SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 29, 1995
0-14871
(Commission File Number)
ML MEDIA PARTNERS, L.P.
(Exact name of registrant as specified in its governing
Securities registered pursuant to Section 12(b) of the Act:
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) 236-6577
Securities registered pursuant to Section 12(b) of the Act:
None
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in a 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]
Part I.
Item 1. Business.
Formation
ML Media Partners, L.P. ("Registrant"), a Delaware limited
partnership, was organized February 1, 1985. Media Management
Partners, a New York general partnership (the "General Partner"),
is Registrant's sole general partner. The General Partner is a
joint venture, organized as a general partnership under New York
law, between RP Media Management ("RPMM") and ML Media Management
Inc. ("MLMM"). MLMM is a Delaware corporation and an indirect
wholly-owned subsidiary of Merrill Lynch & Co., Inc. and an
affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"). RPMM is organized as a general partnership
under New York law, consisting of The Elton H. Rule Company and
IMP Media Management Inc., as a result of the death of Elton H.
Rule, the owner of The Elton H. Rule Company, the general partner
interest of the Elton H. Rule Company may either be redeemed or
acquired by a company controlled by I. Martin Pompadur. The
General Partner was formed for the purpose of acting as general
partner of Registrant.
Registrant was formed 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. (Reference is made to Note 9 of
"Financial Statements and Supplementary Data" included in Item 8
hereof for segment information).
On February 4, 1986, Registrant commenced the offering through
Merrill Lynch of up to 250,000 units of limited partnership
interest ("Units") at $1,000 per Unit. Registrant held four
closings of Units; the first for subscriptions accepted prior to
May 14, 1986 representing 144,990 Units aggregating $144,990,000;
the second for subscriptions accepted thereafter and prior to
October 9, 1986 representing 21,540 Units aggregating
$21,540,000; the third for subscriptions accepted thereafter and
prior to November 18, 1986 representing 6,334 Units aggregating
$6,334,000; and the fourth and final closing of Units for
subscriptions accepted thereafter and prior to March 2, 1987
representing 15,130 Units aggregating $15,130,000. At these
closings, including the initial limited partner capital
contribution, subscriptions for an aggregate of 187,994.1 Units
representing the aggregate capital contributions of $187,994,100
were accepted. During 1989, the initial limited partner's
capital contribution of $100 was returned.
The Registration Statement relating to the offering was filed on
December 19, 1985 pursuant to the Securities Act of 1933 under
Registration Statement No. 33-2290 and was declared effective on
February 3, 1986 and amendments thereto became effective on
September 18, 1986, November 4, 1986 and on December 12, 1986
(such Registration Statement, as amended from and after each such
date, the "Registration Statement").
Media Properties
As of December 29, 1995, Registrant's investments in media
properties consist of a 50% interest in a joint venture which
owns two cable television systems, an FM and AM radio station
combination and a background music service in Puerto Rico; four
cable television systems in California; an FM and AM radio
station combination in Bridgeport, Connecticut; a corporation
which owns an FM radio station in Cleveland, Ohio; and an FM and
AM radio station combination in Anaheim, California.
Registrant has completed the sale of the following media
properties, all further detailed below. Two radio stations
located in Tulsa, Oklahoma and Jacksonville, Florida were sold on
July 31, 1990. The Universal Cable systems were sold on July 8,
1992 and an FM and AM radio station combination in Indianapolis,
Indiana was sold on October 1, 1993. In addition, two VHF
television stations located in Lafayette, Louisiana and Rockford,
Illinois were sold on September 30, 1995 and July 31, 1995,
respectively.
Puerto Rico Investments
Cable Television Investments
Pursuant to the management agreement and joint venture agreement
dated December 16, 1986 (the "Joint Venture Agreement"), as
amended and restated, between Registrant and Century
Communications Corp., a Texas corporation ("Century"), the
parties formed a joint venture under New York law, Century-ML
Cable Venture (the "Venture"), in which each has a 50% ownership
interest. Century is a wholly-owned subsidiary of Century
Communications Corp., a publicly held New Jersey corporation
unaffiliated with the General Partner or any of its affiliates.
On December 16, 1986 the Venture, through its wholly-owned
subsidiary corporation, Century-ML Cable Corporation ("C-ML Cable
Corp."), purchased all of the stock of Cable Television Company
of Greater San Juan, Inc. ("San Juan Cable"), and liquidated San
Juan Cable into C-ML Cable Corp. C-ML Cable Corp., as successor
to San Juan Cable, is the operator of the largest cable
television system in Puerto Rico.
On September 24, 1987, the Venture acquired all of the assets of
Community Cable-Vision of Puerto Rico, Inc., Community
Cablevision of Puerto Rico Associates, and Community Cablevision
Incorporated (collectively, the "Community Companies"), which
consisted of a cable television system serving the communities of
Catano, Toa Baja and Toa Alta, Puerto Rico, which are contiguous
to San Juan Cable.
C-ML Cable Corp. and the Community Companies are herein referred
to as C-ML Cable ("C-ML Cable"). Registrant's two cable
properties in Puerto Rico are herein defined as the "Puerto Rico
Systems." The Puerto Rico Systems currently serve approximately
115,655 basic subscribers, pass approximately 272,198 homes and
consist of approximately 1,810 linear miles of cable plant.
During 1995, Registrant's share of the net revenues of the Puerto
Rico Systems totalled $24,126,675 (22.1% of operating revenues of
Registrant).
During 1994, Registrant's share of the net revenues of the Puerto
Rico Systems totalled $21,525,793 (20.3% of operating revenues of
Registrant).
During 1993, Registrant's share of the net revenues of the Puerto
Rico Systems totalled $20,206,318 (20.1% of operating revenues of
Registrant).
Radio Investments
On February 15, 1989, Registrant and Century entered into a
Management Agreement and Joint Venture Agreement whereby a new
joint venture, Century-ML Radio Venture ("C-ML Radio"), was
formed under New York law, and responsibility for the management
of radio stations to be acquired by C-ML Radio was assumed by
Registrant.
On March 10, 1989, C-ML Radio acquired all of the issued and
outstanding stock of Acosta Broadcasting Corporation ("Acosta"),
Fidelity Broadcasting Corporation ("Fidelity"), and Broadcasting
and Background Systems Consultants Corporation ("BBSC"); all
located in San Juan, Puerto Rico. The purchase price for the
stock was approximately $7.8 million. At the time of
acquisition, Acosta owned radio stations WUNO-AM and Noti Uno
News, Fidelity owned radio station WFID-FM, and BBSC owned
Beautiful Music Services, all serving various communities within
Puerto Rico.
In February, 1990, C-ML Radio acquired the assets of Radio
Ambiente Musical Puerto Rico, Inc. ("RAM"), a background music
service. The purchase price was approximately $200,000 and was
funded with cash generated by C-ML Radio. The operations of RAM
were consolidated into those of BBSC.
Effective January 1, 1994, all of the assets of C-ML Radio were
transferred to the Venture in exchange for the assumption by the
Venture of all the obligations of C-ML Radio and the issuance to
Century and Registrant by the Venture of new certificates
evidencing partnership interests of 50% and 50%, respectively.
The transfer was made pursuant to a Transfer of Assets and
Assumption of Liabilities Agreement. At the time of this
transfer, Registrant and Century entered into an amended and
restated management agreement and joint venture agreement (the
"Revised Joint Venture Agreement") governing the affairs of the
revised Venture (herein referred to as the "Revised Venture").
Under the terms of the Revised Joint Venture Agreement, Century
is responsible for the day-to-day operations of the Puerto Rico
Systems and Registrant is responsible for the day-to-day
operations of the C-ML Radio properties. For providing services
of this kind, Century is entitled to receive annual compensation
of 5% of the Puerto Rico Systems' net gross revenues (defined as
gross revenues from all sources less monies paid to suppliers of
pay TV product, e.g., HBO, Cinemax, Disney and Showtime) and
Registrant is entitled to receive annual compensation of 5% of
the C-ML Radio properties' gross revenues (after agency
commissions, rebates or discounts and excluding revenues from
barter transactions). All significant policy decisions relating
to the Revised Venture, the operation of the Puerto Rico Systems
and the operation of the C-ML Radio properties, however, will
only be made upon the concurrence of both Registrant and Century.
Registrant may require a sale of the assets and business of the
Puerto Rico Systems or the C-ML Radio properties at any time. If
Registrant proposes such a sale, Registrant must first offer
Century the right to purchase Registrant's 50% interest in the
Revised Venture at 50% of the total fair market value of the
Venture at such time as determined by independent appraisal. If
Century elects not to purchase Registrant's 50% interest,
Registrant may elect to purchase Century's interest in the
Revised Venture on similar terms.
During 1995, Registrant's share of the net revenues of the C-ML
Radio properties totalled $2,772,238 (2.5% of operating revenues
of Registrant).
During 1994, Registrant's share of the net revenues of the C-ML
Radio properties totalled $2,761,508 (2.6% of operating revenues
of Registrant).
During 1993, Registrant's investment in the C-ML Radio properties
was accounted for under the equity method of accounting.
California Cable Systems
In December, 1986, ML California Cable Corporation ("ML
California"), a wholly-owned subsidiary of Registrant, entered
into an agreement with SCIPSCO, Inc. ("SCIPSCO"), a wholly-owned
subsidiary of Storer Communications, Inc. for the acquisition by
ML California of four cable television systems servicing the
California communities of Anaheim, Manhattan/Hermosa Beach,
Rohnert Park/Yountville, and Fairfield and surrounding areas.
The acquisition was completed on December 23, 1986 with the
purchase by ML California of all of the stock of four
subsidiaries of SCIPSCO which at closing owned all the assets of
the California cable television systems. The term "California
Cable Systems" or "California Cable" as used herein means either
the cable systems or the owning entities, as the context
requires. The California Cable Systems currently serve
approximately 138,864 basic subscribers, pass 221,256 homes and
consist of approximately 2,382 linear miles of plant.
On December 30, 1986, ML California was liquidated into
Registrant and transferred all of its assets, except its FCC
licenses, subject to its liabilities, to Registrant. The
licenses were transferred to ML California Associates, a
partnership formed between Registrant and the General Partner for
the purpose of holding the licenses in which Registrant is
Managing General Partner and 99.99% equity holder.
The daily operations of the California Cable Systems are managed
by MultiVision Cable TV Corp. ("MultiVision"), a cable television
multiple system operator ("MSO") controlled by I. Martin
Pompadur. Mr. Pompadur, President, Secretary and Director of RP
Media Management and Chairman and Chief Executive Officer of
MultiVision, organized MultiVision in January 1988 to provide MSO
services to cable television systems acquired by entities under
his control, with those entities paying cost for those services
pursuant to an agreement to allocate certain management costs,
(the "Cost Allocation Agreement") with MultiVision. Mr. Pompadur
is, indirectly, the general partner of ML Media Opportunity
Partners, L.P., a publicly held limited partnership, and
Registrant. ML Media Opportunity Partners, L.P. and its
subsidiaries had invested in cable television systems that were
managed by MultiVision, prior to their sale, pursuant to the same
Cost Allocation Agreement.
Registrant engaged Merrill Lynch & Co. and Daniels & Associates
in January, 1994 to act as its financial advisors in connection
with a possible sale of all or a portion of Registrant's
California Cable Systems.
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 Registrant's California Cable operations serving Anaheim
and Hermosa Beach/Manhattan Beach and Rohnert Park/Yountville and
Fairfield (the "California Cable Systems"). The base purchase
price specified in the Asset Purchase Agreement for the
California Cable Systems is $286 million, subject to reduction by
an amount equal to 11 times the amount, if any, by which the
operating cash flow of the California Cable 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 of the sale from the
Federal Communications Commission ("FCC") and the municipal
authorities issuing the franchises for the California Cable
Systems and the approvals of certain franchise extensions,
including the renewal of the franchises for the Anaheim, and
Villa Park communities.
As of December 29, 1995, all such approvals had been obtained,
other than the transfer/renewal approvals for the Anaheim and
Villa Park communities. After several months of negotiations,
Registrant and Century had been unable to reach agreement with
the City of Anaheim and the City of Villa Park regarding the
terms of the renewal of each City's franchise, and therefore
Century agreed to waive the condition precedent of obtaining a
renewal of such franchises and was requiring instead a transfer
to Century of the Anaheim franchise (the "Anaheim Transfer") and
a transfer to Century of the Villa Park franchise (the "Villa
Park Transfer").
The Asset Purchase Agreement provides that Registrant and Century
each have the right to terminate the Asset Purchase Agreement if
the Closing did not occur by December 31, 1995 (the "Optional
Termination Date"). Accordingly, as of January 1, 1996, each
party became vested with the right to elect to terminate the
Asset Purchase Agreement. The parties sought to reach agreement
with regard to an extension of the Optional Termination Date but
were unable to finalize such agreement. Nevertheless, on January
17, 1996, Registrant notified Century that if the Closing does
not occur on or before March 29, 1996, Registrant will terminate
the Asset Purchase Agreement as of that date. However,
Registrant does not intend to terminate the Asset Purchase
Agreement on March 29, 1996 and will continue its attempts to
consummate the Asset Purchase Agreement with Century.
Registrant, Century and the City of Anaheim have reached
agreement on the terms of the Anaheim Transfer and the Anaheim
Transfer has been approved; the approval will become final on
April 4, 1996 unless a legally sufficient objection is raised
under the Anaheim City Charter procedure for a public referendum.
Registrant, Century and Villa Park have also reached agreement on
the terms of the Villa Park Transfer and the Villa Park Transfer
was approved by the Villa Park City Council on March 26, 1996.
No assurances can be given that the Anaheim Transfer will become
final or the other conditions precedent necessary to enable the
Closing to occur will occur. Accordingly, no assurances can be
given that the sale of the California Cable Systems under the
Asset Purchase Agreement will be consummated. (Refer to Notes 5
and 8 of "Item 8. Financial Statements and Supplementary Data"
for a description of possible defaults under the ML California
Cable Credit Agreement, as amended).
Although no assurances can be given as to the timing of any sale
of the California Cable Systems or as to the sale price that
might be realized in connection with any such sale, if the sale
to Century is not consummated, Registrant believes that, under
current market conditions, the California Cable Systems represent
an attractive investment opportunity for a suitable buyer.
Merrill Lynch & Co. did not, nor will it, receive a fee or other
form of compensation for acting as financial advisor in
connection with the sale of the California Cable Systems.
During 1995, California Cable generated operating revenues of
$57,115,752 (52.3% of operating revenues of Registrant).
During 1994, California Cable generated operating revenues of
$55,024,025 (52.0% of operating revenues of Registrant).
During 1993, California Cable generated operating revenues of
$55,197,638 (55.0% of operating revenues of Registrant).
WREX Television Station
On April 29, 1987, Registrant entered into an acquisition
agreement with Gilmore Broadcasting Corporation, a Delaware
corporation ("Gilmore"), for the acquisition by Registrant of
substantially all the assets of television station WREX-TV,
Rockford, Illinois ("WREX-TV" or "WREX"). The acquisition was
consummated on August 31, 1987 for $18 million.
During 1995, until its sale on July 31, 1995, WREX-TV generated
operating revenues of $3,053,336 (2.8% of operating revenues of
Registrant).
During 1994, WREX-TV generated operating revenues of $5,506,056
(5.2% of operating revenues of Registrant).
During 1993, WREX-TV generated operating revenues of $4,925,030
(4.9% of operating revenues of Registrant).
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 approximately $18.4 million, 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 WREX, and the balance of
approximately $16.1 million was applied to repay a portion of the
bank indebtedness secured by the assets of WREX and KATC. Quincy
did not assume certain liabilities of WREX and Registrant will
remain liable for such liabilities. On the sale of WREX,
Registrant recognized a gain for financial reporting purposes of
approximately $8.8 million.
KATC Television Station
On September 17, 1986, Registrant entered into an acquisition
agreement with Loyola University, a Louisiana non-profit
corporation ("Loyola"), for the acquisition by Registrant of
substantially all the assets of television station KATC-TV,
Lafayette Louisiana ("KATC-TV" or "KATC"). The acquisition was
completed on February 2, 1987 for a purchase price of
approximately $26.7 million.
During 1995, until its sale on September 30, 1995, KATC generated
operating revenues of $5,263,423 (4.8% of operating revenues of
Registrant).
During 1994, KATC generated operating revenues of $6,078,081
(5.7% of operating revenues of Registrant).
During 1993, KATC generated operating revenues of $5,276,512
(5.3% of operating revenues of Registrant).
On September 30, 1995, Registrant completed the sale to KATC
Communications, Inc. (the "KATC Buyer") of substantially all of
the assets used in the operations of Registrant's television
station KATC-TV, other than cash and accounts receivable. The
KATC Buyer did not assume certain liabilities of KATC and
Registrant will remain liable for such liabilities. The purchase
price for the assets was $24.5 million. From the proceeds of the
sale, approximately $6.3 million was applied to repay in full the
remaining bank indebtedness secured by the assets of KATC; a
reserve of approximately $2.0 million was established to cover
certain purchase price adjustments and expenses and liabilities
relating to KATC; $1.0 million was deposited into an indemnity
escrow account to secure Registrant's indemnification obligations
to the KATC Buyer; approximately $7.6 million was applied to pay
a portion of deferred fees and expenses owed to the General
Partner; and the remaining amount of approximately $7.6 million
was distributed to Partners in December, 1995. Registrant
recognized a gain for financial reporting purposes of
approximately $14.0 million on the sale of KATC in 1995.
WEBE-FM Radio
On August 20, 1987, Registrant entered into an Asset Purchase
Agreement with 108 Radio Company, L.P., for the acquisition of
the business and assets of radio station WEBE-FM, Westport,
Connecticut ("WEBE-FM" or "WEBE") which serves Fairfield and New
Haven counties for $12.0 million.
On July 19, 1989, Registrant entered into an Amended and Restated
Credit Security and Pledge Agreement (the "Wincom-WEBE-WICC
Loan") which provided for borrowings up to $35.0 million. On
July 30, 1993, Registrant and Chemical Bank executed an amendment
to the Wincom-WEBE-WICC Loan (the "Restructuring Agreement"),
effective January 1, 1993, which cured all previously outstanding
defaults pursuant to the Wincom-WEBE-WICC Loan. Refer to Note 5
of "Item 8. Financial Statements and Supplementary Data" for
further information regarding the Wincom-WEBE-WICC Loan and the
Restructuring Agreement.
During 1995, WEBE-FM generated operating revenues of $5,949,654
(5.5% of operating revenues of Registrant).
During 1994, WEBE-FM generated operating revenues of $5,286,984
(5.0% of operating revenues of Registrant).
During 1993, WEBE-FM generated operating revenues of $4,403,464
(4.4% of operating revenues of Registrant).
Wincom
On August 26, 1988, Registrant acquired 100% of the stock of
Wincom Broadcasting Corporation ("Wincom"), an Ohio corporation
headquartered in Cleveland for $46.0 million. At acquisition,
Wincom and its subsidiaries owned and operated five radio
stations - WQAL-FM, Cleveland, Ohio; WCKN-AM/WRZX-FM,
Indianapolis, Indiana (the "Indianapolis Stations", including the
Indiana University Sports Radio Network, which was discontinued
after the first half of 1992); KBEZ-FM, Tulsa, Oklahoma; and WEJZ-
FM, Jacksonville, Florida. On July 31, 1990, Registrant sold the
business and assets of KBEZ-FM and WEJZ-FM to Renda Broadcasting
Corp. for net proceeds of approximately $10.3 million.
On April 30, 1993, WIN Communications of Indiana, Inc., a 100%-
owned subsidiary of Wincom, entered into an Asset Purchase
Agreement to sell substantially all of the assets of the
Indianapolis Stations to Broadcast Alchemy, L.P.("Alchemy") for
gross proceeds of approximately $7 million. On October 1, 1993,
the date of the sale of the Indianapolis Stations, the net
proceeds from such sale, which totalled approximately $6.1
million, were remitted to Chemical Bank, as required by the terms
of the Restructuring Agreement, to reduce the outstanding
principal amount of the Series B Term Loan due Chemical Bank.
Registrant recognized a gain of approximately $4.7 million on the
sale of the Indianapolis Stations. In addition, Registrant
recognized an extraordinary gain of approximately $490,000 as a
result of the forgiveness of the entire Series C Term Loan due
Chemical Bank. Refer to Notes 2 and 5 of "Item 8. Financial
Statements and Supplementary Data" for further information
regarding the Restructuring Agreement.
During 1995, Wincom generated operating revenues of $5,079,292
(4.7% of operating revenues of Registrant).
During 1994, Wincom generated operating revenues of $4,349,191
(4.1% of operating revenues of Registrant).
During 1993, Wincom generated operating revenues of $5,269,021
(5.2% of operating revenues of Registrant).
Universal
On September 19, 1988, Registrant acquired 100% of the stock of
Universal Cable Holdings, Inc. ("Universal Cable"), a Delaware
Corporation, pursuant to a stock purchase agreement executed on
June 17, 1988 for approximately $43 million. Universal Cable,
through three wholly-owned subsidiaries, owned and operated cable
television systems located in Kansas, Nebraska, Colorado,
Oklahoma and Texas.
On July 8, 1992, Registrant sold Universal Cable; all proceeds of
the sales were paid to the lender to Universal and Registrant was
released from all obligations under a Revolving Credit Agreement.
WICC-AM
On July 19, 1989, Registrant purchased all of the assets of radio
station WICC-AM located in Bridgeport, Connecticut ("WICC-AM or
"WICC") from Connecticut Broadcasting Company, Inc. The purchase
price of $6.25 million was financed solely from proceeds of the
Wincom-WEBE-WICC Loan.
During 1995, WICC-AM generated operating revenues of $2,397,808
(2.2% of operating revenues of Registrant).
During 1994, WICC-AM generated operating revenues of $2,115,461
(2.0% of operating revenues of Registrant).
During 1993, WICC-AM generated operating revenues of $1,875,348
(1.9% of operating revenues of Registrant).
Anaheim Radio Stations
On November 16, 1989, Registrant acquired KORG-AM ("KORG")and
KEZY-FM ("KEZY") ( jointly the "Anaheim Radio Stations" or
"KORG/KEZY") located in Anaheim, California, from Anaheim
Broadcasting Corporation. The total acquisition cost was
$15,125,000.
To finance the acquisition of the Anaheim Radio Stations, on
November 16, 1989, Registrant entered into a $16.5 million
revolving credit bridge loan ("the Anaheim Radio Loan") with Bank
of America.
On May 15, 1990, Registrant entered into the revised ML
California Credit Agreement, which was used in part to repay and
refinance the Anaheim Radio Loan. Refer to Notes 5 and 8 of
"Item 8. Financial Statements and Supplementary Data" for
further information regarding the ML California Credit Agreement.
During 1995, the Anaheim Radio Stations generated operating
revenues of $3,455,853 (3.1% of operating revenues of
Registrant).
During 1994, the Anaheim Radio Stations generated operating
revenues of $3,263,109 (3.1% of operating revenues of
Registrant).
During 1993, the Anaheim Radio Stations generated operating
revenues of $3,049,363 (3.1% of operating revenues of
Registrant).
Employees.
As of December 29, 1995, Registrant employed approximately 348
persons. The business of Registrant is managed by the General
Partner. RPMM, MLMM and ML Leasing Management Inc., all
affiliates of the General Partner, employ individuals who perform
the management and administrative services for Registrant.
COMPETITION.
Cable Television
Cable television systems compete with other communications and
entertainment media, including off-air television broadcast
signals that a viewer is able to receive directly using the
viewer's own television set and antenna. The extent of such
competition is dependent in part upon the quality and quantity of
such off-air signals. In the areas served by Registrant's
systems, a substantial variety of broadcast television
programming can be received off-air. In those areas, the extent
to which cable television service is competitive depends largely
upon the system's ability to provide a greater variety of
programming than that available off-air and the rates charged by
Registrant's cable systems for programming. Cable television
systems also are susceptible to competition from other
multichannel video programming distribution ("MVPD") systems,
from other forms of home entertainment such as video cassette
recorders, and in varying degrees from other sources of
entertainment in the area, including motion picture theaters,
live theater and sporting events.
In recent years, the level of competition in the MVPD market has
increased significantly. Notably, approximately 170 channels of
high-powered direct broadcast satellite ("DBS") service are now
available in the continental U.S., with another 126 channels of
DBS service scheduled to commence later this year. In addition,
the FCC has adopted polices providing for authorization of new
technologies and a more favorable operating environment for
certain existing technologies which provide, or have the
potential to provide, substantial additional competition to cable
television systems. For example, the FCC has revised its rules
on MMDS (or "wireless cable") to foster MMDS services competitive
with cable television systems, has authorized certain telephone
companies to deliver directly to their subscribers video
programming over enhanced telephone facilities, and intends to
authorize later this year a new service, the Local Multipoint
Distribution Service ("LMDS"), which would employ technology
analogous to that used by cellular telephone systems to
distribute multiple channels of video programming and other data
directly to subscribers. Moreover, the Telecommunications Act of
1996 (the "1996 Act") substantially reforms the Communications
Act of 1934 by, among other things, permitting telephone
companies to enter the MVPD market through a number of means,
including in-region cable systems. Regulatory initiatives that
will result in additional competition for cable television
systems are described in the following sections.
The competitive environment surrounding cable television was
further altered during the past year by a series of marketplace
announcements documenting the heightened involvement of telephone
companies in the cable television business. Some of these
involve the purchase of existing cable systems by telephone
companies outside their own exchange areas, while others
contemplate expanded joint ventures between certain major cable
companies and providers of long distance telephone services, as
well as local telephone companies.
Broadcast Television
Operating results for broadcast television stations are affected
by the availability, popularity and cost of programming;
competition for local, regional and national advertising
revenues; the availability to local stations of compensation
payments from national networks with which the local stations are
affiliated; competition within the local markets from programming
on other stations or from other media; competition from other
technologies, including cable television; and government
regulation and licensing. Due primarily to increased competition
from cable television, with that medium's plethora of viewing
alternatives and from the Fox Network, the share of viewers
watching the major U.S. networks, ABC, CBS, and NBC, has declined
significantly over the last ten years. This reduction in viewer
share has made it increasingly difficult for local stations to
increase their revenues from advertising. The combination of
these reduced shares and the impact of the economic recession at
the beginning of this decade on the advertising market resulted
in generally deteriorating performance at many local stations
affiliated with ABC, CBS, and NBC. Although the share of viewers
watching the major networks has recently leveled off or increased
slightly, additional audience and advertiser fragmentation may
occur if, as planned, one or more of the additional, recently
launched broadcast networks develops program offerings
competitive with those of the more established networks.
