SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the year ended
December 31, 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) 236-6577
Securities registered pursuant to Section 12(b) of the Act:
None
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in a definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Part I.
Item l. Business.
Formation
ML Media Opportunity Partners, L.P. (the "Partnership" or
"Registrant"), a Delaware limited partnership, was organized on
June 23, 1987. Media Opportunity Management Partners, a New York
general partnership (the "General Partner"), is Registrant's sole
general partner. The General Partner is a joint venture,
organized as a general partnership under New York law, between RP
Opportunity Management, L.P. ("RPOM") and ML Opportunity
Management, Inc., ("MLOM"). MLOM is a Delaware corporation and
an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc.
and an affiliate of Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPF&S"). RPOM is organized as a limited
partnership under Delaware law, the general partners of which are
EHR Opportunity Management, Inc., and IMP Opportunity Management
Inc. As a result of the death of Elton H. Rule, the owner of EHR
Opportunity Management, Inc., the general partner interest of EHR
Opportunity Management, Inc. may either be acquired by IMP
Opportunity Management Inc. or its designee. The General Partner
was formed for the purpose of acting as general partner of
Registrant.
Registrant was formed to acquire, finance, hold, develop,
improve, maintain, operate, lease, sell, exchange, dispose of and
otherwise invest in and deal with media businesses and direct and
indirect interests therein. During 1996, Registrant continued to
operate its remaining media businesses while continuing to
dispose of its investments.
Registrant received initial capitalization of $4,000 and $100
from the General Partner and initial limited partners,
respectively. On January 14, 1988, Registrant commenced the
offering through MLPF&S of up to 120,000 units of limited
partnership interest ("Units") at $1,000 per Unit. On March 23,
1988 and April 27, 1988, Registrant had its first and second
closings on the sale of 99,131 and 13,016 Units, respectively,
thereby admitting additional limited partners to Registrant. As
of December 31, 1996, total limited partners' and General
Partner's capital contributions were $112,147,100 and $1,132,800,
respectively.
Media Properties
Registrant has completed the sale of the following Media
properties:
As of July 1, 1993, Registrant entered into three
transactions to sell the business of International Media
Publishing, L.P. ("IMPLP")/International Media Publishing, Inc.
("IMPI") and Intelidata Limited ("Intelidata");
On September 30, 1993, Maryland Cable consummated the sale
of cable television systems owned and operated in Leesburg,
Virginia;
On May 18, 1994, Registrant completed the sale of the assets
of its cable television systems in North Carolina (the "Windsor
Systems");
Effective September 30, 1994, Registrant disposed of the
business and assets of its cable television systems in Maryland
("Maryland Cable");
On February 21, 1995, Registrant completed the sale of its
radio station in Virginia ("WMXN-FM");
On September 15, 1995, Registrant completed the sale of all
of the outstanding capital stock of Avant Development
Corporation, the corporation which owned television station WRBL-
TV;
On May 29, 1996, Registrant sold all of its shares of
Western Wireless Corporation ("WWC") in an initial public
offering of shares of common stock of WWC; and
On May 31, 1996, Registrant completed the sale of films and
other projects developed by Paradigm Entertainment, L.P.
("Paradigm"), a California based company and a participating
interest in Bob Banner Associates Development ("BBAD").
Although no assurances can be made concerning the precise timing
of the ultimate disposition of Registrant's remaining media
properties, Registrant will continue to sell or otherwise dispose
of its remaining investments in such properties. Registrant
anticipates that such ultimate disposition will occur in 1997.
As of December 31, 1996, Registrant's investments in media
properties consisted of the following and is detailed below:
a 51.005% ownership of TCS Television Partners, L.P.
("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 WTWO-TV
serving Terre Haute, Indiana and KQTV-TV serving 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. On December
30, 1996, TCS and its wholly owned subsidiary, TCS Inc. entered
into a Stock Purchase Agreement with Nexstar Broadcasting Group,
L.L.C. to sell all of the outstanding shares owned in Fabri; and
a 13.8% ownership of MV Technology Limited ("MVT"), a United
Kingdom corporation whose sole purpose is to manage its sole
asset, a 10% interest in Teletext ("Teletext"), giving Registrant
an indirect 1.38% interest in 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.
Maryland Cable Corp.
On May 13, 1988, Registrant entered into a Securities Purchase
Agreement (the "Prime Agreement") with various entities (the
"Prime Sellers") that, directly or indirectly, owned all the
partnership interests in Prime Cable of Maryland Limited
Partnership ("Prime Cable"). Prime Cable owned and operated
cable television systems in the suburban Washington, D.C. areas
of northern Prince George's County, Maryland and Leesburg,
Virginia (herein referred to as the "Maryland Cable Systems" or
the "Systems"). The cable television system owned and operated
(prior to the sale discussed below) in Leesburg, Virginia is
herein referred to as the "Leesburg System."
The purchase of Prime Cable (the "Acquisition") closed on
November 17, 1988. The purchase price was $198,000,000, of which
approximately $54,152,000 was used to repay Prime Cable's
existing long-term debt and the balance of which was paid to the
Prime Sellers. Registrant also incurred approximately $7,000,000
in financing costs and other transaction fees. Registrant
effected the purchase of Prime Cable through its subsidiaries
Maryland Cable Holdings Corp. ("Holdings") and Maryland Cable
Corp. ("Maryland Cable"), which was wholly-owned by Holdings.
On September 30, 1993, Maryland Cable consummated the sale of the
Leesburg System to Benchmark Acquisition Fund I Limited
Partnership (the "Buyer") for a base payment of approximately
$10,180,000, of which $7,250,000 was paid to Citibank, N.A.
("Citibank"), to discharge $6,750,000 of bank debt and to pay a
fee of $500,000 due in connection with the 1991 amendment to the
Maryland Cable Loan Agreement. An additional amount of $250,000
was deposited into an indemnity escrow account for a period of
one year, which was then paid to Citibank. Following the payment
of certain fees and expenses, Maryland Cable retained
approximately $2,480,000 in proceeds and was entitled to
additional payments following the closing based upon the amount
of its accounts receivable, the number of subscribers served at
closing and certain other adjustments. The Buyer is an affiliate
of Benchmark Communications but is not affiliated with Maryland
Cable or Registrant. This sale resulted in an approximate $4.0
million gain for financial reporting purposes.
Despite the restructuring on September 6, 1991 of its senior bank
credit arrangements (as restructured the "Amended Credit
Agreement") and despite the sale of the Leesburg System, Maryland
Cable was unable to repay the principal amount due under the
Amended Credit Agreement ($85 million) when such borrowings
matured on December 31, 1993. On January 18, 1994, as a result of
the default under the Amended Credit Agreement, the holders of
the senior bank debt exercised their rights under events of
default to collect Maryland Cable's lockbox receipts and apply
such receipts towards the repayment of the outstanding senior
bank debt, related accrued interest, and fees and expenses. As
of March 9, 1994, one day prior to the filing of the Prepackaged
Plan (see below), the holders of the senior bank debt applied
approximately $4,800,000 in lockbox receipts towards the
repayment of the outstanding senior bank debt. Also, as a result
of the default of the senior bank debt, there was also a default
under Maryland Cable's Senior Subordinated Discount Notes due in
1998 (the "Discount Notes").
On December 31, 1993, Registrant, Maryland Cable, Maryland Cable
Holdings Corp. ("Holdings") and ML Cable Partners (see below)
entered into an Exchange Agreement with Water Street Corporate
Recovery Fund I, L.P. (the "Water Street Fund") providing for a
restructuring of Maryland Cable. The Water Street Fund held
approximately 85% of the outstanding principal amount of the
Discount Notes. Also, as of December 31, 1993, another holder of
the Discount Notes (representing 7% of the outstanding principal
amount) joined in the Exchange Agreement.
As of March 10, 1994, requisite approvals for the restructuring
of Maryland Cable outlined in the Exchange Agreement had not been
received from the requisite 99% of the holders of the Discount
Notes or from the senior lenders under the Amended Credit
Agreement. As a result, as provided for in the Exchange
Agreement, on March 10, 1994 Maryland Cable and Holdings filed a
consolidated plan of reorganization of Maryland Cable and
Holdings (as originally filed and, as amended (see below), the
"Prepackaged Plan") under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court-Southern
District of New York (the "Bankruptcy Court"). On May 2, 1994,
the Bankruptcy Court confirmed the Amended Prepackaged Plan of
Reorganization of Maryland Cable and Holdings (the "Prepackaged
Plan").
On September 30, 1994, the Amended Prepackaged Plan was
consummated. Pursuant to the Prepackaged Plan, Maryland Cable
and Holdings were liquidated into Maryland Cable Partners, L.P.,
a newly formed limited partnership ("Newco"). As a result of the
liquidation, Newco acquired all of the assets of Maryland Cable,
subject to all of the liabilities of Maryland Cable that were not
discharged pursuant to the Prepackaged Plan.
Under the Prepackaged Plan, Registrant received a 4.9% interest
in Newco in satisfaction of (i) the $3,600,000 in subordinated
promissory notes held by Registrant, plus accrued interest
thereon, (ii) the $5,379,833 in deferred management fees payable
to Registrant, and (iii) certain other amounts payable to
Registrant. Registrant immediately exercised its right to sell
its 4.9% interest in Newco to the Water Street Fund and certain
other holders of the Notes for an aggregate price of $2,846,423.
Upon the consummation of the Prepackaged Plan, ML Cable Partners,
which is 99% owned by Registrant, received payment in full of the
unpaid portion of the $6,830,000 participation in the senior bank
debt of Maryland Cable held by ML Cable Partners, together with
accrued interest thereon. In addition, MultiVision Cable TV
Corp. received a payment of $500,000 in partial settlement of
severance and other costs relating to the termination of
MultiVision as manager of the Maryland Cable Systems. Registrant
recognized a gain for financial reporting purposes on the
disposition of Maryland Cable of approximately $130 million.
Such gain resulted primarily from the forgiveness of debt at the
subsidiary level and is classified as an extraordinary gain on
Registrant's Consolidated Statements of Operations.
Included in this gain is approximately $450,000 of management
fees which Registrant was entitled to receive for managing the
Maryland Cable Systems from January 1, 1994 through September 30,
1994. Registrant received this amount plus an additional
management fee of $128,212 during 1995.
Windsor Systems
On April 13, 1988, Registrant purchased all of the assets of the
community antenna television systems owned by Windsor
Cablevision, Inc. ("Windsor") serving four communities in North
Carolina (the "Windsor Systems"). The purchase price of the
Windsor Systems was $4,287,500, of which $1,257,500 was paid for
in cash and $3,030,000 was financed by a seller note (the
"Windsor Note").
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, of which the balance as of December 31, 1996 is
approximately $1,012,000.
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 December 31, 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.
WMXN-FM
On May 10, 1989, Registrant purchased all of the assets of radio
station WXRI-FM in Norfolk, Virginia, which it renamed WZCL-FM
upon acquisition and subsequently renamed WMXN-FM ("WMXN-FM").
The purchase price of approximately $5 million was funded solely
with Registrant equity.
Registrant entered into an agreement (the "Option Agreement"),
effective January 25, 1994, with US Radio, Inc. ("US Inc."), a
Delaware corporation, and an affiliated entity, US Radio, L.P.
("US Radio"), a Delaware limited partnership. Pursuant to the
Option Agreement, Registrant granted US Inc. an option (the
"Call"), exercisable at any time prior to January 15, 1995, to
purchase substantially all of the assets of WMXN-FM for a cash
price of $3.5 million. On September 23, 1994, US Inc. exercised
the Call. On October 24, 1994, Registrant and US Radio of
Norfolk, Inc. ("US Norfolk"), an affiliate of US Inc. to which US
Inc. assigned its option to purchase WMXN-FM, filed an
application with the FCC requesting assignment of the license of
WMXN-FM from Registrant to US Norfolk pursuant to the terms of an
Asset Purchase Agreement.
On February 21, 1995, US Norfolk purchased WMXN-FM for
approximately $3.5 million. Following payment of a transaction
fee to a third party unaffiliated with Registrant and/or its
affiliates, approximately $3.3 million was remitted to
Registrant. Registrant recognized a gain of $1.7 million for
financial reporting purposes in 1995 on the sale of WMXN-FM. In
addition, during 1995 and 1996, approximately $400,000 and
$66,000, respectively, was collected on receivables by Registrant
from WMXN-FM.
TCS Television Partners, L.P.
On January 17, 1990, Registrant entered into a limited
partnership agreement with Riverdale Media Corporation
("Riverdale"), forming TCS. The agreement was subsequently
amended to include Commonwealth Capital Partners, L.P.
("Commonwealth"),which is not affiliated with Registrant, as a
limited partner. Initially, Riverdale was the general partner of
TCS, and owned 20.01% of the entity. Registrant and Commonwealth
were limited partners owning 41% and 38.99%, respectively.
Riverdale contracted with ML Media Opportunity Consulting
Partners, a wholly-owned subsidiary of Registrant, to provide
management services for TCS.
On June 19, 1990, TCS completed its acquisition of three network
affiliated television stations; WRBL-TV, the CBS affiliate
serving Columbus, Georgia; WTWO-TV, the NBC affiliate serving
Terre Haute, Indiana; and KQTV-TV, the ABC affiliate serving St.
Joseph, Missouri.
The purchase price of $49 million, a non-compete payment of $7
million, and starting working capital and closing costs of
approximately $5 million were funded by the sale by TCS of senior
notes totaling $35 million and subordinated notes totaling $10
million, and by equity contributions of $16 million, of which
approximately $8.15 million was contributed by Registrant.
Registrant's total equity contribution and incurred costs were
approximately $8.3 million as of December 31, 1994 (including
approximately $170,000 noted below). In addition, Registrant had
loaned TCS approximately $400,000 for working capital purposes
during 1991.
On December 14, 1992, Registrant concluded agreements to
restructure the debt and ownership arrangements of TCS. TCS had
been unable to generate sufficient funds from operations to meet
fully its original obligations under its note purchase
agreements. TCS's senior debt was amended to reschedule
principal payments, and its subordinated lenders agreed to defer
all scheduled interest and principal payments through December
15, 1995. As payment for a transaction fee, the senior lenders
were issued additional notes, due May 31, 1997, in the amount of
$350,000. All previous defaults under the senior and
subordinated debt were waived. The new debt arrangements were
structured to provide TCS with three years following the
restructuring in which to improve operating performance and avoid
selling TCS in the then-illiquid transaction market for broadcast
television stations.
Concurrently, the equity partners in TCS agreed to seek
regulatory approval to alter the ownership structure of the
company. On March 26, 1993, Registrant was granted such approval
by the FCC. As a result, on March 26, 1993, Registrant and
Commonwealth purchased the 20.01% ownership interest held by
Riverdale. On March 26, 1993, a wholly-owned subsidiary of
Registrant, TCS Management Corporation became the new sole
general partner of TCS and Registrant's total ownership interest
in TCS increased from 41% to 51.005% (1% of which is the general
partner interest). Registrant utilized approximately $170,000 of
its working capital reserve to acquire the additional 10.005%
interest.
TCS continues to be in default on payments and covenants under
its note agreements as of December 31, 1996. TCS failed to make
scheduled principal payments during 1995 and 1996 and expects to
default on the majority of its scheduled principal payments under
its note agreements during 1997.
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 Registrant. TCS entered into an agreement (the "Sub-
Debt Proceeds Sharing Agreement") dated September 17, 1996 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 such agreement. The Sub-Debt Proceeds Sharing Agreement
is conditioned on TCS entering into a definitive agreement to
sell the stations by December 31, 1996, and closing the sale
promptly after Federal Communication Commission ("FCC") approval.
On December 30, 1996, TCS and TCS Inc. entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement") with Nextar
Broadcasting Group, L.L.C. ("Nextar") to sell all of the
outstanding shares of their jointly owned subsidiary, Fabri,
which owns and operates two television stations, WTWO-TV in Terre
Haute, Indiana and KQTV-TV in St. Joseph, Missouri. The agreed
upon base purchase price for Fabri is $31,800,000 and is subject
to certain adjustments, including an adjustment relating to the
working capital of Fabri and to the establishment of escrow
accounts, as provided in the Stock Purchase Agreement. The net
proceeds generated from the sale of Fabri, after payment of the
expenses and liabilities relating to the sale, will be applied,
pursuant to the provisions set forth in the Sub-Debt Proceeds
Sharing Agreement to repay the existing indebtedness of TCS,
including indebtedness to its affiliates, with the remainder, if
any, to be distributed to the partners of TCS. There is no
guarantee that Registrant will recover more than a small portion
of its initial investment in TCS.
Consummation of the sale of Fabri pursuant to the terms of the
Stock Purchase Agreement is subject to the satisfaction of
certain conditions, including obtaining the approval from the FCC
to transfer control of the FCC licenses. On February 21, 1997,
the FCC granted consent to the transfer of control of Fabri from
TCS Inc. to Nexstar. The FCC has until April 2, 1997, to
reconsider the transfer on its own motion, after which the
transfer of control will no longer be subject to reconsideration
or appeal. Furthermore, if the sale is not consummated by
September 30, 1997, both parties become vested with the right to
terminate the Stock Purchase Agreement.
On September 15, 1995, TCS Inc. 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 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 was
secured by a pledge of the shares of Fabri, and approximately
$1.1 million in closing costs. Registrant 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. During 1997,
$1 million plus accrued interest of approximately $74,000 was
returned to TCS from the indemnity escrow relating to the sale of
Avant. Registrant expects that these funds will be used to pay
down the indebtedness of TCS.
Refer to Notes 2 and 4 of "Item 8. Financial Statements and
Supplementary Data" for further information regarding TCS's debt.
