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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 24, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PULITZER PUBLISHING COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 43-0496290
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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900 NORTH TUCKER BOULEVARD
ST. LOUIS, MISSOURI 63101
(314) 340-8000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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RONALD H. RIDGWAY
PULITZER PUBLISHING COMPANY
900 NORTH TUCKER BOULEVARD
ST. LOUIS, MISSOURI 63101
(314) 340-8000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES OF ALL COMMUNICATIONS, INCLUDING ALL COMMUNICATIONS SENT TO
THE AGENT FOR SERVICE, SHOULD BE SENT TO:
RICHARD A. PALMER, ESQ.
FULBRIGHT & JAWORSKI L.L.P.
666 FIFTH AVENUE
NEW YORK, NEW YORK 10103
(212) 318-3000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plan, please check the following
box: [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES TO BE AMOUNT TO BE AGGREGATE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PRICE PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value
per share.................. 1,665,545 $79.13 $131,794,575.90 $36,638.89
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(1) Estimated solely for the purpose of calculating the registration fee. Such
estimates have been calculated in accordance with Rule 457(c) under the
Securities Act of 1933, as amended, and are based upon the average of the
high and low prices per share of the registrant's Common Stock on the New
York Stock Exchange, Inc. on December 18, 1998.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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The information in this Prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
Prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED DECEMBER 24, 1998
PROSPECTUS
PULITZER PUBLISHING COMPANY
1,665,545 SHARES
COMMON STOCK
Certain stockholders are offering for sale shares of our common stock. A
list of the selling stockholders can be found on page 18 of this Prospectus. The
selling stockholders may offer their shares from time to time through ordinary
brokerage transactions, in negotiated transactions or otherwise, at market
prices prevailing at the time of sale or at negotiated or other prices. We will
not receive any part of the proceeds from these sales.
Our common stock is listed on the New York Stock Exchange, Inc. under the
symbol "PTZ." On December 22, 1998, the last sale price of the common stock was
$83.06 per share.
------------------------
SEE "RISK FACTORS," WHICH BEGIN ON PAGE 7 OF THIS PROSPECTUS, FOR CERTAIN
INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is , 1998
<PAGE> 3
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may inspect and
copy any document we file at the SEC's public reference facilities in
Washington, D.C., New York, New York, or Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's web site on the Internet
at http://www.sec.gov. This web site contains reports, proxy and information
statements and other information regarding the Company and other registrants
that file electronically with the SEC.
We are allowed to "incorporate by reference" the information contained in
documents we file with the SEC (File No. 1-9329), which means that we can
disclose important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
Prospectus, and later information that we file with the SEC will automatically
update and supersede this information. We incorporate by reference the documents
listed below and any future filings made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, until the
selling stockholders sell all the shares:
1. Our Annual Report on Form 10-K for the year ended December 31, 1997 (except
that Items 6, 7 and 8 and Schedule II of this Annual Report are not
incorporated by reference as they are superseded by the information set
forth in our Current Report on Form 8-K filed on September 4, 1998, and our
Current Report on Form 8-K filed on December 16, 1998, which is incorporated
by reference);
2. Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 (except that Items 1 and 2 and Exhibit 27 of these Quarterly
Reports are not incorporated by reference as they are superseded by the
information set forth in our Current Report on Form 8-K filed on September
4, 1998 and our Current Report Form 8-K filed on December 16, 1998, which is
incorporated by reference) and September 30, 1998, as amended by Form
10-Q/A;
3. Our Current Reports on Form 8-K filed on June 11, 1998, September 4, 1998
and December 16, 1998;
4. The description of our capital stock contained in our Registration Statement
on Form 8-A filed on November 17, 1986;
5. Hearst-Argyle's Annual Report on Form 10-K for the year ended December 31,
1997, as amended by Form 10-K/A;
6. Hearst-Argyle's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998, as amended by Form 10-Q/A, June 30, 1998, as amended by Form
10-Q/A and September 30, 1998;
7. Hearst-Argyle's Current Reports on Form 8-K filed on January 13, 1998, March
31, 1998, May 27, 1998, September 17, 1998, as amended by Form 8-K/A,
September 29, 1998, as amended by Form 8-K/A, and December 16, 1998;
8. The description of Hearst-Argyle Series A Common Stock contained in
Hearst-Argyle's Registration Statement on Form 8-A/A filed on July 14, 1998;
9. Argyle Television, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1996; and
10. Argyle Television, Inc.'s Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997 and June 30, 1997.
You may request a copy of our filings, at no cost, by writing or
telephoning our Secretary at the following address:
Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63101
(314) 340-8000
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You may request a copy of Hearst-Argyle's filings, at no cost, by writing
or telephoning the Secretary of Hearst-Argyle at the following address:
Hearst-Argyle Television, Inc.
888 Seventh Avenue
New York, New York 10106
(212) 887-6800
This Prospectus is part of a registration statement we filed with the SEC
(Registration No. 333- ). You should rely only on the information
incorporated by reference or provided in this Prospectus or any supplement. We
have not authorized anyone else to provide you with different information. The
selling stockholders will not make an offer of these shares in any state where
the offer is not permitted. You should not assume that the information in this
Prospectus or any supplement is accurate as of any date other than the date on
the front of those documents.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements that are
subject to risks and uncertainties. You can find many of these forward-looking
statements by looking for words such as "believes," "expects," "anticipates" or
similar expressions. For all forward-looking statements, we claim the protection
of the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. You should understand that, in
addition to factors discussed elsewhere in this Prospectus and in the documents
that are incorporated by reference, the following important factors could affect
our future results and/or those of Hearst-Argyle and New Pulitzer and could
cause those results to differ materially from those expressed in each
forward-looking statement:
- Material adverse changes in economic conditions in the relevant markets;
- A significant delay in the expected closing of the proposed merger;
- Future regulatory actions and conditions concerning broadcast radio and
television stations or their operating areas;
- The possibility that currently unanticipated difficulties may arise in
integrating the operations of two major businesses; and
- Competition in the respective broadcast television and newspaper markets.
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PROSPECTUS SUMMARY
This summary highlights selected information from this Prospectus and may
not contain all of the information that is important to you. To understand the
terms of our securities, you should carefully read this document. You should
also read the documents we have referred you to in the section entitled "Where
You Can Find More Information" on page 2 for information on our company and our
financial statements.
INVESTMENT IN PULITZER PUBLISHING COMPANY'S COMMON STOCK
The selling stockholders are selling shares of our common stock. However,
you should be aware that, on May 25, 1998, we and Pulitzer Inc., a recently
incorporated subsidiary of ours, entered into a merger agreement with
Hearst-Argyle Television, Inc. This merger agreement provides that Hearst-Argyle
will acquire our television and radio broadcasting operations. Hearst-Argyle
will accomplish this acquisition by merging us into Hearst-Argyle. Our newspaper
publishing and related new media businesses will continue as Pulitzer Inc.,
which we refer to in this document as New Pulitzer.
Prior to the merger, we will transfer to New Pulitzer all of our assets,
other than our broadcasting assets, and then distribute the shares of New
Pulitzer to our stockholders in a tax-free "spin-off" on a share-for-share
basis. As part of the spin-off, we will also transfer the net proceeds of $700
million in new financing, and New Pulitzer will assume certain liabilities
unrelated to the broadcasting assets. After the spin-off, we will have only our
broadcasting assets and the indebtedness under the $700 million new financing
and will merge into Hearst-Argyle. As a result of the merger, Hearst-Argyle will
assume the indebtedness under the new financing.
In the merger, Hearst-Argyle has agreed to issue to our stockholders shares
of Hearst-Argyle Series A common stock in exchange for the stockholders' shares
in our stock. We refer to the Hearst-Argyle Series A common stock as the
Hearst-Argyle stock. While Hearst-Argyle has agreed to issue shares of
Hearst-Argyle stock with a value (as defined in the merger agreement) of $1.15
billion, the number of shares and the actual value of Hearst-Argyle stock to be
issued to our stockholders will depend on the value of the Hearst-Argyle stock
based on a 15-day weighted average price, subject to an equity adjustment or
"collar" mechanism. This collar mechanism generally provides that the
Hearst-Argyle stock will be valued at a maximum price of $38.50 per share and at
a minimum price of $29.75 per share, subject to certain termination and "top-up"
rights.
We refer to the merger and spin-off as the "Transactions." We expect to
hold our special stockholders' meeting in connection with the merger in January
1999 and that the closing of the Transactions will occur shortly thereafter,
subject to certain conditions and rights which are further described in this
Prospectus.
In determining to invest in our common stock, you should consider the risks
described in the section entitled "Risk Factors" which begins on page 7. In
particular, you should consider that if and when the Transactions are completed,
each holder of our common stock will receive, first, common stock of New
Pulitzer in connection with the spin-off and, second, Hearst-Argyle stock in
connection with the merger. However, because the completion of the Transactions
is subject to many factors, including those described in the section entitled
"Risk Factors", there is no assurance that the Transactions will be completed.
Therefore, you are advised to evaluate each of Hearst-Argyle, New Pulitzer and
us (as if the Transactions will not occur) when considering an investment in our
common stock.
THE COMPANY
We are engaged primarily in newspaper publishing and television and radio
broadcasting. We operate and publish two major metropolitan daily newspapers:
the St. Louis Post-Dispatch, the only major daily newspaper serving the St.
Louis metropolitan area; and The Arizona Daily Star, serving the Tucson
metropolitan area. In addition, our Pulitzer Community Newspaper group operates
and publishes 12 dailies which serve smaller markets, primarily in the West and
Midwest. Our television and radio broadcasting operations consist of nine
network-affiliated television stations and five radio stations.
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Publishing
Both major metropolitan daily newspapers have weekly total market coverage
sections to provide advertisers with market saturation. In addition, both
newspapers also offer an electronic news, information and communication web site
on the Internet. We provide full access on a subscription basis to these
"electronic publication" web sites, as well as full Internet access. We began
the Star's service, StarNet (www.azstarnet.com), in May 1995 and had
approximately 12,100 subscribers as of October 31, 1998. We started the service
provided by the Post-Dispatch, POSTnet (www.stlnet.com), in January 1996 and had
approximately 15,600 subscribers as of October 31, 1998.
Our 12 daily community newspapers have a combined average daily circulation
of approximately 162,000. The smaller markets served by these newspapers and
their locations provide us with further diversification and participation in
several higher growth areas of the United States.
We derive our publishing revenues primarily from advertising and
circulation, averaging approximately 87% of total publishing revenue over the
last five years. Advertising rates and rate structures and resulting revenues
vary among publications based on circulation, type of advertising, local market
conditions, competition and other factors. In addition, management continues to
seek ways to leverage its newspaper assets, such as electronic publishing, voice
services delivered by phone, electronic dissemination of information via the
world wide web/Internet and alternative newspaper delivery systems to provide
advertisers with either targeted or total market coverage.
New Pulitzer will retain and continue to operate our newspaper publishing
and related new media businesses.
Broadcasting
We currently own and operate eight network-affiliated VHF television
stations, one network- affiliated UHF television station, two satellite network
television stations rebroadcasting KOAT, four AM radio stations and one FM radio
station. We have diversified our revenues by purchasing properties in different
geographic regions of the United States, in an effort to insulate ourself from
regional economic downturns. Management believes that the success of a local
television station is driven by strong local news programming and that we have
developed a particular strength in local news programming.
