PROVIDENCE JOURNAL CO, 424B4, 1996-06-25

PROVIDENCE JOURNAL CO
424B4, 1996-06-25

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<PAGE> 1
Filed pursuant to Rule 424(b)(4)
Registration No. 333-02703

PROSPECTUS

7,125,000 SHARES

THE PROVIDENCE [THE PROVIDENCE JOURNAL COMPANY LOGO] JOURNAL COMPANY
CLASS A COMMON STOCK
($1.00 PAR VALUE)
------------------------

All of the 7,125,000 shares of Class A Common Stock, $1.00 par value (the
"Class A Common Stock"), offered hereby (the "Underwritten Offering") are being
offered by The Providence Journal Company (the "Company"). In addition to the
Underwritten Offering contemplated hereby, the Company is also offering an
additional 450,000 shares of Class A Common Stock to eligible employees of the
Company and its subsidiaries (the "Direct Placement" and, together with the
Underwritten Offering, the "Offerings") at a price per share equal to $14.03,
the initial public offering price per share for the Class A Common Stock less
an amount equal to the underwriting discount per share. Prior to the Offerings,
there has been no public market for the Class A Common Stock. See
"Underwriting" for information relating to the determination of the initial
public offering price.

Upon consummation of the Offerings, the Company's authorized and
outstanding capital stock will consist of Class A Common Stock and Class B
Common Stock, $1.00 par value (the "Class B Common Stock" and together with the
Class A Common Stock, the "Common Stock"). The rights of the holders of the
Common Stock are identical, except that each share of Class B Common Stock
entitles the holder to four votes per share, while each share of Class A Common
Stock entitles the holder to one vote per share. The Class A Common Stock and
Class B Common Stock vote as a single class on substantially all matters, except
as otherwise required by law. The Class B Common Stock is convertible at any
time at the election of the holder on a share-for-share basis into Class A
Common Stock, and automatically converts into Class A Common Stock under certain
circumstances involving a transfer. See "Description of Capital Stock".

The shares of Class A Common Stock have been approved for listing on the
New York Stock Exchange, subject to official notice of issuance, under the
symbol "PRJ".

SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE CLASS A COMMON STOCK
OFFERED HEREBY.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Per Share................................... $15.00 $.97 $14.03
- -----------------------------------------------------------------------------------------------------------
Total(3).................................... $106,875,000 $6,911,250 $99,963,750
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting".

(2) Before deducting expenses estimated at $1,400,000 payable by the Company.

(3) The Company has granted the Underwriters an option, exercisable within 30
days after the date hereof, to purchase up to an aggregate of 1,068,750
additional shares of Class A Common Stock, at the initial price to public
per share, less the underwriting discount, solely to cover over-allotments,
if any. If such option is exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $122,906,250,
$7,947,938 and $114,958,312, respectively. See "Underwriting".

------------------------

The shares of Class A Common Stock are being offered by the several
Underwriters, subject to prior sale, when, as and if issued to and accepted by
them, subject to approval of certain legal matters by counsel for the
Underwriters and certain other conditions. The Underwriters reserve the right to
withdraw, cancel or modify such offer and to reject orders in whole or in part.
It is expected that delivery of certificates for the shares of Class A Common
Stock will be made in New York, New York on or about June 28, 1996.

------------------------

MERRILL LYNCH & CO.

BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
------------------------

The date of this Prospectus is June 24, 1996.

<PAGE> 2

[LOGO]

IN CONNECTION WITH THIS UNDERWRITTEN OFFERING, THE UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE CLASS A COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

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<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. Unless the
context otherwise requires, all references to the "Company" are to The
Providence Journal Company and its consolidated subsidiaries, as successor to
Providence Journal Company ("Old PJC") after giving effect to the transactions
described herein under "The Company -- Background; Reorganization". Unless
otherwise indicated, all market rank, station rank in market and station
audience rating and share data contained herein have been obtained from the
Nielsen Station Index dated May 1996 and all "effective buying income" ("EBI"),
market population, household growth and retail sales data contained herein have
been obtained from Investing in Television, 1996 Market Report, published by BIA
Publications, Inc. ("BIA"). Unless otherwise indicated, the information in this
Prospectus (i) assumes no exercise of the over-allotment option granted to the
Underwriters, (ii) assumes that 450,000 shares of Class A Common Stock will be
issued in the Direct Placement and (iii) gives effect to a 450-for-1 stock split
(the "Stock Split") of the Common Stock effected on June 18, 1996.

THE COMPANY

GENERAL

The Company owns and operates nine network-affiliated television stations
(the "Stations") and provides or will provide programming and marketing services
to three television stations (the "LMA Stations") under local marketing
agreements ("LMAs") in geographically diverse markets throughout the United
States (the "Broadcasting Business"), publishes the largest daily newspaper in
the Rhode Island and southeastern Massachusetts market (the "Publishing
Business"), and produces diversified programming and interactive electronic
media services (the "Programming and Electronic Media Business"). The Company's
television broadcasting group reaches 5.6 million households, or 6% of all U.S.
television households; its newspaper is the leading newspaper in its market in
terms of advertising and circulation; and certain of its programming and
electronic media businesses, such as the Television Food Network, serve
subscribers and viewers nationwide.

Important factors in the success of the Company's broadcasting and
publishing businesses have been its strong local news focus, targeted local
advertising sales efforts, investment in advanced technology and emphasis on
cost control. The resulting strength of its media franchises presents attractive
opportunities for future growth and for realization of operating efficiencies.
In addition to increasing the reach of its broadcasting operations and cable and
satellite television networks through acquisitions and internal growth, the
Company intends to develop new revenue sources that build on the existing
strength of its brands and expertise and have broad regional or national appeal.
See "Business".

The Company's broadcasting operations are located in markets ranging from
the 12th to the 127th largest Designated Market Areas (defined by A. C. Nielsen
Co. ("Nielsen") as geographic markets for the sale of national "spot" and local
advertising time) in the United States ("DMAs"), with five such Stations and one
LMA Station in the 50 largest DMAs. Five of the Stations are network affiliates
of the National Broadcasting Company Incorporated ("NBC") television network,
two are network affiliates of the Fox Broadcasting Network ("Fox"), one is a
network affiliate of the American Broadcasting Company ("ABC") and one is a
network affiliate of CBS, Inc. ("CBS"). In 1995, EBITDA (as defined herein) of
the Broadcasting Business represented approximately 81% of the Company's EBITDA
excluding programming and electronic media and corporate expenses. Eight of
these nine Stations are VHF (as defined herein) television stations. Two of the
LMA Stations are affiliated with the United Paramount Network ("UPN"). See
"Business -- Broadcasting".

The Company publishes the leading newspaper in terms of advertising and
circulation in its market of Rhode Island and southeastern Massachusetts, the
Providence Journal-Bulletin Monday through Saturday and The Providence Sunday
Journal (collectively the "Providence Journal"). Average daily circulation
levels for the three months ended March 31, 1996 following the consolidation of
the morning and afternoon newspapers in June 1995 (see "Business -- Publishing")
were approximately 169,500 for Monday through

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Saturday and 251,300 for Sunday. The Company, which was founded in 1820,
believes that the Providence Journal, published daily since 1829, is the oldest
continuously published daily newspaper in the United States. See
"Business -- Publishing".

The Company produces cable and satellite television programming and
interactive and on-line electronic media services through its management role or
ownership interests in a variety of content-driven entertainment and information
businesses. The Company owns a 46% interest in and participates in the
management of Television Food Network, a cable television network that is
distributed to approximately 16.5 million subscribers throughout the United
States. The Company controls America's Health Network with a 65% ownership
interest, and owns all of the equity interest in NorthWest Cable News, both
recently launched development stage cable programming network services. The
Company also owns equity interests in a variety of interactive, on-line, and
broadcast programming businesses. See "Business -- Programming and Electronic
Media".

BROADCASTING

GENERAL. The Stations generally are in markets that the Company believes
will experience above-average economic growth in retail sales, EBI and
population. The Stations are typically located in the largest cities or state
capitals of the states in which they operate. The Company's Stations and the LMA
Stations are in geographically diverse regions of the United States, which
reduces the Company's exposure to regional economic fluctuations.

The following table sets forth general information for each of the Stations
and the LMA Stations and the markets they serve, based on the Nielsen Station
Index as of May 1996. In February 1992, the Company acquired a 50% joint venture
interest (the "King Acquisition") in King Holding Corp. ("KHC"), which
indirectly owned Stations KING (Seattle), KGW (Portland), KHNL (Honolulu), KREM
(Spokane) and KTVB (Boise) (the "King Stations"). The Company has operated the
King Stations since such acquisition and in 1995 acquired 100% of the ownership
of the King Stations in the Kelso Buyout (as defined herein). The Stations are
listed in order of the ranking of their DMA.
<TABLE>
<CAPTION>
NUMBER OF
COMMERCIAL
TELEVISION
NETWORK CHANNEL/ DMA STATIONS RANK IN STATION
MARKET AREA(1) STATION(1) STATUS AFFILIATION FREQUENCY(2) RANK(3) IN MARKET(4) MARKET(5) SHARE(6)
- --------------- ---------- -------- ----------- ------------- ------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seattle, WA KING Owned NBC 5/VHF 12 8 1 19%
KONG(8) LMA N/A N/A 12 8 -- --
Portland, OR KGW Owned NBC 8/VHF 24 8 1 17
Charlotte, NC WCNC Owned NBC 36/UHF 28 8 3 10
Albuquerque/ KASA Owned Fox 2/VHF 48 6 4 7
Santa Fe, NM
Louisville, KY WHAS Owned ABC 11/VHF 50 6 1 23
Honolulu, HI KHNL Owned NBC 13/VHF 70 8 1 19
KFVE LMA UPN 5/VHF 70 8 - -
Spokane, WA KREM Owned CBS 2/VHF 74 4 2 18
Tucson, AZ KMSB Owned Fox 11/VHF 80 6 4 10
KTTU LMA UPN 18/UHF 80 6 - -
Boise, ID KTVB Owned NBC 7/VHF 127 5 1 30

<CAPTION>
1995
MARKET REVENUE(7)
---------------------
STATION $(IN
MARKET AREA(1) SHARE MILLIONS)
- --------------- ------- ---------
<S> <C> <C>
Seattle, WA 25% $ 269.0
-- 269.0
Portland, OR 22 144.9
Charlotte, NC 11 118.1
Albuquerque/ 16 79.0
Santa Fe, NM
Louisville, KY 31 82.3
Honolulu, HI 19 63.7
- 63.7
Spokane, WA 27 42.8
Tucson, AZ 21 52.2
- 52.2
Boise, ID 40 26.0
</TABLE>

- ---------------
(1) As used in this Prospectus, the following "call letters" refer, as the
context may require, either to the corporate owner of the station indicated
or to the station itself: "KING" refers to KING-TV, Seattle, Washington;
"KONG" refers to KONG-TV, Seattle, Washington; "KGW" refers to KGW(TV),
Portland, Oregon; "WCNC" refers to WCNC-TV, Charlotte, North Carolina;
"KASA" refers to KASA-TV, Albuquerque/Santa Fe, New Mexico; "WHAS" refers to
WHAS-TV, Louisville, Kentucky; "KHNL" refers to KHNL(TV), Honolulu, Hawaii;
"KFVE" refers to KFVE(TV), Honolulu, Hawaii; "KREM" refers to KREM-TV,
Spokane, Washington; "KMSB" refers to KMSB-TV, Tucson, Arizona; "KTTU"
refers to KTTU(TV), Tucson, Arizona; and "KTVB" refers to KTVB(TV), Boise,
Idaho.

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<PAGE> 5

(2) As used in this Prospectus, "VHF" refers to the very high frequency band
(channels 2-13) of the spectrum and "UHF" refers to the ultra-high frequency
band (channels above 13) of the spectrum.
(3) Ranking of DMA served by the Station among all DMAs, measured by the number
of television households for the 1995-1996 broadcast year.
(4) Represents the number of television stations ("reportable stations")
designated by Nielsen as "local" to the DMA, excluding public television
stations and stations that do not meet minimum Nielsen reporting standards
(weekly cumulative audience of less than 2.5%) for reporting in the Sunday
through Saturday, 6:00 a.m. to 2:00 a.m. period ("sign-on to sign-off").
Does not include national cable channels or satellite stations. The number
of reportable stations may change for each reporting period.
(5) Station's rank relative to other reportable stations, based upon the DMA
rating as reported by Nielsen, 6:00 a.m. to 2:00 a.m., during the May 1996
measuring period. Data for KHNL and KMSB include KFVE and KTTU,
respectively. Data for KING does not include KONG because the LMA for such
LMA Station was entered into on May 14, 1996 and the station is not yet
operational.
(6) Represents the number of television households tuned to the Station as a
percentage of the number of television households with sets in use for
Sunday-Saturday 6:00 a.m. to 2:00 a.m. from the May 1996 Nielsen Station
Index. Data for KHNL and KMSB include KFVE and KTTU, respectively. Data for
KING does not include KONG because the LMA for such LMA Station was entered
into on May 14, 1996 and the station is not yet operational.
(7) Represents gross national, local, regional and political advertising
revenues, excluding network and barter revenues (defined as the revenue
resulting from the exchange of unsold advertising time for products or
services, typically including programming, merchandise, fixed assets, other
media advertising privileges, travel and hotel arrangements, and
entertainment), for all commercial television stations in the DMA, based on
actual local market reporting, as estimated by BIA. Station share of 1995
market revenue for KHNL and KMSB includes revenues of KFVE and KTTU,
respectively. Data for KING does not include KONG because the LMA for such
LMA Station was entered into on May 14, 1996 and the station is not yet
operational.
(8) Data for KONG is not available because the station is not yet operational.

BROADCASTING BUSINESS AND OPERATING STRATEGY. The Company's strategy in
the Broadcasting Business is to increase viewership, advertising revenue and
EBITDA primarily by capitalizing on its strong local news franchises, targeted
marketing and local sales efforts, high quality, non-network programming and
strict cost controls. This strategy has contributed to average compound annual
growth in the Company's net revenues and EBITDA in the Broadcasting Business,
calculated on a combined basis as herein described, of 9.5% and 23.9%,
respectively, from 1991 to 1995. In addition, EBITDA as a percentage of net
revenues, calculated on a combined basis, has increased from 21.6% in 1991 to
35.7% in 1995. The components of the Company's Broadcasting Business strategy
include the following:

ENHANCE STRONG LOCAL NEWS FRANCHISES. Most of the Stations lead their
markets in terms of ratings for local news and number of hours of local
news that are broadcast per week. The Company has focused on enhancing each
Station's local market news programming franchise as the foundation to
build significant audience share in such market. Local news programming is
commercially valuable because of its high viewership level, the
attractiveness to advertisers of the demographic characteristics of the
typical news audience (allowing stations generally to charge higher rates
for advertising time) and the enhanced ratings of programming in time
periods adjacent to the news. In addition, the Company believes that its
strong local news programming has helped to differentiate the Stations from
cable programming competitors, which generally do not provide such
programming.

LEVERAGE LOCAL MARKET STRENGTH WITH ADDITIONAL LMAS. The Company
plans to pursue opportunities to enter into LMAs in the DMAs in which the
Company's Stations operate. The Company believes that LMAs enable the
Company to increase revenue and broadcast cash flow by taking advantage of
the economies of scale derived from being a television station group owner.
The Company also believes that there are benefits in terms of increased
advertising revenue from LMA arrangements.

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<PAGE> 6

advertisers to develop campaigns that match specifically targeted audience
segments with the advertisers' overall marketing strategies.

MAXIMIZE VIEWER SHARE THROUGH HIGH QUALITY, NON-NETWORK
PROGRAMMING. Each of the Company's Stations is focused on improving its
syndicated and locally produced non-network programming to attract
audiences with favorable demographic characteristics. The Company believes
that through a cooperative approach to programming, it can generate
incremental revenue by adjusting its programming mix to capture viewers of
certain targeted demographic segments that meet the needs of valued
advertisers.

MAINTAIN EFFECTIVE COST CONTROLS AND LEVERAGE ECONOMIES OF
SCALE. Each Station emphasizes strict control of its programming and
operating costs as an essential factor in increasing broadcast cash flow.
In addition, the Company, as a television station group owner, believes
that it has the ability to enter into advantageous group programming
contracts. As the provider of NBC network programming in five markets, the
Company believes that its ability to enter into stable and favorable
affiliation agreements with NBC is enhanced. Through strategic planning and
annual budget processes, the Company continually seeks to identify and
implement cost-saving opportunities at each of the Stations.

BROADCASTING ACQUISITION STRATEGY. The Company plans to pursue favorable
acquisition opportunities as they become available. The Company's acquisition
strategy is to target network-affiliated television stations where it believes
it can successfully apply its operating strategy and where such stations can be
acquired on attractive terms. The Company generally intends to review
acquisition opportunities in growth markets, typically in the 75 largest DMAs in
the nation, with what the Company believes to be advantageous business climates.
In assessing acquisitions, the Company targets stations for which it has
identified specific expense reductions and proposals for revenue enhancement
that can be implemented upon acquisition. The Company does not presently have
any agreements or understandings to acquire or sell any television stations.

See "Business -- Broadcasting -- Business and Operating Strategy".

PUBLISHING

GENERAL. The Providence Journal is the leading newspaper in terms of
advertising and circulation in its market of Rhode Island and southeastern
Massachusetts. Average daily circulation levels for the three months ended March
31, 1996 following the consolidation of the morning and afternoon newspapers in
June 1995 (as described below) were approximately 169,500 for circulation Monday
through Saturday and 251,300 for circulation on Sunday. According to a Belden
Associates study, an average of approximately 58% and 69% of the 929,000 total
adults in the market surveyed in the fourth quarter of 1995 read the daily
Providence Journal-Bulletin and The Providence Sunday Journal, respectively, on
a daily basis. In addition, according to this study, an average of approximately
77% and 87% of adults in the market who read any newspaper read the daily
Providence Journal-Bulletin and The Providence Sunday Journal, respectively, on
a daily basis. The Providence Journal has received numerous awards over the
years for its local and national coverage, including its fourth Pulitzer Prize
in 1994.

BUSINESS AND OPERATING STRATEGY. The Company's publishing strategy is to
leverage the Providence Journal's comprehensive regional and local news coverage
to generate increased readership, local advertising sales, and new revenue
sources based on its strong brand recognition. The Company believes that the
recent consolidation of its daily newspapers, reorganization of its staff, and
effective cost controls will help contribute to improved operating results. The
Company's business and operating strategy for the Publishing Business includes
the following key elements:

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<PAGE> 7

ENHANCE STRONG LOCAL NEWS PRESENCE. The Company has the largest local
news gathering resources in its Rhode Island and southeastern Massachusetts
market. In 1995, the Company intensified its commitment to local news by
reallocating resources to the Providence Journal's regional sections that
target readers in seven geographic zones of its market. As a result of the
Company's strategies to emphasize regionally-zoned news and information
sections and to control costs, on June 5, 1995, the Company consolidated
the morning and afternoon newspapers in order to reallocate resources to
the regional editions and to reduce operating costs (the "Newspaper
Consolidation"). A portion of the total annual savings from this
consolidation is being used to enhance local news coverage.

REORGANIZE SALES FORCE TO INCREASE CUSTOMER FOCUS. The Company
emphasizes a targeted approach to its advertisers and has recently begun
the reorganization of its sales force to enhance its effectiveness in
attracting advertisers. The Company also intends to institute a new
performance-based incentive compensation plan for its salespeople that
rewards employees based on their contribution to EBITDA rather than to
revenues. The Company believes that this reorganization will enable its
sales force to better identify sales opportunities, be more responsive to
advertiser needs, and operate more cost effectively.

REDUCE OPERATING COSTS. Expenses of the Company's Publishing Business
are closely monitored in an effort to control costs without sacrificing
revenue opportunities. The Company seeks to reduce labor costs through
investment in modern production equipment and the consolidation of
operations and administrative activities. The Company has recently reduced
operating costs through the Newspaper Consolidation and the Newspaper
Restructuring (as defined herein), which together have resulted in an
estimated $10 million in annual savings. The Company has also made efforts
to reduce its newsprint costs through a variety of methods, including
reducing the page width of the newspaper and strict control of newspaper
waste.

INCREASE REVENUES THROUGH RELATED PRODUCTS. The Company has
introduced new informational products and services to generate revenue from
sources other than newspaper publishing. These products and services seek
to exploit the strong local brand recognition of the Providence Journal and
include fax-on-demand products, voice information services, a news wire
service, and telemarketing services.

See "Business -- Publishing -- Business and Operating Strategy" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".

PROGRAMMING AND ELECTRONIC MEDIA

GENERAL; BUSINESS AND OPERATING STRATEGY. The Company produces cable
television and satellite network programming and interactive and on-line
electronic media services through its management role or ownership interests in
a variety of content-driven entertainment and information businesses. The
Company's approach to development of programming and interactive opportunities
is to invest in or manage businesses that are extensions of its experience in
the production of programming content or that build on existing media
franchises. The Company's programming and electronic media strategy consists of
the following key elements:

LEVERAGE EXISTING EXPERTISE IN PROGRAMMING AND OTHER CONTENT
DEVELOPMENT. The Company has invested in and operates certain businesses,
such as the Television Food Network, America's Health Network and NorthWest
Cable News, that capitalize on the Company's experience in television
broadcasting and newspaper publishing. As additional opportunities arise,
the Company expects to pursue such opportunities that best exploit or
extend the capabilities of existing talent and resources.

EMPHASIZE PROGRAMMING TOPICS WITH BROAD APPEAL. The Company's
strategy in its programming businesses is to develop cable and satellite
programming networks, such as the Television Food Network, America's Health
Network and NorthWest Cable News, based on issues of interest to potential
viewers such as food, health and local news. As the Company reviews
additional opportunities, it plans to invest in such ventures that it
believes have broad audience appeal.

EXTEND AND ENHANCE EXISTING BRANDS AND CONTENT. The Company's
strategy in developing cable network programming and interactive and
on-line electronic media products has been to create products

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that are closely related to the Company's existing brands and franchises.
For example, NorthWest Cable News builds on the leading local news
franchises of the Stations in Washington, Oregon and Idaho, and Rhode
Island Horizons, an on-line service, presents news, features and
advertising displayed in the Providence Journal. The Company also believes
that the success of these ventures will serve to enhance the Company's
existing broadcast and newspaper properties.

MINIMIZE RISK THROUGH STAGED INVESTMENTS IN NEW OPPORTUNITIES. The
Company attempts to take a staged approach to investing in start-up
ventures by committing financial and managerial resources upon reaching
certain milestones in the businesses' development. Such milestones are
dependent on the nature of the start-up business, but include identifying
promising concepts, commissioning market research, establishing strategic
relationships with other investors, negotiating contractual arrangements
with key suppliers and evaluating early-stage financial results of specific
projects.

See "Business -- Programming and Electronic Media -- Business and Operating
Strategy".

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THE OFFERINGS

<TABLE>
<S> <C>
Class A Common Stock offered in the
Underwritten Offering............... 7,125,000 shares(1)
Class A Common Stock offered in the
Direct Placement.................... 450,000 shares
Common Stock to be outstanding after
the Offerings:
Class A Common Stock................ 24,928,800 shares(2)(3)
Class B Common Stock................ 21,067,650 shares
Total....................... 45,996,450 shares
Use of Proceeds....................... The net proceeds from the Offerings will be
used to repay a portion of the indebtedness
outstanding under the Company's revolving
credit facility. See "Use of Proceeds".
Voting and Conversion Rights.......... The rights of the holders of the Common Stock
are identical, except that each share of Class
B Common Stock entitles the holder to four
votes per share, while each share of Class A
Common Stock entitles the holder to one vote
per share. The Class A Common Stock and Class
B Common Stock vote as a single class on
substantially all matters, except as
otherwise required by law. The Class B Common
Stock is convertible at any time at the
election of the holder on a share-for-share
basis into Class A Common Stock, and
automatically converts into Class A Common
Stock under certain circumstances involving a
transfer. See "Description of Capital Stock".
New York Stock Exchange symbol........ The shares of Class A Common Stock have been
approved for listing on the New York Stock
Exchange, subject to official notice of
issuance, under the symbol "PRJ".
</TABLE>

- ---------------
(1) If the Underwriters exercise their over-allotment option in full, the total
number of shares of Class A Common Stock offered will be 8,193,750.

(2) If the Underwriters exercise their over-allotment option in full, the total
number of shares of Class A Common Stock outstanding after the Offerings
will be 25,997,550.

(3) Excludes an aggregate of 1,972,800 shares of Class A Common Stock currently
issuable upon exercise of options and units outstanding under the Company's
1994 Employee Stock Option Plan and the 1994 Non-Employee Director Stock
Option Plan (the "Option Plans") and the Restricted Stock Unit Plan (the
"RSU"). See "Risk Factors -- Shares Eligible For Future Sale". Also excludes
approximately $7.7 million of Class A Common Stock that could be issued in
1996 to participants in the Option Plans, the RSU and the Incentive Units
Plan (the "IUP", and together with the Option Plans and the RSU,
collectively, the "Stock Incentive Plans") in the event of the consummation
of the proposed US West Merger (as defined herein under the caption,
"Business -- Background; Reorganization") as adjustments required pursuant
to the terms of such plans. See "Risk Factors -- Shares Eligible for Future
Sale" and "Business -- Background; Reorganization". The actual number of
shares of Class A Common Stock to be issued will depend on the fair market
value of the Class A Common Stock determined in accordance with the terms of
such plans at the effective time of the US West Merger.

RISK FACTORS

Prospective investors should carefully consider the factors set forth
herein under "Risk Factors", in addition to the other information contained in
this Prospectus, before purchasing any of the shares of Class A Common Stock
offered hereby.

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SUMMARY SUPPLEMENTAL PRO FORMA FINANCIAL DATA

The following table presents summary supplemental pro forma financial data
for the years ended December 31, 1994 and 1995, and the three months ended March
31, 1995 and 1996, as if the Spin-Off, Merger and Kelso Buyout (each as defined
herein under "The Company -- Background; Reorganization") had occurred on
January 1, 1994. Supplemental pro forma financial data is presented because the
Company believes such data is more meaningful than historical financial data in
comparing 1995 and 1996 results of operations with 1994 because such pro forma
data includes KHC's operations and excludes discontinued cable operations for
all periods presented. Although the Company did not consolidate the results of
KHC's operations for accounting purposes until after the Kelso Buyout, the
Company has managed these operations since the completion of the King
Acquisition in February 1992. This summary supplemental pro forma financial
data, which is unaudited, consolidates the historical results of operations of
the Company and KHC, after giving effect to the supplemental pro forma
adjustments and eliminations described in footnote (1) below, for all periods
presented. This data is not necessarily indicative of the results of operations
that would have actually been obtained had the transactions referred to above
been consummated on January 1, 1994, nor is it indicative of the results of
operations that may be obtained in the future. Such financial data should be
read in conjunction with "Selected Financial Data", "-- Broadcasting
Business -- Summary of Financial Results", "-- Publishing Business -- Summary of
Financial Results" and "-- Programming and Electronic Media Business -- Summary
of Financial Results" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations", and is qualified in its entirety by
reference to, the consolidated financial statements of the Company and KHC and
respective notes thereto, included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SUPPLEMENTAL PRO FORMA (UNAUDITED)(1)
-------------------------------------------
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------- -------------------
1994 1995 1995 1996
-------- -------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Broadcasting....................................... $171,083 $180,547 $38,904 $ 43,381
Publishing......................................... 127,893 128,491 30,300 30,125
Programming and Electronic Media................... 2,300 3,468 525 1,608
-------- -------- -------- --------
Total revenues................................ 301,276 312,506 69,729 75,114
Expenses:
Operating and administrative expenses:
Broadcasting.................................... 113,449 116,128 28,000 31,073
Publishing, excluding Newspaper Consolidation
Costs(2) and Newspaper Restructuring
Costs(3)...................................... 107,425 113,683 27,889 27,381
Programming and Electronic Media................ 2,914 5,132 898 4,989
Corporate....................................... 13,074 12,363 3,550 3,136
-------- -------- -------- --------
Total......................................... 236,862 247,306 60,337 66,579
Depreciation and amortization(1)................... 41,219 39,585 9,807 9,845
Stock-based compensation........................... 15,138 2,387 1,498 11,730
Pension expense.................................... 303 1,236 44 214
-------- -------- -------- --------
Total......................................... 293,522 290,514 71,686 88,368
Newspaper Consolidation Costs
and Newspaper Restructuring Costs............... -- 14,222 102 1,150
-------- -------- -------- --------
Total expenses................................ 293,522 304,736 71,788 89,518
-------- -------- -------- --------
Operating income (loss).............................. 7,754 7,770 (2,059) (14,404)
Interest expense(1).................................. (17,971) (19,573) (4,893) (5,084)
Equity in loss of affiliates(4)...................... (5,054) (7,835) (1,272) (1,595)
Other income (expense), net.......................... 2,601 4,797 616 1,364
-------- -------- -------- --------
Loss from continuing operations before income
taxes.............................................. (12,670) (14,841) (7,608) (19,719)
Income tax expense (benefit)(1)...................... 6,466 52 (1,888) (4,834)
-------- -------- -------- --------
Loss from continuing operations...................... $(19,136) $(14,893) $(5,720) $(14,885)
======== ======== ======== ========
Loss from continuing operations per share............ $ (0.50) $ (0.39) $ (0.15) $ (0.39)
Number of shares used in per share calculation....... 38,197 38,507 38,110 38,400
======== ======== ======== ========
Pro forma loss from continuing operations per share
after giving effect to the Offerings(5)............ $ (0.21) $ (0.09) $ (0.30)
======== ======== ========
Number of shares used in pro forma per share
calculation........................................ 46,082 45,685 45,975
======== ======== ========
</TABLE>

10
<PAGE> 11

<TABLE>
<CAPTION>
SUPPLEMENTAL PRO FORMA (UNAUDITED)(1)
(UNAUDITED) --------------------------------------------
COMBINED(6)
YEAR ENDED YEARS ENDED DECEMBER THREE MONTHS ENDED
DECEMBER 31, 31, MARCH 31,
------------ --------------------- -------------------
1993 1994 1995 1995 1996
------------ -------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CERTAIN FINANCIAL DATA:
Revenues:
Broadcasting............................ $147,846 $171,083 $180,547 $38,904 $ 43,381
Publishing.............................. 124,914 127,893 128,491 30,300 30,125
Programming and Electronic Media........ -- 2,300 3,468 525 1,608
-------- -------- -------- -------- --------
Total revenues..................... 272,760 301,276 312,506 69,729 75,114
======== ======== ======== ======== ========
EBITDA(7):
Broadcasting............................ $ 43,014 $ 57,634 $ 64,419 $10,904 $ 12,308
Publishing.............................. 21,317 20,468 14,808 2,411 2,744
-------- -------- -------- -------- --------
EBITDA excluding programming and
electronic media and corporate
expenses........................... 64,331 78,102 79,227 13,315 15,052
Programming and Electronic Media........ -- (614) (1,664) (373) (3,381)
Corporate............................... (17,346) (13,074) (12,363) (3,550) (3,136)
-------- -------- -------- -------- --------
Total EBITDA......................... $ 46,985 $ 64,414 $ 65,200 $ 9,392 $ 8,535
======== ======== ======== ======== ========
Broadcast Cash Flow(8).................... $ 42,620 $ 59,492 $ 66,274 $11,219 $ 12,364
Capital expenditures...................... 14,683 13,617 15,276 3,578 3,008
</TABLE>

- ---------------

(1) The Supplemental Pro Forma results of operations consolidate KHC's results
of operations for 1994 with those of the Company in order for the Company's
results of operations during those years to be comparable with 1995 and
1996. To effect this consolidation, adjustments were made to consolidate and
eliminate the minority interest in KHC for 1994. In addition, pro forma
adjustments were made for all periods presented to reflect the Spin-Off, the
Kelso Buyout and the Merger as if those transactions had occurred on January
1, 1994. For a detailed description of the pro forma adjustments and
elimination entries, see footnote (1) to "Selected Financial
Data -- Supplemental Pro Forma Financial Data".
(2) "Newspaper Consolidation Costs" are defined as those costs totaling $7,422
incurred in 1995 in connection with the Newspaper Consolidation.
(3) "Newspaper Restructuring Costs" are defined as estimated severance costs
totaling $6,800 incurred in 1995 and $1,150 incurred in the three months
ended March 31, 1996 in connection with the Newspaper Restructuring.
(4) Equity in loss of affiliates consists of equity in loss of affiliates in the
Programming and Electronic Media Business of $4,545, and $6,796 in 1994 and
1995, respectively, and $1,072 and $1,265 for the three months ended March
31, 1995 and 1996, respectively, and also consists of equity in loss of
Linkatel Pacific, LP, an investment of the Company which is held for sale,
of $509, and $1,039 for 1994, and 1995, respectively, and $200 and $330 for
the three months ended March 31, 1995 and 1996, respectively.

(5) "Pro forma loss from continuing operations per share" assumes the Offerings
occurred on January 1, 1995, that 7,575,000 shares of Class A Common Stock
are issued in the Offerings and that the estimated net proceeds of the
Offerings were used to repay indebtedness. See "Use of Proceeds." After
giving effect to the resulting reduction in interest expense, loss from
continuing operations would have been $9,447 in 1995 and $4,035 and $13,758
for the three months ended March 31, 1995, and 1996, respectively.

(6) The 1993 certain financial data combine KHC's financial data for 1993 with
those of the Company in order to be comparable with the other periods
presented. Management fees of $1,584 paid to the Company from KHC included
in KHC operating expenses have been eliminated in such combination.

(7) "EBITDA" is defined by the Company as operating income (loss) plus Newspaper
Consolidation Costs, Newspaper Restructuring Costs, depreciation,
amortization, stock-based compensation and pension expense. EBITDA is not
intended to represent cash flow from operations and should not be considered
as an alternative to operating or net income computed in accordance with
generally accepted accounting principles ("GAAP") as an indicator of the
Company's operating performance or as an alternative to cash flows from
operating activities (as determined in accordance with GAAP) as a measure of
liquidity. The Company believes that EBITDA is a standard measure commonly
reported and widely used by analysts, investors and other interested parties
in the media industry. Accordingly, this information has been disclosed
herein to permit a more complete comparative analysis of the Company's
operating performance relative to other companies in its industry.
(8) "Broadcast Cash Flow" is defined by the Company as Broadcasting EBITDA plus
corporate expense allocations for the Broadcasting Business plus program
rights amortization less program rights payments. Corporate expense
allocations for the Broadcasting Business were $514, $773, and $703 for
1993, 1994, and 1995, respectively, and $209 and $172 for the three months
ended March 31, 1995 and 1996, respectively. Program rights amortization was
$17,899, $18,924, and $17,318 for 1993, 1994 and 1995, respectively, and
$4,269 and $4,379 for the three months ended March 31, 1995 and 1996,
respectively. Program rights payments were $18,807, $17,839, and $16,166 for
1993, 1994 and 1995, respectively, and $4,163 and $4,495 for the three
months ended March 31, 1995 and 1996, respectively.

11
<PAGE> 12

RISK FACTORS

Prospective investors should carefully consider the following risk factors,
in addition to the other information contained in this Prospectus, before
purchasing any of the shares of Class A Common Stock offered hereby.

LOSSES FROM CONTINUING OPERATIONS OF THE COMPANY. The Company experienced
losses from continuing operations of $16.3 million, $23.2 million and $5.0
million in 1993, 1994 and 1995, respectively, and $2.8 million and $14.9 million
for the three months ended March 31, 1995 and 1996, respectively. These losses
include certain non-cash charges attributable to amortization of intangibles
resulting from the acquisition of the Stations, costs associated with
stock-based compensation expense and equity in losses from its affiliated
companies. In 1995, Newspaper Consolidation Costs and Newspaper Restructuring
Costs accounted for a total of $14.2 million in additional operating expenses.
In the three months ended March 31, 1996, the Company recorded a charge to
continuing operations of $11.4 million related to a one-time adjustment to
stock-based compensation plans. The Company expects to incur losses from
continuing operations during the next few years primarily due to amortization
charges attributable to its acquisitions and costs associated with the
development of its Programming and Electronic Media Business. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations".

RELIANCE ON NETWORK PROGRAMMING; DEPENDENCE ON NETWORK AFFILIATION. Of the
Company's nine Stations, five are affiliated with NBC, two with Fox, one with
ABC and one with CBS. The television viewership levels for each of the Stations
are materially dependent upon programming provided by the network with which
each Station is affiliated. There can be no assurance that such programming will
achieve or maintain satisfactory viewership levels in the future. In 1995,
68.7%, 11.8%, 13.5% and 6.0% of the Company's revenues in the Broadcasting
Business were attributable to the Company's Stations affiliated with NBC, Fox,
ABC and CBS, respectively. Since the majority of the Company's Stations are
currently affiliated with NBC and 68.2% and 55.5% of the Broadcasting Business
1995 EBITDA and the Company's 1995 EBITDA, excluding programming and electronic
media and corporate expenses, respectively, was derived from such Stations, a
material decline in NBC's ratings could have an adverse effect on the Company.
Each of the Stations is a party to a network affiliation agreement giving such
Station the right to rebroadcast programs transmitted by the network. The
affiliation agreement for each of the NBC Stations expires in 2001 (except for
the affiliation agreement for KHNL (Honolulu) which expires in 2002), while such
agreements for each of the ABC, CBS and Fox Stations expire in 2000, 1998 and
1998, respectively. Each network has the right to terminate its respective
affiliation agreement in the event of a material breach of such agreement by a
Station and in certain other circumstances. Although the Company expects to
continue to be able to renew its network affiliation agreements, no assurance
can be given that such renewals will be obtained. The non-renewal or termination
of one or more of the Stations' network affiliation agreements could have a
material adverse effect on the Company's results of operations. See
"Business -- Broadcasting".

INDEMNIFICATION; TAX LIABILITIES AND RECENT ADVERSE JUDGMENT. The
Agreement and Plan of Merger, dated as of November 18, 1994, as amended and
restated as of August 1, 1995 (the "Merger Agreement"), by and among Continental
Cablevision, Inc. ("Continental"), Old PJC, the Company, KHC and King
Broadcasting Company ("KBC") provides that the Company will, with certain
exceptions, hold Continental, as successor by merger to Old PJC, harmless from
all of Old PJC's liabilities arising from its non-cable businesses. The
Company's indemnification obligations include responsibility for all federal and
state income tax liabilities of Old PJC and its subsidiaries for periods ending
on or before the closing of the transactions contemplated by the Merger
Agreement (the "Closing Date"), including income tax liabilities resulting from
any failure of the Spin-Off and the Merger (each as described under "The
Company -- Background; Reorganization") to qualify as tax-free reorganizations
under the Internal Revenue Code of 1986, as amended (the "Code"), unless such
failure to qualify is the result of certain actions by Continental. See "The
Company -- Background; Reorganization" and "Business -- Background;
Reorganization".

On January 17, 1995 a declaratory judgment action was brought by Cable LP
I, Inc. ("Cable LP") against Old PJC, among other parties, claiming that a
subsidiary of Colony Communications, Inc., a wholly-owned subsidiary of Old PJC
("Colony") had breached a right of first refusal entitling Cable LP to purchase
a

12
<PAGE> 13

general partnership interest in a cable system Colony had transferred to
Continental in connection with the Merger Agreement. A final declaratory
judgment in this action in favor of Cable LP was entered on May 21, 1996. Such
judgment requires, among other matters, Dynamic and Colony to negotiate on a
price to transfer Dynamic's interest in the general partnership to Cable LP. See
"Business -- Legal Proceedings" for a more detailed description of this legal
proceeding.

The Company has appealed this judgment and moved to stay the effect of the
judgment during the pendency of the appeal. On June 10, 1996 a hearing was held
on the Company's motion to stay. At such hearing the judge declined to grant or
deny the Company's motion to stay at this time. The Company is unable to predict
at this time what the ultimate outcome of this litigation might be. In
accordance with applicable accounting principles, should any loss resulting from
this litigation ultimately prove to be probable and reasonably estimatable, such
loss, at that time, would result in a charge to stockholders' equity to reflect
the estimated decrease in the net book value of the cable assets disposed of in
1995 pursuant to the Merger Agreement. Such a charge could have a material
effect upon the Company's financial condition. If any payment obligations are
ultimately required under the terms of the Merger Agreement, it is currently
anticipated that such payments could be up to $40 million and could have a
material effect upon the Company's liquidity position. It is currently
contemplated that any such payment would be funded by borrowings under the
Company's revolving credit facility. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

RISKS ASSOCIATED WITH NEW BUSINESSES. The Company has invested
approximately $101.8 million through May 31, 1996 in its existing start-up
businesses, including three cable and satellite television networks, Television
Food Network, America's Health Network and NorthWest Cable News, and intends to
fund approximately an additional $25.8 million during the remainder of 1996 and
$36.5 million in 1997 in the form of investments and funding of the Company's
share of operating losses in Television Food Network, G.P. ("TVFN") and
America's Health Network, LLC and AHN Partners, L.P. (collectively, "AHN") which
own and operate the Television Food Network and America's Health Network,
respectively, and NorthWest Cable News. The Company does not intend to use any
of the proceeds of the Offerings to fund these amounts. Except as set forth
above, the Company cannot predict the amount it will be required to expend in
such businesses in the future, but believes that it will likely spend additional
amounts in its existing and other early stage businesses. These investments
involve the considerable risks frequently encountered in the establishment of a
new business in an evolving industry characterized by new market entrants,
intense competition, new and rapidly changing technology and new marketing
concepts, such as the technique of combining America's Health Network's
informational content with the on-air sale of products. In addition, the Company
is highly dependent upon the negotiation of contracts with cable television
multi-system operators for distribution of its three cable and satellite
television networks, particularly in the case of NorthWest Cable News which is
primarily carried by one such operator, in an environment which is currently
characterized by a scarcity of channel capacity. See "Business -- Programming
and Electronic Media -- Competition".

TELEVISION INDUSTRY; COMPETITION AND TECHNOLOGY. The television industry
is highly competitive. Some of the stations with which the Stations and the LMA
Stations compete are subsidiaries of large national or regional companies that
have greater resources, including financial resources, than the Company.
Technological innovation, and the resulting proliferation of programming
alternatives such as cable, direct satellite-to-home services and home video
rentals, have fractionalized television viewing audiences and subjected
television broadcast stations to new types of competition. Over the past decade,
cable television has captured an increasing market share, while the overall
viewership of the major networks has generally declined. In addition, the
expansion of cable television and other industry changes have increased, and may
continue to increase, competitive demand for programming. Such increased demand,
together with rising production costs, may in the future increase the Company's
programming costs or impair the Company's ability to acquire

13
<PAGE> 14

programming. In addition, new television networks, such as the recently launched
UPN and the Warner Brothers Network ("WB"), could create additional competition.

The Federal Communications Commission (the "FCC") has proposed the adoption
of rules for implementing advanced (including high-definition) television
("ATV") service in the United States. Implementation of ATV is expected to
improve the technical quality of television. Under certain circumstances,
however, conversion to ATV operations may reduce a station's geographical
coverage area. Implementation of ATV is expected to impose additional costs on
television stations providing the new service, due to increased equipment costs
and possible spectrum-related fees. Recently some leaders in Congress have
proposed various plans that might require broadcasters to bid at auction for ATV
channels, or which might require that the current conventional channels be
returned to the government on an expedited schedule. In addition, some leaders
in Congress have asked the FCC to postpone issuing ATV licenses pending
consideration of such matters. While the Company believes the FCC will
eventually authorize the implementation of ATV, the Company cannot predict when
such authorization might occur or whether an auction might be required, the
implementation costs of ATV or the effect such authorization might have on the
Company's business. See "Business -- Broadcasting -- Competition" and
"-- Licensing and Regulation".

In addition to competing with other media outlets for audience share, the
Stations also compete for advertising revenue, their primary source of revenue.
The Stations compete for such advertising revenue with other television stations
in their respective markets, as well as with other advertising media, such as
newspapers, radio stations, magazines, outdoor advertising, transit advertising,
yellow page directories, direct mail and local cable systems. The Stations are
located in highly competitive markets. Accordingly, the Company's results of
operations will be dependent upon the ability of each Station to compete
successfully for advertising revenue in its market, and there can be no
assurance that any one of the Stations will be able to maintain or increase its
current audience share or revenue share. To the extent that certain of its
competitors have, or may in the future obtain, greater resources than the
Company, the Company's ability to compete successfully in its broadcasting
markets may be impeded. See "Business -- Broadcasting -- Competition".

DEPENDENCE ON ADVERTISING REVENUES; EFFECT OF ECONOMIC CONDITIONS. Since
the Company is significantly dependent upon sales of advertising for its
revenues (approximately 85% of the Company's revenues during 1995), the
operating results of the Company are affected by the national economy as well as
by regional economic conditions in each of the markets in which the Company
operates. For 1995, KING (Seattle) and KGW (Portland) accounted for 36.7% and
14.0% of the Company's EBITDA (excluding programming and electronic media and
corporate expenses), respectively, while the Providence Journal and related
businesses accounted for 18.7% of the Company's EBITDA (excluding programming
and electronic media and corporate expenses). As a result, the Company's results
of operations are highly dependent on the local economies in these geographic
regions, particularly as they may affect advertising expenditures and, to a
lesser extent, circulation of the Providence Journal. In addition, the Company's
results of operations are slightly higher in the fourth quarter of the year, and
EBITDA is significantly higher during such period, due principally to increased
expenditures by advertisers. During 1995, 28.4% of the Company's revenues and
36.8% of the Company's EBITDA (excluding programming and electronic media and
corporate expenses) were earned in the fourth quarter. See "Management's
Discussion and Analysis and Results of Financial Condition",
"Business -- Broadcasting" and "-- Publishing".

NEWSPAPER CIRCULATION. The Company's daily newspaper has experienced a
steady decline in circulation from 1990 to 1995, attributable to a number of
factors, including increased prices, a lackluster economy and, more recently,
the Newspaper Consolidation. While the Company in recent years has been able to
offset the effect on revenues of this decline with periodic price increases,
there can be no assurance that the Company will be able to continue to raise
prices sufficiently to offset any future declines in circulation. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Publishing".

NEWSPRINT COSTS. Newsprint, the single largest raw material expense of the
Publishing Business, represented 18.9% and 8.7% of the operating and
administrative costs of the Publishing Business and the Company, respectively,
during 1995, reflecting an increase in newsprint costs of approximately 45% per
metric

14
<PAGE> 15

ton. While the major newsprint producers recently announced a withdrawal of
their previously planned price increase, any future increases could have an
adverse effect on the Company's results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business -- Publishing".

REGULATORY MATTERS. The Company's television operations are subject to
significant regulation by the FCC under the Communications Act of 1934, as
amended (the "Communications Act"), most recently amended by the
Telecommunications Act of 1996 (the "Telecommunications Act"). Approval of the
FCC is required for the issuance, renewal and transfer of television station
operating licenses. In particular, the Company's business is dependent upon its
continuing to hold broadcasting licenses from the FCC. License renewals filed
after 1996 will be customarily granted for terms of eight years. While broadcast
licenses are typically renewed by the FCC, there can be no assurance that the
Company's licenses or the licenses of the owner-operators of the LMA Stations
will be renewed at their expiration dates, or, if renewed, that the renewal
terms will be for eight-year periods. All of the Stations are presently
operating under five-year licenses that expire on the following dates: December
1, 1996 (WCNC (Charlotte)); August 1, 1997 (WHAS (Louisville)); October 1, 1998
(KASA (Albuquerque/Santa Fe), KMSB (Tucson) and KTVB (Boise)); and February 1,
1999 (KING (Seattle), KGW (Portland), KHNL (Honolulu) and KREM (Spokane)). In
addition, the licenses for the LMA Stations, KFVE (Honolulu), KTTU (Tucson),
expire on February 1, 1999 and April 1, 1997, respectively. KONG holds a permit
which expired on December 30, 1995 to construct a television station in the
Seattle, Washington market. KONG applied for an extension in November, 1995, and
on May 22, 1996, applied to co-locate its transmission facilities with KING. An
FCC license is granted when a station commences on-air broadcasting, which is
expected for KONG in the first quarter of 1997. The non-renewal or revocation of
one or more of the Company's FCC licenses could have a material adverse effect
on the Company's operations. LMAs may also be subject to regulation by the FCC.
The Telecommunications Act grandfathers existing LMAs and permits future LMAs
that are in compliance with FCC rules. The FCC may, however, consider the
adoption of new restrictions on television LMAs, including the treatment of an
LMA as an attributable interest in the future. Further, the Communications Act
and FCC rules restrict alien ownership and voting of the capital stock of, and
participation in the affairs of, the Company.

The United States Congress and the FCC currently have under consideration,
and may in the future adopt, new laws, regulations and policies regarding a wide
variety of matters which could, directly or indirectly, materially adversely
affect the operation and ownership of the Company's broadcast properties. The
FCC has not yet fully implemented the Telecommunications Act. The Company is
unable to predict the outcome of future federal legislation or the impact of any
such laws or regulations on its operations. See "Business -- Licensing and
Regulation".

ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF
INCORPORATION, BY-LAWS AND RIGHTS AGREEMENT. Certain provisions of the
Company's Certificate of Incorporation, as amended (the "Certificate") and the
Company's By-Laws, as amended (the "By-Laws"), could have the effect of making
it more difficult for a third party to acquire a majority of the outstanding
capital stock of the Company. These provisions include the disparate voting
rights of the Class A Common Stock and the Class B Common Stock, and the
division of the Company's Board of Directors into three classes to be elected on
a staggered basis of one class per year. In addition, the Rights Agreement dated
May 8, 1996 between the Company and The First National Bank of Boston, as Rights
Agent (the "Rights Agreement"), provides stockholders of the Company with
certain rights which would substantially increase the cost of acquiring the
Company in a transaction not approved by the Company's Board of Directors. See
"Description of Capital Stock".

RELIANCE ON KEY PERSONNEL. The Company believes that its success will
continue to be dependent upon its ability to attract and retain skilled managers
and other personnel, including its present officers. The loss of the services of
any of the present officers, especially Stephen Hamblett, Chairman of the Board
and Chief Executive Officer, and Jack C. Clifford, Executive Vice
President-Broadcasting, Programming and Electronic Media, could have a material
adverse effect on the operations of the Company. The Company does not have
employment contracts with, nor does it maintain key person life insurance on,
any of its executive officers. See "Management".

15
<PAGE> 16

NO PRIOR PUBLIC MARKET FOR CLASS A COMMON STOCK; POSSIBLE VOLATILITY OF
STOCK PRICE. Prior to the Offerings, there has been no public market for the
Class A Common Stock. Consequently, the initial public offering price of the
Class A Common Stock will be determined by negotiations among the Company and
the Underwriters and may not be indicative of the price at which the Class A
Common Stock will trade after the Offerings. See "Underwriting" for a discussion
of the factors considered in determining the initial public offering price of
the Class A Common Stock. There can be no assurance that any active public
market for the Class A Common Stock will develop or be sustained after the
Offerings, or that the market price of the Class A Common Stock will not decline
below the initial public offering price. The trading price of the Class A Common
Stock may fluctuate significantly based upon a number of factors, including
actual or anticipated business performance, announcements by the Company or
changes in general industry or securities market conditions. See "Underwriting".

DIVIDEND POLICY. The Company has no intention of paying any cash dividends
on the Class A Common Stock or the Class B Common Stock for the foreseeable
future following consummation of the Offerings. The Company intends to
reevaluate this dividend policy in the event the proposed US West Merger is not
consummated or should other circumstances change. The payment of future
dividends will be at the discretion of the Company's Board of Directors and will
be dependent upon a variety of factors, including the Company's future earnings,
financial condition and capital requirements, the ability to obtain dividends or
advances from its subsidiaries and restrictions in applicable financing and
other agreements. See "Dividend Policy".

RESTRICTIONS IN CERTAIN AGREEMENTS. As part of the Merger, the Company
agreed that until October 5, 1999, without the prior consent of Continental, it
would not dispose of any material assets or declare or pay any dividend or
distribution on its capital stock if, as a result of such transaction, the fair
market value of the Company (determined as described herein under
"Business -- Restrictions in Certain Agreements") would be less than certain
specified amounts. In addition, the Company agreed to certain non-competition
and employee non-solicitation restrictions related to the disposed cable
operations for a three-year period ending October 5, 1998.

The credit agreement of the Company and its principal subsidiaries contains
various covenants, events of default and other provisions that could affect the
Company's business, operating and acquisition strategies. Such provisions
include requirements to maintain compliance with certain financial ratios and
limitations on the ability of the Company and its principal subsidiaries to make
acquisitions or investments without the consent of the lenders, to incur
indebtedness, to make dividend and other restricted payments and to take certain
other actions. In addition, such indebtedness is secured by pledges of the stock
of the Company's principal subsidiaries. See "Business -- Restrictions in
Certain Agreements".

SHARES ELIGIBLE FOR FUTURE SALE. Upon completion of the Offerings, the
Company will have outstanding 24,928,800 shares of Class A Common Stock and
21,067,650 shares of Class B Common Stock. All of the shares of Class B Common
Stock are convertible into shares of Class A Common Stock on a share-for-share
basis at any time at the option of the holder. Shares held by affiliates of the
Company may be sold only if they are registered under the Securities Act or are
sold pursuant to an applicable exemption from the registration requirements of
the Securities Act, including Rule 144 thereunder. All but 28,800 shares of
Class A Common Stock and all shares of Class B Common Stock currently
outstanding are subject to legended transfer restrictions imposed to protect the
tax-free nature of the Spin-Off and the Merger, which restrictions prohibit all
transfers, sales, assignments or other dispositions for value prior to October
5, 1996 (the "Tax Lockup"). See "Business -- Background; Reorganization". Of the
28,800 shares of Class A Common Stock not subject to the Tax Lockup, 26,550
shares are held by executive officers of the Company. In addition, each of the
Company's directors and executive officers and owners of more than 5% of the
Class A Common Stock and Class B Common Stock (other than (i) Rhode Island
Hospital Trust National Bank ("Hospital Trust") as to 900,000 shares of Class A
Common Stock and Class B Common Stock over which Hospital Trust exercises sole
or shared investment power under 64 wills, trusts and agency arrangements and
(ii) Fiduciary Trust Company International as to 617,400 shares of Class A
Common Stock and Class B Common Stock over which Fiduciary Trust Company
International exercises sole or shared investment power under five wills, trusts
and agency relationships) have agreed not to offer, sell, contract to sell or
otherwise dispose of such shares (or securities convertible into, or
exchangeable or exercisable for, such shares) for 180 days after the

16
<PAGE> 17

date of this Prospectus, without the prior written consent of Merrill Lynch,
Pierce, Fenner & Smith Incorporated acting on behalf of the Underwriters. See
"Underwriting". Further, all employees who purchase Class A Common Stock in the
Direct Placement have agreed to similar transfer restrictions for a period of 30
days after the date of this Prospectus. Up to an additional 1,972,800 shares of
Class A Common Stock are currently issuable upon exercise of options and units
outstanding under the Option Plans and the RSU. Further, the Company intends to
implement an employee stock purchase plan following consummation of the
Offerings under which participants may purchase Class A Common Stock through
periodic payroll deductions and the reinvestment of dividends (the "Employee
Stock Purchase Plan").

In addition, in accordance with certain adjustments required pursuant to
the terms of the Company's existing Stock Incentive Plans as a result of the
proposed US West Merger, the Company believes that it will issue approximately
$7.7 million of Class A Common Stock in the event of the consummation of the US
West Merger. For additional information, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Stock Based
Compensation Payouts", "Business -- Background; Reorganization" and footnote 2
to the table "Aggregated SAR Exercises in Fiscal Year 1995 and Fiscal Year-End
SAR Values" set forth herein under "Management -- Executive Compensation." The
actual number of shares of Class A Common Stock to be issued will depend on the
fair market value of the Class A Common Stock determined in accordance with the
terms of such plans at the effective time of the US West Merger.

In addition, the Company may finance a portion of the cost of future
acquisitions through additional issuances of Class A Common Stock. Sales of
substantial amounts of Common Stock, or the perception that such sales could
occur, could adversely affect the prevailing market prices of the Class A Common
Stock and the Company's ability to raise capital through an offering of Class A
Common Stock.

See "Shares Eligible for Future Sale".

DILUTION. Purchasers of shares of Class A Common Stock in the Underwritten
Offering and the Direct Placement will incur immediate and substantial dilution
in net tangible book value of $15.08 and $14.11, respectively, per share of
Class A Common Stock based on an initial public offering price of $15.00 per
share in the Underwritten Offering and an offering price of $14.03 per share in
the Direct Placement. See "Dilution".

17
<PAGE> 18

THE COMPANY

GENERAL. The Company owns and operates nine network affiliated television
stations and provides or will provide programming and marketing services to
three television stations under local marketing agreements in geographically
diverse markets throughout the United States, publishes the largest daily
newspaper in the Rhode Island and southeastern Massachusetts market, and
produces diversified programming and interactive electronic media services. The
Company's television broadcasting group reaches 5.6 million households, or 6% of
all U.S. television households; its newspaper is the leading newspaper in its
market in terms of advertising and circulation; and certain of its programming
and electronic media businesses, such as the Television Food Network, serve
subscribers and viewers nationwide.

The Company was incorporated in the State of Delaware in 1994 as the
successor to Old PJC, which was incorporated in Rhode Island in 1884. The
principal executive offices of the Company are located at 75 Fountain Street,
Providence, Rhode Island 02902, telephone number (401) 277-7000.

BACKGROUND; REORGANIZATION. Pursuant to the transactions described below,
on October 5, 1995, the Company acquired its joint venture partner's 50%
interest in the King Stations which were owned and operated by KHC, a subsidiary
of Old PJC, and disposed of all its cable operations. Such transactions were as
follows: (i) Old PJC acquired its joint venture partner's interest (the "Kelso
Buyout") in KHC, which at the time of such acquisition held all of the capital
stock of KBC, (ii) Old PJC contributed all of its non-cable businesses
(including all of the outstanding capital stock of KHC) to the Company, its
wholly-owned subsidiary, and the Company assumed all of the liabilities related
thereto (the "Contribution"), (iii) Old PJC distributed one share of Class A
Common Stock and Class B Common Stock to the holder of each share of Old PJC's
Class A Common Stock and Class B Common Stock, respectively (the "Distribution",
and together with the Contribution, the "Spin-Off"), and (iv) Old PJC, which
following the Spin-Off held only Old PJC's cable television businesses and
assets (the "Old PJC Cable Business"), merged (the "Merger") with and into
Continental. Immediately prior to the Kelso Buyout, Continental purchased all of
the stock of King Videocable Company, a Washington corporation and wholly-owned
subsidiary of KBC, which held all of the cable television assets and business of
KHC and KBC (the "King Cable Purchase"). As a result of these transactions, the
Company, in substance, became successor to Old PJC, in the same lines of
business, simultaneously disposing of its cable operations.

In connection with, and as part of the Spin-Off, the Company, with certain
exceptions, assumed and agreed to hold Continental, as successor by merger to
Old PJC, harmless from all of Old PJC's liabilities arising from its non-cable
businesses, and Old PJC, with certain exceptions, in turn agreed to hold the
Company harmless from liabilities arising from the Old PJC Cable Business, which
liabilities were assumed by Continental pursuant to the Merger. See
"Business -- Background and Reorganization".

18
<PAGE> 19

USE OF PROCEEDS

The net proceeds from the Offerings, at an initial public offering price of
$15.00 per share in the Underwritten Offering and at an offering price of $14.03
per share in the Direct Placement, are estimated to be $104.9 million ($119.9
million if the Underwriters' over-allotment option is exercised in full), after
deduction of the underwriting discount in the Underwritten Offering and
estimated expenses of the Offerings. The Company intends to use the net proceeds
of the Offerings to repay a portion of the indebtedness outstanding under its
revolving credit facility established pursuant to a Credit Agreement dated as of
October 5, 1995 (the "Credit Agreement") with a syndicate of commercial banks.
The Credit Agreement provides for a term loan of $75 million and a revolving
credit facility of up to $300 million. The amount outstanding under the
revolving credit facility as of March 31, 1996 was $188 million and the
stipulated interest rate provided for under the revolving credit facility at
such date was 6.5% per annum for the first $165 million principal amount and
8.25% for the remaining $23 million principal amount then outstanding. Credit
availability under the revolving credit facility decreases quarterly commencing
December 31, 1996 until its final maturity on June 30, 2004. See "Management's
Discussion of Financial Condition and Results of Operations" and Note 10 of the
Company's consolidated financial statements. The Company used the revolving
credit and term loan facilities to finance the Kelso Buyout, to pay certain
income taxes due as a result of the King Cable Purchase and for certain other
corporate purposes.

DIVIDEND POLICY

The Company paid cash dividends in each of 1994 and 1995 on all outstanding
shares of Class A Common Stock and Class B Common Stock in an amount equal to
$0.25 per share (after giving effect to the Stock Split). In the first quarter
of 1996, the Company paid a cash dividend of $.06 per share (after giving effect
to the Stock Split). In addition, the Company paid a special dividend (the
"Special Dividend") equal to $0.19 per share (after giving effect to the Stock
Split) prior to the consummation of the Offerings. Purchasers of shares of Class
A Common Stock in the Offerings will not be entitled to receive the Special
Dividend.

The Company has no intention of paying any cash dividends on the Class A
Common Stock or the Class B Common Stock for the foreseeable future following
consummation of the Offerings. The Company intends to reevaluate this dividend
policy in the event the proposed US West Merger is not consummated or should
other circumstances change. The payment of future dividends will be at the
discretion of the Company's Board of Directors and will be dependent upon a
variety of factors, including the Company's future earnings, financial condition
and capital requirements and restrictions in applicable financing and other
agreements. See "Business -- Restrictions in Certain Agreements".

19
<PAGE> 20

DILUTION

At March 31, 1996, the Common Stock had a net tangible book value (deficit)
per share of $(2.83). Net tangible book value (deficit) per share is equal to
the Company's total tangible assets (total assets less intangible assets,
consisting primarily of licenses and goodwill) less its total liabilities,
divided by the number of shares of Common Stock outstanding. After giving effect
to the Offerings at an initial public offering price of $15.00 per share in the
Underwritten Offering and at an offering price of $14.03 per share in the Direct
Placement and the application of the estimated net proceeds therefrom to repay
indebtedness, the pro forma net tangible book value (deficit) of the Company at
March 31, 1996 would have been $(3.8) million, or $(0.08) per share. This
represents an immediate increase in net tangible book value of $2.75 per share
to existing stockholders and an immediate dilution in net tangible book value of
$15.08 per share to the purchasers of the Class A Common Stock in the
Underwritten Offering and an immediate dilution of $14.11 per share to the
purchasers of Class A Common Stock in the Direct Placement. The following table
gives effect to the Stock Split and illustrates the per share dilution that
would have occurred if the Offerings had been consummated on March 31, 1996:

<TABLE>
<CAPTION>
UNDERWRITTEN
OFFERING DIRECT PLACEMENT
------------------ ------------------
<S> <C> <C> <C> <C>
Assumed initial public offering price per share........ $15.00 $14.03
Net tangible book value per share prior to the
Offerings......................................... $ (2.83) $ (2.83)
Increase in net tangible book value per share
attributable to price paid by purchasers of Class
A Common Stock in the Offerings................... $ 2.75 $ 2.75
------ ------
Pro forma net tangible book value per share after the
Offerings............................................ $(0.08) $(0.08)
------ ------
Dilution in net tangible book value per share to
purchasers of Class A Common Stock in the
Offerings............................................ $15.08 $14.11
====== ======
</TABLE>

- ---------------

(1) As described herein under "Risk Factors -- Shares Eligible for Future Sale",
the Company currently estimates that approximately $7.7 million of Class A
Common Stock could be issued in 1996 to participants in the Company's
existing Stock Incentive Plans in the event of the consummation of the
proposed US West Merger as adjustments required pursuant to the terms of
such plans. The actual number of shares of Class A Common Stock to be
issued will depend on the fair market value of the Class A Common Stock
determined in accordance with the terms of such plans of the effective time
of the US West Merger. See "Business -- Background; Reorganization".