Paradigm Entertainment
On June 15, 1989, Registrant entered into a limited partnership
agreement (the "Paradigm Agreement") with ML Media Opportunity
Productions, Inc. ("Productions"), the Gary L. Pudney Co. ("GLP
Co."), and Bob Banner Associates Inc. ("Associates") to form
Paradigm Entertainment L.P. ("Paradigm"), a broadcast and cable
television production company based in California. Productions
is a corporation, 100% owned by Registrant, formed to hold a 1%
general partnership interest in Paradigm. Initially, Registrant
owned 49% of Paradigm as a limited partner, while GLP Co. and
Associates each had a 25% ownership share in Paradigm as general
partners. GLP Co. pledged the exclusive services of Gary L.
Pudney and Associates pledged the exclusive services of Bob
Banner for the duration of Paradigm's operations. Registrant
committed to fund up to $10 million to Paradigm, to be
contributed over a period of up to five years.
On May 31, 1991, Registrant, Productions, GLP Co. and Associates
entered into a new agreement (the "Revised Paradigm Agreement")
that amended the original Paradigm Agreement. Under the terms of
the Revised Paradigm Agreement, effective June 16, 1991 the
general partner interests of GLP Co. and Associates in Paradigm
were converted to limited partner interests. GLP Co. and
Associates each retained their 25% ownership in Paradigm and
Registrant retained its 50% beneficial interest. Under the terms
of the Revised Paradigm Agreement, Paradigm retained ownership of
all program concepts developed by Paradigm prior to June 15,
1991, but assigned the task of further developing these program
concepts to GLP Co. and/or Associates as independent contractors.
Per the Revised Paradigm Agreement, if GLP Co. or Associates were
to develop any new program concepts during the period in which
they were acting as independent contractors for Paradigm, GLP Co.
or Associates would be required to offer Paradigm the right to
finance the production of such program concepts. Regardless of
Paradigm's decision to finance the further development of the new
program concepts, Paradigm would receive a share of the profits
and fees, if any, from such new program concepts.
The consulting agreements described above expired on December 31,
1991. Effective with the expiration, Associates continued,
without a formal agreement, to develop projects to offer to
Paradigm. As was the case under the Revised Paradigm Agreement,
Registrant had the option of financing such projects in return
for equity interests in such projects.
Effective June 23, 1992, Paradigm formed a general partnership
with Associates to start a new production company Bob Banner
Associates Development ("BBAD"). Paradigm and/or BBAD are not
currently producing television programs, and Registrant has not
advanced any funds to Paradigm and/or BBAD since the second
quarter of 1992. Paradigm and/or BBAD took several steps in 1992
and 1993 to reduce operating costs, primarily by reducing the
number, and compensation, of employees. However, Paradigm and/or
BBAD did not operate profitably during 1993, and were dependent
on outside sources, primarily Bob Banner Associates Inc.
("Associates"), to finance BBAD's monthly operating costs.
Registrant elected not to fund such operating costs. Due in part
to Registrant's unwillingness to advance additional funds to fund
the continuing operating losses and possible winding down of
Paradigm's and BBAD's operating activities, Registrant recorded
in 1993 a writedown of approximately $516,000 of its investment
in Paradigm and BBAD to reduce Registrant's net investment to
zero. Registrant actively sought a strategic partner that would
share in meeting Paradigm's and/or BBAD's potential future
funding needs but was unable to identify such a partner.
Paradigm and/or BBAD have no liability for borrowed funds.
Registrant has entered into an agreement with Associates under
which Paradigm retains the three television movies and the series
developed by it, and the other projects and program concepts
developed by Paradigm and/or BBAD were assigned to Associates,
and Paradigm retained a percentage interest in all such projects
and concepts.
During 1996, Registrant received proceeds of $135,000 from the
sale of the remaining interests in the films and other projects
developed by Paradigm. Registrant recognized a gain for
financial reporting purposes of $135,000 on the sale of these
films and other projects in 1996, offset by operational losses of
$53,201. Although Registrant is no longer advancing funds for
continuing operations and Paradigm has no operating assets,
Registrant may be liable for certain liabilities of Paradigm.
These liabilities are reflected in the discontinued operations of
the Production Segment on the Consolidated Balance Sheet as of
December 31, 1996.
GCC/WWC
On May 24, 1989, Registrant entered into a subscription and
purchase agreement (the "Subscription Agreement") to purchase
500,000 shares of Series A Convertible Preferred Stock
("Preferred Stock") of General Cellular Corporation ("GCC") at
$30 per share, for a total subscription of $15 million. GCC is
an owner and operator of cellular telephone systems. In 1990,
Registrant wrote down the value of its investment in GCC by $15
million, the full value of its preferred stock investment in GCC,
because of GCC's inability at that time to raise the financing
critical to its viability as a going concern.
On or about July 30, 1991, GCC's primary lender, NovAtel, sold
its loans due from GCC and its rights under the loan agreements
with GCC to an investor group named GCC Holdings Corporation,
which was comprised primarily of Hellman and Friedman and Stanton
Communications, Inc. (the "Investors"). GCC and the Investors
agreed to pursue a plan of reorganization by which most of that
debt would be converted into 90% ownership of GCC. On October
21, 1991, GCC filed a bankruptcy petition and plan of
reorganization under Chapter 11 of the U.S. Bankruptcy Code to
implement this reorganization plan.
On November 1, 1991, in connection with the plan of
reorganization, Registrant sold a $500,000 note that it purchased
on June 15, 1990 to the Investors for $275,000 in cash.
On March 17, 1992, a plan of reorganization under Chapter 11 of
the U.S. Bankruptcy Code became effective, in which GCC was
recapitalized by an investor group comprised primarily of the
Investors. As part of the plan of reorganization, GCC's
outstanding debt, which had previously been purchased by Hellman
and Friedman, was reduced from approximately $97 million to
$20 million. Under the plan, Registrant's 500,000 shares of
Preferred Stock were converted to 199,281 shares of common stock,
prior to the effect of Registrant's exercise of rights pursuant
to a rights offering. The rights offering provided that existing
shareholders, including Registrant, could purchase additional
ownership in GCC. Each right consisted of the right to purchase
from GCC a unit consisting of one share of common stock and $9.09
in principal amount of senior notes, for a total unit price of
$19.09. On March 4, 1992, Registrant exercised 52,384 rights,
for a total price of $1,000,011. By exercising these rights,
Registrant purchased: a) 52,384 shares of common stock of GCC,
which increased Registrant's ownership position in GCC to 251,665
shares; and b) senior notes with a face value of $476,171. On
August 19, 1992, GCC redeemed the senior notes, repaying to
Registrant $476,171, plus accrued interest.
On October 26, 1992, GCC completed a second rights offering
pursuant to which existing shareholders, including Registrant,
were issued rights to purchase one additional share of common
stock for each 1.75 shares owned, for a price of $10.00.
Registrant purchased 100,000 additional shares for an investment
of $1,000,000. In addition, Registrant sold 43,809 rights to
purchase shares for a price of $120,000 to an unaffiliated
entity. GCC raised $25,281,000 in the offering to assist it in
completing its business plan of purchasing and operating clusters
of cellular systems in certain geographic areas.
Effective November 3, 1993, Registrant sold 61,160 rights to
purchase shares for a price of $100,000 to several unaffiliated
entities.
On January 20, 1994, the majority stockholders of GCC and certain
holders of interest 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.
Registrant 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, Registrant exchanged its
shares in GCC for an equal number of shares in Western Wireless
Corporation ("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 Registrant's interests in Markets and
approximately 95% of the outstanding common stock of GCC.
Subsequently, WWC acquired the remaining shares and now owns 100%
of the outstanding common stock of GCC.
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. Registrant recognized a gain of approximately
$22.8 million on the sale of its WWC stock.
Investments and EMP, Ltd. and MVT
On September 1, 1989, Registrant entered into various agreements
with Peter Clark ("Clark") and Alan Morris ("Morris") to form
U.K. entities (the "Media Ventures Companies") that would develop
and invest in media businesses in Europe. Pursuant to the terms
of these agreements, Registrant advanced $2.0 million to Media
Ventures Investments ("Investments") and its predecessors between
1989 and December 31, 1991. During 1991, and following
Registrant's decision not to advance additional funds to the
Media Ventures Companies beyond Registrant's initial $2.0 million
commitment, the Media Ventures Companies secured funding from a
third party, ALP Enterprises, Inc. ("ALP Enterprises") to allow
the Media Ventures Companies to continue their operations. Due
to: (i) Registrant's unwillingness to advance additional funds to
the Media Ventures Companies; and (ii) the Media Ventures
Companies' resultant reliance on funding from ALP Enterprises,
Registrant's ownership in the Media Ventures Companies was
diluted -- through a number of restructurings of the ownership of
the Media Ventures Companies -- as ALP Enterprises advanced funds
to the Media Ventures Companies.
As of December 31, 1993, the Media Ventures Companies had
started, or made investments in, a number of media businesses,
including an investment in 1992 in Teletext U.K., Ltd.
("Teletext"), a newly formed U.K. corporation organized to
acquire U.K. franchise rights to provide data in text form to
television viewers via television broadcast sidebands. The
investment of the Media Ventures Companies in Teletext was
initially held by European Media Partners, Ltd. ("EMP, Ltd."),
the primary operating holding company organized by the Media
Ventures Companies. Following a July 30, 1993 restructuring,
EMP, Ltd. was owned 13.8% by Registrant, 45.6% by Clarendon (a
company controlled by the founders and management of the Media
Ventures Companies),and 40.6% by ALP Enterprises. Registrant
also owned 36.8% of the common stock of Investments (which was,
and remains, essentially inactive), ALP Enterprises owned 13.8%,
Clarendon owned 41.4%, and Charles Dawson (who manages a business
in which the Media Ventures Companies have an investment) owned
8.0%. Subsequently, Christopher Turner as nominee, purchased
Charles Dawson's interest for a nominal fee.
During 1994 and 1995, the Media Ventures Companies continued to
distribute television programs, to monitor the Teletext
investment held by MV Technology Limited ("MVT") (see below), and
to attempt to expand the operations of the Media Ventures
Companies into new areas of European media.
Effective August 12, 1994, Registrant and 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 and other potential third party investors. In the
restructuring, based on certain representations from EMP, Ltd.
and ALP Enterprises, Registrant sold to Clarendon and ALP
Enterprises for nominal consideration Registrant's shares in EMP,
Ltd. Simultaneously, Registrant and EMP, Ltd. entered into an
agreement whereby EMP, Ltd.'s 10% interest in Teletext was
transferred, together with a 350,000 pounds loan (approximately
$543,000 at then-current exchange rates) from EMP, Ltd. to a
newly formed entity, MVT. After the transfer, Registrant owns
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, Registrant no longer has any interest in EMP, Ltd.
Registrant has the right to require EMP, Ltd. to purchase
Registrant's interest in MVT at any time between December 31,
1994 and December 31, 1997. EMP, Ltd. has the right to require
Registrant to sell Registrant's interest in MVT to EMP, Ltd. at
any time between September 30, 1995 and September 30, 1998. In
January, 1996, EMP, Ltd. exercised its right to require
Registrant to sell its interest in MVT to EMP, Ltd. and notified
Registrant of its intention to acquire Registrant's interest.
Registrant is currently negotiating the terms of such sale.
During 1996, Registrant received approximately $87,000 in
dividends from MVT. It is likely that Registrant will not recover
more than a nominal portion of its $2.0 million investment in
Investments either from Investments or from MVT.
IMP/INTELIDATA
On June 22, 1990, Registrant entered into a limited partnership
agreement whereby Registrant and ML Media International, Inc. (a
wholly-owned subsidiary of Registrant), together with Venture
Media & Communications, L.P. and Tyler Information Strategies,
Inc. ("Tyler") formed International Media Publishing, L.P.
("IMPLP") and its wholly-owned subsidiary, International Media
Publishing, Inc. ("IMPI") to develop European business
information businesses. IMPLP/IMPI originally developed,
produced and marketed a newsletter and certain related products
focusing on European media business and finance. In the fourth
quarter of 1991, Registrant expanded IMPLP/IMPI's European
business information activities by acquiring -- through a newly-
formed corporation, Intelidata Limited ("Intelidata") -- a
division of Logica plc. IMPLP/IMPI/Intelidata did not operate
profitably, and were dependent on Registrant for working capital
advances. Registrant sought a strategic partner to invest in
IMPLP/IMPI/Intelidata, but was unable to identify such a partner.
Registrant therefore arranged to sell IMPLP/IMPI/Intelidata, and
consummated the sale of the businesses effective July 1, 1993
(see below). As of July 1, 1993, Registrant had advanced
approximately $4.2 million, and Tyler had advanced approximately
$100,000 (including $50,000 advanced to a predecessor company of
IMPLP) to IMPLP/IMPI/Intelidata.
Effective July 1, 1993, Registrant entered into three
transactions to sell the business and assets of International
Media Publishing, L.P. ("IMPLP") and its wholly owned subsidiary
Intelidata Media Publishing Inc. ("IMPI") and Intelidata Limited
("Intelidata"). In two separate transactions, Registrant sold
the entire business and substantially all of the assets of
IMPLP/IMPI and a portion of the business and assets of Intelidata
to Phillips Business Information, Inc. ("PBI") for future
consideration based on the revenues of IMPLP/IMPI and the portion
of the Intelidata business acquired by PBI. At closing, PBI made
advances of $100,000 and $150,000 to IMPLP/IMPI and Intelidata,
respectively, which advances would be recoverable by PBI from any
future consideration payable by PBI to Registrant. In addition,
PBI agreed to assume certain liabilities of IMPLP/IMPI and
Intelidata.
In the third transaction, Registrant sold the remaining business
and assets of Intelidata, which were not sold to PBI, to Romtec
plc. ("Romtec") in exchange for future consideration, based on
both the amount of assets and liabilities transferred to Romtec
and the combined profits of the portion of the Intelidata
business acquired by Romtec and another, existing division of
Romtec. In addition, certain liabilities of Intelidata were
assumed by Romtec.
Subsequent to the sale of the businesses, Registrant advanced net
additional funds totaling approximately $130,000 through December
31, 1996 to IMPLP/IMPI and Intelidata to fund cash shortfalls
resulting from the pre-sale claims of certain creditors.
Registrant anticipates that it will make additional such advances
to IMPLP/IMPI and Intelidata during 1997. The total of any
Registrant obligations to fund such advances, including certain
contractual obligations, is not currently anticipated to exceed
the amount of the writedown of $364,000. These contractual
obligations are reflected in the liability section of
Registrant's Consolidated Balance Sheet as of December 31, 1996.
It is unlikely that Registrant will recover any portion of its
investment in IMPLP/IMPI/Intelidata.
Employees.
As of December 31, 1996, Registrant and its consolidated
subsidiaries employed approximately 135 persons. The business of
Registrant is managed by the General Partner. RPOM, MLOM and ML
Leasing Management Inc., all affiliates of the General Partner,
employ individuals who perform the management and administrative
services for Registrant.
COMPETITION.
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 United States 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.
LEGISLATION AND REGULATION.
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 authorizes the FCC to promulgate regulations
if needed to ensure 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 local
marketing agreements ("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. Accordingly, on January 24, 1997, the FCC issued an order
amending its applicable rules so that, henceforth, broadcast
stations (both radio and TV) will ordinarily be granted renewal
for a term of 8 years. Also under the 1996 Act, competing
applications for the same frequency may no longer be accepted
unless the FCC has first denied an incumbent's application for
renewal of license. The FCC, however, may still consider
petitions to deny a renewal application.
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 of 1934, as amended, 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. In a pending rulemaking proceeding, the FCC has
suggested 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. The FCC also has
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.
The 1996 Act, which requires the FCC to conduct various
rulemaking proceedings, has a direct impact on several of these
issues. Thus, on November 7, 1996, the FCC released a "Second
Further Notice of Proposed Rulemaking" inviting additional
comment on a number of local television ownership issues,
including (i) whether to extend the presumptive waiver of the one-
to-a-market rule from the top 25 to the top 50 markets; and (ii)
whether to modify the television duopoly rule to allow common
ownership of two television stations in separate designated
market areas ("DMAs") as long as the stations do not have
overlapping Grade A signal contours. In that same proceeding,
the FCC also sought comment on whether to grandfather existing
LMAs if such agreements are deemed attributable in a companion
proceeding seeking comment on revisions to the FCC's attribution
rules.
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; and (vi) whether to eliminate or codify the cross-
interest policy. On November 7, 1996, the FCC released a
"Further Notice of Proposed Rulemaking" in that proceeding,
seeking additional comment on the foregoing and certain related
issues, including (i) the circumstances, if any, in which an LMA
should be attributed to an entity holding the right to program
more than 15% of the time of a television station; and (ii)
whether a combination of debt and equity exceeding a certain
threshold should be considered to be an attributable interest.
Recent Developments, Proposed Legislation and Regulation
The FCC 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 also recently eliminated 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. Decisions on the rules and policies to govern
digital television and on a specific ATV allotment plan are
expected in 1997. A decision adopting a technical standard for
the transmission of digital television was released by the FCC on
December 27, 1996.
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. In addition, on February 5, 1997, the Clinton
Administration announced that it will establish a special
advisory panel to make recommendations concerning specific public
interest obligations that might be imposed on television
licensees in exchange for the future awarding of digital
television licenses.
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.
Item 2. Properties.
TCS owns the land and studio buildings at each of its two
locations (Terre Haute, Indiana and St. Joseph, Missouri) as well
as broadcasting transmitters, antennas and towers at each
location. In addition, TCS owns technical broadcasting equipment
as well as the furniture and fixtures at TCS's two stations.