Our television stations are affiliated with national television networks
under ten-year contracts which are automatically renewed for successive
five-year terms unless we or a network exercise our or its right to cancel.
We derive our broadcasting revenues principally from the sale of time to
advertisers. We derive television broadcasting revenues from local and national
spot advertising and network compensation. Local advertising consists of short
announcements and sponsored programs on behalf of advertisers in the immediate
area served by the station. National spot advertising generally consists of
short announcements and sponsored programs on behalf of national and regional
advertisers. Network revenue is based upon a contractual agreement with a
network and depends upon the network programs broadcast by the stations. We
believe that our stations are particularly strong in local news programming.
Advertising during local news programs accounted for approximately 35% to 50% of
each station's total revenues in 1997.
We intend to sell this broadcasting business to Hearst-Argyle.
General
At October 31, 1998, we had approximately 3,600 full-time employees, of
whom approximately 2,300 were engaged in publishing and 1,300 in broadcasting.
In St. Louis, a majority of the approximately 1,225 full-time employees engaged
in publishing are represented by unions. In addition, certain other employees
are represented by unions. We consider our relationship with our employees and
the unions to be good.
The Pulitzer Publishing Company was founded by the first Joseph Pulitzer in
1878 to publish the original St. Louis Post-Dispatch and has operated
continuously since that time under the direction of the Pulitzer family. We were
reorganized as a Delaware corporation in October 1986. Michael E. Pulitzer, a
grandson of
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the founder, currently serves as our Chairman of the Board, President and Chief
Executive Officer. On December 18, 1998, New Pulitzer entered into an employment
agreement with Robert C. Woodworth pursuant to which Mr. Woodworth will serve as
President and Chief Executive Officer of New Pulitzer for an initial term of
three years, beginning January 1, 1999. At the end of each year, the agreement
automatically renews for an additional year. Mr. Woodworth will be entitled to
receive an annual base salary of $575,000 and an annual incentive bonus target
of 100% of salary. Mr. Woodworth will receive initial stock option and
restricted stock awards in New Pulitzer valued at approximately $2,500,000,
subject to vesting conditions. If Mr. Woodworth terminates his employment for
"good reason" or New Pulitzer terminates his employment without "cause," then
Mr. Woodworth will be entitled to severance equal to three years' salary plus
accelerated vesting of the initial option and restricted stock awards. In the
event the Transactions do not occur, the Company will assume all provisions of
the employment agreement with Mr. Woodworth, including the provisions relating
to his position, rights and entitlements.
Our principal executive offices are located at 900 North Tucker Boulevard,
St. Louis, Missouri 63101, and our telephone number is (314) 340-8000.
HEARST-ARGYLE
Hearst-Argyle owns or manages 15 television stations reaching approximately
11.0% of U.S. television households. Hearst-Argyle is the largest "pure-play"
(owning television stations only) publicly-owned television broadcast company in
the U.S. and is the fourth-largest non-network-owned television group. Formed as
a Delaware corporation in 1994 under the name Argyle Television, Inc.,
Hearst-Argyle is the successor to the combined operations of Argyle Television,
Inc. and the television broadcast group of The Hearst Corporation. Hearst-Argyle
owns 12 television stations and manages three additional television stations and
two radio stations that are owned or operated by The Hearst Corporation.
Hearst-Argyle has an option to acquire one of the managed television stations
and The Hearst Corporation's interests in another of the managed television
station. Hearst-Argyle also has a right of first refusal with respect to the
third managed television station.
On July 2, 1998, Hearst-Argyle completed a tax-deferred exchange with STC
Broadcasting, Inc. and certain related entities whereby Hearst-Argyle exchanged
its television stations WNAC-TV, Providence, Rhode Island, and WDTN-TV, Dayton,
Ohio, for television stations KSBW-TV, Monterey-Salinas, California, and
WPTZ-TV/WNNE-TV, Burlington, Vermont/Plattsburgh, New York. Divestiture of WNAC
and WDTN was required under the order of the FCC approving the combination of
Argyle Television, Inc. and the television group of The Hearst Corporation.
On August 21, 1998, Hearst-Argyle entered, through a merger transaction,
into an agreement to acquire Kelly Broadcasting Co. for approximately $520
million in cash, subject to certain closing adjustments. We refer to this
transaction as the Kelly Transaction. Kelly Broadcasting owns and operates
television broadcast station KCRA-TV, Sacramento, California, and provides
programming for television broadcast station KQCA-TV, Sacramento, California,
pursuant to an agreement with Channel 58, Inc. In connection with the Kelly
Transaction, Hearst-Argyle agreed to acquire substantially all of the assets and
certain of the liabilities of Kelleproductions, Inc. for $10 million in cash,
subject to certain closing adjustments. The acquisition of Kelleproductions,
Inc. is expected to be completed simultaneously with, and is conditioned upon,
the completion of the Kelly Transaction. Completion of the Kelly Transaction is
subject to regulatory approvals and other customary closing conditions, and
there is no assurance as to when the Kelly Transaction will be completed, if at
all.
Hearst-Argyle has obtained commitments from institutional investors to
purchase $450 million of senior notes to be issued by Hearst-Argyle. The notes
will have a maturity of 12 years, with an average life of ten years, and will
bear interest at 7.18% per annum.
The Hearst-Argyle stock is listed on the New York Stock Exchange under the
symbol "HTV." Additional information regarding Hearst-Argyle is contained in
reports filed by Hearst-Argyle with the SEC.
Hearst-Argyle is organized under the laws of the State of Delaware and its
principal executive offices are located at 888 Seventh Avenue, New York, New
York 10106, (212) 887-6800.
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RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should consider carefully the following risk factors, as well as the other
information set forth in this Prospectus.
RISK FACTORS ASSOCIATED WITH THE SPIN-OFF AND THE MERGER
Consummation of the Transactions. One of the most significant risks in
purchasing our shares in this offering is that the Transactions may not be
completed. If the Transactions are not completed, purchasers of the shares will
not receive shares of New Pulitzer or Hearst-Argyle and will continue to own our
shares. On May 22, 1998, the last business day before we entered into the merger
agreement with Pulitzer Inc. and Hearst-Argyle, the price of our shares closed
at $90.00 per share. Since that time, the price of our shares has closed as low
as $64.94 and as high as $90.00. The completion of the Transactions is subject
to many factors, including the following:
- Our ability to obtain new financing in the amount of $700 million, the
net proceeds of which will be transferred to New Pulitzer in the
spin-off;
- Consents of various third parties;
- Approval by the holders of our common stock, voting separately as a
class, of an amendment to our Restated Certificate of Incorporation. This
amendment is required in connection with the spin-off to permit us to
distribute shares of New Pulitzer for shares of our stock pursuant to the
merger agreement; and
- Determinations by our board of directors and by Hearst-Argyle's board of
directors if the weighted average price per share of the Hearst-Argyle
stock for the 15-day period ending two days prior to the closing of the
merger is below the minimum collar price of $29.75 per share. If the
weighted average price of Hearst-Argyle stock is between $38.50 and
$29.75, then that weighted average price will be used to determine the
number of shares of Hearst-Argyle stock to be delivered in the merger. If
the weighted average price of Hearst-Argyle stock rises above $38.50 per
share, then $38.50 per share will be used to determine the number of
shares of Hearst-Argyle stock to be delivered in the merger. If the
weighted average price of Hearst-Argyle stock falls below $29.75 per
share, then either (1) $29.75 per share will be used to determine the
number of shares of Hearst-Argyle stock to be delivered in the merger or
(2) we may notify Hearst-Argyle that we intend to terminate the merger
agreement. Hearst-Argyle may then offer to "top-up" and deliver
additional shares of Hearst-Argyle stock to our stockholders based on the
actual average price of Hearst-Argyle stock, and we would have to accept
those additional shares. Alternatively, Hearst-Argyle and we may agree on
a lesser number of additional shares and proceed with the merger. If the
parties cannot reach an agreement, the merger agreement will be
terminated.
The following example illustrates how this collar mechanism works. We
assume the weighted average price of Hearst-Argyle stock for the 15-day
measurement period is $26.00 per share, which is $3.75 below the $29.75
minimum collar price.
Based on the $1.15 billion that Hearst-Argyle agreed to pay, our
stockholders might, in the absence of the collar, expect to receive:
$1,150,000,000 or approximately 44,230,769 shares of Hearst-Argyle stock.
26.00
However, with the minimum collar price in effect, Hearst-Argyle is only
required to offer:
$1,150,000,000 or approximately 38,655,462 shares of Hearst-Argyle stock.
29.75
At $26.00 per share, 38,655,462 shares of Hearst-Argyle stock is worth
$1,005,042,012, which is $144,957,888 less than $1.15 billion. In this
situation, we may notify Hearst-Argyle that we intend to
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terminate the merger agreement. Hearst-Argyle may then top-up and offer to
deliver the additional 5,576,923 shares of its stock, which we would have
to accept.
Our board of directors has not determined whether or under what
circumstances it would elect to terminate the merger agreement if the
average price of Hearst-Argyle stock falls below $29.75 per share.
Similarly, Hearst-Argyle's board of directors has not determined whether
or under what circumstances it would elect to deliver additional shares to
our stockholders if the weighted average price of Hearst-Argyle stock
falls below $29.75 per share and we give notice of our intention to
terminate. In making their determinations, each board will take into
account all relevant facts and circumstances existing at the time,
consistent with its fiduciary duties. If each company's stockholders
approve the merger agreement, they will be granting to that company's
board of directors the discretion and the authority to make its
determination.
Because of these and other factors, there is no assurance as to if or when
the spin-off or the merger will be completed.
Federal Income Tax Risks Relating to the Spin-Off. We have received a
ruling from the IRS that the spin-off will qualify as a reorganization and
tax-free distribution to our stockholders under the Internal Revenue Code of
1986. A ruling from the IRS, while generally binding on the IRS, may under
certain circumstances be revoked or modified by the IRS retroactively. However,
we and Hearst-Argyle are not currently aware of any facts or circumstances that
would cause the IRS to revoke or modify its ruling. If the spin-off did not
qualify as a reorganization and tax-free distribution to our stockholders under
the Code:
- The value of the New Pulitzer stock received by each of our stockholders
in the spin-off would be taxable to such stockholder as a dividend to the
extent of such stockholder's pro rata share of our current and
accumulated earnings and profits; and
- The remaining value, if any, of the New Pulitzer stock received in the
spin-off by each of our stockholders would be treated first as a recovery
of the adjusted tax basis of our stock owned by such stockholder and then
as taxable capital gain.
In the spin-off, we will recognize taxable gain in an amount equal to the
excess, if any, of the fair market value of the New Pulitzer stock distributed
to our stockholders over the adjusted tax basis of such New Pulitzer stock in
our hands immediately prior to the distribution. There is no assurance that the
IRS will agree with our determination of the fair market value of the New
Pulitzer stock or the resulting tax. Under the merger agreement, New Pulitzer
will be liable and will indemnify Hearst-Argyle and its subsidiaries for certain
of our unpaid tax liabilities resulting from the spin-off.
Federal Income Tax Risks Relating to the Merger. Our counsel has issued its
legal opinion that the merger will qualify as a reorganization that is tax-free
to our stockholders, except to the extent of any cash received by our
stockholders in lieu of fractional shares of Hearst-Argyle stock. However,
opinions of counsel are not binding on the IRS or the courts, and there is no
assurance that the IRS will agree with the conclusions set forth in our
counsel's opinion. If the merger did not qualify as a tax-free reorganization:
- Each of our stockholders would recognize gain or loss equal to the
difference between:
(a) the fair market value of the Hearst-Argyle stock received by such
stockholder plus any cash received by such stockholder in lieu of
a fractional share of Hearst-Argyle stock; and
(b) the adjusted tax basis of our stock held by such stockholder
immediately before the merger.
