<PAGE> 1
LOGO
SCRIPPS HOWARD BROADCASTING COMPANY
312 WALNUT STREET
CINCINNATI, OHIO 45202
August 9, 1994
TO OUR STOCKHOLDERS:
It is our pleasure to invite you to attend a Special Meeting of
Stockholders of Scripps Howard Broadcasting Company (the "Company") to be held
on September 14, 1994, commencing at 10:00 a.m. local time, at the offices of
the Company, 312 Walnut Street, Cincinnati, Ohio 45202.
The purpose of the Special Meeting is to consider and vote upon a proposal
to adopt an Agreement and Plan of Merger dated as of May 4, 1994 (the "Merger
Agreement"), by and among the Company, The E. W. Scripps Company ("E. W.
Scripps") and SHB Merger Corporation, a wholly owned subsidiary of E. W. Scripps
("Mergerco"), which provides for the merger (the "Merger") of the Company with
and into Mergerco, with Mergerco being the surviving corporation. The surviving
corporation will be a wholly owned subsidiary of E. W. Scripps with the same
Articles of Incorporation, Code of Regulations, Board of Directors and
management as presently exist with respect to the Company.
In the Merger, holders of outstanding shares of the Company's Common Stock
(other than E. W. Scripps and its subsidiaries, and holders who have made and
not withdrawn or waived written demand for payment of fair cash value of their
shares) will receive 3.45 fully paid and nonassessable shares of E. W. Scripps
Class A Common Stock for each of their shares of the Company's Common Stock (the
"Exchange Ratio").
A Special Committee of the Board of Directors of the Company (the "Special
Committee") has considered the fairness of the terms and conditions of the
Merger. In connection with such consideration, the Special Committee retained
Lehman Brothers Inc. ("Lehman Brothers") to act as its independent financial
advisor. A copy of Lehman Brothers' written opinion as to the fairness, from a
financial point of view, to the Company's stockholders (other than E. W. Scripps
and its subsidiaries) of the consideration to be received in the Merger by such
stockholders, is included as Annex II to the attached Proxy
Statement/Prospectus. The Special Committee has unanimously recommended to your
Board of Directors that it approve the Merger Agreement and your Board of
Directors has unanimously approved the Merger Agreement. The Special Committee
and your Board of Directors each recommends that you vote FOR adoption of the
Merger Agreement.
A lawsuit has been filed in Delaware, the state of incorporation of E. W.
Scripps, seeking to enjoin the Merger. The law firm of Abbey & Ellis, which has
filed this suit, regularly engages in the filing of lawsuits to enjoin mergers
of publicly traded companies. E. W. Scripps believes it is important for you to
understand that it will not agree to any payment to Abbey & Ellis to dismiss
this lawsuit and that it will not agree to any increase in the Exchange Ratio.
If Abbey & Ellis should persist in its lawsuit and obtain an order or injunction
against the Merger, E. W. Scripps has informed the Company that it will exercise
its right to terminate the Merger Agreement and will not attempt to acquire your
shares of the Company's Common Stock.
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The Attached Proxy Statement/Prospectus is a proxy statement for the
Special Meeting and a prospectus for the shares of E. W. Scripps Class A Common
Stock to be issued to holders of the Company's Common Stock in the Merger.
Please give these materials your careful attention, because the discussion
included therein is important to your decision on the matters being presented.
Whether or not you plan to attend the Meeting in person, please promptly mark,
sign and date the enclosed proxy and return it in the enclosed envelope to
ensure that your shares will be represented at the Meeting. E. W. Scripps
beneficially owns approximately 86.1% of the outstanding shares of the Company's
Common Stock and will vote such shares in favor of the Merger. The vote of such
shares will be sufficient to approve the Merger.
YOU SHOULD NOT SEND IN YOUR STOCK CERTIFICATES WHEN RETURNING YOUR PROXY.
IF THE MERGER IS CONSUMMATED, YOU WILL BE NOTIFIED AND PROVIDED WITH
INSTRUCTIONS FOR EXCHANGE OF YOUR CERTIFICATES.
Sincerely yours,
LAWRENCE A. LESER PAUL F. GARDNER
President and Chief Executive Vice President
Executive Officer
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SCRIPPS HOWARD BROADCASTING COMPANY
312 WALNUT STREET
CINCINNATI, OHIO 45202
------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 14, 1994
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the "Special
Meeting") of Scripps Howard Broadcasting Company, an Ohio corporation (the
"Company"), will be held on September 14, 1994, commencing at 10:00 a.m. local
time at the offices of the Company, 312 Walnut Street, Cincinnati, Ohio 45202
for the following purposes:
1. to consider and vote upon a proposal to adopt the Agreement and
Plan of Merger, dated May 4, 1994 (the "Merger Agreement"), by and among
the Company, The E. W. Scripps Company and SHB Merger Corporation, a copy
of which is attached as Annex I to the accompanying Proxy
Statement/Prospectus; and
2. to transact such other business as may properly come before the
Special Meeting or any adjournment or postponement thereof.
Only stockholders of record on August 9, 1994 are entitled to receive
notice of and to vote at the Special Meeting and any adjournment or postponement
thereof. See "The Special Meeting" in the accompanying Proxy
Statement/Prospectus.
Please promptly mark, sign and date the enclosed proxy and return it in the
enclosed envelope whether or not you plan to attend the Special Meeting. Your
proxy may be revoked at any time before it is voted by filing with the Secretary
of the Company a written revocation of proxy bearing a later date, or by
attending and voting in person at the Special Meeting.
By Order of the Board of Directors
M. DENISE KUPRIONIS
Secretary
Cincinnati, Ohio
August 9, 1994
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE SPECIAL MEETING, PLEASE MARK,
SIGN, DATE AND RETURN THE ACCOMPANYING PROXY PROMPTLY.
PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME.
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PROXY STATEMENT
OF
SCRIPPS HOWARD BROADCASTING COMPANY
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 14, 1994
------------------
PROSPECTUS OF
THE E. W. SCRIPPS COMPANY
CLASS A COMMON STOCK
PAR VALUE $.01 PER SHARE
------------------
HOLDERS OF E. W. SCRIPPS CLASS A COMMON STOCK ARE ENTITLED TO ELECT THE GREATER
OF THREE OR ONE-THIRD OF THE DIRECTORS OF E. W. SCRIPPS, BUT ARE NOT ENTITLED TO
VOTE ON ANY OTHER MATTERS EXCEPT AS REQUIRED BY DELAWARE LAW. HOLDERS OF E. W.
SCRIPPS COMMON VOTING STOCK ARE ENTITLED TO ELECT ALL REMAINING DIRECTORS AND TO
VOTE ON ALL OTHER MATTERS REQUIRING A VOTE OF E. W. SCRIPPS STOCKHOLDERS. SHARES
OF E. W. SCRIPPS CLASS A COMMON STOCK AND COMMON VOTING STOCK ARE ENTITLED TO
THE SAME CASH DIVIDENDS AND TO SHARE EQUALLY IN DISTRIBUTIONS ON LIQUIDATION OF
E. W. SCRIPPS. EACH SHARE OF E. W. SCRIPPS COMMON VOTING STOCK IS CONVERTIBLE
INTO ONE SHARE OF E. W. SCRIPPS CLASS A COMMON STOCK.
------------------
THE SHARES OF E. W. SCRIPPS CLASS A COMMON STOCK HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS AUGUST 9, 1994.
<PAGE> 5
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to stockholders of
Scripps Howard Broadcasting Company, an Ohio corporation ("SHB"), in connection
with the solicitation of proxies by the Board of Directors of SHB (the "SHB
Board") from holders of the outstanding shares of SHB common stock, par value
$.25 per share (the "SHB Common Stock"), for use at a special meeting of
stockholders of SHB scheduled to be held on September 14, 1994, commencing at
10:00 a.m. local time at the offices of SHB, 312 Walnut Street, Cincinnati, Ohio
45202, and at any adjournment or postponement thereof (the "Special Meeting").
Only holders of SHB Common Stock (each, an "SHB Stockholder") at the close of
business on August 9, 1994 (the "Record Date"), are entitled to notice of and to
vote at the Special Meeting and any adjournment or postponement thereof. On the
Record Date, there were outstanding 10,325,788 shares of SHB Common Stock,
8,890,199 of which (constituting approximately 86.1% of such outstanding shares)
were held beneficially by The E. W. Scripps Company, a Delaware corporation ("E.
W. Scripps").
This Proxy Statement/Prospectus and a form of proxy for use at the Special
Meeting are first being mailed on August 15, 1994, to holders of record on the
Record Date of shares of SHB Common Stock.
At the Special Meeting, stockholders will be asked to consider and vote
upon a proposal to adopt the Agreement and Plan of Merger, dated as of May 4,
1994 (the "Merger Agreement"), by and among E. W. Scripps, SHB Merger
Corporation, an Ohio corporation and wholly owned subsidiary of E. W. Scripps
("Mergerco"), and SHB. A copy of the Merger Agreement is attached as Annex I to
this Proxy Statement/Prospectus. The Merger Agreement provides that (a) SHB will
be merged with and into Mergerco (the "Merger"), with Mergerco being the
surviving corporation (the "Surviving Corporation"), all of the stock of which
will be owned by E. W. Scripps, and (b) each share of SHB Common Stock
outstanding immediately prior to the time the Merger becomes effective (the
"Effective Time") (other than shares which are (i) held by E. W. Scripps or
Mergerco or a subsidiary of E. W. Scripps or in the treasury of SHB or by a
subsidiary of SHB (collectively, the "Excluded Shares") or (ii) Dissenting
Shares (hereinafter defined)), will be converted into the right to receive 3.45
shares of E. W. Scripps Class A Common Stock, par value $.01 per share (the "E.
W. Scripps Class A Common Stock"), all as described below.
E. W. Scripps has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 (the "Registration
Statement") pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), for up to 4,952,782 shares of E. W. Scripps Class A Common Stock to be
issued in connection with the Merger. This Proxy Statement/Prospectus also
constitutes the Prospectus of E. W. Scripps, which is part of the Registration
Statement.
Holders as of the Record Date of shares of SHB Common Stock (other than
holders of the Excluded Shares) have the right to dissent from the Merger and
(in the event that the Merger Agreement is approved and the Merger is
consummated) demand in writing payment of the fair cash value of such shares in
compliance with and by following the procedures under Section 1701.85 ("Section
1701.85") of the Ohio Revised Code (the "ORC"). All shares that are subject to
such a written demand for payment of the fair cash value that has not been
withdrawn or waived are sometimes referred to herein as the "Dissenting Shares."
E. W. Scripps has agreed, pursuant to the Merger Agreement, to vote or cause to
be voted FOR adoption of the Merger Agreement all shares of SHB Common Stock
beneficially owned by it and therefore will not exercise or cause to be
exercised any of its rights under Section 1701.85.
E. W. Scripps Class A Common Stock is listed on the New York Stock
Exchange, Inc. (the "NYSE") under the symbol "SSP."
2
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Approximately 4,952,782 shares of E. W. Scripps Class A Common Stock will
be issued by E. W. Scripps in the Merger. Such shares will represent
approximately 8.32% of the issued and outstanding shares of E. W. Scripps Class
A Common Stock immediately after the Merger.
Pursuant to the terms of the Merger Agreement, each holder immediately
prior to the Effective Time of shares of SHB Common Stock (other than the
Excluded Shares and Dissenting Shares) will receive (a) a number of whole shares
of E. W. Scripps Class A Common Stock determined by multiplying the number of
shares of SHB Common Stock owned by such stockholder immediately prior to the
Effective Time by 3.45 and (b) cash in lieu of any fractional shares of E. W.
Scripps Class A Common Stock which they would otherwise be entitled to receive.
The shares of E. W. Scripps Class A Common Stock, and cash in lieu of fractional
shares of E. W. Scripps Class A Common Stock, to be received by holders of SHB
Common Stock in the Merger are sometimes hereinafter referred to as the "Merger
Consideration."
Approval of the proposal to adopt the Merger Agreement requires the
affirmative votes of the holders of at least a majority of the outstanding
shares of SHB Common Stock entitled to vote at the Special Meeting (the
foregoing votes being the "Required Stockholder Vote"). E. W. Scripps
beneficially owns a sufficient number of shares of SHB Common Stock to cause the
Required Stockholder Vote to be obtained without the vote of any other SHB
Stockholder. E. W. Scripps has agreed, pursuant to the Merger Agreement, to vote
or cause to be voted all such shares FOR adoption of the Merger Agreement.
3
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TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION...................................................................... 2
AVAILABLE INFORMATION............................................................. 6
INFORMATION INCORPORATED BY REFERENCE............................................. 6
SUMMARY........................................................................... 8
THE SPECIAL MEETING............................................................... 24
General...................................................................... 24
Voting at the Special Meeting................................................ 24
Proxies...................................................................... 24
THE MERGER........................................................................ 25
Background and Reasons for the Merger........................................ 25
Purpose and Structure of the Merger and Certain Effects of the Merger........ 32
Conduct of the Business of the Surviving Corporation After the Merger........ 32
Recommendation of the SHB Special Committee and the SHB Board................ 32
Opinion of Financial Advisor................................................. 33
Rights of Dissenting Stockholders............................................ 38
Interests of Certain Persons in the Merger................................... 40
THE MERGER AGREEMENT.............................................................. 40
General...................................................................... 41
Effective Time of Merger..................................................... 41
Conversion of Stock.......................................................... 41
Payment for SHB Common Stock................................................. 41
Articles of Incorporation, Code of Regulations, Officers and Directors....... 42
Conditions to the Merger..................................................... 42
Certain Agreements Pending the Merger........................................ 43
Termination.................................................................. 45
Certain Other Provisions of the Merger Agreement............................. 46
FINANCING OF THE MERGER AND RELATED TRANSACTIONS: SOURCE AND AMOUNT OF FUNDS...... 46
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER............................. 47
COMPARISON OF RIGHTS OF HOLDERS OF SHB COMMON STOCK AND
E. W. SCRIPPS CLASS A COMMON STOCK.............................................. 48
Introduction................................................................. 48
Certain Voting Rights........................................................ 49
Special Meetings of Stockholders; Stockholder Action by Written Consent...... 50
Amendment of Corporate Governing Documents................................... 50
Board-Approved Preferred Stock............................................... 51
Liability and Indemnification of Officers and Directors...................... 51
Classification of Board of Directors......................................... 52
Cumulative Voting of Shares.................................................. 52
Number of Directors.......................................................... 52
Removal of Directors......................................................... 53
Dissenters' Rights in Mergers................................................ 53
Payment of Dividends......................................................... 53
Repurchase of Shares......................................................... 53
Loans to Directors and Officers.............................................. 53
Tender Offer Statute......................................................... 54
Merger Moratorium Statutes................................................... 54
Anti-Greenmail Statute....................................................... 55
</TABLE>
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<TABLE>
<S> <C>
MARKET FOR E. W. SCRIPPS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS........... 55
MARKET FOR SHB COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...................... 56
BUSINESS OF E. W. SCRIPPS......................................................... 56
Newspapers................................................................... 57
Broadcast Television......................................................... 57
Cable Television............................................................. 57
Entertainment................................................................ 58
BUSINESS OF SHB................................................................... 58
Broadcast Television......................................................... 58
Cable Television............................................................. 59
Entertainment................................................................ 59
INFORMATION RELATING TO MERGERCO.................................................. 60
General...................................................................... 60
Executive Officers and Directors of Mergerco................................. 60
SUBMISSION OF STOCKHOLDER PROPOSALS............................................... 60
CERTAIN LEGAL MATTERS, EXPERTS AND REGULATORY APPROVALS........................... 61
Federal and State Approvals.................................................. 61
Legal Opinions............................................................... 61
Experts...................................................................... 61
Miscellaneous................................................................ 61
ANNEX I AGREEMENT AND PLAN OF MERGER BY AND AMONG THE E. W. SCRIPPS COMPANY,
SCRIPPS HOWARD BROADCASTING COMPANY, AND SHB MERGER CORPORATION................. A-1
ANNEX II LEHMAN BROTHERS FAIRNESS OPINION....................................... B-1
ANNEX III OHIO REVISED CODE SECTION 1701.85 GOVERNING DISSENTERS' RIGHTS......... C-1
</TABLE>
5
<PAGE> 9
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS,
IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED.
THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SECURITIES TO WHICH IT RELATES IN ANY
JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS
NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN INFORMATION SET FORTH HEREIN OR IN
THE AFFAIRS OF SHB, E. W. SCRIPPS OR MERGERCO OR ANY OF THEIR AFFILIATES OR
SUBSIDIARIES FROM THE DATE HEREOF.
AVAILABLE INFORMATION
E. W. Scripps has filed with the Commission the Registration Statement, of
which this Proxy Statement/Prospectus is a part, under the Securities Act, with
respect to the E. W. Scripps Class A Common Stock. As permitted by the rules and
regulations of the Commission, this Proxy Statement/Prospectus omits certain
information and exhibits contained in the Registration Statement.
SHB and E. W. Scripps are subject to the information and reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith SHB and E. W. Scripps file periodic reports,
proxy statements and other information with the Commission. The Registration
Statement and the exhibits thereto, as well as such reports, proxy statements
and other information filed by SHB or E. W. Scripps with the Commission, can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Chicago Regional Offices at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and New York Regional Offices at 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
materials can be obtained from the public reference section of the Commission at
450 Fifth Street, N.W. Washington, D.C. 20549 upon payment of the prescribed
fee.
The SHB Common Stock is listed on the National Association of Securities
Dealers Automated Quotation System (the "NASDAQ"). Reports and other information
concerning SHB are available for inspection and copying at the offices of the
NASDAQ at 1735 K Street, N.W., Washington, D.C. 20006-1506.
If the Merger is consummated, the SHB Common Stock will be delisted from
the NASDAQ and SHB will take steps to terminate the registration of the SHB
Common Stock under Section 12 of the Exchange Act. See "Market For SHB Common
Equity And Related Stockholder Matters."
The E. W. Scripps Class A Common Stock is listed on the NYSE. Application
will be made to list the additional shares of E. W. Scripps Class A Common Stock
to be issued in connection with the Merger for trading on the NYSE. Reports and
other information concerning E. W. Scripps are available for inspection and
copying at the offices of the NYSE at 11 Wall Street, New York, New York 10005.
Such reports and other information may also be obtained from E. W. Scripps in
the manner specified in "Information Incorporated By Reference."
INFORMATION INCORPORATED BY REFERENCE
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS THEY ARE SPECIFI-
6
<PAGE> 10
CALLY INCORPORATED BY REFERENCE, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS
DELIVERED, UPON WRITTEN OR ORAL REQUEST TO: DIRECTOR OF INVESTOR RELATIONS, 312
WALNUT STREET, 28TH FLOOR, CINCINNATI, OHIO 45202 (TELEPHONE: (513) 977-3000).
IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE
BY SEPTEMBER 7, 1994.
The following documents filed with the Commission pursuant to the Exchange
Act with respect to E. W. Scripps (File No. 1-10701) are hereby incorporated by
reference into this Proxy Statement/Prospectus:
1. E. W. Scripps' Annual Report on Form 10-K for the year ended
December 31, 1993;
2. E. W. Scripps' Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1994 and June 30, 1994; and
3. The description of the E. W. Scripps Class A Common Stock contained
in E. W. Scripps' Registration Statement on Form 8-A, declared effective on
June 29, 1988, pursuant to Section 12 of the Exchange Act, including any
amendment or report filed for the purpose of updating such description.
The following documents filed with the Commission pursuant to the Exchange
Act with respect to SHB (File No. 0-300) are hereby incorporated by reference
into this Proxy Statement/Prospectus:
1. SHB's Annual Report on Form 10-K for the year ended December 31,
1993;
2. SHB's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1994 and June 30, 1994; and
3. The description of the SHB Common Stock contained in SHB's
Registration Statement on Form S-1 (File No. 2-21144), declared effective
on April 3, 1963, pursuant to the Securities Act.
All documents filed by E. W. Scripps and SHB with the Commission pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date hereof
and prior to the date of the Special Meeting shall be deemed to be incorporated
by reference herein from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein) modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed to constitute a part
hereof except as so modified or superseded.
All information appearing in this Proxy Statement/Prospectus is qualified
in its entirety by the information and financial statements (including notes
thereto) appearing in the documents incorporated herein or deemed to be
incorporated herein by reference.
7
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SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED INFORMATION AND THE FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO)
APPEARING ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS OR INCORPORATED BY
REFERENCE HEREIN. SHB STOCKHOLDERS ARE URGED TO READ THIS PROXY
STATEMENT/PROSPECTUS AND THE ANNEXES HERETO IN THEIR ENTIRETY. UNLESS OTHERWISE
INDICATED, (I) REFERENCES HEREIN TO FINANCIAL INFORMATION OF E. W. SCRIPPS'
SUBSIDIARIES REFER TO SUCH FINANCIAL INFORMATION AS REFLECTED IN THE
CONSOLIDATED FINANCIAL STATEMENTS OF E. W. SCRIPPS AND SUBSIDIARIES INCLUDING
SHB AND (II) REFERENCES HEREIN TO A YEAR PRECEDED BY THE WORD "FISCAL" REFER TO
THE TWELVE MONTHS ENDED DECEMBER 31 OF SUCH YEAR.
PARTIES TO THE MERGER AGREEMENT
E. W. SCRIPPS
E. W. Scripps is a diversified media company operating principally in four
business segments: newspaper publishing, broadcast television, cable television
and entertainment.
E. W. Scripps publishes nineteen metropolitan and suburban daily
newspapers. From its Washington bureau E. W. Scripps operates the Scripps Howard
News Service, a supplemental wire service covering stories in the capital, other
parts of the United States and abroad.
E. W. Scripps' broadcast television operations are owned and operated by
SHB. See "Summary -- Parties To The Merger Agreement -- SHB."
E. W. Scripps' cable television system operations are conducted through
several subsidiaries. Its Lake County, Florida and Sacramento, California,
systems and its Longmont, Colorado, cluster are owned by SHB. See "Summary --
Parties To The Merger Agreement -- SHB." Other wholly owned subsidiaries of E.
W. Scripps operate cable television systems in Florida, Georgia, Indiana,
Kentucky, South Carolina, Tennessee, Virginia and West Virginia.
E. W. Scripps' entertainment division, newly created in 1994, consists of
its licensing and syndication operations under the trade name United Media, and
three new television programming ventures. United Media is a leading distributor
of news columns, comics and other features for the newspaper industry. United
Media licenses worldwide copyrights relating to "Peanuts" and other character
properties for use on numerous products, including plush toys, greeting cards
and apparel, and for exhibit on television, video cassettes and other media. The
Home & Garden Television Network, a 24-hour cable channel, is scheduled to
launch in late 1994. Scripps Howard Productions produces news and entertainment
programming for domestic and international distribution. On March 31, 1994, E.
W. Scripps acquired Cinetel Productions, one of the largest independent
producers of cable television programming. The Home & Garden Television Network
and Cinetel Productions are operated through SHB.
E. W. Scripps, a Delaware corporation, maintains its principal executive
offices at 1105 N. Market Street, Wilmington, Delaware 19801, and its telephone
number is (302) 478-4141. See "Business of E. W. Scripps"; "Business of SHB."
SHB
SHB operates nine broadcast television stations, cable television systems
with approximately 295,000 basic subscribers as of March 31, 1994, The Home &
Garden Television Network and Cinetel Productions.
E. W. Scripps beneficially owns approximately 86.1% of the outstanding
shares of SHB Common Stock. If the Merger is consummated, SHB's business will
become the business of the Surviving Corporation, a wholly owned subsidiary of
E. W. Scripps.
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<PAGE> 12
SHB, an Ohio corporation, maintains its principal executive offices at 312
Walnut Street, Cincinnati, Ohio 45202, and its telephone number is (513)
977-3000. See "Business of SHB;" "Business of E. W. Scripps."
MERGERCO
Mergerco was organized by E. W. Scripps in March 1994 under Ohio law in
order to effect the Merger and is a wholly owned subsidiary of E. W. Scripps.
Mergerco has not engaged in any activities other than those incident to its
formation. If the Merger is consummated, SHB will be merged into Mergerco and
Mergerco will be the Surviving Corporation. Mergerco's principal executive
offices are located at 312 Walnut Street, Cincinnati, Ohio 45202 and its
telephone number is (513) 977-3000. See "Information Relating To Mergerco."
RECENT DEVELOPMENTS
On May 23, 1994, Fox Broadcasting Company ("Fox") and New World
Communications Group, Inc. ("New World") announced that they had entered into an
agreement under which 12 television stations owned or to be acquired by New
World would change their network affiliations from American Broadcasting
Companies, Inc. ("ABC"), CBS, Inc. ("CBS") and National Broadcasting Company
("NBC") to Fox. Three of these stations are in Phoenix, Tampa and Kansas City,
markets in which SHB is currently the Fox affiliate. On June 9 and June 13,
1994, Fox notified SHB of its intention to terminate each of its affiliation
agreements with SHB's television stations in these markets. In view of the
agreement reached by Fox and New World and Fox's notices of termination, SHB
held discussions with other networks to determine possible alternatives for new
affiliation arrangements in these markets. On June 16, 1994, SHB announced that
it had agreed to enter into ten-year affiliation agreements with ABC pursuant to
which SHB's television stations in Detroit and Cleveland would continue as ABC
affiliates and its stations in Phoenix, Tampa and Baltimore would become ABC
affiliates (the "ABC Affiliation Agreements"). On July 7, 1994, SHB and ABC
executed the ABC Affiliation Agreements. The new affiliation agreements for
Detroit and Cleveland will commence in December 1994, and those for Baltimore
(which is currently an NBC affiliate), Phoenix and Tampa will commence in
January 1995.
On July 7, 1994, Southern Broadcasting Corporation of Sarasota
("Southern"), the licensee of television station WWSB, the ABC affiliate for
Sarasota-Bradenton, Florida, filed a Formal Petition for Order to Show Cause
with the Federal Communications Commission ("FCC") alleging that SHB had
required ABC to terminate its affiliation with WWSB. Southern's petition
requests the FCC to revoke SHB's license for television station WFTS, Tampa,
Florida, or in lieu thereof to issue an order directing SHB to cease violating
the FCC's network territorial exclusivity rule. This rule prohibits a station in
one community from having an agreement with a network which prevents or hinders
another broadcast station located in a different community from becoming
affiliated with such network. On July 25, 1994, SHB and ABC filed responses
denying WWSB's allegations and asking the FCC to dismiss Southern's petition.
On July 27, 1994, SHB announced that it had agreed to enter into a
long-term affiliation agreement with NBC pursuant to which its television
station in Kansas City would become an NBC affiliate and to extend its existing
affiliation agreements with NBC covering its stations in West Palm Beach and
Tulsa. SHB expects to execute final agreements with NBC in late August 1994.
THE SPECIAL MEETING
The Special Meeting will be held on September 14, 1994, commencing at 10:00
a.m. local time, at SHB's offices, 312 Walnut Street, Cincinnati, Ohio 45202.
Holders of record of shares of SHB Common Stock at the close of business on the
Record Date are entitled to notice of and to vote at the Special Meeting.
9
<PAGE> 13
Each outstanding share of SHB Common Stock entitles the holder thereof to
one vote. On the Record Date, 10,325,788 shares of SHB Common Stock were
outstanding.
The affirmative vote of the holders of at least a majority of the
outstanding shares of SHB Common Stock entitled to vote at the Special Meeting
is required to adopt the Merger Agreement. Therefore, abstentions and broker
non-votes will have the same effect as votes against approval of the Merger. E.
W. Scripps beneficially owns a sufficient number of shares of SHB Common Stock
to cause the Merger Agreement to be adopted without the vote of any other SHB
Stockholder. The Merger Agreement requires E. W. Scripps to vote, or cause to be
voted, all of its SHB Common Stock in favor of the adoption of the Merger
Agreement. See "The Special Meeting -- Voting at the Special Meeting."
THE MERGER
TERMS OF THE MERGER
The Merger Agreement provides for the merger of SHB into Mergerco with
Mergerco being the Surviving Corporation. The Surviving Corporation will be a
wholly owned subsidiary of E. W. Scripps.
At the Effective Time, (i) each outstanding share of SHB Common Stock,
other than the Excluded Shares and Dissenting Shares, will, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive from E. W. Scripps 3.45 shares of E. W. Scripps Class
A Common Stock, (ii) each of the Excluded Shares will be cancelled, (iii) the
Surviving Corporation's name will be changed to "Scripps Howard Broadcasting
Company," (iv) the Articles of Incorporation and Code of Regulations of SHB will
become the Articles of Incorporation and Code of Regulations of the Surviving
Corporation, and (v) the Board of Directors and management of the Surviving
Corporation will be the same as the Board of Directors and management of SHB.
Assuming the Merger is consummated, approximately 4,952,782 shares of E. W.
Scripps Class A Common Stock will be issued in the Merger. Such shares will
represent approximately 8.32% of the shares of E. W. Scripps Class A Common
Stock issued and outstanding immediately after the Merger.
EXCHANGE OF SHB COMMON STOCK FOR MERGER CONSIDERATION
In order to receive the Merger Consideration following the Effective Time,
each holder of a certificate theretofore representing SHB Common Stock will be
required to surrender his or her stock certificate, together with a duly
executed and properly completed letter of transmittal and any other required
documents, to E. W. Scripps by following the procedures described under "The
Merger Agreement -- Payment for SHB Common Stock."
Each holder of SHB Common Stock (other than holders of the Excluded Shares
and Dissenting Shares) will receive a number of whole shares of E. W. Scripps
Class A Common Stock determined by multiplying the number of shares of SHB
Common Stock owned by such stockholder at the Effective Time by 3.45. Such
holders will be paid cash in lieu of any fractional shares of E. W. Scripps
Class A Common Stock which they would otherwise be entitled to receive. See "The
Merger Agreement -- Payment for SHB Common Stock."
SHB STOCKHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THE ENCLOSED
PROXY CARD.
RECOMMENDATION OF THE SHB BOARD
On February 17, 1994, the SHB Board created a special committee of the SHB
Board composed of directors Robert E. Stautberg and Gordon E. Heffern (the "SHB
Special Commit-
10
<PAGE> 14
tee") for the purpose of reviewing the fairness of, and reporting back to the
full SHB Board as to its recommendation with respect to, the merger transaction
proposed by E. W. Scripps. Mr. Stautberg is a retired partner and director of
KPMG Peat Marwick. Mr. Heffern is a retired Chairman and Chief Executive Officer
of Society Corporation. The SHB Special Committee was authorized to engage such
legal, financial and other advisors as it deemed appropriate in carrying out its
assignment. Pursuant to such authority, the SHB Special Committee retained Taft,
Stettinius & Hollister ("Taft, Stettinius") to act as its legal counsel and
Lehman Brothers Inc. ("Lehman Brothers") to act as its financial advisor. See
"The Merger -- Recommendation of the SHB Special Committee and the SHB Board."
After considering all relevant information, including the opinion of Lehman
Brothers to the effect that the Merger Consideration to be received by the
holders of SHB Common Stock (other than holders of the Excluded Shares) (each, a
"Public Stockholder") is fair, from a financial point of view, to each Public
Stockholder, the SHB Special Committee voted unanimously on May 4, 1994, to
recommend to the SHB Board that it approve the terms of the Merger. On May 4,
1994, following the favorable recommendation of the SHB Special Committee, the
SHB Board unanimously approved the Merger Agreement.
Following the announcement by SHB of the ABC Affiliation Agreements, the
SHB Special Committee, with the assistance of Lehman Brothers, considered the
effect of the Fox network affiliation changes and the ABC Affiliation Agreements
on the Committee's May 4, 1994 determination. After considering all relevant
information, including the fact that Lehman Brothers remained of the opinion
that the Merger Consideration is fair, from a financial point of view, to the
Public Stockholders, the SHB Special Committee on July 6, 1994 voted unanimously
to reaffirm its decision of May 4, 1994, to recommend to the SHB Board that it
approve the terms of the Merger and that the SHB Board call a special meeting of
the SHB Stockholders to approve the Merger. On July 7, 1994, the SHB Board voted
unanimously in favor of calling the Special Meeting to approve the Merger.
The SHB Board and the SHB Special Committee recommend that the SHB
Stockholders vote FOR adoption of the Merger Agreement. See "The Merger --
Recommendation of the SHB Special Committee and the SHB Board." In considering
the recommendation of the SHB Board with respect to the Merger, SHB stockholders
should be aware that certain members of SHB's management and of the SHB Board
have certain interests which may present them with potential conflicts of
interest in connection with the Merger. See "The Merger -- Interests of Certain
Persons in the Merger."
THE SHB BOARD AND THE SPECIAL COMMITTEE UNANIMOUSLY RECOMMEND THAT SHB
STOCKHOLDERS VOTE FOR ADOPTION OF THE MERGER AGREEMENT.