Registrant believes that the properties owned by the stations and
the other equipment and furniture and fixtures owned are in
reasonably good condition and are adequate for the operations of
the stations.
In addition, the offices of RPOM and MLOM are located at 350 Park
Avenue - 16th Floor, New York, New York 10022 and at The World
Financial Center, South Tower - 14th Floor, New York, New York,
10080-6114; respectively.
Item 3. Legal Proceedings.
There are no material legal proceedings against Registrant or to
which Registrant is a party.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters which required a vote of the limited
partners of Registrant during the fourth quarter of the fiscal
year covered by this report.
Part II.
Item 5. Market for Registrant's Common Stock and Stockholder
Matters.
An established public market for Registrant's Units does not now
exist, and it is not anticipated that such a market will develop
in the future. Accordingly, accurate information as to the
market value of a Unit at any given date is not available.
As of March 4, 1997, the number of owners of Units was 14,781.
Beginning with the December 1994 client account statements,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S")
implemented new guidelines for providing estimated values of
limited partnerships and other direct investments reported on
client account statements. As a result, MLPF&S no longer reports
general partner estimates of limited partnership net asset value
on its client account statements, although the Registrant may
continue to provide its estimate of net asset value to Unit
holders. Pursuant to the guidelines, estimated values for
limited partnership interests originally sold by MLPF&S (such as
Registrant's Units) will be provided two times per year to MLPF&S
by independent valuation services. These estimated values will
be based on financial and other information available to the
independent services on (1) the prior August 15th for reporting
on December year-end and subsequent client account statements
through the following May's month-end client account statements
and on (2) March 31st for reporting on June month-end and
subsequent client account statements through the November month-
end client account statements of the same year. MLPF&S clients
may contact their MLPF&S Financial Consultants or telephone the
number provided to them on their account statements to obtain a
general description of the methodology used by the independent
valuation services to determine their estimates of value. The
estimated values provided by the independent services and the
Registrant's current net asset value are not market values and
Unit holders may not be able to sell their Units or realize
either amount upon a sale of their Units. In addition, Unit
holders may not realize the independent estimated value or the
Registrant's current net asset value amount upon the liquidation
of Registrant's assets over its remaining life.
Registrant does not distribute dividends, but rather distributes
Distributable Cash From Operations, Distributable Refinancing
Proceeds, and Distributable Sale Proceeds, to the extent
available. On June 6, 1989, Registrant made a federal tax
allowance cash distribution in an amount equal to 33% of the 1988
federal taxable income to all limited partners owning Units in
1988 in proportion to their federal taxable income from the
ownership of Units. The total amount distributed was $2,040,121.
In the fourth quarter of 1994, Registrant made a cash
distribution of $8,971,760 to its limited partners and $90,624 to
its General Partner following the disposition of Maryland Cable.
In the second quarter of 1995, Registrant made a cash
distribution of $2,915,822 to its limited partners and $29,453 to
its General Partner following the sale of radio station WMXN-FM.
On July 29, 1996, Registrant made a cash distribution of
$23,999,458 to its limited partners and $242,419 to its General
Partner following the sale of its stock of Western Wireless
Corporation and the remaining interests in films and other
projects developed by Paradigm Entertainment, L.P. On April 2,
1997, Registrant intends to make a cash distribution of
$23,671,989 to its limited partners of record as of March 24,
1997. See the "Liquidity and Capital Resources" section of Item
7 "Management's Discussions and Analysis of Financial Condition
and Results of Operations" for additional information regarding
the April 1997 cash distribution.
Item 6. Selected Financial Data.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1992 1993 1994
<S> <C> <C> <C>
Interest income $ 517,769 $ 130,302 $ 430,730
(Loss)/Income from
Partnership
operations (3,275,961) (4,093,928) (3,101,614)
(Loss)/Income from
Discontinued
operations (35,096,389) (30,223,491) (10,426,057)
Gain on Sale of
Discontinued
operations - - 600,000
Extraordinary Item - - 130,330,596
Cash distributions
paid to partners - - 9,062,384
Per Unit of Limited
Partnership
Interest:
(Loss)/Income from
Partnership
operations $ (28.92) $ (36.14) $ (27.38)
(Loss)/Income from
Discontinued
operations (309.82) (266.80) (92.04)
Gain on Sale of
Discontinued
operations - - 5.30
Extraordinary Item - - 1,150.52
Cash distributions
paid to partners - - 80.00
As of As of As of
December 31, December 31, December 31,
1992 1993 1994
<S> <C> <C> <C>
Total Assets $ 9,293,863 $ 5,307,240 $ 3,950,040
Number of Units 112,147.1 112,147.1 112,147.1
Year Ended Year Ended
December 31, December 31,
1995 1996
<S> <C> <C>
Interest income $ 105,808 $ 290,820
(Loss)/Income from
Partnership operations (2,270,461) 21,433,458
(Loss)/Income from
Discontinued operations - 81,799
Gain on Sale of
Discontinued operations 9,471,059 -
Extraordinary Item - -
Cash distributions paid
to partners 2,945,275 24,241,877
Per Unit of Limited
Partnership Interest:
(Loss)/Income from
Partnership operations $ (20.04) $ 189.21
(Loss)/Income from
Discontinued operations - .72
Gain on Sale of
Discontinued operations 83.61 -
Extraordinary Item - -
Cash distributions paid
to partners 26.00 214.00
As of As of
December 31, December 31,
1995 1996
<S> <C> <C>
Total Assets $ 2,889,001 $ 2,387,661
Number of Units 112,147.1 112,147.1
On April 2, 1997, Registrant intends to make a cash distribution
to the limited partners of record as of March 24, 1997 of $211.08
per Unit, or $23,671,989.
Certain 1995 account balances have been reclassified to conform
to the 1996 financial statement presentation. See Note 3 of Item
8 "Financial Statement and Supplementary Data" for additional
information regarding discontinued operations.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources.
As of December 31, 1996 and 1995, Registrant had $2,383,444 and
$1,539,981, respectively, in cash and cash equivalents.
Registrant has no contractual commitment to advance funds to any
of its investments, other than its obligations relating to its
former investments in IMPLP/IMPI and Intelidata, Paradigm and
Windsor, which in the aggregate is approximately $1.4 million
(see below).
Although no assurance can be made concerning the precise timing
of the ultimate disposition of Registrant's remaining media
properties, Registrant will continue to sell or otherwise dispose
of its remaining investments in such properties, Registrant
anticipates that such ultimate disposition will occur in 1997.
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 ("Unit") totaling $23,999,458 and $242,419 to
the General Partner of net distributable sale proceeds from the
sales of WWC and Paradigm (see below).
On March 27, 1997, Registrant received a voluntary cash payment
of $23,671,989 (the "Cash Payment") from Merrill Lynch, Pierce,
Fenner & Smith Incorporated, an affiliate of the General Partner,
for distribution to limited partners. The Cash Payment will be
reflected in Registrant's 1997 first quarter financial statements
as a capital contribution and a distribution payable to limited
partners. On April 2, 1997, Registrant intends to make a
distribution to the limited partners of record as of March 24,
1997 of $211.08 per Unit, or $23,671,989. For a more complete
description of the Cash Payment discussed above, see Exhibits
99.3 and 99.4 attached hereto.
The General Partner has executed an amendment dated March 24,
1997 to the Partnership Agreement which provides for the
distribution of the Cash Payment solely to the limited partners
and the termination of Registrant's obligation to pay a
partnership management fee and a property management fee for 1996
and subsequent periods.
TCS Television Partners L.P. ("TCS") continues to be in default
on payments and covenants under its note agreements as of
December 31, 1996. TCS failed to make scheduled principal
payments during 1995 and 1996 and expects to default on the
majority of its scheduled principal payments under its note
agreements in 1997.
TCS entered into an agreement (the "Sub-Debt Proceeds Sharing
Agreement") dated September 17, 1996 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 such
agreement. The Sub-Debt Proceeds Sharing Agreement is
conditioned on TCS entering into a definitive agreement to sell
the stations by December 31, 1996, and closing the sale promptly
after Federal Communication Commission ("FCC") approval.
See below for a more detailed description of Registrant's
dispositions and current investments.
Sale of WWC
On May 29, 1996, Registrant sold all of its 1,090,162 shares of
Western Wireless Corporation ("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. Registrant recognized a
gain of approximately $22.8 million on the sale of its WWC stock.
During 1996, Registrant received proceeds of $135,000 from
Paradigm Entertainment L.P.'s ("Paradigm") sale of Registrant's
remaining interests in the films and other projects developed by
Paradigm. Registrant recognized a gain for financial reporting
purposes of $135,000 on the sale of these films and other
projects in 1996, offset by operational losses of $53,201.
Although Registrant is no longer advancing funds for continuing
operations and Paradigm has no operating assets, Registrant may
be liable for certain liabilities of Paradigm. These liabilities
are reflected in the discontinued operations of the Production
Segment on the Consolidated Balance Sheet as of December 31,
1996.
Sale of Windsor
On May 18, 1994, Registrant sold the assets of its cable
television systems in North Carolina, (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, of which the balance as
of December 31, 1996 is approximately $1,012,000.
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 December 31, 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.
Disposition of Maryland Cable
On September 30, 1994, the Amended Prepackaged Plan of
Reorganization of Maryland Cable and Holdings (the "Prepackaged
Plan") was consummated. Pursuant to the Prepackaged Plan,
Maryland Cable Corp. ("Maryland Cable") and Maryland Cable
Holdings Corp. ("Holdings") were liquidated into Maryland Cable
Partners, L.P., a newly formed limited partnership ("Newco"). As
a result of the liquidation, Newco acquired all of the assets of
Maryland Cable, subject to all of the liabilities of Maryland
Cable that were not discharged pursuant to the Prepackaged Plan.
Under the Prepackaged Plan, Registrant received a 4.9% interest
in Newco in satisfaction of (i) the $3,600,000 in subordinated
promissory notes held by Registrant, plus accrued interest
thereon, (ii) the $5,379,833 in deferred management fees payable
to Registrant, and (iii) certain other amounts payable to
Registrant. Registrant immediately exercised its right to sell
its 4.9% interest in Newco to the Water Street Corporate Recovery
Fund I, L.P. (the holder of 85% of the outstanding principal
amount of the 15-3/8% Subordinated Discount Notes due 1998 of
Maryland Cable) and certain other holders of the Notes for an
aggregate price of $2,846,423. Upon the consummation of the
Prepackaged Plan, ML Cable Partners, which is 99% owned by
Registrant, received payment in full of the unpaid portion of the
$6,830,000 participation in the senior bank debt of Maryland
Cable held by ML Cable Partners, together with accrued interest
thereon. In addition, MultiVision Cable TV Corp. received a
payment of $500,000 in partial settlement of severance and other
costs relating to the termination of MultiVision as manager of
the Maryland Cable systems. Registrant recognized a gain for
financial reporting purposes on the disposition of Maryland Cable
of approximately $130 million in 1994. Such gain resulted
primarily from the forgiveness of debt at the subsidiary level
and is classified as an extraordinary gain on Registrant's
Consolidated Income Statements.
Included in this gain is approximately $450,000 of management
fees which Registrant was entitled to receive for managing the
Maryland Cable Systems from January 1, 1994 through September 30,
1994. Registrant received this amount plus an additional
management fee of $128,212 during 1995.
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 Registrant
and/or its affiliates, approximately $3.3 million was remitted to
Registrant. Registrant recognized a gain of $1.7 million for
financial reporting purposes in 1995 on the sale of WMXN-FM. In
addition, during 1995 and 1996, approximately $400,000 and
$66,000, respectively, was collected on receivables by Registrant
from WMXN-FM.
Disposition of IMPLP/IMPI and Intelidata
Effective July 1, 1993, Registrant entered into three
transactions to sell the business and assets of International
Media Publishing, L.P. ("IMPLP") and its wholly owned subsidiary
Intelidata Media Publishing Inc. ("IMPI") and Intelidata Limited
("Intelidata"). In two separate transactions, Registrant sold
the entire business and substantially all of the assets of
IMPLP/IMPI and a portion of the business and assets of Intelidata
to Phillips Business Information, Inc. ("PBI") for future
consideration based on the revenues of IMPLP/IMPI and the portion
of the Intelidata business acquired by PBI. At closing, PBI made
advances of $100,000 and $150,000 to IMPLP/IMPI and Intelidata,
respectively, which advances would be recoverable by PBI from any
future consideration payable by PBI to Registrant. In addition,
PBI agreed to assume certain liabilities of IMPLP/IMPI and
Intelidata.
In a third transaction, Registrant sold the remaining business
and assets of Intelidata, which were not sold to PBI, to Romtec
plc. ("Romtec") in exchange for future consideration, based on
both the amount of assets and liabilities transferred to Romtec
and the combined profits of the portion of the Intelidata
business acquired by Romtec and another, existing division of
Romtec. In addition, certain liabilities of Intelidata were
assumed by Romtec.
Subsequent to the sale of the businesses, Registrant advanced net
additional funds totaling approximately $130,000 through December
31, 1996 on behalf of IMPLP/IMPI and Intelidata to fund cash
shortfalls resulting from the pre-sale claims of certain
creditors. Registrant anticipates that it will make additional
such advances to IMPLP/IMPI and Intelidata during 1997. The
aggregate amounts of Registrant's obligations to fund such
advances, including certain contractual obligations, is not
currently anticipated to exceed the amount of the writedown of
$364,000. These contractual obligations are reflected in the
liability section of Registrant's Consolidated Balance Sheet as
of December 31, 1996. It is unlikely that Registrant will
recover any portion of its investment in IMPLP/IMPI/Intelidata.
TCS Television Partners, L.P.
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 Development
Corporation ("Fabri"), but not the other assets of Registrant.
TCS entered into the Sub-Debt Proceeds Sharing Agreement pursuant
to 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 such agreement. The Sub-Debt
Proceeds Sharing Agreement 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.
On December 30, 1996, TCS and TCS Television, Inc. ("TCS Inc."),
entered into a stock purchase agreement (the "Stock Purchase
Agreement") with Nexstar Broadcasting Group, L.L.C. ("Nexstar")
to sell all of the outstanding shares of their jointly owned
subsidiary Fabri, which owns and operates two television
stations, WTWO-TV in Terre Haute, Indiana and KQTV-TV in St.
Joseph, Missouri. The agreed upon base purchase price for Fabri
is $31,800,000 and is subject to certain adjustments, including
an adjustment relating to the working capital of Fabri and to the
establishment of escrow accounts, as provided in the Stock
Purchase Agreement. The net proceeds generated from the sale of
Fabri, after payment of the expenses and liabilities relating to
the sale, will be applied, pursuant to the provisions set forth
in the Sub-Debt Proceeds Sharing Agreement, to repay the existing
indebtedness of TCS, including indebtedness to its affiliates,
with the remainder, if any, to be distributed to the partners of
TCS. There is no guarantee that Registrant will recover more
than a small portion of its initial investment in TCS.
Consummation of the sale of Fabri pursuant to the terms of the
Stock Purchase Agreement is subject to the satisfaction of
certain conditions, including obtaining the approval from the FCC
to transfer control of the FCC licenses. On February 21, 1997,
the FCC granted consent to the transfer of control of Fabri from
TCS Inc. to Nexstar. The FCC has until April 2, 1997, to
reconsider the transfer on its own motion, after which the
transfer of control will no longer be subject to reconsideration
or appeal. Furthermore, if the sale is not consummated by
September 30, 1997, both parties become vested with the right to
terminate the Stock Purchase Agreement.
On September 15, 1995, TCS Inc. completed the sale to 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 to secure TCS
Inc.'s indemnification obligations 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 was
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. Registrant
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. During
1997, $1 million plus accrued interest of approximately $74,000
was returned to TCS from the indemnity escrow relating to the
sale of Avant. Registrant expects that these amounts will be
used to pay down indebtedness of TCS.
Refer to Notes 2 and 4 of "Item 8. Financial Statements and
Supplementary Data" for further information regarding TCS's debt.
Paradigm
Paradigm Entertainment, L.P. ("Paradigm") and/or Bob Banner
Associates Development ("BBAD") are not currently producing
television programs, and Registrant has not advanced any funds to
Paradigm and/or BBAD since the second quarter of 1992. Due in
part to Registrant's unwillingness to advance additional funds to
fund the continuing operating losses and possible winding down of
Paradigm's and BBAD's operating activities, Registrant recorded
in 1993 a writedown of approximately $516,000 of its investment
in Paradigm and BBAD to reduce Registrant's net investment to
zero. Paradigm and/or BBAD have no liability for borrowed funds.
Investments and EMP, Ltd. and MVT
As of December 31, 1994, Registrant had advanced approximately
$2.0 million to Media Ventures Investments ("Investments").
During 1994 and 1995, the Media Ventures Companies continued to
distribute television programs, to monitor the Teletext U.K.,
Ltd. ("Teletext") investment held by MV Technology Limited
("MVT") (see below), and to attempt to expand the operations at
MVT into new areas of European media.
Effective August 12, 1994, Registrant 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 and other
potential third party investors. In the restructuring, based on
certain representations from EMP, Ltd. and ALP Enterprises,
Registrant sold to Clarendon and ALP Enterprises for nominal
consideration Registrant's shares in EMP, Ltd. Simultaneously,
Registrant and EMP, Ltd. entered into an agreement whereby EMP,
Ltd.'s 10% interest in Teletext was transferred, together with a
350,000 pounds loan (approximately $543,000 at then-current exchange
rates) from EMP, Ltd. to a newly formed entity, MVT. After the
transfer, Registrant owns 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, Registrant no longer has
any interest in EMP, Ltd.
