CENTRAL NEWSPAPERS INC, S-3/A, 1997-05-28

CENTRAL NEWSPAPERS INC
S-3/A, 1997-05-28
NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1997.

REGISTRATION NO. 333-26165
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------

AMENDMENT NO. 1

TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
CENTRAL NEWSPAPERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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INDIANA 2711 35-0220660
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
135 NORTH PENNSYLVANIA STREET, SUITE 1200, INDIANAPOLIS, INDIANA 46204
317-231-9200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
ERIC S. TOOKER, ESQ.
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
CENTRAL NEWSPAPERS, INC.
135 NORTH PENNSYLVANIA STREET, SUITE 1200
INDIANAPOLIS, INDIANA 46204
317-231-9200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES OF ALL COMMUNICATIONS TO:
O. WAYNE DAVIS, ESQ. WINTHROP B. CONRAD, JR., ESQ.
HENDERSON, DAILY, WITHROW & DEVOE DAVIS POLK & WARDWELL
2600 ONE INDIANA SQUARE 450 LEXINGTON AVENUE
INDIANAPOLIS, INDIANA 46204 NEW YORK, NEW YORK 10017
TELEPHONE: 317-639-4121 TELEPHONE: 212-450-4890
--------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.

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<PAGE>

EXPLANATORY NOTE

This Registration Statement contains a prospectus relating to a public
offering in the United States and Canada (the "U.S. Offering") of an aggregate
of 1,638,075 shares of Class A Common Stock, without par value ("Class A
Common Stock"), of Central Newspapers, Inc., together with a separate
prospectus cover page relating to a concurrent offering outside the United
States and Canada (the "International Offering") of an aggregate of 409,519
shares of Class A Common Stock. The complete prospectus for the U.S. Offering
follows immediately after this Explanatory Note. After such prospectus is the
alternate front cover page for the International Offering. All other pages of
the prospectus for the U.S. Offering are to be used for both the U.S. Offering
and the International Offering. The U.S. Offering and the International
Offering are collectively referred to herein as the "Offering."
<PAGE>

PROSPECTUS (Subject to Completion)

Issued May 28, 1997

2,047,594 Shares

LOGO

CLASS A COMMON STOCK

-----------

OF THE 2,047,594 SHARES OF CLASS A COMMON STOCK, WITHOUT PAR VALUE (THE "CLASS
A COMMON STOCK") BEING OFFERED HEREBY, 1,638,075 SHARES ARE BEING OFFERED
INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS AND
409,519 SHARES ARE BEING OFFERED INITIALLY OUTSIDE OF THE UNITED STATES
AND CANADA BY THE INTERNATIONAL UNDERWRITERS. SEE "UNDERWRITERS." ALL OF
THE SHARES OF CLASS A COMMON STOCK BEING OFFERED HEREBY ARE BEING SOLD
BY THE SELLING SHAREHOLDERS. SEE "SELLING SHAREHOLDERS." THE COMPANY
WILL NOT RECEIVE ANY PROCEEDS FROM THE SALE OF THE CLASS A COMMON
STOCK BY THE SELLING SHAREHOLDERS. THE CLASS A COMMON STOCK IS
LISTED ON THE NEW YORK STOCK EXCHANGE UNDER THE SYMBOL "ECP." ON
MAY 27, 1997, THE REPORTED LAST SALE PRICE OF THE CLASS A
COMMON STOCK ON THE NEW YORK STOCK EXCHANGE WAS $60 PER SHARE.

EACH SHARE OF CLASS A COMMON STOCK HAS TEN TIMES THE DIVIDEND AND
LIQUIDATION RIGHTS OF A SHARE OF CLASS B COMMON STOCK, WITHOUT PAR
VALUE (THE "CLASS B COMMON STOCK"), BUT ONLY ONE-TENTH OF THE
VOTING POWER OF A SHARE OF CLASS B COMMON STOCK. EACH SHARE OF
CLASS B COMMON STOCK IS CONVERTIBLE INTO ONE-TENTH OF A
SHARE OF CLASS A COMMON STOCK. IF ALL OF THE
OUTSTANDING SHARES OF CLASS B COMMON STOCK WERE SO
CONVERTED, THERE WOULD HAVE BEEN 25,226,794
SHARES OF CLASS A COMMON STOCK OUTSTANDING
AS OF MAY 20, 1997, AFTER GIVING
EFFECT TO THE GOODRICH REPURCHASE (AS
DEFINED HEREIN). SEE "SELLING
SHAREHOLDERS."

-----------

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

-----------

PRICE $ A SHARE

-----------

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) SELLING SHAREHOLDERS(2)
---------- -------------- -----------------------
<S> <C> <C> <C>
Per Share..................... $ $ $
Total (3)..................... $ $ $
</TABLE>
- -----
(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended.

(2) Expenses estimated at $200,000 will be paid by the Selling Shareholders
and expenses estimated at $250,000 will be paid by the Company.
(3) The Selling Shareholders have granted the U.S. Underwriters an option,
exercisable within 30 days from the date hereof, to purchase up to
307,139 additional shares of Class A Common Stock at the Price to
Public, less the Underwriting Discounts and Commissions, for the purpose
of covering over-allotments, if any. If the U.S. Underwriters exercise
such option in full, the total Price to Public, Underwriting Discounts
and Commissions and Proceeds to Selling Shareholders will be $ ,
$ , and $ , respectively. See "Underwriters."

-----------

The shares of Class A Common Stock are offered, subject to prior sale, when,
as and if accepted by the Underwriters and subject to approval of certain legal
matters by Davis Polk & Wardwell, counsel for the Underwriters. It is expected
that delivery of the shares of Class A Common Stock will be made on or about
June , 1997 at the offices of Morgan Stanley & Co. Incorporated, New York,
New York against payment therefor in immediately available funds.

-----------

MORGAN STANLEY & CO.
Incorporated
DONALDSON, LUFKIN & JENRETTE
Securities Corporation
MERRILL LYNCH & CO.

PAINEWEBBER INCORPORATED

June , 1997
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>

[Various photos and graphics showing front pages of the Company's newspapers,
facilities and websites]

COMPANIES AND PUBLICATIONS OF CENTRAL NEWSPAPERS, INC.

CENTRAL NEWSPAPERS, INC. MUNCIE NEWSPAPERS, INC.
Vincennes Sun-Commercial The Star Press

The Delaware County Advertiser
INDIANAPOLIS NEWSPAPERS, INC. Internet address:
The Indianapolis Star http://www.thestarpress.com

The Indianapolis News
Internet address: http://www.starnews.com PHOENIX NEWSPAPERS, INC.
The Arizona Republic

McCORMICK & COMPANY, INC. The Arizona Business Gazette
Alexandria Daily Town Talk Internet address:
McCormick Graphics, Inc. http://www.azcentral.com

Internet address: http://www.thetowntalk.com
TOPICS NEWSPAPERS, INC.
The Daily Ledger
14 Community Weeklies

CAREER SERVICES, INC.
Westech ExpoCorp.
JobsAmerica
High Technology Careers Magazine
Virtual Job Fair
Internet address: http://www.vjf.com

2
<PAGE>

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, BY ANY SELLING
SHAREHOLDER OR BY ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE
SUCH AN OFFERING OR SOLICITATION.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 4
Incorporation of Certain Documents by Reference........................... 4
Prospectus Summary........................................................ 5
Price Range of Common Stock and Dividend Policy........................... 8
Use of Proceeds........................................................... 9
Capitalization............................................................ 9
Selected Consolidated Financial Data...................................... 10
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 12
Business.................................................................. 20
Management................................................................ 27
Description of Capital Stock.............................................. 29
Certain United States Federal Tax Considerations for Non-U.S. Holders..... 31
Selling Shareholders...................................................... 33
Underwriters.............................................................. 34
Legal Matters............................................................. 37
Experts................................................................... 37
Consolidated Financial Statements......................................... F-1
</TABLE>

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, SHARES OF THE CLASS A COMMON STOCK IN THE OPEN
MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITERS."

3
<PAGE>

AVAILABLE INFORMATION

The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the following
Regional Offices of the Commission: New York Regional Office, 7 World Trade
Center, Suite 1300, New York, New York 10048 and Chicago Regional Office, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may be obtained at prescribed rates from the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Such reports, proxy statements and other information are also available
for inspection and copying at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, on which the Company's Class
A Common Stock is listed. In addition, the Commission maintains a Website on
the Internet (http://www.sec.gov) that contains such reports, proxy statements
and other information.

The Company has filed with the Commission a Registration Statement on Form
S-3 (of which this Prospectus is a part) under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the shares of Class A Common
Stock offered hereby. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Statements
contained in this Prospectus as to the contents of any contract or any other
document are not necessarily complete, and in each instance reference is made
to the copy of such contract or other document filed as an exhibit or schedule
to the Registration Statement, each such statement being qualified in all
respects by such reference and the exhibits and schedules thereto. For further
information with respect to the Company and the Class A Common Stock,
reference is hereby made to such Registration Statement, including the
exhibits filed as a part thereof. The Registration Statement and the exhibits
thereto may be inspected without charge at the office of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549 and copies thereof may be obtained
from the Commission at prescribed rates.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents heretofore filed by the Company (File No. 1-10333)
with the Commission pursuant to the Exchange Act are incorporated herein by
reference and made a part hereof:

1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 29, 1996, which incorporates by reference certain portions of (a)
the Company's 1996 Annual Report to Shareholders and (b) the Company's
proxy statement for the 1997 Annual Meeting of Shareholders;

2. The Company's Report on Form 8-K dated March 12, 1997;

3. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 30, 1997; and

4. The description of the Company's capital stock contained in the
Company's Registration Statement on Form 10 filed September 13, 1989.

All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the shares shall be
deemed to be incorporated by reference herein and to be part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement as modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or
oral request of such person, a copy of any or all of the documents which have
been or may be incorporated herein by reference (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
such documents). Requests for such copies should be directed to Central
Newspapers, Inc., 135 North Pennsylvania Street, Suite 1200, Indianapolis,
Indiana 46204-4412, Attention: Chief Financial Officer (telephone 317-231-
9200).

4
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information appearing elsewhere, or incorporated by reference, in this
Prospectus. Unless the context otherwise requires, all references herein to the
"Company" include Central Newspapers, Inc. and its consolidated subsidiaries.
Unless otherwise indicated, the information set forth herein assumes no
exercise of the U.S. Underwriters' over-allotment option.

THE COMPANY

The Company publishes the only major daily newspapers in each of its key
markets of the greater Phoenix metropolitan area and central Indiana. The
Company's flagship newspapers are The Arizona Republic in Phoenix and The
Indianapolis Star in Indianapolis, both of which have been published for over a
century. The average daily circulation levels were 406,725 for The Arizona
Republic and 230,932 for The Indianapolis Star for the fiscal year ended
December 29, 1996. According to circulation statistics compiled by the
Newspaper Association of America, The Arizona Republic has been the second
fastest growing major daily morning newspaper in the country over the last
three years. Circulation penetration at December 31, 1996 for The Arizona
Republic was approximately 45% daily and 57% Sunday and for the Indianapolis
newspapers was approximately 45% daily and 64% Sunday, according to the Audit
Bureau of Circulation ("ABC"), ranking them among the highest in the industry.
The Company's control of the only major daily newspapers in each of its key
markets is of critical importance in attracting and maintaining advertising,
the Company's principal source of revenue. Moreover, the Company generates in
excess of 80% of its circulation from subscriptions, thereby adding relative
stability to its revenue base.

The Company has benefitted from the continuing economic growth and
development of its key markets. With 2.6 million residents in the greater
Phoenix metropolitan area, Phoenix is the nation's seventh largest city. In the
greater Phoenix metropolitan area, growth across several diverse economic
sectors, from manufacturing and construction to trade and services, has
outpaced the national average over the past three years. Phoenix led the nation
in job growth for the first three quarters of 1996, and its 1996 unemployment
rate of 3.4% was below the national unemployment rate of 5.5%. Its
manufacturing base, a substantial portion of which comes from high technology,
is projected by the Greater Phoenix Economic Council to grow faster than the
national rate. The greater Indianapolis metropolitan area, with 1.4 million
residents, has also experienced solid economic and population growth, and its
1996 unemployment rate of 3.5% was well below the national average. Its economy
is anchored by a large and diverse industrial base, including such major
corporations as Eli Lilly and Company, Conseco, Inc., and DowElanco. Large
downtown development projects such as the Convention Center, the RCA Dome and
Circle Centre, a large retail shopping center, have also bolstered the regional
economy.

The Company also owns and operates several smaller newspapers in central
Indiana and central Louisiana. These include The Indianapolis News, a daily
afternoon newspaper (with an average daily circulation of 54,423), The Star
Press (mornings and Sundays) in Muncie, Indiana (average circulation of 33,672
daily and 38,748 Sunday), The Vincennes Sun-Commercial, a daily newspaper in
Vincennes, Indiana (average circulation of 14,246 daily and 17,324 Sunday), as
well as The Daily Ledger, a daily newspaper (with an average daily circulation
of 10,527) and fourteen controlled circulation (home-delivered and free to
readers) newspapers (with an average weekly circulation of 108,955) serving the
northern suburbs of Indianapolis, the fastest growing area of metropolitan
Indianapolis. In March 1996, the Company purchased McCormick & Company, Inc.,
which publishes the Alexandria Daily Town Talk, serving Rapides Parish,
Louisiana and its outlying areas (average circulation of 38,819 daily and
41,619 Sunday), as well as McCormick Graphics, Inc., a commercial printing
subsidiary.

The Company recently acquired an 80% interest in the Santa Clara, California-
based Westech companies ("Westech"). Westech consists of Westech ExpoCorp.,
which organizes job fairs for the high tech industry; High Technology Careers,
which publishes High Technology Careers Magazine and Virtual Job Fair
(http://www.vjf.com), an internet-based resume posting and research service;
and JobsAmerica, which organizes

5
<PAGE>

job fairs for service industry positions. The Company also has a 13.5% interest
in Ponderay Newsprint Company ("Ponderay"), a general partnership that owns and
operates a newsprint mill in the State of Washington.

The Company has consistently grown its revenues, EBITDA (as defined in
"Selected Consolidated Financial Data") and net income over the last five
years. For the five fiscal years ended December 29, 1996, the Company recorded
compound annual growth in revenues, EBITDA and net income of 8.1%, 15.6% and
18.9%, respectively. For the fiscal year ended December 29, 1996, the Company
generated revenues of $620.3 million, EBITDA of $141.0 million and net income
of $61.5 million. In 1996, the Company derived 77.3% of its revenue from
advertising, 21.6% from circulation, and 1.1% from other sources. The Company's
EBITDA as a percentage of revenues ("EBITDA margin") was 22.7% for this period,
representing the fourth year of improving EBITDA margin out of the last five
years. Key drivers of the Company's financial success include the expansion of
advertising and circulation revenue in its existing markets, the implementation
of certain cost-cutting measures, the acquisition of newspapers in additional
markets, and the development of product line extensions to meet the information
needs of the markets it serves.

The Company seeks to maintain its position as the primary source of news and
information for its readers and the most effective way for advertisers to reach
their target markets. To this end, the Company manages its newspapers with a
commitment to the highest standards of product quality and journalistic
excellence. For example, The Arizona Republic was the first major daily
newspaper in the country to have its pages fully composed by computer
generation, enabling the Company to deliver higher quality products. Since
1990, the Company's newspapers have won Pulitzer prizes for investigative
reporting and political cartooning, as well as numerous other awards from
industry organizations such as the American Association of Sunday and Feature
Editors, the Society for Newspaper Design and the National Press Photographers'
Association, among others.

The Company's financial objective is to continue to build value for its
shareholders by focusing on the strengths inherent in its current markets while
selectively pursuing acquisitions. The principal elements of the Company's
strategy are the following:

ENHANCE ADVERTISING AND CIRCULATION REVENUE BASE. Controlling the only
major daily newspapers in its key markets, the Company enjoys a competitive
advantage in attracting and maintaining advertising, especially compared to
other advertising vehicles such as radio and television broadcasting
stations, each of which individually reach a significantly smaller
audience. The Company's newspaper advertising revenue growth over the past
three years has consistently surpassed that of most other major newspaper
companies. The Company continues to expand its advertising revenue base
through the development of long-term relationships with key advertising
accounts and the promotion of cross-selling opportunities. The Company also
recently restructured the sales and marketing departments at both The
Arizona Republic and The Indianapolis Star, incorporating more sales-based
incentives into the compensation structure, which the Company believes will
produce greater advertising revenue.

The Company's daily home-delivered subscription base represents more than
80% of total circulation, exceeding the industry average of approximately
70%. The large subscription base adds to the stability of the Company's
revenue base, and the Company continues to emphasize and improve the
quality of daily home delivery.

CONTINUE TO ACHIEVE COST EFFICIENCIES. The Company has recently identified
several areas for more efficient cost management and has begun to pursue
these opportunities. Recent initiatives include the January 1997 closing of
The Phoenix Gazette, the afternoon newspaper in Phoenix, the consolidation
of The Muncie Star and the Muncie Evening Press into The Star Press in May
1996, the implementation of client server computer systems throughout the
Company's Phoenix operations and the consolidation of the editorial
function in Indianapolis. The Company will continue to pursue such
opportunities, with a particular focus on increasing production automation,
improving distribution and enhancing workforce productivity.

6
<PAGE>

SELECTIVELY PURSUE BRAND-ENHANCING ACQUISITIONS AND NEW PRODUCT
DEVELOPMENTS. The Company pursues acquisitions where it believes it can add
or derive significant value from its operating expertise or line extension
opportunities. Recent acquisitions include the March 1996 acquisition of
the Alexandria Daily Town Talk newspaper and the February 1997 purchase of
Westech. Additional product developments include the development of web
sites for the Company's major newspapers.

The Company maintains its corporate headquarters at First Indiana Plaza, 135
North Pennsylvania Street, Suite 1200, Indianapolis, Indiana 46204-4412 and its
telephone number is (317) 231-9200.

SELLING SHAREHOLDERS

The Selling Shareholders are non-profit organizations which received an
aggregate of 2,485,200 shares of Class A Common Stock in May 1997 from the
estate of Enid Goodrich (the "Estate"). In addition, one of the Selling
Shareholders holds 1,146,900 additional shares of Class A Common Stock. The
Selling Shareholders have elected to sell substantially all of such shares. On
May 20, 1997, the Company purchased an aggregate of 1,177,367 shares of Class A
Common Stock from the Selling Shareholders at $49.50 per share plus interest
from April 11, 1997 for total consideration of $58,606,591 (the "Goodrich
Repurchase"). The Company has agreed to purchase up to 307,139 shares of Class
A Common Stock from the Selling Shareholders (the "Additional Repurchase") to
the extent the U.S. Underwriters' over-allotment option is not exercised. The
purchase price per share will equal the Price to Public less Underwriting
Discounts and Commissions as set forth on the cover page. See "Selling
Shareholders."

THE OFFERING

<TABLE>
<S> <C>
Class A Common Stock offered by
the Selling Shareholders:
U.S. Offering.................. 1,638,075 shares
International Offering......... 409,519 shares
----------------
Total........................ 2,047,594 shares(1)
Common Stock to be Outstanding
after the Offering:
Class A Common Stock........... 22,092,244 shares(2)
Class B Common Stock........... 31,345,500 shares(3)
Use of Proceeds.................. The Company will not receive any of the
proceeds from this offering. See "Use of
Proceeds."
NYSE Symbol for Class A Common
Stock........................... "ECP"
</TABLE>
- --------
(1) Excludes up to 307,139 additional shares of Class A Common Stock subject to
the U.S. Underwriters' over-allotment option.

(2) As of May 20, 1997, after giving effect to the Goodrich Repurchase.
Excludes 1,497,975 shares of Class A Common Stock reserved for issuance
upon the exercise of outstanding options of which 546,500 are currently
exercisable. If the U.S. Underwriters' over-allotment option is not
exercised and the shares subject thereto are purchased by the Company
pursuant to the Additional Repurchase, Class A Common Stock outstanding
after the Offering will decrease by up to 307,139 shares.

