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 27, 1996
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. (the "Registrant" or the "Partnership"),
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.
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 27, 1996, Registrant's investments in media
properties consist of:
a 50% interest in a joint venture which owns two cable
television systems in Puerto Rico and an AM and FM radio station
combination and a background music service in Puerto Rico;
an AM and FM radio station combination in Bridgeport,
Connecticut;
a corporation which owns an FM radio station in Cleveland,
Ohio; and
an AM and FM radio station combination in Anaheim,
California.
Registrant has completed the sale of the following media
properties, all further detailed below:
two radio stations, one located in Tulsa, Oklahoma and the
other in Jacksonville, Florida, were sold on July 31, 1990;
the Universal Cable systems were sold on July 8, 1992;
an AM and FM radio station combination in Indianapolis,
Indiana was sold on October 1, 1993;
two VHF television stations, one located in Lafayette,
Louisiana and the other in Rockford, Illinois, were sold on
September 30, 1995 and July 31, 1995, respectively; and
four cable television systems located in the California
communities of Anaheim, Hermosa Beach/Manhattan Beach, Rohnert
Park/Yountville, and Fairfield were sold on May 31, 1996.
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. ("Century"), a Texas corporation, 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"). C-ML Cable currently serves
117,338 basic subscribers, passes 276,858 homes and consists of
approximately 1,800 linear miles of cable plant.
During 1996, Registrant's share of the net revenues of C-ML Cable
totalled $26,342,927 (36.7% of operating revenues of Registrant).
During 1995, Registrant's share of the net revenues of C-ML Cable
totalled $24,126,675 (22.1% of operating revenues of Registrant).
During 1994, Registrant's share of the net revenues of C-ML Cable
totalled $21,525,793 (20.3% 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 C-ML Cable 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 C-ML
Cable's 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 C-ML Cable 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 C-ML Cable 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 such property at 50% of the total
fair market value of such property 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 such property on similar terms.
During 1996, Registrant's share of the net revenues of the C-ML
Radio properties totalled $2,951,028 (4.1% of operating revenues
of Registrant).
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).
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, Hermosa Beach/Manhattan 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.
On December 30, 1986, ML California was liquidated into
Registrant and transferred all of its assets, except its Federal
Communications Commission ("FCC" or "Commission") 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.
On November 28, 1994, Registrant entered into an agreement (the
"Asset Purchase Agreement") with 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.
At the closing, Registrant and Century entered into a letter
agreement (the "Letter Agreement") with respect to certain
matters. Pursuant to the Asset Purchase Agreement and the Letter
Agreement, Registrant deposited $5 million into an indemnity
escrow account, and agreed to hold cash reserves of approximately
$5.1 million pending the resolution of certain rate regulation
and other matters relating to charges by Registrant to its
subscribers for cable service.
From the purchase price for the California Cable Systems,
approximately $119.1 million, inclusive of accrued interest, was
paid to Bank of America, as agent, to repay in full all
outstanding indebtedness under the Amended and Restated Credit
Agreement dated as of May 15, 1990, as amended, between
Registrant and the banks party thereto and to pay the brokerage
fee of approximately $3 million. Registrant set aside
approximately $40.7 million, including the $5.1 million discussed
above, 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
significant purchase price adjustment. In addition, from the
initial sale proceeds of the California Cable Systems, Registrant
will remit accrued management fees and expenses owed to the
General Partner of approximately $9.2 million, of which $7.6
million was paid through December 27, 1996.
On August 15, 1996, Registrant made a cash distribution to
limited partners of record on May 31, 1996, of approximately
$108.1 million ($575 per Unit) and approximately $1.1 million to
its General Partner, representing its 1% share, from net
distributable sales proceeds from the sale of the California
Cable Systems.
In accordance with the Amended and Restated Agreement of Limited
Partnership, any amounts which may be available for distribution
from any unused cash reserves, after accounting for other
Registrant expenses including 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 December 27,
1996, 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.
During 1996, until its sale on May 31, 1996, California Cable
generated operating revenues of $24,085,663 (33.5% of operating
revenues of Registrant).
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).
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.
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,
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 (as
defined below). 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 in 1995.
During 1995, until its sale on July 31, 1995, WREX generated
operating revenues of $3,053,336 (2.8% of operating revenues of
Registrant).
During 1994, WREX generated operating revenues of $5,506,056
(5.2% of operating revenues of Registrant).
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.
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, 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 and
WREX; 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 accrued 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 in
1995.
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).
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 1996, WEBE-FM generated operating revenues of $6,519,197
(9.1% of operating revenues of Registrant).
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).
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
October 1, 1993, Registrant sold the Indianapolis stations which
generated net proceeds in the approximate amount of $6.1 million.
All proceeds of the sales were paid to the lender.
During 1996 Wincom generated operating revenues of $5,428,648
(7.6% of operating revenues of Registrant).
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).
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 1996, WICC-AM generated operating revenues of $2,494,402
(3.5% of operating revenues of Registrant).
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).
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
approximately $15.1 million.
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 Note 5 of "Item
8. Financial Statements and Supplementary Data" for further
information regarding the ML California Credit Agreement.
During 1996, the Anaheim Radio Stations generated operating
revenues of $3,750,442 (5.2% of operating revenues of
Registrant).
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).
Employees.
As of December 27, 1996, Registrant and its consolidated
subsidiaries employed approximately 390 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, general entities provide high-
powered direct broadcast satellite ("DBS") service in the
continental United States, and others have announced plans to
commence DBS operation in the near future. 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 multi-channel multi-point distribution service ("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 recently authorized a new
service, the local multipoint distribution service ("LMDS"),
which will 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.
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 1992 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, (the
"Communications 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 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. Subsequent to the passage of the
1992 Cable Act, the FCC undertook 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 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 sunset certain of the rate
regulations in three years and eliminated the three-year
ownership requirement.
Other provisions of the 1992 Cable Act include: (1) 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; (2)
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; (3) a
requirement that the FCC promulgate rules limiting children's
access to indecent programming on access channels; (4)
notification requirements regarding sexually explicit programs;
and (5) 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 established an entirely
new set of regulatory requirements and standards. It is an
unusually complicated and sometimes confusing legislative
enactment that spawned a multitude of FCC enforcement decisions
as well as certain still-to-be concluded FCC proceedings. It
also remains 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.
Pursuant to the 1992 Cable Act, the FCC promulgated 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 broadcast 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
United States Court of Appeals for the D.C. Circuit found the
indecency rules to be unconstitutional and remanded them to the
Commission. Subsequently, the United States 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. The Supreme Court
ultimately affirmed the provision allowing cable operators to
decide whether to carry indecent programming on leased access
channels but struck down provisions that would have (i) allowed
cable operators to decide whether to carry such programming on
PEG channels; and (ii) required cable operators to segregate and
block indecent programming allowed on lease access channels. The
latter two provisions were struck down on First Amendment grounds
for being insufficiently tailored to achieve the legitimate
governmental objective of protecting children from exposure to
"patently offensive" programming. On March 31, 1997, the Supreme
Court, in a 5-4 decision, upheld the must carry provisions of the
1992 Cable Act, finding them to be content-neutral regulations
that advance important governmental interests unrelated to the
suppression of free speech. The must carry rules promulgated the
Commission to implement the must carry provisions which were in
effect, pending the outcome of the appellate process. The must
carry provisions will remain in effect. On a separate matter, in
September 1993 the United States 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. In August 1996,
the United States Court of Appeals for the District of Columbia
Circuit affirmed the lower court's finding. A further appeal is
expected and 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. In January 1997, the FCC released an order that
established a new formula for setting leased access rates. It is
anticipated that the new formula will lower the rates programmers
must pay to lease capacity on cable systems. The FCC 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, among other things, enacted a related "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 added a fourth
condition: the mere offering (regardless of penetration) by a
local exchange carrier, or an entity using the local exchange
carrier's ("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, 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 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. The 1996
Act also modifies the rules governing the filing of complaints
for rate increases on the CPST. Under the former procedures,
mandated by the 1992 Cable Act, subscribers were allowed 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.
The FCC's rate regulations generally required regulated cable
systems to use an FCC-prescribed "benchmark" approach to set
initial rates for BSTs and CPSTs. Cable systems ultimately were
required to reduce their rates by approximately 17% from the
rates in effect on September 30, 1992. Certain modifications of
the rules were made for low-price cable systems 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). The United States Court of Appeals has upheld these
regulations, but these and other rate regulations may be subject
to further judicial review, and may be altered by ongoing FCC
rulemaking and case-by-case review.
