SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30,1996
0-16690
(Commission File Number)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
(Exact name of registrant as specified in its governing
instruments)
Delaware
(State or other jurisdiction of organization)
13-3429969
(IRS Employer Identification No.)
World Financial Center
South Tower - 14th Floor
New York, New York 10080-6114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 236-6472
N/A
Former name, former address and former fiscal year if changed
since last report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
ML Media Opportunity Partners, L.P.
Part I - Financial Information.
Item 1. Financial Statements.
TABLE OF CONTENTS.
Consolidated Balance Sheets as of September 30,
1996 (Unaudited) and December 31, 1995 (Unaudited)
Consolidated Income Statements for the thirteen
and thirty-nine week periods ended September 30,
1996 (Unaudited) and September 30, 1995
(Unaudited)
Consolidated Statements of Cash Flows for the
thirty-nine week periods ended September 30, 1996
(Unaudited) and September 30, 1995 (Unaudited)
Notes to the Consolidated Financial Statements for
the thirty-nine week period ended September 30,
1996 (Unaudited)
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ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 1996
(UNAUDITED) AND DECEMBER 31, 1995 (UNAUDITED)
September 30, December 31,
1996 1995
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 1,367,514 $ 570,336
Investment in joint venture and
common stock - 1,261,666
Other assets 17,107 87,354
TOTAL ASSETS $ 1,384,621 $ 1,919,356
LIABILITIES AND PARTNERS'
CAPITAL:
Liabilities:
Accounts payable and accrued
liabilities $ 663,280 $ 539,327
Net Liabilities of Discontinued
Operations:
Production Segment 75,167 140,711
Total Liabilities 738,447 680,038
Commitments and Contingencies
(Continued on the following page.)
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ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 1996
(UNAUDITED) AND DECEMBER 31, 1995 (UNAUDITED)
(Continued)
September 30, December 31,
1996 1995
<S> <C> <C>
Partners' Capital:
General Partner:
Capital contributions, net of
offering expenses 1,019,428 1,019,428
Cash distributions (362,496) (120,077)
Cumulative loss (629,979) (866,466)
26,953 32,885
Limited Partners:
Capital contributions, net of
offering expenses (112,147.1
Units of Limited Partnership
Interest) 100,914,316 100,914,316
Tax allowance cash distribution (2,040,121) (2,040,121)
Other cash distributions (35,887,040) (11,887,582)
Cumulative loss (62,367,934) (85,780,180)
619,221 1,206,433
Total Partners' Capital 646,174 1,239,318
TOTAL LIABILITIES AND PARTNERS'
CAPITAL $ 1,384,621 $ 1,919,356
See Notes to Consolidated Financial Statements (Unaudited).
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ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED INCOME STATEMENTS
FOR THE THIRTEEN AND THIRTY-NINE WEEK PERIODS ENDED
SEPTEMBER 30, 1996 (UNAUDITED)
AND SEPTEMBER 30, 1995 (UNAUDITED)
Thirteen Weeks Thirty-Nine Weeks
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Gain on Sale of
Western
Wireless
Corporation
stock $ - $ - $ 22,843,249 $ -
Other income 555,489 - 555,489 128,212
Interest income 142,303 16,317 268,606 97,233
697,792 16,317 23,667,344 225,445
Partnership
Operating
Expenses:
General and
administrative 67,832 28,395 84,155 177,057
Management fees - 589,386 - 1,794,680
67,832 617,781 84,155 1,971,737
Income/(Loss)
from
Partnership 629,960 (601,464) 23,583,189 (1,746,292)
operations
Discontinued
operations:
(Loss)/Income
from
Discontinued (69,456) - 65,544 -
Production
Segment
Gain on Sale of
Discontinued
Television and
Radio Station
Segment - 7,786,731 - 9,471,059
(Continued on the following page.)
</TABLE>
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<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED INCOME STATEMENTS
FOR THE THIRTEEN AND THIRTY-NINE WEEK PERIODS ENDED
SEPTEMBER 30, 1996 (UNAUDITED)
AND SEPTEMBER 30, 1995 (UNAUDITED)
(Continued)
Thirteen Weeks Thirty-Nine Weeks
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
(Loss)/Income from
discontinued
operations (69,456) 7,786,731 65,544 9,471,059
NET INCOME $ 560,504 $ 7,185,26 $23,648,73 $ 7,724,76
7 3 7
Per Unit of
Limited
Partnership
Interest:
Income/(Loss) from
Partnership
operations
$ 5.56 $ (5.31 $ 208.1 $ (15.4
) 8 2)
(Loss)/Income from
discontinued
operations
(.61) 68.74 .58 83.61
NET INCOME $ 4.95 $ 63.43 $ 208.7 $ 68.1
6 9
Number of Units 112,147.1 112,147.1 112,147.1 112,147.1
See Notes to Consolidated Financial Statements (Unaudited).
</TABLE>
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ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTY-NINE WEEK PERIODS ENDED
SEPTEMBER 30, 1996 (UNAUDITED)
AND SEPTEMBER 30, 1995 (UNAUDITED)
September September 30,
30, 1995
1996
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 23,648,733 $ 7,724,767
Adjustments to reconcile net income
to net cash provided by/(used in)
operating activities:
Gain on Sale of Discontinued Tele-
vision and Radio Station Segment - (9,471,059)
Gain on sale of Western Wireless
Corporation stock (22,843,249) -
Change in operating assets and
liabilities:
Other assets 70,247 454,969
Accounts payable and accrued
liabilities 81,780 (82,734)
Change in Net Liabilities of
Discontinued Operations-Production
Segment (65,544) -
Net cash provided by/(used in)
operating activities 891,967 (1,374,057)
(Continued on the following page.)
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<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTY-NINE WEEK PERIODS ENDED
SEPTEMBER 30, 1996 (UNAUDITED)
AND SEPTEMBER 30, 1995 (UNAUDITED)
(Continued)
September 30, September 30,
1996 1995
<S> <C> <C>
Cash flows from investing activities:
Net proceeds from sale of radio station
WMXN-FM - 3,334,013
Net proceeds from sale of Western
Wireless Corporation stock 24,147,088 -
Net cash provided by investing
activities 24,147,088 3,334,013
Cash flows from financing activities:
Cash distributions (24,241,877) (2,945,275)
Net cash used in financing activities (24,241,877) (2,945,275)
Net increase/(decrease) in cash and
cash equivalents 797,178 (985,319)
Cash and cash equivalents at beginning
of period 570,336 2,150,473
Cash and cash equivalents at end of
period $ 1,367,514 $ 1,165,154
Interest paid $ 970,875 $ 2,511,322
(Continued on the following page.)