OPINION OF FINANCIAL ADVISOR
On April 6, 1994, Lehman Brothers delivered to the SHB Special Committee
its oral opinion, confirmed by a written opinion dated May 4, 1994, to the
effect that, as of the respective dates and based upon and subject to certain
matters as stated in its written opinion, the Merger Consideration to be
received by the Public Stockholders in exchange for their shares of SHB Common
Stock in the Merger was fair, from a financial point of view, to such holders.
On July 6, 1994, Lehman Brothers advised the SHB Special Committee that it
remained of the opinion that the Merger Consideration to be received by the
Public Stockholders in the Merger was fair, from a financial point of view, to
such holders. Subsequently, Lehman Brothers delivered to the SHB Special
Committee its written opinion dated August 9, 1994 to such effect for inclusion
in this Proxy Statement/Prospectus. The full text of the August 9, 1994 Lehman
Brothers written opinion setting forth the assumptions made, matters considered
and scope of review undertaken in connection therewith is attached as Annex II
to this Proxy Statement/Prospectus and should be read in its entirety. See "The
Merger -- Opinion of Financial Advisor."
11
<PAGE> 15
DIRECTOR, EXECUTIVE OFFICER AND AFFILIATE VOTING RIGHTS WITH RESPECT TO THE
MERGER
Holders of E. W. Scripps Class A Common Stock are not required, nor will
they be requested, to act or vote on the proposed Merger.
With respect to SHB, certain SHB directors and executive officers are
directors of E. W. Scripps and as such share voting power with respect to the
shares of SHB Common Stock beneficially owned by E. W. Scripps. Such shares
constitute 86.1% of the outstanding shares of SHB and are sufficient to cause
the Merger to be approved.
LEGAL PROCEEDINGS RELATED TO THE MERGER
On March 2, 1994, Diane Abbey, an alleged shareholder of SHB, filed a
purported class action complaint, individually and on behalf of others similarly
situated, against E. W. Scripps before the Court of Chancery for the State of
Delaware in and for New Castle County (Civ. Action No. 13397) (the "Abbey
Complaint"). The Abbey Complaint alleges that the Merger is not in the best
interests of the Public Stockholders and that E. W. Scripps is in breach of its
fiduciary duties which arise by virtue of its controlling interest in SHB. The
Abbey Complaint seeks, among other things, to enjoin the Merger and any similar
transaction proposed by E. W. Scripps with respect to SHB. On March 24, 1994, E.
W. Scripps filed a motion to dismiss the Abbey Complaint. On June 16, 1994,
Diane Abbey filed an Amended Class Action Complaint (the "Amended Complaint")
which contains additional allegations. E. W. Scripps has not yet responded to
the Amended Complaint.
The obligation of E. W. Scripps to consummate the Merger is subject to a
condition that there shall not be any judgment, order or injunction entered by
any court restraining or preventing the Merger or prohibiting or imposing
certain actions in connection therewith. If this condition is not satisfied at
the time that the parties are otherwise in a position to consummate the Merger,
E. W. Scripps has the right under the Merger Agreement to terminate the Merger,
whether or not SHB or Mergerco desires to do so.
E. W. Scripps has informed SHB and the Special Committee that it will not
make any payment to plaintiff to dismiss the Abbey Complaint and that it will
not agree to any increase in the Exchange Ratio. E. W. Scripps has also informed
SHB and the Special Committee that if an order or injunction is obtained against
the Merger as a result of the Abbey Complaint, it will exercise its right to
terminate the Merger Agreement and will not attempt to acquire the shares of SHB
Common Stock that it is seeking to acquire pursuant to the Merger.
RIGHTS OF DISSENTING STOCKHOLDERS
Holders of record of shares of SHB Common Stock have the right to dissent
from the Merger and receive the fair cash value of their shares pursuant to
Section 1701.85 of the O.R.C. See "The Merger -- Rights of Dissenting
Stockholders." E. W. Scripps has agreed pursuant to the Merger Agreement to
cause all such shares beneficially owned by it to be voted FOR adoption of the
Merger Agreement and therefore will not exercise any of its rights under Section
1701.85.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
SHB and E. W. Scripps will receive an opinion of Baker & Hostetler that the
merger of SHB with and into Mergerco pursuant to the Merger, with the SHB
Stockholders receiving E. W. Scripps Class A Common Stock, will be treated as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and, accordingly, for federal income tax
purposes, (i) no gain or loss will be recognized by either SHB, Mergerco or E.
W. Scripps as a result of the Merger and (ii) SHB's shareholders will not
recognize gain or loss upon the receipt of E. W. Scripps Class A Common Stock in
exchange for SHB Common Stock in the Merger, except that gain or loss will be
recognized on receipt of any cash in lieu of
12
<PAGE> 16
fractional shares or because of the exercise of dissenters' rights. See "Certain
Federal Income Tax Consequences of the Merger."
PURPOSE, STRUCTURE AND CERTAIN EFFECTS OF THE MERGER
The purpose of the Merger is for E. W. Scripps to acquire the shares of SHB
Common Stock that it does not beneficially own so that SHB will be a wholly
owned subsidiary of E. W. Scripps. The Merger is structured in order to give the
SHB Stockholders the opportunity to own, in a tax-free exchange, a stock with
greater liquidity, as well as to share in the prospects of the combined
organization. As a result of the Merger, the SHB Common Stock would be delisted
from the NASDAQ, the registration of the SHB Common Stock under the Exchange Act
would terminate, and stockholders of SHB would become stockholders of E. W.
Scripps, SHB's parent. See "The Merger -- Purpose and Structure of the Merger
and Certain Effects of the Merger."
COMPARISON OF STOCKHOLDER RIGHTS
As a result of the Merger, SHB Common Stock, which is issued by an Ohio
corporation, will be converted into the right to receive E. W. Scripps Class A
Common Stock, which is issued by a Delaware corporation. There are differences
between the rights of SHB Stockholders and the rights of E. W. Scripps
Stockholders. These differences result from differences between Delaware and
Ohio law and between the governing instruments of SHB and E. W. Scripps,
including differences in terms of, and rights of holders with respect to, SHB
Common Stock and E. W. Scripps Class A Common Stock. For a discussion of the
various differences between the rights of SHB Stockholders and E. W. Scripps
Stockholders, see "Comparison Of Stockholder Rights."
CERTAIN BENEFITS OF THE MERGER
SHB. The Special Committee and the Board of Directors of SHB identified a
number of potential benefits of the Merger to SHB Stockholders. See "The Merger
- -- Background and Reasons for the Merger; Recommendation of the SHB Special
Committee and the SHB Board." These benefits include, among others:
- The opportunity for SHB Stockholders to participate, as holders of
E. W. Scripps Class A Common Stock, in a larger, more diversified
company of which SHB will continue to be a significant part;
- Increase in liquidity for SHB Stockholders;
- The terms and structure of the Merger, including its structure as a
tax-free exchange; and
- Certain strategic and business management benefits that the Merger
will provide to E. W. Scripps and SHB, including elimination of
potential conflicts of interest and potential corporate governance
and corporate opportunity issues and enhancement of ability of the
companies to explore strategic opportunities in their businesses.
Furthermore, since SHB has been controlled by E. W. Scripps since SHB's
inception in 1935, the challenges and costs usually associated with a merger of
two large business entities, such as integration of management teams, retention
and motivation of key personnel and effective management of significantly larger
organizations and business operations, will not be presented by the Merger.
E. W. SCRIPPS. The E. W. Scripps Board of Directors identified a number of
potential benefits of the Merger to E. W. Scripps Stockholders. See "The Merger
- -- Background and Reasons for the Merger." These benefits include, among others:
- Ending of the confusion in the marketplace between the two publicly
traded stocks;
13
<PAGE> 17
- The increase in the "public float" of E. W. Scripps, i.e., the
number of shares of E. W. Scripps Class A Common Stock held by the
public and freely tradeable in the public market; and
- The opportunity to realize certain strategic and business management
benefits, including the elimination of potential conflicts of
interest and potential corporate governance and opportunity issues,
and the additional flexibility to explore strategic opportunities in
each business, including the cable businesses that each company
owns.
To the extent that the current market price of E. W. Scripps Class A Common
Stock or SHB Common Stock reflects a premium attributable to the Merger, the
market price of either or both of such stocks may decline if the Merger is not
completed for any reason.
REGULATORY APPROVALS
Except for pending applications for certain routine authorizations from the
FCC, no federal or state regulatory requirements remain to be complied with in
order to consummate the Merger. See "Certain Legal Matters, Experts and
Regulatory Approvals." However, the obligations of E. W. Scripps, Mergerco and
SHB to consummate the Merger are subject to satisfaction of a number of other
conditions. See "The Merger Agreement -- Conditions to the Merger."
ACCOUNTING TREATMENT OF THE MERGER
The Merger will be accounted for as a purchase and, accordingly, the
purchase price will be allocated to assets and liabilities based on estimated
fair values as of the date of the Merger.
14
<PAGE> 18
THE E.W. SCRIPPS COMPANY
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
(IN MILLIONS, EXCEPT SHARE DATA) 1994 1993
-------- --------
<S> <C> <C>
SUMMARY OF OPERATIONS
Operating Revenue:
Newspapers.................................................... $ 293.8 $ 269.7
Broadcast television.......................................... 134.2 124.0
Cable television.............................................. 125.7 126.9
Entertainment................................................. 39.7 38.2
-------- --------
Total ongoing operations................................. 593.4 558.8
Divested operations........................................... 31.8
-------- --------
Total operating revenue.................................. $ 593.4 $ 590.6
-------- --------
Operating Income:
Newspapers.................................................... $ 62.1 $ 36.0
Broadcast television.......................................... 41.9 31.0
Cable television.............................................. 16.9 25.6
Entertainment................................................. 1.0 2.8
Corporate..................................................... (6.6) (6.4)
-------- --------
Total ongoing operations................................. 115.3 89.0
Divested operations........................................... 3.3
Unusual credits (charges)..................................... 5.4
-------- --------
Total operating income................................... 115.3 97.7
Interest expense................................................. (9.3) (15.1)
Unusual credits and net gains.................................... 31.6 24.9
Miscellaneous, net............................................... (0.2) (0.5)
Income taxes..................................................... (59.5) (47.7)
Minority interests............................................... (5.0) (4.6)
-------- --------
Net income....................................................... $ 72.9 $ 54.7
======== ========
SHARE DATA
Income before unusual items...................................... $ .74 $ .50
Unusual credits (charges) and net gains.......................... .24 .23
-------- --------
Net income....................................................... $ .98 $ .73
======== ========
Dividends........................................................ $ .22 $ .22
======== ========
Common stock price:
High.......................................................... $ 29.375 $ 29.125
Low........................................................... 23.000 23.750
======== ========
OTHER FINANCIAL DATA
Depreciation and amortization.................................... $ 59.7 $ 59.7
Net cash flow from operating activities.......................... 121.7 91.2
Investing Activity:
Capital expenditures.......................................... (39.1) (53.1)
Other (investing)/divesting activity, net..................... 15.4 16.7
Total assets..................................................... 1,623.0 1,661.0
Long-term debt (including current portion)....................... 162.6 402.5
Stockholders' equity............................................. 905.5 772.0
Long-term debt % of total capitalization......................... 15% 34%
======== ========
</TABLE>
15
<PAGE> 19
THE E.W. SCRIPPS COMPANY
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------
(IN MILLIONS, EXCEPT SHARE DATA) 1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Operating Revenue:
Newspapers................................. $ 551.9 $ 508.7 $ 489.5 $ 503.3 $ 504.3
Broadcast television....................... 255.0 247.3 216.4 205.2 191.0
Cable television........................... 251.8 238.0 218.1 192.8 171.1
Entertainment.............................. 84.7 87.2 91.6 91.7 99.8
-------- -------- -------- -------- --------
Total ongoing operations................... 1,143.4 1,081.2 1,015.6 993.0 966.2
Divested operations........................ 53.6 174.2 276.9 297.0 294.0
-------- -------- -------- -------- --------
Total operating revenue............... $1,197.0 $1,255.4 $1,292.5 $1,290.0 $1,260.2
-------- -------- -------- -------- --------
Operating Income:
Newspapers................................. $ 71.8 $ 88.8 $ 70.7 $ 81.5 $ 103.1
Broadcast television....................... 69.1 61.6 49.6 60.8 48.8
Cable television........................... 45.2 43.7 35.7 26.8 22.2
Entertainment.............................. 8.0 7.7 9.6 9.9 18.2
Corporate.................................. (13.0) (14.6) (12.4) (14.5) (16.0)
-------- -------- -------- -------- --------
Total ongoing operations.............. 181.1 187.2 153.2 164.5 176.3
Divested operations........................ 7.6 (14.7) 33.1 31.6 34.7
Unusual credits (charges).................. (0.9) (12.0) (36.4)
-------- -------- -------- -------- --------
Total operating income................ 187.8 172.5 174.3 159.7 211.0
Interest expense............................. (27.3) (34.2) (38.7) (43.8) (42.9)
Unusual credits and net gains................ 94.4 74.5 3.9
Miscellaneous, net........................... (2.5) (3.7) (0.5) (2.3) (0.6)
Income taxes................................. (106.8) (92.6) (62.6) (56.2) (75.7)
Minority interests........................... (16.9) (10.2) (5.9) (8.5) (7.5)
-------- -------- -------- -------- --------
Income before cumulative effect of accounting
change..................................... 128.7 106.3 66.6 48.9 88.2
Cumulative effect of accounting change....... (22.4)
-------- -------- -------- -------- --------
Net income................................... $ 128.7 $ 83.9 $ 66.6 $ 48.9 $ 88.2
======== ======== ======== ======== ========
SHARE DATA
Income before cumulative effect of accounting
change and unusual items................... $ 1.06 $ 1.12 $ 0.97 $ 0.95 $ 1.09
Unusual credits (charges) and net gains...... 0.66 0.31 (0.08) (0.31) 0.03
-------- -------- -------- -------- --------
Income before cumulative effect of accounting
change..................................... $ 1.72 $ 1.43 $ 0.89 $ 0.64 $ 1.12
Cumulative effect of accounting change....... (0.30)
-------- -------- -------- -------- --------
Net income................................... $ 1.72 $ 1.13 $ 0.89 $ 0.64 $ 1.12
-------- -------- -------- -------- --------
Dividends.................................... $ 0.44 $ 0.40 $ 0.40 $ 0.40 $ 0.345
-------- -------- -------- -------- --------
Common stock price:
High....................................... $ 30.875 $ 29.000 $ 24.500 $ 24.000 $ 27.000
Low........................................ 22.875 22.125 14.750 13.000 16.880
======== ======== ======== ======== ========
OTHER FINANCIAL DATA
Depreciation and amortization................ $ 120.9 $ 121.9 $ 112.1 $ 106.6 $ 102.1
Net cash flow from operating activities...... 226.8 204.8 210.6 199.1 221.1
Investing Activity:
Capital expenditures....................... (103.9) (145.2) (151.0) (85.0) (86.7)
Other (investing)/divesting activity,
net...................................... 108.5 19.1 (132.5) 11.0 (11.0)
Total assets................................. 1,676.5 1,700.8 1,711.4 1,525.4 1,568.7
Long-term debt (including current portion)... 247.9 441.9 491.8 367.6 421.0
Stockholders' equity......................... 859.6 733.1 676.6 639.0 643.4
Long-term debt % of total capitalization..... 22% 38% 42% 37% 40%
======== ======== ======== ======== ========
</TABLE>
16
<PAGE> 20
THE E.W. SCRIPPS COMPANY
NOTES TO SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA INCLUDES THE ACCOUNTS OF E. W. SCRIPPS AND
ITS MAJORITY-OWNED SUBSIDIARY COMPANIES (INCLUDING SHB).
(a) For comparison purposes previously reported operating revenues, operating
expenses, and equity in income of certain joint ventures (see Note (b))
have been reclassified to conform with 1994 classifications.
(b) Previously reported segment information has been restated to conform with
1994 segment classifications. The Entertainment segment includes United
Media licensing and syndication (previously included in the Publishing
segment), Scripps Howard Productions (a producer of television
programming), The Home & Garden Television Network (a 24-hour cable channel
scheduled for launch in late 1994), and E. W. Scripps' equity interest in
The Food Network and SportSouth cable television networks (previously
reported in Miscellaneous, net).
(c) E. W. Scripps acquired or divested the following operations during the
periods presented:
Six Months Ended June 30:
1994 -- E. W. Scripps, through SHB, acquired Cinetel Productions, a
producer of programs for cable television. E. W. Scripps sold its worldwide
Garfield and U.S. Acres copyrights, resulting in an after-tax gain of $17.4
million, $.23 per share.
1993 -- E. W. Scripps, through SHB, acquired a cable television system. E.
W. Scripps acquired 589,000 shares of SHB common stock (see below). E. W.
Scripps sold its book publishing operations and a newspaper, resulting in
after-tax gains of $12.4 million, $.17 per share.
Years Ended December 31:
1993 -- E. W. Scripps acquired 589,000 shares of SHB common stock,
increasing its ownership to 86.1%, and acquired the remaining 2.7% minority
interest in the Knoxville News-Sentinel. Through SHB, it also acquired a
cable television system. E. W. Scripps sold its book publishing operations,
newspapers in Tulare, California, and San Juan, and through SHB its Memphis
television station and its radio stations. The sales resulted in after-tax
gains of $46.8 million, $.63 per share.
1992 -- E. W. Scripps acquired three daily newspapers (including The Herald
in Monterey, California, in connection with the sale of The Pittsburgh
Press) and through SHB several cable television systems. E. W. Scripps sold
The Pittsburgh Press, TV Data, and certain other investments. The sales
resulted in after-tax gains of $45.6 million, $.61 per share.
1991 -- Through SHB, E. W. Scripps acquired Baltimore television station
WMAR and several cable television systems. It also sold George R. Hall
Company. No gain or loss was recognized on the sale.
1990 -- Through SHB, E. W. Scripps purchased several cable television
systems.
1989 -- E. W. Scripps purchased certain book publishing operations and
through SHB several cable television systems. E. W. Scripps sold its
investment in American City Business Journals. The sale resulted in an
after-tax gain of $2.3 million, $.03 per share.
(d) In the first quarter of 1993 management changed the estimate of the
additional amount of copyright fees SHB would owe when a dispute between
the television industry and the American Society of Composers, Authors and
Publishers ("ASCAP") was resolved. The adjustment increased 1993 first
quarter operating income $4.3 million and net income $2.3 million ($.03 per
share).
(e) In the first quarter of 1993 E. W. Scripps received a $2.5 million fee
associated with the change in ownership of the Ogden, Utah, Standard
Examiner. The fee increased 1993 first quarter net income $1.6 million,
$.02 per share.
17
<PAGE> 21
(f) In the second quarter of 1993 E. W. Scripps realized a gain of $1.1 million
on the sale of certain equipment. The gain increased 1993 net income $0.7
million, $.01 per share.
(g) In the third quarter of 1993 management changed its estimate of the tax
basis and lives of certain assets. Also in August 1993 the federal income
tax rate was increased to 35%, retroactive to January 1, 1993. The net
effects of the change in the estimated tax liabilities for prior years, the
higher tax rate on 1993 income, and the higher rate on deferred income tax
liabilities increased 1993 net income $1.7 million, $.02 per share.
(h) In the fourth quarter of 1993 E. W. Scripps recorded restructuring costs of
$6.3 million for the Rocky Mountain News and United Media. The costs
reduced 1993 net income $3.6 million, $.05 per share.
(i) The Pittsburgh Press was not published after May 17, 1992 due to a strike.
Reported 1992 results include operating losses of $32.7 million and net
losses of $20.2 million, $.27 per share, during the strike period. E. W.
Scripps sold The Pittsburgh Press on December 31, 1992 (see (c) above).
(j) In 1992 E. W. Scripps reduced the carrying value of certain property and
investments to estimated realizable value. The resultant $3.5 million
charge reduced net income $2.3 million, $.03 per share.
(k) In 1991 E. W. Scripps, through SHB, agreed to settle a lawsuit filed in
1988 by Pacific West Cable Company that alleged violations of antitrust and
unfair trade practice laws. The resultant charge reduced operating income
by $12.0 million and net income by $6.3 million, $.08 per share.
(l) In 1990 E. W. Scripps accrued the costs associated with an agreement to
terminate the Knoxville joint operating agency. The resultant charge
reduced operating income $36.4 million and net income $23.7 million, $.31
per share.
(m) E. W. Scripps adopted Financial Accounting Standard ("FAS") No. 106 --
Employers' Accounting for Post-Retirement Benefits Other Than Pensions
effective January 1, 1992. The cumulative effect of the accounting change
reduced net income $22.4 million, $.30 per share, of which $18.0 million,
$.24 per share, was associated with The Pittsburgh Press (see (c) above).
(n) E. W. Scripps adopted Financial Accounting Standard ("FAS") No. 115 --
Accounting for Certain Investments in Debt and Equity Securities on
December 31, 1993. As a result of the change, total assets increased $42.1
million and stockholders' equity increased $27.4 million. Adoption of the
new standard had no effect on results of operations.
18
<PAGE> 22
SCRIPPS HOWARD BROADCASTING COMPANY
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30,
-----------------------
(IN MILLIONS, EXCEPT SHARE DATA) 1994 1993
--------- ---------
<S> <C> <C>
SUMMARY OF OPERATIONS
Operating Revenue:
Broadcast television.......................................... $ 134.2 $ 124.0
Cable television.............................................. 56.4 57.2
Entertainment................................................. 2.1
--------- ---------
Total ongoing operations...................................... 192.7 181.2
Divested operations........................................... 15.3
--------- ---------
Total operating revenue.................................. $ 192.7 $ 196.5
--------- ---------
Operating Income:
Broadcast television.......................................... $ 42.2 $ 31.3
Cable television.............................................. 6.5 12.6
Entertainment................................................. (1.4)
Corporate..................................................... (1.8) (2.3)
--------- ---------
Total ongoing operations...................................... 45.5 41.6
Divested operations........................................... 4.2
Unusual credits (charges)..................................... 4.3
--------- ---------
Total operating income................................... 45.5 50.1
Interest expense.............................................. (4.0) (9.0)
Miscellaneous, net............................................ (0.1) (0.1)
Income taxes.................................................. (17.2) (18.0)
--------- ---------
Net income.................................................... $ 24.2 $ 23.0
========== ==========
SHARE DATA
Income before unusual items...................................... $ 2.35 $ 1.97
Unusual credits (charges)........................................ .26
--------- ---------
Net income....................................................... $ 2.35 2.23
========== ==========
Dividends........................................................ $ .60 $ .60
========== ==========
Common stock price:
High.......................................................... $ 103.000 $ 73.000
Low........................................................... 75.000 44.000
========== ==========
OTHER FINANCIAL DATA
Depreciation and amortization.................................... $ 22.0 $ 21.9
Net cash flow from operating activities.......................... 35.5 40.5
Investing Activity:
Capital expenditures.......................................... (14.3) (13.6)
Other (investing)/divesting activity, net..................... (17.3) (0.2)
Total assets..................................................... 615.1 626.0
Long-term debt and advances...................................... 104.4 218.4
Stockholders' equity............................................. 321.0 231.9
Long-term debt % of total capitalization......................... 25% 49%
========== ==========
</TABLE>
19
<PAGE> 23
SCRIPPS HOWARD BROADCASTING COMPANY
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------
(IN MILLIONS, EXCEPT SHARE DATA) 1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Operating Revenue:
Broadcast television....................... $ 255.0 $ 247.3 $ 216.4 $ 205.2 $ 191.0
Cable television........................... 113.1 109.0 99.5 86.7 74.5
-------- -------- -------- -------- --------
Total ongoing operations................... 368.1 356.3 315.9 291.9 265.5
Divested operations........................ 29.3 30.0 29.1 30.4 31.6
-------- -------- -------- -------- --------
Total operating revenue............... $ 397.4 $ 386.3 $ 345.0 $ 322.3 $ 297.1
-------- -------- -------- -------- --------
Operating Income:
Broadcast television....................... $ 69.6 $ 61.9 $ 49.9 $ 61.1 $ 49.1
Cable television........................... 20.0 23.5 15.4 14.3 11.7
Entertainment..............................
Corporate.................................. (3.7) (3.6) (2.7) (3.1) (2.8)
-------- -------- -------- -------- --------
Total on-going operations.................. 85.9 81.8 62.6 72.3 58.0
Divested operations........................ 8.7 8.4 7.7 7.4 9.4
Unusual credits (charges).................. 4.3 (12.0)
-------- -------- -------- -------- --------
Total operating income................ 98.9 90.2 58.3 79.7 67.4
Interest expense........................... (16.1) (22.7) (24.2) (23.4) (27.3)
Net Gains.................................. 84.5
Miscellaneous, net......................... (0.3) 0.1 (0.1)
Income taxes............................... (66.7) (30.8) (17.9) (26.3) (19.0)
-------- -------- -------- -------- --------
Net income................................. $ 100.3 $ 36.8 $ 16.2 $ 30.0 $ 21.0
======== ======== ======== ======== ========
SHARE DATA
Income before unusual items.................. $ 4.34 $ 3.56 $ 2.33 $ 2.91 $ 2.04
Unusual credits (charges) and net gains...... 5.38 (0.77)
-------- -------- -------- -------- --------
Net income................................... $ 9.72 $ 3.56 $ 1.56 $ 2.91 $ 2.04
-------- -------- -------- -------- --------
Dividends.................................... $ 1.20 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Common stock price:
High....................................... $ 84.000 $ 52.000 $ 58.000 $ 67.000 $ 81.000
Low........................................ 44.000 38.000 38.000 35.000 57.500
======== ======== ======== ======== ========
OTHER FINANCIAL DATA
Depreciation and amortization................ $ 44.4 $ 41.7 $ 38.9 $ 36.5 $ 37.1
Net cash flow from operating activities...... 88.4 92.3 60.3 82.9 82.7
Investing Activity:
Capital expenditures....................... (30.9) (26.5) (22.3) (22.5) (19.8)
Other (investing)/divesting activity,
net...................................... 94.3 (0.6) (129.2) (3.3) (2.0)
Total assets............................... 621.9 653.6 682.2 554.0 575.2
Long-term debt and advances................ 99.9 238.8 294.0 193.3 238.5
Stockholders' equity....................... 303.0 215.1 188.6 182.9 163.2
Long-term debt % of total capitalization... 25% 53% 61% 51% 59%
======== ======== ======== ======== ========
</TABLE>
20
<PAGE> 24
SCRIPPS HOWARD BROADCASTING COMPANY
NOTES TO SELECTED FINANCIAL DATA
(a) For comparison purposes previously reported operating revenues, operating
expenses, and equity in income of certain joint ventures (see Note b) have
been reclassified to conform with 1994 classifications.
(b) SHB acquired or divested the following operations during the periods
presented:
Six Months Ended June 30:
1994 -- SHB acquired Cinetel Productions, a producer of programs for cable
television.
1993 -- SHB acquired a cable television system.
Years Ended December 31:
1993 -- SHB acquired a cable television system. SHB also sold its Memphis
television station and its radio stations. The sales resulted in after-tax
gains of $53.0 million, $5.13 per share.
1992 -- SHB acquired several cable television systems.
1991 -- SHB acquired Baltimore television station WMAR and several cable
television systems.
1990 -- SHB purchased several cable television systems.
1989 -- SHB purchased several cable television systems.
(c) In the first quarter of 1993 management changed the estimate of the
additional amount of copyright fees SHB would owe when a dispute between
the television industry and the American Society of Composers, Authors and
Publishers ("ASCAP") was resolved. The adjustment increased 1993 first
quarter operating income $4.3 million and net income $2.7 million, $.26 per
share.
(d) In the third quarter of 1993 management changed its estimate of the tax
basis and lives of certain assets. Also, in August 1993 the federal income
tax rate was increased to 35%, retroactive to January 1, 1993. The net
effects of the change in the estimated tax liabilities for prior years, the
higher tax rate on 1993 income, and the higher rate on SHB's deferred
income tax liabilities decreased 1993 net income $0.1 million, $.01 per
share.
(e) In 1991 SHB agreed to settle a lawsuit filed in 1988 by Pacific West Cable
Company that alleged violations of antitrust and unfair trade practice
laws. The resultant charge reduced operating income by $12.0 million and
net income by $7.9 million, $.77 per share.
21
<PAGE> 25
COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
----------------- --------------------------
(IN MILLIONS, EXCEPT SHARE DATA) 1994 1993 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
THE E.W. SCRIPPS COMPANY -- HISTORICAL:
Net income per share from continuing operations......... $ 0.98 $ 0.73 $ 1.72 $ 1.43 $ 0.89
Dividends declared per share............................ $ 0.22 $ 0.22 $ 0.44 $ 0.40 $ 0.40
Book value per share.................................... $12.11 $10.34 $11.50 $ 9.82 $ 9.08
------ ------ ------ ------ ------
SCRIPPS HOWARD BROADCASTING COMPANY -- HISTORICAL:
Net income per share from continuing operations......... $ 2.35 $ 2.23 $ 9.72 $ 3.56 $ 1.56
Dividends declared per share............................ $ 0.60 $ 0.60 $ 1.20 $ 1.00 $ 1.00
Book value per share.................................... $31.09 $22.46 $29.34 $20.83 $18.26
------ ------ ------ ------ ------
EQUIVALENT PER SHARE BASIS (3.45 SHARES OF E.W. SCRIPPS
COMPANY CLASS A COMMON STOCK):
Net income per share from continuing operations......... $ 3.38 $ 2.52 $ 5.93 $ 4.93 $ 3.07
Dividends declared per share............................ $ 0.76 $ 0.76 $ 1.52 $ 1.38 $ 1.38
Book value per share.................................... $41.78 $35.67 $39.68 $33.88 $31.33
</TABLE>
22
<PAGE> 26
COMPARATIVE MARKET VALUES OF SHB COMMON STOCK AND E. W. SCRIPPS
CLASS A COMMON STOCK
The NASDAQ is the principal market on which SHB Common Stock is traded
(symbol: SCRP). The NYSE is the principal market on which E. W. Scripps Class A
Common Stock is traded (symbol: SSP).
Set forth below are the closing sale prices for a share of SHB Common Stock
(on a historical and equivalent per share basis) and for a share of E. W.
Scripps Class A Common Stock (on a historical per share basis), each as reported
by The Wall Street Journal, as of February 17, 1994, the last full business day
preceding the day on which E. W. Scripps and SHB first announced that the Merger
had been proposed, and as of April 6, 1994, the last full business day preceding
the day on which E. W. Scripps and SHB first announced that their respective
Boards of Directors had approved the Merger and the exchange ratio of 3.45 to 1,
and as of July 6, 1994, the last full business day preceding the day on which
SHB called the Special Meeting.
<TABLE>
<CAPTION>
E. W. SCRIPPS
SHB SHB CLASS A
COMMON STOCK COMMON STOCK COMMON STOCK
(HISTORICAL) (EQUIVALENT) (HISTORICAL)
------------ ------------ -------------
<S> <C> <C> <C>
February 17, 1994............... $75.00 $ 99.19 $ 28.75
April 6, 1994................... $82.00 $ 82.80 $ 24.00
July 6, 1994.................... $99.50 $ 100.91 $ 29.25
</TABLE>
For information relating to historical market prices of and dividends on
the SHB Common Stock and the E. W. Scripps Class A Common Stock, see "Market For
SHB Common Equity And Related Stockholder Matters" and "Market For E. W. Scripps
Common Equity And Related Stockholder Matters." Holders of SHB Common Stock are
urged to obtain current quotations for such securities.
23
<PAGE> 27
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus and the accompanying notice of the Special
Meeting and form of proxy are being furnished to all holders of record on the
Record Date of shares of SHB Common Stock in connection with the solicitation of
proxies by the SHB Board for use at the Special Meeting to be held on September
14, 1994, commencing at 10:00 a.m. local time at SHB's offices, 312 Walnut
Street, Cincinnati, Ohio 45202, and any adjournment or postponement thereof.
These proxy materials are being mailed to the SHB Stockholders on August 15,
1994.
At the Special Meeting, the SHB Stockholders will be asked to consider and
vote upon a proposal to adopt the Merger Agreement, pursuant to which (i) SHB
will be merged with and into Mergerco, with Mergerco being the Surviving
Corporation, all of the stock of which will be owned by E. W. Scripps, and (ii)
each share of SHB Common Stock outstanding immediately prior to the Effective
Time (other than the Excluded Shares and Dissenting Shares) will be converted
into the right to receive 3.45 shares of E. W. Scripps Class A Common Stock. The
full text of the Merger Agreement is attached as Annex I hereto and is
incorporated herein in its entirety. See "The Merger Agreement."
VOTING AT THE SPECIAL MEETING
RECORD DATE. The close of business on August 9, 1994 has been fixed as the
Record Date for determining the SHB Stockholders entitled to notice of and to
vote at the Special Meeting. On the Record Date, there were 10,325,788 shares of
SHB Common Stock outstanding and entitled to vote, held by approximately 600
holders of record. SHB Stockholders may cast one vote per share, either in
person or by proxy, on each matter to be voted on at the Special Meeting.
