SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 27, 1997
0-14871
(Commission File Number)
ML MEDIA PARTNERS, L.P.
(Exact name of registrant as specified in its governing
instruments)
Delaware
(State or other jurisdiction of organization)
13-3321085
(IRS Employer Identification No.)
World Financial Center
South Tower - 14th Floor
New York, New York 10080-6114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 236-6575
N/A
Former name, former address and former fiscal year if changed
since last report
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
<PAGE>
ML MEDIA PARTNERS, L.P.
PART I - FINANCIAL INFORMATION.
Item 1. Financial Statements.
TABLE OF CONTENTS
Consolidated Balance Sheets as of June 27, 1997
(Unaudited) and December 27, 1996 (Unaudited)
Consolidated Statements of Operations for the Thirteen and
Twenty-Six Week Periods Ended June 27, 1997 (Unaudited)
and June 28, 1996 (Unaudited)
Consolidated Statements of Cash Flows for the Twenty-Six
Week Periods Ended June 27, 1997 (Unaudited) and June 28,
1996 (Unaudited)
Notes to the Consolidated Financial Statements for the
Twenty-Six Week Period Ended June 27, 1997 (Unaudited)
<PAGE>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 27, 1997 (UNAUDITED) AND DECEMBER 27, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
June 27, December 27,
1997 1996
<S> <C> <C>
ASSETS:
Cash and cash equivalents $101,637,466 $ 91,591,280
Investments held by escrow
agents - 6,244,252
Accounts receivable (net of
allowance for doubtful
accounts of $536,580 and
$798,773, respectively) 6,983,790 6,768,307
Prepaid expenses and deferred
charges (net of
accumulated amortization of
$3,560,929 and $3,481,529,
respectively) 665,082 984,574
Property, plant and
equipment(net of accumulated
depreciation of $16,940,498
and $15,246,042,
respectively) 22,145,482 20,582,046
Intangible assets (net of
accumulated amortization of
$56,080,849 and $54,346,121,
respectively) 31,853,152 33,587,880
Other assets 4,296,410 1,236,485
TOTAL ASSETS $167,581,382 $160,994,824
</TABLE>
(Continued on the following page.)
<PAGE>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 27, 1997 (UNAUDITED) AND DECEMBER 27, 1996 (UNAUDITED)
(continued)
<TABLE>
<CAPTION>
June 27, December 27,
1997 1996
<S> <C> <C>
LIABILITIES AND PARTNERS'
CAPITAL:
Liabilities:
Borrowings $ 58,349,038 $ 60,348,428
Accounts payable and
accrued liabilities 22,799,443 20,941,830
Subscriber advance payments 1,541,289 1,545,835
Total Liabilities 82,689,770 82,836,093
Commitments and Contingencies
(Note 3)
Partners' Capital:
General Partner:
Capital contributions, net of
offering expenses 1,708,299 1,708,299
Cash distributions (1,167,841) (1,167,841)
Cumulative income 371,376 304,047
911,834 844,505
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 distributions (115,616,310) (115,616,310)
Cumulative income 36,766,397 30,100,845
83,979,778 77,314,226
Total Partners' Capital 84,891,612 78,158,731
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $ 167,581,382 $ 160,994,824
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited).
<PAGE>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN AND TWENTY-SIX WEEK PERIODS ENDED JUNE 27, 1997
(UNAUDITED) AND JUNE 28, 1996 (UNAUDITED)
<TABLE>
<CAPTION> Thirteen Weeks Twenty-Six Weeks
June 27, 1997 June 28, 1996 June 27, 1997 June 28, 1996
<S> <C> <C> <C> <C>
REVENUES:
Operating
revenues $ 13,705,775 $ 21,929,891 $ 25,800,264 $ 47,231,912
Interest 874,625 694,918 1,658,359 745,765
Gain on sale
of the
California
Cable Systems - 186,020,511 - 186,020,511
Total revenues 14,580,400 208,645,320 27,458,623 233,998,188
COSTS AND
EXPENSES:
Property
operating 4,922,350 7,807,215 9,512,213 16,606,967
General and
adminis-
trative 2,363,029 4,761,546 4,555,357 9,649,666
Depreciation
and amorti-
zation 1,391,832 5,904,527 3,563,072 13,674,184
Interest
expense 1,172,020 3,255,178 2,489,265 7,510,820
Management
fees 302,917 353,341 605,835 731,199
Total costs
and expenses 10,152,148 22,081,807 20,725,742 48,172,836
NET INCOME $ 4,428,252 $186,563,513 $ 6,732,881 $185,825,352
PER UNIT OF LIMITED
PARTNERSHIP INTEREST:
NET INCOME $ 23.32 $ 982.47 $ 35.46 $ 978.58
Number of
Units 187,994 187,994 187,994 187,994
See Notes to Consolidated Financial Statements (Unaudited).