20
<PAGE> 21

CAPITALIZATION

The following table sets forth the capitalization on a consolidated basis
of the Company at March 31, 1996, and as adjusted to reflect (i) the sale in the
Underwritten Offering of 7,125,000 shares of Class A Common Stock at an initial
public offering price of $15.00 per share, (ii) the sale in the Direct Placement
of 450,000 shares of Class A Common Stock at an offering price of $14.03 per
share and (iii) the application of the estimated net proceeds thereof as
described under "Use of Proceeds". This table should be read in conjunction with
the historical financial statements of the Company, including the notes thereto.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Historical Financial Statements".

<TABLE>
<CAPTION>
AT MARCH 31, 1996
----------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS EXCEPT
PER SHARE DATA)
<S> <C> <C>
Current installments of long-term debt............................. $ 100 $ 100
-------- --------
Long-term debt, less current installments:
Revolving credit and term loan facility.......................... $263,000 $ 158,123
Industrial Revenue Bonds......................................... 9,700 9,700
-------- --------
Total long-term debt, less current installments.......... 272,700 167,823
Stockholders' equity:
Class A common stock, par value $1.00 per share; authorized
180,000,000 shares; issued and outstanding 17,333,550 shares,
historical, and 24,908,550 shares, as adjusted(1)............. 17,333 24,908
Class B common stock, par value $1.00 per share; authorized
46,825,000 shares; issued and outstanding 21,067,650 shares... 21,068 21,068
Additional paid-in capital....................................... 88 97,390
Retained earnings................................................ 206,310 206,310
Unrealized loss on securities held for sale, net................. (837) (837)
-------- --------
Total stockholders' equity.................................... 243,962 348,839
-------- --------
$516,662 $ 516,662
======== ========
</TABLE>

- ---------------

(1) The Company amended its Certificate of Incorporation on May 10, 1996 to
decrease the number of authorized shares of Class A Common Stock from
180,000,000 to 150,000,000. The number of shares of Class A Common Stock
issued and outstanding on a historical basis does not include shares
currently issuable upon exercise of options and units outstanding under the
Company's Options Plans and RSU. Such number also does not include
approximately $7.7 million of Class A Common Stock that could be issued in
1996 to participants in the Company's existing Stock Incentive Plans in the
event of the consummation of the proposed US West Merger as adjustments
required pursuant to the terms of such plans. See "Risk Factors -- Shares
Eligible for Future Sale" and "Business -- Background; Reorganization". The
actual number of shares of Class A Common Stock to be issued will depend on
the fair market value of the Class A Common Stock determined in accordance
with the terms of such plans at the effective time of the US West Merger.

21
<PAGE> 22

SELECTED FINANCIAL DATA

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA. The following selected
consolidated historical financial data has been derived from the consolidated
financial statements of the Company. The Statement of Operations Data for the
years ended December 31, 1991, 1992, 1993, 1994 and 1995 and the Balance Sheet
Data as of the same dates have been derived from the audited consolidated
financial statements of the Company included elsewhere in this Prospectus. The
Statement of Operations Data for the three months ended March 31, 1995 and 1996
and the balance sheet data as of March 31, 1996 have been derived from the
unaudited consolidated financial statements of the Company which, in the opinion
of management, include all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of financial position and results
of operations for such periods. Operating results for the three months ended
March 31, 1996 are not necessarily indicative of the results that may be
expected for the entire year ending December 31, 1996. The data should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and is qualified in its entirety by reference to the
consolidated financial statements of the Company and notes thereto. As more
fully discussed in "Management's Discussion and Analysis of Financial Condition
and Results of Operations", the Company, among other transactions, disposed of
its cable operations and completed the Kelso Buyout on October 5, 1995. The
results of operations for 1995 include the results of operations of KHC since
January 1, 1995 with adjustments for the consolidation of KHC. As a result of
these transactions, the Company's historical results of operations and financial
condition for the years 1991 through 1994 are not comparable to 1995 and 1996.

<TABLE>
<CAPTION>
HISTORICAL
-------------------------------------------------------------------------
(UNAUDITED)
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Broadcasting...................... $ 39,381 $ 43,281 $ 45,506 $ 54,024 $180,547 $38,904 $ 43,381
Publishing........................ 118,169 120,516 124,914 127,893 128,491 30,300 30,125
Programming and Electronic
Media........................... -- -- -- 2,300 3,468 525 1,608
-------- -------- -------- -------- -------- ------- --------
Total revenues................ 157,550 163,797 170,420 184,217 312,506 69,729 75,114
-------- -------- -------- -------- -------- ------- --------
Expenses:
Operating and administrative
expenses:
Broadcasting.................... 36,597 37,884 38,296 39,949 116,128 28,000 31,073
Publishing, excluding newspaper
consolidation and
restructuring costs........... 101,770 97,204 103,597 107,425 113,683 27,889 27,381
Programming and Electronic
Media......................... -- -- -- 2,582 5,132 898 4,989
Corporate....................... 10,442 14,072 14,632 10,889 12,363 3,550 3,136
-------- -------- -------- -------- -------- ------- --------
Total......................... 148,809 149,160 156,525 160,845 247,306 60,337 66,579
Depreciation and amortization..... 20,909 20,549 20,613 19,983 33,969 7,935 9,845
Stock-based compensation.......... 8,923 2,641 5,735 15,138 2,387 1,498 11,730
Pension expense (income).......... (590) (1,762) 756 (173) 1,236 44 214
-------- -------- -------- -------- -------- ------- --------
Total......................... 178,051 170,588 183,629 195,793 284,898 69,814 88,368
Newspaper consolidation and
restructuring costs(1).......... 3,400 2,335 -- -- 14,222 102 1,150
-------- -------- -------- -------- -------- ------- --------
Total expenses................ 181,451 172,923 183,629 195,793 299,120 69,916 89,518
-------- -------- -------- -------- -------- ------- --------
Operating income (loss)............. (23,901) (9,126) (13,209) (11,576) 13,386 (187) (14,404)
Interest expense.................... (10,102) (6,455) (2,578) (2,426) (11,395) (2,747) (5,084)
Equity in loss of affiliates........ -- (12,705) (8,763) (13,380) (7,835) (1,272) (1,595)
Other income, net................... 31,072 46,104 2,182 6,103 4,797 616 1,364
-------- -------- -------- -------- -------- ------- --------
Income (loss) from continuing
operations before income taxes.... (2,931) 17,818 (22,368) (21,279) (1,047) (3,590) (19,719)
</TABLE>

22
<PAGE> 23

<TABLE>
<CAPTION>
HISTORICAL
(UNAUDITED)
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Income tax expense (benefit)........ 3,616 11,816 (6,097) 1,950 3,956 (784) (4,834)
-------- -------- -------- -------- -------- ------- --------
Income (loss) from continuing
operations........................ $ (6,547) $ 6,002 $(16,271) $(23,229) $ (5,003) $(2,806) $(14,885)
======== ======== ======== ======== ======== ======= ========
Income (loss) from continuing
operations per share.............. $ (0.17) $ 0.16 $ (0.42) $ (0.61) $ (0.13) $ (0.07) $ (0.39)
======== ======== ======== ======== ======== ======= ========
Dividends paid per share............ $ 0.20 $ 0.21 $ 0.23 $ 0.25 $ 0.25 $ 0.06 $ 0.06
======== ======== ======== ======== ======== ======= ========
Number of shares used in per share
calculation....................... 39,516 38,711 38,386 38,197 38,507 38,110 38,400
======== ======== ======== ======== ======== ======= ========
OTHER DATA:
EBITDA(2):
Broadcasting...................... $ 2,784 $ 5,397 $ 7,210 $ 14,075 $ 64,419 $10,904 $ 12,308
Publishing........................ 16,399 23,312 21,317 20,468 14,808 2,411 2,744
-------- -------- -------- -------- -------- ------- --------
EBITDA excluding programming and
electronic media and corporate
expenses...................... 19,183 28,709 28,527 34,543 79,227 13,315 15,052
Programming and Electronic
Media........................... -- -- -- (282) (1,664) (373) (3,381)
Corporate......................... (10,442) (14,072) (14,632) (10,889) (12,363) (3,550) (3,136)
-------- -------- -------- -------- -------- ------- --------
Total EBITDA.................... $ 8,741 $ 14,637 $ 13,895 $ 23,372 $ 65,200 $ 9,392 $ 8,535
======== ======== ======== ======== ======== ======= ========
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31, (UNAUDITED)
------------------------------------------------------------ AT MARCH 31,
1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
BALANCE SHEET DATA:
Total assets................. $594,098 $793,433 $775,685 $724,713 $707,230 $703,713
Net assets of discontinued
cable television operations
included in total assets... 54,184 400,639 402,819 369,790 -- --
Long-term debt (including
current installments)...... 73,112 263,609 280,106 260,761 244,098 272,800
Stockholders' equity......... 399,938 391,967 359,575 285,887 263,239 243,962
</TABLE>

- ---------------
(1) Includes Newspaper Consolidation Costs totaling $7,422 incurred in 1995 in
connection with the Newspaper Consolidation, Newspaper Restructuring Costs
totaling $6,800 incurred in 1995 and $1,150 incurred in the three months
ended March 31, 1996 in connection with the Newspaper Restructuring and
severance costs totaling $3,400 and $2,335 incurred in 1991 and 1992,
respectively associated with the consolidation from 30 to 13 of the
Company's regional circulation centers ("RCC Consolidation Costs").

(2) "EBITDA" is defined by the Company as operating income (loss) plus RCC
Consolidation Costs, Newspaper Consolidation Costs, Newspaper Restructuring
Costs, depreciation, amortization, stock-based compensation and pension
expense (income). EBITDA is not intended to represent cash flow from
operations and should not be considered as an alternative to operating or
net income computed in accordance with GAAP as an indicator of the Company's
operating performance or as an alternative to cash flows from operating
activities (as determined in accordance with GAAP) as a measure of
liquidity. The Company believes that EBITDA is a standard measure commonly
reported and widely used by analysts, investors and other interested parties
in the media industry. Accordingly, this information has been disclosed
herein to permit a more complete comparative analysis of the Company's
operating performance relative to other companies in its industry.

23
<PAGE> 24

SUPPLEMENTAL PRO FORMA FINANCIAL DATA. The following table presents
supplemental pro forma financial data for the years ended December 31, 1994 and
1995, and the three months ended March 31, 1995 and 1996, as if the Spin-Off,
Merger and Kelso Buyout had occurred on January 1, 1994. Supplemental pro forma
financial data is presented because the Company believes such data is more
meaningful than historical financial data in comparing 1995 and 1996 results of
operations with 1994 because such pro forma data includes KHC's operations, and
excludes discontinued cable operations for all periods presented. Although the
Company did not consolidate the results of KHC's operations for accounting
purposes until after the Kelso Buyout, the Company has managed these operations
since the completion of the King Acquisition in February 1992. This supplemental
pro forma financial data, which is unaudited, consolidates the historical
results of operations of the Company and KHC, after giving effect to the
supplemental pro forma adjustments and eliminations described in footnote (1)
below, for all periods presented. This data is not necessarily indicative of the
results of operations that would have actually been obtained had the
transactions referred to above been consummated on January 1, 1994, nor is it
indicative of the results of operations that may be obtained in the future. Such
financial data should be read in conjunction with "-- Selected Consolidated
Historical Financial Data", "-- Broadcasting Business -- Summary of Financial
Results", "-- Publishing Business -- Summary of Financial Results" and
"-- Programming and Electronic Media Business -- Summary of Financial Results"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations", and is qualified in its entirety by reference to the consolidated
financial statements of the Company and KHC and respective notes thereto,
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SUPPLEMENTAL PRO FORMA (UNAUDITED)(1)
----------------------------------------
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------- ------------------
1994 1995 1995 1996
-------- -------- ------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Broadcasting......................................... $171,083 $180,547 $38,904 $ 43,381
Publishing........................................... 127,893 128,491 30,300 30,125
Programming and Electronic Media..................... 2,300 3,468 525 1,608
-------- -------- ------- --------
Total revenues.................................. 301,276 312,506 69,729 75,114
-------- -------- ------- --------
Expenses:
Operating and administrative expenses:
Broadcasting...................................... 113,449 116,128 28,000 31,073
Publishing, excluding Newspaper Consolidation
Costs(2) and Newspaper Restructuring Costs(3)... 107,425 113,683 27,889 27,381
Programming and Electronic Media.................. 2,914 5,132 898 4,989
Corporate......................................... 13,074 12,363 3,550 3,136
-------- -------- ------- --------
Total........................................... 236,862 247,306 60,337 66,579
Depreciation and amortization(1)..................... 41,219 39,585 9,807 9,845
Stock-based compensation............................. 15,138 2,387 1,498 11,730
Pension expense...................................... 303 1,236 44 214
-------- -------- ------- --------
Total........................................... 293,522 290,514 71,686 88,368
Newspaper Consolidation Costs and Newspaper
Restructuring Costs............................... -- 14,222 102 1,150
-------- -------- ------- --------
Total expenses.................................. 293,522 304,736 71,788 89,518
-------- -------- ------- --------
Operating income (loss)................................ 7,754 7,770 (2,059) (14,404)
Interest expense(1).................................... (17,971) (19,573) (4,893) (5,084)
Equity in loss of affiliates(4)........................ (5,054) (7,835) (1,272) (1,595)
Other income (expense), net............................ 2,601 4,797 616 1,364
-------- -------- ------- --------
Loss from continuing operations before income taxes.... (12,670) (14,841) (7,608) (19,719)
Income taxes expense (benefit)(1)...................... 6,466 52 (1,888) (4,834)
-------- -------- ------- --------
Loss from continuing operations........................ $(19,136) $(14,893) $(5,720) $(14,885)
======== ======== ======= ========
Loss from continuing operations per share.............. $ (0.50) $ (0.39) $ (.15) $ (.39)
Number of shares used in per share calculation......... 38,197 38,507 38,110 38,400
======== ======== ======= ========
</TABLE>

24
<PAGE> 25

<TABLE>
<CAPTION>
SUPPLEMENTAL PRO FORMA (UNAUDITED)(1)
(UNAUDITED) ------------------------------------------
COMBINED(5) THREE MONTHS
YEAR ENDED YEARS ENDED DECEMBER ENDED
DECEMBER 31, 31, MARCH 31,
------------ --------------------- -----------------
1993 1994 1995 1995 1996
------------ -------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CERTAIN FINANCIAL DATA:
Revenues:
Broadcasting.......................... $147,846 $171,083 $180,547 $38,904 $ 43,381
Publishing............................ 124,914 127,893 128,491 30,300 30,125
Programming and Electronic Media...... -- 2,300 3,468 525 1,608
-------- -------- -------- ------- --------
Total revenues................... 272,760 301,276 312,506 69,729 75,114
======== ======== ======== ======= ========
EBITDA(6):
Broadcasting....................... $ 43,014 $ 57,634 $ 64,419 $10,904 $ 12,308
Publishing......................... 21,317 20,468 14,808 2,411 2,744
-------- -------- -------- ------- --------
EBITDA excluding programming and
electronic media and corporate
expenses......................... 64,331 78,102 79,227 13,315 15,052
Programming and Electronic Media... -- (614) (1,664) (373) (3,381)
Corporate.......................... (17,346) (13,074) (12,363) (3,550) (3,136)
-------- -------- -------- ------- --------
Total EBITDA.................. $ 46,985 $ 64,414 $ 65,200 $ 9,392 $ 8,535
======== ======== ======== ======= ========
Broadcast Cash Flow(7).................. $ 42,620 $ 59,492 $ 66,274 $11,219 $ 12,364
Capital expenditures.................... 14,683 13,617 15,276 3,578 3,008
</TABLE>

- ---------------

<TABLE>
<CAPTION>
(UNAUDITED)
INCREMENTAL AMOUNT TO ARRIVE AT
SUPPLEMENTAL PRO FORMA AMOUNTS
------------------------------------
YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED
------------------- MARCH 31,
LINE ITEM IN HISTORICAL FINANCIAL STATEMENTS 1994 1995 1995
- ----------------------------------------------------------- ------- ------- ------------
DEBIT (CREDIT)
(IN THOUSANDS)
<S> <C> <C> <C>
Pro Forma Adjustments
Depreciation and amortization
Additional amortization expense as a result of the
"step-up" in basis in acquired assets of KHC.......... $ 7,488 $ 5,616 $ 1,872
Interest expense
Additional interest expense assuming beginning debt as a
result of the transactions at January 1, 1994 was
approximately $225 million with an average interest
rate of approximately 8.1%............................ 6,852 8,178 2,146
Income tax expense (benefit)
Incremental income tax expense (benefit) from above
adjustments........................................... $(3,827) $(3,904) $ (1,104)
======= ======= ==========
Elimination Entries
Operating and administrative expenses
Eliminate management fees paid to the Company from KHC
included in KHC continuing operating expenses ($1,481
was allocated to discontinued operations in 1994)..... $(2,044) * *
Other income (expense)
Eliminate management fees paid to the Company from KHC... $ 3,525 * *
Equity in income (loss) of affiliates
Eliminate the Company's equity in loss of KHC............ $(8,326) * *
Income tax expense (benefit)
Eliminate income tax effects of above eliminations....... $ (500) * *
======= ======= ==========
</TABLE>

- ---------------
* Elimination entries are not shown for 1995 because KHC was consolidated in
the Company's audited financial statements for that year.

25
<PAGE> 26

(2) Newspaper Consolidation Costs are those costs totaling $7,422 incurred in
1995 in connection with the Newspaper Consolidation.

(3) Newspaper Restructuring Costs are estimated severance costs totaling $6,800
incurred in 1995 and $1,150 incurred in the three months ended March 31,
1996 in connection with the Newspaper Restructuring.

(4) Equity in loss of affiliates consists of equity in loss of affiliates in the
Programming and Electronic Media Business of $4,545, and $6,796 in 1994 and
1995, respectively, and $1,072 and $1,265 for the three months ended March
31, 1995 and 1996, respectively, and also consists of equity in loss of
Linkatel Pacific, LP, an investment of the Company which is held for sale,
of $509, and $1,039 for 1994, and 1995, respectively, and $200 and $330 for
the three months ended March 31, 1995 and 1996, respectively.

(5) The 1993 certain financial data combine KHC's financial data for 1993 with
those of the Company in order to be comparable with the other periods
presented. Management fees of $1,584 paid to the Company from KHC included
in KHC operating expenses have been eliminated in such combination.

(6) "EBITDA" is defined by the Company as operating income (loss), plus
Newspaper Consolidation Costs, Newspaper Restructuring Costs, depreciation,
amortization, stock-based compensation and pension expense. EBITDA is not
intended to represent cash flow from operations and should not be considered
as an alternative to operating or net income computed in accordance with
GAAP as an indicator of the Company's operating performance or as an
alternative to cash flows from operating activities (as determined in
accordance with GAAP) as a measure of liquidity. The Company believes that
EBITDA is a standard measure commonly reported and widely used by analysts,
investors and other interested parties in the media industry. Accordingly,
this information has been disclosed herein to permit a more complete
comparative analysis of the Company's operating performance relative to
other companies in its industry.

(7) "Broadcast Cash Flow" is defined by the Company as Broadcasting EBITDA plus
corporate expense allocations for the Broadcasting Business plus program
rights amortization less program rights payments. Corporate expense
allocations to the Broadcasting Business were $514, $773, and $703 for 1993,
1994, and 1995, respectively, and $209 and $172 for the three months ended
March 31, 1995 and 1996, respectively. Program rights amortization was
$17,899, $18,924, and $17,318 for 1993, 1994 and 1995, respectively, and
$4,269 and $4,379 for the three months ended March 31, 1995 and 1996,
respectively. Program rights payments were $18,807, $17,839, and $16,166 for
1993, 1994 and 1995, respectively, and $4,163 and $4,495 for the three
months ended March 31, 1995 and 1996, respectively.

26
<PAGE> 27

BROADCASTING BUSINESS -- SUMMARY OF FINANCIAL RESULTS (HISTORICAL)

The following table sets forth historical operating results for the
Broadcasting Business for the years ended December 31, 1993, 1994 and 1995 and
the three months ended March 31, 1995 and 1996.

<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------------------
(UNAUDITED)
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------ --------------------
1993 1994 1995 1995 1996
------- ------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
National................................ $19,475 $24,487 $ 91,125 $ 18,208 $ 19,792
Local and regional...................... 27,180 32,909 106,054 23,646 26,922
Other................................... 5,510 4,924 11,572 2,982 3,279
Agency commissions...................... (6,659) (8,296) (28,204) (5,932) (6,612)
------- ------- -------- -------- --------
Net revenues.............................. 45,506 54,024 180,547 38,904 43,381
------- ------- -------- -------- --------
Expenses:
Operating and administrative expenses... 38,296 39,949 116,128 28,000 31,073
Depreciation and amortization........... 8,682 7,856 21,884 4,916 6,735
------- ------- -------- -------- --------
Total expenses.................. 46,978 47,805 138,012 32,916 37,808
------- ------- -------- -------- --------
Operating income (loss)................... $(1,472) $ 6,219 $ 42,535 $ 5,988 $ 5,573
======= ======= ======== ======== ========
OTHER DATA:
EBITDA(1)............................... $ 7,210 $14,075 $ 64,419 $ 10,904 $ 12,308
EBITDA as a percentage of net
revenues........................... 16% 26% 36% 28% 28%
Corporate expense allocations........... 94 364 703 209 172
Program rights amortization............. 7,674 7,356 17,318 4,269 4,379
Program rights payments................. (7,296) (6,760) (16,166) (4,163) (4,495)
------- ------- -------- -------- --------
Broadcast Cash Flow(2).................. $ 7,682 $15,035 $ 66,274 $ 11,219 $ 12,364
======= ======= ======== ======== ========
</TABLE>

- ---------------
(1) See footnote (2) to "Selected Financial Data -- Selected Consolidated
Historical Financial Data" for a definition of, and certain matters relating
to, EBITDA.

(2) "Broadcast Cash Flow" is defined by the Company as Broadcasting EBITDA plus
corporate expense allocations for the Broadcasting Business plus program
rights amortization less program rights payments.

27
<PAGE> 28

BROADCASTING BUSINESS -- SUMMARY OF FINANCIAL RESULTS (SUPPLEMENTAL PRO FORMA)

The following table sets forth supplemental pro forma operating results for
the Broadcasting Business for the years ended December 31, 1994 and 1995 and the
three months ended March 31, 1995 and 1996. This table also sets forth combined
1993 data as described in footnote (5) to "Selected Financial Data --
Supplemental Pro Forma Financial Data". For comparative purposes, supplemental
pro forma amounts consolidate the results of KHC's broadcasting operations as if
the Kelso Buyout occurred on January 1, 1994 and give effect to the adjustments
and eliminations described in footnote (1) to "Selected Financial Data --
Supplemental Pro Forma Financial Data".

<TABLE>
<CAPTION>
SUPPLEMENTAL PRO FORMA (UNAUDITED)
(UNAUDITED) -------------------------------------------
COMBINED
YEAR ENDED YEARS ENDED DECEMBER THREE MONTHS ENDED
DECEMBER 31, 31, MARCH 31,
------------ --------------------- ------------------
1993 1994 1995 1995 1996
------------ -------- -------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
National............................. $ 74,503 $ 88,691 $ 91,125 $18,208 $19,792
Local and regional................... 82,657 96,268 106,054 23,646 26,922
Other................................ 12,972 12,538 11,572 2,982 3,279
Agency commissions................... (22,286) (26,414) (28,204) (5,932) (6,612)
-------- -------- -------- ------- -------
Net revenues........................... 147,846 171,083 180,547 38,904 43,381
-------- -------- -------- ------- -------
Expenses:
Operating and administrative
expenses.......................... 104,832 113,449 116,128 28,000 31,073
Depreciation and amortization(1)..... 23,337 29,019 27,500 6,788 6,735
-------- -------- -------- ------- -------
Total expenses............... 128,169 142,468 143,628 34,788 37,808
-------- -------- -------- ------- -------
Operating income....................... $ 19,677 $ 28,615 $ 36,919 $ 4,116 $ 5,573
======== ======== ======== ======= =======
OTHER DATA:
EBITDA(2)............................ $ 43,014 $ 57,634 $ 64,419 $10,904 $12,308
EBITDA as a percentage of net
revenues........................ 29% 34% 36% 28% 28%
Corporate expense allocations........ 514 773 703 209 172
Program rights amortization.......... 17,899 18,924 17,318 4,269 4,379
Program rights payments.............. (18,807) (17,839) (16,166) (4,163) (4,495)
-------- -------- -------- ------- -------
Broadcast Cash Flow(3)............... $ 42,620 $ 59,492 $ 66,274 $11,219 $12,364
======== ======== ======== ======= =======
</TABLE>

- ---------------

(1) Depreciation and amortization for combined 1993 excludes the effects of any
pro forma adjustments for the step-up in basis in acquired assets of KHC
from the Kelso Buyout.

(2) See footnote (6) to "Selected Financial Data -- Supplemental Pro Forma
Financial Data" for a definition of, and certain matters relating to,
EBITDA.

(3) "Broadcast Cash Flow" is defined by the Company as Broadcasting EBITDA plus
corporate expense allocations for the Broadcasting Business plus program
rights amortization less program rights payments.

28
<PAGE> 29

PUBLISHING BUSINESS -- SUMMARY OF FINANCIAL RESULTS

The Publishing segment was not affected by the Spin-Off, the Merger or the
Kelso Buyout. Therefore, the following table includes only certain historical
operating and other data for the years ended December 31, 1993, 1994 and 1995
and the three months ended March 31, 1995 and 1996:

<TABLE>
<CAPTION>
HISTORICAL
----------------------------------------------------------
(UNAUDITED)
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------- -------------------
1993 1994 1995 1995 1996
-------- -------- -------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Advertising......................... $ 93,087 $ 95,079 $ 93,671 $21,740 $21,547
Circulation......................... 31,028 30,888 32,151 7,889 8,139
Other............................... 799 1,926 2,669 671 439
-------- -------- -------- ------- -------
124,914 127,893 128,491 30,300 30,125
Operating and administrative expenses
before Newspaper Consolidation
Costs(1) and Newspaper Restructuring
Costs(2)............................ 103,597 107,425 113,683 27,889 27,381
Depreciation.......................... 11,426 11,198 10,850 2,717 2,664
-------- -------- -------- ------- -------
Operating income (loss) before
Newspaper Consolidation Costs and
Newspaper Restructuring Costs....... 9,891 9,270 3,958 (306) 80
Newspaper Consolidation Costs and
Newspaper Restructuring Costs....... -- -- (14,222) (102) (1,150)
-------- -------- -------- ------- -------
Operating income (loss)............... $ 9,891 $ 9,270 $(10,264) $ (408) $(1,070)
======== ======== ======== ======= =======
OTHER DATA:
EBITDA(3)............................. $ 21,317 $ 20,468 $ 14,808 $ 2,411 $ 2,744
======== ======== ======== ======= =======
Average net paid circulation:
Daily............................... 187,700 183,900 179,000 180,700 169,500
Sunday.............................. 268,900 267,100 259,800 262,200 251,300
</TABLE>

- ---------------
(1) "Newspaper Consolidation Costs" are those costs totaling $7,422 incurred in
1995 in connection with the Newspaper Consolidation.

(2) "Newspaper Restructuring Costs" are estimated severance costs totaling
$6,800 incurred in 1995 and $1,150 incurred in the three months ended March
31, 1996 in connection with the Newspaper Restructuring.

(3) See footnote (2) to "Selected Financial Data -- Selected Consolidated
Historical Financial Data" for a definition of, and certain matters relating
to, EBITDA.

29
<PAGE> 30

PROGRAMMING AND ELECTRONIC MEDIA BUSINESS -- SUMMARY OF FINANCIAL RESULTS

The Programming and Electronic Media Business was not significantly
affected by the Spin-Off, the Merger or the Kelso Buyout. As such, the following
tables present the historical results of the Company's wholly-owned entities and
the Company's share of the equity in loss of affiliates comprising this segment:

<TABLE>
<CAPTION>
HISTORICAL
---------------------------------------------------
(UNAUDITED)
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------- ------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues..................................... $ -- $ 2,300 $ 3,468 $ 525 $ 1,608
Operating expenses(1)........................ -- 2,582 5,132 898 4,989
Depreciation................................. -- 33 167 30 226
------- ------- ------- ------- -------
Operating loss............................... $ -- $ (315) $(1,831) $ (403) $(3,607)
======= ======= ======= ======= =======
EQUITY IN LOSS OF AFFILIATES:
AHN (2).................................... $ -- $ -- $(1,835) $ -- $ --
TVFN....................................... (1,391) (3,848) (4,177) (1,022) (783)
Peapod, L.P................................ -- -- (460) -- (302)
Partner Stations Network, L.P.............. -- (697) (324) (50) (180)
======= ======= ======= ======= =======
Total equity in loss of affiliates...... $(1,391) $(4,545) $(6,796) $(1,072) $(1,265)
======= ======= ======= ======= =======
OTHER DATA:
EBITDA(3).................................... $ -- $ (282) $(1,664) $ (373) $(3,381)
======= ======= ======= ======= =======
</TABLE>

- ---------------
(1) Operating expenses for 1994 on a Supplemental Pro Forma (unaudited) basis
are $2.9 million, an increase of $0.3 million over historical operating
expenses, due to inclusion in Supplemental Pro Forma of the operation of
NorthWest Cable News, which was owned by KHC.

(2) AHN was consolidated with the Company's results of operations effective
January 1, 1996.

(3) See footnote (2) to "Selected Financial Data -- Selected Consolidated
Historical Financial Data" for a definition of, and certain matters relating
to, EBITDA.

30
<PAGE> 31

Programming and Electronic Media operating businesses include:

<TABLE>
<CAPTION>
CUMULATIVE CUMULATIVE
AMOUNTS AMOUNTS
INVESTED OWNERSHIP % INVESTED OWNERSHIP %
THROUGH AS OF THROUGH AS OF
MARCH 31, MARCH 31, MAY 31, MAY 31,
1996 1996 1996 1996
---------- ----------- ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CONSOLIDATED BUSINESSES:
AHN(1)...................................... $ 17,750 59% $ 35,250 65%
NWCN........................................ 6,300 100% 6,800 100%
Rhode Island Horizons....................... 900 100% 1,000 100%
------- --------
subtotal............................... 24,950 43,050
------- --------
INVESTMENTS IN AFFILIATES:
TVFN(2)..................................... 17,650 24% 44,700 46%
Peapod, L.P.(3)............................. 5,338 17% 6,338 15%
Partner Stations Network, L.P.(4)........... 1,810 16% 1,810 16%
------- --------
subtotal............................... 24,798 52,848
------- --------
OTHER:
StarSight Telecast, Inc................... 5,939 5% 5,939 5%
------- --------
Total investments........................... $ 55,687 $101,837
======= ========
</TABLE>

- ---------------
(1) AHN was consolidated into the Company's results of operations as of January
1, 1996. The Company has agreed to invest an additional $19.5 million
through the first quarter of 1997 upon the achievement of certain operating
milestones, including entering into carriage agreements and meeting certain
revenue and ratings objectives.
(2) The Company expects to invest an additional $22.5 million for the remainder
of 1996. TVFN became a consolidated subsidiary effective May 14, 1996.
(3) Peapod, L.P. ("Peapod") is an existing interactive grocery ordering and
delivery service.
(4) Partner Stations Network, L.P. ("PSN") is a limited partnership formed to
develop and produce broadcast television programming.

31
<PAGE> 32

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

GENERAL

The following analysis of the financial condition and results of operations
of the Company should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto and the unaudited "Selected
Financial Data -- Selected Consolidated Historical Financial Data" and "--
Supplemental Pro Forma Financial Data" included elsewhere in this Prospectus.

The Company's businesses are concentrated principally in broadcast
television, the publication of the Providence Journal, and in programming and
electronic media ventures. The Company's broadcast television revenues, which
comprised approximately 57.8% of total revenues in both 1995 and for the three
months ended March 31, 1996, are derived substantially from local and national
advertising and, to a lesser extent, from network compensation for the broadcast
of network programming. The Company's publishing revenues, which represented
approximately 41.1% and 40.1% of total revenues in 1995 and for the three months
ended March 31, 1996, respectively, are derived primarily from advertising and,
to a lesser extent, paid circulation. Revenues from the programming and
electronic media ventures, which comprised approximately 1.1% and 2.1% of total
revenues in 1995 and for the three months ended March 31, 1996, respectively,
are principally derived from subscriptions, service fees and advertising.

The Company's revenues historically have been slightly higher in the fourth
quarter of the year and EBITDA has been significantly higher during such period,
primarily attributable to increased expenditures by advertisers. Revenues and
EBITDA excluding programming and electronic media and corporate expenses for the
fourth quarter of 1995 amounted to approximately 28.4% and 36.8%, respectively,
of the Company's total revenues and EBITDA excluding programming and electronic
media and corporate expenses, respectively.

Broadcasting operating costs, which include primarily employee
compensation, programming, production and promotion, represented 47.0% and 46.7%
of the total operating and administrative costs of the Company during 1995 and
the first three months of 1996, respectively. Publishing's operating costs,
principally labor and newsprint costs, represented 46.0% and 41.1% of the
Company's total operating and administrative costs during 1995 and the first
three months of 1996, respectively.

RECENT DEVELOPMENTS

Subsequent to March 31, 1996, the following significant events have
occurred:

Litigation

On January 17, 1995 a declaratory judgment action was brought by Cable LP
against Old PJC, among other parties, claiming that a subsidiary of Colony had
breached a right of first refusal entitling Cable LP to purchase a general
partnership interest in a cable system Colony had transferred to Continental in
connection with the Merger Agreement. A final declaratory judgment in this
action in favor of Cable LP was entered on May 21, 1996. Such judgment requires,
among other matters, Dynamic and Colony to negotiate on a price to transfer
Dynamic's interest in the general partnership to Cable LP. See
"Business -- Legal Proceedings" for a more detailed description of this legal
proceeding.

The Merger Agreement provides that if, as a result of such litigation,
Continental is required to convey its interest, at the time of any such
conveyance the Company will pay Continental an amount equal to the sum of (i)
the amount (if any) by which the consideration received in connection with the
conveyance is less than $115 million plus (ii) the taxes which would be payable
assuming the purchase price for such interest equaled $115 million. The Company
has appealed this judgment and moved to stay the effect of the judgment during
the pendency of the appeal. On June 10, 1996 a hearing was held on the Company's
motion to stay. At such hearing the judge declined to grant or deny the
Company's motion to stay at this time. The Company is unable to predict at this
time what the ultimate outcome of this litigation might be. In accordance with
applicable accounting principles, should any loss resulting from this litigation
ultimately prove to be probable and reasonably estimatable, such loss, at that
time, would result in a charge to stockholders' equity to reflect the

32
<PAGE> 33

estimated decrease in the net book value of the cable assets disposed of in 1995
pursuant to the Merger Agreement. Such a charge could have a material effect
upon the Company's financial condition. If any payment obligations are
ultimately required under the terms of the Merger Agreement, it is currently
anticipated such payments could be up to $40 million and could have a material
effect upon the Company's liquidity position. It is currently contemplated that
any such payment would be funded by borrowings under the Company's revolving
credit facility. See "-- Liquidity and Capital Resources."

Increased Ownership Interest in Television Food Network, G.P.

On May 14, 1996 the Company purchased the equity partnership interests held
by Landmark Programming, Inc. ("Landmark") and Scripps Howard Publishing, Inc.
("Scripps"), two of the partners of TVFN, for respective purchase prices of
approximately $12.7 million and $11.4 million. Prior to such purchase, Landmark
and Scripps each owned a 10.8% and 9.7% general partnership interest in TVFN.
The agreements with each of Landmark and Scripps contain covenants by such
parties not to compete with TVFN and its affiliates for a period of one year
following such purchase. The Company's investment in TVFN through May 31, 1996,
including these purchases and funding of its share of operating losses, totaled
$44.7 million, which represents an equity interest of approximately 46%.
Following these recent purchases, the Company now holds three of the five voting
seats on the management committee of TVFN. As a result of such purchases, TVFN
became a controlled subsidiary of the Company and, effective May 14, 1996, was
consolidated into the Company's results of operations. The Company is pursuing a
proposed transaction to purchase all of the equity partnership interest held by
a third partner which would increase its ownership percentage in TVFN to
approximately 55% and result in control of four of the five voting seats on the
management committee. The Company estimates its additional investment in TVFN
for the third partner's equity interest plus funding of the Company's share of
operating losses of TVFN will total approximately $22.5 million for the
remainder of 1996.

Increased Ownership Interest in America's Health Network

On May 9, 1996 the Company increased its investment in AHN to $35.3
million, which represents an equity interest of approximately 65%. The Company
does not anticipate any additional funding of its share of operating losses for
the remainder of 1996 but is committed to investing an additional $19.5 million
by the first quarter of 1997 upon the achievement of certain operating
milestones, including entering into carriage agreements and meeting certain
revenue and ratings objectives.

Execution of a Local Marketing Agreement with KONG in Seattle, Washington

As part of the Company's LMA strategy, in May 1996 the Company entered into
a 10-year LMA with KONG, which holds a permit to construct a television station
in the Seattle, Washington market, and has an option to purchase the station at
an agreed upon exercise price. The option to purchase the station is exercisable
by either the Company or KONG after such time as the FCC permits ownership of
two television stations in a single market. The present duopoly rules prohibit
attributable interests in two television stations in the same DMA. Although the
FCC is currently reviewing ownership rules, there can be no assurance that the
FCC will change or repeal the duopoly rules. See "Business -- Licensing and
Regulation." Under this LMA, the Company will spend approximately $2.0 million
for equipment in the first year and, once operational, will provide annual
programming and marketing services to the LMA Station pursuant to which the
Company will receive all advertising revenues. If the option to purchase the
station is not exercised, the Company is required to make annual payments to
KONG of approximately $0.4 million in years one through five of the contract
term and $0.7 million in years six through ten of the contract term.

REORGANIZATION

On October 5, 1995, Old PJC completed the acquisition of its joint venture
partner's interest in KHC through the Kelso Buyout for $265 million, including
transaction fees, completed the Spin-Off and, following the Spin-Off, at which
point it held only Old PJC's cable television businesses and assets, Old PJC was
merged with and into Continental. Immediately prior to the Kelso Buyout,
Continental purchased for $405 million all of the stock of KVC, an indirect
wholly-owned cable subsidiary of KHC. As a result of these transactions, the
Company, in substance, became successor to Old PJC, in the same lines of
business,

33
<PAGE> 34

simultaneously disposing of its cable operations, and in connection with the
Kelso Buyout, acquired the 50% interest in the King Stations that it did not
previously own.

DISPOSAL OF CABLE OPERATIONS

Gross proceeds from the disposal of the cable operations discussed above
consisted of a combination of Continental stock, which was received directly
from Continental by Old PJC's shareholders in connection with the Merger,
assumption of a portion of Old PJC's debt by Continental and cash. The total
combined consideration amounted to approximately $1.4 billion (including $405
million from the sale of KVC). The accounting for this transaction was to treat
the disposal of the cable operations as if the Company had spun off its cable
operations to shareholders, which the Company believes more appropriately
reflects the substance of the transaction. Accordingly, the excess of the gross
proceeds over the net assets of the discontinued cable operations less income
taxes, which amounted to $582.5 million, is reflected in the consolidated
statement of stockholders' equity for the year ended December 31, 1995. The
receipt by the Old PJC shareholders of the Continental shares, valued at $584.8
million, is recorded as a "deemed distribution" in the consolidated statement of
stockholders' equity.

The loss from operations of the disposal of the discontinued cable business
is not reflected in the 1995 results of operations because loss on disposal of
that business, including estimated loss during the 1995 phase-out period, was
recognized in the fourth quarter of 1994. The loss from operations and disposal
of discontinued wholly-owned cable operations (excluding KHC's discontinued
cable operation) in 1994 amounted to $36.6 million, of which $34.8 million
reflected severance and transaction costs and $1.8 million reflected the
estimated loss from cable operations through the disposal date, net of allocated
interest of $20.7 million.

In connection with the Merger, the Company agreed to indemnify Continental
from any and all liabilities arising from the non-cable television businesses
and is responsible for all federal and state income tax liabilities for periods
ending on or before the closing date of the Merger. See "Business -- Background;
Reorganization".

KELSO BUYOUT

The Kelso Buyout as discussed above and in Note 3(a) of the consolidated
financial statements, was effected in the fourth quarter of 1995. As illustrated
below, the excess of the purchase price over the net book value of assets
acquired, including deferred taxes, was $206.7 million, of which approximately
$88.0 million was allocated to identifiable intangibles and the remainder to
goodwill together to be amortized over an average life of approximately 30
years.

<TABLE>
In connection with the Kelso Buyout, assets acquired and liabilities
assumed were as follows (in thousands):

<S> <C>
Assets acquired................................................... $243,186
Goodwill and other intangibles.................................... $206,740
Liabilities assumed............................................... $184,926
Cash paid......................................................... $265,000
</TABLE>

The primary business of KHC is broadcast television and, prior to the sale
to Continental of KVC, also included cable television. Prior to the Kelso
Buyout, the Company reported its 50% investment in KHC under the equity method
of accounting and provided management services to KHC. Audited financial
statements of KHC as of December 31, 1994 and for each of the years in the
two-year period then ended are presented elsewhere in this Prospectus.

CONSOLIDATED RESULTS OF OPERATIONS

SUPPLEMENTAL PRO FORMA RESULTS OF OPERATIONS

The supplemental pro forma financial data discussed below is presented as
if the Spin-Off, Merger and Kelso Buyout had occurred on January 1, 1994.
Supplemental pro forma data is presented because the

34
<PAGE> 35

Company believes such data is more meaningful than historical financial data in
comparing 1995 and 1996 results of operations with 1994 because such pro forma
data includes KHC operations and excludes discontinued cable operations for all
periods presented. Although the Company did not consolidate the results of KHC's
operations for accounting purposes until after the Kelso Buyout, the Company has
managed these operations since the completion of the King Acquisition in
February 1992. This supplemental pro forma financial data consolidates the
historical results of operations of the Company and KHC, after giving effect to
the supplemental pro forma adjustments and eliminations described in footnote
(1) to the table "Supplemental Pro Forma Financial Data" included in "Selected
Financial Data", for all periods presented. This data is not necessarily
indicative of the results of operations that would have actually been obtained
had the transactions referred to above been consummated on January 1, 1994, nor
is it indicative of the results of operations that may be obtained in the
future. Such financial data should be read in conjunction with "Selected
Financial Data", "-- Broadcasting Business -- Summary of Financial Results", "--
Publishing Business -- Summary of Financial Results" and "-- Programming and
Electronic Media -- Summary of Financial Results" and is qualified in its
entirety by reference to the consolidated financial statements of the Company
and KHC and respective notes thereto included elsewhere in this Prospectus.

SUPPLEMENTAL PRO FORMA THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO
SUPPLEMENTAL PRO FORMA THREE MONTHS ENDED MARCH 31, 1995

Consolidated (Supplemental Pro Forma)

Consolidated revenues for the three months ended March 31, 1996 were $75.1
million, an increase of 7.7%, compared to $69.7 million for the three months
ended March 31, 1995. Broadcasting revenues contributed significantly to the
increase in consolidated revenues with an increase of 11.6% in the 1996 period
to $43.4 million from $38.9 million in the 1995 period due to increased
advertising rates as a result of improved ratings, local market growth, and, for
the Portland station, increased political advertising revenue. Publishing
contributed substantially the same revenue in the three months ended March 31,
1996 as in the prior year with $30.1 million for the 1996 period and $30.3
million for the 1995 period. Operations in Programming and Electronic Media are
in the early development phase and contributed $1.6 million in revenue in the
1996 period compared to $0.5 million in the 1995 period.

Consolidated operating and administrative expenses increased 10.4% to $66.6
million in the three months ended March 31, 1996 from $60.3 million in the three
months ended March 31, 1995. This increase was due primarily to the
consolidation of AHN in 1996 described below, which contributed $2.6 million of
the $4.1 million increase in Programming and Electronic Media operating
expenses, to $5.0 million in the 1996 period from $0.9 million in the 1995
period. Broadcasting operating and administrative expenses increased 11.1% to
$31.1 million in the 1996 period from $28.0 million in the 1995 period due
primarily to the incremental costs of a start-up news operation in Honolulu.
Publishing operating and administrative expenses decreased 1.8% in the 1996
period to $27.4 million from $27.9 million in the 1995 period, as savings
totaling $1.5 million generated by net payroll decreases from the Newspaper
Consolidation, the discontinuance of a local shopper, and the elimination of a
Sunday magazine more than offset an increase of $1.0 million in newsprint costs.
Corporate operating and administrative expenses declined 13.9% to $3.1 million
from $3.6 million due to savings from corporate restructurings associated with
the cable operations disposed of in the fourth quarter of 1995.

In the three months ended March 31, 1996, the Company recorded an $11.4
million charge (of which $10.1 million related to the IUP) to continuing
operations and a $5.4 million (pre-tax) charge to discontinued operations to
reflect the vested portion of an estimated $20.5 million accounting adjustment
to stock-based compensation plans. The difference of $3.7 million will be
charged to operations over the remaining vesting period of the plans, primarily
in the second and third quarters of 1996. See "-- Stock-Based Compensation
Payouts".

35
<PAGE> 36

In 1995 the Company reorganized the staffing of the Providence Journal and
targeted a reduction of 100 employees through early retirement and voluntary
separation packages offered to selected groups of employees and if necessary,
involuntary terminations (the "Newspaper Restructuring"). As a result of a
greater than anticipated response to the early retirement and voluntary
separation programs, the Company recorded an additional $1.1 million charge to
its operations in the three month period ended March 31, 1996. The Newspaper
Restructuring is expected to be completed by the second quarter of 1996 and,
when fully implemented, result in annual savings of $6.0 million and a net
full-time equivalent ("FTE") reduction of 110 employees, or approximately 9% of
the Publishing work force. Substantially all costs will be paid from the
Company's pension plans (in which plan assets exceed plan obligations). The
following table illustrates the current status of the restructuring accrual by
component (in millions):

<TABLE>
<CAPTION>
OUTPLACEMENT
EMPLOYEE & OTHER
SEVERANCE COSTS COSTS TOTAL
--------------- ------------ -----
<S> <C> <C> <C>
Balance at December 31, 1995............................. $ 6.5 $ 0.3 $ 6.8
Charge to first quarter operations..................... 1.1 -- 1.1
Utilization of accrual................................. (0.1) (0.1) (0.2)
----- ----- -----
Balance at March 31, 1996................................ $ 7.5 $ 0.2 $ 7.7
===== ===== =====
</TABLE>

Consolidated depreciation and amortization expense for the 1996 period was
relatively even with the 1995 period at $9.8 million, including the pro forma
adjustment of approximately $1.9 million included in the 1995 period
attributable to the step-up in carrying value of the intangible assets acquired
in the Kelso Buyout.

Other income, net increased $0.8 million to $1.4 million from $0.6 million
due to interest income received from the notes receivable from the Lowell Sun
Publishing Company and Lowell Sun Realty Company (the "Lowell Sun Companies").

As a result of the additional stock-based compensation expense, additional
Newspaper Restructuring charges, and consolidation of AHN, loss from continuing
operations for the three months ended March 31, 1996 was $14.9 million compared
to $5.7 million on a supplemental pro forma basis for the same period in 1995.

Consolidated EBITDA, excluding Programming and Electronic Media and
corporate expenses, increased 13.5% to $15.1 million in the first quarter of
1996 from $13.3 million in the first quarter of 1995. Broadcasting experienced
12.8% EBITDA growth in the three months ended March 31, 1996 to $12.3 million
from $10.9 million in the 1995 period. Publishing EBITDA increased $0.3 million,
or 12.5%, in the 1996 period to $2.7 million from $2.4 million in the 1995
period. Primarily because of the consolidation of the results of operations of
AHN in 1996, the Programming and Electronic Media Business EBITDA was a loss of
$3.4 million in the three months ended March 31, 1996 compared to a loss of $0.4
million in the three months ended March 31, 1995.

Broadcasting (Supplemental Pro Forma)

The Broadcasting Business in the first quarter of 1996 consisted of nine
Stations and two LMA Stations. KING (Seattle), KGW (Portland), and WHAS
(Louisville) contributed approximately 41.8%, 19.4% and 11.2%, respectively, of
the first quarter 1996 EBITDA of the Company's stations. No other station
represented more than 10% of the segment's 1996 first quarter EBITDA.

Broadcasting revenues grew 11.6% in the three months ended March 31, 1996
to $43.4 million compared to revenues for the three months ended March 31, 1995
of $38.9 million. Revenue growth was particularly strong in Seattle (9.1%);
Portland (12.3%); Charlotte (20.6%); Albuquerque (17.9%); Honolulu (28.3%); and
Boise (11.2%). National advertising revenues increased 8.8% to $19.8 million in
the 1996 period from $18.2 million in the 1995 period principally as a result of
market growth and increased advertising rates from improved ratings in Seattle,
Portland and Charlotte. Local and regional advertising revenues exhibited 14.0%
growth in the 1996 period to $26.9 million from $23.6 million for the same
period in 1995. In addition to the improved ratings in Seattle and Portland, the
increase in local and regional revenues was also attributable to political
advertising revenue of $0.6 million in the three months ended March 31, 1996
from a special U.S. Senate race in Portland and the affiliation switch in
Honolulu to NBC, leading to an increased share of local business in that market.

36
<PAGE> 37

Operating and administrative expenses increased 11.1% to $31.1 million in
the three months ended March 31, 1996 from $28.0 million in the three months
ended March 31, 1995, a change of $3.1 million. This increase primarily reflects
the incremental costs of a start-up news operation and promotional expenses in
Honolulu (required by KHNL's affiliation switch from Fox to NBC on January 1,
1996). Depreciation and amortization expense was relatively unchanged, at $6.7
million in the 1996 period compared to $6.8 million in the 1995 period. The 1995
period includes a pro forma adjustment of $1.9 million to reflect the increased
amortization associated with the step-up in carrying value of intangible assets
acquired in the Kelso Buyout.

As a result of revenue growth outpacing cost increases, operating income
increased 36.6% to $5.6 million in the 1996 period from $4.1 million in the 1995
period. Similarly, EBITDA for Broadcasting increased 12.8% to $12.3 million in
the 1996 period from $10.9 million in the 1995 period. EBITDA margin for the
1996 period and the 1995 period was 28% of Broadcasting net revenues. Broadcast
Cash Flow, which represents Broadcasting EBITDA adjusted to add back corporate
expense allocations plus program rights amortization less program rights
payments, grew 10.7% to $12.4 million in the 1996 period from $11.2 million in
the 1995 period.

Publishing (Supplemental Pro Forma and Historical)

The Publishing Business was unaffected by the Spin-Off, the Merger or the
Kelso Buyout. Therefore, the results of operations for the Publishing Business
are identical on both a "Supplemental Pro Forma" and "Historical" basis.

Publishing revenues for the three months ended March 31, 1996 remained
relatively even at $30.1 million, compared with $30.3 million for the three
months ended March 31, 1995. Advertising revenues remained substantially the
same at $21.5 million in the 1996 period and $21.7 million in the 1995 period.
As a result of the Newspaper Consolidation, average daily circulation for the
three months ended March 31, 1996 approximated 169,500, a decrease of 6.2% from
an average of 180,700 for the three months ended March 31, 1995. Average Sunday
circulation for the quarter was 251,300, down by 4.2% from 262,200 for the same
period last year, largely because of increased prices. Despite the decline in
circulation levels, circulation revenues of $8.1 million in the three months
ended March 31, 1996 were 2.5% ahead of circulation revenues of $7.9 million for
the three months ended March 31, 1995 as a result of price increases. While
circulation levels declined as a result of the Newspaper Consolidation, the
Company believes that certain readers of the Providence Journal who were
purchasing both the morning and afternoon newspapers have continued to read the
consolidated newspaper. As a result, the Company believes that the readership
levels that the Company offered to advertisers remained relatively constant
immediately following the Newspaper Consolidation. Moreover, a recent
independent study conducted by Belden Associates on behalf of the Company has
indicated that both daily and Sunday readership has remained constant over the
past three years with daily readership fluctuating between 54% to 58% of the
total adults in the market and Sunday readership remaining between 68% to 70% of
total adults in the market. In addition, management is making efforts to
increase circulation levels through expanded local coverage and continued
improvement in content and customer service. There can be no assurance, however,
that management will be successful in these efforts.

Operating and administrative expenses decreased 1.8% in the 1996 period to
$27.4 million from $27.9 million in the 1995 period, a decrease of $0.5 million.
Payroll savings from the Newspaper Consolidation, the elimination of a Sunday
magazine, and reduced costs from the discontinuance of a local shopper each
saved $0.5 million in the three months ended March 31, 1996, which more than
offset the increase in newsprint costs of $1.0 million in the 1996 period
compared to the 1995 period.

As a result of a greater than anticipated response to the early retirement
and voluntary separation programs, the Company recorded an additional $1.1
million charge to operations in the three months ended March 31, 1996 associated
with the Newspaper Restructuring. The Company expects annual savings from the
restructuring to be approximately $6.0 million. Substantially all costs will be
paid by the Company's pension plans (in which plan assets exceed plan
obligations) in 1996.

Due primarily to the additional $1.1 million additional restructuring
charge, operating loss for the 1996 period was $1.1 million compared to $0.4
million in the 1995 period.

37
<PAGE> 38

As a result of cost savings, however, EBITDA increased 12.5% to $2.7
million in the three months ended March 31, 1996 from $2.4 million in the three
months ended March 31, 1995.

Programming and Electronic Media (Supplemental Pro Forma and Historical)

The Programming and Electronic Media Business was unaffected by the
Spin-Off, the Merger or the Kelso Buyout for each of the periods in the three
months ended March 31, 1996 and 1995. Therefore, the results of operations for
the Programming and Electronic Media Business are identical on both a
"Supplemental Pro Forma" and "Historical" basis.

Through the three months ended March 31, 1996, the Company continued to
fund its share of the operations of Television Food Network and America's Health
Network. Effective January 1, 1996, the Company consolidated its investment in
AHN (which launched on March 25, 1996), which it previously had accounted for
under the equity method of accounting, reflecting the Company's decision to
expand its holdings in this entity.

The operations in the Programming and Electronic Media Business are in the
early development phase and contributed $1.6 million in revenue in the three
months ended March 31, 1996 and $0.5 million in revenue in the three months
ended March 31, 1995. Operating and administrative expenses, as a result of the
consolidation of AHN and start-up operations of NorthWest Cable News, increased
to $5.0 million for the three months ended March 31, 1996, compared to $0.9
million in the same period last year. Consequently, operating losses were $3.6
million in the three months ended March 31, 1996, compared with $0.4 million in
the three months ended March 31, 1995. Equity in loss of affiliates increased
slightly to $1.3 million in the 1996 period from $1.1 million in the 1995
period.

SUPPLEMENTAL PRO FORMA 1995 COMPARED TO SUPPLEMENTAL PRO FORMA 1994

Consolidated (Supplemental Pro Forma)

Consolidated revenues increased by 3.7% in 1995 to $312.5 million from
$301.3 million in 1994. Broadcasting revenues contributed significantly to the
increase in consolidated revenues with an increase of 5.5% in 1995 to $180.5
million from $171.1 million in 1994 due to increased advertising revenue
resulting from improved ratings and local market growth. Publishing contributed
substantially the same revenue in 1995 as in the prior year with $128.5 million
for 1995 compared with $127.9 million in 1994. The operations in the Programming
and Electronic Media Business, which are in the early development phase,
contributed $3.5 million in revenue in 1995 compared to $2.3 million in 1994.

Consolidated operating and administrative expenses increased 4.4% to $247.3
million in 1995 from $236.9 million in 1994, primarily as a result of the
increased costs in Publishing. Broadcasting operating and administrative
expenses increased 2.4% to $116.1 million in 1995 from $113.4 million in 1994.
Publishing operating and administrative expenses increased 5.9% in 1995 to
$113.7 million from $107.4 million in 1994. This increase was the result of a
45% increase in the average price per ton of newsprint paid by the Company,
which caused a $6.5 million increase in newsprint costs in 1995 compared to
1994. Operating expenses for the development stage businesses in the Programming
and Electronic Media Business increased to $5.1 million in 1995 from $2.9
million in 1994 primarily due to expenses associated with the launching of the
Company's cable network, NorthWest Cable News.

In 1995, the Company recorded a $7.4 million charge in connection with the
Newspaper Consolidation and a $6.8 million charge at year end in connection with
the Newspaper Restructuring. The combined impact of both of these efforts is
expected to reduce the number of employees by approximately 170 full-time
equivalents (net of 24 additional full-time equivalents) and, when fully
implemented, to generate estimated annual cost savings of approximately $10
million.

Stock-based compensation expense, which relates to the Company's Stock
Incentive Plans, declined $12.7 million to $2.4 million in 1995 from $15.1
million in 1994 primarily due to the freezing of the IUP in 1994 and the
establishment of a reserve in 1994 for cash payments to be made pursuant to such
plan in 1995. See also "-- Liquidity and Capital Resources" regarding possible
additional payments under these plans.

38
<PAGE> 39

Consolidated depreciation and amortization expense decreased $1.6 million
from $41.2 million in 1994 to $39.6 million in 1995. Included in supplemental
pro forma depreciation and amortization for both 1994 and 1995 is approximately
$7.5 million associated with the step-up in the carrying value of intangible
assets (with an average life of 30 years) acquired in the Kelso Buyout.

The increase of $2.8 million in equity in losses of affiliates from 1994 is
a result of the investment by the Programming and Electronic Media Business in
start-up businesses, America's Health Network and Peapod. Other income
(expense), net increased $2.2 million to $4.8 million in 1995 from $2.6 million
in 1994, principally due to recognition in 1995 of $2.4 million in interest
income from a note receivable with the Lowell Sun Companies. Interest income
received in 1994 and 1993 had been used to create a reserve against the
principal of the note receivable in those years. Included in other income
(expense) are the operating results of the Company's ancillary garage operation,
which are not material to the Company's results of operations.

Income tax expense decreased from $6.5 million in 1994 to $0.1 million in
1995 primarily due to a $6.0 million additional tax provision recorded in 1994
relating principally to interest on settlements and contingencies related to
income tax liabilities identified during Internal Revenue Service examinations.
Effective tax rates for 1995 and 1994 were unfavorably affected by
non-deductible amortization of certain intangibles acquired. Loss from
continuing operations for 1995 was $14.9 million compared with $19.1 million in
1994 reflecting the factors discussed above.

Consolidated EBITDA was relatively flat at $65.2 million and $64.4 million
in 1995 and 1994, respectively. Broadcasting experienced 11.8% EBITDA growth in
1995 to $64.4 million compared to $57.6 million in 1994. The growth in
Broadcasting EBITDA was offset by a $5.7 million decline in Publishing EBITDA
that was primarily the result of the 45% increase in newsprint prices. In
Programming and Electronic Media, EBITDA was a loss of $1.7 million in 1995 and
$0.6 million in 1994, largely as a result of development stage expenses.

Broadcasting (Supplemental Pro Forma)

The Company's Broadcasting revenues grew 5.5% in 1995. Revenues
attributable to national advertisers increased 2.7% to $91.1 million in 1995
from $88.7 million in 1994. This modest increase occurred despite a slight
weakening of the economy in the fourth quarter of 1995 as well as the
unfavorable effects of large advance sales of advertising by the major networks
which reduced national advertiser demand for spot advertising at the Company's
Stations. Revenues attributable to local and regional advertisers grew 10.2% in
1995, increasing from $96.3 million in 1994 to $106.1 million in 1995, due to
improved ratings and market growth.

Operating and administrative expenses increased 2.4% to $116.1 million in
1995 from $113.4 million in 1994, an increase of $2.7 million. This increase
reflects the incremental costs of a start-up news operation in Honolulu
(required by KHNL's affiliation switch from Fox to NBC on January 1, 1996) and
the offsetting impact of cost containment policies at the Stations. Depreciation
and amortization expense decreased 5.2% to $27.5 million in 1995 from $29.0
million in 1994, a change of $1.5 million. Included in supplemental pro forma
depreciation and amortization is approximately $7.5 million annually associated
with the step-up in carrying value of intangible assets (with an average life of
30 years) resulting from the Kelso Buyout.

As a result of revenue growth and reduced costs, operating income increased
29.0% to $36.9 million in 1995 from $28.6 million in 1994. Likewise, EBITDA for
the Broadcasting Business increased 11.8% to $64.4 million in 1995 from $57.6
million in 1994. Broadcast Cash Flow also grew 11.4% to $66.3 million in 1995
from $59.5 million in 1994. Operating income improved 29.0% in 1995. Increases
in EBITDA were particularly strong at the Company's Seattle, Portland,
Louisville, and Albuquerque Stations.

Publishing (Supplemental Pro Forma and Historical)

Prior to June 5, 1995, the Company published a Sunday newspaper, and both a
morning daily newspaper (Monday through Saturday) and an afternoon daily
newspaper (Monday through Friday). As discussed previously, in response to
changing readership preferences and declining circulation, primarily in the
afternoon daily newspaper, and in an attempt to permanently reduce the Company's
cost basis, the Company effected

39
<PAGE> 40

the Newspaper Consolidation, and now publishes a morning only daily Providence
Journal-Bulletin (Monday through Saturday) in addition to The Providence Sunday
Journal.

Publishing revenues in 1995 of $128.5 million were relatively flat with
1994 revenues of $127.9 million. Advertising revenues declined slightly in 1995
to $93.7 million from $95.1 million in 1994 due to a continuing lackluster Rhode
Island economy. Advertising linage declined from 2.0 million in 1994 to 1.9
million in 1995. Despite the decline in circulation levels as a result of the
Newspaper Consolidation, circulation revenues of $32.2 million in 1995 were 4.2%
ahead of 1994 circulation revenues of $30.9 million as a result of rate
increases in 1994 and 1995.

Operating and administrative expenses increased 5.9% in 1995 to $113.7
million primarily due to newsprint price increases of $6.5 million in 1995. The
average price per ton of newsprint paid by the Company increased 45% in 1995.
Publishing has implemented several newsprint conservation programs to offset
these price increases, including, among others, reducing the page width of the
newspaper and strict control of newspaper waste. Due to recent market trends in
price increase withdrawals, the Company believes that if such trends continue,
newsprint prices could decrease somewhat in 1996. In implementing the Newspaper
Consolidation, the Company incurred costs of $7.4 million which include early
retirement and voluntary separation costs totaling $4.9 million affecting
approximately 80 employees and $2.5 million for promotion, training, and other
costs of the conversion. Annual savings from the Newspaper Consolidation are
estimated to be approximately $4 million. As previously discussed, the Company
also implemented the Newspaper Restructuring at the end of 1995 in an effort to
improve efficiencies. Under the plan, the Company targeted a reduction in
workforce of approximately 100 full time equivalents through a combination of
early retirement and voluntary separation assistance plans. Newspaper
Restructuring Costs in an amount equal to $6.8 million were recorded in the
fourth quarter of 1995 relating to salaries, benefits, and payroll taxes
associated with the restructuring. Annual savings from the Newspaper
Restructuring are estimated to be approximately $6 million.

Primarily due to the Newspaper Consolidation Costs, Newspaper Restructuring
Costs and increases in newsprint costs, the Publishing Business had a $10.3
million operating loss in 1995 compared to $9.3 million of operating income in
1994.

Principally as a result of the increase in newsprint costs, EBITDA declined
to $14.8 million in 1995 from $20.5 million in 1994. Substantially all of the
Restructuring Costs as well as the early retirement benefits offered in the
Newspaper Consolidation, together totaling approximately $10.6 million, are
expected to be paid from the Company's pension plan (the plan assets of which
exceed plan obligations), thereby minimizing the impact on cash flow of the
Publishing Business.

Programming and Electronic Media (Supplemental Pro Forma and Historical)

The Programming and Electronic Media Business was not significantly
affected by the Spin-Off, the Merger or the Kelso Buyout. The only difference
between "Historical" and "Supplemental Pro Forma" results of operations for the
Programming and Electronic Media Business is an additional $0.3 million of
operating expenses included in 1994 on a supplemental pro forma basis
attributable to the operations of NorthWest Cable News, which was previously
owned by KHC. Therefore, the results of operations and financial condition of
the Programming and Electronic Media Business are substantially identical on
both a "Supplemental Pro Forma" and "Historical" basis.

