FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 33-15433 and 33-15433-01
QUEEN CITY BROADCASTING OF NEW YORK, INC. QUEEN CITY BROADCASTING, INC.
(Exact name of registrant as specified in its charter)
NEW YORK DELAWARE
(State or other jurisdiction (State or other jurisdiction of
of incorporation or organization) incorporation or organization)
13-3315942 13-3285054
(I.R.S. Employer (I.R.S. Employer
Identification Number) Identification Number)
30 ROCKEFELLER PLAZA, 29TH FLOOR, NEW YORK, NEW YORK 10112
(Address of principal executive officers) (zip code)
Registrants' telephone number, including area code: (212)698-7860
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.
1,010,000 shares of common stock of Queen City Broadcasting,
Inc. were outstanding at May 1, 1995. 100 shares of common
stock of Queen City Broadcasting of New York, Inc., all of which are
owned by Queen City Broadcasting, Inc., were outstanding at
May 1, 1995.
Page 1 of 16
PART I. FINANCIAL INFORMATION
QUEEN CITY BROADCASTING, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
March 31, December 31,
1995 1994
(unaudited) (audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,202,492 $ 2,920,270
Accounts receivable, net 4,517,446 5,708,256
Program rights 884,534 1,227,169
Prepaid expenses and other current
assets 258,835 212,943
Total current assets 8,863,307 10,068,638
Property, plant and equipment, at cost: 16,865,099 16,516,754
Less accumulated depreciation 12,365,084 12,199,484
Property, plant and equipment, net 4,500,015 4,317,270
Intangible assets, net 38,998,610 39,313,301
Deferred financing charges, net 288,833 311,681
Program rights--noncurrent portion 77,935 210,508
Other assets 1,552 1,152
$52,730,252 $ 54,222,550
LIABILITIES AND NET CAPITAL DEFICIENCY
Current liabilities:
Long term debt-current $44,903,036 $ 23,000,000
Revolving credit line -0- 614,500
Accounts payable and accrued
liabilities 346,071 581,070
Accrued interest 1,123,604 1,093,474
Accrued compensation 518,730 710,499
Program rights payable 732,558 1,337,102
Total current liabilities 47,623,999 27,336,645
Program rights payable--noncurrent
portion 299,718 328,011
Long-term debt 19,355,000 41,102,222
Net capital deficiency:
Common stock--$.01 par value, authorized
2,000,000 shares; outstanding 1,010,000
shares after deducting 10,000 shares
held in treasury 10,100 10,100
Additional paid-in capital 10,089,900 10,089,900
Accumulated deficit (24,648,465) (24,644,328)
Total net capital deficiency (14,548,465) (14,544,328)
$52,730,252 $54,222,550
</TABLE>
Page 2 of 16
QUEEN CITY BROADCASTING, INC.
CONSOLIDATED STATEMENT OF NET CAPITAL DEFICIENCY (UNAUDITED)
<TABLE>
Common Paid-in Accumulated
Stock Capital Deficit Total
<S> <C> <C> <C> <C>
Balance at December 31, 1994 $10,100 $10,089,900 $(24,644,328 $(14,544,328)
Net profit for the period 0 0 (4,137) (4,137)
Balance at March 31, 1995 $10,100 $10,089,900 $(24,648,465) $(14,548,465)
Page 4 of 16
QUEEN CITY BROADCASTING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
</TABLE>
<TABLE>
Three Months Ended
March 31, March 31,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $ (4,137) $ (916,577)
Adjustments to reconcile net (loss)
to net cash provided by operating
activities:
Depreciation 165,600 176,625
Amortization of intangibles 314,691 317,319
Amortization of deferred financing charges 22,848 26,430
Deferred interest--subordinated note 155,814 (128,112)
Decrease (increase) in:
Accounts receivable 1,190,810 678,152
Program rights--current 342,635 398,284
Prepaid expenses and other current
assets (45,892) (132,431)
Increase (decrease) in:
Accounts payable and accrued
liabilities (234,999) 72,964
Accrued interest 30,130 36,645
Accrued compensation (191,769) 11,894
Program rights payable--current (604,544) (389,891)
Decrease (increase) in program
rights--noncurrent 132,573 (28,966)
Increase (decrease) in program rights
payable--noncurrent (28,293) (52,982)
Total adjustments 1,249,604 985,931
Net cash provided by operating
activities 1,245,467 69,354
Cash flows from investing activities:
Capital expenditures (348,345) (200,158)
Receipts from other assets (400) 40
Net cash used for investing activities (348,745) (200,118)
Cash flows from financing activities:
Payments from short-term borrowing (614,500) (625,000)
Net cash used for financing activities (614,500) (625,000)
Net increase (decrease)
in cash and cash equivalents 282,222 (755,764)
Cash and cash equivalents at beginning of
period 2,920,270 1,735,257
Cash and cash equivalents at end of period $3,202,492 $ 979,493
Supplemental disclosures of cash flow information:
Cash paid for:
Interest $1,318,918 $1,859,872
Income taxes $ 114,272 $ 2,486
</TABLE>
Page 5 of 16
QUEEN CITY BROADCASTING, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1.The results presented in the financial statements are
unaudited, but in the opinion of management contain all
adjustments necessary for a fair presentation of the results
of operations. The results of operations include the
accounts of Queen City Broadcasting, Inc. and its wholly-
owned subsidiary, Queen City Broadcasting of New York, Inc.,
collectively referred to as the "Company".