</TABLE>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTY-NINE WEEK PERIODS ENDED
SEPTEMBER 30, 1996 (UNAUDITED)
AND SEPTEMBER 30, 1995 (UNAUDITED)
(Continued)
Supplemental Disclosure:
Effective February 21, 1995, the Partnership sold the assets of
radio station WMXN-FM.
Effective September 15, 1995, the Partnership sold all of the
capital stock of Avant Development Corporation.
Effective May 29, 1996, the Partnership sold all of its stock of
Western Wireless Corporation.
Effective May 31, 1996, the Partnership sold its remaining
interests in films and other projects developed by Paradigm.
See Notes to Consolidated Financial Statements (Unaudited).
ML MEDIA OPPORTUNITY PARTNERS, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THIRTY-NINE WEEK PERIOD ENDED SEPTEMBER 30, 1996
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
ML Media Opportunity Partners, L.P. (the "Partnership") was
formed and the Certificate of Limited Partnership was filed under
the Delaware Revised Uniform Limited Partnership Act on June 23,
1987. Operations commenced on March 23, 1988 with the first
closing of the sale of units of limited partnership interest
("Units"). Subscriptions for an aggregate of 112,147.1 Units
were accepted and are now outstanding.
Media Opportunity Management Partners (the "General Partner") is
a joint venture, organized as a general partnership under the
laws of the State of New York, between RP Opportunity Management,
L.P., a limited partnership under Delaware law, and ML
Opportunity Management Inc., a Delaware corporation and an
indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc.
The General Partner was formed for the purpose of acting as
general partner of the Partnership. The General Partner's total
capital contribution was $1,132,800 which represented 1% of the
total Partnership capital contributions.
Pursuant to the terms of the Amended and Restated Agreement of
Limited Partnership, the General Partner is liable for all
general obligations of the Partnership to the extent not paid by
the Partnership. The limited partners are not liable for the
obligations of the Partnership in excess of the amount of their
contributed capital.
The Partnership was formed to acquire, finance, hold, develop,
improve, maintain, operate, lease, sell, exchange, dispose of and
otherwise invest in and deal with media businesses and direct and
indirect interests therein.
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information. They do not
include all information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of the General Partner, the financial statements
include all adjustments necessary to reflect fairly the financial
position of the Partnership as of September 30, 1996 and the
results of operations and cash flows of the Partnership for the
interim periods presented. All adjustments are of a normal
recurring nature. The results of operations for the three and
nine months ended September 30, 1996 are not necessarily
indicative of the results of operations for the entire year.
Additional information, including the audited year end 1995
Financial Statements and the Summary of Significant Accounting
Policies, is included in the Partnership's filing on Form 10-K
for the year ended December 31, 1995 on file with the Securities
and Exchange Commission.
2. Liquidity and Capital Resources
At September 30, 1996, the Partnership had $1,367,514 in cash and
cash equivalents. The Partnership will continue its attempt to
sell or otherwise dispose of its remaining investments in media
properties, which it anticipates will occur in 1997.
On July 29, 1996, the Partnership made a cash distribution to
Limited Partners of record on May 31, 1996, of $214 per $1,000
limited partnership unit ("Unit") totaling $23,999,458 and
$242,419 to the General Partner of net distributable sale
proceeds from the sale of its stock of Western Wireless
Corporation ("WWC") and the remaining interests in films and
other projects developed by Paradigm Entertainment, L.P.
("Paradigm") (see below).
TCS Television Partners L.P. ("TCS") continues to be in default
on covenants under its note agreements as of September 30, 1996
and expects to default on the majority of its scheduled principal
payments under its note agreements for the remainder of 1996. TCS
is in the process of marketing the remaining TCS stations for
sale. As of September 17, 1996, TCS entered into an agreement
with the holders of its subordinated debt under which the lenders
agreed that TCS would be entitled to share in the net proceeds of
the sale of the TCS stations in accordance with a formula set
forth in the agreement. The agreement with the lenders is
conditioned on TCS entering into a definitive agreement to sell
the stations by December 31, 1996, and closing the sale promptly
after FCC approval. The amount that the Partnership will receive
from the sale of the TCS stations will depend on the sales price
for the stations but is not expected to be more than a small
portion of the Partnership's initial investment in TCS. There
can be no assurance that TCS will enter into an agreement to sell
the TCS stations or that the conditions to the agreement with its
lenders will be satisfied (see below).
Sale of WMXN-FM
On February 21, 1995, US Radio of Norfolk, Inc. purchased WMXN-FM
for approximately $3.5 million. Following payment of a
transaction fee to a third party unaffiliated with the
Partnership and/or its affiliates, approximately $3.3 million was
remitted to the Partnership. The Partnership recognized a gain
of approximately $1.7 million for financial reporting purposes in
1995 on the sale of WMXN-FM. In addition, on March 7, 1995 and
February 28, 1996, approximately $400,000 and $66,000,
respectively, were returned to the Partnership from WMXN-FM's
cash balances.
Disposition of IMPLP/IMPI and Intelidata
Effective July 1, 1993, the Partnership entered into three
transactions to sell the business and liquidate the assets of
IMPLP/IMPI and Intelidata. Subsequent to the sale of the
businesses, the Partnership advanced net additional funds
totaling approximately $130,000 through September 30, 1996 on
behalf of IMPLP/IMPI and Intelidata to fund cash shortfalls
resulting from the pre-sale claims of certain creditors and
liquidation costs. The Partnership anticipates that it will make
additional such advances on behalf of IMPLP/IMPI and Intelidata
during 1996. The aggregate amounts of the Partnership's
obligations to fund such advances, including certain contractual
obligations, is not currently anticipated to exceed the amount of
the writedown of $364,000. It is unlikely that the Partnership
will recover any portion of its investment in
IMPLP/IMPI/Intelidata.
GCC/WWC
On January 20, 1994, the majority stockholders of General
Cellular Corporation ("GCC") and certain holders of interests in
MARKETS Cellular Limited Partnership ("Markets") and PN Cellular,
Inc. ("PNCI") executed a Memorandum of Intention (the
"Memorandum") pursuant to which the parties thereto expressed
their intent to effect a proposed business combination of GCC and
Markets.