REQUIRED STOCKHOLDER VOTE. A majority of the outstanding shares of SHB
Common Stock, represented in person or by proxy, is required for a quorum at the
Special Meeting. The affirmative vote of the holders of a majority of the
outstanding shares of SHB Common Stock is required to adopt the Merger
Agreement. Abstentions and broker non-votes will have the same effect as votes
against adoption of the Merger Agreement. E. W. Scripps beneficially owns a
sufficient number of shares of SHB Common Stock to cause the Merger Agreement to
be adopted without the vote of any other SHB Stockholder. The Merger Agreement
requires E. W. Scripps to vote, or cause to be voted, all shares beneficially
owned by it in favor of adoption of the Merger Agreement.
THE SHB BOARD AND THE SPECIAL COMMITTEE UNANIMOUSLY RECOMMEND THAT SHB
STOCKHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
PROXIES
All shares of SHB Voting Stock represented at the Special Meeting by
properly executed proxies received prior to or at the Special Meeting, unless
the proxies have previously been revoked, will be voted in accordance with the
instructions on such proxies. If no instructions are given, proxies will be
voted FOR approval and adoption of the Merger Agreement. If any other matters
are properly presented to the Special Meeting for action, the persons named in
the enclosed form of proxy as acting thereunder will have discretion to vote on
such matters in accordance with their best judgment. SHB does not know of any
matters other than adoption of the Merger Agreement and procedural matters
relating to the conduct of business at the Special Meeting that will be
presented at the Special Meeting.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by delivery to
the Secretary of SHB at 312 Walnut Street, Cincinnati, Ohio 45202, of a written
notice of revocation bearing a later date than
24
<PAGE> 28
the proxy, by duly executing and delivering to the Secretary a subsequent proxy
relating to the same shares, or by attending the Special Meeting and voting in
person (although attendance at the Special Meeting will not in and of itself
constitute revocation of a proxy).
Proxies are being solicited by and on behalf of the SHB Board. In addition
to solicitation by mail, proxies may be solicited by directors and authorized
officers and employees of SHB in person or by telephone, telegram or other means
of communication. Such directors, officers and employees will not be
additionally compensated, but may be reimbursed for out-of-pocket expenses in
connection with such solicitation. Arrangements will also be made with
custodians, nominees and fiduciaries for forwarding of proxy solicitation
material to beneficial owners of shares of SHB Common Stock held of record by
such persons, and SHB may reimburse such custodians, nominees and fiduciaries
for reasonable expenses incurred in connection therewith.
All information in this Proxy Statement/Prospectus concerning E. W. Scripps
and its subsidiaries (other than SHB), Mergerco, the E. W. Scripps Class A
Common Stock and the conduct of the business of Mergerco after the Merger has
been provided by E. W. Scripps. Except as otherwise indicated, all other
information contained in this Proxy Statement/Prospectus has been supplied by
SHB.
THE MERGER CONSTITUTES A MATTER OF GREAT IMPORTANCE TO SHB STOCKHOLDERS.
UPON ADOPTION OF THE MERGER AGREEMENT AND CONSUMATION OF THE MERGER, THE
DIRECT EQUITY INVESTMENT IN SHB OF SHB'S STOCKHOLDERS WILL CEASE, AND SUCH
STOCKHOLDERS (OTHER THAN THE HOLDERS OF THE EXCLUDED SHARES AND DISSENTING
SHARES) WILL BE ENTITLED TO RECEIVE THE MERGER CONSIDERATION. ACCORDINGLY,
SHB STOCKHOLDERS ARE URGED TO READ AND CAREFULLY CONSIDER THE INFORMATION
PRESENTED IN THIS PROXY STATEMENT/PROSPECTUS.
THE MERGER
BACKGROUND AND REASONS FOR THE MERGER
E. W. Scripps formed SHB in 1935 in connection with the acquisition of its
first radio stations. In 1963, E. W. Scripps and certain affiliated stockholders
of SHB sold approximately 15% of SHB's outstanding shares in an initial public
offering, following which E. W. Scripps retained control of SHB with
approximately 67% of the outstanding SHB Common Stock. Over the years after
SHB's initial public offering, E. W. Scripps repurchased shares of SHB Common
Stock in public and private transactions from time to time, including a tender
offer in 1984 pursuant to which it increased its percentage ownership to 80% for
tax consolidation purposes. At present, E. W. Scripps beneficially owns 86.1% of
the outstanding shares of SHB Common Stock.
From its inception SHB has operated in the broadcast media industry,
starting with its first radio stations in 1935, its first television station in
1947 and its first cable system in 1980. SHB today operates nine broadcast
television stations, all of which are network affiliated, and cable systems with
approximately 295,000 subscribers in Colorado, Florida and California as of
March 31, 1994. SHB's largest cable franchise is in Sacramento, California,
where SHB has approximately 212,000 subscribers as of March 31, 1994. In 1993,
SHB divested all of its radio stations and a television station in Memphis,
Tennessee.
E. W. Scripps, which traces its beginnings to 1878, became a publicly held
company in 1988 with an initial public offering of its Class A Common Stock. In
addition to operating in the broadcast media industry historically through its
control of SHB, E. W. Scripps has been engaged in the publishing and cable
television industries through various operating subsidiaries. E. W. Scripps
acquired its first cable television system in 1980 and today operates cable
systems
25
<PAGE> 29
in California, Colorado, Florida, Georgia, Indiana, Kentucky, South Carolina,
Tennessee, Virginia and West Virginia, with approximately 701,000 subscribers as
of March 31, 1994.
The operation of two public companies, each of which owns significant cable
television properties, has presented the Boards of Directors and management of
these companies with potential conflicts of interest and potential corporate
governance and opportunity issues. Furthermore, since the initial public
offering of E. W. Scripps Class A Common Stock in 1988, the operation of two
public companies associated with the Scripps and Howard names has, in the view
of the Boards of Directors of both companies, engendered confusion in the
marketplace between the two publicly traded stocks. Historically, the SHB Common
Stock has been a relatively illiquid stock characterized by generally thin
volume and significant price volatility.
In light of the foregoing and in the belief that there were a number of
potential benefits to both companies and their stockholders that could be
realized if E. W. Scripps acquired all of the outstanding shares of SHB Common
Stock that it does not presently own, management of E. W. Scripps engaged J.P.
Morgan Securities, Inc. ("J.P. Morgan") in January 1994 to prepare a report for
the Board of Directors of E. W. Scripps to assist the Board in evaluating a
possible merger involving the companies. J.P. Morgan completed its report (the
"J.P. Morgan Report") in February 1994 and at the E. W. Scripps Board of
Directors meeting on February 17, 1994 delivered the report and discussed it
with the directors of E. W. Scripps. The J.P. Morgan Report focused on a variety
of matters appropriate to an analysis of the proposed merger, including an
overview of the stock ownership of SHB, the operations of E. W. Scripps and SHB,
the advantages of the proposed merger for each company and its stockholders, the
dilution that would occur as a result of the issuance of a substantial number of
shares of E. W. Scripps Class A Common Stock in connection with the proposed
merger, and the illiquidity and volatility of the SHB Common Stock.
Additionally, the J.P. Morgan Report analyzed a proposed exchange ratio of three
shares of E. W. Scripps Class A Common Stock for each share of SHB Common Stock
from a number of perspectives, including premium to average market price of SHB
Common Stock, cash flow multiples of a group of companies comparable to SHB, and
trading multiples and other indicia such as liquidity, volatility and trading
volume of the stock of such companies in SHB's peer group.
Following presentation of the J.P. Morgan Report and discussion thereof and
related matters at its February 17, 1994 meeting, the Board of Directors of E.
W. Scripps unanimously approved an offer to acquire pursuant to merger all
outstanding shares of SHB Common Stock not beneficially owned by E. W. Scripps.
At this meeting, the E. W. Scripps Board of Directors authorized an exchange
ratio of three shares of E. W. Scripps Class A Common Stock for each outstanding
share of SHB Common Stock owned by the Public Stockholders.
Following the aforesaid meeting of the E. W. Scripps Board of Directors,
the President of E. W. Scripps delivered to the Board of Directors of SHB a
letter setting forth the terms of the aforesaid merger proposal at a regularly
scheduled meeting of the SHB Board of Directors held on February 17, 1994. Upon
delivery of the letter to the SHB Board of Directors, it was decided that there
would be no discussion of the proposal because several members of the SHB Board
of Directors were also members of the E. W. Scripps Board of Directors. The only
action taken at the meeting with respect to the proposal was the formation of
the SHB Special Committee. See "Summary -- Recommendation of the SHB Board." The
SHB Special Committee was authorized to consider the merger proposal, to
determine the fairness of the proposal to Public Stockholders and to recommend
to the SHB Board of Directors and to the SHB Stockholders whether they should
approve the proposed merger.
At the SHB meeting on February 17, 1994, the SHB Special Committee was also
authorized to employ investment bankers and legal counsel as it deemed
appropriate to assist in the analysis of the proposal. It was also decided that
each member of the SHB Special Committee would receive a special fee in the
amount of $25,000 in recognition of the work that would be involved in
discharging his responsibilities.
26
<PAGE> 30
On February 17, 1994, prior to the announcement of the proposed merger, the
SHB Common Stock closed at $75 per share on NASDAQ and the E. W. Scripps Class A
Common Stock closed at $28.75 per share on the NYSE.
Following its formation, the SHB Special Committee met on February 22,
1994. At that meeting the SHB Special Committee retained Taft, Stettinius as its
legal counsel and agreed that it would interview nationally recognized
investment banking firms for the possible retention of a financial advisor.
On March 1, 1994, Lehman Brothers and two other nationally recognized
investment banking firms were interviewed by the SHB Special Committee.
Following these interviews and subsequent discussions, the SHB Special Committee
selected Lehman Brothers to assist the SHB Special Committee in determining
whether the consideration to be offered in the proposed merger was fair from a
financial point of view to the Public Stockholders, to perform such other
financial advisory services as the SHB Special Committee might request and to
provide a formal written opinion as to fairness, from a financial point of view,
of the exchange ratio to be offered to the Public Stockholders in the proposed
merger. See "The Merger -- Opinion of Financial Advisor."
On March 7, 1994, Mr. Stautberg, on behalf of the SHB Special Committee,
and representatives of Lehman Brothers and Taft, Stettinius met with
representatives of J.P. Morgan and members of upper-level management of E. W.
Scripps and SHB in order to gather information about various aspects of the
companies' businesses, including the newspaper publishing, broadcast television,
cable television and entertainment segments. For the three-week period following
the March 7 meeting, Lehman Brothers and Taft, Stettinius continued to gather
information through numerous conference calls with members of the managements of
SHB and E. W. Scripps.
After its advisors had devoted more than two weeks to the due diligence
process, the SHB Special Committee held a meeting on March 25, 1994. At this
meeting the SHB Special Committee reviewed with its legal counsel due diligence
sessions which had been held with managements of SHB and E. W. Scripps, and
information gleaned by its legal counsel from a review of various documents
relating to E. W. Scripps and SHB. A proposed form of merger agreement which had
been prepared by E. W. Scripps was provided to members of the SHB Special
Committee and to Lehman Brothers. Lehman Brothers reported that because under
the proposed transaction the Public Stockholders were to receive shares of E. W.
Scripps Class A Common Stock, it was necessary for Lehman Brothers to evaluate
both E. W. Scripps and SHB to determine whether the consideration to be received
by the Public Stockholders was fair from a financial point of view. Lehman
Brothers then described the various analyses that it anticipated it would use in
its valuations of E. W. Scripps and SHB. These would involve four different
methodologies, including three comparative analyses and a discounted cash flow
analysis. Specifically, Lehman Brothers indicated that it would compare trading
multiples of SHB and E. W. Scripps, both pre- and post-announcement of the
proposed merger, to comparable public companies; would derive theoretical public
values for SHB and E. W. Scripps on a segment-by-segment basis based on the
public trading ranges of comparable companies; and would derive private market
values for SHB and E. W. Scripps on a segment-by-segment basis based on
transaction multiples of recently announced cable, newspaper and television
station sales. Lehman Brothers added that its discounted cash flow analysis
would involve values derived by Lehman Brothers based on management's
projections -- extrapolated by Lehman Brothers when necessary to have a minimum
of five-year projections -- using separate discount rates and terminal multiples
for each business division. Lehman Brothers also noted that it would present
various sensitivity analyses, which would show the effects of different
assumptions as to the success of certain divisions' future operations.
On March 29, 1994, the SHB Special Committee reviewed with its legal
counsel and financial advisor the proposed merger agreement. Following this
review the SHB Special Committee
27
<PAGE> 31
agreed to propose to E. W. Scripps certain additions and changes to the proposed
merger agreement, including a condition that the proposed merger be approved by
the favorable vote of a majority of the votes cast by the Public Stockholders, a
condition that the opinion received by the SHB Special Committee from Lehman
Brothers be updated at the time of the consummation of the proposed merger and a
provision giving members of the SHB Special Committee the ability to terminate
the proposed merger agreement if they believed such action was warranted in the
exercise of their fiduciary duties.
While the companies evaluated and negotiated the proposed merger during
late March and early April 1994, legal counsel for the SHB Special Committee and
E. W. Scripps exchanged comments and held several discussions regarding various
provisions of the proposed merger agreement. In response to comments of the SHB
Special Committee, the proposed merger agreement was revised ultimately to
include, among other things, a condition that the opinion as to fairness
provided by Lehman Brothers be updated as of the date of closing and the right
on the part of the SHB Special Committee to terminate the merger agreement if it
determined that such action was in accord with its fiduciary duties to the SHB
Stockholders. Additionally, a similar right to terminate on the basis of
fiduciary duty was reserved by the E. W. Scripps Board of Directors. E. W.
Scripps did not agree to SHB Special Committee's other request that a condition
be added to the proposed merger agreement to the effect that the proposed merger
would have to be approved by a majority of the Public Stockholders who actually
vote on the proposed merger. The decision of E. W. Scripps not to agree to this
request was based on the following factors: (i) E. W. Scripps increased the
exchange ratio from 3 to 1 to 3.45 to 1, a 15% increase; (ii) E. W. Scripps and
SHB are not required by Ohio law, which governs the merger, to seek approval by
a majority of the Public Stockholders who vote on the merger; and (iii) E. W.
Scripps does not believe it to be in the best interests of its stockholders to
invest substantial funds and significant Board and management time if the merger
can be disapproved by a vote of Public Stockholders that is not required by law.
During the March 29 meeting, Lehman Brothers also reviewed with the SHB
Special Committee its preliminary report on the valuations of E. W. Scripps and
SHB. Lehman Brothers described the various meetings which its representatives
had held with the managements of E. W. Scripps and SHB, and the nature of the
information made available to them by both companies. Lehman Brothers then
summarized the information received and the reviews which Lehman Brothers
carried out in order to be in a position to provide its report to the SHB
Special Committee.
Lehman Brothers reviewed with the SHB Special Committee an overview of each
of SHB and E. W. Scripps. These overviews consisted of breakdowns of historical
and projected revenues and operating cash flow by various business segments of
each company and a discussion of Lehman Brothers' understanding of the nature
and prospects of the businesses in each segment of the two companies.
Lehman Brothers and the SHB Special Committee then reviewed together the
various analyses, which were consistent with the descriptions provided at the
March 25 meeting. Lehman Brothers noted that it had determined that the first
proposed analysis described at the March 25, 1994 meeting, i.e., trading
multiples of comparable companies, was of limited use because of the lack of any
companies actually comparable to SHB in terms of the combination of businesses
conducted by SHB. In the other analyses, Lehman Brothers calculated a range of
exchange ratios derived from the relative values of the securities of the two
companies. Lehman Brothers' report was preliminary in nature and contained
necessarily incomplete versions of the analyses described in "The Merger --
Opinion of Financial Advisor." Following the review of Lehman Brothers'
preliminary report, it was the view of Lehman Brothers that the proposed
exchange ratio of three shares of E. W. Scripps Class A Common Stock for each
share of SHB Common Stock appeared to be below the range of exchange ratios
suggested by the various analyses and the view of the SHB Special Committee that
the proposed exchange ratio was not sufficient. The SHB Special Committee
authorized Lehman Brothers and the Committee's counsel
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to meet with the representatives of E. W. Scripps to explore the possibility of
increasing the exchange ratio above that initially proposed.
On March 31, 1994, E. W. Scripps' and the SHB Committee's respective legal
and financial advisors held a meeting at which the SHB advisors reported to the
E. W. Scripps advisors that the exchange ratio of 3 to 1 proposed by E. W.
Scripps was not sufficient. The E. W. Scripps advisors indicated that E. W.
Scripps might be willing to increase the exchange ratio.
At a meeting held on April 1, 1994, Lehman Brothers presented to and
discussed with the SHB Special Committee various analyses of SHB and E. W.
Scripps based on the same methodologies considered at the March 29 meeting and
which reflected points raised at the March 29 and 31 meetings. Lehman Brothers
divided each of SHB and E. W. Scripps into their component parts of cable,
television, newspaper and entertainment, and developed different valuation
scenarios, assuming high or low values for each component part. Lehman Brothers
also performed a variety of sensitivity analyses which factored in varying
assumptions as to the success of certain divisions' future operations. A summary
of the exchange ratio analyses was also provided. Lehman Brothers' analyses were
consistent with, and essentially refinements of, those discussed at the March 29
meeting.
Following its review of these analyses, the SHB Special Committee concluded
that these analyses offered continued support for its determination that an
increase in the exchange ratio was appropriate, and further concluded that the
SHB Special Committee would not be in a position to determine that the proposed
merger was fair to and in the best interests of the Public Stockholders without
an increase in the exchange ratio. The SHB Special Committee authorized Lehman
Brothers and its counsel to advise E. W. Scripps of these decisions of the SHB
Special Committee.
On April 1 and 3, 1994, representatives of J.P. Morgan and Lehman Brothers
had several telephone discussions concerning the proposed merger and exchange
ratio. On April 5, 1994, representatives of both financial advisors met to
discuss these matters further.
On April 4, 5 and 6, 1994, the SHB Special Committee and its legal and
financial advisors had ongoing discussions with representatives of both E. W.
Scripps and SHB concerning possible increases in the exchange ratio. Following
the aforesaid discussions, the President of E. W. Scripps convened a special
telephonic meeting of the E. W. Scripps Board of Directors on April 6, 1994.
At that meeting, E. W. Scripps' President reviewed the E. W. Scripps
Board's earlier discussions relating to the merger proposal, including the
initial offer of an exchange ratio of three shares of E. W. Scripps Class A
Common Stock for each outstanding share of SHB Common Stock. The President then
reviewed events since those discussions, including advising the Board of the
declines in the stock market in general and in the per share price of E. W.
Scripps Class A Common Stock from approximately $28 to approximately $24 since
the initial proposal had been made. The President also informed the Board that
he expected earnings during the first quarter of 1994 for both companies to be
good. He reminded the Board that he had recommended the initial exchange ratio
of 3 to 1 because it was nondilutive to E. W. Scripps.
Following the President's comments, a representative of J.P. Morgan
reported to the E. W. Scripps Board on his discussions with members of the SHB
Special Committee and its financial and legal advisors. He indicated that after
review of the situation and advice from Lehman Brothers, the SHB Special
Committee stated that the exchange ratio of 3 to 1 proposed by E. W. Scripps was
not sufficient. The J.P. Morgan representative reported that, following these
discussions with the SHB Special Committee, he and the President discussed a
possible increase in the exchange ratio from 3 to 1 to 3.45 to 1. The J.P.
Morgan representative then stated that a 3.45 to 1 exchange ratio was expected
to cause minimal dilution to E. W. Scripps. He also indicated that, based on his
discussions with the Special Committee, its legal counsel and
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investment bankers, he believed that this offer might be acceptable to the SHB
Special Committee.
The J.P. Morgan representative then reviewed some of the benefits to E. W.
Scripps in consummating the proposed merger, including the following: (i) the
opportunity to realize certain strategic and business management benefits,
including the elimination of potential conflicts of interest and potential
corporate governance and opportunity issues; (ii) ending the confusion in the
marketplace between the two publicly traded stocks; and (iii) additional
flexibility to explore strategic opportunities in each company's businesses,
including the cable businesses that each company owns.
Following the comments of the J.P. Morgan representative, the President of
E. W. Scripps indicated that he concurred with the benefits described above and
stated that an additional benefit to E. W. Scripps was that there would be an
increase in the number of shares of E. W. Scripps Class A Common Stock held by
the public and freely tradeable in the public market following the proposed
merger. The President then recommended that the Board approve a new proposed
exchange ratio of 3.45 to 1. Following discussion by the Board, the new proposed
exchange ratio was approved and the President was authorized to inform the SHB
Special Committee and the SHB Board of the new exchange ratio and its approval
by the E. W. Scripps Board of Directors.
Following the meeting of the E. W. Scripps Board of Directors on April 6,
1994, the President of E. W. Scripps advised the SHB Special Committee on that
date that E.W. Scripps was willing to increase the exchange ratio to 3.45 shares
of E. W. Scripps Class A Common Stock for each share of SHB Common Stock. The
SHB Special Committee then reconvened to consider E. W. Scripps' proposal. At
this meeting, the SHB Special Committee reviewed its previous discussions with
legal counsel and Lehman Brothers. Lehman Brothers reviewed its final report
with the SHB Special Committee, noting that it was consistent with its previous
reports. See "The Merger -- Opinion of Financial Advisor." Lehman Brothers then
stated that it was of the opinion that the proposed exchange ratio of 3.45
shares of E. W. Scripps Class A Common Stock for each share of SHB Common Stock
was fair, from a financial point of view, to the Public Stockholders, and that
it was prepared to deliver its written opinion to such effect at or about the
time of mailing the Proxy Statement/Prospectus to the SHB Stockholders (and an
update at the Effective Time), subject to material changes in such companies'
businesses prior to the time of rendering such written opinion. The SHB Special
Committee then agreed unanimously to adopt resolutions (i) finding that the
proposed merger, as set forth in the merger agreement revised to reflect an
exchange ratio of 3.45 shares of E. W. Scripps Class A Common Stock for each
share of SHB Common Stock, was fair to the Public Stockholders and (ii)
recommending that the SHB Board approve the proposed merger.
After this meeting, the SHB Special Committee informed the President of E.
W. Scripps of its decision, and a special telephonic meeting of the SHB Board of
Directors was called to receive the recommendation of the SHB Special Committee
and approve the new proposed exchange ratio.
A special meeting of the SHB Board of Directors was then convened late in
the afternoon on April 6, 1994. At the meeting, the SHB Special Committee
delivered its report to the SHB Board. Mr. Stautberg, reporting for the SHB
Special Committee, stated that the SHB Special Committee, along with its legal
and financial advisors, had completed appropriate due diligence and analysis of
the merger proposal and had received a report from Lehman Brothers with respect
to the fairness of the consideration in the proposed merger. Mr. Stautberg then
informed the SHB Board that, following negotiations between the SHB Special
Committee and its advisors and E. W. Scripps and its advisors, E. W. Scripps had
increased the exchange ratio of its original merger proposal from 3 to 3.45
shares of E. W. Scripps Class A Common Stock for each share of SHB Common Stock
owned by the Public Stockholders. The SHB Board was also informed by Mr.
Stautberg that Lehman Brothers had confirmed that it was prepared to deliver a
fairness
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opinion with respect to the revised exchange ratio. Mr. Stautberg then stated
that on the basis of the foregoing, the SHB Special Committee was unanimously
recommending that the SHB Board approve the revised merger proposal. Following a
discussion, the SHB Board unanimously approved the revised exchange ratio and
merger proposal.
On April 7, 1994, E. W. Scripps and SHB issued press releases announcing
the new exchange ratio and revised merger proposal and its approval by their
respective Boards of Directors. Following that date, certain terms and
conditions of the Merger Agreement were negotiated by legal counsel for the
companies. On the morning of May 4, 1994, the SHB Special Committee met and,
after discussion and final review of the proposed merger agreement, recommended
approval thereof by the SHB Board and the SHB Stockholders. Later that day, the
Merger Agreement was approved in final form by the Executive Committee of E. W.
Scripps and, on the basis of the SHB Special Committee's recommendation, by the
SHB Board. Following such approval, the Merger Agreement was executed by E. W.
Scripps, Mergerco and SHB on May 4, 1994.
Following approval of the Merger and execution of the Merger Agreement by
the parties thereto, SHB filed preliminary proxy materials with the Securities
and Exchange Commission on May 13, 1994. Approximately 10 days after such
filing, on May 23, 1994, Fox and New World announced their agreement under which
12 television stations owned or to be acquired by New World would become
affiliates of Fox. On May 27, 1994, at a special meeting of the Board of E. W.
Scripps, the Chief Executive Officer of E. W. Scripps reported that, as a result
of the Fox-New World alliance, SHB could lose its Fox affiliations in Kansas
City, Phoenix and Tampa and that the effects of the Fox-New World announcement
on the television industry and SHB were not yet known. The Chief Executive
Officer stated that SHB management was studying this development.
At various times after the Fox-New World announcement, senior management of
SHB held discussions with representatives of other networks. On June 15, 1994,
the Board of Directors of each of E. W. Scripps and SHB approved the ABC
Affiliation Agreements pursuant to which SHB's television stations in Detroit
and Cleveland would continue as ABC affiliates and its stations in Phoenix,
Tampa and Baltimore would become ABC affiliates.
On June 16, 1994, the Special Committee, its legal counsel, and Lehman
Brothers were provided information about the ABC Affiliation Agreements.
Following this meeting, Lehman Brothers met with management of E. W. Scripps and
with representatives of J. P. Morgan to obtain additional information concerning
the changes in SHB's television broadcast activities. An additional meeting of
the SHB Special Committee was held on July 6, 1994. At this meeting, Lehman
Brothers reported to the SHB Special Committee that, based upon the information
it had obtained from SHB and its own expertise with respect to the television
broadcast industry, it believed that its earlier analyses discussed with the
Special Committee on April 6, 1994 (see "The Merger -- Opinion of Financial
Advisor") remained accurate in all material respects. Lehman Brothers then
reviewed with the SHB Special Committee the bases underlying such determination.
Lehman Brothers further advised the SHB Special Committee that it remained of
the opinion that the proposed exchange ratio of 3.45 shares of E. W. Scripps
Class A Common Stock for each share of SHB Common Stock was fair, from a
financial point of view, to the Public Stockholders, and that it was prepared to
deliver its written opinion to such effect at the time of the mailing of the
Proxy Statement/Prospectus to the SHB Stockholders. The SHB Special Committee
then agreed unanimously to reaffirm its May 4, 1994 determination that the
proposed Merger, as set forth in the Merger Agreement, was fair to the Public
Stockholders, and to recommend that the SHB Board call a special meeting of SHB
Stockholders to approve the Merger.
On July 7, 1994, the SHB Board voted unanimously in favor of calling the
Special Meeting to approve the Merger.
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PURPOSE AND STRUCTURE OF THE MERGER AND CERTAIN EFFECTS OF THE MERGER
The purpose of the Merger is for E. W. Scripps to acquire all of the shares
of SHB Common Stock that it does not beneficially own so that SHB will be a
wholly owned subsidiary of E. W. Scripps. The Merger is structured in order to
give the SHB Stockholders the opportunity to own, in a tax-free exchange, a
stock with greater liquidity, as well as to share in the prospects of the
combined organization.
Following the consummation of the Merger, the SHB Common Stock will be
delisted from the NASDAQ and the registration of the SHB Common Stock under the
Exchange Act will be terminated. The termination of the registration of the SHB
Common Stock under the Exchange Act would make certain of the provisions of the
Exchange Act, such as the requirement of furnishing a proxy statement in
connection with certain meetings of stockholders, no longer applicable with
respect to the SHB Common Stock. See "Business of SHB" and "The Merger --
Conduct of the Business of the Surviving Corporation After the Merger."
CONDUCT OF THE BUSINESS OF THE SURVIVING CORPORATION AFTER THE MERGER
Following the Merger, the Surviving Corporation will be a wholly owned
subsidiary of E. W. Scripps. The Surviving Corporation will exist and operate
under the name "Scripps Howard Broadcasting Company." The Surviving
Corporation's Articles of Incorporation and Code of Regulations will be the same
as the SHB Articles of Incorporation and SHB Code of Regulations as in effect
immediately prior to the Effective Time, except that the number of authorized
shares of common stock of the Surviving Corporation will be 850 shares instead
of 25,000,000 shares. The Surviving Corporation's Board of Directors and
management will be the same as that of SHB as in effect immediately prior to the
Effective Time.
RECOMMENDATION OF THE SHB SPECIAL COMMITTEE AND THE SHB BOARD
On February 17, 1994, E. W. Scripps proposed to the SHB Board that SHB
enter into a transaction in which SHB would be merged into Mergerco and the
Public Stockholders would receive three shares of E. W. Scripps Class A Common
Stock for each share of SHB Common Stock. At this time the SHB Board created the
SHB Special Committee to consider the merger proposal, to determine the fairness
of the merger proposal to the Public Stockholders and to recommend to the SHB
Board and SHB Stockholders whether they should approve the proposed merger. See
"The Merger -- Background and Reasons for the Merger."
On February 22, 1994, the SHB Special Committee retained Taft, Stettinius
to act as its legal counsel in connection with the merger proposal. On March 1,
1994, Lehman Brothers and two other nationally recognized investment banking
firms were interviewed by the SHB Special Committee. The SHB Special Committee
selected Lehman Brothers to assist the SHB Special Committee in determining
whether the consideration to be offered in the proposed merger was fair from a
financial point of view to the Public Stockholders, to perform such other
financial advisory services as the SHB Special Committee might request and to
provide a formal written opinion as to the fairness, from a financial point of
view, of the exchange ratio to the Public Stockholders. See "The Merger --
Background and Reasons for the Merger -- Opinion of Financial Advisor."
From February 17, 1994 through April 6, 1994, the SHB Special Committee and
its legal and financial advisors took certain actions to carry out the purposes
for which the SHB Special Committee was formed, some of which are described
under "The Merger -- Background and Reasons for the Merger."
On May 4, 1994, the SHB Special Committee met and recommended approval of
the Merger Agreement by the SHB Board and the SHB Stockholders. In reaching its
conclusion, and in making its recommendations to the SHB Board, the SHB Special
Committee determined that the
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proposed merger was fair and in the best interests of the Public Stockholders
for the following reasons:
- Lehman Brothers indicated that, subject to certain assumptions and
conditions described under the heading "The Merger -- Opinion of
Financial Advisor," the exchange ratio of 3.45 shares of E. W.
Scripps Class A Common Stock for each share of SHB Common Stock was
fair, from a financial point of view, to the Public Stockholders,
and that it was prepared to deliver its written opinion to such
effect at or about the time of mailing the Proxy
Statement/Prospectus to the SHB Stockholders (and an update at the
Effective Time), subject to changes in such companies' businesses
prior to the time of rendering such written opinion.
- The fact that in the twelve months preceding the first announcement
of the proposed merger, SHB Common Stock traded 110 of 256 trading
days on NASDAQ with an average daily volume of 709 shares. Lehman
Brothers compared this to E. W. Scripps Class A Common Stock, which
traded 254 of 256 trading days on the NYSE with an average daily
volume of 30,037 shares.
- The SHB Special Committee was advised by Lehman Brothers that,
historically, the average weekly trading volume of E. W. Scripps
Class A Common Stock has been greater than that of SHB Common Stock.
- The Special Committee considered the various analyses with respect
to SHB and E. W. Scripps performed by Lehman Brothers as described
under "The Merger -- Opinion of Financial Advisor."
- It is anticipated that the Merger will be tax-free to shareholders
of SHB.
- The SHB Special Committee successfully negotiated a number of
changes in the Merger Agreement, including specifically a provision
which allows for termination of the Merger Agreement by SHB if the
SHB Special Committee, in the exercise of its fiduciary duties,
determines it should be terminated.
The SHB Board met on May 4, 1994, and received a report and recommendation
to approve the exchange ratio and the merger proposal from the SHB Special
Committee. The SHB Board then unanimously approved the Merger Agreement.
At a meeting on July 6, 1994, the SHB Special Committee discussed with
Lehman Brothers the effect of the ABC Affiliation Agreements. The SHB Special
Committee was advised by Lehman Brothers that the effect of the Fox network
affiliation changes and the ABC Affiliation Agreements was such that it did not
change materially the analyses provided by Lehman Brothers on April 6, 1994, and
that Lehman Brothers remained of the opinion that the consideration to be
received by the Public Stockholders in the Merger was fair, from a financial
point of view, to such Public Stockholders. Thereafter, the SHB Special
Committee reaffirmed its determination reached on May 4, 1994. On July 7, 1994,
the SHB Board voted unanimously in favor of calling the Special Meeting to
approve the Merger.