In December 1995, the Company launched the NorthWest Cable News channel,
which provides 24-hour news service to cable television viewers in Washington,
Oregon, and Idaho, and in May 1995, launched Rhode Island Horizons, the
Company's electronic on-line information service. The Company made new
investments in America's Health Network, a 24-hour health channel that was
launched on March 25, 1996, and Peapod, an existing interactive grocery ordering
and delivery service. During 1995, the Company also continued to fund its share
of its investment in Television Food Network and PSN. In addition, the Company
has fully subleased the satellite transmission capacity it had previously
leased. In 1995, the Company grouped these investments together in a new
business segment called "Programming and Electronic Media" (originally called
"Programming and New Media"). Currently, the Company wholly owns and operates
NorthWest Cable News and Rhode Island Horizons and has significant equity
investment positions in the other entities.

40
<PAGE> 41

The operations in the Programming and Electronic Media Business are in the
early development phase and contributed $3.5 million in revenue in 1995 compared
to $2.3 million in 1994. Operating expenses for the Programming and Electronic
Media Business increased to $5.1 million in 1995 from $2.9 million in 1994
primarily due to expenses associated with the launching of NorthWest Cable News.
As a result of high start-up costs associated with an early development phase
business, the operating loss of the Programming and Electronic Media Business
was $1.8 million in 1995 and $0.3 million in 1994. The increase of $2.3 million
in the Programming and Electronic Media equity in losses of affiliates from 1994
is a result of start-up costs incurred by America's Health Network and Peapod.

CERTAIN FINANCIAL DATA -- SUPPLEMENTAL PRO FORMA 1994 COMPARED TO COMBINED 1993

Consolidated (Supplemental Pro Forma/Combined)

Consolidated revenues increased by 10.4% in 1994 to $301.3 million from
$272.8 million. Broadcasting revenues accounted for most of the consolidated
revenue increase, a 15.8% growth in revenues to $171.1 million in 1994 from
$147.8 million in 1993. Publishing revenues grew slowly at 2.4% to $127.9
million in 1994 from $124.9 million in 1993 reflecting a continuing recession in
the local economy serviced by the Publishing Business. The Programming and
Electronic Media Business began developing its operating services in 1994 and
generated $2.3 million in revenue.

Consolidated EBITDA grew 37.0% to $64.4 million in 1994 from $47.0 million
in 1993 primarily due to a 34.0% increase in Broadcasting EBITDA. Broadcasting
EBITDA increased to $57.6 million in 1994 compared to $43.0 million in 1993.
Publishing EBITDA declined slightly to $20.5 million in 1994 from $21.3 million
in 1993. Corporate overhead declined $4.2 million in 1994 to $13.1 million from
$17.3 million in 1993 primarily due to consolidation and allocation of shared
services.

Broadcasting (Supplemental Pro Forma/Combined)

Broadcasting revenues grew 15.8% in 1994 to $171.1 million from $147.8
million in 1993. Revenues attributable to national advertisers grew 19.1% in
1994 to $88.7 million from $74.5 million in 1993 reflecting nationwide economic
improvement. Local and regional revenues exhibited strong growth in 1994 of
16.5%, due to improved ratings and market growth. Contributing to revenue growth
in 1994 were changes in certain network affiliations, increased market share for
the three stations that were Fox affiliates during 1994 and advertising revenue
generated by the 1994 Winter Olympics carried by NBC.

Operating and administrative expenses increased 8.2% to $113.4 million in
1994 from $104.8 million in 1993, a change of $8.6 million. This increase is a
result of program development and promotional incentive programs to increase
market share. Depreciation and amortization expense increased to $29.0 million
in 1994 from $23.3 million in 1993 primarily as a result of pro forma
depreciation and amortization in 1994 of approximately $7.5 million associated
with the step-up in carrying value of intangible assets (with an average life of
30 years) resulting from the Kelso Buyout.

As a result of revenue growth and reduced costs, operating income increased
to $28.6 million in 1994 from $19.7 million in 1993. Similarly, EBITDA for
Broadcasting increased 34.0% in 1994 to $57.6 million from $43.0 million in
1993. Broadcast Cash Flow increased 39.7% in 1994 to $59.5 million from $42.6
million in 1993.

41
<PAGE> 42

CONSOLIDATED HISTORICAL RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995

The results of operations on an historical basis for each of the periods in
the three months ended March 31, 1996 and 1995 are not significantly different
than those presented on a supplemental pro forma basis, except that the results
on a supplemental pro forma basis in the 1995 period include pro forma
adjustments as follows:

Incremental Amount to Arrive at Supplemental Pro Forma Amounts:

<TABLE>
<CAPTION>
DEBIT (CREDIT)
---------------------------
THREE
MONTHS
AFFECTED ENDED MARCH
BUSINESS 31, 1995
------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Line Item in Historical Financial Statements
Depreciation and amortization
Additional amortization expense as a result of the
"step-up" in basis in acquired assets of KHC Broadcasting $1,872
Interest expense
Additional interest expense assuming beginning debt as a
result of the transactions at January 1, 1994 was $225
million with an average interest rate of 8.1% Consolidated $2,146
Income tax expense (benefit)
Incremental income tax expense (benefit) from above
adjustments Consolidated $(1,104)
</TABLE>

After considering the effects of these adjustments, historical results of
operations on both a consolidated basis and a segment basis for each of the
periods in the three months ended March 31, 1995 and 1996 exhibited the same
trends as those discussed previously on a "Supplemental Pro Forma" basis. As a
result of such trends and the previously discussed additional Newspaper
Restructuring charges and additional stock-based compensation charges,
consolidated net loss for the three months ended March 31, 1996 was $17.3
million compared to $3.1 million for the three months ended March 31, 1995.

HISTORICAL 1995 COMPARED TO HISTORICAL 1994

The consolidated historical financial data discussed below is derived from
the audited consolidated financial statements of the Company for the years ended
December 31, 1993, 1994, and 1995 summarized above in the table "Selected
Financial Data -- Selected Consolidated Historical Financial Data". As a result
of the Kelso Buyout, 1995 results include the results of operations of KHC since
January 1, 1995. As a result of the Spin-Off, the Merger and the Kelso Buyout,
the Company's results of operations and financial condition for the years 1991
through 1994 are not comparable to 1995 and 1996.

The discussion of historical results of operations which follows is
presented for the consolidated results of operations and the Broadcasting
segment for the years ended December 31, 1993, 1994 and 1995. The Publishing
Business and the Programming and Electronic Media Business for these years were
not significantly affected by the Spin-Off, the Merger and the Kelso Buyout.
Consequently, the historical trends for these segments are the same as those
presented above under "Supplemental Pro Forma", and therefore are not repeated
here. A comparison of 1994 to 1993 on a historical basis for Publishing Business
and the Programming and Electronic Media Business is, however, included.

Consolidated (Historical)

As discussed above, 1995 results include the consolidation of KHC's
operations since January 1, 1995. Prior to the Kelso Buyout, the Company
recorded the investment in KHC under the equity method of accounting.
Consequently, the significant increases in comparing historical Broadcasting
revenues, Broadcasting operating and administrative expenses, Broadcasting
operating income, interest expense and income taxes are attributable to the
consolidation of KHC's operations in 1995. The Company's 50% ownership interest
in

42
<PAGE> 43

KHC's net operations included in the equity in loss of affiliates amounted to
$8.3 million and $7.2 million for 1994 and 1993, respectively. Management fees
from KHC, which were eliminated in consolidation in 1995, amounted to $3.5
million in each of the years 1994 and 1993, and are included in other income,
net. As a result of the consolidation of KHC's operations in 1995 and the
related changes in equity in loss of affiliates and other income, net loss from
continuing operations for 1995 was $5.0 million compared with $23.2 million in
1994.

Loss from the discontinued cable business is not reflected in 1995 because
loss on disposal of that business, including estimated loss during the 1995
phase-out period, was recognized in the fourth quarter of 1994. The loss from
the operations and disposal of discontinued wholly-owned cable operations
(excluding KHC's discontinued cable operation) in 1994 amounted to $36.6 million
of which $34.8 million reflected severance and transaction costs and $1.8
million reflected the loss from cable operations, net of allocated interest of
$20.7 million and loss during the phase-out period.

Net loss for 1995 was $9.6 million which includes an extraordinary charge
of $2.1 million related to the early extinguishment of debt. Net loss, including
the loss for discontinued operations of $36.6 million was $59.8 million in 1994.

Broadcasting (Historical)

The primary difference between "Historical" and "Supplemental Pro Forma"
results of operations for the Broadcasting Business in 1995 and 1994 is
attributable to (i) an adjustment increasing amortization expense by $5.6
million in 1995 and $7.5 million in 1994 in connection with the step-up in
carrying value of intangible assets resulting from the Kelso Buyout and (ii)
consolidation of KHC broadcast operations. See footnote (1) to "Selected
Financial Data -- Supplemental Pro Forma Financial Data". Historical
depreciation and amortization increased $14.0 million in 1995 to $21.9 million
from $7.9 million in 1994 as a result of the consolidation of KHC and additional
amortization expense of $1.9 million associated with the step-up in carrying
values from the Kelso Buyout. Broadcasting's historical revenue and operating
and administrative expenses for 1995 compared to 1994 exhibited the same trends
as those discussed on a "Supplemental Pro Forma" basis. As a result of these
trends, the consolidation of KHC's operations, and the fluctuations discussed
above, Broadcasting Business operating income increased to $42.5 million in 1995
from $6.2 million in 1994.

HISTORICAL 1994 COMPARED TO HISTORICAL 1993

Consolidated (Historical)

Historical consolidated revenues increased 8.1% to $184.2 million in 1994
from $170.4 million in 1993. Broadcasting revenues grew 18.7% to $54.0 million
from $45.5 million due to a national improvement in the economy. Publishing
revenues grew slowly at 2.4% to $127.9 million in 1994 from $124.9 million in
1993 reflecting a continuing recession in the local economy serviced by the
Publishing Business. The Programming and Electronic Media Business began its
early stage development operating services in 1994 and generated $2.3 million in
revenue. Operating and administrative expenses increased 2.7% on a consolidated
basis to $160.8 million in 1994 from $156.5 million in 1993 primarily due to
$2.6 million in start-up costs associated with new operations of the Programming
and Electronic Media Business. Stock-based compensation under the Company's
Stock Incentive Plans increased $9.4 million to $15.1 million in 1994 from $5.7
million in 1993 primarily due to payments required to be made under the terms of
such plans as a result of a 40% increase in the valuation of the Company
resulting from the Kelso Buyout, the Spin-Off and the Merger, as determined by
an independent appraiser. Depreciation and amortization declined slightly to
$20.0 million in 1994 from $20.6 million in 1993 due to reduced capital
spending. Other income, net increased $3.9 million from $2.2 million in 1993 to
$6.1 million in 1994. A valuation adjustment resulting in an approximate $2.7
million loss associated with the Company's garage operation was recorded in
1993. Increases in losses from affiliates of $4.6 million were primarily due to
an increase of $1.1 million in the Company's share of KHC's net operations
(including discontinued operations) and a $2.5 million increase in the Company's
share of TVFN losses. Including the $6.0 million provision for income tax
settlements and contingencies in 1994 discussed earlier, loss from continuing
operations declined $6.9 million to $23.2 million in 1994 from $16.3 million in
1993.

43
<PAGE> 44

As previously discussed, the loss from the operations and disposal of
discontinued wholly owned cable operations in 1994 amounted to $36.6 million.
The loss in 1993 from discontinued cable operations of $6.4 million includes
$19.8 million in allocated interest expense.

Net loss for 1994, including the $36.6 million loss for discontinued
operations, was $59.8 million. Net loss for 1993, including a $1.6 million
extraordinary gain associated with the early extinguishment of debt, was $21.1
million.

Broadcasting (Historical)

Broadcasting historical revenues grew 18.7% in 1994 to $54.0 million from
$45.5 million in 1993 reflecting national economic improvement and local market
growth. Operating and administrative expenses on an historical basis increased
4.2% to $39.9 million from $38.3 million. Historical depreciation declined to
$7.9 million in 1994 from $8.7 million in 1993 due to reduced capital spending
coupled with assets becoming fully depreciated. As a result of revenue growth
exceeding cost increases, the Broadcasting Business had operating income of $6.2
million on a historical basis for 1994 compared to an operating loss of $1.5
million in 1993.

Publishing (Historical)

Publishing revenues grew 2.4% in 1994 to $127.9 million from $124.9 million
in 1993. The decline in advertising linage from 2.1 million in 1993 to 2.0
million in 1994 was offset by 3% rate increases. As a result, advertising
revenue increased 2.1% in 1994 to $95.1 million from $93.1 million in 1993.
Circulation revenues declined slightly to $30.9 million from $31.0 million in
1993 primarily as a result of the decline in the average net paid daily
circulation from 187,700 in 1993 to 183,900 in 1994, particularly in the
afternoon daily newspaper. Operating and administrative expenses increased 3.7%
in 1994 to $107.4 million from $103.6 million in 1993, primarily due to $2.3
million of costs associated with development efforts in 1994 related to a weekly
"shopper" and expanded information services and systems conversion costs of $1.0
million. Depreciation and amortization remained relatively flat with $11.2
million in 1994 and $11.4 million in 1993. As a result of the above factors,
operating income for Publishing declined 6.1% to $9.3 million in 1994 from $9.9
million in 1993 and EBITDA declined 3.8% to $20.5 million in 1994 from $21.3
million in 1993.

Programming and Electronic Media (Historical)

The Programming and Electronic Media Business began developing its
operating services in 1994 and generated $2.3 million in revenue. Operating
expenses for the start-up of businesses in the Programming and Electronic Media
Business amounted to $2.6 million in 1994. Equity in losses of affiliates of
this segment increased $3.2 million primarily due to costs incurred in
developing operations at TVFN and PSN.

44
<PAGE> 45

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically funded its working capital, debt service,
capital expenditures and dividend requirements primarily through cash provided
by its operating activities. Significant acquisitions or investments have
historically been funded primarily through long-term debt borrowings under
credit facilities. It is currently contemplated that any payment obligation
resulting from the litigation described under "Business -- Legal Proceedings"
could be up to $40 million, and would be funded by the Company through
borrowings under the Company's revolving credit facility. Any payment obligation
resulting from such litigation could have a material effect on the Company's
liquidity position. The following table sets forth summary information from the
Company's Consolidated Statement of Cash Flows for the years ended December 31,
1993, 1994, and 1995 and the three months ended March 31, 1995 and 1996 included
elsewhere in this Prospectus:

<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------- -------------------
1993 1994 1995 1995 1996
-------- -------- --------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash flows provided by (used in)
continuing operations.................. $ 23,383 $ 24,927 $ 11,975 $ 9,281 $ (6,286)
======== ======== ========= ======== ========
Cash flows provided by (used in)
investing activities:
Kelso Buyout, less cash acquired....... $ -- -- $(261,422) -- --
Investments in affiliates.............. (5,783) (6,555) (23,647) (2,150) (12,503)
Property, plant, and equipment......... (11,597) (6,481) (15,276) (3,578) (3,008)
Cash proceeds from sale of cable
operations, net of taxes paid(1).... -- -- 693,058 -- --
(Increase) decrease in investment in
cable operations through disposal
date................................ (4,528) 24,838 (66,459) 7,806 --
Proceeds from sale of assets........... 1,073 594 8,739 -- --
Other.................................. (2,800) 3,086 (58) -- --
-------- -------- --------- -------- --------
Total.......................... $(23,635) $ 15,482 $ 334,935 2,078 (15,511)
======== ======== ========= ======== ========
Cash flows provided by (used in)
financing activities:
Net borrowings (repayments)............ $ 18,847 $(19,345) $(313,215) (7,505) 28,702
Payments for television programming
rights financed..................... (7,296) (6,760) (16,166) (4,163) (4,495)
Dividends paid......................... (8,872) (9,711) (9,706) (2,422) (2,441)
Purchases and adjustments to basis of
treasury stock...................... (2,387) (4,291) (7,353) -- --
Other.................................. -- -- (1,702) -- 3
-------- -------- --------- -------- --------
Total.......................... $ 292 $(40,107) $(348,142) $(14,090) $ 21,769
======== ======== ========= ======== ========
</TABLE>

- ---------------
(1) Represents $405,000 from the sale of KVC plus $410,000 assumption of New
Cable Indebtedness (as defined below) less taxes of $121,942.

45
<PAGE> 46

CASH FLOWS FROM OPERATIONS

The following table discusses cash flows from operations in a manner which
identifies significant cash inflows and outflows. It is intended to enhance the
reader's understanding of, and reconciles EBITDA to, the cash flows from
operations as presented in the Company's consolidated statement of cash flows
for the year ending December 31, 1995 and the three months ended March 31, 1996
included elsewhere in this Prospectus.

Consolidated cash flows provided by (used in) operations can be analyzed as
follows:

<TABLE>
<CAPTION>
YEAR ENDED (UNAUDITED)
DECEMBER 31, THREE MONTHS ENDED
1995 MARCH 31, 1996
---------------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
EBITDA:
Broadcasting...................................... $ 64,419 $ 12,308
Publishing (excluding Newspaper Consolidation
Costs and Newspaper Restructuring Costs)....... 14,808 2,744
Programming and Electronic Media.................. (1,664) (3,381)
Corporate......................................... (12,363) (3,136)
-------- --------
Total.......................................... 65,200 8,535
Program rights amortization....................... 17,318 4,379
Interest paid..................................... (12,500) (4,700)
Income taxes (paid) received, net................. (12,679) 4,100
Other working capital items....................... (6,765) (6,300)
-------- --------
Cash flow from operations before one-time cash
payouts...................................... 50,574 6,014
One-time cash payouts:
IRS and state tax settlements(1).................. (15,023) (3,500)
Stock-based compensation payouts in connection
with incentive stock unit plan liquidation (see
discussion below).............................. (20,633) --
Payment of working capital and other cable-related
disposal adjustments(2)........................ -- (8,800)
Cash paid related to Newspaper Consolidation
Costs(3)....................................... (2,943) --
-------- --------
Cash flow provided by (used in) operations..... $ 11,975 $ (6,286)
======== ========
</TABLE>

- ---------------
(1) "IRS settlements" relates to amounts paid in connection with final
settlements reached with the Internal Revenue Service and applicable states
relating to examinations of the Company's income tax returns for the years
1984 through 1989.

(2) Includes working capital and other basis adjustments in disposal of cable
operations of $4.3 million and approximately $4.5 million in cash paid for
severance costs associated with such cable operations.

(3) Cash portion of Newspaper Consolidation Costs. See discussion of such costs
in "Selected Financial Data -- Supplemental Pro Forma Financial Data" and
Note 8 of the Company's consolidated financial statements.

46
<PAGE> 47

As discussed previously, EBITDA on a supplemental pro forma consolidated
basis for 1995 was relatively even with the prior year. However, 1995 EBITDA
compared to combined 1993 EBITDA increased 38.8% with 50% growth in Broadcasting
from 1993 to 1995. EBITDA for the KHC broadcasting operations acquired amounted
to $46.3 million in 1995, $43.5 million in 1994 and $35.8 million in 1993.
Supplemental pro forma EBITDA for the years ended December 31, 1994 and 1995 (as
well as combined 1993) and the three months ended March 31, 1995 and 1996,
including KHC's broadcasting operations, are as follows:

<TABLE>
<CAPTION>
(UNAUDITED)
SUPPLEMENTAL PRO FORMA (UNAUDITED)
YEARS ENDED DECEMBER THREE MONTHS ENDED
31, MARCH 31,
COMBINED ---------------------- ----------------------
1993 1994 1995 1995 1996
-------- -------- -------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
EBITDA:
Broadcasting.................. $ 43,014 $ 57,634 $ 64,419 $10,904 $12,308
Publishing.................... 21,317 20,468 14,808 2,411 2,744
Programming and Electronic
Media...................... -- (614) (1,664) (373) (3,381)
Corporate..................... (17,346) (13,074) (12,363) (3,550) (3,136)
-------- -------- -------- ------- -------
Total................. $ 46,985 $ 64,414 $ 65,200 $ 9,392 $ 8,535
======== ======== ======== ======= =======
</TABLE>

Stock-Based Compensation Payouts

Stock-based compensation payouts identified above totaling $20.6 million
relate to cash paid to participants in the liquidation of 85% of the units in
the IUP Plan. An additional $6.6 million of this liability was settled in shares
of Class A Common Stock. Amounts paid to participants in the IUP and for the
remaining units previously were to be adjusted if, upon the occurrence of a
public offering of Continental class A common stock or certain other events, the
value of Continental class A common stock was greater or less than the price
attributed to such shares at the time 85% of the units were liquidated. A
similar adjustment was applicable to certain other stock-based compensation
plans of the Company. See footnote 2 to the table "Aggregate SAR Exercises in
Fiscal Year 1995 and Fiscal Year-End SAR Values" set forth herein under
"Management -- Executive Compensation". As a result of the proposed US West
Merger, the value of the Continental class A common stock has been re-defined by
the Compensation Committee of the Company's Board of Directors as the amount
received by the holders of Continental's class A common stock (the holders of
which include the shareholders of the Company that were shareholders of Old PJC)
upon consummation of the US West Merger or, if the merger agreement between
Continental and US West is terminated, the average of the closing prices for
Continental class A common stock during a specified trading period following
listing of Continental's class A common stock. In the three months ended March
31, 1996, the Company recorded a charge to continuing operations of $11.4
million and a pre-tax charge to discontinued operations of $5.4 million to
reflect the vested portion of an estimated $20.5 million accounting adjustment
to the stock-based compensation plans. The difference of $3.7 million will be
charged to operations over the remaining vesting period of the plans, primarily
in the second and third quarters of 1996. The final amount of the adjustment is
subject to the closing of the US West Merger, expected by the end of 1996.
Following such adjustment and payout of any additional amounts, the IUP will be
fully liquidated and terminated. The amount of the liquidation of the IUP,
including the 15% retained units and the estimated aforementioned adjustments
related to the US West Merger, could total $18.9 million. Such total would be
payable approximately $4.3 million in shares of Class A Common Stock and the
remainder in cash. In addition, approximately $3.4 million will be issued in
shares of Class A Common Stock as similar adjustments under the Stock Incentive
Plans other than the IUP. See "Risk Factors -- Shares Eligible for Future Sale"
and "Business -- Background; Reorganization".

CASH FLOWS -- INVESTING AND FINANCING ACTIVITIES

Investments in Affiliates

In addition to the Kelso Buyout, the Company made significant investments
in the businesses in its Programming and Electronic Media segment in 1995.
Investments in AHN and TVFN totaled $10.3 million and $5.2 million,
respectively, in 1995. Investments in its interactive shopping venture, Peapod,
totaled $5.3

47
<PAGE> 48

million in 1995 and investments in PSN totaled $0.9 million in 1995. In 1995,
the Company disposed of the Biltmore Hotel in Providence, Rhode Island, for
approximately $7 million, which approximated net book value.

Investments in TVFN totaled $5.0 million in the first three months of 1996.
On May 14, 1996 the Company purchased the equity partnership interests held by
Landmark and Scripps, two of the partners of TVFN, for respective purchase
prices of approximately $12.7 million and $11.4 million. Prior to such purchase,
Landmark and Scripps each owned a 10.8% and 9.7% general partnership interest in
TVFN. The agreements with each of Landmark and Scripps contain covenants by such
parties not to compete with TVFN and its affiliates for a period of one year
following such purchase. The Company's investment in TVFN through May 31, 1996,
including these purchases and funding of its share of operating losses, totals
$44.7 million, which represents an equity interest of approximately 46%.
Following these recent purchases, the Company now holds three of the five voting
seats on the management committee of TVFN. As a result of such purchases, TVFN
became a controlled subsidiary of the Company and, effective May 14, 1996, was
consolidated into the Company's results of operations. The Company is pursuing a
proposed transaction to purchase all of the equity partnership interest held by
a third partner which would increase its ownership percentage in TVFN to
approximately 55% and result in control of four of the five voting seats on the
management committee. The Company estimates its additional investment in TVFN
for the third partner's equity interest plus funding of the Company's share of
operating losses of TVFN will total approximately $22.5 million for the
remainder of 1996.

Investments in AHN during the first three months of 1996 totaled $7.5
million. On May 9, 1996 the Company increased its investment in AHN to $35.3
million, which represents an equity interest of approximately 65%. The Company
does not anticipate any additional funding of its share of operating losses for
the remainder of 1996, but is committed to investing an additional $19.5 million
by the first quarter of 1997 upon the achievement of certain operating
milestones, including entering into carriage agreements and meeting certain
revenue and ratings objectives.

Merger and Kelso Buyout

The Company's significant investing and financing activities in 1995 are
primarily related to the consummation of the Merger and Kelso Buyout
transactions. The cash flows of KHC's operations are included in the above table
for 1995 since January 1, 1995, net of the effects of the acquired assets and
liabilities of KHC.

In connection with the Merger and Kelso Buyout transactions, Old PJC, prior
to the Spin-Off, incurred indebtedness to a subsidiary of Continental in a
principal amount of approximately $408 million (net of $2 million in certain
costs shared with Continental) ("New Cable Indebtedness"). Prior to the
Spin-Off, Old PJC used the proceeds of the New Cable Indebtedness, the $405
million provided by the sale of KVC and the Company Indebtedness (defined below)
to (i) consummate the Kelso Buyout, (ii) to repay substantially all outstanding
indebtedness of Old PJC and KHC in an aggregate amount of approximately $623
million, and (iii) to pay other costs associated with the transactions.
Additional indebtedness (the "Company Indebtedness") required to meet the
foregoing obligations, among others, was incurred by Old PJC and the Company in
the principal amount of $105 million. Following the Spin-Off, the Company had no
obligations or liabilities with respect to the New Cable Indebtedness, and
Continental had no obligations or liabilities with respect to the Company
Indebtedness. In connection with the sale of KVC, KBC paid approximately $121
million in taxes, which was funded by borrowings under the Company's credit
facility in December 1995.

The effects of the above transactions on consolidated long-term debt and
consolidated stockholders' equity of the Company are illustrated in the
following table comparing amounts immediately before the reorganization,
disposal of cable operations and the Kelso Buyout (effectively, September 30,
1995) with balances as of December 31, 1995:

<TABLE>
<CAPTION>
AT AT
SEPTEMBER 30, DECEMBER 31,
1995 1995
-------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Consolidated Long-Term Debt....................... $337,400 $244,098
Consolidated Stockholders' Equity................. 277,745 263,239
Long-Term Debt to Equity Ratio.................... 1.21 .93
======== ========
</TABLE>

The Company's debt to equity ratio at March 31, 1996 was 1.12. During the
three months ended March 31, 1996, the Company incurred $28.7 million of
additional indebtedness to fund the investing

48
<PAGE> 49

activities described above and the one-time cash payments made in connection
with the discontinued operations adjustments and IRS and state tax settlements
discussed above.

Credit Facility

The Company Indebtedness was incurred pursuant to the Credit Agreement,
which consists of a $75 million term loan and a $300 million revolving credit
facility. The amount of credit available as of March 31, 1996 under the
revolving credit facility was approximately $112 million.

The amount available to be borrowed under the Company's revolving credit
facility decreases quarterly commencing December 31, 1996, with a final maturity
on June 30, 2004. The amount available to be borrowed under the revolving credit
facility decreases as follows (in thousands): 1996 -- $4,000; 1997 -- $10,500;
1998 -- $14,500; 1999 -- $21,500; 2000 -- $53,250; 2001 -- $65,750;
2002 -- $67,750; and 2003 -- $62,750. The indebtedness evidenced by the Credit
Agreement is secured by guarantees from all of the principal subsidiaries of the
Company and a first priority pledge of all such principal subsidiaries' capital
stock. The Credit Agreement provides for borrowings indexed, as the Company may
from time to time elect, to the Eurodollar rate, the certificate of deposit
rate, or the "base" rate of the agent, plus the "spread" over such rates. The
"spread" is determined by the ratio of the total debt of the Company to the
operating cash flow of the Company (as defined by the Credit Agreement). The
Credit Agreement contains customary events of default, financial covenants,
covenants restricting the incurrence of debt (other than under the Credit
Agreement), investments and encumbrances on assets and covenants limiting
mergers and acquisitions. See "Business -- Restrictions in Certain Agreements".
The Credit Agreement provides for the mandatory prepayment of amounts
outstanding and a reduction in the commitment under certain circumstances.

The Company has hedged against a portion of its liability for changes in
interest rates on its revolving credit and term loan facilities described above
through an interest rate swap agreement. The interest rate under the swap
agreement is equal to 6.71% plus an applicable margin as defined in the
revolving credit and term loan facility which effectively set the interest rate
at December 31, 1995 at 8.1% on the first $200 million of outstanding debt. The
Company recorded additional interest expense during 1995 and the three months
ended March 31, 1996 of approximately $1.1 million and $0.5 million,
respectively, which represents the excess of the swap agreement rate over the
original contractual rate. The notional amounts under the agreement are as
follows: $200 million in 1996, $175 million in 1997 and $150 million in 1998 and
1999.

Dividends and Treasury Stock

Total gross dividends have been fairly constant over the past three years
at $9.7 million in 1995 and 1994 and $8.9 million in 1993. The cash dividend
declared per share in the three months ended March 31, 1996 was $0.06. Including
the Special Dividend, total dividends paid in 1996 prior to the consummation of
the Offerings will be equivalent to the aggregate dividend paid in 1995. See
"Dividend Policy".

As discussed in note 16 of the consolidated financial statements,
additional consideration totaling $7.4 million was paid in 1995 to a former
stockholder under the terms of a redemption agreement dated April 15, 1987 in
connection with a treasury stock repurchase at that time.

Capital Expenditures

Of the $15.3 million spent in 1995 on capital expenditures, $8.0 million
was spent by Broadcasting, $3.2 million was spent by Publishing and $3.7 million
was spent in Programming and Electronic Media. Broadcasting and Programming and
Electronic Media capital expenditures consisted primarily of maintenance of
existing broadcasting plant and equipment as well as approximately $2.1 million
spent on advanced digital editing systems, with another $4 million to $5 million
planned for such digital editing systems in 1996. Total capital expenditures
planned for Broadcasting in 1996 are expected to be approximately $12.5 million,
of which $2.5 million was spent in the first quarter of 1996. Publishing capital
expenditures in 1995 of $3.2 million were related to information and prepress
systems and equipment replacement. A similar amount of capital expenditures is
planned for Publishing for 1996.

FUTURE FUNDING AND CAPITAL RESOURCES

The Company anticipates that amounts available under its revolving credit
facility and cash flow from operations will be sufficient to meet the liquidity
requirements described above under "-- Liquidity and Capital Resources". To the
extent that the Company makes significant acquisitions or investments or is
required to meet significant liquidity requirements other than as described
above, the Company may need to

49
<PAGE> 50

obtain additional financing. There can be no assurance that such additional
financing will be available on terms acceptable to the Company.

RECENT ACCOUNTING PRONOUNCEMENTS

On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123").
The Statement encourages, but does not require, a fair value based method of
accounting for stock-based compensation plans. SFAS No. 123 allows an entity to
continue to measure compensation cost for those plans using the intrinsic value
based method prescribed by APB Opinion No. 25. For those entities electing to
use the intrinsic value based method, SFAS No. 123 requires pro forma
disclosures of net income and earnings per share computed as if the fair value
based method had been applied. The Company will continue to account for
stock-based compensation costs under APB Opinion No. 25 and will provide the
additional required disclosures relating to 1995 and 1996 stock options in its
1996 Annual Report.

On January 1, 1996, the Company adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
This statement requires that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. This statement also requires that long-lived assets and
certain identifiable intangibles to be disposed of be reported at the lower of
carrying value or fair value less costs to sell. Adoption of SFAS No. 121 is not
expected to have a material impact on the Company's consolidated financial
statements.

50
<PAGE> 51

BUSINESS
GENERAL

The Company owns and operates nine network-affiliated television stations
and provides or will provide programming and marketing services to three
television stations under local marketing agreements in geographically diverse
markets throughout the United States, publishes the largest daily newspaper in
the Rhode Island and southeastern Massachusetts market, and produces diversified
programming and interactive electronic media services. The Company's television
broadcasting group reaches 5.6 million households, or 6% of all U.S. television
households; its newspaper is the leading newspaper in its market in terms of
advertising and circulation; and certain of its programming and electronic media
businesses, such as the Television Food Network, serve subscribers and viewers
nationwide.

Important factors in the success of the Company's broadcasting and
publishing businesses have been its strong local news focus, targeted local
advertising sales efforts, investment in advanced technology and emphasis on
cost control. The resulting strength of its media franchises presents attractive
opportunities for future growth and for realization of operating efficiencies.
In addition to increasing the reach of its broadcasting operations and cable and
satellite television networks through acquisitions and internal growth, the
Company intends to develop new revenue sources in a variety of media that build
on the existing strength of its brands and expertise and have broad regional or
national appeal.

The Stations and the LMA Stations are located in markets ranging from the
12th to the 127th largest DMAs of the United States, with five such Stations and
one LMA Station in the 50 largest DMAs. Five of the Stations are network
affiliates of NBC, two are network affiliates of Fox, one is a network affiliate
of ABC and one is a network affiliate of CBS. In 1995, EBITDA of the
Broadcasting Business represented approximately 81% of the Company's EBITDA
excluding programming and electronic media and corporate expenses. Eight of
these nine Stations are VHF television stations. Two of the LMA Stations are
affiliated with UPN. The Company's strategy in the Broadcasting Business is to
increase viewership, advertising revenue and EBITDA primarily by capitalizing on
its strong local news franchises, targeted marketing and local sales efforts,
high quality, non-network programming and strict cost controls. For a discussion
of the television industry generally, see "-- Industry Background".

The Providence Journal is the leading newspaper in terms of advertising and
circulation in its market of Rhode Island and southeastern Massachusetts.
Average daily circulation levels for the three months ended March 31, 1996
following the consolidation of the morning and afternoon newspapers in June 1995
(see "-- Publishing") were approximately 169,500 for circulation Monday through
Saturday and 251,300 for Sunday. The Company's strategy for the Publishing
Business is to leverage the Providence Journal's comprehensive regional and
local news coverage to generate increased readership, local advertising sales,
and new revenue sources based on its strong brand recognition. The Company
believes that the recent Newspaper Consolidation, reorganization of its staff,
and effective cost controls will help contribute to improved operating results.

The Company produces cable and satellite television programming and
interactive and on-line electronic media services through its management role or
ownership interest in a variety of content-driven entertainment and information
businesses. The Company owns a 46% interest and participates in the management
of Television Food Network, a cable television network that is distributed to
approximately 16.5 million subscribers throughout the United States. The Company
controls America's Health Network, with a 65% ownership interest, and owns all
of the equity interest in NorthWest Cable News, both recently launched
development stage cable programming network services. The Company also owns
equity interests in a variety of interactive, on-line, and broadcast programming
businesses. The Company's strategy in its programming ventures is to develop
cable and satellite television programming networks, such as the Television Food
Network, America's Health Network and NorthWest Cable News, with programming
content based on topics or themes that the Company believes are of importance to
a broad audience of potential viewers.

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<PAGE> 52

The following table sets forth certain operating results and other
financial data for each of the Company's business segments for the years ended
December 31, 1994 and 1995 and for the three months ended March 31, 1996
presented on a supplemental pro forma basis and on a combined basis for 1993 as
described under "Selected Financial Data -- Supplemental Pro Forma Financial
Data".

<TABLE>
<CAPTION>
SUPPLEMENTAL PRO FORMA (UNAUDITED)
--------------------------------------------
COMBINED
YEAR ENDED YEARS ENDED DECEMBER
DECEMBER 31, 31, (UNAUDITED)
------------ --------------------- THREE MONTHS ENDED
1993 1994 1995 MARCH 31, 1996
------------ -------- -------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
EBITDA(1):
Broadcasting......................... $ 43,014 $ 57,634 $ 64,419 $ 12,308
Publishing........................... 21,317 20,468 14,808 2,744
EBITDA excluding programming and
electronic media and corporate
expenses........................ 64,331 78,102 79,227 15,052
Programming and Electronic Media..... -- (614) (1,664) (3,381)
Corporate............................ (17,346) (13,074) (12,363) (3,136)
-------- -------- -------- --------
$ 46,985 $ 64,414 $ 65,200 $ 8,535
======== ======== ======== ========
</TABLE>

- ---------------
(1) See footnote (2) to "Selected Financial Data -- Selected Consolidated
Historical Financial Data" and footnote (5) to "Selected Financial
Data -- Supplemental Pro Forma Financial Data" for a definition of, and
certain matters relating to, EBITDA.

BROADCASTING

OVERVIEW. The Stations generally are in markets that the Company believes
will experience above-average economic growth in retail sales, EBI and
population. The Stations are owned by subsidiaries of the Company and are
typically located in the largest cities or state capitals of the states in which
they operate. The Company's Stations and the LMA Stations are in geographically
diverse regions of the United States, which reduces the Company's exposure to
regional economic fluctuations. With the exception of the Company's flagship
station, KING (Seattle), which accounted for approximately 19.2% and 17.7% of
1995 and the three months ended March 31, 1996 consolidated revenues,
respectively, none of the Company's other Stations accounted for more than 10%
of the Company's consolidated revenues for those periods. For the year ended
December 31, 1995 net revenues, Broadcast Cash Flow and EBITDA attributable to
the Broadcasting Business were $180.5 million, $66.3 million and $64.4 million,
respectively, and for the three months ended March 31, 1996 were $43.4 million,
$12.4 million, and $12.3 million, respectively.

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<PAGE> 53

The following table sets forth general information for each of the Stations
and the LMA Stations and the markets they serve, based on the Nielsen Station
Index as of May 1996. In February 1992, the Company completed the King
Acquisition and acquired a 50% joint venture interest in KHC, which indirectly
owned the King Stations. The Company has operated the King Stations since such
acquisition and in 1995 acquired 100% of the ownership of the King Stations in
the Kelso Buyout. The Stations are listed in order of the ranking of their DMA.
<TABLE>
<CAPTION>
NUMBER OF
COMMERCIAL
TELEVISION
NETWORK CHANNEL/ DMA STATIONS RANK IN STATION
MARKET AREA STATION STATUS AFFILIATION FREQUENCY RANK(1) IN MARKET(2) MARKET(3) SHARE(4)
- --------------- ------- -------- ----------- --------- ------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seattle, WA KING Owned NBC 5/VHF 12 8 1 19%
KONG (6) LMA N/A N/A 12 8 -- --
Portland, OR KGW Owned NBC 8/VHF 24 8 1 17
Charlotte, NC WCNC Owned NBC 36/UHF 28 8 3 10
Albuquerque/ KASA Owned Fox 2/VHF 48 6 4 7
Santa Fe, NM
Louisville, KY WHAS Owned ABC 11/VHF 50 6 1 23
Honolulu, HI KHNL Owned NBC 13/VHF 70 8 1 19
KFVE LMA UPN 5/VHF 70 8 - -
Spokane, WA KREM Owned CBS 2/VHF 74 4 2 18
Tucson, AZ KMSB Owned Fox 11/VHF 80 6 4 10
KTTU LMA UPN 18/UHF 80 6 - -
Boise, ID KTVB Owned NBC 7/VHF 127 5 1 30

<CAPTION>
1995
MARKET
REVENUE(5)
---------------------
STATION $ (IN
MARKET AREA SHARE MILLIONS)
- --------------- ------- ---------
<S> <C> <C>
Seattle, WA 25% $ 269.0
-- 269.0
Portland, OR 22 144.9
Charlotte, NC 11 118.1
Albuquerque/ 16 79.0
Santa Fe, NM
Louisville, KY 31 82.3
Honolulu, HI 19 63.7
- 63.7
Spokane, WA 27 42.8
Tucson, AZ 21 52.2
- 52.2
Boise, ID 40 26.0
</TABLE>

- ---------------

(1) Ranking of DMA served by the Station among all DMAs, measured by the number
of television households for the 1995-1996 broadcast year.
(2) Represents the number of television stations ("reportable stations")
designated by Nielsen as "local" to the DMA, excluding public television
stations and stations that do not meet minimum Nielsen reporting standards
(weekly cumulative audience of less than 2.5%) for reporting in the Sunday
through Saturday, 6:00 a.m. to 2:00 a.m. period ("sign-on to sign-off").
Does not include national cable channels or satellite stations. The number
of reportable stations may change for each reporting period.
(3) Station's rank relative to other reportable stations, based upon the DMA
rating as reported by Nielsen, 6:00 a.m. to 2:00 a.m., during the May 1996
measuring period. Data for KHNL and KMSB include KFVE and KTTU,
respectively. Data for KING does not include KONG because the LMA for such
LMA Station was entered into on May 14, 1996 and the Station is not yet
operational.
(4) Represents the number of television households tuned to the Station as a
percentage of the number of television households with sets in use for
Sunday-Saturday 6:00 a.m. to 2:00 a.m. from the May 1996 Nielsen Station
Index. Data for KHNL and KMSB include KFVE and KTTU, respectively. Data for
KING does not include KONG because the LMA for such LMA Station was entered
into on May 14, 1996 and the Station is not yet operational.
(5) Represents gross national, local, regional and political advertising
revenues, excluding network and barter revenues, for all commercial
television stations in the DMA, based on actual local market reporting, as
estimated by BIA. Station share of 1995 market revenue for KHNL and KMSB
includes revenues of KFVE and KTTU, respectively. Data for KING does not
include KONG because the LMA for such LMA Station was entered into on May
14, 1996 and the Station is not yet operational.
(6) Data for KONG is not available because the station is not yet operational.

BUSINESS AND OPERATING STRATEGY. The Company's strategy in the
Broadcasting Business is to increase viewership, advertising revenue and EBITDA
by capitalizing on its strong local news franchise, targeted marketing and local
sales efforts, high quality, non-network programming and strict cost controls.
This strategy has contributed to compound annual growth in the Company's net
revenues and EBITDA in the Broadcasting Business, calculated on a supplemental
pro forma basis as herein described, of 9.5% and 23.9%, respectively, from 1991
to 1995. In addition, EBITDA as a percentage of net revenues calculated on a
supplemental pro forma basis have increased from 21.6% in 1991 to 35.7% in 1995.
The components of the Company's Broadcasting Business strategy include the
following:

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<PAGE> 54

ENHANCE STRONG LOCAL NEWS FRANCHISES. The Company's Stations, other than
the Fox-affiliated Stations, generally are the local news leaders and attempt to
exploit the revenue potential associated with local news leadership. Most of
such Stations lead their markets in terms of ratings for local news and the
number of hours of local news broadcast per week. The Company has focused on
enhancing each such Station's local market news programming franchise as the
foundation to build significant audience share in such market. The Company's
commitment to a strong local presence is particularly evidenced by the hours of
local news programming that each such Station broadcasts per week. Local news
programming is commercially valuable because of its high viewership level, the
attractiveness to advertisers of the demographic characteristics of the typical
news audience (allowing Stations generally to charge higher rates for
advertising time) and the enhanced ratings of programming in time periods
adjacent to the news. In addition, the Company believes that its strong local
news programming has helped to differentiate each such Station from cable
programming competitors, which generally do not provide such programming. At
certain of such Stations, the Company has also created enhanced viewership
through an emphasis on local weather trends through the use of advanced weather
radar equipment.

LEVERAGE LOCAL MARKET STRENGTH WITH ADDITIONAL LMAS. The Company plans to
pursue opportunities to enter into LMAs in the DMAs in which the Company's
Stations operate. The Company believes that LMAs enable the Company to take
advantage of the economies of scale that are derived from operating a group of
broadcast stations. By providing programming and marketing services to other
stations in the DMAs where the Stations are located, the Company believes that
it can increase revenue without incurring substantial incremental expenses and
thereby increase operating margins. The Company also believes that there are
benefits in terms of increased advertising revenue from LMA arrangements.

MATCH ADVERTISERS TO AUDIENCES THROUGH TARGETED LOCAL SALES. The Company
seeks to leverage its strong local presence to increase its advertising revenues
and broadcast cash flow by expanding relationships with local and national
advertisers and attracting new advertisers through targeted marketing techniques
and carefully tailored programming. Each of the Company's Stations has developed
high quality programming of local interest and periodically sponsors community
events which the Company believes have generally proven successful in attracting
incremental advertising revenues. In addition, the Company works closely with
advertisers to develop campaigns that match specifically targeted audience
segments with the advertisers' overall marketing strategies. With this
information, the Company regularly refines its programming mix among network,
syndicated and locally-produced programs in a focused effort to attract
audiences with demographic characteristics desirable to advertisers.

MAXIMIZE VIEWER SHARE THROUGH HIGH QUALITY NON-NETWORK PROGRAMMING. Each
of the Company's Stations is focused on improving its syndicated and locally
produced non-network programming to attract audiences with favorable demographic
characteristics during dayparts which are not programmed by a Station's network.
An important element in determining advertising rates is the Station's share
among a particular demographic group which an advertiser may be targeting. The
Company believes that through a cooperative approach to programming, it can
generate incremental revenue by adjusting its programming mix to capture viewers
of certain targeted demographic segments that meet the needs of valued
advertisers. The Company focuses on purchasing cost-effective programming that
will have long-term audience appeal and will be supported by syndicators with
local promotion of the shows. For several of the Stations, such programming
includes "Wheel of Fortune", "Jeopardy" and "The Oprah Winfrey Show", which are
highly ranked, first-run syndicated programs.

MAINTAIN EFFECTIVE COST CONTROLS AND LEVERAGE ECONOMIES OF SCALE. Each
Station emphasizes strict control of its programming and operating costs as an
essential factor in increasing broadcast cash flow. As a result of its ownership
of a group of nine television Stations and its programming and marketing
arrangements with the three LMA Stations, the Company is able to purchase
syndicated programming at a discount (on a per Station basis) to the cost that
any one of its Stations would incur as an individual purchaser of such
programming and is able to purchase a variety of programming that might
otherwise not be available to a single station. For example, the Company
believes that it has the ability to enter into advantageous group programming
purchases such as those with King World Productions, Inc. (syndicator of "The
Oprah Winfrey Show", "Wheel of Fortune" and "Jeopardy"). As the provider of NBC
network programming in five markets, the Company believes that its ability to
enter into stable and favorable affiliation agreements with NBC is

54
<PAGE> 55

enhanced. Through strategic planning and annual budget processes, the Company
continually seeks to identify and implement cost-saving opportunities at each of
the Stations. In the early years of Station ownership, the Company's strategy is
to build viewership through investment in high quality news and local
programming. Once leadership is established in a market, however, the Company
believes viewer loyalty can be maintained at a lower level of local programming
and news expenditure. The strategic planning and budget processes are intended
to insure that an early stage Station's programming investments are carefully
monitored and that a mature Station's expenditures are reduced. In addition to
cost reductions attributable to the natural life cycle of Stations under
management, the Company also believes that personnel costs can be significantly
reduced through investments in technology.

The Company closely monitors the expenses incurred by each of the Stations
and continually reviews the performance and productivity of Station personnel.
The Company believes that it has been successful in reducing its costs without
sacrificing revenues through efficient use of its available resources.

CREATE OPERATING EFFICIENCIES THROUGH INVESTING IN TECHNOLOGY. The Company
invests selectively in technology to increase operating efficiency, reduce
Station operating expenses or gain a local market competitive advantage. Areas
of focus include digital news production, editing and library systems, advanced
weather radar equipment, and robotic cameras. The Company invested $2.1 million
in 1995 and anticipates investing $11.5 million in capital expenditures in 1996
and 1997 to deploy AVID digital editing, production and server technology that
will create a streamlined video production environment. The Company has entered
into an agreement with AVID to test and deploy this advanced, digital
technology. The Company believes that the use of AVID's digital equipment will
result in cost savings and operating efficiencies when fully deployed at the
Stations. To date, this technology is being used on a limited basis by KING
(Seattle), KGW (Portland) and WHAS (Louisville). The Company's operations at
NorthWest Cable News and KHNL (Honolulu) are entirely run with AVID technology.
The Company is using its NorthWest Cable News facility in order to further test
and refine such technology before deploying the technology at all of its
Stations. The Company intends to invest on a cost-effective basis in the most
up-to-date technology as it becomes available.

BROADCASTING ACQUISITION STRATEGY. The Company plans to pursue favorable
acquisitions of network-affiliated television stations where the Company
believes it can successfully apply its operating strategy and where such
stations can be acquired on attractive terms. The Company generally intends to
review acquisition opportunities in growth markets, typically in the 75 largest
DMAs in the nation, with what the Company believes to be advantageous business
climates. In assessing acquisitions, the Company targets stations for which it
has identified expense reductions and proposals for revenue enhancements that
can be implemented upon acquisition. The Company does not presently have any
agreements or understandings to acquire or sell any television stations.

55
<PAGE> 56

THE STATIONS

As used in the tables for each Station in the following section, unless
otherwise indicated, (i) "Market revenue" represents gross advertising revenues,
excluding network compensation and barter revenues, for all commercial
television stations in the market, and for 1995 represents calendar year gross
market revenue estimates, in each case as reported by BIA; (ii) "Market rank
(DMA)" is based on the Nielsen Station Index for February of the years
indicated; (iii) "Total commercial competitors in market" is the total number of
commercial television stations in the DMA calculated as set forth in footnote
(2) to the Station table appearing on page 44 of this Prospectus; (iv) "Station
rank in market" is the Station's rank in the market based on its share of total
viewing of commercial broadcast television stations in the market reported by
Nielsen for the "sign-on to sign-off" time period and by BIA for the "early
fringe" period, in each case for February of the years indicated; and (v)
"Station audience share" is a Station's share of total viewing of commercial
broadcast television stations in the market for the time periods referenced
reported by Nielsen for the "sign-on to sign-off" time period and by BIA for the
"early fringe" period, in each case for February of the years indicated.
Depending on the Station, data is presented for either 4:00 p.m. to 8:00 p.m. or
3:00 p.m. to 7:00 p.m., which represents the four hour "early fringe" period
immediately preceding "prime time" in the indicated market, during which period
the Stations earn a substantial portion of their advertising revenue. For 1991
through 1993, "sign-on to sign-off" was reported on a 7:00 a.m. to 1:00 a.m.
basis. Beginning in 1994, "sign-on to sign-off" was reported on a 6:00 a.m. to
2:00 a.m. basis. Nielsen has informed the Company that its data represents
estimates only.

KING: SEATTLE, WASHINGTON

Market Overview. KING, an NBC affiliate, operates in the Seattle/Tacoma
market, the 12th largest DMA in the nation, with approximately 1.5 million
television households and a population of approximately 3.8 million. In 1995,
approximately 71% of the population in the DMA subscribed to cable. In 1994, the
market's metropolitan audience was of above-average affluence in the United
States, with an average household EBI of approximately $49,400 as compared to
the national average of $45,937. The Seattle economy has experienced steady
economic and employment growth, with greater economic diversification in recent
years. Major industries in the market include aerospace, biotechnology,
forestry, software, telecommunications, transportation, retail and international
trade. Major employers include The Boeing Company, Microsoft Corporation,
Nordstrom, Inc., Alaska Airlines, Inc. and United Airlines, Inc. The television
advertising revenue for the Seattle market is estimated to have been $269
million in 1995 as compiled by BIA.

Station Performance and Strategy. KING is the leading television station
in the Seattle market in terms of ratings. The Station, promoted as "KING-5",
has been the leading station in the Seattle market in recent years, with
significant share advantages over its competitors. KING is ranked first in the
4:00 p.m. to 8:00 p.m. daypart, a primarily non-network time period sold by the
Station from which it realizes a substantial portion of its revenue. KING ranked
first in the highly competitive Seattle market with an 19% audience share
"sign-on to sign-off" (6:00 a.m. to 2:00 a.m., Pacific Time, Sunday through
Saturday) as compared to its nearest competitor at 15%. KING is the leading
station in terms of share during prime time (8:00 p.m. to 11:00 p.m., Pacific
Time, Monday through Saturday, and 7:00 p.m. to 11:00 p.m., Pacific Time,
Sunday) with a 23% rating in comparison to its nearest competitor at 17%. KING
is ranked first in terms of ratings during nearly every news time period for all
adults in the market and is ranked first during every news time period in the
demographic category most valued by advertisers, adults between the ages of 25
and 54. KING has been an NBC affiliate since 1959, and its current affiliation
agreement expires in 2001.

The Company believes that KING has established a strong local presence
through its news broadcasts that has enabled it to maintain its leading position
in the market in terms of ratings and audience share. Based on the cumulative
ratings for dayparts, 67% of the adults in the DMA watch the Station's 11:00
p.m. news broadcast for some period of time. KING airs 32 hours of news
programming per week and promotes its broadcasts as "Coverage You Can Count On".
KING has invested in weather tracking technology that enables the Station to
provide advanced weather images and forecasts, and is the only station in the
market with Doppler radar equipment.

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<PAGE> 57

KING's programming strategy is to feature local news, programming and
entertainment. KING airs its own program, "Evening Magazine", during the
"access" daypart (7:00 p.m. to 8:00 p.m., Pacific time, Monday through Friday),
which performs well against non-network syndicated programming at a lower cost.
KING also features highly rated non-network syndicated programming including
"The Oprah Winfrey Show" and "American Journal".

KING's journalistic achievements have been recognized by its receipt of
numerous national and regional awards. KING maintains a strong community focus,
which is demonstrated through an unusually high level of locally-produced
programming and public affairs programs and campaigns. The quality of these
programs has earned KING various national and local awards in the areas of
entertainment, news, education and public service.

In order to extend its local franchise to viewers in its DMA and throughout
the northwest, KING-5 provides portions of its news broadcasts for use by
NorthWest Cable News in its programming.

<TABLE>
<CAPTION>
MARKET/STATION DATA
----------------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
KING: SEATTLE, WASHINGTON
Market revenue (in thousands)...................................... $203,500 $223,900 $228,400 $260,400 $269,000
Market revenue growth over prior period............................ -5.0% 10.0% 2.0% 14.0% 3.3%
Market rank (DMA).................................................. 14 13 13 13 12
Television homes (in thousands).................................... 1,322 1,370 1,390 1,428 1,469
Total commercial competitors in market............................. 8 9 8 9 8
Station rank in market 6:00 a.m. to 2:00 a.m....................... 2 3 2 2 1
Station audience share 6:00 a.m. to 2:00 a.m....................... 17 17 18 17 18
Station rank in market 4:00 p.m. to 8:00 p.m....................... 2 1 1 1 1
Station audience share 4:00 p.m. to 8:00 p.m....................... 22 24 23 21 20
</TABLE>

KGW: PORTLAND, OREGON

Market Overview. Portland, Oregon ranks as the 24th largest DMA in the
nation, with approximately 933,400 television households in the DMA and a
population of approximately 2.5 million. Approximately 61% of Portland's
population subscribed to cable in 1995. The Portland market has experienced
rapid population growth since 1990 of 2.5% on a compound annual basis. Average
household EBI and average household retail sales in 1994 were $43,183 and
$24,028, respectively. Portland maintains a balanced economy with services,
wholesale/retail and manufacturing representing approximately 26%, 25% and 16%
of total employment, respectively. Major employers include such high-technology
companies such as Intel Corporation, Hewlett-Packard Company, Nike, Inc. and
Tektronix, Inc., as well as Kaiser Permanente, the United States Government and
the State of Oregon. The Company believes that the demographic characteristics
of the Portland DMA make it an excellent national test market. Consequently, the
Company believes that KGW derives incremental advertising revenues from
advertisers seeking to test market new products.

Station Performance and Strategy. KGW is the first-ranked station in the
Portland market with an audience share, sign-on to sign-off, of 17% as of May
1996. KGW is a news leader in its market with 28 hours

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<PAGE> 58

per week broadcast as compared to 25 and 21 hours per week for KGW's closest
competitors. The Station provides the only Saturday morning newscast in the
market. The Station has won numerous awards for news programming, including the
"Best News Program" awarded by the Associated Press for 1994. KGW is the only
station in the market to utilize a helicopter, which the Company believes
provides that Station's newscasts with a distinct brand awareness in the market.
In addition, the Station has 5 outdoor, robotically-controlled cameras mounted
at various locations in the market which provide live video footage of areas of
interest to viewers and are utilized during the weather sections of news
broadcasts. KGW is also under a five-year contract which expires in 2000 with
the Portland Trail Blazers basketball team to provide television coverage of 20
games per season and non-network playoff coverage. The Station's syndicated
programming includes "Live with Regis and Kathie Lee", "The Oprah Winfrey Show",
"Inside Edition" and "American Journal". KGW was first in terms of ratings in
May 1996 for "Live with Regis and Kathie Lee" and "The Oprah Winfrey Show". KGW
has been an NBC affiliate since 1959 and its current affiliation agreement
expires in 2001.

Television advertising revenues in the Portland area are estimated to have
grown approximately 4.8% from approximately $138.2 million in 1994 to $144.9
million in 1995. KGW is estimated to have received approximately 22.2% of 1995
revenues compared with 23.1% and 19.6% for its two closest competitors. During
1995, political advertising for KGW totaled $1.2 million, which represented 36%
of total estimated political advertising revenue in the market, compared with
approximately 30% and 25% for each of its two closest competitors.

KGW will shortly institute a free on-line service for its viewers which
provides such data as weather, a video tour of the Station, and links to other
on-line databases on the Internet. The Station has begun to solicit corporate
advertising as a way to subsidize the operating cost of this on-line service.

KGW participates in numerous community service sponsorships with local
corporations as a means to promote viewer awareness and philanthropy. In
conjunction with these programs, corporations underwrite KGW's production
expenses and purchase airtime. KGW has helped to increase awareness of a number
of civic programs and events, including anti-drug campaigns, environmental
awareness programs and toy drives. The Station has also received numerous awards
and recognition for its contributions to local schools and other learning
institutions.

Since 1993, KGW has made several investments in new technology such as
robotic cameras, weather graphics systems, and AVID digital equipment. KGW
expects to spend approximately $2.5 million in 1996 to complete the first phase
of the Station's conversion to AVID's digital equipment, purchase three
additional outdoor cameras and perform necessary equipment maintenance. The
Company believes that the conversion to digital production and editing will
improve operating efficiencies and reduce operating costs.

In order to extend its local franchise to viewers in its DMA and throughout
the northwest, KGW provides portions of its news broadcasts for use by NorthWest
Cable News in its programming.

<TABLE>
<CAPTION>
MARKET/STATION DATA
----------------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
KGW: PORTLAND, OREGON
Market revenue (in thousands)(1)................................... $111,800 $119,900 $119,100 $138,200 $144,900
Market revenue growth over prior period............................ -7.9% 7.2% -0.7% 16.0% 4.8%
Market rank (DMA).................................................. 27 27 27 27 25
Television homes (in thousands).................................... 821 846 868 890 920
Total commercial competitors in market............................. 6 6 5 7 8
Station rank in market 6:00 a.m. to 2:00 a.m....................... 1 3 3 3 2
Station audience share 6:00 a.m. to 2:00 a.m....................... 17 17 17 15 16
Station rank in market 4:00 p.m. to 8:00 p.m....................... 3 3 2 2 2
Station audience share 4:00 p.m. to 8:00 p.m....................... 15 15 17 17 16
</TABLE>

WCNC: CHARLOTTE, NORTH CAROLINA

Market Overview. Charlotte, North Carolina is the 28th largest DMA in the
nation, with approximately 802,000 television households and a population of
approximately 2.1 million. The Charlotte market is experiencing substantial
growth in population, retail sales and EBI. The Charlotte metropolitan area had
an

58
<PAGE> 59

average household EBI of approximately $41,154 in 1994, average household retail
sales of $22,056 in 1994 and experienced a 2.1% increase in the number of
households from 1990 to 1994. Following the textile-related recessions of the
1980s, Charlotte has diversified its employment base away from a substantial
dependence on the textile and apparel industry. Charlotte is one of the major
banking centers in the United States, serving as the headquarters of First Union
Corporation and NationsBank Corporation, with other important sectors in the
market including transportation, communications, wholesale trade, health care
and utilities. Charlotte had a low unemployment rate of 3.5% in 1995. Television
advertising revenue in the market has experienced significant growth and is
estimated to have been $118 million in 1995 and to have grown at a compound
annual rate of 6.8% from 1991 to 1995.

Station Performance and Strategy. As a UHF station competing against two
VHF stations and five other UHF stations in the Charlotte market, WCNC increased
its station audience share during 1991 through 1995 in comparison to the falling
audience share for the three network stations in the market in the aggregate for
the same period. As part of its positioning strategy, the Company negotiated
with most cable systems in the DMA to carry WCNC's signal on the cable channel 6
position, which improves its competitive position as compared to its off-air
channel 36 position. As a result, WCNC markets itself as NBC 6. Cable
penetration in the DMA is 66%, with 69% penetration in metropolitan Charlotte.
Mecklenburg County, in which Charlotte is located, has close to 76% cable
penetration. WCNC's local news coverage distinguishes the Station with
approximately 17 hours of local news broadcasts each week, with local news
broadcast at 5:00 p.m. through 6:30 p.m. and 11:00 p.m. through 11:35 p.m. on
weekdays and with Saturday and Sunday morning newscasts. The Station has begun
the conversion to the use of digital technology in the production of its
broadcasts and is deploying AVID equipment in the Station. The Company believes
the use of such technology and equipment will improve operating efficiencies and
reduce operating costs. The Station's inventory of syndicated programming
includes "Wheel of Fortune" and "Jeopardy". WCNC has been an NBC affiliate since
1978, and its current affiliation agreement expires in 2001.

<TABLE>
<CAPTION>
MARKET/STATION DATA
----------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
WCNC: CHARLOTTE, NORTH CAROLINA
Market revenue (in thousands)......................................... $91,000 $94,900 $94,500 $105,700 $118,100
Market revenue growth over prior period............................... 12.5% 4.3% -0.4% 11.9% 11.7%
Market rank (DMA)..................................................... 31 31 30 29 28
Television homes (in thousands)....................................... 734 745 759 775 794
Total commercial competitors in market................................ 5 6 6 6 8
Station rank in market 6:00 a.m. to 2:00 a.m.......................... 3 4 3 3 3
Station audience share 6:00 a.m. to 2:00 a.m.......................... 9 9 9 8 9
Station rank in market 4:00 p.m. to 8:00 p.m.......................... 4 4 4 5 3
Station audience share 4:00 p.m. to 8:00 p.m.......................... 7 8 7 8 9
</TABLE>

KASA: ALBUQUERQUE/SANTA FE, NEW MEXICO

Market Overview. KASA operates in the Albuquerque/Santa Fe market, the
48th largest DMA in the nation, with approximately 553,000 television households
and a population of approximately 1,571,000. Approximately 59% of the population
in the DMA subscribed to cable in 1995. The Albuquerque/Santa Fe market has had
an average growth in retail sales of 14.0% from 1993 to 1994. In 1994, the
market's average household EBI was $38,083. The Albuquerque/Santa Fe market has
attracted a growing number of high technology companies such as Intel
Corporation and is home to several research and military facilities such as Los
Alamos National Laboratories, Intel Corporation, Lockheed Technical Operations,
Honeywell, Inc. and Kirtland and Holloman Air Force Bases. Television
advertising revenue in the market has experienced significant growth, and is
estimated to have been $79 million in 1995 and to have grown at a compound
annual rate of 13.8% from 1991 to 1995.

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<PAGE> 60

Station Performance and Strategy. In April 1993, KASA converted from a UHF
station to a VHF station, putting KASA on a par with its other network
competitors. KASA's conversion to VHF and its concomitant signal expansion have
spurred a 54% growth in its revenue for 1995 as compared to 1993. KASA has
increased its overall revenue share by 12% since 1993. The Station's marketing
inventory of syndicated programming includes "The Simpsons", "Fresh Prince" and
"Roseanne". KASA has been a Fox affiliate since 1986 and its current affiliation
agreement expires in 1998.