- We would recognize taxable gain in an amount equal to the excess of:
(a) the sum of (i) the aggregate fair market value of the
Hearst-Argyle stock received by our stockholders, (ii) the amount
of cash received by our stockholders in lieu of fractional shares
of Hearst-Argyle stock and (iii) the amount of our liabilities
assumed by Hearst-Argyle in the merger, over
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<PAGE> 10
(b) the aggregate adjusted tax basis of our assets.
Under the Merger Agreement, we will be liable and will indemnify
Hearst-Argyle and its subsidiaries against our tax liabilities attributable to
any tax period (or portion of such tax period) prior to completion of the
Merger, except for any of our tax liability that results from the Merger not
qualifying as a reorganization under the Code due to actions or inactions of
Hearst-Argyle after completion of the Merger, or due primarily to
Hearst-Argyle's breach of certain covenants concerning the representations which
it has made in connection with the private letter ruling request which we filed
with the IRS. In addition, if the merger did not qualify as a reorganization,
the spin-off would probably not qualify as a tax-free distribution to our
stockholders.
EACH OF OUR STOCKHOLDERS IS URGED TO CONSULT WITH HIS, HER OR ITS TAX
ADVISOR REGARDING THE PARTICULAR TAX CONSEQUENCES OF THE TRANSACTIONS TO THAT
STOCKHOLDER.
RISK FACTORS RELATED TO THE HEARST-ARGYLE STOCK
Reliance on Network Affiliation Agreements; Television Programming. The
success of each of the television stations owned by Hearst-Argyle depends upon,
among other things, network programming obtained through network affiliation
agreements. There is no assurance that the programming will achieve or maintain
satisfactory viewership levels in the future. In addition, although
Hearst-Argyle expects to be able to renew the network affiliation agreements,
there is no assurance that the renewals will be obtained on as favorable terms
or at all. The termination, non-renewal or renewal at less favorable terms of
the affiliation agreements could have an adverse effect on the operations of
Hearst-Argyle.
Television programming is one of Hearst-Argyle's most significant operating
cost components. There is no assurance that Hearst-Argyle will not be exposed in
the future to increased television programming costs. Should an increase occur,
it could have an adverse effect on Hearst-Argyle's results from operations.
Dependence on Advertising; Effect of Economic Conditions. Hearst-Argyle
relies to a significant extent upon sales of advertising for its revenues. On a
pro forma basis giving effect to Argyle Television, Inc.'s merger transaction
with the television broadcast group of the Hearst Corporation, advertising
revenue accounted for 92.3% of Hearst-Argyle's total revenues for the year ended
December 31, 1997. For the nine months ended September 30, 1998, advertising
revenue accounted for 93.3% of the total revenues of Hearst-Argyle. The
Hearst-Argyle stations compete for advertising revenues with other television
stations, as well as other media, in their respective markets, and there is no
assurance that Hearst-Argyle will be able to continue to compete successfully
for such advertising revenues.
In addition, Hearst-Argyle's ability to generate advertising revenues
depends on and will continue to depend on cyclical changes in the national
economy and regional economic conditions in each of the markets in which its
stations operate. Hearst-Argyle's revenues could therefore be adversely affected
by a future local, regional or national recessionary environment.
Control by Majority Stockholder; Conflicts of Interest. Currently, Hearst
Broadcasting, Inc., a subsidiary of The Hearst Corporation, elects nine of the
11 directors of Hearst-Argyle and owns approximately 82.3% of the outstanding
common stock of Hearst-Argyle. As a result, The Hearst Corporation is able to
control substantially all actions to be taken by Hearst-Argyle stockholders and
is able to maintain control over the operations and business of Hearst-Argyle.
This control, as well as certain other factors, may make Hearst-Argyle a less
attractive target for a takeover than it otherwise might be, or render more
difficult or discourage transactions involving an actual or potential change of
control of Hearst-Argyle.
In addition, under current law and existing contractual arrangements,
Hearst-Argyle is not allowed, without The Hearst Corporation's consent, to
acquire television broadcast stations in New York, Michigan, Texas, California,
Washington and Missouri. As a result, Hearst-Argyle's ability to make
acquisitions is restricted.
The Hearst Corporation and Hearst-Argyle are parties to a series of
agreements where the interests of the two parties could conflict. Hearst-Argyle
believes that the terms of these agreements are reasonable to both parties.
There is no assurance, however, that more favorable terms would not be available
from third parties.
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<PAGE> 11
Television Industry Competition and Technology. The television broadcast
industry is highly competitive. Some of the stations that compete with
Hearst-Argyle's stations are owned and operated by large national or regional
companies that may have greater resources, including financial resources, than
Hearst-Argyle. There is no assurance that any one of Hearst-Argyle's stations
will compete successfully and maintain or increase its current audience share or
revenue share. The following are some of the factors that have fractionalized
television viewing audiences and/or affect the industry generally:
- Technological innovation and the resulting proliferation of programming
alternatives such as cable, direct satellite-to-home services,
pay-per-view and home video and entertainment systems;
- The formation and success of new television networks such as UPN and the
WB Network; and
- The FCC's adoption of rules for implementing digital television,
otherwise known as DTV, service in the United States.
Regulatory Matters. Generally, Hearst-Argyle depends upon its continuing
ability to maintain broadcasting licenses from the FCC. While broadcasting
licenses are typically renewed by the FCC, there is no assurance that the FCC
will renew the licenses for the Hearst-Argyle's stations or that, if renewed,
the renewal terms will be for the customary eight-year periods. The non-renewal
or revocation of one or more of the FCC licenses held by Hearst-Argyle could
have a material adverse effect on the operations of Hearst-Argyle.
The FCC restricts the common ownership of certain media interests in the
same market, including television and radio broadcast stations. In addition, no
person is permitted to hold an interest in television stations collectively
reaching more than 35% of all U.S. television households, subject to a 50%
discount for UHF television stations. As a result of prohibitions by the FCC's
"television duopoly" and "one-to-a-market" rules on certain combinations created
as a result of the merger, we and Hearst-Argyle sought, and have received, the
consent and approval of the FCC for the issuance, renewal and transfer or
assignment of our television station operating licenses. We and Hearst-Argyle
also requested, and have received, the following waivers of the FCC's rules:
- temporary, six-month waiver of the television duopoly rule to permit the
common ownership of WBAL-TV, Baltimore, Maryland, and WGAL(TV),
Lancaster, Pennsylvania, for a brief period of time following the
completion of the merger;
- conditional waiver of the television duopoly rule to permit the common
ownership of WWWB(TV), Lakeland, Florida, and WESH(TV), Daytona Beach,
Florida;
- conditional waiver of the television duopoly rule to permit the common
ownership of WLWT(TV), Cincinnati, Ohio, and WLKY-TV, Louisville,
Kentucky;
- continued permanent waiver of the television duopoly rule to permit the
common ownership of KCCI(TV), Des Moines, Iowa, and KETV(TV), Omaha,
Nebraska;
- continued waiver of the one-to-a-market rule to permit the common
ownership of WXII-TV, Winston-Salem, North Carolina, and WXII(AM),
Kernersville, North Carolina; and
- continued waiver of the one-to-a-market rule to permit the common
ownership of WLKY-TV, Louisville, Kentucky, and WLKY(AM), Louisville,
Kentucky.
Although the FCC granted the application, including the various waiver
requests, on November 24, 1998, the FCC requires that licensees subject to
conditional waivers of the duopoly rule comply with the rule if it is not
changed to allow permanent common ownership of stations.
Petition to Deny Transfer Applications. On July 20, 1998, WLOS Licensee,
Inc., licensee of WLOS(TV), Asheville, North Carolina, filed with the FCC a
petition to deny the FCC transfer application with respect to WYFF(TV). WLOS
claimed that we lacked the requisite qualifications to be a FCC licensee.
Pulitzer Broadcasting Company, a subsidiary of ours, filed an opposition to
WLOS's petition, and WLOS submitted a reply to the Pulitzer Broadcasting
opposition. In granting the transfer application with respect to WYFF(TV), the
FCC considered the merits of the WLOS petition and denied it. While WLOS has
until
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<PAGE> 12
December 24, 1998 to ask the FCC to reconsider its grant of the transfer
application, the parties may consummate the transaction notwithstanding the
filing of such a challenge. Both Hearst-Argyle and we believe that it is
unlikely that any such request for reconsideration by WLOS will have a material
adverse effect upon the completion of the merger.
Acquisition of KCRA-TV. On August 28, 1998, Hearst-Argyle filed an
application seeking the consent of the FCC to the Kelly Transaction involving
KCRA-TV and KSBW(TV). Currently, the two stations have overlapping contours,
which is prohibited by the FCC's duopoly rule. However, there is an ongoing
rulemaking proceeding considering changes to this rule. The FCC has adopted a
policy of granting waivers conditioned on the outcome of the rulemaking
proceeding in certain situations in which the stations are located in separate
television markets and have no Grade A signal contour overlap. The FCC has
granted Hearst-Argyle's application seeking the modification of the facilities
of KSBW(TV) in a manner that would eliminate the Grade A contour overlap between
the two stations. On December 11, 1998, the FCC granted its consent to the Kelly
Transaction. Because of the signal contour overlap between KCRA and
Hearst-Argyle's KSBW (TV), the FCC's grant was conditioned on (i) Hearst-Argyle
completing the modification of the KSBW facilities that will eliminate the Grade
A signal contour overlap between the stations within nine months of the
consummation of the Kelly Transaction; and (ii) the outcome of the pending FCC
rulemaking considering changes to the duopoly rule that would, if adopted, allow
the common ownership of certain stations, including KCRA and the modified KSBW,
with overlapping Grade B signal contours. As noted above, the FCC requires that
licensees subject to duopoly waivers conditioned on the outcome of the pending
rulemaking proceeding come into compliance with the duopoly rule if the rule is
not changed to allow permanent common ownership of the stations.
Risks Associated with Integration of the Combined Operations and Possible
Expansion. As a result of the merger, the Kelly Transaction and other recent
transactions, Hearst-Argyle has expanded and will expand significantly into both
new and familiar markets. As part of its business strategy, Hearst-Argyle
intends to expand further through the acquisition of additional television
stations or television station groups. As a result, Hearst-Argyle's management
is and probably will be managing a substantially larger number of television
stations than it has historically. There is no assurance that Hearst-Argyle will
implement and manage effectively the organizational and operational systems
necessary for optimal management and integration of its newly acquired or future
television stations. In addition, such acquisition opportunities may become
limited due to industry consolidation, competition for acquisition targets and
FCC rules. There is no assurance that future acquisitions will be available on
attractive terms, if at all.
Shares Eligible for Future Sale; Dilution; Share Repurchase Program. After
the completion of the merger, our stockholders will own shares of Hearst-Argyle
stock. All of the shares of Hearst-Argyle stock generally will be freely
tradeable without restriction or further registration under the Securities Act.
However, affiliates of Hearst-Argyle (as defined by the SEC) may generally sell
their shares only subject to certain restrictions as to timing, manner, volume,
notice and the availability of current public information regarding
Hearst-Argyle.