Alternatively, cable operators may seek to have their rates
regulated under 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. The final cost-of-service rules
ultimately adopted by the FCC: (1) establish an industry-wide
11.25% rate of return, (but the Commission has proposed to use a
cable system's actual debt cost and capital structure to
determine its final rate of return); (2) establish 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 the rate
base; and (3) replaced the presumption of a two-year period for
accumulated start-up losses with a case-by-case determination of
the appropriate period. The 1996 Act 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.
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, 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 regulatory treatment of "a la carte" packages of
channels has been a source of particular regulatory uncertainty
for many cable systems. 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. Pursuant to the 1996 Act, the FCC
revised its 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
transition rate relief and streamlined rate reduction approaches
to setting initial permitted rates, 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 United States
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 United States (approximately
600,000 subscribers) and is not affiliated with an entity whose
gross annual revenues exceed $250 million is exempt from rate
regulation of the CPST and also of the BST (provided that the
basic tier was the only tier subject to regulation as of December
31, 1994) in any franchise area in which that operator serves
50,000 or fewer subscribers.
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.
The 1996 Act also provides operator flexibility for subscriber
notification of rate and service changes. The 1996 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. The FCC has adopted rules
implementing a number of provisions of the 1996 Act and is
considering the adoption of others.
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. A federal district court in
Kentucky, however, 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. On February 24, 1997,
the United States Court of Appeals for the Sixth Circuit upheld
the denial of the franchise. It is possible that the cable
operator will take a further appeal of the decision.
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. Pursuant to the 1992 Cable Act, however, 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
Prior to the passage of the 1996 Act, an LEC was generally
prohibited 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. The 1996 Act completely revised the law governing
cable and telephone company competition and cross-ownership: the
1996 Act eliminates the cable/telco cross-ownership ban, 214
certification requirement, and all of the FCC's video dialtone
("VDT") rules, but retains (in modified form) the prohibitions on
cable/telco buy-outs.
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
systems entirely replace the VDT rules. The 1996 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 1996 Act to terminate operation. 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 system
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 PEG channels. Cable companies are, in certain
circumstances, also permitted to operate open video systems.
The FCC's new open video system rules: (1) restrict the amount of
capacity that a carrier or its affiliates may use to provide
programming directly to subscribers; (2) prohibit an open video
systems ("OVS") operator from discriminating among video
programming providers with regard to carriage; (3) permit an OVS
operator to carry on only one channel any video programming
service that is offered by more than one programming provider;
and (4) prohibit an OVS 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 provides 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. The
FCC currently is seeking comment on proposed revisions to its
pole attachment rules.
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 1992 Cable 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. In August 1996, the United
States Court of Appeals for the District of Columbia Circuit
affirmed the lower court's ruling. The FCC's vertical ownership
restriction consists of a "channel occupancy" standard which
places a 40% limit on the number of channels (up to 75 channels)
that may be occupied by services from programmers in which the
cable operator has an attributable ownership interest. Further,
the 1992 Cable 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, the
Commission has issued a series of annual reports assessing the
status of competition in the market for the delivery of video
programming. Although the Commission has 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
has 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. Although the FCC is allowed
to adopt regulations necessary to ensure carriage, channel
positioning, and nondiscriminatory treatment of nonaffiliated
broadcast stations, it has opted not to impose any such rules at
this time. 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
1996 Act also eliminates the cable/MMDS and cable/satellite
master antenna television facilities ("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. Currently, several
entities, including DirecTV, Inc., an affiliate of Hughes
Communications Galaxy, United States Satellite Broadcasting
Company and EchoStar Satellite Corporation ("EchoStar"), provide
DBS service to consumers throughout the country.
In 1996, MCI Telecommunications Corporation ("MCI") paid to the
United States treasury $682.5 million for the right to operate a
28 transponder DBS system capable of providing service to the
entire continental United States. Thereafter, MCI entered into a
joint venture, called American Sky Broadcasting ("ASkyB"), with
News Corporation Ltd. (an entity controlled by Rupert Murdoch) to
provide DBS service from MCI's satellite.
Recently, ASkyB announced a plan to acquire 50% of EchoStar.
According to reports, ASkyB and EchoStar believe the combined
assets of the companies would provide enough satellite capacity
to offer 500 channels of DBS television service, including local
broadcast station signals, to a majority of the United States.
In that regard, the Copyright Office recently issued an "advisory
letter" in response to a request by ASkyB in which it stated that
it would not question DBS companies that file copyright
statements that include the retransmission of local television
station signals with the television station's market. The
Copyright Office also indicated, however, that the ultimate
ability of DBS operators to provide local signals to subscribers
on such a basis is ultimately a determination of the courts. The
rules by which MCI acquired its DBS interest pursuant to auction
are subject to an ongoing appeal at the United States Court of
Appeals for the district of Columbia Circuit.
In March 1997, TEMPO Satellite, Inc. launched a new satellite
from which it will provide DBS service. 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.
Digital Television: On April 3, 1997, the FCC announced that it
had adopted rules that will allow television broadcasters to
provide digital television ("DTV") to consumers. The Commission
also adopted a table of allotments for DTV, which will provide
eligible existing broadcasters with a second channel on which to
provide DTV service. The allotment plan is based on the use of
channels 2-51, although the "core" DTV spectrum will be between
channels 2-46 or 7-51. Ultimately, the Commission will recover
the channels currently used for analog broadcasting and will
decide at a later date the use of the spectrum ultimately
recovered. Television broadcasters will be allowed to use their
channels according to their best business judgment. Such uses
can include data transfer, subscription video, interactive
materials, and audio signals, although broadcasters will be
required to provide a free digital video programming service that
is at least comparable to today's analog service. Broadcasters
will not be required to air "high definition" programming or to
simulcast their analog programming on the digital channel.
Affiliates of ABC, CBS, FOX, and NBC in the top ten markets will
be required to be on the air with a digital signal by May 1,
1999. Affiliates of those networks in markets 11-30 will be
required to be on the air with a digital signal by November 1,
1999. The Commission reminded broadcasters that they remain
public trustees and that it will issue a notice to determine the
extent of broadcasters' future public interest obligations.
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 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 could be used to supply multichannel
video, telephony, and other communications services directly to
subscribers. This service would operate primarily 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 February and August 1996, the FCC issued an order
designating a total of 1300 mHz of spectrum to accommodate up to
two LMDS operators in each community in the United States.
Additionally, the FCC is attempting to identify additional
spectrum for LMDS. Auctions for LMDS licenses are expected to be
held sometime in 1997. Registrant cannot predict the timing or
ultimate impact of any future LMDS operations.
Personal Communications Service: In August, 1993, the FCC
established rules for a new portable telephone service, the
Personal Communications Service ("PCS"). PCS has the ability 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 and Major Trading Areas. Thus, there are up
to six PCS licenses available in each geographic area. The
Commission used competitive bidding to assign the PCS licenses
and PCS service is starting to emerge in various areas, primarily
competing with incumbent cellular telephone operators.
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). 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 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 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 most recent required election
date was October 1, 1996 with elections taking effect on January
1, 1997.
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.
On March 31, 1997, the 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.
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, a cable
operator is required to fully scramble or block the audio and
video programming of each channel primarily dedicated to the
carriage of sexually explicit adult programming or to permit the
carriage of such programming to the hours between 10 p.m. and 6
a.m. The FCC's rules implementing these provisions have been
stayed pending the outcome of judicial appeal. The Supreme Court
recently upheld a ruling of the United States District Court in
Delaware dismissing requests for a preliminary injunction of the
provision. The FCC is expected to release shortly a public
notice notifying cable operators of their obligation to begin
complying with the provision and its rules. 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 1996 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. The FCC has asked for
public comment on a ratings plan developed by the advisory
committee.
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 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 ruled that some SMATV systems are
eligible for the cable compulsory license. Pursuant to a recent
request by the Chairman of the Senate Judiciary Committee, the
Copyright Office will examine the compulsory license scheme and
submit a report to the Committee by August 1, 1997.
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, in the past, 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 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: Pursuant to the 1992 Cable Act, the FCC has
promulgated rules on customer service standards. 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 United States Supreme Court. The 1996
Act revised 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. The FCC currently is seeking comment on proposed
revisions to its pole attachment rules.
The FCC also has set forth standards on signal leakage. 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 United States Supreme Court. In 1992, the FCC
adopted mandatory technical standards for cable carriage of all
video programming, including retransmitted broadcast material,
cable originated programs and pay channels. The 1992 Cable Act
included 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. Those standards 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, had 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 remain unclear to the Registrant.