<TABLE>
<CAPTION>
MARKET/STATION DATA
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
KASA: ALBUQUERQUE/SANTA FE, NEW MEXICO
Market revenue (in thousands)........................................... $47,100 $52,700 $57,700 $74,100 $79,000
Market revenue growth over prior period................................. -5.9% 11.9% 9.5% 28.4% 6.6%
Market rank (DMA)....................................................... 51 50 49 50 49
Television homes (in thousands)......................................... 517 512 522 530 541
Total commercial competitors in market.................................. 8 7 6 7 5
Station rank in market 6:00 a.m. to 2:00 a.m............................ 4 4 4 4 4
Station audience share 6:00 a.m. to 2:00 a.m............................ 6 6 8 8 9
Station rank in market 3:00 p.m. to 7:00 p.m............................ 4 4 4 4 4
Station audience share 3:00 p.m. to 7:00 p.m............................ 10 9 11 12 10
</TABLE>

WHAS: LOUISVILLE, KENTUCKY

Market Overview. Louisville, Kentucky is the 50th ranked DMA, with total
television households of approximately 543,000 and a total population of
approximately 1,438,000. Cable penetration in the DMA was 65% in 1995. Average
household EBI and average retail sales for the Louisville market in 1994 were
$41,673 and $21,680, respectively. Louisville's economy has been stable in
recent years, with unemployment for the region at 4.2% versus the national
average of 5.5%. The Louisville economy has a diverse employment base with 30.3%
of the workforce in the service sector, 23.2% in wholesale and retail trade,
17.8% in manufacturing, and the remainder in construction, transportation,
utilities, finance, real estate and the public sectors. Major employers in the
Louisville market include United Parcel Service of America, Inc., General
Electric Company, Ford Motor Company, Humana Inc., The Kroger Co., Columbia/HCA
Healthcare Corporation and PNC Bank Corp.

Station Performance and Strategy. WHAS is the market leader in Louisville,
with a 31% share of television revenues and a 23% audience share between sign-on
and sign-off as reported in the May, 1996 Nielsen Station Index. WHAS is
promoted as "Kentuckiana's News Channel", serving portions of Kentucky and
Indiana, and is ranked first in every revenue-critical news time period. The
Station currently originates approximately 31 hours of local programming per
week, compared to 26 and 22 hours originated by its two closest competitors.
WHAS's strategy is to maintain its leading position in the market by (i)
focusing on local programming, news and special events, (ii) providing
syndicated and locally-originated programming that receives high audience
ratings and (iii) extending the Station's strong local presence through
community service.

WHAS's syndicated programs include "Live with Regis and Kathie Lee", "The
Oprah Winfrey Show", "Coach" and "M*A*S*H*", all of which ranked as or were tied
for first place in their time periods in May, 1996. The Company believes that
WHAS's exclusive coverage of the Kentucky Derby each year is an important factor
in generating ratings and advertising in connection with the event and in terms
of developing audience loyalty to the Station. In 1996, WHAS broadcast 40 hours
of Kentucky Derby-related programming, which garnered substantial ratings and
audience share. During the actual race in 1996, audience share increased to 82%
in the DMA. This coverage includes live coverage of all races at Churchill Downs
on the day of the Kentucky Derby, as well as coverage of the Kentucky Oaks and
Triple Crown. The Station also successfully launched a Saturday morning news
program in 1991, which generated an audience share of 41% as reported in the
May, 1996 Nielsen Station Index. The Station has an exclusive contract with the
Kentucky State Lottery through 1999 which provides WHAS with an additional
revenue stream of approximately $1 million per year.

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<PAGE> 61

WHAS is also a leader in philanthropic activities, which serves to promote
viewer awareness and community service. The Station has also received numerous
awards and recognition for its contributions to local schools and learning
institutions.

Since 1994, WHAS has made several investments in new technology such as
robotic cameras, weather graphics systems, and AVID's digital equipment, which
the Company believes will improve operating efficiencies and reduce operating
costs.

<TABLE>
<CAPTION>
MARKET/STATION DATA
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
WHAS: LOUISVILLE, KENTUCKY
Market revenue (in thousands)........................................... $65,900 $66,900 $73,100 $74,600 $82,300
Market revenue growth over prior period................................. 1.5% 1.5% 9.3% 2.1% 10.3%
Market rank (DMA)....................................................... 50 49 50 49 50
Television homes (in thousands)......................................... 521 525 520 533 539
Total commercial competitors in market.................................. 5 5 5 5 6
Station rank in market 6:00 a.m. to 2:00 a.m............................ 2 2 2 2 1
Station audience share 6:00 a.m. to 2:00 a.m............................ 22 21 21 24 22
Station rank in market 4:00 p.m. to 8:00 p.m............................ 1 3 1 1 1
Station audience share 4:00 p.m. to 8:00 p.m............................ 24 21 24 28 26
</TABLE>

KHNL AND KFVE: HONOLULU, HAWAII

Market Overview. Honolulu, Hawaii is the 70th largest DMA in the United
States when ranked by number of television households, but is the 58th largest
DMA when ranked by television advertising revenues. The Honolulu DMA comprises
the entire State of Hawaii. The market has approximately 381,000 television
households and a total population of approximately 1.2 million. The market is of
above-average affluence with an average household EBI of $57,619 in 1994 as
compared to the national average of $45,937. Cable penetration in the Honolulu
DMA was 85% in 1995. Hawaii's chief employment sectors are tourism, retail,
services, finance, insurance, defense, and government. Leading employers include
the Department of the Navy, Hilton Hotels Corporation, Kaiser Corporation Health
Plan, Aloha Airlines, ITT Sheraton Hotels and Bancorp Hawaii Inc.

Station Performance and Strategy. On January 1, 1996, KHNL began a seven
year affiliation contract with NBC, propelling KHNL to the leading position
during prime time (7:00 p.m. to 10:00 p.m., Monday through Friday) with a 22.1%
share among adults ages 25 to 54 as compared to 14.9% for its closest
competitor. With this performance in prime time, KHNL outperformed the NBC
national prime time average. KHNL plans to capitalize on its strength in prime
time to promote continued growth in other broadcast time periods. Since its
first newscast aired in April 1995, now promoted as "NBC Hawaii News 8", the
KHNL news organization has evolved into a strong local news competitor. The
Station now produces four hours of local news daily and has gained market share
for every news broadcast category with its approach to newsgathering and
presentation and the only all-digital newsroom in Hawaii. KHNL won an Emmy award
for best newscast in 1995 in its region. KHNL's inventory of syndicated
programming includes "Ricki Lake", "Geraldo" and "Entertainment Tonight".

As a part of the Company's LMA strategy, the Company entered into an LMA
with KFVE in May 1993 which has expanded the Company's audience reach, market
revenue share, and combined ratings in the market. Under the LMA for KFVE, the
Company provides programming and marketing services pursuant to which the
Company receives all advertising revenues in exchange for funding the
programming and most operating costs. The Company is required to pay a
percentage of such revenues to KFVE (equal to approximately $748,000 in 1995).
KFVE is affiliated with UPN. In 1994, the Company transferred the broadcast of
University of Hawaii sporting events to KFVE. The current agreement expires in
May 1997 and the Company is currently negotiating a renewal of the agreement.
While the Company's owned and operated station, KHNL, and its LMA Station, KFVE,
have separate identities in the market among viewers, the Company believes there
are advantages to having two stations in the DMA and, at times, markets the two
stations together to advertisers. For example, KFVE's exclusive contract for the
University of Hawaii's sporting events provides KHNL with a promotional
opportunity for the newscasts of KHNL. In addition, as a

61
<PAGE> 62

result of the Company's marketing efforts, these two stations when calculated
together have garnered audience ratings and revenue shares that provide the
Company with additional strength in the market. For example, during prime time,
KFVE in May 1996 earned a 5.8% audience share among adults ages 25 to 54, in
addition to KHNL's leading market share of 22.1%. KFVE's inventory of syndicated
programming includes "The Simpsons", "Blossom", "Doogie Howser, M.D." and
"Coach".

<TABLE>
<CAPTION>
MARKET/STATION DATA
-------------------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
KHNL/KFVE: HONOLULU, HAWAII
Market revenue (in thousands)................................... $58,000 $60,800 $59,600 $67,600 $63,700
Market revenue growth over prior period......................... -4.0% 4.8% -2.0% 13.4% -5.8%
Market rank (DMA)............................................... 70 71 70 70 69
Television homes (in thousands)................................. 360 357 363 374 380
Total commercial competitors in market.......................... 7 7 6 8 8
Station rank in market 6:00 a.m. to 2:00 a.m.................... 3 3 3 3 2
Station audience share 6:00 a.m. to 2:00 a.m.................... 15 16 15 14 15
Station rank in market 4:00 p.m. to 8:00 p.m.................... * * * 4 4
Station audience share 4:00 p.m. to 8:00 p.m.................... * * * 14 14
</TABLE>

- ---------------

* Data not available for these years.

KREM: SPOKANE, WASHINGTON

Market Overview. KREM operates in the Spokane, Washington market, the 74th
largest DMA in the nation, with approximately 366,250 television households and
a population of 961,000. Cable penetration was 63% in 1995. The Spokane area had
an average household EBI of $37,781 in 1994, with average retail sales per
household of $21,762. EBI per household and retail sales grew 6.2% and 11.4%,
respectively, in 1994 from 1993. Spokane's largest employer is the Fairchild Air
Force Base and is not currently subject to closure. Other employers include
health care, manufacturing and high technology companies.

Station Performance and Strategy. KREM, a CBS affiliate, is the second
ranked station in the Spokane DMA, sign-on to sign-off, with an 18% household
share, compared to a 20% share for the number one station in the market. In the
local news category, KREM, branded as "Your News Leader for the Inland
Northwest", is the number one ranked news source for the Spokane area in the
majority of news periods. In the May 1996 Nielsen ratings, KREM was the number
two station in the market during the revenue critical 4:00 p.m. to 8:00 p.m.,
Monday through Friday, daypart with an audience share of 20%. KREM's news
excellence has earned the Station numerous awards including three Emmy Awards in
1994 and most recently the prestigious Polk award for the Best Local Reporting
in the country. In addition, the station's number one ranked "The Oprah Winfrey
Show" and the popular ranked "Seinfeld" and "The Simpsons" syndicated
programming are used by the Station to lead and follow KREM news programming.
KREM has been a CBS affiliate since 1977 and its affiliation agreement expires
in 1998. CBS is currently tied for the number one network in prime time in the
Spokane market.

In order to extend its local franchise to viewers in its DMA and throughout
the northwest, KREM provides portions of its news broadcasts for use by
NorthWest Cable News in its programming.

<TABLE>
<CAPTION>
MARKET/STATION DATA
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
KREM: SPOKANE, WASHINGTON
Market revenue (in thousands)........................................... $30,200 $34,100 $37,100 $43,600 $42,800
Market revenue growth over prior period................................. -0.3% 12.9% 8.8% 17.5% -1.8%
Market rank (DMA)(1).................................................... 78 80 79 78 75
Television homes (in thousands)......................................... * * 325 342 353
Total commercial competitors in market.................................. * * 4 4 4
Station rank in market 6:00 a.m. to 2:00 a.m............................ * * 1 1 2
Station audience share 6:00 a.m. to 2:00 a.m............................ * * 23 32 19
Station rank in market 4:00 p.m. to 8:00 p.m............................ 1 1 1 2 2
Station audience share 4:00 p.m. to 8:00 p.m............................ 24 24 25 22 21
</TABLE>

- ---------------

(1) Market rank (DMA) for 1991 and 1992 as reported by BIA.

* Data unavailable for these years.

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<PAGE> 63

KMSB AND KTTU: TUCSON/NOGALES, ARIZONA

Market Overview. Tucson, Arizona is the 80th largest DMA in the United
States when ranked by number of television households, but is the 67th largest
DMA when ranked by television advertising revenues. The market has approximately
344,000 television households and population of approximately 887,000. Cable
penetration was approximately 60% in 1995. Tucson's chief employers include
federal, state and local government, aerospace manufacturing, health and the
hospitality industry. The Tucson DMA had an average household EBI of $36,026 in
1994. In 1994, the Tucson market totaled approximately $7.6 billion in retail
sales. EBI per household and retail sales grew 5.8% and 8.4%, respectively, in
1994 from 1993.

Station Performance and Strategy. Acquired by the Company in 1985, KMSB
has been a Fox affiliate since 1987 and its current affiliation agreement
expires in 1998. As a part of the Company's LMA strategy, the Company entered
into an LMA with KTTU in 1991, which has expanded the Company's audience reach,
market revenue share, and combined ratings in the market. KTTU is affiliated
with UPN. Under this LMA, the Company provides programming and marketing
services pursuant to which the Company receives all advertising revenues in
exchange for funding the programming and most operating costs. The Company is
required to pay a fixed periodic fee (equal to approximately $420,000 in 1995)
to the owner of KTTU. While the Company's owned and operated Station, KMSB, and
its LMA Station, KTTU, have separate identities in the market among viewers, the
Company markets the two stations together to advertisers. The result of the
Company's marketing efforts is that these two stations when calculated together
have garnered audience ratings and revenue shares that frequently are on par
with or above certain of the three major networks. For example, KMSB and KTTU
taken together are tied for first place during the 5:00 p.m. to 7:00 p.m. Monday
through Friday daypart as measured among adults ages 18 to 49, an important
demographic group for advertisers. During prime time in the market (7:00 p.m. to
10:00 p.m., Monday through Saturday, 6:00 p.m. to 10:00 p.m., Sunday), KMSB and
KTTU together are ranked fourth in the market on a combined basis with a 14%
audience share behind the network affiliates. From sign-on to sign-off, KMSB and
KTTU taken together were in fourth place with 10% audience share, five share
points behind its closest competitor.

The Company believes that KMSB and KTTU produce local programming that is
attractive to viewers and advertisers on a cost-effective basis. The Stations'
inventory of syndicated programming includes, among other shows, "Home
Improvement", "The Simpsons", "Entertainment Tonight" and "Star Trek: The Next
Generation".

<TABLE>
<CAPTION>
MARKET/STATION DATA
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
KMSB/KTTU: TUCSON/NOGALES, ARIZONA
Market revenue (in thousands)........................................... $35,900 $37,000 $41,000 $51,300 $52,200
Market revenue growth over prior period................................. -3.2% 3.1% 10.8% 25.1% 1.8%
Market rank (DMA)....................................................... 81 81 81 81 81
Television homes (in thousands)......................................... 311 310 314 323 334
Total commercial competitors in market.................................. 5 6 6 6 6
Station rank in market 6:00 a.m. to 2:00 a.m............................ 4 4 4 4 4
Station audience share 6:00 a.m. to 2:00 a.m............................ 12 12 12 11 13
Station rank in market 3:00 p.m. to 7:00 p.m............................ 4 4 4 4 4
Station audience share 3:00 p.m. to 7:00 p.m............................ 16 13 12 13 12
</TABLE>

KTVB: BOISE, IDAHO

Market Overview. The Boise, Idaho market, the 127th largest DMA in the
nation, serves approximately 185,000 television households and a total
population of approximately 498,000. Cable penetration in the DMA was 54% in
1995. The Boise market has a diversified economy and serves as the seat of state
and local government. Several major national and international corporations are
headquartered in Boise. Among the companies that are headquartered in Boise are
Albertson's, Inc., Boise Cascade Corporation, Micron Technology, Inc. and the
J.R. Simplot Company. In addition, Hewlett-Packard has a large facility in
Boise. The Mountain Home Air Force Base in nearby Mountain Home, with its 4,000
military and civilian employees, adds further diversification to the market.
Other significant industries in the Boise market include high technology,
manufacturing, retail and wholesale trade, agriculture, timber products and
services industries. In 1994, the Boise market totaled approximately $4.7
billion in retail sales, with average household EBI of over $42,000 in 1994 and
average retail sales per household of $25,495. EBI per household and retail
sales grew 6.6% and 30.1%, respectively, in 1994 from 1993.

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<PAGE> 64

Station Performance and Strategy. KTVB, an NBC affiliate, is Boise's first
rated television station sign-on to sign-off, outranking its competition with
news ratings and audience shares double that of its closest competitor. In May
1996, five out of KTVB's six Monday to Friday newscasts had a market share
greater than 40%. An independent survey conducted by Frank N. Magid Associates
in January 1996 indicated that 59% of the viewers in the Boise market preferred
Channel 7's news programming to that of its competitors in the market. KTVB has
been an NBC affiliate since 1953 and its current affiliation agreement expires
in 2001.

The Station has an active public affairs schedule and community service
commitments with weekly viewpoint programs and quarterly town hall live
telecasts, including sponsorship and broadcast coverage of important local
events. The Station's news coverage and public service efforts have been
regularly recognized by local and regional awards from such organizations as the
Associated Press, the Idaho Press Club and the Idaho State Broadcasters
Association. The Station's inventory of syndicated programming includes "The
Oprah Winfrey Show" and "Entertainment Tonight".

In order to extend its local franchise to viewers in its DMA and throughout
the northwest, KTVB provides portions of its news broadcasts for use by
NorthWest Cable News in its programming.

<TABLE>
<CAPTION>
MARKET/STATION DATA
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
KTVB: BOISE, IDAHO
Market revenue (in thousands)........................................... $17,300 $18,400 $20,100 $25,000 $26,000
Market revenue growth over prior period................................. -3.3% 6.4% 9.2% 24.4% 4.0%
Market rank (DMA)(1).................................................... 136 142 135 131 125
Television homes (in thousands)......................................... * * 158 168 177
Total commercial competitors in market.................................. * * 4 4 5
Station rank in market 6:00 a.m. to 2:00 a.m............................ * * 1 2 1
Station audience share 6:00 a.m. to 2:00 a.m............................ * * 27 22 24
Station rank in market 3:00 p.m. to 7:00 p.m............................ 1 1 1 1 1
Station audience share 3:00 p.m. to 7:00 p.m............................ 31 34 37 36 37
</TABLE>

- ---------------

(1) Market rank (DMA) for 1991 and 1992 as reported by BIA.

* Data unavailable for these years.

NETWORK AFFILIATION AGREEMENTS AND RELATIONSHIPS. Each of the Stations is
a party to an affiliation agreement with one of the four major networks giving
the Station the right to rebroadcast programs transmitted by such network. The
affiliation agreement for each of the NBC Stations expires in 2001 (except for
the affiliation agreement for KHNL, which expires in 2002), while such
agreements for each of the ABC, CBS and Fox Stations expire in 2000, 1998 and
1998, respectively. Each network has the right to terminate its respective
affiliation agreement in the event of a material breach of such agreement by a
Station and in certain other circumstances. Although the Company expects to
continue to be able to renew its network affiliation agreements no assurance can
be given that such renewals will be obtained. The non-renewal or termination of
one or more of the Stations' affiliation agreements could have a material
adverse effect on the Company's results of operations. See "Risk
Factors -- Reliance on Network Programming; Dependence on Network Affiliation".

INDUSTRY BACKGROUND. Commercial television broadcasting began in the
United States on a regular basis in the 1940s. There are a limited number of
channels available for broadcasting in any one geographic area, and the license
to operate a television station is granted by the FCC. Television stations that
broadcast over the VHF band (channels 2-13) of the spectrum generally have some
competitive advantage over television stations that broadcast over the UHF band
(channels above 13) of the spectrum because VHF channels usually have better
signal coverage and operate at a lower transmission cost. However, the
improvement of UHF transmitters and receivers, the complete elimination from the
marketplace of VHF-only television receivers and the expansion of cable
television systems have reduced the competitive advantage of television stations
broadcasting over the VHF band.

Television station revenues are primarily derived from local, regional and
national advertising and, to a much lesser extent, from network compensation and
revenues from studio rental and commercial production

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activities. Because broadcast television stations rely on advertising revenues,
they are sensitive to cyclical changes in the economy. The size of advertisers'
budgets, which are affected by broad economic trends, affect the broadcast
industry in general and the revenues of individual broadcast television
stations.

Television stations in the country are grouped by Nielsen into
approximately 210 generally recognized television markets that are ranked in
size according to various formulae based upon actual or potential audience. Each
market is designated as an exclusive geographic area consisting of all counties
in which the home-market commercial stations receive the greatest percentage of
total viewing hours.

Nielsen, which provides audience measuring services, periodically publishes
data on estimated audiences for television stations in the various television
markets throughout the country. These estimates are expressed in terms of the
percentage of the total potential audience in the market viewing a station (the
station's "rating") and of the percentage of the audience actually watching
television (the station's "share"). Nielsen provides such data on the basis of
total television households and selected demographic groupings in the market.
The specific geographic markets are called DMAs. Nielsen uses two methods of
determining a station's rating and share. In larger geographic markets, ratings
are determined by a combination of meters connected directly to selected
television sets and weekly viewer-completed diaries of television viewing, while
in smaller markets, ratings are determined by weekly diaries only. Of the
markets in which the Company conducts its business, three are metered markets
while the remaining markets are weekly diary markets.

Historically, three major broadcast networks, NBC, ABC and CBS, dominated
broadcast television. In recent years, Fox has effectively evolved into the
fourth major network, although the hours of network programming produced by Fox
for its affiliates are fewer than those produced by the other three major
networks. In addition, UPN and WB recently have been launched as new television
networks.

The affiliation by a television station with one of the four major networks
has a significant impact on the composition of the station's programming,
revenues, expenses and operations. A typical affiliated station receives
approximately 9 to 10 hours of each day's programming from the network. This
programming, along with cash payments ("network compensation"), is provided to
the affiliate by the network in exchange for a substantial majority of the
advertising time sold during the airing of network programs. The network then
sells this advertising time for its own account. The affiliate retains the
revenues from time sold during breaks in and between network programs and during
programs produced by the affiliate or purchased from non-network sources. In
acquiring programming to supplement network programming, network affiliates
compete primarily with other affiliates and independent stations in their
markets. Cable systems generally do not compete with local stations for
programming, although various national cable networks from time to time have
acquired programs that would otherwise have been offered to local television
stations. In addition, a television station may acquire programming through
bartering arrangements. Under such arrangements, which are becoming increasingly
popular with both network affiliates and independents, a national program
distributor may receive advertising time in exchange for the programming it
supplies, with the station paying no fee or a reduced fee for such programming.

An affiliate of UPN or WB receives a smaller portion of each day's
programming from its network compared to an affiliate of NBC, ABC, CBS or Fox.
Currently, UPN and WB provide six and two hours of programming per day to their
affiliates, respectively. As a result of the smaller amount of programming
provided by their networks, affiliates of UPN or WB must purchase or produce a
greater amount of their programming, resulting in generally higher programming
costs. These stations, however, retain a larger portion of the inventory of
advertising time and the revenues obtained therefrom than stations affiliated
with the major networks, which may partially offset their higher programming
costs.

In contrast to a network-affiliated station, an independent station
purchases or produces all of the programming that it broadcasts, generally
resulting in higher programming costs, although the independent station is, in
theory, able to retain its entire inventory of advertising time and all of the
revenue obtained from the sale of such time. Barter and cash-plus-barter
arrangements, however, have become increasingly popular among all stations.

Broadcast television stations compete for advertising revenues primarily
with other broadcast television stations and, to a lesser extent, with radio
stations, cable system operators and programmers and newspapers serving the same
market. Traditional network programming, and recently Fox programming, generally

65
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achieves higher audience levels than syndicated programs aired by independent
stations. However, as greater amounts of advertising time become available for
sale by independent stations and Fox affiliates in syndicated programs, those
stations typically achieve a share of the television market advertising revenues
greater than their share of the market's audience.

Through the 1970s, network television broadcasting enjoyed virtual
dominance in viewership and television advertising revenues because
network-affiliated stations only competed with each other in local markets.
Beginning in the 1980s, this level of dominance began to change as the FCC
authorized more local stations and marketplace choices expanded with the growth
of independent stations and cable television services.

Cable television systems were first installed in significant numbers in the
1970s and were initially used to retransmit broadcast television programming to
paying subscribers in areas with poor broadcast signal reception. In the
aggregate, cable-originated programming has emerged as a significant competitor
for viewers of broadcast television programming, although no single cable
programming network regularly attains audience levels amounting to more than a
small fraction of any of the major broadcast networks. The advertising share of
cable networks increased during the 1970s and 1980s as a result of the growth in
cable penetration (the percentage of television households that are connected to
a cable system). Notwithstanding such increases in cable viewership and
advertising, over-the-air broadcasting remains the dominant distribution system
for mass market television advertising.

The Company believes that the market shares of television stations
affiliated with NBC, ABC and CBS declined during the 1980s primarily because of
the emergence of Fox and certain strong independent stations and secondarily
because of increased cable penetration. Independent stations have emerged as
viable competitors for television viewership share, particularly as a result of
the availability of first-run, network-quality programming. In addition, there
has been substantial growth in the number of home satellite dish receivers and
video cassette recorders, which has further expanded the number of programming
alternatives available to household audiences.

Further advances in technology may increase competition for household
audiences and advertisers. Video compression techniques, now in use with direct
broadcast satellites and in development for cable and wireless cable, are
expected to permit greater numbers of channels to be carried with existing
bandwidth. These compression techniques, as well as other technological
developments, are applicable to all video delivery systems, including
over-the-air broadcasting, and have the potential to provide vastly expanded
programming to highly targeted audiences. Reduction in the cost of creating
additional channel capacity could lower entry barriers for new channels and
encourage the development of increasingly specialized niche programming. This
ability to reach very narrowly defined audiences is expected to alter the
competitive dynamics for advertising expenditures. The Company is unable to
predict the effect that technological changes will have on the broadcast
television industry or the future results of the Company's operations.

COMPETITION. Competition in the television industry, including each of the
markets in which the Stations and the LMA Stations compete, takes place on
several levels: competition for audience, competition for programming (including
news) and competition for advertisers. Additional factors material to a
television station's competitive position include signal coverage and assigned
frequency. The television broadcasting industry is continually faced with
technological change and innovation, the possible rise in popularity of
competing entertainment and communications media and governmental restrictions
or actions of federal regulatory bodies, including the FCC and the Federal Trade
Commission, any of which could have a material effect on the Broadcasting
Business.

Audience. The Stations compete for audience on the basis of program
popularity, which has a direct effect on advertising rates. A majority of the
daily programming on the Stations is supplied by the network with which each
Station is affiliated. In those periods, the Stations are totally dependent upon
the performance of the network programs in attracting viewers. Each Station
competes in non-network time periods based on the performance of its programming
during such time periods, using a combination of self-produced news, public
affairs and other entertainment programming, including news and syndicated
programs, that such Station believes will be attractive to viewers.

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The Stations compete for television viewership share against local
network-affiliated and independent stations, as well as against cable and
alternate methods of television transmission. These other transmission methods
can increase competition for a Station by bringing into its market distant
broadcasting signals not otherwise available to the Station's audience and also
by serving as a distribution system for non-broadcast programming originated on
the cable system. Historically, cable operators have not sought to compete with
broadcast stations for a share of the local news audience. To the extent cable
operators elect to do so, their increased competition for local news audiences
could have an adverse effect on the Company's advertising revenues.

Other sources of competition for the Stations include home entertainment
systems (including video cassette recorder and playback systems, videodiscs and
television game devices), multipoint distribution systems, multichannel
multipoint distribution systems, wireless cable, satellite master antenna
television systems, and some low power, in-home satellite services. The Stations
also face competition from high-powered direct broadcast satellite services,
such as DIRECT-TV, which transmit programming directly to homes equipped with
special receiving antennas or to cable television systems for transmission to
their subscribers. The Company competes with these sources of competition both
on the basis of service and product performance (quality of reception and number
of channels that may be offered) and price (the relative cost to utilize these
systems compared to television viewing).

Programming. Competition for non-network programming involves negotiating
with national program distributors or syndicators which sell first-run and rerun
packages of programming. The Stations compete against in-market broadcast
station competitors for exclusive access to off-network reruns (such as "Home
Improvement") and first-run product (such as "The Oprah Winfrey Show") for
exclusive access to those programs. Cable systems generally do not compete with
local stations for programming, although various national cable networks from
time to time have acquired programs that would have otherwise been offered to
local television stations. Competition for exclusive news stories and features
is also endemic to the television industry. Such competition is generally on the
basis of price.

Advertising. Advertising rates are based upon the size of the market in
which the Station operates, a program's popularity among the viewers an
advertiser wishes to attract, the number of advertisers competing for the
available time, the demographic makeup of the market served by the Station, the
availability of alternative advertising media in the market area, aggressive and
knowledgeable sales forces and the development of projects, features and
programs that tie advertiser messages to programming. Advertising rates are also
determined by a Station's overall ability to attract viewers in its market, as
well as the Station's ability to attract viewers among particular demographic
groups that an advertiser may be targeting. The Stations compete for advertising
revenues with other television stations in their respective markets, as well as
with other advertising media, such as newspapers, radio, magazines, outdoor
advertising, transit advertising, yellow page directories, direct mail and local
cable systems. Competition for advertising dollars in the broadcasting industry
occurs primarily within individual markets on the basis of the above factors as
well as on the basis of advertising rates charged by competitors. Generally, a
television broadcasting station in the market does not compete with stations in
other market areas. The Stations are located in highly competitive markets.

PUBLISHING

OVERVIEW. The Providence Journal is the leading newspaper in terms of
advertising and circulation in its market of Rhode Island and southeastern
Massachusetts. Average daily circulation levels for the three months ended March
31, 1996 following the Newspaper Consolidation in June, 1995 were approximately
169,500 for circulation Monday through Saturday and 251,300 for circulation on
Sunday. According to a Belden Associates study, an average of approximately 58%
and 69% of the 929,000 total adults in the market surveyed in the fourth quarter
of 1995 read the daily Providence Journal-Bulletinand The Providence Sunday
Journal, respectively, on a daily basis. In addition, according to this study,
an average of approximately 77% and 87% of adults in the market who read any
newspaper read the daily Providence Journal-Bulletin and The Providence Sunday
Journal, respectively, on a daily basis. The Company believes that the
Providence Journal, published daily since 1829, is the oldest continuously
published daily newspaper in the United States. The Providence

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Journal has received numerous awards over the years for its local and national
coverage, including its fourth Pulitzer Prize in 1994.

The Publishing Business generated approximately $128.5 million and $30.1
million in revenues in 1995 and for the three months ended March 31, 1996,
respectively, or 41.1% and 40.1%, respectively, of consolidated operating
revenues. Publishing EBITDA was $14.8 million and $2.7 million in 1995 and for
the three months ended March 31, 1996, respectively, which represented 18.7% and
18.2%, respectively, of the Company's EBITDA excluding programming and
electronic media and corporate expenses.

The Company's business and operating strategy for the Publishing Business
includes the following key elements:

ENHANCE STRONG LOCAL NEWS FRANCHISE. The Company has the largest local
news gathering resources in its Rhode Island and southeastern Massachusetts
market and, as a result, the Providence Journal provides high quality, local
news and information that effectively serves its readers. The Company emphasizes
a local focus in virtually every section of the Providence Journal with a
commitment to editorial excellence that has earned it a high degree of reader
loyalty and market penetration. The Providence Journal regularly features the
following sections, among others, in which articles concerning local issues are
published: Main News, Rhode Island, Suburban, Sports, Business, Lifebeat, Food,
Hers, Travel/Society, Your Home and Classified. In order to reach and attract
readers more effectively, the Company in 1995 began publishing more extensive
regional sections in the Providence Journal that targeted the news and
information needs of readers in seven geographic zones of its market. The
Company is committing significant resources to these local sections, with 82
full-time equivalent newsroom employees out of a total of 295 focusing on news
gathering for these sections. As a result of the Company's strategies to
emphasize regionally-zoned news and information sections and to control
operating costs, on June 5, 1995, the Company completed the Newspaper
Consolidation in order to reallocate personnel to the regional editions and to
reduce operating costs. A portion of the total annual savings is being used to
enhance local news coverage.

REORGANIZE SALES FORCE TO INCREASE CUSTOMER FOCUS. The Company emphasizes
a targeted approach to its advertisers and has recently begun a reorganization
of its sales force in an attempt to enhance its effectiveness in attracting
advertising revenues and increasing EBITDA. Salespeople will be grouped in teams
that are focused on categories of advertisers rather than on types of
advertisements, as had been the Company's previous practice. For example, the
Providence Journal will have teams of sales people focused on automobile
dealers, professional services firms, national chains, travel companies, and
help wanted advertisers, among other categories. The Company also intends to
institute a new performance-based incentive compensation plan for its
salespeople which will reward employees based on their contribution to EBITDA
rather than to revenues. The Company believes that this reorganization, which it
has entitled "World Class," will enable its sales force to better identify sales
opportunities, be more responsive to advertiser needs, and operate more cost
effectively.

REDUCE OPERATING COSTS. The Company attempts to closely monitor expenses
in its Publishing Business to control costs without sacrificing revenue
opportunities. The Company seeks to reduce labor costs through investment in
modern production equipment and the consolidation of operations and
administrative activities. As a result of the Newspaper Consolidation, annual
savings are estimated to be approximately $4 million. In an effort to reduce
labor costs, the Company recently reorganized the staffing of the Providence
Journal in the Newspaper Restructuring and offered retirement and voluntary
separation packages to employees. As a result of personnel reductions achieved
through these plans, the Company estimates that it will realize cost savings of
approximately $6 million per year. In addition, the Company seeks to realize
cost savings through emphasizing increased accountability for performance by its
employees. The Company has also made efforts to reduce its newsprint costs,
which in 1995 accounted for 18.9% of the Publishing Business' operating and

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administrative expenses and 8.7% of the Company's consolidated operating and
administrative expenses. The Company has reduced the number of suppliers and
entered into contracts with these suppliers resulting in favorable pricing and
continuity of supply. The Company's cost control initiatives have included
aggressive conservation efforts, including reducing the page width of the
newspaper and strict control of newspaper waste.

INCREASE REVENUES THROUGH RELATED PRODUCTS. The Publishing Business has
developed a number of fax-on-demand services providing material ranging from old
Providence Journal newspaper articles to current information on sports, weather
and other subjects of general interest. The Publishing Business has also
developed and expanded Journal Line, a voice information service that provides
pre-recorded information in a variety of categories, including stock quotes,
weather forecasts and sports scores; the New England Wire Service, that
electronically provides editorial content to area newspapers; and Journal
Telemarketing, a telemarketing sales division providing services to a range of
customers. These products and services seek to exploit the additional potential
of the strong local brand recognition of the Providence Journal. As part of its
strategy to increase revenue and EBITDA, the Company anticipates introducing
additional services in the future.

MARKET OVERVIEW. The Providence Journal market area includes the entire
state of Rhode Island as well as southeastern Massachusetts, an area that
includes approximately 458,000 households and a population of 1.2 million. In
the market area, 34% of the adults are college graduates compared to only 20% of
all adults in the United States. Median household income for the market was
$38,000 in 1995, which exceeded the national average by over $4,000. Retail
sales in the market grew by 5% from 1990 through 1994 to reach total retail
sales in 1994 of $9.8 billion.

The economy of Providence Journal's market is comprised of a diversified
industrial base, banking, educational institutions, financial services industry,
health care and tourism. Major employers in the market include the state and
federal government, the Diocese of Providence, Rhode Island Hospital, Texas
Instruments Incorporated, Fleet Financial Group, Inc., General Dynamics, and
Hasbro, Inc.

SOURCES OF REVENUE. Substantially all of the Company's Publishing revenue
is derived from advertising and circulation, with lesser amounts derived from
electronic publishing, telemarketing and other sources. The following table sets
forth the sources and amounts of the Company's Publishing revenue for the years
ended December 31, 1993, 1994 and 1995 and the three months ended March 31,
1996:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------- THREE MONTHS
ENDED
1993 1994 1995 MARCH 31, 1996
---------------- ---------------- ---------------- ---------------
SOURCE OF REVENUE AMOUNT % AMOUNT % AMOUNT % AMOUNT %
- ------------------------ -------- ----- -------- ----- -------- ----- ------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Newspaper Advertising:
Retail................ $ 57,935 46.4% $ 58,880 46.0% $ 56,795 44.2% $12,678 42.1%
Classified............ 26,465 21.2 27,764 21.7 29,006 22.6 7,086 23.5
General............... 8,687 7.0 8,435 6.6 7,870 6.1 1,783 5.9
Circulation............. 31,028 24.8 30,888 24.2 32,151 25.0 8,139 27.0
Development
(New Ventures)........ 799 0.6 1,926 1.5 2,669 2.1 439 1.5
-------- ------ -------- ------ -------- ------ -------- ------
Total......... $124,914 100.0% $127,893 100.0% $128,491 100.0% $30,125 100.0%
======== ====== ======== ====== ======== ====== ======== ======
</TABLE>

NEWSPAPER ADVERTISING. Approximately 72.9% and 71.5% of the Providence
Journal's 1995 and first quarter 1996 revenues, respectively, were derived from
the sale of advertising (historically between 70% and 80% of the Providence
Journal's revenues). Retail advertising appears throughout the Providence
Journal and consists of display advertising from local merchants, such as
grocery and department stores, and national retail advertisers that have local
outlets. Classified advertising consists of display and text advertisements
which are listed together in sequence by the nature of the advertisement, such
as automobile, employment and real estate and appear in the classified section
of the Providence Journal. National advertising is comprised of advertisements
from national distributors and manufacturers that appear throughout the
Providence Journal.

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The Providence Journal also contains preprinted advertisements that are provided
to the Providence Journal for distribution both in the Providence Journal and at
times through the mail. Preprint advertising revenue is derived primarily from
retail and national advertisers and accounted for approximately 20% of the total
Providence Journal advertising revenue in 1995.

The Providence Journal increased advertising rates for most major
categories of retail and classified advertising by at least 3% in each of 1993,
1994 and 1995.

CIRCULATION AND PRICING. The following table shows the average net paid
daily, Saturday and Sunday circulation of the Providence Journal for the 52
weeks ended on the last Sunday in March in each of the years 1991 through 1994,
as reported by the Audit Bureau of Circulation (the "Audit Bureau"), an
independent agency that audits the circulation of most U.S. newspapers and
magazines on an annual basis. To coincide with the Newspaper Consolidation, the
auditing cycle at the "Audit Bureau" was changed to July 2, 1995, a 53-week
period.

AVERAGE NET PAID CIRCULATION

<TABLE>
<CAPTION>
52 WEEKS ENDED DAILY SATURDAY SUNDAY
------------------------------------------------------ -------- -------- --------
<S> <C> <C> <C>
March 31, 1991........................................ 202,200 188,900 265,000
March 29, 1992........................................ 197,100 186,400 268,100
March 28, 1993........................................ 192,500 182,700 269,100
March 27, 1994........................................ 188,200 179,600 268,800
July 2, 1995.......................................... 184,100 177,000 264,300
</TABLE>

The above numbers are before the Newspaper Consolidation of the morning and
afternoon newspapers. Circulation levels as calculated by management for the
three months ended March 31, 1996 were approximately 169,500 for daily
circulation and 251,300 for Sunday circulation. Following the Newspaper
Consolidation, management is currently making efforts to increase the
circulation of the Providence Journal with emphasis on the local news and
information provided in the seven regionally zoned sections of the newspaper.
There can be no assurances, however, that circulation will increase as a result
of these efforts.

PRODUCTION AND RAW MATERIALS. In 1987, the Company began operations at its
newly-constructed newspaper flexographic printing and distribution plant in
Providence, Rhode Island. The use of flexography, a water-based printing
process, improves printing quality and prevents newspaper ink from rubbing off
onto the reader's hands. The facility is also equipped with computer
control-driven systems, which shut down presses within five copies of the
specified production number, thereby significantly reducing the number of
unusable copies.

Newsprint costs, which are the largest component of direct expenses, have
in recent years accounted for between 13.0% and 19.3% of the Publishing
Business' total operating and administrative expenses. In 1995 and the first
quarter of 1996, the Providence Journal incurred total newsprint costs of $21.5
million and $5.3 million, respectively, or 18.9% and 19.3% of total Publishing
Business operating and administrative expenses, respectively, and 8.7% and 8.0%
of the Company's operating and administrative expenses, respectively, and used
approximately 33,000 and 7,000 metric tons of newsprint, respectively. The
Company reduced the number of newsprint suppliers to five from eight in 1992 and
has entered into contracts with these suppliers resulting in favorable pricing
and continuity of supply. The Providence Journal currently receives modest
discounts off list price for newsprint supplies. Additional cost savings have
been achieved by the implementation of quality controls. Although the Company's
newsprint costs increased approximately 45% per metric ton in 1995, recently the
major newsprint producers announced a withdrawal of their previously planned
price increase. The Company has implemented measures in an attempt to offset the
impact of future increases in newsprint prices, such as reducing the page width
of the newspaper and strict control of newspaper waste. Any such future
increases could have an adverse effect on the Company's results of operations.

COMPETITION. The Providence Journal has five daily newspaper competitors
in Rhode Island: The Times (Pawtucket, RI), Woonsocket Call, Daily News
(Newport, RI), Westerly Sun, and Kent County Daily Times, each with net paid
circulation levels under 20,000 in Rhode Island. The Providence Journal also
encounters

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competition in varying degrees from Boston and other Massachusetts newspapers,
nationally circulated newspapers, television, radio, magazines, electronic
publishing services, and other advertising media, including direct mail
advertising and yellow pages. The competition from electronic information
services may be increased in the future as a result of the Telecommunications
Act, which allows the Regional Bell Holding Companies to provide such services,
subject to certain safeguards. The Providence Journal competes for readership
primarily on the basis of local news content and, to a lesser extent, on the
basis of the price charged for its daily and Sunday newspapers. The Providence
Journal competes for advertising revenue based on its readership levels and its
ability to provide quality display and classified advertising at a competitive
price.

NEWSPAPER INDUSTRY BACKGROUND. Newspaper publishing is the oldest and
largest segment of the media industry, with total advertising expenditures on
daily and weekly newspapers reported at $36.0 billion in 1995 according to the
Newspaper Association of America (the "NAA"). Due to a focus on local news,
newspapers remain the dominant medium for local advertising and in 1995,
accounted for more than 48.0% of all local media advertising expenditures
according to the NAA. In addition, newspapers continue to be the preferred
medium for retail advertising that emphasizes the price of goods, in contrast to
television which is generally used for image advertising.

Advertising and, to a lesser extent, circulation, revenues are cyclical and
dependent upon general economic conditions. Historically, increases in
advertising revenues have corresponded with economic recoveries while decreases,
as well as changes in the mix of advertising, have corresponded with general
economic downturns and regional and local economic recessions.

The State of Rhode Island has enacted legislation concerning the percentage
of recycled content of newsprint which must be contained in the Providence
Journal. For 1996, at least 22% of the Company's annual usage of newsprint must
consist of recycled content. Such percentage increases to 31% and 40% in 1998
and 2001, respectively. The Rhode Island law does not require such minimum
quantities in the event the price of recycled materials is more expensive than
virgin newsprint or if recycled materials are not readily available for use by
the Providence Journal. The Company is currently in compliance and intends to
use its best efforts to comply with this law in the future.

PROGRAMMING AND ELECTRONIC MEDIA

OVERVIEW. The Company produces cable television and satellite network
programming and interactive and on-line electronic media services through its
management role or ownership interest in a variety of content-driven
entertainment and information businesses. The Company's approach to development
of programming and interactive opportunities is to invest in or manage
businesses that are extensions of its experience in the production of
programming content or build on existing media franchises.

BUSINESS AND OPERATING STRATEGY

LEVERAGE EXISTING EXPERTISE IN PROGRAMMING AND OTHER CONTENT
DEPLOYMENT. Through its primary businesses in television broadcasting and
newspaper publishing, the Company believes that it has developed expertise in
creating entertaining informational programming and editorial content. The
Company has invested in and operates certain businesses, such as the Television
Food Network, America's Health Network and NorthWest Cable News, that capitalize
on the Company's experience in this regard. As additional opportunities arise,
the Company expects to review such projects and pursue such opportunities that
best exploit or extend the capabilities of existing talent and resources.

EMPHASIZE PROGRAMMING TOPICS WITH BROAD APPEAL. The Company's strategy in
its programming businesses is to develop cable and satellite programming
networks, such as the Television Food Network, America's Health Network and
NorthWest Cable News, and broadcast programming content based on topics or
themes that the Company believes are of importance to a broad audience of
potential viewers. The Company believes that the focus of these investments on
food, health, and local news is attractive to cable television subscribers. As
the Company reviews additional opportunities, it plans to invest in such
ventures that it believes have broad audience appeal.

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EXTEND AND ENHANCE EXISTING BRANDS AND CONTENT. The Company's strategy in
developing cable and satellite network programming and interactive and on-line
electronic media products, has been to create products and approaches that are
closely related to the Company's existing brands and franchises. For example,
NorthWest Cable News builds on the leading local news franchise of, and uses
some of the programming resources available to, the Stations in Washington,
Oregon and Idaho. In addition, Rhode Island Horizons, an on-line service,
presents news, features and advertising displayed in the Providence Journal.
Moreover, the Company maintains the right to link its investment in Peapod, an
interactive grocery shopping service, to the operations of its Stations and
cable television networks, including the Television Food Network. The Company
also believes that the success of these ventures will serve to enhance the
Company's existing broadcast and newspaper properties.

MINIMIZE RISK THROUGH STAGED INVESTMENTS IN NEW OPPORTUNITIES. The Company
attempts to take a staged approach to investing in start-up ventures by
committing financial and managerial resources incrementally. The Company has
initially provided its portion of the capital required to commence operations of
a venture and has increased its investment and its managerial role at certain
milestones in the businesses' development. Such milestones are dependent on the
nature of the start-up business, but include identifying promising concepts,
commissioning market research, establishing strategic relationship with other
investors, negotiating contractual arrangements with key suppliers and
evaluating early-stage financial results of specific projects.

CABLE AND SATELLITE TELEVISION PROGRAMMING.

The Company continually reviews opportunities to participate in the
creation and development of new cable and satellite television programming
services. The Company seeks to enter into partnerships and other relationships
with companies or individuals having specialized expertise with regard to the
content of the programming. The Company's practice is to play the leading role
in the formation and management of the services and to increase its ownership
interest when appropriate.

TELEVISION FOOD NETWORK. As of March 31, 1996, the Company controlled a
24% interest in TVFN. TVFN, a general partnership consisting of eight media
companies with cable television and/or programming holdings, was formed
specifically to own and operate the Television Food Network, a 24-hour
advertising-supported cable and satellite network service that provides
television programming related to the preparation, enjoyment and consumption of
food, as well as programs focusing on nutrition and topical news areas. The
Television Food Network is distributed predominately through cable television
operators to approximately 16.5 million subscribers throughout the United
States. The Company is the managing general partner of the managing partner of
TVFN and has invested approximately $17.7 million in TVFN through March 31,
1996. In addition, on May 14, 1996, the Company purchased the equity partnership
interests held by Landmark and Scripps, two of the partners of TVFN, for
respective purchase prices of approximately $12.7 million and $11.4 million.
Prior to such purchase, Landmark and Scripps each owned a 10.8% and 9.7% general
partnership interest in TVFN. The agreements with each of Landmark and Scripps
contain covenants by such parties not to compete with TVFN and its affiliates
for a period of one year following such purchase. Following such purchases, the
Company holds 46% of the TVFN partnership interests and controls three of the
five votes on the TVFN management committee. As a result of such purchases, TVFN
became a controlled subsidiary of the Company and effective May 14, 1996, was
consolidated into the Company's results of operations. The Company is continuing
to negotiate with a third partner for the purchase of that partner's TVFN
interest. If this negotiation is successfully concluded, the Company would
directly or indirectly hold 55% of the TVFN partnership interests and would
control four of the five votes on the TVFN management committee.

Currently, the Television Food Network is the only 24-hour a day cable
channel dedicated solely to broadcasting food-related programming. As a result,
the Company believes that the Television Food Network has a unique opportunity
to establish a leading brand name in a variety of media relating to food and its
preparation. The Television Food Network's production operation enables the
Television Food Network to produce the vast majority of its programming in
27,282 square feet of office space in New York City.

The Television Food Network generated net revenues of $6.7 million in 1995,
up $4.7 million from 1994. The Television Food Network's subscriber base grew
57% in 1995 to approximately 15.5 million from 9.9 million at year end 1994. At
present, the Television Food Network has distribution agreements with 35 of the
top 50 cable television multiple system operators ("MSOs") and is carried in 33
of the top 50 cable systems in

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the United States. The network is currently available at no charge to MSOs that
place the Television Food Network on a basic or expanded service level; however,
due to the changing programming marketplace, the Television Food Network will
begin to institute subscriber fees along with enhanced marketing support in
1996. The Television Food Network believes that this initiative as well as the
introduction of several on-air direct merchandising projects will become major
sources of revenue for the network over the next five years.

The Company believes that the quality of the Television Food Network's
programming has generated strong ratings in comparison to other cable television
networks. While the Company believes the network has broad appeal, the
Television Food Network's strategy is to produce programming to reach a target
audience of women, particularly young and working women, in order to attract
advertisers. Advertisers generally consider women ages 25 to 54 to be one of the
most economically attractive demographic groups. The network's audience
composition is favorable due to its high percentage of working women. As a
result, the Company is better able to charge advertisers premium rates to reach
this favorable demographic group. The Television Food Network ranks as number 17
out of the 28 major cable and satellite programming networks in terms of the
amount of time per week its viewers spend viewing the channel. Further, the
Company believes that the Television Food Network viewers are highly interactive
with the network as demonstrated by the approximately 2,500 letters per day it
receives requesting recipes, critiquing the network, and writing to chefs and
hosts. Since its inception in March 1996, the Television Food Network Internet
site (http://www.foodtv.com) has averaged over 4,000 visits per day. These
contacts have contributed to the Television Food Network's growing database of
over 250,000 unduplicated names.

A significant part of the network's strategy going forward is to tap into
what the Company believes is the high interest and involvement of its viewers by
creating and marketing merchandise related to the network, its programs and its
talent. In 1996, the Television Food Network will introduce several on-air
direct merchandising projects which allow the network to share in the revenues
from the on-air sale of merchandise. The Company expects the product selection
to include the Television Food Network branded items, products from third-party
suppliers and advertisers. The Television Food Network is also beginning to
produce cookbooks which focus on its most popular hosts and programs. The
Company believes that the Television Food Network's programming results could be
duplicated outside the United States and is currently exploring international
expansion.

AMERICA'S HEALTH NETWORK. The Company owns interests in AHN, the
controlling entities of America's Health Network, that collectively represent a
65% equity interest in the development stage programming network service. It is
anticipated that this interest will be reduced to between 56% and 62% in early
1997 through the exercise of certain options by investors in AHN Partners, L.P.
America's Health Network is a 24-hour basic cable television programming service
principally featuring viewer call-in programs designed for health-conscious
adults who are active participants in their own health care and the health care
of spouses, parents, and children. America's Health Network's "Ask the Doctor"
programs are hosted by health care professionals whose responses to viewers'
questions are extensively visualized using graphics, animations and
illustrations. America's Health Network's programming also includes brief
"Health Mall" segments during which health-related products are offered for sale
to viewers, and "Health News" segments which provide daily updates on the areas
of health, medicine, wellness and nutrition. In addition, a limited number of
commercials from national and local advertisers are shown.

America's Health Network launched its service on March 25, 1996. To date
the Company believes that America's Health Network is available to approximately
1.2 million basic cable television subscribers in the United States. AHN has
distribution agreements with MSOs that include affiliates of Cablevision Systems
Corporation, Adelphia Communications Corporation and Greater Media Cablevision
and also has agreements with two buying consortiums that represent small and
mid-sized MSOs, Telesynergy Inc. and National Cable TV Cooperative to distribute
America's Health Network. These organizations represent a subscriber base of
over 16 million subscribers. The Company provided project management services to
AHN in connection with the construction and build-out of America's Health
Network's production center at Universal Studios and has agreed to sub-lease a
transponder to AHN for five years. AHN has also assembled a group of strategic
partners including the Mayo Foundation for Medical Education and Research
("Mayo" or "Mayo Clinic") and IVI Publishing, Inc. ("IVI"), Mayo's electronic
publisher, which have entered into a

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comprehensive and exclusive program content relationship with AHN. The Company
believes that the strategic relationship with Mayo is an important factor in
establishing credibility with subscribers as the Mayo Clinic has one of the most
recognized names in medicine in the United States. AHN has also entered into an
agreement in principle with Reuters Health Information Services, Inc. and the
Massachusetts Medical Society, publisher of the New England Journal of Medicine,
to produce the "Health News" segments and has exclusive rights to syndicate
these segments.

America's Health Network is housed in a 16,500 square foot production
facility immediately adjacent to the Universal Studios Florida theme park in
Orlando, Florida, and Universal Studios will recruit its theme park visitors to
participate in America's Health Network's live productions. National Call
Center, Inc., a wholly-owned subsidiary of Home Shopping Network, Inc., provides
telemarketing, order processing, warehousing and fulfillment services related to
the sale of merchandise on America's Health Network's "Health Mall" segments and
through AHN's database marketing programs.

NORTHWEST CABLE NEWS. To build on the Company's established local news
franchises in Washington, Oregon and Idaho, the Company launched NorthWest Cable
News, a 24-hour regional cable news network serving cable subscribers in the
Pacific Northwest in December 1995. NorthWest Cable News is based in Seattle and
combines state-of-the-art digital news-gathering and editing systems with
resources of the Company's Stations located in Seattle, Portland, Spokane and
Boise. NorthWest Cable News was developed as a result of research conducted by
Frank M. Magid Associates that indicated that 95% of northwest United States
cable television viewers are likely to watch a regional news cable network, with
86% of these prospective viewers likely to watch such a news cable network in
addition to their local broadcast news program. NorthWest Cable News is
currently available in approximately 1.3 million cable homes. NorthWest Cable
News provides Pacific Northwest cable subscribers with 24-hour continuous news
by combining the quality news teams of the Company's four northwestern Stations
with NorthWest Cable News own bureaus located throughout the region. The
Company's four Stations also help to promote NorthWest Cable News and increase
viewers' overall awareness of the network.

INTERACTIVE AND ON-LINE MEDIA.

The Company continually reviews opportunities to participate in the
creation and development of the interactive and on-line media. The Company seeks
to enter into partnerships and other relationships with companies or individuals
having specialized expertise in such media.

RHODE ISLAND HORIZONS. During 1994, the Company entered into a two year
agreement with Prodigy Services Company providing for the creation of Rhode
Island Horizons, a local on-line service owned by the Providence Journal to be
offered in conjunction with the national Prodigy service. The local on-line
service includes news, features and advertising similar to that appearing in the
Providence Journal. Rhode Island Horizons began operations in the second quarter
of 1995. The Company currently has an Internet site (http://www.projo.com) and
is negotiating with certain Internet providers to make Rhode Island Horizons
fully available over the Internet.

PEAPOD, L.P. As of March 31, 1996, the Company owned a 17.2% interest in
Peapod, which provides an interactive computer on-line grocery ordering,
shopping and delivery service in Chicago and San Francisco, with plans to expand
into Boston and Providence. In April 1996, the Company invested an additional $1
million in Peapod in a private placement offering, following which the Company
owned an approximate 14.5% equity interest. The Company maintains certain rights
with regard to the expansion of Peapod into the Stations' markets and
Providence, Rhode Island.

STARSIGHT. The Company is a 4.85% investor in StarSight Telecast, Inc.
("StarSight"), a company engaged in developing and marketing an on-screen
interactive television program guide designed to facilitate the identification,
selection and recording of television programming. StarSight's shares are traded
on the National Association of Securities Dealers Automated Quotation System
under the symbol "SGHT".

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BROADCAST TELEVISION PROGRAMMING.

The Company continually reviews opportunities to participate in the
creation and development of broadcast television programming. The Company seeks
to enter into partnerships and other relationships with companies or individuals
having specialized expertise with regard to the content of the programming.

The Company is a limited partner with four other television group
broadcasters in PSN, a limited partnership formed in 1994 to develop and produce
television programming for broadcast on their own stations and for potential
national distribution to other television broadcast stations. The stations owned
by PSN's five limited partners serve markets accounting for approximately 20% of
the television households in the United States. Each of PSN's limited partners
has a right of first access in its respective television markets to the programs
produced by PSN. The Company believes PSN to be a cost-effective testing ground
for new programs and a launch vehicle for successful syndicated programming.
Before making a full-season commitment to production, PSN will conduct short
trials on its partners' stations. Promising shows can then be introduced to a
broader national audience. PSN has produced and is currently testing several
programs. As of May 31, 1996, the Company's investment in PSN was approximately
$1.8 million.

COMPETITION

CABLE TELEVISION AND SATELLITE NETWORK PROGRAMMING SERVICES. Competition
in the cable television and satellite network programming services industry
takes place on several levels: competition for distribution, competition for
audience and advertisers and, to a lesser extent, competition for programming.

Distribution. The Company's cable television and satellite network
programming services compete for distribution with numerous other programming
services and local television stations. There are currently over 50 nationally
distributed cable television and satellite network programming services that
compete for distribution over existing cable, wireless cable and satellite
distribution systems with very limited distribution capacity. "Must-carry" and
certain other rules may further limit distribution capacity. See "Licensing and
Regulation". These systems carry established cable television and satellite
network programming services such as CNN, USA, TBS, ESPN, TNT, Discovery,
Lifetime and A&E, and are upgrading their facilities and enhancing their
technological capabilities in order to carry additional services, many of which
have been launched in the past several years, such as E!, The History Channel,
ESPN2, Home & Garden, Outdoor Life and Speedvision, in addition to the
Television Food Network, America's Health Network and NorthWest Cable News.

Audience and Advertisers. The Company's cable television and satellite
network programming services compete for audience on the basis of program
popularity, which has a direct effect on advertising sales rates. Advertising
rates are based upon the size of the demographic make-up of the network
subscriber base that is reached, a program's popularity among the viewers an
advertiser wishes to attract, the number of advertisers competing for the
available time, the demographic make-up of the household subscriber base and
availability of alternative advertising media in the market areas where the
network is distributed, the aggressive and knowledgeable sales forces and the
development of projects, features and programs that tie advertiser messages to
programming. Advertising rates are also determined by a network's overall
ability to attract viewers, especially among particular demographic groups that
an advertiser may target. In the case of America's Health Network, program
popularity has an additional effect on the sale of merchandise. The Company's
networks compete for viewership share and advertising revenue against local,
affiliated and independent television stations, other cable and satellite
network programming services, local cable systems, broadcast television stations
and networks, newspapers, radio, magazines, outdoor advertising, transit
advertising, yellow page advertising and direct mail.

Programming. The Company's networks compete on a limited basis for
pre-produced programming with other cable television and satellite network
programming services. This involves negotiating with national program owners,
distributors and syndicators which sell first run and rerun packages of
programming. While the effects of the Telecommunications Act on the Company's
Programming and Electronic Media Business cannot be fully determined at this
time, the Company believes that various provisions of the new law could

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create a favorable environment for the development and distribution of new
programming and interactive services.

INTERACTIVE AND ON-LINE MEDIA SERVICES. The market for interactive and
on-line media services products is highly competitive and competition is
expected to continue to increase significantly. The Company's interactive and
on-line media services compete in varying degrees with commercial on-line
services and various electronic media, including Internet and CD-ROM-distributed
services. The Company's interactive and on-line media services also face
indirect competition from more traditional media that vie for consumers' time
and money, including cable television and satellite network programming
services, local cable systems, broadcast television stations and networks,
newspapers, radio and magazines.

BROADCAST TELEVISION PROGRAMMING. The market for the development of
broadcast television programming is extremely competitive. The Company's efforts
in this regard compete directly with producers, syndicators and other
broadcasters that produce programming for syndication and license.

LICENSING AND REGULATION

The following is a brief discussion of certain provisions of the
Communications Act, the Telecommunications Act and of FCC regulations and
policies that affect the Broadcasting Business and the Programming and
Electronic Media Business. Reference should be made to the Communications Act,
FCC rules and the public notices and rulings of the FCC, on which this
discussion is based, for further information concerning the nature and extent of
FCC regulation of television broadcasting stations. The Publishing Business is
not subject to extensive regulation.

License Renewal, Assignments and Transfers. Television broadcasting
licenses are currently for a maximum of five years and are subject to renewal
upon application to the FCC. Pursuant to the Telecommunications Act, the FCC
proposed to extend the maximum term to eight years for most television broadcast
stations filing for license renewal in 1996 or later. The FCC prohibits the
assignment of a license or the transfer of control of a broadcasting license
without prior FCC approval. In determining whether to grant or renew a
broadcasting license, the FCC considers a number of factors pertaining to the
applicant, including compliance with limitations on alien ownership, common
ownership of broadcasting, cable and newspaper properties, and compliance with
character and technical standards. The Telecommunications Act, which has been
enacted, but not yet fully implemented by the FCC, eliminates the comparative
renewal process and simplifies license renewal. During certain limited periods
when a renewal application is pending, petitions to deny a license renewal may
be filed by interested parties, including members of the public. Such petitions
may raise various issues before the FCC. The FCC is required to hold
evidentiary, trial-type hearings on renewal applications if a petition to deny
renewal raises a "substantial and material question of fact" as to whether the
grant of the renewal application would be inconsistent with the public interest,
convenience and necessity. The FCC is required to renew a broadcast license if
the FCC finds that the station has served the public interest, convenience and
necessity; there have been no serious violations by the licensee of either the
Communications Act or the FCC's rules; and there have been no other violations
by the licensee which taken together would constitute a pattern of abuse. If the
incumbent licensee fails to meet the renewal standard, and it if does not show
other mitigating factors warranting a lesser sanction, the FCC then has the
authority to deny the renewal application and consider a competing application.

Failure to observe FCC rules and policies, including, but not limited to,
those discussed herein, can result in the imposition of various sanctions,
including monetary forfeitures, the grant of short-term (i.e., less than the
full eight years) license renewals or, for particularly egregious violations,
the denial of a license renewal application or revocation of a license.

While in the vast majority of cases such licenses are renewed by the FCC,
there can be no assurance that the Company's licenses or the licenses of the
owner-operators of the LMA Stations will be renewed at their expiration dates,
or, if renewed, that the renewal terms will be for eight years. All of the
Stations are presently operating under regular five-year licenses that expire on
the following dates: December 1, 1996 (WCNC (Charlotte)); August 1, 1997 (WHAS
(Louisville)); October 1, 1998 (KASA (Albuquerque/Santa Fe), KMSB (Tucson) and
KTVB (Boise)); and February 1, 1999 (KING (Seattle), KGW (Portland), KHNL

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(Honolulu) and KREM (Spokane)). In addition, the licenses for each of the LMA
Stations, KFVE (Honolulu) and KTTU (Tucson) expire on February 1, 1999 and April
1, 1997, respectively. KONG holds a permit which expired on December 30, 1995 to
construct a television station in the Seattle, Washington market. KONG applied
for an extension in November, 1995, and on May 22, 1996, applied to co-locate
its transmission facilities with KING. An FCC license is granted when a station
commences on-air broadcasting, which is expected for KONG in the first quarter
of 1997. The non-renewal or revocation of one or more of the Company's FCC
licenses could have a material adverse effect on the Company's operations.

Multiple Ownership Rules and Cross Ownership Restrictions. The FCC
generally applies its ownership limits to "attributable" interests held by an
individual, corporation, partnership or other association. In the case of
corporations holding broadcast licenses, the interests of officers, directors
and those who, directly or indirectly, have the right to vote 5% or more of the
corporation's stock (or 10% or more of such stock in the case of insurance
companies, mutual funds, bank trust departments and certain other passive
investors that are holding stock for investment purposes only) are generally
deemed to be attributable, as are positions as an officer or director of a
corporate parent of a broadcast licensee. On a national level, pursuant to the
Telecommunications Act, the FCC has eliminated the restrictions on the number of
television stations in which a person or entity may have an attributable
interest, but instead establishes a national television audience reach limit of
35%. The Telecommunications Act requires the FCC to conduct a rulemaking
proceeding to determine whether the local "duopoly" television ownership rules
should be retained, modified or eliminated. The present "duopoly" rules prohibit
attributable interests in two or more television stations with overlapping
service areas. The Telecommunications Act grandfathers existing LMAs and permits
future LMAs that are in compliance with FCC rules as they may be adopted from
time to time. The FCC may, however, consider the adoption of new restrictions on
television LMAs, including the treatment of an LMA as an attributable interest
in the future. Further, if the FCC were to find that a licensee of an LMA
station failed to maintain control over its operations, the licensee of the LMA
station and/or the station providing programming and marketing services could be
subject to sanctions. While LMAs provide a financial benefit to the Company,
LMAs permit stations that otherwise might "go dark" or operate marginally to add
programming and public affairs coverage and contribute to diversity in their
respective markets. The Telecommunications Act directs the FCC to extend its
liberal waiver policy of the one-to-a-market restriction (allowing
radio-television combinations) to the top 50 markets, consistent with the public
interest, convenience and necessity.