No prediction is made as to the effect, if any, that sales of shares of
Hearst-Argyle Series A common stock, or the availability of shares for future
sale, will have on the market price of the stock prevailing from time to time
following the merger. Sales of substantial amounts of stock in the public
market, or the perception that sales could occur, could depress the prevailing
market price for the stock. Sales may also make it more difficult for
Hearst-Argyle to sell equity securities or equity-related securities in the
future at a time and price that it deems appropriate.
As part of its share repurchase program, Hearst-Argyle may repurchase up to
$300 million of Hearst-Argyle stock from time to time. To date, Hearst-Argyle
has repurchased approximately 776,764 shares. In addition, Hearst Broadcasting
has notified Hearst-Argyle of its intention to purchase up to 10 million shares
of Hearst-Argyle stock from time to time. To date, Hearst Broadcasting has
purchased approximately 1,613,666 shares. These repurchases and purchases may
affect the market price of the Hearst-Argyle stock.
Dividend Policy; Limitation on Dividends. Since its inception,
Hearst-Argyle has not paid any dividends on the Hearst-Argyle stock and does not
anticipate that it will pay any dividends on the stock in the
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<PAGE> 13
foreseeable future. Hearst-Argyle's senior credit facility limits the ability of
Hearst-Argyle to pay dividends on the stock under certain conditions.
Impact on Net Income. Both the merger and the Kelly Transaction will result
in a decline in pro forma net income of Hearst-Argyle. This decline is
attributable to the increase in depreciation and amortization resulting from the
write-up of the assets of the properties acquired in the merger and the Kelly
Transaction.
RISK FACTORS RELATED TO THE NEW PULITZER STOCK
Stand-Alone Company. New Pulitzer was formed in May 1998 for purposes of
effecting the Transactions and does not have any operating history. Although we
have a substantial operating history with respect to the newspaper publishing
and related new media businesses to be contributed to New Pulitzer, there is no
assurance that New Pulitzer will be able to continue or improve such operating
history.
Competition. New Pulitzer will face significant competition for readership
and advertising revenues from other newspapers and other publications, as well
as with other news and advertising media. Many of these competitors may be
larger and have greater financial resources than will New Pulitzer. There is no
assurance that New Pulitzer will be able to compete effectively in its markets
or that alternative technologies may not in the future replace newspapers as a
preferred form of media.
Dependence on Local Economies; Importance of the St. Louis Post-Dispatch;
Importance of the Arizona Daily Star. New Pulitzer's advertising revenues and,
to a lesser extent, circulation revenues will depend on a variety of factors
specific to the communities that our newspapers serve. These factors include the
size and demographic characteristics of the local population, local economic
conditions in general, and the related retail segments in particular. If the
local economy or prevailing retail environment of the communities that New
Pulitzer's newspapers will serve were to be adversely affected, there is the
possibility that New Pulitzer's financial condition or results of operations
would be adversely affected.
Both the Post-Dispatch and the Star have historically generated a
significant portion of our newspaper revenue, advertising revenue and operating
cash flow. New Pulitzer expects that both of these newspapers will continue to
have a similar impact for the foreseeable future. A significant decline in the
performance of the Post-Dispatch or the Star or in general advertising spending
could have a material adverse effect on New Pulitzer's business, financial
condition and results of operations.
Fluctuation of Quarterly Results. New Pulitzer expects that seasonal
fluctuations will affect its results of operations from period to period.
Results of operations in any period should not be considered indicative of the
results to be expected for any future periods.
Acquisition Strategy. New Pulitzer anticipates that it will grow through
acquisitions of daily and non-daily newspapers and similar publications.
Acquisitions may expose New Pulitzer to particular risks, such as diversion of
management's attention, assumption of liabilities and amortization of goodwill
and other acquired intangible assets. These and other risks could have a
material adverse effect on the financial condition or results of operations of
New Pulitzer. Depending on the value and nature of the consideration paid by New
Pulitzer for acquisitions, these acquisitions may have a dilutive impact on New
Pulitzer's earnings per share. In making acquisitions, New Pulitzer will compete
for acquisition targets with other companies. There is no assurance that New
Pulitzer will be successful in identifying acquisition opportunities, assessing
the value, strengths and weaknesses of such opportunities, generating the cash
flow necessary to capitalize on such opportunities, consummating such
opportunities on terms favorable to New Pulitzer or managing the publications it
acquires and improving their operating efficiency.
Price and Availability of Newsprint. Although generally we obtain newsprint
at relatively favorable prices, there is no assurance that New Pulitzer will
continue to obtain its newsprint at those prices. Significant increases in
newsprint prices could have a material adverse effect on New Pulitzer's
business, financial condition and results of operations
Environmental Matters. New Pulitzer's operations will be subject to
federal, state and local environmental laws and regulations pertaining to air
and water quality, storage tanks and the management and disposal of
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<PAGE> 14
wastes at its facilities. Neither we nor New Pulitzer can predict whether future
events, such as changes in existing laws and regulations or the discovery of
conditions not currently known to them, may give rise to additional costs that
could be material. Furthermore, actions by federal, state and local governments
concerning environmental matters could result in laws or regulations that could
have a material adverse effect on the financial condition or results of
operations of New Pulitzer.
Potential Litigation Exposure. From time to time, we have been involved in
various claims and lawsuits incidental to the ordinary course of its business,
including matters such as libel, slander and defamation actions and complaints
alleging discrimination. While the results of litigation cannot be predicted, we
and New Pulitzer believe that the ultimate outcome of existing litigation will
not have a material adverse effect on the consolidated financial statements of
New Pulitzer and its subsidiaries.
Gross-Up Matters. Pursuant to the merger agreement, New Pulitzer will pay
and indemnify Hearst-Argyle against any liabilities and/or expenses arising from
any claim or dispute relating to certain agreements entered into by us with
certain of our former stockholders. We agreed under certain circumstances to
make additional payments to those former stockholders. For many reasons, we and
New Pulitzer cannot determine at this time the additional amounts, if any,
payable by New Pulitzer under these Agreements with respect to the merger.
Depending on the ultimate resolution of the meaning and application of various
provisions of those agreements, we believe that the amount of the additional
payments, if any, could be material to the consolidated financial statements of
New Pulitzer.
Control of New Pulitzer. Following the completion of the Transactions and
subject to the terms of a New Pulitzer voting agreement, a small number of New
Pulitzer stockholders could control the stockholder vote of New Pulitzer stock
on any matter in which all shares of New Pulitzer stock are voted together as a
single class. This control and concentration of voting power may make New
Pulitzer a less attractive target for a takeover than it otherwise might be or
render more difficult or discourage transactions involving an actual or
potential change of control of New Pulitzer. As a result, holders of New
Pulitzer stock may not receive any premium above market price for their New
Pulitzer stock that would otherwise be offered in connection with any attempt to
acquire control of New Pulitzer.
Anti-Takeover Effect of Certain Certificate of Incorporation and By-Laws
Provisions. Certain provisions of New Pulitzer's Certificate of Incorporation
and By-laws could have the effect of discouraging or making it more difficult
for a third party to acquire a majority of the outstanding capital stock of New
Pulitzer.
No Prior Public Market. Prior to the completion of the Transactions, there
will not have been any trading market for any New Pulitzer stock. Pulitzer has
filed an application with the New York Stock Exchange to list the New Pulitzer
common stock to be distributed to the holders of our common stock in the
spin-off. There is no assurance as to the prices at which trading in the New
Pulitzer common stock will occur after the completion of the Transactions.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of our common
stock by the selling stockholders.
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<PAGE> 15
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
selling stockholders as of December 21, 1998. The selling stockholders
beneficially own shares of class B common stock of the Company, and these shares
of class B common stock may be converted into common stock of the Company
pursuant to the Company's Restated Certificate of Incorporation and a voting
trust agreement. The shares of common stock are being registered to permit
public secondary trading of the shares of common stock, and the selling
stockholders may offer the shares of common stock for resale from time to time
after the conversion of the requisite number of shares of class B common stock.
See "Plan of Distribution."
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NUMBER OF CLASS B AGGREGATE VOTING NUMBER OF NUMBER OF CLASS B AGGREGATE VOTING
COMMON SHARES POWER OF COMMON COMMON COMMON SHARES POWER OF COMMON
BENEFICIALLY STOCK AND CLASS B SHARES BENEFICIALLY STOCK AND CLASS B
OWNED PRIOR TO COMMON STOCK BEING OWNED AFTER COMMON STOCK
CONVERSION AND PRIOR TO CONVERSION OFFERED AFTER CONVERSION AND AFTER CONVERSION
NAME OF SELLING STOCKHOLDER OFFERING AND OFFERING CONVERSION OFFERING AND OFFERING
- - - - --------------------------- ----------------- ------------------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Emily Rauh Pulitzer(1)...... 6,459,972(8) 40.27% 519,679 5,748,867(10) 39.50%
Emily Rauh Pulitzer, as
Trustee of the Pulitzer
Family Trust U/D/T dtd
6/8/74, as amended on
1/15/96(2)................ 300,935 1.88% 214,286 86,649 *
Spring Foundation(3)........ 214,286(9) * 214,286 0 *
David E. Moore(4)........... 3,926,669 24.48% 214,286 3,912,383 25.53%
Margaret J. Warner and Kate
C. Moore as Trustees of
the David and Kathryn
Moore 1998 Charitable
Remainder Trust dtd
10/5/98(5)................ 60,150 * 60,150 0 *
Michael E. Pulitzer, Tr. U/A
dtd 3/22/82 F/B/O Michael
E. Pulitzer(6)............ 3,639,190 22.69% 428,572 3,210,618 22.08%
The Ceil and Michael E.
Pulitzer Foundation,
Inc.(7)................... 51,113 * 14,286 36,827 *
</TABLE>
- - - - -------------------------
(1) Emily Rauh Pulitzer is a director of the Company.
(2) Emily Rauh Pulitzer is a beneficiary during her lifetime of the Pulitzer
Family Trust.
(3) Emily Rauh Pulitzer is an officer and a director of the Spring Foundation.
The Spring Foundation is a private operating foundation established by
Emily Rauh Pulitzer to further the arts.
(4) David E. Moore is a director of the Company.
(5) David E. Moore is a beneficiary during his lifetime of the 1998 Charitable
Remainder Trust.
(6) Michael E. Pulitzer is Chairman of the Board, President and Chief Executive
Officer of the Company.
(7) Michael E. Pulitzer is an officer and a director of the Ceil and Michael E.
Pulitzer Foundation, Inc.
(8) The beneficial ownership of Emily Rauh Pulitzer is computed as follows:
Emily Rauh Pulitzer, James V. Maloney and William Bush, Succ. The. U/T
Joseph Pulitzer, Jr. Dtd 6/12/74, as amended 10/20/92
<TABLE>
<S> <C>
Marital Trust A........................................ 10,560
Marital Trust B........................................ 5,929,733
Emily Rauh Pulitzer........................................ 519,679
---------
Total............................................. 6,459,972
=========
</TABLE>
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<PAGE> 16
(9) There will be contributed to the Spring Foundation by Emily Rauh Pulitzer a
sufficient number of shares so that the Spring Foundation will beneficially
own up to that number of shares before any sales by it pursuant to this
Registration Statement. As of December 21, 1998, the Spring Foundation
beneficially owns 22,860 shares of class B common stock.