Page 6 of 16
QUEEN CITY BROADCASTING, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Revenues
Revenues are derived principally from national and local
advertising and to a lesser extent from network compensation.
The following table sets forth sources of revenues for the
periods indicated (dollars in thousands):
<TABLE>
Three Months Ended March 31,
Increase
1995 1994 (Decrease)
<S> <C> <C> <C>
National/Regional Advertising $3,472 $ 3,233 $239
Local Advertising 3,032 2,290 742
Network Compensation 264 252 12
Other 37 34 3
Gross Revenues $6,805 $5,809 $996
</TABLE>
First Quarter Ended March 31, 1995 Compared With First Quarter
Ended March 31, 1994
Gross revenues for the first quarter 1995 were $6,804,962
compared with $5,808,691 for the first quarter 1994, an
increase of 17.2%. National/regional revenues for the first
quarter 1995 increased $239,000 or 7.4% due to increases in
automotive, food products, laundry products and pet care categories
of revenue. This was offset in part by decreases in utility, paid
programming and department store categories of revenue. Local revenues
for the first quarter 1995 increased $742,000 or 32.4% due to increases
in automotive, medical, utility, grocery store and furniture
categories of revenue. This was offset in small part by
decreases in restaurant, soft drink, appliance and building
supply categories of revenue.
Total Operating Expenses for the first quarter were $4,365,891
in 1995 compared with $4,136,496 in 1994, an increase of 5.5%.
The increase was caused by greater syndicated program costs and
news department expenses.
Net Interest Expense (interest expense less interest income)
for the first quarter 1995 decreased $285,314 due to savings in
interest on the subordinated note due to CapCities. The
decrease in interest was a result of the amended terms of the
subordinated note, which were made in conjunction with the
extension of the network affiliation agreement. The interest
was reduced to $262,500 per calendar quarter from $417,240 in
1994. An additional reduction of the interest expense results
from the amortization of deferred interest on the CapCities
note over the remaining term of the note.
Page 7 of 16
Net Loss for the First Quarter 1995 was $4,137 compared with a
loss of $916,577 in the first quarter 1994. The reduced loss
was caused by increased revenue and savings in interest expense
offset in part by increased operating expenses as described in
the preceeding paragraphs. Net Loss per Common Share was
reduced to $.01 in the first quarter 1995 from $.91 in the
first quarter 1994.
Liquidity and Capital Resources
At March 31, 1995 cash and cash equivalents increased to
$3,202,492 from $979,493 at March 31, 1994, an increase of
$2,222,999. The increase was caused by increased revenue and
the deferral of payment of interest on the CapCities
subordinated note.
In 1991, the Company and CapCities amended the subordinated
note due to CapCities. The amendment deferred interest
payments through July 2, 1993 with the first interest payment
due on October 2, 1993. In addition, the rate of interest was
reduced to 8.5% per annum effective January 2, 1992 through
July 2, 1993. The deferred interest payments were added to the
amount of the subordinated note on July 2, 1993. In 1993, the
Company and CapCities further amended such note to confirm that
the unpaid principal balance was $20,775,130 and to set the interest
rate on such note at 10.5%, effective as of July 2, 1993. In January 1995,
the Company and CapCities further amended such note to provide that
interest thereon will accrue and be added to the principal
amount thereof until the aggregate principal balance thereof
reaches $22,000,000. At that time, CapCities also agreed to
certain additional financial accomodations in the event the
Station is sold.