The Partnership executed an Exchange Agreement and Plan of Merger
("Agreement") dated July 20, 1994, to which the majority
stockholders of GCC and the majority owners of Markets are
parties. Pursuant to the Agreement, the Partnership exchanged
its shares in GCC for an equal number of shares in WWC, a new
company which was organized to own the equity interest of GCC and
Markets. Following the consummation of the business combination
on July 29, 1994, WWC became the owner of 100% of the Partnership
interests in Markets and approximately 95% of the outstanding
common stock of GCC. Subsequently, WWC acquired the remaining
shares of GCC.
On May 29, 1996, the Partnership sold all of its 1,090,162 shares
of WWC at a price of $23.50 per share in an initial public
offering of shares of common stock of WWC. The 1,090,162 shares
of WWC sold by the Partnership represented all of the shares held
by the Partnership, after giving effect to a 3.1 to 1 stock split
immediately prior to the offering. As a result, on May 29, 1996,
the Partnership received $24,147,088 in net proceeds for its
1,090,162 shares, after payment of underwriter's commission in
connection with the sale. The Partnership recognized a gain of
approximately $22.8 million on the sale of WWC stock.
Paradigm/BBAD
Effective June 23, 1992, Paradigm formed a general partnership
with Bob Banner Associates ("Associates") to start a new
production company, BBAD. Pursuant to this new general
partnership arrangement between Paradigm and Associates, during
1992 Paradigm advanced approximately $942,000 and Associates
advanced approximately $457,000 to fund BBAD's operations and the
development of certain programming concepts. Initially, Paradigm
owned 67% and Associates owned 33% of BBAD, based on their
capital contributions to BBAD. In addition, Associates
contributed an additional approximately $0.7 million and Paradigm
contributed approximately $0.3 million from existing cash
balances during 1993 to fund BBAD's operations. As of June 30,
1996, the Partnership had advanced a total of approximately $7.5
million to Paradigm (net of funds returned by Paradigm).
Due in part to the Partnership's unwillingness to advance
additional funds to fund the continuing operating losses and
possible winding down of Paradigm's and BBAD's operating
activities, the Partnership recorded in the second quarter of
1993 a writedown of approximately $516,000 of certain assets of
Paradigm and BBAD to reduce the Partnership's net investment to a
net realizable value of zero.
Through the end of 1993, Paradigm had produced three television
movies which had aired as well as one syndicated series (which
was discontinued after thirteen episodes), and BBAD had produced
one television movie which had aired and one series. BBAD had
also developed other program concepts which may be produced as
either movies or series for television.
On April 25, 1996 and May 31, 1996, the Partnership received
proceeds of $80,000 and $55,000, respectively, from Paradigm's
sale of the Partnership's remaining interests in the films and
other projects developed by Paradigm and assigned to Associates.
The Partnership recognized a gain for financial reporting
purposes of $135,000 on the sale of the films and other projects
in the second quarter of 1996, offset by operational losses of
$69,456 recognized in the third quarter of 1996. Although the
Partnership is no longer advancing funds for continuing
operations and Paradigm has no operating assets, the Partnership
may be liable for certain liabilities of Paradigm. These
liabilities are reflected in the Discontinued Operations section
of the Partnership's financial statements as of September 30,
1996.
Refer to Note 3 for further information regarding Paradigm and
BBAD.
Sale of Windsor
On May 18, 1994, the Partnership sold the assets of the Windsor
Systems to Tar River Communications Inc. ("Tar River")for
$3,443,200, subject to post-closing adjustments. At closing, the
Partnership repaid the $2,050,058 of principal and interest then
due under the Windsor Note, as required by the terms of the
Windsor Note. In addition, as required by the Asset Purchase
Agreement with Tar River, at closing, $342,160 (the "Escrowed
Monies") was placed into two separate escrow accounts to cover
the potential costs of improving pole attachments and other
possible post-closing expenses. The remaining $1,050,982 in
sales proceeds was applied or reserved to pay closing costs of
the transaction and certain pre-closing liabilities to third
parties.
On August 29, 1996, approximately $190,000 was received by the
Partnership as final settlement for post-closing adjustments
related to the sale of the Windsor systems to Multimedia
Cablevision. As of September 30, 1996, Escrowed Monies of
approximately $279,000 plus approximately $34,000 of interest was
received by the Partnership in full settlement of the post-
closing expense escrow. In addition, Escrowed Monies of
approximately $63,000 plus approximately $8,000 of interest was
distributed to Multimedia Cablevision in full settlement of the
pole attachment escrow.
The Partnership recognized a gain of $600,000 for financial
reporting purposes in 1994 on the sale of the Windsor Systems and
a gain of approximately $469,000 in 1996 for settlement of
escrows and other post closing adjustments.
Partnership's Remaining Investments
As of September 30, 1996, the Partnership's investments in media
properties consisted of:
a 51.005% ownership of TCS, which owns (i) 20% of the
outstanding common stock of Fabri Development Corporation
("Fabri"), which in turn owns and operates two network
affiliated television stations serving Terre Haute, Indiana
and St. Joseph, Missouri and (ii) 100% of the outstanding
common stock of TCS Television, Inc., ("TCS Inc.") which in
turn owns the 80% of the outstanding common stock of Fabri
not owned by TCS; and
a 13.8% ownership of MVT Technology Limited ("MVT"), a
United Kingdom corporation whose sole purpose is to manage a
10% interest in Teletext ("Teletext"), a United Kingdom
corporation organized to acquire United Kingdom franchise
rights to provide data in text form to television viewers
via television broadcast sidebands.
The status of the Partnership's remaining investments is
discussed in more detail below.
TCS Television Partners, L.P.
TCS remains in default on payments and covenants under its note
agreements as of September 30, 1996 and expects to default on the
majority of its scheduled principal payments under its note
agreements for the remainder of 1996. TCS engaged in discussions
with its note holders regarding a potential restructuring of
TCS's note agreements, but ultimately decided to pursue a sale of
the TCS stations. The Partnership engaged Furman Selz
Incorporated to assist it in marketing the TCS television
stations for sale.