Registrant has the right to require EMP, Ltd. to purchase
Registrant's interest in MVT at any time between December 31,
1994 and December 31, 1997. EMP, Ltd. has the right to require
Registrant to sell Registrant's interest in MVT to EMP, Ltd. at
any time between September 30, 1995 and September 30, 1998. In
January, 1996, EMP, Ltd. exercised its right to require
Registrant to sell its interest in MVT to EMP, Ltd., and notified
Registrant of its intention to acquire Registrant's interest.
Registrant is currently negotiating the terms of such sale.
During 1996, Registrant received approximately $87,000 in
dividends from MVT. Registrant is currently negotiating the
terms of such sale. It is likely that Registrant will not
recover more than a nominal portion of its $2.0 million
investment in Investments either from Investments or from MVT.
Results of Operations.
1996
Registrant generated net income of approximately $21.5 million in
1996, which was comprised of the following components: (1) a gain
of approximately $22.8 million on the sale of the stock of WWC,
(2) interest income of approximately $291,000, (3) income from
dividends received from MVT of approximately $87,000, (4)
approximately $469,000 from monies released from escrow and other
post closing adjustments relating to the sale of the Windsor
Systems, (5) a gain of $135,000 on the sale of Registrant's
interests in films and other projects developed by Paradigm
partially offset by (a) management fee expenses of approximately
$2.1 million, (b) operational losses at Paradigm of approximately
$53,000 and (c) general and administrative expenses of
approximately $112,000.
1995
Registrant generated net income of approximately $7.2 million in
1995, which was comprised of the following components: (1) gains
of approximately $17.6 million on the sale of capital stock of
Avant Development Corporation and approximately $1.7 million on
the sale of radio station WMXN-FM, partially offset by additional
anticipated losses on the sale of the remaining TCS stations of
approximately $9.9 million, (2) income related to management
services it provided to Maryland Cable prior to its disposition
of Maryland Cable of approximately $128,000, (3) income from
dividends received from MVT of approximately $108,000 and
interest income of approximately $106,000, partially offset by
(a) management fee expenses of approximately $2.4 million and (b)
general and administrative expenses of approximately $228,000.
1994
Registrant generated net income of approximately $117.4 million
in 1994, which was comprised of the following components: (1) an
extraordinary gain of approximately $130.3 million on the
disposition of Maryland Cable; (2) a $600,000 gain on the sale of
the Windsor Systems; and (3) interest income of approximately
$431,000, partially offset by: (a) a loss from discontinued
operations of approximately $10.4 million; (b) management fee
expenses of approximately $3.0 million; (c) general and
administrative expenses of approximately $269,000; and (d)
amortization expense of approximately $298,000.
1996 vs. 1995
The increase in net income of approximately $14.3 million from
1995 is primarily attributable to the one-time gain on the sale
of the stock of WWC of approximately $22.8 million 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 in 1995.
1995 vs. 1994
The decrease in net income of approximately $110.2 million from
1994 is primarily attributable to the one-time extraordinary gain
on the disposition of Maryland Cable of approximately $130.3
million in 1994, offset by (a) 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 in 1995
and (b) the loss from discontinued operations of approximately
$10.4 million in 1994. The loss from discontinued operations in
1994 are not comparable to the results in 1995 because of the
sale of certain discontinued assets during 1995 and 1994.
Item 8. Financial Statements and Supplementary Data.
TABLE OF CONTENTS
ML Media Opportunity Partners, L.P.
Independent Auditors' Report
Consolidated Balance Sheets as of December 31,
1996 and 1995
Consolidated Income Statements for the three
years ended December 31, 1996
Consolidated Statements of Cash Flows for the
three years ended December 31, 1996
Consolidated Statements of Changes in Partners'
Capital/(Deficit) for the three years ended
December 31, 1996
Notes to Consolidated Financial Statements for
the three years ended December 31, 1996
No financial statement schedules are included
because of the absence of the conditions under
which they are required or because the
information is included in the financial
statements or the notes thereto.
INDEPENDENT AUDITORS' REPORT
ML Media Opportunity Partners, L.P.:
We have audited the accompanying consolidated financial
statements of ML Media Opportunity Partners, L.P. (the
"Partnership") and its affiliated entities, as listed in the
accompanying table of contents. These consolidated financial
statements are the responsibility of the Partnership's general
partner. Our responsibility is to express an opinion on the
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by the general partner, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Partnership and its affiliated entities as of December 31, 1996
and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended December
31, 1996 in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been
prepared assuming that the Partnership will continue as a going
concern. As discussed in Note 2 to the consolidated financial
statements, the Partnership has sold and is in the process of
selling or disposing of its remaining investments. In addition,
TCS Television Partners, L.P. ("TCS") was in default under the
TCS note agreements as of December 31, 1996 and 1995, failed to
make scheduled principal payments during 1996 and 1995, and TCS
expects to default on the majority of its scheduled principal
payments under its note agreements for the remainder of 1997.
The Partnership through TCS, is in the process of selling the
remaining TCS stations. These circumstances raise substantial
doubt about the Partnership's ability to continue as a going
concern. Management's plans concerning these matters are also
described in Note 2. Accordingly, the consolidated financial
statements do not include adjustments that might result from the
outcome of the uncertainties referred to herein.
/s/ Deloitte & Touche LLP
New York, New York
March 14, 1997
(except for Note 9, as to which the date is March 27, 1997)
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995
NOTES 1996 1995
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 2,383,444 $ 1,539,981
Investment in joint venture
and common stock - 1,261,666
Other assets 4,217 87,354
TOTAL ASSETS $ 2,387,661 $ 2,889,001
LIABILITIES AND PARTNERS'
CAPITAL/(DEFICIT):
Liabilities:
Accounts payable and accrued
liabilities $ 1,671,454 $ 1,508,972
Management fee payable 2,144,597 -
Net Liabilities of
Discontinued Operations:
Production Segment 58,912 140,711
Television and Radio Station
Segment 3 - -
Total Liabilities 3,874,963 1,649,683
Commitments and Contingencies
2
</TABLE>
(Continued on the following page.)
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995
(continued)
1996 1995
<S> <C> <C>
Partners' Capital/(Deficit):
General Partner:
Capital contributions, net of
offering expenses 1,019,428 1,019,428
Cash distributions (362,496) (120,077)
Cumulative loss (651,313) (866,466)
5,619 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 (64,480,076) (85,780,180)
(1,492,921) 1,206,433
Total Partners' Capital/(Deficit) (1,487,302) 1,239,318
TOTAL LIABILITIES AND PARTNERS'
CAPITAL/(DEFICIT) $ 2,387,661 $ 2,889,001
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED INCOME STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
1996 1995 1994
<S> <C> <C> <C>
Gain on Sale of Western
Wireless Corporation
stock $22,843,249 $ - $ -
Other income 555,489 236,283 -
Interest income 290,820 105,808 430,730
23,689,558 342,091 430,730
Partnership Operating
Expenses:
General and
administrative 111,503 228,486 268,523
Amortization - - 297,954
Management fees 2,144,597 2,384,066 2,965,867
2,256,100 2,612,552 3,532,344
Income/(Loss) from
Partnership operations 21,433,458 (2,270,461) (3,101,614)
Discontinued operations:
Income/(Loss) from
Discontinued operations
of:
Cable Television Systems
Segment - - (6,784,982)
Production Segment 81,799 - (37,436)
Television and Radio
Station Segment - - (3,603,639)
Gain on Sale of
Discontinued Television
and Radio Station
Segment - 9,471,059 -
Gain on Sale of
Discontinued Cable
Television Systems
Segment - - 600,000
Income/(Loss) from
discontinued operations 81,799 9,471,059 (9,826,057)
</TABLE>
(Continued on the following page.)
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED INCOME STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
(continued)
1996 1995 1994
<S> <C> <C> <C>
Net Income/(Loss) Before
Extraordinary Item 21,515,257 7,200,598 (12,927,671)
Extraordinary Item - - 130,330,596
NET INCOME $21,515,257 $ 7,200,598 $117,402,925
Per Unit of Limited
Partnership Interest:
Income/(Loss) from
Partnership operations $ 189.21 $ (20.04) $ (27.38)
Income/(Loss) from
discontinued operations .72 - (92.04)
Gain on sale of
discontinued operations - 83.61 5.30
Extraordinary Item - - 1,150.52
NET INCOME $ 189.93 $ 63.57 $ 1,036.40
Number of Units 112,147.1 112,147.1 112,147.1
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating
activities:
Net Income $ 21,515,257 $ 7,200,598 $ 117,402,925
Adjustments to reconcile
net income to net
cash provided by/(used
in) operating
activities:
Gain on Sale of
Discontinued
Television
and Radio Station - (9,471,059) -
Segment
Gain on Sale of
Western Wireless
Corporation stock (22,843,249) - -
Gain on Sale of
Discontinued
Cable Television
Systems Segment - - (600,000)
Amortization - - 297,954
Extraordinary Item - - (130,330,596)
</TABLE>
(Continued on the following page.)
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
(continued)
1996 1995 1994
<S> <C> <C> <C>
Changes in operating
assets and liabilities:
Accounts payable and
accrued liabilities 120,309 820,684 (47,887)
Other assets 83,137 450,547 (529,959)
Management fee payable 2,144,597 - -
Changes in Net
Liabilities of
Discontinued Operations:
Cable Television
Systems Segment - - 7,875,016
Production Segment (81,799) - 37,436
Television and Radio
Station Segment - - 4,763,952
Net cash provided
by/(used in) operating
activities 938,252 ( 999,230) (1,131,159)
</TABLE>
(Continued on the following page.)
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
(continued)
1996 1995 1994
<S> <C> <C> <C>
Cash flows from investing
activities:
Net purchase of property,
plant and equipment - - (1,147,149)
Net proceeds from sale of
Maryland Cable - - 9,771,952
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 8,624,803
</TABLE>
(Continued on the following page.)
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
(continued)
1996 1995 1994
<S> <C> <C> <C>
Cash flows from financing
activities:
Principal payments on
bank loans - - (20,465)
Cash distributions (24,241,877) (2,945,275) (9,062,384)
Net cash used in
financing activities (24,241,877) (2,945,275) (9,082,849)
Net increase/(decrease)
in cash and cash
equivalents 843,463 (610,492) (1,589,205)
Cash and cash equiva-
lents at beginning
of period 1,539,981 2,150,473 3,739,678
Cash and cash equiva-
lents at end of period $ 2,383,444 $ 1,539,981 $ 2,150,473
Interest paid $ 1,269,914 $ 3,138,731 $ 3,424,172
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 all its remaining
interests in films and other projects developed by Paradigm.
See Notes to Consolidated Financial Statements.
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL/(DEFICIT)
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
General Limited
Partner Partners Total
<S> <C> <C> <C>
1994:
Partners' Deficit as
of January 1, 1994 $ (1,093,073) $(110,263,473) $(111,356,546)
Net Income 1,174,029 116,228,896 117,402,925
Cash Distribution (90,624) (8,971,760) (9,062,384)
Partners' Deficit
as of December 31,
1994 (9,668) (3,006,337) (3,016,005)
1995:
Net Income 72,006 7,128,592 7,200,598
Cash Distribution (29,453) (2,915,822) (2,945,275)
Partners' Capital
as of December 31,
1995 32,885 1,206,433 1,239,318
1996:
Net Income 215,153 21,300,104 21,515,257
Cash Distribution (242,419) (23,999,458) (24,241,877)
Partners'
Capital/(Deficit)
as of December 31,
1996 $ 5,619 $ (1,492,921) $ (1,487,302)
See Notes to Consolidated Financial Statements.
</TABLE>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
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 is $1,132,800 which represents 1% of the
total Partnership capital contributions.
Pursuant to the terms of the Amended and Restated Agreement of
Limited Partnership (the "Partnership Agreement"), the General
Partner is liable for all general obligations of the Partnership
to the extent not paid by the Partnership. The limited partners
are not liable for the obligations of the Partnership in excess
of the amount of their contributed capital.
The Partnership was formed to acquire, finance, hold, develop,
improve, maintain, operate, lease, sell, exchange, dispose of and
otherwise invest in and deal with media businesses and direct and
indirect interests therein.
As of December 31, 1996, the Partnership's investments consisted
of (See Note 2):
a 51.005% ownership of TCS Television Partners, L.P.
("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 MV Technology Limited ("MVT"), a United
Kingdom corporation whose sole purpose is to manage its sole
asset, a 10% interest in Teletext ("Teletext"), giving the
Partnership an indirect 1.38% interest in 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.
Reclassifications
Certain reclassifications were made to the 1995 financial
statements to conform with the current period's presentation.
Basis of Accounting and Fiscal Year
The Partnership's records are maintained on the accrual basis of
accounting for financial reporting and tax purposes. Media
Ventures Investments, LTD. and MVT are accounted for on the cost
method of accounting. In addition, prior to its disposition,
General Cellular Corporation ("GCC")/Western Wireless Corporation
("WWC") was also accounted for on the cost method of accounting.
The fiscal year of the Partnership shall be the calendar year.
See Note 3 regarding discontinued operations.
Barter Transactions
As is customary in the broadcasting industry, the Partnership
engages in the bartering of commercial air time for various goods
and services. Barter transactions are recorded based on the fair
market value of the products and/or services received. The goods
and services are capitalized or expensed as appropriate when
received or utilized. Revenues are recognized when the
commercial spots are aired. All such revenues and expenses are
included in the Partnership's loss from discontinued operations.
Property and Depreciation
Property, plant and equipment is stated at cost, less accumulated
depreciation, and is included in the net liabilities of the
Partnership's discontinued operations. Property, plant and
equipment is depreciated using the straight-line method over the
following estimated useful lives:
Buildings 30 years
Other 5-7 years
Expenditures for maintenance and repairs are charged to operating
expense as incurred. Betterments, replacement equipment and
additions are capitalized and depreciated over the remaining life
of the assets.
Intangible Assets and Deferred Charges
Intangible assets and deferred charges are being amortized on a
straight-line basis over various periods as follows:
Franchise life of the franchise
Other Intangibles various
Deferred Charges 3-10 years
The excess of cost over fair value of net assets acquired
("Goodwill") in business combinations consummated since inception
of the Partnership were amortized to expense over twenty through
forty years using the straight-line method.
Intangible assets, deferred charges and related amortization are
included in the Partnership's net liabilities from discontinued
operations and loss from discontinued operations, respectively.
Asset Impairment
The Partnership assesses the impairment of assets on a regular
basis or immediately upon the occurrence of a significant event
in the marketplace or an event that directly impacts its assets.
The methodology varies depending on the type of asset but
typically consists of comparing the net book value of the asset
to either: (1) the undiscounted expected future cash flows
generated by the asset, and/or (2) the current market values
obtained from industry sources.
Management Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Discontinued operations include management's best estimates of
the amounts expected to be realized on the sales of its
television and radio station segment. While the estimates are
based on an analysis of the facilities, there have been limited
recent sales of comparable properties to consider in preparing
such valuations. The amounts the Partnership will ultimately
realize could differ materially in the near term from the amounts
assumed in arriving at the loss on disposal of the discontinued
operations.
Income Taxes
The Partnership accounts for income taxes pursuant to Statement
of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" ("SFAS No. 109"). No provision for income taxes has been
made for the Partnership because all income and losses are
allocated to the partners for inclusion in their respective tax
returns. However, the Partnership owns certain entities which
are consolidated in the accompanying financial statements which
are taxable entities.
For entities owned by the Partnership which are consolidated in
the accompanying financial statements, SFAS No. 109 requires the
recognition of deferred income taxes for the tax consequences of
differences between the bases of assets and liabilities for
income tax and financial statement reporting, based on enacted
tax laws. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be
realized. For the Partnership, SFAS No. 109 requires the
disclosure of the difference between the tax bases and the
reported amounts of the Partnership's assets and liabilities (see
Note 7).
Cash Equivalents
Short-term investments which have an original maturity of ninety
days or less are considered cash equivalents.
2. Liquidity and Summary of Investment Status
TCS continues to be in default on payments and covenants under
its note agreements as of December 31, 1996. TCS failed to make
scheduled principal payments during 1995 and 1996 and expects to
default on the majority of its scheduled principal payments under
its note agreements during 1997.
As of December 31, 1996 and 1995, the Partnership had $2,383,444
and $1,539,981, respectively, in cash and cash equivalents.
The Partnership has no contractual commitment to advance funds to
any of its investments, other than its obligations relating to
its former investments in IMPLP/IMPI and Intelidata, Paradigm and
Windsor, which in the aggregate is approximately $1.4 million
(see below).
Although no assurance can be made concerning the precise timing
of the ultimate disposition of the Partnership's remaining media
properties, the Partnership will continue to sell or otherwise
dispose of its remaining investments in such properties
Registrant anticipates that such ultimate disposition will occur
in 1997. The status of all of the Partnership's investments is
discussed in more detail below.
TCS Television Partners, L.P.
On January 17, 1990, the Partnership entered into a limited
partnership agreement with Riverdale Media Corporation
("Riverdale"), forming TCS. The agreement was subsequently
amended to include Commonwealth Capital Partners, L.P.
("Commonwealth"), which is not affiliated with the Partnership,
as a limited partner. Initially, Riverdale was the general
partner of TCS, and owned 20.01% of the entity. The Partnership
and Commonwealth were limited partners owning 41% and 38.99%,
respectively. Riverdale contracted with ML Media Opportunity
Consulting Partners, a wholly-owned subsidiary of the
Partnership, to provide management services for TCS.
On June 19, 1990, TCS completed its acquisition of three network
affiliated television stations; WRBL-TV, the CBS affiliate
serving Columbus, Georgia; WTWO-TV, the NBC affiliate serving
Terre Haute, Indiana; and KQTV-TV, the ABC affiliate serving St.