(10) The beneficial ownership of Emily Rauh Pulitzer after conversion and
offering is computed as follows:
<TABLE>
<S> <C>
Number of shares beneficially owned prior to conversion and
offering.................................................. 6,459,972
-- Number of shares being offered after conversion........ (519,679)
-- Number of shares that may be contributed to the Spring
Foundation.............................................. (191,426)
---------
5,748,867
</TABLE>
* Less than one percent.
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<PAGE> 17
PLAN OF DISTRIBUTION
The selling stockholders may sell their shares of our common stock in one
or more transactions on the New York Stock Exchange, in negotiated transactions,
or a combination of such methods of sale, at fixed prices which may be changed,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices, or at negotiated prices. They may sell shares directly
to purchasers or to or through broker-dealers, which may act as agents or
principals. Such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Stockholders
and/or purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer may be in excess of customary commissions). The selling
stockholders may also sell their shares pursuant to Rule 144 promulgated under
the Securities Act, or pledge shares as collateral for margin accounts and such
shares could be resold pursuant to the terms of such accounts. The selling
stockholders and any broker-dealers that act in connection with the sale of our
common stock might be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act and any commission received by them and any profit
on the resale of the shares of our common stock as principal might be deemed to
be underwriting discounts and commissions under the Securities Act. The selling
stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act. Liabilities
under the federal securities laws cannot be waived.
Because the selling stockholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the selling stockholders
will be subject to prospectus delivery requirements under the Securities Act.
Furthermore, in the event of a "distribution" of their shares, the selling
stockholders, any selling broker or dealer and any "affiliated purchasers" may
be subject to Regulation M under the Exchange Act, which prohibits, with certain
exceptions, any such person from bidding for or purchasing any security which is
the subject of such distribution until such person's participation in that
distribution is completed. In addition, Regulation M prohibits, with certain
exceptions, any "stabilizing", which is defined as placing any bid or effecting
any purchase for the purpose of pegging, fixing or maintaining the price of our
common stock in connection with this offering.
In order to comply with certain state securities laws, if applicable, our
common stock will not be sold in a particular state unless such securities have
been registered or qualified for sale in that state or any exemption from
registration or qualification is available and complied with.
The selling stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the shares
against certain liabilities, including liabilities arising under the Securities
Act. Liabilities under the federal securities laws cannot be waived. Such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the selling stockholders and/or purchasers of
shares for whom such broker-dealers may act as agents or to whom they sell as
principal, or both.
The selling stockholders may be entitled under agreements entered into with
us to indemnification against liabilities under the Securities Act.
We are registering the shares on behalf of the selling stockholders. All
costs, expenses and fees in connection with the registration of their shares
offered hereby will be borne by us, except that the selling stockholders (or
their donees and pledgees) will pay underwriting discounts and selling
commissions, if any. We will not receive any of the proceeds from the sale of
the shares by the selling stockholders.
The selling stockholders may sell shares of Hearst-Argyle and New Pulitzer
from time to time after the closing of the merger. The selling stockholders may
effect these sales through ordinary brokerage transactions, in negotiated
transactions or otherwise, at market prices prevailing at the time of sale or at
negotiated or other prices.
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<PAGE> 18
LEGAL MATTERS
The validity of the issuance of the shares of our common stock offered will
be passed upon for us by Fulbright & Jaworski L.L.P., New York, New York. As of
December 17, 1998, William Bush, a partner of such firm, owns options to
purchase an aggregate of 3,334 shares of our common stock.
EXPERTS
Our financial statements and the related financial statement schedule as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997 incorporated in this prospectus by reference from our Current
Report on Form 8-K, dated December 16, 1998, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
The consolidated financial statements and the related financial statement
schedule of Hearst-Argyle Television, Inc. incorporated in this prospectus of
Pulitzer Publishing Company by reference from Hearst-Argyle's Annual Report on
Form 10-K, as amended by Form 10-K/A, for the year ended December 31, 1997, have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements and schedule of Argyle Television, Inc. included in Argyle
Television, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1996, as set forth in their report, which is incorporated in this prospectus by
reference. The consolidated financial statements and schedule of Argyle
Television, Inc. are incorporated by reference in reliance on their report,
given on their authority as experts in accounting and auditing.
The financial statements as of December 31, 1997 and 1996 and for each of
the three years in the period ended December 31, 1997 of Kelly Broadcasting Co.,
which appear in the Hearst-Argyle's Current Reports on Form 8-K dated September
17, 1998, as amended by Form 8-K/A dated December 7, 1998, incorporated by
reference in this prospectus, have been incorporated herein in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of that firm, as experts in accounting and auditing.
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NO PERSON (INCLUDING ANY SALESMAN OR BROKER) IS AUTHORIZED TO PROVIDE ORAL
OR WRITTEN INFORMATION ABOUT THIS OFFERING NOT CONTAINED IN THIS PROSPECTUS. YOU
SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY
DATE OTHER THAN THE DATE INDICATED BELOW.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information... 2
Cautionary Statement Concerning
Forward-Looking Statements.......... 3
Prospectus Summary.................... 4
Investment in Pulitzer Publishing
Company's Common Stock........... 4
The Company......................... 4
Risk Factors.......................... 7
Risk Factors Associated with the
Spin-Off and the Merger.......... 7
Risk Factors Related to the Hearst-
Argyle Stock..................... 9
Risk Factors Related to the New
Pulitzer Stock................... 12
Use of Proceeds....................... 13
Selling Stockholders.................. 14
Plan of Distribution.................. 15
Legal Matters......................... 16
Experts............................... 16
</TABLE>
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1,665,545 SHARES
PULITZER PUBLISHING
COMPANY
COMMON STOCK
---------------------
PROSPECTUS
---------------------
DECEMBER , 1998
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<PAGE> 20
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the Company's estimates (other than the SEC
registration fee) of the expenses in connection with the issuance and
distribution of the shares being registered. None of the following expenses are
being paid by the selling stockholders.
<TABLE>
<S> <C>
SEC registration fee........................................ $36,638.89
Legal fees and expenses*.................................... $
Accounting fees and expenses*............................... $
Printing fees and expenses*................................. $
Miscellaneous expenses*..................................... $
----------
Total.................................................. $
==========
</TABLE>
- - - - -------------------------
* To be provided upon filing of amendment to this Registration Statement
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware grants
corporations the power to indemnify their directors, officers, employees and
agents in accordance with the provisions set forth therein.
Article XI of the Restated Certificate of Incorporation of the Company
provides for indemnification of directors, officers, employees and agents of the
Company to the fullest extent provided by law. The Company currently maintains
directors' and officers' liability insurance. Sections 1, 2, 3 and 10 of Article
XI include basic indemnification provisions and provide as follows:
(1) Action Not By or on Behalf of Corporation. The Company shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that he is or was a director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against judgments and
amounts paid in settlement and expenses (including attorneys' fees), actually
and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company, and with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(2) Action By or on Behalf of Corporation. The Company shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Company to procure a judgment in its favor by reason of the fact that he is or
was a director, officer, employee or agent of the Company or is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Company unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability and in view of all
of the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the court shall deem proper.
II-1
<PAGE> 21
(3) Successful Defense. To the extent that a director, officer, employee or
agent of the corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 1 or 2 of
Article XI, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(10) A director's liability to the Company for breach of duty to the
Company or its stockholders shall be limited to the fullest extent permitted by
Delaware law as now in effect or hereafter amended. In particular, no director
of the Company shall be personally liable to the Company or any of its
stockholders for monetary damages for breach of fiduciary duty as director,
except for liability (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation law, as the same exists or
hereafter may be amended, or (iv) for any transaction from which the director
derived an improper personal benefit. If the Delaware General Corporation Law
hereafter is amended to authorize the further elimination or limitation of the
liability of directors, then the liability of a director of the Company, in
addition to the limitation on personal liability provided herein, shall be
limited to the fullest extent permitted by the amended Delaware General
Corporation law. Any repeal or modification of Article XI by the stockholders of
the Company shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Company existing at
the time of such repeal or modification.
ITEM 16. EXHIBITS.
(a) Exhibits.
<TABLE>
<C> <S>
5 Opinion of Fulbright & Jaworski L.L.P.
10 Employment Agreement with Robert C. Woodworth.
23.1 Consent of Fulbright & Jaworski L.L.P. (included in Exhibit
5).
23.2 Consent of Deloitte & Touche LLP with respect to the audited
financial statements of the Company.
23.3 Consent of Deloitte & Touche LLP with respect to the audited
financial statements of Hearst-Argyle.
23.4 Consent of Ernst & Young LLP.
23.5 Consent of PricewaterhouseCoopers.
24 Power of Attorney (included on signature page).
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
II-2
<PAGE> 22
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of St. Louis and State of Missouri on the 23rd day of
December, 1998.
PULITZER PUBLISHING COMPANY
By: /s/ MICHAEL E. PULITZER
------------------------------------
Michael E. Pulitzer
Chairman of the Board, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints MICHAEL E. PULITZER and RONALD H.
RIDGWAY, or either of them, his true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting said attorney-in-fact and agent,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<C> <S> <C>
/s/ MICHAEL E. PULITZER Director, Chairman of the December 23, 1998
- - - - --------------------------------------------- Board, President and Chief
Michael E. Pulitzer Executive Officer (principal
executive officer)
/s/ RONALD H. RIDGWAY Director, Senior Vice December 23, 1998
- - - - --------------------------------------------- President -- Finance
Ronald H. Ridgway (principal financial and
accounting officer)
/s/ WILLIAM BUSH Director December 23, 1998
- - - - ---------------------------------------------
William Bush
/s/ KEN J. ELKINS Director, Senior Vice December 23, 1998
- - - - --------------------------------------------- President -- Broadcast
Ken J. Elkins Operations
/s/ ALICE B. HAYES Director December 23, 1998
- - - - ---------------------------------------------
Alice B. Hayes
/s/ DAVID E. MOORE Director December 23, 1998
- - - - ---------------------------------------------
David E. Moore
</TABLE>
II-4
<PAGE> 24
<TABLE>
<C> <S> <C>
/s/ NICHOLAS G. PENNIMAN IV Director, Senior Vice December 23, 1998
- - - - --------------------------------------------- President -- Newspaper
Nicholas G. Penniman IV Operations
/s/ EMILY RAUH PULITZER Director December 23, 1998
- - - - ---------------------------------------------
Emily Rauh Pulitzer
/s/ JAMES M. SNOWDEN, JR. Director December 23, 1998
- - - - ---------------------------------------------
James M. Snowden, Jr.
</TABLE>
II-5
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- - - - ------- -------
<C> <S>
5... Opinion of Fulbright & Jaworski L.L.P.
10.. Employment Agreement with Robert C. Woodworth.
23.1.. Consent of Fulbright & Jaworski L.L.P. (included in Exhibit
5).
23.2.. Consent of Deloitte & Touche LLP with respect to the audited
financial statements of the Company.
23.3.. Consent of Deloitte & Touche LLP with respect to the audited
financial statements of Hearst-Argyle.
23.4.. Consent of Ernst & Young LLP.
23.5.. Consent of PricewaterhouseCoopers.
24.. Power of Attorney (included on signature page).
</TABLE>
II-6
<PAGE> 1
EXHIBIT 5
Fulbright & Jaworski L.L.P.
A Registered Limited Liability Partnership
666 Fifth Avenue
New York, New York 10103-3198
Telephone 212/318-3000 Houston
Facsimile: 212/752-5958 Washington, D.C.