As of September 17, 1996, TCS entered into an agreement with the
holders of its subordinated debt under which the lenders agreed
that TCS would be entitled to share in the net proceeds of the
sale of the TCS stations in accordance with a formula set forth
in the agreement. The agreement with the lenders is conditioned
on TCS entering into a definitive agreement to sell the stations
by December 31, 1996, and closing the sale promptly after FCC
approval. The amount that the Partnership will receive from the
sale of the TCS stations will depend on the sales price for the
stations but is not expected to be more than a small portion of
the Partnership's initial investment in TCS. There can be no
assurance that TCS will enter into an agreement to sell the TCS
stations or that the conditions to the agreement with its lenders
will be satisfied.
On September 15, 1995, TCS Inc., a wholly owned subsidiary of
TCS, completed the sale to The Spartan Radiocasting Company
("Spartan") of all of the outstanding capital stock of Avant
Development Corporation ("Avant"), a 100% owned corporate
subsidiary of TCS, Inc. which owns WRBL-TV for a net sales price
of $22.7 million. From the proceeds of the sale, a reserve of
approximately $1.4 million was established to cover certain
expenses and liabilities relating to the sale and $1,250,000 was
deposited into an indemnity escrow account to secure TCS Inc.'s
indemnification obligations account to Spartan for taxes and
other liabilities. In addition, approximately $18.9 million was
applied to repay a portion of TCS' total indebtedness of
approximately $43 million as of December 31, 1994, which is
secured by a pledge of the shares of Fabri, another wholly owned
subsidiary of TCS Inc. which owns and operates KQTV-TV, St.
Joseph, Missouri and WTWO-TV Terre Haute, Indiana and
approximately $1.1 million in closing costs. The Partnership
recognized a gain, for financial reporting purposes, on the sale
of Avant of approximately $17.6 million, partially offset by a
reserve for estimated losses on such future sale of the remaining
television stations of TCS of approximately $9.9 million.
While TCS remains in default, the note holders have the option to
exercise their rights under the notes, which rights include the
ability to foreclose on the stock of Fabri, but not the other
assets of the Partnership.
Investments and EMP, Ltd. and MVT
Effective August 12, 1994, the Partnership and European Media
Partners, Ltd. ("EMP, Ltd.") restructured the ownership of EMP,
Ltd. and certain of its subsidiaries in order to enable EMP, Ltd.
to attract additional capital from ALP Enterprises, Inc. ("ALP
Enterprises") and other potential third party investors. In the
restructuring, based on certain representations from EMP, Ltd.
and ALP Enterprises, the Partnership sold to Clarendon and ALP
Enterprises for nominal consideration the Partnership's shares in
EMP, Ltd. Simultaneously, the Partnership and EMP, Ltd. entered
into an agreement whereby EMP, Ltd.'s 10% interest in Teletext
was transferred, together with a 350,000 loan (approximately
$543,000 at then-current exchange rates) from EMP, Ltd. to a
newly formed entity, MVT. After the transfer, the Partnership
owned 13.8% of the issued common shares of MVT, while EMP, Ltd.
owns the remaining 86.2%. MVT's sole purpose is to manage its
10% interest in Teletext. MVT will pay an annual fee to EMP,
Ltd. for management services provided by EMP, Ltd. in connection
with overseeing MVT's investment in Teletext. Following the
restructuring, the Partnership no longer has any interest in EMP,
Ltd.
The Partnership has the right to require EMP, Ltd. to purchase
the Partnership's interest in MVT at any time between December
31, 1994 and December 31, 1997. EMP, Ltd. has the right to
require the Partnership to sell the Partnership's interest in MVT
to EMP, Ltd. at any time between September 30, 1995 and September
30, 1998. In January, 1996, EMP, Ltd. decided to exercise its
right to require the Partnership to sell its interest in MVT to
EMP, Ltd. and notified the Partnership of its intention to
acquire the Partnership's interest. The Partnership is currently
negotiating the terms of such sale. During 1995, the Partnership
received approximately $108,000 in dividends from MVT. In July,
1996, the Partnership received approximately $87,000 in dividends
from MVT.
Summary
In summary of the Partnership's liquidity status, the Partnership
had $1,367,514 as of September 30, 1996 in cash and cash
equivalents. The Partnership has no contractual commitment to
advance funds to any of its existing investments, other than its
obligation to fund cash shortfalls resulting from pre-sale claims
and liquidation costs related to its former investments in
IMPLP/IMPI and Intelidata and certain obligations related to
Paradigm.
3. DISCONTINUED OPERATIONS
Television and Radio Station Segment
Due to the Partnership's decision to dispose of its interest in
its television and radio stations, the Partnership has presented
its Television and Radio Station Segment as discontinued
operations. The Partnership sold two of its stations in 1995
(see Note 2) and intends to sell the remaining two stations.
The net liabilities of discontinued operations of the Television
and Radio Station Segment on the Consolidated Balance Sheets are
comprised of the following:
<TABLE>
<CAPTION>
As of As of
September 30, December 31,
1996 1995
<S> <C> <C>
Property, plant and
equipment, net $ 2,981,775 $ 3,277,806
Intangible assets, net 32,078,275 32,939,937
Other assets 6,701,648 6,801,971
Borrowings (22,516,314) (24,045,943)
Other liabilities (19,245,384) (18,973,771)
Net liabilities of
discontinued operations $ 0 $ 0
</TABLE>
Included in net liabilities of discontinued operations is the
reserve established for expected losses on the disposition of the
remaining stations comprising the Television and Radio Station
Segment (inclusive of expected operating losses through the date
of disposal)(See Note 2).
The aggregate amount of borrowings is detailed as follows:
<TABLE>
<CAPTION> As of As of
September 30, December 31,
1996 1995
<S> <C> <C>
Senior Secured Notes-TCS $ 11,189,510 $ 12,719,139
Senior Secured Subordinated
Notes-TCS 11,326,804 11,326,804
$ 22,516,314 $ 24,045,943
Through September 30, 1996, TCS paid down $1,529,629 on secured
borrowings, which included outstanding principal payments
totaling $299,450 which had become due and owing in 1995.
The Partnership recorded a gain of $1,684,328 on the sale of WMXN-
FM during the first quarter of 1995(see Note 2). In addition,
the Partnership recognized a gain, for financial reporting
purposes, on the sale of Avant of approximately $17.7 million,
offset by a reserve for estimated losses on the sale of the
remaining television stations of TCS for approximately $9.9
million.