(3) Each share of Class B Common Stock is convertible into one-tenth of a share
of Class A Common Stock. If all of the outstanding shares of Class B Common
Stock were so converted there would have been 25,226,794 shares of Class A
Common Stock outstanding as of May 20, 1997, after giving effect to the
Goodrich Repurchase. See "Description of Capital Stock."

7
<PAGE>

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Class A Common Stock is listed on the New York Stock Exchange under the
symbol "ECP." The Class B Common Stock is not publicly traded. The following
table sets forth the high and low reported sale prices for the Class A Common
Stock for the periods indicated as reported on the New York Stock Exchange
Composite Tape and the dividends declared and subsequently paid with respect
to the Class A Common Stock and the Class B Common Stock for such periods.

<TABLE>
<CAPTION>
CLASS A COMMON DIVIDENDS PER
STOCK PRICE SHARE
--------------- ---------------
HIGH LOW CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
1995
First Quarter........................... $28 $24 1/8 $.14 $.014
Second Quarter.......................... 29 7/8 25 3/8 .14 .014
Third Quarter........................... 30 3/4 26 5/8 .17 .017
Fourth Quarter.......................... 32 5/8 29 1/4 .17 .017
---- -----
$.62 $.062
1996
First Quarter........................... $37 7/8 $30 3/4 $.17 $.017
Second Quarter.......................... 38 3/8 34 1/8 .17 .017
Third Quarter........................... 39 3/8 33 3/8 .19 .019
Fourth Quarter.......................... 44 1/4 38 1/4 .19 .019
---- -----
$.72 $.072
1997
First Quarter........................... $50 3/4 $43 3/8 $.19 $.019
Second Quarter (through May 27, 1997)... 60 47 7/8
</TABLE>

On May 27, 1997, the reported last sale price for the Class A Common Stock
was $60 per share on the New York Stock Exchange. On April 24, 1997 the
Company declared a $.19 dividend per share of Class A Common Stock ($.019 per
share with respect to the Class B Common Stock) payable on July 10, 1997, to
holders of record on June 30, 1997.

While future dividends will be subject to the discretion of the Company's
Board of Directors, the Board of Directors currently intends to continue the
policy of paying cash dividends on a quarterly basis. However, future
dividends will depend upon the Company's results of operations, financial
condition, capital expenditure program and other factors, some of which are
beyond the Company's control. There can be no assurance as to whether or when
the Company's Board of Directors will change the current policy regarding
dividends.

8
<PAGE>

USE OF PROCEEDS

All of the shares of Class A Common Stock being offered hereby are being
sold by the Selling Shareholders. The Company will not receive any proceeds
from the Offering.

CAPITALIZATION

The following table sets forth the unaudited capitalization of the Company
as of March 30, 1997, and as adjusted to reflect the Goodrich Repurchase. The
Company will not receive any of the proceeds from the sale of the shares of
Class A Common Stock in the Offering. Funding for the Goodrich Repurchase came
from a combination of cash and short-term borrowings.

<TABLE>
<CAPTION>
MARCH 30, 1997
------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents............................. $ 59,447 $ 40,240
======== ========
Short-term borrowings................................. $ -- $ 39,400
======== ========
Long-term debt........................................ $ 2,678 $ 2,678
-------- --------
Redeemable preferred stock issued by subsidiary....... 18,920 18,920
-------- --------
Shareholders' equity:
Preferred Stock, issuable in series:
Authorized--25,000,000 shares
Issued--none....................................... -- --
Class A Common Stock--without par value:
Authorized--75,000,000 shares
Issued--23,197,911 and 22,020,544 shares........... 25,763 24,456
Class B Common Stock--without par value:
Authorized--50,000,000 shares
Issued--31,553,000 shares.......................... 63 63
Retained earnings................................... 372,070 314,770
Unamortized value of restricted stock............... (1,800) (1,800)
Net unrealized gain on available-for-sale
securities......................................... 1,878 1,878
-------- --------
Total shareholders' equity........................ 397,974 339,367
-------- --------
Total capitalization.................................. $419,572 $360,965
======== ========
</TABLE>
- --------

(1) Assumes no purchase by the Company of Class A Common Stock pursuant to the
Additional Repurchase. If additional shares of Class A Common Stock are
purchased by the Company, funding will come from a combination of cash and
short-term borrowings.

9
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data in the following table (other than
the financial data for the thirteen weeks ended March 31, 1996 and March 30,
1997) for each of the five fiscal years in the period ended December 29, 1996
have been derived from the Company's consolidated financial statements which
have been audited by Geo. S. Olive & Co. LLC, independent auditors. The
selected consolidated financial data should be read in conjunction with the
Company's consolidated financial statements and notes thereto appearing
elsewhere in this Prospectus. The selected consolidated financial data for the
thirteen weeks ended March 31, 1996 and March 30, 1997 have been derived from
the Company's unaudited financial statements and, in the opinion of the
Company, contain all adjustments that are of a normal and recurring nature
necessary to present fairly the financial position and results of operations
for such periods. The results of operations for the thirteen weeks ended March
30, 1997 are not necessarily indicative of the results expected for the full
fiscal year 1997.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED 13 WEEKS ENDED
------------------------------------------------------------------ --------------------
DECEMBER 27, DECEMBER 26, DECEMBER 25, DECEMBER 31, DECEMBER 29, MARCH 31, MARCH 30,
1992 1993 1994 1995(1) 1996 1996 1997
------------ ------------ ------------ ------------ ------------ --------- ---------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Operating revenues:
Advertising.......... $319,872 $346,566 $395,450 $446,693 $479,474 $112,504 $128,996
Circulation.......... 112,180 118,032 121,823 129,537 134,133 34,270 35,554
Other................ 1,548 1,969 2,429 3,671 6,708 1,122 6,418
-------- -------- -------- -------- -------- -------- --------
433,600 466,567 519,702 579,901 620,315 147,896 170,968
-------- -------- -------- -------- -------- -------- --------
Operating expenses:
Compensation......... 193,579 199,266 217,078 222,748 228,316 56,817 59,599
Newsprint and ink.... 63,108 68,336 76,247 110,085 113,171 32,348 24,320
Other operating
costs............... 100,029 106,042 116,944 129,362 137,875 32,499 39,295
Depreciation and
amortization........ 21,649 25,810 26,639 28,487 35,528 8,459 10,705
Asset impairment
cost................ 4,226 3,034
Work force reduction
cost................ 3,572 1,491 7,064 3,328 1,340 440 6,041
-------- -------- -------- -------- -------- -------- --------
381,937 400,945 443,972 494,010 520,456 133,597 139,960
-------- -------- -------- -------- -------- -------- --------
Operating income....... 51,663 65,622 75,730 85,891 99,859 14,299 31,008
Other income--net...... 1,111 2,417 4,965 8,154 4,009 1,593 1,092
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes................. 52,774 68,039 80,695 94,045 103,868 15,892 32,100
Provision for income
taxes................. 21,491 27,948 32,847 38,048 42,431 6,592 13,534
-------- -------- -------- -------- -------- -------- --------
Income before minority
interest and equity
in Affiliate.......... 31,283 40,091 47,848 55,997 61,437 9,300 18,566
Minority interest in
subsidiaries.......... (3,105) (3,683) (2,977) (1,409) (1,629) (182) (543)
Equity in Affiliate,
net of tax............ (4,820) (4,280) (3,550) (590) 1,726 691 (285)
Cumulative effect of
accounting change,
net of tax............ (34,212)
-------- -------- -------- -------- -------- -------- --------
Net income (loss)...... $(10,854) $ 32,128 $ 41,321 $ 53,998 $ 61,534 $ 9,809 $ 17,738
======== ======== ======== ======== ======== ======== ========
Net income (loss) per
common share.......... $ (.41)(2) $ 1.21 $ 1.55 $ 2.03 $ 2.31 $ .37 $ .67
======== ======== ======== ======== ======== ======== ========
Average common shares
outstanding........... 26,515 26,571 26,621 26,651 26,619 26,700 26,394
STATEMENT OF CASH FLOWS
DATA:
Net cash provided by
operating activities.. $ 67,634 $ 73,732 $ 41,897 $ 62,283 $122,015 $ 73,513 $ 61,115
Net cash used by
investing activities.. (51,919) (55,547) (27,530) (42,463) (73,037) (59,314) (28,483)
Net cash used by
financing activities.. (11,956) (13,263) (14,405) (15,783) (38,971) (4,136) (9,334)
OTHER DATA:
EBITDA (3)............. $ 76,884 $ 92,923 $109,433 $117,706 $140,953 $ 26,232 $ 47,754
EBITDA margin.......... 17.7% 19.9% 21.1% 20.3% 22.7% 17.7% 27.9%
Capital expenditures... $ 26,175 $ 16,049 $ 23,256 $ 58,676 $ 46,530 $ 12,310 $ 6,665
Net cash provided by
operating activities,
excluding the effect
of trading
securities............ 67,634 73,732 87,579 79,913 81,344 32,121 59,067
</TABLE>

10
<PAGE>

<TABLE>
<CAPTION>
AS OF AS OF
---------------------------------------------------------------- -------------------
DECEMBER 27, DECEMBER 26, DECEMBER 25, DECEMBER 31, DECEMBER 29, MARCH 31, MARCH 30,
1992 1993 1994 1995(1) 1996 1996 1997
------------ ------------ ------------ ------------ ------------ --------- ---------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents........... $ 17,221 $ 22,143 $ 22,105 $ 26,142 $ 36,149 $ 36,205 $ 59,447
Total assets........... 432,872 464,688 500,444 547,204 586,972 567,740 622,714
Working capital........ 90,488 127,999 132,907 137,818 92,323 87,687 78,678
Long-term debt......... 2,678 2,678 2,678 2,678 2,678 7,178 2,678
Shareholders' equity... 269,997 290,693 319,762 358,741 387,550 365,070 397,974
</TABLE>
- -------

(1) 53-week year.
(2) Net income per common share, before cumulative effect of accounting
change, for the fiscal year ended December 27, 1992, was $.88.
(3) Earnings before non-operating income and interest expense (other income--
net), taxes, depreciation, amortization and costs associated with asset
impairments and workforce reductions. The Company believes that EBITDA is
a valuable indicator of pre-tax profitability and also is used commonly by
the financial and investment community to analyze communications and media
companies. However, EBITDA is not derived pursuant to generally accepted
accounting principles ("GAAP") and therefore should not be construed as an
alternative to operating income or as a measure of liquidity.

11
<PAGE>

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

GENERAL

The principal line of business of the Company is newspaper publishing.
Revenues are derived primarily from advertising and newspaper sales in the
Phoenix, Arizona and Indianapolis, Indiana metropolitan areas. The Company has
a 13.5% interest in Ponderay, a partnership formed to own and operate a
newsprint mill in the State of Washington. The following analysis should be
read in conjunction with the 1996 consolidated financial statements and the
accompanying notes to the consolidated financial statements.

The Company's business tends to be seasonal, with peak revenues and profits
generally occurring in the second and fourth quarters of each year. The
results for 1994, 1995 and 1996 reflect these seasonal patterns. In addition,
the 1994 and 1996 fiscal years each included 52 weeks and the 1995 fiscal year
included 53 weeks.

RECENT EVENTS

On May 20, 1997, the Company purchased from the Selling Shareholders an
aggregate of 1,177,367 shares of Class A Common Stock at $49.50 per share plus
interest from April 11, 1997 for total consideration of $58,606,591.

In February 1997, the Company acquired 80% of Westech. Westech consists of
Westech ExpoCorp., which organizes job fairs for the high tech industry; High
Technology Careers, which publishes High Technology Careers Magazine and
Virtual Job Fair (http://www.vjf.com), an internet-based resume posting and
research service; and JobsAmerica, which organizes job fairs for service
industry positions. Westech had approximately $20 million of revenues in 1996.

Effective January 18, 1997, the Company ceased publication of its afternoon
newspaper, The Phoenix Gazette, and realigned the news gathering structure of
its morning newspaper, The Arizona Republic. These changes resulted in the
Company recording a one-time pre-tax charge to earnings of approximately $4.8
million in the first quarter of 1997, and are expected to result in a
reduction in operating expenses of approximately $5.0 million in 1997 and
ongoing annual operating expense savings in future years of approximately $6.4
million. A substantial portion of the savings are derived from the
approximately 85 positions eliminated as a result of these actions.

On January 3, 1997, the Company acquired the remaining 9.8% of Indianapolis
Newspapers, Inc. ("INI") common stock that it did not already own. This
transaction, which was recorded using purchase accounting, was accomplished by
issuing the current minority shareholders an aggregate of 1,892 shares of
newly created, non-voting, INI preferred stock with an aggregate stated value
of $18,920,000 in exchange for the shares of INI common stock owned by them.
The preferred stock provides for aggregate annual dividends of $1,324,400 on a
cumulative basis, is callable in five years by INI, and is redeemable at any
time by the shareholders of INI at the stated value plus accrued but unpaid
dividends. This transaction is not expected to have a material effect on
future earnings.

On March 12, 1996, the Company purchased 100% of the outstanding common
stock of McCormick & Company, Inc. ("McCormick"), which owns the Alexandria
Daily Town Talk newspaper of Alexandria, Louisiana and McCormick Graphics,
Inc., a commercial printing subsidiary. The purchase price was approximately
$62.0 million in cash. Since a significant portion of the purchase price was
allocated to intangible assets, the amortization of which is not deductible
for tax purposes, the Company's net income may be negatively impacted for
approximately three years from the date of acquisition. Thereafter, the
acquisition is expected to contribute positively to net income. However, the
Company's EBITDA has been positively impacted since the acquisition.

FIRST QUARTER OF 1997 COMPARED WITH THE FIRST QUARTER OF 1996

Results of Operations

The first quarter of 1997 resulted in record revenues and profits for the
Company. First quarter earnings per share were $.67, an 81.1% increase over
the $.37 earned in the first quarter of 1996. Both quarters included the
effects of work force reduction and/or asset impairment costs ("special
charges") which negatively impacted earnings. Excluding the special charges,
earnings per share would have been $.81 in the first quarter of 1997 and

12
<PAGE>

$.44 in the first quarter of 1996, an increase of 84.1%. Operating income for
the first quarter of 1997 was $31.0 million for an increase of 116.9% from the
$14.3 million earned in the first quarter of 1996. Approximately $9.6 million
of the operating income increase was due to substantially lower newsprint
prices in the 1997 first quarter when compared with 1996. The first quarter of
1997 included two additional months of year-over-year McCormick activity,
initial operating income from Westech and work force reduction charges
primarily related to The Phoenix Gazette closure. The 1996 first quarter
included charges related to asset impairments and work force reductions.
Excluding these items in both periods, 1997 first quarter operating income
would have been $34.7 million compared to $17.8 million in the 1996 first
quarter for an increase of 95.0%. EBITDA for the comparable periods was $47.8
million in the 1997 period and $26.2 million in the 1996 period, an increase
of 82.0%. Net income for the 1997 first quarter was $17.7 million, an 80.8%
increase from the $9.8 million net income in the first quarter of 1996.
Excluding the special charges for both periods, net income would have been
$21.2 million and $11.8 million, respectively.

Operating Revenues

The Company's quarterly operating revenues rose to $171.0 million in 1997
from $147.9 million in 1996, an increase of 15.6%. These comparisons include
the 1997 revenues from the February 1997 Westech acquisition and the March
1996 McCormick acquisition (the "acquisitions"). Excluding the effects of the
acquisitions, operating revenues increased 9.3%. Advertising and circulation
revenues increased 14.7% and 3.7%, respectively, in the first quarter of 1997
as compared to the first quarter of 1996. These gains were partially affected
by the acquisitions, but the advertising increases were primarily due to
strong gains in the classified and national advertising groups in both major
markets. Areas of particular advertising strength included automotive and
recruitment advertising categories in Phoenix and all major advertising
categories in Indianapolis. Although The Phoenix Gazette closed in January
1997, the impact on advertising and circulation revenues was not significant
since approximately 85% of Phoenix afternoon subscribers have been
successfully transferred to The Arizona Republic.

The following is a summary of major market linage and circulation for the
period:

<TABLE>
<CAPTION>
13 WEEKS ENDED
--------------------
MARCH 31, MARCH 30, PERCENT
1996 1997 CHANGE
--------- ---------- -------
(IN THOUSANDS,
EXCEPT CIRCULATION)
<S> <C> <C> <C>
Full-run linage in six column inches (1):
By advertising category:
Retail........................................... 567.2 633.6 11.7%
National......................................... 62.3 101.3 62.6
Classified....................................... 656.8 759.5 15.6
--------- ---------
Total.......................................... 1,286.3 1,494.4 16.2
========= =========
By major market:
Phoenix (1)...................................... 652.4 686.9 5.3%
Indianapolis..................................... 633.9 807.5 27.4
--------- ---------
Total.......................................... 1,286.3 1,494.4 16.2
========= =========
Net advertising revenue (1)........................ $ 112,504 $ 128,996 14.7%
Combined average daily circulation:
Phoenix.......................................... 492,413 487,050 (1.1)%
Indianapolis..................................... 290,111 274,660 (5.3)
Sunday circulation:
Phoenix.......................................... 621,310 618,546 (.4)%
Indianapolis..................................... 403,134 393,219 (2.5)
</TABLE>
- --------
(1) For comparability, linage statistics for the thirteen weeks ended March
31, 1996 and March 30, 1997 exclude linage of The Phoenix Gazette, which
ceased publication in January 1997. Linage statistics for the thirteen
weeks ended March 31, 1996, including The Phoenix Gazette, were 762
retail, 88 national and 889 classified. Total Phoenix market full-run
linage for the 1996 period, including The Phoenix Gazette, was 1,106.
Advertising revenue was not significantly affected by the closure of The
Phoenix Gazette and has not been restated.

13
<PAGE>

Operating Expenses

Compensation cost, which includes payroll and fringe benefits, increased
4.9% to $59.6 million in the first quarter of 1997. Excluding the
acquisitions, compensation cost would have increased 0.3%. Period over period
headcount (excluding Westech) decreased 2.7% due primarily to the closure of
The Phoenix Gazette and the impact of the conversion from a carrier-based
distribution arrangement to an agency-based distribution work force in
Indianapolis. Newsprint and ink expense decreased to $24.3 million in the
first quarter of 1997, a 24.8% decrease from the first quarter of 1996.
Excluding the acquisitions, newsprint and ink expenses would have decreased
26.8%. Sharply lower prices of newsprint of approximately 30% in the first
quarter of 1997 compared to the first quarter 1996 have resulted in a
significant decrease in costs; however, the Company increased newsprint
consumption by 6.5% due to the acquisitions and increased advertising linage.
Other operating costs increased to $39.3 million in the first quarter of 1997,
a 20.9% increase from the first quarter of 1996. Excluding the acquisitions,
operating costs increased 12.7%. Significant items contributing to the
increase in operating costs included higher property taxes in Phoenix and
Indianapolis, charges associated with the Phoenix client server computer
system, and changes in circulation distribution methods in Indianapolis.

Depreciation and amortization expense increased 26.6% to $10.7 million in
the first quarter of 1997 compared with the first quarter of 1996. Excluding
the effects of the acquisitions, depreciation and amortization expense would
have increased 13.7% as a result of the new office building and client server
computer system in Phoenix and distribution centers and inserting equipment at
both locations.

The Company recorded work force reduction costs of approximately $6.0
million in the first quarter of 1997. Of this amount, approximately $4.8
million resulted from the closure of The Phoenix Gazette where approximately
85 positions were eliminated. The balance of the charge related to the costs
of eliminating 18 positions in the conversion of distribution systems in
Indianapolis.