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 Communications Act or
limited by specific FCC rules and regulations, the Communications
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
United States 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 revised the radio ownership rules most
recently changed by the FCC in 1992. The 1996 Act eliminated 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. An auction for DARS Spectrum has
been scheduled for April 1, 1997 to assign two licenses to
provide nationwide DARS services. Four applicants have been
found to qualify for the auction. 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.
Auctions are expected to be held in 1997 in order to allocate
spectrum for two DARS licenses. 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.
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.
Item 3. Legal Proceedings.
On May 1, 1996, a purported class action lawsuit was filed
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.
On May 31, 1996, Win Communications, Inc. filed with the FCC an
application for renewal of the license of WQAL-FM, Cleveland,
Ohio. On September 3, 1996, the National Rainbow Coalition filed
a petition to deny the renewal application. Win Communications,
Inc. filed an opposition to the petition on October 3, 1996 and a
settlement of approximately $10,000 has been negotiated with the
National Rainbow Coalition. The FCC has approved such
settlement, which will be effective May 7, 1997, and has also
granted WQAL-FM's renewal application.
Registrant is not aware of any other material legal proceedings.
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 the 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 March 1, 1997, the number of owners of Units was 15,072.
Beginning with the December 1994 client account statements,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("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. These estimated values will be based on financial and
other information available to the independent service on (1) the
prior August 15th for reporting on December year-end and
subsequent client account statements through the following May's
month-end client account statements, and on (2) March 31st for
reporting on June month-end and subsequent client account
statements through the November month-end account statements of
the same year. 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 of
their Units. In addition, Unit holders may not realize the
independent estimated value or the Registrant's current net asset
value amount upon the liquidation of Registrant's assets over its
remaining life.
Registrant does not distribute dividends, but rather distributes
Distributable Cash From Operations, Distributable Refinancing
Proceeds, and Distributable Sale Proceeds, to the extent
available. There were no distributions in 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. In 1996, $108.1 million ($575 per Unit) was
distributed to its limited partners and $1.1 million to its
General Partner from the proceeds of the sale of California Cable
Systems.
Item 6. Selected Financial Data.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 27, December 29, December 30,
1996 1995 1994
<S> <C> <C> <C>
Operating revenues $ 71,831,99 $ 109,214,03 $105,910,208
6 1
Gain on sale of the
California Cable
Systems $ 185,609,19 $ - $ -
1
Gain on sale of
television stations
$ - $ 22,796,45 $ -
4
Net Income/(Loss) $ 189,711,30 $ 21,490,24 $( 1,450,756)
4 0
Net Income/(Loss)
per Unit of Limited
Partnership
Interest
$ 999.0 $ 113.1 $ (7.64)
4 7
Number of Units 187,994 187,994 187,994
As of As of As of
December 27, December 29, December 30,
1996 1995 1994
Total Assets $ 160,994,82 $ 210,198,49 $238,330,358
4 6
Borrowings $ 60,348,42 $ 182,821,92 $218,170,968
8 8
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 25,
1993 1992
<S> <C> <C>
Operating revenues $100,401,671 $100,443,967
Net Income/(Loss) $ 1,377,340 $ (9,280,770)
Net Income/(Loss) per
Unit of Limited
Partnership Interest $ 7.25 $ (48.87)
Number of Units 187,994 187,994
As of As of
December 31, December 25,
1993 1992
Total Assets $249,851,937 $261,554,442
Borrowings $232,568,349 $245,994,745
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources.
As of December 27, 1996, Registrant had $91,591,280 in cash and
cash equivalents. Of this amount, approximately $28.8 million is
restricted for use at C-ML Cable and approximately $37.0 million
is in cash reserves to cover both operating liabilities and
litigation contingencies relating to the California Cable Systems
prior to their sale. Approximately $6.0 million is in cash
reserve to fund both actual and contingent liabilities resulting
from the sale of WREX and KATC. The remaining investments
account for approximately $11.1 million of cash limited for use
at the operating level. The cash at C-ML Cable has been
restricted for the funding of its capital expenditure programs
and to satisfy its future debt service requirements. C-ML
Cable's debt service requirements include annual principal
payments of $20 million which will commence November 30, 1998.
In addition, the amount payable for accrued management fees and
expenses owed to the General Partner amounted to approximately
$2.3 million as of December 27, 1996.
As of December 29, 1995, Registrant had $40,124,366 in cash and
cash equivalents, of which $36,275,625 was limited for use at the
operating level and the remaining $3,848,741 was Registrant's
working capital.
During 1996, Registrant continued its operations phase and the
process of liquidating certain of its media properties.
Registrant consummated the sale of the California Cable
Operations serving the Anaheim, Hermosa Beach/Manhattan Beach,
Rohnert Park/Yountville and Fairfield communities (the
"California Cable Systems") on May 31, 1996 (see below). On
August 15, 1996, Registrant made a cash distribution to Limited
Partners of record on May 31, 1996, of approximately $108.1
million ($575 per unit of limited partnership interest ("Unit"))
and $1.1 million to its General Partner, representing its 1%
share, from net distributable sales proceeds.
As of December 27, 1996, Registrant's investments in media
properties consisted of a 50% interest in a 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, 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 selling its
remaining investments through 1998.
On May 1, 1996, a purported class action lawsuit was filed
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.
On May 31, 1996, Win Communications, Inc. filed with the Federal
Communications Commission ("FCC" or "Commission") an application
for renewal of the license of WQAL-FM, Cleveland, Ohio. On
September 3, 1996, the National Rainbow Coalition filed a
petition to deny the renewal application. Win Communications,
Inc. filed an opposition to the petition on October 3, 1996 and a
settlement of approximately $10,000 has been negotiated with the
National Rainbow Coalition. The FCC has approved such
settlement, which will be effective May 7, 1997, and has also
granted WQAL-FM's renewal application.
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 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.
At the closing, Registrant and Century entered into a letter
agreement (the "Letter Agreement") with respect to certain
matters. Pursuant to the Asset Purchase Agreement and the Letter
Agreement, Registrant deposited $5 million into an indemnity
escrow account, which is being classified on the accompanying
Consolidated Balance Sheet as Investments held by escrow agents,
and agreed to hold cash reserves of approximately $5.1 million
pending the resolution of certain rate regulation and other
matters relating to charges by Registrant to its subscribers for
cable service.
From the purchase price for the California Cable Systems,
approximately $119.1 million, inclusive of accrued interest, was
paid to Bank of America, as agent, to repay in full all
outstanding indebtedness under the Amended and Restated Credit
Agreement dated as of May 15, 1990, as amended, between
Registrant and the banks party thereto and to pay the brokerage
fee of approximately $3 million. Registrant set aside
approximately $40.7 million, including the $5.1 million discussed
above, 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
significant purchase price adjustment. In addition, from the
initial sale proceeds of the California Cable Systems, Registrant
will remit accrued management fees and expenses owed to the
General Partner of approximately $9.2 million, of which $7.6
million was paid through December 27, 1996.
On August 15, 1996, Registrant made a cash distribution to
limited partners of record on May 31, 1996, of approximately
$108.1 million ($575 per Unit) and approximately $1.1 million to
its General Partner, representing its 1% share, from net
distributable sales proceeds from the sale of the California
Cable Systems.
In accordance with the Amended and Restated Agreement of Limited
Partnership, any amounts which may be available for distribution
from any unused cash reserves, after accounting for other
Partnership expenses including 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 December 27,
1996, 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.
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
continued 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 Systems 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. As of December 27, 1996 and
December 29, 1995, the net property tax refund receivable from
Orange County was approximately $665,000 and $2.3 million,
respectively, as a result of California Cable Systems having
received approximately $1.7 million during 1996.
As of December 27, 1996, Registrant had funds related to the
Northern California Systems in an escrow account totaling
approximately $853,000, 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 27, 1996, Registrant had funds in an additional
escrow account totaling approximately $183,000, 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.
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, which cured all previously outstanding
principal and interest payments and covenant 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.
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.
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
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 distribution ("MVPD")
systems 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 Telecommunications Act of 1996 (the
"1996 Act") added a fourth condition: the mere offering
(regardless of penetration) by a local exchange carrier, or an
entity using the local exchange carrier'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,
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 1996 Act, however, confines rate regulation to the
BST after three years: on March 31, 1999, the CPST will be
exempted from regulation. The 1996 Act also modifies the rules
governing the filing of complaints for rate increases on the
CPST. Under the former procedures, mandated by the 1992 Cable
Act, subscribers were allowed 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.