Production Segment
Due to the disposition of the Partnership's interests in films
and other projects owned by Paradigm, the Partnership's
Production Segment has been presented as discontinued operations.
The Partnership sold these remaining interests in films in other
projects during 1996 (see Note 2).
The net liabilities of the discontinued operations of the
Production Segment on the Consolidated Balance Sheets are
comprised of the following:
</TABLE>
<TABLE>
<CAPTION>
As of As of
September 30, December 31,
1996 1995
<S> <C> <C>
Cash $ 29,946 $ 57,131
Accounts payable and
accrued liabilities (105,113) (197,842)
Net liabilities of
discontinued operations $ (75,167) $ (140,711)
</TABLE>
The Partnership recorded a gain $135,000 on the sale of films and
other projects owned by Paradigm offset by operational losses of
$69,456. (see Note 2.)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources.
At September 30, 1996, Registrant had $1,367,514 in cash and cash
equivalents.
Registrant will continue to attempt to sell or otherwise dispose
of its remaining investments in media properties, which it
anticipates will occur in 1997.
Although Registrant has no contractual commitment to advance
funds to any of its existing investments, Registrant has an
obligation to fund cash shortfalls resulting from pre-sale claims
and liquidation costs related to its former investments in
IMPLP/IMPI and Intelidata and certain obligations related to
Paradigm.
TCS Television Partners L.P. ("TCS") continues to be in default
on payments and covenants under its note agreements as of
September 30, 1996 and expects to default on the majority of its
scheduled principal payments under its note agreements for the
remainder of 1996. As of September 17, 1996, TCS entered into an
agreement with the holders of its subordinated debt under which
the lenders agreed that TCS would be entitled to share in the net
proceeds of the sale of the TCS stations in accordance with a
formula set forth in the agreement. The agreement with the
lenders is conditioned on TCS entering into a definitive
agreement to sell the stations by December 31, 1996, and closing
the sale promptly after FCC approval. The amount that Registrant
will receive from the sale of the TCS stations will depend on the
sales price for the stations but is not expected to be more than
a small portion of Registrant's initial investment in TCS. There
can be no assurance that TCS will enter into an agreement to sell
the TCS stations or that the conditions to the agreement with its
lenders will be satisfied. TCS is in the process of marketing
the remaining TCS stations for sale.
On May 29, 1996, Registrant sold all of its 1,090,162 shares of
WWC at a price of $23.50 per share in an initial public offering
of shares of common stock of WWC. The 1,090,162 shares of WWC
sold by Registrant represented all of the shares held by
Registrant, after giving effect to a 3.1 to 1 stock split
immediately prior to the offering. As a result, on May 29, 1996,
Registrant received $24,147,088 in net proceeds for its 1,090,162
shares, after payment of underwriter's commission in connection
with the sale.
On April 25, 1996 and May 31, 1996, Registrant received proceeds
of $80,000 and $55,000, respectively, from Paradigm's sale of
Registrant's remaining interests in the films and other projects
developed by Paradigm and assigned to Bob Banner Associates.
Registrant recognized a gain for financial reporting purposes of
$135,000 on the sale of the films and other projects in the
second quarter of 1996, offset by operational losses of $69,456
recognized in the third quarter of 1996. Although Registrant is
no longer advancing funds for continuing operations, Registrant
may be liable for certain liabilities of Paradigm. These
liabilities are reflected in the Discontinued Operations section
of Registrant's financial statements as of September 30, 1996.
On July 29, 1996, Registrant made a cash distribution to Limited
Partners of record on May 31, 1996, of $214 per $1,000 limited
partnership unit totaling $23,999,458 and $242,419 to the General
Partner for a total of $24,241,877 of net distributable proceeds
from the sales of WWC and Paradigm.
On May 18, 1994, Registrant sold the assets of the Windsor
Systems to Tar River Communications Inc. ("Tar River")for
$3,443,200, subject to post-closing adjustments. At closing,
Registrant repaid the $2,050,058 of principal and interest then
due under the Windsor Note, as required by the terms of the
Windsor Note. In addition, as required by the Asset Purchase
Agreement with Tar River, at closing, $342,160 (the "Escrowed
Monies") was placed into two separate escrow accounts to cover
the potential costs of improving pole attachments and other
possible post-closing expenses. The remaining $1,050,982 in
sales proceeds was applied or reserved to pay closing costs of
the transaction and certain pre-closing liabilities to third
parties.
On August 29, 1996, approximately $190,000 was received by
Registrant as final settlement for post-closing adjustments
related to the sale of the Windsor systems to Multimedia
Cablevision. As of September 30, 1996, Escrowed Monies of
approximately $279,000 plus approximately $34,000 of interest was
received by Registrant in full settlement of the post-closing
expense escrow. In addition, Escrowed Monies of approximately
$63,000 plus approximately $8,000 of interest was distributed to
Multimedia Cablevision in full settlement of the pole attachment
escrow.
Registrant recognized a gain of $600,000 for financial reporting
purposes in 1994 on the sale of the Windsor Systems and a gain of
approximately $469,000 in 1996 for settlement of escrows and
other post closing adjustments.
The information set forth in Part I Item 1, Financial Statements
Footnote 2, Liquidity and Capital Resources, appearing on pages
11 through 17 hereof is hereby incorporated herein by reference
and made a part hereof.
Broadcast Television
Operating results for broadcast television stations are affected
by the availability, popularity and cost of programming;
competition for local, regional and national advertising
revenues; the availability to local stations of compensation
payments from national networks with which the local stations are
affiliated; competition within the local markets from programming
on other stations or from other media; competition from other
technologies, including cable television; and government
regulation and licensing. Due primarily to increased competition
from cable television, with that medium's plethora of viewing
alternatives and from the Fox Network, the share of viewers
watching the major U.S. networks, ABC, CBS and NBC, has declined
significantly over the last ten years. This reduction in viewer
share has made it increasingly difficult for local stations to
increase their revenues from advertising. The combination of
these reduced shares and the impact of the economic recession at
the beginning of this decade on the advertising market resulted
in generally deteriorating performance at many local stations
affiliated with ABC, CBS and NBC. Although the share of viewers
watching the major networks has recently leveled off or increased
slightly, additional audience and advertiser fragmentation may
occur if, as planned, one or more of the additional, recently
launched broadcast networks develops program offerings
competitive with those of the more established networks.