Non-Operating Items

Other net non-operating income (primarily investment income) decreased 31.5%
in the first quarter of 1997 primarily due to a reduction in investable cash
because of the acquisitions. Income tax expense increased 105.3% reflecting
sharply higher taxable income. Equity in Affiliate decreased $1.0 million due
to a reduction in newsprint selling prices being realized by Ponderay
Newsprint Company.

FISCAL YEARS 1994, 1995 AND 1996

Results of Operations

Fiscal 1996 was a year of record revenues and profits for the Company.
Earnings per share for 1996 were $2.31, up $.28 from the $2.03 reported in
1995. The 1995 earnings increased $.48 from the $1.55 earned in 1994. All
three years included work force reduction and/or asset impairment costs that
negatively impacted earnings. Earnings per share, adjusted for these costs,
would have been $2.43 in 1996, $2.11 in 1995 and $1.71 in 1994. The results
for 1995 included an additional week when compared with the 1996 and 1994
periods.

Operating income for 1994, 1995 and 1996 was $75.7 million, $85.9 million
and $99.9 million, respectively, rising 13.4% in 1995 and 16.3% in 1996. The
1996 results include ten months of activity from the McCormick acquisition and
all three years included the effects of asset impairment and/or work force
reduction costs. Excluding these items, operating income would have been $82.8
million, $89.2 million and $103.6 million in 1994, 1995 and 1996,
respectively. EBITDA for the three year period (excluding asset impairment and
work force reduction charges) increased each year to $109.4 million, $117.7
million and $141.0 million, respectively.

Net income increased from $41.3 million in 1994 to $54.0 million in 1995, an
increase of 30.7%, and to $61.5 million in 1996, an increase of 14.0%. Had the
Company not incurred the charges for asset impairment and work force
reductions, net income would have been $45.6 million, $56.2 million, and $64.7
million in 1994, 1995 and 1996, respectively.

14
<PAGE>

Operating Revenues

The Company's operating revenues rose 11.6% in 1995 and 7.0% in 1996. These
comparisons include the effects of the McCormick acquisition effective as of
March 1, 1996 and the fifty-third week in 1995. Excluding these two items,
operating revenues would have increased 9.7% and 6.2%, respectively.

Total advertising revenues were $395.5 million in 1994, $446.7 million in
1995 and $479.5 million in 1996. The 1995 gain of 13.0% and the 1996 gain of
7.3% were both affected by the fifty-third week in 1995, and 1996 was impacted
by the McCormick acquisition. Excluding both of these items, comparable
increases would have been 11.1% and 7.3%, respectively. The balance of the
advertising revenue changes resulted primarily from increases in advertising
linage and higher advertising rates. Major market linage volume for the period
was:

<TABLE>
<CAPTION>
FULL-RUN LINAGE IN SIX COLUMN INCHES
----------------------------------------------------------
FISCAL YEAR ENDED
-------------------------------------- 1994-1995 1995-1996
DECEMBER 25, DECEMBER 31, DECEMBER 29, PERCENT PERCENT
1994 1995 1996 CHANGE CHANGE
------------ ------------ ------------ --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
By advertising category:
Retail................ 3,257.6 3,558.4 3,280.3 9.2% (7.8)%
National.............. 282.6 284.3 439.0 .6 54.4
Classified............ 3,189.6 3,607.2 3,774.2 13.1 4.6
------- ------- -------
Total............... 6,729.8 7,449.9 7,493.5 10.7 .6
======= ======= =======
By major market:
Phoenix............... 4,013.6 4,513.4 4,517.5 12.5% .1%
Indianapolis.......... 2,716.2 2,936.5 2,976.0 8.1 1.3
------- ------- -------
Total............... 6,729.8 7,449.9 7,493.5 10.7 .6
======= ======= =======
</TABLE>

The 1995 linage amounts included the effects of the fifty-third week. Areas
of particular advertising strength in 1996 included real estate and automotive
advertising in Phoenix and major department stores and automotive advertising
in Indianapolis. Areas which showed a decrease in linage during 1996 included
certain areas of retail advertising, primarily the department store category
in Phoenix and the grocery store category in both major markets. Advertising
revenues were further enhanced by Phoenix rate increases ranging from 5.0% to
8.0% and Indianapolis rate increases ranging from 4.5% to 7.0%. Both
newspapers also raised advertising rates at various times throughout 1995.

Circulation revenues for 1994, 1995 and 1996 were $121.8 million, $129.5
million, and $134.1 million, respectively, increasing 6.3% in 1995 and 3.6% in
1996. Excluding the effects of the McCormick acquisition and the fifty-third
week of 1995, the corresponding increases would have been 4.4% and 3.0%,
respectively. The combined average daily and Sunday circulation for Phoenix
and Indianapolis were:

<TABLE>
<CAPTION>
COMBINED AVERAGE DAILY CIRCULATION
----------------------------------------------------------
FISCAL YEAR ENDED
-------------------------------------- 1994-1995 1995-1996
DECEMBER 25, DECEMBER 31, DECEMBER 29, PERCENT PERCENT
1994 1995 1996 CHANGE CHANGE
------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Phoenix............. 454,587 459,109 455,131 1.0% (.9)%
Indianapolis........ 317,344 300,990 285,355 (5.2) (5.2)
<CAPTION>
AVERAGE SUNDAY CIRCULATION
----------------------------------------------------------
FISCAL YEAR ENDED
-------------------------------------- 1994-1995 1995-1996
DECEMBER 25, DECEMBER 31, DECEMBER 29, PERCENT PERCENT
1994 1995 1996 CHANGE CHANGE
------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Phoenix............. 587,919 581,337 583,162 (1.1)% .3%
Indianapolis........ 404,468 399,539 402,884 (1.2) .8
</TABLE>

15
<PAGE>

In 1995, the Phoenix and Indianapolis newspapers each consolidated their
morning and evening newsroom staffs. These changes were designed to create
more resources for expanded coverage of urban and suburban news along with
continued expansion of new forms of information distribution. As a result of
these actions, the morning and evening newspaper products had similar news
content which caused most duplicate subscribers to drop their evening
subscriptions, resulting in decreased combined average daily circulation in
both markets. Circulation rate increases more than offset the decline in the
number of papers sold.

Circulation revenues were favorably impacted by a $.35 increase in the
Phoenix home-delivered price per week, to a range of $3.25 to $3.50, in August
1995, and a Sunday single copy price increase of $.50 to $2.00 in March 1995.
Indianapolis instituted September 1996 increases of $.30 per week for the
weekly home price of The Indianapolis Star to $3.60 and a single copy price
increase of $.25 for the Sunday Star to $1.75. Indianapolis also increased
prices by $.30 for the home-delivered afternoon paper to $1.80 and the daily
single copy price of both papers from $.35 to $.50 in March 1995.

Operating Expenses

Compensation costs, which include payroll and fringe benefits, increased
2.6% to $222.7 million in 1995 and 2.5% to $228.3 million in 1996. Excluding
the effects of the McCormick acquisition and the fifty-third week of 1995,
compensation costs would have increased 1.0% for 1994 compared with 1995 and
2.1% for the 1995 to 1996 period. Although 1996 headcount decreased
approximately 2.8%, the 1996 increase in costs was attributable to a change in
the discount rate used in post-retirement and pension calculations and one-
time labor costs associated with the move of editorial and business personnel
in Phoenix to a new office building.

Newsprint and ink expense increased 44.4% to $110.1 million in 1995 and 2.8%
to $113.2 million in 1996. Excluding the effects of the McCormick acquisition
and the fifty-third week in 1995, newsprint and ink expense would have
increased 41.6% in 1995 and 2.0% in 1996. The increase was due to the effects
of rapidly escalating newsprint prices throughout 1995 which reached a peak in
the first quarter of 1996, followed by decreasing prices throughout the last
three quarters of 1996. Newsprint consumption for 1996, when compared with
1995 (excluding the McCormick acquisition) decreased .4% compared with a 2.5%
consumption increase in 1995 versus 1994 levels.

Other operating costs for 1994, 1995 and 1996 were $116.9 million, $129.4
million and $137.9 million respectively, representing a 1995 increase of 10.6%
and a 1996 increase of 6.6%. Excluding the effects of the McCormick
acquisition and the fifty-third week of 1995, operating costs would have
increased 9.5% and 5.0%. Items contributing to the 1996 increase included
operating duplicate office facilities, implementation of a new client server
computer system, additional circulation costs and the opening of new
distribution centers in Phoenix. The 1995 operating cost increases related to
production and delivery of zoned advertising products, promotional expenses
and higher property taxes.

Depreciation and amortization expense was $26.6 million, $28.5 million and
$35.5 million for 1994, 1995 and 1996, respectively. Excluding the McCormick
acquisition, 1996 depreciation and amortization expense would have been $33.4
million. The 1996 increase of 17.4% resulted from the depreciation expense
associated with the Phoenix client server computer system, the opening of a
packaging facility in Indianapolis and additional distribution centers. The
1995 increase of 6.9% was primarily due to the first phase implementation of
the client server computer system and the opening of a new inserting facility
in Indianapolis.

During 1996, the Company recognized asset impairment costs for a Phoenix
office building held for sale and a charge for the premature retirement of a
Phoenix conveyor system. These losses were recorded using the provisions of
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of," which the Company adopted during 1996.

The Company recorded work force reduction costs of $7.1 million, $3.3
million and $1.3 million in 1994, 1995 and 1996, respectively. The 1996 amount
related primarily to voluntary early retirement programs in

16
<PAGE>

Indianapolis and work force reduction costs related to the consolidation of
the Company's Muncie, Indiana morning and evening newspapers. The 1995 and
1994 work force reduction costs related to voluntary early retirement programs
in Indianapolis and Phoenix which were undertaken due to economic conditions,
increasing costs and changes in technology.

Non-Operating Items

Other non-operating income (primarily investment income) was $5.0 million,
$8.2 million and $4.0 million for 1994, 1995 and 1996, respectively. The $4.2
million decrease in 1996 was attributable to a reduction in investable cash
related to the McCormick acquisition along with a general reduction in
interest rates. The $3.2 million increase in 1995 reflected higher rates of
return on investments and the full year effect of a new cash management policy
implemented in July 1994.

Income tax expense for 1994, 1995 and 1996 was $32.8 million, $38.0 million
and $42.4 million, reflecting effective tax rates of 40.7%, 40.5% and 40.9%,
respectively. The increase in the effective income tax rate in 1996 was
primarily due to the increased non-tax deductible goodwill associated with the
McCormick acquisition, offset by the tax benefits received from filing a
consolidated state income tax return in Arizona.

EQUITY IN AFFILIATE

The Company's investment in Ponderay is accounted for using the equity
method, which reflects the Company's share of Ponderay's net income or loss,
tax credits and related income tax expense or benefit. Ponderay's operating
results include interest expense on its long-term debt. Income from Equity in
Affiliate increased $2.3 million to $1.7 million in 1996 from a loss of $.6
million in 1995. A loss in the amount of $3.6 million from Equity in Affiliate
was reported in 1994. These changes were attributable to fluctuations in the
sales price of newsprint realized by Ponderay. Based upon current pricing,
Ponderay is expected to report a loss in 1997. The Company does not anticipate
making additional cash investments in Ponderay during 1997. See further
discussion in Note 10 to the 1996 Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities is the Company's primary source of
liquidity. Net cash provided by operating activities of $41.9 million, $62.3
million and $122.0 million in 1994, 1995 and 1996, and $73.5 million and $61.1
million for the first quarters of 1996 and 1997, respectively, include the
effects of net purchases of or proceeds from trading securities. Net cash
provided by operating activities, excluding the impact of net purchases of or
proceeds from trading securities, were $87.6 million, $79.9 million and $81.3
million and $32.1 million and $59.1 million for the comparable periods.
Changes between all periods were primarily attributable to increases in
earnings and changes in working capital. Principal uses of cash in 1996 and
the first quarter of 1997 were capital expenditures, the acquisitions, payment
of dividends and repurchases of Class A Common Stock. As of March 30, 1997,
the Company's cash and investments in marketable securities totaled $71.4
million, up $9.6 million from $61.7 million at December 29, 1996. Working
capital as of March 30, 1997 was $78.7 million, down $13.6 million from $92.3
million at December 29, 1996. This reduction was primarily due to the Westech
acquisition and the repurchase of Class A Common Stock.

Total capital expenditures in 1996 were $46.5 million, down from $58.7
million in 1995 and up from $23.3 million in 1994. Capital expenditures for
the first quarter of 1997 were $6.7 million compared with $12.3 million for
the first quarter of 1996. The majority of these expenditures in 1996 and 1995
related to the new Phoenix office building completed in 1996 and a client
server computer system placed in service in 1995 and 1996. It is expected that
capital expenditures for 1997 will be approximately $28.0 million, primarily
for computer system enhancements, replacement of equipment and distribution
facility improvements. As of the date hereof, there are no significant formal
commitments related to future capital projects.

17
<PAGE>

On May 8, 1997, the Company obtained a $60.0 million unsecured, uncommitted,
short-term credit facility of which $39.4 million was used to fund a portion
of the purchase price of the Goodrich Repurchase. The balance of the purchase
price was financed through internally generated funds.

On March 19, 1996 the Board of Directors of the Company authorized the
repurchase of up to 1,000,000 shares of the Company's Class A Common Stock.
The shares may be purchased over three years on the open market or in
privately negotiated transactions. Through March 30, 1997, the Company had
repurchased 580,600 shares at an aggregate cost of approximately $22.1
million. The Board of Directors has independently authorized the Goodrich
Repurchase.

The Company guarantees debt related to Ponderay which is discussed in Note
10 to the Consolidated Financial Statements.

Dividends of $.72 per share on Class A Common Stock and $.072 per share on
Class B Common Stock were paid during 1996. This represents an increase over
the prior year of $.10 per share on the Class A Common Stock and $.01 per
share on the Class B Common Stock. Cash dividend payments of $15.2 million,
$16.4 million and $19.6 million were made in 1994, 1995 and 1996,
respectively. Dividends of $.19 per share on the Class A Common Stock and
$.019 on the Class B Common Stock were declared during the first and second
quarters of 1997. The first quarter dividends were paid in April 1997 and the
second quarter dividends are payable in July 1997.

The Company has demonstrated a consistent ability to generate net cash flow
from operations. As a result, management believes that existing cash and
investments, available bank credit resources and net cash flow from operations
will be sufficient to fund existing capital and investment needs along with
working capital requirements for the foreseeable future.

INFLATION AND CHANGING PRICES

Over the past several years, the impact of inflation on the Company's
operations has become less significant because of lower overall inflation
rates. However, the Company and the newspaper industry as a whole have
experienced wide fluctuations in newsprint pricing. Variations in newsprint
pricing can have a significant impact on earnings for any given year. The
Company has attempted to offset newsprint price increases through the
conservation of newsprint and by increasing advertising and circulation rates.

NEW ACCOUNTING STANDARDS

The Company invests a portion of its cash equivalents in preferred equity
securities which, for purposes of SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," are classified as trading
securities. The costs of the net purchases of or proceeds from trading these
securities are included in net cash provided by operating activities. In 1996,
the Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of." The application of this
standard resulted in a charge to earnings of $2.5 million net of tax.

The Company adopted SFAS No. 123, "Accounting for Stock Based Compensation"
in 1996. The statement prescribes accounting and reporting standards for all
stock based compensation plans. SFAS No. 123 allows companies to continue to
use existing methods for recognizing the expense of these plans and provide
pro forma earnings per share and other disclosures in the financial statements
using the fair value method prescribed in the statement. The Company has
elected the pro forma disclosure provisions of this statement.

In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share," establishing new standards in reporting earnings
per share. This standard is effective for fiscal years ending after December
15, 1997, including interim periods, and therefore will be adopted by the
Company when reporting fiscal year ending December 28, 1997 results. It is not
expected to have a material impact on the Company's earnings per share.

18
<PAGE>

FORWARD LOOKING STATEMENTS

This document contains material that is forward-looking in nature relating
to such matters as anticipated financial performance, business prospects and
similar matters. All forward-looking statements are based upon information
available to the Company at the time they are made and the Company assumes no
obligation to update any forward-looking statements. A variety of factors
could cause the Company's actual results to differ materially from the
expectations expressed in the forward-looking statements. The risks and
uncertainties that may affect the operations, performance and results of the
Company's business include, but are not limited to:

. economic weakness in the Company's geographic markets

. weakness in retail and/or classified advertising revenue due to various
factors including retail consolidations, declines in the advertising
budgets of major customers, and increased competition from print and non-
print products

. declines in circulation due to changing reader preferences and/or new
forms of information dissemination

. fluctuations in the price of newsprint

. an increase in distribution and/or production costs over anticipated
levels

. the negative impact of issues related to labor agreements

19
<PAGE>

BUSINESS

The Company publishes the only major daily newspapers in each of its key
markets of the greater Phoenix metropolitan area and central Indiana. The
Company's flagship newspapers are The Arizona Republic in Phoenix and The
Indianapolis Star in Indianapolis, both of which have been published for over
a century. The average daily circulation levels were 406,725 for The Arizona
Republic and 230,932 for The Indianapolis Star for the fiscal year ended
December 29, 1996. According to circulation statistics compiled by the
Newspaper Association of America, The Arizona Republic has been the second
fastest growing major daily morning newspaper in the country over the last
three years. Circulation penetration at December 31, 1996 for The Arizona
Republic was approximately 45% daily and 57% Sunday and for the Indianapolis
newspapers was approximately 45% daily and 64% Sunday, according to the Audit
Bureau of Circulation ("ABC"), ranking them among the highest in the industry.
The Company's control of the only major daily newspapers in each of its key
markets is of critical importance in attracting and maintaining advertising,
the Company's principal source of revenue. Moreover, the Company generates in
excess of 80% of its circulation from subscriptions, thereby adding relative
stability to its revenue base.

The Company's financial objective is to continue to build value for its
shareholders by focusing on the strengths inherent in its current markets
while selectively pursuing acquisitions. The principal elements of the
Company's strategy are the following:

ENHANCE ADVERTISING AND CIRCULATION REVENUE BASE. Controlling the only major
daily newspapers in its key markets, the Company enjoys a competitive
advantage in attracting and maintaining advertising, especially compared to
other advertising vehicles such as radio and television broadcasting
stations, each of which individually reach a significantly smaller
audience. The Company's newspaper advertising revenue growth over the past
three years has consistently surpassed that of most other major newspaper
companies. The Company continues to expand its advertising revenue base
through the development of long-term relationships with key advertising
accounts and the promotion of cross-selling opportunities. The Company also
recently restructured the sales and marketing departments at both The
Arizona Republic and The Indianapolis Star, incorporating more sales-based
incentives into the compensation structure, which the Company believes will
produce greater advertising revenue.

The Company's daily home-delivered subscription base represents more than
80% of total circulation, exceeding the industry average of approximately
70%. The large subscription base adds relative stability to the Company's
revenue base, and the Company continues to emphasize and improve the
quality of daily home delivery.

CONTINUE TO ACHIEVE COST EFFICIENCIES. The Company has recently identified
several areas for more efficient cost management and has begun to exploit
these opportunities. Recent initiatives include the January 1997 closing of
The Phoenix Gazette, the afternoon newspaper in Phoenix, the consolidation
of The Muncie Star and the Muncie Evening Press into The Star Press in May
1996, the introduction of client server computer systems throughout The
Arizona Republic and the consolidation of the editorial function in
Indianapolis. The Company will continue to pursue such opportunities, with
a particular focus on increasing production automation, improving
distribution and enhancing workforce productivity.

THE ARIZONA REPUBLIC

In Phoenix, the Company currently publishes The Arizona Republic, the second
fastest growing major daily morning newspaper in the United States, together
with the Arizona Business Gazette, a weekly newspaper. The

20
<PAGE>

Company, together with a group of other investors, originally acquired a 30%
interest in The Arizona Republic and The Phoenix Gazette in 1946. The Company
has owned 100% of these newspapers since 1977. On January 18, 1997, the
Company ceased publication of The Phoenix Gazette. The average paid
circulation of The Phoenix Gazette for the 52 weeks ended December 29, 1996
was 48,406. The Company has determined that approximately 85% of the
subscribers of The Phoenix Gazette have subsequently subscribed to The Arizona
Republic.