OPINION OF FINANCIAL ADVISOR
Lehman Brothers was retained by the SHB Special Committee to act as its
financial advisor in connection with the Merger. Pursuant to such engagement,
the Special Committee requested that Lehman Brothers evaluate the fairness, from
a financial point of view, to the Public Stockholders of the consideration to be
received in the Merger by such stockholders. On April 6, 1994, Lehman Brothers
delivered to the SHB Special Committee its oral opinion, confirmed by a written
opinion dated May 4, 1994, to the effect that, as of the respective dates and
based upon and subject to certain matters as stated in its written opinion, the
exchange ratio to be received by the Public Stockholders in the Merger was fair,
from a financial point of view, to such stockholders. On July 6, 1994, Lehman
Brothers advised the Special Committee that it remained
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of the opinion that the Merger Consideration to be received by the Public
Stockholders in the Merger was fair from a financial point of view to such
stockholders. This was confirmed by a written opinion dated August 9, 1994.
In arriving at its written opinion dated August 9, 1994, Lehman Brothers
considered market, economic and other conditions as they existed on the date of
such opinion. Although changes in such conditions since the date of Lehman
Brothers' initial opinion affected certain of the above-described financial and
comparative analyses performed by Lehman Brothers, Lehman Brothers was still of
the opinion that, as of August 9, 1994, the Exchange Ratio to be received by the
Public Stockholders in the Merger is fair, from a financial point of view, to
such stockholders.
THE FULL TEXT OF THE WRITTEN OPINION OF LEHMAN BROTHERS DATED AUGUST 9,
1994, WHICH SETS FORTH ASSUMPTIONS MADE, FACTORS CONSIDERED AND LIMITATIONS ON
THE REVIEW UNDERTAKEN BY LEHMAN BROTHERS, IS ATTACHED TO AND MADE PART OF THIS
PROXY STATEMENT/PROSPECTUS AS ANNEX II. SHB STOCKHOLDERS ARE URGED TO READ SUCH
OPINION CAREFULLY AND IN ITS ENTIRETY.
No limitations were imposed by the SHB Special Committee on the scope of
Lehman Brothers' investigation or the procedures to be followed by Lehman
Brothers in rendering its opinion, except that the SHB Special Committee did not
authorize Lehman Brothers to solicit, and Lehman Brothers did not solicit, any
indications of interest from any third party with respect to the purchase of all
or a part of SHB's business. Lehman Brothers was not requested to and did not
make any recommendations to the SHB Special Committee as to the form or amount
of the consideration to be paid by E. W. Scripps in the proposed merger
transactions, which was determined through arm's-length negotiations between the
parties. In arriving at its opinion, Lehman Brothers did not ascribe a specific
range of value to SHB but made its determination as to the fairness, from a
financial point of view, of the exchange ratio to be offered to the Public
Stockholders by E. W. Scripps, on the basis of a financial and comparative
analysis described below. Lehman Brothers' opinion is directed to the SHB
Special Committee only and does not constitute a recommendation to any SHB
Stockholder as to how such stockholder should vote at the Special Meeting.
Lehman Brothers was not requested to opine as to, and its opinion does not
address, the underlying business decision to proceed with or the effect of the
proposed merger.
In arriving at its opinion, Lehman Brothers reviewed the following
financial and other information, including but not limited to: the Merger
Agreement; publicly available information concerning E. W. Scripps and SHB which
it believed to be relevant to its inquiry, including but not limited to, the
December 31, 1993 annual reports and Form 10-Ks and 1993 proxy materials of E.
W. Scripps and SHB which include, among other things, discussion of the
interrelationships between E. W. Scripps and SHB managements; financial and
operating information with respect to the businesses, operations and prospects
of E. W. Scripps and SHB and their respective business segments furnished to
Lehman Brothers by E. W. Scripps and SHB including, but not limited to, the
strategic plans and operating projections of E. W. Scripps and SHB; a trading
history of the common stock of E. W. Scripps and SHB and a comparison of that
trading history with those of other companies which it deemed relevant as well
as the trading relationship of the common stock of E. W. Scripps to that of SHB;
a comparison of the historical financial results, present financial condition of
E. W Scripps and SHB and their respective business segments with those of other
companies which it deemed relevant; a comparison of the financial terms of the
proposed merger with the financial terms of certain other transactions which it
deemed relevant; the pro forma effects of the proposed merger on the business,
operations and financial condition of E. W. Scripps and the ownership profile
and relative liquidity of the outstanding shares of E. W. Scripps Class A Common
Stock and SHB Common Stock and the pro forma ownership of E. W. Scripps
following the proposed merger and the voting characteristics of the shares of E.
W. Scripps Class A Common Stock to be received as consideration by the SHB
Stockholders in the proposed merger; and the voting control position by the
majority stockholders of E. W. Scripps and the restrictions on transfer of that
control.
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In addition, Lehman Brothers had discussions with the managements of E. W.
Scripps and SHB concerning the respective businesses, operations, assets,
financial condition and prospects of SHB and E. W. Scripps, including the
potential cost savings and strategic benefits of the proposed merger, the Fox
network affiliation changes, and the financial impact of the ABC Affiliation
Agreements, and undertook such other studies, analyses and investigations as it
deemed appropriate.
In rendering its opinion, Lehman Brothers assumed and relied upon the
accuracy and completeness of the financial and other information used by it in
arriving at its opinion without independent verification and further relied upon
the assurances of management of E. W. Scripps and SHB that they were not aware
of any facts that would make such information inaccurate or misleading. With
respect to the projections of E. W. Scripps and SHB, upon advice of E. W.
Scripps and SHB, Lehman Brothers assumed that such projections were reasonably
prepared on the basis of reflecting the best currently available estimates and
judgments of the management of E. W. Scripps and SHB as to the future financial
performance of E. W. Scripps and SHB, and that E. W. Scripps and SHB would
perform substantially in accordance with such projections. In arriving at its
opinion, Lehman Brothers did not conduct a physical inspection of the properties
and facilities of E. W. Scripps or SHB and did not make nor obtain any
evaluations or appraisals of the assets or liabilities of E. W. Scripps or SHB.
In addition, Lehman Brothers was not authorized to solicit, and did not solicit,
any indications of interest from any third party with respect to the purchase of
all or a part of SHB's business. Upon advice of SHB and its legal and accounting
advisors, Lehman Brothers assumed that the proposed merger would be tax-free to
the Public Stockholders. Lehman Brothers' opinion is necessarily based upon
market, economic and other conditions as they existed on, and could be evaluated
as of, the date thereof.
Lehman Brothers did not express an opinion as to the prices at which the
shares of E. W. Scripps Class A Common Stock will actually trade at any time.
The following paragraphs summarize the material financial and comparative
analyses performed by Lehman Brothers in arriving at its opinion as to the
fairness, from a financial point of view, to the Public Stockholders of the
proposed exchange ratio to be offered in the Merger. Lehman Brothers described
these analyses to the SHB Special Committee on April 6, 1994, and in preliminary
form at earlier meetings, and delivered its written opinion on May 4, 1994 and
again on August 9, 1994. For a description of other meetings and discussions
that occurred, see "The Merger -- Background and Reasons for the Merger;
Recommendation of the SHB Special Committee to the SHB Board." The following
does not purport to be a complete description of the analyses performed, or the
matters considered, by Lehman Brothers in arriving at its opinion. The
preparation of a fairness opinion involves determinations as to the most
appropriate and relevant methods of financial analyses and the application of
those methods to the particular circumstances, and therefore such an opinion is
not readily susceptible to summary description. Furthermore, in arriving at its
fairness opinion, Lehman Brothers did not attribute any particular weight to any
analysis or factor considered by it, but rather made qualitative judgments as to
the significance and relevance of each analysis and factor. Accordingly, Lehman
Brothers believes that its analyses must be considered as a whole and that
considering any portion of such analysis without considering all analyses and
factors could create a misleading or incomplete view of the process underlying
the opinion. In its analyses, Lehman Brothers made numerous assumptions with
respect to industry performance, general business and economic conditions,
discount rates and other matters, many of which are beyond the control of SHB.
Any estimates contained in these analyses are not necessarily indicative of
actual values or predictive of future results or values, which may be
significantly more or less favorable than as set forth therein. In addition,
analyses relating to the value of businesses do not purport to be appraisals or
to reflect the prices at which businesses actually may be sold.
1. STOCK PRICE, VOLUME AND LIQUIDITY STUDY. Lehman Brothers reviewed and
analyzed the performance of the per share market prices and trading volume of
SHB Common Stock and E. W. Scripps Class A Common Stock since June 30, 1988.
Lehman Brothers reviewed and analyzed the historical ratio of the per share
market price of E. W. Scripps Class A Common Stock to the per
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share market price of SHB Common Stock since June 30, 1988, as well as impact on
the public float and liquidity of E. W. Scripps Class A Common Stock pro forma
the proposed transaction. Lehman Brothers calculated the exchange ratio from
June 30, 1988 to February 17, 1994, the last full trading day prior to the
announcement of the proposed merger. Lehman Brothers noted that in the twelve
months preceding the first announcement of the proposed merger, SHB Common Stock
traded 110 of 256 trading days on NASDAQ with an average daily volume of 709
shares. Lehman Brothers compared this to E. W. Scripps Class A Common Stock,
which traded 254 of 256 trading days on the NYSE with an average daily volume of
30,037 shares.
2. ANALYSIS OF CERTAIN OTHER PUBLICLY TRADED COMPANIES. Lehman Brothers
reviewed the historical revenues, operating cash flow, net income and book value
for certain publicly traded newspaper publishing, cable television, broadcast
television and entertainment companies, as well as the trading valuations of
these companies expressed as aggregate market value as a multiple of operating
cash flow or, where appropriate, multiples of earnings, subscribers and
circulation. Lehman Brothers then performed valuations on a segment-by-segment
basis for both SHB and E. W. Scripps based on several factors including the
trading valuations as expressed primarily through multiples of operating cash
flow of other public companies that operate in these segments and Lehman
Brothers' experience in securities valuation generally. The proposed exchange
ratio of 3.45 shares of E. W. Scripps Class A Common Stock for each share of SHB
Common Stock exceeded the range calculated by this analysis.
In addition, Lehman Brothers performed a variety of sensitivity analyses
that factored in varying assumptions as to the success of certain divisions'
future operations. The proposed exchange ratio of 3.45 shares of E. W. Scripps
Class A Common Sock for each share of SHB Common Stock exceeded the range
calculated by Lehman Brothers based on these analyses.
Because of the lack of a sufficient number of independent comparable
companies and the inherent differences between the businesses, operations and
prospects of E. W. Scripps and SHB and the businesses, operations and prospects
of the companies included in the comparable universe, Lehman Brothers believed
that it was inappropriate to, and therefore did not, place significant emphasis
on the results of this analysis.
3. ANALYSIS OF SELECTED ACQUISITION TRANSACTIONS. Lehman Brothers reviewed
the prices paid, to the extent publicly available, of selected acquisition
transactions in the newspaper, publishing, television broadcasting, cable
television and entertainment industries. Lehman Brothers reviewed the prices
paid in such transactions in terms of the aggregate value of such transactions
as a multiple of revenues, operating cash flow and to the extent appropriate,
net income, subscribers and circulation. In certain situations Lehman Brothers
utilized its industry expertise derived from working with buyers and sellers of
media and entertainment companies over time to determine values for certain
transactions. Lehman Brothers' analysis included deriving a valuation for SHB
and E. W. Scripps on a segment-by-segment basis. The valuation of each of the
divisions in both E. W. Scripps and SHB was based on several factors, including
the valuation of recent transactions in the newspaper publishing, broadcast
television, cable television and entertainment industries, and Lehman Brothers'
experience in valuing companies in these industries generally. The proposed
exchange ratio of 3.45 shares of E. W. Scripps Class A Common Stock for each
share of SHB Common Stock exceeded the range based on this analysis.
In addition, Lehman Brothers performed a variety of sensitivity analyses
that factored in varying assumptions as to the success of certain divisions'
future operations. The proposed exchange ratio of 3.45 shares of E. W. Scripps
Class A Common Stock for each share of SHB Common Stock exceeded the range
calculated by Lehman Brothers based on these analyses.
Because the reasons for and the circumstances surrounding each of the
transactions analyzed were specific to each transaction and because of the
inherent differences between the businesses, operations and prospects of E. W.
Scripps and the businesses, operations and
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prospects of the selected acquired companies analyzed, Lehman Brothers believed
that it was inappropriate to, and therefore did not, rely solely on the
quantitative results of the analysis, and accordingly also made qualitative
judgments concerning differences between the characteristics of these
transactions and the proposed merger that would affect the acquisition values of
SHB, E. W. Scripps and such acquired companies.
4. DISCOUNTED CASH FLOW ANALYSIS. Lehman Brothers conducted a discounted
cash flow analysis for the purpose of determining the stand-alone fully diluted
equity value per share of SHB and E. W. Scripps (the "Discounted Cash Flow
Analysis"). Using the information contained in projections prepared by SHB's and
E. W. Scripps' management and extrapolated where necessary in order to have a
five-year projection period, Lehman Brothers calculated the operating cash flow
that SHB and E. W. Scripps was projected to generate for the period beginning
January 1, 1995 and ending December 31, 1999 and, with respect to certain
portions of SHB's and E. W. Scripps' operations, for the period beginning
January 1, 1995 and ending December 31, 2000. Lehman Brothers then calculated
terminal values for the different segments of SHB's and E. W. Scripps'
individual business segments' business at the end of the projection periods
based on various multiples of operating cash flow. The multiples used by Lehman
Brothers varied by business segment and ranged from 5 to 13, and the resulting
terminal values and annual free cash flow amounts were then discounted to
calculate a present value using discount rates ranging from 11.0 percent to 17.5
percent. The range of discount rates selected was based upon the following
factors: (i) the interest rate environment at the time of the opinion, (ii) the
rate of return required by investors in the common stock of similar companies
(as estimated based on the experience of Lehman Brothers in working with buyers
and sellers of media and entertainment companies over time), (iii) the risk
associated with an investment in the stock of similar companies, (iv) the
expected probability of achieving projected results by business segment, (v) the
weighted average costs of capital of SHB, E. W. Scripps and other companies that
operate in the companies' individual business segments, and (vi) Lehman
Brothers' experience in securities valuation generally. The range of terminal
values was based upon the above factors as well as the expected sustainable
growth prospects for each business segment beyond the projection period. Based
on these assumptions as to multiples and discount rates, the proposed exchange
ratio of 3.45 shares of E. W. Scripps Class A Common Stock for each share of SHB
Common Stock was within the range indicated by the Discounted Cash Flow
Analysis. In addition, Lehman Brothers performed a variety of sensitivity
analyses that factored in varying assumptions as to the success of certain
divisions' future operations. The exchange ratio of 3.45 shares of E.W. Scripps
Class A Common Stock for each share of SHB Common Stock was within the range
calculated by Lehman Brothers based on these analyses.
5. OTHER FACTORS. Lehman Brothers also considered certain other factors in
its analysis including, but not limited to, synergies that may be realized from
the transaction, and other benefits to E.W. Scripps, including cost savings, the
dividend yield differential resulting from the transaction, potential dilution
or accretion of the earnings and cash flow of E.W. Scripps, the relative
illiquidity of SHB Common Stock, as compared to that of E. W. Scripps Class A
Common Stock, the percentage that SHB comprises of E.W. Scripps total revenues,
cash flow and asset value, whether any natural buyer for the shares may exist
and the history and outlook for the newspaper publishing, broadcast television,
cable television and entertainment industries in general.
The SHB Special Committee selected Lehman Brothers as its financial advisor
because Lehman Brothers is a nationally recognized investment banking firm with
substantial experience in transactions similar to the Merger. As part of its
investment banking business, Lehman Brothers regularly engages in the valuation
of businesses and securities in connection with mergers, acquisitions,
underwriting, sales and distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes.
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In consideration of its services as financial advisor to the SHB Special
Committee, Lehman Brothers has been paid a fee of $500,000. SHB has also agreed
to reimburse Lehman Brothers for its out-of-pocket expenses, including the
reasonable fees and expenses of its legal counsel, up to a maximum of $25,000,
and to indemnify Lehman Brothers against certain liabilities which may arise out
of or in connection with the services rendered by Lehman Brothers which may
arise under the engagement letter. Lehman Brothers has not performed any
investment banking or other services for SHB or E.W. Scripps in the past.
RIGHTS OF DISSENTING STOCKHOLDERS
Section 1701.84 of the ORC provides that any holder of SHB Common Stock (a
"stockholder") who so desires is entitled to relief as a dissenting stockholder
("Dissenting Stockholder") and as such may exercise dissenters' rights with
respect to the Merger.
The following is a summary of the principal steps a stockholder must take
to perfect dissenters' rights under Section 1701.85 of the ORC. This summary
does not purport to be complete and is qualified in its entirety by reference to
Section 1701.85, a copy of which is contained herein as Annex III. Any
stockholder contemplating the exercise of dissenters' rights is urged to review
carefully such provisions and to consult an attorney, since dissenters' rights
will be lost if the procedural requirements under Section 1701.85 are not fully
and precisely satisfied. To perfect dissenters' rights with respect to any
shares of SHB Common Stock so that they become Dissenting Shares as described in
this Proxy Statement/Prospectus, a Dissenting Stockholder must satisfy each of
the following conditions:
1. No Vote in Favor of the Merger. SHB Common Stock ("Dissenter's Shares")
held by the Dissenting Stockholder must not be voted at the Meeting in favor of
the Merger. This requirement will be satisfied if a proxy is signed and returned
with instructions to vote against the Merger or to abstain from such vote, if no
proxy is returned and no vote is cast at the Meeting in favor of the Merger, or
if the Dissenting Stockholder revokes a proxy and thereafter abstains from
voting with respect to the Merger or votes against the Merger at the Meeting. A
vote in favor of the Merger at the Meeting constitutes a waiver of dissenters'
rights. A proxy that is returned signed but on which no voting preference is
indicated will be voted in favor of the Merger and will constitute a waiver of
dissenters' rights. A Dissenting Stockholder may revoke his proxy at any time
before its exercise by filing with SHB an instrument revoking it or a duly
executed proxy bearing a later date, or by attending and giving notice of the
revocation of the proxy in open meeting (although attendance at the Meeting will
not in and of itself constitute revocation of a proxy).
2. Filing Written Demand. Not later than ten days after the taking of the
vote on the Merger, a Dissenting Stockholder must deliver to SHB a written
demand (the "Demand") for payment of the fair cash value of the Dissenter's
Shares. The Demand should be delivered to SHB at 312 Walnut Street, Cincinnati,
Ohio 45202, Attention: Secretary. It is recommended, although not required, that
the Demand be sent by registered or certified mail, return receipt requested.
Voting against the Merger will not itself constitute a Demand. SHB will not send
any further notice to SHB Stockholders as to the date on which such ten-day
period expires.
The Demand must identify the name and address of the holder of record of
the Dissenter's Shares, the number and class of Dissenter's Shares and the
amount claimed as the fair cash value thereof. A beneficial owner must, in all
cases, have the record holder submit the Demand in respect of the Dissenter's
Shares. The Demand must be signed by the stockholder of record (or by the duly
authorized representative of such stockholder) exactly as the stockholder's name
appears on the stockholder records of SHB. A Demand with respect to shares owned
jointly by more than one person must identify and be signed by all of the
holders of record. Any person signing a Demand on behalf of a partnership or
corporation or in any other representative capacity (such as an
attorney-in-fact, executor, administrator, trustee or guardian) must
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indicate the nature of the representative capacity and, if requested, must
furnish written proof of his capacity and his authority to sign the demand.
Because only SHB Stockholders of record at the close of business on the
Record Date may exercise dissenters' rights, any person who beneficially owns
shares that are held of record by a broker, fiduciary, nominee, or other holder
and who wishes to exercise dissenters' rights must instruct the record holder of
the shares to satisfy the conditions outlined above. If a record holder does not
satisfy, in a timely manner, all of the conditions outlined in this section, the
dissenters' rights for all of the shares held by that stockholder will be lost.
From the time the Demand is given until either the termination of the
rights and obligations arising from such Demand or the purchase of the
Dissenter's Shares related thereto by SHB, all rights accruing to the holder of
the Dissenter's Shares, including voting and dividend or distribution rights,
will be suspended. If any dividend or distribution is paid on SHB Common Stock,
during the suspension, an amount equal to the dividend or distribution which
would have been payable on the Dissenter's Shares, but for such suspension,
shall be paid to the holder of record of the Dissenter's Shares as a credit upon
the fair cash value of the Dissenter's Shares. If the right to receive the fair
cash value is terminated otherwise than by the purchase of the Dissenter's
Shares by SHB, all rights will be restored to the Dissenting Stockholder and any
distribution that would have been made to the holder of record of the
Dissenter's Shares, but for the suspension, will be made at the time of the
termination.
If SHB sends to a Dissenting Stockholder, at the address specified in the
Demand, a request for the certificates representing the Dissenting Shares, the
Dissenting Stockholder, within fifteen days from the date of sending such
request, shall deliver to SHB the certificates requested. SHB will then endorse
the certificates with a legend to the effect that a demand for the fair cash
value of such shares has been made, and return such endorsed certificates to the
Dissenting Stockholder. Failure on the part of the Dissenting Stockholder to
deliver such certificates terminates his rights as a Dissenting Stockholder at
the option of SHB, exercised by written notice to the Dissenting Stockholder
within twenty days after the lapse of the fifteen-day period, unless a court,
for good cause shown, otherwise directs.
3. PETITIONS TO BE FILED IN COURT. Within three months after the service
of the Demand, if SHB and the Dissenting Stockholder do not reach an agreement
on the fair cash value of the Dissenter's Shares, the Dissenting Stockholder or
SHB may file a complaint in the appropriate Court of Common Pleas in Hamilton
County, Ohio (the "Common Pleas Court"), or join or be joined in an action
similarly brought by another Dissenting Stockholder, for a judicial
determination of the fair cash value of the Dissenter's Shares. SHB does not
intend to file any complaint for a judicial determination of the fair cash value
of any Dissenter's Shares.
Upon motion of the complainant, the Common Pleas Court will hold a hearing
to determine whether the Dissenting Stockholder is entitled to be paid the fair
cash value of the Dissenter's Shares. If the Common Pleas Court finds that the
Dissenting Stockholder is so entitled, it may appoint one or more appraisers to
receive evidence and to recommend a decision on the amount of such value. The
Common Pleas Court is required to make a finding as to the fair cash value of
the Dissenter's Shares and to render a judgment against SHB for the payment
thereof, with interest at such rate and from such date as the Common Pleas Court
considers equitable. Costs of the proceedings, including reasonable compensation
to the appraiser or appraisers to be fixed by the Common Pleas Court, are to be
apportioned or assessed as the Common Pleas Court considers equitable. Payment
of the fair cash value of the Dissenter's Shares is required to be made within
30 days after the date of final determination of such value or the effective
time of the Merger, whichever is later, only upon surrender to SHB of the
certificates representing the Dissenter's Shares for which payment is made.
Fair cash value is the amount which a willing seller, under no compulsion
to sell, would be willing to accept, and which a willing buyer, under no
compulsion to purchase, would be willing
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to pay, but in no event may the fair cash value exceed the amount specified in
the Demand. The fair cash value is to be determined as of the day prior to the
day of the Meeting. In computing this value, any appreciation or depreciation in
the market value of the Dissenter's Shares resulting from the Merger is
excluded.
The dissenters' rights of any Dissenting Stockholder will terminate if,
among other things, (a) he has not complied with Section 1701.85 of the Ohio
Revised Code (unless the Board of Directors of SHB waives compliance), (b) the
Merger is abandoned or otherwise not carried out or such Dissenting Stockholder
withdraws his Demand with the consent of the Board of Directors of SHB, or (c)
no agreement has been reached between SHB and the Dissenting Stockholder with
respect to the fair cash value of the Dissenter's Shares and neither the
Dissenting Stockholder nor SHB shall have timely filed or joined in a complaint
in the Common Pleas Court. For a discussion of the tax consequences to a
stockholder exercising dissenters' rights; see "Certain Federal Income Tax
Consequences."
If the holders of more than 140,000 of the outstanding shares of SHB Common
Stock perfect their rights as Dissenting Stockholders, the Board of Directors of
E. W. Scripps has the right to abandon the Merger.
BECAUSE A PROXY CARD WHICH DOES NOT CONTAIN VOTING INSTRUCTIONS WILL,
UNLESS REVOKED, BE VOTED IN FAVOR OF THE MERGER, A STOCKHOLDER OF SHB COMMON
STOCK WHO WISHES TO EXERCISE HIS DISSENTERS' RIGHTS MUST EITHER NOT SIGN AND
RETURN HIS PROXY CARD OR, IF HE SIGNS AND RETURNS HIS PROXY CARD, VOTE AGAINST
OR ABSTAIN FROM VOTING ON THE MERGER.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the SHB Board with respect to the
Merger, SHB Stockholders should be aware that certain members of SHB's
management and of the SHB Board have certain interests that may present them
with potential conflicts of interest in connection with the Merger. Lawrence A.
Leser is President and Chief Executive Officer and a director of each of SHB, E.
W. Scripps and Mergerco. Daniel J. Castellini is Treasurer of SHB and Mergerco,
Senior Vice President, Finance and Administration of E. W. Scripps, and a
director of SHB and Mergerco. Charles E. Scripps and John H. Burlingame are
directors of each of SHB, E. W. Scripps and Mergerco. Charles E. Scripps also
owns 200 shares of SHB Common Stock, which holdings represent less than one
percent of the outstanding shares of SHB Common Stock.
THE MERGER AGREEMENT
GENERAL
THE TERMS OF THE MERGER ARE CONTAINED IN THE MERGER AGREEMENT, A COPY OF
WHICH IS ATTACHED AS ANNEX I TO THIS PROXY STATEMENT/PROSPECTUS AND INCORPORATED
HEREIN BY REFERENCE. STATEMENTS IN THIS PROXY STATEMENT/PROSPECTUS WITH RESPECT
TO THE TERMS OF THE MERGER ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE
MERGER AGREEMENT. SHB STOCKHOLDERS ARE URGED TO READ THE FULL TEXT OF THE MERGER
AGREEMENT.
Under the Merger Agreement, if the Merger is approved by SHB Stockholders
and becomes effective, SHB will merge with and into Mergerco, and Mergerco, as
the Surviving Corporation in the Merger, will continue its corporate existence
under the laws of Ohio under the name "Scripps Howard Broadcasting Company." The
Surviving Corporation will be a wholly owned subsidiary of E. W. Scripps.
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EFFECTIVE TIME OF MERGER
The Effective Time of the Merger will be at the time of filing of a
Certificate of Merger with the Secretary of State of the State of Ohio in
accordance with applicable Ohio law. It is presently anticipated that the filing
of the Certificate of Merger will be made as soon as practicable after the
conclusion of the Special Meeting. Such filing will be made, however, only upon
satisfaction or waiver, where permissible, of the conditions set forth in the
Merger Agreement. See "The Merger Agreement -- Conditions to the Merger."
CONVERSION OF STOCK
At the Effective Time, each outstanding share of SHB Common Stock (other
than shares of SHB Common Stock owned by E. W. Scripps or a subsidiary of E. W.
Scripps, which will be cancelled) automatically will be converted into the right
to receive 3.45 shares of E. W. Scripps Class A Common Stock.
Upon the Effective Time, holders of shares of SHB Common Stock will have no
continuing interests in or rights as stockholders of SHB.
Each share of Mergerco's common stock, without par value ("Mergerco Common
Stock"), issued and outstanding immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part of E. W. Scripps, be
converted into and become one share of Common Stock, par value $.25 per share,
of the Surviving Corporation.
Holders of shares of SHB Common Stock have the right under Section 1701.84
of the ORC to dissent from the Merger and obtain an appraisal of the fair value
of such shares pursuant to Section 1701.85 of the ORC if the Merger is
consummated.
PAYMENT FOR SHB COMMON STOCK
In order to receive the Merger Consideration, each holder of certificates
(each, a "Certificate") theretofore representing shares of SHB Common Stock will
be required to surrender his or her Certificate or Certificates, together with a
duly executed and properly completed letter of transmittal and any other
required documents, to Fifth Third Bank, Cincinnati, Ohio, which has been
appointed by E. W. Scripps as its exchange agent for the Merger (the "Exchange
Agent"). The Exchange Agent will provide each Public Stockholder with the
requisite forms of the letter of transmittal and other documents referred to
above, together with instructions for their use. Upon receipt of such
Certificate or Certificates, together with a duly executed and properly
completed letter of transmittal and any other required documents from a holder
of SHB Common Stock, the Exchange Agent will arrange for the issuance and
delivery to the person or persons entitled thereto of a certificate or
certificates representing that number of whole shares of E. W. Scripps Class A
Common Stock equal to 3.45 multiplied by the number of shares of SHB Common
Stock represented by the surrendered Certificate or Certificates. Shares of E.
W. Scripps Class A Common Stock will be issued only in whole shares. Former
holders of shares of SHB Common Stock will not be entitled to receive fractions
of shares of E. W. Scripps Class A Common Stock ("Fractional Shares") but,
instead, will be entitled to receive promptly from the Exchange Agent a cash
payment in lieu of Fractional Shares in an amount equal to the "Fair Market
Value" (as defined in the Merger Agreement) of one share of E. W. Scripps Class
A Common Stock multiplied by the Fractional Share in question.
No dividends or other distributions that are otherwise payable on the
shares of E. W. Scripps Class A Common Stock issued in connection with the
Merger will be paid to the holder of any unsurrendered Certificate until such
Certificate is properly surrendered to the Exchange Agent. However, upon the
proper surrender of such Certificate to the Exchange Agent (i) there shall be
paid to the person in whose name the shares of E. W. Scripps Class A Common
Stock constituting Merger consideration are issued the amount of any dividends
that shall have become payable with respect to such shares of E. W. Scripps
Class A Common Stock between the
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Effective Time of the Merger and the time of such surrender and (ii) at the
appropriate payment date or as soon thereafter as practicable, there shall be
paid to such person the amount of any dividends on such shares of E. W. Scripps
Class A Common Stock that shall have a record or due date prior to such
surrender and a payment date after such surrender, subject in each such case to
(x) deduction therefrom of any amount required by applicable law to be withheld,
and (y) any applicable escheat laws or unclaimed property laws. On proper
surrender of a Certificate, no interest shall be payable with respect to the
payment of such dividends and no interest shall be payable with respect to the
amount of any cash payable in lieu of a fractional share of E. W. Scripps Class
A Common Stock.
If the Merger Consideration is to be paid to a person other than the
registered holder of the Certificates surrendered, it is a condition of such
issuance that the Certificate or Certificates so surrendered be properly
endorsed or otherwise be in proper form for transfer and that the person
requesting such payment or issuance either pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance to a person other
than the registered owner of the Certificate or Certificates surrendered, or
shall establish to the satisfaction of E. W. Scripps that such tax has been paid
or is not applicable.
The Exchange Agent will send instructions to holders of SHB Common Stock
with regard to the procedure for surrendering Certificates in exchange for the
Merger Consideration, together with a letter of transmittal to be used for this
purpose, as promptly as practicable after the Effective Time. Holders of SHB
Common Stock should surrender Certificates only with a letter of transmittal.
SHB STOCKHOLDERS SHOULD NOT SEND ANY CERTIFICATES WITH THE ENCLOSED PROXY
CARD.
ARTICLES OF INCORPORATION, CODE OF REGULATIONS, OFFICERS AND DIRECTORS
The Merger Agreement provides that, at the Effective Time, the Articles of
Incorporation of SHB, and Code of Regulations of SHB, each as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
and Code of Regulations of the Surviving Corporation, except that at the
Effective Time Article Fourth of the Articles of Incorporation of the Surviving
Corporation shall be amended to read as follows: "The total number of shares of
stock of all classes which the Corporation has authority to issue is 850 shares
of Common Stock, par value $.25 per share." The Merger Agreement also provides
that the officers and directors of SHB at the Effective Time shall be the
initial officers and directors of the Surviving Corporation and shall serve
until their respective successors are duly elected or appointed and qualify in
the manner provided in the Articles of Incorporation and Code of Regulations of
the Surviving Corporation, or as otherwise provided by law.
CONDITIONS TO THE MERGER
The obligations of each of E. W. Scripps, Mergerco and SHB to consummate
the Merger are subject to fulfillment of the following conditions at or prior to
the Effective Time: (i) the Merger Agreement shall have been adopted by the
Required Stockholder Vote; (ii) the Registration Statement shall have become
effective under the Securities Act and no stop order suspending such
effectiveness shall have been issued, or proceeding for such purpose instituted
or threatened; (iii) all authorizations, consents, orders or approvals of, and
all expirations of waiting periods imposed by, any "Governmental Entity" (as
defined in the Merger Agreement) (collectively, the "Consents") which are
necessary for the consummation of the Merger (other than immaterial Consents)
shall have been obtained or shall have occurred and shall be in full force and
effect at the Effective Time; provided, however, that no such authorization,
consent, order or approval shall be deemed to have been received if it shall
include any conditions or requirements which would so reduce the economic or
business benefits of the transactions contemplated by the Merger Agreement so as
to render inadvisable in the reasonable opinion of
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the Board of Directors of either SHB or E. W. Scripps the consummation of the
Merger; (iv) no order, statute, rule, regulation, executive order, stay, decree,
judgment or injunction shall have been enacted, entered, promulgated or enforced
by any court or governmental authority which prevents or materially restricts
consummation of the Merger; (v) the shares of E. W. Scripps Class A Common Stock
to be issued as Merger Consideration shall have been approved for listing on the
New York Stock Exchange, subject to official notice of issuance; (vi) SHB and
the SHB Special Committee shall have received written confirmation from Lehman
Brothers dated the date of the Effective Time, in customary form, to the effect
that the opinions expressed by them remain valid, and in full force without
material amendment, as of such date; and (vii) Baker & Hostetler, counsel to E.