</TABLE>
<PAGE>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEK PERIODS ENDED JUNE 27, 1997 (UNAUDITED) AND
JUNE 28, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
June 27, June 28,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,732,88 $185,825,352
1
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 3,563,072 13,674,184
Bad debt expense/(recovery, net) (128,612) 138,200
Gain on sale of the California Cable
Systems - (186,020,511)
Changes in operating assets and
liabilities:
Decrease/(Increase):
Accounts receivable (86,871) 2,962,546
Investments held by escrow agents 6,244,252 (5,000,000)
Prepaid expenses and deferred 240,092 500,018
charges
Other assets (3,059,925) (26,177)
(Decrease)/Increase:
Accounts payable and accrued
liabilities 1,857,613 (1,935,017)
Subscriber advance payments (4,546 (58,726)
)
Net cash provided by operating
activities 15,357,956 10,059,869
</TABLE>
(Continued on the following page.)
<PAGE>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEK PERIODS ENDED JUNE 27, 1997 (UNAUDITED) AND
JUNE 28, 1996 (UNAUDITED)
(continued)
<TABLE>
<CAPTION>
June 27, June 28,
1997 1996
<S> <C> <C>
Cash flows from investing activities:
Proceeds from sale of the California
Cable Systems $ - $ 286,000,00
0
Payment of costs incurred related to
sale of the California Cable Systems - (8,196,272)
Purchase of property, plant and
equipment (3,312,380) (5,153,369)
Intangible assets - (10,000
)
Net cash provided by/(used in)
investing activities (3,312,380 272,640,359
)
Cash flows from financing activities:
Principal payments on borrowings (1,999,390 (120,673,500
) )
Net cash used in financing activities (1,999,390 (120,673,500
) )
Net increase in cash and cash
equivalents 10,046,186 162,026,728
Cash and cash equivalents at
beginning of year 91,591,280 40,124,366
Cash and cash equivalents at end of
period $ 101,637,46 $ 202,151,09
6 4
Cash paid for interest $ 2,849,05 $ 7,781,48
2 7
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited).
ML MEDIA PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE TWENTY-SIX WEEK PERIOD ENDED JUNE 27, 1997 (UNAUDITED)
1. Basis of Presentation
The unaudited consolidated financial statements included herein
reflect all normal recurring adjustments which are, in the
opinion of the General Partner, necessary for a fair presentation
of the financial position of the Partnership as of June 27, 1997
and the results of operations and cash flows of the Partnership
for the interim periods presented. The results of operations for
the twenty-six week period ended June 27, 1997 are not
necessarily indicative of the results of operations that may be
expected for the entire year. Certain information and note
disclosures normally included in the financial statements
provided herein and prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to the rules of the Securities and Exchange Commission
("Commission"). These unaudited consolidated financial
statements should be read in conjunction with the audited
consolidated financial statements and notes thereto, included in
the Partnership's 1996 Annual Report on Form 10-K filed with the
Commission on April 11, 1997.
Certain reclassifications were made to the 1996 financial
statements to conform with the current period's presentation.
2. California Cable Systems, KATC, Puerto Rico Radio and Wincom-
WEBE-WICC
The information set forth in the Liquidity and Capital Resources
section of Part I, Item 2; Management's Discussion and Analysis
of Financial Condition and Results of Operations under the
headings California Cable Systems, KATC, Puerto Rico Radio and
Wincom-WEBE-WICC is hereby incorporated herein by reference and
made a part hereof.
3. Contingencies
On May 1, 1996, a purported class action lawsuit was filed in
Orange County Superior Court against the Partnership on behalf of
subscribers of the California Cable Systems serving Anaheim,
Villa Park and adjacent areas of unincorporated Orange County,
California. This purported class action lawsuit alleges that
excessive late fee payments have been charged to such subscribers
since April, 1992 and seeks refunds of late fee payments to
subscribers and related interest, damages and legal costs. The
action is presently in the discovery phase and no determination
of class action confirmation has yet been attempted by the
plaintiffs. The Partnership is presently unable to estimate its
potential liability, if any, related to this purported class
action or whether any additional members may be sought to be
added to the purported class action lawsuit.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources.