Circulation

Approximately 86% of the daily and 74% of the Sunday circulation of The
Arizona Republic were home-delivered as of December 29, 1996, with the
remainder being single copy sales. The circulation level of The Arizona
Republic is seasonal due to the large number of part-year residents in the
Phoenix area. Typically, circulation for The Arizona Republic achieves its
highest levels in February and March and decreases during the late spring and
summer months. During 1996, the seasonal variation was approximately 86,000.
The following table shows the average paid daily circulation for The Arizona
Republic and The Phoenix Gazette for the periods shown. The figures for 1994
and 1995 are based upon reports issued by the ABC, an independent agency which
audits the circulation of daily and Sunday newspapers, and include circulation
outside the Phoenix metropolitan statistical area ("MSA"). The figures for
periods subsequent to 1995 are based upon the records of the Company because
no ABC report is available for any period after 1995 as of the date of this
Prospectus. Net circulation revenue for the periods shown is based upon the
records of the Company.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED 13 WEEKS ENDED
-------------------------------------- -------------------
DECEMBER 25, DECEMBER 31, DECEMBER 29, MARCH 31, MARCH 30,
1994 1995(1)(2) 1996(1) 1996 1997
------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
The Arizona Republic
(Sunday)............... 587,919 581,337 583,162 622,668 618,546
The Arizona Republic
(Daily)................ 379,093 387,986 406,725 427,101 487,050
The Phoenix Gazette
(Daily)................ 75,494 71,123 48,406 62,727 --
Net circulation revenue
(in thousands)......... $77,537 $84,212 $87,790 $23,378 $23,070(3)
</TABLE>
- --------
(1) In 1995, The Arizona Republic and The Phoenix Gazette consolidated their
newsroom staffs. Due to this combination, the morning and afternoon
content of the newspapers was similar, which caused many duplicate readers
to cancel their subscription to The Phoenix Gazette.

(2) 53-week year.

(3) Net circulation revenue includes The Phoenix Gazette through January 18,
1997, the last day of its publication.

The Arizona Business Gazette contains business news and legal notices
relating to the Phoenix metropolitan area. The average paid circulation of the
Arizona Business Gazette was 10,340, 10,351 and 10,491 for 1994, 1995 and
1996, respectively.

The home-delivered pricing structure for seven day subscriptions is based on
length of subscription. The home-delivered price for The Arizona Republic
(seven days) in the Phoenix MSA, ranges from $3.25 per week for a fifty-two
week subscription to $3.50 per week for an eight-week subscription. There is
also a four-week direct bank debit option of $3.25 per week. The home-
delivered price for The Arizona Republic (six days) is $2.10 per week for all
subscription terms. A weekend package comprising the Sunday paper and the
Friday and Saturday edition is offered at $2.50 per week. The single copy
price of the morning paper is $.50 and $2.00 for the Sunday paper.

Advertising

The newspapers generate revenue from two primary types of advertisements,
"run-of-paper," which are printed in the body of the newspaper, and
"preprinted," which are furnished by the advertiser and inserted into the
newspaper. The Company derives the majority of its advertising revenue for its
Arizona newspapers from run-of-paper advertisements. However, like other major
newspapers, The Arizona Republic has experienced an increase in advertisers'
use of preprinted advertisements in recent years. Because preprinted
advertisements are furnished by the advertisers and can be distributed by
alternate means, revenues and profits from preprinted

21
<PAGE>

advertisements are generally lower than those from run-of-paper
advertisements. To encourage use of run-of-paper advertisements, the Company
structures its advertising rates to provide more favorable rates to high
volume and frequent run-of-paper advertisers.

The Company also structures its advertising format to accommodate the
numerous communities that comprise the Phoenix metropolitan area. The Arizona
Republic publishes "Community" sections that are inserted in up to twelve
zoned editions on certain days of the week. Zoned editions, which include news
stories and advertisements targeted to specific communities or geographic
areas, provide an important means of competing with news coverage of local
newspapers and thereby promote circulation. Other part-run sections are also
provided to accommodate the needs of advertisers for more targeted
distribution.

The combined run-of-paper advertising linage for the Company's Arizona
newspapers for the periods shown and the combined advertising revenues of the
newspapers for such periods are set forth in the following table:

(1) 53-week year.

(2) For comparability, linage statistics for the thirteen weeks ended March
31, 1996 and March 30, 1997 exclude linage of The Phoenix Gazette, which
ceased publication in January 1997. Linage statistics for the thirteen
weeks ended March 31, 1996 including The Phoenix Gazette were 1,106 full-
run, 566 part-run and 66 weekly. Advertising revenue was not significantly
affected by the closure of The Phoenix Gazette and has not been restated.

Distribution

The Company distributes The Arizona Republic primarily by home delivery
through a network of independent contractors. The Company has implemented a
centralized billing system which removes the responsibility for billing and
collection from the independent contractors. Newspapers are distributed to the
independent contractor network by an outside company which has been under
contract for over forty years.

Production

The Arizona Republic's editing and composing functions are performed
primarily at its facility in downtown Phoenix. The Arizona Republic was the
first major daily newspaper in the country to have its pages fully composed by
computer generation, enabling the Company to produce a higher quality product.
Electronic pagination allows entire pages of the newspaper to be formatted at
a computer terminal. Composed pages are electronically transmitted from the
newspaper's downtown facility to its two satellite production facilities.

The Arizona Republic's two satellite production facilities are located in
Deer Valley, which is north of downtown Phoenix, and in Mesa, Arizona. The
Deer Valley facility includes four offset presses and related production
equipment as well as circulation, advertising and editorial offices and began
production during the first quarter of 1992 with full operation commencing in
the third quarter of 1992. The Mesa facility began operation in 1982 and has
been subsequently expanded and upgraded. It has three offset presses and
related production equipment. The Company owns an additional site in western
Maricopa County for a possible satellite production facility to meet future
growth.

22
<PAGE>

INDIANAPOLIS NEWSPAPERS, INC.

In Indianapolis, the Company's primary newspapers are The Indianapolis Star
(mornings and Sunday) and The Indianapolis News (evenings). The Company formed
Indianapolis Newspapers, Inc. ("INI") in 1948, through which it currently
publishes The Indianapolis Star and The Indianapolis News. At the end of 1996,
the Company owned 90.2% of the voting equity of INI and had the right to elect
INI's Board of Directors. On January 3, 1997, the Company acquired the
remaining voting equity of INI through the issuance of nonvoting preferred
stock of INI with an aggregate liquidation value of $18,920,000, entitling the
holders to aggregate annual dividends of $1,324,000. The preferred stock is
callable in five years by INI and is redeemable any time by the holders
thereof at the stated value plus any accrued but unpaid dividends.

Circulation

Approximately 81% of the daily and 80% of the Sunday circulation of The
Indianapolis Star and 81% of the daily circulation of The Indianapolis News
was home-delivered as of December 29, 1996, with the remainder being single
copy sales.

The following table shows the average paid daily circulation for The
Indianapolis Star and The Indianapolis News for the last three fiscal years.
The figures for 1994 and 1995 are based upon reports issued by the ABC and
include circulation outside the Indianapolis metropolitan statistical area.
The figures for the periods after 1995 are based upon records of the Company
because no ABC report is available for any period after 1995 as of the date of
this Prospectus. Net circulation revenue is based upon the records of the
Company.

(1) 53-week year.

The home-delivered price for The Indianapolis Star (seven days) in the
Indianapolis metropolitan statistical area is $3.60 per week. The home-
delivered price for The Indianapolis News (six days) is $1.80 per week. The
single copy price is $.50 for each daily paper. The home-delivered price of
the Sunday newspaper is $1.80, and the single copy price is $1.75.

Advertising

As is the case for the Arizona newspapers, the Company's Indianapolis
newspapers derive the majority of their advertising revenues from run-of-paper
advertisements. The Indianapolis Star and The Indianapolis News have also
experienced an increase in advertisers' use of preprinted advertisements in
recent years. To encourage use of run-of-paper advertisements, the Company
structures its advertising rates to provide more favorable rates to high
volume and frequent run-of-paper advertisers. The combined run-of-paper
advertising linage for The Indianapolis Star and The Indianapolis News for the
past three fiscal years and the combined advertising revenue of the newspapers
for such periods are set forth in the following table:

(1) 53-week year.

23
<PAGE>

Distribution

Through 1996, the Company distributed The Indianapolis Star and The
Indianapolis News primarily by home delivery through a network of
approximately 3,200 carriers. Carriers are independent contractors who
purchase newspapers from the Company and resell them at a markup to their
customers.

In 1997, the Company's Indianapolis newspapers are converting from a
carrier-based delivery system to an agency-based distribution system for the
Indianapolis metropolitan area and its eight surrounding counties.
Approximately 1,350 carriers will be replaced by 120 independent delivery
agents, who will be paid on a commission basis. The Company believes the
conversion will allow for uniform pricing, will result in higher levels of
customer satisfaction, and will help facilitate the creation of customer data
bases.

Production

The Indianapolis Star and The Indianapolis News merged their editorial news
staffs in 1995 and share production and distribution facilities. All editorial
and production functions are handled from the Company's facility in downtown
Indianapolis. The Company's downtown Indianapolis production facility is
equipped with six offset presses and related production and distribution
equipment.

The Indianapolis Star and The Indianapolis News have recently implemented
several formatting changes to promote greater standardization and
customization. The weather, editorial and obituary sections are now anchored
daily on the same pages, and there are weekday stand-alone classified and
automotive sections, as well as a four-page daily "Metro" section with local
coverage for each of the major metropolitan distribution areas.

SMALLER NEWSPAPERS

In March 1996, the Company purchased 100% of the outstanding common stock of
McCormick & Company, Inc., the parent company of the Alexandria Daily Town
Talk newspaper and McCormick Graphics, Inc., a commercial printing subsidiary.
The Alexandria Daily Town Talk serves Rapides Parish in Central Louisiana and
the outlying areas within a 50 mile radius, with a population base of
approximately 350,000. For the fiscal year ended December 29, 1996, the
average paid circulation of the Alexandria Daily Town Talk was 38,819 daily
and 41,619 Sunday.

The Company also publishes The Star Press (mornings and Sundays) in Muncie,
Indiana. The Company had formerly published two newspapers in the Muncie
market, The Muncie Star and the Muncie Evening Press, but merged the two
newspapers into The Star Press in May 1996 in order to improve product quality
and cost efficiency. The Star Press serves Muncie and east central Indiana
which has a population base of just over 300,000. For the fiscal year ended
December 29, 1996, the average paid circulation of The Star Press was 33,672
daily and 38,748 Sunday.

The Company, through its subsidiary, Topics Newspapers, Inc., publishes The
Daily Ledger (which for 1996 had an average daily circulation of 10,527) and
fourteen controlled circulation newspapers (which for 1996 had an average
weekly circulation of 108,955) that serve the northern suburbs of
Indianapolis, the fastest growing area of metropolitan Indianapolis.

The Company publishes the Vincennes Sun-Commercial, a daily newspaper which
serves the city of Vincennes, Indiana, with a population of approximately
19,800. For the fiscal year ended December 29, 1996, the average paid
circulation of the Vincennes Sun-Commercial was 14,246 daily (five days) and
17,324 Sunday.

The revenues earned by these smaller publications represented approximately
4% in 1994 and 1995 and 7% in 1996 of total Company revenues.

WESTECH

In February 1997, the Company acquired an 80% interest in the Santa Clara,
California-based Westech companies. Westech consists of Westech ExpoCorp,
which organizes job fairs for the high tech industry; High

24
<PAGE>

Technology Careers, which publishes High Technology Careers Magazine and
Virtual Job Fair (http://www.vjf.com), an internet-based resume posting and
research service; and JobsAmerica, which organizes job fairs for service
industry positions.

Westech has enjoyed rapid growth in recent years and had approximately $20
million of revenue in 1996. Operating margins in this business have
historically been higher than those associated with the newspaper publishing
industry.

The Company believes that the acquisition of Westech is a strategic
extension of its business of matching employers and employees. A substantial
portion of the Company's revenues are derived from recruitment advertising
and, historically, recruitment advertising has been the most important means
for employers to find qualified employees and for job seekers to find
employment. The Company believes that recruitment classified advertising will
continue to be an important avenue for job placement in the future, that an
increasing number of placements will be made using the internet and job fairs
and that the acquisition of Westech should ensure that the Company is well
positioned to provide career services information to employers and employees
through a variety of cost-effective channels.

Historically, Westech has operated predominantly in five western states. The
Company plans to expand Westech into other major U.S. cities with high
technology employment opportunities.

RAW MATERIALS--PONDERAY NEWSPRINT COMPANY

The Company consumed approximately 169,100 metric tons of newsprint in
fiscal year 1996 and expects that consumption will increase in 1997 due
primarily to linage gains. The Company currently obtains its newsprint from a
number of suppliers, both foreign and domestic, under long-term contracts,
standard in the industry, which offer dependable sources of newsprint at
current market rates.

To provide the Company with an additional source of newsprint for a portion
of its needs, the Company, together with four other newspaper publishing
companies and a Canadian newsprint manufacturer, formed a general partnership,
Ponderay Newsprint Company ("Ponderay"), to own and operate a newsprint mill
in Usk, Washington. The mill began operations in December 1989. The Company is
required to purchase on an annual basis the lesser of 13.5% of Ponderay's
newsprint production or 28,400 metric tons on a "take if tendered" basis until
the Ponderay debt is repaid.

COMPETITION

The Company faces competition for advertising revenue from television, radio
and direct mail programs, as well as competition for advertising and
circulation from suburban neighborhood and national newspapers and other
publications. Competition for advertising is based upon circulation levels,
readership demographics, advertising rates and advertiser results. Competition
for circulation is generally based upon the content, journalistic quality and
price of the newspaper.

In Phoenix, several suburban newspapers owned by major media corporations
operate in cities that are part of the Phoenix metropolitan area and compete
with The Arizona Republic for advertising and circulation. The most
significant of these competitors is Thomson Corporation, which owns five daily
newspapers in the East Valley region. These newspapers had a combined paid
daily circulation of 101,000, compared to 171,000 for The Arizona Republic in
this region in 1995, the period for which the latest ABC audit figures are
available. The Arizona Republic recently introduced four new "Community"
sections in order to maintain its position as the leading source of news and
information in this region. In Indianapolis, the Company's newspapers do not
experience significant direct competition from suburban newspapers.

EMPLOYEES--LABOR

As of January 31, 1997, the Company had approximately 5,341 employees
(including 1,523 part-time employees), 40% of whom were covered by a total of
23 collective bargaining agreements. Given the large

25
<PAGE>

number of collective bargaining agreements, the Company is frequently involved
in labor negotiations. As of May 20, 1997, the Company was involved in ongoing
negotiations with respect to 5 different bargaining agreements, involving
approximately 435 employees engaged in various trades at the Company's
facilities. No assurance can be given as to the outcome of these negotiations
or as to the impact on the Company. The Company has never had a significant
strike or work stoppage at its operations and considers its labor
relationships with its employees to be satisfactory.

LEGAL PROCEEDINGS

The Company becomes involved from time to time in various claims and
lawsuits in the ordinary course of its business, including libel and invasion
of privacy actions, and is involved from time to time in various governmental
and administrative proceedings. Management believes that the outcome of any
pending claims or proceedings will not have a significant adverse effect on
the Company and its subsidiaries, taken as a whole.

26
<PAGE>

MANAGEMENT

The executive officers and directors of the Company are:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
---- --- ---------------------
<S> <C> <C>
Frank E. Russell.............. 76 Chairman of the Board and Assistant Secretary
Louis A. Weil, III............ 56 President and Chief Executive Officer;
Chairman of the Board of Phoenix Newspapers,
Inc.; Director
Thomas K. MacGillivray........ 36 Vice President and Chief Financial Officer
Eric S. Tooker................ 35 Vice President, General Counsel and Secretary
Eugene S. Pulliam............. 82 Executive Vice President; Publisher of The
Indianapolis Star and The Indianapolis News;
Director
Malcolm W. Applegate.......... 61 President and General Manager of Indianapolis
Newspapers, Inc.
John F. Oppedahl.............. 52 Publisher and Chief Executive Officer of
Phoenix Newspapers, Inc.
William A. Franke............. 60 Director
L. Ben Lytle.................. 50 Director
Dan Quayle.................... 50 Director
Richard Snell................. 66 Director
</TABLE>

FRANK E. RUSSELL has been Chairman of the Company's Board of Directors and
Assistant Secretary of the Company since January 1996. Mr. Russell served as
President and Chief Executive Officer of the Company from 1979 through 1995.
He has been a Director of the Company since 1974.

LOUIS A. WEIL, III has been President and Chief Executive Officer since
January 1996. He served as Publisher and Chief Executive Officer of The
Arizona Republic and The Phoenix Gazette and Executive Vice President of
Phoenix Newspapers, Inc. between July 1991 and January 1996. Mr. Weil served
as Publisher of Time from May 1989 to July 1991 and President and Publisher of
The Detroit News from May 1987 to May 1989. Mr. Weil serves as an independent
director of Prudential's Domestic Equity, Domestic Fixed Income, Global Fixed
Income and Municipal Bond mutual funds. He has been a Director of the Company
since 1991.

THOMAS K. MACGILLIVRAY has been Vice President since April 1997 and Chief
Financial Officer since January 1996. Previously, he was Director of
Investments from April 1993 to December 1995. He was Vice President and Equity
Portfolio Manager for Sovran Capital Management from January 1989 to March
1993.

ERIC S. TOOKER has been Vice President since April 1997 and General Counsel
and Secretary since June 1996. From November 1989 through May 1996, he was
Associate General Counsel at Conseco, Inc.

EUGENE S. PULLIAM has been the Publisher of The Indianapolis Star and The
Indianapolis News since 1975, Executive Vice President of the Company since
1973 and a Director of the Company since 1954. Mr. Pulliam is the uncle of Dan
Quayle, who is a Director of the Company.

MALCOLM W. APPLEGATE has been President since May 1993 and General Manager
since July 1990 of Indianapolis Newspapers, Inc. From 1985 until assuming his
current position with Indianapolis Newspapers, Inc., Mr. Applegate was
publisher of the Lansing (Michigan) State Journal.

JOHN F. OPPEDAHL has been Publisher and Chief Executive Officer of Phoenix
Newspapers, Inc. since January 1996. Previously, he was Executive Editor of
Phoenix Newspapers, Inc. since 1993 and Managing Editor of The Arizona
Republic from 1989 to 1993.

27
<PAGE>

WILLIAM A. FRANKE has been the Chairman and Chief Executive Officer of
America West Holdings Corporation, an aviation and travel service company,
since February 1997 and the Chairman of the Board of its principal subsidiary,
America West Airlines, Inc., an airline carrier. Mr. Franke was the
subsidiary's Chief Executive Officer from December 1993 until February 1997,
and its President from May 1996 until February 1997. He is a director of
America West Holdings Corporation, America West Airlines, Inc., Phelps Dodge
Corporation, Beringer Wine Estates, Mtel Latin America, Inc. and AirTransport
Association of America. He is a director and Chairman of the Board of
Airplanes Limited and a controlling trustee and Chairman of Airplanes U.S.
Trust, entities involved in aircraft financing and leasing. He has been a
director of the Company since 1990.

L. BEN LYTLE has been President and Chief Executive Officer of Anthem
Insurance Companies, Inc., an insurance holding company, since 1989 and
presently serves as Chairman of the Board of Directors of its major
subsidiaries. He is a director of Acordia, Inc., IPALCO, Inc., Duke REIT, and
Bank One, Indianapolis, N.A. He is serving his first term as a Director of the
Company.