Joseph, Missouri (the "TCS Stations").
The purchase price of $49 million, a non-compete payment of $7
million, and starting working capital and closing costs of
approximately $5 million were funded by the sale by TCS of senior
notes totaling $35 million and subordinated notes totaling $10
million, and equity contributions of $16 million, of which
approximately $8.15 was contributed by the Partnership. The
Partnership's total equity contribution and incurred costs were
approximately $8.3 million as of December 31, 1994 (including
approximately $170,000 noted below). In addition, the
Partnership had loaned TCS approximately $400,000 for working
capital purposes during 1991.
On December 14, 1992, the Partnership concluded agreements to
restructure the debt and ownership arrangements of TCS. TCS had
been unable to generate sufficient funds from operations to meet
fully its original obligations under its note purchase
agreements. TCS's senior debt was amended to reschedule
principal payments, and its subordinated lenders agreed to defer
all scheduled interest and principal payments through December
15, 1995. As payment for a transaction fee, the senior lenders
were issued additional notes, due May 31, 1997, in the amount of
$350,000. All previous defaults under the senior and
subordinated debt were waived. The new debt arrangements were
structured to provide TCS with three years following the
restructuring in which to improve operating performance and avoid
selling TCS in the then-illiquid transaction market for broadcast
television stations.
Concurrently the equity partners in TCS agreed to seek regulatory
approval to alter the ownership structure of the company. On
March 26, 1993, the Partnership was granted such approval by the
FCC. As a result, on March 26, 1993, the Partnership and
Commonwealth purchased the 20.01% ownership interest held by
Riverdale. On March 26, 1993, a wholly-owned subsidiary of the
Partnership, TCS Management Corporation became the new sole
general partner of TCS and the Partnership's total ownership
interest in TCS increased from 41% to 51.005% (1% of which is the
general partner interest). The Partnership utilized
approximately $170,000 of its working capital reserve to acquire
the additional 10.005% interest.
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 Partnerships. TCS entered into an agreement (the
"Sub-Debt Proceeds Sharing Agreement") dated September 17, 1996,
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 such TCS stations in accordance with a formula set
forth in such agreement. The Sub-Debt Proceeds Sharing Agreement
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.
On December 30, 1996, TCS and TCS Inc. entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement") with Nexstar
Broadcasting Group, L.L.C ("Nexstar") to sell all of the
outstanding shares of their jointly owned subsidiary, Fabri,
which owns and operates two television stations, WTWO-TV in Terre
Haute, Indiana and KQTV-TV in St. Joseph, Missouri. The agreed
upon base purchase price for Fabri is $31,800,000 and is subject
to certain adjustments, including an adjustment relating to the
working capital of Fabri and to the establishment of escrow
accounts, as provided in the Stock Purchase Agreement. The net
proceeds generated from the sale of Fabri, after payment of the
expenses and liabilities relating to the sale, will be applied,
pursuant to the provisions set forth in the Sub-Debt Proceeds
Sharing Agreement, to repay the existing indebtedness of TCS,
including indebtedness to its affiliates, with the remainder, if
any, to be distributed to the partners of TCS. There is no
guarantee that the Partnership will recover more than a small
portion of its initial investment in TCS.
Consummation of the sale of Fabri pursuant to the terms of the
Stock Purchase Agreement is subject to the satisfaction of
certain conditions, including obtaining the approval from the FCC
to transfer control of the FCC licenses. On February 21, 1997,
the FCC granted consent to the transfer of control of Fabri from
TCS Inc. to Nexstar. The FCC has until April 2, 1997, to
reconsider the transfer on its own motion, after which the
transfer of control will no longer be subject to reconsideration
or appeal. Furthermore, if the sale is not consummated by
September 30, 1997, both parties become vested with the right to
terminate the Stock Purchase Agreement.
On September 15, 1995, TCS Inc. 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 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 was
secured by a pledge of the shares of Fabri, 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 (see Note 3).
During 1997, $1 million plus accrued interest of approximately
$74,000 was returned to TCS from the indemnity escrow related to
the sale of Avant. Registrant expects that these amounts will be
used to pay down indebtedness of TCS.
Refer to Note 4 for further information regarding TCS's debt.
Investments and EMP, Ltd. and MVT
On September 1, 1989, the Partnership entered into various
agreements with Peter Clark ("Clark") and Alan Morris ("Morris")
to form U.K. entities (the "Media Ventures Companies") that would
develop and invest in media businesses in Europe. Pursuant to
the terms of these agreements, the Partnership advanced $2.0
million to Media Ventures Investments ("Investments") and its
predecessors between 1989 and December 31, 1991. During 1991,
and following the Partnership's decision not to advance
additional funds to the Media Ventures Companies beyond the
Partnership's initial $2.0 million commitment, the Media Ventures
Companies secured funding from a third party, ALP Enterprises,
Inc. ("ALP Enterprises") to allow the Media Ventures Companies to
continue their operations. Due to: (i) the Partnership's
unwillingness to advance additional funds to the Media Ventures
Companies; and (ii) the Media Ventures Companies' resultant
reliance on funding from ALP Enterprises, the Partnership's
ownership in the Media Ventures Companies was diluted -- through
a number of restructurings of the ownership of the Media Ventures
Companies -- as ALP Enterprises advanced funds to the Media
Ventures Companies.
As of December 31, 1993, the Media Ventures Companies had
started, or made investments in, a number of media businesses,
including an investment in 1992 in Teletext U.K., Ltd.
("Teletext"), a newly formed U.K. corporation organized to
acquire U.K. franchise rights to provide data in text form to
television viewers via television broadcast sidebands. The
investment of the Media Ventures Companies in Teletext was
initially held by European Media Partners, Ltd. ("EMP, Ltd."),
the primary operating holding company organized by the Media
Ventures Companies. Following a July 30, 1993 restructuring,
EMP, Ltd. was owned 13.8% by the Partnership, 45.6% by Clarendon
(a company controlled by the founders and management of the Media
Ventures Companies),and 40.6% by ALP Enterprises. The
Partnership also owned 36.8% of the common stock of Investments
(which was, and remains, essentially inactive), ALP Enterprises
owned 13.8%, Clarendon owned 41.4%, and Charles Dawson (who
manages a business in which the Media Ventures Companies have an
investment) owned 8.0%. Subsequently, Christopher Turner as
nominee, purchased Charles Dawson's interest for a nominal fee.
During 1994 and 1995, the Media Ventures Companies continued to
distribute television programs, to monitor the Teletext
investment held by MVT (see below), and to attempt to expand the
operations at MVT into new areas of European media.
Effective August 12, 1994, the Partnership and 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 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, MV Technology Limited ("MVT"). After the transfer, the
Partnership owns 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. During 1995, the Partnership received approximately
$108,000 in dividends from MVT. In January, 1996, EMP, Ltd.
exercised 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 1996,
the Partnership received approximately $87,000 in dividends from
MVT. It is likely that the Partnership will not recover more
than a nominal portion of its $2.0 million investment in
Investments either form Investments or from MVT.
Disposition of Maryland Cable
On September 30, 1994, the Amended Prepackaged Plan of
Reorganization of Maryland Cable and Holdings (the "Prepackaged
Plan") was consummated. Pursuant to the Prepackaged Plan,
Maryland Cable and Holdings were liquidated into Maryland Cable
Partners, L.P., a newly formed limited partnership ("Newco"). As
a result of the liquidation, Newco acquired all of the assets of
Maryland Cable, subject to all of the liabilities of Maryland
Cable that were not discharged pursuant to the Prepackaged Plan.
Under the Prepackaged Plan, the Partnership received a 4.9%
interest in Newco in satisfaction of (i) the $3,600,000 in
subordinated promissory notes held by the Partnership, plus
accrued interest thereon, (ii) the $5,379,833 in deferred
management fees payable to the Partnership, and (iii) certain
other amounts payable to the Partnership. The Partnership
immediately exercised its right to sell its 4.9% interest in
Newco to the Water Street Corporate Recovery Fund I, L.P. (the
holder of 85% of the outstanding principal amount of the 15-3/8%
Subordinated Discount Notes due 1998 of Maryland Cable) and
certain other holders of the Notes for an aggregate price of
$2,846,423. Upon the consummation of the Prepackaged Plan, ML
Cable Partners, which is 99% owned by the Partnership, received
payment in full of the unpaid portion of the $6,830,000
participation in the senior bank debt of Maryland Cable held by
ML Cable Partners, together with accrued interest thereon. In
addition, MultiVision Cable TV Corp. received a payment of
$500,000 in partial settlement of severance and other costs
relating to the termination of MultiVision as manager of the
Maryland Cable systems. The Partnership recognized a gain for
financial reporting purposes on the disposition of Maryland Cable
of approximately $130 million in 1994. Such gain resulted
primarily from forgiveness of debt at the subsidiary level and is
classified as an extraordinary gain on the Partnership's
Consolidated Income Statements.
Included in this gain is approximately $450,000 of management
fees which the Partnership was entitled to receive for managing
the Maryland Cable Systems from January 1, 1994 through September
30, 1994. The Partnership received this amount plus an
additional management fee of $128,212 during 1995.
Sale of Windsor
On May 18, 1994, the Partnership sold the assets of its cable
television systems in North Carolina (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, of which the balance as
of December 31, 1996 is approximately $1,012,000.
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 December 31, 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.
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 $1.7 million for financial reporting purposes in 1995 on the
sale of WMXN-FM. In addition, during 1995 and 1996,
approximately $400,000 and $66,000, respectively, was collected
on receivables by the Partnership from WMXN-FM.
Disposition of WWC
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 its WWC stock.
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 WWC and the remaining
interests in films and other projects developed by Paradigm
Entertainment, L.P. ("Paradigm") (see below).
Disposition of IMPLP/IMP and Intelidata
Effective July 1, 1993, the Partnership entered into three
transactions to sell the business and assets of International
Media Publishing, L.P. ("IMPLP") and its wholly owned subsidiary
Intelidata Media Publishing Inc. ("IMPI") and Intelidata Limited
("Intelidata"). In two separate transactions, the Partnership
sold the entire business and substantially all of the assets of
IMPLP/IMPI and a portion of the business and assets of Intelidata
to Phillips Business Information, Inc. ("PBI") for future
consideration based on the revenues of IMPLP/IMPI and the portion
of the Intelidata business acquired by PBI. At closing, PBI made
advances of $100,000 and $150,000 to IMPLP/IMPI and Intelidata,
respectively, which advances would be recoverable by PBI from any
future consideration payable by PBI to the Partnership. In
addition, PBI agreed to assume certain liabilities of IMPLP/IMPI
and Intelidata.
In the third transaction, the Partnership sold the remaining
business and assets of Intelidata, which were not sold to PBI, to
Romtec plc. ("Romtec") in exchange for future consideration,
based on both the amount of assets and liabilities transferred to
Romtec and the combined profits of the portion of the Intelidata
business acquired by Romtec and another, existing division of
Romtec. In addition, certain liabilities of Intelidata were
assumed by Romtec.
Subsequent to the sale of the businesses, the Partnership
advanced net additional funds totaling approximately $130,000
through December 31, 1996 to IMPLP/IMPI and Intelidata to fund
cash shortfalls resulting from the pre-sale claims of certain
creditors. The Partnership anticipates that it will make
additional such advances to IMPLP/IMPI and Intelidata during
1997. The total of any Partnership obligations to fund such
advances, including certain contractual obligations, is not
currently anticipated to exceed the amount of the writedown of
$364,000. These contractual obligations are reflected in the
liability section of the Partnership's Consolidated Balance Sheet
as of December 31, 1996. It is unlikely that the Partnership
will recover any portion of its investment in
IMPLP/IMPI/Intelidata.
Paradigm/BBAD
On May 31, 1991, the Partnership, Productions, GLP Co. and
Associates entered into a new agreement (the "Revised Paradigm
Agreement") that amended the original Paradigm Agreement. Under
the terms of the Revised Paradigm Agreement, effective June 16,
1991 the general partner interests of GLP Co. and Associates in
Paradigm were converted to limited partner interests. GLP Co.
and Associates each retained their 25% ownership in Paradigm and
the Partnership retained its 50% beneficial interest. Under the
terms of the Revised Paradigm Agreement, Paradigm retained
ownership of all program concepts developed by Paradigm prior to
June 15, 1991, but assigned the task of further developing these
program concepts to GLP Co. and/or Associates as independent
contractors. Per the Revised Paradigm Agreement, if GLP Co. or
Associates were to develop any new program concepts during the
period in which they were acting as independent contractors for
Paradigm, GLP Co. or Associates would be required to offer
Paradigm the right to finance the production of such program
concepts. Regardless of Paradigm's decision to finance the
further development of the new program concepts, Paradigm would
receive a share of the profits and fees, if any, from such new
program concepts.
The consulting agreements described above expired on December 31,
1991. Effective with the expiration, Associates continued,
without a formal agreement, to develop projects to offer to
Paradigm. As was the case under the Revised Paradigm Agreement,
the Partnership had the option of financing such projects in
return for equity interests in such projects.
Effective June 23, 1992, Paradigm formed a general partnership
with 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.
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.
During 1996, the Partnership received $135,000 from the sale of
the remaining interests in the films and other projects developed
by Paradigm. The Partnership recognized a gain for financial
reporting purposes of $135,000 on the sale of these films and
other projects in 1996, offset by operational losses of $53,201
recognized during 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 net
liabilities of the discontinued operations of the Production
Segment on the Consolidated Balance Sheet as of December 31,
1996.
3. DISCONTINUED OPERATIONS
Cable Television Systems Segment
Due to the disposition of Windsor and Maryland Cable in 1994,
discussed in Note 2, the Partnership has presented its Cable
Television Systems Segment (comprised of Maryland Cable and
Windsor) as discontinued operations.
Summarized results of the discontinued operations of the Cable
Television Systems Segment on the Consolidated Income Statement
for the year ended December 31, 1994 are as follows:
<TABLE>
<S> <C>
Operating Revenues $10,730,711
Less: Operating Expenses 9,750,040
Operating Income 980,671
Interest Expense (7,765,653)
Loss from discontinued operations $(6,784,982)
</TABLE>
Any losses incurred by this segment subsequent to March 31, 1994
have been offset against the gain on disposition for the year
ended December 31, 1994. In addition, the Partnership recorded a
gain of $600,000 on the sale of Windsor for financial reporting
purposes during 1994.
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).
<PAGE>
The net liabilities of the discontinued operations of the
Production Segment on the Consolidated Balance Sheets are
comprised of the following:
<TABLE>
<CAPTION>
As of As of
December 31, December 31,
1996 1995
<S> <C> <C>
Cash $ 65,082 $ 57,131
Accounts payable and accrued
liabilities (123,994) (197,842)
Net liabilities of
discontinued operations $ (58,912) $(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
$53,201 (see Note 2).
Summarized results of the discontinued operations of the
Production Segment on the Consolidated Income Statements are as
follows:
<TABLE>
<CAPTION>
For the Year For the Year
Ended Ended
December 31, December 31,
1996 1994
<S> <C>
Operating Revenues $158,468 $ 4,039
Less: Operating Expenses 59,956 67,997
Operating Income/(Loss) 98,512 (63,958)
Minority Interest (16,713) 26,522
Income/(Loss) from
discontinued operations $ 81,799 $(37,436)
</TABLE>
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 and
has entered into an agreement to sell the remaining two stations
in 1997 (See Note 2).
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
December 31, December 31,
1996 1995
<S> <C> <C>
Property, plant and
equipment, net $ 2,856,611 $ 3,277,806
Intangible assets, net 27,791,054 32,939,937
Other assets 8,493,912 6,801,971
Borrowings (See Note 4) (22,106,254) (24,045,943)
Other liabilities (17,035,323) (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).
<PAGE>
Summarized results of the discontinued operations of the
Television and Radio Station Segment on the Consolidated Income
Statement for the year ended December 31, 1994 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Operating Revenues $14,361,993
Less: Operating Expenses
12,743,603
Operating Income 1,618,390
Interest Expense (5,222,029)
Loss from discontinued operations $(3,603,639)
</TABLE>
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. During 1996, the remaining operations of TCS generated
operating revenues of $10,011,810, offset by $16,281,227 in
operating and other expenses, including a writedown of intangible
assets, resulting in a net operating loss of $6,269,417, which is
included in the reserve calculation mentioned above.
<PAGE>
4. BORROWINGS
The aggregate amount of borrowings reflected on the Consolidated
Balance Sheets of the Partnership (included in the net
liabilities of discontinued operations of the Television and
Radio Station Segment) is as follows:
<TABLE>
<CAPTION> As of As of
December 31, December 31,
1996 1995
<S> <C> <C>
Senior Secured Notes-TCS $ 10,779,450 $ 12,719,139
Senior Secured Subordinated
Notes-TCS 11,326,804 11,326,804
$ 22,106,254 $ 24,045,943
</TABLE>
On June 1, 1990, TCS entered into note purchase agreements with a
group of insurance companies which provided for senior secured
borrowings of $35 million (the "Senior Secured Notes") and
subordinated secured borrowings of $10 million (the "Subordinated
Notes").
TCS also entered into a security and pledge agreement dated as of
June 1, 1990 with a bank, whereby it is a condition to the
purchasers' obligation under the note purchase agreements that
TCS grant to the security trustee a security interest in and lien
upon (i) all of the capital stock of each corporation which owns
or operates one or more of TCS's stations and (ii) all of TCS's
present and future right, title and interest in the subsidiary
notes, to secure TCS's indenture obligations.