Radio Industry
The radio industry is highly competitive and dynamic, and reaches
a larger portion of the population than any other medium. There
are generally several stations competing in an area and most
larger markets have twenty or more viable stations; however,
stations tend to focus on a specific target market by programming
music or other formats that appeal to certain demographically
specific audiences. As a result of these factors, radio is an
effective medium for advertisers as it can have mass appeal or be
focused on a specific market. While radio has not been subject
to an erosion in market share such as that experienced by
broadcast television, it was also subject to the depressed
nationwide advertising market at the beginning of this decade.
Recent changes in FCC multiple ownership rules have led to more
concentration in some local radio markets as a single party is
permitted to own additional stations or provide programming and
sell advertising on stations it does not own. The provisions of
the 1996 Act eliminating national ownership caps and easing local
ownership caps are likely to accelerate this trend, as described
more fully below.
Registrant is subject to significant competition, in many cases
from competitors whose media properties are larger than
Registrant's media properties.
LEGISLATION AND REGULATION.
Cable Television Industry
The cable television industry is extensively regulated by the
federal government, some state governments and most local
franchising authorities. In addition, the Copyright Act of 1976
(the "Copyright Act") imposes copyright liability on all cable
television systems for their primary and secondary transmissions
of copyrighted programming. The regulation of cable television
systems at the federal, state and local levels is subject to the
political process and has been in constant flux over the past
decade. This process continues to generate proposals for new
laws and for the adoption or deletion of administrative
regulations and policies. Further material changes in the law
and regulatory requirements, especially as a result of both the
1996 Act and the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), must be expected.
There can be no assurance that the Registrant's Cable Systems
will not be adversely affected by future legislation, new
regulations or judicial or administrative decisions. The
following is a summary of federal laws and regulations materially
affecting the cable television industry and a description of
certain state and local laws with which the cable industry must
comply.
Federal Statutes
The 1992 Cable Act imposed certain uniform national standards and
guidelines for the regulation of cable television systems. Among
other things, the legislation regulates the provision of cable
television service pursuant to a franchise, specifies a procedure
and certain criteria under which a cable television operator may
request modification of its franchise, establishes criteria for
franchise renewal, sets maximum fees payable by cable television
operators to franchising authorities, authorizes a system for
regulating certain subscriber rates and services, outlines signal
carriage requirements, imposes certain ownership restrictions,
and sets forth customer service, consumer protection, and
technical standards.
The 1996 Act's cable provisions expand and in some cases
significantly modify the rules established by the Cable Act.
Most significantly, the 1996 Act takes steps to reduce, or in
some cases eliminate, rate regulation of cable systems, while
also allowing substantially greater telephone company
participation in the MVPD market, as well as promoting cable
operator provision of telecommunications services.
Violations of the Communications Act of 1934, as amended by the
1996 Act and the 1992 Cable Act or any FCC regulations
implementing the statutory laws can subject a cable operator to
substantial monetary penalties and other sanctions.
Federal Regulations
Federal regulation of cable television systems under the
Communications Act of 1934, as amended, is conducted primarily
through the FCC, although, as discussed below, the Copyright
Office also regulates certain aspects of cable television system
operation. Among other things, FCC regulations currently contain
detailed provisions concerning non-duplication of network
programming, sports program blackouts, program origination,
ownership of cable television systems and equal employment
opportunities. There are also comprehensive registration and
reporting requirements and various technical standards.
Moreover, pursuant to the 1992 Cable Act, the FCC has, among
other things, established regulations concerning mandatory signal
carriage and retransmission consent, consumer service standards,
the rates for service, equipment, and installation that may be
charged to subscribers, and the rates and conditions for
commercial channel leasing. The FCC also issues permits,
licenses or registrations for microwave facilities, mobile radios
and receive-only satellite earth stations, all of which are
commonly used in the operation of cable systems.
The FCC is authorized to impose monetary fines upon cable
television systems for violations of existing regulations and may
also suspend licenses and other authorizations and issue cease
and desist orders. It is likewise authorized to promulgate
various new or modified rules and regulations affecting cable
television, many of which are discussed in the following
paragraphs.
The 1996 Act and the 1992 Cable Act
The 1992 Cable Act clarified and modified certain provisions of
the Cable Communications and Policy Act of 1984, ("1984 Cable
Act"). It also codified certain FCC regulations and added a
number of new requirements. Throughout 1993-94 the FCC undertook
or completed a substantial number of complicated rulemaking
proceedings resulting in a host of new regulatory requirements or
guidelines. Several of the provisions of the 1992 Cable Act and
certain FCC regulations implemented pursuant thereto are still
being tested in court. At the same time, a number of provisions
have been recently modified by the 1996 Act. Registrant cannot
predict the result of any pending or future court challenges or
the shape any still-pending or proposed FCC regulations may
ultimately take, nor can Registrant predict the effect of either
on its operations.
As discussed in greater detail elsewhere in this filing, some of
the principal provisions of the 1992 Cable Act include: (1) a
mandatory carriage requirement coupled with alternative
provisions for retransmission consent as to over-the-air
television signals; (2) rate regulations that completely replace
the rate provisions of the 1984 Cable Act; (3) consumer
protection provisions; (4) a three-year ownership holding
requirement; (5) some clarification of franchise renewal
procedures; and (6) FCC authority to examine and set limitations
on the horizontal and vertical integration of the cable industry.
Of these provisions, the 1996 Act sunsets the rate regulations in
three years and eliminates the three-year ownership requirement.
Other provisions of the 1992 Cable Act include: a prohibition on
"buy-throughs," an arrangement whereby subscribers are required
to subscribe to a program tier other than basic in order to
receive certain per-channel or per-program services; requiring
the FCC to develop minimum signal standards, rules for the
disposition of home wiring upon termination of cable service, and
regulations regarding compatibility of cable service with
consumer television receivers and video cassette recorders; a
requirement that the FCC promulgate rules limiting children's
access to indecent programming on access channels; notification
requirements regarding sexually explicit programs; and more
stringent equal employment opportunity rules for cable operators.
Of these provisions, the 1996 Act addresses cable equipment
compatibility, as further discussed below.
The 1992 Cable Act also contains a provision barring both cable
operators and certain vertically integrated program suppliers
from engaging in practices which unfairly impede the availability
of programming to other multichannel video programming
distributors. In sum, the 1992 Cable Act codifies, initiates, or
mandates an entirely new set of regulatory requirements and
standards. It is an unusually complicated and sometimes
confusing legislative enactment that has spawned a multitude of
FCC enforcement decisions as well as certain yet-to-be concluded
FCC proceedings. It also is subject to certain pending judicial
challenges. Adding to the complexity is the 1996 Act, which in
some areas mandates additional regulation to that required by the
1992 Cable Act and in other areas modifies or eliminates extant
cable laws.
The FCC has adopted new regulations in a number of areas mandated
by the 1992 Cable Act. These include rules and regulations
governing the following areas: indecency on leased access
channels, obscenity on public, educational and governmental
("PEG") channels, mandatory carriage and retransmission consent
of over-the-air signals, home wiring, equal employment
opportunity, tier "buy-throughs," customer service standards,
cable television ownership standards, program access, carriage of
home shopping stations, and rate regulation. Most of these new
regulations went into effect by 1994. However, in November 1993,
a three-judge panel of the U.S. Court of Appeals for the D.C.
Circuit found the indecency rules to be unconstitutional and
remanded them to the Commission. Subsequently, the U.S. Court of
Appeals for the D.C. Circuit vacated the panel decision pending
rehearing and a decision by the full court. On rehearing, the en
banc court sustained the Commission's regulations. However, the
Supreme Court has agreed to review the en banc court's decision
and is expected to issue a decision in 1996. Similarly,
challenges to the constitutionality of the mandatory carriage
provision remain pending. Although a special three judge panel
of the U.S. District Court for the District of Columbia initially
upheld the constitutionality of the mandatory carriage provision,
the U.S. Supreme Court vacated that decision in June 1994 and
remanded the case to the district court for further proceedings.
In December 1995, the district court reaffirmed its decision
upholding the law. The Supreme Court has again agreed to review
the case and will likely issue a decision in 1997. Currently,
the must carry rules remain in effect. On a separate matter, in
September 1993 the U.S. District Court for the District of
Columbia found that the horizontal ownership limits called for by
the 1992 Cable Act are unconstitutional. Accordingly, the
Commission has stayed the effect of horizontal ownership rules
until final judicial resolution of the issue. Registrant is
unable to predict the ultimate outcome of these proceedings or
the impact upon its operations of various FCC regulations still
being formulated and/or interpreted. As previously noted, under
the broad statutory scheme, cable operators are subject to a two-
level system of regulation with some matters under federal
jurisdiction, others subject strictly to local regulation, and
still others subject to both federal and local regulation.
Following are descriptions of some of the more significant
regulatory areas of concern to cable operators.
Franchises
The 1984 Cable Act affirms the right of franchising authorities
to award one or more franchises within their jurisdictions and
prohibits future cable television systems from operating without
a franchise. The 1992 Cable Act provides that franchising
authorities may not grant an exclusive franchise or unreasonably
deny award of a competing franchise. The 1984 Cable Act also
provides that in granting or renewing franchises, franchising
authorities may establish requirements for cable-related
facilities and equipment but may not specify requirements for
video programming or information services other than in broad
categories.
Under the 1992 Cable Act, franchising authorities are now exempt
from money damages in cases involving their exercise of
regulatory authority, including the award, renewal, or transfer
of a franchise, except for cases involving discrimination on
race, sex, or similar impermissible grounds. Remedies are
limited exclusively to injunctive or declaratory relief.
Franchising authorities may also build and operate their own
cable systems without a franchise.
The 1984 Cable Act permits local franchising authorities to
require cable operators to set aside certain channels for PEG
access programming and to impose a franchise fee of up to 5% of
gross annual system revenues. The 1984 Cable Act further
requires cable television systems with 36 or more channels to
designate a portion of their channel capacity for commercially
leased access by third parties, which generally is available to
commercial and non-commercial parties to provide programming
(including programming supported by advertising). As required by
the 1992 Cable Act, the FCC adopted rules setting maximum
reasonable rates and other terms for the use of such leased
channels. The FCC also has jurisdiction to resolve disputes over
the provision of leased access.
The 1996 Act modifies the definition of a "cable system" by
expanding the so-called "private cable" exemption so that a
system serving subscribers without using any public rights-of-way
is not a cable system, and need not obtain a local franchise.
In 1992, the FCC permitted local exchange carriers to engage in
so-called "video dialtone" operations in their local telephone
exchange areas pursuant to which neither they nor the programming
entities they serve are required to obtain a local cable
franchise. However, the 1996 Act repealed the FCC's video
dialtone rules and enacted a related (but yet to be implemented)
"open video system" regulation regime.
Rate Regulation
Under the 1992 Cable Act, cable systems' rates for service and
related subscriber equipment are subject to regulation by the FCC
and local franchising authorities. However, only the rates of
cable systems that are not subject to "effective competition" may
be regulated. A cable system is subject to effective competition
if one of the following conditions is met: (1) fewer than 30% of
the households in the franchise area subscribe to the system; (2)
at least 50% of the households in the franchise area are served
by two MVPDs and at least 15% of the households in the franchise
area subscribe to any MVPD other than the dominant cable system;
or (3) a franchising authority for that franchise area itself
serves as an MVPD offering service to at least 50% of the
households in the franchise area. The 1996 Act adds a fourth
condition: the mere offering (regardless of penetration) by a
local exchange carrier, or an entity using the local exchange
carrier, ("LEC") facilities, of video programming services
(including 12 or more channels of programming, at least some of
which are television broadcasting signals) directly to
subscribers by any means (other than direct-to-home satellite
services) in the franchise area of an unaffiliated cable
operator. Under these regulations the Partnership's systems,
like most cable systems in most areas, are not currently subject
to effective competition. Consequently, the rates charged by the
Partnership's systems are subject to rate regulation under
certain circumstances.
Under the 1992 Cable Act, a local franchising authority may
certify with the FCC to regulate the Basic Service Tier ("BST")
and associated subscriber equipment of a cable system within its
jurisdiction. By law, the BST must include all broadcast signals
(with the exception of national "superstations"), including those
required to be carried under the mandatory carriage provisions of
the 1992 Cable Act , as well as public, educational, and
governmental ("PEG") access channels required by the franchise.
The FCC has jurisdiction over the Cable Programming Service Tier
("CPST"), which generally includes programming other than that
carried on the BST or offered on a per-channel or per-program
basis. The 1996 Act, however, confines rate regulation to the
BST after three years: on March 31, 1999, the CPST will be
exempted from regulation. On enactment, the 1996 Act also
modifies the rules governing complaints for rate increases on the
CPST by replacing the current procedure. The current procedure,
mandated by the 1992 Cable Act, allows subscribers to file
complaints directly with the FCC. Under the new procedure, only
a local franchising authority may file an FCC complaint, and then
only if the franchising authority receives "subscriber
complaints" within 90 days of the effective date of a rate
increase. The FCC must issue a final order within 90 days after
receiving a franchising authority's complaint.
Effective September 1, 1993, regulated cable systems were
required to use the FCC-prescribed "benchmark" approach to set
initial rates for BSTs and CPSTs. Cable systems whose rates
exceeded the applicable benchmark were required to reduce their
rates either to the benchmark or by 10%, whichever reduction was
less. The Commission subsequently modified its rules, however,
to establish a second round of benchmark rate rollbacks, which
became effective May 15, 1994. Under this more stringent regime,
each cable system whose BST or CPST is subject to regulation is
required to select from among the following methodologies to set
a permitted rate: (1) a full reduction rate; (2) a transition
rate; (3) a rate based on a streamlined rate reduction; or (4) a
cost-of-service showing. The full reduction rate is a system's
September 30, 1992 rate, measured on an average regulated revenue
per subscriber basis, reduced by 17%. Under the transition rate
approach, low-price cable systems (as determined under the FCC's
revised benchmark formula) and systems owned by small operators
(operators with a total subscriber base of 15,000 or less and not
affiliated with or controlled by another operator) are not
initially required to reduce rates to the full reduction rate
level, but instead are permitted to cap their rates at March 31,
1994 levels, subject to possible further reduction based on cost
studies. The streamlined rate reduction approach allows a cable
system to reduce each billed item of regulated cable service as
of March 31, 1994 by 14%, rather than completing various FCC rate
regulation forms and establishing cost-based equipment and
installation charges. This approach is available only to cable
systems of 15,000 or fewer subscribers that are owned by a cable
company serving a total of 400,000 or fewer subscribers over all
of its systems. While the U.S. Court of Appeals for the D.C.
Circuit has upheld these regulations, the regulations may be
subject to further judicial review, and may be altered by ongoing
FCC rulemakings and case-by-case adjudications.
The cost-of-service approach allows a cable system to recover
through regulated rates its normal operating expenses and a
reasonable return on investment. Prior to May 15, 1994, the
effective date of FCC "interim" cost-of-service rules, the
Commission permitted cable systems to use general cost-of-service
principles, such as those historically used to set rates for
public utilities. Beginning May 15, 1994, the FCC's interim
rules took effect, which, among other things, established an
industry-wide rate of return of 11.25% and presumptively excluded
from a cable system's rate base acquisition costs above book
value (while allowing certain intangible, above-book costs, such
as start-up losses incurred during a two-year start-up period)
and the costs of obtaining franchise rights. The FCC recently
adopted final cost-of-service rules, which modify the interim
rules, in relevant part, by: (1) retaining the 11.25% rate of
return, but proposing, in a further notice of proposed
rulemaking, to use a system's actual debt cost and capital
structure to determine its final rate of return; (2) establishing
a rebuttable presumption that 34% of the purchase price of cable
systems purchased prior to May 15, 1994 (and not just the portion
of the price allocable to intangibles) must be excluded from rate
base; and (3) replacing the presumption of a two-year period for
accumulated start-up losses with a case-by-case determination of
the appropriate period. Additionally, the 1996 Act also
restricts the FCC from disallowing certain operator losses for
cost-of-service filings. 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 systems may not file a new cost-of-
service showing to justify new rates for a period of two years.
An appeal of the interim rules brought before the U.S. Court of
Appeals for the D.C. Circuit has been held in abeyance pending
adoption of the final rules. Given the recent changes to the
interim rules, it is uncertain whether the appeal will now go
forward.
Having set an initial permitted rate for regulated service using
one of the above methodologies, a cable system may adjust its
rate going forward either quarterly or annually under the FCC's
"price cap" mechanism, which accounts for inflation, changes in
"external costs," and changes in the number of regulated
channels. External costs include state and local taxes
applicable to the provision of cable television service,
franchise fees, the costs of complying with certain franchise
requirements, and retransmission consent fees and copyright fees
incurred for the carriage of broadcast signals. In addition, a
cable system may treat as external (and thus pass through to its
subscribers) the costs, plus a 20 cent per channel mark-up, for
channels newly added to a CPST. Through 1996, however, each
cable system is subject to an aggregate cap of $1.50 on the
amount it may increase CPST rates due to channel additions.
The FCC's regulatory treatment of "a la carte" packages of
channels has been a source of particular regulatory uncertainty
for many cable systems and -- like the rate rollbacks -- has
negatively affected the Partnership's revenues and profits.
Under the 1992 Cable Act, per-channel and per-program offerings
("a la carte" channels) are exempt from rate regulation. In
implementing rules pursuant to the 1992 Cable Act, the FCC
likewise exempted from rate regulation packages of a la carte
channels if certain conditions were met. Upon reconsideration,
however, the FCC tightened its regulatory treatment of these a la
carte packages by supplementing its initial conditions with a
number of additional criteria designed to ensure that cable
systems creating collective a la carte offerings do not
improperly evade rate regulation. The FCC later reversed its
approach to a la carte packages by ruling that all non-premium
packages of channels -- even if also available on an a la carte
basis -- would be treated as a regulated tier. To ease the
negative effect of these policy shifts on cable systems (and to
further mitigate the rate regulations' disincentive for adding
new program services) the FCC at the same time adopted rules
allowing systems to create currently unregulated "new products
tiers", provided that the fundamental nature of preexisting
regulated tiers is preserved.
The charges for subscriber equipment and installation also are
regulated by the FCC and local franchising authorities. FCC
rules require that charges for converter boxes, remote control
units, connections for additional television receivers, and cable
installations must be based on a cable system's actual costs,
plus an 11.25% rate of return. The regulations further dictate
that the charges for each variety of subscriber equipment or
installation charge be listed individually and "unbundled" from
the charges for cable service. The 1996 Act, however, directs
the FCC, within 120 days, to revise these rules to permit cable
operators to aggregate, on a franchise, system, regional, or
company level, their equipment costs into broad categories
(except for equipment used only to receive a rate regulated basic
service tier).
In accordance with the intent of the 1992 Cable Act, the FCC has
established special rate and administrative treatment for small
cable systems and small cable companies. In addition to the
transition rate relief and streamlined rate reduction approaches
to setting initial permitted rates (discussed above), the
Commission has provided for the following relief mechanisms for
small cable systems and companies: (1) a simplified cost-of-
service approach for small systems owned by small companies in
which a per-channel rate below $1.24 is considered presumptively
reasonable; and (2) a system of any size owned by a small cable
company that incurs additional monthly per subscriber headend
costs of one full cent or more for the addition of a channel may
recover a 20 cent mark-up, the license fee (if any) for the
channel, as well as the actual cost of the headend equipment
necessary to add new channels (not to exceed $5,000 per channel)
for adding not more than seven new channels through 1997. By
these actions, the FCC stated that it has expanded the category
of systems eligible for special rate and administrative treatment
to include approximately 66% of all cable systems in the U.S.
serving approximately 12% of all cable subscribers. The 1996 Act
further deregulates small cable companies: under the 1996 Act,
an operator that, directly or through an affiliate, serves fewer
than 1% of all subscribers in the U.S. (600,000 subscribers) and
is not affiliated with an entity whose gross annual revenues
exceed $250 million is exempt from rate regulation of the cable
programming services tier and also of the basic service tier
(provided that the basic tier was the only tier subject to
regulation as of 12/31/94) in any franchise area in which that
operator serves 50,000 or fewer subscribers.
In late 1995, the FCC demonstrated increasing willingness to
settle some or all of the rate cases pending against a multiple
system operator ("MSO") by entering into a "social contract" or
rate settlement (collectively "social contract/settlement").
While the terms of each social contract/settlement vary according
to the underlying facts unique to the relevant cable systems, the
common elements include an agreement by an MSO to make a
specified subscriber refund (generally in the form of in-kind
service or a billing credit) in exchange for the dismissal, with
prejudice, of pending complaints and rate proceedings. In
addition, the FCC recently has adopted or proposed two measures
that may mitigate the negative effect of the Commission's rate
regulations on cable systems' revenues and profits, and allow
systems to more efficiently market cable service. The FCC
implemented an abbreviated cost-of-service mechanism for cable
systems of all sizes that permits systems to recover the costs of
"significant" upgrades (e.g., expansion of system bandwidth
capacity) that provide benefits to subscribers to regulated cable
service. This mechanism could make it easier for cable systems
to raise rates to cover the costs of an upgrade. The Commission
also has preliminarily proposed, but not yet adopted, an optional
rate-setting methodology under which a cable operator serving
multiple franchise areas could establish uniform rates for
uniform cable service tiers offered in multiple franchise areas.
The 1996 Act also provides operator flexibility for subscriber
notification of rate and service changes. The Act permits cable
operators to use "reasonable" written means to notify subscribers
of rate and service changes; notice need not be inserted in
subscriber bills. Prior notice of a rate change is not required
for any rate change that is the result of regulatory fee,
franchise fee, or any other fee, tax, assessment, or change of
any kind imposed by a regulator or on the transaction between a
cable operator and a subscriber.
Renewal and Transfer
The 1984 Cable Act established procedures for the renewal of
cable television franchises. The procedures were designed to
provide incumbent franchisees with a fair hearing on past
performances, an opportunity to present a renewal proposal and to
have it fairly and carefully considered, and a right of appeal if
the franchising authority either fails to follow the procedures
or denies renewal unfairly. These procedures were intended to
provide an incumbent franchisee with substantially greater
protection than previously available against the denial of its
franchise renewal application. Recently, however, a federal
district court in Kentucky upheld a city's denial of franchise
renewal because the incumbent cable operator's renewal proposal
failed to meet community needs and interests, which the court
gave city officials broad discretion in determining. This case
is now on appeal to the U.S. Court of Appeals for the Sixth
Circuit.
The 1992 Cable Act sought to address some of the issues left
unresolved by the 1984 Cable Act. It established a more definite
timetable in which the franchising authority is to act on a
renewal request. It also narrows the range of circumstances in
which a franchised operator might contend that the franchising
authority had constructively waived non-compliance with its
franchise.
Cable system operators are sometimes confronted by challenges in
the form of proposals for competing cable franchises in the same
geographic area, challenges which may arise in the context of
renewal proceedings. In Rolla Cable Systems v. City of Rolla, a
federal district court in Missouri in 1991 upheld a city's denial
of franchise renewal to an operator whose level of technical
services was found deficient under the renewal standards of the
1984 Cable Act. Local franchising authorities also have, in some
circumstances, proposed to construct their own cable systems or
decided to invite other private interests to compete with the
incumbent cable operator. Judicial challenges to such actions by
incumbent system operators have, to date, generally been
unsuccessful. Registrant cannot predict the outcome or ultimate
impact of these or similar franchising and judicial actions.
The 1996 Act repealed the anti-trafficking rules of the 1992
Cable Act. Those rules generally prohibited a cable operator
from selling a cable system within three years of acquiring or
constructing it. The 1992 Cable Act continues to provide,
however, that where local consent to a transfer is required, the
franchise authority must act within 120 days of submission of a
transfer request or the transfer is deemed approved. The 120-day
period commences upon the submission to local franchising
authorities of information now required on a new standardized FCC
transfer form. The franchise authority may request additional
information beyond that required under FCC rules. Further, the
1992 Cable Act gives local franchising officials the authority to
prohibit the sale of a cable system if the proposed buyer
operates another cable system in the jurisdiction or if such sale
would reduce competition in cable service.
Cable/Telephone Competition and Cross-Ownership Restrictions
The 1996 Act completely revises the law governing cable and
telephone company competition and cross-ownership: the Act
eliminates the cable/telco cross-ownership ban, 214 certification
requirement, and all of the FCC's current video dialtone rules,
but retains (in modified form) the prohibitions on cable/telco
buy-outs. Prior to the passage of the 1996 Act, however, the
1984 Cable Act generally prohibited an LEC from owning a cable
television system or offering video programming directly to
subscribers in the LEC's local telephone service area. This
cross-ownership ban had been the subject of a number of
successful judicial challenges brought by LECs claiming that the
ban violated their constitutional right of free speech.
In addition, in early 1995, the Commission had announced that it
would use the "good cause" waiver provision of the statutory ban
to permit LECs to provide video programming through the agency's
"video dialtone" ("VDT") common carrier regulatory scheme. The
Commission's original VDT policy permitted in-service-area
delivery of video programming by LECs and exempted them from the
1984 Cable Act's franchising requirements so long as the LECs'
facilities were used for transmission of video programming on a
common carrier basis. The 1996 Act, however, explicitly
nullifies all of these regulatory efforts. The Act also provides
that elimination of the VDT rules does not require a VDT system
that has already been approved by the FCC prior to the enactment
of the Act to terminate operation.
In place of these repealed regulations, the 1996 Act gives
telephone companies four options for entering into the MVPD
market, all four of which are subject to the buy-out provisions:
(1) wireless entry (which is not subject to cable regulation);
(2) common carrier entry (which is subject to Title II common
carrier regulation, but not subject to cable regulation); (3)
cable system entry (which is subject to cable regulation); and
(4) "open video system" entry, which is a new mode of entry
established by the 1996 Act that allows a common carrier to
program 33% of its video distribution system, while making the
rest of its capacity available to unaffiliated program providers.
The hybrid common carrier/cable rules governing open video
entirely replace the VDT rules. The open video system rules
generally subject open video system operators to reduced
regulation. For example, such operators are not required to
obtain a local franchise, nor are they subject to rate
regulation. The 1996 Act also limits fees that open video
operators may have to pay to local franchises and clarifies that
such operators are not subject to Title II common carrier
requirements. Open video system operators are required, however,
to comply with certain cable regulations, including the must-
carry/retransmission consent requirements and the rules governing
carriage of public educational and governmental ("PEG") channels.
Depending on yet to be adopted FCC rules, cable companies also
may be permitted to operate open video systems.