DAN QUAYLE has been Chairman of Campaign America, a political action
committee, since 1995 and Chairman of BTC, Inc., a private company through
which he operates certain of his personal business interests, since 1993. He
served as Chairman of Circle Investors, Inc., a private financial services and
insurance holding company from 1993 until February 1997, and served on the
Board of Directors of Amtran, Inc. in 1996. He was Vice President of the
United States from January 1989 to January 1993 and a United States Senator
from January 1981 to January 1989. Mr. Quayle is a director of American
Standard, Inc., U.S. Filter Corporation and Circle Investors, Inc. He has been
a Director of the Company since 1993. Mr. Quayle is the nephew of Eugene S.
Pulliam.

RICHARD SNELL has been Chairman of the Board and Chief Executive Officer of
Pinnacle West Capital Corporation, a utility holding company and Chairman of
the Board of Arizona Public Service Company since 1990. He is also a director
of Aztar Corporation and Bank One Arizona Corporation. He has been a Director
of the Company since September 1996.

28
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 75,000,000 shares of
Class A Common Stock, without par value, 50,000,000 shares of Class B Common
Stock, without par value, and 25,000,000 shares of Preferred Stock (the
"Preferred Stock"). As of May 20, 1997, 22,092,244 shares of Class A Common
Stock were issued and outstanding, 31,345,500 shares of Class B Common Stock
(convertible into 3,134,550 shares of Class A Common Stock) were issued and
outstanding, and no shares of Preferred Stock have been issued. As of May 20,
1997, the Class A Common Stock was held by 335 shareholders of record and the
Class B Common Stock was held by 22 shareholders of record. All outstanding
shares are legally issued, fully paid and nonassessable.

CLASS A COMMON STOCK AND CLASS B COMMON STOCK

Voting Rights

The Company's Articles of Incorporation provide that each share of Class A
Common Stock entitles the holder thereof to one-tenth of a vote per share on
all matters on which shareholders are entitled to vote. Each share of Class B
Common Stock entitles the holder thereof to one vote per share on all matters
on which shareholders are entitled to vote.

In general, matters submitted to the vote of the shareholders, such as the
election of directors, are voted on by holders of the Class A Common Stock and
the Class B Common Stock voting together as a single class. Holders of Class A
Common Stock and Class B Common Stock are not entitled to vote cumulatively
for the election of directors. The holders of the Class B Common Stock hold
approximately 93.4% of the combined voting power of the outstanding Class A
Common Stock and Class B Common Stock. Under the Indiana Business Corporation
Law, however, holders of Class A Common Stock are also entitled to vote as a
separate class to approve amendments to the Company's Articles of
Incorporation that modify rights, preferences and powers that affect the
rights of the holders adversely, or to increase the number of authorized
shares of Class A Common Stock.

Dividend and Liquidation Rights

Each share of Class A Common Stock and Class B Common Stock is entitled to
receive dividends if, as and when declared by the Board of Directors of the
Company. The Company's Articles of Incorporation provide that dividends must
be paid on both the Class A Common Stock and the Class B Common Stock at any
time that dividends are paid on either. It is further provided that each share
of Class B Common Stock is entitled to receive only 10% of any dividend or
other distribution in cash, stock (other than Class A Common Stock or Class B
Common Stock) or property of the Company (including any liquidating
distribution) made with respect to each share of Class A Common Stock. To the
extent that a stock dividend is involved, holders of Class A Common Stock are
entitled to receive only Class A Common Stock in respect of those shares and
holders of Class B Common Stock are entitled to receive only Class B Common
Stock in respect of those shares. Furthermore, the Articles of Incorporation
of the Company provide that stock dividends on a class of common stock may not
be paid without a concomitant stock dividend for the other class of common
stock.

Transferability and Convertibility

The Class A Common Stock is freely transferable, subject to applicable
securities laws. The Class B Common Stock is also freely transferable, subject
to applicable securities laws; however, the Class B Common Stock has not been
registered under the Securities Act and the Company does not plan at any time
in the future to register such stock. No trading market currently exists for
the Class B Common Stock and it is not anticipated that such a market will
develop.

To allow holders of shares of Class B Common Stock to have access to
trading, the Company's Articles of Incorporation provide that each share of
Class B Common Stock is convertible at any time at the option of the holder
into one-tenth of a share of Class A Common Stock. A shareholder desiring to
sell an equity interest represented by Class B Common Stock could thereby
convert and sell, consistent with applicable securities laws, shares of Class
A Common Stock.

29
<PAGE>

PREFERRED STOCK

No shares of Preferred Stock have been issued. The Board of Directors,
without further shareholder action, is authorized to issue up to 25,000,000
shares of Preferred Stock and establish the designations, dividend rights,
dividend rate, conversion rights, voting rights, terms of redemption,
liquidation preference and all other preferences and rights of any series of
preferred stock; provided, however, that shares of Preferred Stock may not be
given voting rights without the prior approval of holders of a majority of the
outstanding shares of Class B Common Stock.

CERTAIN PROVISIONS OF INDIANA CORPORATE LAW AND THE EUGENE C. PULLIAM TRUST

Certain provisions of Indiana law applicable to the Company could delay,
deter or prevent a merger, tender offer or other takeover attempt of the
Company. Such provisions include those pertaining to "control shares"
(generally shares having 20%, 33 1/3% and 50% of voting power) which only have
voting rights to the extent approved by disinterested shareholders and
limitations upon business combinations involving the Company and any
"interested shareholder" (generally defined to include any holder of 10% or
more of the corporation's voting securities). The foregoing provisions may
have limited effect on the Company in light of the provisions of the Eugene C.
Pulliam Trust which has voting control of the Company. Under the terms of this
Trust, the Trustees are directed not to sell, exchange, pledge or otherwise
dispose of the Class B Common Stock held by the Trust or approve any
reorganization or recapitalization of the Company, including mergers and
consolidations if, as a result, the property held by the Trust would consist
of a smaller proportion of the voting power of the Company or any corporation
into which it was merged or consolidated, than its proportion of the voting
power of the Company at the time of the execution of the Trust. At the time
the Trust was established it had 54% of all outstanding voting common stock of
the Company. The Trust specifies that this limitation shall last for the
duration of the Trust, except that this limitation shall become void if the
Trustees (i) unanimously determine that a substantially complete loss of the
value of the property held in the Trust is seriously threatened and (ii)
obtain the written consent of two-thirds of the beneficiaries of the Trust
(which consist of descendants of Eugene C. Pulliam). By its terms, the Trust
will terminate twenty-one years after the death of the survivor of the class
consisting of the descendants of Eugene C. Pulliam living at the time of the
most recent amendment to the Trust in May 1973. As of May 20, 1997, the Trust
owned 22,907,500 shares of Class B Common Stock representing 73.1% of the
outstanding Class B Common Stock and 68.3% of the combined voting power of the
Company.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Class A Common Stock and Class B
Common Stock of the Company is Norwest Bank Minnesota, NA.

30
<PAGE>

CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of Class A
Common Stock by a "Non-U.S. Holder." A "Non-U.S. Holder" is a person or entity
that, for United States federal income tax purposes, is a non-resident alien
individual, a foreign corporation, a foreign partnership, or a foreign estate
or trust.

This discussion is based on the Internal Revenue Code of 1986, as amended
(the "Code"), and administrative interpretations as of the date hereof, all of
which are subject to change, including changes with adverse retroactive
effect. This discussion does not address all aspects of U.S. federal income
and estate taxation that may be relevant to Non-U.S. Holders in light of their
particular circumstances and does not address any tax consequences arising
under the laws of any state, local or foreign jurisdiction. PROSPECTIVE NON
U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF OWNING AND DISPOSING OF CLASS A COMMON
STOCK, INCLUDING THE CONSEQUENCES UNDER THE LAWS OF ANY STATE, LOCAL OR
FOREIGN JURISDICTION.

Proposed United States Treasury Regulations were issued on April 15, 1996
(the "Proposed Regulations") which, if adopted, would affect the United States
taxation of dividends paid to a Non-U.S. Holder on Class A Common Stock. The
Proposed Regulations are generally proposed to be effective with respect to
dividends paid after December 31, 1997, subject to certain transition rules.
THE DISCUSSION BELOW IS NOT INTENDED TO BE A COMPLETE DISCUSSION OF THE
PROVISIONS OF THE PROPOSED REGULATIONS, AND PROSPECTIVE INVESTORS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE EFFECT THE PROPOSED REGULATIONS
WOULD HAVE IF ADOPTED.

DIVIDENDS

Subject to the discussion below, dividends paid to a Non-U.S. Holder of
Class A Common Stock generally will be subject to withholding tax at a 30%
rate or such lower rate as may be specified by an applicable income tax
treaty. For purposes of determining whether tax is to be withheld at a 30%
rate or at a reduced rate as specified by an income tax treaty, the Company
ordinarily will presume that dividends paid to an address in a foreign country
are paid to a resident of such country absent knowledge that such presumption
is not warranted.

Under the Proposed Regulations, to obtain a reduced rate of withholding
under a treaty, a Non-U.S. Holder would generally be required to provide to
the Company an Internal Revenue Service Form W-8 certifying such Non-U.S.
Holder's entitlement to benefits under a treaty. The Proposed Regulations
would also provide special rules to determine whether, for purposes of
determining the applicability of a tax treaty, dividends paid to a Non-U.S.
Holder that is an entity should be treated as paid to the entity or those
holding an interest in that entity.

There will be no withholding tax on dividends paid to a Non-U.S. Holder that
are effectively connected with the Non-U.S. Holder's conduct of a trade or
business within the United States if an Internal Revenue Service Form 4224
stating that the dividends are so connected is filed with the Company or
Paying Agent. Instead, the effectively connected dividends will be subject to
regular United States income tax in the same manner as if the Non-U.S. Holder
were a U.S. resident. A non-U.S. corporation receiving effectively connected
dividends may also be subject to an additional "branch profits tax" which is
imposed, under certain circumstances, at a rate of 30%, or such lower rate as
may be specified by an applicable treaty, of the non-U.S. corporation's
effectively connected earnings and profits, subject to certain adjustments.

Generally, the Company must report to the Internal Revenue Service the
amount of dividends paid, the name and address of the recipient, and the
amount, if any, of tax withheld. A similar report is sent to the Non-U.S.
Holder. Pursuant to tax treaties or certain other agreements, the Internal
Revenue Service may make its reports available to tax authorities in the
recipient's country of residence.

Dividends paid to a Non-U.S. Holder at an address within the United States
may be subject to backup withholding imposed at a rate of 31% if the Non-U.S.
Holder fails to establish that such holder is entitled to an exemption or to
provide a correct taxpayer identification number and certain other information
to the Company or Paying Agent.

31
<PAGE>

GAIN ON DISPOSITION OF CLASS A COMMON STOCK

A Non-U.S. Holder generally will not be subject to United States federal
income tax with respect to gain realized on a sale or other disposition of
Class A Common Stock, unless (i) the gain is effectively connected with a
trade or business of such holder in the United States, (ii) in the case of
certain Non-U.S. Holders who are non-resident alien individuals and hold the
Class A Common Stock as a capital asset, such individuals are present in the
United States for 183 or more days in the taxable year of the disposition,
(iii) the Non-U.S. Holder is subject to tax pursuant to the provisions of the
Code regarding the taxation of U.S. expatriates, or (iv) the Company is or has
been a "U.S. real property holding corporation" within the meaning of Section
897(c)(2) of the Code at any time within the shorter of the five-year period
preceding such disposition or such holder's holding period. The Company is
not, and does not anticipate becoming, a U.S. real property holding
corporation.

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING ON DISPOSITION OF
CLASS A COMMON STOCK

Under current United States federal income tax law, information reporting
and backup withholding imposed at a rate of 31% will apply to the proceeds of
a disposition of Class A Common Stock effected by or through a United States
office of a broker unless the disposing holder provides certification of its
non-U.S. status or otherwise establishes an exemption. Generally, United
States information reporting and backup withholding will not apply to a
payment of disposition proceeds where the transaction is effected outside the
United States through a non-U.S. office of a non-U.S. broker. However, United
States information reporting requirements (but not backup withholding) will
apply to a payment of disposition proceeds where the transaction is effected
outside the United States by or through an office outside the United States of
a broker that is either (i) a United States person, (ii) a foreign person
which derives 50% or more of its gross income for certain periods from the
conduct of a trade or business in the United States or (iii) a "controlled
foreign corporation" for United States federal income tax purposes, and the
broker fails to maintain documentary evidence that the holder is a Non-U.S.
Holder and that certain conditions are met, or that the holder otherwise is
entitled to an exemption.

The Proposed Regulations would, if adopted, alter the foregoing rules in
certain respects. Among other things, the Proposed Regulations would provide
certain presumptions under which a Non-U.S. Holder would be subject to backup
withholding and information reporting unless the Company receives
certification from such holder of non-U.S. status.

Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is timely furnished to the
Internal Revenue Service.

FEDERAL ESTATE TAX

An individual Non-U.S. Holder who is treated as the owner of, or has made
certain lifetime transfers of, an interest in the Class A Common Stock will be
required to include the value thereof in his gross estate for United States
federal estate tax purposes, and may be subject to United States federal
estate tax unless an applicable estate tax treaty provides otherwise.

32
<PAGE>

SELLING SHAREHOLDERS

The following table sets forth certain information with respect to the Class
A Common Stock beneficially owned as of May 20, 1997 and sold and to be sold
by the Selling Shareholders. The Company agreed to use its best efforts to
assist the Selling Shareholders in selling their remaining shares after the
Goodrich Repurchase in a public offering. All of the Selling Shareholders are
non-profit organizations which received all (in the case of each museum) or a
significant amount (1,242,600 shares in the case of the Liberty Fund, Inc.) of
their shares of Class A Common Stock in a bequest from the Estate. See
"Prospectus Summary--Selling Shareholders."

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES SHARES BENEFICIALLY
OWNED PRIOR TO SOLD IN OWNED AFTER THE
THE OFFERING AND THE SHARES TO GOODRICH REPURCHASE
THE GOODRICH GOODRICH BE SOLD IN AND THE
REPURCHASE REPURCHASE THE OFFERING (1) OFFERING (2)
----------------- ---------- ---------------- ----------------------
NAME NUMBER PERCENT NUMBER PERCENT
- ---- --------- ------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Indianapolis Museum of
Art, Inc............... 621,300 2.7% 207,100 360,174 -- --
The Children's Museum of
Indianapolis........... 621,300 2.7 207,100 360,174 -- --
Liberty Fund, Inc....... 2,389,500 10.3 763,167 1,327,246 100,000 *
</TABLE>
- --------

(1) Assumes no exercise of the U.S. Underwriters' over-allotment option.

(2) Assumes either (i) exercise in full of the U.S. Underwriters' over-
allotment option or (ii) consummation of the Additional Repurchase to the
extent the U.S. Underwriters' over-allotment option is not exercised.
*Constitutes less than one percent of the outstanding shares of Class A Common
Stock.

33
<PAGE>

UNDERWRITERS

Under the terms and subject to the conditions in the Underwriting Agreement
dated the date hereof (the "Underwriting Agreement"), the U.S. Underwriters
named below, for whom Morgan Stanley & Co. Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and PaineWebber Incorporated are serving as U.S.
Representatives, have severally agreed to purchase, and the Selling
Shareholders have severally agreed to sell to them, and the International
Underwriters named below, for whom Morgan Stanley & Co. International Limited,
Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch
International and PaineWebber International (U.K.) Ltd. are serving as
International Representatives, have severally agreed to purchase, and the
Selling Shareholders have severally agreed to sell to them, the respective
number of shares of Class A Common Stock set forth opposite the names of such
Underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---- ---------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated...................................
Donaldson, Lufkin & Jenrette Securities Corporation.................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...............................................
PaineWebber Incorporated............................................
---------
Subtotal..........................................................
---------
International Underwriters:
Morgan Stanley & Co. International Limited..........................
Donaldson, Lufkin & Jenrette Securities Corporation.................
Merrill Lynch International.........................................
PaineWebber International (U.K.) Ltd................................
---------
Subtotal..........................................................
---------
Total...............................................................
=========
</TABLE>

The U.S. Underwriters and the International Underwriters are collectively
referred to as the "Underwriters," and the U.S. Representatives and the
International Representatives are collectively referred to as the
"Representatives." The Underwriting Agreement provides that the obligations of
the several Underwriters to pay for and accept delivery of the shares of Class
A Common Stock offered hereby are subject to the approval of certain legal
matters by their counsel and to certain other conditions. The Underwriters are
obligated to take and pay for all of the shares of Class A Common Stock
offered hereby (other than those covered by the U.S. Underwriters' over-
allotment option described below) if any such shares are taken.

34
<PAGE>

Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions: (i)
it is not purchasing any U.S. Shares (as defined below) for the account of
anyone other than a United States or Canadian Person (as defined below) and
(ii) it has not offered or sold, and will not offer or sell, directly or
indirectly, any U.S. Shares or distribute any prospectus relating to the U.S.
Shares outside the United States or Canada or to any person who is not a
United States or Canadian Person. Pursuant to the Agreement Between U.S. and
International Underwriters, each International Underwriter has represented and
agreed that, with certain exceptions: (i) it is not purchasing any
International Shares (as defined below) for the account of any United States
or Canadian Person and (ii) it has not offered or sold, and will not offer or
sell, directly or indirectly, any International Shares or distribute any
prospectus relating to the International Shares within the United States or
Canada or to any United States or Canadian Person. With respect to any
Underwriter that is a U.S. Underwriter and an International Underwriter, the
foregoing representations or agreements (i) made by it in its capacity as a
U.S. Underwriter shall apply only to shares of Class A Common Stock purchased
by it in its capacity as a U.S. Underwriter and (ii) made by it in its
capacity as an International Underwriter shall apply only to shares of Class A
Common Stock purchased by it in its capacity as an International Underwriter.
The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Agreement Between U.S. and
International Underwriters. As used herein, "United States or Canadian Person"
means any national or resident of the United States or Canada, or any
corporation, pension, profit-sharing or other trust or other entity organized
under the laws of the United States or Canada or of any political subdivision
thereof (other than a branch located outside the United States and Canada of
any United States or Canadian Person) and includes any United States or
Canadian branch of a person who is otherwise not a United States or Canadian
Person. All shares of Class A Common Stock to be purchased by the U.S.
Underwriters and the International Underwriters are referred to herein as the
"U.S. Shares" and the "International Shares," respectively.

Pursuant to the Agreement Between U.S. and International Underwriters, sales
may be made between the U.S. Underwriters and International Underwriters of
any number of shares of Class A Common Stock to be purchased pursuant to the
Underwriting Agreement as may be mutually agreed. The per share price of any
shares sold shall be the public offering price set forth on the cover page
hereof, in United States dollars, less an amount not greater than the per
share amount of the concession to dealers set forth below.

Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has
agreed not to offer or sell, any shares of Class A Common Stock, directly or
indirectly, in any province or territory of Canada, or to or for the benefit
of, any resident of any province or territory of Canada in contravention of
the securities laws thereof and has represented that any offer or sale of
Class A Common Stock in Canada will be made only pursuant to an exemption from
the requirement to file a prospectus in the province or territory of Canada in
which such offer or sale is made. Each U.S. Underwriter has further agreed to
send to any dealer who purchases from it any shares of Class A Common Stock a
notice stating in substance that, by purchasing such Class A Common Stock,
such dealer represents and agrees that it has not offered or sold, and will
not offer or sell, directly or indirectly, any of such Class A Common Stock in
any province or territory of Canada or to, or for the benefit of, any resident
of any province or territory of Canada in contravention of the securities laws
thereof and that any offer or sale of Class A Common Stock in Canada will be
made only pursuant to an exemption from the requirement to file a prospectus
in the province or territory of Canada in which such offer or sale is made,
and that such dealer will deliver to any other dealer to whom it sells any of
such Class A Common Stock a notice containing substantially the same statement
as is contained in this sentence.

Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that (i) it has not
offered or sold and, prior to the date six months after the closing date for
the sale of the International Shares to the International Underwriters will
not offer or sell, any shares of Class A Common Stock to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in

35
<PAGE>

the United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995, (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 with respect to anything done by
it in relation to the shares of Class A Common Stock offered hereby in, from
or otherwise involving the United Kingdom, and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the offering of the shares of Class A Common
Stock to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996, or is a
person to whom such document may otherwise lawfully be issued or passed on.

The Underwriters initially propose to offer part of the Class A Common Stock
directly to the public at the public offering price set forth on the cover
page hereof and part to certain dealers at a price that represents a
concession not in excess of $ a share under the public offering price.
Any Underwriter may allow, and such dealers may reallow, a concession not in
excess of $ a share to other Underwriters or to certain other dealers.
After the initial offering of the Class A Common Stock offered hereby, the
offering price and other selling terms may from time to time be varied by the
Representatives.

Pursuant to the Underwriting Agreement, the Selling Stockholders have
granted to the U.S. Underwriters an option, exercisable for 30 days from the
date of this Prospectus, to purchase up to 307,139 additional shares of Class
A Common Stock at the public offering price set forth on the cover page
hereof, less underwriting discounts and commissions. The U.S. Underwriters may
exercise such option to purchase solely for the purpose of covering over-
allotments, if any, made in connection with the Offering. To the extent such
option is exercised, each U.S. Underwriter will become obligated, subject to
certain conditions, to purchase approximately the same percentage of such
additional shares of Class A Common Stock as the number set forth next to such
U.S. Underwriter's name in the preceding table bears to the total number of
shares of Class A Common Stock offered by the U.S. Underwriters hereby.

The Class A Common Stock is listed on the New York Stock Exchange under the
symbol "ECP."

In order to facilitate the offering of the Class A Common Stock, the
Underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Class A Common Stock. Specifically, the Underwriters
may over-allot in connection with the offering, creating a short position in
the Class A Common Stock for their own account. In addition, to cover over-
allotments or to stabilize the price of the Class A Common Stock, the
Underwriters may bid for, and purchase, shares of Class A Common Stock in the
open market. Finally, the underwriting syndicate may reclaim selling
concessions allowed to an underwriter or a dealer for distributing the Class A
Common Stock in the offering, if the syndicate repurchases previously
distributed Class A Common Stock in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the Class A Common Stock above
independent market levels. The Underwriters are not required to engage in
these activities and may end any of these activities at any time.

The Company, the Selling Shareholders and each shareholder holding combined
voting power in excess of five percent (5%) of the Company's issued and
outstanding shares and the directors and other executive officers of the
Company, have agreed, subject to certain limited exceptions, that without the
prior written consent of Morgan Stanley & Co. Incorporated on behalf of the
Underwriters, they will not, during the period ending 90 days (180 days in the
case of each of the Selling Shareholders) after the date of this Prospectus
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Class A Common Stock or any securities convertible
into or exercisable or exchangeable for Class A Common Stock (whether such
shares or any such securities are not owned by such party or hereafter
acquired) or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Class A Common Stock, whether any such transaction described in clauses
(i) or (ii) above is to be settled by delivered of Class A Common Stock or
other such securities, in cash or otherwise.

The Company, the Selling Shareholders and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.

36
<PAGE>

LEGAL MATTERS

Certain legal matters in connection with the Offering will be passed upon
for the Company by Henderson, Daily, Withrow & DeVoe, Indianapolis, Indiana,
for the Selling Shareholders by Baker & Daniels, Indianapolis, Indiana, and
for the U.S. Underwriters and the International Underwriters by Davis Polk &
Wardwell, New York, New York.

EXPERTS

The consolidated financial statements of Central Newspapers, Inc. as of
December 29, 1996 and December 31, 1995, and for each of the three fiscal
years in the period ended December 29, 1996, set forth herein have been
audited by Geo. S. Olive & Co. LLC, independent auditors, as set forth in
their report thereon included therein and appearing elsewhere herein. Such
financial statements are included herein in reliance upon the reports of Geo.
S. Olive & Co. LLC pertaining to such financial statements given upon the
authority of such firm as experts in accounting and auditing.

With respect to the unaudited consolidated financial information of the
Company for the thirteen week period ended March 30, 1997, appearing elsewhere
in this Prospectus, Price Waterhouse LLP reported that they have applied
limited procedures in accordance with professional standards for a review of
such information. However, their separate report dated April 28, 1997 states
that they did not audit and they do not express an opinion on that unaudited
consolidated financial information. Price Waterhouse LLP has not carried out
any significant or additional audit tests beyond those which would have been
necessary if their report had not been included. Accordingly, the degree of
reliance on their report on such information should be restricted in light of
the limited nature of the review procedures applied. Price Waterhouse LLP is
not subject to the liability provisions of Section 11 of the Securities Act
for their report on the unaudited consolidated financial information because
that report is not a "report" or a "part" of the Registration Statement
prepared or certified by Price Waterhouse LLP within the meaning of Sections 7
and 11 of the Securities Act.

Price Waterhouse LLP, has been selected to examine and report upon the
financial statements of the Company for the fiscal year ending December 28,
1997. This selection was made following the solicitation and receipt of bids
for audit, tax and related services from several independent accounting firms,
including Price Waterhouse LLP and Geo. S. Olive & Co. LLC. During the last
two fiscal years, the audit reports issued by Geo. S. Olive & Co. LLC with
respect to the Company's financial statements did not contain an adverse
opinion or disclaimer of opinion, and were not qualified as to uncertainty,
audit scope or accounting principles. During the last two fiscal years (and in
any subsequent interim period), there have been no disagreements between the
Company and Geo. S. Olive & Co. LLC on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Geo. S. Olive &
Co. LLC, would have caused it to make a reference to the subject matter of the
disagreement in connection with its audit report.

During 1996, the Company consulted with Price Waterhouse LLP, to confirm the
conclusions reached by Geo. S. Olive & Co. LLC, with respect to the accounting
treatment to be afforded the purchase of a minority shareholders' interest of
Indianapolis Newspapers, Inc., a majority owned subsidiary of the Company
which transaction closed on January 3, 1997. The views expressed by Price
Waterhouse LLP, were in agreement with those of Geo. S. Olive & Co. LLC.

37
<PAGE>

INDEPENDENT AUDITOR'S REPORT

Board of Directors and Shareholders
Central Newspapers, Inc.

We have audited the accompanying consolidated statement of financial
position of Central Newspapers, Inc. and Subsidiaries as of December 29, 1996
and December 31, 1995 and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended December 29, 1996. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Central Newspapers, Inc. and Subsidiaries as of December 29, 1996 and
December 31, 1995 and the consolidated results of their operations and their
cash flows for each of the three fiscal years in the period ended December 29,
1996, in conformity with generally accepted accounting principles.

As discussed in Note 1, the Company adopted, effective at the beginning of
1994, SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities."

Geo. S. Olive & Co. LLC
Indianapolis, Indiana
February 3, 1997

F-1
<PAGE>

CENTRAL NEWSPAPERS, INC.

CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
--------------------------------------
DECEMBER 25, DECEMBER 31, DECEMBER 29,
1994 1995 1996
------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Operating revenues:
Advertising........................... $395,450 $446,693 $479,474
Circulation........................... 121,823 129,537 134,133
Other................................. 2,429 3,671 6,708
-------- -------- --------
519,702 579,901 620,315
-------- -------- --------
Operating expenses:
Compensation.......................... 217,078 222,748 228,316
Newsprint and ink..................... 76,247 110,085 113,171
Other operating costs................. 116,944 129,362 137,875
Depreciation and amortization......... 26,639 28,487 35,528
Asset impairment cost................. 4,226
Work force reduction cost............. 7,064 3,328 1,340
-------- -------- --------
443,972 494,010 520,456
-------- -------- --------
Operating income........................ 75,730 85,891 99,859
Other income--net....................... 4,965 8,154 4,009
-------- -------- --------
Income before income taxes.............. 80,695 94,045 103,868
Provision for income taxes.............. 32,847 38,048 42,431
-------- -------- --------
Income before minority interest and
Equity in Affiliate.................... 47,848 55,997 61,437
Minority interest in subsidiary......... (2,977) (1,409) (1,629)
Equity in Affiliate, net of tax......... (3,550) (590) 1,726
-------- -------- --------
Net income.............................. $ 41,321 $ 53,998 $ 61,534
======== ======== ========
Net income per common share............. $ 1.55 $ 2.03 $ 2.31
======== ======== ========
Average common shares outstanding....... 26,621 26,651 26,619
</TABLE>

See accompanying notes to consolidated financial statements.

F-2
<PAGE>

CENTRAL NEWSPAPERS, INC.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29,
1995 1996
------------ ------------
(IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 26,142 $ 36,149
Marketable securities............................... 103,390 25,612
Accounts receivable (net of allowances of $1,067
and $1,638)........................................ 62,355 90,023
Inventories......................................... 10,125 8,912
Deferred income taxes............................... 6,773 7,263
Other current assets................................ 4,233 3,503
-------- --------
Total current assets............................ 213,018 171,462
-------- --------
Property, plant and equipment:
Land................................................ 16,943 18,225
Buildings and improvements.......................... 110,265 121,785
Leasehold improvements.............................. 4,177 4,255
Machinery and equipment............................. 322,799 367,173
Construction in progress............................ 33,567 1,414
-------- --------
487,751 512,852
Less accumulated depreciation..................... 206,946 215,872
-------- --------
280,805 296,980
-------- --------
Other assets:
Land held for development........................... 1,607 3,118
Goodwill and other intangibles...................... 29,009 75,449
Investment in Affiliate............................. 5,843 8,867
Other............................................... 16,922 31,096
-------- --------
53,381 118,530
-------- --------
Total Assets......................................... $547,204 $586,972
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................... $ 19,122 $ 19,079
Accrued compensation................................ 17,172 17,052
Dividends payable................................... 5,027 5,180
Accrued expenses and other liabilities.............. 14,567 13,914
Federal and state income taxes...................... 1,941 5,880
Deferred revenue.................................... 17,371 18,034
-------- --------
Total current liabilities....................... 75,200 79,139
-------- --------
Deferred income taxes................................ 23,009 26,602
-------- --------
Long-term debt....................................... 2,678 2,678
-------- --------
Postretirement benefit obligation.................... 79,327 81,759
-------- --------
Minority interest in subsidiary...................... 8,249 9,244
-------- --------
Shareholders' equity:
Preferred Stock--issuable in series:
Authorized--25,000,000 shares Issued--none
Class A Common Stock--without par value:
Authorized--75,000,000 shares Issued--23,520.611
and 23,237,711 shares............................ 18,967 24,259
Class B Common Stock--without par value:
Authorized--50,000,000 shares Issued--31,553,000
shares........................................... 63 63
Retained earnings................................... 338,436 363,365
Unamortized value of restricted stock............... (1,627)
Net unrealized gain on available-for-sale
securities......................................... 1,275 1,490
-------- --------
358,741 387,550
-------- --------
Total Liabilities and Shareholders' Equity........... $547,204 $586,972
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE>

CENTRAL NEWSPAPERS, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
UNREALIZED
CLASS A CLASS B UNAMORTIZED GAIN ON
COMMON STOCK COMMON STOCK VALUE OF AVAILABLE-
------------------- ------------------ RETAINED RESTRICTED FOR-SALE
SHARES AMOUNT SHARES AMOUNT EARNINGS STOCK SECURITIES
---------- ------- ---------- ------ -------- ----------- ----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 27,
1993................... 23,431,450 $17,137 31,578,000 $63 $273,493
Adoption of SFAS No.
115, net of deferred
income taxes and
minority interest...... $ 649
Net income (52 weeks)... 41,321
Dividends declared:
Class A Common Stock... (12,204)
Class B Common Stock... (1,642)
Exercise of stock
options................ 49,050 1,045
Common stock conversion. 2,500 (25,000)
Change in net unrealized
gain on available-for-
sale securities........ (100)
---------- ------- ---------- --- -------- ------- ------
Balance at December 25,
1994................... 23,483,000 18,182 31,553,000 63 300,968 549
Net income (53 weeks)... 53,998
Dividends declared:
Class A Common Stock... (14,573)
Class B Common Stock... (1,957)
Exercise of stock
options................ 37,611 785
Change in net unrealized
gain on available-for-
sale securities........ 726
---------- ------- ---------- --- -------- ------- ------
Balance at December 31,
1995................... 23,520,611 18,967 31,553,000 63 338,436 1,275
Net income (52 weeks)... 61,534
Dividends declared:
Class A Common Stock... (16,856)
Class B Common Stock... (2,272)
Exercise of stock
options................ 154,700 3,928
Repurchase of Class A
Common Stock........... (490,100) (539) (17,477)
Issuance of restricted
stock grants........... 52,500 1,903 $(1,903)
Amortization of
restricted stock
grants................. 276
Change in net unrealized
gain on available-for-
sale securities........ 215
---------- ------- ---------- --- -------- ------- ------
Balance at December 29,
1996................... 23,237,711 $24,259 31,553,000 $63 $363,365 $(1,627) $1,490
========== ======= ========== === ======== ======= ======
</TABLE>

See accompanying notes to consolidated statements.

F-4
<PAGE>

CENTRAL NEWSPAPERS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED:
--------------------------------------
DECEMBER 25, DECEMBER 31, DECEMBER 29,
1994 1995 1996
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Operating activities:
Net income............................ $ 41,321 $53,998 $61,534
Items which did not use (provide)
cash:
Depreciation and amortization....... 27,284 29,281 35,528
Postretirement and pension benefits. 7,815 2,072 2,050
Asset impairment cost............... 4,226
Change in unrealized gain on trading
securities......................... (105) (1,009) 821
Minority interest in earnings of
subsidiary......................... 2,977 1,409 1,629
Equity in Affiliate................. 3,550 540 (1,864)
Deferred income taxes............... (92) 1,791 (1,543)
Other............................... (203) 357 634
Change in assets and liabilities:
Net proceeds from (purchases of)
trading securities................. (45,682) (17,630) 40,671
Accounts receivable................. (8,276) (7,730) (26,320)
Inventories......................... 974 (983) 1,835
Other current assets................ 428 (1,429) 2,363
Accounts payable.................... 3,564 1,056 (1,041)
Accrued compensation................ 1,257 749 (317)
Accrued expenses and other
liabilities........................ 3,586 (4,869) (1,617)
Federal and state income taxes...... 1,340 1,739 3,338
Deferred revenue.................... 2,159 2,941 88
-------- ------- -------
Net cash provided by operating
activities....................... 41,897 62,283 122,015
-------- ------- -------
Investing activities:
Purchases of property, plant and
equipment............................ (23,256) (58,676) (46,530)
Proceeds from disposition of assets... 622 2,452 1,975
Purchases of available-for-sale
securities........................... (234,011) (76,726) (24,659)
Proceeds from available-for-sale
securities........................... 274,800 99,051 62,243
Acquisition of McCormick & Co., Inc... (60,509)
Investment in Affiliate............... (5,603) (2,484)
Purchase of minority interest in
subsidiary........................... (36,205) (500)
Purchase of intangibles and other..... (3,877) (5,580) (5,557)
-------- ------- -------
Net cash used by investing
activities....................... (27,530) (42,463) (73,037)
-------- ------- -------
Financing activities:
Cash dividends paid................... (13,308) (15,724) (18,647)
Dividends paid to minority interest... (1,937) (678) (989)
Proceeds from exercise of stock
options.............................. 840 619 2,882
Principal repayments on long-term
debt................................. (4,200)
Repurchase of Class A Common Stock.... (18,017)
-------- ------- -------
Net cash used by financing
activities....................... (14,405) (15,783) (38,971)
-------- ------- -------
Increase (decrease) in cash and cash
equivalents............................ (38) 4,037 10,007
Cash and cash equivalents, beginning of
year................................... 22,143 22,105 26,142
-------- ------- -------
Cash and cash equivalents, end of year.. $ 22,105 $26,142 $36,149
======== ======= =======
Supplemental cash flow information:
Income taxes paid..................... $ 31,920 $34,492 $40,798
Interest paid......................... 208 215 615
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>

CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations--Central Newspapers, Inc. and its subsidiaries (the
"Company") are primarily engaged in the publishing and distribution of
newspapers. Revenues are principally derived from advertising and newspaper
sales in the Phoenix, Arizona and Indianapolis, Indiana metropolitan areas.
The Company also has a 13.5% interest in Ponderay Newsprint Company
("Affiliate"), a partnership formed to own and operate a newsprint mill in
Washington.

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

Principles of Consolidation--The consolidated financial statements include
the accounts of the Company and all wholly-owned and majority-owned
subsidiaries. Investments in companies in which the Company exercises
significant influence are accounted for using the equity method. All
significant intercompany accounts and transactions have been eliminated.

Fiscal Year--The Company's fiscal year ends on the last Sunday of the
calendar year. The fiscal years 1996, 1995 and 1994 included fifty-two, fifty-
three and fifty-two weeks, respectively.

Revenue Recognition--Advertising revenue is recognized when the
advertisement appears in the newspaper. Deferred subscription revenue, which
primarily represents amounts received from customers in advance of newspaper
delivery, is included in revenue over the subscription term.

Cash Equivalents--The Company considers highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents.

Concentrations of Credit Risk--Financial instruments which potentially
subject the Company to concentrations of credit risk consist primarily of cash
equivalents, trade accounts receivable and investments in marketable
securities. The Company places its temporary cash with financial institutions
and limits the amount of credit exposure to any one financial institution.
Accounts receivable are with customers located primarily in the immediate
geographical area of each city of publication. The Company reviews a
customer's credit history before extending credit and establishes an allowance
for doubtful accounts based on factors surrounding the credit risk of specific
customers, historic trends and other information. The Company, by policy,
limits the type and amount of its investments in marketable securities.

Inventories--Newsprint is valued at the lower of cost or market on the last-
in, first-out (LIFO) method. Other inventories are valued at the lower of cost
or market using the first-in, first-out (FIFO) and moving average methods.

Property, Plant and Equipment--Property, plant and equipment are carried at
cost. Depreciation is computed using primarily the straight-line method based
on the estimated useful lives of the assets. The principal estimated useful
lives range from three to fifteen years for machinery and equipment and ten to
forty years for buildings and leasehold improvements.

Investment in Affiliate--The Company uses the equity method of accounting
for its 13.5% partnership interest in Ponderay Newsprint Company.

Goodwill and Other Intangibles--Goodwill acquired before 1970 is not being
amortized. Goodwill and other intangibles acquired after 1970 are being
amortized on a straight-line basis over periods of fifteen to forty years.

Income Taxes--The Company provides for the determination of deferred tax
liabilities and assets at the end of each period based on the difference
between financial statement and tax basis of assets and liabilities using

F-6
<PAGE>

CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

tax rates expected to be in effect when taxes are actually paid or recovered.
The Company files a consolidated federal income tax return with its wholly and
majority owned subsidiaries.

Net Income Per Common Share--The net income per common share is computed
based on the weighted average number of common shares outstanding in each
year. The Class B Common Stock is included in the computation as if converted
to Class A Common Stock at a ratio of ten shares of Class B Common Stock to
one share of Class A Common Stock. Outstanding stock options are common stock
equivalents but are excluded from net income per common share computations
since their effect is not significant.

Accounting Changes--The Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of," in the first quarter of
1996. The statement establishes accounting standards for recognizing and
measuring impairment of long-lived assets, and requires reducing the carrying
amount of any impaired assets to fair value. Application of SFAS No. 121
resulted in a charge to earnings of approximately $2,500,000, net of tax.