On December 14, 1992, the Senior Secured Notes and the
Subordinated Notes were amended (the "Amended Agreements")to
reschedule principal payments. In addition, the Amended
Agreements contain certain options for required prepayments and
restrictions requiring excess cash to be paid based upon a
calculation outlined in the Amended Agreements. As payment for a
transaction fee, the senior lenders were issued additional notes
due May 31, 1997, in the amount of $350,000 (the "Senior Secured
Fee Notes"), which was repaid in full in 1995.
Under the Amended Agreements, the Senior Secured Notes and the
Senior Secured Fee Notes accrue interest at the rate of 10.69%
per annum payable on the last day of February, May, August and
November. In addition, the Amended Agreements reclassified
accrued interest due through December 14, 1992 on the Senior
Secured Subordinated Notes of $1,326,804 into the original Senior
Secured Subordinated Notes amount of $10,000,000. The restated
Senior Secured Subordinated Notes total of $11,326,804 accrues
interest at the rate of 12.69% per annum compounded quarterly on
the 15th of March, June, September and December until certain
conditions are met (refer to the Amended Agreement for specific
conditions).
On November 30, 1995, TCS failed to make a principal payment of
$299,450. In February 1996, the principal payment was made along
with another payment due of $410,060. In addition, during 1996,
TCS paid down principal of $1,230,179. In total, during 1996,
TCS paid down $1,939,689 of principal on secured borrowings. As
of December 31, 1996, TCS failed to make principal payments of
$1,160,000 on the Subordinated Notes. Thus, TCS is in default of
certain covenants under its note agreements (see Note 2). As of
December 31, 1996, the aggregate amounts of principal payments
required for the borrowings of TCS are $22,106,254. In addition,
TCS has accrued interest of $7,646,326 as of December 31, 1996.
In February, 1997, TCS made a scheduled principal payment of
$410,000 on the Senior Secured Notes. As of March 15, 1997, TCS
had defaulted on $290,000 on the Subordinated Notes.
5. TRANSACTIONS WITH THE GENERAL PARTNER AND ITS AFFILIATES
During the three years ended December 31, 1996 the Partnership
incurred the following expenses in connection with services
provided by the General Partner and its affiliates (see Note 9):
<TABLE> For the Year For the Year For the Year
Ended Ended Ended
<CAPTION> December 31, December 31, December 31,
1996 1995 1994
<S> <C> <C> <C>
Media Opportunity Management
Partners (General
Partner):
Partnership Management Fee $ 913,253 $ 884,080 $ 860,836
Property Management Fee 1,231,344 1,499,986 2,105,031
$2,144,597 $2,384,066 $2,965,867
</TABLE>
The 1996 management fees are recorded as management fee payable
in the Consolidated Balance Sheet as of December 31, 1996.
The Partnership, through Maryland Cable, entered into an
agreement with MultiVision, an affiliate of the General Partner,
whereby MultiVision provided Maryland Cable (through its sale in
1994) with certain administrative services. The reimbursed cost
to the Maryland Cable for these services amounted to $848,067 for
the year ended December 31, 1994. These costs do not include
programming costs that were charged under a cost allocation
agreement. In addition, in 1994 MultiVision Cable TV Corp.
received a payment of $500,000 in partial settlement of severance
and other costs relating to the termination of MultiVision as
manager of the Maryland Cable Systems. Effective June 30, 1992,
the Partnership entered into a management agreement with
Cablevision Systems Corporation, which is not affiliated with the
Partnership, to manage the day-to-day operations and maintain the
books and records of the Windsor Systems through the sale of the
Windsor Systems in 1994. These responsibilities were subject to
the direction and control of the General Partner.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures
about Fair Value of Financial Instruments", requires companies to
report the fair value of certain on- and off-balance sheet assets
and liabilities which are defined as financial instruments.
Considerable judgment is required in interpreting data to develop
the estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts
that the Partnership could realize in a current market exchange.
The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair
value amounts.
Assets, including cash and cash equivalents and accounts
receivable and liabilities, such as trade payables, are carried
at amounts which approximate fair value.
Borrowings
As of December 31, 1996 and 1995, due to the uncertainty of the
Partnership's ability to meet its obligations under the TCS notes
and the uncertainty relating to the ultimate outcome of the
Partnership's efforts to sell the TCS television stations, it was
not practical to estimate the fair value of the TCS debt
obligations (included in net liabilities of discontinued
operations in the accompanying Consolidated Balance Sheets).
7. ACCOUNTING FOR INCOME TAXES
Certain entities owned by the Partnership are taxable entities
and thus are required under SFAS No. 109 to recognize deferred
income taxes. The components of the net deferred tax asset
(included in the net liabilities of discontinued operations in
the accompanying Consolidated Balance Sheets) are as follows:
<TABLE>
<CAPTION> As of As of
December 31, December 31,
1996 1995
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward
$ 1,267,827 $ 952,000
Allowance for doubtful accounts
52,848 43,860
1,320,675 995,860
Deferred tax liabilities:
Basis of property, plant and
equipment (530,047) (619,037)
Total 790,628 376,823
Less: valuation allowance (790,628) (376,823)
Net deferred tax asset $ 0 $ 0
</TABLE>
There is no provision for income taxes required for each of the
three years ended December 31, 1996. The change in the net
deferred tax asset for the year ended December 31, 1996 of
approximately $414,000 relates primarily to additional net
operating loss carryforwards and was fully offset by a
corresponding increase in the valuation allowance.
As of December 31, 1996, the taxable entities have available net
operating loss carryforwards of approximately $3.7 million which
may be applied against future taxable income of such entities.
Such net operating loss carryforwards expire at various dates
from 2008 through 2011.
For the Partnership, the differences between the tax bases of
assets and liabilities and the reported amounts are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
As of As of
December 31, December 31,
1996 1995
Partners' Capital/(Deficit) -
financial statements $(1,487,302) $ 1,239,318
Differences:
Offering expenses 11,346,156 11,346,156
Basis of property, plant and equipment
and intangible assets
4,206,605 4,206,605
Unrealized loss on common stock
investment - 15,000,000
Cumulative (income) losses of stock
investments (corporations) 2,032,195 4,711,797
Management fees 4,176,677 4,176,677
Other 7,110,273 3,387,604
Partners' Capital - income tax basis
$27,384,604 $44,068,157
</TABLE>
8. MINORITY INTEREST
The Partnership's Consolidated Financial Statements include 100%
of the assets, liabilities and results of operations of Paradigm
and its affiliate, BBAD. The Partnership's net income decreased
by approximately $17,000 and the net loss was decreased by
approximately $27,000 for the years ended December 31, 1996 and
1994, respectively as a result of the minority interest in BBAD.
Minority interest is presented along with the discontinued
operations of the Production segment of the Consolidated
Financial Statements.
9. Subsequent Events
On March 27, 1997, the Partnership received a voluntary cash
payment of $23,671,989 (the "Cash Payment") from Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), an
affiliate of the General Partner, for distribution to limited
partners. The Cash Payment will be reflected in the
Partnership's 1997 first quarter financial statements as a
capital contribution and a distribution payable to limited
partners. On April 2, 1997, the Partnership intends to make a
distribution to the limited partners of record as of March 24,
1997 of $211.08 per Unit, or $23,671,989.
The General Partner has executed an amendment dated March 24,
1997 to the Partnership Agreement which provides for the
distribution of the Cash Payment solely to the limited partners
and the termination of the Partnership's obligation to pay a
Partnership Management Fee and a Property Management Fee for 1996
and subsequent periods.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
Part III.
Item 10. Directors and Executive Officers of the Registrant
Registrant has no executive officers or directors. The General
Partner manages Registrant's affairs and has general
responsibility and authority in all matters affecting its
business. The responsibilities of the General Partner are
carried out either by executive officers of EHR Opportunity
Management, Inc. and IMP Opportunity Management, Inc. as general
partners of RP Opportunity Management, L.P. or executive officers
of ML Opportunity Management Inc., acting on behalf of the
General Partner. The executive officers and directors of RP
Opportunity Management, L.P. and ML Opportunity Management Inc.
are:
RP Opportunity Management, L.P. (the "Management Company")
Served in Present
Name Capacity Since (1) Position Held
Director and President
I. Martin Pompadur 6/15/87 IMP Opportunity Management
Executive Vice President
Elizabeth McNey Yates 4/01/88 IMP Opportunity Management
(1) The Director holds office until a successor is elected and
qualified. All executive officers serve at the pleasure of
the Director.
ML Opportunity Management Inc. ("MLOM")
Served in Present
Name Capacity Since (1) Position Held
Kevin K. Albert 2/19/91 President
6/22/87 Director
Robert F. Aufenanger 2/02/93 Executive Vice President
3/28/88 Director
Michael E. Lurie 8/10/95 Vice President
8/11/95 Director
Steven N. Baumgarten 3/07/94 Vice President
David G. Cohen 8/11/95 Vice President
Diane T. Herte 8/11/95 Treasurer
(1) Directors hold office until their successors are elected and
qualified. All executive officers serve at the pleasure of
the Board of Directors.
I. Martin Pompadur, 61, Director and President of RP Opportunity
Management, L.P. Mr. Pompadur is also the Chairman and Chief
Executive Officer of GP Station Partners which is the General
Partner of Television Station Partners, L.P., a private limited
partnership that owned and operated four network affiliated
television stations. These stations were sold in January 1996
and this partnership is currently in its liquidation phase. Mr.
Pompadur is the Chairman and Chief Executive Officer of PBTV,
Inc., the Managing General Partner of Northeastern Television
Investors Limited Partnership, a private limited partnership
which owns and operates WBRE-TV, a network affiliated station in
Wilkes-Barre/Scranton, Pennsylvania. Mr. Pompadur is also the
President and a Director of RP Media Management ("RPMM"), a joint
venture which is a partner in Media Management Partners ("MMP"),
an affiliate of the General Partner and the general partner of ML
Media Partners, L.P., which presently owns cable television
systems and several radio stations. Mr. Pompadur is also Chief
Executive Officer of MultiVision Cable TV Corp. ("MultiVision"),
a cable television multiple system operator ("MSO") organized in
January 1988 and owned principally by Mr. Pompadur and the estate
of Elton H. Rule to provide MSO services to cable television
systems acquired by entities under his control. Mr. Pompadur is
a principal owner, member of the Board of Directors and Secretary
of Caribbean International News Corporation ("Caribbean").
Caribbean owns and publishes EL Vocero, the largest Spanish
language daily newspaper in the United States.
Elizabeth McNey Yates, 33, Executive Vice President of RP
Opportunity Management, L.P., joined RP Companies Inc., an entity
controlled by Mr. Pompadur, in April 1988 and has senior
executive responsibilities in the areas of finance, operations,
administration, acquisitions and dispositions. Ms. Yates is
Chief Operating Officer and Executive Vice President of RP
Companies, Inc., Executive Vice President of RPMM, Chief
Operating Officer and Executive Vice President of RP Radio
Management Inc. and is the President and Chief Operating Officer
of MultiVision.
Kevin K. Albert, 44, a Managing Director of Merrill Lynch
Investment Banking Group ("ML Investment Banking"), joined
Merrill Lynch in 1981. Mr. Albert works in the Equity Private
Placement Group and is involved in structuring and placing a
diversified array of private equity financings including common
stock, preferred stock, limited partnership interests and other
equity-related securities. Mr. Albert is also a director of ML
Media Management Inc. ("ML Media"), an affiliate of MLOM and a
joint venturer of Media Management Partners, the general partner
of ML Media Partners, L.P.; a director of ML Film Entertainment
Inc. ("ML Film"), an affiliate of MLOM and the managing general
partner of the general partners of Delphi Film Associates IV, V
and ML Delphi Premier Partners, L.P.; a director of ML Mezzanine
II Inc. ("ML Mezzanine II"), an affiliate of MLOM and sole
general partner of the managing general partner of ML-Lee
Acquisition Fund II, L.P. and ML-Lee Acquisition Fund (Retirement
Accounts) II, L.P.; a director of ML Mezzanine Inc. ("ML
Mezzanine"), an affiliate of MLOM and the sole general partner of
the managing general partner of ML-Lee Acquisition Fund, L.P.; a
director of Merrill Lynch Venture Capital Inc. ("ML Venture"), an
affiliate of MLOM and the general partner of the Managing General
Partner of ML Venture Partners II, L.P. ("Venture II") and ML
Oklahoma Venture Partners Limited Partnership ("Oklahoma"); and a
director of Merrill Lynch R&D Management Inc. ("ML R&D"), an
affiliate of MLOM and the general partner of the General Partner
of ML Technology Ventures, L.P.; Mr. Albert also serves as an
independent general partner of Venture II.
Robert F. Aufenanger, 43, a Vice President of Merrill Lynch & Co.
Corporate Credit and a Director of the Partnership Management
Department, joined Merrill Lynch in 1980. Mr. Aufenanger is
responsible for the ongoing management of the operations of the
equipment, real estate and project related limited partnerships
for which subsidiaries of ML Leasing Equipment Corp. and Merrill
Lynch, Hubbard Inc., affiliates of Merrill Lynch, are general
partners. Mr. Aufenanger is also a director of ML Media, MLH
Real Estate Inc., an affiliate of MLOM and the general partner of
the Associate General Partner of ML/EQ Real Estate Portfolio,
L.P., MLH Property Managers Inc., an affiliate of MLOM and the
Managing General Partner of MLH Income Realty Partnership VI, ML
Film, ML Venture, ML R&D, ML Mezzanine and ML Mezzanine II.
Michael E. Lurie, 53, a First Vice President of Merrill Lynch &
Co. Corporate Credit and the Director of the Asset Recovery
Management Department, joined Merrill Lynch in 1970. Prior to
his present position, Mr. Lurie was the Director of Debt and
Equity Markets Credit responsible for the global allocation of
credit limits and the approval and structuring of specific
transactions relating to debt and equity products. Mr. Lurie
also served as Chairman of the Merrill Lynch International Bank
Credit Committee. Mr. Lurie is also a director of ML Media, ML
Film, ML Venture, ML R&D and MLH Real Estate Inc.
Steven N. Baumgarten, 41, a Vice President of Merrill Lynch & Co.
Corporate Credit joined Merrill Lynch in 1986. Mr. Baumgarten
shares responsibility for the ongoing management of the
operations of the equipment and project related limited
partnerships for which subsidiaries of ML Leasing Equipment
Corp., an affiliate of Merrill Lynch, are general partners.
Mr. Baumgarten is also a director of ML Film.
David G. Cohen, 34, a Vice President of Merrill Lynch & Co.
Corporate Credit joined Merrill Lynch in 1987. Mr. Cohen shares
responsibility for the ongoing management of the operations of
the equipment and project related limited partnerships for which
subsidiaries of ML Leasing Equipment Corp., an affiliate of
Merrill Lynch, are general partners.
Diane T. Herte, 36, a Vice President of Merrill Lynch & Co.
Investment Banking Group since 1996 and previously an Assistant
Vice President of Merrill Lynch & Co. Corporate Credit Group
since 1992, joined Merrill Lynch in 1984. Ms. Herte's
responsibilities include controllership and financial management
functions for certain partnerships for which subsidiaries of
Merrill Lynch are the general partner.
Mr. Pompadur and Ms. Yates were each executive officers of
Maryland Cable Corp. and Maryland Cable Holdings Corp. at and
during the two years prior to the filing by both companies on
March 10, 1994 of a consolidated plan of reorganization under
Chapter 11 of the United States Bankruptcy Code with the United
States Bankruptcy Court for the Southern District of New York.
For more information regarding such filings, refer to "Item 1.
Business -- Maryland Cable Corp.".
Mr. Aufenanger is an executive officer of Mid-Miami Diagnostics
Inc. ("Mid-Miami Inc."). On October 28, 1994 both Mid-Miami Inc.
and Mid-Miami Diagnostics, L.P. filed voluntary petitions for
protection from creditors under Chapter 7 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of New York.
An Investment Committee of Registrant was established to have the
responsibility and authority for developing, in conjunction with
the Management Company, diversification objectives for the
investments to be made by Registrant, for reviewing and approving
each investment proposed by the Management Company for Registrant
and for evaluating and approving dispositions of investments of
Registrant. The Investment Committee will also establish
reserves for Registrant for such purposes and in such amounts as
it deems appropriate. A simple majority vote shall be required
for any proposed investment or disposition. The Investment
Committee also has the responsibility and authority for
monitoring the management of the investments of Registrant by the
Management Company.
The current members of the Investment Committee are as follows:
RPMM Representative MLMM Representatives
I. Martin Pompadur Kevin K. Albert
Robert F. Aufenanger
Item 11. Executive Compensation.
Registrant does not pay the executive officers or directors of
the General Partner any remuneration. The General Partner does
not presently pay any remuneration to any of its executive
officers or directors. See Note 5 to the Financial Statements
included in Item 8 hereof, however, for amounts paid by
Registrant to the General Partner and its affiliates for the
three years ended December 31, 1996.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
As of March 20, 1997, no person was known by the Registrant to be
the beneficial owner of more than 5 percent of the Units.
To the knowledge of the General Partner, as of February 1, 1997,
the officers and directors of the General Partner in aggregate
own less than 1% of the outstanding common stock of Merrill Lynch
& Co., Inc.
RP Opportunity Management, L.P. ("RPOM") is organized as a
limited partnership, the general partners of which are EHR
Opportunity Management, Inc., and IMP Opportunity Management,
Inc. IMP Opportunity Management, Inc. is wholly-owned by Mr. I.
Martin Pompadur and EHR Opportunity Management, Inc. is wholly-
owned by The Rule Trust.
Item 13. Certain Relationships and Related Transactions.
Refer to Note 5 to the Financial Statements included in Item 8
hereof, and in Item 1 for a description of the relationship of
the General Partner and its affiliates to Registrant and its
subsidiaries.