Under the 1996 Cable Act, the FCC is to issue new open video
system rules within six months that (1) restrict the amount of
capacity that a carrier or its affiliates may use to provide
programming directly to subscribers; (2) prohibit an operator
from discriminating among video programming providers with regard
to carriage; (3) permit an operator to carry on only one channel
any video programming service that is offered by more than one
programming provider; and (4) prohibit an operator from
unreasonably discriminating in favor of itself and its affiliates
with regard to material or information provided for the purpose
of selecting programming or presenting information to
subscribers.
Although telephone companies may now provide video programming to
their telephone subscribers, the 1996 Act maintains the general
prohibition on cable/telco buy-outs. A LEC or any affiliate may
not acquire more than a 10% financial interest, or any management
interest, in a cable operator serving the LEC's telephone service
area. Similarly, a cable operator may not acquire a 10%
financial interest, or any management interest, in a LEC
providing telephone exchange service within the cable operator's
franchise area. Joint ventures between LECs and cable operators
to provide video or telecommunications in the same market are
also prohibited. The 1996 Act does provide for a number of
limited exceptions to the buy-out and joint venture prohibitions.
These exceptions generally relate to systems in rural areas and
small cable systems and LECs. The 1996 Act also authorizes the
FCC to waive the buy-out and joint venture prohibitions only (1)
if the cable operator or LEC would otherwise be subject to undue
economic distress or if benefits to the community clearly
outweigh the anticompetitive effects of the proposed transaction
and (2) if the local franchising authority approves of the
waiver.
The 1996 Act also clears the way for cable provision of
telephony. For example, the 1996 Act preempts cable franchising
authority regulation of telecommunications services. Moreover,
under the 1996 Act, Title VI (which governs cable operators) does
not apply to cable operators' provision of telecommunications
services. The 1996 Act also clarifies that franchise fees do not
include gross revenue derived from the provision of
telecommunications services. State regulations that may prohibit
the ability to provide telecommunications services are preempted.
The 1996 Act also revises the rules governing pole attachments in
order to foster competitive telecommunications services and
remedy inequity in the current charges for pole attachments.
Concentration of Ownership: The 1992 Cable Act directed the FCC
to establish reasonable limits on the number of cable subscribers
a single company may reach through cable systems it owns
("horizontal concentration") and the number of system channels
that a cable operator could use to carry programming services in
which it holds an ownership interest ("vertical concentration").
The horizontal ownership restrictions of the Act were struck down
by a federal district court as an unconstitutional restriction on
speech. Pending final judicial resolution of this issue, the FCC
stayed the effective date of its horizontal ownership
limitations, which would place a 30% nationwide limit on
subscribers by any one entity. The FCC's vertical restriction
consists of a "channel occupancy" standard which places a 40%
limit on the number of channels that may be occupied by services
from programmers in which the cable operator has an attributable
ownership interest. Further, the 1992 Act and FCC rules restrict
the ability of programmers to enter into exclusive contracts with
cable operators.
Video Marketplace: As required by the 1992 Cable Act, in
December 1995 the Commission issued its second report assessing
the status of competition in the market for the delivery of video
programming. Although the Commission found that cable television
continues to dominate the MVPD market in most localities, it also
noted that competing distribution technologies have continued to
make substantial strides, in particular DBS (see below). The
Commission identified several types of dominant firm strategic
behavior, policy-relevant barriers to entry, and technological
bottlenecks that could adversely affect the development of
competition in the multichannel video distribution market.
Although the Commission determined that several specific reforms
might improve market performance, it concluded that most of the
competitive issues identified would require ongoing monitoring.
Cable Ownership and Cross-Ownership: The 1996 Act repeals or
curtails several cable-related ownership and cross-ownership
restrictions. In addition to the repeal of the anti-trafficking
rules (discussed above), the 1996 Act eliminates the broadcast
network/cable cross-ownership ban. The FCC, however, is allowed
to adopt necessary regulations to ensure carriage, channel
positioning, and nondiscriminatory treatment of nonaffiliated
broadcast stations. The 1996 Act also eliminates the statutory
prohibition on broadcast/cable cross-ownership, but leaves in
place the FCC's rules which continue to restrict the common
ownership of cable and television properties in the same market
area. When a cable operator faces effective competition, the Act
also eliminates the cable/MMDS and cable/SMATV cross-ownership
prohibitions.
Alternative Video Programming Services
Direct Broadcast Satellites:
The FCC has authorized the provision of video programming
directly to home subscribers through high-powered direct
broadcast satellites ("DBS"). DBS systems currently are capable
of broadcasting as many as 175 channels of digital television
service directly to subscribers equipped with 18-inch receive
dishes and decoders. Generally, the signal of local broadcast
stations are not carried on DBS systems. On December 17, 1993,
Hughes Communications Galaxy ("Hughes"), an affiliate of the
General Motors Company, and United States Satellite Broadcasting
Company ("USSB") jointly launched a high-powered satellite with
16 transponders, from which they currently can provide
approximately 170 channels of DBS service to the entire
continental U.S. In December 1994, two DBS permittees, EchoStar
Satellite Corporation ("EchoStar") and Directsat Corporation
("Directsat"), merged their DBS authorizations. In December
1995, EchoStar launched its first satellite. EchoStar and
Directsat plan to commence approximately 120 channels of DBS
service in 1996. On April 27, 1995, the International Bureau of
the FCC released an order (1) denying Advanced Communications
Corporation's ("Advanced") request for an extension of time to
make its DBS system operational and (2) revoking its permit. On
October 18, 1995, the Commission affirmed the Bureau's decision.
An appeal of this decision is currently pending before the U.S.
Court of Appeals for the D.C. Circuit. The Commission auctioned
the channels previously held by Advanced to MCI Communications
Corp. for $682.5 million on January 24, 1996, subject to the
outcome of the appeal. Notices of Appeal of the Commission's
auction Order have also been filed. On January 22, 1996, the
AT&T Corp. announced that it had agreed to make a major
investment in DirecTV, Inc., the DBS affiliate of Hughes. This
arrangement will also permit AT&T to begin marketing DirecTV
products and services. Other parties hold authorizations to
provide DBS service, but have not yet launched their proposed
satellites. It is uncertain when additional service may
commence. Registrant cannot predict the effect of existing and
future DBS services on its cable television operations.
Wireless Cable: The FCC has expanded the authorization of MMDS
services to provide "wireless cable" via multiple microwave
transmissions to home subscribers. In 1990, the FCC increased
the availability of channels for use in wireless cable systems by
eliminating MMDS ownership restrictions and simplifying various
processing and administrative rules. The FCC also modified
equipment and technical standards to increase service
capabilities and improve service quality. Since then, the FCC
has resolved certain additional wireless cable issues, including
channel allocations for MMDS, Operational Fixed Service ("OFS")
and Instructional Television Fixed Service ("ITFS") facilities,
direct application by wireless operators for use of certain ITFS
channels, and restrictions on ownership or operation of wireless
facilities by cable entities.
Local Multipoint Distribution Service: In 1992, the FCC proposed
a new service, LMDS, which also could be used to supply
multichannel video and other communications services directly to
subscribers. This service would operate in the 28 GHz frequency
range and, consistent with the nature of operations in that
range, the FCC envisions that LMDS transmitters could serve areas
of only six to twelve miles in diameter. Accordingly, it is
proposed that LMDS systems utilize a grid of transmitter "cells,"
similar to the structure of cellular telephone operations. In
July 1994, the Commission established a negotiated rulemaking
committee to develop technical rules and to reach a consensus on
sharing the 28 GHz band between terrestrial (LMDS) and satellite
users. In September, however, the negotiated rulemaking
committee reported to the Commission that it was unable to reach
a consensus on sharing. Additional sharing discussions in the
latter half of 1995, prompted by a further notice of proposed
rulemaking released by the FCC in July, are expected to lead to
Commission authorization of the service in the Spring of 1996.
Auctions for LMDS licenses are expected to be held sometime in
1996. Registrant cannot predict how the LMDS sharing issue will
be resolved.
Personal Communications Service ("PCS"): In August, 1993, the
FCC established rules for a new portable telephone service, the
Personal Communications Service ("PCS"). PCS has potential to
compete with landline local telephone exchange services. Among
several parties expressing interest in PCS were cable television
operators, whose plant structures present possible synergies for
PCS operation. In September 1993, the FCC adopted rules for
"broadband PCS" service. It allocated 120 MHz of spectrum in the
2 GHz band for licensed broadband PCS services, divided into
three 30 MHz blocks (blocks A, B and C) and three 10 MHz blocks
(blocks D, E and F). The Commission has also established two
different service areas for these blocks based on Rand McNally's
Basic Trading Areas (BTAs) and Major Trading Areas (MTAs). Thus,
there are up to six PCS licenses available in each geographic
area. The Commission will use competitive bidding to assign the
PCS licenses. The auction rules were finalized in July 1994 and
modified in November 1994, and July 1995. Auctions for the A and
B block authorizations concluded in March of 1995 and the
licenses were granted in June of 1995. The auction for the 493 C
block PCS licenses commenced in December of 1995. Three
broadband PCS licenses were awarded to "pioneer's preference"
winners in December 1994. Registrant cannot predict the outcome
of this auction, nor the outcome of the remaining D, E and F
block PCS auctions.
Information and Interexchange Services (Modified Final Judgment):
The 1996 Act explicitly supersedes the judicial and regulatory
regime created by the Consent Decree that terminated the United
States v. AT&T antitrust litigation in 1982 (known as the
Modification of Final Judgment or "MFJ"). The Consent Decree
prohibited the Bell Operating Companies and their affiliates
(collectively, the "Regional Bells") from, inter alia providing
telecommunications services, including certain cable services,
across Local Access and Transport Areas ("LATAs") as defined in
the Consent Decree. A Regional Bell was required to obtain a
waiver from the FCC in order to provide such services. The 1996
Act eliminates this requirement.
Other Multichannel Video Programming Technologies:
Several additional technologies exist or have been proposed that
also have the potential to increase competition in the provision
of video programming. Currently, many cable subscribers can
receive programming received by C-band home satellite dishes or
via satellite master antenna television facilities ("SMATV").
Programming Issues
Mandatory Carriage and Retransmission Consent: The 1992 Cable
Act requires cable operators to carry the signals of local
commercial and non-commercial television stations and certain low
power television stations. The 1992 Cable Act also includes a
retransmission consent provision that prohibits cable operators
and other multichannel video programming distributors from
carrying broadcast stations without obtaining their consent in
certain circumstances.
The "must carry" and retransmission consent provisions are
related in that television broadcasters, on a cable system-by-
cable system basis, must make a choice once every three years
whether or not to proceed under the must carry rules or to waive
that right to mandatory but uncompensated carriage and negotiate
a grant of retransmission consent to permit the cable system to
carry the station's signal. The FCC's implementing regulations
initially required broadcasters to elect between must-carry and
retransmission consent by June 17, 1993. The next required
election date is October 1, 1996.
While monetary compensation is possible in return for stations
granting retransmission consent, many broadcast station operators
have accepted arrangements that do not require payment but
involve other types of consideration, such as use of a second
cable channel, advertising time, and joint programming efforts.
The must carry provisions of the FCC's rules have been challenged
as unconstitutional. After a special three-judge district court
rejected the challenge, the Supreme Court vacated the panel's
decision and remanded the case to the panel, directing it to
determine the factual validity of the Congressional premise for
enacting the law -- that "the economic health of local
broadcasting is in genuine jeopardy." In December 1995, the
panel, by a 2-1 majority, affirmed its prior decision, finding
that Congress did indeed have substantial evidence to draw the
reasonable inference that the must-carry provisions are necessary
to protect the local broadcasting industry. The Supreme Court
again has agreed to review the case and will likely issue a
decision in 1997. Registrant cannot predict the timing or
outcome of the case.
Program Content Regulation: In contrast to its deregulatory
approach to media ownership, the 1996 Act contains a number of
new regulations affecting program content. For example, upon
request by a subscriber, a cable operator is required to fully
scramble or block the audio and video programming of each channel
carrying sexually explicit adult programming without charge.
Also, the FCC is required to take certain steps to effectuate the
accessibility of "closed captioned" and "video description"
programming. Last, if distributors of video programming --
including cable operators -- fail voluntarily to establish rating
rules to identify programming that contains sexual, violent, or
other indecent material, the Act requires the FCC to formulate,
in conjunction with a nonpartisan advisory committee, a system to
identify and rate such programming. Distributors of rated
programs are required to transmit these ratings, thereby
permitting parents to block the programs.
Copyright: Cable television systems are subject to the Copyright
Act which, among other things, covers the carriage of television
broadcast signals. Pursuant to the Copyright Act, cable
operators obtain a compulsory license to retransmit copyrighted
programming broadcast by local and distant stations in exchange
for contributing a percentage of their revenues as statutory
royalties to the U.S. Copyright Office. The amount of this
royalty payment varies depending on the amount of system revenues
from certain sources, the number of distant signals carried, and
the locations of the cable television system with respect to off-
air television stations and markets. Copyright royalty
arbitration panels, to be convened by the Librarian of Congress
as necessary, are responsible for distributing the royalty
payments among copyrights owners and for periodically adjusting
the royalty rates.
Recently, several types of multichannel video distributors that
compete with cable television systems were successful in gaining
compulsory license coverage of their retransmission of television
broadcast signals. Legislation enacted in 1994 provided an
alternative compulsory license for satellite distributors through
January 1, 2000 and extended permanent coverage of the cable
copyright license to "wireless cable" systems (MMDS). The
Copyright Office also has tentatively ruled that some SMATV
systems are eligible for the cable compulsory license and is
scheduled to issue new regulations covering SMATV copyright
payments and filings in 1996.
Congress established the compulsory license in 1976 to serve as a
means of compensating program suppliers for cable retransmission
of broadcast programming. The FCC has recommended that Congress
eliminate the compulsory copyright license for cable
retransmission of both local and distant broadcast programming.
In addition, legislative proposals have been and may continue to
be made to simplify or eliminate the compulsory license. As
noted, the 1992 Cable Act requires cable systems to obtain
permission of certain broadcast licensees in order to carry their
signals ("retransmission consent") should such stations so elect.
(See "Mandatory Carriage and Retransmission Consent" above).
This permission is needed in addition to the copyright permission
inherent in the compulsory license. Without the compulsory
license, cable operators would need to negotiate rights for the
copyright ownership of each program carried on each broadcast
station transmitted by the system. Registrant cannot predict
whether Congress will act on the FCC recommendations or similar
proposals.
Exclusivity: Except for retransmission consent, the FCC imposes
no restriction on the number or type of distant (or "non-local")
television signals a system may carry. FCC regulations, however,
require cable television systems serving more than 1,000
subscribers, at the request of a local network affiliate, to
protect the local affiliate's broadcast of network programs by
blacking out duplicated programs of any distant network-
affiliated stations carried by the system. Similar rules require
cable television systems to black out the broadcast on distant
stations of certain local sporting events not broadcast locally.
The FCC rules also provide exclusivity protection for syndicated
programs. Under these rules, television stations may compel
cable operators to black out syndicated programming broadcast
from distant signals where the local broadcaster has negotiated
exclusive local rights to such programming. Syndicated program
suppliers are afforded similar rights for a period of one year
from the first sale of that program to any television broadcast
station in the United States. The FCC rules allow any
broadcaster to bargain for and enforce exclusivity rights.
However, exclusivity protection may not be granted against a
station that is generally available over-the-air in the cable
system's market. Cable systems with fewer than 1,000 subscribers
are exempt from compliance with the rules. Although broadcasters
generally may, under certain circumstances, acquire exclusivity
only within 35 miles of their community of license, they may
acquire national exclusive rights to syndicated programming. The
ability to secure national rights is intended to assist so-called
"superstations" whose local broadcast signals are then
distributed nationally via satellite. The 35-mile limitation has
been subject to possible re-examination by the FCC the past
several years.
Cable Origination Programming: The FCC also requires that cable
origination programming meet certain standards similar to those
imposed on broadcasters. These standards include regulations
governing political advertising and programming, advertising
during children's programming, rules on lottery information, and
sponsorship identification requirements.
Customer Service: On July 1, 1993, following a public rulemaking
proceeding mandated by the 1992 Cable Act, new FCC rules on
customer service standards became effective. The standards
govern cable system office hours, telephone availability,
installations, outages, service calls, and communications between
the cable operator and subscriber, including billing and refund
policies. Although the FCC has stated that its standards are
"self effectuating," it has also provided that a franchising
authority wishing to enforce particular customer service
standards must give the system at least 90 days advance written
notice. Franchise authorities also may agree with cable
operators to adopt stricter standards and may enact any state or
municipal law or regulation which imposes a stricter or different
customer service standard than that set by the FCC. Enforcement
of customer service standards, including those set by the FCC, is
entrusted to local franchising authorities.
Pole Attachment Rates and Technical Standards
The FCC currently regulates the rates and conditions imposed by
public utilities for use of their poles, unless, under the
Federal Pole Attachments Act, a state public service commission
demonstrates that it is entitled to regulate the pole attachment
rates. The FCC has adopted a specific formula to administer pole
attachment rates under this scheme. The validity of this FCC
function was upheld by the U.S. Supreme Court. The 1996 Act
revises the pole attachment rules in a number of ways to
encourage competition in the provision of telecommunications
services and to address inequity in the current pole attachment
rates.
In 1990, new FCC standards on signal leakage became effective.
Like all systems, Registrant's cable television systems are
subject to yearly reporting requirements regarding compliance
with these standards. Further, the FCC has instituted on-site
inspections of cable systems to monitor compliance. Any failure
by Registrant's cable television systems to maintain compliance
with these new standards could adversely affect the ability of
Registrant's cable television systems to provide certain
services.
The 1992 Cable Act empowers the FCC to set certain technical
standards governing the quality of cable signals and to preempt
local authorities from imposing more stringent technical
standards. The FCC's preemptive authority over technical
standards for channels carrying broadcast signals has been
affirmed by the U.S. Supreme Court. On March 4, 1992, the FCC
adopted new mandatory technical standards for cable carriage of
all video programming, including retransmitted broadcast
material, cable originated programs and pay channels. The 1992
Cable Act includes a provision requiring the FCC to prescribe
regulations establishing minimum technical standards. The FCC
has determined that its 1992 rulemaking proceeding satisfied the
mandate of the 1992 Cable Act. The new standards, which became
effective December 30, 1992, focus primarily on the quality of
the signal delivered to the cable subscriber's television. In a
related vein, the 1996 Act provides that no local franchising
authority may prohibit, condition, or restrict a cable system's
use of any type of subscriber equipment or any transmission
technology.
The 1996 Act also limits the FCC to the adoption of only minimal
standards to achieve compatibility between cable equipment and
consumer electronics (as Congress required the agency to do in
the 1992 Cable Act) and to rely on the marketplace for other
features, services, and devices. The FCC, however, has already
made much progress with regard to compatibility pursuant to its
1992 Cable Act mandate. On May 4, 1994, the Commission released
an order implementing the 1992 Cable Act requirements. In this
order, the Commission adopted a three-phase plan for achieving
compatibility between cable systems and consumer electronics.
The Phase I requirements include the following: (1) cable
operators are prohibited from scrambling or otherwise encrypting
signals carried on the basic tier; (2) cable operators are
prohibited from taking actions that would prevent equipment with
remote control capabilities from operating with commercially
available remote controls; (3) cable operators must offer
subscribers supplemental equipment for resolving specific
compatibility problems; and (4) cable operators must provide more
compatibility information to subscribers. During Phase II, cable
operators must use the new "Decoder Interface" standard that is
presently being developed. Finally, the third phase of the
compatibility plan addresses future standards issues to be raised
in a future Notice of Inquiry. A number of cable and electronic
company interests have sought reconsideration of this order.
Whether and to what extent the provisions of the 1996 Act affect
the Commission plan is unclear to the Registrant at this time.
The 1996 Act directs the FCC, in consultation with private
standard setting organizations, to prescribe regulations to
ensure the commercial availability of converter boxes and other
interactive communications equipment used by consumers to access
services provided by cable operators and MVPDs. The 1996 Act
specifies that the regulations should ensure the availability of
such equipment from manufacturers, retailers, and other vendors
not affiliated with an MVPD. However, MVPDs are not prohibited
from offering such equipment to consumers, provided that they
charge separately for equipment and service, and do not subsidize
the equipment charge. Once the market for MVPDs and converter
equipment is fully competitive, the FCC is required to sunset any
pertinent regulations if it determines that such an elimination
would promote competition and be the public interest.
State and Local Regulation
Local Authority: Cable television systems are generally operated
pursuant to non-exclusive franchises, permits or licenses issued
by a municipality or other local governmental entity. The
franchises are generally in the nature of a contract between the
cable television system owner and the issuing authority and
typically cover a broad range of provisions and obligations
directly affecting the business of the systems in question.
Except as otherwise specified in the Cable Act or limited by
specific FCC rules and regulations, the Cable Act permits state
and local officials to retain their primary responsibility for
selecting franchisees to serve their communities and to continue
regulating other essentially local aspects of cable television.
The constitutionality of franchising cable television systems by
local governments has been challenged as a burden on First
Amendment rights but the U.S. Supreme Court has declared that
while cable activities "plainly implicate First Amendment
interest" they must be balanced against competing societal
interests. The applicability of this broad judicial standard to
specific local franchising activities is subject to continuing
interpretation by the federal courts.
Cable television franchises generally contain provisions
governing the fees to be paid to the franchising authority, the
length of the franchise term, renewal and sale or transfer of the
franchise, design and technical performance of the system, use
and occupancy of public streets, and the number and types of
cable services provided. The specific terms and conditions of
the franchise directly affect the profitability of the cable
television system. Franchises are generally issued for fixed
terms and must be renewed periodically. There can be no
assurance that such renewals will be granted or that renewals
will be made on similar terms and conditions.
Various proposals have been introduced at state and local levels
with regard to the regulation of cable television systems and a
number of states have adopted legislation subjecting cable
television systems to the jurisdiction of centralized state
governmental agencies, some of which impose regulation of a
public utility character. Increased state and local regulations
may increase cable television system expenses.
Radio Industry
The 1996 Act completely revises the radio ownership rules most
recently changed by the FCC in 1992. The 1996 Act eliminates the
national radio ownership restriction. Any number of AM or FM
broadcast stations may be owned or controlled by one entity
nationally. The 1996 Act also greatly eases local radio
ownership restrictions. As with the old rules, the maximum
varies depending on the number of radio stations within the
market. In markets with more than 45 stations, one company may
own, operate, or control eight stations, with no more than five
in any one service (AM or FM). In markets of 30-44 stations, one
company may own seven stations, with no more than four in any one
service; in markets with 15-29 stations, one entity may own six
stations, with no more than four in any one service. In markets
with 14 commercial stations or less, one company may own up to
five stations or 50% of all of the stations, whichever is less,
with no more than three in any one service.
In 1992, the FCC placed limitations on local marketing agreements
("LMAs") through which the licensee of one radio station provides
the programming for another licensee's station in the same
market. Stations operating in the same service (e.g., where both
stations are AM) and in the same market are prohibited from
simulcasting more than 25% of their programming. Moreover, in
determining the number of stations that a single entity may
control, an entity programming a station pursuant to an LMA is
required, under certain circumstances, to count that station
toward its maximum even though it does not own the station.
In addition, in January 1995, the FCC adopted rules to allocate
spectrum for satellite digital audio radio service ("DARS").
Satellite DARS systems potentially could provide for regional or
nationwide distribution of radio programming with fidelity
comparable to compact disks. The FCC has solicited comment on
proposed service and licensing regulations in a current
rulemaking proceeding. Four applications for licenses to provide
satellite DARS are currently pending before the FCC. In
addition, the FCC has undertaken an inquiry into the terrestrial
broadcast of DARS signals, addressing, inter alia, the need for
spectrum outside the existing FM band and the role of existing
broadcasters. Further, in 1995 the laboratory testing of a
number of competing in-band on-channel DARS technologies was
completed, with many of the systems progressing to the next stage
of field testing. Registrant cannot predict the outcome of these
proceedings.
Item 2. Properties.
A description of the media properties of Registrant is contained
in Item 1 above. Registrant owns or leases real estate for
certain headend and transmitting equipment along with space for
studios and offices. Registrant believes that the properties
owned by the stations and the other equipment and furniture and
fixtures owned are in reasonably good condition and are adequate
for the operations of the stations. Refer to Item 8. "Financial
Statements and Supplementary Data" for further information
regarding Registrant's properties.
In addition, the offices of RPMM and MLMM are located at 350 Park
Avenue - 16th Floor, New York, New York 10022 and at The World
Financial Center, South Tower - 14th Floor, New York, New York,
10080-6114; respectively.
For additional description of Registrant's business refer to Item
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Item 3. Legal Proceedings.
There are no material legal proceedings against Registrant or to
which Registrant is a party.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters which required a vote of the limited
partners of Registrant during the fourth quarter of fiscal year
covered by this report.
Part II.
Item 5. Market for Registrant's Common Stock and Stockholder
Matters.
An established public market for Registrant's Units does not now
exist, and it is not anticipated that such a market will develop
in the future. Accordingly, accurate information as to the market
value of a Unit at any given date is not available.
As of February 9, 1996, the number of owners of Units was 15,622.
Effective November 9, 1992, Registrant was advised that Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch")
introduced a new limited partnership secondary service available
to its clients through Merrill Lynch's Limited Partnership
Secondary Transaction Department.
Beginning with the December 1994 client account statements,
Merrill Lynch implemented new guidelines for providing estimated
values of limited partnerships and other direct investments
reported on client account statements. As a result, Merrill
Lynch no longer reports general partner estimates of limited
partnership net asset value on its client account statements,
although the Registrant may continue to provide its estimate of
net asset value to Unit holders. Pursuant to the guidelines,
estimated values for limited partnership interests originally
sold by Merrill Lynch (such as Registrant's Units) will be
provided two times per year to Merrill Lynch by independent
valuation services. The estimated values will be based on
financial and other information available to the independent
services on the prior August 15th for reporting on December year-
end client account statements, and on information available to
the services on March 31st for reporting on June month-end
Merrill Lynch client account statements. Merrill Lynch clients
may contact their Merrill Lynch Financial Consultants or
telephone the number provided to them on their account statements
to obtain a general description of the methodology used by the
independent valuation services to determine their estimates of
value. The estimated values provided by the independent services
and the Registrant's current net asset value are not market
values and Unit holders may not be able to sell their Units or
realize either amount upon a sale. In addition, Unit holders may
not realize the independent estimated value or the Registrant's
current net asset value upon the liquidation of Registrant over
its remaining life.
Registrant does not distribute dividends, but rather distributes
Distributable Cash From Operations and Distributable Sale and
Refinancing Proceeds, to the extent available. There were no
distributions in 1993 or 1994. In 1995, $7.5 million ($40 per
Unit) was distributed to its Limited Partners and $75,957 to its
General Partner from the proceeds of the sale of KATC-TV.