W. Scripps, shall have delivered its opinion, dated the date of the Effective
Time, substantially to the effect summarized herein under "Certain Federal
Income Tax Considerations."
The obligation of SHB to effect the Merger is subject to fulfillment of the
following additional conditions at or prior to the Effective Time: (i) E. W.
Scripps and Mergerco shall have performed their agreements contained in the
Merger Agreement in all material respects and (ii) except as contemplated by the
Merger Agreement, the representations and warranties of E. W. Scripps and
Mergerco set forth in the Merger Agreement shall be true and correct in all
material respects at and as of the Effective Time as if made at and as of such
date, unless stated in the Merger Agreement to be true on and as of another
date, in which case such representation and warranty shall have been true in all
material respects on and as of another date.
The obligations of E. W. Scripps and Mergerco to effect the Merger are
subject to fulfillment of the following additional conditions at or prior to the
Effective Time: (i) subject to the Control Agreement (hereinafter defined), SHB
shall have performed its agreements under the Merger Agreement in all material
respects; (ii) except as contemplated by the Merger Agreement, the
representations and warranties of SHB shall be true and correct in all material
respects at and as of the Effective Time as if made at and as of such date,
unless stated in the Merger Agreement to be true on and as of such date, in
which event such representation and warranty shall have been true in all
material respects on and as of such date; (iii) there shall not have been any
action taken, or any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction enacted, entered, enforced, promulgated, amended,
issued or deemed applicable to the Merger by any Governmental Entity (as defined
in the Merger Agreement) (a) restraining or preventing the carrying out of the
transactions contemplated by the Merger Agreement, (b) prohibiting ownership or
operation by E. W. Scripps of all or any material portion of its or SHB's
businesses or assets, or compelling it to dispose of or hold separate all or any
material portion of its or SHB's businesses or assets as a result of the
transactions contemplated by the Merger Agreement, (c) making acquisition of the
shares of SHB Common Stock pursuant to the Merger illegal, (d) prohibiting E. W.
Scripps effectively from acquiring or holding or exercising full rights of
ownership of the shares of SHB Common Stock, including, without limitation, the
right to vote the shares of SHB Common Stock acquired by it pursuant to the
Merger, on all matters properly presented to the stockholders of SHB, (e)
prohibiting E. W. Scripps or any of its subsidiaries or affiliates from
effectively controlling in any material respect the businesses or operations of
SHB, E. W. Scripps or their respective subsidiaries, or (f) which would impose
any condition which would materially adversely affect the business of SHB and
its subsidiaries or the business of E. W. Scripps and its subsidiaries; (iv) the
SHB Board shall not have withdrawn or modified its position with respect to the
Merger; and (v) Dissenting Shares shall not exceed 140,000 of the outstanding
shares of SHB Common Stock.
CERTAIN AGREEMENTS PENDING THE MERGER
AGREEMENTS OF SHB. In the Merger Agreement, SHB has agreed that, prior to
the Effective Time, unless E. W. Scripps otherwise agrees, or as otherwise
contemplated by the Merger Agreement, neither SHB nor any subsidiary thereof
shall (i) amend its articles or certificate of incorporation or code of
regulations or by-laws; (ii) change the number of authorized or
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outstanding shares of its capital stock, from the number authorized and
outstanding on the date of the Merger Agreement; (iii) declare, set aside or pay
any dividend or other distribution, or make any payment in cash, stock or
property, in respect of any shares of its capital stock, except for regular
dividends and/or distributions declared and/or paid by any subsidiary of SHB to
SHB or to any other subsidiary of SHB or on presently outstanding SHB Common
Stock; (iv) authorize for issuance, issue, grant, sell, pledge or dispose of, or
propose to issue, grant, sell, pledge or dispose of any shares of, or warrants,
options, commitments, subscriptions or rights of any kind to acquire any shares
of, the capital stock of SHB or such subsidiary or any securities convertible
into or exchangeable for shares of any such capital stock; (v) incur any
material indebtedness for borrowed money other than in the ordinary and usual
course of business, consistent with past practice; (vi) acquire directly or
indirectly by redemption or otherwise any shares of the capital stock of SHB or
any subsidiary of SHB; or (vii) enter into any agreement or take any other
action to do any of the things described above or which would make any
representation or warranty of SHB set forth in the Merger Agreement that is
qualified as to materiality untrue or incorrect and any such representation or
warranty which is not so qualified materially untrue or incorrect.
AGREEMENTS OF E. W. SCRIPPS. E. W. Scripps, either in its capacity as an
SHB Stockholder or through its representatives on the SHB Board (which for
purposes of the Merger Agreement means each SHB director who is either an
executive officer or director of E. W. Scripps), in each case subject to the
exercise of their respective fiduciary duties, if any, to the SHB Stockholders,
has agreed not to take or fail to take, as the case may be, any action, the
taking or failure of which to take, as the case may be, would be likely to cause
any representation or warranty of SHB contained in the Merger Agreement to cease
to be accurate in any material respect or that would be reasonably likely to
prevent the performance in all material respects by SHB of any covenant or the
satisfaction by SHB of any condition contained in the Merger Agreement (the
foregoing agreement being referred to as the "Control Agreement").
AGREEMENTS OF SHB, E. W. SCRIPPS AND MERGERCO. In the Merger Agreement,
each party agrees to use its best efforts to take, or cause to be taken, all
lawful action, to do, or cause to be done, and to assist and cooperate with the
other parties thereto in doing, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective, as soon as
reasonably practicable, the transactions contemplated by the Merger Agreement,
including (i) the Merger; (ii) the obtaining of consents, amendments to or
waivers under the terms of any material borrowing arrangements or other material
contractual arrangements required by the transactions contemplated by the Merger
Agreement; and (iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging the Merger Agreement or the
consummation of the transactions contemplated thereby. Each of the parties to
the Merger Agreement also agreed not to take or to fail to take, as the case may
be, any action, the taking of which or the failure of which to take, as the case
may be, would be likely to cause any representation or warranty contained in the
Merger Agreement to cease to be true or accurate in any material respect or that
would be reasonably likely to prevent the performance in all material respects
of any covenant or the satisfaction of any condition contained in the Merger
Agreement.
In the Merger Agreement, each of the parties agrees promptly to notify each
other party of any claims, actions, proceedings or investigations commenced or,
to the best of its knowledge, threatened, and any material developments relating
to any such pending claim, action, proceeding or investigation involving or
affecting the parties, or any of their respective properties or assets, or, to
the best of its knowledge, any employee or consultant of the parties, in his or
her capacity as such, or director or officer, in his or her capacity as such, of
E. W. Scripps or SHB disclosed in writing pursuant to or which, if pending on
the date, would have been required to have been disclosed in writing pursuant
to, the Merger Agreement, or which relate to the consummation of the Merger.
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The Merger Agreement also provides that each party promptly shall notify
the others of: (i) any notice of, or other communication relating to, a default
or event that, with notice or lapse of time or both, would become a default,
received by such party or any of its subsidiaries subsequent to the date of the
Merger Agreement and prior to the Effective Time, under any agreement, indenture
or instrument material to the financial condition, properties, business or
results of operations of such party and its subsidiaries taken as a whole to
which such party or any of its subsidiaries is a party or is subject; (ii) any
notice or other communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by the Merger Agreement; (iii) any notice or other communication
from any regulatory authority in connection with the transactions contemplated
by the Merger Agreement; (iv) any material adverse change in the financial
condition, properties, businesses or results of operations of such party and its
subsidiaries taken as a whole, or the occurrence of an event which, so far as
reasonably can be foreseen at the time of its occurrence, would result in any
such change; or (v) any matter arising after the date of the Merger Agreement
which, if existing, occurring or known at the date of the Merger Agreement,
would have been required to be disclosed to such other parties.
In the Merger Agreement, each party agrees that it shall, and shall cause
its subsidiaries, officers, directors, employees and agents to, afford to each
other party and such party's accountants, counsel, financial advisors,
investment bankers and other agents and representatives, full access at all
reasonable times throughout the period prior to the Effective Time to all of the
officers, employees, agents, properties, books, contracts, commitments and
records (including but not limited to tax returns) of such party and its
subsidiaries.
TERMINATION
The Merger Agreement may be terminated notwithstanding the approval by SHB
Stockholders or the shareholder of Mergerco (i) at any time prior to the
Effective Time, by mutual consent of the boards of directors of each of the
respective parties to the Merger Agreement; (ii) by either E. W. Scripps and
Mergerco or SHB if the Merger is not consummated on or before December 31, 1994
(or such later date as the parties may agree to in writing) unless the failure
to consummate the Merger on or prior to such date resulted from the failure of
the party seeking to terminate the Merger Agreement to satisfy any of the
closing conditions set forth in the Merger Agreement; (iii) by SHB if either E.
W. Scripps or Mergerco fails to perform in any material respect any of its
material obligations under the Merger Agreement; (iv) by E. W. Scripps or
Mergerco if SHB fails to perform in any material respect any of its material
obligations under the Merger Agreement; (v) by SHB if certain conditions
specified in the Merger Agreement have not been met or waived by SHB at such
time as such conditions can no longer be satisfied; or (vi) by E. W. Scripps or
Mergerco if certain conditions specified in the Merger Agreement have not been
met or waived by them at such time as such conditions can no longer be
satisfied; or (vii) by either E. W. Scripps and Mergerco or SHB if (a) in the
case of E. W. Scripps and Mergerco, their respective Boards of Directors
conclude prior to the Effective Time, after consultation with legal counsel,
that as a result of an event or condition not directly caused by either E. W.
Scripps or Mergerco, pursuant to their fiduciary duties in accordance with
applicable law, the Merger Agreement should be terminated and (b) in the case of
SHB the Special Committee advises SHB's Board of Directors prior to the
Effective Time that it has concluded, after consultation with legal counsel,
that as a result of an event or condition not directly caused by SHB, pursuant
to the Special Committee's fiduciary duties in accordance with applicable law,
the Merger Agreement should be terminated; provided that, in the event of a
failure to perform under clauses (iii) or (iv) above, if such failure is
curable, notice of such failure shall have been given to the defaulting party
and the failure shall not have been cured within 30 days of such notice.
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CERTAIN OTHER PROVISIONS OF THE MERGER AGREEMENT
In the Merger Agreement, E. W. Scripps has agreed that all rights to
indemnification existing as of the date of the Merger Agreement in favor of the
employees, agents, directors or officers of SHB and its subsidiaries
(collectively, the "Indemnified Parties") as provided in their respective
charters, codes of regulations, or by-laws, by agreement or otherwise in effect
on the date of the Merger Agreement shall survive the Merger and shall, with
respect to any action or omission occurring prior to the Effective Time,
continue in full force and effect in accordance with their terms. In addition,
the Merger Agreement provides that if any Indemnified Party becomes involved in
any capacity in any action, proceeding or investigation in connection with any
matter, including the transactions contemplated by the Merger Agreement,
occurring prior to, and including, the Effective Time, SHB will periodically
advance to such Indemnified Party its legal and other expenses incurred in
connection therewith. Furthermore, E. W. Scripps has agreed in the Merger
Agreement that subsequent to the Effective Time it shall also indemnify the
Indemnified Parties to the fullest extent permitted by applicable law and shall
guarantee the timely payment of any amounts owed to each member of the SHB
Special Committee pursuant to his indemnity agreement with SHB dated as of
February 17, 1994. E. W. Scripps has also agreed to cause to be maintained in
effect for a period of two years from the Effective Time the current policies of
the directors' and officers' liability insurance maintained by or for the
benefit of SHB (the "D&O Insurance Coverage") (provided that E. W. Scripps may
substitute therefor policies of at least the same coverage containing terms and
conditions which are no less advantageous) with respect to matters occurring
prior to the Effective Time. Its obligation to maintain such D&O Insurance
Coverage shall be subject to SHB's being able to maintain or obtain insurance at
an annual cost not greater than 150% of the annual premiums currently paid (the
annual premiums currently being paid being the "Current Annual Premiums") by SHB
with respect to its D&O Insurance Coverage and if such D&O Insurance Coverage is
not available at such cost, then E. W. Scripps has agreed to cause to be
maintained the highest level of D&O Insurance Coverage that can be purchased
against payment of annual premiums equal to 150% of the Current Annual Premiums.
The Merger Agreement provides that it may be amended by the parties
thereto, by action taken by their respective Boards of Directors, at any time
prior to the Effective Time; provided, however, that after approval of the
Merger Agreement by the SHB Stockholders, no amendment or modification shall (a)
alter or change the amount or kind of shares, securities, cash, property and/or
rights to be received in exchange for or on conversion of all or any of the
shares of any class or series thereof of SHB, or (b) alter or change any of the
terms and conditions of the Merger Agreement if such alteration or change would
adversely affect the holders of any class or series of capital stock of SHB. In
addition, at any time prior to the Effective Time, the parties to the Merger
Agreement by action taken by their respective Board of Directors may (x) extend
the time for the performance of any of the obligations or other acts of the
other parties to the Merger Agreement, (y) waive any inaccuracies in the
representations and warranties contained in the Merger Agreement or in any
document delivered pursuant thereto, and (z) waive compliance with any of the
agreements or conditions contained in the Merger Agreement. Any action taken by
the SHB Board to enforce SHB's rights under the Merger Agreement may only be
taken following the recommendation thereof by the Special Committee.
The Merger Agreement also provides that (i) subject to applicable law and
fiduciary duties, including the duties of loyalty and care, the SHB Board shall
recommend that SHB Stockholders vote in favor of the Merger and adoption of the
Merger Agreement and (ii) all SHB Stock owned by E. W. Scripps or any subsidiary
thereof will be voted in favor of the Merger and adoption of the Merger
Agreement.
FINANCING OF THE MERGER AND RELATED
TRANSACTIONS; SOURCE AND AMOUNT OF FUNDS
Out-of-pocket costs and expenses incurred by E. W. Scripps and SHB in
connection with the Merger will be paid by the party incurring such costs and
expenses.
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The approximate fees and expenses expected to be incurred by E. W. Scripps
and SHB in connection with the Merger are as set forth below:
<TABLE>
<CAPTION>
E. W. SCRIPPS SHB
------------- --------
<S> <C> <C>
Investment Bankers' Fees and Expenses.................. $ 800,000 $525,000
Attorneys' Fees and Expenses........................... 225,000 175,000
Accountants' Fees and Expenses......................... 25,000
Exchange Agent's Fees and Expenses..................... 10,000
Printing Costs......................................... 25,000
NYSE Listing Fee....................................... 17,500
Fee for Filing with the SEC............................ 44,828
Special Committee Fees................................. 50,000
Miscellaneous.......................................... 2,672
------------- --------
TOTAL........................................ $ 1,150,000 $750,000
============= =========
</TABLE>
Expenses incurred by E. W. Scripps and SHB in connection with the Merger
are expected to be paid out of available funds.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The federal income tax discussion set forth below is included for general
information only. In certain situations it may not be applicable to certain
classes of taxpayers, including insurance companies, securities dealers,
financial institutions, foreign persons and persons who acquired shares of SHB
Common Stock pursuant to the exercise of employee stock options or rights or
otherwise as compensation. BECAUSE EACH STOCKHOLDER'S TAX CIRCUMSTANCES MAY
DIFFER, EACH SHB STOCKHOLDER IS URGED TO CONSULT HIS OWN TAX ADVISOR AS TO THE
SPECIFIC TAX CONSEQUENCES TO HIM OF THE MERGER, INCLUDING THE APPLICABILITY AND
EFFECT OF STATE, LOCAL AND OTHER TAX LAWS AND ANY PROPOSED CHANGES IN SUCH LAWS.
GENERAL. SHB and E. W. Scripps will receive an opinion of Baker &
Hostetler that the merger of SHB into Mergerco pursuant to the Merger will be
treated as a reorganization within the meaning of Code Section 368(a) and that,
accordingly, for federal income tax purposes: (i) no gain or loss will be
recognized by any of SHB, Mergerco or E. W. Scripps as a result of the Merger;
(ii) no gain or loss will be recognized by a holder of SHB Common Stock upon the
receipt of E. W. Scripps Class A Common Stock in exchange for SHB Common Stock
in the Merger, except as discussed below with respect to cash received in lieu
of a fractional share interest in E. W. Scripps Class A Common Stock; (iii) the
aggregate adjusted tax basis of the shares of E. W. Scripps Class A Common Stock
to be received by a holder of SHB Common Stock in the Merger will be the same as
the aggregate adjusted tax basis in the shares of SHB Common Stock surrendered
in exchange therefor (reduced by any amount allocable to fractional share
interests for which cash is to be received); and (iv) the holding period of the
shares of E. W. Scripps Class A Common Stock to be received by the holders of
SHB Common Stock in the Merger will include the holding period of the shares of
SHB Common Stock surrendered in exchange therefor, provided that such shares of
SHB Common Stock are held as capital assets at the Effective Time. Consummation
of the Merger is conditioned upon receipt by each of E. W. Scripps and SHB of
such opinion, dated as of the Effective Date.
The opinion of Baker & Hostetler to be delivered on the Effective Date
relating to the Merger will be conditioned on certain representations and
assumptions, including an assumption that
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there is no plan or intention by the SHB Stockholders to sell or exchange or
otherwise dispose of a number of shares of E. W. Scripps Class A Common Stock
received that would reduce the ownership of E. W. Scripps Class A Common Stock
by SHB stockholders (other than E. W. Scripps or its subsidiaries) to a number
of shares having a value, as of the Effective Date, of less than 50% of the
value of all of the shares of SHB Common Stock (other than those held by E. W.
Scripps or its subsidiaries) as of the Effective Date.
CONSEQUENCES OF RECEIPT OF CASH IN LIEU OF FRACTIONAL SHARES. A holder of
shares of SHB Common Stock who receives cash in the Merger in lieu of a
fractional share interest in E. W. Scripps Class A Common Stock will be treated
for federal income tax purposes as having received cash in redemption of such
fractional share interest. The receipt of such cash generally should result in
capital gain or loss in an amount equal to the difference between the amount of
cash received and the portion of such shareholder's adjusted tax basis in the
shares of SHB Common Stock allocable to the fractional share interest. Such
capital gain or loss will be long-term capital gain or loss if the holder holds
the shares as capital assets and the holding period for the fractional shares of
E. W. Scripps Class A Common Stock deemed to be received and then redeemed is
more than one year.
CASH RECEIVED BY HOLDERS OF SHB COMMON STOCK WHO DISSENT. A holder of
shares of SHB Common Stock who perfects dissenters' rights under the laws of the
State of Ohio and who receives cash payment of the fair value of his shares of
SHB Common Stock will be treated as having received such payment in redemption
of such shares. Such redemption will be subject to the conditions and
limitations of Code Section 302, including the attribution rules of Code Section
318. In general, if the shares of SHB Common Stock are held by the holder as a
capital asset at the Effective Time, a dissenting holder will recognize capital
gain or loss measured by the difference between the amount of cash received by
such holder and the basis for such shares. If, however, such holder owns, either
actually or constructively, any SHB Common Stock that is exchanged in the Merger
for E. W. Scripps Class A Common Stock, the payment made to such holder could be
treated as dividend income. In general, under the constructive ownership rules
of the Code, a holder may be considered to own stock that is owned, and in some
cases constructively owned, by certain related individuals or entities, as well
as stock that such holder (or related individuals or entities) has the right to
acquire by exercising an option or converting a convertible security. Each
holder of SHB Common Stock who contemplates exercising his dissenters' rights
should consult his own tax advisor as to the possibility that the payment to him
will be treated as dividend income.
COMPARISON OF RIGHTS OF HOLDERS OF SHB COMMON STOCK
AND E. W. SCRIPPS CLASS A COMMON STOCK
INTRODUCTION
E. W. Scripps is incorporated under the laws of the State of Delaware, and
SHB is incorporated under the laws of the State of Ohio. SHB's Stockholders,
whose rights as stockholders are currently governed by Ohio law and SHB's
Articles of Incorporation, as amended (the "SHB Articles"), and Code of
Regulations (the "SHB Regulations"), will, upon the exchange of their shares for
shares of E. W. Scripps Class A Common Stock pursuant to the Merger, become
shareholders of E. W. Scripps, and their rights as such will be governed by
Delaware law, E. W. Scripps's Certificate of Incorporation, as amended (the "E.
W. Scripps Certificate"), and the By-Laws of E. W. Scripps (the "E. W. Scripps
By-Laws"). Certain differences between the rights of holders of E. W. Scripps
Class A Common Stock and the rights of holders of SHB Common Stock resulting
from such differences in governing law and documents are summarized below.
The following summary does not purport to be a complete statement of the
rights of E. W. Scripps Stockholders under applicable Delaware laws, the E. W.
Scripps Certificate and the E. W. Scripps By-Laws as compared with the rights of
SHB Stockholders under applicable Ohio laws,
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the SHB Articles and the SHB Regulations, or a complete description of the
specific provisions referred to herein. The identification of specific
differences is not meant to indicate that other equally or more significant
differences do not exist. This summary is qualified in its entirety by reference
to the Delaware General Corporation Law and the Ohio General Corporation Law (as
well as Chapters 1704 and 1707 of the ORC) and the governing corporate
instruments of E. W. Scripps and SHB, to which the holders of shares of SHB
Common Stock are referred.
Certain provisions contained in the Delaware laws may discourage certain
transactions involving an actual or threatened change in control of E. W.
Scripps. To the extent any of such provisions has such an effect, stockholders
might be deprived of an opportunity to sell their shares of E. W. Scripps at a
premium above the market price.
CERTAIN VOTING RIGHTS
Delaware law generally requires approval of any merger, consolidation or
sale of substantially all assets of a corporation at a meeting of stockholders
by vote of the holders of a majority of all outstanding shares of the
corporation entitled to vote thereon. While a certificate of incorporation of a
Delaware corporation may provide for a greater vote, the E. W. Scripps'
Certificate of Incorporation does not so provide.
Under Ohio law, unless otherwise provided in the corporation's articles of
incorporation, mergers and other such matters require the approval of the
holders of shares entitling such holders to exercise at least two-thirds of the
voting power of the corporation. The articles of incorporation of an Ohio
corporation may provide for a greater or lesser vote or a vote by separate
classes of stock so long as the vote provided for is not less than a majority of
the voting power of the corporation. The SHB Articles provide for the approval
of such matters by the holders of shares entitling such holders to exercise a
majority of the voting power of the corporation.
If a proposed amendment to the certificate of incorporation of a Delaware
corporation affects adversely the rights, preferences or powers of a class of
stock without voting rights in certain specified matters, such amendment must
also be approved by a majority of the holders of that class of stock. Unless
otherwise provided by an Ohio corporation's articles of incorporation, Ohio law
requires that, among certain other amendments, an amendment that would change
the express terms of a class of shares without voting rights in any
substantially prejudicial manner must be approved by the holders of two-thirds
of such class.
Both Ohio law and Delaware law permit mergers without approval by
stockholders of the surviving corporation if, among other things, no charter
amendment is involved and issuances of common stock and securities convertible
into common stock to stockholders of the non-surviving corporation pursuant to
the merger will result in no more than a specified maximum increase in
outstanding common stock. Under Delaware law, the maximum permitted increase is
20% of the corporation's common stock outstanding immediately prior to the
merger. Under Ohio law, the maximum permitted increase is any amount less than
16 2/3% of a corporation's resulting shares possessing the voting power of that
corporation in the election of directors.
The rules of the NYSE, on which E. W. Scripps Class A Common Stock is
listed, require E. W. Scripps stockholder approval prior to the issuance by E.
W. Scripps of any E. W. Scripps Class A Common Stock, or any securities
convertible into E. W. Scripps Class A Common Stock, if such shares are to be
issued in connection with any transaction or series of related transactions,
other than a public offering for cash, if (i) the voting power of such E. W.
Scripps Class A Common Stock would be equal to at least 20% of the voting power
of the shares outstanding prior to the issuance of such shares, or (ii) the
number of such shares would be equal to at least 20% of the number of shares of
E. W. Scripps Class A Common Stock outstanding prior to the issuance of such
shares. The NYSE rules also require stockholder approval for certain
transactions in which shares of E. W. Scripps Class A Common Stock, or
securities convertible into E. W. Scripps Class A Common Stock, are to be issued
to an E. W. Scripps director, officer, substantial shareholder,
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or an entity in which any such person holds a substantial interest, if the
number of shares of E. W. Scripps Class A Common Stock so issued or into which
the securities so issued are convertible exceeds one percent of the number of
shares of E. W. Scripps Class A Common Stock outstanding prior to such issuance
or one percent of the outstanding voting power prior to such issuance. The NYSE
also requires stockholder approval for any issuance of securities by E. W.
Scripps that will result in a change of control of E. W. Scripps.
SPECIAL MEETINGS OF STOCKHOLDERS; STOCKHOLDER ACTION BY WRITTEN CONSENT
Under Delaware law, special stockholder meetings may be called by the board
of directors and by any person or persons authorized by the certificate of
incorporation or the by-laws. Under the E. W. Scripps By-Laws, special meetings
of stockholders may be called at any time by the chairman of the board of
directors or the president or by a majority of the directors acting at a meeting
or by written consent, or by the holders of record of a majority of the
outstanding shares of Common Voting Stock acting at a meeting or by written
consent.
Under Ohio law, a special meeting of shareholders may be called by the
chairman of the board of directors, the president, a majority of the directors
acting without a meeting, persons owning 25% of the outstanding shares entitled
to vote at such meeting (or a lesser or greater proportion as specified in the
articles or regulations but not greater than 50%) or the person or persons
authorized to do so by the articles of incorporation or the corporation's
regulations. The SHB Code of Regulations does not authorize any additional
persons to call a meeting and allows shareholders holding at least 50% of all
shares outstanding to call a special meeting. The SHB Code of Regulations
further provides that business transacted at any special meeting of shareholders
shall be confined to the purpose stated in the notice for such special meeting.
Under Delaware law, any action by stockholders must be taken at a meeting
of stockholders, unless a consent in writing setting forth the action so taken
is signed by the stockholders having not less than the minimum number of votes
necessary to take such action at a meeting at which all shares entitled to vote
were present and voted.
Under Ohio law, any action by shareholders generally must be taken at a
meeting of shareholders, unless a consent in writing setting forth the action so
taken is signed by all of the shareholders who would be entitled to notice of
the meeting held to consider the subject matter thereof.
AMENDMENT OF CORPORATE GOVERNING DOCUMENTS
Delaware law allows amendments of the certificate of incorporation if the
board of directors adopts a resolution setting forth the amendment proposed and
declaring its advisability, and the stockholders thereafter approve such
proposed amendment either at a special meeting called by the board for the
purpose of approval of such amendment by the stockholders or, if so directed by
the board, at the next annual stockholders' meeting. At any such meeting, the
proposed amendment generally must be approved by a majority of the outstanding
shares entitled to vote.
Ohio law permits the adoption of amendments to articles of incorporation if
such amendments are approved at a meeting held for such purpose by the holders
of shares entitling them to exercise two-thirds of the voting power of the
corporation, or such lesser, but not less than a majority, or greater vote as
specified in the corporation's articles of incorporation. The SHB Articles
require a majority vote for amendment thereof.
Under Delaware law, the power to adopt, amend or repeal by-laws resides
with the stockholders entitled to vote thereon, and with the directors if such
power is conferred upon the board of directors by the certificate of
incorporation. The E. W. Scripps Certificate so provides.
Under Ohio law, regulations may be adopted, amended or repealed only by
approval of the shareholders. They may be adopted or amended at a meeting of
shareholders by the affirmative vote of the holders of shares entitling them to
exercise a majority of the voting power on such
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proposal or by written consent signed by holders of shares entitling them to
exercise two-thirds of the voting power on such proposed amendment (or such
lesser, but not less than a majority, or greater vote as specified in the
regulations). The SHB Regulations provide for a majority vote or consent to
amend the SHB Regulations.
BOARD-APPROVED PREFERRED STOCK
Both Delaware law and Ohio law permit a corporation's certificate of
incorporation or articles of incorporation, respectively, to allow the board of
directors to issue, without shareholder approval, a series of preferred stock
and to designate the powers, rights, preferences and privileges thereof and
restrictions thereon (except that Ohio law does not permit the board of
directors to fix the voting rights of any such series of preferred stock). The
SHB Articles do not authorize any preferred stock. The E. W. Scripps Certificate
authorizes preferred stock and grants power to the E. W. Scripps Board with
respect to the issuance and terms of one or more series of such stock.
LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
Delaware law and Ohio law have provisions and limitations regarding
directors' liability and regarding indemnification by a corporation of its
officers, directors and employees.
A director of an Ohio corporation shall not be found to have violated his
fiduciary duties to the corporation or its shareholders unless there is proof by
clear and convincing evidence that the director has not acted in good faith, in
a manner he reasonably believes to be in or not opposed to the best interests of
the corporation, or with the care that an ordinarily prudent person in a like
position would use under similar circumstances. In addition, under Ohio law a
director is liable in damages for any action or failure to act as a director
only if it is proved by clear and convincing evidence that such act or omission
was undertaken either with deliberate intent to cause injury to the corporation
or with reckless disregard for the best interests of the corporation, unless the
corporation's articles or regulations make this provision inapplicable by
specific reference. The SHB Articles do not make this provision inapplicable.
Ohio law does not, however, require proof of intent to cause injury or
reckless disregard as a condition to the availability of injunctions, recovery
on principles of restitution or other relief which is essentially equitable in
nature. The Ohio law limits a director's liability for breaches of the fiduciary
duties of care and loyalty. This standard does not apply, however, where the
director has acted either outside his capacity as a director or with respect to
certain dividends, distributions, purchases or redemptions of corporation shares
or loans, in the case of a corporation that does not have actively traded
shares, a change in control in which a majority of the shareholders receive a
greater consideration for their shares than other shareholders. Ohio law further
requires all expenses, including attorneys' fees, incurred by a director in
defending any action, suit or proceeding (other than one asserting only
liability for unlawful dividends, distributions or redemptions) to be paid by
the corporation as they are incurred in advance of the final disposition of the
action, suit or proceeding if it receives an undertaking from or on behalf of
the director in which he agrees to repay such amounts if it is proved by clear
and convincing evidence that his action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the corporation or
undertaken with reckless disregard for the best interests of the corporation and
if the director reasonably cooperates with the corporation concerning the
action, suit or proceeding. These provisions are automatically applicable to an
Ohio corporation unless the corporation opts out from its application. SHB has
not opted out.
Delaware law permits a Delaware corporation to include in its certificate
of incorporation a provision which eliminates or limits the personal liability
of a director to the corporation or its stockholders for monetary damages for
breach of fiduciary duties as a director. However, no such provision may
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in
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good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for illegal redemptions and stock repurchases, or (iv) for any
transaction from which the director derived an improper personal benefit. The E.
W. Scripps Certificate includes such a provision.
The E. W. Scripps By-Laws require E. W. Scripps to indemnify any person who
is or was a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding by reason of the fact that he is or was
a director, officer, employee or agent of E. W. Scripps, or is or was serving at
the request of E. W. Scripps as a director, officer, employee or agent of
another enterprise against expenses (including attorneys' fees) and, if the
action, suit or proceeding is one which is other than by or in the right of E.
W. Scripps to procure a judgment in its favor, against judgments, fines, amounts
paid in settlement, actually and reasonably incurred by such person in
connection with any such action, suit or proceeding to the fullest extent
permitted by Delaware law. Under Delaware law, a director or officer may, in
general, be indemnified by the corporation if he has acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
CLASSIFICATION OF BOARD OF DIRECTORS
Both Delaware law and Ohio law permit, but do not require, the adoption of
a "classified" board of directors with staggered terms under which a part of the
board of directors is elected each year for a maximum term of three years.
Neither SHB nor E. W. Scripps has a classified board of directors, and all
directors of each Company stand for election on an annual basis.
CUMULATIVE VOTING OF SHARES
Under Delaware law, stockholders of a corporation cannot elect directors by
cumulative voting unless the certificate of incorporation so provides. The E. W.
Scripps Certificate does not provide for cumulative voting. As a result, the
holder or holders of a majority of the voting power of each class of common
stock of E. W. Scripps are able to elect all directors then being elected by
such class.
In accordance with Ohio law, cumulative voting (unless eliminated by
amendment of the articles of incorporation) is required to be available for the
election of directors if notice to such effect is given by a shareholder prior
to a shareholders' meeting and an announcement to such effect is made at such
meeting. The SHB Articles have been amended to provide for the elimination of
cumulative voting rights.