A bank line of credit of $5,000,000 is available for general
corporate and working capital purposes. As of May 1, 1995 all
of the line was available.
The operations of the Company generate significant working
capital in excess of its requirements for operating expenses.
However, interest expense on the Debentures and the Senior
Guaranteed Notes substantially reduces the availability of
excess working capital. Further, approximately $23,000,000 and
as much as $22,000,000 of the Company's debt, being the Senior
Guaranteed Notes and the subordinated note, become due on June 29, 1995
and January 2, 1996, respectively. In addition, Queen City III
Limited Partnership, a Delaware limited partnership ("QCIII"),
which owns approximately 98% of Queen City's stock, has pledged
such stock, QCIII's principal asset, as collateral for QCIII's
senior note that will have an outstanding balance of
approximately $28,750,000 when it becomes due on June 29, 1995.
A default in the payment of QCIII's senior note can cause a default
in the Company's debt. While the Company and QCIII's operating cash flow
is insufficient to fully fund their respective 1995 and 1996 scheduled
payments of debt, management believes that it will be able to either
(a) refinance these obligations or (b) sell the Station and/or the
Company for a price sufficient to fully repay the Company and
QCIII's debt.
Page 8 of 16
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings
Neither the Company nor Queen City is a party to any
lawsuit or legal proceeding which, in the opinion of
management, individually or in the aggregate, is likely
to have a material adverse effect on the Company or
Queen City.
On December 21, 1993, the Company, Queen City III
Limited Partnership and certain general partners of
such limited partner-ship commenced a lawsuit in the
Superior Court of New Jersey, Law Division - Essex County,
against The Prudential Insurance Company of America,
Miguel Thames, Gary Trabka, Granite Broadcasting Corporation,
W. Don Cornwell, Thomas Inglesly, Trustee of the Trust Dated
August 24, 1993, Lazard Freres & Co. et al. Such suit
charged the defendants with fraud, tortious interference
with contract, and breach of contract. The complaint
sought money damages in an unliquidated amount, recision
of certain transactions and other forms of relief. The court
has ruled that the action should be stayed pending arbitration
of the issues before the American Arbitration Association.
The Company and the other plaintiffs intend to vigorously
pursue such arbitration.
ITEM 2. Changes in Securities
Not applicable
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
Not applicable
ITEM 5. Other Information
On April 12, 1995, Queen City III Limited Partnership
("QCIII") and Granite Broadcasting Corporation
("Granite") entered into a letter of intent with
respect to the proposed aquisition by Granite of the
55% general partnership interest in QCIII. Granite had
previously acquired the 45% limited partnership
interest in QCIII and QCIII's outstanding senior note.
The consumation of the transaction described in such
letter of intent is subject to the negotiation and
execution of a definitive purchase and sale agreement,
approval by the Federal Communications Commission, and
satisfaction of certain other conditions. It is
unclear, at this time, what will be the effect on the
Company if the contemplated sale is not consumated by
June 29, 1995 (see Part I - Liquidity and Capital Resources).
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Indenture between Queen City Broadcasting, Inc.,
Queen City Broadcasting of New York, Inc. and
Manufacturers Hanover Trust Co., as trustee,
incorporated by reference from exhibits to the
registrants' annual report on Form 10-K,
pp. 70-189, filed with the Securities and Exchange
Commission on March 30, 1988.
Letter of Intent dated April 12, 1995 between
Granite Broadcasting Corporation and Queen City III
Limited Partnership is attached hereto pp. 12-16 .
(b) Reports on Form 8-K
None filed during first quarter 1995
Page 9 of 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
QUEEN CITY BROADCASTING OF NEW YORK, INC.
(Registrant)
Date: May 15, 1995 /s/ Paul J. Cassidy
(Signature)
Paul J. Cassidy
President and Chief Operating Officer
Date: May 15, 1995 /s/ Kenneth J. Koller
(Signature)
Kenneth J. Koller
Vice President and
Chief Financial Officer
Page 10 of 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
QUEEN CITY BROADCASTING, INC.