Austin
San Antonio
Dallas
New York
Los Angeles
London
Hong Kong
December 23, 1998
Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63101
Dear Sirs:
We refer to the Registration Statement of Form S-3 (the "Registration
Statement") filed by Pulitzer Publishing Company (the "Company") on behalf of
certain selling stockholders (the "Selling Stockholders") with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Act"), relating to 1,665,545 shares of the Company's Common Stock, $.01 par
value (the "Shares"), to be sold by the Selling Stockholders named therein.
As counsel for the Company, we have examined such corporate records,
documents and questions of law as we have considered necessary or appropriate
for the purposes of this opinion and, upon the basis of such examination, advise
you that in our opinion the Shares to be sold by the Selling Stockholders have
been duly and validly authorized and, upon conversion of the requisite shares of
the Class B Common Stock of the Company, par value $.01 per share, pursuant to
the Company's Restated Certificate of Incorporation and that certain Voting
Trust Agreement, dated as of June 19, 1995, as may be amended, will be legally
issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" and elsewhere in the Registration Statement. This consent is not
to be construed as an admission that we are a party whose consent is required to
be filed with the Registration Statement under the provisions of the Act.
Very truly yours,
/s/ Fulbright & Jaworski L.L.P.
<PAGE> 1
EXHIBIT 10
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made on the 18th day of December, 1998, by and
between PULITZER INC., a Delaware corporation with its principal offices in St.
Louis, Missouri (the "Company"), and ROBERT C. WOODWORTH, a resident of the
State of Texas ("Mr. Woodworth").
1. Employment. The Company hereby employs Mr. Woodworth, and Mr.
Woodworth hereby accepts such employment, upon the terms and conditions set
forth in this Agreement.
2. Term. The term of Mr. Woodworth's employment under this Agreement will
be three years, starting January 1, 1999. On each subsequent January 1
(beginning January 1, 2000) prior to the termination of Mr. Woodworth's
employment under Section 7, the term will be extended by one additional year
or, if earlier, to the date Mr. Woodworth reaches age 65 provided Mr. Woodworth
is then employed hereunder.
3. Position and Duties. Mr. Woodworth will serve as the President and
Chief Executive Officer of the Company and as a voting trustee under any voting
trust agreement established by the holders of the Company's Class B common
stock. The Company will use its best efforts to cause Mr. Woodworth to be a
member of the Company's Board of Directors ("Board"). Mr. Woodworth will report
directly to the Board. Except as otherwise specifically provided herein, the
duties which may be assigned to Mr. Woodworth will be the usual and customary
duties of the offices of president and chief executive officer and will be
consistent with the provisions of the Company's Certificate of Incorporation,
By-laws and applicable law. At the request of the Board, Mr. Woodworth will
serve as an officer and director of the Company's subsidiaries and other
affiliates without additional compensation. Mr. Woodworth will devote all of
his business time and attention to the performance of his obligations, duties
and responsibilities under this Agreement. Subject to Company policies
applicable to senior executives generally, Mr. Woodworth may engage in
personal, charitable, professional and investment activities to the extent such
activities do not conflict or interfere with his obligations to, or his ability
to perform the duties and responsibilities of his employment by, the Company
hereunder.
4. Annual Compensation.
(a) Base Salary. The Company will pay salary to Mr. Woodworth at an
annual rate of $575,000, in accordance with it regular payroll practices. The
Board will review Mr. Woodworth's salary at least annually. The Board, acting
in its discretion, may increase (but not decrease) the annual rate of Mr.
Woodworth's salary in effect at any time.
<PAGE> 2
(b) Bonus. Mr. Woodworth will participate in the Company's bonus plan
established for its senior corporate executives, with an annual target equal to
100% of salary. Mr. Woodworth's bonus for 1999 will be no less than $425,000 if
Mr. Woodworth remains employed by the Company through December 31, 1999. Mr.
Woodworth's annual bonus will be payable promptly after the end of the year for
which it is earned, subject to such deferral requirements as the Company may
impose in order to preserve its full income tax deduction for the payment of the
bonus.
5. Additional Compensation.
(a) Start Bonus. Mr. Woodworth will be paid a bonus of $200,000 within
five days after the execution and delivery of this agreement.
(b) Initial Stock Option Grant. On the first business day following the
date the Closing (defined in Section 12(b) hereof) occurs, the Company will
grant to Mr. Woodworth a nonstatutory option pursuant to the Company's Stock
Option Plan (the "Initial Option") to purchase shares of Company common stock.
The value of the Initial Option, as determined by the Company's outside
compensation consultants under the Black-Scholes method, will be approximately
$1,500,000, and the number of shares and exercise price per share covered by
the Initial Option will be equal to the number of shares and exercise price per
share covered by a similar option to be granted at the same time to Michael E.
Pulitzer. The Initial Option will vest ratably (1/3, 1/3, 1/3) at the end of
1999, 2000, and 2001, subject in the case of any nonvested portion, to Mr.
Woodworth's continuing employment (except as provided in Section 7 hereof). If
the Closing does not occur, then Pulitzer Publishing Company will grant Mr.
Woodworth a comparable option to purchase shares of its common stock upon
comparable terms and conditions.
(c) Restricted Stock Grant. On the date the Initial Option is granted
pursuant to the preceding subsection, the Company will also credit X shares of
Company common stock to a bookkeeping account set up in the name of Mr.
Woodworth, where X is equal to $1,000,000 divided by the closing price per
share on the award date. The shares credited to Mr. Woodworth's account will
vest, if at all, on January 1, 2002, subject to the satisfaction such
performance conditions as are mutually agreed upon by the parties. Payment of
shares credited to Mr. Woodworth's restricted stock account, or their cash
equivalent, will be subject to such deferral requirements as the Company may
impose in order to preserve its full income tax deduction attributable to the
restricted stock award. If the Closing does not occur, then Pulitzer Publishing
Company will make a comparable grant of restricted stock to Mr. Woodworth upon
comparable terms and conditions.
-2-
<PAGE> 3
6. Employee Benefit Programs and Perquisites.
(a) General. Mr. Woodworth will be entitled to participate in such
qualified and nonqualified employee pension plans, stock option or other equity
compensation plans, group health, long term disability and group life insurance
plans, and any other welfare and fringe benefit plans, arrangements, programs
and perquisites sponsored or maintained by the Company from time to time for
the benefit of its employees generally or its senior executives generally.
Schedule A (attached) contains a summary of the benefits currently provided to
senior executives of the Company. Mr. Woodworth will be entitled to annual stock
option grants on a basis not less favorable than other senior officers.
(b) SERP Vesting Credit. Notwithstanding any contrary provision in the
Company's supplemental executive retirement plan, Mr. Woodworth will become
fully vested in his accrued benefit under that plan if he remains in the
continuous employ of the Company through December 31, 2001.
(c) Reimbursement of Business Expenses. Mr. Woodworth is authorized to
incur reasonable expenses in carrying out his duties and responsibilities under
this Agreement, and the Company will promptly reimburse him for all expenses
that are so incurred upon presentation of appropriate vouchers or receipts,
subject to the Company's expense reimbursement policies applicable to senior
executive officers generally.
(d) Relocation Expenses. Mr. Woodworth will establish his principal
residence in the St. Louis metropolitan area ("St. Louis") as soon as
practicable after the execution of this Agreement. The Company will pay or
reimburse Mr. Woodworth for the payment of all expenses reasonably incurred by
him in connection with the relocation of his residence to St. Louis, including,
without limitation, the cost of packing and moving household goods, traveling
expenses, interim living expenses during a transition period, and house hunting
trips for Mr. Woodworth and his wife. Mr. Woodworth will also be entitled to
reimbursement for the real estate commission and other closing costs incurred by
him on the sale of his present home in Texas ("present home") and any points
applicable to a loan Mr. Woodworth may take out in purchasing his new residence
in St. Louis. In the event Mr. Woodworth ends up having to carry two home loans
at the same time, he will be entitled to reimbursement for the interest portion
of the loan on his present home. If Mr. Woodworth wishes to buy a home in St.
Louis before selling his present home, the Company will make available an
interest-free bridge loan to Mr. Woodworth approximately equal to the equity in
his present home. The Company will make a tax gross-up payment to Mr. Woodworth
to make him whole for income taxes incurred in respect of any nondeductible and
nonexcludable relocation payments and reimbursement amounts. If Mr. Woodworth
cannot sell his present home by March 31, 1999, the Company will make
arrangements with a third party relocation company or otherwise for the purchase
of Mr. Woodworth's present home at its mutually agreed upon appraised value.
-3-
<PAGE> 4
(e) Conditions of Employment. Mr. Woodworth's place of employment during
the term of his employment under this Agreement will be at the principal office
of the Company in St. Louis, Missouri, subject to the need for business travel.
The conditions of Mr. Woodworth's employment, including, without limitation,
office space and accouterments, secretarial, administrative and other support,
will be consistent with his status as a senior executive officer of the Company.
7. Termination of Employment.
(a) Death. If Mr. Woodworth's employment with the Company terminates
before the end of the term by reason of his death, then (1) as soon as
practicable thereafter, the Company will pay to his estate an amount equal to
his "Accrued Compensation" (defined below), (2) the unvested portion (if any)
of the Initial Option and the special restricted stock grant (described in
Sections 5(b) and (c) hereof) will become fully vested, and (3) Mr. Woodworth's
spouse and covered dependents will be entitled to continue to participate in
the Company's group health plan(s) at the same benefit level at which they
participated immediately before Mr. Woodworth's death for a period of at least
one year after Mr. Woodworth's death or, if longer, for the balance remaining
in the then current term of this Agreement at the time of his death, and,
thereafter, for such additional continuation period as may be available under
COBRA or under any post-retirement group health plan or arrangement in which
Mr. Woodworth participated prior to his death. For the purposes of this
Agreement, the term "Accrued Compensation" means, as of any date, the amount of
any unpaid salary earned by Mr. Woodworth through that date, plus a pro rata
amount of Mr. Woodworth's target bonus for the year in which such date occurs,
plus any additional amounts and/or benefits payable to or in respect of Mr.
Woodworth under and in accordance with the provisions of any employee plan,
program or arrangement under which Mr. Woodworth is covered immediately prior
to his death. For the purpose of the preceding sentence, the target for 1999
will be deemed to be $425,000.
(b) Disability. If the Company terminates Mr. Woodworth's employment by
reason of Mr. Woodworth's "disability" (defined below), then (1) as soon as
practicable thereafter, Mr. Woodworth will be entitled to receive his Accrued
Compensation through his employment termination date, (2) the unvested portion
(if any) of the Initial Option and the special restricted stock grant
(described in Sections 5(b) and (c) hereof) will become fully vested, and (3)
Mr. Woodworth will be entitled to continue his participation in the Company's
group health plan(s) at the same benefit level at which he and his covered
dependent(s) participated immediately before the termination of his employment
for the balance remaining in the then current term of this Agreement at the
time of such termination of employment, and, thereafter, for such additional
continuation period as may be available under COBRA or under any
post-retirement group health plan or arrangement in which Mr. Woodworth
participated prior to the termination of his employment. For purposes of this
Agreement, the term "disability" means the inability of Mr. Woodworth to
substantially perform the customary duties and responsibilities of his
employment
-4-
<PAGE> 5
by the Company for a period of at least 120 consecutive days by reason of a
physical or mental incapacity which is expected to result in death or last
indefinitely.
(c) Termination by the Company for Cause or Voluntary Termination by Mr.