NUMBER OF DIRECTORS
Under Delaware law, unless the certificate of incorporation specifies the
number of directors, a board of directors may change the authorized number of
directors by an amendment to the corporation's by-laws if fixed therein, or in
such manner as provided therein. If the certificate of incorporation specifies
the number of directors, the number of directors can only be changed by amending
the certificate of incorporation. The E. W. Scripps By-Laws provide that the
number of directors of E. W. Scripps shall be fixed and may be altered from time
to time by the vote of a majority of directors. The number of directors is
currently fixed at nine and may not exceed twelve.
Under Ohio law, the number of directors of a corporation may be fixed or
changed by the shareholders or by the board of directors if so authorized by the
corporation's articles of incorporation or regulations. SHB's Code of
Regulations provides that the number of directors which shall constitute the
whole board of directors shall be seven persons unless changed by a vote of the
holders of a majority of shares entitled to vote thereon at a meeting of
shareholders called for the purpose of electing directors.
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<PAGE> 56
REMOVAL OF DIRECTORS
In general, under both Delaware law and Ohio law, any or all of the
directors of a corporation may be removed, with or without cause, by vote of the
holders of a majority of the shares then entitled to vote at an election of
directors, except that Delaware law authorizes removal by the shareholders of a
member of a classified board only for cause.
DISSENTERS' RIGHTS IN MERGERS
Under both Delaware law and Ohio law, a shareholder of a corporation
participating in certain merger transactions may, under certain circumstances,
receive cash in the amount of the fair market value of his shares (as determined
by a court) in lieu of the consideration he would otherwise receive in the
merger. Unless a corporation's certificate of incorporation provides otherwise,
Delaware law does not require that such dissenters' rights of appraisal be
afforded to stockholders with respect to (i) a merger or consolidation of a
corporation with a surviving corporation the shares of which are either listed
on a national securities exchange designated as a national market security or on
an interdealer quotation system by the National Association of Securities
Dealers, Inc. or widely held (by more than 2,000 shareholders), if the
stockholders of such corporation receive only shares of the surviving
corporation or of such a listed or widely held corporation; or (ii) those
stockholders who are the stockholders of a corporation surviving a merger if no
vote of such stockholders is required because, among other things, the number of
shares to be issued in the merger does not exceed 20% of the shares of the
surviving corporation outstanding immediately prior to the merger (if certain
other conditions are met).
Ohio law does not provide exclusions from dissenters' rights similar to
those described above with respect to Delaware law. However, under Ohio law, in
mergers and certain other transactions (e.g., acquisitions of assets or of a
majority of stock interests in exchange for stock) in which, after giving effect
to the transaction, the original shareholders of the acquiring corporation
retain more than five-sixths of the voting power of such corporation, such
shareholders are denied dissenters' rights.
PAYMENT OF DIVIDENDS
Both Delaware law and Ohio law permit the payment of dividends out of
paid-in, earned or other surplus. However, under Ohio law, if a dividend is paid
out of capital surplus, shareholders must be so notified. Under Delaware law, no
such notice is required and dividends may also be paid out of net profits for
the fiscal year in which declared or out of net profits for the preceding fiscal
year, even if the corporation has no surplus.
REPURCHASE OF SHARES
Under Ohio law, a corporation by act of its directors may repurchase shares
only in certain specified instances, the most significant of which are when the
articles authorize the redemption of such shares, when the articles in substance
provide that the corporation shall have the right to repurchase, and when
authorized by the shareholders at a meeting called for such purpose by the
affirmative vote of the holders of two-thirds of the shares of each class or, if
the articles so provide, by a greater or lesser proportion but not less than a
majority.
Delaware law vests discretion in the board of directors to authorize the
repurchase of shares.
Both Delaware and Ohio law permit the redemption of shares out of paid-in,
earned or other surplus.
LOANS TO DIRECTORS AND OFFICERS
Under Delaware law, a corporation may make loans to, guarantee the
obligations of or otherwise assist its officers or other employees and those of
its subsidiaries when the transac-
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<PAGE> 57
tion, in the judgment of the corporation's board of directors, may reasonably be
expected to benefit the corporation. Under Ohio law, a corporation generally may
make a loan to or a guaranty of the obligations of officers, directors or
shareholders only if such loan or guaranty is approved by a majority of the
disinterested members of its board of directors. The disinterested directors,
taking into account the terms and provisions of the loan and other relevant
factors, must determine that the making of the loan could reasonably be expected
to benefit the corporation. Under Ohio law, directors who authorize unlawful
loans are jointly and severally liable for the loan together with interest. The
standard of conduct which is a precondition to the imposition of monetary
damages discussed under "Liability and Indemnification of Officers and
Directors" above is not applicable to directors authorizing unlawful loans.
TENDER OFFER STATUTE
The Ohio tender offer statute requires any person making a tender offer for
a corporation incorporated in Ohio to comply with certain filing, disclosure and
procedural requirements. Delaware has no tender offer statute.
The Ohio tender offer statute imposes certain filing and disclosure
requirements. The disclosure requirements include a statement of any plans or
proposals that the offeror, upon gaining control, may have to liquidate the
subject company, sell its assets, effect a merger or consolidation of it,
establish, terminate, convert, or amend employee benefit plans, close any plant
or facility of the subject company or of any of its subsidiaries or affiliates,
change or reduce the work force of the subject company or any of its
subsidiaries or affiliates, or make any other major change in its business,
corporate structure, management personnel, or policies of employment.
Until the issue of constitutionality is decided by clearly controlling
appellate court decisions or clarifying legislation is adopted, the
enforceability of the Ohio statute as a protection against board-opposed
takeover attempts is uncertain.
In addition, Ohio has a "Control Share Acquisition" statute which requires
shareholder approval for the acquisition of voting power for certain ranges of
stock ownership. This statute was declared unconstitutional in 1986 by the
United States District Court for the Southern District of Ohio in FLEET
AEROSPACE CORP. V. HOLDERMAN, which holding was affirmed by the United States
Court of Appeals for the Sixth Circuit. On April 27, 1987, however, the United
States Supreme Court vacated and remanded the Sixth Circuit's decision in light
of the Supreme Court's recent holding in CTS CORPORATION V. DYNAMICS CORPORATION
OF AMERICA, which held that Indiana's Control Share Acquisition Act, a law
similar in some respects to the Ohio Control Share Acquisition Act, is
constitutional. Ohio law permits a corporation to opt out of the Control Share
Acquisition Statute. SHB has opted out of this statute.
MERGER MORATORIUM STATUTES
Both Ohio and Delaware have "merger moratorium" statutes which are designed
to encourage potential acquirors of publicly traded corporations such as E. W.
Scripps and SHB to obtain the consent and approval of the proposed target's
board of directors prior to commencing a tender offer for the target company's
shares. This encouragement is accomplished by prohibiting or restricting
acquirors from undertaking many post-acquisition financial restructuring
alternatives.
Both the Ohio and Delaware statutes permit a corporation to opt out of the
operation of the merger moratorium provisions. Neither E. W. Scripps nor SHB has
opted out.
The Ohio law becomes applicable (with certain exceptions) when a person (a
potential acquiror and all of that acquiror's affiliates) can vote or direct the
vote of 10% or more of the voting shares. In Delaware, the law is applicable
when a person acquires more than 15% of the voting stock.
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<PAGE> 58
Under Ohio law (with minor exceptions), there is an absolute prohibition on
mergers and dissolutions and restrictions on asset sales and purchases and other
transactions that would give the acquiror significant funds or assets of the
target during the three-year period after the acquiror becomes a greater than
10% shareholder. Following the three-year period, in Ohio the acquiror can
engage in these transactions only if a fair price as defined in the statute is
provided to the minority shareholders or the acquiror obtains the consent of the
shareholders holding a majority of the disinterested shares.
In Delaware, the restriction on such transactions lasts for three years.
The restrictions are not applicable if at the time the acquiror became subject
to the statute it held more than 85% of such stock or if during the three-year
period the transaction is approved by two-thirds of the disinterested
stockholders.
ANTI-GREENMAIL STATUTE
"Greenmail" is the practice whereby a corporation purchases the shares of a
substantial minority shareholder at a premium to avoid the future potential
takeover of the corporation by that minority shareholder. Ohio recently enacted
an anti-greenmail statute which would cause the forfeiture of any premium
received by the minority shareholder. Ohio law permits a corporation to opt out
of the anti-greenmail statute, but SHB has not opted out.
MARKET FOR E. W. SCRIPPS' COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
E. W. Scripps Class A Common Stock is traded on the NYSE under the symbol
SSP. The following table sets forth, for the periods indicated, the high and low
market prices for E. W. Scripps Class A Common Stock on the New York Stock
Exchange, as reported by The Wall Street Journal, and the cash dividends
declared per share on E. W. Scripps Class A Common Stock for the periods
indicated.
<TABLE>
<CAPTION>
MARKET PRICE CASH
------------------------- DIVIDEND
CALENDAR QUARTERS HIGH LOW DECLARED
- ----------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
1992
First Quarter $ 26 3/4 $ 22 1/8 $.10
Second Quarter 29 23 1/2 .10
Third Quarter 26 7/8 24 .10
Fourth Quarter 26 1/8 23 .10
1993
First Quarter $ 29 1/8 $ 23 3/4 $.11
Second Quarter 28 1/2 24 3/4 .11
Third Quarter 26 5/8 22 7/8 .11
Fourth Quarter 30 7/8 25 1/4 .11
1994
First Quarter $ 28 7/8 $ 25 $.11
Second Quarter 29 3/8 23 .11
Third Quarter (through July 28, 1994) 30 1/4 28 1/2 --
1994 MERGER PERIOD
February 17, 1994 through April 6, 1994 $ 28 7/8 $ 23 N/A
April 7, 1994 through May 4, 1994 26 3/4 23 7/8 N/A
May 5, 1994 through July 28, 1994 30 1/4 23 N/A
</TABLE>
At August 1, 1994, there were approximately 4,500 holders of E. W. Scripps
Class A Common Stock and 27 owners of E. W. Scripps Common Voting Stock, which
does not have a public market, based on security position listings.
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E. W. Scripps has declared cash dividends in every year since its
incorporation in 1922. Future dividends are subject to, among other things, E.W.
Scripps' earnings, financial condition and capital requirements. Certain
long-term debt agreements contain restrictions on dividends.
Because E. W. Scripps is a holding company, holders of its debt and equity
securities, including holders of E. W. Scripps Class A Common Stock, are
dependent primarily upon the cash flow from E. W. Scripps subsidiaries for
payment of principal, interest and dividends. Potential dividends and other
advances and transfers from E. W. Scripps' subsidiaries represent its most
significant sources of cash flow. Applicable state laws and the provisions of
the debt instruments by which E. W. Scripps' principal subsidiaries are bound
limit the ability of such companies to pay dividends or otherwise provide funds
to E. W. Scripps.
MARKET FOR SHB COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
SHB Common Stock is traded in the over-the-counter market on the NASDAQ
under the symbol SCRP. The following table sets forth, for the periods
indicated, the high and low market prices of the SHB Common Stock, as reported
by The Wall Street Journal, and the cash dividends declared per share on the SHB
Common Stock for the periods indicated.
<TABLE>
<CAPTION>
MARKET PRICE CASH
------------------------- DIVIDEND
CALENDAR QUARTERS HIGH LOW DECLARED
- ----------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
1992
First Quarter $ 48 $ 38 .25
Second Quarter 46 39 .25
Third Quarter 52 38 .25
Fourth Quarter 52 40 .25
1993
First Quarter $ 58 $ 44 .30
Second Quarter 73 60 .30
Third Quarter 75 67 .30
Fourth Quarter 84 70 .30
1994
First Quarter $ 94 $ 75 .30
Second Quarter 103 82 .30
Third Quarter (through July 28, 1994) 102 97 --
1994 MERGER PERIOD
February 17, 1994 through April 6, 1994 $ 94 $ 75 N/A
April 7, 1994 through May 4, 1994 90 1/2 82 N/A
May 5, 1994 through July 28, 1994 103 82 N/A
</TABLE>
At August 1, 1994, there were approximately 600 record holders of SHB
Common Stock, based on security position listings.
BUSINESS OF E. W. SCRIPPS
E. W. Scripps is a diversified media company operating principally in four
segments: newspaper publishing, broadcast television, cable television and
entertainment. E. W. Scripps' broadcast television operations and certain of its
cable television systems and entertainment businesses are operated through SHB.
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NEWSPAPERS
E. W. Scripps publishes nineteen metropolitan and suburban daily
newspapers. From its Washington bureau, E. W. Scripps operates the Scripps
Howard News Service, a supplemental wire service covering stories in the
capital, other parts of the United States and abroad.
Substantially all of E. W. Scripps' newspaper publishing operating revenues
are derived from advertising and circulation. Advertising rates and volume are
highest on Sundays, primarily because circulation and readership is greatest on
Sundays. Competition for advertising revenues is based upon circulation levels,
demographics, price and effectiveness.
E. W. Scripps is currently a party to newspaper joint operating agencies
("JOAs") in five markets. JOAs combine all but the editorial operations of two
competing newspapers in a market in order to reduce aggregate expenses and take
advantage of economies of scale, thereby allowing the continuing operation of
both newspapers in that market. JOA revenues less JOA expenses, as defined in
each JOA, equals JOA profits, which are split between the parties to the JOA. In
each case JOA expenses exclude editorial expenses. E. W. Scripps manages its JOA
in Evansville, Indiana and receives approximately 80% of the JOA profits in such
JOA. Each of E. W. Scripps' other four JOAs are managed by the other party to
the JOA. E. W. Scripps receives approximately 20% to 40% of JOA profits of those
JOAs.
BROADCAST TELEVISION
E. W. Scripps' broadcast television operations currently consist of six
network-affiliated VHF television stations and three Fox-affiliated UHF
television stations. All of E. W. Scripps' broadcast television operations are
owned and operated directly or through subsidiaries by SHB. SHB recently entered
into ten-year affiliation agreements with ABC for five of its television
stations. Two of these stations, in Detroit and Cleveland, are currently ABC
affiliates, one of the stations, in Baltimore, is currently an NBC affiliate,
and the other two stations, in Phoenix and Tampa, are currently Fox affiliates.
The new affiliation agreements for Detroit and Cleveland will take effect in
December 1994, and those for Tampa, Baltimore and Phoenix will take effect in
January 1995. See "Business of SHB." SHB also recently agreed to enter into a
long-term affiliation agreement with NBC for its television station in Kansas
City and to extend existing affiliation agreements with NBC covering its
stations in West Palm Beach and Tulsa. The Kansas City station is currently a
Fox affiliate. SHB expects that the agreements for West Palm Beach and Tulsa
will take effect in August 1994, and that the agreement for Kansas City will
take effect in December 1994.
CABLE TELEVISION
E. W. Scripps' cable television system operations are conducted through
several subsidiaries. Its Lake County, Florida, and Sacramento, California,
systems and its Longmont, Colorado, cluster are owned by SHB. Other wholly owned
subsidiaries of E. W. Scripps operate cable television systems in Florida,
Georgia, Indiana, Kentucky, South Carolina, Tennessee, Virginia and West
Virginia. Basic subscribers to E. W. Scripps' systems totaled approximately
711,300 at March 31, 1994, of which approximately 295,000 subscribed to systems
owned by SHB.
Substantially all of E. W. Scripps' cable television operating revenues are
derived from entertainment and information services provided to subscribers of
E. W. Scripps' systems.
E. W. Scripps' cable television systems compete for subscribers with other
cable television systems in certain of its franchise areas. E. W. Scripps' cable
television systems compete for subscribers with other methods of delivering
entertainment and information programming to the subscriber's home, such as
broadcast television, multi-point distribution systems, master and satellite
antenna systems, television receive-only satellite dishes and home systems such
as videocassette and laser disk players. In the future E. W. Scripps' cable
television systems may compete with new technologies such as more advanced
"wireless cable systems" and broadcast
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satellite delivery services, as well as "video dial tone" services whereby the
local telephone company leases video distribution lines to programmers on a
common carrier basis. Direct competition from local telephone companies is now
prohibited by law, but these provisions of law are subject to change.
Cable television systems are regulated by federal, local and in some
instances, state authorities. Certain powers of regulatory agencies and
officials, as well as various rights and obligations of cable television
operators, are specified under the Cable Communications Policy Act of 1984 and
the Cable Television Consumer Protection and Competition Act of 1992, as amended
(the "Cable Act"). Among other things, the Cable Act (i) empowers local
franchising authorities and the FCC jointly to regulate rates for certain cable
television services and (ii) establishes ownership rules with respect to cable
television systems and other media.
In April 1993 the FCC issued rules that established allowable rates for
cable television services (other than programming offered on a per-channel or
per-program basis) and for cable equipment based on benchmarks established by
the FCC. The rules require rates for equipment to be cost-based, and require
reasonable rates for regulated cable television services based upon, at the
election of the cable television system operator, application of the benchmarks
established by the FCC or a cost-of-service showing based upon standards
established by the FCC. The rules became effective in September 1993 and were
recently revised to further reduce regulated rates. The revised rules became
effective in May 1994.
ENTERTAINMENT
E. W. Scripps, under the trade name United Media, is a leading distributor
of news columns, comics and other features for the newspaper industry. United
Media licenses worldwide copyrights relating to "Peanuts" and other character
properties for use on numerous products, including plush toys, greeting cards
and apparel, and for exhibition on television, videocassettes and other media.
In September 1993 E. W. Scripps established Scripps Howard Productions to
acquire, create, develop, produce and own programming products for domestic and
international television. E. W. Scripps, through SHB, acquired Cinetel
Productions in Knoxville, Tennessee, on March 31, 1994, and also plans to
introduce The Home & Garden Television Network in late 1994. See "Business of
SHB."
BUSINESS OF SHB
SHB is a diversified media company operating principally in three segments:
broadcast television, cable television and entertainment.
BROADCAST TELEVISION
SHB's broadcast television operations consist of six network-affiliated VHF
television stations and three Fox-affiliated UHF television stations.
In addition to network programs, SHB's television stations broadcast
locally produced programs, syndicated programs, sports events, movies and public
service programs. Local news and information programming are integral factors in
developing each station's ties to its community and viewer loyalty.
Substantially all of SHB's broadcast television operating revenues are derived
from advertising. Competition for advertising revenues is based upon audience
levels, demographics, price and effectiveness.
SHB recently entered into ten-year affiliation agreements with ABC for five
of its television stations. Two of these stations, in Detroit and Cleveland, are
currently ABC affiliates; one of the stations, in Baltimore, is currently an NBC
affiliate; and the other two stations, in Phoenix and Tampa, are currently Fox
affiliates. The new affiliation agreements for Detroit and Cleveland
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will take effect in December 1994, and those for Tampa, Baltimore and Phoenix
will take effect in January 1995. SHB also recently agreed to enter into a
long-term affiliation agreement with NBC for its television station in Kansas
City and to extend existing affiliation agreements with NBC covering its
stations in West Palm Beach and Tulsa. The Kansas City station is currently a
Fox affiliate. SHB expects that the agreements for West Palm Beach and Tulsa
will take effect in August 1994, and that the agreement for Kansas City will
take effect in December 1994.
Broadcast television is subject to the jurisdiction of the FCC pursuant to
the Communications Act of 1934, as amended, which, among other things, empowers
the FCC to regulate the issuance and renewal of broadcast television licenses
and to regulate the ownership of broadcast television stations.
CABLE TELEVISION
Substantially all of SHB's cable television operating revenues are derived
from entertainment and information services provided to subscribers of SHB's
systems. Basic subscribers to SHB's systems totaled approximately 295,000 at
March 31, 1994.
SHB's cable television systems compete for subscribers with other cable
television systems in certain of its franchise areas. SHB's cable television
systems compete for subscribers with other methods of delivering entertainment
and information programming to the subscriber's home, such as broadcast
television, multi-point distribution systems, master and satellite antenna
systems, television receive-only satellite dishes and home systems such as
videocassette and laser disk players. In the future the Company's cable
television systems may compete with new technologies such as more advanced
"wireless cable systems" and broadcast satellite delivery services, as well as
"video dial tone" services whereby the local telephone company leases video
distribution lines to programmers on a common carrier basis.
Cable television systems are regulated by federal, local and, in some
instances, state authorities. Certain powers of regulatory agencies and
officials, as well as various rights and obligations of cable television
operators, are specified under the Cable Act. Among other things, the Cable Act
(i) empowers local franchising authorities and the FCC jointly to regulate rates
for certain cable television services and (ii) establishes ownership rules with
respect to cable television systems and other media.
In April 1993 the FCC issued rules that established allowable rates for
cable television services (other than programming offered on a per-channel or
per-program basis) and for cable equipment based on benchmarks established by
the FCC. The rules require rates for equipment to be cost-based, and require
reasonable rates for regulated cable television services based upon, at the
election of the cable television system operator, application of the benchmarks
established by the FCC or a cost-of-service showing based upon standards
established by FCC. The rules became effective in September 1993 and were
recently revised to further reduce regulated rates. The revised rules became
effective in May 1994.
ENTERTAINMENT
SHB plans to introduce The Home & Garden Television Network in late 1994.
This network will feature 24 hours of daily programming focused on home repair
and remodeling, gardening, decorating and home electronics. SHB acquired Cinetel
Productions in Knoxville, Tennessee, on March 31, 1994. Cinetel is one of the
largest independent producers of cable television programming. Cinetel's
production facility will also be the primary production facility for The Home &
Garden Television Network.
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INFORMATION RELATING TO MERGERCO
GENERAL
Mergerco was organized by E. W. Scripps in March 1994 under Ohio law in
order to effect the Merger. Mergerco is a wholly owned subsidiary of E. W.
Scripps. Mergerco has not engaged in any activities other than those incident to
its formation. If the Merger is consummated, SHB will be merged into Mergerco
and Mergerco will be the Surviving Corporation. Mergerco's principal executive
offices are located at 312 Walnut Street, Cincinnati, Ohio 45202 and its
telephone number is (513) 977-3000. See "Information Relating to Mergerco."
The directors and the sole stockholder of Mergerco have approved the Merger
Agreement. Mergerco will not have any assets or liabilities (other than those
arising under the Merger Agreement) or engage in any activities other than those
incident to its formation and capitalization and the Merger. As of the date of
this Proxy Statement/Prospectus, the authorized capital stock of Mergerco
consists of 850 shares of common stock without par value, all of which are
issued and outstanding and owned by E. W. Scripps. In the Merger, SHB will merge
with and into Mergerco, with Mergerco being the Surviving Corporation.
EXECUTIVE OFFICERS AND DIRECTORS OF MERGERCO
The following table sets forth certain information regarding the directors
and executive officers of Mergerco. All of such individuals are U.S. citizens.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --------- ------------------------------------
<S> <C> <C>
Charles E. Scripps 74 Director
Donald L. Perris 71 Director
Gordon E. Heffern 70 Director
Robert E. Stautberg 59 Director
John H. Burlingame 61 Director
Lawrence A. Leser 59 President and Chief Executive
Officer and Director
Paul F. Gardner 51 Executive Vice President and
Director
Daniel J. Castellini 54 Treasurer and Director
M. Denise Kuprionis 38 Secretary
E. John Wolfzorn 48 Assistant Treasurer
</TABLE>
Each director has been elected to serve until the next annual meeting of
Mergerco stockholders and until his successor is duly chosen and qualified or
until his prior death, resignation or removal.
The term of office of each executive officer is until the organizational
meeting of the Mergerco Board of Directors following the next annual meeting of
Mergerco stockholders and until his successor is elected and qualified or until
his prior death, resignation or removal.
SUBMISSION OF STOCKHOLDER PROPOSALS
In the event the Merger is not consummated for any reason, SHB will hold an
annual meeting of its stockholders. In accordance with the rules of the
Commission, certain stockholder proposals that are received by the Secretary of
SHB at SHB's corporate headquarters a reasonable time before proxies are
solicited by the SHB Board for such meeting must be included in the proxy
statement and proxy relating to such meeting.
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CERTAIN LEGAL MATTERS, EXPERTS AND REGULATORY APPROVALS
FEDERAL AND STATE APPROVALS
Except for pending applications for certain routine authorizations from the
FCC, no federal or state regulatory requirements remain to be complied with in
order to consummate the Merger. However, the obligations of E. W. Scripps,
Mergerco and SHB to consummate the Merger are subject to satisfaction of a
number of other conditions. See "The Merger Agreement -- Conditions to the
Merger."
LEGAL OPINIONS
The validity of the shares of E. W. Scripps Class A Common Stock to be
issued in the Merger will be passed upon for E. W. Scripps by Baker & Hostetler,
Cleveland, Ohio. John H. Burlingame, a director and a member of the Executive
Committee of the Board of Directors of E. W. Scripps and a Trustee of The Edward
W. Scripps Trust, is the Executive Partner of Baker & Hostetler.
EXPERTS
The consolidated financial statements and the related consolidated
financial statement schedules incorporated in this Proxy Statement-Prospectus by
reference from E. W. Scripps and subsidiary companies' Annual Report on Form
10-K for the year ended December 31, 1993 have been audited by Deloitte &
Touche, independent auditors, as stated in their report, which is incorporated
herein by reference (which report expresses an unqualified opinion and includes
explanatory paragraphs relating to the changes in accounting for certain
investments and for post-retirement benefits other than pensions), and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements and the related consolidated
financial statement schedules incorporated in this Proxy Statement-Prospectus by
reference from SHB and subsidiary companies' Annual Report on Form 10-K for the
year ended December 31, 1993 have been audited by Deloitte & Touche, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
MISCELLANEOUS
It is expected that representatives of Deloitte & Touche, E. W. Scripps'
and SHB's independent public accountants, will be present at the Special Meeting
to respond to appropriate questions and to make a statement if they so desire.
SHB knows of no matters to be presented at the Special Meeting other than
the matters set forth in the attached Notice and this Proxy
Statement/Prospectus. However, if any other matters come before the Special
Meeting, it is intended that the holder of the proxies will vote thereon in
their discretion.
No person has been authorized to give any information or make any
representation on behalf of E. W. Scripps, SHB or Mergerco not contained in this
Proxy Statement/Prospectus, and if given or made, such information or
representation must not be relied upon as having been authorized.
By order of the Board of Directors
M. DENISE KUPRIONIS
Secretary
312 Walnut Street
Cincinnati, Ohio 45202
August 9, 1994
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ANNEX I
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SCRIPPS HOWARD BROADCASTING COMPANY,
SHB MERGER CORPORATION AND
THE E.W. SCRIPPS COMPANY
DATED MAY 4, 1994
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TABLE OF CONTENTS
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ARTICLE I THE MERGER............................................................ 1
SECTION 1.1 The Merger.......................................................... 1
SECTION 1.2 Articles of Incorporation........................................... 1
SECTION 1.3 Code of Regulations................................................. 1
SECTION 1.4 Board of Directors and Officers..................................... 2
SECTION 1.5 Meeting of Company Shareholders..................................... 2
SECTION 1.6 SEC Filings......................................................... 2
SECTION 1.7 Effective Time of the Merger........................................ 3
ARTICLE II CONVERSION OF SHARES.................................................. 3
SECTION 2.1 Conversion of Shares................................................ 3
SECTION 2.2 Exchange of Company Common Shares................................... 3
SECTION 2.3 No Further Transfers................................................ 5
ARTICLE III ADDITIONAL AGREEMENTS IN CONNECTION WITH THE MERGER................... 5
SECTION 3.1 Best Efforts........................................................ 5
SECTION 3.2 Conduct of Business by the Company Pending the Merger............... 6
SECTION 3.3 Notice of Actions and Proceedings................................... 6
SECTION 3.4 Access and Information.............................................. 6
SECTION 3.5 Notification of Certain Other Matters............................... 7
SECTION 3.6 Certain Filings, Consents and Arrangements.......................... 7
SECTION 3.7 Stock Exchange Listing.............................................. 7
SECTION 3.8 Tax-Free Reorganization Treatment................................... 7
SECTION 3.9 FCC Compliance...................................................... 7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................... 8
SECTION 4.1 Organization and Good Standing...................................... 8
SECTION 4.2 Authorization; Binding Agreement.................................... 8
SECTION 4.3 Capitalization...................................................... 8
SECTION 4.4 Reports and Financial Statements.................................... 8
SECTION 4.5 Litigation.......................................................... 9
SECTION 4.6 Governmental Approvals and Compliance with Law...................... 9
SECTION 4.7 Absence of Breach................................................... 9
SECTION 4.8 Proxy Statement; Registration Statement............................. 9
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO................. 10
SECTION 5.1 Organization and Good Standing...................................... 10
SECTION 5.2 Authorization; Binding Agreement.................................... 10
SECTION 5.3 Capitalization...................................................... 10
SECTION 5.4 Reports and Financial Statements.................................... 11
SECTION 5.5 Litigation.......................................................... 11
SECTION 5.6 Governmental Approvals.............................................. 11
SECTION 5.7 Absence of Breach................................................... 11
SECTION 5.8 Proxy Statement; Registration Statement............................. 12
ARTICLE VI COVENANTS FOLLOWING THE MERGER........................................ 12
SECTION 6.1 Indemnification..................................................... 12
SECTION 6.2 Further Action...................................................... 12
ARTICLE VII CONDITIONS............................................................ 13
SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger.......... 13
SECTION 7.2 Conditions to Obligation of the Company to Effect the Merger........ 14
SECTION 7.3 Conditions to Obligations of Parent and Mergerco to Effect the
Merger.............................................................. 14
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ARTICLE VIII CLOSING; TERMINATION.................................................. 15
SECTION 8.1 The Closing......................................................... 15
SECTION 8.2 Documents and Certificates.......................................... 15
SECTION 8.3 Termination......................................................... 15
SECTION 8.4 Effect of Termination............................................... 16
ARTICLE IX GENERAL AGREEMENTS.................................................... 16
SECTION 9.1 Non-Survival of Representations, Warranties and Agreements.......... 16
SECTION 9.2 Entire Agreement.................................................... 16
SECTION 9.3 Expenses............................................................ 16
SECTION 9.4 Notice.............................................................. 17
SECTION 9.5 Amendments.......................................................... 17
SECTION 9.6 Waiver.............................................................. 18
SECTION 9.7 Brokers............................................................. 18
SECTION 9.8 Publicity........................................................... 18
SECTION 9.9 Subsidiaries........................................................ 18
SECTION 9.10 Headings........................................................... 18
SECTION 9.11 Non-Assignability.................................................. 18
SECTION 9.12 Counterparts....................................................... 18
SECTION 9.13 Governing Law...................................................... 18
SECTION 9.14 Severability....................................................... 18
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 4, 1994 (this "Merger
Agreement"), by and among Scripps Howard Broadcasting Company, an Ohio
corporation (the "Company"), The E.W. Scripps Company, a Delaware corporation
("Parent"), and SHB Merger Corporation, an Ohio corporation and a wholly owned
subsidiary of Parent ("Mergerco"). Mergerco and the Company are hereinafter
sometimes collectively referred to as the "Constituent Corporations."
WHEREAS, following the favorable recommendation of the Special Committee of
the Board of Directors of the Company (the "Special Committee"), the Board of
Directors or Executive Committee of each of Parent, Mergerco and the Company has
approved the merger of the Company with and into Mergerco (the "Merger")
pursuant to the terms and subject to the conditions of this Merger Agreement
whereby (i) each of the issued and outstanding common shares, par value $.25 per
share, of the Company ("Company Common Shares"), other than Company Common
Shares held by Parent and its subsidiaries (as defined in Section 9.9 hereof),
shares held in the treasury of the Company and by any of its subsidiaries and
shares with respect to which a written demand for payment of fair cash value has
been made pursuant to Section 2.2(e) of this Merger Agreement and not withdrawn
or waived (the "Dissenting Shares"), will be converted into the right to receive
the Merger Consideration set forth in Section 2.1(b) hereof and (ii) the Company
will become a wholly owned subsidiary of Parent; and
WHEREAS, for federal income tax purposes it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Subject to the terms and conditions hereof, the
Merger shall be consummated in accordance with the Ohio General Corporation Law
(Title XVII, Chapter 1701 of the Ohio Revised Code) (the "ORC") as soon as
practicable following the satisfaction or waiver of the conditions set forth in
Article VII hereof. Upon the terms and subject to the conditions hereof, at the
Effective Time (as defined in Section 1.7 hereof), the Company shall be merged
with and into Mergerco in accordance with the applicable provisions of the ORC
and the separate existence of the Company shall thereupon cease, and Mergerco,
as the surviving corporation in the Merger (the "Surviving Corporation"), shall
continue its corporate existence under the laws of the State of Ohio under the
name "Scripps Howard Broadcasting Company." The Merger shall have the effects
set forth in Section 1701.82 of the ORC.
SECTION 1.2 Articles of Incorporation. The Articles of Incorporation of
the Company as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation, until such Articles of
Incorporation are thereafter further changed or amended as provided therein or
by law, except that at the Effective Time paragraph (a) of Article Fourth of the
Articles of Incorporation of the Surviving Corporation shall be amended to read
as follows: "The total number of shares of stock of all classes which the
Corporation has authority to issue is 850 Common Shares, par value $.25 per
share."