The statutory prohibition against television station/cable system
cross-ownership is repealed in the Telecommunications Act, but the FCC's
parallel cross-ownership rule remains in place. The FCC intends to conduct a
proceeding on repeal of this cross-ownership restriction. The television
station/daily newspaper cross-ownership prohibition in the FCC rule was not
repealed by the Telecommunications Act. The FCC, however, intends to conduct a
rulemaking proceeding on whether to repeal the restriction. The
Telecommunications Act requires the FCC to review its ownership rules biennially
as part of its regulatory reform obligations.

Because of these multiple ownership rules and cross-ownership restrictions,
unless or until these rules are modified or repealed, a purchaser of Class A
Common Stock who acquires an attributable interest in the Company may violate
the FCC's rules if that purchaser also has an attributable interest in other
television or radio stations, or in daily newspapers, depending on the size and
location of those radio or television stations or daily newspapers. Such a
purchaser also may be restricted in the companies in which it may invest to the
extent that those investments give rise to an attributable interest. If an
attributable stockholder of the Company violates any of these ownership rules or
if a proposed acquisition by the Company would cause such a violation, the
Company may be unable to obtain from the FCC one or more authorizations needed
to conduct the Broadcasting Business and may be unable to obtain FCC consents
for certain future acquisitions.

The Company is unable to predict the ultimate outcome of possible changes
to these FCC rules and the impact such changes may have on its broadcasting
operations.

Alien Ownership. Under the Communications Act, broadcast licenses may not
be granted to or held by any corporation having more than one-fifth of its
capital stock owned of record or voted by non-U.S. citizens (including a
non-U.S. corporation), foreign governments or their representatives
(collectively, "Aliens"). The Communications Act also prohibits a corporation,
without an FCC public interest finding, from holding a

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broadcast license if that corporation is controlled, directly or indirectly, by
another corporation, or more than one-fourth of the capital stock of which is
owned of record or voted by Aliens. The FCC has issued interpretations of
existing law under which these restrictions in modified form apply to other
forms of business organizations, including general and limited partnerships. As
a result of these provisions, and without an FCC public interest finding, the
Company, which serves as a holding company for its various television station
licensee subsidiaries, cannot have more than 25% of its capital stock owned of
record or voted by Aliens.

Programming and Operation. The Communications Act requires broadcasters to
serve the "public interest." Since the late 1970s, the FCC gradually relaxed or
eliminated many of the more formalized procedures it had developed to promote
the broadcast of certain types of programming responsive to the needs of a
station's community of license. Broadcast station licensees continue, however,
to be required to present programming that is responsive to community problems,
needs and interests and to maintain certain records demonstrating such
responsiveness. Complaints from viewers concerning a station's programming may
be considered by the FCC when it evaluates license renewal applications,
although such complaints may be filed, and generally may be considered by the
FCC, at any time. Stations also must follow various rules promulgated under the
Communications Act that regulate, among other things, children's television
programming, political advertising, sponsorship identifications, contest and
lottery advertising, obscene and indecent broadcasts, and technical operations,
including limits on radio frequency radiation. In addition, broadcast licensees
must develop and implement affirmative action programs designed to promote equal
employment opportunities, and must submit reports to the FCC with respect to
these matters on an annual basis and in connection with a license renewal
application.

Syndicated Exclusivity/Territorial Exclusivity. Effective January 1, 1990,
the FCC reimposed syndicated exclusivity rules and expanded the existing network
non-duplication rules. The syndicated exclusivity rules allow local broadcast
stations to require that cable television operators black out certain
syndicated, non-network programming carried on "distant signals" (i.e., signals
of broadcast stations, including so-called superstations, that serve areas
substantially removed from the local community). Under certain circumstances,
the network non-duplication rule allows local broadcast network affiliates to
demand that cable television operators black out duplicative network broadcast
programming carried on more distant signals.

Prime Time Access Rule. The FCC's prime time access rule (the "PTAR") also
places programming restrictions on affiliates of "networks". The PTAR restricts
affiliates of "networks" in the 50 largest television markets (as defined by the
PTAR) from broadcasting more than three hours of network programming during the
four hours of prime time. Five of the Stations are located in the nation's 50
largest television markets. In a Report and Order released on July 31, 1995, the
FCC repealed the PTAR effective August 30, 1996. The Company cannot predict the
effect any modification or elimination of the PTAR would have on the Company's
programming or operations.

Restrictions on Broadcast Advertising. The advertising of cigarettes on
broadcast stations has been banned for many years. The broadcast advertising of
smokeless tobacco products has more recently been banned by Congress. Certain
Congressional committees have in the past examined legislative proposals to
eliminate or severely restrict the advertising of beer and wine. The Company
cannot predict whether any or all of such proposals will be enacted into law
and, if so, what the final form of such law might be. The elimination of all
beer and wine advertising would have an adverse effect on the Stations' revenues
and operating income, as well as the revenues and operating income of other
stations that carry beer and wine advertising.

Other Programming Restrictions. The Telecommunications Act requires that
any newly manufactured television set with a picture screen of 13 inches or
greater be equipped with a feature designed to enable viewers to block all
programs with a certain violence rating (the "v-chip"). The FCC, after
consulting with the TV manufacturing industry, shall specify the effective date
of this requirement, which may not be less than two years after enactment of the
law. The FCC is directed to oversee the adoption of standards for this blocking
technology. If the television industry has not voluntarily devised a violence
rating system within one year, the FCC is directed to prescribe a rating system.
Industry efforts to adopt a rating system similar to the motion picture rating
system are now underway. The Company cannot predict whether the v-chip and a
ratings system will have any significant effect on the operations of the
Broadcasting Business.

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Cable "Must-Carry" or "Retransmission Consent" Rights. The 1992 Cable Act
requires television broadcasters to make an election to exercise either certain
"must-carry" or "retransmission consent" rights in connection with the carriage
of television stations by cable television systems in the station's local
market. If a broadcaster chooses to exercise its must-carry rights, it may
demand carriage on a specified channel on cable systems within its market,
which, in certain circumstances, may be denied. Must-carry rights are not
absolute, and their exercise is dependent on variables such as the number of
activated channels on and the location and size of the cable system and the
amount of duplicative programming on a broadcast station. If a broadcaster
chooses to exercise its retransmission consent rights, it may prohibit cable
systems from carrying its signal, or permit carriage under a negotiated
compensation arrangement.

On April 8, 1993, a three-judge panel of the United States District Court
for the District of Columbia upheld the constitutionality of the must-carry
provisions of the 1992 Cable Act. In 1994, the Supreme Court ruled that the
must-carry provisions were "content neutral" and thus not subject to strict
scrutiny and that Congress' stated interests in preserving the benefits of free,
over-the-air local broadcast television, promoting the widespread dissemination
of information from a multiplicity of sources and promoting fair competition in
the market for television programming all qualify as important governmental
interests. However, the Court remanded the case to a lower federal court with
instructions to hold further proceedings with respect to evidence that lack of
the must-carry requirements would harm local broadcasting. In late 1995, on
remand, the three-judge panel of the United States District Court for the
District of Columbia upheld the constitutionality of the must-carry
requirements. The case is now again before the Supreme Court, with a decision
likely in the first half of 1997. The Company cannot predict the effect of the
outcome or the effect on the Company of this case.

Proposed Legislation and Regulations. The FCC has proposed the adoption of
rules for implementing Advanced Television ("ATV") in the United States.
Implementation of ATV will improve the technical quality of over-the-air
broadcast television. Under certain circumstances, however, conversion to ATV
operations may reduce a station's geographical coverage area. The FCC is
considering the implementation of a proposal that would allot a second broadcast
channel to each regular commercial television station for ATV operation.
Stations would be required to phase in their ATV operations on the second
channel, with a three-year period to build necessary ATV facilities and a
consecutive three-year period in which to begin operations. Such stations would
be required to surrender their non-ATV channel 15 years after the commencement
of the first three-year period. Implementation of ATV will impose additional
costs on television stations providing the new service due to increased
equipment and operating costs. The Company estimates that the adoption of ATV
would require average capital expenditures of approximately $8-10 million per
Station to provide facilities and equipment necessary to broadcast an ATV
signal. The introduction of this new technology will require that consumers
purchase new receivers (television sets) for ATV signals or, if available by
that time, adapters for their existing receivers. The FCC has also proposed to
assign to full-power ATV stations the channels currently occupied by LPTV
stations, which could adversely affect the Company's LPTV channels. When the
Telecommunications Act was passed, certain leaders in Congress asked the FCC to
postpone issuing ATV licenses pending consideration of possible future
legislation that might require broadcasters to bid at auction for ATV channels
or which might require that the current conventional channels be returned to the
government on an expedited schedule. In the course of the debate on the federal
budget, some leaders in Congress have proposed various plans that might require
the auctioning of the spectrum which broadcasters will need in order to provide
ATV. Various plans for raising revenue also include provisions to require the
auctioning of radio frequencies in bands which encompass those currently
licensed for use by broadcasters, including those channels used for "auxiliary"
purposes, such as remote pickups in electronic news gathering and
studio-to-transmitter links. Hearings on spectrum auctions and usage were
recently held by Congress. While the Company believes that the FCC will
authorize ATV in the United States, the Company cannot predict when such
authorization might be given or the effect such authorization might have on the
Broadcasting Business. The Company cannot predict whether legislation requiring
auctions for ATV spectrum will be enacted or the effect of such legislation.

In addition, the FCC is conducting an inquiry to consider proposals to
increase broadcasters' obligations under its rules implementing the Children's
Television Act of 1990, which requires television stations to

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present programming specifically directed to the "educational and informational"
needs of children. Other matters that could affect the Stations include
technological innovations affecting the mass communications industry such as
technical allocation matters, including assignment by the FCC of channels for
additional broadcast stations, low-power television stations and wireless cable
systems and their relationship to and competition with full-power television
broadcasting service.

Congress and the FCC also have under consideration, or may in the future
consider and adopt, new laws, regulations and policies regarding a wide variety
of matters that could, directly or indirectly, affect the operation, ownership
and profitability of the Broadcasting Business and the Stations, result in the
loss of audience share and advertising revenues of the Stations, and affect the
Company's ability to acquire additional broadcast stations or finance such
acquisitions. Such matters include, for example, (i) changes to the license
renewal process; (ii) imposition of spectrum use or other governmentally imposed
fees upon a licensee; (iii) proposals to expand the FCC's equal employment
opportunity rules and other matters relating to minority and female involvement
in broadcasting; (iv) proposals to increase the benchmarks or thresholds for
attributing ownership interest in broadcast media; (v) proposals to change rules
or policies relating to political broadcasting; (vi) technical and frequency
allocation matters, including those relative to the implementation of ATV; (vii)
proposals to restrict or prohibit the advertising of beer, wine and other
alcoholic beverages on broadcast stations; (viii) changes in the FCC's
cross-interest, multiple ownership, alien ownership and cross-ownership
policies; (ix) changes to broadcast technical requirements; and (x) proposals to
limit the tax deductibility of advertising expenses by advertisers.

The Company cannot predict what other matters might be considered in the
future, nor can it judge in advance what impact, if any, the implementation of
any of these proposals or changes might have on the Broadcasting Business.

The foregoing does not purport to be a complete discussion of all of the
provisions of the Communications Act, the Telecommunications Act, or other
Congressional acts or the regulations and policies promulgated by the FCC
thereunder. Reference is made to the Communications Act, the Telecommunications
Act, other Congressional acts, such regulations, and the public notices
promulgated by the FCC, on which the foregoing discussion is based, for further
information. There are additional FCC regulations and policies, and regulations
and policies of other federal agencies, that govern political broadcasts, public
affairs programming, equal employment opportunities and other areas affecting
the Station's businesses and operations.

SEASONALITY OF BUSINESSES

The Company's revenues historically have been slightly higher in the fourth
quarter of the year and EBITDA has been significantly higher during such period,
primarily attributable to increased expenditures by advertisers. During 1995,
28.4% of the Company's revenues and 36.8% of the Company's EBITDA were earned in
the fourth quarter in each case excluding programming and electronic media and
corporate expenses.

EMPLOYEES

As of March 31, 1996, the Company employed approximately 2,480 full-time
equivalents, of which approximately 1,070 worked in the Broadcasting Business,
approximately 1,230 worked in the Publishing Business, and the remainder of
which worked in corporate headquarters and the Programming and Electronic Media
Business. Approximately 32% of the Broadcasting Business employees are
represented by a number of labor unions that are independent and unaffiliated
among the Stations.

Approximately 50% of the Publishing Business employees are represented by
labor unions, mostly under existing collective bargaining agreements. The
Providence Newspaper Guild and The Communications Workers of America, Local 33
collective bargaining agreements expire on December 31, 1996. No assurance can
be given that new collective bargaining agreements will be entered into prior to
the December 31, 1996 expiration dates. The Company has not experienced any
significant work stoppages since 1973 when 425 employees in the Publishing
Business represented by the Providence Newspaper Guild organized a work stoppage
which lasted for a period of 13 days. Such work stoppage did not have a material
impact on the

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financial condition and operations of the Publishing Business. The Newspaper
Printing Pressman's Union is in the fifth year of a ten-year contract. The
International Brotherhood of Teamsters, Local 64, was elected on February 29,
1996 as the bargaining agent for 172 packaging department employees. Negotiation
of a collective bargaining agreement is pending.

The Company contributes to and maintains various employee benefit or
retirement plans for eligible employees. The Company considers its relations
with its employees to be good.

PROPERTIES

The Company's corporate headquarters and various operating and
administrative departments of the Broadcasting Business, the Publishing Business
and the Programming and Electronic Media Business are located at 75 Fountain
Street, Providence, Rhode Island, an historic building owned by the Company with
205,635 square feet of working space. Each of the Stations has local facilities
consisting of owned or leased offices, studios, sales offices and transmitter
and tower sites. The Company owns a number of production and storage facilities
in Providence used for the Publishing Business, and leases various regional
distribution centers and news and advertising offices.

The Company believes that its properties are generally in good condition
and are adequate and suitable for the operations of its businesses. None of the
properties owned or leased by the Company is subject to a lien under the Credit
Agreement or is individually material to the Company's operations. However, the
cost to relocate any of the Stations' towers could be significant because zoning
and other land use restrictions, as well as Federal Aviation Administration
regulations, limit the number of suitable sites available in any geographic
area.

LEGAL PROCEEDINGS

On January 17, 1995, Cable LP brought a declaratory judgment action against
Old PJC, Colony and Dynamic Cablevision of Florida, Inc., a wholly-owned
subsidiary of Colony ("Dynamic") in the Circuit Court of the Eleventh Judicial
Circuit in Dade County, Florida. Colony was a cable television subsidiary of Old
PJC, which was transferred to Continental in connection with the Merger. This
case relates to a partnership (the "Dynamic Partnership") in which Dynamic is
the general partner with an 89.8% interest and Cable LP is the limited partner
with a 10.2% interest. In this action, Cable LP claimed that (i) Dynamic was
obligated to offer to sell Dynamic's general partnership interest to Cable LP
before Old PJC entered into the Merger Agreement with Continental and (ii)
Dynamic's offer to purchase Cable LP's limited partnership interest for $13.1
million triggered a right of first refusal entitling Cable LP to purchase the
general partnership interest for $115 million. Cable LP sought a declaration by
the court that the right of first refusal it is asserting applies.

A motion to strike allegations of bad faith and breach of fiduciary duty
against Old PJC, Colony and Dynamic was granted by the court, and an Answer to
the Complaint and a Counterclaim was filed by them on March 16, 1995, seeking a
declaratory judgment that Cable LP unreasonably refused consent to the transfer
of the general partner's interest to Continental and that a purported transfer
of Cable LP's interest in the Dynamic Partnership to a partnership to be managed
by Adelphia Communications, Inc. violated Dynamic's right of first refusal under
the Dynamic Partnership Agreement. The case was tried in December 1995. A
declaratory judgment in this action in favor of Cable LP was entered on May 21,
1996, and requires, among other matters, Dynamic and Colony to negotiate on a
price to transfer Dynamic's interest in the general partnership to Cable LP. The
Company has appealed this judgment and moved to stay the effect of the judgment
during the pendency of the appeal. On June 10, 1996 a hearing was held on the
Company's motion to stay. At such hearing the judge declined to grant or deny
the Company's motion to stay at this time.

In the event that, as a result of such litigation, Dynamic is required to
sell its interest in the Dynamic partnership to Cable LP, the Merger Agreement
provides that the Company will pay to Continental simultaneously with the
closing of such sale an amount equal to the sum of (i) the amount (if any) by
which the consideration received by Dynamic for the sale of such interest is
less than $115 million plus (ii) the taxes which would be payable assuming the
purchase price for such interest equaled $115 million. The Company is unable to
predict at this time what the ultimate outcome of this litigation might be. In
accordance with applicable accounting principles, should any loss from this
litigation ultimately prove to be probable and reasonably estimatable, such
loss, at that time, would result in a charge to stockholders' equity to reflect
the estimated decrease in the net book value of the cable assets disposed of in
1995 pursuant to the Merger

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<PAGE> 82

Agreement. Such a charge could have a material effect upon the Company's
financial condition. If any payment obligations are ultimately required under
the terms of the Merger Agreement, it is currently anticipated that such
payments could be up to $40 million and could have a material effect upon the
Company's liquidity position. It is currently contemplated that any such payment
would be funded by borrowings under the Company's revolving credit facility. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

The Company is a party to various other claims, legal actions and
complaints arising in the ordinary course of business. In the Company's opinion,
all such matters are adequately covered by insurance or, if not so covered, are
without merit or are of such kind, or involve such amounts, that unfavorable
disposition would not have a material effect on the consolidated financial
position or results of operations of the Company.

BACKGROUND; REORGANIZATION

Pursuant to the transactions described above under "The Company --
Background; Reorganization", on October 5, 1995, the Company, Old PJC
and Continental completed the Kelso Buyout, the Spin-Off and the Merger.
Immediately prior to the Kelso Buyout, Continental completed the King Cable
Purchase. In connection with, and as part of the Spin-Off, the Company, with
certain exceptions, assumed and agreed to hold Continental, as successor by
merger to Old PJC, harmless from all of Old PJC's liabilities arising from its
non-cable businesses, and Old PJC, with certain exceptions, in turn agreed to
hold the Company harmless from liabilities arising from the Old PJC Cable
Business, which liabilities were assumed by Continental pursuant to the Merger.

The Merger and the Spin-Off were intended to qualify as tax-free
reorganizations under the Code. In the event either the Merger or the Spin-Off
are determined not to so qualify, such failure to qualify would result in
Continental, the surviving entity in the Merger, recognizing gain equal to the
excess of the fair market value of the shares of the Company's Common Stock
received in the Spin-Off (the "Spin-Off Stock") distributed to Old PJC's
stockholders over Old PJC's basis in the assets transferred to the Company in
the Contribution. The Merger Agreement also provides that the Company will
indemnify Continental for all federal and state income tax liabilities of Old
PJC and its subsidiaries for periods ending on or before the Closing Date,
including income tax liabilities resulting from any failure of the Spin-Off or
the Merger to qualify as tax-free reorganizations under the Code, unless such
failure to qualify is the result of certain actions by Continental. Continental
and US West Media Group ("US West") recently announced that they had entered
into an agreement pursuant to which Continental will be merged with and into US
West (the "US West Merger"). As part of such transaction, US West has agreed
that any failure of the Spin-Off and the Merger to qualify as tax-free
reorganizations under the Code as a result of the transactions contemplated by
the US West Merger would not give rise to an indemnification obligation by the
Company under the Merger Agreement.

In order to protect the tax-free nature of the Spin-Off and the Merger, for
the one-year period ending on October 5, 1996, the Spin-Off Stock is subject to
the Tax Lockup, which are legended transfer restrictions which prohibit all
transfers, sales, assignments or other dispositions of Spin-Off Stock for value
by the former Old PJC stockholders.

RESTRICTIONS IN CERTAIN AGREEMENTS

Pursuant to the Contribution and Assumption Agreement entered into in
connection with the Spin-Off, the Company agreed that until October 5, 1999, it
would not (i) sell, transfer, assign or otherwise dispose of any material assets
or (ii) declare, set aside or pay any dividend or other distribution (with
certain exceptions) in respect of its capital stock, or redeem or otherwise
acquire any of its capital stock, if, as a result of any such transaction, the
Company would have a fair market value (determined on the basis of a sale on a
private market, going concern basis, free and clear of all liabilities) of less
than: (x) for the period to and including October 5, 1996, $200 million, (y) for
the period from October 5, 1996 to and including October 5, 1997, $150 million
and (z) for the period from October 5, 1997 to and including October 5, 1999,
$50 million. The

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<PAGE> 83

Company may proceed with any transaction which would otherwise be prohibited by
the foregoing if it provides security to Continental in form and amount
reasonably acceptable to Continental.

As part of the Merger, the Company entered into a noncompetition agreement
pursuant to which the Company agreed that, until October 5, 1998, neither it nor
any of its subsidiaries will (or will attempt to), on its own behalf or in the
service or on behalf of others, (i) solicit for employment, interfere with or
entice away any of the directors, officers, employees or agents of Continental
or any person who at any time on or after January 1, 1994 was an officer or
employee of the Company or its cable subsidiaries and who is employed by
Continental following the Closing Date, (ii) subject to certain exceptions,
engage in any manner in the operation (in specified geographic areas) of cable
television systems providing the services provided by Old PJC and its cable
subsidiaries (the "Restricted Business") at the Closing Date other than the
business of developing or creating programming or (iii) use or permit Old PJC or
the Company's name to be used in connection with any Restricted Business in
specified geographic locations.

The indebtedness under the Credit Agreement is guaranteed by the Company's
principal subsidiaries, and is secured by pledges of the stock of such
companies. The Credit Agreement contains various covenants, events of default
and other provisions which could affect the Company's business, operating and
acquisition strategies. Such covenants include specified financial covenants
relating to debt and interest coverage and fixed charge ratios. In addition, the
Credit Agreement (i) prohibits the creation of indebtedness in excess of (x) $45
million in the aggregate of pari passu and senior indebtedness and (y) $150
million in the aggregate of unsecured subordinated indebtedness; (ii) restricts
the creation of liens; (iii) restricts the sale of assets, subject to certain
restrictions and prepayment requirements; and (iv) limits (a) investments in
existing or identified investments to $120 million in the aggregate and (b)
investments in businesses involved in publishing, television stations and
programming other than existing and qualified investments to $150 million in the
aggregate, in each case subject to certain exceptions and conditions.

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<PAGE> 84

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

<TABLE>
<CAPTION>
NAME POSITION WITH COMPANY
- ------------------------------------- ------------------------------------------------------
<S> <C>
Stephen Hamblett(1).................. Chairman of the Board, Chief Executive Officer,
Publisher and Director
Jack C. Clifford..................... Executive Vice President-Broadcasting, Programming &
Electronic Media
Howard G. Sutton..................... Senior Vice President & General Manager-Publishing
John L. Hammond...................... Vice President-General Counsel & Chief Administrative
Officer
Thomas N. Matlack.................... Vice President-Finance and Chief Financial Officer
John A. Bowers....................... Vice President-Human Resources
John E. Hayes........................ Vice President-Television
Michael B. Isaacs.................... Vice President-Government and Corporate Relations
Paul H. McTear, Jr................... Vice President-Finance and Business Development-
Broadcasting, Programming and Electronic Media
Joel P. Rawson....................... Vice President and Executive Editor
Joel N. Stark........................ Vice President-Publishing Development and Marketing
Harry Dyson.......................... Treasurer and Secretary
F. Remington Ballou(1)(2)............ Director
Henry P. Becton, Jr.(4).............. Director
Fanchon M. Burnham(3)(4)............. Director
Kay K. Clarke(3)..................... Director
Peter B. Freeman(3).................. Director
Benjamin P. Harris, III(3)........... Director
Paul A. Maeder(3).................... Director
Trygve E. Myhren(5).................. Director
John W. Rosenblum(2)................. Director
W. Nicholas Thorndike(1)(2).......... Director
John W. Wall(1)...................... Director
Patrick R. Wilmerding(1)(4).......... Director
</TABLE>

- ---------------
(1) Member of the Executive Committee
(2) Member of the Compensation Committee
(3) Member of the Audit Committee
(4) Member of the Nominating Committee
(5) Mr. Myhren resigned as President and Chief Operating Officer of the Company
effective March 31, 1996, but will continue to serve on the Board of
Directors of the Company.

The Company has three classes of Directors, Class I, Class II and Class
III, the terms of office of which will expire, respectively, at the annual
meetings of stockholders in 1999, 1998 and 1997. The term of the current Class I
Directors, Messrs. Hamblett, Wilmerding and Rosenblum and Ms. Burnham, will
expire at the 1998 Annual Meeting of the Company. The term of the current Class
II Directors, Messrs. Wall, Thorndike, Becton, Maeder and Myhren, will expire at
the 1997 Annual Meeting of the Company. The term of the current Class III
Directors, Messrs. Freeman, Ballou and Harris and Ms. Clarke, will expire at the
1999 Annual Meeting of the Company. Successors to any Directors whose terms are
expiring are elected to three-year terms and hold office until their successors
are elected and qualified. Executive officers of the Company are elected to
serve until they resign or are removed or are otherwise disqualified to serve.

STEPHEN HAMBLETT, 61, is Chairman of the Board of Directors and Chief
Executive Officer of the Company and Publisher of the Providence Journal. He has
served in such capacities since 1987. Mr. Hamblett was first employed by the
Company in 1957 in its advertising department and has been continuously employed

84
<PAGE> 85

by the Company since that time, serving as Assistant Vice President for
Administration, Vice President Marketing, Vice President Marketing and Corporate
Development, Executive Vice President and President and Chief Operating Officer
before assuming his current positions. He has been a Director of the Company
since 1985. Mr. Hamblett also serves on the Board of Directors of the Associated
Press, Continental and the Inter American Press Association.

JACK C. CLIFFORD, 62, was appointed Executive Vice President-Broadcasting,
Programming & Electronic Media on April 1, 1996. Prior to that, Mr. Clifford
served as Vice President-Broadcasting since September 1995 and was Vice
President-Broadcasting and Cable Television from 1982 to 1995. Mr. Clifford
serves on the Board of Directors of StarSight.

HOWARD G. SUTTON, 46, was appointed Senior Vice President & General
Manager-Publishing on April 1, 1996. Prior to that, Mr. Sutton served as Vice
President & General Manager since 1994 and Vice President-Administration since
1987.

JOHN L. HAMMOND, 50, was appointed Vice President-General Counsel & Chief
Administrative Officer on April 1, 1996. Mr. Hammond had been Vice
President-Legal since October, 1992. Mr. Hammond was Vice President, General
Counsel and Secretary of Landstar System, Inc. from 1989 to 1992. Prior to that,
Mr. Hammond was employed by The Singer Company for ten years and was Deputy
General Counsel at the time of his departure.

THOMAS N. MATLACK, 31, was appointed Chief Financial Officer of the Company
on April 1, 1996. Since September 1995, Mr. Matlack has been Vice
President-Finance. From 1992 to 1995, Mr. Matlack was Director-Financial
Planning and Analysis of the Company. Prior to that, Mr. Matlack was employed by
Houghton Mifflin Company in various strategic and financial positions and by
Goldman, Sachs & Co.

JOHN A. BOWERS, 43, has been Vice President-Human Resources since November,
1990. Prior to that time, Mr. Bowers served in various Human Resources positions
with the Company and its subsidiaries since 1980.

JOHN E. HAYES, 54, has been Vice President-Television since April 1, 1996.
From 1992 to 1996, Mr. Hayes had been Vice President-Television of the Company's
Broadcasting Division. Prior to that, Mr. Hayes had been President and General
Manager of the Company's television station in Charlotte, North Carolina since
1989.

MICHAEL B. ISAACS, 49, was appointed Vice President-Government and
Corporate Relations on April 1, 1996. Prior to that, Mr. Isaacs has been Vice
President-Government Affairs and Public Policy of the Company's Broadcasting and
Telecommunications Division since 1994. From 1991 to 1994, Mr. Isaacs had been
Director of Government Affairs & Public Policy.

PAUL H. MCTEAR, JR., 47, has been Vice President-Finance and Business
Development-Broadcasting, Programming and Electronic Media since April 1, 1996.
Prior to that, Mr. McTear had been Vice President-Finance and Business
Development of the Company's Broadcasting and Telecommunications Division since
October 1, 1995. Mr. McTear had been Vice President-Finance and Business Affairs
of the Company's Broadcasting and Cable Television Division since June 1995 and
prior to that, was Executive Director-Finance of the Company's Broadcasting and
Cable Television Division.

JOEL P. RAWSON, 52, became Vice President and Executive Editor in January
1996. Prior to that, Mr. Rawson served as Deputy Executive Editor since 1989.

JOEL N. STARK, 51, is currently Vice President-Publishing Development and
Marketing, a position he has held since 1988.

HARRY DYSON, 59, a certified public accountant, is currently Treasurer and
Secretary, a position he has held since 1986.

F. REMINGTON BALLOU, 67, is Chief Executive Officer of B. A. Ballou & Co.
Inc., a jewelry manufacturing company, and served as its president from 1965 to
1995. Mr. Ballou has served as a Director of the Company

85
<PAGE> 86

since 1985. He is also a Director of Keyport Life Insurance Co. and Rhode Island
Hospital Trust National Bank.

HENRY P. BECTON, JR., 52, has been President and General Manager of WGBH
Education Foundation, the operator of public television and radio stations in
Massachusetts and producer of educational broadcast and non-broadcast
programming and software, since 1984. Mr. Becton has been a Director of the
Company since 1992 and currently serves as Chairman of the Nominating Committee
of the Board of Directors. He is also a director of Becton Dickinson and Company
and is a trustee or director of the following investment companies managed by
Scudder, Stevens & Clark: Scudder Cash Investment Trust; Scudder California Tax
Free Trust; Scudder Municipal Trust; Scudder State Tax Free Trust; Scudder
Investment Trust; and Scudder Portfolio Trust.

FANCHON M. BURNHAM, 51, has been a partner in the accounting firm of F.M.
Burnham and Associates (formerly Brooks/Burnham) in Washington, D.C., since
1985. Ms. Burnham has been a Director of the Company since 1992.

KAY K. CLARKE, 57, is President of Templeton, Ltd., a management consulting
firm. Prior to that, Ms. Clarke was President of the Micromarketing Division and
Senior Vice President-Business Development for ADVO, Inc., which she joined in
1990, from McGraw-Hill, Inc., where she was Executive Vice President. Ms. Clarke
is also a director of Guardian Life Insurance Company of America, Age Wave, Inc.
and Lumex, Inc. Ms. Clarke joined the Company's Board of Directors in 1995.

PETER B. FREEMAN, 63, has been a Director of the Company since 1981 and
currently serves as Chairman of the Audit Committee of the Board of Directors.
During the past five years Mr. Freeman has been self-employed as a corporate
director and trustee, including serving as a director of Blackstone Valley
Electric Company, AMICA Mutual Insurance Company and AMICA Life Insurance
Company, a trustee of Eastern Utilities Associates, as well as a trustee or
director of the following investment companies managed by Scudder, Stevens &
Clark: Scudder Fund, Inc.; Scudder Institutional Fund, Inc.; Scudder Cash
Investment Trust; Scudder California Tax Free Trust; Scudder Municipal Trust;
Scudder State Tax Free Trust; Scudder Tax Free Money Fund; Scudder Tax Free
Trust; Scudder Funds Trust; and Scudder Variable Life Investment Fund.

BENJAMIN P. HARRIS, III, 59, has been a partner in the law firm of Edwards
& Angell, Providence, Rhode Island, since 1969 and became a senior partner as of
January 1, 1996. Mr. Harris has been a Director of the Company since 1985. Mr.
Harris is also a director of The Providence Mutual Fire Insurance Company.

PAUL A. MAEDER, 42, is Managing General Partner of Highland Capital
Partners, Inc., where he manages the firm's technology investments. Before
joining Highland in 1988, Mr. Maeder was a general partner at Charles River
Ventures. Mr. Maeder is also a Director of AVID, The Dodge Group, SQA, Inc.,
HighGround Systems Inc. and PureSpeech, Inc. Mr. Maeder has been a Director of
the Company since 1995.

TRYGVE E. MYHREN, 59, was President and Chief Operating Officer of the
Company from 1990 until his recent resignation effective March 31, 1996. From
1981 to 1988, Mr. Myhren was Chairman and Chief Executive Officer of American
Television and Communications Corporation (now Time Warner Cable). Mr. Myhren
was a member of the Board of Directors of the National Cable Television
Association from 1980 to 1991 and served as its Chairman in 1986 and 1987. Prior
to joining the Company, Mr. Myhren served as President and Chief Executive
Officer of Myhren Media and General Partner of Arizona & Southwest Cable from
1989 to 1990. Mr. Myhren is currently a director of Advanced Marketing Services,
Inc., Peapod, Cable Labs and Continental. Mr. Myhren has been a Director of the
Company since 1994.

JOHN W. ROSENBLUM, 52, became the Tayloe Murphy Professor of Business
Administration at the Darden School of Business, University of Virginia, in
1993. From 1982 to 1993, Mr. Rosenblum was the Dean of the Darden School of
Business. Mr. Rosenblum serves on the Board of Directors of Cadmus
Communications Corp., Chesapeake Corporation, Comdial Corporation, Cone Mills
Corporation and T. Rowe Price Associates. He has been a Director of the Company
since 1992 and currently serves as Chairman of the Compensation Committee of the
Board of Directors.

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<PAGE> 87

W. NICHOLAS THORNDIKE, 63, has been a Director of the Company since 1984
and currently serves as Chairman of the Executive Committee of the Board of
Directors. Mr. Thorndike serves as a corporate director or trustee of a number
of organizations, including Bradley Real Estate, Inc., Courier Corporation, Data
General, Eastern Utilities Associates and The Putnam Funds. He also serves as a
trustee of Massachusetts General Hospital, having served as Chairman of the
Board of Directors from 1987 to 1992 and President from 1992 to 1994. In
February 1994 he accepted appointment as a successor trustee of private trusts
in which he has no beneficial interest, and concurrently became, serving until
October 1994, Chairman of the Board of Directors of two privately-owned
corporations controlled by such trusts that filed voluntary petitions for relief
under Chapter 11 of the United States Bankruptcy Code in August 1994.

JOHN W. WALL, 71, retired as Vice-Chairman of Rhode Island Hospital Trust
National Bank ("Hospital Trust"), Providence, Rhode Island in 1986. Mr. Wall had
been with Hospital Trust since 1946. He returned to Hospital Trust at
management's request to serve as Chairman and Chief Executive Officer from 1991
to 1992. Since 1992 Mr. Wall has served as Vice-Chairman of Hospital Trust. Mr.
Wall has served as a Director of the Company since 1975.

PATRICK R. WILMERDING, 53, has been a Director of the Company since 1979.
Mr. Wilmerding has been chairman of Private Signals, Inc., an import/export
company, since 1994. Prior to that, he served as a Division Executive with The
First National Bank of Boston. Mr. Wilmerding is a director of the Indian
Opportunities Fund and a trustee of five U.S. business trusts managed by Martin
Currie Investment Management Ltd.

COMMITTEES OF THE BOARD OF DIRECTORS OF THE COMPANY

The standing committees of the Board of Directors of the Company are an
Executive Committee, an Audit Committee, a Compensation Committee and a
Nominating Committee. The Executive Committee has authority to exercise
substantially all authority of the Board of Directors with specific exceptions
provided by law and the Company's By-Laws. The Audit Committee reviews the
Company's audit plan, the scope of activities of the independent auditors and of
internal auditors, the results of the audit after completion, and the fees for
services performed during the year. The Audit Committee also recommends to the
Board of Directors the firm to be appointed as independent auditors. During
portions of some meetings this Committee meets with representatives of the
independent auditors without any officers or employees of the Company present.
The Compensation Committee administers the Company's Incentive Stock Plans and
retirement and benefit plans, determines the compensation of key officers of the
Company and authorizes and approves bonus-incentive compensation programs for
executive personnel. The Nominating Committee considers and recommends to the
Board of Directors nominees for possible election to the Board of Directors and
considers other matters pertaining to the size and composition of the Board of
Directors and its Committees.

COMPENSATION OF DIRECTORS

The Board of Directors of the Company is comprised of thirteen Directors,
one of whom is a salaried employee of the Company. Directors who are full-time
employees of the Company receive no additional compensation for services
rendered as a Director. The members of the Company's Board of Directors who are
not officers of the Company ("Non-Employee Directors") receive an annual
retainer of $10,000. In addition, each Non-Employee Director received a fee of
$950 for each meeting attended in 1995, which amount was increased to $1,250 in
1996 as a result of the Board of Directors' decision to reduce from ten to six
the number of meetings but increase their length from a half day to four full
day meetings and strategic meetings in December and July lasting one full day
and two full days, respectively. The Company also pays each Non-Employee
Director a fee of $750 for each Committee meeting attended. In addition, the
Chairmen of the Executive Committee, the Audit Committee, the Compensation
Committee and the Nominating Committee of the Company's Board of Directors
receive an annual retainer of $3,000, $2,500, $2,500 and $1,000, respectively.
Directors who reside outside the Providence area are reimbursed for their travel
expenses incurred in connection with attendance at meetings of the Company's
Board of Directors. The Board of Directors recently adopted a resolution which
requires Non-Employee Directors to own the equivalent of at least three times
their annual compensation in shares of Common Stock.

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<PAGE> 88

The Directors of the Company are participants in the Company's IUP Plan. At
December 31, 1994, the Directors held 296,100 Stock Units (adjusted to give
effect to the Stock Split) in the IUP. Upon the liquidation of eighty-five
percent of the Stock Units in the IUP, which occurred prior to the consummation
of the Merger, the Non-Employee Directors were paid an aggregate amount of
$3,610,263 in a combination of cash and stock. The payout related to the
liquidation of the remaining fifteen percent of the Stock Units in the IUP is
anticipated in the second half of 1996. See footnote (2) to table, "Aggregated
SAR Exercises in Last Fiscal Year and Year-End SAR Values".

Each Non-Employee Director of the Company also participates in the
Company's 1994 Non-Employee Director Stock Option Plan (the "Director Option
Plan"). Under the Director Option Plan, an option to purchase 4,500 shares
(adjusted to give effect to the Stock Split) of the Class A Common Stock is
granted to each Non-Employee Director upon commencement of service on the Board
of Directors. An option to purchase an additional 4,500 shares is granted to
each such Director on October 1 of each subsequent year the Director Option Plan
is in effect. The exercise price for each option is the fair market value of the
Company's Class A Common Stock on the date of grant. Each option is exercisable
one year following the date of grant.

EXECUTIVE COMPENSATION

The following table sets forth for the fiscal years ended December 31,
1995, 1994 and 1993 information regarding compensation paid by the Company and
its predecessor, Old PJC, to the Chief Executive Officer and the Company's other
four most highly compensated executive officers (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION(1)
ANNUAL COMPENSATION -------------------------
----------------------------------- RESTRICTED SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(2) AWARDS(3) OPTIONS(#)(4) COMPENSATION(5)
- ---------------------- ----- --------- -------- --------------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen Hamblett...... 1995 $600,000 $390,000 -- -- 67,500 $ 702
Chairman, Chief 1994 600,000 360,000 -- -- 67,500 702
Executive Officer 1993 600,000 360,000 -- $1,013,800 -- 30,702
and Publisher
Trygve E. Myhren(6)... 1995 500,000 325,000 -- -- 51,750 702
President and Chief 1994 500,000 300,000 -- -- 51,750 702
Operating Officer 1993 500,000 300,000 $51,949 762,200 -- 25,702
Jack C. Clifford...... 1995 260,000 169,000 -- -- 29,250 702
Executive Vice 1994 260,000 171,000 47,481 -- 24,750 544,702
1993 260,000 156,000 407,000 -- 702
President-Broadcasting,
Programming and
Electronic Media
John A. Bowers........ 1995 180,000 117,000 -- -- 18,000 702
Vice President- 1994 180,000 108,000 52,544 -- 15,750 702
Human Resources 1993 180,000 108,000 -- 273,800 -- 9,702
John L. Hammond....... 1995 155,000 147,000(7) -- -- 18,000 702
Vice 1994 148,000 74,200(7) -- -- 4,500 702
President-General
Counsel & Chief 1993 140,000 56,000(7) -- 199,800 -- 30,846
Administrative
Officer

<FN>
- ---------------
(1) All participants, including the Named Executive Officers, in the Company's
1994 Employee Stock Option Plan (the "Employee Option Plan"), the Director
Option Plan and the Company's Restricted Stock Unit Plan (the "Restricted
Stock Unit Plan") previously were to receive additional payments in cash or
shares of the Company's Class A Common Stock reflecting any increase in the
price of Continental class A common stock established after a public
offering thereof or in certain other circumstances. As a result of the
proposed US West Merger, participants in these plans now may receive such
additional payments based on the increased price of Continental class A
common stock reflected in the proposed merger. See footnote (2) to table,
"Aggregated SAR Exercises in Last Fiscal Year and Year-End SAR Values".
</TABLE>
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<PAGE> 89

(2) This column includes the aggregate incremental cost to the Company of
providing various perquisites and personal benefits. Includes automobile
purchase allowances in 1994 for Mr. Clifford and Mr. Bowers of $21,702 and
$31,540, respectively. During 1993, Mr. Myhren was granted an allowance to
purchase a vehicle including tax reimbursement for $23,148.

(3) This column shows the market value of Restricted Stock Unit awards made
pursuant to the Restricted Stock Unit Plan on October 1, 1993, the date of
grant, to senior officers of the Company including the executives listed on
the table above. Restricted stock units will be completely vested on October
1, 1996. The number of restricted stock unit holdings at the end of 1995
(adjusted for the Stock Split) were for Mr. Hamblett, 147,150 units; Mr.
Myhren, 110,250 units; Mr. Clifford, 58,950 units; Mr. Bowers, 39,600 units;
and Mr. Hammond, 28,800 units. The value of each unit as of December 31,
1995, based upon the most recent independent appraisal of the Class A Common
Stock, is $11.27 (adjusted for the Stock Split). Dividends are added to the
awards as and when declared, but have not been accrued in the listed
valuation.

(4) Adjusted for the Stock Split.

(5) The amount shown for Mr. Clifford in 1994 includes a payout of $544,000
pursuant to a previous deferred bonus arrangement. The amounts shown for
1993 include Old PJC class A common stock granted in lieu of salary
increases in 1993 to Mr. Hamblett, Mr. Myhren, and Mr. Bowers in the amounts
of $30,000, $25,000 and $9,000, respectively. The remaining amounts shown in
the table are amounts contributed under the Company's 401(k) Plan as
described below under the caption "Retirement Benefits". The amount shown
for Mr. Hammond in 1993 includes $30,142 in moving expenses.

(6) Resigned from the Company effective March 31, 1996. See "Change in Control
and Termination of Employment Agreements" for a discussion of payments made
to Mr. Myhren upon his resignation.

(7) Includes deferred compensation.

The following table sets forth stock options granted on October 1, 1995 to
the Named Executive Officers pursuant to the Employee Option Plan.

OPTION/SAR GRANTS IN FISCAL YEAR 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- --------------------------------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME GRANTED(1) FISCAL YEAR ($/SH)(2) DATE 5% 10%
---- ---------- ------------- -------------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stephen Hamblett....... 67,500 19% $11.27 10/04/05 $478,500 $1,212,450
Trygve E. Myhren....... 51,750 14% 11.27 10/04/05 366,850 929,945
Jack C. Clifford....... 29,250 8% 11.27 10/04/05 207,350 525,395
John A. Bowers......... 18,000 5% 11.27 10/04/05 127,600 323,320
John L. Hammond........ 18,000 5% 11.27 10/04/05 127,600 323,320

<FN>
- ---------------
(1) The options are non-qualified stock options and become exercisable in four
equal annual installments beginning October 1, 1996. All options become
exercisable immediately upon a change of control (as defined in the Employee
Option Plan). Adjusted for the Stock Split.

(2) The per share option exercise price represents the fair market value of the
Company's Class A Common Stock at the date of grant, adjusted for the Stock
Split. In accordance with the terms of the Employee Option Plan, the
Committee used the most recent valuation by an independent appraisal firm as
the basis to determine the fair market value since the Company's shares are
not traded on a public market.

(3) The dollar amounts under these columns result from calculations at the 5%
and 10% assumed appreciation rate set by the Securities and Exchange
Commission (the "Commission") and, therefore, are not intended to forecast
possible future appreciation, if any, of the Company's Class A Common Stock
price. At the 5% and 10% assumed appreciation rate the price per share of
the Company's Class A Common Stock would be $18.36 and $29.23, respectively,
adjusted for the Stock Split.
</TABLE>
89
<PAGE> 90

AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1995
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR-END(#) AT FISCAL YEAR-END
NAME EXERCISE(#)(1) REALIZED(2) EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE(2)
- ---------------------- ----------- ----------- ----------------------------- ----------------------------
<S> <C> <C> <C> <C>
Stephen Hamblett...... -- -- 17,100/117,900 $167,580/$493,920
Trygve E. Myhren...... -- -- 51,750/ 51,750 507,150/ 0
Jack C. Clifford...... 6,300 $61,740 0/ 47,700 0/ 180,810
John A. Bowers........ -- -- 4,050/ 29,700 39,690/ 114,660
John L. Hammond....... -- -- 1,350/ 21,150 13,230/ 30,870
</TABLE>

- ---------------
(1) Adjusted for the Stock Split.

(2) The amounts in these columns are calculated using the difference between the
fair market value of the Company's Class A Common Stock at the end of the
Company's 1995 fiscal year (using the most recent appraisal of the Class A
Common Stock) and the option exercise prices.

AGGREGATED SAR EXERCISES IN FISCAL YEAR 1995
AND FISCAL YEAR-END SAR VALUES

<TABLE>
<CAPTION>
STOCK UNITS VALUE NUMBER OF VALUE OF
NAME LIQUIDATED(1) REALIZED(2) RETAINED STOCK UNITS(1) RETAINED STOCK UNITS(2)
- ----------------------------- ------------- ----------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Stephen Hamblett............. 563,400 $12,474,965 99,000 $ 2,201,464
Trygve E. Myhren............. 305,100 4,720,747 54,000 833,073
Jack C. Clifford............. 201,600 4,086,289 35,550 721,110
John A. Bowers............... 71,100 759,366 12,600 134,006
John L. Hammond.............. -- -- -- --
</TABLE>

- ---------------
(1) Adjusted for the Stock Split.

(2) Eighty-five percent of the Stock Units in the IUP were liquidated upon
completion of an independent appraisal of the class A common stock of Old
PJC with respect to Old PJC's non-cable assets (the "Company Appraisal"),
which was completed prior to the Merger. Each of the Stock Units of an IUP
participant was valued in an amount equal to the sum of (i) the price
ascribed to a share of the Company's Common Stock as determined by the
Company Appraisal and (ii) the price ascribed to a share of Continental
Common Stock received by the Old PJC shareholders (the "Continental Merger
Stock") on the date of the closing of the Merger, which was $19.40 per share
(the "Continental Closing Share Value"). IUP participants received a
combination of cash and Old PJC class A common stock, net of tax
obligations, in the liquidation of eighty-five percent of the Stock Units.
The Old PJC class A common stock received by IUP participants was exchanged
for Continental Merger Stock and Class A Common Stock in connection with the
Merger and the Spin-Off. The remaining obligations regarding the IUP,
including the Stock Units that were not liquidated (the "Retained Stock
Units") were transferred to and assumed by the Company. Each of the Retained
Stock Units will be valued based upon the sum of (a) the fair market value
of a share of Continental class A common stock determined as described below
(the "Continental Share Value"), and (b) the value of the Common Stock
previously determined in the Company Appraisal. The Retained Stock Units
will be liquidated by payment in cash or Class A Common Stock to the IUP
participants promptly after determination of the Continental Share Value. If
the Continental Share Value is less than the Continental Closing Share Value
at the time the Continental Share Value is determined, an amount equal to
the shortfall shall be deducted from the amount paid with respect to the
Retained Stock Units. Alternatively, if, at the time of such payment, the
Continental Share Value is more than the Continental Closing Share Value,
the IUP participants will be paid in cash or Class A Common Stock an amount
equal to the incremental amount, if any, that would have been due each IUP
participant had the Continental Share Value been used instead of the
Continental Closing

90
<PAGE> 91

Share Value in the valuation of Stock Units in connection with the
liquidation of eighty-five percent of the Stock Units. At the time of such
payment, all obligations regarding the IUP will have been finally and fully
satisfied. A similar adjustment is applicable to the Company's other Stock
Incentive Plans. Previously, the Continental Share Value was to be
determined after the earlier of a public offering of Continental class A
common stock or the issuance by Continental of shares of its capital stock
for aggregate consideration of not less than $1 billion and, if neither
event occurred within eighteen months of the closing of the Merger, the
Continental Share Value was to be determined by independent appraisal. Since
consummation of the Merger, Continental has agreed to merge with US West.
Accordingly, pursuant to a resolution of the Compensation Committee of the
Company's Board of Directors, the Continental Share Value has been
re-defined as the amount received by the holders of Continental's class A
common stock (which holders include the shareholders of the Company that
were shareholders of Old PJC) upon consummation of the US West Merger or, if
the merger agreement between Continental and US West is terminated, the
average of the closing prices for Continental class A common stock during
the last 20 trading days during the first 90 days after the later to occur
of the following: (a) termination of the merger agreement between
Continental and US West; or (b) listing of Continental's class A common
stock on the NASDAQ National Market System or on a national securities
exchange. The adjustments to the IUP and the other Stock Incentive Plans are
part of the anticipated $320 million increase in the value of Continental
class A common stock received by stockholders of Old PJC in the Merger
assuming consummation of the US West Merger. Such $320 million increase has
been estimated by the Company to be the difference between the value
ascribed to the approximate 30.2 million shares of Continental class A
common stock received by shareholders of Old PJC at the time of the Merger
($19.40 per share) and the value of such shares in the US West Merger
(currently anticipated to be approximately $30.00 per share). The
adjustments to the Stock Incentive Plans are based on such difference in
value, and are being made by the Compensation Committee of the Company's
Board of Directors under the terms of each such plan authorizing the
Compensation Committee to make such adjustments as are appropriate to meet
the intent of the plan in the event of an extraordinary transaction. The
actual number of shares of Class A Common Stock to be issued will depend on
the fair market value of the Class A Common Stock determined in accordance
with the terms of such plans at the effective time of the US West Merger.
See "Business -- Background; Reorganization".

RETIREMENT BENEFITS

PENSION PLAN TABLE

<TABLE>
<CAPTION>
EARNINGS CREDITED YEARS OF SERVICE AT RETIREMENT
FOR RETIREMENT -----------------------------------------------
BENEFITS 10 15 20 25
- ------------------------------------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 150,000....................................... $ 28,177 $ 42,265 $ 53,353 $ 70,442
200,000...................................... 38,177 57,265 76,353 95,442
300,000...................................... 58,177 87,265 116,353 145,442
400,000...................................... 78,177 117,265 156,353 195,442
500,000...................................... 98,177 147,265 196,353 245,442
600,000...................................... 118,177 177,265 236,353 295,442
700,000...................................... 138,177 207,265 276,353 345,442
800,000...................................... 158,177 237,265 316,353 395,442
900,000...................................... 178,177 267,235 356,353 445,442
1,000,000...................................... 198,177 297,265 396,353 495,442
1,100,000...................................... 218,177 327,265 436,353 545,442
1,200,000...................................... 238,177 357,265 476,353 595,442
</TABLE>

The Company maintains a retirement income plan (the "Pension Plan") which
is a funded, qualified, non-contributory, defined benefit plan that covers all
employees, including executive officers, of the Company and its subsidiaries.
The Pension Plan provides benefits based on the participant's highest average
salary for

91
<PAGE> 92

the 60 consecutive months within the ten years last served with the Company
prior to retirement and the participant's length of service. The amounts payable
under the Pension Plan are in addition to any Social Security benefit to be
received by a participant. The Pension Plan benefit vests upon completion of
five years of service with the Company.

As of December 31, 1995, the Named Executive Officers have the following
years of credited service calculated as set forth in the Pension Plan: Mr.
Hamblett, 38 years; Mr. Myhren, 5 years; Mr. Clifford, 17 years; Mr. Bowers, 16
years; and Mr. Hammond, 3 years. For purposes of calculating their retirement
benefit in the above table, the Supplemental Retirement Plan discussed below
requires that Mr. Myhren and Mr. Clifford be deemed to have been employed by the
Company since age 35. Under such plan, the resulting benefit for each of these
two executive officers would be reduced by an amount which represents the
estimate of benefits under the provisions of the Pension Plan based upon the
executive officer's years of service with prior employers.

The amounts shown in the table above have been calculated without reference
to the maximum limitations imposed by the Internal Revenue Code of 1986, as
amended (the "Code") on benefits which may be paid, or on compensation that may
be recognized, under a qualified defined benefit plan. The amounts include the
estimated total annual retirement benefits that would be paid from the Pension
Plan and, if applicable, the Excess Benefit Plan and the Supplemental Retirement
Plan.

The Company has established an Excess Benefit Plan to provide pension
benefits for certain employees, including the Named Executive Officers. The
Excess Benefit Plan provides that each participant will receive benefits
thereunder equal to the difference between the amount such participant is
entitled to receive under the Pension Plan and the amount he or she would have
been entitled to receive without regard to the maximum limitations imposed by
the Code. Participants will be vested under the Excess Benefit Plan according to
the same vesting provisions as the Pension Plan. The Excess Benefit Plan is
unfunded.

The Company has also established a Supplemental Retirement Plan to provide
full retirement benefits (less an imputed benefit for service with previous
employers) for any of the five top executive officers of the Company who retire
as employees of the Company and who would not otherwise receive full pension
benefits because of a shortened length of service with the Company. The
Supplemental Retirement Plan is unfunded. "Covered Compensation" for the Named
Executive Officers under the Supplemental Retirement Plan is the total of their
salary and bonus payments shown in the Summary Compensation Table above.

The Company has established the Journal Qualified Compensation Deferral
Plan (the "401(k) Plan") to provide a savings incentive for employees. The
401(k) Plan involves a contribution of up to $10.50 per week by the Company for
each participating employee and a matching contribution of $3 per week for each
participant who deducts 2% to 15% of pre-tax income. Employees who have
completed six months of service with the Company, including the Named Executive
Officers, are eligible to participate in the 401(k) Plan.

CHANGE OF CONTROL AND TERMINATION OF EMPLOYMENT AGREEMENTS

On October 11, 1993, the Company entered into change of control agreements
with certain executives of the Company, including the Named Executive Officers,
which agreements become effective upon a change in control of the Company (the
"Change of Control Agreements"). Mr. Myhren's Change of Control Agreement was
terminated effective March 31, 1996.

In the event of a change of control, each of the agreements with Messrs.
Hamblett, Myhren, Clifford and Bowers provides a three-year term of employment
with responsibilities, compensation and benefits at least commensurate with
those experienced by such officer during the prior six months. If terminated
involuntarily, the individual is entitled to 299% of the highest annual base
salary and average bonus received during the prior three years as a lump sum
severance payment. The agreement with Mr. Hammond provides for a two-year term
and severance of 150% of the highest annual base salary and average bonus
received during the prior three years. In the event of a voluntary resignation,
the agreement provides a severance benefit equal to six months of base salary.
Dismissal of the officer for cause results in no severance payment to the
individual.

On October 11, 1993, in a supplemental letter agreement, the Company agreed
to pay the Maximum Severance to Messrs. Hamblett, Myhren, Clifford and Bowers
(or a lesser severance for certain other

92
<PAGE> 93

executives) in the event any of these executives were to be involuntarily
terminated as a result of a corporate restructuring even if prior to a change of
control. However, the Maximum Severance (or such lesser severance) will not
apply in the case of termination for cause, for unsatisfactory performance or as
a result of a reduction in staff for economic reasons. The Change of Control
Agreements specify that if the Company seeks to retain the executive subsequent
to the restructuring, even with diminished responsibilities, and such executive
declines, a severance payment from the Company to the executive would be
discretionary.

The maximum amount that could be payable to all 20 executives pursuant to
the Change of Control Agreements or supplemental letter agreements based upon
the requisite percentage of base salary and bonus, in the event that each such
executive were to be terminated because of a change of control of the Company,
is approximately $11 million.

On February 9, 1996, the Company entered into an agreement with Trygve E.
Myhren in connection with his resignation effective March 31, 1996 as President
and Chief Operating Officer. This agreement provided for severance payments of
$2,434,100. In addition, this agreement provided that Mr. Myhren's 1994 grant of
51,750 stock options (adjusted for the Stock Split) under the Employee Option
Plan would become fully vested and exercisable as of the Effective Date and that
his 110,250 Stock Units (adjusted for the Stock Split) under the Restricted
Stock Unit Plan would become fully vested and would be distributed to him in
shares of the Company, net of tax obligations. The agreement also provided for
Mr. Myhren to receive distributions under the IUP on the same basis as all other
participants and that he would receive a retirement benefit of $143,735 per year
commencing at age 65 pursuant to the Company's Supplemental Retirement Plan. The
agreement also covers certain continuing relationships between Mr. Myhren and
the Company. Mr. Myhren will continue to serve as a member of the Board of
Directors of the Company and as the Company's representative on the Board of
Directors of Peapod, L.P., in which the Company has an interest of approximately
14.5%. Also, Mr. Myhren will continue to serve on the Board of Directors of
Continental as provided in the Merger Agreement. In addition, the agreement
provides that in the event that Mr. Hamblett dies, becomes disabled or resigns
prior to March 1, 1997, the Board of Directors of the Company has the right to
recall Mr. Myhren to full-time employment as the Company's Chief Executive
Officer. This recall arrangement is subject to termination by either party on
thirty days' notice.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Executive Committee of the Board of Directors of Old PJC performed the
functions of the compensation committee since Old PJC did not have a separate
committee for this function. The members of the Executive Committee during 1994
and 1995 were Messrs. Hamblett, Thorndike, Wall, Wilmerding and Mr. Henry D.
Sharpe, Jr., who retired from the Board of Directors on May 8, 1996. Mr.
Hamblett was the Chairman of the Board of Directors and Chief Executive Officer
of Old PJC. The Compensation Committee of the Company is comprised entirely of
non-employee Directors and held its first meeting in October 1995.

93
<PAGE> 94

PRINCIPAL STOCKHOLDERS

The following table sets forth information as of June 24, 1996 (giving
effect to the stock split) with respect to the shares of Class A Common Stock
and Class B Common Stock beneficially owned by (i) each person known by the
Company to own beneficially more than 5% of either class of Common Stock; (ii)
each Director of the Company; (iii) each Named Executive Officer; and (iv) all
Directors and executive officers of the Company as a group. The number of shares
beneficially owned by each stockholder, Director or executive officer is
determined according to rules of the Commission, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares as to which the individual or
entity has sole or shared voting power or investment power. As a consequence,
several persons may be deemed to be the "beneficial owners" of the same shares.
Except as noted below, each holder has sole voting and investment power with
respect to shares of Class A Common Stock and/or Class B Common Stock listed as
owned by such person or entity. When a person is a "co-trustee" or one of a
number of Directors of a corporation that owns shares of the Company's Common
Stock, he or she has shared voting and investment power.

<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
NUMBER OF OF NUMBER OF OF
SHARES OF OUTSTANDING SHARES OF OUTSTANDING
NAME AND ADDRESS CLASS A CLASS A CLASS B CLASS B AGGREGATE
OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK VOTING POWER
- ---------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Rhode Island Hospital Trust
National Bank(1)................ 4,129,650 23.8% 5,664,150 26.9% 26.4%
One Hospital Trust Tower
Providence, RI 02903
Fiduciary Trust Company
International(2)................ 1,128,600 6.5% 1,405,800 6.7% 6.6%
Two World Trade Center
New York, NY 10048
Southland Communications, Inc. ... 1,087,200 6.3% 941,400 4.5% 4.8%
127 Dorrance Street
Providence, RI 02903
Helen D. Buchanan(3).............. 1,071,000 6.2% 1,011,600 4.8% 5.0%
c/o Manasett Corporation
127 Dorrance Street Providence,
RI 02903
Murray S. Danforth, III(4)........ 1,092,600 6.3% 1,038,600 4.9% 5.2%
c/o Manasett Corporation
127 Dorrance Street
Providence, RI 02903
Esther E. M. Mauran(5)............ 1,197,000 6.9% 1,080,900 5.1% 5.4%
c/o Manasett Corporation
127 Dorrance Street
Providence, RI 02903
Frank Mauran(6)................... 2,006,100 11.6% 2,115,000 10.0% 10.3%
c/o Manasett Corporation
127 Dorrance Street
Providence, RI 02903
Pauline C. Metcalf(7)............. 1,359,000 7.8% 1,277,550 6.1% 6.4%
c/o Manasett Corporation
127 Dorrance Street
Providence, RI 02903
Jane P. Watkins(8)................ 1,058,850 6.1% 1,114,200 5.3% 5.4%
c/o Manasett Corporation
127 Dorrance Street
Providence, RI 02903
NAME OF DIRECTOR/
EXECUTIVE OFFICER(9)
- ----------------------------------
Stephen Hamblett.................. 186,300 1.1% 66,600 0.3% 0.4%
F. Remington Ballou............... 20,700 0.1% 10,800 0.1% 0.1%
Henry P. Becton, Jr. ............. 5,850 0.0% -- -- 0.0%
Fanchon M. Burnham(10)............ 166,950 1.0% 169,200 0.8% 0.8%
</TABLE>

94
<PAGE> 95

- ---------------
(1) Hospital Trust, as a fiduciary, possesses sole voting and investment power
as to 314,550 shares of Class A Common Stock and 1,137,600 shares of Class
B Common Stock and shared voting and investment power as to 3,815,100
shares of Class A Common Stock and 4,526,550 shares of Class B Common Stock
under a number of wills, trusts and agency arrangements. A substantial
majority of the shares so held are reflected elsewhere in this table, and
include some of the shares reported as beneficially owned by Helen D.
Buchanan, Frank Mauran, Esther E. M. Mauran, Pauline C. Metcalf and Jane P.
Watkins. Also, Hospital Trust is a co-trustee of several trusts for the
benefit of the family of the late Michael P. Metcalf holding 692,550 shares
of Class A Common Stock and 855,000 shares of Class B Common Stock.

(2) Fiduciary Trust Company International holds shares and acts as trustee
under trusts created by Henry D. Sharpe, Jr. and his wife, Peggy Boyd
Sharpe, for the benefit of members of the Sharpe family and, in certain
cases, designated charitable organizations. Fiduciary Trust Company
International shares voting and investment power with Mr. Sharpe's children
as to 135,000 shares of Class A Common Stock; as to all other shares,
Fiduciary Trust Company International possesses sole voting and investment
power.

(3) Helen D. Buchanan is co-trustee with Hospital Trust and her daughter, Jane
P. Watkins, of the Helen M. Danforth 1935 Trust, which holds 997,200 shares
of Class A Common Stock and 997,200 shares of Class B Common Stock; is
co-trustee with Hospital Trust of the Helen M. Danforth 1941 Trust, which
holds 12,150 shares of Class B Common Stock; is one of the directors of two
corporations holding 70,200 shares of Class A Common Stock and 2,250 shares
of Class B Common Stock; and holds 3,600 shares of Class A Common Stock
through a revocable trust.