(Registrant)
Date: May 15, 1995 /s/ Paul J. Cassidy
(Signature)
Paul J. Cassidy
President and Chief Operating Officer
Date: May 15, 1995 /s/ Kenneth J. Koller
(Signature)
Kenneth J. Koller
Chief Accounting Officer
Page 11 of 16
QUEEN CITY BROADCASTING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
Three Months Ended
March 31, March 31,
1995 1994
<S> <C> <C>
Gross Revenues $6,804,962 $5,808,691
Less agency commissions 938,270 793,403
Net revenues 5,866,692 5,015,288
Costs and expenses:
Direct operating 2,460,872 2,234,957
Selling, general and
administrative 1,424,728 1,407,595
Depreciation 165,600 176,625
Amortization of intangible assets 314,691 317,319
Total operating expenses 4,365,891 4,136,496
Operating income 1,500,801 878,792
Interest expense 1,504,862 1,768,410
Amortization of deferred financing
charges 22,848 26,430
Other income, net (34,772) (3,971)
Profit (loss) before income taxes 7,863 (912,077)
Income taxes 12,000 4,500
Net (loss) $ (4,137) $ (916,577)
Per Common Share:
Net (loss) $(.01) $(.91)
Average common shares outstanding
during the period 1,010,000 1,010,000
</TABLE>
Page 3 of 16
April 12, 1995
Queen City III Limited Partnership
c/o Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
29th Floor
New York, New York 10012
Attention: Mr. J. Bruce Llewellyn,
Chairman of the Management Committee
Ladies and Gentlemen:
This letter, when countersigned by Queen City III Limited
Partnership ("QCIII" or the "Seller"), which owns approximately
98% of the issued and outstanding Common Stock of Queen City
Broadcasting, Inc. ("Holding Company"), which, in turn, owns 100% of
the issued and outstanding common stock of Queen City Broadcasting
Corporation of New York, Inc. ("Operating Company"), which owns and
operates television station WKBW-TV, Buffalo, New York ("WKBW"),
will confirm our mutual intentions regarding the acquisition (the
"Transaction") by Granite Broadcasting Corporation or its designee
(the "Purchaser") at Purchaser's option of either (a) all of the
general partnership interests in QCIII (the "GP Interests") or (b)
all the shares of Holding Company owned by QCIII (the "Subject
Shares"). Upon execution of this letter, the parties will proceed,
in good faith, toward the negotiation, preparation, and execution of
a definitive purchase agreement (the "Definitive Agreement"),
containing terms, conditions, representations, warranties,
indemnities, covenants and other provisions customary to
transactions of this type, and the preparation of the other
documentation necessary to consummate the Transaction as herein
contemplated.
1. Purchase Price. The aggregate net purchase price (the
"Purchase Price") payable to the General Partners of QCIII (the
"General Partners") in the Transaction will be $14.245 million less
55% of all QCIII expenses (the "Seller Expenses") of the Transaction
(estimated to be an aggregate of approximately $1.5 million,
resulting in an estimated net Purchase Price payable to the General
Partners of $13.42 million), payable in immediately available funds
at the closing of the Transaction (the "Closing").
2. Operating Conditions. The above Purchase Price is
premised upon the following being true at the Closing:
(a) the liabilities of QCIII (other than the QCIII Senior
Secured Note due 1995 owned by Purchaser (the "Note") and the Seller
Expenses) shall be zero;
(b) the consolidated debt of Holding Company and its
subsidiaries shall not exceed $52,355,000 excluding accrued and
unpaid interest (subject to an increase of up to $6.7 million as
provided in the Cap Cities/ABC amended Subordinated Note);
Page 12 of 16
Queen City III Limited Partnership
April 12, 1995
Page 2
(c) the consolidated cash and cash equivalents of Holding
Company and its subsidiaries shall be not less than $3,000,000;
(d) the consolidated working capital (i.e., total Current
assets less total Current liabilities excluding Long-term debt - current
portion) of Holding Company and its subsidiaries shall not be less than
that indicated on the Holding Company Consolidated Balance Sheet dated
December 31, 1994 ($5,731,993 excluding Long-term debt - current portion);
and
(e) there shall have occurred no material adverse change
since December 31, 1994 in the assets, business, operations or prospects
of QCIII, Holding Company, Operating Company or WKBW.