Item 6. Selected Financial Data.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 29, December 30, December 31,
1995 1994 1993
<S> <C> <C> <C>
Operating Revenue $ 109,214,031 $105,910,208 $100,401,671
Gain on Sale of
Television Stations
$ 22,796,454 $ - $ -
Net Income/(Loss) $ 21,490,240 $( 1,450,756) $ 1,377,340
Net Income/(Loss)
per Unit of Limited
Partnership
Interest
$ 113.17 $ (7.64) $ 7.25
Number of Units 187,994 187,994 187,994
As of As of As of
December 29, December 30, December 31,
1995 1994 1993
Total Assets $ 210,198,496 $238,330,358 $249,851,937
Borrowings $ 182,821,928 $218,170,968 $232,568,349
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended
December 25, December 27,
1992 1991
<S> <C> <C>
Operating Revenue $100,443,967 $ 99,185,423
Net Loss $ (9,280,770) $(51,049,551)
Net Loss per Unit
of Limited
Partnership $ (48.87) $ (268.83)
Interest
Number of Units 187,994 187,994
As of As of
December 25, December 27,
1992 1991
Total Assets $261,554,442 $310,248,561
Borrowings $245,994,745 $279,440,750
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
As of December 29, 1995, Registrant had $41,124,366 in cash and
cash equivalents, of which $37,275,625 was limited for use at the
operating level and the remaining $3,848,741 was Registrant's
working capital.
As of December 30, 1994, Registrant had $26,682,289 in cash and
cash equivalents, of which $22,115,559 was limited for use at the
operating level and the remaining $4,566,730 was Registrant's
working capital.
During 1995, Registrant continued its operations phase and the
process of liquidating certain of its media properties.
Registrant engaged Merrill Lynch & Co. and Daniels & Associates
in January, 1994 to act as its financial advisors in connection
with a possible sale of all or a portion of Registrant's
California Cable Systems (the "California Cable Systems").
Registrant has an agreement to sell California Cable Systems (see
below).
Registrant consummated the sale of WREX and KATC on July 31, 1995
and September 30, 1995, respectively (see below). A cash
distribution of approximately $7.5 million ($40 per Unit) was
made to Limited Partners and $75,957 to its General Partner from
net distributable sales proceeds.
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 Registrant's California Cable operations serving Anaheim
and Hermosa Beach/Manhattan Beach and Rohnert Park/Yountville and
Fairfield (the "California Cable Systems"). The base purchase
price specified in the Asset Purchase Agreement for the
California Cable Systems is $286 million, subject to reduction by
an amount equal to 11 times the amount, if any, by which the
operating cash flow of the California Cable 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 of the sale from the
Federal Communications Commission ("FCC") and the municipal
authorities issuing the franchises for the California Cable
Systems and the approvals of certain franchise extensions,
including the renewal of the franchises license for the Anaheim
and Villa Park communities.
As of December 29, 1995, all such approvals had been obtained,
other than the transfer/renewal approvals for the Anaheim and
Villa Park communities. After several months of negotiations,
Registrant and Century had been unable to reach agreement with
the City of Anaheim and the City of Villa Park regarding the
terms of the renewal of each City's franchise, and therefore
Century agreed to waive the condition precedent of obtaining a
renewal of such franchises and was requiring instead a transfer
to Century of the Anaheim franchise (the "Anaheim Transfer") and
a transfer to Century of the Villa Park franchise (the "Villa
Park Transfer").
The Asset Purchase Agreement provides that Registrant and Century
each have the right to terminate the Asset Purchase Agreement if
the Closing did not occur by December 31, 1995 (the "Optional
Termination Date"). Accordingly, as of January 1, 1996, each
party became vested with the right to elect to terminate the
Asset Purchase Agreement. The parties sought to reach agreement
with regard to an extension of the Optional Termination Date but
were unable to finalize such agreement. Nevertheless, on January
17, 1996, Registrant notified Century that if the Closing does
not occur on or before March 29, 1996, Registrant will terminate
the Asset Purchase Agreement as of that date. However,
Registrant does not intend to terminate the Asset Purchase
Agreement on March 29, 1996 and will continue its attempts to
consummate the Asset Purchase Agreement with Century.
Registrant, Century and the City of Anaheim have reached
agreement on the terms of the Anaheim Transfer and the Anaheim
Transfer has been approved; the approval will become final on
April 4, 1996 unless a legally sufficient objection is raised
under the Anaheim City Charter procedure for a public referendum.
Registrant, Century and Villa Park have also reached agreement on
the terms of the Villa Park Transfer and the Villa Park Transfer
was approved by the Villa Park City Council on March 26, 1996.
No assurances can be given that the Anaheim Transfer will become
final or the other conditions precedent necessary to enable the
Closing to occur will occur. Accordingly, no assurances can be
given that the sale of the California Cable Systems under the
Asset Purchase Agreement will be consummated. (Refer to Notes 5
and 8 of "Item 8. Financial Statements and Supplementary Data"
for a description of possible defaults under the ML California
Cable Credit Agreement, as amended).
Although no assurances can be given as to the timing of any sale
of the California Cable Systems or as to the sale price that
might be realized in connection with any such sale, if the sale
to Century is not consummated, Registrant believes that, under
current market conditions, the California Cable Systems represent
an attractive investment opportunity for a suitable buyer.
As of December 30, 1994 due in part to the negative impact of
rate-reregulation on the operations of the California Cable
Systems, Registrant was in default of certain financial covenants
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 of
$322,969 plus additional interest for the full year 1995 was paid
as a result of the sale of the California Cable Systems not being
consummated prior to December 29, 1995. Certain other non-
material terms of the revised ML California Credit Agreement were
also affected by the First Amendment.
Effective June 30, 1995, Registrant and the banks entered into a
second amendment to the revised ML California Credit Agreement
that provided for required technical revisions.
Pursuant to the ML California Credit Agreement, a payment of
principal in the amount of approximately $13.1 million (the
"Principal Payment") became due and payable by the Registrant on
December 29, 1995. Since the sale of the California Cable
Systems did not occur by that date, Registrant was unable to make
the entire Principal Payment, but did make a $3,555,000 partial
payment. Effective December 29, 1995, Registrant and the banks
entered into a third amendment (the "Third Amendment") to the
revised ML California Credit Agreement that provided for reduced
principal payments for the fourth quarter of 1995 and required a
new quarterly principal payment of $15,812,500 to be due and
payable on April 1, 1996. In addition, the Third Amendment
increased the Registrant's cost of borrowing. The loan under the
ML California Credit Agreement, as amended, is nonrecourse to the
other assets of Registrant. As of December 29, 1995, Registrant
was in compliance under the revised ML California Credit
Agreement and the outstanding principal debt balance was
$120,148,500.
Registrant expects that the sale of the California Cable Systems
will not occur by April 1, 1996 and, therefore, Registrant will
be unable to make the principal payment of $15,812,500 due under
the ML California Credit Agreement on such date. Accordingly, as
of April 1, 1996, Registrant expects to be in default under the
terms of the ML California Credit Agreement. However, Registrant
and the banks party to the ML California Credit Agreement are
currently negotiating an amendment to the ML California Credit
Agreement to defer the April 1, 1996 principal payment due date.
Registrant has advised the banks that it will continue its
attempts to consummate the Asset Purchase Agreement with Century
assuming approval of the Anaheim Transfer becomes final. Although
such negotiations with the banks continue, no assurances can be
given that Registrant will be successful in its attempt to obtain
an amendment to the ML California Credit Agreement. Should such
amendment not be obtained, upon such default the banks may
accelerate the payment obligations with respect to the full
amount owing under the ML California Credit Agreement and take
other action to enforce their rights under the ML California
Credit Agreement.
In December 1993, the California Cable Systems received a
favorable decision with respect to a property tax appeal filed
with one county served by the California Cable Systems. The
county had the right to appeal the decision for a period of six
months. This period expired without appeal during the second
quarter of 1994. Also in December of 1993, the California Cable
Systems reached a favorable agreement in principle with a second
county served by the California Cable Systems where an appeal
relating to property taxes had also been filed. During 1994, the
California Cable Systems executed a settlement agreement and
finalized assessed property values with, and received a refund of
approximately $700,000 from, this second county. In part as a
result of these developments, the California Cable Systems
continue to be entitled to receive tax refunds. On December 30,
1994, Registrant reduced by approximately $2.2 million the
general and administrative expense of California Cable in order
to account for these tax refunds. During the fourth quarter of
1994, Orange County, California, in which a significant
percentage of the California Cable Systems are located, filed for
bankruptcy. At December 29, 1995 and December 30, 1994, the net
property tax refund receivable from Orange County was
approximately $2.3 million and $1.7 million, respectively.
As of December 29, 1995, Registrant had funds related to the
Northern California Systems in an escrow account totalling
$817,630, which funds were included in other assets on the
accompanying Consolidated Balance Sheet. The funds were
deposited in such account during 1994 in accordance with
Registrant's Agreement with the 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.
As of December 29, 1995, Registrant had funds in an additional
escrow account totalling $176,947, which funds were included in
other assets on the accompanying Consolidated Balance Sheet. The
funds, which initially totalled $680,000, 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,
and as a result of the city's rate structure, pursuant to such
decision, the escrowed amounts were reduced to the current level.
WREX-KATC
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, Rockford, Illinois ("WREX"), other than cash and accounts
receivable. The purchase price for the assets was approximately
$18.4 million, 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 WREX, and the balance of approximately $16.1 million was
applied to repay a portion of the bank indebtedness secured by
the assets of WREX and KATC. Quincy did not assume certain
liabilities of WREX and Registrant will remain liable for such
liabilities. On the sale of WREX, Registrant recognized a gain
for financial reporting purposes of approximately $8.8 million.
On September 30, 1995, Registrant completed the sale to KATC
Communications, Inc. (the "KATC Buyer") of substantially all of
the assets used in the operations of Registrant's television
station KATC-TV, Lafayette, Louisiana ("KATC") other than cash
and accounts receivable. The KATC Buyer did not assume certain
liabilities of KATC and Registrant will remain liable for such
liabilities. The purchase price for the assets was $24.5
million. From the proceeds of the sale, approximately $6.3
million was applied to repay in full the remaining bank
indebtedness secured by the assets of KATC; a reserve of
approximately $2.0 million was established to cover certain
purchase price adjustments and expenses and liabilities relating
to KATC; $1.0 million was deposited into an indemnity escrow to
secure Registrant's indemnification obligations to the KATC
Buyer; approximately $7.6 million was applied to pay a portion of
deferred fees and expenses owed to the General Partner; and the
remaining amount of approximately $7.6 million ($40 per Unit)was
distributed to Partners in December, 1995. Registrant recognized
a gain for financial reporting purposes of approximately $14.0
million on the sale of KATC.
Wincom-WEBE-WICC
On July 30, 1993, Registrant and Chemical Bank executed an
amendment to the Wincom-WEBE-WICC Loan (the "Restructuring
Agreement") effective January 1, 1993, which cured all previously
outstanding defaults pursuant to the Wincom-WEBE-WICC Loan.
Refer to Note 5 of "Item 8. Financial Statements and
Supplementary Data" for further information regarding the Wincom-
WEBE-WICC Loan and the Restructuring Agreement. Registrant was
in compliance with all terms of its Wincom-WEBE-WICC Loan and the
Restructuring Agreement at December 29, 1995.
Impact of Cable Legislation and Regulation
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
Under the 1992 Cable Act, cable systems' rates for service and
related subscriber equipment are subject to regulation by the FCC
and local franchising authorities. However, only the rates of
cable systems that are not subject to "effective competition" may
be regulated. A cable system is subject to effective competition
if one of the following conditions is met: (1) fewer than 30% of
the households in the franchise area subscribe to the system; (2)
at least 50% of the households in the franchise area are served
by two multichannel video programming distributors ("MVPD") and
at least 15% of the households in the franchise area subscribe to
any MVPD other than the dominant cable system; or (3) a
franchising authority for that franchise area itself serves as an
MVPD offering service to at least 50% of the households in the
franchise area. The 1996 Act adds a fourth condition: the mere
offering (regardless of penetration) by a local exchange carrier,
or an entity using the LEC's facilities, of video programming
services (including 12 or more channels of programming, at least
some of which are television broadcasting signals) directly to
subscribers by any means (other than direct-to-home satellite
services) in the franchise area of an unaffiliated cable
operator. Under these regulations, the Partnership's systems,
like most cable systems in most areas, are not currently subject
to effective competition. Consequently, the rates charged by the
Partnership's systems are subject to rate regulation under
certain circumstances.
Under the 1992 Cable Act, a local franchising authority may
certify with the FCC to regulate the Basic Service Tier ("BST")
and associated subscriber equipment of a cable system within its
jurisdiction. By law, the BST must include all broadcast signals
(with the exception of national "superstations"), including those
required to be carried under the mandatory carriage provisions of
the 1992 Cable Act, as well as public, educational, and
governmental ("PEG") access channels required by the franchise.
The FCC has jurisdiction over the Cable Programming Service Tier
("CPST"), which generally includes programming other than that
carried on the BST or offered on a per-channel or per-program
basis. The 1996 Act, however, confines rate regulation to the
BST after three years: on March 31, 1999, the CPST will be
exempted from regulation. On enactment, the 1996 Act also
modifies the rules governing complaints for rate increases on the
CPST by replacing the current procedure. The current procedure,
mandated by the 1992 Cable Act, allows subscribers to file
complaints directly with the FCC. Under the new procedure, only
a local franchising authority may file an FCC complaint, and then
only if the franchising authority receives "subscriber
complaints" within 90 days of the effective date of a rate
increase. The FCC must issue a final order within 90 days after
receiving a franchising authority's complaint.
Effective September 1, 1993, regulated cable systems were
required to use the FCC-prescribed "benchmark" approach to set
initial rates for BSTs and CPSTs. Cable systems whose rates
exceeded the applicable benchmark were required to reduce their
rates either to the benchmark or by 10%, whichever reduction was
less. The Commission subsequently modified its rules, however,
to establish a second round of benchmark rate rollbacks, which
became effective May 15, 1994. Under this more stringent regime,
each cable system whose BST or CPST is subject to regulation is
required to select from among the following methodologies to set
a permitted rate: (1) a full reduction rate; (2) a transition
rate; (3) a rate based on a streamlined rate reduction; or (4) a
cost-of-service showing. The full reduction rate is a system's
September 30, 1992 rate, measured on an average regulated revenue
per subscriber basis, reduced by 17%. Under the transition rate
approach, low-price cable systems (as determined under the FCC's
revised benchmark formula) and systems owned by small operators
(operators with a total subscriber base of 15,000 or less and not
affiliated with or controlled by another operator) are not
initially required to reduce rates to the full reduction rate
level, but instead are permitted to cap their rates at March 31,
1994 levels, subject to possible further reduction based on cost
studies. The streamlined rate reduction approach allows a cable
system to reduce each billed item of regulated cable service as
of March 31, 1994 by 14%, rather than completing various FCC rate
regulation forms and establishing cost-based equipment and
installation charges. This approach is available only to cable
systems of 15,000 or fewer subscribers that are owned by a cable
company serving a total of 400,000 or fewer subscribers over all
of its systems. While the U.S. Court of Appeals for the D.C.
Circuit has upheld these regulations, the regulations may be
subject to further judicial review, and may be altered by ongoing
FCC rulemakings and case-by-case adjudications.
The cost-of-service approach allows a cable system to recover
through regulated rates its normal operating expenses and a
reasonable return on investment. Prior to May 15, 1994, the
effective date of FCC "interim" cost-of-service rules, the
Commission permitted cable systems to use general cost-of-service
principles, such as those historically used to set rates for
public utilities. Beginning May 15, 1994, the FCC's interim
rules took effect, which, among other things, established an
industry-wide rate of return of 11.25% and presumptively excluded
from a cable system's rate base acquisition costs above book
value (while allowing certain intangible, above-book costs, such
as start-up losses incurred during a two-year start-up period)
and the costs of obtaining franchise rights. The FCC recently
adopted final cost-of-service rules, which modify the interim
rules, in relevant part, by: (1) retaining the 11.25% rate of
return, but proposing, in a further notice of proposed
rulemaking, to use a system's actual debt cost and capital
structure to determine its final rate of return; (2) establishing
a rebuttable presumption that 34% of the purchase price of cable
systems purchased prior to May 15, 1994 (and not just the portion
of the price allocable to intangibles) must be excluded from rate
base; and (3) replacing the presumption of a two-year period for
accumulated start-up losses with a case-by-case determination of
the appropriate period. Additionally, the 1996 Act also
restricts the FCC from disallowing certain operator losses for
cost-of-service filings. 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 systems may not file a new cost-of-
service showing to justify new rates for a period of two years.
An appeal of the interim rules brought before the U.S. Court of
Appeals for the D.C. Circuit has been held in abeyance pending
adoption of the final rules. Given the recent changes to the
interim rules, it is uncertain whether the appeal will now go
forward.
Having set an initial permitted rate for regulated service using
one of the above methodologies, a cable system may adjust its
rate going forward either quarterly or annually under the FCC's
"price cap" mechanism, which accounts for inflation, changes in
"external costs," and changes in the number of regulated
channels. External costs include state and local taxes
applicable to the provision of cable television service,
franchise fees, the costs of complying with certain franchise
requirements, and retransmission consent fees and copyright fees
incurred for the carriage of broadcast signals. In addition, a
cable system may treat as external (and thus pass through to its
subscribers) the costs, plus a 20 cent per channel mark-up, for
channels newly added to a CPST. Through 1996, however, each
cable system is subject to an aggregate cap of $1.50 on the
amount it may increase CPST rates due to channel additions.
The FCC's regulatory treatment of "a la carte" packages of
channels has been a source of particular regulatory uncertainty
for many cable systems and -- like the rate rollbacks -- has
negatively affected the Partnership's revenues and profits.
Under the 1992 Cable Act, per-channel and per-program offerings
("a la carte" channels) are exempt from rate regulation. In
implementing rules pursuant to the 1992 Cable Act, the FCC
likewise exempted from rate regulation packages of a la carte
channels if certain conditions were met. Upon reconsideration,
however, the FCC tightened its regulatory treatment of these a la
carte packages by supplementing its initial conditions with a
number of additional criteria designed to ensure that cable
systems creating collective a la carte offerings do not
improperly evade rate regulation. The FCC later reversed its
approach to a la carte packages by ruling that all non-premium
packages of channels -- even if also available on an a la carte
basis -- would be treated as a regulated tier. To ease the
negative effect of these policy shifts on cable systems (and to
further mitigate the rate regulations' disincentive for adding
new program services) the FCC at the same time adopted rules
allowing systems to create currently unregulated "new products
tiers", provided that the fundamental nature of preexisting
regulated tiers is preserved.
The charges for subscriber equipment and installation also are
regulated by the FCC and local franchising authorities. FCC
rules require that charges for converter boxes, remote control
units, connections for additional television receivers, and cable
installations must be based on a cable system's actual costs,
plus an 11.25% rate of return. The regulations further dictate
that the charges for each variety of subscriber equipment or
installation charge be listed individually and "unbundled" from
the charges for cable service. The 1996 Act, however, directs
the FCC, within 120 days, to revise these rules to permit cable
operators to aggregate, on a franchise, system, regional, or
company level, their equipment costs into broad categories
(except for equipment used only to receive a rate regulated basic
service tier).
In accordance with the intent of the 1992 Act, the FCC has
established special rate and administrative treatment for small
cable systems and small cable companies. In addition to the
transition rate relief and streamlined rate reduction approaches
to setting initial permitted rates (discussed above), the
Commission has provided for the following relief mechanisms for
small cable systems and companies: (1) a simplified cost-of-
service approach for small systems owned by small companies in
which a per-channel rate below $1.24 is considered presumptively
reasonable; and (2) a system of any size owned by a small cable
company that incurs additional monthly per subscriber headend
costs of one full cent or more for the addition of a channel may
recover a 20 cent mark-up, the license fee (if any) for the
channel, as well as the actual cost of the headend equipment
necessary to add new channels (not to exceed $5,000 per channel)
for adding not more than seven new channels through 1997. By
these actions, the FCC stated that it has expanded the category
of systems eligible for special rate and administrative treatment
to include approximately 66% of all cable systems in the U.S.
serving approximately 12% of all cable subscribers. The 1996 Act
further deregulates small cable companies: under the Act, an
operator that, directly or through an affiliate, serves fewer
than 1% of all subscribers in the U.S. (600,000 subscribers) and
is not affiliated with an entity whose gross annual revenues
exceed $250 million is exempt from rate regulation of the cable
programming services tier and also of the basic service tier
(provided that the basic tier was the only tier subject to
regulation as of 12/31/94) in any franchise area in which that
operator serves 50,000 or fewer subscribers.
In late 1995, the FCC demonstrated increasing willingness to
settle some or all of the rate cases pending against a multiple
system operator ("MSO") by entering into a "social contract" or
rate settlement (collectively "social contract/settlement").
While the terms of each social contract/settlement vary according
to the underlying facts unique to the relevant cable systems, the
common elements include an agreement by an MSO to make a
specified subscriber refund (generally in the form of in-kind
service or a billing credit) in exchange for the dismissal, with
prejudice, of pending complaints and rate proceedings. In
addition, the FCC recently has adopted or proposed two measures
that may mitigate the negative effect of the Commission's rate
regulations on cable systems' revenues and profits, and allow
systems to more efficiently market cable service. The FCC
implemented an abbreviated cost-of-service mechanism for cable
systems of all sizes that permits systems to recover the costs of
"significant" upgrades (e.g., expansion of system bandwidth
capacity) that provide benefits to subscribers to regulated cable
service. This mechanism could make it easier for cable systems
to raise rates to cover the costs of an upgrade. The Commission
also has preliminarily proposed, but not yet adopted, an optional
rate-setting methodology under which a cable operator serving
multiple franchise areas could establish uniform rates for
uniform cable service tiers offered in multiple franchise areas.
The 1996 Act also provides operator flexibility for subscriber
notification of rate and service changes. The Act permits cable
operators to use "reasonable" written means to notify subscribers
of rate and service changes; notice need not be inserted in
subscriber bills. Prior notice of a rate change is not required
for any rate change that is the result of regulatory fee,
franchise fee, or any other fee, tax, assessment, or change of
any kind imposed by a regulator or on the transaction between a
cable operator and a subscriber.
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,
Registrant'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, Registrant 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 1994 the
revenues of the California Cable Systems decreased slightly
compared to 1993 after having increased in every previous year.
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 on C-ML Cable. For example, while the
revenues of the C-ML Cable systems increased in 1994 compared to
1993, the increase in revenues of the C-ML Cable Systems was
lower than in previous years. However, Registrant 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 1996. There were no defaults
under the C-ML Notes or the C-ML Revolving Credit Agreement at
December 29, 1995.
Summary
Registrant's ongoing cash needs will be to fund debt service,
capital expenditures and working capital needs. During 1995,
cash interest paid was $21,384,422, and principal repayments of
$35,349,040 were made. During 1996, Registrant is required by
its various debt agreements to make scheduled principal
repayments of $32,350,000 under all of its debt agreements. If
the ML California Credit Agreement is accelerated as a result of
the sale to Century not being consummated or otherwise,
Registrant would be required to satisfy the remaining loan
balance of $120,148,500 as of December 29, 1995.
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 its contractual debt obligations of all of its
investments, however such debt obligations are recourse only to
specified assets. Registrant does not currently expect to, nor
is it obligated to, advance any of its unrestricted working
capital to California Cable Systems.
Current and future maturities under Registrant's existing credit
facilities are described in Note 5 of "Item 8. Financial
Statements and Supplementary Data".
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. As discussed in Note 2,
approximately $7.6 million of net proceeds from the sale of the
television stations was applied to pay a portion of these
deferred fees and expenses owed to the General Partner. In
addition, during 1995, Registrant paid $1.0 million to the
General Partner representing partial payment for third and fourth
quarter management fees and out-of-pocket expenses. As of
December 29, 1995 the amount payable to the General Partner was
approximately $7.9 million.
Results of Operations
1995 vs. 1994
During 1995 and 1994, Registrant had total operating revenues of
approximately $109.2 million and $105.9 million, respectively.
The approximate $3.3 million increase was primarily due to
increases in revenues in Registrant's cable and radio properties
offset by a decrease in television revenues as a result of the
sale of Registrant's television stations in 1995.
Registrant's 50% share of the revenues of C-ML Cable increased by
approximately $2.6 million in 1995 compared to 1994. The
increase in revenues at C-ML Cable occurred as a result of an
increase in the number of basic subscribers during 1995,
implementation of allowed rate increases and an increase in pay
revenue due to both an increase in subscriptions as well as the
average pay rate. The average level of basic subscribers at C-ML
Cable increased to 113,942 in 1995 from 108,453 in 1994, and the
total number of basic subscribers increased to 115,655 at the end
of 1995 from 112,228 at the end of 1994. The number of average
premium subscriptions at C-ML Cable increased to 71,150 during
1995 from 69,027 during 1994 due to aggressive marketing efforts.
Total premium subscriptions increased to 73,565 at the end of
1995 from 68,735 at the end of 1994.
Revenues at California Cable increased by approximately $2.1
million. The increase at California Cable resulted primarily
from the implementation of rate increases permitted under the
FCC's rate re-regulations and an increase in the number of basic
subscribers from 136,022 at the end of 1994 to 138,864 at the end
of 1995. Average basic subscribers increased to 137,443 in 1995
from 133,926 in 1994. Total premium subscribers decreased from
77,749 at the end of 1994 to 73,500 at the end of 1995. Average
premium subscribers decreased slightly to 75,625 during 1995 from
75,687 during 1994.
During 1995, Registrant recognized gains of approximately $14.0
million and $8.8 million on the sale of television stations KATC
and WREX, respectively. Due to the sale of television stations
WREX on July 31, 1995 and KATC on September 30, 1995, the results
of operations for the year ended 1995 and 1994 are not
comparable. The Wincom-WEBE-WICC radio group reported an
increase in revenues of approximately $1.7 million, primarily as
a result of stronger local and national advertising and network
revenues resulting from improved market conditions. Revenues
increased by approximately $0.2 million at KORG/KEZY due
primarily to an increase in trade revenues as well as interest
income.