The FCC's rate regulations generally required regulated cable
systems to use an FCC-prescribed "benchmark" approach to set
initial rates for BSTs and CPSTs. Cable systems ultimately were
required to reduce their rates by approximately 17% from the
rates in effect on September 30, 1992. Certain modifications of
the rules were made for low-price cable systems 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). The United States Court of Appeals has upheld these
regulations, but these and other rate regulations may be subject
to further judicial review, and may be altered by ongoing FCC
rulemaking and case-by-case review.
Alternatively, cable operators may seek to have their rates
regulated under 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. The final cost-of-service rules
ultimately adopted by the FCC: (1) establish an industry-wide
11.25% rate of return, (but the commission has proposed to use a
cable system's actual debt cost and capital structure to
determine its final rate of return); (2) establish 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 the rate
base; and (3) replaced the presumption of a two-year period for
accumulated start-up losses with a case-by-case determination of
the appropriate period. The 1996 Act 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.
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, 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 regulatory treatment of "a la carte" packages of
channels has been a source of particular regulatory uncertainty
for many cable systems. 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. Pursuant to the 1996 Act, the FCC
revised its 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
transition rate relief and streamlined rate reduction approaches
to setting initial permitted rates, 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 United States
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 United States (approximately
600,000 subscribers) and is not affiliated with an entity whose
gross annual revenues exceed $250 million is exempt from rate
regulation of the CPST and also of the BST (provided that the
basic tier was the only tier subject to regulation as of December
31, 1994) in any franchise area in which that operator serves
50,000 or fewer subscribers.
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.
The 1996 Act also provides operator flexibility for subscriber
notification of rate and service changes. The 1996 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. The FCC has adopted rules
implementing a number of provisions of the 1996 Act and is
considering the adoption of others.
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 C-ML Cable increased in 1994 compared to 1993, the
increase in revenues of C-ML Cable 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 1997. There were no defaults under the C-ML Notes or the
C-ML Revolving Credit Agreement as of December 27, 1996.
Summary
Registrant's ongoing cash needs will be to fund debt service,
capital expenditures and working capital needs. During 1996,
cash interest paid was $10,772,817, and principal repayments of
$122,473,500 were made. During 1997, Registrant is required by
its various debt agreements to make scheduled principal
repayments of $10,348,428 under all of its debt agreements.
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
unrestricted cash to meet all of its contractual debt obligations
of all of its investments, however, such debt obligations are
recourse only to specified assets.
Current and future maturities under Registrant's existing credit
facilities are described in Note 5 of "Item 8. Financial
Statements and Supplementary Data".
Results of Operations
1996 vs. 1995
During 1996 and 1995, Registrant had total operating revenues of
approximately $71.8 million and $109.2 million, respectively.
The approximate $37.4 million decrease in operating revenues was
primarily due to the sale of the California Cable Systems on May
31, 1996 and the sales of KATC and WREX in September and July,
1995, respectively, offset partially by revenue increases in
retained properties.
Registrant's 50% share of the operating revenues of Century-ML
Cable Corporation ("C-ML Cable Corp.") and the Community Cable-
Vision of Puerto Rico, Inc., Community Cablevision of Puerto Rico
Associates, and Community Cablevision Incorporated (collectively,
the "Community Companies") herein referred to as C-ML Cable ("C-
ML Cable") increased by approximately $2.2 million in 1996
compared to 1995. The increase in operating revenues at C-ML
Cable occurred as a result of an increase in the number of basic
and premium subscribers during 1996, implementation of 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 116,497 in
1996 from 113,942 in 1995, and the total number of basic
subscribers increased to 117,338 at the end of 1996 from 115,655
at the end of 1995. The number of average premium subscriptions
at C-ML Cable increased to 74,663 during 1996 from 71,150 during
1995 due to aggressive marketing efforts. Total premium
subscriptions increased to 75,760 at the end of 1996 from 73,565
at the end of 1995 at C-ML Cable.
The Wincom-WEBE-WICC radio group reported an increase in
operating revenues of approximately $1.0 million, primarily due
to stronger local and national advertising and network revenues
resulting from improved ratings at both WEBE-FM and WQAL-FM.
Operating revenues increased by approximately $295,000 at
KORG/KEZY due primarily to an increase in advertising revenues
from the Anaheim Mighty Ducks, as well as increases in trade
revenues and interest income.
During 1996, Registrant recognized a gain of approximately $185.6
million on the sale of the California Cable Systems and, during
1995, Registrant recognized gains of approximately $14.0 million
and $8.8 million on the sale of television stations KATC and
WREX, respectively. Therefore, the results of operations of the
California Cable Systems and KATC and WREX for 1996 and 1995 are
not comparable.
During 1996 and 1995, Registrant incurred property operating
expenses of approximately $25.4 million and $39.3 million,
respectively. Registrant's total property operating expenses
decreased by approximately $13.9 million from year to year
primarily as a result of the sale of the California Cable Systems
in 1996 and KATC and WREX 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 1996 and 1995, Registrant incurred general and
administrative expenses of approximately $13.9 million and $22.3
million, respectively. Registrant's total general and
administrative expenses decreased by approximately $8.4 million
from year to year primarily as a result of the sale of the
California Cable Systems in 1996 and KATC and WREX in 1995. 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 $3.7 million
and $332,000 during 1996 and 1995, respectively, on its excess
funds; the increase resulting primarily from the income earned on
the net sales proceeds of KATC, WREX and the California Cable
Systems.
Interest expense of approximately $10.4 million and $19.4 million
in 1996 and 1995, respectively, represents the cost incurred for
borrowed funds utilized to acquire various media properties. The
approximate $9.0 million decrease in interest expense is due
primarily to a decrease of approximately $8.8 million related to
the full repayment of the outstanding borrowings of the
California Cable Systems and the Anaheim Radio Stations in 1996
and the full repayment of the outstanding borrowings of the
television stations in 1995. 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 $20.2 million and $28.1 million in 1996 and 1995,
respectively. This $7.9 million decrease resulted primarily from
the sale of the California Cable Systems in 1996 and KATC and
WREX in 1995, offsetting an approximate $3.8 million increase at
C-ML Cable resulting from the write-off of fixed assets. The
remaining increases or decreases in depreciation and amortization
expense at Registrant's other properties were immaterial, either
individually or in aggregate.
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 operating 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.
Operating revenues at California Cable Systems 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 operating revenues of approximately $1.7 million,
primarily as a result of stronger local and national advertising
and network revenues resulting from improved market conditions.
During 1995 and 1994, Registrant incurred property operating
expenses of approximately $39.3 million and $38.8 million,
respectively. Registrant's total property operating expenses
increased by approximately $536,000 from year to year as a result
of: an increase of approximately $711,000 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 $384,000 due primarily to higher
programming costs partially offset by decreased marketing costs;
a combined increase of approximately $496,000 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 $22.3 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; $374,000 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 $207,000 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 $677,000 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 excess funds.
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 $538,000 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 $763,000 at combined
California Cable and radio operations due to fully depreciated
assets; and a $198,000 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.
Additional Operating Information
Registrant holds a 50% interest in the Revised Venture, which in
turn, through C-ML Cable, passed 276,858 homes, provided basic
cable television service to 117,338 subscribers and accounted for
75,760 pay units as of December 27, 1996. The following table
shows the numbers of basic subscribers and pay units at
Registrant's wholly-owned California Cable Systems and at C-ML
Cable:
<TABLE>
<CAPTION> As of As of As of
December 27, December 29, December 30,
1996 1995 1994
<S> <C> <C> <C>
Homes Passed
California Cable
Systems (wholly-
owned) 0 221,256 218,992
C-ML Cable (50%
owned) 276,858 272,198 262,505
Basic Subscribers
California Cable
Systems (wholly-
owned) 0 138,864 136,022
C-ML Cable (50%
owned) 117,338 115,655 112,228
Pay Units
California Cable
Systems (wholly-
owned) 0 73,500 77,749
C-ML Cable (50%
owned) 75,760 73,565 68,735
</TABLE>
The overall number of homes passed by C-ML Cable increased from
the end of 1994 to the end of 1996 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. The number of pay units at C-
ML Cable increased from the end of 1994 to the end of 1996,
primarily due to aggressive marketing efforts.
As of December 27, 1996, Registrant operated seven radio stations
in three cities in the continental United States and one city in
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 set forth 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 one in the
market in terms of listeners 12+ as of the Fall, 1996 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, 1996 rating
period.