Television Industry
The Telecommunications Act of 1996 (the "1996 Act") liberalizes
the television ownership rules by eliminating the national
ownership cap. Subject to the national audience reach limit
(described below), a person or entity may now directly or
indirectly own, operate, or control, or have a cognizable
interest in any number of television stations nationwide. The
1996 Act also raises the national television audience reach limit
from 25% to 35% of all United States households. Although the
1996 Act retains the television duopoly rule, which prohibits
ownership of two TV stations in the same market, the 1996 Act
directs the FCC to reexamine the rule through a rulemaking. With
respect to the radio/TV cross-ownership restriction, the 1996 Act
extends the FCC's one-to-a-market waiver policy to the top 50
markets. Congress also directed the FCC to revise the dual
network rule to permit broadcast stations to affiliate with two
or more networks, unless the combination is composed of (1) two
of the four established networks (i.e., ABC, CBS, NBC, and Fox)
or (2) any of the four networks and one of the two emerging
networks. The 1996 Act eliminates the network/cable cross-
ownership ban, but ensures carriage, channel positioning, and
nondiscriminatory treatment of nonaffiliated broadcast stations.
The 1996 Act also repeals the statutory ban (but not the related
FCC rules) on the common ownership of a television station and a
cable system in situations where the cable system is located
within the Grade B contour of the television station. In
addition, the 1996 Act grandfathers certain television LMAs which
were in existence upon enactment and are in compliance with FCC
regulations. Last, the 1996 Act requires the FCC to review its
ownership rules biennially to determine whether they are
necessary in the public interest.
The 1996 Act also has several provisions relating to broadcast
license reform. The 1996 Act permits the FCC to extend broadcast
license terms for both radio and television stations up to 8
years. Moreover, renewal of a broadcast license is now required
under certain circumstances without considering competing
applications.
On a local basis, FCC rules currently allow an entity to have an
attributable interest (as defined below) in only one television
station in a market. In addition, FCC rules and/or the
Communications Act generally prohibit an individual or entity
from having an attributable interest in a television station and
a radio station (for which a waiver may now be sought in the top
50 markets under the 1996 Act), daily newspaper or cable
television system that is located in the same local market area
served by the television station. Proposals currently before the
FCC would substantially alter these standards. For example, in a
recently initiated rulemaking proceeding, the FCC suggests
narrowing the geographic scope of the local television cross-
ownership rule (the so-called "duopoly" rule) from Grade B to
Grade A contours, and eliminating the television/radio cross-
ownership restriction (the so-called "one-to-a-market" rule)
entirely, or at least exempting larger markets. These rulemaking
proposals may be changed and/or expanded in a new rulemaking
proceeding that is anticipated this year as a result of the 1996
Act. The FCC also recently released a notice of inquiry ("NOI")
soliciting comment on what changes, if any, it should make with
regard to its policies generally prohibiting common ownership of
daily newspapers and radio stations serving the same market.
Under current FCC regulations, holders of debt instruments, non-
voting stock and certain limited partnership interests (provided
the licensee certifies that the limited partners are not
"materially involved" in the management or operation of the
subject media property) are not generally considered to own an
"attributable" interest in a particular media property. In the
case of corporations, ownership of television licenses generally
is "attributed" to all officers and directors of a licensee, as
well as shareholders who own 5% or more of the outstanding voting
stock of a licensee, except that certain institutional investors
who exert no control or influence over a licensee may own up to
10% of such outstanding voting stock before attribution results.
In addition, the FCC's cross-interest policy, which precludes an
individual or entity from having an attributable interest in one
media property and a "meaningful" (but not attributable) interest
in a broadcast, cable or newspaper property in the same area, may
be invoked in certain circumstances to reach interests not
expressly covered by the multiple ownership rules. On January
12, 1995, the FCC released a "Notice of Proposed Rule Making"
designed to permit a "thorough review of its broadcast media
attribution rules." Among other things, the FCC is considering
the following: (i) whether to change the voting stock
attribution benchmarks from five percent to ten percent and, for
passive investors, from ten percent to twenty percent; (ii)
whether there are any circumstances in which non-voting stock
interests, which are currently considered non-attributable,
should be considered attributable; (iii) whether the FCC should
eliminate its single majority shareholder exception (pursuant to
which voting interests in excess of five percent are not
considered cognizable if a single majority shareholder owns more
than fifty percent of the voting stock); (iv) whether to relax
insulation standards for business development companies and other
widely-held limited partnerships; (v) how to treat limited
liability companies and other new business forms for attribution
purposes; (vi) whether to eliminate or codify the cross-interest
policy; and (vii) whether to adopt a new policy which would
consider whether multiple "cross interest" or other significant
business relationships (such as time brokerage agreements, debt
relationships, or holdings of non-attributable interests), which
individually do not raise concerns, raise issues with respect to
diversity and competition.
Recent Developments, Proposed Legislation and Regulation
The FCC, in an order adopted July 28, 1995, eliminated the prime
time access rule ("PTAR"), effective August 30, 1996. PTAR
limited a television station's ability to broadcast network
programming (including syndicated programming previously
broadcast over a network) during prime time hours. The recent
elimination of PTAR could increase the amount of network
programming broadcast over a station affiliated with ABC, NBC or
CBS. Such elimination also could result in (i) an increase in
the compensation paid by the network to a station (due to the
additional prime time during which network programming could be
aired by a network-affiliated station) and (ii) increased
competition for syndicated network programming that previously
was unavailable for broadcast by network affiliates during prime
time.
The FCC, by order adopted August 29, 1995, also announced that it
was rescinding its remaining financial interest and syndication
("fin-syn") rules. The fin-syn rules restricted the ability of
ABC, CBS and NBC to obtain financial interests in, or
participation in syndication of, prime-time entertainment
programming created by independent producers for airing during
the networks' evening schedules.
The FCC currently has under consideration, and the FCC and the
Congress both may in the future adopt, new laws, regulations and
policies regarding a wide variety of matters which could,
directly or indirectly, affect the operation and ownership of the
Registrant's broadcast properties. In addition to the matters
noted above, such pending or potential subject areas include, for
example, the license renewal process, spectrum use fees,
political advertising rates, potential advertising restrictions
on certain products (such as beer and wine), the rules and
policies to be applied in enforcing the FCC's equal employment
opportunity regulations, possible changes in the deductibility of
advertising expenses, and violent and indecent programming. On
June 15, 1995, the FCC initiated a review and update of certain
long-standing rules governing the programming practices of
broadcast television networks and their affiliates.