(4) Murray S. Danforth, III owns 503,100 shares of Class A Common Stock and
472,500 shares of Class B Common Stock; is sole trustee of a trust for the
benefit of his sister, which holds 508,500 shares of Class A Common Stock
and 477,900 shares of Class B Common Stock; is co-trustee of a trust for
the benefit of his sister which holds 73,800 shares of Class B Common
Stock; is one of four co-trustees of the Murray S. Danforth, Jr. Grantor
Trust No. 2 which holds 81,000 shares of Class A Common Stock and 5,400
shares of Class B Common Stock; and is co-trustee of the Manasett
Corporation Retirement Plan, which holds 9,000 shares of Class B Common
Stock.

(5) Esther E. M. Mauran is one of the Directors of Southland Communications,
Inc., which owns the shares indicated in the foregoing table. In addition,
Mrs. Mauran owns 109,800 shares of Class A Common Stock and 139,500 shares
of Class B Common Stock.

(6) Frank Mauran, the husband of Esther E. M. Mauran, owns 18,000 shares of
Class B Common Stock; is co-trustee with Hospital Trust (and another
individual in one case) of several trusts created by

95
<PAGE> 96

Mrs. Mauran's father, George P. Metcalf, for the benefit of Mrs. Mauran and
her sister, Pauline C. Metcalf, which trusts hold 1,587,600 shares of Class
A Common Stock and 1,679,400 shares of Class B Common Stock; and is
co-trustee of the Esther E. M. Mauran Family Trust, which holds 418,500
shares of Class A Common Stock and 417,600 shares of Class B Common Stock.

(7) Pauline C. Metcalf is one of the Directors of Southland Communications,
Inc., which owns the shares indicated in the foregoing table. In addition,
through a revocable trust, Ms. Metcalf owns 271,800 shares of Class A
Common Stock and 336,150 shares of Class B Common Stock.

(8) Jane P. Watkins owns 52,650 shares of Class A Common Stock and 117,000
shares of Class B Common Stock; is a co-trustee with Hospital Trust and her
mother, Helen D. Buchanan, of the Helen M. Danforth 1935 Trust, which holds
997,200 shares of Class A Common Stock and 997,200 shares of Class B Common
Stock; and is co-trustee of a trust created by Mrs. Buchanan which holds
9,000 shares of Class A Common Stock.

(9) Includes maximum number of shares subject to purchase within sixty days
upon the exercise of stock options and, for Mr. Myhren, Restricted Stock
Units, as follows: Mr. Myhren, 122,400; Mr. Ballou, 2,250; Mr. Becton,
2,250; Ms. Burnham, 2,250; Mr. Freeman, 2,250; Mr. Harris, 2,250; Mr.
Rosenblum, 2,250; Mr. Thorndike, 2,250; Mr. Wall, 2,250; Mr. Wilmerding,
2,250; Mr. Bowers, 4,050; Mr. Hammond, 1,350; and Directors and Executive
Officers as a Group, 176,400.

(10) Fanchon M. Burnham owns 52,650 shares of Class A Common Stock, 66,150
shares of Class B Common Stock, and holds vested options exercisable within
sixty days to purchase an additional 2,250 shares of Class A Common Stock.
She serves as a co-trustee of trusts for her brother, which hold 94,950
shares of Class A Common Stock and 85,050 shares of Class B Common Stock.
In addition, Mrs. Burnham's children own a total of 17,100 shares of Class
A Common Stock and 18,000 shares of Class B Common Stock.

(11) Paul A. Maeder is one of four co-trustees of the Murray S. Danforth, Jr.
Grantor Trust No. 2 which holds 81,000 shares of Class A Common Stock and
5,400 shares of Class B Common Stock. He is co-trustee of two trusts, one
for the benefit of Murray S. Danforth, III and the other for the benefit of
Mr. Danforth's sister, with each trust holding 73,800 shares of Class B
Common Stock.

(12) W. Nicholas Thorndike owns 64,800 shares of Class A Common Stock, 48,600
shares of Class B Common Stock, and holds vested options exercisable within
sixty days to purchase an additional 2,250 shares of Class A Common Stock.
He is a co-trustee of several trusts for the benefit of members of another
family holding 1,130,400 shares of Class A Common Stock and 1,439,550
shares of Class B Common Stock. Mr. Thorndike is one of the Directors of
Southland Communications, Inc., which owns the shares indicated in the
foregoing table.

(13) Patrick R. Wilmerding owns 58,950 shares of Class A Common Stock, 129,600
shares of Class B Common Stock, and holds vested options exercisable within
sixty days to purchase an additional 2,250 shares of Class A Common Stock.
He is a co-trustee of several trusts for the benefit of his family holding
149,400 shares of Class A Common Stock and 142,200 shares of Class B Common
Stock.

CERTAIN TRANSACTIONS

The law firm of Edwards & Angell, of which Mr. Harris is a senior partner,
regularly performs legal services for the Company. Edwards & Angell has acted as
the Company's principal counsel for over 60 years.

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<PAGE> 97

DESCRIPTION OF CAPITAL STOCK

The Company is currently authorized to issue 196,825,000 shares of capital
stock consisting of: (i) 150,000,000 shares of Class A Common Stock, $1.00 par
value per share, of which 17,353,800 shares were outstanding as of June 24,
1996, and 75,000,000 shares are reserved for issuance upon the exercise of the
rights issued pursuant to the Rights Agreement (as defined herein) and (ii)
46,825,000 shares of Class B Common Stock, of which 21,067,650 shares were
outstanding as of June 24, 1996 and 23,412,500 shares are reserved for issuance
upon the exercise of rights issued pursuant to the Rights Agreement. In
addition, the Company has 1,972,800 shares of Class A Common Stock reserved for
issuance pursuant to options and units currently outstanding under the Option
Plans and the RSU and 21,067,650 shares of Class A Common Stock reserved for
issuance upon conversion of the Class B Common Stock.

The following description of the capital stock of the Company and certain
provisions of the Company's Certificate of Incorporation (the "Charter") and
By-Laws is a summary, does not purport to be complete and is subject to detailed
provisions of, and is qualified in its entirety by reference to, the Charter and
By-Laws, copies of which have been filed as exhibits to the Registration
Statement of which this Prospectus is a part and are available as set forth
under "Additional Information".

COMMON STOCK

VOTING. The holders of Class A Common Stock are entitled to one vote per
share held of record on all matters submitted to a vote of the stockholders and
the holders of Class B Common Stock are entitled to four votes per share held of
record on all such matters. Except as set forth below and except as may
otherwise be required by law, all actions submitted to a vote of stockholders
will be voted on by holders of Class A Common Stock and Class B Common Stock
together as a single class. The affirmative vote of the holders of a majority of
the outstanding shares of Class A Common Stock and Class B Common Stock, voting
separately as a class, is required (i) to approve any amendment to the Charter
that would alter or change the powers, preferences or special rights of such
series so as to affect it adversely and (ii) to approve such other matters as
may require class votes under the General Corporation Law of the State of
Delaware ("DGCL").

CONVERSION RIGHTS. Each share of Class B Common Stock is convertible at
the holder's option at all times, without cost to the stockholder, into one
share of Class A Common Stock. In addition, Class B Common Stock is subject to
automatic conversion in the event of a purported transfer in violation of the
transfer restrictions described below.

DIVIDENDS AND OTHER DISTRIBUTIONS (INCLUDING DISTRIBUTIONS UPON
LIQUIDATION). Each share of Class A Common Stock and Class B Common Stock are
equal in respect of dividends and other distributions in cash, stock or property
(including distributions upon liquidation of the Company), except that a
dividend payable in shares of Class B Common Stock to holders of Class B Common
Stock and in shares of Class A Common Stock to the holders of Class A Common
Stock shall be deemed to be shared equally among both classes. No dividend shall
be declared or paid in shares of Class B Common Stock except to holders of Class
B Common Stock, but dividends may be declared and paid, as determined by the
Board of Directors, in shares of Class A Common Stock to all holders of Common
Stock.

TRANSFERABILITY OF SHARES. The shares of Class A Common Stock offered
hereby are freely transferable, subject to certain restrictions on resale
imposed on affiliates of the Company and the Alien Ownership Restriction
described below. Class B Common Stock is not transferable by a stockholder
except to or among, principally, such holder's spouse, parents or a lineal
descendant of a parent, certain trusts established for their benefit and
beneficiaries thereof and certain entities, all of the outstanding ownership
interests of which are owned by Permitted Transferees (collectively, "Permitted
Transferees"). Further, any securities convertible into shares of Class B Common
Stock or which carry a right to subscribe to or acquire shares of Class B Common
Stock are subject to the transfer restrictions described above. Any purported
transfer of Class B Common Stock other than to a Permitted Transferee shall be
null and void and of no effect and the purported transfer by a holder of Class B
Common Stock, other than to a Permitted Transferee, will result in the immediate
and automatic conversion of such holder's shares of Class B Common Stock into
shares of Class A Common Stock.

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ALIEN OWNERSHIP RESTRICTIONS. The Company's Charter restricts the
ownership, voting and transfer of the Company's capital stock in accordance with
the Communications Act and the rules and regulations of the FCC, to prohibit
ownership of more than 25% of the Company's outstanding capital stock by or for
the account of aliens (the "Alien Ownership Restriction"). Aliens include: (a) a
person who is citizen of a country other than the United States; (b) an entity
organized under the laws of a government other than the government of the United
States or any state, territory or possession of the United States; (c) a
government other than the government of the United States or of any state,
territory, or possession of the United States; or (d) a representative of, or an
individual or entity controlled by, any of the foregoing ("Alien"). No more than
25% of the Company's directors may be Aliens and Aliens cannot serve as officers
of the Company.

In addition, the Charter authorizes the Board of Directors of the Company
to adopt such provisions as it deems necessary to enforce these prohibitions.
The Company has established certain procedures and controls designed to
determine the amount of capital stock owned at any time by Aliens and to
restrict the right of transfer if the capital stock of the Company held by
Aliens reaches 25%. Specifically, at the time shares of capital stock are
presented for transfer, the Company's transfer agent will inquire as to whether
the new shares are to be issued to or for the account of an Alien. If so, the
new shares will be issued on a different form of share certificate, designated a
"foreign share certificate." The transfer agent will keep the Company informed
as to the volume of shares represented by such foreign share certificates.

DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS

Certain provisions of the DGCL and of the Charter and By-Laws, summarized
in the following paragraphs, may be considered to have an anti-takeover effect
and may delay, deter or prevent a tender offer, proxy contest or other takeover
attempt that a stockholder might consider to be in such stockholder's best
interest, including such an attempt as might result in payment of a premium over
the market price for shares held by stockholders.

DELAWARE ANTI-TAKEOVER LAW. As a Delaware corporation, the Company is
subject to the provisions of the DGCL, including Section 203. In general,
Section 203 prohibits a public Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which such person became an interested
stockholder unless: (i) prior to such time, the Board of Directors approved
either the business combination or transaction which resulted in the stockholder
becoming an interested stockholder; or (ii) upon becoming an interested
stockholder, the stockholder then owned at least 85% of the voting stock, as
defined in Section 203; or (iii) at or subsequent to such time, the business
combination is approved by both the Board of Directors and by the holders of at
least 66 2/3% of the corporation's outstanding voting stock, excluding shares
owned by the interested stockholder. For these purposes, the term "business
combination" includes mergers, asset sales and other similar transactions with
an "interested stockholder." An "interested stockholder" is a person who,
together with affiliates and associates, owns (or, within the prior three years,
did own) 15% or more of the corporation's voting stock. Although Section 203
permits a corporation to elect not to be governed by its provisions, the Company
to date has not made this election.

INCREASED STOCKHOLDER VOTE REQUIRED IN CERTAIN BUSINESS COMBINATIONS AND
OTHER TRANSACTIONS AND RELEVANT FACTORS TO BE CONSIDERED BY THE BOARD OF
DIRECTORS. The Charter provides that in addition to any vote ordinarily
required under Section 203 of the DGCL, the affirmative vote of (i) not less
than two-thirds of the entire Board of Directors or (ii) if subsection (i) above
is not fully complied with, the holders of at least 80% of the combined voting
power of the then outstanding shares of stock of all classes entitled to vote
generally in the election of Directors, would be required to approve certain
business combinations.

The Charter also empowers the Board of Directors, when voting with regard
to any business combination, to take into account any factors that the Board of
Directors determines to be relevant, including, without limitation, (i) the
working conditions, job security or compensation of the employees of the Company
and its subsidiaries, (ii) the short-term and long-term financial stability of
the Company, (iii) the ability of the Company to publish an independent,
high-quality, comprehensive newspaper and to freely conduct its other operations
and those of its subsidiaries to the advantage of the customers and markets
served, (iv) the

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economic strength, business reputation, managerial ability and recognized
integrity of the party proposing the business combination and (v) the effects on
the communities served by the Company's newspapers and by its other operations.

The Charter requires the affirmative vote of holders of at least 80% of the
combined voting power of the then outstanding shares of stock of all classes
entitled to vote generally in the election of Directors cast at a meeting of the
stockholders called for the purpose to amend or repeal these business
combination Charter provisions; however, if the adoption of the change is
recommended to the stockholders by the vote of not less than two-thirds of the
entire Board of Directors, then the Charter instead requires the vote, if any,
required by the DGCL.

SPECIAL MEETINGS OF STOCKHOLDERS. The By-Laws provide that special
meetings of stockholders may be called by the Chairman of the Board of
Directors, President or by order of the Board of Directors.

CLASSIFIED BOARD OF DIRECTORS, REMOVAL OF DIRECTORS AND RELATED
MATTERS. The Charter and the By-Laws provide for the division of the Board of
Directors into three classes as nearly equal in size as possible with staggered
three-year terms. At each annual meeting of stockholders, successors to the
Directors whose terms expire at that annual meeting shall be elected for a
three-year term, with each Director to hold office until a successor has been
duly elected and qualified. As a result, approximately one-third of the Board of
Directors will be elected each year. See "Management -- Executive Officers and
Directors". Any director may be removed without cause only by the vote of at
least 80% of the shares entitled to vote for the election of directors;
provided, however, such 80% vote shall not be required for any such removal
recommended to the stockholders by the vote of not less than two-thirds of the
whole Board of Directors. The Charter and By-Laws require the affirmative vote
of holders of at least 80% of the combined voting power of the then outstanding
shares of stock of all classes entitled to vote generally in the election of
Directors cast at a meeting of the stockholders called for the purpose to amend
or repeal these Charter provisions; however, if the adoption of the change is
recommended to the stockholders by the vote of not less than two-thirds of the
entire Board of Directors, then the Charter and By Laws instead require the
vote, if any, required by the DGCL.

DIRECTOR LIABILITY AND INDEMNIFICATION

The Charter and the By-Laws, taken together, provide that the Company
shall, to the fullest extent permitted by the DGCL as then in effect, indemnify
any person who was or is involved in any manner or was or is threatened to be
made so involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative, 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 director, officer,
employee or agent of another corporation or other enterprise against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such proceeding. The Charter
provides that no director of the Company will be personally liable to the
Company or to its stockholders for monetary damages for breach of fiduciary duty
as a director. This right to indemnification includes the right to receive
payment of any expenses incurred by the person being indemnified in connection
with such proceeding in advance of the final disposition of the proceeding
consistent with applicable law as then in effect. All rights to indemnification
conferred in the Charter shall be contract rights. The right of indemnification,
including the right to receive payment in advance of expenses, conferred by the
Charter and By-Laws are not exclusive of any other rights to which any person
seeking indemnification may otherwise be entitled. By reference to Delaware law,
the Charter also specifies certain procedures, presumptions and remedies that
apply with respect to the right to indemnification and the advancement of
expenses provided for therein. The Charter requires the affirmative vote of
holders of at least 80% of the combined voting power of the then outstanding
shares of stock of all classes entitled to vote generally in the election of
Directors to amend or repeal the Charter indemnification provisions.

RIGHTS AGREEMENT

On May 8, 1996, the Company declared a dividend of one class A right (a
"Class A Right") for each outstanding share of Class A Common Stock and one
Class B right (a "Class B Right", and together with the

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<PAGE> 100

Class A Rights, the "Rights") for each outstanding share of Class B Common
Stock. The dividend will be payable before the Offerings to stockholders of
record on May 8, 1996 (the "Declaration Date"). Each Class A Right entitles the
registered holder to purchase from the Company one share of Class A Common Stock
of the Company at a price of $70 per share of Class A Common Stock (the "Class A
Purchase Price"), subject to adjustment. Each Class B Right entitles the
registered holder to purchase from the Company one share of Class B Common Stock
of the Company at a price of $70 per share of Class B Common Stock (the "Class B
Purchase Price", and together with the Class A Purchase Price, the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement dated May 8, 1996 (the "Rights Agreement") between
the Company and The First National Bank of Boston, as Rights Agent (the "Rights
Agent").

Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") have acquired beneficial ownership of (A) 15% or more of the Voting
Power (as defined in the Rights Agreement) of the Common Stock or (B) 35% or
more of the Voting Power of the Class A Common Stock or (ii) 10 business days
(or such later date as may be determined by action of the Board of Directors
prior to such time as any person or group of affiliated persons becomes an
Acquiring Person) following the commencement of, or announcement of an intention
to make, a tender offer or exchange offer the consummation of which would result
in the beneficial ownership by a person or group of either 15% or more of the
Voting Power of the Common Stock or 35% or more of the Voting Power of the Class
A Common Stock (the earlier of such dates being the "Distribution Date"), the
Class A Rights and the Class B Rights will be evidenced, with respect to any of
the Class A Common Stock certificates or Class B Common Stock certificates
outstanding as of the Record Date, by such Common Stock certificate with a copy
of the Summary of Rights attached thereto.

The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Common Stock. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Stock certificates issued after the
Record Date upon transfer or new issuance of Common Stock will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Stock outstanding as of the Record Date,
even without such notation or a copy of the Summary of Rights being attached
thereto, will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the applicable Rights
("Right Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights. Class B Rights may only be
transferred to Permitted Transferees (as such term is defined in the Rights
Agreement).

The Rights are not exercisable until the Distribution Date. The Rights will
expire on May 7, 2006 (the "Final Expiration Date"), unless the Final Expiration
Date is extended or unless the Rights are earlier redeemed or exchanged by the
Company, in each case as described below.

The Purchase Price payable, and the number of shares of Class A Common
Stock, Class B Common Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, such Common Stock, (ii) upon the grant to holders of
such Common Stock of certain rights or warrants to subscribe for or purchase
such Common Stock at a price, or securities convertible into such Common Stock
with a conversion price, less than the then-current market price of such Common
Stock or (iii) upon the distribution to holders of such Common Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
paid out of earnings or retained earnings or dividends payable in Common Stock)
or of subscription rights or warrants (other than those referred to above).

The number of outstanding Class A Rights and Class B Rights and the number
of shares of Class A Common Stock or Class B Common Stock issuable upon exercise
of each such Right are also subject to adjustment in the event of a stock split
of the Class A Common Stock or Class B Common Stock, as applicable, or a stock
dividend on the Class A Common Stock or Class B Common Stock, as applicable,

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payable in the related Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.

In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then-current exercise price
of the Right, that number of shares of common stock of the acquiring company,
which, at the time of such transaction, will have a market value of two times
the exercise price of the Right. In the event that any person or group of
affiliated or associated persons becomes an Acquiring Person, proper provision
shall be made so that each holder of a Class A Right and a Class B Right, other
than Rights beneficially owned by the Acquiring Person (which will thereafter be
void), will thereafter have the right to receive upon exercise that number of
shares of Class A Common Stock or Class B Common Stock, as applicable, having a
market value of two times the exercise price of such Right.

At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the Voting Power of
the Common Stock, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such person or group which will have become void),
in whole or in part, at an exchange ratio of one share of Class A Common Stock
or Class B Common Stock per related Right (subject to adjustment).

With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional share of Common Stock will be issued and in
lieu thereof, an adjustment in cash will be made based on the market price of
the Common Stock on the last trading day prior to the date of exercise.

At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the Voting Power of
the Common Stock or 35% or more of the Voting Power of the Class A Common Stock,
the Board of Directors of the Company may redeem the rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time on such basis with such conditions
as the Board of Directors in its sole discretion may establish. Immediately upon
any redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.

The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an amendment
to lower certain thresholds with respect to the Voting Power of the Common Stock
described above to not less than 10% and with respect to the Voting Power of the
Class A Common Stock to not less than 25%, except that from and after such time
as any person or group of affiliated or associated persons becomes an Acquiring
Person, no such amendment may adversely affect the interests of the holders of
the Rights.

Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.

A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Form 8-A dated May 8, 1996 and will be
available free of charge from the Company. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated in this
Prospectus by reference.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock of the Company is The
First National Bank of Boston.

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SHARES ELIGIBLE FOR FUTURE SALE

The shares of Class A Common Stock sold by the Company in the Offerings
will be freely tradable without restriction or further registration under the
Securities Act, except for shares held by "affiliates" of the Company (as that
term is defined in Rule 144 under the Securities Act), whose sales would be
subject to certain limitations and restrictions described below.

Upon completion of the Offerings, the Company will have outstanding
24,928,800 shares of Class A Common Stock and 21,067,650 shares of Class B
Common Stock. Each share of Class B Common Stock is convertible into a share of
Class A Common Stock at any time at the option of the holder. All of these
shares, including the 7,125,000 shares sold in the Underwritten Offering, the
450,000 shares sold in the Direct Placement, the 1,972,800 shares of Class A
Common Stock currently issuable upon exercise of options and units outstanding
under the Option Plans and the RSU, as well as shares to be issued pursuant to
the proposed Employee Stock Purchase Plan, will be tradable without restriction
unless they are held by directors, executive officers or other affiliates of the
Company. Any shares held by affiliates of the Company may be sold only if they
are registered under the Securities Act or are sold pursuant to an applicable
exemption from the registration requirements of the Securities Act, including
Rule 144 thereunder. In general, under Rule 144 as currently in effect, a person
(or persons whose shares are aggregated), including an affiliate, who has
beneficially owned shares for at least two years is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of (i)
1% of the then outstanding shares of Common Stock (249,288 shares immediately
after the Offerings) or (ii) the average weekly trading volume in the Common
Stock during the four calendar weeks preceding such sale, subject to the filing
of a Form 144 with respect to such sale and certain other limitations and
restrictions. In addition, a person who is not deemed to have been an affiliate
of the Company at any time during the 90 days preceding a sale and who has
beneficially owned the shares proposed to be sold for at least three years would
be entitled to sell such shares under Rule 144(k) without regard to the
requirements described above. To the extent that shares were acquired from an
affiliate of the Company, such stockholder's holding period for the purpose of
effecting a sale under Rule 144 commences on the date of transfer from the
affiliate. The Commission has recently proposed to amend Rule 144 to shorten
each of the two-year and three-year holding periods by one year.

In addition, in accordance with certain adjustments required pursuant to
the terms of the Company's existing Stock Incentive Plans as a result of the
proposed US West Merger, the Company believes that it will issue approximately
$7.7 million of Class A Common Stock in the event of the consummation of the US
West Merger. For additional information, see "Business -- Background;
Reorganization", "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Stock Based Compensation Payouts" and footnote 2 to
the table "Aggregated SAR Exercises in Fiscal Year 1995 and Fiscal Year-End SAR
Values" set forth herein under "Management -- Executive Compensation." The
actual number of shares of Class A Common Stock to be issued will depend on the
fair market value of the Class A Common Stock determined in accordance with the
terms of such plans at the effective time of the US West Merger.

All but 28,800 shares of Class A Common Stock and all shares of Class B
Common Stock currently outstanding are subject to the Tax Lockup, which
restrictions prohibit all transfers, sales, assignments or other dispositions
for value prior to October 5, 1996. See "Business -- Background;
Reorganization." Of the 28,800 shares of Class A Common Stock not subject to the
Tax Lockup, 26,550 shares are held by executive officers of the Company. In
addition, the Company, each of the Company's directors and executive officers
and owners of more than 5% of the Class A Common Stock and Class B Common Stock
(other than (i) Hospital Trust as to 900,000 shares of Class A Common Stock and
Class B Common Stock over which Hospital Trust exercises sole or shared
investment power under 64 wills, trusts and agency arrangements and (ii)
Fiduciary Trust Company International as to 617,400 shares of Class A Common
Stock and Class B Common Stock over which Fiduciary Trust Company International
exercises sole or shared investment power under five wills, trusts and agency
relationships) have agreed not to offer, sell, contract to sell or otherwise
dispose of shares of Common Stock (or securities convertible into, or
exchangeable or exercisable for, such shares) held by them (other than shares of
Class A Common Stock offered hereby) for 180 days after the date of this
Prospectus, without the prior written consent of Merrill Lynch, Pierce, Fenner &
Smith Incorporated acting on behalf of the Underwriters, subject to certain
limited exceptions included in the Purchase Agreement (as defined

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herein). Further, all employees who purchase Class A Common Stock in the Direct
Placement have agreed to similar transfer restrictions for a period of 30 days
after the date of this Prospectus.

No prediction can be made as to the effect, if any, that market sales of
such shares or the availability of such shares for future sale will have on the
market price of shares of Class A Common Stock prevailing from time to time.
Future sales of substantial amounts of Class A Common Stock by existing
stockholders could adversely affect the prevailing market price of the Class A
Common Stock after the Offerings and the Company's ability to raise additional
capital through the sale of equity securities or equity-related securities in
the future at a time and price which it deems appropriate.

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UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Company has agreed to sell to each of the
underwriters named below (the "Underwriters"), and each of the Underwriters, for
whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bear, Stearns & Co.
Inc. and Donaldson, Lufkin & Jenrette Securities Corporation are acting as
representatives (the "Representatives"), severally has agreed to purchase, the
aggregate number of shares of Class A Common Stock set forth opposite its name
below.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................... 1,558,334
Bear, Stearns & Co. Inc........................................... 1,558,333
Donaldson, Lufkin & Jenrette Securities Corporation............... 1,558,333
Advest, Inc....................................................... 100,000
Allen & Company Incorporated...................................... 100,000
Sanford C. Bernstein & Co., Inc................................... 100,000
Alex. Brown & Sons Incorporated................................... 100,000
CS First Boston Corporation....................................... 100,000
Dean Witter Reynolds Inc.......................................... 100,000
A.G. Edwards & Sons, Inc.......................................... 100,000
Goldman, Sachs & Co............................................... 100,000
Janney Montgomery Scott Inc....................................... 100,000
Morgan Stanley & Co. Incorporated................................. 100,000
Oppenheimer & Co., Inc............................................ 100,000
PaineWebber Incorporated.......................................... 100,000
Prudential Securities Incorporated................................ 100,000
Schroder Wertheim & Co. Incorporated.............................. 100,000
Smith Barney Inc.................................................. 100,000
Wasserstein Perella Securities, Inc............................... 100,000
Barclay Investments, Inc.......................................... 50,000
Brean Murray, Foster Securities Inc............................... 50,000
Brown, Lisle/Cummings, Inc........................................ 50,000
The Buckingham Research Group Incorporated........................ 50,000
Dominick & Dominick, Incorporated................................. 50,000
Fahnestock & Co. Inc.............................................. 50,000
First Albany Corporation.......................................... 50,000
Gabelli & Company, Inc............................................ 50,000
Legg Mason Wood Walker, Incorporated.............................. 50,000
Morgan Keegan & Company, Inc...................................... 50,000
Ragen MacKenzie Incorporated...................................... 50,000
Raymond James & Associates, Inc................................... 50,000
Sutro & Co. Incorporated.......................................... 50,000
Tucker Anthony Incorporated....................................... 50,000
Utendahl Capital Partners, L.P.................................... 50,000
H.G. Wellington & Co. Inc......................................... 50,000
Wheat, First Securities, Inc...................................... 50,000
---------
Total................................................ 7,125,000
=========
</TABLE>

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In the Purchase Agreement, the Underwriters named therein have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
shares of Class A Common Stock being sold pursuant to such Purchase Agreement if
any of the shares of Class A Common Stock being sold are purchased. Under
certain circumstances, the commitments of non-defaulting Underwriters may be
increased under the Purchase Agreement.

The Representatives have advised the Company that the Underwriters propose
to offer the shares of Class A Common Stock offered hereby to the public
initially at the public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $.58 per share of Class A Common Stock, and that the Underwriters may allow,
and such dealers may reallow, a discount not in excess of $.10 per share of
Class A Common Stock on sales to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.

The Company has granted to the Underwriters an option to purchase up to an
aggregate of 1,068,750 shares of Class A Common Stock at the initial public
offering price, less the underwriting discount. Such option, which will expire
30 days after the date of this Prospectus, may be exercised solely to cover
over-allotments. To the extent that the Underwriters exercise such option, each
of the Underwriters will have a firm commitment, subject to certain conditions,
to purchase approximately the same percentage of the option shares that the
number of shares to be purchased initially by that Underwriter is of the
7,125,000 shares of Class A Common Stock initially purchased by the
Underwriters.

All but 28,800 shares of Class A Common Stock and all shares of Class B
Common Stock currently outstanding are subject to the Tax Lockup, which
restrictions prohibit all transfers, sales, assignments or other dispositions
for value prior to October 5, 1996. See "Business -- Background;
Reorganization". Of the 28,800 shares of Class A Common Stock not subject to the
Tax Lockup, 26,550 shares are held by executive officers of the Company. In
addition, the Company, each of the Company's directors and executive officers
and owners of more than 5% of the Class A Common Stock and Class B Common Stock
(other than (i) Hospital Trust as to 900,000 shares of Class A Common Stock and
Class B Common Stock over which Hospital Trust exercises sole or shared
investment power under 64 wills, trusts and agency arrangements and (ii)
Fiduciary Trust Company International as to 617,400 shares of Class A Common
Stock and Class B Common Stock over which Fiduciary Trust Company International
exercises sole or shared investment power under five wills, trusts and agency
relationships) have agreed not to sell, offer to sell, grant any option for the
sale of, or otherwise dispose of, any shares of Class A Common Stock or
securities convertible into or exercisable or exchangeable for Class A Common
Stock (except for the shares offered hereby) for a period of 180 days after the
date of this Prospectus without the prior written consent of Merrill Lynch,
Pierce, Fenner & Smith Incorporated acting on behalf of the Underwriters,
subject to certain limited exceptions included in the Purchase Agreement.
Further, all employees who purchase Class A Common Stock in the Direct Placement
have agreed to similar transfer restrictions for a period of 30 days after the
date of this Prospectus.

In addition to the Underwritten Offering contemplated hereby, the Company
is also offering an additional 450,000 shares of Class A Common Stock to
eligible employees of the Company and its subsidiaries pursuant to the Direct
Placement at a price per share equal to the initial public offering price per
share for the Class A Common Stock less an amount equal to the underwriting
discount per share.

Prior to the Offerings, there has been no public market for the shares of
Class A Common Stock. The initial public offering price of the Class A Common
Stock was determined by negotiations between the Company and the
Representatives. Among the factors considered in such negotiations, in addition
to prevailing market conditions, were current market valuations of
publicly-traded companies that the Company and the Underwriters believe to be
reasonably comparable to the Company, an assessment of the Company's results of
operations in recent periods, estimates of the business potential and earnings
prospects of the Company, the current state of the Company's development and the
current state of the Company's industry and the economy as a whole. The initial
public offering price set forth on the cover of the Prospectus should not,
however, be considered an indication of the actual value of the Class A Common
Stock. Such price will be subject to change as a result of market conditions and
other factors. There can be no assurance that an

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active trading market will develop for the Class A Common Stock or that the
Class A Common Stock will trade in the public market subsequent to the Offerings
at or above the initial public offering price.

The Company has agreed to indemnify the several underwriters against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments the Underwriters may be required to make in respect
thereof.

Certain of the Underwriters have provided various investment banking
services to the Company and certain of its subsidiaries.

LEGAL MATTERS

Certain legal matters relating to the shares of Class A Common Stock will
be passed upon for the Company by Edwards & Angell, Providence, Rhode Island.
Certain legal matters under the Communications Act and the rules and regulations
promulgated thereunder by the FCC will be passed upon for the Company by
Covington & Burling, Washington, D.C. Certain legal matters in connection with
the Underwritten Offering will be passed upon for the Underwriters by Brown &
Wood, New York, New York. Partners and of-counsel attorneys of Edwards & Angell
own 49,950 (adjusted for the Stock Split) shares of Common Stock. Benjamin P.
Harris, III, a Director of the Company, is a senior partner of Edwards & Angell
and beneficially owns 21,150 and 21,600 shares of the Class A Common Stock and
the Class B Common Stock, respectively (adjusted for the Stock Split).

EXPERTS

The consolidated financial statements and schedule of The Providence
Journal Company and Subsidiaries as of December 31, 1994 and 1995 and for each
of the years in the three-year period ended December 31, 1995 have been included
herein and in the Registration Statement in reliance upon the reports of KPMG
Peat Marwick LLP and Deloitte & Touche LLP, independent auditors, appearing
herein and elsewhere in this registration statement, given upon the authority of
said firms as experts in accounting and auditing.

The report of KPMG Peat Marwick, LLP covering the December 31, 1995
financial statements contains an explanatory paragraph that states that the
Company completed the merger and related transactions with Continental
Cablevision, Inc. and the Kelso Buyout on October 5, 1995 which resulted in the
disposal of the Company's cable operations, and the acquisition of the Company's
joint venture partner's interest in King Holding Corp.

The consolidated financial statements of King Holding Corp. and
subsidiaries included in this prospectus and the related financial statement
schedule included elsewhere in the registration statement have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein and elsewhere in the registration statement, and are included
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.

106
<PAGE> 107

AVAILABLE INFORMATION

The Company is subject to the information requirements of the Exchange Act,
and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Reports, proxy statements and other information
concerning the Company can be inspected and copied at the Commission's office at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and
the Commission's Regional Offices in New York (Suite 1300, Seven World Trade
Center, New York, New York 10048) and Chicago (Citicorp Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661), and copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. This
Prospectus does not contain all information set forth in the Registration
Statement and exhibits thereto which the Company has filed with the Commission
under the Securities Act, which may be obtained from the Public Reference
Section of the Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the prescribed fees, and to which
reference is hereby made.

107
<PAGE> 108

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS OF THE COMPANY
THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES
Independent Auditors' Report........................................................ F-2
Consolidated Balance Sheets, December 31, 1994 and 1995 and (Unaudited) March 31,
1996............................................................................. F-3
Consolidated Statements of Operations for the Years Ended December 31, 1993, 1994,
and 1995 and (Unaudited) Three Months Ended March 31, 1995 and 1996.............. F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 1993, 1994,
and 1995 and (Unaudited) Three Months Ended March 31, 1995 and 1996.............. F-5
Consolidated Statements of Stockholders' Equity for the Years Ended December 31,
1993, 1994, and 1995 and (Unaudited) Three Months Ended March 31, 1996........... F-6
Notes to Consolidated Financial Statements.......................................... F-7
FINANCIAL STATEMENTS OF THE COMPANY'S SIGNIFICANT UNCONSOLIDATED AFFILIATE
KING HOLDING CORP. AND SUBSIDIARIES*
Independent Auditors' Report........................................................ F-31
Consolidated Balance Sheet, December 31, 1994....................................... F-32
Consolidated Statements of Operations, for the Years Ended December 31, 1993 and
1994............................................................................. F-33
Consolidated Statements of Cash Flows for the Years Ended December 31, 1993 and
1994............................................................................. F-34
Consolidated Statements of Stockholders' Equity for the Years Ended December 31,
1993
and 1994......................................................................... F-35
Notes to Consolidated Financial Statements.......................................... F-36
</TABLE>

- ---------------
* King Holding Corp. was acquired and consolidated by the Company in 1995.

F-1
<PAGE> 109

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of The Providence Journal Company:

We have audited the consolidated financial statements of The Providence
Journal Company and Subsidiaries (the Company) as listed in the accompanying
index. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We did not audit the
consolidated financial statements of King Holding Corp. (a 50% owned investee
company prior to October 5, 1995) as of December 31, 1994 and for each of the
years in the two-year period then ended. The Company's investment in King
Holding Corp. at December 31, 1994 was $76,829,000 and its equity in losses of
King Holding Corp. was $7,244,000 and $8,325,000 for the years ended December
31, 1993 and 1994, respectively. The consolidated financial statements of King
Holding Corp. were audited by other auditors whose report has been furnished to
us, and our opinion, insofar as it relates to the amounts included for King
Holding Corp. is based solely on the report of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors provide a
reasonable basis for our opinion.

As discussed more fully in Note 2 to the consolidated financial statements,
the Company completed the Merger and related transactions with Continental
Cablevision, Inc. and the Kelso Buyout on October 5, 1995 which resulted in the
disposal of the Company's cable operations, and the acquisition of the Company's
joint venture partner's interest in King Holding Corp.

In our opinion, based on our audits and the report of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of The Providence Journal Company and
Subsidiaries as of December 31, 1994 and 1995, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles.

/s/ KPMG Peat Marwick LLP

Providence, Rhode Island
February 16, 1996, except for
Notes 2, 13 and 17 which are dated
March 4, 1996, February 27, 1996
and June 18, 1996, respectively.

F-2
<PAGE> 110

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- MARCH 31,
1994 1995 1996
-------- -------- -----------
<S> <C> <C> <C>
(UNAUDITED)
Current assets:
Cash........................................................ $ 1,319 $ 87 $ 59
Accounts receivable, net of allowance for doubtful accounts
of $1,950 in 1994 and $4,328 in 1995..................... 24,916 56,321 48,484
Notes receivable, current................................... -- -- 17,726
Television program rights, net.............................. 4,699 16,536 9,767
Federal and state income taxes receivable................... 1,661 24,146 30,905
Deferred income taxes (note 9).............................. 20,526 7,112 7,112
Inventory, prepaid expenses and other current assets........ 4,593 5,019 6,432
-------- -------- --------
Total current assets................................ 57,714 109,221 120,485
Investments in affiliated companies (note 3).................. 83,407 22,171 17,164
Notes receivable (note 4)..................................... 19,513 19,174 1,162
Television program rights, net................................ 2,670 3,817 3,387
Property, plant and equipment, net (note 5)................... 130,287 171,649 177,916
License costs, goodwill and other intangible assets, net (note
6).......................................................... 35,222 354,411 352,660
Other assets (notes 10 and 14)................................ 26,110 26,787 30,939
Net assets of discontinued operations (note 2)................ 369,790 -- --
-------- -------- --------
$724,713 $707,230 $ 703,713
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................ $ 10,202 $ 16,837 $ 10,926
Accrued expenses and other current liabilities (note 7)..... 92,840 49,504 49,952
Current installments of long-term debt (note 10)............ 13,588 100 100
Current portion of television program rights payable (note
11)...................................................... 4,542 16,463 10,138
-------- -------- --------
Total current liabilities........................... 121,172 82,904 71,116
Long-term debt (note 10)...................................... 247,173 243,998 272,700
Television program rights payable (note 11)................... 2,822 5,509 4,519
Deferred income taxes (note 9)................................ 11,944 52,298 52,298
Deferred compensation (note 13)............................... 11,287 10,204 10,234
Other liabilities (notes 13 and 14 ).......................... 44,428 49,078 48,835
-------- -------- --------
Total liabilities................................... 438,826 443,991 459,702
-------- -------- --------
Commitments and contingencies (notes 2, 3, 12, 14, 16 and 19)
Minority interest............................................. -- -- 49
-------- -------- --------
Stockholders' equity (notes 2 and 17):
Class A common stock, par value $1.00 per share; authorized
180,000,000 shares; issued 17,331,300 shares in 1995..... -- 17,331 17,333
Class B common stock, par value $1.00 per share; authorized
46,825,000 shares; issued 21,067,650 shares in 1995...... -- 21,068 21,068
Class A common stock, par value $2.50 per share; issued
17,266,050 shares in 1994................................ 43,165 -- --
Class B common stock, par value $2.50 per share; issued
21,276,450 shares in 1994................................ 53,191 -- --
Additional paid in capital.................................. -- 65 88
Retained earnings (note 2).................................. 196,874 226,028 206,310
Unrealized gain (loss) on securities held for sale, net..... 105 (1,253) (837)
Treasury stock at cost-432,450 shares in 1994............... (7,448) -- --
-------- -------- --------
Total stockholders' equity.......................... 285,887 263,239 243,962
-------- -------- --------
$724,713 $707,230 $ 703,713
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements

F-3
<PAGE> 111

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------------- -------------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Broadcasting......................... $ 45,506 $ 54,024 $ 180,547 $ 38,904 $ 43,381
Publishing advertising............... 93,886 97,006 96,340 22,411 21,986
Publishing circulation............... 31,028 30,887 32,151 7,889 8,139
Programming and Electronic Media..... -- 2,300 3,468 525 1,608
---------- ---------- ---------- ---------- ----------
Total net revenues............ 170,420 184,217 312,506 69,729 75,114
---------- ---------- ---------- ---------- ----------
Expenses:
Operating............................ 84,925 77,543 161,283 40,426 43,528
Selling, general and
administrative..................... 71,600 83,302 86,023 19,911 23,051
Newspaper consolidation and
restructuring costs (note 8)....... -- -- 14,222 102 1,150
Stock-based compensation............. 5,735 15,138 2,387 1,498 11,730
Depreciation and amortization........ 20,613 19,983 33,969 7,935 9,845
Pension expense (income)............. 756 (173) 1,236 44 214
---------- ---------- ---------- ---------- ----------
Total expenses................ 183,629 195,793 299,120 69,916 89,518
---------- ---------- ---------- ---------- ----------
Operating income (loss)................ (13,209) (11,576) 13,386 (187) (14,404)
Other income (expense):
Interest expense (notes 2 and 10).... (2,578) (2,426) (11,395) (2,747) (5,084)
Equity in loss of affiliated
companies (note 3)................. (8,763) (13,380) (7,835) (1,272) (1,595)
Management fees from related parties
(note 3)........................... 3,781 3,525 -- -- --
Other income (expense), net.......... (1,599) 2,578 4,797 616 1,364
---------- ---------- ---------- ---------- ----------
Total other expense, net...... (9,159) (9,703) (14,433) (3,403) (5,315)
---------- ---------- ---------- ---------- ----------
Loss from continuing operations before
income tax expense (benefit)......... (22,368) (21,279) (1,047) (3,590) (19,719)
Income tax expense (benefit) (note
9)................................... (6,097) 1,950 3,956 (784) (4,834)
---------- ---------- ---------- ---------- ----------
Loss from continuing operations........ (16,271) (23,229) (5,003) (2,806) (14,885)
Discontinued operations (note 2):
Loss from operations of discontinued
segments, net of
income tax benefits................ (6,413) (1,798) -- -- --
Loss on disposal of segments, net of
income tax benefits................ -- (34,764) -- -- (3,578)
---------- ---------- ---------- ---------- ----------
Loss before extraordinary items........ (22,684) (59,791) (5,003) (2,806) (18,463)
Extraordinary items, net (note 10)..... 1,551 -- (2,086) -- --
---------- ---------- ---------- ---------- ----------
Loss before minority interests......... (21,133) (59,791) (7,089) (2,806) (18,463)
Minority interests..................... -- -- (2,559) (299) 1,186
---------- ---------- ---------- ---------- ----------
Net loss............................... $ (21,133) $ (59,791) $ (9,648) $ (3,105) $ (17,277)
========== ========== ========== ========== ==========
Net income (loss) per common share:
From continuing operations........... $ (0.42) $ (0.61) $ (0.13) $ (0.07) $ (0.39)
From discontinued operations......... (0.17) (0.96) -- -- (0.09)
Extraordinary items.................. 0.04 -- (0.05) -- --
Minority interests................... -- -- (0.07) (0.01) 0.03
---------- ---------- ---------- ---------- ----------
Net loss per common share.............. $ (0.55) $ (1.57) $ (0.25) $ (0.08) $ (0.45)
========== ========== ========== ========== ==========
Weighted average shares outstanding.... 38,385,900 38,196,900 38,506,500 38,110,050 38,400,300
========== ========== ========== ========== ==========
</TABLE>

See accompanying notes to consolidated financial statements

F-4
<PAGE> 112

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------- -------------------
1993 1994 1995 1995 1996
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Operating activities:
Net loss........................................... $(21,133) $(59,791) $ (9,648) $ (3,105) $(17,277)
Adjustments to reconcile net loss to cash flows
provided by continuing operations:
Extraordinary items.............................. (1,551) -- 2,086 -- --
Discontinued operations.......................... 6,413 36,562 -- -- 3,578
Minority interests............................... -- -- 2,559 299 (1,186)
Depreciation and amortization.................... 20,613 19,983 33,969 7,935 9,845
Program rights amortization...................... 7,674 7,356 17,318 4,269 4,379
Equity in loss of affiliated companies........... 8,763 13,380 7,835 1,272 1,595
Deferred income taxes............................ (4,846) (3,258) 11,008 (262) --
Increase (decrease) in deferred compensation..... 5,767 7,740 (1,531) 792 30
Changes in assets and liabilities, net of effects
of acquisitions
Accounts receivable.............................. (1,451) (484) (4,604) 9,641 7,837
Inventories, prepaid expenses and other current
assets......................................... (660) (1,868) (34,870) (778) (7,578)
Accounts payable................................. (3,128) 2,545 1,172 (4,692) (5,911)
Accrued expenses and other current liabilities... 1,629 (697) (15,095) (5,606) (3,104)
Other, net......................................... 5,293 3,459 1,776 (484) 1,506
-------- -------- --------- -------- --------
Cash flows provided by (used in) continuing
operations..................................... 23,383 24,927 11,975 9,281 (6,286)
-------- -------- --------- -------- --------
Investing activities:
Purchase of Kelso interest, less cash acquired
$3,578......................................... -- -- (261,422) -- --
Investment in securities held for sale........... (5,551) -- (397) -- --
Investments in and advances to affiliated
companies...................................... (5,783) (6,555) (23,647) (2,150) (12,503)
Additions to property, plant and equipment....... (11,597) (6,481) (15,276) (3,578) (3,008)
Collections on notes receivable.................. 2,751 3,086 339
Proceeds from sale of assets..................... 1,073 594 8,739
Cash proceeds in sale of cable operations, net of
taxes paid..................................... -- -- 693,058 -- --
(Increase) decrease in discontinued operations
through disposal date.......................... (4,528) 24,838 (66,459) 7,806 --
-------- -------- --------- -------- --------
Cash flows provided by (used in) investing
activities..................................... (23,635) 15,482 334,935 2,078 (15,511)
-------- -------- --------- -------- --------
Financing activities:
Proceeds from syndicated long-term debt.......... 30,000 -- 233,000 -- 28,702
Net increase in syndicate line of credit......... -- -- 1,298 -- --
Proceeds from refinanced syndicated long-term
debt........................................... -- -- 90,711 -- --
Principal payments on long-term debt including
prepayment penalty............................. (11,153) (19,345) (638,224) (7,505) --
Payments of debt issue costs..................... -- -- (1,748) -- --
Payments on television program rights payable.... (7,296) (6,760) (16,166) (4,163) (4,495)
Dividends paid................................... (8,872) (9,711) (9,706) (2,422) (2,441)
Issuance of Class A stock........................ -- -- 46 -- 3
Purchases and adjustments to basis of treasury
stock.......................................... (2,387) (4,291) (7,353) -- --
-------- -------- --------- -------- --------
Cash flows provided by (used in) financing
activities..................................... 292 (40,107) (348,142) (14,090) 21,769
-------- -------- --------- -------- --------
Increase (decrease) in cash.......................... 40 302 (1,232) (2,731) (28)
Cash at beginning of period.......................... 977 1,017 1,319 4,897 87
-------- -------- --------- -------- --------
Cash at end of period................................ $ 1,017 $ 1,319 $ 87 $ 2,166 $ 59
======== ======== ========= ======== ========
</TABLE>

See accompanying notes to consolidated financial statements

F-5
<PAGE> 113

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
CLASS A CLASS B UNREALIZED
COMMON STOCK COMMON STOCK ADDITIONAL GAIN (LOSS)
-------------------- -------------------- PAID IN RETAINED ON SECURITIES
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS HELD FOR SALE
---------- ------- ---------- ------- ---------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1992............. 17,090,550 $42,726 21,451,950 $53,630 $ -- $ 296,381 --
Treasury stock activity:
Tender offer and other purchases....... -- -- -- -- -- -- --
Issuance of common stock from
treasury............................. -- -- -- -- -- -- --
Conversion upon sale of Class B to Class
A common stock......................... 168,300 421 (168,300) (421) -- -- --
Dividends declared, $0.23 per share...... -- -- -- -- -- (8,872) --
Net loss................................. -- -- -- -- -- (21,133) --
---------- ------- ---------- ------- -------- --------- ------
Balances at December 31, 1993............. 17,258,850 43,147 21,283,650 53,209 -- 266,376 --
Purchases of treasury stock.............. -- -- -- -- -- -- --
Conversion upon sale of Class B to Class
A common stock......................... 7,200 18 (7,200) (18) -- -- --
Dividends declared, $0.25 per share...... -- -- -- -- -- (9,711) --
Cumulative effect of change in accounting
principle (note 1(c)).................. -- -- -- -- -- -- 5,120
Net change in unrealized gain (loss)..... -- -- -- -- -- -- (5,015)
Net loss................................. -- -- -- -- -- (59,791) --
---------- ------- ---------- ------- -------- ---------- ------
Balances at December 31, 1994............. 17,266,050 43,165 21,276,450 53,191 -- 196,874 105
Conversion upon sale of Class B to Class
A common stock......................... 58,950 147 (58,950) (147) -- -- --
Reissuance of treasury stock in
connection with stock based
compensation plans..................... -- -- -- -- 2,738 -- --
Treasury stock adjustments to basis (note
16).................................... -- -- -- -- -- -- --
Dividends declared $0.25 per share....... -- -- -- -- -- (9,706) --
Net change in unrealized gain (loss)..... -- -- -- -- -- -- (1,358)
Excess of proceeds over net assets held
for sale in disposal of cable
operations (note 2).................... -- -- -- -- -- 582,510 --
Deemed distribution to shareholders of
Continental capital stock in connection
with disposal of cable operations (note
2)..................................... -- -- -- -- -- (584,769) --
Recapitalization in connection with PJC
Spin-Off (notes 2 and 17).............. -- (25,987) (149,850) (31,976) (2,738) 50,767 --
Exercised options........................ 6,300 6 -- -- 65 -- --
Net loss................................. -- -- -- -- -- (9,648) --
---------- ------- ---------- ------- -------- --------- ------
Balances at December 31, 1995............. 17,331,300 17,331 21,067,650 21,068 65 226,028 (1,253)
Dividends declared $0.06 per share....... (2,441 )
et change in unrealized gain (loss)..... 416
Exercised options........................ 2,250 2 -- -- 23
Net loss................................. (17,277 )
---------- ------- ---------- ------- -------- --------- ------
Balances at March 31, 1996 (unaudited).... 17,333,550 $17,333 21,067,650 $21,068 $ 88 $ 206,310 $ (837)
========== ======= ========== ======= ======== ========= ========

<CAPTION>
TREASURY STOCK
------------------
SHARES AMOUNT TOTAL
-------- ------- ---------
<S> <C> <C> <C>
Balances at December 31, 1992............. (45,000) $ (770) $ 391,967
Treasury stock activity:
Tender offer and other purchases....... (151,650) (2,460) (2,460)
Issuance of common stock from
treasury............................. 4,500 73 73
Conversion upon sale of Class B to Class
A common stock......................... -- -- --
Dividends declared, $0.23 per share...... -- -- (8,872)
Net loss................................. -- -- (21,133)
------- ------ ---------
Balances at December 31, 1993............. (192,150) (3,157) 359,575
Purchases of treasury stock.............. (240,300) (4,291) (4,291)
Conversion upon sale of Class B to Class
A common stock......................... -- -- --
Dividends declared, $0.25 per share...... -- -- (9,711)
Cumulative effect of change in accounting
principle (note 1(c)).................. -- -- 5,120
Net change in unrealized gain (loss)..... -- -- (5,015)
Net loss................................. -- -- (59,791)
------- ------ ---------
Balances at December 31, 1994............. (432,450) (7,448) 285,887
Conversion upon sale of Class B to Class
A common stock......................... -- -- --
Reissuance of treasury stock in
connection with stock based
compensation plans..................... 282,600 4,867 7,605
Treasury stock adjustments to basis (note
16).................................... -- (7,353) (7,353)
Dividends declared $0.25 per share....... -- -- (9,706)
Net change in unrealized gain (loss)..... -- -- (1,358)
Excess of proceeds over net assets held
for sale in disposal of cable
operations (note 2).................... -- -- 582,510
Deemed distribution to shareholders of
Continental capital stock in connection
with disposal of cable operations (note
2)..................................... -- -- (584,769)
Recapitalization in connection with PJC
Spin-Off (notes 2 and 17).............. 149,850 9,934 --
Exercised options........................ -- -- 71
Net loss................................. -- -- (9,648)
------- ------ ---------
Balances at December 31, 1995............. -- -- 263,239
Dividends declared $0.06 per share....... (2,441)
Net change in unrealized gain (loss)..... 416
Exercised options........................ 25
Net loss................................. (17,277)
------- ------ ---------
Balances at March 31, 1996 (unaudited).... -- $ -- $ 243,962
======= ====== =========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 114

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1994 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of Business and Basis of Consolidation

The consolidated financial statements present the financial position and
results of operations of The Providence Journal Company ("Registrant") and its
subsidiaries (collectively the "Company"). Registrant is the successor to
Providence Journal Company ("Old PJC") which reorganized itself, acquired all of
its joint venture partner's interest in King Holding Corp. ("KHC"), and disposed
of its cable operations on October 5, 1995 in a series of transactions as
described in Note 2. The Company is a diversified communications company with
operations and investments in several media and electronic communications
businesses. The principal areas of the Company's activities are television
broadcasting ("Broadcasting"), newspaper publishing ("Publishing") and
programming and electronic media ventures ("Programming and Electronic Media").
Prior to the consummation of the Merger (defined below) and other transactions
described below, these businesses were conducted by Old PJC which was also
engaged in the ownership and operation of cable television systems ("PJC Cable
Business").

All significant intercompany balances and transactions have been eliminated
and appropriate minority interests have been recorded in consolidation. The
results of operations for KHC have been consolidated in the accompanying
statements of operations since January 1, 1995 with appropriate adjustments for
minority interests for the period from January 1, 1995 to October 5, 1995 the
date of the Kelso Buyout, as discussed in Note 3.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Certain prior year amounts have been reclassified to conform with the
current year presentation.

(b) Cash

The Company has a cash management program whereby outstanding checks in
excess of cash in the concentration account are not accounted for as reductions
of cash until presented to the bank for payment. At December 31, 1994 and 1995,
the Company reclassified $2,805 and $2,162 respectively, of net outstanding
checks to accounts payable.

Supplemental cash flow information is as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Income taxes paid during the year (excluding IRS
settlements, see Note 9)........................ $ 9,815 $ 2,588 $12,679
------- ------- -------
Interest paid during the year (including amounts
allocated to discontinued operations), net of
amounts capitalized............................. $20,285 $20,911 $47,891
------- ------- -------
Obligations incurred for acquisition of television
program rights (non-cash transactions).......... $ 5,898 $ 6,627 $21,520
------- ------- -------
</TABLE>

F-7
<PAGE> 115

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

In connection with the acquisition of the joint venture partner's interest
in King Holding Corp. in 1995, assets acquired and liabilities assumed were as
follows:

<TABLE>
<S> <C>
Assets acquired................................................... $243,186
--------
Goodwill and other intangibles.................................... $206,740
--------
Liabilities assumed............................................... $184,926
========
</TABLE>

Investments in Affiliates

Investments in affiliates in which the Company has significant influence
(generally ownership of 20% to 50% of voting stock) and investments in
partnerships are accounted for using the equity method. Other investments
(generally ownership of less than 20% of voting stock) are carried at the lower
of cost or net realizable value. The following investments are accounted for
under the equity method as of December 31, 1995:

Television Food Network, G.P.
America's Health Network
Peapod, L.P.
Partner Stations Network, L.P.
Linkatel Pacific, L.P.

Effective January 1, 1996, the results of America's Health Network's
operations have been consolidated with the Company to reflect the Company's
decision to maintain a controlling majority interest.

Information about these investments is presented in Note 3.

Investments in Marketable Equity Securities

Investments in marketable equity securities consist of one common stock
investment, StarSight Telecast, Inc., in which the Company owns approximately 5%
of the outstanding common stock. This marketable equity security is included in
other assets on the accompanying consolidated balance sheets.

Prior to January 1, 1994, marketable equity securities were stated at cost.
Effective January 1, 1994, the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". Under this standard, the Company's marketable equity securities are
considered to be "held for sale" and unrealized gains and losses, net of the
related tax effect, are recorded as a separate component of stockholders'
equity. A decline in the market value of any marketable equity security below
cost that is deemed other than temporary results in an adjustment to the cost
basis of the security which is charged to the consolidated statement of
operations.

At December 31, 1994 and 1995, the cost of marketable equity securities
totaled and $5,552 and $5,949, respectively; fair market value totaled and
$5,727 and $3,861 respectively.

(d) Inventories

Inventories, principally comprising raw materials, are stated at the lower
of cost or market. Cost is determined principally on the last-in, first-out
(LIFO) basis. Replacement cost of inventories was $1,945 and $2,806 at December
31, 1994 and 1995, respectively.

F-8
<PAGE> 116

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

(e) Television Program Rights

Television program rights acquired under license agreements are recorded as
assets at the gross value of the related liabilities at the time the programs
become available for showing. The rights are amortized using accelerated methods
over the term of the applicable contract. Amortized costs are included in
operating expenses in the accompanying consolidated statements of operations.

Program rights classified as a current asset represent the total amount
estimated to be amortized within a year. Related liabilities due to licensers
are classified as current or long-term in accordance with the payment terms.

Television program rights are reviewed periodically for impairment and, if
necessary, adjusted to estimated net realizable value.

(f) Property, Plant and Equipment

Property, plant and equipment are stated at cost. Expenditures for
maintenance and repairs are charged to income as incurred; significant
improvements are capitalized. The Company provides for depreciation using the
straight-line method over the following estimated useful lives:

<TABLE>
<S> <C>
Buildings and improvements.............................................. 2 - 45 years
Machinery and equipment................................................. 3 - 15
Furniture and fixtures.................................................. 5 - 11
Broadcast equipment..................................................... 6 - 15
</TABLE>

When the Company determines that certain property, plant and equipment is
impaired, a loss for impairment is recorded for the excess of the carrying value
over the fair value of the asset. Fair value is determined by independent
appraisal, if an active market exists for the related asset. Otherwise, fair
value is estimated through forecasts of expected cash flows.

(g) License Costs, Goodwill and Other Intangible Assets

License costs and other intangible assets are stated at cost. Goodwill
represents the excess of purchase price over fair value of net assets acquired.
The Company provides for amortization using the straight-line method over
periods ranging from 5 to 40 years.

The Company periodically reviews its intangible assets to determine whether
any impairment has occurred. The Company assesses the recoverability of
intangible assets by reviewing the performance of the underlying operations, in
particular the operating cash flows (earnings before income taxes, depreciation,
and amortization) of the operation.

(h) Income Taxes

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the period that includes the enactment
date.

F-9
<PAGE> 117

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

(i) Pension and Other Postretirement Benefits

The Company has defined benefit pension plans covering substantially all
employees of Publishing and certain employees of Broadcasting. The plans are
funded in accordance with the requirements of the Employee Retirement Income
Security Act.

The Company sponsors a defined life insurance and medical plan for its
newspaper and one of its broadcast operations, respectively. The plans are
accounted for under Statement of Financial Accounting Standards ("SFAS") No.
106, "Employer's Accounting for Postretirement Benefits Other than Pensions".

(j) Derivative Financial Instruments

The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. Derivative financial
instruments are only used to manage interest rate risks.

The Company has entered into an interest rate swap agreement which is
accounted for as a hedge of the obligation and, accordingly, the net swap
settlement amount is recorded as an adjustment to interest expense in the period
incurred (see note 10). Gains and losses upon settlement of a swap agreement are
deferred and amortized over the remaining term of the agreement.

(k) Net Loss Per Share

Net loss per share is based on the weighted average number of Class A and
Class B shares of common stock outstanding. Restricted stock units and stock
options are both considered common stock equivalents. Common stock equivalents
were anti-dilutive for all periods in which the common stock equivalents were
outstanding.

(l) Stock-Based Compensation

Effective January 1, 1996, the Company will adopt SFAS No. 123, "Accounting
for Stock-Based Compensation." The Statement encourages, but does not require, a
fair value based method of accounting for stock-based compensation plans. SFAS
No. 123 allows an entity to continue to measure compensation cost for those
plans using the intrinsic value based method prescribed by APB Opinion No. 25.
For those entities electing to use the intrinsic value based method, SFAS No.
123 requires pro forma disclosures of net income and earnings per share computed
as if the fair value based method had been applied. The Company intends to
continue to account for stock-based compensation costs under APB Opinion No. 25
and will provide the additional required disclosures relating to 1995 and 1996
stock options in its 1996 Annual Report.

(m) Unaudited Interim Consolidated Financial Statements

The consolidated financial statements as of and for the three months ended
March 31, 1995 and 1996 are unaudited; however, they include all adjustments
(consisting of normal recurring adjustments) considered necessary by management
for a fair presentation of the financial position and results of operations for
these periods. The results of operations for interim periods are not necessarily
indicative of the results that may be expected for the entire year.

NOTE 2 -- REORGANIZATION AND DISCONTINUED CABLE OPERATIONS

(a) Reorganization

On October 5, 1995, Old PJC completed the acquisition of the 50% interest
in King Holding Corp. ("KHC") held by an unrelated third party for $265 million,
including $5 million in transaction fees (the "Kelso Buyout"), completed the
transfer of all non-cable operations from Old PJC to the Company in a

F-10
<PAGE> 118

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

substantially tax-free reorganization pursuant to which the shares of capital
stock of the Company were distributed to the shareholders of Old PJC (the "PJC
Spin-Off"), and, following the PJC Spin-Off, at which point it held only Old
PJC's cable television businesses and assets, Old PJC was merged ("the Merger")
with and into Continental Cablevision, Inc. ("Continental"). Immediately prior
to the Kelso Buyout, Continental purchased for $405 million all of the stock of
King Videocable Company ("KVC"), a wholly owned subsidiary of King Broadcasting
Company ("KBC"), which is wholly owned by KHC. As a result of these
transactions, the Company, in substance, became successor to Old PJC, in the
same lines of businesses, simultaneously spinning off its cable subsidiaries to
its shareholders who then merged them into Continental.

Proceeds from the disposal of the cable operations discussed above
consisted of a combination of Continental stock, which was received directly
from Continental by Old PJC's shareholders in connection with the Merger,
assumption of a portion of the Old PJC's debt by Continental (see Note 10), and
cash. The total combined consideration amounted to approximately $1.4 billion
(including the $405 million from the sale of KVC). The excess of the proceeds
over the net assets of the discontinued cable operations was $582,510 and is
reflected in the consolidated statement of stockholders' equity. The receipt by
the Old PJC Shareholders of the Continental shares, valued at $584,769, is
recorded as a deemed distribution to shareholders in the statement of
stockholders' equity.

The Merger agreement between Old PJC and Continental provides that the
total combined consideration received from the disposal of the Company's cable
operations will be adjusted for certain working capital items of the cable
operations acquired by Continental. On March 4, 1996, the Company agreed to pay
Continental $4,250 in full settlement of this working capital adjustment which
was accrued in the accompanying balance sheet as of December 31, 1995 and
included in discontinued operations of 1995.

In connection with the Merger, the Company agreed to indemnify Continental
from any and all liabilities arising from the non-cable television businesses,
and is responsible for all federal and state income tax liabilities for periods
ending on or before the closing date.

(b) Discontinued Cable Operations

The results of operations of the cable television segment, the cellular
system and the paging subsidiary have been reported as discontinued in the
accompanying consolidated statements of operations. Prior year financial
statements have been reclassified to present these businesses as discontinued
operations. Operating results of these discontinued operations were as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
Revenues........................................ $ 177,417 $ 177,953 $ 148,268
Costs and expenses.............................. (185,998) (180,597) (154,741)
Equity in income of affiliate................... 1,413 2,417 1,373
--------- --------- ---------
Loss before income taxes........................ (7,168) (227) (5,100)
Income tax (expense) benefit.................... 755 (1,571) (2,017)
--------- --------- ---------
Net loss........................................ $ (6,413) $ (1,798) $ (7,117)
========= ========= =========
</TABLE>

The net loss for discontinued operations in 1995 was accrued in 1994 as
part of the costs to dispose of the cable operations. No amounts were required
to be recorded in the loss from operations of discontinued segments in the
consolidated statement of operations for 1995.