Market rating information was not available from a reliable
source for Registrant's radio stations in 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 27, 1996 and
December 29, 1995
Consolidated Statements of Operations for the three years
ended December 27, 1996
Consolidated Statements of Cash Flows for the three years
ended December 27, 1996
Consolidated Statements of Changes in Partners'
Capital/(Deficit) for the three years ended
December 27, 1996
Notes to Consolidated Financial Statements for the three
years ended December 27, 1996
Schedule I - Condensed Financial Information of Registrant
as of December 27, 1996 and December 29, 1995 and for the
three years ended December 27, 1996
Schedule II - Valuation and Qualifying Accounts as of
December 27, 1996, December 29, 1995 and December 30, 1994
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 27, 1996 and
December 29, 1995 and the results of their operations and their
cash flows for each of the three years in the period ended
December 27, 1996 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.
/s/ Deloitte & Touche, LLP.
New York, New York
March 14, 1997
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 27, 1996 AND DECEMBER 29, 1995
Notes 1996 1995
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents 1 $ 91,591,280 $ 40,124,366
Investments held by escrow
agents 2 6,244,252 1,000,000
Accounts receivable (net of
allowance for doubtful
accounts of $798,773 and
$856,484, respectively) 6,768,307 12,215,484
Prepaid expenses and deferred
charges - net 1 984,574 2,842,996
Property, plant and equipment
- - net 1,3 20,582,046 72,989,071
Intangible assets - net 1,4 33,587,880 79,636,581
Other assets 1,236,485 1,389,998
TOTAL ASSETS $160,994,824 $210,198,496
LIABILITIES AND PARTNERS'
CAPITAL/(DEFICIT):
Liabilities:
Borrowings 5,10 $ 60,348,428 $182,821,928
Accounts payable and
accrued liabilities 6 20,941,830 27,630,778
Subscriber advance payments 1,545,835 2,109,929
Total Liabilities 82,836,093 212,562,635
</TABLE>
(Continued on the following page.)
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 27, 1996 AND DECEMBER 29, 1995
(continued)
Notes 1996 1995
<S> <C> <C> <C>
Commitments and Contingencies 5,7
Partners' Capital/(Deficit):
General Partner:
Capital contributions, net of
offering expenses 1 1,708,299 1,708,299
Cash distributions (1,167,841) (75,957)
Cumulative income/(loss) 304,047 (1,593,066)
844,505 39,276
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 distributions (115,616,310) (7,519,760)
Cumulative income/(loss) 30,100,845 (157,713,346)
77,314,226 (2,403,415)
Total Partners'
Capital/(Deficit) 78,158,731 (2,364,139)
TOTAL LIABILITIES AND PARTNERS'
CAPITAL/(DEFICIT) $ 160,994,824 $ 210,198,496
</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 27, 1996
Notes 1996 1995 1994
<S> <C> <C> <C> <C>
REVENUES:
Operating revenues 1 $ 71,831,996 $109,214,031 $105,910,208
Interest 3,692,033 332,181 192,875
(Loss)/Gain on
sale of assets 2 - (22,802) 122,154
Gain on sale of the
California Cable
Systems 2 185,609,191 - -
Gain on sale of
WREX 2 - 8,838,248 -
Gain on sale of
KATC 2 - 13,958,206 -
Total revenues 261,133,220 132,319,864 106,225,237
COSTS AND EXPENSES:
Property operating 25,351,743 39,301,436 38,764,954
General and
administrative 6,7 13,895,965 22,255,438 20,907,542
Depreciation and
amortization 1,3,4 20,238,004 28,086,433 30,180,011
Interest expense 5 10,352,597 19,417,987 16,046,700
Management fees 6 1,337,034 1,566,245 1,591,831
Other 246,573 202,085 184,955
Total costs and
expenses 71,421,916 110,829,624 107,675,993
NET INCOME/(LOSS) $189,711,304 $ 21,490,240 $ (1,450,756)
Per Unit of Limited
Partnership Interest:
NET INCOME/(LOSS) $ 999.04 $ 113.17 $ (7.64)
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 27, 1996
1996 1995 1994
<S> <C> <C> <C>
Cash flows from
operating activities:
Net income/(loss) $189,711,304 $ 21,490,24 $(1,450,756
0 )
Adjustments to reconcile
net income/(loss) to
net cash provided by
operating activities:
Depreciation and
amortization 20,238,004 28,086,433 30,180,011
Bad debt expense 360,989 236,504 319,392
Loss/(Gain) on sale of
assets - 22,802 (122,154)
Gain on sale of the
California Cable Systems (185,609,19 - -
1)
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
held by agents - 6,000,000 (6,000,000)
Investments held by
escrow agents (5,244,252) (1,000,000) -
Accounts receivable 4,387,235 (750,328) (2,451,478)
Prepaid expenses and
deferred charges 396,823 197,004 272,316
Other assets (62,218) 1,468,187 (94,528)
(Decrease)/Increase:
Accounts payable and
accrued liabilities (10,445,177) (10,154,531 4,443,739
)
Subscriber advance
payments (101,592 214,52 (206,682
) 9 )
Net cash provided by
operating activities 13,631,925 23,014,386 24,889,860
</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 27, 1996
(continued)
1996 1995 1994
<S> <C> <C> <C>
Cash flows from investing
activities:
Proceeds from sale of - 30,923 243,142
assets
Purchase of property,
plant and equipment (8,236,792) (9,282,276) (10,688,588)
Intangible assets (10,000) (246,699) (281,221)
Proceeds from sale of the
California Cable
Systems 286,000,000 - -
Payment of costs
incurred related to sale
of the California Cable
Systems (8,256,285) - -
Proceeds from sale of WREX - 18,370,500 -
Proceeds from sale of KATC - 24,500,000 -
Net cash provided by/
(used in) investing
activities 269,496,923 33,372,448 (10,726,667)
Cash flows from
financing activities:
Principal payments on
borrowings (122,473,500 (35,349,040) (14,397,381)
)
Cash distributions (109,188,434 (7,595,717) -
)
Net cash used in
financing activities (231,661,934 (42,944,757 (14,397,381)
) )
Net increase/(decrease)in
cash and cash equivalents 51,466,914 13,442,077 (234,188)
Cash and cash
equivalents at the
beginning of year 40,124,366 26,682,289 26,916,477
Cash and cash
equivalents at the
end of year $ 91,591,280 $ 40,124,366 $ 26,682,289
Cash paid for interest $ 10,772,817 $ 21,384,422 $ 15,388,775
</TABLE>
(Continued on the following page.)
<PAGE>
ML MEDIA PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 27, 1996
(continued)
Supplemental Disclosure:
Property, plant and equipment of approximately $184,000 and
$696,000 was acquired but not paid for as of December 29, 1995
and December 30, 1994, respectively.
Effective May 31, 1996, the Partnership sold substantially all of
the assets used in the operations of the California Cable
Systems.
Effective July 31, 1995, the Partnership sold substantially all
of the assets used in the operations of television station WREX.
Effective September 30, 1995, the Partnership sold substantially
all of the assets used in the operations 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 27, 1996
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
<S> <C> <C> <C>
1994:
Partners' Deficit as
of January 1, 1994 $ (85,161) $ (14,722,745 $ (14,807,906)
)
Net Loss (14,508) (1,436,248) (1,450,756)
Partners' Deficit as
of December 30, 1994 (99,669) (16,158,993) (16,258,662)
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)
1996:
Net Income 1,897,113 187,814,191 189,711,304
Cash Distribution (1,091,884) (108,096,550) (109,188,434)
Partners' Capital as
of December 27, 1996 $ 844,505 $ 77,314,226 $ 78,158,731
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
ML MEDIA PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 27, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ML Media Partners, L.P. (the "Partnership" or the "Registrant")
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 27, 1996, the Partnership's investments in media
properties consisted of:
a 50% interest in a venture (the "Revised Venture") which
owns an AM (WUNO-AM) and FM (WFID-FM) radio station combination
and a background music service in San Juan, Puerto Rico ("C-ML
Radio") and, through its wholly-owned subsidiary corporation,
Century-ML Cable Corporation ("C-ML Cable Corp."), operates two
cable television systems in Puerto Rico ("C-ML Cable");
an AM (WICC-AM) and FM (WEBE-FM) radio station combination
in Bridgeport, Connecticut;
an AM (KORG-AM) and FM (KEZY-FM) radio station combination
in Anaheim, California; and
Wincom Broadcasting Corporation ("Wincom"), a corporation
that owns an FM radio station (WQAL-FM) in Cleveland, Ohio.
Reclassifications
Certain reclassifications were made to the 1995 financial
statements to conform with the current period's presentation.
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 WEBE, WICC and Anaheim Radio and its pro rata 50%
interest in the Revised Venture. In addition, the Partnership
consolidated KATC, WREX and California Cable Systems prior to
their respective dispositions (see Note 2). All intercompany
accounts have been eliminated. The fiscal year of the
Partnership ends on the last Friday of each calendar year.