SECTION 1.3 Code of Regulations. The Code of Regulations of the Company as
in effect immediately prior to the Effective Time shall be the Code of
Regulations of the Surviving Corporation until thereafter changed or amended as
provided therein or as otherwise permitted or required by law or by the
Surviving Corporation's Articles of Incorporation.
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SECTION 1.4 Board of Directors and Officers. The directors of the Company
at the Effective Time shall be the initial directors of the Surviving
Corporation and shall serve until their respective successors are duly elected
or appointed and qualify in the manner provided in the Articles of Incorporation
and Code of Regulations of the Surviving Corporation or as otherwise provided by
law. The officers of the Company at the Effective Time shall be the officers of
the Surviving Corporation and shall serve until their respective successors are
duly elected or appointed and qualify in the manner provided in the Articles of
Incorporation and Code of Regulations of the Surviving Corporation, or as
otherwise provided by law.
SECTION 1.5 Meeting of Company Shareholders. The Company shall take all
necessary action in accordance with applicable law to convene a meeting of its
shareholders (a "Meeting") to consider and vote upon the Merger and this Merger
Agreement and shall use its best efforts to hold such Meeting as promptly as
practicable after the date hereof. Subject to applicable law and fiduciary
duties, including the duties of loyalty and care, the Board of Directors of the
Company shall recommend that the Company's shareholders vote in favor of the
Merger and the adoption of this Agreement. Parent agrees that it shall vote, or
cause to be voted, in favor of the Merger and the adoption and approval of the
Merger Agreement each Company Common Share held by it or by any of its
subsidiaries on the record date set by the Company for determining Company
Common Shares entitled to vote at the Meeting.
SECTION 1.6 SEC Filings. (a) The Company shall file with the Securities
and Exchange Commission (the "SEC") as promptly as practicable after the date
hereof, pursuant to the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), a proxy statement and form of proxy with respect to the Meeting
(the "Proxy Statement"). Parent and Mergerco shall provide the Company with the
information concerning Parent and Mergerco required to be included in the Proxy
Statement.
(b) As soon as practicable after the date hereof, Parent shall file with
the SEC a registration statement on Form S-4 (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), which
registers the shares of Class A Common Stock, par value $.01 per share ("Parent
Class A Common Stock"), of Parent to be issued to the Company's shareholders
pursuant to the Merger. The Company and Mergerco shall provide Parent with the
information concerning the Company and Mergerco required to be included in the
Registration Statement.
(c) The Company and Parent shall (i) provide such cooperation as may be
necessary or useful to cause the Registration Statement to incorporate the Proxy
Statement, (ii) use all reasonable efforts to have the Registration Statement
declared effective under the Securities Act and the Proxy Statement cleared by
the SEC as promptly as practicable, and (iii) promptly thereafter mail the Proxy
Statement to shareholders of the Company. Parent shall take any action required
to be taken under state Blue Sky or securities laws in connection with the
Merger and the issuance of the Merger Consideration in connection therewith. The
term "Registration Statement" shall mean such Registration Statement at the time
it becomes effective and all amendments thereto duly filed.
(d) The information provided and to be provided by the Company (with
respect to itself and its subsidiaries), Parent (with respect to itself and its
subsidiaries) and Mergerco, respectively, for use in the Registration Statement
and the Proxy Statement shall, at the time the Registration Statement becomes
effective, on the date the Proxy Statement is first mailed to the Company's
shareholders, on the date of the meeting of the Company's shareholders referred
to in Section 1.5 hereof and at the Effective Time, be true and correct in all
material respects and shall not omit to state any material fact required to be
set forth therein or necessary in order to make the information set forth
therein not misleading. The Company, Parent and Mergerco each agree to correct
any information provided by it for use in the Registration Statement or the
Proxy Statement which shall have become false and misleading. The Registration
Statement and
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the Proxy Statement shall comply as to form in all material respects with all
applicable requirements of federal securities laws.
SECTION 1.7 Effective Time of the Merger. As soon as practicable following
the satisfaction or waiver of the conditions set forth in Article VII hereof at
the Closing (as defined in Section 8.1 hereof), a Certificate of Merger shall be
duly executed by Mergerco and the Company and shall be duly filed with the
Secretary of State of Ohio in accordance with the ORC. The Merger shall become
effective when such Certificate of Merger is so filed with the Secretary of
State of Ohio. When used in this Agreement, the term "Effective Time" shall mean
the time and date at which such Certificate of Merger is so filed.
ARTICLE II
CONVERSION OF SHARES
SECTION 2.1 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof:
(a) Each Company Common Share then owned by Parent or Mergerco or by
any other direct or indirect subsidiary of Parent and shares held in the
treasury of the Company or by any direct or indirect subsidiary of the
Company (each of the foregoing shares being "Excluded Shares") shall, by
virtue of the Merger, and without any action on the part of the Company or
the holder thereof, be cancelled.
(b) Each then remaining issued and outstanding Company Common Share
not cancelled pursuant to Section 2.1(a) (excluding Dissenting Shares)
shall be by virtue of the Merger, and without any action on the part of the
holder thereof, cancelled and converted solely into the right to receive,
upon the surrender of the certificate formerly representing such Company
Common Share in accordance with Section 2.3 hereof, three and forty-five
hundredths (3.45) fully paid and nonassessable shares of Parent Class A
Common Stock, without interest thereon. The shares of Parent Class A Common
Stock to be issued in the Merger in exchange for certificates which
immediately prior to the Effective Time represented Company Common Shares,
together with any cash to be received pursuant to Paragraph (e) of Section
2.2 in lieu of issuing fractional shares of Parent Class A Common Stock,
are referred to herein as the "Merger Consideration."
(c) Each then issued and outstanding Common Share, without par value
("Mergerco Common"), of Mergerco shall be converted into one fully paid and
nonassessable common share, par value $.25 per share, of the Surviving
Corporation.
SECTION 2.2 Exchange of Company Common Shares. (a) Prior to the Effective
Time, Parent shall designate a bank or trust company to act as exchange agent
(the "Exchange Agent") for the Merger. Immediately prior to the Effective Time,
Parent will instruct the transfer agent of the shares of Parent Class A Common
Stock to countersign and deliver to the Exchange Agent a sufficient number of
certificates representing shares of Parent Class A Common Stock, all so as to
allow for the issuance and delivery of the Merger Consideration on a timely
basis. Parent shall pay all reasonable charges or expenses, including those of
the Exchange Agent, in connection with the exchange of Company Common Shares for
the Merger Consideration.
(b) As soon as practicable after the Effective Time, Parent shall cause the
Exchange Agent to mail or make available to each holder of a certificate
theretofore representing Company Common Shares (a "Certificate") (other than
holders of certificates theretofore representing Excluded Shares) a notice and
letter of transmittal advising such holder of the effectiveness of the Merger
and the procedure for surrendering to the Exchange Agent such Certificate or
Certificates for exchange for the Merger Consideration multiplied by the number
of Company Common Shares represented by such Certificate or Certificates. Upon
the surrender to the
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Exchange Agent of such Certificate or Certificates, together with a letter of
transmittal, duly executed and completed in accordance with the instructions
thereon, the holder of such Certificate or Certificates shall be entitled to
receive the Merger Consideration. From and after the Effective Time, until
surrendered in accordance with the provisions of this Section 2.2, each
Certificate evidencing Company Common Shares (other than Certificates
representing Excluded Shares and Dissenting Shares) shall represent for all
purposes only the right to receive the Merger Consideration, without any
interest thereon. Any portion of the Merger Consideration that shall not have
been paid to shareholders of the Company pursuant to this Section 2.2 prior to
the first anniversary of the Effective Time shall be paid to the Parent, and any
shareholders of the Company who have not theretofore complied with this Section
2.2 thereafter shall look, subject to escheat and other similar laws, solely to
the Parent for payment of the Merger Consideration to which they are entitled
under this Agreement. Holders of unsurrendered Certificates shall not be
entitled to vote the shares of Parent Class A Common Stock represented by such
Certificates or exercise their other rights as a shareholder of Parent unless
and until the holder of such Certificates has surrendered such Certificate in
accordance herewith.
(c) No dividends or other distributions that are otherwise payable on the
shares of Parent Class A Common Stock constituting any of the Merger
Consideration will be paid to the holder of any unsurrendered Certificate until
such Certificate is properly surrendered as provided herein, but (i) upon such
surrender, there shall be paid to the person in whose name the shares of Parent
Class A Common Stock constituting any of the Merger Consideration shall be
issued the amount of any dividends which shall have become payable with respect
to such shares between the Effective Time and the time of such surrender and
(ii) at the appropriate payment date or as soon thereafter as practicable, there
shall be paid to such person the amount of any dividends on such shares of
Parent Class A Common Stock which shall have a record or due date prior to such
surrender and a payment date after such surrender, subject in each such case to
(x) deduction therefrom of any amount required by applicable law to be withheld,
and (y) any applicable escheat laws or unclaimed property laws. On surrender of
a Certificate, no interest shall be payable with respect to the payment of such
dividends and no interest shall be payable with respect to the amount of any
cash payable in lieu of a fractional share of Parent Class A Common Stock
pursuant to paragraph (e) of this Section 2.2.
(d) If any cash is to be paid pursuant to Section 2.2(e) to, or
certificates representing shares of Parent Class A Common Stock are to be issued
to, a person other than the person in whose name the Certificate so surrendered
in exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates representing the shares of Parent Class A Common Stock
in any name other than that of the registered holder of the Certificate
surrendered or otherwise required, or shall establish to the satisfaction of the
Exchange Agent that such taxes have been paid or are not applicable.
(e) Shares of Parent Class A Common Stock shall be issued only in whole
shares. Former holders of Company Common Shares will not be entitled to receive
fractional shares of Parent Class A Common Stock ("Fractional Shares") but,
instead, will be entitled to receive promptly from the Exchange Agent a cash
payment in lieu of Fractional Shares in an amount equal to the Fractional Share
to which said holder would otherwise be entitled multiplied by the per share
closing sale price on the New York Stock Exchange of Parent Class A Common Stock
on the Closing Date. No dividends or distributions of Parent shall be payable on
or with respect to any Fractional Share and any such Fractional Share will not
entitle the owner thereof to vote or to any rights of stockholders of Parent.
Such cash payments will be made to each such former holder only upon proper
surrender of such former holder's Certificates, together with a properly
completed and duly executed transmittal form and any other required documents.
(f) Each holder of one or more Company Common Shares who shall have been a
record holder of such shares as of the date fixed for the determination of
shareholders entitled to notice
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of and to vote at the meeting of shareholders of the Company called to approve
the Merger and adopt this Merger Agreement and who shall have filed with
Company, not later than ten (10) days after such meeting, a written demand for
payment to him of the fair cash value of such shares in compliance with Section
1701.85 of the ORC, and whose such shares shall not have been voted in favor of
the Merger or adoption of this Merger Agreement, shall cease to have any of the
rights of a shareholder in respect of such shares except the right to be paid
the fair cash value of such shares and any other rights bestowed under Sections
1701.84 and 1701.85 of the ORC. Any holder of Company Common Shares who (i)
surrenders his certificates representing Company Common Shares for exchange
pursuant hereto or (ii) validly withdraws his written demand for payment of fair
cash value of such share pursuant to Sections 1701.84 and 1702.85 of the ORC
will thereupon be reinstated to all his rights as a shareholder in respect of
such shares as of the filing of his written withdrawal, subject to the
provisions of Section 2.1 of this Merger Agreement, and will be entitled to
receive the Merger Consideration as of the Effective Time pursuant to this
Merger Agreement. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Company Common Shares, and Parent shall
have the right to participate in all negotiations and proceedings with respect
to such demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands.
SECTION 2.3 No Further Transfers. The stock transfer books of the Company
shall be closed at the close of business on the business day immediately
preceding the date of the Effective Time. In the event of a transfer of
ownership of Company Common Shares which is not registered in the transfer
records of the Company, the Merger Consideration to be distributed pursuant to
this Merger Agreement may be delivered to a transferee, if a Certificate is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by payment of any applicable stock
transfer taxes. Parent and the Exchange Agent shall be entitled to rely upon the
stock transfer books of the Company to establish the identity of those persons
entitled to receive the Merger Consideration for their Company Common Shares,
which books shall be conclusive with respect to the ownership of such shares. In
the event of a dispute with respect to the ownership of any such shares, the
Surviving Corporation and the Exchange Agent shall be entitled to deposit any
Merger Consideration represented thereby in escrow with an independent party and
thereafter be relieved with respect to any claims to such Merger Consideration.
If, after the Effective Time, any certificate previously representing Company
Common Shares is presented for transfer, it shall be forwarded to the Exchange
Agent for cancellation and exchange in accordance with Section 2.2 hereof.
ARTICLE III
ADDITIONAL AGREEMENTS IN CONNECTION WITH THE MERGER
SECTION 3.1 Best Efforts. Upon the terms and subject to the conditions
herein provided, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all lawful action, to do, or cause to be done, and
to assist and cooperate with the other parties hereto in doing, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective, as soon as reasonably practicable, the
transactions contemplated by this Merger Agreement, including (i) the Merger,
(ii) the obtaining of consents, amendments to or waivers under the terms of any
material borrowing arrangements or other material contractual arrangements
required by the transactions contemplated by this Merger Agreement, and (iii)
the defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby. Each of the parties hereto agrees not to take
or to fail to take, as the case may be, any action, the taking of which or the
failure of which to take, as the case may be, would be likely to cause any
representation or warranty contained in this Merger Agreement to cease to be
true or accurate in any material respect or that would be reasonably likely to
prevent the performance in all material respects of any covenant or the
satisfaction of any condition
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contained in this Merger Agreement. In addition, Parent, either in its capacity
as a shareholder, directly or indirectly, of the Company or through its
representatives on the Company's Board of Directors (which shall be understood
to mean those directors of the Company who are executive officers or directors
of the Parent), in each case subject to the exercise of their respective
fiduciary duties, if any, to the Company's shareholders, agrees not to take or
fail to take, as the case may be, any action, the taking or failure of which to
take, as the case may be, would be likely to cause any representation or
warranty of the Company contained in this Merger Agreement to cease to be true
or accurate in any material respect or that would be reasonably likely to
prevent the performance in all material respects by the Company of any covenant
or the satisfaction by the Company of any condition contained in this Merger
Agreement.
SECTION 3.2 Conduct of Business by the Company Pending the Merger. Subject
to the last sentence of Section 3.1 hereof, the Company covenants and agrees
that, prior to the Effective Time, unless Parent shall otherwise agree in
writing, or except as otherwise contemplated by this Agreement:
(a) neither the Company nor any subsidiary of the Company shall (i)
amend its articles or certificate of incorporation or code of regulations
or by-laws, (ii) change the number of authorized or outstanding shares of
its capital stock, as set forth in Section 4.3 hereof, or (iii) declare,
set aside or pay any dividend or other distribution, or make any payment in
cash, stock or property, in respect of any shares of its capital stock,
except for regular dividends or distributions declared or paid (x) by any
subsidiary of the Company to the Company or any other subsidiary of the
Company, or (y) on presently outstanding Company Common Shares;
(b) neither the Company nor any subsidiary of the Company shall (i)
authorize for issuance, issue, grant, sell, pledge or dispose of or propose
to issue, grant, sell, pledge or dispose of any shares of, or warrants,
options, commitments, subscriptions or rights of any kind to acquire any
shares of, the capital stock of the Company or such subsidiary or any
securities convertible into or exchangeable for shares of any such capital
stock, (ii) incur any material indebtedness for borrowed money other than
in the ordinary and usual course of business, consistent with past
practice, or (iii) acquire directly or indirectly by redemption or
otherwise any shares of the capital stock of the Company or any subsidiary
of the Company; and
(c) neither the Company nor any subsidiary of the Company shall enter
into any agreement or take any other action to do any of the things
described in paragraphs (a) or (b) of this Section 3.2 or which would make
any representation or warranty of the Company set forth in this Agreement
which is qualified as to materiality untrue or incorrect and any such
representation or warranty which is not so qualified materially untrue or
incorrect.
SECTION 3.3 Notice of Actions and Proceedings. Each party promptly shall
notify the others of any claims, actions, proceedings or investigations
commenced or, to the best of its knowledge, threatened, and any material
developments relating to any such pending claim, action, proceeding or
investigation involving or affecting the parties, or any of their respective
properties or assets, or, to the best of its knowledge, any employee or
consultant of the parties, in his or her capacity as such, or director or
officer, in his or her capacity as such, of the Company or the Parent disclosed
in writing pursuant to Section 4.5 or 5.5 hereof, as the case may be, or which,
if pending on the date hereof, would have been required to have been disclosed
in writing pursuant to Section 4.5 or 5.5 hereof, as the case may be, or which
relate to the consummation of the Merger.
SECTION 3.4 Access and Information. Each party shall, and shall cause its
subsidiaries, officers, directors, employees and agents to, afford to each other
party and such party's accountants, counsel, financial advisors, investment
bankers and other agents and representatives, and its banks and other financial
institutions, full access at all reasonable times through-
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out the period prior to the Effective Time to all of the officers, employees,
agents, properties, books, contracts, commitments and records (including but not
limited to tax returns) of such party and its subsidiaries and, during such
period, such party shall furnish promptly to each other party (i) a copy of each
report, schedule and other document filed by it or any of its subsidiaries
pursuant to the requirements of federal or state securities laws, and (ii) all
other financial, operating and other information concerning the business,
properties and personnel of such party and its subsidiaries as each other party
may reasonably request.
SECTION 3.5 Notification of Certain Other Matters. Each party promptly
shall notify the others of: (i) any notice of, or other communication relating
to, a default or event which, with notice or lapse of time or both, would become
a default, received by such party or any of its subsidiaries subsequent to the
date of this Merger Agreement and prior to the Effective Time, under any
agreement, indenture or instrument material to the financial condition,
properties, business or results of operations of such party and its subsidiaries
taken as a whole to which such party or any of its subsidiaries is a party or is
subject; (ii) any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Merger Agreement; (iii) any notice or
other communication from any regulatory authority in connection with the
transactions contemplated hereby; (iv) any material adverse change in the
financial condition, properties, businesses or results of operations of such
party and its subsidiaries taken as a whole, or the occurrence of an event
which, so far as reasonably can be foreseen at the time of its occurrence, would
result in any such change; or (v) any matter hereafter arising which, if
existing, occurring or known at the date of this Merger Agreement, would have
been required to be disclosed to such other party.
SECTION 3.6 Certain Filings, Consents and Arrangements. Parent, Mergerco
and the Company shall (a) as soon as practicable make any filings required to be
filed with any court, government, legislative body, governmental authority or
other regulatory or administrative agency or commission, domestic or foreign,
including, without limitation, any cable television commission or authority
("Governmental Entity") between the date of this Agreement and the Effective
Time; (b) cooperate with one another (i) in promptly determining whether any
other filings are required to be made or consents, approvals, permits or
authorizations are required to be obtained under any other relevant federal,
state or foreign law or regulation and (ii) in promptly making any such filings,
furnishing information required in connection therewith and timely seeking to
obtain any such consents, approvals, permits or authorizations; and (c) deliver
to the other parties to this Agreement copies of the publicly available portions
of all such reports promptly after they are filed.
SECTION 3.7 Stock Exchange Listing. Parent shall use its best efforts to
list on the New York Stock Exchange, upon official notice of issuance, the
Parent Class A Common Stock to be issued pursuant to the Merger.
SECTION 3.8 Tax-Free Reorganization Treatment. Neither Parent, Mergerco,
nor the Company shall intentionally take or cause to be taken any action,
whether before or after the Effective Time, which would disqualify the Merger as
a "reorganization" within the meaning of Section 368(a) of the Code.
SECTION 3.9 FCC Compliance. The Company shall retain no right of reversion
or reassignment of the broadcast licenses and shall not reserve the right to use
the facilities of the broadcast stations in question for any period whatsoever.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Mergerco as follows:
SECTION 4.1 Organization and Good Standing. Each of the Company and its
subsidiaries is a duly incorporated and validly existing corporation in good
standing under the laws of the state of its incorporation, with all requisite
corporate power and authority to own its properties and conduct its business,
and is duly qualified and in good standing as a foreign corporation authorized
to do business in each of the jurisdictions in which the character of the
properties owned or leased by it or the nature of the business transacted by it
makes such qualification necessary, except where the failure to be so qualified
would not in the aggregate have a material adverse effect on the business,
assets, properties, financial condition or results of operations of the Company
and its subsidiaries taken as a whole (in respect of either the Company and its
subsidiaries taken as a whole or Parent and its subsidiaries taken as a whole,
as the case may be, a "Material Adverse Effect"). The Company has heretofore
delivered to the Parent true and correct copies of its articles of incorporation
and code of regulations as currently in effect.
SECTION 4.2 Authorization; Binding Agreement. The Company has all
requisite corporate power and authority to execute and deliver this Merger
Agreement and to consummate the transactions contemplated hereby, subject only
to approval of the Merger Agreement by the affirmative vote of holders of a
majority of the outstanding Company Common Shares. The Company's Board of
Directors (at a meeting duly called and held) has (a) duly approved the Merger
Agreement and determined that the Merger is fair to and in the best interests of
the Company's shareholders (other than Parent and its subsidiaries) and (b)
adopted resolutions recommending approval of the Merger by the Company's
shareholders. Lehman Brothers Inc. has delivered to the Special Committee of the
Board of Directors of the Company its written opinion in the form of Exhibit A
hereto (the "Fairness Opinion"). The execution and delivery of this Merger
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Company's Board of Directors and, except for
the adoption of this Merger Agreement by the shareholders of the Company holding
at least a majority of the outstanding Company Common Shares (the "Required
Shareholder Vote"), no other corporate proceedings on the part of the Company
are necessary to authorize this Merger Agreement and the transactions
contemplated hereby. This Merger Agreement has been duly and validly executed
and delivered by the Company, and constitutes a legal, valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms (except as enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights generally or by the
principles governing the availability of equitable remedies).
SECTION 4.3 Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 25,000,000 Company Common Shares. As of the
date hereof, 10,325,788 Company Common Shares are issued and outstanding, all of
which are validly issued, fully paid and nonassessable. There is not now, and at
the Effective Time there will not be, any existing option, warrant, subscription
or other right, agreement or commitment to which the Company or any of its
subsidiaries is a party which either obligates the Company or any of its
subsidiaries to issue, sell or transfer any shares of its capital stock or
restricts the transfer of or otherwise relates to the capital stock of the
Company or any of its subsidiaries.
SECTION 4.4 Reports and Financial Statements. The Company has delivered to
Parent true and complete copies of (i) the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993, as filed with the SEC (the "Company
1993 10-K"), (ii) all other reports, statements and registration statements
(including quarterly reports on Form 10-Q and current reports on Form 8-K) filed
by it with the SEC since the filing of the Company 1993 10-K (collectively, the
"SEC Filings"). Except as expressly amended by a subsequent SEC Filing, as of
their respective dates the SEC Filings did not contain any untrue statement of a
material fact
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or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The historical consolidated financial statements of the
Company included in the SEC Filings were prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as
otherwise noted in such historical financial statements) and present fairly the
consolidated financial position, results of operations and changes in financial
position of the Company and its consolidated subsidiaries as of the dates and
for the periods indicated (subject, in the case of any unaudited interim
financial statements, to normal year-end adjustments), except that the footnotes
to any quarterly financial statements do not contain all of the disclosures
required by generally accepted accounting principles.
SECTION 4.5 Litigation. Except as may be disclosed in the SEC Filings or
has been disclosed to Parent in writing on or prior to the date hereof, as of
the date hereof there are no claims, actions, proceedings or investigations
pending or, to the best knowledge of the Company, threatened, involving or
affecting the Company or any of its subsidiaries or any of their properties or
assets or, to the best of the Company's knowledge, any employee, consultant,
director or officer in his or her capacity as such, of the Company or any of its
subsidiaries before any court or governmental or regulatory authority or body
which, if adversely decided, could have a Material Adverse Effect. As of the
date hereof, neither the Company nor any of its subsidiaries nor any property or
assets of any of them is subject to any order, judgment, injunction or decree
that singly or in the aggregate has a Material Adverse Effect.
SECTION 4.6 Governmental Approvals and Compliance with Law. No consent,
license, approval, qualification or form of exemption from or authorization of
or declaration, registration or filing with any Governmental Entity on the part
of the Company or any subsidiary of the Company which has not been made is
required in connection with the execution or delivery by the Company of this
Merger Agreement, the consummation by the Company of the transactions
contemplated hereby or the performance by the Company of its obligations
hereunder other than (a) the filing of a Certificate of Merger with the
Secretary of State of Ohio in accordance with the ORC, (b) filings with the SEC
and any applicable national securities exchanges, (c) filings under state
securities, "Blue Sky" or anti-takeover laws, (d) any applicable filings
required under the laws of foreign jurisdictions, (e) filings with and approvals
of the Federal Communications Commission ("FCC") ("FCC Filings and Approvals")
and any applicable filings and approvals with respect to the Company's cable
franchises (the "Cable Filings and Approvals"), and (f) filings, authorizations,
consents or approvals relating to matters which, in the aggregate, are not
material to the Company and its subsidiaries taken as a whole.
SECTION 4.7 Absence of Breach. Except as has been disclosed to Parent in
writing on or prior to the date hereof, the execution and delivery by the
Company of this Merger Agreement, the consummation of the transactions
contemplated hereby and the performance by the Company of its obligations
hereunder, will not (a) subject to obtaining the required approval of the
Company's shareholders, conflict with or result in a breach of any of the
provisions of its Articles of Incorporation or Code of Regulations, (b) subject
to the obtaining of the governmental approvals and consents referred to in
Section 4.6 hereof, contravene any law, rule or regulation of any state or of
the United States or any political subdivision thereof or therein, or any order,
writ, judgment, injunction, decree, determination or award currently in effect,
or (c) require any consent, approval or notice under or result in a violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement or other instrument to which the
Company or any of its subsidiaries is a party or by which any of their other
assets are bound, the failure of which to obtain, in each such case, would have
a Material Adverse Effect.
SECTION 4.8 Proxy Statement; Registration Statement. None of the
information included in the Proxy Statement filed by the Company (excluding
information therein provided by Parent, as to which the Company makes no
representation), or provided by the Company for
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inclusion in the Registration Statement filed by the Parent, will be false or
misleading with respect to any material fact or will omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. Except for information supplied or to be supplied by Parent and
Mergerco for inclusion therein, including all information concerning
subsidiaries of Parent other than the Company and its subsidiaries, as to which
the Company makes no representation, the Proxy Statement, including any
amendments thereto, will comply in all material respects with the Exchange Act
and the rules and regulations thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO
Parent and Mergerco, jointly and severally, represent and warrant to the
Company as follows:
SECTION 5.1 Organization and Good Standing. Each of Parent and its
subsidiaries (including Mergerco) is a duly incorporated and validly existing
corporation in good standing under the laws of the state of its incorporation,
with all requisite corporate power and authority to own its properties and
conduct its business, and is duly qualified and in good standing as a foreign
corporation authorized to do business in each of the jurisdictions in which the
character of the properties owned or leased by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure to
be so qualified would not have a Material Adverse Effect. Parent and Mergerco
have heretofore delivered to the Company accurate and complete copies of their
respective corporate charters and by-laws or regulations as currently in effect.
SECTION 5.2 Authorization; Binding Agreement. Each of Parent and Mergerco
has the requisite corporate power and authority to execute and deliver this
Merger Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Merger Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of each of Parent and Mergerco and by Parent as the sole
shareholder of Mergerco and no other corporate proceedings on the part of Parent
or Mergerco are necessary to authorize this Merger Agreement and the
transactions contemplated hereby. The Merger Agreement has been duly and validly
executed and delivered by Parent and Mergerco and constitutes a legal, valid and
binding agreement of Parent and Mergerco, enforceable against each of them in
accordance with its terms (except as enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights generally or by the principles governing the availability of equitable
remedies).
SECTION 5.3 Capitalization. As of the date of this Merger Agreement, the
authorized capital stock of Parent consists of, and as of the Effective Time
such stock will consist of, 120,000,000 shares of Parent Class A Common Stock,
30,000,000 shares of Common Voting Stock, par value $.01 per share ("Parent
Voting Stock" and together with Parent Class A Common Stock, "Parent Common
Stock"), and 25,000,000 shares of Serial Preferred Stock, par value $.01 per
share ("Preferred Stock"). As of the date hereof, 54,471,733 shares of Parent
Class A Common Stock, no shares of Preferred Stock, and 20,174,833 shares of
Parent Voting Stock were outstanding, and 1,739,500 shares of Parent Class A
Common Stock were reserved for issuance upon conversion of outstanding options.
As of the Effective Time, there will have been no change in the number of shares
of capital stock of the Parent outstanding or reserved as aforesaid, except for
shares of Parent Class A Common Stock issued pursuant to this Merger Agreement
and shares of Parent Class A Common Stock issued or reserved for issuance
pursuant to the Parent's 1987 Amended and Restated Long-Term Incentive Plan (the
"Long-Term Incentive Plan"). The Long-Term Incentive Plan provides for a maximum
of 2,500,000 shares of (and as of the Effective Time will provide for a maximum
of 3,250,000 shares of) Parent Class A Common Stock to be granted to officers,
directors and key employees of Parent and its
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subsidiaries, as restricted stock or issued on the exercise of options or stock
appreciation rights. The authorized capital stock of Mergerco consists solely of
1,000 shares of Mergerco Common, all of which, as of the date hereof, are issued
and outstanding and held by Parent. As of the Effective Time, the authorized
capital stock of the Surviving Corporation shall consist solely of 850 Common
Shares, $.25 par value, all of which, as of the Effective Time, will be issued
and outstanding and held by Parent. All of the outstanding shares of capital
stock of Parent and its subsidiaries (including Mergerco) have been duly
authorized and validly issued and are fully paid and nonassessable and, in the
case of Parent's capital stock, free of preemptive rights. Upon consummation of
the Merger, each share of Parent Class A Common Stock issued as part of the
Merger Consideration will be duly authorized, validly issued, fully paid and
nonassessable.
SECTION 5.4 Reports and Financial Statements. Parent has delivered to the
Company true and complete copies of (i) Parent's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993, as filed with the SEC (the "Parent 1993
10-K"), and (ii) all other reports, statements and registration statements
(including quarterly reports on Form 10-Q and current reports on Form 8-K) filed
by it with the SEC since the filing of the Parent 1993 10-K (collectively, the
"Parent SEC Filings"). Except as expressly amended by subsequent Parent SEC
Filings, as of their respective dates the Parent SEC Filings did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The historical
consolidated financial statements of Parent included in the Parent SEC Filings
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as otherwise noted in such historical
financial statements) and present fairly the consolidated financial position,
results of operations and changes in financial position of Parent and its
consolidated subsidiaries as of the dates and for the periods indicated
(subject, in the case of any unaudited interim financial statements, to normal
year-end adjustments), except that the footnotes to any quarterly financial
statements do not contain all of the disclosures required by generally accepted
accounting principles.
SECTION 5.5 Litigation. Except as may be disclosed in the Parent SEC
Filings or has been disclosed to the Company in writing on or prior to the date
hereof, as of the date hereof there are no claims, actions, proceedings or
investigations pending or, to the best knowledge of Parent, threatened,
involving or affecting Parent or any of its subsidiaries or any of their
properties or assets before any court or governmental or regulatory authority or
body which, if adversely decided, could have a Material Adverse Effect. As of
the date hereof, neither Parent nor any of its subsidiaries nor any properties
or assets of any of them is subject to any order, judgment, injunction or decree
that singly or in the aggregate has a Material Adverse Effect.
SECTION 5.6 Governmental Approvals. No consent, license, approval or
authorization of or declaration, regulation or filing with any Governmental
Entity on the part of Parent or Mergerco which has not been made is required in
connection with the execution or delivery by Parent or Mergerco of this Merger
Agreement, the consummation by Parent and Mergerco of the transactions
contemplated hereby or the performance by each of Parent and Mergerco of its
respective obligations hereunder other than (i) the filing of a Certificate of
Merger with the Secretary of State of Ohio in accordance with the ORC, (ii)
filings with the SEC and any applicable national securities exchanges, (iii)
filings under state securities, "Blue Sky" or antitakeover laws, (iv) any
applicable filings required under the laws of foreign jurisdictions, and (v)
filings, authorizations, consents or approvals relating to matters which, in the
aggregate, are not material to Parent and its subsidiaries taken as a whole.
SECTION 5.7 Absence of Breach. Except as has been disclosed to the Company
in writing on or prior to the date hereof, the execution and delivery by Parent
and Mergerco of this Merger Agreement, the consummation by Parent and Mergerco
of the transactions contemplated hereby and the performance by Parent and
Mergerco of their respective obligations hereunder, will not (a) require the
approval of Parent's shareholders, (b) conflict with or result in a breach of
any of the provisions of their respective charters, code of regulations or
by-laws, (c) subject to the
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obtaining of the governmental and other consents referred to in Section 5.6
hereof, contravene any law, rule or regulation of any state or of the United
States or any political subdivision thereof or therein, or any order, writ,
judgment, injunction, decree, determination or award currently in effect, or (d)
require any consent, approval or notice under or result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default or give rise to any right of termination, cancellation or acceleration
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, agreement or other instrument to which Parent or any of its
subsidiaries (including Mergerco but excluding the Company and its subsidiaries)
is a party or by which any of them or their assets are bound, the failure of
which to obtain could have a Material Adverse Effect.