As of June 27, 1997, Registrant had $101,637,466 in cash and cash
equivalents. Of this amount, approximately $31.4 million is
restricted for use at the operating level of the Puerto Rico
Systems (as defined below), to fund capital expenditure programs
and satisfy future debt service requirements (including annual
principal payments of $20 million which will commence November
30, 1998), and approximately $34.4 million is held in cash
reserves to cover both operating liabilities and litigation
contingencies relating to the California Cable Systems prior to
their sale. In addition, approximately $7.2 million is dedicated
to fund both actual and contingent liabilities resulting from the
sale of WREX and KATC, approximately $14.3 million is being held
for use at the operating level of Registrant's other remaining
media properties and all remaining cash and cash equivalents are
available to Registrant for uses as provided in the Partnership
Agreement. As of June 27, 1997, the amount payable for accrued
management fees and expenses owed to the General Partner amounted
to approximately $3.1 million.
Registrant's ongoing cash needs will be to fund debt service,
capital expenditures and working capital requirements. During
the twenty-six week period ended June 27, 1997, cash interest
paid was $2,849,052 and principal repayments of $1,999,390 were
made. During the remainder of 1997, Registrant is required by its
various debt agreements to make scheduled principal repayments in
the aggregate, of $8,349,038 under all of its debt agreements.
Registrant does not have sufficient unrestricted cash to meet all
its contractual debt obligations of all of its investments;
however, such debt obligations are recourse only to specified
assets.
As of June 27, 1997, Registrant's investments in media properties
consisted of a 50% interest in a joint venture (the "Venture"),
which owns an FM (WFID-FM) and AM (WUNO-AM) radio station
combination and a background music service in San Juan, Puerto
Rico ("C-ML Radio"), and 100% of the stock of Century-ML Cable
Corporation ("C-ML Cable"; jointly with C-ML Radio, the "Puerto
Rico Systems"), which owns and operates two cable television
systems in Puerto Rico; 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.
Although no assurance can be made concerning the precise timing
of the ultimate disposition of Registrant's remaining media
properties, Registrant currently anticipates that selling its
remaining investments in media properties will run through 1998.
On May 1, 1996, a purported class action lawsuit was filed in
Orange County Superior Court against Registrant on behalf of
subscribers of the California Cable Systems serving Anaheim,
Villa Park and adjacent areas of unincorporated Orange County,
California. This purported class action lawsuit alleges that
excessive late fee payments have been charged to such subscribers
since April, 1992 and seeks refunds of late fee payments to
subscribers and related interest, damages and legal costs. The
action is presently in the discovery phase and no determination
of class action confirmation has yet been attempted by the
plaintiffs. Registrant is presently unable to estimate its
potential liability, if any, related to this purported class
action or whether any additional members may be sought to be
added to the purported class action lawsuit.
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 Systems. On May 31, 1996,
Registrant consummated such sale pursuant to the terms of the
Asset Purchase Agreement. The base purchase price for the
California Cable Systems was $286 million, subject to certain
adjustments including an operating cash flow, as well as a
working capital adjustment, as provided in the Asset Purchase
Agreement.
Pursuant to the Asset Purchase Agreement and a letter agreement,
entered into by Registrant and Century at closing, Registrant
deposited $5 million into an indemnity escrow account. In the
second quarter of 1997, Registrant received approximately $5.3
million, including interest, from the release of such escrowed
proceeds generated from the sale of the California Cable Systems.
Such funds will be distributed as soon as practicable to the
partners in accordance with the terms of the Partnership
Agreement. The $5.3 million received from the release of the
indemnity escrow account, after accounting for certain other
expenses of Registrant including certain expenses incurred after
May 31, 1996, will be distributed to partners of record as of the
date such unused amounts are released, rather than to the
partners of record on May 31, 1996, the date of the sale.
Upon closing, Registrant set aside approximately $40.7 million in
a cash reserve to cover both operating liabilities and litigation
contingencies relating to the California Cable Systems'
operations prior to their sale, as well as a potential purchase
price adjustment. In addition, a portion of the sales proceeds
of the California Cable Systems were allocated to pay
approximately $9.2 million to the General Partner for accrued
management fees and expenses as of the date of sale; of this
amount, approximately $7.6 million was paid through June 27, 1997
and the balance will be paid in the remainder of 1997.