Loss from operations of discontinued segments includes allocated interest
expense totaling $19,807, $20,674 and $17,265 (excluding $12,380 allocated to
KVC operations) in 1993, 1994 and 1995, respectively.

F-11
<PAGE> 119

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

Interest allocated to discontinued segments was limited to the associated
interest on debt that was repaid in connection with the Merger. The estimated
loss on disposal of segments in 1994 of $34,764, which is net of income tax
benefits of $8,038, includes severance packages, transaction costs and a
provision for loss during the phase-out period.

In addition, in 1994 the Company sold its remaining cellular system
investment and its paging subsidiary. As a result of these transactions, the
Company recorded gains of $1,390 (net of phase-out period operating losses and
income taxes).

Included in discontinued operations is a 50% equity investment in
Copley/Colony, Inc. ("Copley/ Colony"), a joint venture between Colony
Communications, Inc. ("Colony") (a subsidiary of Old PJC) and Copley Press
Electronics Company ("Copley"), engaged in cable television operations. In
connection with the Merger agreement with Continental, in May, 1995 Copley sold
all of its interests in Copley/Colony to Colony for a fixed aggregate purchase
price of $47,790 in cash. As a result, Colony owned all of the outstanding
shares of Copley/Colony at the time of the Merger with Continental.

The net assets of the cable television businesses acquired by Continental
are presented in the accompanying consolidated balance sheets as "net assets of
discontinued operations" prior to the disposal. Discontinued assets acquired
consisted primarily of plant and equipment, and intangible assets. Liabilities
assumed consisted primarily of accounts payable and accrued expenses.

NOTE 3 -- INVESTMENTS IN AFFILIATED COMPANIES

(a) King Holding Corp.

The Kelso Buyout as discussed in Note 2 (a), was recorded in the fourth
quarter of 1995 as a step acquisition under the purchase method of accounting.
The excess of the purchase price over the net book value of assets acquired
including deferred taxes was $206,740, of which approximately $88,000 was
allocated to identifiable intangibles and the remainder to goodwill, together to
be amortized over an average life of approximately 30 years.

The following table presents unaudited pro forma summary results of
operations as if the Kelso Buyout and Merger had occurred on January 1, 1994,
and accordingly, include adjustments for additional amortization and interest
expense and related income tax benefits. It does not purport to be indicative of
what would have actually occurred had the acquisition occurred on January 1,
1994 nor is it indicative of results which may occur in the future:

<TABLE>
<CAPTION>
PRO FORMA (UNAUDITED)
YEARS ENDED DECEMBER
31,
---------------------
1994 1995
-------- --------
<S> <C> <C>
Revenues....................................................... $301,276 $312,506
Loss from continuing operations................................ (19,136) (14,893)
Net loss....................................................... $(19,136) $(16,979)
======== ========
Net loss per common share...................................... $ (0.50) $ (0.44)
======== ========
</TABLE>

Prior to the acquisition of all outstanding interests, the Company received
annual governance fees and management fees from KHC totaling $3,781 and $3,525
in 1993 and 1994 respectively, which had been included in management fees from
related parties. The Company charged KHC $330 and $1,130 for accounting services
in 1993 and 1994, respectively, and was also reimbursed $2,842 and $3,240 by KHC
for expenses in its capacity as manager in 1993 and 1994, respectively. In 1995,
the annual governance, management, and accounting fees and expenses reimbursed
have been eliminated in consolidation.

F-12
<PAGE> 120

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

Summary combined information for King Holding Corp. as of December 31, 1994
and for each of the years in the two year period then ended is summarized below:

<TABLE>
<CAPTION>
1994
---------
<S> <C> <C>
Current assets.............................................. $ 39,978
Current liabilities......................................... (48,804)
-------
Working capital deficiency................................ (8,826)
Property, plant and equipment, net.......................... 58,131
Intangible and other assets................................. 138,453
Net assets of discontinued operations....................... 255,902
Long-term liabilities....................................... (289,669)
-------
Net assets................................................ $ 153,991
=======
</TABLE>

<TABLE>
<CAPTION>
1993 1994
-------- ---------
<S> <C> <C>
Revenues.................................................... $102,340 $ 117,059
-------- ---------
Operating income............................................ $ 16,371 $ 24,776
-------- ---------
Income from continuing operations........................... $ 900 $ 7,263
-------- ---------
Loss from discontinued operations, net...................... $(15,389) $ (23,915)
-------- ---------
Net loss.................................................. $(14,489) $ (16,652)
======== =========
</TABLE>

(b) Television Food Network, G.P.

As of December 31, 1995, the Company, controlled a 21% interest in
Television Food Network, G.P. ("TVFN"). The partnership was formed specifically
to own and operate the Television Food Network channel. TVFN is a 24-hour
advertising supported network service that provides television programming
related to the preparation, enjoyment and consumption of food, as well as
programs focusing on nutrition and topical news areas. TVFN is a general
partnership consisting of eight media companies with cable television, broadcast
television and programming holdings. TVFN is distributed predominantly through
cable television stations to approximately 15.5 million subscribers throughout
the United States. The Company is the general partner in the managing partner of
TVFN and has invested approximately $17,650 through March 31, 1996.

Effective March 1994 the Company entered into a sub-lease agreement with
TVFN for use of the Company's C-band primary transponder. The lease is effective
through March 1999. The Company recorded $1,700 and $1,090 in rental revenue
from TVFN in 1994 and 1995, respectively.

During 1995, the Company invested $10,250 in America's Health Network
("AHN"), a development stage cable programming network service intending to
provide health-related information and products. The channel launched on March
25, 1996 with 750,000 subscribers. The Company's Board of Directors has approved
additional investments up to $12,000, expected to made in 1996. In early 1996,
AHN, Inc. was reorganized and became America's Health Network, L.L.C. ("AHN
LLC"), a limited liability corporation which is the general partner in AHN
Partners, L.P. ("AHN Partners"), a limited partnership formed to carry on the
operations of the network. The Company's total investment through March 31, 1996
is $17,750 and its interest in AHN is approximately 59%. Effective January 1,
1996, the results of AHN's operations have been consolidated with the Company.
Prior to January 1, 1996, the Company accounted for this investment under the
equity method of accounting at which time control was considered temporary.

F-13
<PAGE> 121

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

The Company also entered into a sub-lease agreement with AHN for use of the
Company's C-band primary transponder. The lease term is from November 1, 1995
through October 31, 2000. The Company recorded revenue of $410 related to this
agreement during 1995.

(d) Peapod, L.P.

On July 27, 1995, the Company purchased a 17.1% interest in Peapod, L.P.,
which currently provides an interactive computer on-line grocery ordering,
shopping and delivery service in Chicago and San Francisco and will expand such
services to Boston and Providence in 1996. Total investments in the partnership
during 1995 were $5,335. The Company has committed to invest an additional
$1,000 in 1996 as part of a $15 million private placement. No additional
investments have been committed to.

Summary Financial Information -- TVFN, AHN, and Peapod, L.P

Summary combined financial information for TVFN, AHN and Peapod L.P., as of
December 31, 1994 and 1995 and for the years ended December 31, 1994 and 1995 is
presented below. Information for 1993 presented below is for TVFN only:

<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C> <C>
Current assets...................................... $ 8,511 $ 14,935
Current liabilities................................. (2,489) (8,418)
-------- --------
Working capital................................... 6,022 6,517
Property, plant and equipment, net.................. 6,052 7,996
Intangible and other assets......................... 3,356 11,248
Long-term liabilities............................... (373) (3,009)
-------- --------
Net assets........................................ $ 15,057 $ 22,752
======== ========
</TABLE>

<TABLE>
<CAPTION>
1993 1994 1995
------- -------- --------
<S> <C> <C> <C>
Revenues............................................ $ 13 $ 10,307 $ 22,579
------- ------- -------
Operating loss...................................... $(6,526) $(25,513) $(31,863)
------- ------- -------
Net loss.......................................... $(6,648) $(25,223) $(31,614)
======= ======= =======
</TABLE>

(e) Partner Stations Network, L.P.

The Company is a limited partner with four other television group
broadcasters in Partner Stations Network, L.P. ("PSN"). PSN was formed in 1994
to develop and produce television programming for broadcast on their own
stations and for potential national distribution to other television broadcast
stations. Each of the limited partners has a 16% interest and the general
partner, Lambert Television Management, Inc. has a 20% interest. Through
December 31, 1995, the Company has invested $1,810.

(f) Linkatel Pacific, L.P.

In July 1993, the Company, through its wholly-owned subsidiary
Colony/Linkatel Networks, Inc., invested in Linkatel Pacific, L.P. (a
development stage enterprise), with two other communications companies. The
Company has a 45% limited interest in the partnership, which was formed to
pursue the development of alternative access networks. Through December 31,
1995, the Company has invested $6,531 in Linkatel Pacific, L.P. The Company
intends to sell this investment in 1996 for an amount at least equal to the
amounts invested to date, although no firm commitments are in place as of
December 31, 1995.

Linkatel Pacific, L.P.'s net loss approximated $1,262 and $2,319 for the
years ended December 31, 1994 and 1995. Net assets approximated $7,367 and
$9,088 as of December 31, 1994 and 1995.

F-14
<PAGE> 122

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

NOTE 4 -- NOTES RECEIVABLE

In September 1990, the Company advanced the Lowell Sun Publishing Company
and Lowell Sun Realty Company (collectively the "Lowell Sun Companies") $25,650
and agreed to provide a $6,500 revolving credit facility. The loan and revolving
credit facility which were originally due in March 1996 are subject to a
forbearance until January 2, 1997. Amounts outstanding bear interest at a
floating rate of prime plus 1.25%. The advance is collateralized by all assets
of the Lowell Sun Companies and an interest in Lowell Sun Companies stock. The
principal balance receivable at December 31, 1994 and 1995 was $23,675 and
$23,575, respectively.

NOTE 5 -- PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, at cost, consist of the following at
December 31:

<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Land......................................................... $ 17,054 $ 24,338
Machinery and equipment...................................... 78,503 84,733
Buildings and improvements................................... 75,608 116,790
Broadcast equipment.......................................... 38,307 104,147
Furniture and fixtures....................................... 39,871 45,076
Construction in progress..................................... 1,564 1,445
-------- --------
250,907 376,529
Less accumulated depreciation................................ 120,620 204,880
-------- --------
$130,287 $171,649
======== ========
</TABLE>

Depreciation expense on property, plant and equipment used in continuing
operations totaled $16,964, $16,617 and $22,346 in 1993, 1994 and 1995,
respectively.

NOTE 6 -- INTANGIBLE ASSETS

As of December 31, 1994 and 1995, intangible assets consist of:

<TABLE>
<CAPTION>
1994 1995
------- --------
<S> <C> <C>
Goodwill........................................................ $28,219 $166,594
Licenses........................................................ 1,303 165,836
Advertiser Relations............................................ 41,395 88,595
Other........................................................... 307 411
------- --------
Total................................................. $71,224 $421,436
======= ========
</TABLE>

Amortization expense on intangible assets charged to continuing operations
totaled $3,649, $3,366 and $11,623 in 1993, 1994, and 1995, respectively.
Accumulated amortization on intangible assets totaled $36,002 and $67,025 at
December 31, 1994 and 1995, respectively. See also Note 3.

F-15
<PAGE> 123

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

NOTE 7 -- ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Significant components of accrued expenses and other current liabilities
consisted of the following amounts at December 31:

<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Accrued costs on disposal of the cable television segment........ $35,075 $12,278
Deferred compensation............................................ 31,266 4,806
Accrued interest................................................. 7,263 872
Salaries, wages and other employee benefits...................... 7,033 11,626
Unearned revenue................................................. 4,024 3,709
Newspaper restructuring.......................................... -- 6,800
Other............................................................ 8,179 9,413
------- -------
$92,840 $49,504
======= =======
</TABLE>

NOTE 8 -- NEWSPAPER CONSOLIDATION AND RESTRUCTURING COSTS

(a) Newspaper Consolidation Costs

Included in the 1995 consolidated statement of operations are one-time
charges related to the consolidation of the Company's afternoon newspaper (The
Evening Bulletin) with the morning newspaper (The Providence Journal). This
consolidation was effective June 5, 1995 and resulted in the publishing of
Providence Journal-Bulletin, a morning newspaper. This consolidation is referred
to as the Newspaper Consolidation. In connection with the Newspaper
Consolidation, the Company offered early retirement benefits and voluntary
separation assistance to affected employees. As of December 31, 1995, 61
employees accepted early retirement benefits and 19 employees accepted voluntary
separation amounting to a charge to operations of approximately $3,826 and
$1,071, respectively, including benefits. In addition, the Company incurred
costs of approximately $2,525 for promotion, training, and other costs of the
conversion. The early retirement benefits will be paid from the Company's
retirement plans. As of December 31, 1995 approximately $700 remains unpaid
under the voluntary separation plans. This amount is expected to be paid in
1996.

(b) Newspaper Restructuring Costs

During the fourth quarter of 1995, management approved a plan of
reorganization and restructuring of most departments of Publishing in an effort
to improve efficiencies (the "Newspaper Restructuring"). Under the plan, the
Company has targeted a reduction in workforce of approximately 100 full time
equivalents through a combination of early retirement and voluntary and
involuntary separation assistance plans. Of the 100 full time equivalents,
approximately 62 are from the news and operations departments with the remainder
coming from other departments. Salaries and related payroll taxes associated
with these reductions amounted to approximately $6,800 and has been included as
a restructuring charge in the accompanying consolidated statement of operations
for 1995. In the three months ended March 31, 1996, the Company recorded an
additional charge to operations of approximately $1,150 relating to early
retirement costs and voluntary separation benefits in connection with this
Newspaper Restructuring. The Newspaper Restructuring is expected to be completed
by the second quarter of 1996. Early retirement and voluntary separation
benefits will be paid out of the Company's pension plans (in which plan assets
exceed plan obligations) and all other costs are expected to be paid out in
1996.

F-16
<PAGE> 124

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

NOTE 9 -- FEDERAL AND STATE INCOME TAXES

Income tax expense (benefit) has been allocated as follows:

<TABLE>
<CAPTION>
1993 1994 1995
------- ------- ------
<S> <C> <C> <C>
Continuing operations.................................. $(6,097) $ 1,950 $3,956
Operations of discontinued segments.................... (755) 1,571 2,017
Loss on disposal of segments........................... -- (8,038) --
Extraordinary items.................................... 799 -- (417)
Stockholders' equity................................... -- 70 (905)
------- ------- ------
$(6,053) $(4,447) $4,651
======= ======= ======
</TABLE>

Income tax expense (benefit) attributable to income from continuing
operations consists of:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -------
<S> <C> <C> <C>
Year ended December 31, 1993:
U.S. Federal........................................ $ (879) $ (4,886) $(5,765)
State............................................... (372) 40 (332)
------- -------- -------
$(1,251) $ (4,846) $(6,097)
======= ======== =======
Year ended December 31, 1994:
U.S. Federal........................................ $ 5,855 $ (3,258) $ 2,597
State............................................... (647) -- (647)
------- -------- -------
$ 5,208 $ (3,258) $ 1,950
======= ======== =======
Year ended December 31, 1995:
U.S. Federal........................................ $(8,523) $ 11,162 $ 2,639
State............................................... 1,471 (154) 1,317
------- -------- -------
$(7,052) $ 11,008 $ 3,956
======= ======== =======
</TABLE>

During 1995, the Company paid $15,023 in additional taxes and interest in
final settlement with the Internal Revenue Service ("IRS") relating to
examinations of its income tax returns for the years 1984 through 1989. In
anticipation of the interest on these settlements and in providing for various
contingencies on income tax exposures identified during on-going examinations,
the Company recorded additional income tax expense of $6,000 in 1994.

During 1994, the Company also agreed to a settlement in connection with the
IRS initiative for settlement of intangible asset issues. Consequently, deferred
tax liabilities previously recorded for uncertainties related to income taxes in
connection with prior purchase business combinations were adjusted to reflect
the revised tax basis resulting from the settlement of these intangible asset
issues. As a result of these adjustments, deferred tax liabilities and goodwill
associated with the purchase business combinations were reduced by approximately
$12,500.

F-17
<PAGE> 125

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

Income tax expense (benefit) differed from the amounts computed by applying
the U.S. federal income tax rate of 34% to pretax loss from continuing
operations as a result of the following:

<TABLE>
<CAPTION>
1993 1994 1995
------- ------- ------
<S> <C> <C> <C>
Computed "expected" tax benefit........................ $(7,605) $(7,235) $ (356)
Increase (decrease) in income taxes resulting from:
Reserve for tax contingencies and interest on
settlements....................................... -- 6,000 --
Equity in net loss of affiliates..................... 2,463 2,831 623
State and local income taxes, net of federal income
tax............................................... (219) (427) 804
Rehabilitation credit................................ (1,248) -- --
Amortization of goodwill............................. 271 231 2,223
Other, net........................................... 241 550 662
------- ------- ------
$(6,097) $ 1,950 $3,956
======= ======= ======
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1994 and 1995 are presented below:

<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Gross deferred tax assets:
Deferred compensation........................................ $ 14,915 $ 5,678
State net operating loss carryforwards....................... 3,252 3,329
Investment and other reserves................................ 5,117 5,535
Self-insurance reserves...................................... 1,027 1,357
Vacation accrual............................................. 702 935
Postretirement benefits...................................... 1,897 3,767
Accounts receivable, principally due to allowance for
doubtful accounts......................................... 438 1,163
Accrued costs on disposal of segments........................ 7,021 2,968
Other........................................................ 3,510 3,765
-------- --------
Total gross deferred tax assets...................... 37,879 28,497
Less valuation allowance............................. (3,252) (3,329)
-------- --------
Net deferred tax assets.............................. 34,627 25,168
-------- --------
Gross deferred tax liabilities:
Plant and equipment, principally due to differences in
depreciation
and capitalized interest.................................. (15,477) (29,771)
Net intangibles, principally due to differences in basis..... (4,140) (33,288)
Prepaid pension costs........................................ (4,016) (3,544)
Partnership investment....................................... (486) (213)
Other........................................................ (1,926) (3,538)
-------- --------
Total gross deferred tax liabilities................. (26,045) (70,354)
-------- --------
Net deferred tax asset (liability)................... $ 8,582 $(45,186)
======== ========
</TABLE>

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible, or the recovery of taxes
paid in the carryback period. Based upon

F-18
<PAGE> 126

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

certain assumptions, such as the scheduled reversal of deferred tax liabilities,
available taxes in the carryback period, projected future taxable income, (the
realizaton of which there can be no assurance) in determining management has
determined that it is more likely than not that the deferred tax assets will be
realized.

The valuation allowance for deferred tax assets as of December 31, 1994 and
1995 was $3,252 and $3,329. The net change in the total valuation allowance was
an increase of $394 in 1993, a decrease of $1,283 in 1994, and an increase of
$77 in 1995. Changes to the valuation allowance relate principally to deferred
tax assets recorded for state net operating loss carryforwards.

At December 31, 1995, the Company had net operating loss carryforwards for
state income tax purposes of approximately $59,401 which are available to offset
future state taxable income, if any, expiring in various years ending in 2007.

NOTE 10 -- LONG-TERM DEBT

At December 31, 1994 and 1995, long-term debt consists of the following:

<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Revolving credit and term loan facility at rates of interest
averaging .2% in 1995........................................ $ -- $234,298
Revolving credit and term loan facility at rates of interest
averaging .8% and 7.52% in 1994 and 1995, repaid October
1995......................................................... 243,655 --
Industrial Revenue Bonds ("IRB") payable at various rates of
interest averaging 3.5% payable through December 2022........ 9,900 9,800
Note payable at an annual rate of interest equal to 18% payable
through April 2002, retired in July 1995..................... 7,123 --
Other.......................................................... 83 --
-------- --------
Total long-term debt................................. 260,761 244,098
Less current installments...................................... 13,588 100
-------- --------
Long-term debt, excluding current installments....... $247,173 $243,998
======== ========
</TABLE>

Scheduled principal payments on outstanding debt total $244,098 and are due
as follows: IRB payments of $100 in each of the years 1996 through 2000.
Thereafter scheduled principal payments on the IRB continue at $100 annually
until increasing to $200 in 1998 through 2005; to $300 in 2006 through 2010; to
$400 in 2011 through 2014; to $500 in 2015 through 2017; to $600 in 2018 through
2019; to $700 in 2020 and 2021, and a final payment of $800 in 2022. Of the
revolver and term loan outstanding at December 31, 1995, $75,000 is a term loan
with a balloon payment due in 2004. The revolver commitment decreases quarterly
on a schedule commencing December 31, 1996 in accordance with the Credit
Agreement as described below.

Costs of obtaining debt financing have been deferred and are being
amortized using the straight-line method over the period of the related debt.
Deferred financing costs totaled $7,097 and $1,748 at December 31, 1994 and
1995, respectively. Accumulated amortization at December 31, 1994 and 1995
aggregated $1,876 and $50, respectively. On October 5, 1995 the Company
refinanced its debt in connection with the transactions described in Note 2.
Accordingly, unamortized deferred financing costs of $4,554 associated with the
debt refinanced was written off and allocated to discontinued operations in the
fourth quarter of 1995.

On October 5, 1995, in connection with the transactions discussed in Note
2, Old PJC (net of $2 million in certain costs shared with Continental), prior
to the PJC Spin-Off, incurred indebtedness to a subsidiary of Continental in a
principal amount of approximately $408 million ("New Cable Indebtedness"). Prior
to the

F-19
<PAGE> 127

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

PJC Spin-Off, Old PJC used the proceeds of the New Cable Indebtedness, the $405
million provided by the sale of KVC and the Registrant Indebtedness (defined
below) to (i) consummate the Kelso Buyout (ii) to repay substantially all
outstanding indebtedness of Old PJC and KHC in an aggregate amount of
approximately $623 million, and (iii) to pay other costs associated with the
transactions discussed in Notes 2 and 16. Additional indebtedness (the "Company
Indebtedness") required to meet the foregoing obligations, among others, was
incurred by Old PJC and the Company in the principal amount of $105 million.
Following the PJC Spin-Off, the Company had no obligations or liabilities with
respect to the New Cable Indebtedness, and Continental had no obligations or
liabilities with respect to the Company Indebtedness. In connection with the
sale of KVC, KBC paid approximately $121 million in taxes.

The Company Indebtedness was incurred pursuant to a Credit Agreement
entered into by the Company on October 5, 1995 (the "Credit Agreement"). The
Credit Agreement, consists of a $75,000 term loan and a $300,000 revolving
credit facility. The $75,000 term loan provided for under the Credit Agreement
is due 2004. The revolving credit facility provides for under the terms of the
Credit Agreement decreases by the following amounts in the years indicated:
1996-$4,000; 1997-$10,500; 1998-$14,500; 1999-$21,500; 2000-$53,250;
2001-$65,750; 2002-$67,750; 2003- $62,750. The indebtedness evidenced by the
Credit Agreement is secured by guarantees from all of the material subsidiaries
of the Company and a first priority pledge of all such material subsidiaries'
capital stock. The Credit Agreement provides for borrowings indexed, as the
Company may from time to time elect, to the Eurodollar rate, the certificate of
deposit rate, or the "base" rate of the agent, plus the "spread" over such
rates. The "spread" will be determined by the ratio of the total debt of the
Company to the operating cash flow of the Company (as defined by the Credit
Agreement).

The Credit Agreement contains customary events of default, financial
covenants, covenants restricting the incurrence of debt (other than under the
Credit Agreement), investments and encumbrances on assets and covenants limiting
mergers and acquisitions. The Credit Agreement provides for the mandatory
prepayment of amounts outstanding and a reduction in the commitment under
certain circumstances.

In July, 1995, the Company retired its 18% note payable for $8,734. The
loss on the early retirement of this debt amounted to $2,086 (net of income
taxes of $417) and is included as an extraordinary item in the Company's
consolidated statement of operations.

In January 1993, the Company retired an industrial revenue bond with a face
value of $9,500 for $7,150. The gain resulting from this transaction, totaling
$1,551 net of tax, has been presented as an extraordinary item in the 1993
statement of operations. These retirements were funded through additional
borrowings under the revolving credit and term loan facility.

In November 1992, the Company entered into an interest rate swap agreement
to reduce the impact of changes in interest rates on its revolving credit and
term loan facilities described above. The interest rate under the swap agreement
is equal to 6.71% plus an applicable margin as defined in the revolving credit
and term loan facility which presently sets the fixed interest rate at 8.1% on
the first $200,000 of outstanding debt. The Company recorded additional interest
expense during 1993, 1994 and 1995 totaling approximately $6,883, $4,880, and
$1,121, respectively, which represents the excess of the swap agreement rate
over the original contractual rate. In accordance with certain covenants under
the Credit Agreement, the Company will maintain its existing interest rate swap
arrangements with The First National Bank of Chicago through December 31, 1999.

F-20
<PAGE> 128

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

The notional amounts and respective periods covered under the interest rate
swap agreement are as follows:

<TABLE>
<CAPTION>
AMOUNT PERIOD
----------- ---------------------------------------
<S> <C>
$200,000...................................... December 30, 1992 -- December 30, 1996
$175,000...................................... December 30, 1996 -- December 30, 1997
$150,000...................................... December 30, 1997 -- December 30, 1999
</TABLE>

The Company is exposed to credit loss in the event of nonperformance by the
other party to the interest rate swap agreement, however, the Company does not
anticipate nonperformance under the agreement.

NOTE 11 -- TELEVISION PROGRAM RIGHTS PAYABLE

Television program rights payable consist of the gross value of cash
payments due on the acquisition of program rights as well as amounts due in the
amount of approximately $3,805 at December 31, 1995 for programs purchased
through barter transactions. Future cash payments total $18,167 and are due in
the following years: 1996 -- $12,658; 1997 -- $3,128; 1998 -- $1,814; and
1999 -- $567. The barter obligations are scheduled to be fulfilled in 1996.

NOTE 12 -- OPERATING LEASES

The Company has certain noncancelable operating leases with renewal options
for land, buildings, machinery and equipment. Future minimum lease payments
under noncancelable operating leases are due in the following years:
1996 -- $6,037; 1997 -- $5,362; 1998 -- $4,711; 1999 -- $4,253; 2000 -- $4,229;
and thereafter -- $15,228. Gross rental expense for the years ended December 31,
1993, 1994 and 1995, was $2,173, $5,167 and $5,993, respectively.

Future minimum rental income under noncancelable satellite subleases is as
follows: 1996 -- $4,030; 1997 -- $4,030; 1998 -- $3,220; 1999 -- $1,923; and
2000 -- $900. Sublease satellite rental income totaled $2,100 and $3,349 in 1994
and 1995 and is included in Programming and Electronic Media revenue. There was
no sublease satellite rental income in 1993.

NOTE 13 -- STOCK-BASED COMPENSATION PLANS

(a) Incentive Compensation Plans

The Company has a deferred incentive compensation plan which is
administered by the Compensation Committee of the Board of Directors. The
expense under this plan was $5,330, $12,747, and $773 in 1993, 1994 and 1995,
respectively. As of December 31, 1994 and 1995, the amounts accrued under this
plan equaled $31,266 and $4,806 respectively. On September 29, 1995, the Company
liquidated 85% of the units in the Company's deferred incentive compensation
units plan (the "IUP Plan") which was paid in cash and stock totaling $27,233.

(b) Restricted Stock Unit Plan

During 1993, the Company established a Restricted Stock Unit Plan for
certain key executives. Participants were awarded restricted stock units with
each unit being equivalent to one share of Class A Common Stock. Restricted
stock units, including additional units accrued as a result of dividends and
reinvested dividends, will be 100% vested at the end of three years from the
date of the award. Upon vesting, the restricted stock units will be paid out,
net of taxes, in actual shares of Class A Common Stock. Participants will be
offered an opportunity to defer such payout. Vesting is accelerated for death,
total disability, termination other than for cause, and for retirement
(pro-rata). In connection with the disposal of

F-21
<PAGE> 129

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

its cable operations, the Company fully vested 115,650 units of which 60,300
units were paid in cash and stock totaling $1,653 prior to the Merger. In
connection with the reorganization and transactions described in Note 2, and as
provided under the terms of the plans, the number of units awarded to
participants holding units immediately after the closing of the transaction were
adjusted upward by a factor of approximately 2.3876 (the "Conversion Factor") in
order to preserve the economic value of the outstanding units. In connection
with the Plan, a total of 730,800 Class A shares (after considering the
Conversion Factor) have been reserved. As of December 31, 1994 and 1995, 299,700
units and 567,450 (after the Conversion Factor), respectively, were issued and
outstanding. Compensation expense, included in continuing operations, totaled
$405, $2,400, and $1,173 during 1993, 1994 and 1995, respectively.

Effective October 1, 1994, the Board of Directors of the Company adopted
the "1994 Employee Stock Option Plan" and the "1994 Non-Employee Director Stock
Option Plan", (The "Option Plans"). The Option Plans were approved by the
stockholders of the Company at its Annual Meeting in 1995. The Option Plans will
remain in effect until the earlier of October 1, 1999 or termination of the
aforementioned Option Plans by the Board of Directors of the Company.

Under the terms of the Option Plans, key employees recommended by the
Compensation Committee of the Board of Directors (or by any other committee
appointed by the Board consisting of two or more non-employee Directors) and all
12 non-employee directors, are eligible to receive grants of stock options. The
maximum number of shares of Class A Common Stock that can be used for purposes
of the Option Plans is 1,867,500. Shares may be awarded from authorized and
unissued shares or from treasury shares, as determined by the Compensation
Committee.

Options granted under the "1994 Employee Stock Option Plan" are exercisable
in four equal annual installments beginning one year after the grant date.
Options under the "1994 Non-Employee Director Stock Option Plan" are exercisable
on the first anniversary date of the grant. Options granted under both plans
have a term of ten years.

Upon a "Change of Control" as defined in the Option Plans, all options
granted will become immediately vested and exercisable. In 1994, 286,650 options
were granted, at an exercise price of $17.11. In 1995, an additional 27,000
options were granted to the non-employee directors, and an additional 349,200
options were granted to key employees at an exercise price of $11.27. In
connection with the reorganization and transactions described in Note 2, and as
provided under the terms of the plans, the option exercise price on the 286,650
options issued in 1994 were adjusted to $1.471 in order to preserve the economic
value of the outstanding options. During 1995, 6,300 options were exercised at
an exercise price of $1.471. As of December 31, 1995, there were 656,550 options
outstanding of which 81,900 are exercisable.

Amounts paid to participants in the liquidation of 85% of the IUP Plan and
the remaining units in the IUP Plan, may be adjusted if, upon the occurrence of
a public offering of Continental Class A Common Stock or certain other events,
the value of Continental Class A Common Stock was greater or less than the price
attributed to such shares at the time 85% of the units were liquidated. A
similar adjustment is applicable to certain options and units issued prior to
the Merger in the Option Plans and the Restricted Stock Unit Plan. As a result
of a planned merger of Continental with and into USWest Media Group (the
"USWest/ Continental Merger"), jointly announced by these entities on February
27, 1996, participants in these plans may receive the adjustment as additional
payments in cash or stock reflecting the increase in the price of Continental
Class A Common Stock since the Merger. In the three months ended March 31, 1996,
the Company recorded a charge to continuing operations of $11,397 and a charge
to discontinued operations of $5,421 (pre-tax) to reflect the vested portion of
an estimated $20,530 adjustment to the stock-based compensation plans. The
difference of $3,712 will be charged to operations over the remaining vesting
period

F-22
<PAGE> 130

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

of the plans, primarily in the second and third quarters of 1996. The final
amount of additional consideration is subject to the closing of the US West
Merger, expected by the end of 1996. The amount of the liquidation of the IUP,
including the 15% retained units and the estimated $14.0 million adjustment
related to the US West Merger, totals $18.9 million which would be payable to
participants in the IUP, of which payment of approximately $4.3 million will be
in shares of Class A Common Stock and the remainder will be paid in cash.
Following the payout of any additional consideration, the IUP Plan will be fully
liquidated and terminated.

NOTE 14 -- PENSIONS AND OTHER EMPLOYEE BENEFITS

(a) Defined Benefit Pension Plans

The Company has three noncontributory defined benefit retirement plans
(including one funded by KHC acquired in the Kelso Buyout). The Company's
funding policy for the defined benefit plans is to contribute such amounts as
are deductible for federal income tax purposes. Benefits are based on the
employee's years of service and average compensation immediately preceding
retirement.

The funded status of the defined benefit plans is as follows:

<TABLE>
<CAPTION>
1994 1995
-------- ---------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligations................................ $(49,956) $ (86,502)
-------- ---------
Accumulated benefit obligations........................... $(54,169) $ (91,968)
-------- ---------
Projected benefit obligations............................... $(71,227) $(109,985)
Plan assets at fair value (primarily corporate equity and
debt securities, government securities and real estate)... 89,106 132,779
-------- ---------
Excess of plan assets over projected benefit
obligations.......................................... $ 17,879 $ 22,794
-------- ---------
</TABLE>

The assumptions used in the above valuations are as follows:

<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Discount rate............................................... 7.5 % 7.0 %
Rate of increase in compensation levels..................... 5.0 % 4.5 %
</TABLE>

Certain changes in the items shown above are not recognized as they occur,
but are amortized systematically over subsequent periods. Unrecognized amounts
to be amortized and amounts included in the consolidated balance sheets are
shown below:

<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Unrecognized net loss.......................................... $(8,336) $(2,874)
Unrecognized net transition asset being amortized principally
over 18 years................................................ 11,956 10,727
Unrecognized prior service cost due to plan amendment.......... (3,504) (3,029)
Prepaid pension cost (included in other assets)................ 17,763 17,970
------- -------
Excess of plan assets over projected benefit
obligations........................................ $17,879 $22,794
======= =======
</TABLE>

F-23
<PAGE> 131

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

The components of 1993, 1994 and 1995 pension expense (income) and the
assumptions used as determined by the plans' actuary, are as follows:

<TABLE>
<CAPTION>
1993 1994 1995
------- -------- --------
<S> <C> <C> <C>
Service cost.................................... $ 1,971 $ 2,017 $ 3,185
Interest cost................................... 5,022 5,093 7,480
Actual return on plan assets.................... (8,681) 2,724 (25,674)
Net amortization of unrecognized net assets and
deferrals..................................... 691 (11,304) 15,041
------- -------- --------
Pension expense (income)...................... $ (997) $ (1,470) $ 32
======= ======== ========
</TABLE>

<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Discount rate................................... 7.5 % 7.5 % 7.5 %
Rate of increase in compensation levels......... 5.0 5.0 5.0
Expected long-term rate of return on assets..... 8.5 8.5 8.5
</TABLE>

The effects of the special termination benefits of $3,701 and curtailment
gain of $531 associated with the Newspaper Consolidation and early retirement
program are included in the Newspaper Consolidation Costs discussed in Note 8
(a).

(b) Defined Contribution Plan

The Company contributes to defined contribution plans based on the amount
of each employee's plan contribution, not to exceed a predetermined amount as
defined by each plan. The total expense of these plans was $1,086, $1,150 and
$1,312 in 1993, 1994 and 1995, respectively.

In addition to the Company's defined benefit pension plans, one of
Broadcasting stations provides postretirement medical benefits to its group of
employees. The Registrant provides postretirement life insurance benefits to
substantially all of its employees. These plans are non-contributory and are not
funded.

The Company's accrued postretirement benefit cost as of December 31, 1994
and 1995 was $3,086 and $3,461, respectively, consisting primarily of
accumulated postretirement benefit obligations for retirees. Net periodic
postretirement benefit cost for 1993, 1994 and 1995 totaled $252, $300 and $204,
respectively, consisting primarily of interest costs.

For measurement purposes relating to the medical plan, a medical trend rate
of 13.0% was used grading to 6.0% by the year 2002. A 1% change in the medical
trend rate does not result in a material impact to the Company's reported
postretirement benefits. The discount rate used in determining the accumulated
postretirement benefit obligation for the medical and life insurance plans was
7.5% and 7.0 % in 1994 and 1995, respectively.

(d) Supplemental Retirement Plan

The Company maintains an unfunded supplemental retirement plan which
provides supplemental benefits to a select group of senior management employees.
At December 31, 1994 and 1995, the vested benefit obligation was $1,220 and
$3,933, respectively, and the accumulated benefit obligation was $3,437 and
$4,684, respectively. The projected benefit obligation totaled $5,799 and
$6,065, respectively, at December 31, 1994 and 1995.

F-24
<PAGE> 132

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

The net periodic pension cost for 1993, 1994, and 1995 was $1,501, $997 and
$1,000, respectively, consisting of service and interest costs. An assumed
discount rate of 7.5% and 7.0% and compensation level increase rate of 5.0% and
4.5% were used in determining the benefit obligations at December 31, 1994 and
1995, respectively.

(e) Change in Control Agreements

In October, 1993, the Company executed various management agreements which
only become effective upon a change-in-control of the Company. The terms of the
agreements vary, with the maximum agreement providing a three year term of
employment with responsibilities, compensation, and benefits at least
commensurate as those during the prior six (6) months. If terminated
involuntarily, the individuals are entitled to a maximum of 299% of their
highest base pay and average bonus received during the prior three years as a
lump sum severance payment. In a supplemental agreement, executed in October
1993, the Company committed to paying the severance stated above in the event an
individual was involuntarily terminated as a result of corporate restructuring,
even if prior to a change-in-control.

NOTE 15 -- DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

(a) Current Assets and Liabilities

The carrying amount of cash, trade receivables, trade accounts payable and
accrued expenses approximates fair value because of the short maturity of these
instruments.

(b) Notes Receivable

The fair values of the Company's notes receivable are based on the amount
of future cash flows associated with each instrument, discounted using current
rates at which similar loans would be made to borrowers with similar credit
ratings and for the same maturities.

The fair values of each of the Company's long-term debt instruments are
based on the amount of future cash flows associated with each instrument
discounted using the Company's current borrowing rate, for similar debt
instruments of comparable maturity.

The fair value of obligations for television program rights are based on
future cash flows, discounted using the Company's current borrowing rate, over
the term of the related contract.

(d) Interest Rate Swaps

The fair value of interest rate swaps is the amount at which they could be
settled, based on estimates obtained from dealers. At December 31, 1994
settlement approximated a $9,400 receivable to the Company. The amount of
payment required to settle outstanding interest rate swaps at December 31, 1995
approximated $8,000.

(e) Limitations

Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates are subjective in nature and involve uncertainties and matters
of significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.

F-25
<PAGE> 133

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

The estimated fair value of the Company's financial instruments are
summarized as follows:

<TABLE>
<CAPTION>
AT DECEMBER 31, 1994 AT DECEMBER 31, 1995
----------------------- -----------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Notes receivable........................ $ 19,513 $ 19,513 $ 19,174 $ 19,174
======== ========= ======== =========
Long-term debt.......................... $260,761 $ 263,430 $244,098 $ 244,098
======== ========= ======== =========
Television program rights payable....... $ 7,364 $ 6,458 $ 21,972 $ 20,467
======== ========= ======== =========
</TABLE>

NOTE 16 -- COMMITMENTS AND CONTINGENCIES

The Company has outstanding payment commitments for broadcast television
programming totaling $45,511 at December 31, 1995, which under the licensing
agreements are not yet available for showing. Such programming becomes available
at various times over the years 1996 through 2000, at which point the Company
records the asset and related liability.

The Company has various talent contract commitments primarily with its
newscast employees covering up to three years together totaling $28,743.

The Company has insurance programs for workers' compensation, general
liability, auto and certain health coverages which comprise a form of
self-insurance. The Company's liability for large losses is capped, individually
and in the aggregate, through contracts with insurance companies. In addition,
the Company is self-insured for environmental hazards. An estimate for claims
incurred but not paid is accrued annually.

The Company has a letter of credit commitment in an amount not to exceed
$12,000 in support of industrial revenue bonds of a wholly-owned subsidiary.

In 1987, the Company repurchased approximately 8% of its outstanding shares
of common stock from an unaffiliated party with a provision that additional
consideration be paid to the unaffiliated party in the event of a significant
change in ownership of the Company. The Company paid this unaffiliated party
approximately $7,353 on October 5, 1995 in full settlement of the redemption
agreement, and has recorded the additional consideration in the consolidated
statement of stockholders' equity.

On August 12, 1994, Department of Insurance regulators seized control of
Confederation Life Insurance Company. The Company's Qualified Compensation
Deferral Plan has an investment contract with Confederation Life Insurance
Company. The contract was entered into in 1991 and was scheduled to mature on
January 2, 1996. As a result of the seizure, the value of the contract as of
August 11, 1994, has been frozen at $3,840. The Company has agreed to guarantee
the difference between the amount eventually paid by the regulators and the
contract value on the seizure date. To date this amount cannot be quantified but
is not expected to have a material effect on the consolidated financial position
or results of operations of the Company.

On January 17, 1995, Cable LP I, Inc. ("Cable LP") brought a declaratory
judgment action against Old PJC, Colony and Dynamic Cablevision of Florida,
Inc., a wholly-owned subsidiary of Colony ("Dynamic"), in the Circuit Court of
Dade County, Florida. Colony was a cable television subsidiary of Old PJC, which
was transferred to Continental in connection with the Merger. This case relates
to a partnership (the "Dynamic Partnership"), in which Dynamic is the general
partner with an 89.8% interest, and Cable LP is the limited partner with a 10.2%
interest. In this action, Cable LP claimed that Dynamic was obligated to offer
to sell Dynamic's general partnership interest to Cable LP before Old PJC
entered into the Merger Agreement with Continental. Cable LP further claims that
Dynamic's offer to purchase Cable LP's limited partnership interest for $13.1
million triggered a right of first refusal entitling Cable LP to purchase the
general partnership

F-26
<PAGE> 134

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

interest for $115 million. Cable LP seeks a declaration by the court that the
right of first refusal it is asserting applies.

Old PJC, Colony and Dynamic made a motion to strike allegations of bad
faith and breach of fiduciary duty filed against them, which motion was granted
by the court, and they filed an Answer to the Complaint and a Counterclaim on
March 16, 1995. In their counterclaim, Colony and Dynamic seek a declaratory
judgment that Cable LP unreasonably refused consent to the transfer of the
general partner's interest to Continental and that a purported transfer of Cable
LP's interest in the Dynamic Partnership to a partnership to be managed by
Adelphia Communications, Inc. violated Dynamic's right of first refusal under
the Dynamic Partnership Agreement. The case was tried with testimony given on
December 11 through December 13, 1995 with final arguments heard on January 12,
1996.

NOTE 17 -- STOCKHOLDERS' EQUITY

In connection with a proposed initial public offering of shares of Class A
common stock, the Company's Board of Directors approved a 450 for 1 split of its
issued and outstanding common stock effective June 18, 1996. Such stock split
has been reflected throughout these financial statements.

The Company has two classes of common stock: Class A and Class B. Each
class has the same rights and privileges, except that Class A common stock is
entitled to one vote per share, whereas Class B common stock is entitled to four
votes per share. In addition, the transfer of Class B common stock is limited to
"Permitted Transferees" only, otherwise the shares convert to Class A common
stock upon sale. In connection with the Merger agreement, trading of all shares
is restricted for a period of one year from the date of the closing.

Effective September 26, 1990, pursuant to a shareholder rights agreement,
the Company issued to shareholders one common stock right for each share of
Class A or Class B common stock then outstanding. The right entitles the holder
to purchase one share of Class A or Class B common stock at a purchase price of
$77.78 per share. Upon the occurrence of certain events, as defined in the
rights agreement, the Board of Directors may order the exchange of three common
shares for each right held. The shareholder rights agreement was terminated in
connection with the closing under the Merger Agreement. A substantially similar
agreement was entered into by the Company.

Treasury stock at December 31, 1994, consisted of 288,450 Class A shares
and 144,000 Class B shares. In connection with the PJC Spin-off, all treasury
stock was canceled as of the effective time of the closing.

NOTE 18 -- BUSINESS SEGMENT INFORMATION

The Company primarily operates in Broadcasting, Publishing, and Programming
and Electronic Media. Broadcasting consists of nine owned network-affiliated
television stations and two television stations for which the Company provides
programming and marketing service for under local marketing agreements ("LMA"s)
serving the following markets: Seattle, Portland, Charlotte, Albuquerque,
Louisville, Honolulu, Spokane, Tucson, and Boise. Prior to the Kelso Buyout,
Broadcasting consisted of five stations (including one station under an LMA).
Publishing consists primarily of the publication and sale of the major daily
newspaper serving Rhode Island and parts of southeastern Massachusetts. The
Programming and Electronic Media segment consists of wholly owned subsidiaries
or equity investments in cable television programming networks,

F-27
<PAGE> 135

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

electronic and interactive media, programming ventures, and other electronic
media. It currently consists of the Company's investments in AHN and TVFN (cable
programming networks); interactive media investments: Peapod and StarSight; its
electronic on-line information service, Rhode Island Horizons; its broadcast
programming venture: Partner Stations Network; and its recently launched cable
news network: NorthWest Cable News Network ("NWCN"). NWCN is a 24-hour regional
cable news network serving cable subscribers in the Pacific Northwest. It was
launched on December 18, 1995 and currently reaches 1.2 million subscribers.

Operating results and other financial data for the principal business
segments of the Company for 1993, 1994 and 1995 are presented in the table which
follows. Operating income (loss) by business segment is total revenue less
operating expenses. Other income (expense), income taxes and extraordinary items
have all been excluded from the computation of operating income (loss) by
segment. Identifiable assets by business segment are those assets used in
Company operations in each segment. Capital expenditures are reported exclusive
of acquisitions.

F-28
<PAGE> 136

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Broadcasting................................................. $ 45,506 $ 54,024 $180,547
Publishing................................................... 124,914 127,893 128,491
Programming and Electronic Media............................. -- 2,300 3,468
-------- -------- --------
$170,420 $184,217 $312,506
======== ======== ========
Operating income (loss):
Broadcasting................................................. $ (1,472) $ 6,219 $ 42,535
Publishing................................................... 9,891 9,270 (10,264)
Programming and Electronic Media............................. -- (315) (1,831)
Corporate.................................................... (21,628) (26,750) (17,054)
-------- -------- --------
$(13,209) $(11,576) $ 13,386
======== ======== ========
Identifiable assets
Broadcasting................................................... $106,992 $ 84,278 $502,024
Publishing................................................... 162,848 161,743 152,890
Programming and Electronic Media:
Investments in affiliated companies....................... 3,786 2,708 17,315
Other..................................................... 1,312 8,364 10,719
Discontinued operations, net................................. 396,707 369,790 --
Investments in affiliates -- Other........................... 86,451 80,699 4,856
Other........................................................ 17,589 17,131 19,426
-------- -------- --------
$775,685 $724,713 $707,230
======== ======== ========
Depreciation and amortization:
Broadcasting................................................. $ 8,682 $ 7,856 $ 21,884
Publishing................................................... 11,426 11,198 10,850
Programming and Electronic Media............................. -- 33 167
Other........................................................ 505 896 1,068
-------- -------- --------
$ 20,613 $ 19,983 $ 33,969
======== ======== ========
Capital expenditures
Broadcasting................................................. $ 1,368 $ 1,587 $ 7,951
Publishing................................................... 9,962 2,356 3,200
Programming and Electronic Media............................. -- 1,138 3,670
Other........................................................ 267 1,400 455
-------- -------- --------
$ 11,597 $ 6,481 $ 15,276
======== ======== ========
</TABLE>

F-29
<PAGE> 137

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

NOTE 19 -- SUBSEQUENT EVENTS (UNAUDITED)

Subsequent to March 31, 1996, the following significant events have
occurred:

(a) Litigation

On January 17, 1995, as discussed in Note 16, a declaratory judgment action
was brought by Cable L.P. I, Inc. ("Cable LP") against Old PJC, among other
parties, claiming that a subsidiary of Colony Communications, Inc., a
wholly-owned subsidiary of Old PJC ("Colony") had breached a right of first
refusal entitling Cable LP to purchase a general partnership interest in a cable
system Colony had transferred to Continental in connection with the Merger
Agreement. A final judgment in this action in favor of Cable LP was entered on
May 21, 1996. Such judgment requires, among other matters, Dynamic and Colony to
negotiate on a price to transfer Dynamic's interest in the general partnership
to Cable LP.

The Company has appealed this judgment and moved to stay the effect of the
judgment during the pendency of the appeal. On June 10, 1996 a hearing was held
on the Company's motion to stay. At such hearing the judge declined to grant or
deny the Company's motion to stay at this time. The Company is unable to predict
at this time what the ultimate outcome of this litigation might be. In
accordance with applicable accounting principles, should any loss resulting from
this litigation ultimately prove to be probable and reasonably estimable, such
loss, at that time, would result in a charge to stockholders' equity to reflect
the estimated decrease in the net book value of the cable assets disposed of in
1995 pursuant to the Merger Agreement. Such a charge could have a material
effect upon the Company's financial condition. If any payment obligations are
ultimately required under the terms of the Merger Agreement, it is currently
anticipated that such payments could be up to $40,000 and could have a material
effect upon the Company's liquidity position.

(b) Increased Ownership Interest in Television Food Network, G.P.

On May 14, 1996 the Company purchased the equity partnership interests held
by Landmark Programming, Inc. ("Landmark") and Scripps Howard Publishing, Inc.
("Scripps"), two of the partners of TVFN, for respective purchase prices of
approximately $12,650 and $11,400. Prior to such purchase, Landmark and Scripps
each owned a 10.8% and 9.7% general partnership interest in TVFN. The agreements
with each of Landmark and Scripps contain covenants by such parties not to
compete with TVFN and its affiliates for a period of one year following such
purchase. The Company's investment in TVFN through May 31, 1996, including these
purchases and funding of its share of operating losses, totaled $44.7 million,
which represents an equity interest of approximately 46%. Following these recent
purchases, the Company now holds three of the five voting seats on the
management committees of TVFN. As a result of the purchases, TVFN became a
controlled subsidiary of the Company and, effective May 14, 1996, was
consolidated into the Company's results of operations. The Company is pursuing a
proposed transaction to purchase all of the equity partnership interest held by
a third partner which would increase its ownership percentage in TVFN to
approximately 55% and result in control of four of the five voting seats on the
management committee. The Company estimates its additional investment in TVFN
for the third partner's equity interest plus funding of the Company's share of
operating losses of TVFN will total approximately $22,500 for the remainder of
1996.

F-30
<PAGE> 138

INDEPENDENT AUDITORS' REPORT

King Holding Corp.:

We have audited the consolidated balance sheet of King Holding Corp. and
subsidiaries (the Company) as of December 31, 1994 and the related consolidated
statements of operations, stockholders' equity, and of cash flows for each of
the two years in the period ended December 31, 1994. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of King Holding Corp. and
subsidiaries at December 31, 1994, and the results of their operations and their
cash flows for each of the two years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles.

/S/ DELOITTE & TOUCHE LLP

Boston, Massachusetts
February 10, 1995

F-31
<PAGE> 139

KING HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
1994
--------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents....................................................... $ 3,578
Accounts receivable, net........................................................ 26,801
Film and syndication rights, current portion.................................... 7,995
Prepaid expenses and other current assets....................................... 1,604
--------
Total current assets.................................................... 39,978
--------
Property and Equipment, net....................................................... 58,131
--------
Other Assets:
Film and syndication rights, long-term portion.................................. 787
Deferred financing costs, net................................................... 10,625
Intangible assets, net.......................................................... 124,070
Long-term pension asset......................................................... 2,927
Other assets.................................................................... 44
--------
Total other assets...................................................... 138,453
--------
Net Assets of Discontinued Operations............................................. 255,902
--------
$492,464
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt............................................... $ 28,804
Current portion of film and syndication rights.................................. 7,753
Accounts payable and other accrued expenses..................................... 12,247
--------
Total current liabilities............................................... 48,804
Long-term Obligations:
Long-term debt.................................................................. 265,245
Film and syndication rights obligations......................................... 1,501
Deferred income taxes........................................................... 17,202
Other........................................................................... 5,721
--------
Total liabilities....................................................... 338,473
--------
Commitments and Contingencies
Stockholders' Equity:
Common stock, Class A; $0.10 par value; 200 shares authorized issued and
outstanding.................................................................. --
Common stock, Class B (nonvoting); $0.10 par value; 240,000 shares authorized;
211,000 issued and outstanding............................................... 21
Additional paid in capital...................................................... 210,314
Accumulated deficit............................................................. (56,344)
--------
Total stockholders' equity.............................................. 153,991
--------
$492,464
========
</TABLE>

See accompanying notes to consolidated financial statements

F-32
<PAGE> 140

KING HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
1993 1994
-------- --------
<S> <C> <C>
Revenues:
Gross broadcast revenue.............................................. $117,967 $135,177
Less agency commissions.............................................. 15,627 18,118
-------- --------
Net revenues................................................. 102,340 117,059
-------- --------
Costs and Expenses:
Operating............................................................ 44,005 48,734
Selling, general and administrative.................................. 25,233 27,179
Management and other fees paid to related parties.................... 2,034 2,624
Depreciation and amortization........................................ 14,697 13,746
-------- --------
Total........................................................ 85,969 92,283
-------- --------
Operating income....................................................... 16,371 24,776
Other income (expense):
Interest expense, net of allocation to discontinued operations....... (8,972) (8,694)
Other, net........................................................... 288 24
-------- --------
Total other expense.......................................... (8,684) (8,670)
-------- --------
Income from continuing operations before income taxes.................. 7,687 16,106
Income tax provision................................................... 6,787 8,843
-------- --------
Income from continuing operations...................................... 900 7,263
Loss from discontinued cable operations, net of taxes.................. (15,389) (11,837)
Provision for loss on discontinued cable operations during phaseout
period, net of taxes................................................. -- (12,078)
-------- --------
Net loss..................................................... $(14,489) $(16,652)
======== ========
Net loss per common share:
Income from continuing operations.................................... $ 4.26 $ 34.38
Discontinued operations.............................................. (72.86) (113.23)
-------- --------
Net loss per common share.............................................. $ (68.60) $ (78.85)
======== ========
Weighted average shares outstanding.................................... 211,198 211,198
======== ========
</TABLE>

See accompanying notes to consolidated financial statements

F-33
<PAGE> 141

KING HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1993 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations.................................... $ 900 $ 7,263
Adjustments to reconcile income from continuing operations to net
cash flows provided by continuing operating activities:
Depreciation and amortization..................................... 14,697 13,746
Loss on disposal of fixed assets.................................. -- 464
Compensation costs related to warrant bonuses..................... 335 --
Deferred income taxes............................................. 18 (746)
Changes in assets and liabilities:
Accounts receivable............................................... (4,695) (3,116)
Prepaid expenses and other current assets......................... 905 533
Accounts payable and other accrued expenses....................... 838 2,491
Other, net........................................................ 575 2,595
Film rights assets and liabilities................................ (1,286) 489
-------- --------
Total adjustments............................................ 11,387 16,456
-------- --------
Net cash flows provided by continuing operating activities... 12,287 23,719
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment................................... (3,086) (7,136)
Increase in other assets, net........................................ (250) --
Net decrease in investments in discontinued operations............... 7,238 7,113
-------- --------
Net cash provided by (used in) investing activities.......... 3,902 (23)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of notes payable............................................ (16,000) (20,951)
-------- --------
Net cash used in financing activities........................ (16,000) (20,951)
-------- --------
Increase in cash and cash equivalents.................................. 189 2,745
Cash and cash equivalents, beginning of year (including cash and cash
equivalents included in net assets of discontinued operations)....... 687 876
-------- --------
Cash and cash equivalents, end of year:
Continuing operations................................................ 833 3,578
Included in net assets of discontinued operations.................... $ 43 $ 43
======== ========
</TABLE>

See accompanying notes to consolidated financial statements

F-34
<PAGE> 142

KING HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------------- PAID-IN ACCUMULATED STOCKHOLDERS'
CLASS A CLASS B CAPITAL DEFICIT EQUITY
------- ------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992.......... $ -- $ 21 $ 209,979 $ (25,203) $184,797
Compensation costs related to
warrant bonuses.................. 335 335
Net loss............................ (14,489) (14,489)
----- ----- --------- --------- --------
BALANCE AT DECEMBER 31, 1993.......... -- 21 210,314 (39,692) 170,643
Net loss............................ (16,652) (16,652)
----- ----- --------- --------- --------
BALANCE AT DECEMBER 31, 1994.......... $ -- $ 21 $ 210,314 $ (56,344) $153,991
===== ===== ========= ========= ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-35
<PAGE> 143

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business -- King Holding Corp. (the "Company") owns and operates certain
television stations and cable television properties throughout the central and
western United States and Hawaii. The Company was formed as a joint venture
between the Providence Journal Company and subsidiaries ("Providence Journal")
and an investment banking organization (the "Investor Stockholder"). The
Providence Journal and Investor Stockholder each own a 50% interest in the
Company. On February 25, 1992, the Company acquired the outstanding capital
stock of King Broadcasting Company ("KBC"), the parent company of King
Videocable Company ("KVC"), for a purchase price of approximately $364,000 plus
assumed liabilities aggregating $183,000 (the "Acquisition"). The Acquisition
has been accounted for as a purchase, and accordingly, the accompanying
consolidated statements of operations, stockholders' equity, and cash flows
include the operations of the Company and its subsidiaries commencing February
25, 1992. The purchase price was funded through the initial capitalization of
the Company and proceeds received from debt financing with a syndicate of banks
(see Note 5). As part of the initial capitalization of the Company, the
Providence Journal was awarded a warrant allowing for the purchase of 2,012
shares of Class B nonvoting common stock at $.10 per share.

During 1994 the Company entered into a plan to dispose of its Cable
operations (see Note 2).

Summary of Significant Accounting Policies

Basis of Presentation -- The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. The accompanying
consolidated financial statements differ from those previously issued by the
Company due to the reporting of its discontinued cable operations (see Note 2).
All significant transactions between the consolidated entities have been
eliminated (see Note 9).

Revenue Recognition -- Revenues from broadcast activities are recognized as
advertisements are broadcast. Revenues from cable activities are recognized as
the services are provided.

Investment in Nonconsolidated Partnerships -- The Company has made certain
investments in media partnerships as a limited and general partner with voting
interests of approximately 10% and 50%, respectively. These investments are
accounted for using the equity method and are included in net assets of
discontinued operations. Income attributable to the Company's proportional share
of the partnership earnings is reported within other expense.

Allowance for Doubtful Accounts -- The allowance for doubtful accounts
related to continuing operations at December 31, 1994 aggregated $1,200.

Property and Equipment -- Property and equipment are recorded at cost, or
in the case of property and equipment acquired as a result of the Acquisition,
at appraised fair value at the date of purchase. Cable system betterments,
including materials, labor and interest, are recorded at cost. Depreciation and
amortization are provided using the straight-line method over the estimated
useful lives of the related assets, generally three to twenty years.

In 1993, due to provisions of the Cable Television Consumer Protection and
Competition Act of 1992 ("Cable Act") which effectively transferred ownership of
wiring and additional outlets installed in a customer's residence, KVC
accelerated the depreciation of these items based upon the estimated customer
churn rate and expensed all costs of installation and wiring in the home as
incurred effective January 1, 1993. The charge recorded in December 1993 related
to these items aggregated $4,607 and is reflected in discontinued operations.

F-36
<PAGE> 144

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred Financing Costs -- Costs of obtaining debt financing have been
deferred and are being amortized using the straight-line method over the
amortization period of the related debt (ten years). Included in such costs are
$12,000 of fees paid to the Company's stockholders to assist in the arrangement
of the financing. Accumulated amortization at December 31, 1994 aggregated
$4,201.

Intangible Assets -- Intangible assets are recorded at their appraised fair
value at the date of Acquisition. Amortization is provided using the
straight-line method over the estimated useful lives of the related assets,
generally fifteen to forty years. The Company evaluates the recoverability of
intangible assets by reviewing the performance of the underlying operations, in
particular the future undiscounted operating cash flows. The Company also
evaluates the amortization periods of the intangible assets to determine whether
events or circumstances warrant revised estimates of useful lives.

Film and Syndication Rights -- Assets and liabilities related to film and
syndication rights are recorded at cost, when the related film or television
series is available for broadcast. Film rights assets are amortized using
principally accelerated methods, based on the anticipated value of each film
showing and the number of anticipated showings. Syndication rights are amortized
ratably over the term of the series expected showing.

Cash and Cash Equivalents -- The Company considers all short-term, highly
liquid investments purchased with remaining maturities of three months or less
to be cash equivalents.

Supplemental cash flow information for the years ended December 31, 1993
and 1994 is as follows:

<TABLE>
<CAPTION>
1993 1994
------- -------
<S> <C> <C>
Cash paid for interest........................................... $25,453 $25,165
Cash paid for income taxes....................................... 3,021 4,736
</TABLE>

Income Taxes -- Deferred income taxes are provided to recognize temporary
differences between book and tax bases of the Company's assets and liabilities
and the effects of credits and other items not yet recognized for tax purposes.

Interest Rate Swaps -- The Company has only limited involvement with
derivative financial instruments and does not use them for trading purposes.
Derivative financial instruments are used only to manage well-defined interest
rate risks.

The Company has entered into interest rate swap agreements which are
accounted for as a hedge of the obligation and accordingly, the net swap
settlement amount is recorded as an adjustment to interest expense in the period
incurred. Gains and losses upon settlement of a swap agreement are deferred and
amortized over the remaining term of the agreement.

Net Loss Per Common Share -- Net loss per common share is computed using
the weighted average number of common shares outstanding during the year.

Reclassifications -- The accompanying statements of cash flows have been
reclassified to present cash flows from discontinued operations in investing
activities.

2. DISCONTINUED OPERATIONS (INFORMATION SUBSEQUENT TO FEBRUARY 10, 1995 IS
UNAUDITED)

In November 1994, the Providence Journal entered into an agreement with
Continental Cablevision, Inc. ("Continental") whereby Continental would acquire
all of the Providence Journal's cable operations, both wholly and partly owned.
Under the terms of the agreement, as modified in August 1995 (the "August
Modification"), in an integrated transaction, KBC sold its entire interest in
KVC to Continental for proceeds which approximated $405 million. Simultaneously
with this transaction, the Providence Journal acquired the remaining 50%
interest in the Company held by the Investor Stockholder, thus becoming sole
owner of the

F-37
<PAGE> 145

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company. Immediately thereafter, the remaining cable operations of the
Providence Journal were merged into Continental in accordance with the terms of
the agreement in a tax-free transaction.

Prior to the August Modification, the transaction had been structured to
qualify as a tax-free exchange effected through a distribution of assets to the
shareholders, which would have resulted in no gain or loss for the Company.
Accordingly, the Company provided for the anticipated operating losses of KVC
through the expected date of its disposal in the Company's 1994 financial
statements. The provision for loss during the phase-out period, recorded by the
Company during 1994, including allocated interest of $18,258, net of taxes was
$12,078. Proceeds of the transaction were used to repay all of the Company's
existing longterm debt and to settle the outstanding interest rate swaps.

The net assets of KVC have been segregated in the accompanying consolidated
balance sheets as "net assets of discontinued operations". Net assets to be
acquired consist primarily of property and equipment, and intangible assets.
Such amounts have been reported net of costs and expenses expected to be
incurred through the disposal date.