Cash Equivalents
Short-term investments which have an original maturity of ninety
days or less are considered cash equivalents.
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 charged to operating expense 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
In March 1995, Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of". This pronouncement, effective
January 1, 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 did not
have a material effect on the Partnership's financial position
and results of operations.
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: (1) the undiscounted expected future cash flows
generated by the asset, and/or (2) 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
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
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 11).
2. DISPOSITION OF ASSETS
WREX
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 (as defined below). 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 million in 1995.
KATC
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 accrued 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. The proposed sale was subject to
approval by the Federal Communications Commission ("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 (now known as Chase
Manhattan Bank; the "Wincom Bank"), as required by the terms of a
restructuring agreement (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 the Wincom Bank of approximately $6.1 million in
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 the Wincom 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.
California Cable
On November 28, 1994, the Partnership entered into an agreement
(the "Asset Purchase Agreement") with Century Communications
Corp. ("Century") to sell to Century substantially all of the
assets used in the Partnership's California Cable Operation
serving the Anaheim, Hermosa Beach/Manhattan Beach, Rohnert
Park/Yountville and Fairfield communities (the "California Cable
Systems"). On May 31, 1996, the Partnership 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.
At the closing, the Partnership and Century entered into a letter
agreement (the "Letter Agreement") with respect to certain
matters. Pursuant to the Asset Purchase Agreement and the Letter
Agreement, the Partnership deposited $5 million into an indemnity
escrow account, which is being classified on the accompanying
Consolidated Balance Sheet as Investments held by escrow agents,
and agreed to hold cash reserves of approximately $5.1 million
pending the resolution of certain rate regulation and other
matters relating to charges by the Partnership to its subscribers
for cable service.
From the purchase price for the California Cable Systems,
approximately $119.1 million, inclusive of accrued interest, was
paid to Bank of America, as agent, to repay in full all
outstanding indebtedness under the Amended and Restated Credit
Agreement dated as of May 15, 1990, as amended, between the
Partnership and the banks party thereto and to pay the brokerage
fee of approximately $3 million. The Partnership set aside
approximately $40.7 million, including the $5.1 million discussed
above, 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
significant purchase price adjustment. In addition, from the
initial sale proceeds of the California Cable Systems, the
Partnership will remit accrued management fees and expenses owed
to the General Partner of approximately $9.2 million, of which
$7.6 million was paid through December 27, 1996.
On August 15, 1996, the Partnership made a cash distribution to
limited partners of record on May 31, 1996, of approximately
$108.1 million ($575 per Unit) and approximately $1.1 million to
its General Partner, representing its 1% share, from net
distributable sales proceeds from the sale of the California
Cable Systems.
In accordance with the Partnership Agreement, any amounts which
may be available for distribution from any unused cash reserves,
after accounting for other Partnership expenses including
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 December 27, 1996, the Partnership
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.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION> As of As of
December 27, December 29,
1996 1995
<S> <C> <C>
Land and Improvements $ 994,026 $ 4,633,340
Buildings 2,330,889 4,466,187
Cable Distribution Systems
and Equipment 31,486,992 178,814,721
Other 1,016,181 2,825,282
35,828,088 190,739,530
Less accumulated (15,246,042) (117,750,459)
depreciation
Property, plant and
equipment, net $ 20,582,046 $ 72,989,071
</TABLE>
4. INTANGIBLE ASSETS
Intangible assets consisted of the following:
<TABLE>
<CAPTION> As of As of
December 27, December 29,
1996 1995
<S> <C> <C>
Goodwill $ 43,798,528 $ 82,974,909
Franchises 35,315,562 109,499,044
Other 8,819,911 8,819,911
87,934,001 201,293,864
Less accumulated (54,346,121) (121,657,283)
amortization
Intangible assets, net $ 33,587,880 $ 79,636,581
</TABLE>
5. BORROWINGS
The aggregate amount of borrowings as reflected on the
Consolidated Balance Sheets of the Partnership is as follows:
<TABLE>
<CAPTION> As of As of
December 27, December 29,
1996 1995
<S> <C> <C>
A)C-ML Notes/Credit $ 50,000,000 $ 50,000,000
Agreement
B)ML California Credit
Agreement - 120,148,500
C)Restructuring
Agreement/Wincom-WEBE-WICC
Loan 10,348,428 12,673,428
$ 60,348,428 $182,821,928
</TABLE>
A) Borrowings under the C-ML Notes bear semi-annual interest at
a fixed annual rate of 9.47%. Beginning November 30, 1998,
annual principal payments of $20 million, of which the
Partnership's share is $10 million (see Note 9), commence
and continue thereafter until 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 C-ML Cable and C-ML Radio, as well
as by all of the assets of C-ML Cable and C-ML Radio.
As of December 27, 1996 and December 29, 1995, outstanding
borrowings under the C-ML Notes totalled $100 million, of
which the Partnership's share is $50 million.
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
27, 1996, there were no borrowings outstanding under the C-
ML Revolving Credit Agreement. In April 1997, the C-ML
Revolving Credit Agreement was terminated.
B) The California Cable Systems borrowings under the Amended
and Restated ML California Credit Agreement dated as of May
15, 1990, as amended, were repaid in full in 1996 with the
proceeds from the sale of the California Cable Systems (see
Note 2).
C) On July 30, 1993, the Partnership and the Wincom Bank
executed the Restructuring Agreement, effective January 1,
1993, which cured all previously outstanding principal and
interest payments 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 Wincom 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
the Wincom 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. The outstanding balance under the
Series A Term Loan was $7,955,291 as of December 27, 1996.
The Series B Term Loan bears interest at a rate equal to the
Wincom 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. The outstanding
balance under the Series B Term Loan was $2,393,137 as of
December 27, 1996. The remaining principal amount of the
Series B Term Loan is due on December 31, 1997.
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
the Wincom Bank on October 1, 1993 pursuant to the terms of
the Restructuring Agreement (see Note 2).
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 the
Partnership is in default of a negative loan covenant. If
the Wincom Bank was successful in asserting this position,
the Partnership 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 the
Partnership's conversations with a representative of the
Wincom Bank, the Partnership 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.
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 the Wincom Bank, with the Partnership
receiving 85% and the Wincom Bank receiving 15%,
respectively.
As of December 27, 1996, 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
1997 $ 10,348,428
1998 10,000,000
1999 10,000,000
2000 10,000,000
2001 10,000,000
Thereafter 10,000,000
$ 60,348,428
</TABLE>
Based upon the restrictions of the borrowings as described above,
approximately $81,075,058 million of assets are restricted from
distribution by the entities in which the Partnership has an
interest as of December 27, 1996.
<PAGE>
6. TRANSACTIONS WITH THE GENERAL PARTNER AND ITS AFFILIATES
During the three years ended December 27, 1996, the Partnership
incurred the following expenses in connection with services
provided by the General Partner and its affiliates:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Media Management
Partners (General
Partner)
Partnership Mgmt. fee $ 557,979 $ 557,979 $ 557,979
Property Mgmt. fee 779,055 1,008,266 1,033,852
Reimbursement of
Operating Expenses 799,690 1,039,772 993,622
$2,136,724 $ 2,606,017 $2,585,453
</TABLE>
In addition, the Partnership, through the California Cable
Systems, was party to an agreement with MultiVision Cable TV
Corp. ("MultiVision"), an affiliate of the General Partner,
whereby MultiVision provided 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 $1,113,302, $2,629,560 and $1,937,332 for 1996, 1995
and 1994, respectively. These costs did not include programming
costs that were charged, without markup, to the California Cable
Systems under an agreement to allocate certain management costs.
From the initial sale proceeds of the California Cable Systems in
1996, the Partnership will remit accrued management fees and
expenses owed to the General Partner of approximately $9.2
million, of which $7.6 million was paid through December 27,
1996. In 1995, approximately $7.6 million of the proceeds from
the sale of KATC was applied to pay a portion of accrued fees and
expenses owed to the General Partner. Also during 1995, 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 27, 1996, December 29,
1995 and December 30, 1994, the amounts payable to the General
Partner for management fees and reimbursement of operating
expenses were approximately $2.3 million, $7.9 million and $14.1
million, respectively.