In accordance with the Partnership Agreement, any amounts which
may be available for distribution from any unused cash reserves,
after accounting for certain other expenses of Registrant
including certain expenses incurred after May 31, 1996, will be
distributed to partners of record as of the date such unused
reserves are released, rather than to the partners of record on
May 31, 1996, the date of the sale. As of June 27, 1997,
Registrant has approximately $37.0 million remaining in cash
reserves to cover both operating liabilities and litigation
contingencies relating to the California Cable Systems prior to
their sale.
KATC/WREX
In the second quarter of 1997, Registrant received approximately
$1.1 million, including interest, from the release of certain
proceeds generated from the sale of KATC which were deposited
into an indemnity escrow account at the time of such sale. Such
funds, after accounting for certain other expenses of Registrant,
will be distributed as soon as practicable to the partners in
accordance with the terms of the Partnership Agreement. In
addition, any funds released from the reserve established at the
time of the KATC and WREX sales, after accounting for certain
other expenses of Registrant will be distributable as soon as
practicable to the partners in accordance with the terms of the
Partnership Agreement.
Puerto Rico Radio
On May 1, 1997, the Venture entered into a non-binding letter of
intent with an independent third party to sell C-ML Radio. Such
non-binding letter of intent has since expired. Irrespective of
the expiration of the non-binding letter of intent, the Venture
continues to negotiate the sale of C-ML Radio to such party;
however, there can be no assurance that such continued
negotiations will result in a definitive sale contract or
eventual closing. Registrant anticipates receiving no proceeds
from any resulting sale since any sale proceeds received are
required to be applied against the outstanding senior
indebtedness of C-ML Radio and C-ML Cable, which are jointly
financed.
Wincom-WEBE-WICC
On July 30, 1993, Registrant and Chemical Bank (now known as the
Chase Manhattan Bank; the "Wincom Bank") executed an amendment to
the Wincom-WEBE-WICC Loan (the "Restructuring Agreement"),
effective January 1, 1993. Pursuant to the final maturity date
set forth in the Restructuring Agreement, all amounts outstanding
under the Series A Term Loan and the Series B Term Loan will
become due and payable on December 31, 1997. As a result of an
ambiguity in the covenant provisions in the Restructuring
Agreement, the Wincom Bank may take the position that Registrant
is in default of a negative loan covenant. If the Wincom Bank
was successful in asserting this position, Registrant would be in
default and the Wincom Bank could exercise its contractual
remedies which include its right to accelerate the December 31,
1997 due date of the entire amount of the loan. However, based
upon Registrant's conversations with a representative of the
Wincom Bank, Registrant does not believe that it is in default.
The Wincom-WEBE-WICC group currently does not, nor does it expect
to in the future, have sufficient cash to pay all outstanding
amounts on such final maturity date. Accordingly, the Wincom-
WEBE-WICC group anticipates obtaining a refinancing of such loan,
although there can be no assurances that it will be able to do so
on economically satisfactory terms.
Cable Industry Regulation
The cable industry is subject to significant regulation at both
the federal and local level, particularly as a result of the
Cable Consumer Protection and Competition Act of 1992 (the "1992
Cable Act"), which imposed significant new regulations on the
industry. The 1992 Cable Act required the development of detailed
regulations and other guidelines by the Federal Communications
Commission ("Commission" or "FCC"), most of which have now been
adopted but some of which remain subject to petitions for
reconsideration before the FCC and/or court of appeals.
Rate Regulation
Under the 1992 Cable Act, cable systems that are not subject to
"effective competition" are subject to regulation by the FCC and
local franchising authorities regarding the rates that may be
charged to subscribers. Under these regulations, Registrant's
systems, like most cable systems in most areas, are not currently
subject to effective competition. Consequently, the rates
charged by Registrant'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 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 Telecommunications Act of 1996 (the "1996 Act"),
however, confines rate regulation to the BST after three years:
on March 31, 1999, the CPST will be exempted from rate
regulation. Under procedures mandated by the 1996 Act, only a
local franchising authority may file an FCC complaint regarding
CPST rates, 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.