Specifically, the FCC will consider whether to modify, repeal or
retain the following programming-related rules: (1) the right to
reject rule which ensures that a network affiliate retains the
right to reject network programming; (2) the time option rule
that currently prohibits a network from holding an option to use
specified amounts of an affiliate's broadcast time; (3) the
exclusive affiliation rule that forbids a network from preventing
an affiliate from broadcasting the programming of another
network; and (4) the network territorial exclusivity rule that
prohibits an agreement between a network program not taken by the
affiliate, and prohibits an agreement that would prevent another
station located in a different community from broadcasting any of
the network's programs. Moreover, in a separate but related
proceeding initiated on June 14, 1995, the FCC is considering
whether to modify or repeal rules that currently forbid a network
from influencing an affiliate's advertising rates during non-
network broadcast time, and whether to modify or repeal a rule
forbidding a network from acting as an advertising representative
for the sale of non-network time. Pursuant to the 1996 Act, the
FCC revised its long-standing "dual network" rule to permit
television broadcast stations to affiliate with an entity that
maintains two or more networks, unless the combination is
composed of (a) two of the four existing networks (ABC, CBS, NBC
or Fox) or (b) any of the four existing networks and one of the
two emerging networks (WBN or UPN). Finally, on August 8, 1996,
the FCC adopted new children's television rules which include a
so-called "processing guideline" that, for the first time,
establishes a weekly standard of three hours of educational and
informational children's programming that the FCC will use in
reviewing future license renewal applications of individual
television stations.
On October 7, 1996, the Supreme Court heard oral arguments in a
case testing the constitutionality of the signal carriage (or
"must-carry") provisions of the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act").
The must-carry rules generally require cable systems to carry the
signals of eligible local broadcast stations. A decision is
expected this Court term.
Advanced Television
The FCC has proposed the adoption of rules for implementing
advanced television ("ATV") service in the United States.
Implementation of digital ATV will improve the technical quality
of television signals receivable by viewers and will provide
broadcasters the flexibility to offer new services, including
high-definition television ("HDTV"), simultaneous multiple
programs of standard definition television ("SDTV"), and data
broadcasting.
The FCC must adopt ATV service rules and a table of ATV
allotments before broadcasters can provide these services made
possible by the new technology. In 1995, the FCC issued a notice
of proposed rulemaking ("NPRM") inviting comment on a broad range
of issues related to the implementation of ATV, particularly the
transition to digital broadcasting, and in August 1996 it
similarly invited comment on its proposed ATV channel
allocations. A decision on the ATV allotment plan is expected in
1997.
Absent further legislation requiring the auctioning of ATV
channels, it is expected that the FCC will assign all existing
television licensees and permittees a second channel on which to
provide ATV simultaneously with their current "NTSC" service.
After a period of years (the 1992 proposal was for 15 years,
although that period of time is under review in the pending FCC
proceeding) broadcasters would be required to cease NTSC
operations and broadcast only with the newer digital ATV
technology. It is also possible that the NTSC channel, once
returned to the FCC, will be auctioned for other use. Under
certain circumstances, conversion to ATV operations could reduce
a station's geographical coverage area, the majority of stations,
however, will obtain service areas that match or exceed the
limits of existing operations. Recent debates in Congress call
into question whether the transition to ATV will proceed as
planned.
Due to additional equipment costs, implementation of ATV will
impose near-term financial burdens on television stations
providing the service. If ATV stations are licensed by auction,
this additional expense will apply to broadcasters who choose to
implement ATV. At the same time, there is a potential for
increased revenues to be derived from ATV.
Results of Operations.
For the thirteen and thirty-nine week periods ended September 30,
1996 and September 30, 1995:
Registrant generated net income of approximately $561,000 in the
thirteen weeks ended September 30, 1996, which was comprised of
interest income of approximately $142,000, a dividend received
from an investment in MVT of approximately $87,000, and
approximately $469,000 from monies released from escrow and other
post closing adjustments relating to the sale of the Windsor
Systems, partially offset by general and administrative expenses
and operational losses incurred in the production segment. The
decrease in net income of approximately $6.6 million from the
thirteen weeks ended September 30, 1995, is primarily
attributable to a one time gain recognized in the third quarter
of 1995, for financial reporting purposes, of approximately $17.7
million on the sale of Avant, offset by a reserve for estimated
losses on the sale of the remaining television stations of TCS of
approximately $9.9 million.
Registrant generated net income of approximately $23.6 million in
the thirty-nine weeks ended September 30, 1996, which was
comprised of a gain of approximately $22.8 million on the sale of
the stock of Western Wireless Corporation, interest income of
approximately $269,000, a dividend received from an investment in
MVT of approximately $87,000, approximately $469,000 from monies
released from escrow and other post closing adjustments relating
to the sale of the Windsor Systems, a gain of $135,000 on the
sale of Registrant's interests in films and other projects
developed by Paradigm, offset by operational losses at Paradigm
of approximately $70,000 and general and administrative expense
of approximately $84,000. The increase in net income of
approximately $15.9 million from the thirty-nine weeks ended
September 30, 1995, is primarily attributable to these one time
gains on the sale of such media properties of Registrant in 1996,
offset by the one-time gain on sale of radio station WMXN-FM of
approximately $1.7 million and a gain of approximately $17.7
million on the sale of Avant, offset by a reserve for estimated
losses on the sale of the remaining television stations of TCS of
approximately $9.9 million.
PART II - OTHER INFORMATION.
Item 3. Defaults Upon Senior Securities.
The information set forth in Part I Item 1, Financial Statements
Footnote 2, Liquidity and Capital Resources appearing on pages 11
and 17 hereof and the information set forth in Part I Item 2,
Management's Discussion and Analysis of Financial Condition and
Results of Operations appearing on page 20 hereof is hereby
incorporated herein by reference and made a part hereof.
Item 6. Exhibits and Reports on Form 8-K.
A).Exhibits:
Exhibit # Description
10.01 Agreement dated as of September 17,
1996 between TCS and Cigna Investments
Inc.
27. Financial Data Schedule
B).Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: RP Opportunity Management, L.P.