Part IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a) Financial Statements, Financial Statement Schedules and
Exhibits.
(1) Financial Statements
See Item 8. "Financial Statements and Supplementary
Data."
(2) Financial Statement Schedules
No financial statement schedules are included
because of the absence of the conditions under
which they are required or because the information
is included in the financial statement or the notes
thereto.
(3) Exhibits
<TABLE>
<CAPTION>
Exhibits Incorporated by Reference to
<C> <C>
3.1 Certificate of Limited Exhibit 3.1 to Registrant's
Partnership Form S-1 the Registration
Statement
(File No. 33-15502)
3.2 Amended and Restated Agreement of Exhibit 3.2 to Registrant's
Limited Partnership Annual Report on Form 10-K
for the fiscal year ended
December 31, 1987
(File No. 33-15502)
3.3 Amendment No. 1 to Amended and
Restated Agreement of Limited
Partnership
10.1.1 Exchange Agreement dated December Exhibit 10.1 to Registrant's
31, 1993 Form 8-K Report dated
January 12, 1994
(File No. 33-15502)
10.1.2 Consolidated Prepackaged Plan of Exhibit to Registrant's Form
Reorganization of Maryland Cable 8-K Report dated March 10,
Corp. and Maryland Cable Holdings 1994
Corp. (File No. 33-15502)
10.1.3 Letter Agreement to Purchase and Exhibit 10.1 to Registrant's
Sell all of the Assets of the Annual Report on Form 10-K
community antenna television for the fiscal year ended
systems owned by Windsor December 31, 1988
Cablevision, Inc. between (File No. 33-15502)
Williamston Cable Television,
Inc. and Windsor Cablevision,
Inc. dated as of March 7, 1988
10.1.4 Agreement between TCS, Exhibit 10.1 to Registrant's
Registrant, Commonwealth Capital Form 8-K Report dated
Partners, L.P., and other December 14, 1992
parties, dated December 14, 1992 (File No. 0-16690)
10.1.5 Management Agreement dated as of Exhibit 10.1.1 to
June 30, 1992 between ML Media Registrant's Annual Report on
Opportunity Partners, L.P. and Form 10-K for the fiscal year
Cablevision Systems Corporation ended December 31, 1992
(File No. 0-16690)
10.2 Promissory Note from Williamston Exhibit 10.2 to Registrant's
Cable Television, Inc. to Windsor Annual Report on Form 10-K
Cablevision, Inc. for the fiscal year ended
December 31, 1988
(File No. 33-15502)
10.2 Services Agreement between Exhibit 10.2 to Registrant's
Registrant, TCS Management Corp., Form 8-K Report dated
and Commonwealth Capital December 14, 1992
Partners, L.P., dated December (File 0-16690)
14, 1992
10.2.1 Asset Purchase Agreement dated Exhibit 10.2.1 to
November 16, 1993 between Tar Registrant's Quarterly Report
River Communications, Inc. and on Form 10-Q for the quarter
Registrant ended September 30, 1993
(File No. 0-16690)
10.3.1 Securities Purchase Agreement Exhibit 28.1 to Registrant's
dated May 13, 1988 relating to Quarterly Report on Form 10-Q
Prime Cable Systems for the quarter ended
June 30, 1988
(File No. 0-16690)
10.3.2 Amendment No. 1 to Securities Exhibit 2(b) to Amendment No.
Purchase Agreement, dated as of 2 to the Registration
October 21, 1988 Statement of Maryland Cable
Corp.
(File No. 33-23679)
10.3.3 Amendment No. 2 to Securities Exhibit 2(c) to Maryland
Purchase Agreement, dated as of Cable Corp.'s Annual Report
October 28, 1988 on Form 10-K for the fiscal
year ended December 31, 1989
(File No. 33-23679)
10.3.4 Purchase and Sale Agreement dated Exhibit 10.3.4 to
January 22, 1993 between Maryland Registrant's Annual Report on
Cable Corp. and Benchmark Form 10-K for the fiscal year
Acquisition Fund I Limited ended December 31, 1992
Partnership (File No. 0-16690)
10.4 Credit Agreement dated November Exhibit 28.2 to Registrant's
4, 1988 between Maryland Cable Quarterly Report on Form 10-Q
Corp., and Citibank, N.A., as for the quarter ended
agent June 30, 1988
(File No. 0-16690)
10.5 Maryland Cable Corp. to Security Exhibit 4(a) to Maryland
Pacific National Trust Company Cable Corp.'s Annual Report
(New York) Trustee - Indenture on Form 10-K for the fiscal
Dated as of November 15, 1988 - year ended December 31, 1989
$162,406,000 Senior Subordinated (File No. 33-23679)
Discount Notes due 1988
10.6 Asset Purchase Agreement dated Exhibit 10.6 to Registrant's
December 21, 1988 by and between Annual Report on Form 10-K
CBN Continental Broadcasting for the fiscal year ended
Network, Inc., and ML Media December 31, 1988
Opportunity Partners, L.P. (File No. 33-15502)
10.7 Agency and Cost Allocation Exhibit 10(a) to Maryland
Agreement, as amended Cable Corp.'s Annual Report
on Form 10-K for the fiscal
year ended December 31, 1989
(File No. 33-23679)
10.8 Fee Sharing Agreement between ML Exhibit 10(b) to Maryland
Media Opportunity Partners, L.P. Cable Corp.'s Annual Report
and Maryland Cable Corp. on Form 10-K for the fiscal
year ended December 31, 1989
(File No. 33-23679)
10.9 Subordination Agreement by and Exhibit 28(a) to Maryland
among ML Media Opportunity Cable Corp.'s Annual Report
Partners, L.P., Maryland Cable on Form 10-K for the fiscal
Corp. and Security Pacific year ended December 31, 1989
National Trust Company (New York) (File No. 33-23679)
as trustee
10.10.1Guaranty of Cellular Holdings, Exhibit 10.10.1 to
Inc. dated May 19, 1989 Registrant's Quarterly Report
on Form 10-Q for the quarter
ended June 30, 1989
(File No. 0-16690)
10.10.2Security and Pledge Agreement Exhibit 10.10.2 to
between Cellular Holdings, Inc. Registrant's Quarterly Report
and ML Media Opportunity on Form 10-Q for the quarter
Partners, L.P. dated as of May ended June 30, 1989
19, 1989 (File No. 0-16690)
10.10.3Subscription and Purchase Exhibit 10.10.3 to
Agreement 666,667 shares of Registrant's Quarterly Report
Series A Convertible Preferred on Form 10-Q for the quarter
Stock of General Cellular Corp. ended June 30, 1989
Dated as of May 19, 1989 (File No. 0-16690)
10.10.4Certificate of Designations, Exhibit 10.10.4 to
Preferences, and Relative Rights Registrant's Quarterly Report
of Series A Convertible Preferred on Form 10-Q for the quarter
Stock of General Cellular ended June 30, 1989
Corporation (File No. 0-16690)
10.10.5Registration Rights Agreement Exhibit 10.10.5 to
Dated as of May 19, 1989 between Registrant's Quarterly Report
General Cellular Corp. and ML on Form 10-Q for the quarter
Media Opportunity Partners, L.P. ended June 30, 1989
(File No. 0-16690)
10.11 Limited Partnership Agreement Exhibit 10.11 to Registrant's
between Bob Banner Associates, Quarterly Report on Form 10-Q
the Gary L. Pudney Co. and ML for the quarter ended June
Media Opportunity Productions, 30, 1989
Inc. and ML Media Opportunity (File No. 0-16690)
Partners, L.P.
10.12 Stockholders Agreement dated as Exhibit 10.12 to Registrant's
of September 1, 1989 among Annual Report on Form 10-K
Mediaventures International for the fiscal year ended
Limited, ML Media Opportunity December 31, 1991
Partners, L.P., Peter Clark and (File No. 0-16690)
Alan Morris
10.13 Limited Partnership Agreement of Exhibit 10.13 to Registrant's
European Media Partners dated as Annual Report on Form 10-K
of September 1, 1989 among for the fiscal year ended
Mediaventures Limited, ML Media December 31, 1991
Opportunity Europe, Inc. and ML (File No. 0-16690)
Media Opportunity Partners, L.P.
10.14 Stock Purchase Agreement dated as Exhibit 10.14 to Registrant's
of January 17, 1990 between Annual Report on Form 10-K
Malcolm Glazer and TCS Television for the fiscal year ended
Partners, L.P. December 31, 1991
(File No. 0-16690)
10.15 Limited Partnership Agreement of Exhibit 10.15 to Registrant's
TCS Television Partners, L.P. Annual Report on Form 10-K
dated January 17, 1990 between for the fiscal year ended
Riverdale Media Corp. and ML December 31, 1991
Media Opportunity Partners, L.P. (File No. 0-16690)
10.16 First Amendment to Credit Exhibit 10.16 to Registrant's
Agreement dated as of November Annual Report on Form 10-K
14, 1989 by and among Maryland for the fiscal year ended
Cable Corp., and Citibank, N.A., December 31, 1991
as Agent (File No. 0-16690)
10.17 Second Amendment to Credit Exhibit 10.17 to Registrant's
Agreement dated March 30, 1990 by Annual Report on Form 10-K
and among Maryland Cable Corp. for the fiscal year ended
and Citibank, N.A., as Agent December 31, 1991
(File No. 0-16690)
10.18 Security and Pledge Agreement Exhibit 10.18 to Registrant's
between General Cellular Annual Report on Form 10-K
Corporation and ML Media for the fiscal year ended
Opportunity Partners, L.P. dated December 31, 1991
as of June 15, 1990 (File No. 0-16690)
10.19 Employment Agreement dated June Exhibit 10.19 to Registrant's
22, 1990 between Jessica J. Annual Report on Form 10-K
Josephson and International Media for the fiscal year ended
Publishing, Inc. December 31, 1991
(File No. 0-16690)
10.19.1Agreement dated November 1, 1992 Exhibit 10.19.1 to
between Venture Media and Registrant's Annual Report on
Communications, L.P., ML Media Form 10-K for the fiscal year
Opportunity Partners, L.P., ended December 31, 1992
Jessica J. Josephson, (File No. 0-16690)
International Media Strategies,
Inc. and International Media
Publishing, L.P.
10.20 Limited Partnership Agreement of Exhibit 10.20 to Registrant's
International Media Publishing Annual Report on Form 10-K
L.P. dated June 22, 1990 for the fiscal year ended
December 31, 1991
(File No. 0-16690)
10.20.1Bill of Sale and Agreement dated Exhibit 10.20.1 to
as of July 16, 1993 between Registrant's Quarterly Report
International Media Publishing, on Form 10-Q for the quarter
L.P. and Phillips Business ended June 30, 1993
Information Inc. (File No. 0-16690)
10.20.2Bill of Sale and Agreement dated Exhibit 10.20.2 to
as of July 16, 1993 between Registrant's Quarterly Report
Intelidata Limited and Phillips on Form 10-Q for the quarter
Business Information Inc. ended June 30, 1993
(File No. 0-16690)
10.20.3Sale and Purchase Agreement dated Exhibit 10.20.3 to
as of August 6, 1993 between Registrant's Quarterly Report
Intelidata Limited and Romtec on Form 10-Q for the quarter
plc. ended September 30, 1993
(File No. 0-16690)
10.21 TCS Television Partners, L.P. Exhibit 10.21 to Registrant's
Note Purchase Agreement dated Annual Report on Form 10-K
June 1, 1990 for the fiscal year ended
December 31, 1991
(File No. 0-16690)
10.22 Amended and Restated Credit Exhibit 10.22 to Registrant's
Agreement dated as of September Annual Report on Form 10-K
6, 1991, among Maryland Cable for the fiscal year ended
Corp., Maryland Cable Holdings December 31, 1991
Corp. and Citibank, N.A. as Agent (File No. 0-16690)
10.23 Participation Agreement dated as Exhibit 10.23 to Registrant's
of September 6, 1991, among ML Annual Report on Form 10-K
Cable Partners, L.P. and for the fiscal year ended
Citibank, N.A., as Agent December 31, 1991
(File No. 0-16690)
10.24 Limited Partnership Agreement of Exhibit 10.24 to Registrant's
ML Cable Partners, L.P. dated as Annual Report on Form 10-K
of September 4, 1991 for the fiscal year ended
December 31, 1991
(File No. 0-16690)
10.25 Certificate of Limited Exhibit 10.25 to Registrant's
Partnership of ML Cable Partners, Annual Report on Form 10-K
L.P. for the fiscal year ended
December 31, 1991
(File No. 0-16690)
10.26 Warrant Purchase Agreement dated Exhibit 10.26 to Registrant's
as of September 6, 1991, among Annual Report on Form 10-K
Maryland Cable Holdings Corp. and for the fiscal year ended
Citibank, N.A., as Agent December 31, 1991
(File No. 0-16690)
10.27 Class A Warrant to Purchase Exhibit 10.27 to Registrant's
Common Stock of Maryland Cable Annual Report on Form 10-K
Holdings Corp., dated September for the fiscal year ended
6, 1991 December 31, 1991
(File No. 0-16690)
10.28 Amended and Restated Exhibit 10.28 to Registrant's
Subordination Agreement dated as Annual Report on Form 10-K
of September 6, 1991, among for the fiscal year ended
Registrant, Maryland Cable Corp., December 31, 1991
Maryland Cable Holdings Corp. and (File No. 0-16690)
Citibank, N.A. as Agent
10.29 Amendatory Agreement, dated as of Exhibit 10.29 to Registrant's
September 6, 1991 among Maryland Annual Report on Form 10-K
Cable Corp., Maryland Cable for the fiscal year ended
Holdings Corp., and Citibank, December 31, 1991
N.A. as Agent (File No. 0-16690)
10.30 Amended and Restated Guaranty to Exhibit 10.30 to Registrant's
Maryland Cable Corp., dated as of Annual Report on Form 10-K
September 6, 1991, by Citibank, for the fiscal year ended
N.A. as Agent, and Maryland Cable December 31, 1991
Holdings Corp. (File No. 0-16690)
10.31 Agent's Fee Agreement dated as of Exhibit 10.31 to Registrant's
September 6, 1991, between Annual Report on Form 10-K
Citibank, N.A. and Maryland Cable for the fiscal year ended
Corp. December 31, 1991
(File No. 0-16690)
10.32 Co-Sale Agreement dated as of Exhibit 10.32 to Registrant's
September 6, 1991, among Annual Report on Form 10-K
Registrant and Maryland Cable for the fiscal year ended
Holdings Corp. December 31, 1991
(File No. 0-16690)
10.33 Agreement for the Sale and Exhibit 10.33 to Registrant's
Purchase of Information Research Annual Report on Form 10-K
Division of Logica UK Limited, for the fiscal year ended
dated December 17, 1991 December 31, 1991
(File No. 0-16690)
10.34 Memorandum and Articles of Exhibit 10.34 to Registrant's
Association of Intelidata Annual Report on Form 10-K
Limited, dated as of October 18, for the fiscal year ended
1991 December 31, 1991
(File No. 0-16690)
10.35 Agreement among Bob Banner Exhibit 10.35 to Registrant's
Associates, The Gary L. Pudney Annual Report on Form 10-K
Co., ML Media Opportunity for the fiscal year ended
Productions, Inc., and Registrant December 31, 1991
for withdrawal of Bob Banner (File No. 0-16690)
Associates and the Gary L. Pudney
Co. as General Partners from
Paradigm Entertainment L.P. dated
May 31, 1991
10.35.1Partnership Agreement dated June Exhibit 10.35.1 to
23, 1992 among Bob Banner Registrant's Annual Report on
Associates, Inc. and Paradigm Form 10-K for the fiscal year
Entertainment, L.P. ended December 31, 1992
(File No. 0-16690)
10.36a Articles of Association of Media Exhibit 10.36a to Quarterly
Ventures Investments Ltd. Report on Form 10-Q for the
quarter ended
March 31, 1992
(File No. 0-16690)
10.36b Special Resolution of Media Exhibit 10.36b to Quarterly
Ventures Investments Ltd. Report on Form 10-Q for the
quarter ended March 31, 1992
(File No. 0-16690)
10.36c Articles of Association of Exhibit 10.36c to Quarterly
European Media Partners, Ltd. Report on Form 10-Q for the
quarter ended March 31, 1992
(File No. 0-16690)
10.36d Special Resolution of European Exhibit 10.36d to Quarterly
Media Partners, Ltd. Report on Form 10-Q for the
quarter ended March 31, 1992
(File No. 0-16690)
10.36e Certificate of Incorporation on Exhibit 10.36e to Quarterly
Change of Name (various) Report on Form 10-Q for the
quarter ended March 31, 1992
(File No. 0-16690)
10.36f Resolution of Investment by ALP Exhibit 10.36f to Quarterly
Enterprises in European Media Report on Form 10-Q for the
Partners, Ltd. quarter ended March 31, 1992
(File No. 0-16690)
10.36g Resolution of initial ownership Exhibit 10.36g to Quarterly
structure of European Media Report on Form 10-Q for the
Partners, Ltd. quarter ended March 31, 1992
(File No. 0-16690)
10.36h Agreement to transfer of Exhibit 10.36h to Quarterly
International Programme Ventures Report on Form 10-Q for the
Limited to European Media quarter ended March 31, 1992
Partners, Ltd. (File No. 0-16690)
10.36i Agreement for the Sale and Exhibit 10.36i to Quarterly
Purchase of 50% of the issued Report on Form 10-Q for the
Share Capital of Neomedion Ltd. quarter ended March 31, 1992
(File No. 0-16690)
10.36j Listing of Shareholders at May Exhibit 10.36j to Quarterly
14, 1992 of Mediaventures Report on Form 10-Q for the
Investments Ltd., European Media quarter ended March 31, 1992
Partners, Ltd. and Neomedion Ltd. (File No. 0-16690)
10.37 Management Agreement by and Exhibit 10.37 to Quarterly
between Fairfield Communications, Report on Form 10-Q for the
Inc. and ML Media Partners, L.P. quarter ended June 30, 1993
and Registrant dated May 15, 1993 (File No. 0-16690)
10.37.1Sharing Agreement by and among ML Exhibit 10.37.1 to Quarterly
Media Partners, L.P., Registrant, Report on Form 10-Q for the
RP Companies, Inc., Radio Equity quarter ended June 30, 1993
Partners, Limited Partnership and (File No. 0-16690)
Fairfield Communications, Inc.