Under regulations promulgated by the FCC to implement the 1992
Cable Act, cable operators were required to set an "initial
permitted" rate for regulated service using either (i) a
"benchmark" approach which, essentially involved a reduction in
rates of 17% from those existing on September 30, 1992; or (ii) a
cost of service approach, which, much like the method
historically used to regulate the rates of local exchange
carriers, allows cable system operators to recover through
regulated rates their normal operating expenses, and a reasonable
return on investment. Once set, cable systems were allowed to
adjust their initial permitted rate on a going forward basis,
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, annual FCC
regulatory fees 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, each
cable system was subject to an aggregate cap of $1.50 on the
amount it may increase CPST rates due to channel additions. The
FCC has also adopted "tier flexibility" rules that allow cable
operators to reduce BST rates and take a corresponding revenue
neutral, increase in CPST rates. The FCC's rate regulations will
continue to govern the price the Registrant's cable systems may
charge.
Beginning in late 1995, the FCC demonstrated an increased
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 has adopted or
proposed 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 proposed 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.
Must-Carry
On March 31, 1997, the United States Supreme Court, in a 5-4
decision, upheld the constitutionality of the must-carry
provisions of the 1992 Cable Act. As a result, the regulations
promulgated by the FCC to implement the must-carry provisions
will remain in effect. Under those rules, cable operators
generally are required to devote up to one-third of their
activated channel capacity to the carriage of local commercial
television stations.
Radio Industry Regulation
The 1996 Act completely revised the radio ownership rules by,
among other things, eliminating the national radio ownership
restriction. As a result, any number of AM or FM broadcast
stations may be owned or controlled by one entity nationally.
The 1996 Act also greatly eased 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 in a local market, 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. An auction for DARS spectrum was
held on April 1, 1997 for two licenses to provide nationwide DARS
services. In addition, the FCC has undertaken an inquiry into
the terrestrial broadcast of DARS signals, addressing, among
other things, the need for spectrum outside the existing FM band
and the role of existing broadcasters in providing such a
service. Further, in 1995, the laboratory testing of a number of
competing in-band on-channel terrestrial 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 or the ultimate impact of DARS on its stations.
The foregoing does not purport to be a complete summary of the
Communications Act, the 1992 Cable Act, and the 1996 Act or of
the regulations and policies of the FCC thereunder. Moreover,
proposals for additional or revised statutory or regulatory
requirement are considered by Congress and the FCC from time to
time. It is not possible to predict what legislative, regulatory
or judicial changes, if any, may occur or their impact on the
Company's business or operations.
In addition to historical information contained or incorporated
by reference in this report on Form 10-Q, Registrant may make or
publish forward-looking statements about management expectations,
strategic objectives, business prospects, anticipated financial
performance, and other similar matters. In order to comply with
the terms of the safe harbor for such statements provided by the
Private Securities Litigation Reform Act of 1995. Registrant
notes that a variety of factors, many of which are beyond its
control, affect its operations, performance, business strategy,
and results and could cause actual results and experience to
differ materially from the expectations expressed in these
statements. These factors include, but are not limited to, the
effect of changing economic and market conditions, trends in
business and finance and in investor sentiment, the level of
volatility of interest rates, the actions undertaken by both
current and potential new competitors, the impact of current,
pending, and future legislation and regulation both in the United
States and throughout the world, and the other risks and
uncertainties detailed in this Form 10-Q, and as more fully
detailed in Form 10-K incorporated by reference herein.
Registrant undertakes no responsibility to update publicly or
revise any forward-looking statements.
Results of Operations.
For the thirteen week periods ended June 27, 1997 and June 28,
1996:
Net Income.
Registrant's net income for the thirteen week period ended June
27, 1997 was approximately $4.4 million, as compared to a net
income of approximately $186.6 million for the 1996 period. The
decrease in net income for the 1997 period primarily resulted
from the sale of the California Cable Systems during the second
quarter of 1996 and other factors described below.
Operating Revenues.
During the thirteen week periods ended June 27, 1997 and June 28,
1996, Registrant had total operating revenues of approximately
$13.7 million and $21.9 million, respectively. The approximate
$8.2 million decrease in operating revenues was primarily due to
a decrease of approximately $9.9 million in operating revenues
resulting from the sale of California Cable Systems during the
second quarter of 1996, partially offset by approximately
$840,000 of combined increases in the Wincom-WEBE-WICC Group due
to stronger market conditions at all three stations, including
higher advertising rates arising from increased ratings as well
as an approximate $790,000 increase in C-ML Cable which reflects
increases in the basic subscriber rate and advertising revenues.