The results of operations of KVC have been reported as discontinued
operations in the accompanying consolidated statements of operations. Prior year
financial statements have been reclassified to conform to the current year
presentation. The condensed statements of operations relating to the
discontinued cable operations are presented below:

<TABLE>
<CAPTION>
1993 1994
--------- ---------
<S> <C> <C>
Revenues..................................................... $ 83,538 $ 84,174
Costs and expenses........................................... (106,342) (101,261)
--------- ---------
(Loss) before income taxes................................... (22,804) (17,087)
Income tax benefit........................................... 7,415 5,250
--------- ---------
Net (loss)......................................... $ (15,389) $ (11,837)
========= =========
</TABLE>

3. PROPERTY AND EQUIPMENT

Property and equipment of continuing operations consisted of the following
at December 31:

<TABLE>
<CAPTION>
1994
--------
<S> <C>
Land and buildings........................................................ $ 40,225
Broadcast equipment....................................................... 30,352
Office equipment.......................................................... 2,979
Leasehold improvements.................................................... 1,207
Construction-in-process................................................... 4,343
--------
Total........................................................... 79,106
Less accumulated depreciation and amortization............................ (20,975)
--------
Property and equipment -- net............................................. $ 58,131
========
</TABLE>

F-38
<PAGE> 146

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. INTANGIBLE ASSETS

Intangible assets of continuing operations consisted of the following at
December 31:

<TABLE>
<CAPTION>
1994
--------
<S> <C>
FCC license agreements.................................................... $ 59,780
Goodwill.................................................................. 28,774
Advertiser relations...................................................... 47,200
Other..................................................................... 7,669
--------
Total........................................................... 143,423
Less accumulated amortization............................................. (19,353)
--------
Intangible assets -- net.................................................. $124,070
========
</TABLE>

5. FINANCING AGREEMENTS

The Company has a credit agreement (the "Credit Agreement") with a
syndicate of banks which consists of a revolving credit facility, "swing" loans
(as defined), and a term loan.

The revolving credit facility provides for borrowings of up to $50,000 of
which $10,800 was outstanding on December 31, 1994. Borrowings outstanding under
the facility are payable in full in February 2000. The term loan of $283,249 is
payable in 32 quarterly installments commencing in March 1994.

"Swing" loans are available to the Company from the lead bank of the
syndicate. "Swing" loans are available up to a maximum aggregate borrowing level
of $5,000 at any one time, and are generally subject to the same repayment terms
as the revolving credit facility.

Borrowings under the Credit Agreement bear interest at either a bank's CD
rate plus an applicable margin (as defined), the LIBOR rate plus the applicable
margin or an alternate base rate determined as the greater of a bank's prime
rate, the Federal Funds rate plus 1/2% or a secondary market determined rate
plus 1 1/4% all determined at the Company's option. At December 31, 1994, the
interest rate on the revolving credit facility was 7.375%. During 1994, interest
rates on the term loan ranged between 4.88% and 7.75%, based on the one and
three month LIBOR rates, respectively.

In connection with the Credit Agreement, the Company is required to pay an
annual fee of 3/8 of 1% of the average daily unused availability under the
revolving credit facility. In addition, the Company is required to pay the lead
bank an annual fee of 3/8 of 1% of the average daily unused "swing" loan
availability. Such fees aggregated $187, $194 in 1993 and 1994, respectively.

The Credit Agreement contains certain limitations on additional
indebtedness, capital expenditures, payments to affiliates and disposition of
assets and requires the Company to maintain certain leverage and interest
coverage ratios, all as defined in the Agreement.

At December 31, 1994, long-term debt was due as follows: 1995 -- $28,804;
1996 -- 38,408; 1997 -- $38,408; 1998 -- $38,408; 1999 -- $28,804;
thereafter -- $121,217.

In March 1992, the Company entered into two interest rate swap agreements
to minimize interest rate risk on its revolving and term credit facilities
described above and to access lower interest rates in certain markets. The
interest rate under the swap agreements is equal to 7.23%, plus an applicable
margin as defined in the revolving credit and term loan facility, which
effectively sets the interest rate at 8.6%. The agreements expire March 25, 1999
and cover $250,000 of notional principal amount.

F-39
<PAGE> 147

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company recorded additional interest expense during 1993 and 1994
totaling approximately, $9,915 and $7,427, respectively, which represents the
excess of the swap agreement rate over the original contractual rate. The
notional amounts and respective periods covered under the agreements are as
follows:

<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
$250,000........................................... March 25, 1992 -- March 25, 1995
$200,000........................................... March 25, 1995 -- March 25, 1996
$160,000........................................... March 25, 1996 -- March 25, 1997
$110,000........................................... March 25, 1997 -- March 25, 1998
$ 50,000........................................... March 25, 1998 -- March 25, 1999
</TABLE>

The Company is exposed to credit loss in the event of nonperformance by the
other parties to the interest rate swap agreements, however, the Company does
not anticipate nonperformance under the agreement.

KVC has been allocated interest (including amortization of deferred
financing costs) of $19,054 and $18,224 for the years ended December 31, 1993
and 1994, respectively. Interest expense has been allocated to KVC based upon
intercompany financing in connection with the Acquisition. The effective
interest rate used in these allocations was 8.36% during these periods. The
common stock and assets of the Company are pledged to collateralize all external
financing arrangements.

6. EMPLOYEE BENEFIT PLANS

In connection with the Acquisition described in Note 1, the Company assumed
a defined benefit pension plan (the "Plan"). The Plan covers all qualified
employees who meet certain employment service and age requirements and are not
covered by union pension plans. Net periodic pension cost is comprised of the
components listed below, as determined using the actuarial cost aggregate
method. The Company's funding policy is to make annual contributions to the Plan
in such amounts necessary to fund benefits provided by the Plan on the basis of
information provided by the Plan's actuary.

Consolidated net periodic pension cost without regard to the effect of the
discontinued operations for the years ended December 31, 1993 and 1994 is as
follows:

<TABLE>
<CAPTION>
1993 1994
------- -------
<S> <C> <C>
Service cost for benefits earned during the period............... $ 852 $ 908
Interest cost on projected benefit obligation.................... 1,804 1,896
Return on Plan assets............................................ (2,481) 774
Net deferral..................................................... 323 (3,030)
Amortization of prior service cost............................... -- (18)
------- -------
Total.................................................. $ 498 $ 530
======= =======
</TABLE>

F-40
<PAGE> 148

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table sets forth the Plan's funded status and obligations at
December 31, 1994 without regard to the effect of the discontinued operations:

<TABLE>
<CAPTION>
1994
--------
<S> <C>
Actuarial present value of accumulated benefit obligations, including
vested benefits of $20,012.............................................. $(23,146)
========
Projected benefit obligation.............................................. $(26,596)
Plan assets at fair value, consisting of cash and equity securities....... 28,226
--------
Plan assets in excess of projected benefit obligation..................... 1,630
Prior service cost........................................................ (176)
Unrecognized net loss..................................................... 1,955
--------
Pension asset............................................................. $ 3,409
========
</TABLE>

The assumptions used in the above valuations are as follows:

<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
Discount rate.......................................................... 7.5 % 7.5 %
Rate of increase in compensation levels................................ 5.0 5.0
Expected long-term rate of return on assets............................ 8.5 8.5
</TABLE>

In 1993, the Company instituted an employee savings plan (401(k) Plan) to
provide benefits for substantially all employees of the Company meeting certain
eligibility requirements. The plan requires the Company to match 25% of employee
contributions, up to a maximum of 1% of covered compensation. Expense related to
the plan without regard to the effect of the discontinued operations aggregated
$228 and $252 for the years ended December 31, 1993 and 1994, respectively.

Pension expense allocated to KVC pursuant to these plans aggregated $60 and
$54 for 1993 and 1994, respectively. Further, prepaid pension costs with respect
to the defined benefit plan of $457 and $384 have been allocated to KVC at
December 31, 1993 and 1994, respectively.

7. INCOME TAXES

The income tax provision for continuing operations recorded for the years
ended December 31, 1993 and 1994 consists of the following:

<TABLE>
<CAPTION>
1993 1994
------ ------
<S> <C> <C>
Currently payable:
Federal.......................................................... $5,577 $8,103
State............................................................ 579 1,486
------ ------
Total.................................................... 6,156 9,589
------ ------
Deferred:
Federal.......................................................... 651 (886)
State............................................................ (20) 140
------ ------
Total.................................................... 631 (746)
------ ------
Income tax provision -- net........................................ $6,787 $8,843
====== ======
</TABLE>

F-41
<PAGE> 149

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation of the net income tax provision computed using the U.S.
federal statutory rate of 35% (34% in 1993) to pretax income from continuing
operations was as follows:

<TABLE>
<CAPTION>
1993 1994
------ ------
<S> <C> <C>
Computed "expected" tax expense.................................... $2,614 $5,637
Amortization of goodwill........................................... 1,800 1,850
State and local taxes, net of federal tax benefit.................. 362 1,057
Enacted future rate change......................................... 1,880 362
Other.............................................................. 131 (63)
------ ------
Effective tax...................................................... $6,787 $8,843
====== ======
</TABLE>

The significant components of deferred income tax provision attributable to
income from continuing operations for the years ended December 31, 1993 and 1994
are as follows:

<TABLE>
<CAPTION>
1993 1994
------- -------
<S> <C> <C>
Deferred income tax (exclusive of the effects of other
components below).............................................. $(1,950) $(4,899)
(Increase) decrease in alternative minimum tax................... 701 3,845
State net operating loss benefit, net of federal tax............. -- 244
Federal net operating loss benefit............................... -- 64
Enacted future rate change....................................... 1,880 --
------- -------
Total deferred tax provision (benefit)........................... $ 631 $ (746)
======= =======
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at December 31,
1994 are presented below:

<TABLE>
<CAPTION>
1994
-------
<S> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful
accounts.............................................................. $ 279
Film and syndication rights, principally due to different accounting
methods............................................................... 511
Compensated absences, principally due to accrual for financial reporting
purposes.............................................................. 212
Net operating loss carryforwards......................................... 13
Alternative minimum tax credit carryforwards............................. --
Other.................................................................... 1,186
-------
Gross deferred tax assets.................................................. 2,201
-------
Deferred tax liabilities:
Property and equipment, principally due to basis differences............. 17,778
Retirement plan, principally due to accrual for financial reporting
purposes.............................................................. 1,256
Enacted future rate increases............................................ --
Other.................................................................... 369
-------
Gross deferred tax liabilities............................................. 19,403
-------
Net deferred tax liabilities............................................... $17,202
=======
</TABLE>

At December 31, 1994, the Company has net operating loss carryforwards of
$75,000 for state income tax purposes which are available to offset future state
taxable income, if any, through 2009. Approximately $54,000 of these net
operating loss carryforwards were present at Acquisition and, due to uncertainty
of eventual realization, a full valuation reserve was provided against these
assets at that time. Should these net

F-42
<PAGE> 150

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

operating loss carryforwards be realized in the future, the effect would be to
reduce the recorded value of certain intangible assets.

8. COMMITMENTS

Film and Syndication Rights -- The Company has entered into certain film
and syndication rights' agreements which allow for showings of certain programs
over various periods. At December 31, 1994, film and syndication rights
liabilities related to programs available for broadcast are due as follows:

<TABLE>
<S> <C>
1995........................................................ $7,753
1996........................................................ 787
1997........................................................ 487
1998........................................................ 189
1999........................................................ 38
Thereafter.................................................. --
------
Total............................................. $9,254
======
</TABLE>

In addition, the Company has entered into film and syndication rights'
agreements covering programs not yet available for broadcast. No asset or
liability related to these programs has been reflected in the financial
statements. At December 31, 1994, the Company had executed contracts aggregating
$36,745 (net of deposits) for programs not yet available for broadcast.

Operating Leases -- The Company leases office and other facilities under
operating leases expiring at various dates through 2004. At December 31, 1994,
minimum payments required under noncancelable leases with terms in excess of one
year for continuing operations are as follows:

<TABLE>
<S> <C>
1995........................................................ $ 888
1996........................................................ 880
1997........................................................ 812
1998........................................................ 567
1999........................................................ 309
Thereafter.................................................. 899
------
Total..................................................... $4,355
======
</TABLE>

Rent expense under operating leases from continuing operations aggregated
$383 and $490 for the years ended December 31, 1993 and 1994, respectively.

9. RELATED-PARTY TRANSACTIONS

The Company has entered into a management agreement (the "Management
Agreement") with the Providence Journal, under the terms of which the Providence
Journal will operate and manage the Company's cable systems and KBC's television
stations through February 1997. The Management Agreement provides for a base
management fee of $2,525 per year and payment of bonuses based on operating cash
flow (as defined in the Management Agreement) at the end of each fiscal year for
managing both the Company and KBC. No bonus was earned during 1994 and 1993. In
addition, the Management Agreement provides for the awarding of certain warrant
bonuses, both on an annual and cumulative basis, based on operating cash flow at
the end of defined periods. Through December 31, 1994, the Providence Journal
had been awarded warrant bonuses providing for the purchase of 1,552 shares, of
the Company's Class B nonvoting common stock at $0.10 per share. Compensation
expense recorded related to these warrant issuances aggregated $335 in 1993.
Based upon the purchase and sale agreement (See note 2) whereby the Providence
Journal will buy out the

F-43
<PAGE> 151

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Investor Stockholder for a fixed price, it is not probable that the Providence
Journal will exercise any outstanding warrants and accordingly, the Company has
not recorded compensation expense during 1994.

The Providence Journal is also entitled to compensation for out-of-pocket
costs incurred in its capacity as manager of the cable systems for which the
Company reimbursed the Providence Journal $2,842 and $3,844 during 1993, and
1994, respectively.

The Company is also obligated to pay the Providence Journal an annual
$1,000 governance fee, in advance, on December 20 of each year.

The Company entered into a consulting and advisory services agreement (the
"Services Agreement") with the Investor Stockholder. Under the terms of the
Services Agreement, the Company is obligated to pay the Investor Stockholder an
annual fee of $1,000, in advance, on January 1 of each year.

For the years ended December 31, 1993 and 1994, KVC has been allocated
expenses under the terms of the Management Agreement, and other related fees
discussed above, aggregating $2,034 and $1,901, respectively.

10. FAIR VALUE DISCLOSURE

Current Assets and Liabilities -- The carrying amount of cash, trade
receivables, trade accounts payable and accrued expenses approximates fair value
because of the short maturity of these instruments.

Long-term Debt -- The fair values of each of the Company's long-term debt
instruments are based on the amount of future cash flows associated with each
instrument discounted using current borrowing rates for similar debt instruments
of comparable maturity. The fair value of long-term debt approximated carrying
value at December 31, 1994.

Interest Rate Swaps -- The fair value of interest rate swaps is the amount
at which they could be settled based on estimates obtained from dealers. The
amount required to settle outstanding interest rate swaps at December 31, 1994
approximated $3,575 (gain).

11. COMMITMENTS AND CONTINGENCIES

The Company is the defendant in a number of legal actions, the outcome of
which management believes, based upon the advice of counsel, will not have a
material effect on the Company's financial position or results of operations.

The Company has outstanding letter of credit commitments amounting to $756
as of December 31, 1994.

In October 1992, the Congress of the United States passed the Cable Act. As
a result of the Cable Act, several cable television systems of the Company are
subject to regulation by local franchise authorities and/or the FCC. Regulations
imposed by the Cable Act, among other things, allow regulators to limit and
reduce the rates that cable operators can charge for certain basic cable
television services and equipment rental charges. The Company has been notified
by certain franchise authorities that various regulated rates charged to
subscribers were in excess of the rates permitted. The Company has reviewed the
notifications as well as the disputed rates and has accrued for amounts it
believes it may be required to refund. Further rules and regulations are being
considered by the FCC, however, these regulations have not yet been finalized.
The ultimate impact on the operations of the Company resulting from existing
rules and regulations and proposed rules and regulations, if any, cannot be
determined.

F-44
<PAGE> 152

- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE CLASS A COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 12
The Company........................... 18
Use of Proceeds....................... 19
Dividend Policy....................... 19
Dilution.............................. 20
Capitalization........................ 21
Selected Financial Data............... 22
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 32
Business.............................. 51
Management............................ 84
Principal Stockholders................ 94
Certain Transactions.................. 96
Description of Capital Stock.......... 97
Shares Eligible for Future Sale....... 102
Underwriting.......................... 104
Legal Matters......................... 106
Experts............................... 106
Available Information................. 107
Index to Financial Statements......... F-1
</TABLE>

- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------

7,125,000 SHARES
LOGO

THE PROVIDENCE
JOURNAL COMPANY

CLASS A COMMON STOCK
---------------------------

P R O S P E C T U S

---------------------------

MERRILL LYNCH & CO.

BEAR, STEARNS & CO. INC.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

JUNE 24, 1996

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 153
Filed pursuant to Rule 424(b)(4)
Registration No. 333-02703

PROSPECTUS

450,000 SHARES

THE PROVIDENCE [LOGO] JOURNAL COMPANY
CLASS A COMMON STOCK
($1.00 PAR VALUE)

------------------------

All of the 450,000 shares of Class A Common Stock, $1.00 par value (the
"Class A Common Stock"), offered hereby are being offered by The Providence
Journal Company (the "Company") to eligible employees of the Company and its
subsidiaries in this public offering (the "Direct Placement") at a price per
share equal to $14.03, the initial public offering price per share for the Class
A Common Stock in the underwritten offering described below (the "Underwritten
Offering" and, together with the Direct Placement, the "Offerings") less an
amount equal to the underwriting discount per share in such Underwritten
Offering. Prior to the Offerings, there has been no public market for the Class
A Common Stock. See "Plan of Distribution" for information relating to the
determination of the initial public offering price. As a condition to any sale
hereunder, an employee must agree not to offer, sell, contract to sell or
otherwise dispose of any shares of Class A Common Stock (or securities
convertible into or exchangeable or exercisable for, such shares) for a period
of 30 days after the date of this Prospectus.

In addition to the Direct Placement contemplated hereby, the Company is
also issuing and selling through certain underwriters (the "Underwriters")
7,125,000 shares of Class A Common Stock in the Underwritten Offering. See "Plan
of Distribution".

The shares of Class A Common Stock have been approved for listing on the
New York Stock Exchange, subject to official notice of issuance, under the
symbol "PRJ".

SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE CLASS A COMMON STOCK
OFFERED HEREBY.

------------------------

The date of this Prospectus is June 24, 1996.

<PAGE> 154

[GRAPHICS]

2
<PAGE> 155

PROSPECTUS SUMMARY

THE COMPANY

GENERAL

3
<PAGE> 156

BROADCASTING

4
<PAGE> 157

LEVERAGE LOCAL MARKET STRENGTH WITH ADDITIONAL LMAS. The Company
plans to pursue opportunities to enter into LMAs in the DMAs in which the
Company's Stations operate. The Company believes that LMAs enable the
Company to increase revenue and broadcast cash flow by taking advantage of
the economies of scale derived from being a television station group owner.
The Company also believes that there are benefits in terms of increased
advertising revenue from LMA arrangements.

5
<PAGE> 158

advertisers to develop campaigns that match specifically targeted audience
segments with the advertisers' overall marketing strategies.

MAINTAIN EFFECTIVE COST CONTROLS AND LEVERAGE ECONOMIES OF
SCALE. Each Station emphasizes strict control of its programming and
operating costs as an essential factor in increasing broadcast cash flow.
In addition, the Company, as a television station group owner, believes
that it has the ability to enter into advantageous group programming
contracts. As the provider of NBC network programming in five markets, the
Company believes that its ability to enter into stable and favorable
affiliation agreements with NBC is enhanced. Through strategic planning and
annual budget processes, the Company continually seeks to identify and
implement cost-saving opportunities at each of the Stations.

See "Business -- Broadcasting -- Business and Operating Strategy".

PUBLISHING

6
<PAGE> 159

See "Business -- Publishing -- Business and Operating Strategy" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".

PROGRAMMING AND ELECTRONIC MEDIA

EXTEND AND ENHANCE EXISTING BRANDS AND CONTENT. The Company's
strategy in developing cable network programming and interactive and
on-line electronic media products has been to create products

7
<PAGE> 160

See "Business -- Programming and Electronic Media -- Business and Operating
Strategy".

8
<PAGE> 161

THE OFFERINGS

- ---------------
(1) If the Underwriters exercise their over-allotment option in full, the total
number of shares of Class A Common Stock offered will be 8,193,750.

(2) If the Underwriters exercise their over-allotment option in full, the total
number of shares of Class A Common Stock outstanding after the Offerings
will be 25,997,550.

RISK FACTORS

9
<PAGE> 162

SUMMARY SUPPLEMENTAL PRO FORMA FINANCIAL DATA

10
<PAGE> 163

- ---------------

11
<PAGE> 164

RISK FACTORS

12
<PAGE> 165

13
<PAGE> 166

programming. In addition, new television networks, such as the recently launched
UPN and the Warner Brothers Network ("WB"), could create additional competition.

14
<PAGE> 167

15
<PAGE> 168

NO PRIOR PUBLIC MARKET FOR CLASS A COMMON STOCK; POSSIBLE VOLATILITY OF
STOCK PRICE. Prior to the Offerings, there has been no public market for the
Class A Common Stock. Consequently, the initial public offering price of the
Class A Common Stock will be determined by negotiations among the Company and
the Underwriters in the Underwritten Offering and may not be indicative of the
price at which the Class A Common Stock will trade after the Offerings. See
"Plan of Distribution" for a discussion of the factors considered in determining
the initial public offering price of the Class A Common Stock. There can be no
assurance that any active public market for the Class A Common Stock will
develop or be sustained after the Offerings, or that the market price of the
Class A Common Stock will not decline below the initial public offering price.
The trading price of the Class A Common Stock may fluctuate significantly based
upon a number of factors, including actual or anticipated business performance,
announcements by the Company or changes in general industry or securities market
conditions. See "Plan of Distribution".

16
<PAGE> 169

which Fiduciary Trust Company International exercises sole or shared investment
power under five wills, trusts and agency relationships) have agreed not to
offer, sell, contract to sell or otherwise dispose of such shares (or securities
convertible into, or exchangeable or exercisable for, such shares) for 180 days
after the date of this Prospectus, without the prior written consent of Merrill
Lynch, Pierce, Fenner & Smith Incorporated acting on behalf of the Underwriters.
See "Plan of Distribution". Further, all employees who purchase Class A Common
Stock in the Direct Placement have agreed to similar transfer restrictions for a
period of 30 days after the date of this Prospectus. Up to an additional
1,972,800 shares of Class A Common Stock are currently issuable upon exercise of
options and units outstanding under the Option Plans and the RSU. Further, the
Company intends to implement an employee stock purchase plan following
consummation of the Offerings under which participants may purchase Class A
Common Stock through periodic payroll deductions and the reinvestment of
dividends (the "Employee Stock Purchase Plan").

In addition, in accordance with certain adjustments required pursuant to
the terms of the Company's existing Stock Incentive Plans as a result of the
proposed US West Merger, the Company believes that it will issue approximately
$7.7 million of Class A Common Stock in the event of the consummation of the US
West Merger. For additional information, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Stock Based
Compensation Payouts" and footnote 2 to the table "Aggregated SAR Exercises in
Fiscal Year 1995 and Fiscal Year-End SAR Values" set forth herein under
"Management -- Executive Compensation." The actual number of shares of Class A
Common Stock to be issued will depend on the fair market value of the Class A
Common Stock determined in accordance with the terms of such plans at the
effective time of the US West Merger.

See "Shares Eligible for Future Sale".

17
<PAGE> 170

THE COMPANY

18
<PAGE> 171

USE OF PROCEEDS

DIVIDEND POLICY

19
<PAGE> 172

DILUTION

- ---------------

20
<PAGE> 173

CAPITALIZATION

- ---------------

21
<PAGE> 174

SELECTED FINANCIAL DATA

22
<PAGE> 175

23
<PAGE> 176

24
<PAGE> 177

- ---------------

- ---------------
* Elimination entries are not shown for 1995 because KHC was consolidated in
the Company's audited financial statements for that year.

25
<PAGE> 178

(2) Newspaper Consolidation Costs are those costs totaling $7,422 incurred in
1995 in connection with the Newspaper Consolidation.

26
<PAGE> 179

BROADCASTING BUSINESS -- SUMMARY OF FINANCIAL RESULTS (HISTORICAL)

The following table sets forth historical operating results for the
Broadcasting Business for the years ended December 31, 1993, 1994 and 1995 and
the three months ended March 31, 1995 and 1996.

- ---------------
(1) See footnote (2) to "Selected Financial Data -- Selected Consolidated
Historical Financial Data" for a definition of, and certain matters relating
to, EBITDA.

27
<PAGE> 180

BROADCASTING BUSINESS -- SUMMARY OF FINANCIAL RESULTS (SUPPLEMENTAL PRO FORMA)

- ---------------

(1) Depreciation and amortization for combined 1993 excludes the effects of any
pro forma adjustments for the step-up in basis in acquired assets of KHC
from the Kelso Buyout.

(2) See footnote (6) to "Selected Financial Data -- Supplemental Pro Forma
Financial Data" for a definition of, and certain matters relating to,
EBITDA.

28
<PAGE> 181

PUBLISHING BUSINESS -- SUMMARY OF FINANCIAL RESULTS

- ---------------
(1) "Newspaper Consolidation Costs" are those costs totaling $7,422 incurred in
1995 in connection with the Newspaper Consolidation.

(3) See footnote (2) to "Selected Financial Data -- Selected Consolidated
Historical Financial Data" for a definition of, and certain matters relating
to, EBITDA.

29
<PAGE> 182

PROGRAMMING AND ELECTRONIC MEDIA BUSINESS -- SUMMARY OF FINANCIAL RESULTS

(2) AHN was consolidated with the Company's results of operations effective
January 1, 1996.

(3) See footnote (2) to "Selected Financial Data -- Selected Consolidated
Historical Financial Data" for a definition of, and certain matters relating
to, EBITDA.

30
<PAGE> 183

Programming and Electronic Media operating businesses include:

31
<PAGE> 184

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

GENERAL

RECENT DEVELOPMENTS

Subsequent to March 31, 1996, the following significant events have
occurred:

Litigation

32
<PAGE> 185

Increased Ownership Interest in Television Food Network, G.P.

Increased Ownership Interest in America's Health Network

Execution of a Local Marketing Agreement with KONG in Seattle, Washington

REORGANIZATION

33
<PAGE> 186

simultaneously disposing of its cable operations, and in connection with the
Kelso Buyout, acquired the 50% interest in the King Stations that it did not
previously own.

DISPOSAL OF CABLE OPERATIONS

KELSO BUYOUT

<TABLE>
In connection with the Kelso Buyout, assets acquired and liabilities
assumed were as follows (in thousands):

CONSOLIDATED RESULTS OF OPERATIONS

SUPPLEMENTAL PRO FORMA RESULTS OF OPERATIONS

34
<PAGE> 187

SUPPLEMENTAL PRO FORMA THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO
SUPPLEMENTAL PRO FORMA THREE MONTHS ENDED MARCH 31, 1995

Consolidated (Supplemental Pro Forma)

35
<PAGE> 188

Broadcasting (Supplemental Pro Forma)

36
<PAGE> 189

Publishing (Supplemental Pro Forma and Historical)

Due primarily to the additional $1.1 million additional restructuring
charge, operating loss for the 1996 period was $1.1 million compared to $0.4
million in the 1995 period.

37
<PAGE> 190

As a result of cost savings, however, EBITDA increased 12.5% to $2.7
million in the three months ended March 31, 1996 from $2.4 million in the three
months ended March 31, 1995.

Programming and Electronic Media (Supplemental Pro Forma and Historical)

SUPPLEMENTAL PRO FORMA 1995 COMPARED TO SUPPLEMENTAL PRO FORMA 1994

Consolidated (Supplemental Pro Forma)

38
<PAGE> 191

Broadcasting (Supplemental Pro Forma)

Publishing (Supplemental Pro Forma and Historical)

39
<PAGE> 192

the Newspaper Consolidation, and now publishes a morning only daily Providence
Journal-Bulletin (Monday through Saturday) in addition to The Providence Sunday
Journal.

Programming and Electronic Media (Supplemental Pro Forma and Historical)

40
<PAGE> 193

CERTAIN FINANCIAL DATA -- SUPPLEMENTAL PRO FORMA 1994 COMPARED TO COMBINED 1993

Consolidated (Supplemental Pro Forma/Combined)

Broadcasting (Supplemental Pro Forma/Combined)

41
<PAGE> 194

CONSOLIDATED HISTORICAL RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995

Incremental Amount to Arrive at Supplemental Pro Forma Amounts:

HISTORICAL 1995 COMPARED TO HISTORICAL 1994

Consolidated (Historical)

42
<PAGE> 195

Broadcasting (Historical)

HISTORICAL 1994 COMPARED TO HISTORICAL 1993

Consolidated (Historical)

43
<PAGE> 196

Broadcasting (Historical)

Publishing (Historical)

Programming and Electronic Media (Historical)

44
<PAGE> 197

LIQUIDITY AND CAPITAL RESOURCES

- ---------------
(1) Represents $405,000 from the sale of KVC plus $410,000 assumption of New
Cable Indebtedness (as defined below) less taxes of $121,942.

45
<PAGE> 198

CASH FLOWS FROM OPERATIONS

Consolidated cash flows provided by (used in) operations can be analyzed as
follows:

46
<PAGE> 199

Stock-Based Compensation Payouts

CASH FLOWS -- INVESTING AND FINANCING ACTIVITIES

Investments in Affiliates

47
<PAGE> 200

Merger and Kelso Buyout

The Company's debt to equity ratio at March 31, 1996 was 1.12. During the
three months ended March 31, 1996, the Company incurred $28.7 million of
additional indebtedness to fund the investing

48
<PAGE> 201

activities described above and the one-time cash payments made in connection
with the discontinued operations adjustments and IRS and state tax settlements
discussed above.

Credit Facility

Dividends and Treasury Stock

Capital Expenditures

FUTURE FUNDING AND CAPITAL RESOURCES

49
<PAGE> 202

obtain additional financing. There can be no assurance that such additional
financing will be available on terms acceptable to the Company.

RECENT ACCOUNTING PRONOUNCEMENTS

50
<PAGE> 203

BUSINESS
GENERAL

Important factors in the success of the Company's broadcasting and
publishing businesses have been its strong local news focus, targeted local
advertising sales efforts, investment in advanced technology and emphasis on
cost control. The resulting strength of its media franchises presents attractive
opportunities for future growth and for realization of operating efficiencies.
In addition to increasing the reach of its broadcasting operations and cable and
satellite television networks through acquisitions and internal growth, the
Company intends to develop new revenue sources in a variety of media that build
on the existing strength of its brands and expertise and have broad regional or
national appeal.

51
<PAGE> 204

BROADCASTING

52
<PAGE> 205

The following table sets forth general information for each of the Stations
and the LMA Stations and the markets they serve, based on the Nielsen Station
Index as of May 1996. In February 1992, the Company completed the King
Acquisition and acquired a 50% joint venture interest in KHC, which indirectly
owned the King Stations. The Company has operated the King Stations since such
acquisition and in 1995 acquired 100% of the ownership of the King Stations in
the Kelso Buyout. The Stations are listed in order of the ranking of their DMA.
<TABLE>
<CAPTION>
NUMBER OF
COMMERCIAL
TELEVISION
NETWORK CHANNEL/ DMA STATIONS RANK IN STATION
MARKET AREA STATION STATUS AFFILIATION FREQUENCY RANK(1) IN MARKET(2) MARKET(3) SHARE(4)
- --------------- ------- -------- ----------- --------- ------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seattle, WA KING Owned NBC 5/VHF 12 8 1 19%
KONG (6) LMA N/A N/A 12 8 -- --
Portland, OR KGW Owned NBC 8/VHF 24 8 1 17
Charlotte, NC WCNC Owned NBC 36/UHF 28 8 3 10
Albuquerque/ KASA Owned Fox 2/VHF 48 6 4 7
Santa Fe, NM
Louisville, KY WHAS Owned ABC 11/VHF 50 6 1 23
Honolulu, HI KHNL Owned NBC 13/VHF 70 8 1 19
KFVE LMA UPN 5/VHF 70 8 - -
Spokane, WA KREM Owned CBS 2/VHF 74 4 2 18
Tucson, AZ KMSB Owned Fox 11/VHF 80 6 4 10
KTTU LMA UPN 18/UHF 80 6 - -
Boise, ID KTVB Owned NBC 7/VHF 127 5 1 30

- ---------------

53
<PAGE> 206

LEVERAGE LOCAL MARKET STRENGTH WITH ADDITIONAL LMAS. The Company plans to
pursue opportunities to enter into LMAs in the DMAs in which the Company's
Stations operate. The Company believes that LMAs enable the Company to take
advantage of the economies of scale that are derived from operating a group of
broadcast stations. By providing programming and marketing services to other
stations in the DMAs where the Stations are located, the Company believes that
it can increase revenue without incurring substantial incremental expenses and
thereby increase operating margins. The Company also believes that there are
benefits in terms of increased advertising revenue from LMA arrangements.

MAINTAIN EFFECTIVE COST CONTROLS AND LEVERAGE ECONOMIES OF SCALE. Each
Station emphasizes strict control of its programming and operating costs as an
essential factor in increasing broadcast cash flow. As a result of its ownership
of a group of nine television Stations and its programming and marketing
arrangements with the three LMA Stations, the Company is able to purchase
syndicated programming at a discount (on a per Station basis) to the cost that
any one of its Stations would incur as an individual purchaser of such
programming and is able to purchase a variety of programming that might
otherwise not be available to a single station. For example, the Company
believes that it has the ability to enter into advantageous group programming
purchases such as those with King World Productions, Inc. (syndicator of "The
Oprah Winfrey Show", "Wheel of Fortune" and "Jeopardy"). As the provider of NBC
network programming in five markets, the Company believes that its ability to
enter into stable and favorable affiliation agreements with NBC is

54
<PAGE> 207

55
<PAGE> 208

THE STATIONS

KING: SEATTLE, WASHINGTON

56
<PAGE> 209

In order to extend its local franchise to viewers in its DMA and throughout
the northwest, KING-5 provides portions of its news broadcasts for use by
NorthWest Cable News in its programming.

KGW: PORTLAND, OREGON

57
<PAGE> 210

In order to extend its local franchise to viewers in its DMA and throughout
the northwest, KGW provides portions of its news broadcasts for use by NorthWest
Cable News in its programming.

<TABLE>
<CAPTION>
MARKET/STATION DATA
----------------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
KGW: PORTLAND, OREGON
Market revenue (in thousands)(1)................................... $111,800 $119,900 $119,100 $138,200 $144,900
Market revenue growth over prior period............................ -7.9% 7.2% -0.7% 16.0% 4.8%
Market rank (DMA).................................................. 27 27 27 27 25
Television homes (in thousands).................................... 821 846 868 890 920
Total commercial competitors in market............................. 6 6 5 7 8
Station rank in market 6:00 a.m. to 2:00 a.m....................... 1 3 3 3 2
Station audience share 6:00 a.m. to 2:00 a.m....................... 17 17 17 15 16
Station rank in market 4:00 p.m. to 8:00 p.m....................... 3 3 2 2 2
Station audience share 4:00 p.m. to 8:00 p.m....................... 15 15 17 17 16
</TABLE>

WCNC: CHARLOTTE, NORTH CAROLINA

58
<PAGE> 211

KASA: ALBUQUERQUE/SANTA FE, NEW MEXICO

59
<PAGE> 212

WHAS: LOUISVILLE, KENTUCKY

60
<PAGE> 213

<TABLE>
<CAPTION>
MARKET/STATION DATA
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
WHAS: LOUISVILLE, KENTUCKY
Market revenue (in thousands)........................................... $65,900 $66,900 $73,100 $74,600 $82,300
Market revenue growth over prior period................................. 1.5% 1.5% 9.3% 2.1% 10.3%
Market rank (DMA)....................................................... 50 49 50 49 50
Television homes (in thousands)......................................... 521 525 520 533 539
Total commercial competitors in market.................................. 5 5 5 5 6
Station rank in market 6:00 a.m. to 2:00 a.m............................ 2 2 2 2 1
Station audience share 6:00 a.m. to 2:00 a.m............................ 22 21 21 24 22
Station rank in market 4:00 p.m. to 8:00 p.m............................ 1 3 1 1 1
Station audience share 4:00 p.m. to 8:00 p.m............................ 24 21 24 28 26
</TABLE>

KHNL AND KFVE: HONOLULU, HAWAII

61
<PAGE> 214

- ---------------

* Data not available for these years.

KREM: SPOKANE, WASHINGTON

In order to extend its local franchise to viewers in its DMA and throughout
the northwest, KREM provides portions of its news broadcasts for use by
NorthWest Cable News in its programming.

<TABLE>
<CAPTION>
MARKET/STATION DATA
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
KREM: SPOKANE, WASHINGTON
Market revenue (in thousands)........................................... $30,200 $34,100 $37,100 $43,600 $42,800
Market revenue growth over prior period................................. -0.3% 12.9% 8.8% 17.5% -1.8%
Market rank (DMA)(1).................................................... 78 80 79 78 75
Television homes (in thousands)......................................... * * 325 342 353
Total commercial competitors in market.................................. * * 4 4 4
Station rank in market 6:00 a.m. to 2:00 a.m............................ * * 1 1 2
Station audience share 6:00 a.m. to 2:00 a.m............................ * * 23 32 19
Station rank in market 4:00 p.m. to 8:00 p.m............................ 1 1 1 2 2
Station audience share 4:00 p.m. to 8:00 p.m............................ 24 24 25 22 21
</TABLE>

- ---------------

(1) Market rank (DMA) for 1991 and 1992 as reported by BIA.

* Data unavailable for these years.

62
<PAGE> 215

KMSB AND KTTU: TUCSON/NOGALES, ARIZONA

<TABLE>
<CAPTION>
MARKET/STATION DATA
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
KMSB/KTTU: TUCSON/NOGALES, ARIZONA
Market revenue (in thousands)........................................... $35,900 $37,000 $41,000 $51,300 $52,200
Market revenue growth over prior period................................. -3.2% 3.1% 10.8% 25.1% 1.8%
Market rank (DMA)....................................................... 81 81 81 81 81
Television homes (in thousands)......................................... 311 310 314 323 334
Total commercial competitors in market.................................. 5 6 6 6 6
Station rank in market 6:00 a.m. to 2:00 a.m............................ 4 4 4 4 4
Station audience share 6:00 a.m. to 2:00 a.m............................ 12 12 12 11 13
Station rank in market 3:00 p.m. to 7:00 p.m............................ 4 4 4 4 4
Station audience share 3:00 p.m. to 7:00 p.m............................ 16 13 12 13 12
</TABLE>

KTVB: BOISE, IDAHO

63
<PAGE> 216

In order to extend its local franchise to viewers in its DMA and throughout
the northwest, KTVB provides portions of its news broadcasts for use by
NorthWest Cable News in its programming.

<TABLE>
<CAPTION>
MARKET/STATION DATA
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
KTVB: BOISE, IDAHO
Market revenue (in thousands)........................................... $17,300 $18,400 $20,100 $25,000 $26,000
Market revenue growth over prior period................................. -3.3% 6.4% 9.2% 24.4% 4.0%
Market rank (DMA)(1).................................................... 136 142 135 131 125
Television homes (in thousands)......................................... * * 158 168 177
Total commercial competitors in market.................................. * * 4 4 5
Station rank in market 6:00 a.m. to 2:00 a.m............................ * * 1 2 1
Station audience share 6:00 a.m. to 2:00 a.m............................ * * 27 22 24
Station rank in market 3:00 p.m. to 7:00 p.m............................ 1 1 1 1 1
Station audience share 3:00 p.m. to 7:00 p.m............................ 31 34 37 36 37
</TABLE>

- ---------------

(1) Market rank (DMA) for 1991 and 1992 as reported by BIA.

* Data unavailable for these years.

64
<PAGE> 217

65
<PAGE> 218

66
<PAGE> 219

PUBLISHING

67
<PAGE> 220

Journal has received numerous awards over the years for its local and national
coverage, including its fourth Pulitzer Prize in 1994.

The Company's business and operating strategy for the Publishing Business
includes the following key elements:

68
<PAGE> 221

69
<PAGE> 222

The Providence Journal increased advertising rates for most major
categories of retail and classified advertising by at least 3% in each of 1993,
1994 and 1995.

AVERAGE NET PAID CIRCULATION

70
<PAGE> 223

PROGRAMMING AND ELECTRONIC MEDIA

BUSINESS AND OPERATING STRATEGY

EMPHASIZE PROGRAMMING TOPICS WITH BROAD APPEAL. The Company's strategy in
its programming businesses is to develop cable and satellite programming
networks, such as the Television Food Network, America's Health Network and
NorthWest Cable News, and broadcast programming content based on topics or
themes that the Company believes are of importance to a broad audience of
potential viewers. The Company believes that the focus of these investments on
food, health, and local news is attractive to cable television subscribers. As
the Company reviews additional opportunities, it plans to invest in such
ventures that it believes have broad audience appeal.

71
<PAGE> 224

MINIMIZE RISK THROUGH STAGED INVESTMENTS IN NEW OPPORTUNITIES. The Company
attempts to take a staged approach to investing in start-up ventures by
committing financial and managerial resources incrementally. The Company has
initially provided its portion of the capital required to commence operations of
a venture and has increased its investment and its managerial role at certain
milestones in the businesses' development. Such milestones are dependent on the
nature of the start-up business, but include identifying promising concepts,
commissioning market research, establishing strategic relationship with other
investors, negotiating contractual arrangements with key suppliers and
evaluating early-stage financial results of specific projects.

CABLE AND SATELLITE TELEVISION PROGRAMMING.

72
<PAGE> 225

73
<PAGE> 226

INTERACTIVE AND ON-LINE MEDIA.

74
<PAGE> 227

BROADCAST TELEVISION PROGRAMMING.

COMPETITION

75
<PAGE> 228

create a favorable environment for the development and distribution of new
programming and interactive services.

LICENSING AND REGULATION

76
<PAGE> 229

The Company is unable to predict the ultimate outcome of possible changes
to these FCC rules and the impact such changes may have on its broadcasting
operations.

77
<PAGE> 230

78
<PAGE> 231

79
<PAGE> 232

SEASONALITY OF BUSINESSES

The Company's revenues historically have been slightly higher in the fourth
quarter of the year and EBITDA has been significantly higher during such period,
primarily attributable to increased expenditures by advertisers. During 1995,
28.4% of the Company's revenues and 36.8% of the Company's EBITDA were earned in
the fourth quarter in each case excluding programming and electronic media and
corporate expenses.

EMPLOYEES

80
<PAGE> 233

The Company contributes to and maintains various employee benefit or
retirement plans for eligible employees. The Company considers its relations
with its employees to be good.

PROPERTIES

LEGAL PROCEEDINGS

81
<PAGE> 234

BACKGROUND; REORGANIZATION

RESTRICTIONS IN CERTAIN AGREEMENTS

82
<PAGE> 235

Company may proceed with any transaction which would otherwise be prohibited by
the foregoing if it provides security to Continental in form and amount
reasonably acceptable to Continental.

83
<PAGE> 236

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

84
<PAGE> 237

JOEL P. RAWSON, 52, became Vice President and Executive Editor in January
1996. Prior to that, Mr. Rawson served as Deputy Executive Editor since 1989.

JOEL N. STARK, 51, is currently Vice President-Publishing Development and
Marketing, a position he has held since 1988.

HARRY DYSON, 59, a certified public accountant, is currently Treasurer and
Secretary, a position he has held since 1986.

85
<PAGE> 238

since 1985. He is also a Director of Keyport Life Insurance Co. and Rhode Island
Hospital Trust National Bank.

86
<PAGE> 239

COMMITTEES OF THE BOARD OF DIRECTORS OF THE COMPANY

COMPENSATION OF DIRECTORS

87
<PAGE> 240

EXECUTIVE COMPENSATION

(4) Adjusted for the Stock Split.

(6) Resigned from the Company effective March 31, 1996. See "Change in Control
and Termination of Employment Agreements" for a discussion of payments made
to Mr. Myhren upon his resignation.

(7) Includes deferred compensation.

The following table sets forth stock options granted on October 1, 1995 to
the Named Executive Officers pursuant to the Employee Option Plan.

AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1995
AND FISCAL YEAR-END OPTION VALUES

- ---------------
(1) Adjusted for the Stock Split.

AGGREGATED SAR EXERCISES IN FISCAL YEAR 1995
AND FISCAL YEAR-END SAR VALUES

- ---------------
(1) Adjusted for the Stock Split.

90
<PAGE> 243

RETIREMENT BENEFITS

PENSION PLAN TABLE

91
<PAGE> 244

CHANGE OF CONTROL AND TERMINATION OF EMPLOYMENT AGREEMENTS

On October 11, 1993, in a supplemental letter agreement, the Company agreed
to pay the Maximum Severance to Messrs. Hamblett, Myhren, Clifford and Bowers
(or a lesser severance for certain other

92
<PAGE> 245

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

93
<PAGE> 246

PRINCIPAL STOCKHOLDERS

94
<PAGE> 247

(6) Frank Mauran, the husband of Esther E. M. Mauran, owns 18,000 shares of
Class B Common Stock; is co-trustee with Hospital Trust (and another
individual in one case) of several trusts created by

95
<PAGE> 248

CERTAIN TRANSACTIONS

96
<PAGE> 249

DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

97
<PAGE> 250

DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS

98
<PAGE> 251

SPECIAL MEETINGS OF STOCKHOLDERS. The By-Laws provide that special
meetings of stockholders may be called by the Chairman of the Board of
Directors, President or by order of the Board of Directors.

DIRECTOR LIABILITY AND INDEMNIFICATION

RIGHTS AGREEMENT

99
<PAGE> 252

100
<PAGE> 253

payable in the related Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.

Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock of the Company is The
First National Bank of Boston.

101
<PAGE> 254

SHARES ELIGIBLE FOR FUTURE SALE

In addition, in accordance with certain adjustments required pursuant to
the terms of the Company's existing Stock Incentive Plans as a result of the
proposed US West Merger, the Company believes that it will issue approximately
$7.7 million of Class A Common Stock in the event of the consummation of the US
West Merger. For additional information, see "Business -- Background;
Reorganization", "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Stock Based Compensation Payouts" and footnote 2 to
the table "Aggregated SAR Exercises in Fiscal Year 1995 and Fiscal Year-End SAR
Values" set forth herein under "Management -- Executive Compensation." The
actual number of shares of Class A Common Stock to be issued will depend on the
fair market value of the Class A Common Stock determined in accordance with the
terms of such plans at the effective time of the US West Merger.

102
<PAGE> 255

herein). Further, all employees who purchase Class A Common Stock in the Direct
Placement have agreed to similar transfer restrictions for a period of 30 days
after the date of this Prospectus.

103
<PAGE> 256

PLAN OF DISTRIBUTION

The Company is offering the 450,000 shares of Class A Common Stock offered
hereby to eligible employees of the Company and its subsidiaries at a price per
share equal to $14.03, the initial public offering price per share for the Class
A Common Stock in the Underwritten Offering less an amount equal to the
underwriting discount per share.

Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Company has also agreed in the Underwritten Offering
to sell to each of the underwriters named therein (the "Underwriters"), and each
of the Underwriters, for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Bear, Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette
Securities Corporation are acting as representatives (the "Representatives"),
severally has agreed to purchase, an aggregate of 7,125,000 shares of Class A
Common Stock.

The Representatives have advised the Company that the Underwriters propose
to offer the shares of Class A Common Stock offered in the Underwritten Offering
to the public initially at a public offering price of $15.00 and to certain
dealers at such price less a concession not in excess of $.58 per share of Class
A Common Stock, and that the Underwriters may allow, and such dealers may
reallow, a discount not in excess of $.10 per share of Class A Common Stock on
sales to certain other dealers. After the initial public offering, the public
offering price, concession and discount may be changed.

The Company has granted to the Underwriters an option in the Underwritten
Offering to purchase up to an aggregate of 1,068,750 shares of Class A Common
Stock at the initial public offering price, less the underwriting discount. Such
option, which will expire 30 days after the date of this Prospectus, may be
exercised solely to cover over-allotments. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment,
subject to certain conditions, to purchase approximately the same percentage of
the option shares that the number of shares to be purchased initially by that
Underwriter is of the 7,125,000 shares of Class A Common Stock initially
purchased by the Underwriters.

All but 28,800 shares of Class A Common Stock and all shares of Class B
Common Stock currently outstanding are subject to the Tax Lockup, which
restrictions prohibit all transfers, sales, assignments or other dispositions
for value prior to October 5, 1996. See "Business -- Background;
Reorganization". Of the 28,800 shares of Class A Common Stock not subject to the
Tax Lockup, 26,550 shares are held by executive officers of the Company. In
addition, the Company, each of the Company's directors and executive officers
and owners of more than 5% of the Class A Common Stock and Class B Common Stock
(other than (i) Hospital Trust as to 900,000 shares of Class A Common Stock and
Class B Common Stock over which Hospital Trust exercises sole or shared
investment power under 64 wills, trusts and agency arrangements and (ii)
Fiduciary Trust Company International as to 617,400 shares of Class A Common
Stock and Class B Common Stock over which Fiduciary Trust Company International
exercises sole or shared investment power under five wills, trusts and agency
relationships) have agreed not to sell, offer to sell, grant any option for the
sale of, or otherwise dispose of, any shares of Class A Common Stock or
securities convertible into or exercisable or exchangeable for Class A Common
Stock (except for the shares offered hereby) for a period of 180 days after the
date of this Prospectus without the prior written consent of Merrill Lynch,
Pierce, Fenner & Smith Incorporated acting on behalf of the Underwriters,
subject to certain limited exceptions included in the Purchase Agreement.
Further, all employees who purchase Class A Common Stock in the Direct Placement
have agreed to similar transfer restrictions for a period of 30 days after the
date of this Prospectus.

104
<PAGE> 257

Prior to the Offerings, there has been no public market for the shares of
Class A Common Stock. The initial public offering price of the Class A Common
Stock was determined by negotiations between the Company and the Representatives
in the Underwritten Offering. Among the factors considered in such negotiations,
in addition to prevailing market conditions, were current market valuations of
publicly-traded companies that the Company and the Underwriters believe to be
reasonably comparable to the Company, an assessment of the Company's results of
operations in recent periods, estimates of the business potential and earnings
prospects of the Company, the current state of the Company's development and the
current state of the Company's industry and the economy as a whole. The initial
public offering price should not, however, be considered an indication of the
actual value of the Class A Common Stock. Such price will be subject to change
as a result of market conditions and other factors. There can be no assurance
that an active trading market will develop for the Class A Common Stock or that
the Class A Common Stock will trade in the public market subsequent to the
Offerings at or above the initial public offering price.

The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments the Underwriters may be required to make in respect
thereof.

Certain of the Underwriters have provided various investment banking
services to the Company and certain of its subsidiaries.

LEGAL MATTERS

EXPERTS

105
<PAGE> 258

AVAILABLE INFORMATION

106
<PAGE> 259

AVAILABLE INFORMATION

107
<PAGE> 260

INDEX TO FINANCIAL STATEMENTS

- ---------------
* King Holding Corp. was acquired and consolidated by the Company in 1995.

F-1
<PAGE> 261

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of The Providence Journal Company:

/s/ KPMG Peat Marwick LLP

Providence, Rhode Island
February 16, 1996, except for
Notes 2, 13 and 17 which are dated
March 4, 1996, February 27, 1996
and June 18, 1996, respectively.

F-2
<PAGE> 262

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

ASSETS

See accompanying notes to consolidated financial statements

F-3
<PAGE> 263

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

See accompanying notes to consolidated financial statements

F-4
<PAGE> 264

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

See accompanying notes to consolidated financial statements

F-5
<PAGE> 265

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 266

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of Business and Basis of Consolidation

Certain prior year amounts have been reclassified to conform with the
current year presentation.

(b) Cash

Supplemental cash flow information is as follows:

F-7
<PAGE> 267

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

In connection with the acquisition of the joint venture partner's interest
in King Holding Corp. in 1995, assets acquired and liabilities assumed were as
follows:

Investments in Affiliates

Television Food Network, G.P.
America's Health Network
Peapod, L.P.
Partner Stations Network, L.P.
Linkatel Pacific, L.P.

Effective January 1, 1996, the results of America's Health Network's
operations have been consolidated with the Company to reflect the Company's
decision to maintain a controlling majority interest.

Information about these investments is presented in Note 3.

Investments in Marketable Equity Securities

At December 31, 1994 and 1995, the cost of marketable equity securities
totaled and $5,552 and $5,949, respectively; fair market value totaled and
$5,727 and $3,861 respectively.

(d) Inventories

F-8
<PAGE> 268

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

(e) Television Program Rights

Television program rights are reviewed periodically for impairment and, if
necessary, adjusted to estimated net realizable value.

(f) Property, Plant and Equipment

(g) License Costs, Goodwill and Other Intangible Assets

(h) Income Taxes

F-9
<PAGE> 269

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

(i) Pension and Other Postretirement Benefits

(j) Derivative Financial Instruments

(k) Net Loss Per Share

(l) Stock-Based Compensation

(m) Unaudited Interim Consolidated Financial Statements

NOTE 2 -- REORGANIZATION AND DISCONTINUED CABLE OPERATIONS

(a) Reorganization

F-10
<PAGE> 270

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

(b) Discontinued Cable Operations

F-11
<PAGE> 271

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

NOTE 3 -- INVESTMENTS IN AFFILIATED COMPANIES

(a) King Holding Corp.

F-12
<PAGE> 272

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

Summary combined information for King Holding Corp. as of December 31, 1994
and for each of the years in the two year period then ended is summarized below:

(b) Television Food Network, G.P.

F-13
<PAGE> 273

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

(d) Peapod, L.P.

Summary Financial Information -- TVFN, AHN, and Peapod, L.P

(e) Partner Stations Network, L.P.

(f) Linkatel Pacific, L.P.

Linkatel Pacific, L.P.'s net loss approximated $1,262 and $2,319 for the
years ended December 31, 1994 and 1995. Net assets approximated $7,367 and
$9,088 as of December 31, 1994 and 1995.

F-14
<PAGE> 274

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

NOTE 4 -- NOTES RECEIVABLE

NOTE 5 -- PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, at cost, consist of the following at
December 31:

Depreciation expense on property, plant and equipment used in continuing
operations totaled $16,964, $16,617 and $22,346 in 1993, 1994 and 1995,
respectively.

NOTE 6 -- INTANGIBLE ASSETS

As of December 31, 1994 and 1995, intangible assets consist of:

F-15
<PAGE> 275

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

NOTE 7 -- ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Significant components of accrued expenses and other current liabilities
consisted of the following amounts at December 31:

NOTE 8 -- NEWSPAPER CONSOLIDATION AND RESTRUCTURING COSTS

(a) Newspaper Consolidation Costs

(b) Newspaper Restructuring Costs

F-16
<PAGE> 276

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

NOTE 9 -- FEDERAL AND STATE INCOME TAXES

Income tax expense (benefit) has been allocated as follows:

Income tax expense (benefit) attributable to income from continuing
operations consists of:

F-17
<PAGE> 277

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

Income tax expense (benefit) differed from the amounts computed by applying
the U.S. federal income tax rate of 34% to pretax loss from continuing
operations as a result of the following:

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1994 and 1995 are presented below:

F-18
<PAGE> 278

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

NOTE 10 -- LONG-TERM DEBT

At December 31, 1994 and 1995, long-term debt consists of the following:

F-19
<PAGE> 279

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

F-20
<PAGE> 280

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

The notional amounts and respective periods covered under the interest rate
swap agreement are as follows:

NOTE 11 -- TELEVISION PROGRAM RIGHTS PAYABLE

NOTE 12 -- OPERATING LEASES

NOTE 13 -- STOCK-BASED COMPENSATION PLANS

(a) Incentive Compensation Plans

(b) Restricted Stock Unit Plan

F-21
<PAGE> 281

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

F-22
<PAGE> 282

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

NOTE 14 -- PENSIONS AND OTHER EMPLOYEE BENEFITS

(a) Defined Benefit Pension Plans

The funded status of the defined benefit plans is as follows:

The assumptions used in the above valuations are as follows:

F-23
<PAGE> 283

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

The components of 1993, 1994 and 1995 pension expense (income) and the
assumptions used as determined by the plans' actuary, are as follows:

(b) Defined Contribution Plan

(d) Supplemental Retirement Plan

F-24
<PAGE> 284

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

(e) Change in Control Agreements

NOTE 15 -- DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

(a) Current Assets and Liabilities

The carrying amount of cash, trade receivables, trade accounts payable and
accrued expenses approximates fair value because of the short maturity of these
instruments.

(b) Notes Receivable

The fair value of obligations for television program rights are based on
future cash flows, discounted using the Company's current borrowing rate, over
the term of the related contract.

(d) Interest Rate Swaps

(e) Limitations

F-25
<PAGE> 285

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

The estimated fair value of the Company's financial instruments are
summarized as follows:

NOTE 16 -- COMMITMENTS AND CONTINGENCIES

The Company has various talent contract commitments primarily with its
newscast employees covering up to three years together totaling $28,743.

The Company has a letter of credit commitment in an amount not to exceed
$12,000 in support of industrial revenue bonds of a wholly-owned subsidiary.

F-26
<PAGE> 286

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

interest for $115 million. Cable LP seeks a declaration by the court that the
right of first refusal it is asserting applies.

NOTE 17 -- STOCKHOLDERS' EQUITY

NOTE 18 -- BUSINESS SEGMENT INFORMATION

F-27
<PAGE> 287

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

F-28
<PAGE> 288

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

F-29
<PAGE> 289

THE PROVIDENCE JOURNAL COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)

NOTE 19 -- SUBSEQUENT EVENTS (UNAUDITED)

Subsequent to March 31, 1996, the following significant events have
occurred:

(a) Litigation

The Company has appealed this judgment and moved to stay the effect of the
judgment during the pendency of the appeal. On June 10, 1996 a hearing was held
on the Company's motion to stay. At such hearing the judge declined to grant or
deny the Company's motion to stay at this time. The Company is unable to predict
at this time what the ultimate outcome of this litigation might be. In
accordance with applicable accounting principles, should any loss resulting from
this litigation ultimately prove to be probable and reasonably estimable, such
loss, at that time, would result in a charge to stockholders' equity to reflect
the estimated decrease in the net book value of the cable assets disposed of in
1995 pursuant to the Merger Agreement. Such a charge could have a material
effect upon the Company's financial condition. If any payment obligations are
ultimately required under the terms of the Merger Agreement, it is currently
anticipated that such payments could be up to $40,000 and could have a material
effect upon the Company's liquidity position.

(b) Increased Ownership Interest in Television Food Network, G.P.

On May 14, 1996 the Company purchased the equity partnership interests held
by Landmark Programming, Inc. ("Landmark") and Scripps Howard Publishing, Inc.
("Scripps"), two of the partners of TVFN, for respective purchase prices of
approximately $12,650 and $11,400. Prior to such purchase, Landmark and Scripps
each owned a 10.8% and 9.7% general partnership interest in TVFN. The agreements
with each of Landmark and Scripps contain covenants by such parties not to
compete with TVFN and its affiliates for a period of one year following such
purchase. The Company's investment in TVFN through May 31, 1996, including these
purchases and funding of its share of operating losses, totaled $44.7 million,
which represents an equity interest of approximately 46%. Following these recent
purchases, the Company now holds three of the five voting seats on the
management committees of TVFN. As a result of the purchases, TVFN became a
controlled subsidiary of the Company and, effective May 14, 1996, was
consolidated into the Company's results of operations. The Company is pursuing a
proposed transaction to purchase all of the equity partnership interest held by
a third partner which would increase its ownership percentage in TVFN to
approximately 55% and result in control of four of the five voting seats on the
management committee. The Company estimates its additional investment in TVFN
for the third partner's equity interest plus funding of the Company's share of
operating losses of TVFN will total approximately $22,500 for the remainder of
1996.

F-30
<PAGE> 290

INDEPENDENT AUDITORS' REPORT

King Holding Corp.:

/S/ DELOITTE & TOUCHE LLP

Boston, Massachusetts
February 10, 1995

F-31
<PAGE> 291

KING HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

See accompanying notes to consolidated financial statements

F-32
<PAGE> 292

KING HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

See accompanying notes to consolidated financial statements

F-33
<PAGE> 293

KING HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(DOLLARS IN THOUSANDS)

See accompanying notes to consolidated financial statements

F-34
<PAGE> 294

KING HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(DOLLARS IN THOUSANDS)

See accompanying notes to consolidated financial statements.

F-35
<PAGE> 295

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

During 1994 the Company entered into a plan to dispose of its Cable
operations (see Note 2).

Summary of Significant Accounting Policies

Revenue Recognition -- Revenues from broadcast activities are recognized as
advertisements are broadcast. Revenues from cable activities are recognized as
the services are provided.

Allowance for Doubtful Accounts -- The allowance for doubtful accounts
related to continuing operations at December 31, 1994 aggregated $1,200.

F-36
<PAGE> 296

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Cash and Cash Equivalents -- The Company considers all short-term, highly
liquid investments purchased with remaining maturities of three months or less
to be cash equivalents.

Supplemental cash flow information for the years ended December 31, 1993
and 1994 is as follows:

Net Loss Per Common Share -- Net loss per common share is computed using
the weighted average number of common shares outstanding during the year.

Reclassifications -- The accompanying statements of cash flows have been
reclassified to present cash flows from discontinued operations in investing
activities.

2. DISCONTINUED OPERATIONS (INFORMATION SUBSEQUENT TO FEBRUARY 10, 1995 IS
UNAUDITED)

F-37
<PAGE> 297

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company. Immediately thereafter, the remaining cable operations of the
Providence Journal were merged into Continental in accordance with the terms of
the agreement in a tax-free transaction.

3. PROPERTY AND EQUIPMENT

Property and equipment of continuing operations consisted of the following
at December 31:

F-38
<PAGE> 298

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. INTANGIBLE ASSETS

Intangible assets of continuing operations consisted of the following at
December 31:

5. FINANCING AGREEMENTS

The Company has a credit agreement (the "Credit Agreement") with a
syndicate of banks which consists of a revolving credit facility, "swing" loans
(as defined), and a term loan.

At December 31, 1994, long-term debt was due as follows: 1995 -- $28,804;
1996 -- 38,408; 1997 -- $38,408; 1998 -- $38,408; 1999 -- $28,804;
thereafter -- $121,217.

F-39
<PAGE> 299

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. EMPLOYEE BENEFIT PLANS

Consolidated net periodic pension cost without regard to the effect of the
discontinued operations for the years ended December 31, 1993 and 1994 is as
follows:

F-40
<PAGE> 300

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table sets forth the Plan's funded status and obligations at
December 31, 1994 without regard to the effect of the discontinued operations:

The assumptions used in the above valuations are as follows:

7. INCOME TAXES

The income tax provision for continuing operations recorded for the years
ended December 31, 1993 and 1994 consists of the following:

F-41
<PAGE> 301

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation of the net income tax provision computed using the U.S.
federal statutory rate of 35% (34% in 1993) to pretax income from continuing
operations was as follows:

The significant components of deferred income tax provision attributable to
income from continuing operations for the years ended December 31, 1993 and 1994
are as follows:

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at December 31,
1994 are presented below:

F-42
<PAGE> 302

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

operating loss carryforwards be realized in the future, the effect would be to
reduce the recorded value of certain intangible assets.

8. COMMITMENTS

Rent expense under operating leases from continuing operations aggregated
$383 and $490 for the years ended December 31, 1993 and 1994, respectively.

9. RELATED-PARTY TRANSACTIONS

F-43
<PAGE> 303

KING HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company is also obligated to pay the Providence Journal an annual
$1,000 governance fee, in advance, on December 20 of each year.

10. FAIR VALUE DISCLOSURE

11. COMMITMENTS AND CONTINGENCIES

The Company has outstanding letter of credit commitments amounting to $756
as of December 31, 1994.

F-44
<PAGE> 304

- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE CLASS A COMMON STOCK IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 12
The Company........................... 18
Use of Proceeds....................... 19
Dividend Policy....................... 19
Dilution.............................. 20
Capitalization........................ 21
Selected Financial Data............... 22
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 32
Business.............................. 51
Management............................ 84
Principal Stockholders................ 94
Certain Transactions.................. 96
Description of Capital Stock.......... 97
Shares Eligible for Future Sale....... 102
Plan of Distribution.................. 104
Legal Matters......................... 105
Experts............................... 105
Available Information................. 106
Index to Financial Statements......... F-1
</TABLE>

450,000 SHARES
LOGO

THE PROVIDENCE
JOURNAL COMPANY

CLASS A COMMON STOCK
---------------------------

P R O S P E C T U S

---------------------------

JUNE 24, 1996

- ------------------------------------------------------
- ------------------------------------------------------