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, WEBE-FM and WICC-AM lease office space, broadcast
facilities and certain other equipment under various operating
lease agreements. Prior to their disposition, KATC-TV and the
California Cable Systems leased 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 for the three years
ended December 27, 1996 as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
California Cable
Systems $ 199,501 $ 377,186 $ 360,417
KATC-TV - 8,250 13,199
WICC-AM 72,898 105,182 105,182
Anaheim Radio Stations 145,796 136,260 120,453
WEBE-FM 202,730 147,587 166,362
Wincom 148,296 151,477 152,844
C-ML Cable 30,000 30,000 28,500
$ 799,221 $ 955,942 $ 946,957
</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
1997 $ 629,620
1998 499,883
1999 504,624
2000 308,503
2001 302,378
Thereafter 1,249,218
$3,494,226
</TABLE>
Litigation
On May 1, 1996, a purported class action lawsuit was filed
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>
8. 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 Corp. and the California Cable Systems until
its sale on May 31, 1996. The Television and 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
1996 Systems Stations Total
<S> <C> <C> <C>
Operating revenues $ 50,428,590 $ 21,143,717 $ 71,572,307
Interest income 1,166,362 346,537 1,512,899
Operating expenses (42,296,680) (16,309,917) (58,606,597)
Operating income before
gain on sale of assets 9,298,272 5,180,337 14,478,609
Gain on sale of the
California Cable
Systems 185,609,191 - 185,609,191
Operating income 194,907,463 5,180,337 200,087,800
Plus: depreciation and
amortization 18,848,938 1,389,066 20,238,004
Operating income before
depreciation and
amortization 213,756,401 6,569,403 220,325,804
Less: depreciation and
amortization (18,848,938) (1,389,066) (20,238,004)
Operating income $194,907,463 $ 5,180,337 200,087,800
Service fee income from
C-ML Radio 259,689
Interest income 2,179,134
Interest expense (10,352,597)
Partnership expenses (2,462,722)
Net income $189,711,304
(Continued on the following page.)
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Cable Television
Television and Radio
1996 Systems Stations Total
<S> <C> <C> <C>
Identifiable assets $107,467,339 $ 44,693,750 $152,161,089
Partnership assets 8,833,735
Total $160,994,824
Capital expenditures $ 7,833,870 $ 402,922 $ 8,236,792
Depreciation and
amortization $ 18,848,938 $ 1,389,066 $ 20,238,004
</TABLE>
<PAGE>
<TABLE>
Cable Television
Television and Radio
1995 Systems Stations Total
<S> <C> <C> <C>
Operating revenues $ 81,242,427 $ 27,971,604 $109,214,031
Operating expenses (65,687,910) (22,878,517) (88,566,427)
Operating income before
gain/(loss) on sale of
assets 15,554,517 5,093,087 20,647,604
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 expenses (2,845,210)
Net income $ 21,490,240
Identifiable assets $161,967,792 $ 44,221,535 $206,189,327
Partnership assets 4,009,169
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>
<TABLE>
<CAPTION>
Cable Television
Television and Radio
1994 Systems Stations Total
<S> <C> <C> <C>
Operating revenues $ 76,549,818 $ 29,360,390 $105,910,208
Operating expenses (66,605,154) (25,132,667) (91,737,821)
Operating income before
gain on sale of assets 9,944,664 4,227,723 14,172,387
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 income 108,528
Net loss $ (1,450,756)
Identifiable assets $174,323,336 $ 59,402,010 $233,725,346
Partnership assets 4,605,012
Total $238,330,358
Capital expenditures $ 9,334,475 $ 1,354,113 $ 10,688,588
Depreciation and
amortization $ 26,295,664 $ 3,871,986 30,167,650
Partnership depreciation
and amortization
12,361
Total $ 30,180,011
</TABLE>
<PAGE>
9. 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 C-ML Cable 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 C-ML
Cable's 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 C-ML Cable 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 income of the Revised Venture are as follows:
<TABLE>
<CAPTION>
December 27, December 29,
1996 1995
<S> <C> <C>
Total Assets $ 126,300,000 $ 123,800,000
Total Liabilities $ 117,700,000 $ 115,700,000
Net Capital $ 8,600,000 $ 8,100,000
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Total Revenues $ 58,600,000 $ 53,800,000 $ 48,600,000
Net Income $ 500,000 $ 4,600,000 $ 1,200,000
</TABLE>
<PAGE>
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS 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.
Borrowings
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 27, 1996 and December 29, 1995, the estimated fair
value of the C-ML Notes is approximately $104 million and $110
million, respectively, of which approximately 50% of the
estimated fair value or $52 million and $55 million, respectively
pertains to the carrying amount reflected on the Partnership's
Consolidated Balance Sheet.
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 27, 1996 and December 29, 1995.
11. ACCOUNTING FOR 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 27, December 29,
1996 1995
<S> <C> <C>
Deferred tax assets:
Basis of intangible assets $ 52,325 $ 95,553
Net operating loss carryforward 15,205,078 20,834,250
Alternative minimum tax credit 228,765 80,165
Other 30,520 28,964
15,516,688 21,038,932
Deferred tax liabilities:
Basis of property, plant and
equipment (27,322) (46,756)
Total 15,489,366 20,992,176
Less: valuation allowance (15,489,366) (20,992,176)
Net deferred tax asset $ 0 $ 0
</TABLE>
There is no provision for income taxes required for each of the
three years ended December 27, 1996. The change in the net
deferred tax asset for the year ended December 27, 1996 of
approximately $5.5 million relates primarily to the utilization
and expiration of net operating loss carryforwards and was fully
offset by a corresponding reduction in the valuation allowance.
As of December 27, 1996, the taxable entities have available net
operating loss carryforwards of approximately $39.4 million which
may be applied against future taxable income of such entities.
Such net operating loss carryforwards expire at various dates
from 1997 through 2007.
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 27, December 29,
1996 1995
Partners' Capital/(Deficit) -
financial statements $ 78,158,731 $ (2,364,139)
Differences:
Offering expenses 19,063,585 19,063,585
Basis of property, plant and
equipment and intangible assets
5,415,192 (37,430,057)
Cumulative losses of stock
investments (corporations) 72,762,062 74,080,793
Management fees 782,653 5,588,444
Other (8,240,254) 585,037
Partners' Capital - income tax basis
$167,941,969 $ 59,523,663
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
AS OF DECEMBER 27, 1996 AND DECEMBER 29, 1995
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ML Media Partners, L.P.
Condensed Balance Sheets
as of December 27, 1996 and December 29, 1995
Notes 1996 1995
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents 3 $ 8,678,229 $ 3,848,741
Accrued interest 38,141 9,412
Accounts receivable 117,365 151,016
Investment in subsidiaries 1,2 71,462,433 1,524,730
TOTAL ASSETS $ 80,296,168 $ 5,533,899
LIABILITIES AND PARTNERS'
CAPITAL/(DEFICIT):
Liabilities:
Accounts payable and accrued
liabilities $ 2,137,437 $ 7,898,038
Partners' Capital/(Deficit):
General Partner:
Capital contributions, net
of offering expenses 1,708,299 1,708,299
Cash distributions (1,167,841) (75,957)
Cumulative income/(loss) 304,047 (1,593,066)
844,505 39,276
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) (7,519,760)
Cumulative income/(loss) 30,100,845 (157,713,346)
77,314,226 (2,403,415)
Total Partners'
Capital/(Deficit) 78,158,731 (2,364,139)
TOTAL LIABILITIES AND
PARTNERS' CAPITAL/(DEFICIT) $ 80,296,168 $ 5,533,899
</TABLE>
See Notes to Condensed Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
FOR THE THREE YEARS ENDED DECEMBER 27, 1996
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Cont'd)
ML Media Partners, L.P.
Condensed Statements of Operations
For the Three Years Ended December 27, 1996
NOTE 1996 1995 1994
S
<S> <C> <C> <C> <C>
REVENUES:
Service fee
income from C-ML
Radio $ 259,68 $ 210,694 $ 235,12
9 0
Interest 2,179,134 332,181 192,875
Gain on sale of
the California
Cable Systems 185,609,191 - -
Gain on sale of
WREX - 8,838,248 -
Gain on sale of
KATC - 13,958,206 -
Total revenues 188,048,014 23,339,329 427,995
COSTS AND
EXPENSES:
General and
administrative 1,125,688 1,278,965 1,409,380
Amortization - - 12,361
Management fees
to General
Partner 1,337,034 1,566,245 1,591,831
Total costs and
expenses 2,462,722 2,845,210 3,013,572
Share of
subsidiaries' net
income 2 4,126,012 996,121 1,134,821
NET INCOME/(LOSS) $189,711,30 $21,490,240 $(1,450,75
4 6)
</TABLE>
See Notes to Condensed Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
FOR THE THREE YEARS ENDED DECEMBER 27, 1996
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 27, 1996
1996 1995 1994
Cash flows from
operating activities:
<S> <C> <C> <C>
Net income/(loss) $ 189,711,304 $ 21,490,240 $ (1,450,756)
Adjustments to
reconcile net
income/(loss) to net
cash (used in)/
provided by operating
activities:
Amortization - - 12,361
Gain on sale of the
California Cable
Systems (185,609,191) - -
Gain on sale of WREX - (8,838,248) -
Gain on sale of KATC - (13,958,206) -
Share of subsidiaries'
net income
(4,126,012) (996,121) (1,134,821)
Change in operating
assets and
liabilities:
Decrease/(Increase):
Accrued interest (28,729) 28,869 (26,377)
</TABLE>
Continued on the following page.