The remaining increases or decreases in operating revenues at
Registrant's other properties were immaterial, either
individually or in the aggregate.
Interest Income.
Registrant earned interest income of approximately $875,000 and
$695,000 during the second quarters of 1997 and 1996,
respectively. The increase is due primarily to interest earned
on the cash balances related to the sale of the California Cable
Systems.
Property Operating Expense.
During the second quarters of 1997 and 1996, Registrant incurred
property operating expenses of approximately $4.9 million and
$7.8 million, respectively. Registrant's total property
operating expenses decreased by approximately $2.9 million from
year to year primarily due to a decrease of approximately $3.8
million resulting from the sale of the California Cable Systems
during the second quarter of 1996, partially offset by increases
of approximately $494,000 at C-ML Cable due to expenses directly
related to the increase in operating revenues. The remaining
increases or decreases in property operating expenses at
Registrant's other properties were immaterial, either
individually or in the aggregate.
General and Administrative Expense.
During the second quarters of 1997 and 1996, Registrant incurred
general and administrative expenses of approximately $2.4 million
and $4.8 million, respectively. Registrant's total general and
administrative expenses decreased by approximately $2.4 million
from year to year primarily due to a decrease of approximately
$2.6 million resulting from the sale of the California Cable
Systems during the second quarter of 1996. The remaining
increases or decreases in general and administrative expenses at
Registrant's other properties were immaterial, either
individually or in the aggregate.
Depreciation and Amortization Expense.
Registrant's depreciation and amortization expense totaled
approximately $1.4 million and $5.9 million during the second
quarters of 1997 and 1996, respectively. Registrant's total
depreciation and amortization expense decreased by approximately
$4.5 million from year to year due to a $2.5 million decrease
resulting from the sale of the California Cable Systems during
the second quarter of 1996 and a decrease of approximately $2.0
million at C-ML Cable which resulted from the write-off of fixed
assets during the second quarter of 1996. The remaining
increases or decreases in depreciation and amortization expense
at Registrant's other properties were immaterial, either
individually or in the aggregate.
Interest Expense.
Interest expense of approximately $1.2 million and $3.3 million
in the second quarters of 1997 and 1996, respectively, represents
the cost incurred for borrowed funds utilized to acquire various
media properties. The approximate $2.1 million decrease in
interest expense is due to the repayment of the outstanding
borrowings.
For the twenty-six week periods ended June 27, 1997 and June 28,
1996:
Net Income.
Registrant's net income for the twenty-six week period ended June
27, 1997 was approximately $6.7 million, as compared to a net
income of approximately $185.8 for the 1996 period. The decrease
in net income for the 1997 period primarily resulted from the sale
of the California Cable Systems during the second quarter of 1996
and other factors described below.
Operating Revenues.
During the twenty-six week periods ended June 27, 1997 and June
28, 1996, Registrant had total operating revenues of
approximately $25.8 million and $47.2 million, respectively. The
approximate $21.4 million decrease in operating revenues was
primarily due to a decrease of approximately $24.3 million in
operating revenues resulting from the sale of California Cable
Systems during the second quarter of 1996, partially offset by
approximately $1.6 million of combined increases in the Wincom-
WEBE-WICC Group due to stronger market conditions at all three
stations, including higher advertising rates arising from
increased ratings as well as a $1.1 million increase in C-ML
Cable which reflects increases in the basic subscriber rate and
advertising revenues. The remaining increases or decreases in
operating revenues at Registrant's other properties were
immaterial, either individually or in the aggregate.
Interest Income.
Registrant earned interest income of approximately $1.7 million
and $746,000 during the first twenty-six weeks of 1997 and 1996,
respectively. The increase is due primarily to interest earned on
the cash balances related to the sale of the California Cable
Systems.
Property Operating Expense.
During the first twenty-six weeks of 1997 and 1996, Registrant
incurred property operating expenses of approximately $9.5
million and $16.6 million, respectively. Registrant's total
property operating expenses decreased by approximately $7.1
million from year to year primarily due to a decrease of
approximately $8.6 million resulting from the sale of the
California Cable Systems during the second quarter of 1996,
partially offset by an increase of approximately $783,000 at C-
ML Cable due to expenses directly related to the increase in
operating revenues. The remaining increases or decreases in
property operating expenses at Registrant's other properties were
immaterial, either individually or in the aggregate.