3. Closing; Conditions to the Transaction.
(a) The Definitive Agreement will provide for the Closing
to occur within 15 business days after the satisfaction of the
condition described below. Consummation of the Transaction will be
subject to the following conditions:
(i) the receipt of a Final Order of the Federal
Communications Commission ("FCC") (as defined by the FCC) consenting
to the indirect assignment of the FCC licenses of WKBW to, and the
acquisition of the GP Interests or the Subject Shares, as the case
may be, by the Purchaser (unless this condition is waived by
Purchaser), and the receipt of all other government approvals
necessary for the consummation of the Transaction, including without
limitation any required approvals (or expiration of the waiting
period) under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended;
(ii) the Purchaser shall have completed its due
diligence review of the business and assets of QCIII, Holding
Company, Operating Company and WKBW, and shall have determined in
the reasonable judgment of Purchaser that the results thereof are
satisfactory;
(iii) the Purchaser shall have acquired, at its sole
cost and expense, at the Closing, all of the issued and outstanding
shares of Holding Company not owned by QCIII, on terms and
conditions reasonably satisfactory to Purchaser in its sole
discretion;
(iv) the General Partners and Purchaser shall have
exchanged mutual releases satisfactory to Purchaser and the
Management Committee of QCIII relating to the New York City
arbitration proceeding and any other potential direct or indirect
claims by the General Partners against QCIII, Purchaser, South
Street Corporate Recovery Fund I, L.P., South Street Leverage
Corporate Recovery Fund, L.P., South Street Corporate Recovery Fund
I (International), L.P., SS II as successors to, and Thomas
Inglesby, Trustee of the Trust Dated August 24, 1994 and Lazard
Freres & Co., their advisors and their respective affiliates; and
(v) other conditions as are customary in
transactions of this kind.
Page 13 of 16
Queen City III Limited Partnership
April 12, 1995
Page 3
(b) The Definitive Agreement shall contain a provision
that: (i) in the event Seller is not then in breach of the
Definitive Agreement, and Purchaser breaches the Definitive
Agreement and fails to close the Transaction after notice and the
opportunity to cure and close, Purchaser shall immediately pay to
Seller a cash payment in immediately available funds of $5.0 million
as liquidated damages for Purchaser's breach; and (ii) prior to
termination of the Definitive Agreement, Purchaser will not seek
payment of, and will waive (to the extent necessary to avoid cross
defaults under other indebtedness of Holding Company and Operating
Company), any payment default on, the Note, in each instance, until
such termination.
4. Access to Information; Financial Statements.
(a) From and after the date hereof, the Seller will allow
the Purchaser and its representatives, including attorneys,
accounts, investment bankers and potential lenders, reasonable
access during normal working hours to all of the books, records,
agreements, reports, other documents, assets and facilities of
QCIII, Holding Company, Operating Company and WKBW, wherever
located, to the extent such access is reasonably necessary to
perform a due diligence investigation of the business and assets of
QCIII, Holding Company, Operating Company and WKBW; and QCIII,
Holding Company, Operating Company and WKBW, will make their
respective appropriate officers, partners, employees, attorneys,
agents and independent accountants available to discuss with the
Purchaser or its representatives such aspects of the business and
operations of QCIII, Holding Company, Operating Company and WKBW, as
the Purchaser may reasonably require.
(b) In addition to providing financial information as
heretofore regularly provided to Purchaser by QCIII, the Seller
shall prepare and deliver to the Purchaser, as soon as possible
after the date hereof, unaudited financial statements of Holding
Company and Operating Company for quarterly periods subsequent to
December 31, 1994, including statements of operations, cash flows
and stockholders' equity and balance sheets.
(c) The Seller shall, as soon as practicable after the
date hereof, obtain a consent of Seller's auditors for the use of
the financial statements of Holding Company for the years ended
December 31, 1992, 1993 and 1994, including statements of
operations, cash flows and stockholders' equity and balance sheets
in any documents used by Purchaser in connection with future
financings by Purchaser.
(d) The parties will use their best efforts to file
within two business days after the date hereof with the FCC all
required applications and forms to obtain the FCC approvals required
to consummate the Transaction.