10.37.2Option Agreement by and between Exhibit 10.37.2 to
U.S. Radio, Inc. and Registrant Registrant's Annual Report on
relating to station WMXN-FM dated Form 10-K for the fiscal year
January 25, 1994 ended December 31, 1993
(File No. 0-16690)
10.37.3Time Brokerage Agreement by and Exhibit 10.37.3 to
between U.S. Radio, L.P. and Registrant's Annual Report on
Registrant relating to station Form 10-K for the fiscal year
WMXN-FM dated January 25, 1994 ended December 31, 1993
(File No. 0-16690)
10.38 Order of the United States Exhibit 10.01 to Quarterly
Bankruptcy Court, Southern Report on Form 10-Q for the
District of New York, approving quarter ended
nonmaterial modifications to the March 31, 1994
consolidated prepackaged plan of (File No. 0-16690)
reorganization of Maryland Cable
Corp. and Maryland Cable Holdings
Corp.
10.39 Order of the United States Exhibit 10.02 to Quarterly
Bankruptcy Court, Southern Report on Form 10-Q for the
District of New York, confirming quarter ended
debtors' first amended March 31, 1994
consolidated prepackaged debtors' (File No. 0-16690)
first amended consolidated
prepackaged plan of
reorganization under Chapter 11
of the United States Bankruptcy
Code
10.40 Exchange agreement and plan of Exhibit 10.01 to Quarterly
merger by and among Registrant, Report on Form 10-Q for the
Western Wireless Corporation, quarter ended
Markets Cellular Limited June 30, 1994
Partnership and others dated July (File No. 0-16690)
20, 1994
10.41 Stockholders agreement by and Exhibit 10.02 to Quarterly
among Western Wireless Report on Form 10-Q for the
Corporation, Registrant and quarter ended
others dated July 29, 1994 June 30, 1994
(File No. 0-16690)
10.42 Asset purchase agreement between Exhibit 10.01 to Quarterly
ML Media Opportunity Partners, Report on Form 10-Q for the
L.P. and US Radio of Norfolk, quarter ended
Inc. dated October 26, 1994 September 30, 1994
(File No. 0-16690)
10.43 Agreement between ML Media Exhibit 10.02 to Quarterly
Opportunity Partners, L.P., MV Report on Form 10-Q for the
Technology Limited, ALP quarter ended
Enterprises Inc., European Media September 30, 1994
Partners Limited, and others (File No. 0-16690)
dated August 12, 1994
10.44 Share sale agreement between ML Exhibit 10.03 to Quarterly
Media Opportunity Partners, L.P., Report on Form 10-Q
ALP Enterprises, Inc., European for the quarter ended
Media Partners Limited, and September 30, 1994
others dated August 12, 1994 (File No. 0-16690)
10.45 Agreement by and among Bob Banner Exhibit 10.01 to Quarterly
Associates, Inc. and Paradigm Report on Form 10-Q
for the quarter ended
September 30, 1995
(File No. 0-16690)
10.46 Agreement dated as of Exhibit 10.01 to Quarterly
September 17, 1996, between TCS Report on Form 10-Q
and CIGNA Investments Inc. for the quarter ended
September 30, 1996
(File No. 0-16690)
10.47 Stock purchase agreement dated Exhibit 10.1 to Registrant's
December 30, 1996 among TCS Form 8-K Report dated
Television Partners, L.P., TCS December 30, 1996
Television, Inc., Fabri (File No. 0-16690)
Development Corporation and
Nexstar Broadcasting Group,
L.L.C.
27 Financial Data Schedule
99.1 Pages 13 through 21 and 41 Exhibit 28.1 to Registrant's
through 50 of Prospectus of the Annual Report on Form 10-K
Partnership dated December 31, for the fiscal year ended
1987, filed pursuant to Rule December 31, 1987
424(b) under the Securities Act (File No. 33-15502)
of 1933
99.2 Pages 12 through 15, 17, 18, 22 Exhibit 28.2 to Registrant's
through 25, 41 through 53 and 55 Annual Report on Form 10-K
through 72 of Prospectus for for the fiscal year ended
Maryland Cable Corp.'s offering December 31, 1988
of $162,406,000 Senior (File No. 33-15502)
Subordinated Discount Notes due
1998 and Maryland Cable Holdings
Corp.'s offering of 2,000,000
Shares of Class B common Stock
99.3 Registrant's Proposed Letter to
Limited Partners dated April 2,
1997
99.4 Merrill Lynch, Pierce,
Fenner & Smith
Incorporated's Proposed
Letter to Limited
Partners dated April 2,
1997
</TABLE>
(b) Reports on Form 8-K.
On January 28, 1997, Registrant filed with the Securities and
Exchange Commission a Current Report on Form 8-K dated December
30, 1996. This current report contained details regarding TCS
and TCS Inc.'s agreement to sell two television stations to
Nexstar Broadcasting Group L.L.C.
(c) Exhibits.
See (a)(3) above.
(d) Financial Statement Schedules.
See (a)(2) above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: Media Opportunity Management Partners
General Partner
By: ML Opportunity Management Inc.
Dated: March 27, 1997 /s/ Kevin K. Albert
Kevin K. Albert
Director and President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of Registrant in the capacities and on the dates
indicated.
RP OPPORTUNITY MANAGEMENT, L.P.
By: IMP Opportunity Management Inc.
a general partner
Signature Title Date
/s/ I. Martin Pompadur Director and March 27, 1997
(I. Martin Pompadur) President(principal
executive officer of
the Registrant)
/s/Elizabeth McNey Yates Executive Vice March 27, 1997
(Elizabeth McNey Yates) President
ML OPPORTUNITY MANAGEMENT INC. ("MLOM")
Signature Title Date
Each with respect to
MLOM unless otherwise
noted)
/s/ Kevin K. Albert Director and March 27, 1997
(Kevin K. Albert) President
/s/ Robert F. Aufenanger Director and March 27, 1997
(Robert F. Aufenanger) Executive Vice
President
/s/ Michael E. Lurie Director and Vice March 27, 1997
(Michael E. Lurie) President
/s/ Diane T. Herte Treasurer March 27, 1997
(Diane T. Herte) (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 year ended 1995 Form 10-
K Consolidated Balance Sheets and Consolidated
Statements of Operations as of December 31, 1996, and
is qualified in its entirety by reference to such
financial statements.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,383
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,388
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (1,487)
<TOTAL-LIABILITY-AND-EQUITY> 2,388
<SALES> 0
<TOTAL-REVENUES> 23,690
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,256
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 21,433
<INCOME-TAX> 0
<INCOME-CONTINUING> 21,433
<DISCONTINUED> 82
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,515
<EPS-PRIMARY> 189.93
<EPS-DILUTED> 0
</TABLE>
AMENDMENT NO. 1
TO
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ML MEDIA OPPORTUNITY PARTNERS, L.P.
This Amendment No. 1, dated as of March 24, 1997 (this
"Amendment"), to Amended and Restated Agreement of Limited
Partnership of ML Media Opportunity Partners, L.P., dated as of
March 23, 1988 (the "Limited Partnership Agreement"), is entered
into by and among Media Opportunity Management Partners, a joint
venture organized as a general partnership under the law of the
State of New York (the "General Partner"), consisting of RP
Opportunity Management, L.P., a Delaware limited partnership
("RPOM"), and ML Opportunity Management Inc., a Delaware
corporation ("MLOM"), as General Partner, and those Persons
listed in the books and records of ML Media Opportunity Partners,
L.P., a Delaware limited partnership (the "Partnership"), as
limited partners of the Partnership.
WHEREAS, Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") has indicated that it may make a
voluntary payment to the Partnership in the aggregate amount of
$23,671,989 (the "Cash Payment") with regard to certain general
and administrative expenses of the Partnership since the
formation of the Partnership and the Partnership Management Fees
and the Asset Management Fees paid by the Partnership to or for
the benefit of MLOM and RPOM, respectively, after the first
quarter of 1990; and
WHEREAS, the parties hereto desire to amend the Limited
Partnership Agreement to provide for (i) the distribution of the
proceeds of the Cash Payment to the Limited Partners (with the
General Partner waiving its right to its share thereof) if the
Cash Payment is made by Merrill Lynch and (ii) the termination of
the Partnership's obligation to pay Partnership Management Fees
and Asset Management Fees which have accrued subsequent to
December 31, 1995 and all future Partnership Management Fees and
Asset Management Fees, and the consent of the General Partner,
MLOM and RPOM to such termination.
NOW THEREFORE, the undersigned, in consideration of the
premises, covenants and agreements contained herein and other
good, sufficient and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be
legally bound, hereby agree as follows:
Section 1. Definitions. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed
thereto in the Limited Partnership Agreement.
Section 2. Amendments.
(a) Article One of the Limited Partnership
Agreement is hereby amended to add the following new definitions:
"`Cash Payment' means a voluntary payment in the
amount of $23,671,989 that Merrill Lynch, Pierce, Fenner & Smith
Incorporated may make to the Partnership with regard to certain
general and administrative expenses of the Partnership since
formation of the Partnership and Partnership Management Fees and
Asset Management Fees paid by the Partnership to or for the
benefit of MLOM and RPOM, respectively, after the first quarter
of 1990.
`RPOM' means RP Opportunity Management, L.P., a
Delaware limited partnership.
`MLOM' means ML Opportunity Management Inc., a
Delaware corporation."
(b) The Limited Partnership Agreement is hereby
amended to add a new Article Thirteen that reads as follows:
"ARTICLE THIRTEEN
CASH PAYMENT
Section 13.1. General Partner's Waiver of Right to
Proceeds of the Cash Payment. Notwithstanding anything to the
contrary contained in this Agreement, the Partnership shall not
pay to the General Partner and the General Partner waives any
right it may have to receive any portion of the Cash Payment in
any form.
Section 13.2. Distribution of the Cash Payment.
Notwithstanding anything to the contrary contained in this
Agreement, the Cash Payment if received from Merrill Lynch,
Pierce, Fenner & Smith Incorporated shall be distributed promptly
following receipt by the Partnership to the Persons who were
limited partners of the Partnership as of March 24, 1997, in the
ratio which the Capital Contribution of each Limited Partner
bears to the total Capital Contributions of all Limited Partners.
Section 13.3. Profits Attributable to the Cash
Payment. Notwithstanding anything to the contrary contained in
this Agreement, for federal, state and local income tax purposes,
the full amount of the Profits attributable to the Cash Payment
shall be allocated to the Limited Partners and shall be allocated
among the Limited Partners in the ratio which the Capital
Contribution of each Limited Partner bears to the total Capital
Contributions of all Limited Partners.
Section 13.4. Termination of Partnership Management
Fees and Asset Management Fees. Notwithstanding anything to the
contrary contained in this Agreement, the Partnership shall not
pay the Partnership Management Fee or the Asset Management Fee
for any period subsequent to December 31, 1995, and the
Partnership shall have no further obligations to the General
Partner, MLOM or RPOM or any of their respective Affiliates to
make any additional or future payments of Partnership Management
Fees and Asset Management Fees."
Section 3. Consent of the General Partner, MLOM and
RPOM; Affirmation of the General Partner Duties. Each of the
General Partner, MLOM and RPOM, by its execution of this
Amendment, hereby consents to this Amendment and the effect of
this Amendment.
Section 4. Ratification. Except as amended hereby,
the Limited Partnership Agreement shall remain in full force and
effect in all respects.
Section 5. Headings. Section headings in this
Amendment are included for convenience of reference only and
shall not constitute a part of this Amendment for any other
purpose.
Section 6. Governing Law. This Amendment shall be
governed by, and construed and enforced in accordance with, the
laws of the State of Delaware without regard to principles of
conflict of laws.
Section 7. Counterparts. This Amendment may be
executed in several counterparts, all of which together shall
constitute one agreement binding on all parties hereto
notwithstanding that all parties have not signed the same
counterpart.
Section 8. Binding Provisions. The covenants and
agreements contained herein shall be binding upon and inure to
the benefit of the heirs, executors, administrators, successors
and assigns of the respective parties hereto.
Section 9. Separability of Provisions. Each
provision of this Amendment shall be considered separable and if
for any reason any provision or provisions of this Amendment, or
the application of such provision to any Person or circumstance,
shall be held invalid or unenforceable in any jurisdiction, such
provision or provisions shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability
without invalidating the remaining provisions hereof, or the
application of the affected provision to Persons or circumstances
other than those to which it was held invalid or unenforceable,
and any such invalidity or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in
any other jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the date first above written.
General Partner:
MEDIA OPPORTUNITY MANAGEMENT PARTNERS
By RP OPPORTUNITY MANAGEMENT, L.P.
By IMP OPPORTUNITY MANAGEMENT, INC.
By /s/I. Martin Pompadur
Name:
Title:
By ML OPPORTUNITY MANAGEMENT INC.
By /s/ Michael Lurie
Name: MICHAEL LURIE
Title: VICE PRESIDENT
Limited Partners:
All Limited Partners now or hereafter admitted
as limited partners of the Partnership pursuant
to the Powers of Attorney and authorizations now
and hereafter executed in favor of, granted and
delivered to the General Partner.
By MEDIA OPPORTUNITY MANAGEMENT
PARTNERS as Attorney-in-Fact for all Limited
Partners
By RP OPPORTUNITY MANAGEMENT, L.P.
By IMP OPPORTUNITY MANAGEMENT, INC.
By /s/I. Martin Pompadur
Name:
Title:
By ML OPPORTUNITY MANAGEMENT INC.
By /s/Michael Lurie
Name: MICHAEL LURIE
Title: VICE PRESIDENT
RP OPPORTUNITY MANAGEMENT, L.P.
By IMP OPPORTUNITY MANAGEMENT, INC.
By /s/I. Martin Pompadur
Name:
Title:
ML OPPORTUNITY MANAGEMENT INC.
By /s/Michael Lurie
Name: MICHAEL LURIE
Title: VICE PRESIDENT
April 2, 1997
Dear Limited Partner:
We are pleased to inform you that limited partners of ML Media
Opportunity Partners, L.P. (the "Partnership") who were record
holders of limited partnership units as of March 24, 1997, are
receiving today a special cash distribution from the Partnership
of $211.08 per $1,000 unit (less applicable withholding taxes, if
any). If you or your retirement plan has an account at Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"),
payment will be made today by a credit to that account. With
regard to all other limited partners, payment is being made by
check, which is enclosed with this letter unless your units are
being held by a non-Merrill Lynch custodian for a retirement
account; in such case, the check is being sent to that custodian.
As more fully described in the enclosed letter from Merrill
Lynch, the cash distribution was derived from the proceeds of a
voluntary cash payment (the "Cash Payment") of $23,671,989, which
Merrill Lynch made to the Partnership on March 27, 1997, with
respect to certain management fees and expenses previously paid
by the Partnership. In addition, the General Partner has
executed an amendment to the Partnership Agreement waiving all
future management fees. These voluntary actions have been taken
notwithstanding the General Partner's belief that neither the
Cash Payment nor the waiver of future management fees was
required.
This special cash distribution is a 1997 tax item. Your Schedule
K-1 will be mailed to you by mid-March 1998 and will contain the
actual tax data that must be used in your tax filings for 1997.
The Partnership has been advised that neither the Partnership nor
the limited partners will be required to file amended tax returns
for prior tax years solely as a result of the receipt and
distribution by the Partnership of the Cash Payment.
If you have any questions regarding ML Media Opportunity
Partners, L.P., we invite you to call our toll-free Investor
Services hotline. Operating Monday through Friday, from 10:00
a.m. to 1:00 p.m. and from 2:00 p.m. to 5:00 p.m. Eastern time,
the hotline number is 800-288-3694.
Sincerely yours,
Media Opportunity Management Partners
April 2, 1997
To the Limited Partners of ML Media Opportunity Partners, L.P.:
In connection with the planned liquidation of the remaining
investments of ML Media Opportunity Partners, L.P. (the
"Partnership"), Merrill Lynch, Pierce, Fenner & Smith
Incorporated has re-examined the provisions of the Partnership
Agreement and the prospectus relating to (1) the payment of
management fees from Partnership assets after the first two years
of operations, and (2) the payment of certain general and
administrative expenses.
Our review has led us to conclude that there may be conflicting
interpretations of those provisions, and as a result, we have
decided to resolve any possible ambiguities in favor of the
limited partners. Accordingly, we have made a voluntary payment
of $23,671,989 to the Partnership for distribution to its limited
partners. This payment is equal to the total amount of
management fees paid by the Partnership from the end of the
second year of operations (April 1990) to the present, as well as
certain general and administrative expenses paid by the
Partnership since inception, plus interest at 9%. Our decision
to make this voluntary payment is consistent with Merrill Lynch's
business reputation and the Merrill Lynch tradition of putting
our clients' interests first.
Should you have any questions regarding this payment, we invite
you to contact the Partnership's toll-free Investor Services
Hotline at 800-288-3694.
Sincerely yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