Woodworth. If the Company terminates Mr. Woodworth's employment for "Cause"
(defined below) or if Mr. Woodworth terminates his employment without "Good
Reason" (as defined in subsection(d) below) before the end of the then current
term of this Agreement, Mr. Woodworth will be entitled to receive his Accrued
Compensation through the date his employment terminates, determined without
regard to pro rata bonus, plus any additional amounts and/or benefits payable
to or in respect of Mr. Woodworth under and in accordance with the provisions
of any employee plan, program or arrangement under which Mr. Woodworth is
covered immediately prior to his termination (including, without limitation,
Sections 5(b) and (c) hereof), to the extent vested. For purposes of this
Agreement, the Company may terminate Mr. Woodworth's employment for "Cause" if
(1) Mr. Woodworth commits a felony involving moral turpitude, or (2) Mr.
Woodworth fails or refuses to carry out the duties and responsibilities of his
employment due to his willful neglect or willful misconduct which cannot be
cured or which, if curable, is not cured within 30 days after receipt of
written notice by the Company and a reasonable opportunity to appeal to the
Board (in person or through a representative).
(d) Termination by the Company Without Cause or by Mr. Woodworth for Good
Reason. If Mr. Woodworth's employment is terminated by the Company without Cause
or by Mr. Woodworth for "Good Reason" (defined below), then Mr. Woodworth will
be entitled to receive (1) Accrued Compensation through the termination date;
(2) a single sum payment equal to the salary that would have been payable (at
the then current rate) for a period of three years after the termination date
(or, if shorter, for the balance of the then current term of this Agreement);
(3) continued participation in the Company's group health plan(s) at the same
benefit level at which he and his covered dependent(s) participated immediately
before the termination of his employment for the balance remaining in the then
current term of this Agreement and, thereafter, for such additional continuation
period as may be available under COBRA or under any post-retirement group health
plan or arrangement in which Mr. Woodworth participated prior to the termination
of his employment; and (4) accelerated vesting of the Initial Option and of the
restricted stock grant described in subsections (b) and (c) of Section 5. For
the purposes of this Agreement, Mr. Woodworth may terminate his employment for
"Good Reason" if
(A) the Company materially diminishes Mr. Woodworth's duties,
responsibilities or employment conditions in a manner which is
inconsistent with the provisions hereof or with his status as Chief
Executive Officer of the Company (as described in Section 3 hereof) or
which has or reasonably can be expected to have a material adverse
effect on Mr. Woodworth's status or authority within the Company; or
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(B) the Company fails to perform or breaches its obligations under any
other material provision of this Agreement and does not correct such failure or
breach (if correctable) within 30 days following notice thereof by Mr. Woodworth
to the Company.
(e) Termination Without Cause Following a Change in Control. If a Change in
Control (defined in Schedule B) occurs and if, within two years after the date
on which the Change in Control occurs, Mr. Woodworth's employment is terminated
by the Company without Cause or by Mr. Woodworth for Good Reason, then Mr.
Woodworth will be entitled to receive (1) Accrued Compensation through the
termination date; (2) a single sum payment equal to 2.99 times the sum of his
then current annual salary rate and target bonus; (3) continued participation in
the Company's group health plan(s) at the same benefit level at which he and his
covered dependent(s) participated immediately before the termination of his
employment for a period of one year after such termination or, if longer, until
the third anniversary of the Change in Control, and, thereafter, for such
additional continuation period as may be available under COBRA or under any
post-retirement group health plan or arrangement in which Mr. Woodworth
participated prior to the termination of his employment; (4) continuing accrual
of benefits under the Company's SERP for a period of one year after such
termination or, if longer, the third anniversary of the Change in Control; and
(5) accelerated vesting of the Initial Option and the special restricted stock
grant (described at subsections (b) and (c) of Section 5.
8. Restrictive Covenants.
(a) Nondisclosure of Confidential Information. Mr. Woodworth acknowledges
that, during the course of his employment hereunder, he will have access to
confidential and proprietary information, documents and other materials relating
to the Company which are not generally known to persons outside the Company
(whether conceived or developed by Mr. Woodworth or others) and confidential
information, documents and other materials entrusted to the Company by third
parties, including, without limitation, financial information, trade secrets,
techniques, know-how, marketing and other business plans, data, strategies and
forecasts, and the substance of arrangements and agreements with customers,
suppliers and others (collectively, "Confidential Information"). Information
known by Mr. Woodworth prior to his employment with the Company will not be
considered to be Confidential Information hereunder. Any Confidential
Information conceived or developed by Mr. Woodworth during the period of his
employment will be the exclusive property of the Company. Except as specifically
authorized by the Company, Mr. Woodworth will not (during or after his
employment hereunder) disclose Confidential Information to any third person,
firm or entity or use Confidential Information for his own purposes or for the
benefit of any third person, firm or entity other than (1) as may be legally
required in response to any summons, order or subpoena issued by a court or
governmental agency, or (2) Confidential Information which is or becomes
available to the general public through no act or failure to act by Mr.
Woodworth.
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<PAGE> 7
(b) Company Documents. Upon the termination of his employment, Mr.
Woodworth will deliver to the Company all documents in whatever form and other
tangible property containing Confidential Information which are then in his
possession or control.
(c) Non-Solicitation. During employment and for a period of one year
after the termination of his employment, Mr. Woodworth will not, directly or
indirectly, solicit, induce or otherwise attempt to influence any employee of
the Company or any subsidiary or other affiliate thereof to leave employment
therewith.
(d) Remedies. Mr. Woodworth acknowledges and agrees that damages in
an action at law for breach of any of the provisions of this Section will be
difficult to determine and will not afford a full and adequate remedy and,
therefore, agrees that the Company, in addition to seeking damages in an action
at law, may seek specific performance and such equitable or other remedies as
may be available for breach of this Section, including, without limitation, the
issuance of a temporary or permanent injunction, without the necessity of a
bond. Except as otherwise provided in this Section 8, the provisions of this
subsection (d) shall not be construed as a waiver by Mr. Woodworth of any rights
which Mr. Woodworth may have to offer defenses to any request made by the
Company for injunctive relief.
(e) Survival. The obligations set forth in this Section 8 shall
survive the termination of Mr. Woodworth's employment.
9. Litigation Assistance. Mr. Woodworth will cooperate with the Company,
during the term of his employment and thereafter (including following Mr.
Woodworth's termination of employment for any reason), by making himself
reasonably available to testify on behalf of the Company or any subsidiary or
affiliate of the Company in any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, and to reasonably assist the Company
or any such subsidiary or affiliate in any such action, suit, or proceeding by
providing information and meeting and consulting with the Board or its
representatives or counsel, or representatives or counsel to the Company or any
such subsidiary or affiliate, as reasonably requested; provided, however, that
the same does materially interfere with his then current professional
activities. The Company will reimburse Mr. Woodworth, on an after-tax basis, for
all expenses reasonably incurred by him in connection with his provision of
testimony or assistance.
10. Resolution of Disputes. Any controversy or claim arising out of or
relating to this Agreement or any breach or asserted breach hereof, other than
an action or claim seeking injunctive relief under Section 8, shall be resolved
by binding arbitration, to be held in St. Louis in accordance with the rules and
procedures of the American Arbitration Association. Judgement upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof. Pending the resolution of any arbitration or court proceeding, the
Company will continue payment of all amounts and benefits due Mr. Woodworth
under this Agreement. All costs and expenses of
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<PAGE> 8
any arbitration or court proceeding (including fees and disbursements of
counsel) shall be borne by the respective party incurring such costs and
expenses, but the Company shall reimburse Mr. Woodworth for such reasonable
costs and expenses in the event he substantially prevails in such arbitration
or court proceeding. Notwithstanding the foregoing, following a Change in
Control, all reasonable costs and expenses (including fees and disbursements of
counsel) incurred by Mr. Woodworth pursuant to this section shall be paid on
behalf of or reimbursed to Mr. Woodworth promptly by the Company; provided,
however, that Mr. Woodworth shall repay such amounts to the Company if and to
the extent the arbitrator(s) determine(s) that any of Mr. Woodworth's
litigation assertions or defenses were in bad faith or frivolous.
11. Indemnification. To the extent permitted by its Certificate of
Incorporation and By-laws and subject to applicable law, the Company will
indemnify, defend and hold Mr. Woodworth harmless from and against any claim,
liability or expense (including reasonable attorneys' fees) made against or
incurred by Mr. Woodworth as a result of his employment with the Company or any
subsidiary or other affiliate of the Company, including service as an officer or
director of the Company or any subsidiary or other affiliate of the Company.
(b) Liability Insurance. The Company will continue and maintain a
directors and officers liability insurance policy covering Mr. Woodworth to the
extent the Company provides such coverage for its other senior executive
officers.
12. Assignment: Binding Nature.
(a) General. The services and duties to be performed by Mr. Woodworth
hereunder are personal and may not be assigned. This Agreement shall be binding
upon and inure to the benefit of the Company, its successors and assigns and Mr.
Woodworth and his heirs and representatives. The Company may assign this
Agreement to a successor in interest, provided that any such assignee
affirmatively adopts and agrees to fulfill all obligations to Mr. Woodworth
hereunder and, except in the case of an assignment to Pulitzer Publishing
Company pursuant to subsection (b) of this Section 12, the Company remains
secondarily liable to Mr. Woodworth hereunder.
(b) Effect of Merger Transactions. Upon the closing ("Closing") of the
transactions contemplated by the Agreement and Plan of Merger dated May 25,
1998, by and among Pulitzer Publishing Company, Pulitzer Inc. (a wholly-owned
subsidiary of Pulitzer Publishing Company) and Hearst-Argyle Television Inc.,
the Pulitzer Publishing Company's newspaper operations will be transferred to
Pulitzer Inc., the stock of Pulitzer Inc. will be distributed by the Pulitzer
Publishing Company to its stockholders and the Pulitzer Publishing Company (then
consisting of its broadcasting operations) will be acquired by Hearst-Argyle
Television Inc. If the Closing does not occur, this Agreement will be assigned
to and assumed by Pulitzer Publishing Company, with the result that, unless
clearly inappropriate, all references to the "Company" in this Agreement will
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<PAGE> 9
thereafter be deemed to mean Pulitzer Publishing Company, and all of the
provisions of this Agreement, including, without limitation, the provisions
relating to the position, rights and entitlements of Mr. Woodworth, will
thereafter be applied as if Pulitzer Publishing Company and Mr. Woodworth were
the original parties thereto. The foregoing provisions of this Section 12(b)
will be inapplicable if the Closing does occur during the term of Mr.
Woodworth's employment under this Agreement.
13. No Impediment to Agreement. Mr. Woodworth covenants that except as
otherwise disclosed herein, he is not, as of the date hereof, and will not be,
during the period of his employment hereunder, employed under contract, oral or
written, by any other person, firm or entity, and is not and will not be bound
by the provisions of any other restrictive covenant or confidentiality
agreement, and is not aware of any other circumstance or condition (legal,
health or otherwise) which would constitute an impediment to, or restriction
upon, his ability to enter into this Agreement and to perform the duties and
responsibilities of his employment hereunder.
14. Amendment or Waiver. No provision in this Agreement may be amended
unless such amendment is agreed to in writing and signed by Mr. Woodworth and an
authorized officer of the Company. Except as set forth herein, no delay or
omission to exercise any right, power or remedy accruing to any party shall
impair any such right, power or remedy or shall be construed to be a waiver of
or an acquiescence to any breach hereof. No waiver by either party of any breach
by the other party of any condition or provision contained in this Agreement to
be performed by such other party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent time.