5. Exclusivity. The Seller agrees that, until May 15, 1995,
or such earlier date as (i) the Purchaser has materially breached
its obligations hereunder or (ii) the Seller and the Purchaser have
mutually agreed in writing to terminate negotiations (the
"Termination Date"), neither QCIII, Holding Company nor Operating
Company nor any of their respective officers, directors, agents or
representatives, nor any members of the Management Committee of
QCIII, will, either directly or indirectly, entertain or conduct
Page 14 of 16
Queen City III Limited Partnership
April 12, 1995
Page 4
discussions with any person or entity with respect to any offer for the
purchase or sale of any portion of the assets or capital stock of Holding
Company or Operating Company, or of the assets or partnership interests
in QCIII, or with respect to any merger, acquisition, combination or
similar transaction involving QCIII, Holding Company or Operating Company or
substantially all of the business of any of them. The Definitive
Agreement will contain a provision extending the exclusivity period
referred to above until a mutually agreed upon "drop dead" date.
Seller shall use its reasonable best efforts to require the
remaining partners of QCIII and employees of QCIII, Holding Company
and Operating Company to comply with the restrictions contained
herein applicable to QCIII.
In the event that the provisions of this paragraph 5 are
breached in any material respect which could frustrate consummation
of the Transaction as contemplated herein and this Letter of Intent
is terminated by either party hereto as the result thereof, QCIII
shall immediately pay to Purchaser in cash in immediately available
funds, on demand, in consideration of the substantial time, effort
and expense undertaken by Purchaser, the sum of $5 million.
6. Operation of the Business. From the date hereof through
the later of the Closing or the Termination Date, QCIII, Holding
Company and Operating Company will operate their respective
businesses in the normal course and in a manner consistent with
prudent business practice. During such period, neither Holding
Company nor Operating Company shall issue any stock or any other
securities, QCIII shall not issue or redeem any partnership
interests, and no distributions on account of their respective
equity or capital stock will be made by QCIII or Holding Company.
7. Legal Effect. The parties understand that this letter
(i) represents their current understanding and intention with respect to
the Transaction contemplated herein, (ii) does not contain all
matters concerning the Transaction with respect to which agreements
must be reached, and (iii) creates no legal obligation on the part
of either party hereto except for the obligations set forth in
Paragraphs 3(b), 4, 5, 7 and 8 hereof. This letter will terminate
and be of no further force and effect on the Termination Date,
unless extended by written agreement of the parties. Neither this
letter nor the Definitive Agreement shall trigger or be deemed a
waiver of any rights or obligations under the Note or Section 5.14
or any other provision of the QCIII Partnership Agreement.
8. Publicity. No party to this letter shall issue any press
release or otherwise make any public announcement, or disclose
information to any third party (except those agents or
representatives of a party directly involved in the Transaction or
its financing, and except as required by law) concerning the
Transaction, without the prior approval of the other party hereto as
to the timing, content and method of dissemination thereof, which
consent shall not be unreasonably withheld or delayed. It is
contemplated that simultaneously with the execution hereof, QCIII
and Purchaser will issue mutually satisfactory press releases, and
that QCIII will notify Cap Cities/ABC and Bear Stearns & Co. of the
proposed Transaction.
Page 15 of 16
Queen City III Limited Partnership
April 12, 1995
Page 5
If the foregoing correctly sets forth your understanding,
please sign in the space provided below and return an executed copy
to the undersigned.
Very truly yours,
GRANITE BROADCASTING CORPORATION
By: /s/ W. Don Cornwell
W. Don Cornwell, Chairman and
Chief Executive Officer
Accepted and agreed to
as of the date first above written
QUEEN CITY III LIMITED PARTNERSHIP
By: /s/ J. Bruce Llewellyn
J. Bruce Llewellyn,
Chairman of the Management Committee
Page 16 of 16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 3,202,492
<SECURITIES> 0
<RECEIVABLES> 4,624,087
<ALLOWANCES> 106,641
<INVENTORY> 0
<CURRENT-ASSETS> 8,863,307
<PP&E> 16,865,099
<DEPRECIATION> 12,365,084
<TOTAL-ASSETS> 52,730,252
<CURRENT-LIABILITIES> 47,623,999
<BONDS> 19,355,000
<COMMON> 10,100
0
0
<OTHER-SE> (14,558,565)
<TOTAL-LIABILITY-AND-EQUITY> 52,730,252
<SALES> 6,804,962
<TOTAL-REVENUES> 6,839,734
<CGS> 3,172,561
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<LOSS-PROVISION> 30,000
<INTEREST-EXPENSE> 1,527,710
<INCOME-PRETAX> 7,863
<INCOME-TAX> 12,000
<INCOME-CONTINUING> (4,137)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,137)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