During 1995 and 1994, Registrant incurred property operating
expenses of approximately $39.3 million and $38.8 million,
respectively, in connection with the operation of its cable,
radio and television properties. Registrant's total property
operating expenses increased by approximately $0.5 million from
year to year as a result of: an increase of approximately $0.7
million at C-ML Cable and C-ML Radio (together the "Revised
Venture"), due to an increase in property taxes as compared to
1994, increases in copyright fees and franchise taxes due to the
increased subscriber base and an increase in sales-related
expenses; an increase at California Cable of approximately $0.4
million due primarily to higher programming costs partially
offset by decreased marketing costs; a combined increase of
approximately $0.5 million at the Wincom-WEBE-WICC radio group
due to increases in commission and other revenue-related expenses
as well as increased advertising costs, all partially offset by a
decrease in the operating expenses of Registrant's television
stations due to the sales in 1995. The remaining increases or
decreases in property operating expenses at Registrant's other
properties were immaterial either individually or in the
aggregate.
During 1995 and 1994, Registrant incurred general and
administrative expenses of approximately $22.2 million and $20.9
million, respectively. Registrant's total general and
administrative expenses increased by approximately $1.3 million
from year to year as a result of increases of approximately:
$1.4 million at the combined television operations due primarily
to the cost of marketing the two stations; $0.4 million at the
combined cable and radio operations of the Revised Venture, due
primarily to increased administrative costs related to an
increase in the overall subscriber base; and an increase of
approximately $0.2 million at the Wincom-WEBE-WICC radio group
due primarily to refurbishment costs related to new office space
at WQAL-FM as well as an increase in overall insurance expense.
These increases were partially offset by a decrease of
approximately $0.7 million at California Cable due primarily to
decreased property tax expenses partially offset by increased
costs related to the pending disposition of the California Cable
systems. 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 $332,000 and
$193,000 during 1995 and 1994, respectively, on its working
capital balance.
Interest expense of approximately $19.4 million and $16.0 million
in 1995 and 1994, respectively, represents the cost incurred for
borrowed funds utilized to acquire various media properties. The
approximate $3.4 million increase in interest expense is due to:
(i) an increase pursuant to the Revised ML California Cable
Credit Agreement of $3.9 million due to both higher floating
interest rates from year to year and the increased rate
incorporated by the Amendments to the loan offset partially by a
decrease of approximately $0.5 million due to the sale of
Registrant's television stations. The remaining increases or
decreases in interest expense at Registrant's other properties
were immaterial, either individually or in the aggregate.
Registrant's depreciation and amortization expense totalled
approximately $28.1 million and $30.2 million in 1995 and 1994,
respectively. This $2.1 million decrease resulted primarily
from: a $1.0 million decrease at WREX and KATC due to the sale of
these stations in 1995; a decrease of $0.7 million at combined
California Cable and radio operations due to fully depreciated
assets; and a $0.2 million decrease at the Wincom-WEBE-WICC radio
group due to fully depreciated assets. The remaining increases
or decreases in depreciation and amortization expense at
Registrant's other properties were immaterial, either
individually or in aggregate.
Results of Operations
1994 vs. 1993
During 1994 and 1993, Registrant had total operating revenues of
approximately $105.9 million and $100.4 million, respectively.
The approximate $5.5 million increase was primarily due to the
consolidation of the operating results (approximately $2.6
million in revenue) of Registrant's 50% interest in the C-ML
Radio properties following the transfer of C-ML Radio's assets to
the Revised Venture on January 1, 1994. This increase, combined
with increases at C-ML Cable and Registrant's remaining radio and
broadcast television properties, was partially offset by
decreases at Wincom due to the sale of the Indianapolis Stations
and at California Cable.
Registrant's 50% share of the revenues of C-ML Cable increased by
approximately $1.3 million in 1994 compared to 1993. The
increase in revenues at C-ML Cable occurred as a result of higher
average levels of basic subscribers, due to successful marketing
efforts and the extension of cable plant to pass additional
homes. The average level of basic subscribers at C-ML Cable
increased to 108,453 in 1994 from 105,323 in 1993, and the total
number of basic subscribers increased to 112,228 at the end of
1994 from 104,677 at the end of 1993. The number of average
premium subscriptions at C-ML Cable decreased to 69,027 during
1994 from 73,178 during 1993 due to weakness in the local economy
(which was exacerbated by a severe drought, which has since
ended), as well as to continuing industry-wide softness in
subscriber demand for premium services and the restructuring of C-
ML Cable's rates and services in the second half of 1993. Total
premium subscriptions decreased to 68,735 at the end of 1994 from
69,319 at the end of 1993.
Television stations KATC and WREX reported a combined increase of
approximately $1.4 million in revenue as a result of higher
revenues attributable to political advertising at both stations
and higher revenues attributable to national advertising at KATC.
The Wincom-WEBE-WICC radio group reported a net increase of
approximately $0.2 million, as increased advertising revenues at
WICC, WQAL and WEBE were mostly offset by a decrease of
approximately $0.9 million in revenues at Wincom, primarily due
to the sale of the Indianapolis Stations at the beginning of the
fourth quarter of 1993. Revenues increased by approximately $0.2
million at KORG/KEZY due primarily to increased barter revenue at
KEZY.
Revenues at California Cable decreased by approximately $0.2
million, primarily as a result of a change in policy for
accounting for franchise fees in September 1993 (approximately
$1.2 million), as well as to lower pay-per-view revenues (due to
an absence of strong event programming). The overall decrease in
revenues at California Cable occurred despite increases in basic
revenue due primarily to the positive impact of increases in
average basic subscribers. Average basic subscribers increased
to 133,926 in 1994 from 132,105 in 1993 due to successful
marketing efforts and extension of cable plant to pass additional
homes. In addition, total basic subscribers increased to 136,022
at the end of 1994 from 131,830 at the end of 1993. Reversing
recent annual trends, California Cable experienced growth in
premium subscriptions during 1994 due to heavy promotional
efforts and reduced promotional rates, especially in the second
half of the year. Total premium subscriptions increased to
77,749 at the end of 1994 from 73,625 at the end of 1993.
However, average premium subscriptions decreased to 75,687 during
1994 from 76,480 during 1993 due primarily to the relatively high
number of premium subscriptions at the beginning of 1993. The
decrease in average premium subscriptions was offset by increases
in average premium rates, resulting in flat premium revenues from
1993 to 1994.
During 1994 and 1993, Registrant incurred property operating
expenses of approximately $38.8 million and $33.8 million,
respectively, in connection with the operation of its cable,
radio and television properties. Registrant's total property
operating expenses increased by approximately $5.0 million from
year to year as a result of: an increase of approximately $2.6
million at the combined cable and radio operations of the Revised
Venture, due to the consolidation of the 1994 operating results
of the Revised Venture's radio properties on January 1, 1994
(approximately $1.7 million) and to a non-recurring adjustment to
property tax accruals in 1993 at C-ML Cable (approximately $0.9
million); an increase of approximately $2.5 million at California
Cable, due primarily to higher basic programming costs (due to
increased fees to programmers and the increased number of average
basic subscribers) and higher marketing and copyright fees
associated with rate and service restructuring in response to re-
regulation; and an increase of approximately $0.1 million at
KORG/KEZY due primarily to increased barter expense at KEZY.
These increases were partially offset by a net decrease of $0.2
million at the Wincom-WEBE-WICC group, where higher operating
expenses at WEBE and WICC (due primarily to higher sales
commissions and other expenses) were outweighed by decreased
property operating expenses at Wincom due to the sale of the
Indianapolis Stations at the beginning of the fourth quarter of
1993.
During 1994 and 1993, Registrant incurred general and
administrative expenses of approximately $20.9 million and $20.0
million, respectively. Registrant's total general and
administrative expenses increased by approximately $0.9 million
from year to year as a result of increases of approximately: $1.3
million at California Cable, due to a one-time reversal of
property tax assessments in the fourth quarter of 1993 due to a
favorable decision regarding property tax assessments (partially
offset by a decrease due primarily to reduced expenses for
franchise fees and lower property taxes); $0.4 million at the
combined cable and radio operations of the Revised Venture, due
primarily to the consolidation of the operating results of the
Revised Venture's radio properties on January 1, 1994; and
approximately $0.1 million at WREX, primarily due to increased
employee-related insurance costs. These increases were partially
offset by a decrease of approximately $0.7 million at the Wincom-
WEBE-WICC radio group primarily due to the sale of the
Indianapolis Stations at the beginning of the fourth quarter of
1993. The remaining increases or decreases at Registrant's
properties were immaterial either individually or in the
aggregate.
Registrant earned interest income of approximately $193,000 and
$147,000 during 1994 and 1993, respectively, on its working
capital balance.
Interest expense of approximately $16.0 million and $17.5 million
in 1994 and 1993, respectively, represents the cost incurred for
borrowed funds utilized to acquire various media properties. The
approximate $1.5 million decrease in interest expense is due
to:(1) the expiration of unfavorable interest rate hedge
agreements pursuant to, and lower average outstanding borrowings
under, the revised ML California Cable Credit Agreement, ($1.5
million); and (2) lower average outstanding borrowings under the
Wincom-WEBE-WICC Restructuring Agreement ($0.5 million);
partially offset by generally higher floating interest rates
under the WREX-KATC loan ($0.3 million); and increased interest
expense at C-ML Cable of $0.2 million due to consolidation of the
operating results of the Revised Venture's radio properties on
January 1, 1994.
Registrant's depreciation and amortization expense totalled
approximately $30.2 million and $31.4 million in 1994 and 1993,
respectively. This $1.2 million decrease resulted primarily
from: decreases of approximately: $1.6 million at WREX and KATC,
due primarily to full depreciation of certain equipment,
particularly at KATC during the first quarter of 1994; $0.1
million at the combined cable and radio operations of the Revised
Venture, primarily due to the consolidation of the operating
results of the Revised Venture's radio properties on January 1,
1994; $0.1 million at the Wincom-WEBE-WICC radio group due to the
sale of the Indianapolis Stations at the beginning of the fourth
quarter of 1993 outweighing increased depreciation and
amortization expense at WQAL due to equipment purchases;
partially offset by an increase of approximately $0.4 million at
California Cable, attributable to greater depreciation expense
associated with capital expenditures. The remaining increases or
decreases in depreciation and amortization expense at
Registrant's properties were immaterial, either individually or
in the aggregate.
Statement of Financial Accounting Standards No. 112
Effective January 1, 1994, Registrant adopted Statement of
Financial Accounting Standard ("SFAS") 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. SFAS No. 112 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 reasonable estimated. The
effect of the adoption of SFAS No. 112 was not material to
Registrant's financial position or results of operations as of
and for the year ending December 30, 1994.
Statement of Financial Accounting Standards No. 121
In March 1995, Financial Accounting Standards Board issued SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of". This pronouncement,
effective in 1996, establishes accounting standards for the
impairment of long-lived assets, certain identifiable
intangibles, and goodwill related to those assets to be held and
used, and for long-lived assets and certain identifiable
intangibles to be disposed of. SFAS No. 121 requires that long-
lived assets and certain identifiable intangibles to be held and
used and certain identifiable intangibles to be disposed of by an
entity be reviewed for impairment whenever events or change in
circumstances indicate that the carrying amount of an asset may
not be recoverable. The effect of adopting SFAS No. 121 will not
have a material effect on Registrant's financial position and
results of operations.
Additional Operating Information
Registrant owned cable systems that passed 221,256 homes,
provided basic cable television service to 138,864 subscribers,
and accounted for 73,500 pay units as of December 29, 1995. In
addition, Registrant holds a 50% interest in the Venture, which
in turn, through C-ML Cable, passed 272,198 homes, provided basic
cable television service to 115,655 subscribers and accounted for
73,565 pay units as of December 29, 1995. The following table
shows the numbers of basic subscribers and pay units at
Registrant's wholly-owned California Cable and at C-ML Cable:
<TABLE>
<CAPTION> As of As of As of
December 29, December 30, December 31,
1995 1994 1993
<S> <C> <C> <C>
Homes Passed
California Systems 221,256 218,992 216,328
Wholly-Owned 221,256 218,992 216,328
C-ML Cable 272,198 262,505 259,790
Basic Subscribers
California Systems 138,864 136,022 131,830
Wholly-Owned 138,864 136,022 131,830
C-ML Cable 115,655 112,228 104,677
Pay Units
California Systems 73,500 77,749 73,625
Wholly-Owned 73,500 77,749 73,625
C-ML Cable 73,565 68,735 69,319
</TABLE>
Since December 31, 1993, Registrant has experienced an overall
increase at its California Cable Systems in the number of homes
passed. Homes passed growth has been attributable primarily to
extensions of existing cable plant. The number of basic
subscribers increased from December 31, 1993 to December 29, 1995
due to the extension of cable plant to pass incremental homes and
potential new subscribers, marketing efforts, and broadly-defined
customer retention efforts including ongoing attention to
technical quality and customer service. The number of pay units
in Registrant's California Cable Systems decreased from December
31, 1993 to December 29, 1995, primarily as a result of a weak
local economy in southern California, although the number of pay
units increased from the end of 1993 to the end of 1994 due to
heavy promotional efforts and reduced promotional rates.
The overall number of homes passed by the Puerto Rico Systems
increased from the end of 1993 to the end of 1995 due primarily
to the extension of cable plant to pass incremental homes, and
the number of basic subscribers increased during the same period.
This is due to the extension of cable service to pass additional
homes, as well as to an increased level of marketing during 1994.
The number of pay units at the Puerto Rico Systems increased from
December 31, 1993 to December 29, 1995, primarily due to
aggressive marketing efforts.
As of December 29, 1995, Registrant operated seven radio stations
in three cities in the United States and one city in San Juan,
Puerto Rico. Each of Registrant's broadcast properties competes
with numerous other outlets in its area, with the number of
competing outlets varying from location to location. Stations
are rated in each market versus competitors based on the number
of viewers or listeners tuned to the various outlets in that
market.
The information below briefly describes, for each station owned
by Registrant, the number of competitors that each station faces
in its market and the station's ranking in that market, where
applicable.
Registrant's radio station WQAL-FM in Cleveland, Ohio competes
with approximately 25 other radio stations in the Cleveland
market according to Arbitron, an accepted industry source.
According to Arbitron, the station was ranked number nine in the
market in terms of listeners 12+ as of the Fall, 1995 rating
period.
Registrant's radio stations WEBE-FM and WICC-AM in Fairfield
County, Connecticut compete with approximately 45 other radio
stations in the Fairfield County market according to Arbitron.
According to Arbitron, WEBE-FM was ranked number one in Fairfield
County and WICC-AM was ranked number one in Bridgeport,
Connecticut in terms of listeners 12+ as of the Fall, 1995 rating
period.
Market rating information was not available from a reliable
source for Registrant's radio stations in San Juan, Puerto Rico.
While reliable data is available from Arbitron for Registrant's
radio stations in Anaheim, California, this information is not
available to Registrant, as it does not subscribe to Arbitron or
any other ratings service in the Anaheim market.
The above information on competition and ratings for Registrant's
broadcast properties may give a distorted view of the success of,
or competitive challenges to, each of the properties for a number
of reasons. For example, the signals of stations listed as
competitors may not be of equal strength throughout the market.
In addition, the competitive threat posed by stations that serve
essentially the same broadcast area is largely dependent upon
factors (e.g., financial strength, format, programming,
management, etc.) unknown to or outside the control of
Registrant. Finally, rating information is segmented according
to numerous demographic groups (e.g., listeners 12 +, women 25-
34, etc.), some of which are considered more attractive than
others by advertisers. Consequently, a station may be ranked
highly for one group but not another, with strength in different
groups having substantially different impacts on financial
performance. For purposes of the discussion above, the most
general type of rating was used.
Item 8. Financial Statements and Supplementary Data.
TABLE OF CONTENTS
ML Media Partners, L.P.
Independent Auditors' Report
Consolidated Balance Sheets as of December 29, 1995 and
December 30, 1994
Consolidated Statements of Operations for the three years
ended December 29, 1995
Consolidated Statements of Cash Flows for the three years
ended December 29, 1995
Consolidated Statements of Changes in Partners'
Capital/(Deficit) for the three years ended
December 29, 1995
Notes to Consolidated Financial Statements for the three
years ended December 29, 1995
Schedule I - Condensed Financial Information of Registrant
as of December 29, 1995, December 30, 1994 and
December 31, 1993
Schedule II - Valuation and Qualifying Accounts as of
December 29, 1995, December 30, 1994 and December 31, 1993
Schedules not listed are omitted because of the absence of the
conditions under which they are required or because the
information is included in the financial statements or the notes
thereto.
INDEPENDENT AUDITORS' REPORT
ML Media Partners, L.P.:
We have audited the accompanying consolidated financial
statements and the related financial statement schedules, of ML
Media Partners, L.P. (the "Partnership") and its affiliated
entities, as listed in the accompanying table of contents. These
consolidated financial statements and financial statement
schedules are the responsibility of the Partnership's general
partner. Our responsibility is to express an opinion on the
consolidated financial statements and financial statement
schedules 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 the general partner, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Partnership and its affiliated entities at December 29, 1995 and
December 30, 1994 and the results of their operations and their
cash flows for each of the three years in the period ended
December 29, 1995 in conformity with generally accepted
accounting principles. Also, in our opinion, such financial
statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present
fairly in all material respect the information set forth therein.
As discussed in Note 8 to the consolidated financial statements,
the Partnership expects that it will be unable to meet the
scheduled April 1, 1996 principal payment pursuant to the ML
California Credit Agreement. As a result of this, the maturity
of the outstanding borrowing under the ML California Credit
Agreement could be accelerated and, if so, the Partnership would
be required to satisfy the remaining loan balance ($120,148,500
as of December 29, 1995). In addition, the banks could also take
other action to enforce their rights under the ML California
Credit Agreement. Such debt is without recourse to the
Partnership.
New York, New York
March 11, 1996 (March 26, 1996 as to Note 8, Pending
Transactions)
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 29, 1995 AND DECEMBER 30, 1994
Notes 1995 1994
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents 1 $ 41,124,366 $ 26,682,289
Short-term investments held
by agent 1 - 6,000,000
Accounts receivable (net of
allowance for doubtful
accounts of $856,484 and
$808,919, respectively) 12,215,484 11,751,637
Prepaid expenses and deferred
charges (net of accumulated
amortization of $7,352,383
and $7,782,985,
respectively) 1 2,842,996 3,640,813
Property, plant and equipment
- - net 1,3 72,989,071 85,053,152
Intangible assets - net 1,4 79,636,581 102,344,420
Other assets 10 1,389,998 2,858,047
TOTAL ASSETS $210,198,496 $238,330,358
LIABILITIES AND PARTNERS'
CAPITAL/(DEFICIT):
Liabilities:
Borrowings 5,8,11 $182,821,928 $218,170,968
Accounts payable and
accrued liabilities 6 27,630,778 34,522,652
Subscriber advance payments 2,109,929 1,895,400
Total Liabilities 212,562,635 254,589,020
</TABLE>
(Continued on the following page.)
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 29, 1995 AND DECEMBER 30, 1994
(continued)
Notes 1995 1994
<S> <C> <C> <C>
Commitments and Contingencies
7,8
Partners' Capital/(Deficit):
General Partner:
Capital contributions, net of
offering expenses 1 1,708,299 1,708,299
Cumulative loss (1,593,066) (1,807,968)
Cash distribution (75,957) -
39,276 (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)
Cash distribution (7,519,760) -
Cumulative loss (157,713,346) (178,988,684)
(2,403,415) (16,158,993)
Total Partners'
Capital/(Deficit) (2,364,139) (16,258,662)
TOTAL LIABILITIES AND
PARTNERS' CAPITAL/(DEFICIT)
$ 210,198,496 $ 238,330,358
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE YEARS ENDED DECEMBER 29, 1995
Notes 1995 1994 1993
<S> <C> <C> <C> <C>
REVENUES:
Operating revenues 1 $109,214,031 $105,910,208 $100,401,671
Interest 332,181 192,875 147,466
(Loss)/Gain on
sale of assets 2 (22,802) 122,154 4,988,390
Gain on sale of
WREX 2 8,838,248 - -
Gain on sale of
KATC 2 13,958,206 - -
Total revenues 132,319,864 106,225,237 105,537,527
COSTS AND EXPENSES:
Property operating 39,301,436 38,764,954 33,764,437
General and
administrative 6,7 22,255,438 20,907,542 20,003,401
Depreciation and
amortization 1,3,4 28,086,433 30,180,011 31,419,885
Interest expense 5 19,417,987 16,046,700 17,500,965
Management fees 6 1,566,245 1,591,831 1,591,831
Other 202,085 184,955 179,455
Total costs and
expenses 110,829,624 107,675,993 104,459,974
Income/(Loss)
before provision
for income taxes
and extraordinary
item 21,490,240 (1,450,756) 1,077,553
</TABLE>
(Continued on the following page.)
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE YEARS ENDED DECEMBER 29, 1995
(continued)
Notes 1995 1994 1993
<S> <C> <C> <C> <C>
Provision for
income taxes-
Wincom 1,12 - - 190,000
Net Income/(Loss)
before
extraordinary
item 21,490,240 (1,450,756) 887,553
Extraordinary
item-gain on
extinguishment
of debt 2 - - 489,787
NET INCOME/(LOSS) $ 21,490,240 $ (1,450,756) $ 1,377,340
Per Unit of Limited
Partnership Interest:
Net Income/(Loss)
before extra-
ordinary item $ 113.17 $ (7.64) $ 4.67
Extraordinary
item - - 2.58
NET INCOME/(LOSS) $ 113.17 $ (7.64) $ 7.25
Number of Units 187,994 187,994 187,994
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 29, 1995
1995 1994 1993
<S> <C> <C> <C>
Cash flows from
operating activities:
Net income/(loss) $ 21,490,240 $(1,450,756) $ 1,377,340
Adjustments to
reconcile
net income/(loss) to
net cash provided by
operating activities:
Depreciation and
amortization 28,086,433 30,180,011 31,419,885
Bad debt expense 236,504 319,392 327,194
Equity in earnings of
joint venture - - (143,582)
Extraordinary item-gain
on extinguishment
of debt - - (489,787)
Loss/(Gain) on sale of
assets 22,802 (122,154) (4,988,390)
Gain on sale of WREX (8,838,248) - -
Gain on sale of KATC (13,958,206) - -
Changes in operating
assets and
liabilities:
Decrease/(Increase):
Short-term
investments 6,000,000 (6,000,000) -
held by agent
Accounts receivable (750,328) (2,451,478) (2,733,479)
Prepaid expenses and
deferred charges 197,004 272,316 (1,471,007)
Other assets 1,468,187 (94,528) (171,090)
(Decrease)/Increase:
Accounts payable and
accrued liabilities (10,154,531) 4,443,739 193,632
Subscriber advance
payments 214,529 (206,682) 172,655
</TABLE>
(Continued on the following page.)
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 29, 1995
(continued)
1995 1994 1993
<S> <C> <C> <C>
Net cash provided by
operating 24,014,386 24,889,860 23,493,371
activities
Cash flows from
investing activities:
Proceeds from sale of
assets 30,923 243,142 7,447,854
Purchase of property,
plant and equipment (9,282,276) (10,688,588) (10,205,727)
Intangible assets (246,699) (281,221) (322,723)
Proceeds from sale of
WREX 18,370,500 - -
Proceeds from sale of
KATC 24,500,000 - -
Net cash provided
by/(used in)
investing 33,372,448 (10,726,667) ( 3,080,596)
activities
Cash flows from
financing
activities:
Principal payments on
borrowings (35,349,040) (14,397,381) (14,874,901)
Proceeds from
borrowings - - 1,448,505
Cash distribution (7,595,717) - -
Net cash used in
financing (42,944,757) (14,397,381) (13,426,396)
activities
Net increase/
(decrease) in cash
and cash 14,442,077 (234,188) 6,986,379
equivalents
Cash and cash
equivalents at the
beginning of year 26,682,289 26,916,477 19,930,098
Cash and cash
equivalents at the
end of year $ 41,124,366 $ 26,682,289 $ 26,916,477
Cash paid for $ 21,384,422 $ 15,388,775 $ 17,246,267
interest
</TABLE>
(Continued on the following page.)
<PAGE>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 29, 1995
(continued)
Supplemental Disclosure:
Property, plant and equipment of approximately $184,000, $696,000
and $1,067,000 was acquired but not paid for as of December 29,
1995, December 30, 1994 and December 31, 1993, respectively.
Effective July 31, 1995, the Partnership sold substantially all
of the assets of Television station WREX.
Effective September 30, 1995 the Partnership sold substantially
all of the assets of television station KATC.
See Notes to Consolidated Financial Statements.
<PAGE>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL/(DEFICIT)
FOR THE THREE YEARS ENDED DECEMBER 29, 1995
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
<S> <C> <C> <C>
Partners' Deficit as
of December 25, $ (98,934) $ (16,086,312) $(16,185,246)
1992
1993:
Net Income 13,773 1,363,567 1,377,340
Partners' Deficit as
of December 31, (85,161) (14,722,745) (14,807,906)
1993
1994:
Net Loss (14,508) (1,436,248) (1,450,756)
Partners' Deficit as
of December 30, (99,669) (16,158,993) (16,258,662)
1994
1995:
Net Income 214,902 21,275,338 21,490,240
Cash Distribution (75,957) (7,519,760) (7,595,717)
Partners' Capital/
(Deficit) as of
December 29, 1995 $ 39,276 $ (2,403,415) $ (2,364,139)
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
ML MEDIA PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 29, 1995
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 amounts to $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 Partnership was formed 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.
As of December 29, 1995, the Partnership's investments in media
properties consisted of a 50% interest in Century - ML Cable
Venture (the "Revised Venture") which owns an FM (WFID-FM)and AM
(WUNO-AM) radio station combination and a background music
service in San Juan, Puerto Rico and, through its wholly-owned
subsidiary corporation, Century-ML Cable Corporation ("C-ML
Cable"), operates two cable television systems in Puerto Rico
(the "Puerto Rico Systems"); four cable television systems in
California ("California Cable" or the "California Systems"); an
FM (WEBE-FM) and AM (WICC-AM) radio station combination in
Bridgeport, Connecticut; an FM (KEZY-FM) and AM (KORG-AM) radio
station combination in Anaheim, California and Wincom
Broadcasting Corporation ("Wincom"), a corporation that owns an
FM radio station (WQAL-FM) in Cleveland, Ohio.
Basis of Accounting and Fiscal Year
The Partnership's records are maintained on the accrual basis of
accounting for financial reporting and tax purposes. Pursuant to
generally accepted accounting principles, the Partnership
recognizes revenue as various services are provided. The
Partnership consolidates its 100% interest in Wincom; its 99.999%
interests in ML California Associates, KATC Associates, WREX
Associates, WEBE Associates, WICC Associates and Anaheim Radio
Associates; and its pro rata 50% interest in the Revised Venture,
which effective January 1, 1994, also includes the operations of
C-ML Radio. All intercompany accounts have been eliminated.
The fiscal year of the Partnership ends on the last Friday of
each calendar year.