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA PARTNERS, L.P.
FOR THE THREE YEARS ENDED DECEMBER 27, 1996
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 27, 1996
1996 1995 1994
<S> <C> <C> <C>
Accounts receivable 33,651 (151,016) -
(Decrease)/Increase in
accounts payable and
accrued liabilities (5,741,684) (5,827,295) 2,729,100
Net cash (used
in)/provided by
operating activities (5,760,661) (8,251,777) 129,507
Cash flows from investing
activities:
Net proceeds from sale of
the California Cable
Systems 119,778,583 - -
Net proceeds from sale of
WREX and KATC - 15,129,505 -
Net cash provided by
investing activities 119,778,583 15,129,505 -
Cash flows from financing
activities:
Cash distributions (109,188,434) (7,595,717) -
Net cash used in
financing activities (109,188,434) (7,595,717) -
Net increase/(decrease)
in cash and cash
equivalents 4,829,488 (717,989) 129,507
Cash and cash equivalents
at beginning of year
3,848,741 4,566,730 4,437,223
Cash and cash equivalents
at end of year
$ 8,678,229 $ 3,848,741 $ 4,566,730
</TABLE>
See Notes to Condensed Financial Statements.
<PAGE>
ML MEDIA PARTNERS, L.P.
FOR THE THREE YEARS ENDED DECEMBER 27, 1996
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 27, 1996
1. Organization
As of December 27, 1996, ML Media Partners, L.P. (the
"Partnership") owned Wincom, WEBE-FM, WICC-AM and the Anaheim
Radio Stations. The Partnership owned KATC-TV for all of 1994
and a 273-day period in 1995, and WREX-TV for all of 1994 and a
212-day period in 1995. In addition, the Partnership owned the
California Cable Systems for all 1994, 1995 and a 152-day period
in 1996. The Partnership also has a 50% interest in the Revised
Venture (see Note 9 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 27, December 29,
1996 1995
<S> <C> <C>
Assets $ 152,161,089 $ 206,189,326
Liabilities (80,698,656) (204,664,596)
Investment in Subsidiaries $ 71,462,433 $ 1,524,730
</TABLE>
<PAGE>
ML MEDIA PARTNERS, L.P.
FOR THE THREE YEARS ENDED DECEMBER 27, 1996
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 27, 1996
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 27, December 29, December 30,
1996 1995 1994
<S> <C> <C> <C>
Operating revenues $ 71,831,996 $109,214,031 $105,910,208
Share of
subsidiaries' net
income $ 4,126,012 $ 996,121 $ 1,134,821
</TABLE>
3. Cash and Cash Equivalents
As of December 27, 1996, the Partnership had $8,678,229 in cash
and cash equivalents, of which $8,667,505 was invested in
commercial paper. In addition, the Partnership had $10,724 in
cash. These funds are held in reserve for the operating
requirements of the Partnership.
As of 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
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 27, 1996, DECEMBER 29, 1995 AND DECEMBER 30, 1994
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>
1996 $121,657,283 $ 5,490,735 $(72,801,897) (3) $ 54,346,121
1995 $122,438,628 $10,186,422 $(10,967,767) (1) $121,657,283
1994 $111,069,407 $11,369,221 $ - $122,438,628
Prepaid Expenses and Deferred Charges
1996 $ 7,352,383 $ 339,201 $ (4,210,055) (4) $ 3,481,529
1995 $ 7,782,985 $ 487,245 $ (917,847) (2) $ 7,352,383
1994 $ 7,241,087 $ 545,574 $ (3,676) $ 7,782,985
</TABLE>
(1) 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).
(2) 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).
(3) Deductions and Other for Intangible Assets consists of the
accumulated amortization of intangible assets related to the
sale of the California Cable Systems in the amount of
$72,801,897 (See Note 2).
(4) 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 the
California Cable Systems in the amount of $4,210,055 (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 holds office until his successor is elected and
qualified. All executive 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, 61, Director and President 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 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. 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 United States.
Elizabeth McNey Yates, 33, Executive Vice President of RP Media
Management, 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, acquisitions
and dispositions. Ms. Yates is Chief Operating Officer and
Executive Vice President of RP Companies, Inc., Executive Vice
President of RPOM, Chief Operating Officer and Executive Vice
President of RP Radio Management Inc. and is the President and
Chief Operating Officer of MultiVision.
Kevin K. Albert, 44, 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 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 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 II.
Robert F. Aufenanger, 43, 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, real estate and project related limited partnerships
for which subsidiaries of ML Leasing Equipment Corp. and Merrill
Lynch, Hubbard Inc., affiliates of Merrill Lynch, are general
partners. Mr. Aufenanger is also a director of ML Opportunity,
MLH Real Estate Inc., an affiliate of MLMM and the general
partner of the Associate General Partner of ML/EQ Real Estate
Portfolio, L.P., MLH Property Managers Inc., an affiliate of MLMM
and the Managing General Partner of MLH Income Realty Partnership
VI, ML Film, ML Venture, ML R&D, ML Mezzanine and ML Mezzanine
II.
Michael E. Lurie, 53, 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, ML R&D and MLH Real Estate Inc.
Steven N. Baumgarten, 41, 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, 34, 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, 36, a Vice President of Merrill Lynch & Co.
Investment Banking Group since 1996 and previously an Assistant
Vice President of Merrill Lynch & Co. Corporate Credit Group
since 1992, joined Merrill Lynch in 1984. Ms. Herte's
responsibilities include controllership and financial management
functions for certain partnerships for which subsidiaries of
Merrill Lynch are the general partner.
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 by both companies 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, diversification 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
three years ended December 27, 1996.
Item 12.Security Ownership of Certain Beneficial Owners and
Management.
As of March 15, 1997, 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 1, 1997,
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 Rule Trust.
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
See Item 8. "Financial Statements and Supplementary
Data".
(2) Financial Statement Schedules
No financial statement schedules are included because of
the absence of the conditions which require their
inclusion or because the required information is
included in the financial statements or set forth herein
the notes thereto.
<TABLE>
<CAPTION>
(3) 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.
No reports on Form 8-K were filed by Registrant during
the last quarter of the period covered by this report.
(c) Exhibits.
See (a) (3) above.
(d) Financial Statement Schedules.
See (a) (2) 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: April 11, 1997 /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 April 11, 1997
(I. Martin Pompadur) and Director
(principal executive
officer of the
Registrant)
/s/Elizabeth McNey Yates Executive Vice April 11, 1997
(Elizabeth McNey Yates) President
ML MEDIA MANAGEMENT INC.
Signature Title Date
/s/ Kevin K. Albert Director and April 11, 1997
(Kevin K. Albert) President
/s/ Robert F. Aufenanger Director and April 11, 1997
(Robert F. Aufenanger) Executive Vice
President
/s/ Michael E. Lurie Director and Vice April 11, 1997
(Michael E. Lurie) President
/s/ Diane T. Herte Treasurer (principal April 11, 1997
(Diane T. Herte) financial officer and
principal accounting
officer of the
Registrant)
</TABLE>
<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-27-1996
<CASH> 91,591
<SECURITIES> 0
<RECEIVABLES> 7,567
<ALLOWANCES> 799
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 35,828
<DEPRECIATION> 15,246
<TOTAL-ASSETS> 160,995
<CURRENT-LIABILITIES> 0
<BONDS> 60,348
<COMMON> 0
0
0
<OTHER-SE> 78,159
<TOTAL-LIABILITY-AND-EQUITY> 210,198
<SALES> 0
<TOTAL-REVENUES> 261,133
<CGS> 0
<TOTAL-COSTS> 25,352
<OTHER-EXPENSES> 21,822
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,353
<INCOME-PRETAX> 189,711
<INCOME-TAX> 0
<INCOME-CONTINUING> 189,711
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 189,711
<EPS-PRIMARY> 999.04
<EPS-DILUTED> 0
</TABLE>