The Company also adopted SFAS No. 123, "Accounting for Stock Based
Compensation," in 1996. The statement prescribes accounting and reporting
standards for all stock-based compensation plans. SFAS No. 123 allows
companies to continue to use existing methods for recognizing the expense of
these plans and provide pro forma disclosures in the financial statements and
earnings per share using the fair value method prescribed in the statement.
The Company has elected this approach.

At the beginning of the 1994 fiscal year, the Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."

Reclassification--Certain amounts in the financial statements have been
reclassified to conform to the 1996 presentation.

2--MARKETABLE SECURITIES

Management determines the classification of its investments in debt and
equity securities at the time of purchase. Securities classified as available-
for-sale are carried at fair value, with unrealized gains and losses, net of
tax, reported as a separate component of shareholders' equity. Securities
classified as trading securities are carried at fair value with unrealized
gains and losses reported in earnings. The cost of securities sold is based on
the specific identification method. All marketable debt securities are
classified as current assets. Certain available-for-sale equity securities are
classified as noncurrent assets.

The following is a summary of securities at December 29, 1996:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
AVAILABLE-FOR-SALE SECURITIES
----------------------------- (IN THOUSANDS)
<S> <C> <C> <C> <C>
Debt securities of the U.S.
Treasury and agencies............. $ 1,998 $ 1,998
Equity securities.................. 373 $3,107 3,480
Other.............................. 268 268
-------- ------ ---- -------
2,639 3,107 5,746
-------- ------ ---- -------
<CAPTION>
TRADING SECURITIES
------------------
<S> <C> <C> <C> <C>
Debt securities of the U.S.
Treasury and agencies............. 806 $ (4) 802
Corporate debt securities.......... 1,259 (6) 1,253
Mortgage-backed securities......... 9,576 184 9,760
Preferred stock.................... 11,070 94 (13) 11,151
Other.............................. 213 (67) 146
-------- ------ ---- -------
22,924 278 (90) 23,112
-------- ------ ---- -------
$ 25,563 $3,385 $(90) $28,858
======== ====== ==== =======
</TABLE>

F-7
<PAGE>

CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following is a summary of securities at December 31, 1995:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
AVAILABLE-FOR-SALE SECURITIES
----------------------------- (IN THOUSANDS)
<S> <C> <C> <C> <C>
Debt securities of the U.S.
Treasury and agencies............. $ 35,408 $ 158 $ (5) $ 35,561
Equity securities.................. 153 2,624 2,777
Corporate debt securities.......... 2,783 2 2,785
-------- ------ ----- --------
38,344 2,784 (5) 41,123
-------- ------ ----- --------
<CAPTION>
TRADING SECURITIES
------------------
<S> <C> <C> <C> <C>
Debt securities of the U.S.
Treasury and agencies............. 19,860 243 (3) 20,100
Corporate debt securities.......... 14,025 286 14,311
Mortgage-backed securities......... 19,517 479 (1) 19,995
Preferred stock.................... 10,515 136 (64) 10,587
Other.............................. 118 (67) 51
-------- ------ ----- --------
64,035 1,144 (135) 65,044
-------- ------ ----- --------
$102,379 $3,928 $(140) $106,167
======== ====== ===== ========
</TABLE>

Included in the Company's earnings for 1994, 1995 and 1996 were changes in
net unrealized holding gains of $105,000, $1,009,000 and $(821,000),
respectively, from trading investments.

Proceeds from the sale of available-for-sale investments totaled
approximately $274,800,000, $99,051,000 and $62,243,000 in 1994, 1995 and
1996. Gross realized gains and losses for 1994, 1995 and 1996 on available-
for-sale investments were insignificant. All available-for-sale debt
securities had a contractual maturity of one year or less at the end of 1996.
The fair value of equity securities in the amounts of $2,777,000 in 1995 and
$3,246,000 in 1996 have been classified with other noncurrent assets.

3--ACQUISITIONS

On March 12, 1996, the Company acquired 100% of the outstanding common stock
of McCormick & Company, Inc. ("McCormick"), the parent company of the
Alexandria Daily Town Talk newspaper of Louisiana and McCormick Graphics,
Inc., a commercial printing subsidiary. The purchase price of approximately
$62,000,000 was paid entirely with cash. The amount of the purchase price
allocated to goodwill was approximately $47,473,000 and is being amortized
over forty years.

In July 1994, the Company made a tender offer for the 5,533 shares of Class
A Common Stock of Indianapolis Newspapers, Inc. ("INI") not already owned for
$10,000 net in cash per share. On September 12, 1994, the Company purchased
3,591 shares of INI which increased the Company's ownership to 89.9% from
71.2%. The total acquisition cost of $36,200,000, including consulting fees,
was accounted for using the purchase method of accounting. The fair value of
assets acquired was $22,800,000, including $19,700,000 of goodwill. The
transaction resulted in a reduction of the minority interest of $13,400,000.
In June 1995, the Company purchased an additional 50 shares of INI for $10,000
net in cash per share which increased the Company's ownership to 90.2%. The
effects of these purchases were insignificant to earnings for 1994, 1995 and
1996. See Note 16 for discussion on the acquisition of the remaining minority
interest of INI.

4--EMPLOYEE BENEFIT PLANS

The Company has defined benefit plans to provide pension benefits to all
employees who have met certain eligibility requirements. Benefits are based
primarily on length of service, wages earned, age and the amount of optional
employee contributions. The Company's policy is to fund at least the minimum
amount required by

F-8
<PAGE>

CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

ERISA. Assets of the plans consist primarily of stocks, bonds and short-term
investments. During 1996, the defined benefit plan of McCormick was combined
into the defined benefit plan of the Company. The plan assets of McCormick
exceeded the projected benefit obligation by approximately $5,308,000.

The funded status for the Company's defined benefit plans at year end:

<TABLE>
<CAPTION>
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of plan benefits:
Vested................................................. $180,545 $195,864
Nonvested.............................................. 10,236 9,941
-------- --------
Accumulated benefit obligation......................... 190,781 205,805
Effect of future salary increases...................... 11,999 11,335
-------- --------
Projected benefit obligation........................... 202,780 217,140
Plan assets at fair value................................ 207,401 241,397
-------- --------
Plan assets in excess of projected benefit obligation.... 4,621 24,257
Unrecognized SFAS No. 87 transition asset................ (7,548) (6,265)
Unrecognized prior service cost.......................... 3,680 3,236
Unrecognized net (gain) loss............................. 716 (14,226)
-------- --------
Prepaid pension cost..................................... $ 1,469 $ 7,002
======== ========
</TABLE>

Assumptions used in determining funded status at the end of 1995 were a 9%
rate of return, 7% discount rate and a 4% rate of compensation increase. The
assumptions for determining funded status at the end of 1996 were a 9% rate of
return, 7.5% discount rate and a 4% rate of compensation increase.

Pension expense included the following components:

<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during the year.... $ 5,959 $ 4,904 $ 6,861
Interest cost on projected benefit obligation.... 12,851 14,116 14,575
Return on assets:
Actual......................................... 84 (48,898) (35,418)
Deferred gain (loss)............................(14,551). 33,542 18,274
Amortization of:
Transition asset............................... (1,286) (1,283) (1,283)
Prior service cost............................. 443 444 444
Loss (gain).................................... (10) (10) 39
------- ------- -------
Pension expense.................................. $ 3,490 $ 2,815 $ 3,492
======= ======= =======

Significant assumptions used in determining pension expense:

<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Expected long-term rate of return................ 8.5 % 9.0 % 9.0%
Discount rate.................................... 7.25 8.75 7.0
Rate of increase in future compensation levels... 4.0 5.0 4.0
</TABLE>

The Company has a wage deferral plan qualified under Section 401(k) of the
Internal Revenue Code that covers all eligible employees. Company
contributions to this plan were $4,414,000, $4,397,000 and $4,600,000 for
1994, 1995 and 1996.

F-9
<PAGE>

CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5--POSTRETIREMENT BENEFIT OBLIGATION

The Company sponsors postretirement medical and life insurance plans which
are available to most of its employees. In order to be eligible for these
plans, employees must retire from the Company and have been covered under an
active plan. The level of benefits provided depends on the year of retirement
and years of service. The plans are contributory with periodic adjustments in
the amount of contributions by retirees. The Company's policy is to fund these
benefits as claims and premiums are paid.

The status of the postretirement benefit obligation at year end:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees................................................. $52,077 $55,048
Fully eligible active plan participants.................. 13,556 14,340
Other active plan participants........................... 19,452 20,511
------- -------
Total accumulated postretirement benefit obligation...... 85,085 89,899
Unrecognized prior service cost.......................... 4,884 2,957
Unrecognized net loss.................................... (7,544) (8,198)
------- -------
Accrued postretirement benefit obligation.................. $82,425 $84,658
======= =======
</TABLE>

The net postretirement benefit cost included the following components:

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during the year........ $2,646 $1,941 $2,859
Interest cost on accumulated benefit obligation...... 5,765 5,387 5,974
Amortization of unrecognized prior service cost...... (1,934) (1,927) (1,927)
Amortization of loss (gain).......................... 6 (241) 128
------ ------ ------
Postretirement benefit expense....................... $6,483 $5,160 $7,034
====== ====== ======
</TABLE>

The accumulated postretirement benefit obligation was determined using a
discount rate of 7.5% and a health care cost trend rate of 8% in 1996
decreasing to 5% in the year 2000 and thereafter. Discount rates used for 1994
and 1995 were 8.75% and 7.00%. The effect of a 1% increase each year in the
health care cost trend rate, would result in an increase of approximately
$7,815,000 in the accumulated postretirement benefit obligation at the end of
1996 and $1,048,000 in the aggregate service and interest components of the
1996 expense.

6--WORK FORCE REDUCTION

The Company has reduced its work force in response to economic conditions,
increasing costs and changes in technology. Early retirement incentive
programs contributed to the staff reductions. Employees were offered early
retirement benefits through a non-qualified supplemental retirement plan and
those terminated due to job eliminations received severance payments. Work
force reduction costs include retirement benefits, severance payments and
professional support.

F-10
<PAGE>

CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7--OTHER INCOME--NET

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Income items:
Interest............................................. $5,457 $7,213 $5,196
Change in unrealized gain on trading securities...... 105 1,009 (821)
Gain on disposition of assets........................ 171
Dividends............................................ 62 572 960
Other................................................ 204 708 79
------ ------ ------
5,999 9,502 5,414
------ ------ ------
Expense items:
Interest............................................. 204 238 618
Loss on disposition of assets........................ 357 391
Other................................................ 830 753 396
------ ------ ------
1,034 1,348 1,405
------ ------ ------
Other income--net...................................... $4,965 $8,154 $4,009
====== ====== ======
</TABLE>

8--INCOME TAXES

The provision for income taxes, exclusive of tax effects from equity in
earnings of Affiliate, consisted of:

<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
State:
Currently payable................................. $ 6,376 $ 7,347 $ 8,007
Deferred.......................................... 54 354 (301)
------- ------- -------
6,430 7,701 7,706
------- ------- -------
Federal:
Currently payable................................. 26,077 28,910 35,967
Deferred.......................................... 340 1,437 (1,242)
------- ------- -------
26,417 30,347 34,725
------- ------- -------
Provision for income taxes.......................... $32,847 $38,048 $42,431
======= ======= =======
</TABLE>

Components of net deferred income tax liability:

<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
(No valuation allowance required) (IN THOUSANDS)
<S> <C> <C> <C>
Depreciation...................................... $52,982 $53,520 $55,533
Pension........................................... 549 562 2,490
Other............................................. 641 1,731 1,647
------- ------- -------
Gross deferred tax liability...................... 54,172 55,813 59,670
------- ------- -------
Postretirement benefits........................... (32,020) (33,124) (33,938)
Vacation.......................................... (3,830) (3,857) (3,995)
Other............................................. (3,742) (2,596) (2,398)
------- ------- -------
Gross deferred tax asset.......................... (39,592) (39,577) (40,331)
------- ------- -------
Net deferred income tax liability................. $14,580 $16,236 $19,339
======= ======= =======
</TABLE>

F-11
<PAGE>

CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Reconciliation of the U.S. federal statutory tax rate to the effective tax
rate:

<TABLE>
<CAPTION>
1994 1995 1996
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Federal statutory tax
rate..................... $28,243 35.0% $32,916 35.0% $36,354 35.0%
State taxes net of federal
tax effect............... 4,181 5.2 5,006 5.3 5,009 4.8
Goodwill and other........ 423 .5 126 .2 1,068 1.0
------- ---- ------- ---- ------- ----
Provision for income
taxes..................... $32,847 40.7% $38,048 40.5% $42,431 40.8%
======= ==== ======= ==== ======= ====
</TABLE>

9--INVENTORIES

Newsprint inventory, valued at LIFO, amounted to $7,559,000 and $6,455,000
at the end of 1995 and 1996. If the FIFO inventory valuation method had been
exclusively used for newsprint, the value would have been $8,517,000 and
$3,352,000 higher in respective years. Other inventories, consisting primarily
of newspaper production supplies, amounted to $2,566,000 and $2,457,000 at the
end of 1995 and 1996.

10--INVESTMENT IN AFFILIATE

The Company, through its subsidiaries, has a 13.5% partnership interest in
Ponderay Newsprint Company, which was formed to own and operate a newsprint
mill in Washington. Under the terms of a loan agreement, the Company has
guaranteed certain partnership bank debt in the amount of $16,875,000. At the
end of 1995 and 1996, $36,400,000 had been invested in Ponderay. The Company
has committed to purchase for use in Phoenix the lesser of 13.5% of annual
newsprint production or 34,900 metric tons on a "take if tendered" basis until
the debt is repaid. Newsprint purchased from Ponderay amounted to $19,601,000
during 1995 and $22,177,000 during 1996.

Summarized financial data for Affiliate:

<TABLE>
<CAPTION>
1994 1995 1996
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Results of operations:
Net sales.................................... $100,233 $151,690 $160,979
Net income (loss)............................ (40,509) (4,666) 22,399
Financial position:
Current assets............................... $ 19,484 $ 27,881 $ 17,934
Property and equipment, at cost--net......... 291,033 278,224 263,013
Other assets................................. 1,654 3,457 3,098
-------- -------- --------
$312,171 $309,562 $284,045
======== ======== ========
Current liabilities.......................... $ 34,010 $ 37,252 $ 18,336
Long-term debt ($125 million guaranteed by
partners)................................... 248,633 229,048 200,048
Partners' capital............................ 29,528 43,262 65,661
-------- -------- --------
$312,171 $309,562 $284,045
======== ======== ========
</TABLE>

F-12
<PAGE>

CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Summary of the Company's investment in Affiliate:

<TABLE>
<CAPTION>
1994 1995 1996
------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Investment, beginning of year....................... $ 3,855 $3,989 $5,843
Equity in partnership income (loss)................. (5,469) (630) 3,024
Additional investments.............................. 5,603 2,484
------- ------ ------
Investment, end of year............................. $ 3,989 $5,843 $8,867
======= ====== ======
Equity in Affiliate:
Equity in partnership income (loss)................. $(5,469) $ (630) $3,024
Current income tax (expense) benefit................ 1,325 (606) (1,425)
Deferred tax benefit................................ 594 696 265
Other............................................... (50) (138)
------- ------ ------
Equity in income (loss) in Affiliate, net of tax.... $(3,550) $ (590) $1,726
======= ====== ======
</TABLE>

11--LONG-TERM DEBT

The trust indenture relating to the fifty-year 4 1/2% debentures due
December 1, 1998 contains various requirements and restrictions as to the
financial activities of INI and its subsidiary. There are certain restrictions
on capital expenditures and dividend payments by INI. Interest paid on this
and other debt amounted to $121,000 for 1994 and 1995 and $347,000 for 1996.

12--RENTAL EXPENSE AND LEASE COMMITMENTS

Rental expense for 1994, 1995 and 1996 amounted to $3,843,000, $4,429,000
and $5,000,000. Future obligations for minimum annual rentals under
noncancelable long-term leases are not considered to be significant.

13--CAPITAL STOCK AND STOCK COMPENSATION PLAN

Class A Common Stock is entitled to 1/10 of a vote per share. The Class B
Common Stock has one vote per share while its dividend and liquidation
distributions are 1/10 of the amount of Class A Common Stock. Class B Common
Stock may be converted into Class A Common Stock at a ratio of ten shares of
Class B Common Stock for one share of Class A Common Stock. The Eugene C.
Pulliam Trust ("Trust") owns Class B Common Stock which provides the Trust the
majority voting control of the Company. At December 29, 1996, the Company has
reserved 2,648,400 shares of Class A Common Stock for issuance under its Stock
Compensation Plan, 500,000 shares for issuance under its 401(k) plan and
3,155,300 shares for issuance upon conversion of Class B Common Stock.

Dividends declared per share:

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Class A Common Stock.......................................... $.52 $.62 $.72
Class B Common Stock.......................................... .052 .062 .072
</TABLE>

The Company's Stock Compensation Plan provides for the granting of stock
options and the issuance of restricted stock grants to certain officers, key
employees and members of the Board of Directors. Options issued under this
plan are granted at prices determined by the Compensation Committee of the
Board of Directors but not less than fair market value on the date of the
grant. Options granted may be incentive or non-qualified options with a term
of ten years. Options granted before December 26, 1993 and Board of Director
member options are

F-13
<PAGE>

CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

currently exercisable. Options granted in 1995 and prior to September 13, 1996
are exercisable three years from date of grant and options granted after
September 13, 1996 become exercisable ratably over a three year period
beginning on the first anniversary of the grant.

The Company has historically accounted for employee stock compensation in
accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees." Under APB No. 25, no compensation costs are recognized if options
are granted at an exercise price equal to the current market value of the
stock. SFAS No. 123, "Accounting for Stock-Based Compensation," was adopted by
the Company on January 1, 1996. As permitted by SFAS No. 123, the Company has
elected to continue accounting for employee stock compensation under the APB
No. 25 rules, but will disclose pro forma results using SFAS No. 123's
alternative accounting treatment, which calculates the total compensation
expense to be recognized as the fair value of the award at the date of grant.
The fair value of options granted in 1995 and 1996 was estimated on the grant
date using the Black-Scholes option pricing model using the following
assumptions:

<TABLE>
<CAPTION>
1995 1996
------- ---------
<S> <C> <C>
Risk-free interest rates................................. 6.0-7.0% 6.5-6.6%
Dividend yields.......................................... 2.0% 2.0%
Expected volatility...................................... 27.0% 27.0%
Weighted average expected life of options................ 6 years 4-6 years
</TABLE>

Under SFAS No. 123, compensation cost is recognized in the amount of the
estimated fair value of the options and amortized to expense over the options'
vesting period. The pro forma effects on net income and earnings per share of
this statement are as follows:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS,
EXCEPT PER
SHARE DATA)
<S> <C> <C>
Net income:
As reported................................................ $53,998 $61,534
Pro forma.................................................. 53,543 60,316
Earnings per share:
As reported................................................ $ 2.03 $ 2.31
Pro forma.................................................. 2.00 2.27
</TABLE>

The following is a summary of the status of the Company's Stock Compensation
Plan as of and for the three years ended December 29, 1996:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE PER
SHARE
---------------
RESERVED EXERCISE MARKET
SHARES SHARES PRICE PRICE
--------- --------- -------- ------
<S> <C> <C> <C> <C>
Outstanding, December 27, 1993........ 2,105,000 923,500 $21.13 $27.38
Exercised............................. (49,050) (49,050) 17.11 27.56
Cancelled............................. (6,000) 23.88 --
--------- ---------
Outstanding, December 25, 1994........ 2,055,950 868,450 21.34 27.13
Additional reserved shares............ 800,000
Granted............................... 543,000 28.34 28.34
Exercised............................. (52,850) (52,850) 20.35 28.81
Cancelled............................. (7,500) 23.75 --
--------- ---------
Outstanding, December 31, 1995........ 2,803,100 1,351,100 24.18 31.38
Granted............................... 339,000 37.36 37.36
Exercised............................. (154,700) (154,700) 19.20 36.08
Cancelled............................. (51,500) 26.58 --
--------- ---------
Outstanding, December 29, 1996........ 2,648,400 1,483,900 27.63 42.88
========= =========
</TABLE>

F-14
<PAGE>

CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following table summarizes information about stock options outstanding
at December 29, 1996:

<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
----------------------------------------- -------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE AVERAGE EXERCISE EXERCISE
PRICE RANGE SHARES LIFE(A) PRICE SHARES PRICE
----------- --------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
$15.00-$19.99 179,400 4.5 $17.75 179,400 $17.75
$20.00-$24.99 454,500 6.4 23.48 454,500 23.48
$25.00-$29.99 236,000 8.3 25.74 4,000 25.69
$30.00-$34.99 277,500 8.7 30.63 4,000 34.75
$35.00-$39.99 336,500 9.6 37.36 -- --
--------- -------
1,483,900 7.6 27.63 641,900 22.00
========= =======
</TABLE>
- --------
(a) Weighted Average contractual life remaining in years

In 1996, the Company issued restricted stock grants to certain key
executives who have a critical impact on the long-term performance of the
Company. The Compensation Committee of the Board of Directors awarded 52,500
shares of Class A Common Stock whereby transfer restrictions lapse at the end
of five years from the award date or as early as three years upon achieving
certain performance goals. The restricted stock grants have all the rights of
shareholders, including the right to receive dividends, except for conditions
regarding transferability of shares and the termination of employment. Upon
issuance of the shares, unearned compensation equivalent to the market value
at the date of grant was recorded as unamortized value of restricted stock and
is being charged to earnings over the period during which the restrictions
lapse. During 1996, compensation expense in the amount of $276,000 has been
recorded related to these restricted stock grants.