Cash and Cash Equivalents
Short-term investments which have an original maturity of ninety
days or less are considered cash equivalents.
Short-term Investments Held by Agent
At December 30, 1994, the Partnership had short-term investments
held by agent with maturities of less than 30 days.
Property and Depreciation
Property, plant and equipment is stated at cost, less accumulated
depreciation. Property, plant and equipment is depreciated using
the straight-line method over the following estimated useful
lives:
<TABLE>
<CAPTION>
<S> <C>
Machinery, Equipment and Distribution Systems 5-12 years
Buildings 15-30.5 years
Other 3-10 years
</TABLE>
Initial subscriber connection costs, as it relates to the cable
television systems, are capitalized and included as part of the
distribution systems. Costs related to disconnects and reconnects
are expensed as incurred. Expenditures for maintenance and
repairs are also expensed as incurred. Betterments, replacement
equipment and additions are capitalized and depreciated over the
remaining life of the assets.
Intangible Assets and Deferred Charges
Intangible assets and deferred charges are being amortized on a
straight-line basis over various periods as follows:
<TABLE>
<CAPTION>
<S> <C>
Franchise life of the franchise
Other Intangibles various
Deferred Costs 4-10 years
</TABLE>
The excess of cost over fair value of net assets acquired
("Goodwill") in business combinations consummated since inception
of the Partnership is being amortized to expense over forty years
using the straight-line method.
Asset Impairment
The Partnership assesses the impairment of assets on a regular
basis or immediately upon the occurrence of a significant event
in the marketplace or an event that directly impacts its assets.
The methodology varies depending on the type of asset but
typically consists of comparing the net book value of the asset
to either the undiscounted expected future cash flows generated
by the asset or the current market values obtained from industry
sources.
If the net book value of a particular asset is materially higher
than the estimated net realizable value, and the asset is
considered to be permanently impaired, the Partnership will write
down the net book value of the asset accordingly; however, the
Partnership may not write its assets down to a value below the
asset-related non-recourse debt. The Partnership relies on
industry sources and its experience in the particular marketplace
to determine whether an asset impairment is other than temporary.
Barter Transactions
As is customary in the broadcasting industry, the Partnership
engages in the bartering of commercial air time for various goods
and services. Barter transactions are recorded based on the fair
market value of the products and/or services received. The goods
and services are capitalized or expensed as appropriate when
received or utilized. Revenues are recognized when the
commercial spots are aired.
Broadcast Program Rights
The Partnership's television stations' broadcast program rights,
included in other assets as of December 30, 1994, represent
license agreements for the right to broadcast programs which are
available at the balance sheet date. Prior to the sale of the
two television stations, amortization was recorded on a straight-
line basis over the period of the license agreements or upon run
usage. (See Note 2).
Revenue Recognition
Operating revenue, as it relates to the cable television systems,
includes earned subscriber service revenues and charges for
installation and connections. Subscriber services paid for in
advance are recorded as income when earned. Operating revenue,
as it relates to the radio broadcasting properties is net of
commissions paid to advertising agencies.
Management 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.
Income Taxes
The Partnership accounts for income taxes pursuant to SFAS No.
109 "Accounting for Income Taxes". No provision for income taxes
has been made for the Partnership because all income and losses
are allocated to the partners for inclusion in their respective
tax returns. However, the Partnership owns certain entities
which are consolidated in the accompanying financial statements
and which are taxable entities.
For entities owned by the Partnership which are consolidated in
the accompanying financial statements, SFAS No. 109 requires the
recognition of deferred income taxes for the tax consequences of
differences between the bases of assets and liabilities for
income tax and financial statement reporting, based on enacted
tax laws. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be
realized. For the Partnership, SFAS No. 109 requires the
disclosure of the difference between the tax bases and the
reported amounts of the Partnership's assets and liabilities (see
Note 12).
Statement of Financial Accounting Standards No. 112
Effective January 1, 1994, the Partnership adopted Statement of
Financial Accounting Standards ("SFAS") No. 112, "Employers'
Accounting for Postemployment Benefits". 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. SFAS No. 112 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 reasonable estimated. The effect of the adoption of
SFAS No. 112 was not material to the Partnership's financial
position or results of operations as of and for the year ending
December 30, 1994.
Statement of Financial Accounting Standards No. 121
In March 1995, Financial Accounting Standards Board issued SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of". ("SFAS No. 121"). This
pronouncement, effective in 1996, establishes accounting
standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to
be held and used, and for long-lived assets and certain
identifiable intangibles to be disposed of. SFAS No. 121
requires that long-lived assets and certain identifiable
intangibles to be held and used and certain identifiable
intangibles to be disposed of by an entity be reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The
effect of adopting SFAS No. 121 will not have a material effect
on the Partnership's financial position and results of
operations.
2. DISPOSITION OF ASSETS
WREX-KATC
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, Rockford, Illinois ("WREX"), other than cash and
accounts receivable. The purchase price for the assets was
approximately $18.4 million, 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 WREX, and the balance of approximately $16.1 million
was applied to repay a portion of the bank indebtedness secured
by the assets of WREX and KATC. Quincy did not assume certain
liabilities of WREX and the Partnership will remain liable for
such liabilities. On the sale of WREX, the Partnership
recognized a gain for financial reporting purposes of
approximately $8.8.
On September 30, 1995, the Partnership completed the sale to KATC
Communications, Inc. (the "KATC Buyer") of substantially all of
the assets used in the operations of the Partnership's television
station KATC-TV, Lafayette, Louisiana ("KATC") other than cash
and accounts receivable. The KATC Buyer did not assume certain
liabilities of KATC and the Partnership will remain liable for
such liabilities. The purchase price for the assets was $24.5
million. From the proceeds of the sale, approximately $6.3
million was applied to repay in full the remaining bank
indebtedness secured by the assets of KATC; a reserve of
approximately $2.0 million was established to cover certain
purchase price adjustments and expenses and liabilities relating
to KATC; $1.0 million was deposited into an indemnity escrow
account to secure the Partnership's indemnification obligations
to the KATC Buyer; approximately $7.6 million was applied to pay
a portion of deferred fees and expenses owed to the General
Partner; and the remaining amount of approximately $7.6 million
($40 per unit) was distributed to Partners in December, 1995.
The Partnership recognized a gain for financial reporting
purposes of approximately $14.0 million on the sale of KATC in
1995.
Wincom
On April 30, 1993, WIN Communications of Indiana, Inc., a 100%-
owned subsidiary of Wincom, entered into an Asset Purchase
Agreement to sell substantially all of the assets of WCKN-AM/WRZX-
FM, Indianapolis, Indiana (the "Indianapolis Stations") to
Broadcast Alchemy, L.P.("Alchemy") for gross proceeds of
approximately $7 million. Alchemy is not affiliated with the
Partnership. The proposed sale was subject to approval by the
FCC, which granted its approval on September 22, 1993. On
October 1, 1993, the date of the sale of the Indianapolis
Stations, the net proceeds from such sale, which totalled
approximately $6.1 million, were remitted to Chemical Bank, as
required by the terms of the Restructuring Agreement, to reduce
the outstanding principal amount of the Series B Term Loan due
Chemical Bank. The Partnership recognized a gain of approximately
$4.7 million on the sale of the Indianapolis Stations. In
addition, the Partnership recognized an extraordinary gain of
approximately $490,000 as a result of the remittance to Chemical
Bank of the approximately $6.1 million net proceeds to reduce the
outstanding principal amount of the Series B Term Loan and the
simultaneous forgiveness of the entire Series C Term Loan due
Chemical Bank pursuant to the Restructuring Agreement (see Note
5). The remaining portion of the forgiveness of the Series C
Note will be amortized against interest expense over the
remaining life of the loan.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION> As of As of
December 29, December 30,
1995 1994
<S> <C> <C>
Land and Improvements $ 4,633,340 $ 5,632,210
Buildings 4,466,187 11,320,418
Cable Distribution Systems
and Equipment 178,814,721 185,566,436
Other 2,825,282 3,090,261
190,739,530 205,609,325
Less accumulated (117,750,459) (120,556,173)
depreciation
Property, plant and
equipment, net $ 72,989,071 $ 85,053,152
</TABLE>
4. INTANGIBLE ASSETS
Intangible assets consisted of the following:
<TABLE>
<CAPTION> As of As of
December 29, December 30,
1995 1994
<S> <C> <C>
Goodwill $ 82,974,909 $ 83,429,567
Franchises 109,499,044 115,497,842
FCC Broadcast Licenses - 4,746,304
Network Affiliation - 10,892,168
Contracts
Other 8,819,911 10,217,167
201,293,864 224,783,048
Less accumulated (121,657,283) (122,438,628)
amortization
Intangible assets, net $ 79,636,581 $ 102,344,420
</TABLE>
5. BORROWINGS
The aggregate amount of borrowings as reflected on the balance
sheet of the Partnership is as follows:
<TABLE>
<CAPTION> As of As of
December 29, December 30,
1995 1994
<S> <C> <C>
A)C-ML Notes/Credit $ 50,000,000 $ 50,000,000
Agreement
B)ML California Credit
Agreement 120,148,500 129,187,500
C)WREX-KATC Loan - 23,382,993
D)Restructuring
Agreement/Wincom-WEBE-WICC
Loan 12,673,428 15,600,475
$182,821,928 $218,170,968
</TABLE>
A) Borrowings under the C-ML Notes bear semi-annual interest at
a fixed annual rate of 9.47% with annual principal payments
of $20 million payable beginning November 30, 1998 and the
final principal payment due November 30, 2002. The C-ML
Notes require that C-ML Cable maintain certain ratios such
as debt to operating cash flow, interest expense coverage
and debt service coverage and restricts such items as cash
distributions and certain additional indebtedness.
Borrowings under the C-ML Notes are nonrecourse to the
Partnership and are collateralized with substantially all of
the Venture's interest in the Puerto Rico Systems, as well
as by all of the assets of the Venture, the Venture's
interest in C-ML Cable, and all of the assets of C-ML Radio.
As of December 29, 1995 and December 30, 1994, outstanding
borrowings under the C-ML Notes totalled $100 million, of
which $50 million is reflected on the Partnership's balance
sheet (see Note 10).
On September 30, 1993, C-ML Cable entered into an amendment
to the C-ML Revolving Credit Agreement whereby the
Termination Date (the date upon which all revolving credit
borrowings outstanding under the C-ML Revolving Credit
Agreement are converted into a term loan) was extended from
September 30, 1993 to December 15, 1993. Effective December
15, 1993, C-ML Cable entered into a second amendment to the
C-ML Revolving Credit Agreement whereby the debt facility
was converted into a reducing revolving credit with a final
maturity of December 31, 1998. Beginning December 31, 1993,
the amount of borrowing availability under the C-ML
Revolving Credit Agreement is reduced quarterly each year.
Outstanding amounts under the debt facility may be prepaid
at any time subject to certain conditions. As of December
29, 1995, there were no borrowings outstanding under the C-
ML Revolving Credit Agreement.
B) The ML California Credit Agreement is structured as a term
loan that is scheduled to fully amortize by September 30,
1999.
The ML California Credit Agreement contains numerous
covenants and restrictions regarding the California Media
Operations, including limitations on indebtedness,
acquisitions and divestitures of media properties, and
distributions to the Partnership. The California Media
Operations must also meet certain tests such as the ratio of
Funded Debt to Operating Cash Flow, the Fixed Charge Ratio
and the ratio of Operating Cash Flow to Debt Service, as
defined. Proceeds from the ML California Credit Agreement
are restricted to the use of the California Media Operations
and are generally not available for the working capital
needs of the Partnership.
All borrowings under the ML California Credit Agreement bear
interest at floating rates. The overall effective interest
rate for the borrowings under the revised ML California
Credit Agreement was approximately 9.55%, 5.83% and 6.48%
during 1995, 1994 and 1993, respectively. Pursuant to the
terms of the Third Amendment, dated as of December 29, 1995,
to the revised ML California Credit Agreement, the
applicable margin was increased for periods following
December 29, 1995, to 3.75% for Offshore Rate Loans and
2.75% for Reference Rate Loans.
Borrowings under the ML California Credit Agreement are
nonrecourse to the Partnership and are collateralized with
substantially all of the assets of the California Media
Operations as well as a pledge of the Partnership's interest
in Anaheim Radio Associates.
As of December 31, 1995, $120,148,500 of principal amount
was outstanding under the ML California Credit Agreement.
Pursuant to the ML California Credit Agreement, a payment of
principal in the amount of approximately $13.1 million (the
"Principal Payment") became due and payable by the
Partnership on December 29, 1995. Since the sale of the
California Cable Systems did not occur by that date (see
Note 8), the Partnership was unable to make the entire
Principal Payment, but did make a $3,555,000 partial
payment. The Banks have amended the ML California Credit
Agreement and waived the payment default on the balance of
the Principal Payment and deferred the due date of the balance
of the Principal Payment until April 1, 1996, pending a sale
of the California Cable Operations.
The Partnership expects that the sale of the California
Cable Systems will not occur by April 1, 1996 and,
therefore, the Partnership will be unable to make the
principal payment of $15,812,500 due under the ML California
Credit Agreement on such date. Accordingly, as of April 1,
1996, the Partnership expects to be in default under the
terms of the ML California Credit Agreement. However, the
Partnership and the banks party to the ML California Credit
Agreement are currently negotiating an amendment to the ML
California Credit Agreement to defer the April 1, 1996
principal payment due date. The Partnership has advised the
banks that it will continue its attempts to consummate the
Asset Purchase Agreement with Century assuming approval of
the Anaheim Transfer becomes final. Although such
negotiations with the banks continue, no assurances can be
given that the Partnership will be successful in its attempt
to obtain an amendment to the ML California Credit
Agreement. Should such amendment not be obtained, upon such
default the banks may accelerate the payment obligations
with respect to the full amount owing under the ML
California Credit Agreement and take other action to enforce
their rights under the ML California Credit Agreement.
C) The WREX-KATC Loan was repaid in 1995 with the proceeds from
the sale of WREX-KATC (see Note 2).
D) On July 30, 1993, the Partnership and Chemical Bank executed
an amendment to the Wincom-WEBE-WICC Loan (the
"Restructuring Agreement"), effective January 1, 1993, which
cured all previously outstanding principal and interest
payment and covenant defaults pursuant to the Wincom-WEBE-
WICC Loan. In addition, as part of the restructuring
process, the Partnership agreed to sell substantially all of
the assets of the Indianapolis Stations (see Note 2).
The Restructuring Agreement provided for the outstanding
principal and interest due Chemical Bank as of December 31,
1992 (approximately $24.7 million and $2.0 million,
respectively) to be divided into three notes as follows: a
Series A Term Loan in the amount of $13 million; a Series B
Term Loan in the amount of approximately $11.7 million; and
a Series C Term Loan in the amount of approximately $2.0
million (which represented all the accrued interest
outstanding under the Wincom-WEBE-WICC Loan as of December
31, 1992).
The Series A Term Loan bears interest, payable monthly, at
Chemical Bank's Alternate Base Rate plus 1-3/4% effective
January 1, 1993, with principal payments due quarterly in
increasing amounts beginning March 31, 1994 and continuing
through the final maturity at December 31, 1997. Additional
principal payments are also required annually from Excess
Cash Flow, as defined. There was approximately $10.3
million outstanding under the Series A Term Loan as of
December 29, 1995.
The Series B Term Loan bears interest at a rate equal to
Chemical Bank's Alternate Base Rate plus 1-3/4% beginning on
April 30, 1994, with interest payments accruing, and payable
annually only from Excess Cash Flow. As of December 29,
1995, there was approximately $2.4 million of principal due
under the Series B Term Loan. The remaining principal
amount of the Series B Term Loan is due on December 31,
1997.
The Series C Term Loan was to bear interest at a fixed rate
equal to 6% per annum beginning April 30, 1994, with
interest payments accruing, and payable annually only from
Excess Cash Flow. As a result of the principal payment made
on the Series B Term Loan from the net proceeds from the
sale of the Indianapolis Stations exceeding $6 million, the
full principal amount of the Series C Term Loan was forgiven
by Chemical Bank on October 1, 1993 pursuant to the terms of
the Restructuring Agreement (see Note 2).
The Wincom-WEBE-WICC Loan required that the Wincom-WEBE-WICC
group maintain minimum covenant levels of certain ratios
such as debt to operating profit and debt service coverage,
and restricts such items as: cash; the payment of management
fees, distributions or dividends; additional indebtedness;
or asset sales by or at Wincom, WEBE-FM or WICC-AM. The
Wincom-WEBE-WICC Loan also included other standard and usual
loan covenants. Borrowings under the Wincom-WEBE-WICC Loan
are nonrecourse to the Partnership and are collateralized
with substantially all of the assets of the Wincom-WEBE-WICC
group.
After principal and interest due under the Series A Term
Loan and the Series B Term Loan have been satisfied in full,
any remaining cash proceeds generated from the operations
of, or the sale proceeds from the sale of, the stations in
the Wincom-WEBE-WICC Group will be divided between the
Partnership and Chemical Bank, with the Partnership
receiving 85% and Chemical Bank receiving 15%, respectively.
As of December 29, 1995, the Partnership was in full
compliance with all covenants under the Restructuring
Agreement.
Registrant does not have sufficient cash to meet all of its
contractual debt obligations of all of its investments,
however such debt obligations are recourse only to specified
assets. Registrant does not currently expect to, nor is it
obligated to, advance any of its unrestricted working
capital to California Cable Systems.
<PAGE>
At December 29, 1995, the annual aggregate amounts of principal
payments (without considering potential accelerations made
possible by defaults) required for the borrowings as reflected in
the consolidated balance sheet of the Partnership are as follows:
<TABLE>
<CAPTION>
<S> <C>
Year Ending Principal Amount
1996 $ 32,350,000
1997 40,198,428
1998 44,687,500
1999 35,586,000
2000 10,000,000
Thereafter 20,000,000
$182,821,928
</TABLE>
Based upon the restrictions of the borrowings as described above,
approximately $198,843,475 million of assets are restricted from
distribution by the entities in which the Partnership has an
interest at December 29, 1995.
<PAGE>
6. TRANSACTIONS WITH THE GENERAL PARTNER AND ITS AFFILIATES
During the three years ended December 29, 1995 the Partnership
incurred the following expenses in connection with services
provided by the General Partner and its affiliates:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Media Management
Partners (General
Partner)
Partnership Mgmt. fee $ 557,979 $ 557,979 $ 557,979
Property Mgmt. fee 1,008,266 1,033,852 1,033,852
Reimbursement of
Operating Expenses 1,039,772 993,622 1,074,071
$ 2,606,017 $2,585,453 $2,665,902
</TABLE>
In addition, the Partnership, through the California Cable
Systems, is party to an agreement with MultiVision Cable TV Corp.
("MultiVision"), an affiliate of the General Partner, whereby
MultiVision provides the California Cable Systems with certain
administrative services. The reimbursed cost charged to the
California Cable Systems for these services amounted to an
aggregate of $2,629,560 for 1995, $1,937,332 for 1994, and
$1,481,562 for 1993. These costs do not include programming
costs that are charged, without markup, to the California Cable
Systems under an agreement to allocate certain management costs.
Approximately $7.6 million of the proceeds from the sale of KATC
were applied to pay a portion of deferred fees and expenses owed
to the General Partner. The Partnership paid $1.0 million to the
General Partner representing partial payment for third and fourth
quarter management fees and out-of-pocket expenses. As of
December 29, 1995 and December 30, 1994, the amounts payable to
the General Partner were approximately $7.9 million and $14.1
million, respectively.
<PAGE>
7. COMMITMENTS AND CONTINGENCIES
Lease Commitments
C-ML Cable rents office and warehouse facilities under various
operating lease agreements. In addition, Wincom, the Anaheim
Radio Stations, KATC-TV, WEBE-FM and WICC-AM lease office space,
broadcast facilities and certain other equipment under various
operating lease agreements. The California Systems rent office
space, equipment, and space on utility poles under operating
leases with terms of less than one year, or under agreements
which are generally terminable on short notice. Rental expense
was incurred as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
California Systems $ 377,186 $ 360,417 $ 355,311
KATC-TV 8,250 13,199 19,011
WICC-AM 105,182 105,182 105,182
Anaheim Radio Stations 136,260 120,453 120,672
WEBE-FM 147,587 166,362 164,715
Wincom 151,477 152,844 196,337
$ 925,942 $ 918,457 $ 961,228
</TABLE>
Future minimum commitments under all of the above agreements in
excess of one year are as follows:
<TABLE>
<CAPTION>
<S> <C>
Year Ending Amount
1996 $ 631,012
1997 553,076
1998 460,946
1999 465,720
2000 272,019
Thereafter 1,533,596
$ 3,916,369
</TABLE>
<PAGE>
8. PENDING TRANSACTION
California Cable
On November 28, 1994, the Partnership entered into an agreement
(as heretofore amended, supplemented or otherwise modified, the
"Asset Purchase Agreement") with Century Communications Corp.
("Century") where, among other things, the Partnership agreed to
sell and Century agreed to buy substantially all of the assets
used in the Partnership's California Cable operations (the
"California Cable Operations") serving the Anaheim, Hermosa
Beach/Manhattan Beach, Rohnert Park/Yountville and Fairfield
communities (the "California Cable Systems"). The base purchase
price specified in the Asset Purchase Agreement for the
California Cable Systems is $286 million, subject to reduction by
an amount equal to 11 times the amount, if any, 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 purchase and sale of the California Cable Operations (the
"Closing") is subject to the satisfaction of certain enumerated
conditions precedent set forth in the Asset Purchase Agreement,
including obtaining a transfer or extension from the appropriate
municipal authorities that issue the franchises for the
California Cable Systems, including renewals of the franchises
for the Anaheim and Villa Park communities.
As of December 29, 1995, all such approvals had been obtained,
other than the transfer/renewal approvals for the Anaheim and
Villa Park communities. After several months of negotiations,
the Partnership and Century had been unable to reach agreement
with the City of Anaheim and the City of Villa Park regarding the
terms of the renewal of each City's franchise, and therefore
Century agreed to waive the condition precedent of obtaining a
renewal of such franchises and was requiring instead a transfer
to Century of the Anaheim franchise (the "Anaheim Transfer") and
a transfer to Century of the Villa Park franchise (the "Villa
Park Transfer").
The Asset Purchase Agreement provides that the Partnership and
Century each have the right to terminate the Asset Purchase
Agreement if the Closing did not occur by December 31, 1995 (the
"Optional Termination Date"). Accordingly, as of January 1,
1996, each party became vested with the right to elect to
terminate the Asset Purchase Agreement. The parties sought to
reach agreement with regard to an extension of the Optional
Termination Date but were unable to finalize such agreement.
Nevertheless, on January 17, 1996, the Partnership notified
Century that if the Closing does not occur on or before March 29,
1996, the Partnership will terminate the Asset Purchase Agreement
as of that date. However, the Partnership does not intend to
terminate the Asset Purchase Agreement on March 29, 1996 and will
continue its attempts to consummate the Asset Purchase Agreement
with Century.
The Partnership, Century and the City of Anaheim have reached
agreement on the terms of the Anaheim Transfer and the Anaheim
Transfer has been approved; the approval will become final on
April 4, 1996 unless a legally sufficient objection is raised
under the Anaheim City Charter procedure for a public referendum.
The Partnership, Century and Villa Park have also reached
agreement on the terms of the Villa Park Transfer and the Villa
Park Transfer was approved by the Villa Park City Council on
March 26, 1996.
No assurances can be given that the Anaheim Transfer will become
final or the other conditions precedent necessary to enable the
Closing to occur will occur. Accordingly, no assurances can be
given that the sale of the California Cable Systems under the
Asset Purchase Agreement will be consummated.
As of December 31, 1995, $120,148,500 of principal amount was
outstanding under the ML California Credit Agreement. Pursuant
to the ML California Credit Agreement, a payment of principal in
the amount of approximately $13.1 million (the "Principal
Payment") became due and payable by the Partnership on December
29, 1995. Since the Sale of the California Cable Systems did not
occur by that date, the Partnership was unable to make the entire
Principal Payment, but did made a $3,555,000 partial payment.
The Banks have amended the ML California Credit Agreement to
waive the payment default on the balance of the Principal Payment
and defer the due date of the balance of the Principal Payment
until April 1, 1996, pending a sale of the California Cable
Operations.
The Partnership expects that the sale of the California Cable
Systems will not occur by April 1, 1996 and, therefore, the
Partnership will be unable to make the principal payment of
$15,812,500 due under the ML California Credit Agreement on such
date. Accordingly, as of April 1, 1996, the Partnership expects
to be in default under the terms of the ML California Credit
Agreement. However, the Partnership and the banks party to the
ML California Credit Agreement are currently negotiating an
amendment to the ML California Credit Agreement to defer the
April 1, 1996 principal payment due date. The Partnership has
advised the banks that it will continue its attempts to
consummate the Asset Purchase Agreement with Century assuming
approval of the Anaheim Transfer becomes final. Although such
negotiations with the banks continue, no assurances can be given
that the Partnership will be successful in its attempt to obtain
an amendment to the ML California Credit Agreement. Should such
amendment not be obtained, upon such default the banks may
accelerate the payment obligations with respect to the full
amount owing under the ML California Credit Agreement and take
other action to enforce their rights under the ML California
Credit Agreement.
<PAGE>
9. SEGMENT INFORMATION
The following analysis provides segment information for the two
main industries in which the Partnership operates. The Cable
Television Systems segment consists of the Partnership's 50%
share of C-ML Cable and the California Systems. The Television &
Radio Stations segment consists of KATC-TV until its sale on
September 30, 1995, WREX-TV until its sale on July 31, 1995, WEBE-
FM, Wincom, WICC-AM, the Anaheim Radio Stations, and the
Partnership's 50% share of the C-ML Radio Stations.
<TABLE>
<CAPTION>
Cable Television
Television and Radio
1995 Systems Stations Total
<S> <C> <C> <C>
Operating Revenue $ 81,242,427 $ 27,971,604 $109,214,031
Operating expenses
before Gain on sale of
WREX and KATC (65,687,910) (22,878,517) (88,566,427)
Gain on sale of WREX - 8,838,248 8,838,248
Gain on sale of KATC - 13,958,206 13,958,206
Loss on sale of assets (22,802) - (22,802)
Operating Income 15,531,715 27,889,541 43,421,256
Plus: depreciation and
amortization 25,986,951 2,099,482 28,086,433
Operating income before
depreciation and
amortization 41,518,666 29,989,023 71,507,689
Less: depreciation and
amortization (25,986,951) (2,099,482) (28,086,433)
Operating Income $ 15,531,715 $ 27,889,541 43,421,256
Interest Income 332,181
Interest Expense (19,417,987)
Partnership General
Expenses, net (2,845,210)
Net Income $ 21,490,240
(Continued on the following page.)