SECTION 5.8 Proxy Statement; Registration Statement. None of the
information included in the Registration Statement filed by Parent, or provided
by Parent or Mergerco for inclusion in the Proxy Statement filed by the Company,
will be false or misleading with respect to any material fact or will omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement, including any amendments
thereto, will comply in all material respects with the Exchange Act and the
rules and regulations thereunder.
ARTICLE VI
COVENANTS FOLLOWING THE MERGER
SECTION 6.1 Indemnification. Parent agrees that all rights to
indemnification now existing in favor of the employees, agents, directors or
officers of the Company and its subsidiaries (collectively, the "Indemnified
Parties") as provided in their respective charters, code of regulations or
by-laws, by agreement or otherwise in effect on the date hereof shall survive
the Merger and shall, with respect to any action or omission occurring prior to
the Effective Time, continue in full force and effect in accordance with their
terms. Without limiting the foregoing, in the event that any Indemnified Party
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter for which such party is entitled to be indemnified
hereunder, including the transactions contemplated hereby, occurring prior to,
and including, the Effective Time, the Company will periodically advance to such
Indemnified Party its legal and other expenses incurred in connection therewith
to the extent permitted by applicable law. Parent will indemnify the Indemnified
Parties to the fullest extent permitted by applicable law and shall guarantee
the timely payment of any amounts owed to each member of the Special Committee
pursuant to his Indemnity Agreement with the Company dated as of February 17,
1994 (collectively, the "Indemnity Agreements"). Parent shall cause to be
maintained in effect for a period of two (2) years from the Effective Time the
current policies of the directors' and officers' liability insurance maintained
by or for the benefit of the Company (the "D&O Insurance Coverage") (provided
that Parent may substitute therefor policies of at least the same coverage
containing terms and conditions which are no less advantageous) with respect to
matters occurring prior to the Effective Time; provided, however, that Parent's
obligation to maintain such D&O Insurance Coverage shall be subject to the
Company's being able to maintain or obtain insurance at an annual cost not
greater than 150% of the annual premiums currently paid (the annual premiums
currently paid being the "Current Annual Premiums") by the Company with respect
to its D&O Insurance Coverage and if such D&O Insurance Coverage is not
available at such cost, then Parent shall cause to be maintained the highest
level of D&O Insurance Coverage that can be purchased against payment of annual
premiums equal to 150% of the Current Annual Premiums.
SECTION 6.2 Further Action. In case at any time after the Effective Time,
Parent or the Surviving Corporation or their successors or assigns shall
determine that any further conveyance, assignment or other document or any
further action is reasonably necessary or desirable in connection with the
matters specified in this Merger Agreement, then the parties hereto, with
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the Surviving Corporation acting on behalf of the Company, shall cause to be
executed and delivered all such deeds, endorsements, assignments and other good
and sufficient instruments of conveyance and transfer, including appropriate
form endorsements to all title and other insurance policies, as shall be valid,
operative and effective to vest in the Surviving Corporation good title to all
of the property, assets and business to be conveyed, transferred, assigned and
delivered hereunder, and will take or cause to be taken such further or other
action as Parent or the Surviving Corporation may deem necessary or desirable in
order to vest in and confirm the title to and possession of all of the property,
rights, privileges, powers and franchises of the Company and otherwise to carry
out the intent and purposes of this Merger Agreement.
ARTICLE VII
CONDITIONS
SECTION 7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) this Merger Agreement and the Merger shall have been approved and
adopted at or prior to the Effective Time by the Required Shareholder Vote;
(b) the Registration Statement shall have become effective under the
Securities Act and no stop order suspending such effectiveness shall have
been issued nor shall any proceeding for such purpose have been instituted
or threatened;
(c) All authorizations, consents, orders or approvals of, and all
expirations of waiting periods imposed by, any Governmental Entity
(collectively, the "Consents") which are necessary for the consummation of
the Merger (other than immaterial Consents, the failure to obtain which
would not be materially adverse to the Company and its subsidiaries taken
as a whole) shall have been obtained or shall have occurred and shall be in
full force and effect at the Effective Time; provided however, that no such
authorization, consent, order or approval shall be deemed to have been
received if it shall include any conditions or requirements which would so
reduce the economic or business benefits of the transactions contemplated
by this Agreement so as to render inadvisable in the reasonable opinion of
the Board of Directors of either Parent or the Company the consummation of
the Merger;
(d) no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which
prevents or materially restricts the consummation of the Merger;
(e) the shares of Parent Class A Common Stock to be issued as the
Merger Consideration pursuant to the Merger Agreement shall have been
approved for listing on the New York Stock Exchange, subject to official
notice of issuance;
(f) the Company and the Special Committee shall have received written
confirmation from Lehman Brothers Inc. dated the date of the Effective
Time, in customary form, to the effect that the opinions expressed by them
in the Fairness Opinion remain valid, and in full force without material
amendment, as of such date; and
(g) Baker & Hostetler, counsel to Parent, shall have delivered to
Parent and the Company their opinion, dated the date of the day of the
Effective Time, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code and that, accordingly: (i)
no gain or loss will be recognized by Parent or the Company as a result of
the Merger; (ii) no gain or loss will be recognized by the shareholders of
the Company who exchange their Company Common Shares for shares of
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Parent Class A Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a Fractional Share); (iii) the tax basis of the
shares of Parent Class A Common Stock received by shareholders of the
Company will be the same as the tax basis of the Company Common Shares
surrendered in exchange therefor (reduced by any amount allocable to a
Fractional Share for which cash is received); and (iv) the holding period
of the shares of Parent Class A Common Stock received in the Merger will
include the period during which the Company Common Shares surrendered in
exchange therefor were held, provided such Company Common Shares were held
as capital assets at the Effective Time. In rendering such opinion, counsel
may require and rely upon representations contained in certificates of
officers of the Company and Parent.
SECTION 7.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Parent and Mergerco shall have performed in all material respects
their agreements contained in this Merger Agreement required to be
performed at or prior to the Effective Time; and
(b) except as contemplated or permitted by this Merger Agreement, the
representations and warranties of Parent and Mergerco set forth in this
Merger Agreement shall be true and correct in all material respects at and
as of the Effective Time as if made at and as of such date, unless stated
in this Merger Agreement to be true on and as of another date, in which
case such representation and warranty shall have been true in all material
respects on and as of such date.
SECTION 7.3 Conditions to Obligations of Parent and Mergerco to Effect the
Merger. The obligations of Parent and Mergerco to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) subject to the last sentence of Section 3.1 hereof, the Company
shall have performed in all material respects its agreements contained in
this Merger Agreement required to be performed at or prior to the Effective
Time;
(b) except as contemplated or permitted by the Merger Agreement, the
representations and warranties of the Company set forth in this Merger
Agreement shall be true and correct in all material respects at and as of
the Effective Time as if made at and as of such date unless stated in this
Merger Agreement to be true on and as of another date, in which case such
representation and warranty shall have been true in all material respects
on and as of such date;
(c) there shall not have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to the Merger by any Governmental Entity (i) restraining or
preventing the carrying out of the transactions contemplated hereby, (ii)
prohibiting Parent's ownership or operation of all or any material portion
of its or the Company's or any of the Company's subsidiaries' businesses or
assets, or compelling Parent to dispose of or hold separate all or any
material portion of Parent's or the Company's or any of the Company's
subsidiaries' businesses or assets as a result of the transactions
contemplated by this Merger Agreement, (iii) making acquisition of the
Company Common Shares pursuant to the Merger illegal, (iv) prohibiting
Parent effectively from acquiring or holding or exercising full rights of
ownership of Company Common Shares, including, without limitation, the
right to vote Company Common Shares acquired by it pursuant to the Merger,
on all matters properly presented to the shareholders of the Company, (v)
prohibiting Parent or any of its subsidiaries or affiliates from
effectively controlling in any material respect the businesses or
operations of the Company, Parent or their respective subsidiaries, or (vi)
which would impose any condition which would materially adversely
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affect the business of the Company and its subsidiaries taken as a whole or
the business of Parent and its subsidiaries taken as a whole;
(d) the Company's Board of Directors shall not have withdrawn or
modified its position with respect to the Merger; and
(e) Dissenting Shares shall not exceed 140,000 of the outstanding
Company Common Shares.
ARTICLE VIII
CLOSING; TERMINATION
SECTION 8.1 The Closing. Subject to satisfaction or waiver of all
conditions precedent set forth in Article VII of this Merger Agreement, the
closing ("the Closing") shall take place at the Company's corporate offices in
Cincinnati, Ohio, or at such other location as is mutually agreeable to the
parties and on a date ("the Closing Date") which is the first business day after
the later of (a) the first date on which the Merger may be consummated in
accordance with the approvals, if any, of Governmental Entities and (b) the date
the Required Shareholder Vote has been obtained.
If all conditions are determined to be satisfied in all material respects
(or are duly waived) at the Closing, the Closing shall be consummated by the
filing of the Certificate of Merger with the Secretary of State of the State of
Ohio.
SECTION 8.2 Documents and Certificates. Parent, Mergerco and Company shall
use their respective best efforts, on or prior to Closing, to execute and
deliver all such instruments, documents or certificates as may be necessary or
advisable, on the advice of counsel, for the consummation at the Closing of the
transactions contemplated by this Merger Agreement or to cause the Effective
Time, subject to the consummation at the Closing, to occur as soon as
practicable.
SECTION 8.3 Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding the approval by the shareholders of
any or all of Parent, Mergerco or the Company, (a) by mutual consent of the
Boards of Directors of Parent, Mergerco and the Company; (b) by either Parent
and Mergerco or the Company if the Merger shall not have been consummated on or
before December 31, 1994 (or such later date as may be agreed to by Parent,
Mergerco and the Company in writing) unless the failure to consummate the Merger
on or before such date shall have resulted from the failure of the party seeking
to terminate the Merger Agreement to satisfy any of the closing conditions which
are set forth in Section 7.2 or 7.3 hereof, as the case may be; (c) by the
Company if Parent or Mergerco fails to perform in any material respect any of
their material obligations under this Merger Agreement; or (d) by the Company if
the conditions specified in Section 7.1 and 7.2 hereof have not been met or
waived by the Company at such time as such conditions can no longer be
satisfied; or (e) by Parent or Mergerco if the Company fails to perform in any
material respect any of its material obligations under this Merger Agreement; or
(f) by Parent or Mergerco if the conditions specified in Section 7.1 and 7.3
hereof have not been met or waived by Parent and Mergerco at such time as such
conditions can no longer be satisfied; (g) by Parent if the Company has not
received approval, satisfactory to Parent, of the Sacramento Metropolitan Cable
Television Commission by May 5, 1994; or (h) by either Parent and Mergerco or
the Company if (i) in the case of Parent and Mergerco, their respective Boards
of Directors conclude prior to the Effective Time, after consultation with legal
counsel, that as a result of an event or condition not directly caused by either
Parent or Mergerco, pursuant to their fiduciary duties in accordance with
applicable law, this Agreement should be terminated and (ii) in the case of the
Company the Special Committee advises the Company's Board of Directors prior to
the Effective Time that it has concluded, after consultation with legal counsel,
that as a result of an event or condition not directly caused by the Company,
pursuant to the Special Committee's fiduciary duties in accordance with applica-
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ble law, this Agreement should be terminated; provided that in the case of
either clause (c) or (e), if such failure is curable, notice of such failure
shall have been given to the defaulting party and such defaulting party shall
have failed to cure such failure within 30 days of notice thereof.
SECTION 8.4 Effect of Termination. In the event of the termination of this
Agreement by either Parent or Mergerco or by the Company, as provided in Section
8.3 hereof, this Agreement shall thereafter become void and have no effect and
no party hereto shall have any liability to any other party hereto or its
shareholders or directors or officers in respect thereof (except as set forth in
Section 6.1 and Section 9.3 hereof).
ARTICLE IX
GENERAL AGREEMENTS
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements. All representations, warranties and agreements in this Merger
Agreement or in any instrument delivered pursuant to this Merger Agreement shall
not survive the Effective Time, except for the agreements set forth in Article
VI hereof, Section 9.3 of Article IX hereof and the Indemnity Agreements.
SECTION 9.2 Entire Agreement. This Merger Agreement contains the entire
agreement among the parties hereto with respect to the Merger and the other
transactions contemplated hereby and thereby, and supersedes all prior
agreements among the parties with respect to such matters other than the
Indemnity Agreements.
SECTION 9.3 Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
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SECTION 9.4 Notice. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered by
messenger, transmitted by telecopier, telex or telegram or mailed by registered
or certified mail, postage prepaid, as follows:
If to Parent or Mergerco, to:
The E.W. Scripps Company
1105 N. Market Street
Wilmington, Delaware 19801
Attn: Daniel J. Castellini, Senior Vice President-
Finance and Administration
with a copy to:
John H. Burlingame, Esq.
Baker & Hostetler
3200 National City Center
Cleveland, Ohio 44114
If to the Company, to:
Scripps Howard Broadcasting Company
312 Walnut Street
28th Floor
Cincinnati, Ohio 45202
Attn: P. Frank Gardner, Executive Vice President
with copies to:
Scripps Howard Broadcasting Company
Special Committee of the Board
c/o Robert E. Stautberg and Gordon E. Heffern
312 Walnut Street
28th Floor
Cincinnati, Ohio 45202
James M. Anderson, Esq.
Taft, Stettinius & Hollister
1800 Star Bank Center
425 Walnut Street
Cincinnati, Ohio 45202-3957
Except as otherwise specified herein, all notices and other communications
shall be deemed to have been duly given on the first to occur of (a) the date of
delivery if delivered personally on a business day during normal business hours,
and, if not, on the next occurring business day, (b) five days following posting
if transmitted by mail, (c) the date of transmission with confirmed answer-back
if transmitted by telex on a business day during normal business hours, and, if
not, on the next occurring business day, or (d) the date of receipt if
transmitted by telecopier or facsimile on a business day during normal business
hours, and, if not, on the next occurring business day. Any party may change his
or its address for purposes hereof by notice to the other party given as
provided in this Section 9.4.
SECTION 9.5 Amendments. This Merger Agreement may be amended by the
parties hereto, by action taken by their respective Boards of Directors, at any
time prior to the Effective Time; provided, however, that after approval of this
Agreement by the shareholders of the Company, no amendment or modification shall
(a) alter or change the amount or kind of shares, securities, cash, property or
rights to be received in exchange for or on conversion of all or any of the
shares of any class or series thereof of the Company, or (b) alter or change any
of the terms and conditions of this Agreement if such alteration or change would
adversely affect the
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holders of any class or series of capital stock of the Company. This Merger
Agreement may not be amended, modified or supplemented except by written
agreement of the parties hereto.
SECTION 9.6 Waiver. At any time prior to the Effective Time, the parties
hereto by action taken by their respective Boards of Directors may (a) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, and
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The Company shall only take actions with respect to the enforcement
of its rights under this Merger Agreement, including, without limitation, the
granting of any waivers or the approval of any amendments, if such actions are
recommended by the members of the Special Committee.
SECTION 9.7 Brokers. The Company represents and warrants that except for
fees payable to Lehman Brothers Inc. as financial advisor to the Special
Committee, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger based upon
arrangements made by or on behalf of the Company. Parent and Mergerco represent
and warrant that no broker, finder or investment banker other than J. P. Morgan
Securities Inc. is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger based upon arrangements made by or on
behalf of Parent and Mergerco.
SECTION 9.8 Publicity. So long as this Agreement is in effect, the parties
hereto shall not, and shall cause their affiliates not to, issue or cause the
publication of any press release or other announcement with respect to the
Merger or this Merger Agreement without the consent of the other party, which
consent shall not be withheld or delayed where such release or announcement is
required by applicable law or any listing agreement with a national securities
exchange.
SECTION 9.9 Subsidiaries. When a reference is made in this Agreement to
subsidiaries of Parent or the Company, the word "subsidiaries" means any
corporation more than 50% of whose outstanding voting securities are directly or
indirectly owned by Parent or the Company, as the case may be.
SECTION 9.10 Headings. The headings contained in this Merger Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Merger Agreement.
SECTION 9.11 Non-Assignability. This Merger Agreement shall not be
assigned by operation of law or otherwise, except that at the election of
Parent, any direct or indirect wholly owned subsidiary of Parent may be
substituted for Mergerco as a Constituent Corporation in the Merger for all
purposes of this Merger Agreement.
SECTION 9.12 Counterparts. This Merger Agreement may be executed in two or
more counterparts, each of which shall be deemed to constitute an original, and
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered to the other parties.
SECTION 9.13 Governing Law. This Merger Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio applicable to
contracts made and to be performed wholly within such state.
SECTION 9.14 Severability. If any term or other provision of this Merger
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms and provisions of this Merger Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party hereto. Upon any such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
will negotiate in
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good faith to modify this Merger Agreement so as to effect the original intent
of the parties as closely as possible in an acceptable manner to the end that
the transactions contemplated by this Merger Agreement are consummated to the
extent possible.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective duly authorized officers as of the date first above written.
SCRIPPS HOWARD BROADCASTING COMPANY
By: /s/ P. Frank Gardner
-------------------------------
Title: P. Frank Gardner, Executive
Vice President
Attest:
/s/ M. Denise Kuprionis
--------------------------------
M. Denise Kuprionis, Secretary
THE E.W. SCRIPPS COMPANY
By: /s/ Lawrence A. Leser
-------------------------------
Title: Lawrence A. Leser, President
and Chief Executive Officer
Attest:
/s/ M. Denise Kuprionis
--------------------------------
M. Denise Kuprionis, Secretary
SHB MERGER CORPORATION
By: /s/ Lawrence A. Leser
-------------------------------
Title: Lawrence A. Leser, President
Attest:
/s/ M. Denise Kuprionis
--------------------------------
M. Denise Kuprionis, Secretary
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<PAGE> 87
ANNEX II
LEHMAN BROTHERS
August 9, 1994
Special Committee of the Board of Directors
Scripps Howard Broadcasting Company
312 Walnut Street
Cincinnati, Ohio 45202
Members of the Special Committee of the Board of Directors:
We understand that E.W. Scripps ("EWS") has proposed to purchase the 13.9% of
the outstanding common stock of Scripps Howard Broadcasting (the "Company") it
does not currently own pursuant to a merger of the Company with and into a
wholly owned subsidiary of EWS whereby each issued and outstanding share of
common stock of the Company not currently owned by EWS would be converted into
3.45 shares (the "Exchange Ratio") of Class A Common Stock of EWS ("the Proposed
Transaction"). The terms and conditions of the Proposed Transaction are set
forth in more detail in the Merger Agreement dated May 4, 1994 between EWS and
the Company (the "Agreement").
We have been requested by the Special Committee of the Board of Directors of the
Company to render our opinion with respect to the fairness, from a financial
point of view, to the stockholders of the Company other than EWS of the Exchange
Ratio to be offered in the Proposed Transaction. We have not been requested to
opine as to, and our opinion does not in any manner address, the Company's
underlying business decision to proceed with or effect the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed:
(1) the Agreement,
(2) publicly available information concerning EWS and the Company
which we believe to be relevant to our inquiry including, but not
limited to, the December 31, 1993, annual reports and Form 10Ks,
and 1993 proxy materials of EWS and the Company, which, among
other things, details the interrelationship of the companies and
their two managements;
(3) financial and operating information with respect to the
businesses, operations and prospects of EWS and the Company and
their respective business segments furnished to us by EWS and the
Company including, but not limited to, the strategic plans and
operating projections of EWS and the Company;
(4) a trading history of the common stock of EWS and the Company and a
comparison of that trading history with those of other companies
which we deemed relevant as well as the trading relationship of
the common stock of EWS to that of the Company;
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Special Committee of the Board of Directors
Scripps Howard Broadcasting Company
August 9, 1994
Page 2
(5) a comparison of the historical financial results, present
financial condition of EWS and the Company and their respective
business segments with those of other companies which we deemed
relevant;
(6) a comparison of the financial terms of the Proposed Transaction
with the financial terms of certain other transactions which we
deemed relevant;
(7) the pro forma effects of the Proposed Transaction on the business,
operations and financial condition of EWS;
(8) the ownership profile and relative liquidity of the outstanding
shares of EWS and the Company, and the pro forma ownership of EWS
following the Proposed Transaction; and
(9) the voting characteristics of the E.W. Scripps shares to be
received as consideration by the Scripps Howard Broadcasting
shareholders in the Proposed Transaction, and the voting control
position by the majority shareholders of E.W. Scripps and the
restrictions on transfer of that control.
In addition, we have had discussions with the management of the Company and EWS
concerning their respective businesses, operations, assets, financial condition
and prospects, including the potential cost savings and strategic benefits of
the Proposed Transaction and the financial impact of the Company's recent
television station affiliation agreements, and undertook such other studies,
analyses and investigations as we deemed appropriate.
We have assumed and relied upon the accuracy and completeness of the financial
and other information used by us in arriving at our opinion without independent
verification and have further relied upon the assurances of management of EWS
and the Company that they are not aware of any facts that would make such
information inaccurate or misleading. With respect to the projections of EWS and
the Company, upon advice of EWS and the Company, we have assumed that such
projections have been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the management of EWS and the
Company as to the future financial performance of EWS and the Company, and that
EWS and the Company will perform substantially in accordance with such
projections. In arriving at our opinion, we have not conducted a physical
inspection of the properties and facilities of EWS or the Company and have not
made or obtained any evaluations or appraisals of the assets or liabilities of
EWS or the Company. In addition, you have not authorized us to solicit, and we
have not solicited, any indications of interest from any third party with
respect to the purchase of all or a part of the Company's business. Upon advice
of the Company and its legal and accounting advisors, we have assumed that the
Proposed Transaction will be tax-free to the public stockholders of the Company.
Our opinion is necessarily based upon market, economic and other conditions as
they exist on, and can be evaluated as of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion as of the date
hereof that, from a financial point of view, the Exchange Ratio to be offered to
stockholders of the Company other than EWS in the Proposed Transaction is fair
to such stockholders.
We have acted as financial advisor to the Special Committee of the Board of
Directors of the Company in connection with the Proposed Transaction and the
Company has agreed to indemnify us for certain liabilities which may arise out
of the rendering of this opinion.
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Special Committee of the Board of Directors
Scripps Howard Broadcasting Company
August 9, 1994
Page 3
This opinion is solely for the use and benefit of the Special Committee of the
Board of Directors of the Company and shall not be disclosed publicly or made
available to, or relied upon by, any third party without our prior approval.
This opinion is not intended to be and does not constitute a recommendation to
any stockholder of the Company as to how such stockholder would vote with
respect to the Proposed Transaction.
Very truly yours,
LEHMAN BROTHERS
By: /s/ Jill A. Greenthal
------------------------------
Jill A. Greenthal
Managing Director
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<PAGE> 90
ANNEX III
OHIO REVISED CODE SECTION 1701.85
GOVERNING DISSENTERS' RIGHTS
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ANNEX III
Sec. 1701.85. PROCEDURE IN CASE OF DISSENTS.
(A)(1) A shareholder of a domestic corporation is entitled to relief as a
dissenting shareholder in respect of the proposals in sections 1701.74, 1701.76,
and 1701.84 of the Revised Code, only in compliance with this section.
(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of the
shares of the corporation as to which he seeks relief as of the date fixed for
the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall not
have been voted in favor of the proposal. Not later than ten days after the date
on which the vote of such proposal was taken at the meeting of the shareholders,
the shareholder shall deliver to the corporation a written demand for payment to
him of the fair cash value of the shares as to which he seeks relief, stating
his address, the number and class of such shares, and the amount claimed by him
as the fair cash value of the shares.
(3) The dissenting shareholder entitled to relief under division (C) of
section 1701.84 of the Revised Code in the case of a merger pursuant to section
1701.80 of the Revised Code and a dissenting shareholder entitled to relief
under division (E) of section 1701.84 of the Revised Code in the case of a
merger pursuant to section 1701.801 of the Revised Code shall be record holder
of the shares of the corporation as to which he seeks relief as of the date on
which the agreement of merger was adopted by the directors of that corporation.
Within twenty days after he has been sent the notice provided in section 1701.80
or 1701.801 of the Revised Code, the shareholder shall deliver to the
corporation a written demand for payment with the same information as that
provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the new
corporation, whether served before, on, or after the effective date of the
merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the address
specified in his demand, a request for the certificate representing the shares
as to which he seeks relief, he, within fifteen days from the date of the
sending of such request, shall deliver to the corporation the certificates
requested, in order that the corporation may forthwith endorse on them a legend
to the effect that demand for the fair cash value of such shares has been made.
The corporation promptly shall return such endorsed certificates to the
shareholder. Failure on the part of the shareholder to deliver such certificates
terminates his rights as a dissenting shareholder, at the option of the
corporation, exercised by written notice sent to him within twenty days after
the lapse of the fifteen-day period, unless a court for good cause shown
otherwise directs. If shares represented by a certificate on which such a legend
has been endorsed are transferred, each new certificate issued for them shall
bear a similar legend, together with the name of the original dissenting holder
of such shares. Upon receiving a demand for payment from a dissenting
shareholder who is the record holder of uncertificated securities, the
corporation shall make an appropriate notation of the demand for payment in its
shareholder records. If uncertificated shares for which payment has been
demanded are to be transferred, any new certificate issued for the shares shall
bear the legend required for certificated securities as provided in this
paragraph. A transferee of the shares so endorsed, or of uncertificated
securities where such notation has been made, acquires only such rights in the
corporation as the original dissenting holder of such shares had immediately
after the service of a demand for payment of the fair cash value of the shares.
Such request by the corporation is not an admission by the corporation that the
shareholder is entitled to relief under this section.
(B) Unless the corporation and the dissenting shareholder shall have come
to an agreement on the fair cash value per share of the shares as to which he
seeks relief, the shareholder or the corporation, which in case of a merger or
consolidation may be the surviving or the new
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corporation, within three months after the service of the demand by the
shareholder, may file a complaint in the court of common pleas of the county in
which the principal office of the corporation [that] issued such shares is
located, or was located at the time when the proposal was adopted by the
shareholders of the corporation, or, if the proposal was not required to be
submitted to the shareholders, was approved by the directors. Other dissenting
shareholders, within the period of three months, may join as plaintiffs, or may
be joined as defendants in any such proceeding, and any two or more such
proceedings may be consolidated. The complaint shall contain a brief statement
of the facts, including the vote and the facts entitling the dissenting
shareholder to the relief demanded. No answer to such complaint is required.
Upon the filing of the complaint, the court, on motion of the petitioner, shall
enter an order fixing a date for a hearing on the complaint, and requiring that
a copy of the complaint and a notice of the filing and of the date for hearing
be given to the respondent or defendant in the manner in which summons is
required to be served or substitute service is required to be made in other
cases. On the day fixed for hearing on the complaint or any adjournment of it,
the court shall determine from the complaint and from such evidence as is
submitted by either party whether the shareholder is entitled to be paid the
fair cash value of any shares and, if so, the number and class of such shares.
If the court finds that the shareholder is so entitled, the court may appoint
one or more persons as appraisers to receive evidence and to recommend a
decision on the amount of the fair cash value. The appraisers have such power
and authority as is specified in the order of their appointment. The court
thereupon shall make a finding as to the fair cash value of a share, and shall
render judgment against the corporation for the payment of it, with interest at
such rate and from such date as the court considers equitable. The costs of the
proceeding, including reasonable compensation to the appraisers to be fixed by
the court, shall be assessed or apportioned as the court considers equitable.
The proceeding is a special proceeding, and final orders in it may be vacated,
modified, or reversed on appeal pursuant to the Rules of Appellate Procedure
and, to the extent not in conflict with those rules, Chapter 2505 of the Revised
Code. If, during the pendency of any proceeding instituted under this section, a
suit or proceeding is or has been instituted to enjoin or otherwise to prevent
the carrying out of the action as to which the shareholder has dissented, the
proceeding instituted under this section shall be stayed until the final
determination of the other suit or proceeding. Unless any provision in division
(D) of this section is applicable, the fair cash value of the shares as agreed
upon by the parties or as fixed under this section shall be paid within thirty
days after the date of final determination of such value under this division,
the effective date of the amendment to the articles, or the consummation of the
other action involved, whichever occurs last. Upon the occurrence of the last
such event, payment shall be made immediately to a holder of uncertificated
securities entitled to such payment. In the case of holders of shares
represented by certificates, payment shall be made only upon and simultaneously
with the surrender to the corporation of the certificates representing the
shares for which such payment is made.
(C) If the proposal was required to be submitted to the shareholders of the
corporation, fair cash value as to those shareholders shall be determined as of
the day prior to that on which the vote by the shareholders was taken, and, in
the case of a merger pursuant to section 1701.80 or 1701.801 of the Revised
Code, fair cash value as to shareholders of a constituent subsidiary corporation
shall be determined as of the day before the adoption of the agreement of merger
by the directors of the particular subsidiary corporation. The fair cash value
of a share for the purposes of this section is the amount that a willing seller,
under no compulsion to sell, would be willing to accept, and that a willing
buyer, under no compulsion to purchase, would be willing to pay, but in no event
shall the fair cash value exceed the amount specified in the demand of the
particular shareholder. In computing such fair cash value, any appreciation or
depreciation in market value resulting from the proposal submitted to the
directors or to the shareholders shall be excluded.
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(D) The right and obligation of a dissenting shareholder to receive such
fair cash value and to sell such shares as to which he seeks relief and the
right and obligation of the corporation to purchase such shares and to pay the
fair cash value of them if:
(1) Such shareholder has not complied with this section, unless the
corporation by its directors waives such failure;
(2) The corporation abandons or is finally enjoined or prevented from
carrying out or the shareholders rescind their adoption of the action involved;
(3) The shareholder withdraws his demand, with the consent of the
corporation by its directors;
(4) The corporation and the dissenting shareholder shall not have come to
an agreement as to fair cash value per share, and neither the shareholder nor
the corporation shall have filed or joined in a complaint under division (B) of
this section within the period provided.
(E) From the time of giving the demand until either the termination of the
rights and obligations arising from it or the purchase of the shares by the
corporation, all other rights accruing from such shares, including voting and
dividend or distribution rights, are suspended. If during the suspension, any
dividend or distribution is paid in money upon shares of such class, or any
dividend, distribution, or interest is paid in money upon any securities issued
in extinguishment of or in substitution for such shares, an amount equal to the
dividend, distribution, or interest that, except for the suspension, would have
been payable upon such shares or securities shall be paid to the holder of
record as a credit upon the fair cash value of the shares. If the right to
receive fair cash value is terminated otherwise than by the purchase of the
shares by the corporation, all rights of the holder shall be restored and all
distributions that, except for the suspension, would have been made shall be
made to the holder of record of the shares at the time of termination.
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FORM OF PROXY
SCRIPPS HOWARD BROADCASTING COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Lawrence A. Leser, D. J. Castellini and
John H. Burlingame, and each of them, with power of substitution, attorneys and
proxies to represent and to vote all shares of Common Stock of Scripps Howard
Broadcasting Company (the "Company") which the undersigned is entitled to vote
at the Special Meeting of Stockholders of the Company to be held at the offices
of the Company, 312 Walnut Street, CINCINNATI, OHIO 45202, on September 14,
1994, at 10:00 a.m. local time, and at any adjournment or postponement thereof:
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY TODAY IN THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE> 95
<TABLE>
WILL ATTEND
/ / / /
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
1 -- To adopt the Agreement and Plan of Merger dated May 4, 1994 (the 2 -- In their discretion with
"Merger Agreement"), by and among the Company, SHB Merger respect to such other matters as
Corporation and The E. W. Scripps Company. may properly come before the
Special Meeting or any
FOR AGAINST ABSTAIN adjournment or postponement
/ / / / / / thereof.
- ----------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR adoption of the Merger Agreement. This Proxy, when properly executed, will
be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this Proxy will be voted
FOR adoption of the Merger Agreement. Under the Company's Code of Regulations, business transacted at the Special
Meeting of Stockholders is confined to the purposes stated in the Notice of Special Meeting. THIS PROXY WILL, HOWEVER,
CONVEY DISCRETIONARY AUTHORITY TO THE PERSONS NAMED HEREIN AS PROXIES TO VOTE ON MATTERS INCIDENT TO THE CONDUCT OF THE
SPECIAL MEETING.
- --------------------------------------------------------------------------------------------------------------------------
Dated __________________________________ , 1994
-----------------------------------------------
(Signature of Stockholder)
-----------------------------------------------
(Signature of Stockholder)
This Proxy should bear your signature(s) exactly as your
name(s) appear in the stencil to the left. When signing as
attorney, executor, administrator, personal representative,
trustee, guardian or corporate officer, please give full
title. For joint accounts, each joint owner should sign.
PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD YOUR VOTES.
</TABLE>