Any waiver must be in writing and signed by Mr. Woodworth or an authorized
officer of the Company, as the case may be.
15. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.
16. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of Mr. Woodworth's employment to the
extent necessary to the intended preservation of such rights and obligations.
17. Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of Delaware without reference to
principles of conflict of laws.
18. Notices. Any notice given to a party shall be in writing and shall be
deemed to have been given when delivered personally or sent by certified or
registered mail, postage prepaid, return receipt requested, or express mail to
the recipient at his or its last known address.
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<PAGE> 10
19. Drafting. Each party acknowledges that his or its legal counsel
participated in the preparation of and/or has had ample opportunity to fully
examine this Agreement. The parties therefore stipulate that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement to favor any
party against the other.
20. Entire Agreement. This Agreement contains the entire understanding
and agreement between the parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect thereto.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first above written.
PULITZER INC.
By: /s/ Michael E. Pulitzer
------------------------------------------
Michael E. Pulitzer, Chairman of the Board
/s/ Robert C. Woodworth
------------------------------------------
Robert C. Woodworth
Pulitzer Publishing Company hereby accepts and agrees to the provisions of
Sections 5(b) and (c) and Section 12(b) of the foregoing Employment Agreement
dated December 18, 1998 between Pulitzer Inc. and Robert C. Woodworth.
PULITZER PUBLISHING COMPANY
By: /s/ Michael E. Pulitzer
------------------------------------------
Michael E. Pulitzer, Chairman of the Board
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<PAGE> 11
SCHEDULE A
SUMMARY OF BENEFITS
-------------------
Pulitzer Publishing Company currently provides the following employee
benefits to its senior executives. Pulitzer Inc. will provide similar benefits
to its senior executives, including the incoming senior executive.
1. Group Health. Group health benefits are provided through an 80/20 CIGNA
-------------
indemnity plan.(1) Each executive presently pays only $2.48 per month for family
coverage under the group health plan. Retiree medical coverage is available at
slightly higher contribution levels to executives who retire under the
employer's qualified defined benefit pension plan with at least 10 years of
service.
2. Group Dental. Group dental coverage is provided through CIGNA (with two
-------------
alternative plans). Each executive presently pays only $2.44 per month for
family dental coverage.
3. Group Life Insurance. Each senior executive is offered employer-provided
---------------------
life insurance coverage equal to 1.5 x annual earnings, subject to maximum
coverage of $250,000. The first $35,000 is provided through the employer's group
term policy; the balance is provided through the employer's group variable
universal policy. A senior executive may purchase additional coverage under the
group universal policy up to a total amount of $2,000,000.
4. Long Term Disability. Each executive is covered by employer-paid LTD
---------------------
insurance. The current monthly LTD benefit is 60% of average monthly pay
(including salary and bonus) up to a maximum monthly benefit of $10,000.
5. Qualified Savings Plan. The qualified savings plan is a combination
-----------------------
401k/profit sharing plan. Senior executives may elect to defer up to 10% of
their annual salary (subject to the applicable IRS limit - currently $10,000).
Employer matching contributions are made at the rate of 50% with respect to the
first 4% of pay contributed by each employee. In addition, employer profit
sharing contributions are made at the rate of $50 per month. Eligible employees
may enter the plan after completing one year of service. Each participant
directs the investment of his/her plan account among available Fidelity mutual
funds.
6. Qualified Defined Benefit Pension Plan. The employer maintains a
---------------------------------------
qualified defined benefit pension plan which provides a relatively modest
benefit - 1% of monthly earnings (subject to IRS limits) for the first 25 years
of service. The benefit accrual rate under the qualified defined benefit plan is
significantly lower than the accrual rate under the unqualified SERP (see the
next
___________________
(1) Several HMOs are also available. It is assumed for purposes of this
summary that senior executives will select the indemnity plan.
A-1
<PAGE> 12
paragraph). The benefit payable under the qualified defined benefit plan is
applied as an offset of the benefit otherwise payable under the SERP.
7. SUPPLEMENTAL RETIREMENT PENSION. The SERP is an unfunded, nonqualified
pension plan that provides for the payment of retirement income over and above
the pension benefit provided by the qualified pension plan. In general, the
SERP provides for the payment of an annual benefit starting at age 65 equal to
40% of a participant's average pay (salary and annual incentive bonus) during
the last three years of employment. The SERP benefit accrues ratably over 25
years of service. For example, if an executive retires with 15 years of
service, 60% (15/25) of the maximum SERP benefit will have accrued; i.e., the
annual benefit starting at age 65 will be equal to 24% (60% x 40%) of final
average pay. The benefit payable by the employer under the SERP formula is
offset by amounts payable under the employer's qualified defined benefit plan
and by the value of that portion of a participant's account under the qualified
savings plan which is derived from employer contributions.
8. VACATION AND TIME OFF. In general, vacation time starts at one week
after six months of employment and ranges to five weeks after twenty years. A
more liberal arrangement will be provided for the incoming senior executive. In
addition to vacation, there are ordinarily six holidays during each year, and
there can be as many as four personal days (including one day for an
executive's birthday).
9. RELOCATION BENEFITS. In the case of the incoming senior executive, the
employer will pay all expenses ordinarily associated with a relocation to St.
Louis. These expenses include the cost of packing and moving household goods,
traveling to the new location, interim living expenses during a transition
period, and house hunting trips for the executive and his wife. The executive
would also be entitled to reimbursement for the real estate commission and
other closing costs on the sale of his present home and any points applicable
to a loan executive may take out in purchasing a home in St. Louis. In the
event the executive ends up having to carry two home loans at the same time,
the executive will be entitled to reimbursement for the interest portion on his
old home. If the executive wishes to buy a home in St. Louis before selling his
present home, the employer will make an interest-free bridge loan to the
executive equal to the approximate equity in his present home. If the executive
cannot sell his existing residence within a certain period of time (e.g., 90
days from date of hire), the employer will make arrangements (with a third
party relocation company or otherwise) for the purchase of the executive's
residence at its appraised value. The employer will make a tax gross-up payment
to make the Executive whole for taxes incurred on the relocation payments and
reimbursements. The overall intent is that the incoming senior executive not be
out-of-pocket for move-related expenses.
10. EMPLOYEE STOCK PURCHASE PLAN. The employer maintains a qualified
employee stock purchase plan (under Section 423 of the Code). Subject to annual
limitations imposed by the Internal Revenue Code, this plan permits employees
to purchase employer stock at a 15% discount with money withheld from pay. The
plan operates on the basis of quarterly cycles. At the
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<PAGE> 13
end of each cycle, the amount withheld from pay during that cycle is used to
purchase stock at the discounted price.
11. EMPLOYEE STOCK OPTIONS. Customarily, the compensation committee of the
employer's board of directors grants stock options to senior executives and
other key employees with an exercise price equal to the value of the stock on
the grant date. The options may be designated as "incentive stock options"
under Section 422 of the Internal Revenue Code or as options which do not
qualify as "incentive stock options."
A-3
<PAGE> 14
DRAFT: December 3, 1998
SCHEDULE B
DEFINITION OF CHANGE IN CONTROL
For the purposes of this Employment Agreement, a "Change in Control" shall
be deemed to have occurred if:
(A) any Person (other than the Company, any trustee or other fiduciary
holding securities under any employee benefit plan of the Company, or any
company owned, directly or indirectly, by the stockholders of the Company
immediately prior to the occurrence with respect to which the evaluation is
being made in substantially the same proportions as their ownership of the
common stock of the Company) becomes the Beneficial Owner (except that a
Person shall be deemed to be the Beneficial Owner of all shares that any
such Person has the right to acquire pursuant to any agreement or
arrangement or upon exercise of conversion rights, warrants or options or
otherwise, without regard to the sixty day period referred to in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the
Company's then outstanding securities;
(B) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (A), (C), or
(D) of this section) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the
beginning of the two-year period or whose election or nomination for
election was previously so approved but excluding for this purpose any
such new director whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of
an individual, corporation, partnership, group, associate or other entity
or Person other than the Board, cease for any reason to constitute at least
a majority of the Board;
(C) the consummation of a merger or consolidation of the Company with any
other entity, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving or resulting entity) more
than 50% of the combined voting
B-1
<PAGE> 15
power of the surviving or resulting entity outstanding immediately after
such merger or consolidation; or
(D) the stockholders of the Company approve a plan or agreement for the
sale or disposition of all or substantially all of the consolidated assets
of the Company (other than such a sale or disposition immediately after
which such assets will be owned directly or indirectly by the stockholders
of the Company in substantially the same proportions as their ownership of
the common stock of the Company immediately prior to such sale or
disposition), in which case the Board shall determine the effective date
of the Change in Control resulting therefrom.
For purposes of the definition of Change in Control, (X) the term "Beneficial
Owner" shall have the meaning ascribed to such term in Rule 13d-3 under the
Exchange Act (including any successor to such Rule); (Y) the term "Exchange
Act" means the Securities Exchange Act of 1934, as amended from time to time,
or any successor act thereto; and (Z) the term "Person" shall have the meaning
ascribed to such term in section 3(a)(9) of the Exchange Act and used in
sections 13(d) and 14(d) thereof, including "group" as defined in section 13(d)
thereof. Notwithstanding anything to the contrary contained herein, the closing
of the transactions contemplated by the Agreement and Plan of Merger described
in Section 12(b) of the Employment Agreement will not constitute a Change in
Control.
B-2
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Pulitzer Publishing Company on Form S-3 of our reports dated February 6, 1998
(July 17, 1998 as to paragraphs 1, 2, 3 and 5 of Note 2 and paragraphs 3 through
7 of Note 13; November 25, 1998 as to paragraph 4 of Note 2; and December 11,
1998 as to Note 17) appearing in the Current Report on Form 8-K of Pulitzer
Publishing Company dated December 16, 1998, and to the reference to us under the
heading "Experts" in the Prospectus, which is part of the Registration
Statement.
December 23, 1998
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
(Form S-3) of Pulitzer Publishing Company of our report dated February 26, 1998
(March 9, 1998 as to Note 18), appearing in the Annual Report on Form 10-K, as
amended by Form 10-K/A, of Hearst-Argyle Television, Inc. for the year ended
December 31, 1997 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
Deloitte & Touche LLP
New York, New York
December 23, 1998
<PAGE> 1
EXHIBIT 23.4
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in this Registration Statement (Form S-3) of
Pulitzer Publishing Company of our report dated February 12, 1997 with respect
to the consolidated financial statements and schedule of Argyle Television,
Inc. as of and for the two years ended December 31, 1996 and 1995 included in
the Annual Report (Form 10-K) of Argyle Television, Inc., for the year ended
December 31, 1996.
ERNST & YOUNG LLP
San Antonio, Texas
December 22, 1998
<PAGE> 1
EXHIBIT 23.5
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 333-__________)
of Pulitzer Publishing Company of our report dated November 13, 1998 relating to
the financial statements of Kelly Broadcasting Co., which appear in the
Hearst-Argyle's Current Reports on Form 8-K dated September 17, 1998, as amended
by Form 8-K/A dated December 7, 1998. We also consent to the reference to our
firm under the caption "Experts."
PRICEWATERHOUSECOOPERS LLP
Sacramento, California
December 23, 1998