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Cable Television
Television and Radio
1995 Systems Stations Total
<S> <C> <C> <C>
Identifiable Assets $161,967,792 $ 44,221,534 $206,189,326
Partnership Assets 4,009,170
Total $210,198,496
Capital Expenditures $ 8,850,903 $ 431,373 $ 9,282,276
Depreciation and
Amortization $ 25,986,951 $ 2,099,482 $ 28,086,433
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cable Television
Television and Radio
1994 Systems Stations Total
<S> <C> <C> <C>
Operating Revenue $ 76,549,818 $ 29,360,390 $105,910,208
Operating expenses
before gain on sale of
assets (66,605,154) (25,132,667) (91,737,821)
Gain on sale of assets 122,154 - 122,154
Operating Income 10,066,818 4,227,723 14,294,541
Plus: depreciation and
amortization 26,295,664 3,871,986 30,167,650
Operating income before
depreciation and
amortization 36,362,482 8,099,709 44,462,191
Less: depreciation and
amortization (26,295,664) (3,871,986) (30,167,650)
Operating Income $ 10,066,818 $ 4,227,723 14,294,541
Interest Income 192,875
Interest Expense (16,046,700)
Partnership General
Expenses, net 108,528
Net Loss $ (1,450,756)
</TABLE>
(Continued on the following page.)
<PAGE>
<TABLE>
<CAPTION>
Cable Television
Television and Radio
1994 Systems Stations Total
<S> <C> <C> <C>
Identifiable Assets $174,323,336 $ 59,402,010 $233,725,346
Partnership Assets 4,605,012
Total $238,330,358
Capital Expenditures $ 8,950,367 $ 1,354,113 $ 10,304,480
Depreciation and
Amortization $ 26,295,664 $ 3,871,986 30,167,650
Partnership
Depreciation and
Amortization 12,361
Total $ 30,180,011
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cable Television
Television and Radio
1993 Systems Stations Total
<S> <C> <C> <C>
Operating Revenue $ 75,403,956 $ 24,997,715 $100,401,671
Operating expenses
before gain on sale of
assets (60,907,083) (24,933,540) (85,840,623)
Gain on sale of assets 272,872 4,715,518 4,988,390
Operating Income 14,769,745 4,779,693 19,549,438
Plus: depreciation and
amortization 26,064,361 5,352,429 31,416,790
Operating income before
depreciation and
amortization 40,834,106 10,132,122 50,966,228
Less: depreciation and
amortization (26,064,361) (5,352,429) (31,416,790)
Operating Income $ 14,769,745 $ 4,779,693 19,549,438
Interest Income 147,466
Interest Expense (17,500,965)
Partnership General
Expenses, net (1,451,968)
Equity in income of
subsidiary 143,582
Extraordinary item- gain
on extinguishment of
debt 489,787
Net Income $ 1,377,340
</TABLE>
(Continued on the following page.)
<PAGE>
<TABLE>
<CAPTION>
Cable Television
Television and Radio
1993 Systems Stations Total
<S> <C> <C> <C>
Identifiable Assets $190,242,858 $ 53,882,827 $244,125,685
Partnership Assets 5,726,252
Total $249,851,937
Capital Expenditures $ 9,652,316 $ 530,093 $ 10,182,409
Depreciation and
Amortization $ 26,064,361 $ 5,352,429 $ 31,416,790
Partnership Depreciation
and Amortization
3,095
Total $ 31,419,885
</TABLE>
<PAGE>
10. JOINT VENTURES
Pursuant to a management agreement and joint venture agreement
dated December 16, 1986 (the "Joint Venture Agreement"), as
amended and restated, between the Partnership and Century (the
"Venture"), the parties formed a joint venture in which each has
a 50% ownership interest. The Venture subsequently acquired and
operated Cable Television Company of Greater San Juan, Inc. ("San
Juan Cable"). The Venture also acquired all of the assets of
Community Cable-Vision of Puerto Rico, Inc., Community
Cablevision of Puerto Rico Associates, and Community Cablevision
Incorporated ("Community Companies"), which consisted of a cable
television system serving the communities of Catano, Toa Baja and
Toa Alta, Puerto Rico, which are contiguous to San Juan Cable.
The Community Companies and San Juan Cable are collectively
referred to as C-ML Cable.
On February 15, 1989, the Partnership and Century entered into a
Management Agreement and joint venture agreement whereby C-ML
Radio was formed as a joint venture and responsibility for the
management of radio stations acquired by C-ML Radio was assumed
by the Partnership.
Effective January 1, 1994, all of the assets of C-ML Radio were
transferred to the Venture, in exchange for the assumption by the
Venture of all the obligations of C-ML Radio and the issuance to
Century and the Partnership by the Venture of new certificates
evidencing a partnership interest of 50% and 50%, respectively.
The transfer was made pursuant to a Transfer of Assets and
Assumption of Liabilities Agreement. At the time of this
transfer, the Partnership and Century entered into an amended and
restated management agreement and joint venture agreement (the
"Revised Joint Venture Agreement") governing the affairs of the
revised Venture (herein referred to as the "Revised Venture").
Under the terms of the Revised Joint Venture Agreement, Century
is responsible for the day-to-day operations of the C-ML Cable
Systems and the Partnership is responsible for the day-to-day
operations of the C-ML Radio properties. For providing services
of this kind, Century is entitled to receive annual compensation
of 5% of the Puerto Rico Systems' net gross revenues (defined as
gross revenues from all sources less monies paid to suppliers of
pay TV product, e.g., HBO, Cinemax, Disney and Showtime) and the
Partnership is entitled to receive annual compensation of 5% of
the C-ML Radio properties' gross revenues (after agency
commissions, rebates or discounts and excluding revenues from
barter transactions). All significant policy decisions relating
to the Venture, the operation of the Puerto Rico Systems and the
operation of the C-ML Radio properties, however, will only be
made upon the concurrence of both the Partnership and Century.
The Partnership may require a sale of the assets and business of
C-ML Cable or the C-ML Radio properties at any time. If the
Partnership proposes such a sale, the Partnership must first
offer Century the right to purchase the Partnership's 50%
interest in the assets being sold at 50% of the total fair market
value at such time as determined by independent appraisal. If
Century elects to sell either the C-ML Cable or the C-ML Radio
properties, the Partnership may elect to purchase Century's
interest in the assets being sold on similar terms.
The total assets, total liabilities, net capital, total revenues
and net loss of the Revised Venture (which does not include C-ML
Radio for the year ended December 31, 1993 during which time such
investment was accounted for under the equity method) are as
follows:
<TABLE>
<CAPTION>
December 29, December 30,
1995 1994
<S> <C> <C>
Total Assets $ 123,800,000 $118,600,000
Total Liabilities $ 115,700,000 $114,700,000
Net Capital $ 8,100,000 $ 3,900,000
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Total Revenues $ 53,800,000 $ 48,600,000 $ 40,400,000
Net $ 4,600,000 $ 1,200,000 $ (300,000)
Income/(Loss)
</TABLE>
<PAGE>
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement on Financial Accounting Standards No. 107, "Disclosures
about Fair Value of Financial Instruments", requires companies to
report the fair value of certain on- and off-balance sheet assets
and liabilities which are defined as financial instruments.
Considerable judgment is required in interpreting data to develop
the estimates of fair value. Accordingly, the estimates presented
herein are not indicative of the amounts that the Partnership
could realize in a current market exchange. The use of different
market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.
Assets, including cash and cash equivalents and accounts
receivable, and liabilities, such as trade payables, are carried
at amounts which approximate fair value.
The General Partner has been able to determine the estimated fair
value of the C-ML Notes based on a discounted cash flow analysis.
As of December 29, 1995 and December 30, 1994, the estimated fair
value of the C-ML Notes is approximately $110 million and $94
million, respectively, of which approximately 50% of the
estimated fair value or $55 million and $47 million, respectively
pertains to the carrying amount reflected on the Partnership's
Consolidated Balance Sheet.
The General Partner has been able to estimate the fair value of
the revised ML California Credit Agreement based on (i) the price
at which the Partnership expects to sell the California Cable
Systems to Century; and (ii) the floating rate nature of all
borrowings outstanding under the revised ML California Credit
Agreement. Based on this analysis, the General Partner
determined that, as of December 29, 1995 and December 30, 1994,
the estimated fair value of the revised ML California Credit
Agreement approximated its carrying value.
The General Partner has determined that the carrying value of the
Wincom-WEBE-WICC Restructuring Agreement approximates fair value
due to the floating rate nature of the outstanding borrowings as
of December 29, 1995 and December 30, 1994.
12. INCOME TAXES
<PAGE>
Certain entities owned by the Partnership are taxable entities
and thus are required under SFAS No. 109 to recognize deferred
income taxes. The components of the net deferred tax asset are
as follows:
<TABLE>
<CAPTION> As of As of
December 29, December 30,
1995 1994
<S> <C> <C>
Deferred tax assets:
Basis of intangible assets $ 95,553 $ 151,933
Net operating loss carryforward 20,834,250 26,361,367
Alternative minimum tax credit 80,165 76,000
Other 28,964 16,652
21,038,932 26,605,952
Deferred tax liability:
Basis of property, plant and
equipment (46,756) (83,530)
Total 20,992,176 26,522,422
Less: valuation allowance (20,992,176) (26,522,422)
Net deferred tax asset $ 0 $ 0
</TABLE>
There is no provision for income taxes required for the years
ended December 29, 1995 and December 30, 1994. The change in the
deferred tax asset of approximately $5.6 million relates
primarily to the utilization and expiration of net operating loss
carryforwards and was fully offset by a reduction in the deferred
tax liability and valuation allowance.
The components of the provision for income taxes for the year
ended December 31, 1993 relate to Wincom and are as follows:
<TABLE>
<CAPTION>
<S> <C>
Federal:
Current $ 100,000
Deferred 0
$ 100,000
State and Local:
Current $ 90,000
Deferred 0
$ 90,000
Total Provision $ 190,000
</TABLE>
At December 30, 1995, the taxable entities have available net
operating loss carryforwards of approximately $53.0 million which
may be applied against future taxable income. Such net operating
loss carryforwards expire at various dates from 1996 through
2007.
<PAGE>
For the Partnership, the differences between the tax bases of
assets and liabilities and the reported amounts are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
As of As of
December 29, December 30,
1995 1994
Partners' Deficit - financial
statements $ (2,364,139) $ (16,258,662)
Differences:
Offering expenses 19,063,585 19,063,585
Basis of property, plant and
equipment and intangible assets
(37,430,057) (47,602,928)
Cumulative losses of stock
investments (corporations) 74,080,793 77,536,460
Nondeductible management fees 5,588,444 9,941,987
Other 585,037 1,783,712
Partners' Capital - income tax
basis $ 59,523,663 $ 44,464,154
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
AS OF DECEMBER 29, 1995 AND DECEMBER 30, 1994
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ML Media Partners, L.P.
Condensed Balance Sheets
as of December 29, 1995 and December 30, 1994
Notes 1995 1994
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents 3 $ 3,848,741 $ 4,566,730
Accrued interest 9,412 38,282
Accounts receivable 151,016 -
Investment in Subsidiaries 1,2 1,524,730 (7,260,541)
TOTAL ASSETS 5,533,899 (2,655,529)
LIABILITIES AND PARTNERS'
CAPITAL/(DEFICIT):
Liabilities:
Accounts payable and accrued
liabilities $ 7,898,038 $ 13,603,133
Partners' Capital/(Deficit):
General Partner:
Capital contributions, net
of offering expenses 1,708,299 1,708,299
Cash distribution (75,957) -
Cumulative loss (1,593,066) (1,807,968)
39,276 (99,669)
Limited Partners:
Capital contributions, net
of offering expenses
(187,994 Units of Limited
Partnership Interest) 169,121,150 169,121,150
Tax allowance cash
distribution (6,291,459) (6,291,459)
Cash distribution (7,519,760) -
Cumulative loss (157,713,346) (178,988,684)
(2,403,415) (16,158,993)
Total Partners'
Capital/(Deficit) (2,364,139) (16,258,662)
TOTAL LIABILITIES AND
PARTNERS' CAPITAL/(DEFICIT)
$ 5,533,899 $ (2,655,529)
</TABLE>
See Notes to Condensed Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
FOR THE THREE YEARS ENDED DECEMBER 29, 1995
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Cont'd)
ML Media Partners, L.P.
Condensed Statements of Operations
For the Three Years Ended December 29, 1995
NOTE 1995 1994 1993
S
<S> <C> <C> <C> <C>
REVENUES:
Service fee
income from C-ML
Radio $ 210,694 $ 235,120 $ 198,977
Interest 332,181 192,875 147,466
Gain on sale of
WREX 8,838,248 - -
Gain on sale of
KATC 13,958,206 - -
Total revenues 23,339,329 427,995 346,443
COSTS AND
EXPENSES:
General and
administrative 1,278,965 1,409,380 1,409,387
Amortization - 12,361 3,095
Management fees
to general
partner 1,566,245 1,591,831 1,591,831
Total costs and
expenses 2,845,210 3,013,572 3,004,313
Share of
subsidiaries'
income before
provision for
income taxes and
extra-ordinary
item 2 996,121 1,134,821 3,735,423
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
FOR THE THREE YEARS ENDED DECEMBER 29, 1995
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Cont'd)
ML Media Partners, L.P.
Condensed Statements of Operations
For the Three Years Ended December 29, 1995
(Continued)
NOTE 1995 1994 1993
S
<S> <C> <C> <C> <C>
Income/(Loss)
before provision
for income taxes
and extra-
ordinary item 21,490,240 (1,450,756) 1,077,553
Provision for
income taxes of
subsidiary - - (190,000)
Extraordinary item-
gain on
extinguishment of
debt of
subsidiaries - - 489,787
NET INCOME/(LOSS) $21,490,240 $(1,450,756) $ 1,377,340
</TABLE>
See Notes to Condensed Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
FOR THE THREE YEARS ENDED DECEMBER 29, 1995
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Cont'd)
ML Media Partners, L.P.
Condensed Statements of Cash Flows
For the Three Years Ended December 29, 1995
1995 1994 1993
Cash flows from operating activities:
<S> <C> <C> <C>
Net income/(loss) $ 21,490,240 $ (1,450,756) $ 1,377,340
Adjustments to
reconcile net
income/(loss) to net
cash(used in)/
provided by operating
activities:
Amortization - 12,361 3,095
Gain on sale of WREX (8,838,248) - -
Gain on sale of KATC (13,958,248) - -
Share of subsidiaries'
net loss before
provision for income
taxes and
extraordinary item
(996,121) (1,134,821) (3,735,423)
Share of subsidiaries'
provision for income
taxes
- - 190,000
Share of subsidiaries'
extraordinary item
- - (489,787)
Change in operating
assets and
liabilities:
Decrease/(Increase):
Accrued interest 28,869 (26,377) (7,729)
Continued on the following page.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
FOR THE THREE YEARS ENDED DECEMBER 29, 1995
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Cont'd)
ML Media Partners, L.P.
Condensed Statements of Cash Flows
For the Three Years Ended December 29, 1995
1995 1994 1993
<S> <C> <C> <C>
Accounts receivable (151,016) - -
Other assets - - (143,582)
(Decrease)/Increase in
accounts payable and
accrued liabilities
(5,827,253) 2,729,100 2,695,073
Net cash (used
in)/provided by
operating activities (8,251,777) 129,507 (111,013)
Cash flows from
investing activities:
Net increase in
investment in
subsidiaries - - 295,834
Net proceeds from sale
of WREX and KATC
15,129,505
Cash distributions (7,595,717) - -
Net cash provided by
investing activities 7,533,788 - 295,834
Net
(decrease)/increase
in cash and cash
equivalents (717,989) 129,507 184,821
Cash and cash
equivalents at
beginning of year 4,566,730 4,437,223 4,252,402
Cash and cash
equivalents at end of
year $ 3,848,741 $ 4,566,730 $ 4,437,223
</TABLE>
See Notes to Condensed Financial Statements.
<PAGE>
ML MEDIA PARTNERS, L.P.
FOR THE THREE YEARS ENDED DECEMBER 29, 1995,
Schedule I CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(Cont'd)
ML Media Partners, L.P.
Notes To Condensed Financial Statements
For the Three Years Ended December 29, 1995
1. Organization
As of December 29, 1995, ML Media Partners, L.P. (the
"Partnership") wholly-owned Wincom, WEBE-FM, WICC-AM, the
California Systems and the Anaheim Radio Stations. In addition,
the Partnership wholly-owned KATC-TV for all of 1993 and 1994 and
a 273-day period in 1995, and WREX-TV for all of 1993 and 1994
and a 212-day period in 1995. The Partnership also has a 99.999%
interest in KATC Associates, WREX Associates, WEBE Associates,
WICC Associates, Anaheim Radio Associates, and ML California
Associates; as well as a 50% interest in The Venture (see Note 10
to the consolidated financial statements). All of the preceding
investments shall herein be referred to as the "Subsidiaries".
2. Investment in Subsidiaries
The Partnership's investment in the Subsidiaries is accounted for
under the equity method in the accompanying condensed financial
statements.
The following is a summary of the financial position and results
of operations of the Subsidiaries:
<TABLE>
<CAPTION> As of As of
December 29, December 30,
1995 1994
<S> <C> <C>
Assets $ 206,189,326 $ 233,725,346
Liabilities (204,664,596) (240,985,887)
Investment in Subsidiaries $ 1,524,730 $ (7,260,541)
</TABLE>
<PAGE>
ML MEDIA PARTNERS, L.P.
FOR THE THREE YEARS ENDED DECEMBER 29, 1995,
Schedule I CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(Cont'd)
ML Media Partners, L.P.
Notes To Condensed Financial Statements
For the Three Years Ended December 29, 1995
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 29, December 30, December 31,
1995 1994 1993
<S> <C> <C> <C>
Operating revenue $109,214,031 $105,910,208 $100,202,694
Share of
subsidiaries'
income before
provision for
income taxes and
extraordinary 996,121 1,134,821 3,735,423
item
Provision for
income taxes of
subsidiaries - - (190,000)
Extraordinary item-
gain on
extinguishment of
debt of
subsidiaries - - 489,787
Share of
subsidiaries'
Net Income $ 996,121 $ 1,134,821 $ 4,035,210
</TABLE>
<PAGE>
ML MEDIA PARTNERS, L.P.
FOR THE THREE YEARS ENDED DECEMBER 29, 1995
Schedule I CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(Cont'd)
ML MEDIA PARTNERS, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 29, 1995
3. Cash and Cash Equivalents
At December 29, 1995, the Partnership had $3,848,741 in cash and
cash equivalents, of which $3,752,736 was invested in commercial
paper. In addition, the Partnership had $96,005 in cash. These
funds are held in reserve for the operating requirements of the
Partnership.
At December 30, 1994, the Partnership had $4,566,730 in cash and
cash equivalents, of which $4,550,590 was invested in commercial
paper. In addition, the Partnership had $16,140 invested in
cash. These funds were held in reserve for the operating
requirements of the Partnership.
<PAGE>
ML MEDIA PARTNERS, L.P.
AS OF DECEMBER 29, 1995, DECEMBER 30, 1994 AND DECEMBER 31, 1993
Schedule II Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Additions
Charged to
Balance at Costs and
Beginning of Expenses or Deductions and Balance at
Perio Period Other Other End of
d Accounts Period
Intangible Assets
<S> <C> <C> <C> <C>
1995 $122,438,628 $10,186,422 $(10,967,767) (2) $121,657,283
1994 $111,069,407 $11,369,221 $ - $122,438,628
1993 $112,996,421 $11,163,146 $(13,090,160) (1) $111,069,407
Prepaid Expenses and Deferred Charges
1995 $ 7,782,985 $ 487,245 $ (917,847) (3) $ 7,352,383
1994 $ 7,241,087 $ 545,574 $ (3,676) $ 7,782,985
1993 $ 6,601,766 $ 682,666 $ (43,344) $ 7,241,088
</TABLE>
(1) Deductions and Other for Intangible Assets consists of the
accumulated amortization of intangible assets related to the
sale of the Indianapolis Stations in the amount of
$13,090,160 (see Note 2).
(2) Deductions and Other for Intangible Assets consists of the
accumulated amortization of intangible assets related to the
sale of television stations WREX and KATC in the amount of
$10,967,767 (see Note 2).
(3) Deductions and Other for Prepaid Expenses and Deferred
Charges consists of the accumulated amortization of prepaid
expenses and deferred charges related to the sale of
television stations WREX and KATC in the amount of $917,847
(see Note 2).
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
Part III.
Item 10. Directors and Executive Officers of the Registrant.
Registrant has no executive officers or directors. The General
Partner manages Registrant's affairs and has general
responsibility and authority in all matters affecting its
business. The responsibilities of the General Partner are
carried out either by executive officers of RP Media Management
or ML Media Management Inc. acting on behalf of the General
Partner. The executive officers and directors of RP Media
Management and ML Media Management Inc. are:
RP Media Management (the "Management Company")
Served in Present
Capacity
Name Since (1) Position Held
I. Martin Pompadur 1/01/86 President, Chief Executive
Officer, Chief Operating
Officer, Secretary,
Director
Elizabeth McNey Yates 4/01/88 Executive Vice President
(1) The Director hold office until his successor is elected and
qualified. All officers serve at the pleasure of the Board
of Director.
ML Media Management Inc. ("MLMM")
Served in Present
Capacity
Name Since (1) Position Held
Kevin K. Albert 02/19/91 President
12/16/85 Director
Robert F. Aufenanger 02/02/93 Executive Vice President
03/28/88 Director
Michael E. Lurie 08/10/95 Vice President
08/11/95 Director
Steven N. Baumgarten 02/02/93 Vice President
David G. Cohen 08/11/95 Vice President
Diane T. Herte 08/11/95 Treasurer
(1) Directors hold office until their successors are elected and
qualified. All executive officers serve at the pleasure of
the Board of Directors.
I. Martin Pompadur, 60, is Director and Manager of RP Media
Management. Mr. Pompadur is also the Chairman and Chief
Executive Officer of GP Station Partners which is the General
Partner of Television Station Partners, L.P., a private limited
partnership that owned and operated four network affiliated
television stations. These stations were sold in January, 1996
and this partnership is currently in its liquidation phase. Mr.
Pompadur is the Chairman and Chief Executive Officer of PBTV,
Inc., the Managing General Partner of Northeastern Television
Investors Limited Partnership, a private limited partnership
which owns and operates WBRE-TV, a network affiliated station in
Wilkes-Barre/Scranton, Pennsylvania. Mr. Pompadur is also
Chairman and Chief Executive Officer of U.S. Cable Partners, a
general partner of U.S. Cable Television Group, L.P. ("U.S.
Cable"), which owns and operates cable systems in ten states.
Mr. Pompadur is also the President and a Director of RP
Opportunity Management, L.P. ("RPOM"), a limited partnership
organized under the laws of Delaware, which is indirectly owned
and controlled by Mr. Pompadur. RPOM is a partner in Media
Opportunity Management Partners, an affiliate of the General
Partner, and the general partner of ML Media Opportunity
Partners, L.P. which was formed to invest in under performing and
turnaround media businesses and which presently owns 51.005%
interest in an entity which owns two network affiliated
television stations, and an equity position in a cellular
telecommunications company. Mr. Pompadur is the Principal
Executive Officer of ML Media Opportunity Partners, L.P. Mr.
Pompadur is also Chief Executive Officer of MultiVision Cable TV
Corp. ("MultiVision"), a cable television multiple system
operator ("MSO") organized in January 1988 and owned principally
by Mr. Pompadur and the estate of Elton H. Rule to provide MSO
services to cable television systems acquired by entities under
his control. Mr. Pompadur is a principal owner, member of the
Board of Directors and Secretary of Caribbean International News
Corporation ("Caribbean"). Caribbean owns and publishes EL
Vocero, the largest Spanish language daily newspaper in the U.S.
Elizabeth McNey Yates, 33, Executive Vice President of RP Media
Management and Senior Vice President of Media Management
Partners, joined RP Companies Inc., an entity controlled by Mr.
Pompadur, in April 1988 and has senior executive responsibilities
in the areas of finance, operations, administration and
acquisitions. Ms. Yates is Chief Operating Officer and Executive
Vice President of RP Companies, Inc., and since October 1, 1994
has also been President and Chief Operating Officer of
MultiVision. Ms. Yates is also the Executive Vice President of
RPOM.
Kevin K. Albert, 43, a Managing Director of Merrill Lynch
Investment Banking Group ("ML Investment Banking"), joined
Merrill Lynch in 1981. Mr. Albert works in the Equity Private
Placement Group and is involved in structuring and placing a
diversified array of private equity financings including common
stock, preferred stock, limited partnership interests and other
equity-related securities. Mr. Albert is also a director of ML
Film Entertainment Inc. ("ML Film"), an affiliate of MLMM and the
managing general partner of the general partners of Delphi Film
Associates III, IV, V and ML Delphi Premier Partners, L.P.; a
director of ML Opportunity Management Inc. ("ML Opportunity"), an
affiliate of MLMM and a joint venturer in Media Opportunity
Management Partners, the general partner of ML Media Opportunity
Partners, L.P.; a director of ML Mezzanine II Inc. ("ML Mezzanine
II"), an affiliate of MLMM and sole general partner of the
managing general partner of ML-Lee Acquisition Fund II, L.P. and
ML-Lee Acquisition Fund (Retirement Accounts) II, L.P.; a
director of ML Mezzanine Inc. ("ML Mezzanine"), an affiliate of
MLMM and the sole general partner of the managing general partner
of ML-Lee Acquisition Fund, L.P.; a director of Merrill Lynch
Venture Capital Inc. ("ML Venture"), an affiliate of MLMM and the
general partner of the Managing General Partner of ML Venture
Partners I, L.P. ("Venture I"), ML Venture Partners II, L.P.
("Venture II"), and ML Oklahoma Venture Partners Limited
Partnership ("Oklahoma"); and a director of Merrill Lynch R&D
Management Inc. ("ML R&D"), an affiliate of MLMM and the general
partner of the General Partner of ML Technology Ventures, L.P.
Mr. Albert also serves as an independent general partner of
Venture I and Venture II.
Robert F. Aufenanger, 42, a Vice President of Merrill Lynch & Co.
Corporate Credit and a Director of the Partnership Management
Department, joined Merrill Lynch in 1980. Mr. Aufenanger is
responsible for the ongoing management of the operations of the
equipment and project related limited partnerships for which
subsidiaries of ML Leasing Equipment Corp., an affiliate of
Merrill Lynch, are general partners. Mr. Aufenanger is also a
director of ML Opportunity, ML Film, ML Venture, ML R&D, ML
Mezzanine and ML Mezzanine II.