General and Administrative Expense.
During the first twenty-six weeks of 1997 and 1996, Registrant
incurred general and administrative expenses of approximately
$4.6 million and $9.6 million, respectively. Registrant's total
general and administrative expenses decreased by approximately
$5.1 million from year to year primarily due to a decrease of
approximately $5.4 million resulting from the sale of the
California Cable Systems during the second quarter of 1996. The
remaining increases or decreases in general and administrative
expenses at Registrant's other properties were immaterial, either
individually or in the aggregate.
Depreciation and Amortization Expense.
Registrant's depreciation and amortization expense totaled
approximately $3.6 million and $13.7 million in the first twenty-
six weeks of 1997 and 1996, respectively. Registrant's total
depreciation and amortization expense decreased by approximately
$10.1 million from year to year due to a $7.0 million decrease
resulting from the sale of the California Cable Systems during
the second quarter of 1996 and a $3.1 million decrease at C-ML
Cable which resulted from the write-off of fixed assets during
the first half of 1996. The remaining increases or decreases in
depreciation and amortization expense at Registrant's other
properties were immaterial, either individually or in the
aggregate.
Interest Expense.
Interest expense of approximately $2.5 million and $7.5 million
in the first twenty-six weeks of 1997 and 1996, respectively,
represents the cost incurred for borrowed funds utilized to
acquire various media properties. The approximate $5.0 million
decrease in interest expense is due to the repayment of the
outstanding borrowings.
<PAGE>
PART II - OTHER INFORMATION.
Item 1. Legal Proceedings.
On May 1, 1996, a purported class action lawsuit was
filed in Orange County Superior Court against Registrant
on behalf of subscribers of the California Cable Systems
serving Anaheim, Villa Park and adjacent areas of
unincorporated Orange County, California. This
purported class action lawsuit alleges that excessive
late fee payments have been charged to such subscribers
since April, 1992 and seeks refunds of late fee payments
to subscribers and related interest, damages and legal
costs. The action is presently in the discovery phase
and no determination of class action confirmation has
yet been attempted by the plaintiffs. Registrant is
presently unable to estimate its potential liability, if
any, related to this purported class action or whether
any additional members may be sought to be added to the
purported class action lawsuit.
Registrant is not aware of any other material legal
proceedings.
Item 6. Exhibits and Reports on Form 8-K.
A). Exhibits:
Exhibit # Description
27. Financial Data Schedule
B). Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ML MEDIA PARTNERS, L.P.
By: Media Management Partners
General Partner
By: ML Media Management Inc.
Dated: August 11, 1997 /s/ Kevin K. Albert
Kevin K. Albert
Director and President
Dated: August 11, 1997 /s/ Robert F. Aufenanger
Robert F. Aufenanger
Director and Executive Vice
President
Dated: August 11, 1997 /s/ Diane T. Herte
Diane T. Herte
Treasurer
(principal accounting officer
and principal financial
officer of the Registrant)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ML MEDIA PARTNERS, L.P.
By: Media Management Partners
General Partner
By: RP Media Management
Dated: August 11, 1997 /s/I. Martin Pompadur
I. Martin Pompadur
President, Secretary and
Director
(principal executive officer of
the Registrant)
Dated: August 11, 1997 /s/Elizabeth McNey Yates
Elizabeth McNey Yates
Executive Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from the quarter June 27, 1997 Form
10Q Consolidated Balance Sheets and Consolidated Statements
of Operations as of June 27, 1997, and is qualified in its
entirety by reference to such financial statements.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-26-1997
<PERIOD-END> JUN-27-1997
<CASH> 101,637
<SECURITIES> 0
<RECEIVABLES> 7,520
<ALLOWANCES> 537
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 39,086
<DEPRECIATION> 16,940
<TOTAL-ASSETS> 167,581
<CURRENT-LIABILITIES> 0
<BONDS> 58,349
<COMMON> 0
0
0
<OTHER-SE> 84,892
<TOTAL-LIABILITY-AND-EQUITY> 167,581
<SALES> 0
<TOTAL-REVENUES> 25,800
<CGS> 0
<TOTAL-COSTS> 9,512
<OTHER-EXPENSES> 8,724
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,489
<INCOME-PRETAX> 6,733
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,733
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,733
<EPS-PRIMARY> 35.46
<EPS-DILUTED> 0
</TABLE>
