an
increase at the Wincom-WEBE-WICC radio group of approximately
$0.1 million due primarily to refurbishment costs related to new
office space at radio station WQAL-FM.
The remaining increases or decreases in general and
administrative expenses at Registrant's other properties were
immaterial, either individually or in the aggregate.
Registrant earned interest income of approximately $139,000 and
$82,000 during the first twenty-six weeks of 1995 and 1994,
respectively. This increase in interest income is due primarily
to an increase in its working capital balance.
Interest expense of approximately $9.7 million and $7.2 million
in the first twenty-six weeks of 1995 and 1994, respectively,
represents the cost incurred for borrowed funds utilized to
acquire various media properties. The approximately $2.5 million
increase in interest expense is due to an increase of
approximately $2.0 million related to the Revised ML California
Cable Credit Agreement resulting both from higher floating
interest rates from year to year and the increased rate
incorporated in the First Amendment to the loan. Interest
expense also increased under the Wincom-WEBE-WICC Loan ($0.2
million) and the WREX-KATC Loan ($0.3 million) due to higher
floating interest rates.
Registrant's depreciation and amortization expense totaled
approximately $14.9 million and $15.1 million in the first twenty-
six weeks of 1995 and 1994, respectively. The approximately $0.2
million decrease in Registrant's total depreciation and
amortization expense from year to year was the result of a
decrease in depreciation expense of $0.5 million KATC and WREX
due to assets becoming fully depreciated partially offset by an
increase of $0.3 million at California Cable due to capital
expenditures.
The remaining increases or decreases in depreciation and
amortization expense at Registrant's other properties were
immaterial, either individually or in the aggregate.
<PAGE>
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
Reference is hereby made to Part I Item 1. Financial
Statements Footnote 2. Liquidity.
Item 5. Other Information
none.
Item 6. Exhibits and Reports on Form 8-K
A). Exhibits:
Exhibit # Description
27. Financial Data Schedule
B). Reports on Form 8-K
Registrant filed a Current report on Form 8-K,
dated May 25, 1995, to report an Asset Purchase
Agreement with Quincy Newspapers, Inc. to sell to
Quincy substantially all of the assets used in the
operations of the Registrant's television station
WREX-TV, Rockford, Illinois.
Registrant filed a Current report on Form 8-K,
dated June 9, 1995, to report an Asset Purchase
Agreement with KATC Communications, Inc. to sell
to KATC Communications Inc., substantially all of
the assets used in the operations of the
Registrant's television station KATC-TV,
Lafayette, Louisiana.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ML MEDIA PARTNERS, L.P.
By: Media Management Partners
General Partner
By: ML Media Management Inc.
Dated: August 14, 1995 /s/ Kevin K. Albert
Kevin K. Albert
Director and President
Dated: August 14, 1995 /s/ Robert F. Aufenanger
Robert F. Aufenanger
Director and Executive Vice
President
Dated: August 14, 1995 /s/ Diane T. Herte
Diane T. Herte
Treasurer
(principal accounting officer
and principal financial
officer of the Registrant)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ML MEDIA PARTNERS, L.P.
By: Media Management Partners
General Partner
By: RP Media Management
Dated: August 14, 1995 /s/I. Martin Pompadur
I. Martin Pompadur
President, Secretary and
Director
(principal executive officer of
the Registrant)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from the quarter June 30, 1995 Form
10Q Consolidated Balance Sheets and Consolidated Statements
of Operations as of June 30, 1995, and is qualified in its
entirety by reference to such financial statements.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-29-1995
<PERIOD-END> JUNE-30-1995
<CASH> 29,159
<SECURITIES> 0
<RECEIVABLES> 10,996
<ALLOWANCES> 818
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 210,076
<DEPRECIATION> 129,548
<TOTAL-ASSETS> 226,316
<CURRENT-LIABILITIES> 0
<BONDS> 211,881
<COMMON> 0
0
0
<OTHER-SE> (18,239)
<TOTAL-LIABILITY-AND-EQUITY> 226,316
<SALES> 0
<TOTAL-REVENUES> 54,770
<CGS> 0
<TOTAL-COSTS> 20,331
<OTHER-EXPENSES> 15,714
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,680
<INCOME-PRETAX> (1,980)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,980)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,980)
<EPS-PRIMARY> (10.43)
<EPS-DILUTED> 0
</TABLE>