Michael E. Lurie, 52, a First Vice President of Merrill Lynch &
Co. Corporate Credit and the Director of the Asset Recovery
Management Department, joined Merrill Lynch in 1970. Prior to
his present position, Mr. Lurie was the Director of Debt and
Equity Markets Credit responsible for the global allocation of
credit limits and the approval and structuring of specific
transactions relating to debt and equity products. Mr. Lurie
also served as Chairman of the Merrill Lynch International Bank
Credit Committee. Mr. Lurie is also a director of ML
Opportunity, ML Film, ML Venture and ML R&D.
Steven N. Baumgarten, 40, a Vice President of Merrill Lynch & Co.
Corporate Credit, joined Merrill Lynch in 1986. Mr. Baumgarten
shares responsibility for the ongoing management of the
operations of the equipment and project related limited
partnerships for which subsidiaries of ML Leasing Equipment
Corp., an affiliate of Merrill Lynch, are general partners. Mr.
Baumgarten is also a director of ML Film.
David G. Cohen, 33, a Vice President of Merrill Lynch & Co.
Corporate Credit, joined Merrill Lynch in 1987. Mr. Cohen shares
responsibility for the ongoing management of the operations of
the equipment and project related limited partnerships for which
subsidiaries of ML Leasing Equipment Corp., an affiliate of
Merrill Lynch, are general partners.
Diane T. Herte, 35, an Assistant Vice President of Merrill Lynch
& Co., Corporate Credit since 1992, joined Merrill Lynch in 1984.
Ms. Herte's responsibilities include controllership and financial
management functions for certain partnerships for which
subsidiaries of ML Leasing Equipment Corp., an affiliate of
Merrill Lynch, are general partners.
Mr. Pompadur and Ms. Yates were each executive officers of
Maryland Cable Corp. and Maryland Cable Holdings Corp. at and
during the two years prior to the filing Maryland Cable and
Holdings on March 10, 1994 of a consolidated plan of
reorganization under Chapter 11 of the United States Bankruptcy
Code with the United States Bankruptcy Court for the Southern
District of New York. Maryland Cable Holdings Corp. was at the
time of such filings a subsidiary of ML Media Opportunity
Partners, L.P.
Mr. Aufenanger is an executive officer of Mid-Miami Diagnostics
Inc. ("Mid-Miami Inc."). On October 28, 1994 both Mid-Miami Inc.
and Mid-Miami Diagnostics, L.P. filed voluntary petitions for
protection from creditors under Chapter 7 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of New York.
An Investment Committee of Registrant was established to have the
responsibility and authority for developing, in conjunction with
the Management Company, disversification objectives for the
investments to be made by Registrant, for reviewing and approving
each investment proposed by the Management Company for Registrant
and for evaluating and approving dispositions of investments of
Registrant. The Investment Committee will also establish
reserves for Registrant for such purposes and in such amounts as
it deems appropriate. A simple majority vote shall be required
for any proposed investment or disposition. The Investment
Committee also has the responsibility and authority for
monitoring the management of the investments of Registrant by the
Management Company.
The current members of the Investment Committee are as follows:
RPMM Representative MLMM Representatives
I. Martin Pompadur Kevin K. Albert
Robert F. Aufenanger
Item 11.Executive Compensation.
Registrant does not pay the executive officers or directors of
the General Partner any remuneration. The General Partner does
not presently pay any remuneration to any of its executive
officers or directors. See Note 6 to the Financial Statements
included in Item 8 hereof, however, for amounts paid by
Registrant to the General Partner and its affiliates for the
years ended December 29, 1995, December 30, 1994 and December 31,
1993.
Item 12.Security Ownership of Certain Beneficial Owners and
Management.
As of February 9, 1996, no person was known by Registrant to be
the beneficial owner of more than 5 percent of the Units.
To the knowledge of the General Partner, as of February 9, 1996,
the officers and directors of the General Partner in aggregate
own less than 1% of the outstanding common stock of Merrill Lynch
& Co., Inc.
RP Media Management is owned 50% by IMP Media Management, Inc.
and 50% by the Elton H. Rule Company. IMP Media Management is
wholly-owned by Mr. I. Martin Pompadur and The Elton H. Rule
Company is wholly-owned by the estate of Mr. Elton H. Rule.
Item 13.Certain Relationships and Related Transactions.
Refer to Note 6 to the Financial Statements included in Item 8
hereof, and in Item 1 for a description of the relationship of
the General Partner and its affiliates to Registrant and its
subsidiaries.
Part IV.
Item 14.Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a) Financial Statements, Financial Statement Schedules and
Exhibits
(1) Financial Statements and Financial Statement Schedules
See Item 8. "Financial Statements and Supplementary
Data".
<TABLE>
<CAPTION>
(2) Exhibits Incorporated by Reference to
<S> <C>
3.1 Amended and Restated Certificate Exhibit 3.1 to Registrant's Form S-
of Limited Partnership 1 the Registration Statement
(File No. 33-2290)
3.2.1 Second Amended and Restated Exhibit 3.2.1 to Registrant's
Agreement of Limited Partnership Annual Report on Form 10-K for the
dated May 14, 1986 fiscal year ended
December 26, 1986
(File No. 0-14871)
3.2.2 Amendment No. 1 dated February Exhibit 3.2.2 to Registrant's
27, 1987 to Second Amended and Annual Report on Form 10-K for the
Restated Agreement of Limited fiscal year ended
Partnership December 26, 1986
(File No. 0-14871)
10.1.1Joint Venture Agreement dated Exhibit 10.1.1 to Registrant's
July 2, 1986 between Registrant Annual Report on Form 10-K for the
and Century Communications fiscal year ended
Corp.("CCC") December 26, 1986
(File No. 0-14871)
10.1.2Management Agreement and Joint Exhibit 10.1.2 to Registrant's
Venture Agreement dated December Annual Report on Form 10-K for the
16, 1986 between Registrant and fiscal year ended
CCC (attached as Exhibit 1 to December 26, 1986
Exhibit 10.3) (File No. 0-14871)
10.1.3Management Agreement and Joint Exhibit 10.1.3 to Registrant's
Venture Agreement dated as of Annual Report on Form 10-K for the
February 15, 1989 between fiscal year ended
Registrant and CCC December 30, 1988
(File No. 0-14871)
10.1.4Amended and Restated Management Exhibit 10.1.4 to Registrant's
Agreement and Joint Venture Annual Report on Form 10-K for the
Agreement of Century/ML Cable fiscal year ended
Venture dated January 1, 1994 December 31, 1993
between Century Communications (File No. 0-14871)
Corp. and Registrant
10.2.1Stock Purchase Agreement dated Exhibit 28.1 to Registrant's Form
July 2, 1986 between Registrant 8-K Report dated December 16, 1986
and the sellers of shares of (File No. 33-2290)
Cable Television Company of
Greater San Juan, Inc.
10.2.2Assignment dated July 2, 1986 Exhibit 10.2.2 to Registrant's
between Registrant and Century- Annual Report on Form 10-K for the
ML Cable Corporation ("C-ML") fiscal year ended
December 26, 1986
(File No. 0-14871)
10.2.3Transfer of Assets and Exhibit 10.2.3 to Registrant's
Assumption of Liabilities Annual Report on Form 10-K for the
Agreement dated January 1, 1994 fiscal year ended
between Century-ML Radio December 31, 1993
Venture, Century/ML Cable (File No. 0-14871)
Venture, Century Communications
Corp. and Registrant
10.3 Amended and Restated Credit Exhibit 10.3.5 to Registrant's
Agreement dated as of March 8, Annual Report on Form 10-K for the
1989 between Citibank, N.A., fiscal year ended
Agent, and C-ML December 30, 1988
(File No. 0-14871)
10.3.1Note Agreement dated as of Exhibit 10.3.1 to Registrant's
December 1, 1992 between Century- Annual Report on Form 10-K for the
ML Cable Corporation, Century/ML fiscal year ended
Cable Venture, Jackson National December 25, 1992
Life Insurance Company, The (File No. 0-14871)
Lincoln National Life Insurance
Company and Massachusetts Mutual
Life Insurance Company
10.3.2Second Restated Credit Agreement Exhibit 10.3.2 to Registrant's
dated December 1, 1992 among Annual Report on Form 10-K for the
Century-ML Cable Corporation, fiscal year ended
Century/ML Cable Venture and December 25, 1992
Citibank (File No. 0-14871)
10.3.3Amendment dated as of September Exhibit 10.3.3 to Registrant's
30, 1993 among Century-ML Cable Quarterly Report on Form 10-Q for
Corporation, the banks parties the quarter ended
to the Credit Agreement, and September 24, 1993
Citibank, N.A. and Century/ML (File No. 0-14871)
Cable Venture
10.3.4Amendment dated as of December Exhibit 10.3.4 to Registrant's
15, 1993 among Century-ML Cable Annual Report on Form 10-K for the
Corporation, the banks parties fiscal year ended
to the Credit Agreement, and December 31, 1993
Citibank, N.A. and Century/ML (File No. 0-14871)
Cable Venture
10.4 Pledge Agreement dated December Exhibit 10.4 to Registrant's
16, 1986 among Registrant, CCC, Annual Report on Form 10-K for the
and Citibank, N.A., Agent fiscal year ended
December 26, 1986
(File No. 0-14871)
10.5 Guarantee dated as of December Exhibit 10.5 to Registrant's
16, 1986 among Registrant, CCC Annual Report on Form 10-K for the
and Citibank, N.A., Agent fiscal year ended
December 25, 1987
(File No. 0-14871)
10.6 Assignment of Accounts Exhibit 10.6 to Registrant's
Receivable dated as of December Annual Report on Form 10-K for the
16, 1986 among Registrant, CCC fiscal year ended
and Citibank, N.A., Agent December 25, 1987
(File No. 0-14871)
10.7 Real Property Mortgage dated as Exhibit 10.7 to Registrant's
of December 16, 1986 among Annual Report on Form 10-K for the
Registrant, CCC and Citibank, fiscal year ended
N.A., Agent December 30, 1988
(File No. 0-14871)
10.8 Stock Sale and Purchase Exhibit 28.1 to Registrant's Form
Agreement dated as of December 8-K Report dated December 23, 1986
5, 1986 between SCIPSCO, Inc. (File No. 33-2290)
and ML California Cable Corp.
("ML California")
10.8.1Asset Purchase Agreement dated Exhibit 2 to Registrant's Form 8-K
as of November 28, 1994 among Report dated November 28, 1994
Registrant and Century (File No. 0-14871)
Communications Corp.
10.9 Security Agreement dated as of Exhibit 10.10 to Registrant's
December 22, 1986 among Annual Report on Form 10-K for the
Registrant, ML California and BA fiscal year ended
December 26, 1987
(File No. 0-14871)
10.10 Assets Purchased Agreement dated Exhibit 28.1 to Registrant's Form
as of September 17, 1986 between 8-K Report dated February 2, 1987
Registrant and Loyola University (File No. 33-2290)
10.11 Asset Acquisition Agreement Exhibit 28.1 to Registrant's Form
dated April 22, 1987 between 8-K Report dated October 14, 1987
Community Cable-Vision of Puerto (File No. 33-2290)
Rico Associates, Community Cable-
Vision of Puerto Rico, Inc.,
Community Cable-Vision
Incorporated and Century
Communications Corp., as
assigned
10.12 Asset Purchase Agreement dated Exhibit 2.1 to Registrant's Form 8-
April 29, 1987 between K Report dated September 16, 1987
Registrant and Gilmore (File No. 33-2290)
Broadcasting Corporation
10.13 License Holder Pledge Agreement Exhibit 2.5 to Registrant's Form 8-
dated August 27, 1987 by K Report dated September 15, 1987
Registrant and Media Management (File No. 33-2290)
Partners in favor of
Manufacturers Hanover
10.14 Asset Purchase Agreement dated Exhibit 28.1 to Registrant's Form
August 20, 1987 between 108 8-K Report dated January 15, 1988
Radio Company Limited (File No. 33-2290)
Partnership and Registrant
10.15 Security Agreement dated as of Exhibit 28.3 to Registrant's Form
December 16, 1987 between 8-K Report dated January 15, 1988
Registrant and CNB (File No. 33-2290)
10.16 Asset Purchase Agreement dated Exhibit 10.25 to Registrant's
as of January 9, 1989 between Annual Report on Form 10-K for the
Registrant and Connecticut fiscal year ended
Broadcasting Company, Inc. December 30, 1988
("WICC") (File No. 0-14871)
10.17.1 Stock Purchase Agreement dated Exhibit 28.2 to Registrant's
June 17, 1988 between Registrant Quarterly Report on Form 10-Q for
and the certain sellers referred the quarter ended June 24, 1988
to therein relating to shares of (File No. 0-14871)
capital stock of Universal Cable
Holdings, Inc. ("Universal")
10.17.2 Amendment and Consent dated July Exhibit 2.2 to Registrant's Form 8-
29, 1988 between Russell V. K Report dated September 19, 1988
Keltner, Larry G. Wiersig and (File No. 0-14871)
Donald L. Benson, Universal
Cable Midwest, Inc. and
Registrant
10.17.3 Amendment and Consent dated July Exhibit 2.3 to Registrant's Form 8-
29, 1988 between Ellsworth K Report dated September 19, 1988
Cable, Inc., Universal Cable (File No. 0-14871)
Midwest, Inc. and Registrant
10.17.4 Amendment and Consent dated Exhibit 2.4 to Registrant's Form 8-
August 29, 1988 between ST K Report dated September 19, 1988
Enterprises, Ltd., Universal (File No. 0-14871)
Cable Communications, Inc. and
Registrant
10.17.5 Amendment and Consent dated Exhibit 2.5 to Registrant's Form 8-
September 19, 1988 between K Report dated September 19, 1988
Dennis Wudtke, Universal Cable (File No. 0-14871)
Midwest, Inc., Universal Cable
Communications, Inc. and
Registrant
10.17.6 Amendment and Consent dated Exhibit 10.26.6 to Registrant's
October 14, 1988 between Down's Annual Report on Form 10-K for the
Cable, Inc., Universal Cable fiscal year ended December 30,
Midwest, Inc. and Registrant 1988
(File No. 0-14871)
10.17.7 Amendment and Consent dated Exhibit 10.26.7 to Registrant's
October 14, 1988 between SJM Annual Report on Form 10-K for the
Cablevision, Inc., Universal fiscal year ended December 30,
Cable Midwest, Inc. and 1988
Registrant (File No. 0-14871)
10.17.8 Bill of Sale and Transfer of Exhibit 2.6 to Registrant's Form 8-
Assets dated as of September 19, K Report dated September 19, 1988
1988 between Registrant and (File No. 0-14871)
Universal Cable Communications
Inc.
10.18 Credit Agreement dated as of Exhibit 10.27 to Registrant's
September 19, 1988 among Annual Report on Form 10-K for the
Registrant, Universal, certain fiscal year ended
subsidiaries of Universal, and December 30, 1988
Manufacturers Hanover Trust (File No. 0-14871)
Company, as Agent
10.19 Stock Purchase Agreement dated Exhibit 10.28 to Registrant's
October 6, 1988 between Annual Report on Form 10-K for the
Registrant and the certain fiscal year ended
sellers referred to therein December 30, 1988
relating to shares of capital (File No. 0-14871)
stock of Acosta Broadcasting
Corp.
10.20 Stock Purchase Agreement dated Exhibit 28.1 to Registrant's
April 19, 1988 between Quarterly Report on Form 10-Q for
Registrant and the certain the quarter ended June 24, 1988
sellers referred to therein (File No. 0-14871)
relating to shares of capital
stock of Wincom Broadcasting
Corporation
10.21 Subordination Agreement dated as Exhibit 2.3 to Registrant's Form 8-
of August 15, 1988 among Wincom, K Report dated August 26, 1988
the Subsidiaries, Registrant and (File No. 0-14871)
Chemical Bank
10.22 Management Agreement dated Exhibit A to Exhibit 10.30.2 above
August 26, 1988 between
Registrant and Wincom
10.22.1 Management Agreement by and Exhibit 10.22.1 to Registrant's
between Fairfield Quarterly Report on Form 10-Q for
Communications, Inc. and the quarter ended June 25, 1993
Registrant and ML Media (File No. 0-14871)
Opportunity Partners, L.P. dated
May 12, 1993
10.22.2 Sharing Agreement by and among Exhibit 10.22.2 to Registrant's
Registrant, ML Media Opportunity Quarterly Report on Form 10-Q for
Partners, L.P., RP Companies, the quarter ended June 25, 1993
Inc., Radio Equity Partners, (File No. 0-14871)
Limited Partnership and
Fairfield Communications, Inc.
10.23 Amended and Restated Credit, Exhibit 10.33 to Registrant's
Security and Pledge Agreement Quarterly Report on Form 10-Q for
dated as of August 15, 1988, as the quarter ended June 30, 1989
amended and restated as of July (File No. 0-14871)
19, 1989 among Registrant,
Wincom Broadcasting Corporation,
Win Communications Inc., Win
Communications of Florida, Inc.,
Win Communications Inc. of
Indiana, WEBE Associates, WICC
Associates, Media Management
Partners, and Chemical Bank and
Chemical Bank, as Agent
10.23.1 Second Amendment dated as of Exhibit 10.23.1 to Registrant's
July 30, 1993 to the Amended and Quarterly Report on Form 10-Q for
Restated Credit, Security and the quarter ended June 25, 1993
Pledge Agreement dated as of (File No. 0-14871)
August 15, 1988, as amended and
restated as of July 19, 1989 and
as amended by the First
Amendment thereto dated as of
August 14, 1989 among
Registrant, Wincom Broadcasting
Corporation, Win Communications
Inc., Win Communications Inc. of
Indiana, WEBE Associates, WICC
Associates, Media Management
Partners, and Chemical Bank and
Chemical Bank, as Agent
10.24 Agreement of Consolidation, Exhibit 10.34 to Registrant's
Extension, Amendment and Quarterly Report on Form 10-Q for
Restatement of the WREX Credit the quarter ended June 30, 1989
Agreement and KATC Credit (File No. 0-14871)
Agreement between Registrant and
Manufacturers Hanover Trust
Company dated as of June 21,
1989
10.25 Asset Purchase Agreement between Exhibit 10.35 to Registrant's
ML Media Partners, L.P. and Quarterly Report on Form 10-Q for
Anaheim Broadcasting Corporation the quarter ended September 29,
dated July 11, 1989 1989 (File No. 0-14871)
10.26 Asset Purchase Agreement between Exhibit 10.36 to Registrant's
WIN Communications Inc. of Annual Report on Form 10-K for the
Indiana, and WIN Communications fiscal year ended
of Florida, Inc. and Renda December 28, 1990
Broadcasting Corp. dated (File No. 0-14871)
November 27, 1989
10.26.1 Asset Purchase Agreement between Exhibit 10.26.1 to Registrant's
WIN Communications of Indiana, Quarterly Report on Form 10-Q for
Inc. and Broadcast Alchemy, L.P. the quarter ended June 25, 1993
dated April 30, 1993 (File No. 0-14871)
10.26.2 Joint Sales Agreement between Exhibit 10.26.2 to Registrant's
WIN Communications of Indiana, Quarterly Report on Form 10-Q for
Inc. and Broadcast Alchemy, L.P. the quarter ended June 25, 1993
dated May 1, 1993 (File No. 0-14871)
10.27 Credit Agreement dated as of Exhibit 10.39 to Registrant's
November 15, 1989 between ML Quarterly Report on Form 10-Q for
Media Partners, L.P. and Bank of the quarter ended June 29, 1990
America National Trust and (File No. 0-14871)
Savings Association
10.27.1 First Amendment and Limited Exhibit 10.27.1 to Registrant's
Waiver dated as of February 23, Annual Report on Form 10-K for the
1995 to the Amended and Restated fiscal year ended
Credit Agreement dated as of May December 30, 1994
15, 1990 among ML Media (File 0-14871)
Partners, L.P. and Bank of
America National Trust and
Saving Association, individually
and as Agent
10.28 Asset Purchase Agreement dated Exhibit 10.38 to Registrant's
November 27, 1989 between Win Quarterly Report on Form 10-Q for
Communications and Renda the quarter ended June 29, 1990
Broadcasting Corp. (File No. 0-14871)
10.29 Amended and Restated Credit Exhibit 10.39 to Registrant's
Agreement dated as of May 15, Quarterly Report on Form 10-Q for
1990 among ML Media Partners, the quarter ended June 29, 1990
L.P. and Bank of America (File No. 0-14871)
National Trust and Saving
Association, individually and as
Agent
10.30 Stock Purchase Agreement between Exhibit 10.40.1 to Registrant's
Registrant and Ponca/Universal Quarterly Report on Form 10-Q for
Holdings, Inc. dated as of April the quarter ended March 27, 1992
3, 1992 (File No. 0-14871)
10.30.1 Earnest Money Escrow Agreement Exhibit 10.40.1 to Registrant's
between Registrant and Quarterly Report on Form 10-Q for
Ponca/Universal Holdings, Inc. the quarter ended March 27, 1992
dated as of April 3, 1992 (File No. 0-14871)
10.30.2 Indemnity Escrow Agreement Exhibit 10.40.2 to Registrant's
between Registrant and Form 8-K Report dated July 8, 1992
Ponca/Universal Holdings, Inc. (File No. 0-14871)
dated as of July 8, 1992
10.30.3 Assignment by Registrant in Exhibit 10.40.3 to Registrant's
favor of Chemical Bank, in its Form 8-K Report dated July 8, 1992
capacity as agent for itself and (File No. 0-14871)
the other banks party to the
credit agreement dated as of
September 19, 1988, among
Registrant, Universal, certain
subsidiaries of Universal, and
Manufacturers Hanover Trust
Company, as agent
10.30.4 Confirmation of final Universal Exhibit 10.40.4 to Registrant's
agreements between Registrant Quarterly Report on Form 10-Q for
and Manufacturers Hanover Trust the quarter ended
Company, dated April 3, 1992 September 25, 1992
(File No. 0-14871)
10.30.5 Letter regarding discharge and Exhibit 10.40.5 to Registrant's
release of the Universal Quarterly Report on Form 10-Q for
Companies and Registrant dated the quarter ended
July 8, 1992 between Registrant September 25, 1992
and Chemical Bank (as successor, (File No. 0-14871)
by merger, to Manufacturers
Hanover Trust Company)
10.31.1 Asset Purchase Agreement dated Exhibit 10.1 to Registrant's Form
May 25, 1995 with Quincy 8-K dated
Newspapers, Inc. to sell May 25, 1995
substantially all of the assets (File No. 0-14871)
used in the operations of the
Registrant's television station
WREX-TV, Rockford, Illinois
10.31.3 Asset Purchase Agreement dated Exhibit to Registrant's Form 8-K
June 1, 1995 with KATC Report dated
Communications, Inc., to sell June 1, 1995
substantially all of the assets (File No. 0-14871)
used in the operations of
Registrant's television station
KATC-TV, Lafayette, Louisiana
18.1 Letter from Deloitte, Haskins & Exhibit 18.1 to Registrant's
Sells regarding the change in Annual Report on Form 10-K for the
accounting method, dated March fiscal year ended
30, 1989 December 30, 1988
(File No. 0-14871)
27.0 Financial Data Schedule to Form
10-K Report for the fiscal year
ended December 29, 1995
99 Pages 12 through 19 and 38 Prospectus dated February 4, 1986,
through 46 of Prospectus dated filed pursuant to Rule 424(b)
February 4, 1986, filed pursuant under the Securities Act of 1933,
to Rule 424(b) under the as amended
Securities Act of 1933, as (File No. 33-2290)
amended
(b) Reports on Form 8-K.
Registrant filed with the Securities and Exchange Commission (the
"SEC") a Current Report on Form 8-K dated September 30, 1995 on
October 2, 1996. This Current Report contained details regarding
the completion of the sale to KATC Communications, Inc., of
substantially all of the assets used in the operations of
Registrant's television station KATC-TV, Lafayette, Louisiana.
Registrant filed with the SEC a Current Report on Form 8-K/A dated
September 30, 1995 on October 16, 1995. This Current Report
contained the Pro-Forma Condensed Financial Statements giving effect
to the sale of WREX and KATC.
In addition, Registrant filed with the SEC a Current Report on Form
8-K dated December 31, 1995. This Current Report contained details
regarding the status of the negotiations for the sale of
substantially all of the assets of the California Cable operations
to Century Communications Corp.
</TABLE>
(c) Exhibits.
See (a) (2) above.
(d) Financial Statement Schedules.
See (a) (1) above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, 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: March 28, 1996 /s/ Kevin K. Albert
Kevin K. Albert
Director and President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of Registrant in the capacities and on the dates
indicated.
RP MEDIA MANAGEMENT
Signature Title Date
/s/ I. Martin Pompadur President, Secretary March 28, 1996
(I. Martin Pompadur) and Director
(principal executive
officer of the
Registrant)
/s/Elizabeth McNey Yates Executive Vice March 28, 1996
(Elizabeth McNey Yates) President
ML MEDIA MANAGEMENT INC.
Signature Title Date
/s/ Kevin K. Albert Director and March 28, 1996
(Kevin K. Albert) President
/s/ Robert F. Aufenanger Director and March 28, 1996
(Robert F. Aufenanger) Executive Vice
President
/s/ Michael E. Lurie Director and Vice March 28, 1996
(Michael E. Lurie) President
/s/ Diane T. Herte Treasurer (principal March 28, 1996
(Diane T. Herte) financial officer and
principal accounting
officer of the
Registrant)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from the year end 1995 Form 10K
Consolidated Balance Sheets and Consolidated Statements of
Operations as of December 29, 1995, and is qualified in its
entirety by reference to such financial statements.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-29-1995
<PERIOD-END> DEC-29-1995
<CASH> 41,124
<SECURITIES> 0
<RECEIVABLES> 13,072
<ALLOWANCES> 856
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 190,740
<DEPRECIATION> 117,750
<TOTAL-ASSETS> 210,198
<CURRENT-LIABILITIES> 0
<BONDS> 182,822
<COMMON> 0
0
0
<OTHER-SE> (2,364)
<TOTAL-LIABILITY-AND-EQUITY> 210,198
<SALES> 0
<TOTAL-REVENUES> 132,320
<CGS> 0
<TOTAL-COSTS> 39,301
<OTHER-EXPENSES> 29,855
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,418
<INCOME-PRETAX> 21,490
<INCOME-TAX> 0
<INCOME-CONTINUING> 21,490
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,490
<EPS-PRIMARY> 113.17
<EPS-DILUTED> 0
</TABLE>