General Partner
By: IMP Opportunity Management Inc.
Dated: November 13, 1996 /s/ I. Martin Pompadur
I. Martin Pompadur
Director and President
(principal executive officer
of the Registrant)
Dated: November 13, 1996 /s/ Elizabeth McNey Yates
Elizabeth McNey Yates
Executive Vice President
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: Media Opportunity Management Partners
General Partner
By: ML Opportunity Management Inc.
Dated: November 13, 1996 /s/ Kevin K. Albert
Kevin K. Albert
Director and President
Dated: November 13, 1996 /s/ Robert F. Aufenanger
Robert F. Aufenanger
Director and Executive Vice President
Dated: November 13, 1996 /s/ Diane T. Herte
Diane T. Herte
Treasurer
(principal accounting officer and
principal financial officer
of the Registrant)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from the quarter ended
September 30, 1996 Form 10-Q Consolidated Balance
Sheets and Consolidated Statements of Operations as of
September 30, 1996, and is qualified in its entirety
by reference to such financial statements.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,368
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,385
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 646
<TOTAL-LIABILITY-AND-EQUITY> 1,385
<SALES> 0
<TOTAL-REVENUES> 23,667
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 23,583
<INCOME-TAX> 0
<INCOME-CONTINUING> 23,583
<DISCONTINUED> 66
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,649
<EPS-PRIMARY> 208.76
<EPS-DILUTED> 0
</TABLE>
September 17, 1996
Lenders identified on Schedule 1
Gentlemen:
TCS Television Partners, L.P. and TCS Television, Inc.
(together "TCS") refer to (1) the Note Purchase Agreements dated
as of June 1, 1990, as amended by an Amendment and Waiver
Agreement dated as of December 14, 1992 (the "Agreement"), and
(2) the letter agreement (the "Letter Agreement") between TCS and
you dated June 28, 1995. Capitalized terms used in this letter
without definition have the meanings given to them in the
Agreement.
In the Letter Agreement, you agreed to forego certain
payments in connection with the repayment of the Subordinated
Notes from the proceeds of the sales of the stock of Avant
Development Corporation ("Avant") and Fabri Development
Corporation ("Fabri").
This will confirm our further agreement as follows:
1. You hereby reconfirm your consent to the sale of
the stock of Fabri. From the proceeds of the sale of the stock
of Fabri (the "Proceeds"), TCS may retain the amount (the
"Reserved Amount") required to pay or reserve for payment any
liabilities or obligations (contingent or otherwise) of TCS;
provided, however, no amounts may be paid with respect to the
indebtedness for borrowed money or the consulting fees payable to
affiliates of TCS (the "Affiliate Liabilities"), except as
provided in paragraph 2(b), (c) and (d).
2. You hereby agree to release your lien on the
shares of Fabri and any other security for the Senior Notes and
the Subordinated Notes upon the sale of the stock of Fabri. At
the closing of the sale of the shares of Fabri the Proceeds less
the Reserved Amount shall be paid, and any amounts which TCS
thereafter determines to release from the Reserved Amount and any
amounts released from any escrow in favor of the buyer of the
stock of Fabri and any amounts released from any reserve or
escrow relating to the sale of Avant, shall be paid, as follows:
(a) first, there shall be payable to you an
amount equal to the sum of (1) the then outstanding principal
amount of the Senior Notes, (2) accrued but unpaid interest, any
Make-Whole Premium and any other amounts payable on the Senior
Notes, (3) the outstanding principal amount of the Subordinated
Notes, and (4) $1,326,805, representing the amount of interest on
the Subordinated Notes that was capitalized as of December 14,
1992;
(b) the next $3.5 million of the Proceeds shall
be applied to satisfy the Affiliate Liabilities or distributed to
the partners of TCS;
(c) the next $4 million of Proceeds shall be
applied 50% to satisfy Affiliate Liabilities or distributed to
the partners of TCS, and 50% to pay to the holders of the
Subordinated Debt; and
(d) any additional Proceeds shall be applied 80%
to satisfy Affiliate Liabilities or distributed to the partners
of TCS and 20% to pay to the holders of the Subordinated Debt.
Upon payment to you of the amounts payable pursuant to
this paragraph 2, you shall have no further rights or claims
against TCS.
(3) The foregoing agreement shall only be effective
if a definitive agreement to sell the stock of Fabri is executed
on or before December 31, 1996 with a bona fide third party
purchaser which agreement provides for a closing within 120 days
after execution of the agreement, subject to extension of the
closing date only if the approval of the Federal Communications
Commission has not become final by that time, in which case the
closing shall be held within 10 days after such approval becomes
final.
(4) TCS agrees to proceed diligently in all respects
to identify a buyer and to negotiate in good faith to enter into
a definitive agreement to sell the stock of Fabri provided that
the purchase price for the stock is at least $28.5 million and
provided further that the terms of the definitive agreement (and
particularly the indemnification provisions) are satisfactory to
TCS, that there has been no significant change in the market for
television stations generally and no significant change in the
operations of the Fabri stations or the markets in which the
Fabri stations are located, and that no other significant event
occurs between the date hereof and the date of signing the
definitive agreement, which causes the general partner of TCS to
reasonably conclude that a sale of the stock of Fabri at that
time would not be in the best interests of the partners of TCS.
Please sign the enclosed copy of this letter to
indicate your agreement to the foregoing.
Very truly yours,
TCS TELEVISION PARTNERS, L.P.
By:/s/ Elizabeth McNey Yates
TCS TELEVISION, INC.
By:/s/ Elizabeth McNey Yates
CONSENT RECONFIRMED AND AGREED:
CENTURY INDEMNITY COMPANY
By: CIGNA INVESTMENTS, INC.
By: /s/ James R. Kuzemchak__
Name: James R. Kuzemchak
Title: Managing Director
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
By: CIGNA INVESTMENTS, INC.
By: /s/ James R. Kuzemchak
Name: James R. Kuzemchak
Title: Managing Director
CIGNA PROPERTY AND CASUALTY
By: CIGNA INVESTMENTS, INC.
By: /s/ James R. Kuzemchak__
Name: James R. Kuzemchak
Title: Managing Director
LIFE INSURANCE COMPANY OF
NORTH AMERICA
By: CIGNA INVESTMENTS, INC.
By: /s/ James R. Kuzemchak__
Name: James R. Kuzemchak
Title: Managing Director