During 1996 the Board of Directors of the Company authorized the repurchase
of up to 1,000,000 shares of the Company's Class A Common Stock. For the year
ending December 29, 1996, the Company has repurchased 490,100 shares.

14--FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Company's financial instruments approximate the
fair value. The Company has guaranteed $16,875,000 of the total $243,085,000
debt of Ponderay. The carrying value approximates the guaranteed amount.

15--CONTINGENCIES

See Note 10 for commitments related to Affiliate.

There are various libel and other legal actions that have arisen in the
normal course of business and are now pending against the Company. It is the
opinion of management that final disposition of such litigation will not have
any material adverse effect on the Company's financial position or results of
operations.

16--SUBSEQUENT EVENTS

On December 10, 1996, the Company announced that it would acquire the
remaining 9.8% of Indianapolis Newspapers, Inc. that it does not already own.
The transaction, which will be recorded using purchase accounting, will be
accomplished by issuing the current minority shareholders one share of a newly
created, non-

F-15
<PAGE>

CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)

voting, $10,000 stated value INI preferred stock in exchange for each share of
INI common stock owned by them. The preferred stock will pay a dividend per
share of $700 per year on a cumulative basis, will be callable in five years
and redeemable at any time by the shareholders at the stated value per share.
This transaction, which is not expected to have a material effect on future
earnings, occurred on January 3, 1997.

The Company's subsidiary, Phoenix Newspapers, Inc. announced that effective
January 18, 1997, PNI would cease publication of its Phoenix afternoon
newspaper, The Phoenix Gazette. As a result of these actions, the Company will
record a one-time pretax charge to earnings of approximately $4,800,000 in the
first quarter of 1997.

F-16
<PAGE>

[Various photos and graphics of the cities in which the Company operates, the
Company's newspapers and websites]
<PAGE>

LOGO
<PAGE>

PROSPECTUS (Subject to Completion)

Issued May 28, 1997

2,047,594 Shares

LOGO

CLASS A COMMON STOCK

-----------

OF THE 2,047,594 SHARES OF CLASS A COMMON STOCK, WITHOUT PAR VALUE (THE "CLASS
A COMMON STOCK") BEING OFFERED HEREBY, 409,519 SHARES ARE BEING OFFERED
INITIALLY OUTSIDE OF THE UNITED STATES AND CANADA BY THE INTERNATIONAL
UNDERWRITERS AND 1,638,075 SHARES ARE BEING OFFERED INITIALLY IN THE
UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS. SEE "UNDERWRITERS."
ALL OF THE SHARES OF CLASS A COMMON STOCK BEING OFFERED HEREBY ARE
BEING SOLD BY THE SELLING SHAREHOLDERS. SEE "SELLING SHAREHOLDERS."
THE COMPANY WILL NOT RECEIVE ANY PROCEEDS FROM THE SALE OF THE
CLASS A COMMON STOCK BY THE SELLING SHAREHOLDERS. THE CLASS A
COMMON STOCK IS LISTED ON THE NEW YORK STOCK EXCHANGE UNDER THE
SYMBOL "ECP." ON MAY 27, 1997, THE REPORTED LAST SALE PRICE OF
THE CLASS A COMMON STOCK ON THE NEW YORK STOCK EXCHANGE WAS
$60 PER SHARE.

-----------

PRICE $ A SHARE

-----------

(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended.

-----------

MORGAN STANLEY & CO.
International
DONALDSON, LUFKIN & JENRETTE
Securities Corporation
MERRILL LYNCH INTERNATIONAL

PAINEWEBBER INTERNATIONAL

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all fees and expenses payable in connection
with the issuance and distribution of the shares of Common Stock, other than
underwriting discounts and commissions. All such fees and expenses will be
paid by the Selling Shareholders and the Company. All the amounts shown are
estimates, except for the Securities and Exchange Commission registration fee
and the NASD filing fee.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $ 35,814
NASD filing fee................................................. 12,319
"Blue Sky" fees and expenses.................................... 5,000
Legal fees and expenses......................................... 95,000
Accounting fees and expenses.................................... 83,000
Printing expenses............................................... 125,000
Miscellaneous................................................... 93,867
--------
Total....................................................... $450,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Sections 23-1-37-1--23-1-37-15 of the Indiana Business Corporation Law
permit a corporation to indemnify directors and officers against liability
incurred in certain proceedings if the individual's conduct was in good faith
and the individual reasonably believed, in the case of conduct in the
individual's official capacity, that such conduct was in the best interests of
the corporation and, in all other cases, believed such conduct was at least
not opposed to the best interests of the corporation. If the proceeding is
criminal, the individual must either have had no reasonable cause to believe
that such conduct was unlawful or had reasonable cause to believe that such
conduct was lawful. The statute requires a corporation to indemnify an
individual who is wholly successful in the defense of any such proceeding
against reasonable expenses incurred by such individual, unless the Articles
of Incorporation provide otherwise. The corporation may pay for or reimburse
the reasonable expenses incurred by a director or officer who is a party to a
proceeding in advance of final disposition of the proceeding if certain
conditions are satisfied. Unless otherwise provided in the Articles of
Incorporation, a director or officer may apply for court ordered
indemnification which will include reasonable expenses incurred to obtain the
indemnification order if the court determines that the director is entitled to
mandatory indemnification or that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances. Except
in the case of mandatory indemnification, a corporation may indemnify a
director of officer only after it is determined that the individual meets the
standard of conduct described above. In addition, a corporation may also
indemnify and advance expenses to an officer, whether or not a director, to
the extent, consistent with public policy, that may be provided by its
Articles of Incorporation, by-laws, general or specification of its board of
directors or contract. Section 23-1-37-14 of the Indiana Business Corporation
Law empowers an Indiana corporation to purchase and maintain insurance on
behalf of any director or officer against any liability asserted against, or
incurred by, such individual in any such capacity or arising out of his or her
status as such, whether or not the corporation would have had the power to
indemnify against such liability.

The Amended and Restated Articles of Incorporation of the Registrant require
the Registrant to indemnify any person who is or was a director or officer of
the Registrant against any and all liabilities and reasonable expenses
incurred by such person in connection with or resulting from any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director or officer of the Registrant, or is or was serving at the
request of the Registrant as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, provided
that (i) such person is wholly successful in the defense of such proceeding or
(ii) such person's conduct was in good faith and the person reasonably
believed that such conduct was in the best interest of the Registrant

II-1
<PAGE>

or at least not opposed to the best interest of the Registrant and, in the
case of criminal proceedings, such person either had no reasonable cause to
believe such conduct was unlawful or had reasonable cause to believe such
conduct was lawful.

The Registrant also carries liability insurance covering officers and
directors.

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.
4.1 Amended and Restated Articles of Incorporation of Central
Newspapers, Inc. incorporated by reference to Registration
Statement on Form S-1, No. 33-30436, filed August 10, 1989.
4.2 The Amended and Restated Code of By-Laws of Central Newspapers,
Inc.*
5.1 Opinion of Henderson, Daily, Withrow & DeVoe as to legality.
10.1 Stock Purchase Agreement by and between Liberty Fund, Inc. and
Central Newspapers, Inc., dated as of April 11, 1997.*
10.2 Stock Purchase Agreement by and between Children's Museum of
Indianapolis and Central Newspapers, Inc., dated as of April 11,
1997.*
10.3 Stock Purchase Agreement by and between Indianapolis Museum of
Art, Inc. and Central Newspapers, Inc., dated as of April 11,
1997.*
10.4 Additional Purchase Agreement by and between Liberty Fund, Inc.
and Central Newspapers, Inc., dated May 27, 1997.
10.5 Additional Purchase Agreement by and between Children's Museum of
Indianapolis and Central Newspapers, Inc., dated May 27, 1997.
10.6 Additional Purchase Agreement by and between Indianapolis Museum
of Art, Inc. and Central Newspapers, Inc., dated May 27, 1997.
15.1 Awareness Letter of Price Waterhouse LLP*
15.2 Awareness Letter of Geo. S. Olive & Co. LLC.*
23.1 Consent of Geo. S. Olive & Co. LLC.
23.2 Consent of Henderson, Daily, Withrow & DeVoe (contained in the
opinion filed as Exhibit 5.1 to this Registration Statement).
24.1 Powers of Attorney*
</TABLE>
- --------

*Previously filed.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial
bona fide offering thereof.

(2) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(3) For the purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-2
<PAGE>

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted against the registrant by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

II-3
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3, AND HAS DULY CAUSED THIS AMENDMENT NO. 1
TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN INDIANAPOLIS, INDIANA ON THE 27TH DAY OF MAY,
1997.

Central Newspapers, Inc.

/s/ Thomas K. MacGillivray
By: _________________________________

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* President, Chief Executive May 27, 1997
____________________________________ Officer and Director
Louis A. Weil, III (Principal Executive
Officer)

/s/ Thomas K. MacGillivray Vice President, Treasurer May 27, 1997
____________________________________ and Chief Financial Officer
Thomas K. MacGillivray (Principal Financial and
Accounting Officer)

* Director May 27, 1997
____________________________________
William A. Franke

* Director May 27, 1997
____________________________________
L. Ben Lytle

* Director May 27, 1997
____________________________________
Eugene S. Pulliam

* Director May 27, 1997
____________________________________
Dan Quayle

* Director May 27, 1997
____________________________________
Frank E. Russell

* Director May 27, 1997
____________________________________
Richard Snell

</TABLE>

/s/ Thomas K. MacGillivray

*By: _____________________

Attorney-in-Fact

II-4
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
1.1 Form of Underwriting Agreement.
4.1 Amended and Restated Articles of Incorporation of
Central Newspapers, Inc. incorporated by reference to
Registration Statement on Form S-1, No. 33-30436, filed
August 10, 1989.
4.2 The Amended and Restated Code of By-Laws of Central
Newspapers, Inc.*
5.1 Opinion of Henderson, Daily, Withrow & DeVoe as to
legality.
10.1 Stock Purchase Agreement by and between Liberty Fund,
Inc. and Central Newspapers, Inc., dated as of April
11, 1997.*
10.2 Stock Purchase Agreement by and between Children's
Museum of Indianapolis and Central Newspapers, Inc.,
dated as of April 11, 1997.*
10.3 Stock Purchase Agreement by and between Indianapolis
Museum of Art, Inc. and Central Newspapers, Inc., dated
as of April 11, 1997.*
10.4 Additional Purchase Agreement by and between Liberty
Fund, Inc. and Central Newspapers, Inc., dated May 27,
1997.
10.5 Additional Purchase Agreement by and between Children's
Museum of Indianapolis and Central Newspapers, Inc.,
dated May 27, 1997.
10.6 Additional Purchase Agreement by and between
Indianapolis Museum of Art, Inc. and Central
Newspapers, Inc., dated May 27, 1997.
15.1 Awareness Letter of Price Waterhouse LLP*
15.2 Awareness Letter of Geo. S. Olive & Co. LLC.*
23.1 Consent of Geo. S. Olive & Co. LLC.
23.2 Consent of Henderson, Daily, Withrow & DeVoe (contained
in the opinion filed as Exhibit 5.1 to this
Registration Statement).
24.1 Powers of Attorney*
</TABLE>
- --------

*Previously filed.

<PAGE>

2,047,594 Shares

CENTRAL NEWSPAPERS, INC.

CLASS A COMMON STOCK, WITHOUT PAR VALUE

UNDERWRITING AGREEMENT

June ___, 1997
<PAGE>

June ___, 1997

Morgan Stanley & Co. Incorporated
Donaldson, Lufkin & Jenrette
Securities Corporation
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
PaineWebber Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036

Morgan Stanley & Co. International Limited
Donaldson, Lufkin & Jenrette
Securities Corporation
Merrill Lynch International
PaineWebber International (U.K.) Ltd.
c/o Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England

Dear Sirs and Mesdames:

Certain shareholders (the "Selling Shareholders") of Central Newspapers,
Inc., an Indiana corporation (the "Company"), named in Schedule I hereto,
severally propose to sell to the several Underwriters (as defined below) an
aggregate of 2,047,594 shares (the "Firm Shares") of the Company's Class A
Common Stock, without par value (the "Class A Common Stock"), with each Selling
Shareholder selling the number of shares set forth opposite such Selling
Shareholder's name in Schedule I hereto under the heading "Number of Firm Shares
To Be Sold." It is understood that, subject to the conditions hereinafter
stated, 1,638,075 Firm Shares (the "U.S. Firm Shares") will be sold to the
several U.S. Underwriters named in Schedule II hereto (the "U.S. Underwriters")
in connection with the offering and sale of such U.S. Firm Shares in the United
States and Canada to United States and Canadian Persons (as such terms are
defined in the Agreement Between U.S. and International Underwriters of even
date herewith), and 409,519 Firm Shares (the "International Shares") will be
sold to the
<PAGE>

several International Underwriters named in Schedule III hereto (the
"International Underwriters") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons. Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and PaineWebber Incorporated shall act as
representatives (the "U.S. Representatives") of the several U.S. Underwriters,
and Morgan Stanley & Co. International Limited, Donaldson, Lufkin & Jenrette
Securities Corporation, Merrill Lynch International and PaineWebber
International (U.K.) Ltd. shall act as representatives (the "International
Representatives") of the several International Underwriters. The U.S.
Underwriters and the International Underwriters are hereinafter collectively
referred to as the Underwriters.

The Selling Shareholders also severally propose to sell to the several U.S.
Underwriters not more than an aggregate of 307,139 additional shares of the
Company's Class A Common Stock (the "Additional Shares"), with each Selling
Shareholder proposing to sell the number of Additional Shares set forth opposite
such Selling Shareholder's name in Schedule I hereto under the heading "Number
of Additional Shares To Be Sold," if and to the extent that the U.S.
Representatives shall have determined to exercise, on behalf of the U.S.
Underwriters, the right to purchase such shares of Class A Common Stock granted
to the U.S. Underwriters in Section 3 hereof. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "Shares."

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-26165) relating
to the Shares. The registration statement contains two prospectuses to be used
in connection with the offering and sale of the Shares: the U.S. prospectus, to
be used in connection with the offering and sale of Shares in the United States
and Canada to United States and Canadian Persons, and the international
prospectus, to be used in connection with the offering and sale of Shares
outside the United States and Canada to persons other than United States and
Canadian Persons. The international prospectus is identical to the U.S.
prospectus except for the outside front cover page. The registration statement
as amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"Securities Act"), is hereinafter referred to as the "Registration Statement";
the U.S. prospectus and the international prospectus in the respective forms
first used to confirm sales of Shares are hereinafter collectively referred to
as the "Prospectus" (including, in the case of all references to the
Registration Statement or the Prospectus, unless the context requires otherwise,
documents incorporated by reference therein). If the Company has filed an
abbreviated registration statement to register additional shares of Class A

2
<PAGE>

Common Stock pursuant to Rule 462(b) under the Securities Act (the "Rule 462
Registration Statement"), then any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462 Registration Statement.

1. Representations and Warranties. The Company represents and warrants
to and agrees with each of the Underwriters that:

(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.

(b) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or
will comply when so filed in all material respects with the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the applicable
rules and regulations of the Commission thereunder, (ii) the Registration
Statement, when it became effective, did not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (iii)
the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iv) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this paragraph 1(b) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to
any Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein.

(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Indiana, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.

3
<PAGE>

As applied to the jurisdiction of incorporation, "good standing" means
that the Company is validly existing, has filed all reports that it is
required to file in such jurisdiction and has filed all franchise tax
returns and paid all franchise taxes required to be so paid. As applied to
every jurisdiction other than the jurisdiction of incorporation, "good
standing" means that the Company has received governmental authorization to
do business in such jurisdiction, which authorization has not been
terminated and has filed all franchise tax returns and paid all franchise
taxes required to be paid in such jurisdiction.

(d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; except as disclosed in the Prospectus, all of the issued shares of
capital stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly by the Company, free and clear of all liens, encumbrances,
equities or claims.

(e) This Agreement has been duly authorized, executed and delivered
by the Company.

(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.

(g) The outstanding shares of common stock of the Company (including
the Shares to be sold by the Selling Shareholders) have been duly
authorized and are validly issued, fully paid and non-assessable.

(h) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene
any provision of applicable law or the articles of incorporation or by-laws
of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary, and no consent,

4
<PAGE>

approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company
of its obligations under this Agreement, except such as may be required by
the securities or Blue Sky laws of the various states in connection with
the offer and sale of the Shares.

(i) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).

(j) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration Statement or
the Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.

(k) Each preliminary prospectus filed as part of the registration
statement on Form S-3 (No. 333-26165) as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 or Rule 462 under the
Securities Act, complied when so filed in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder.

(l) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.

(m) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required

5
<PAGE>

permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals would not, singly or
in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.

(n) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.

(o) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement.

(p) No material labor dispute with the employees of the Company or
any of its subsidiaries exists, except as described in or contemplated by
the Prospectus, or, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could result in any material adverse
change in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.

2. Representations and Warranties of the Selling Shareholders. Each of
the Selling Shareholders represents and warrants to and agrees with each of the
Underwriters that:

(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Shareholder.

(b) The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under, this
Agreement and the Irrevocable Power of Attorney and Custody Agreement (the
"Power of Attorney and Custody Agreement") among such Selling Shareholder,
_____________, as custodian (the "Custodian"), and certain individuals as
attorneys-in-fact, relating to the deposit of the Shares to be sold by such
Selling Shareholder, appointing certain individuals

6
<PAGE>

as such Selling Shareholder's attorneys-in-fact to the extent set forth
therein, and relating to the transactions contemplated hereby and by the
Registration Statement will not contravene any provision of applicable law,
or the articles of incorporation or by-laws of such Selling Shareholder (if
such Selling Shareholder is a corporation), or any agreement or other
instrument binding upon such Selling Shareholder or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over
such Selling Shareholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required for
the performance by such Selling Shareholder of its obligations under this
Agreement or the Power of Attorney and Custody Agreement of such Selling
Shareholder, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the
Shares.

(c) On the date hereof, such Selling Shareholder has, and on the
Closing Date (as hereinafter defined) will have, valid title to the Shares
to be sold by such Selling Shareholder and the legal right and power, and
all authorization and approval required by law, to enter into this
Agreement and the Power of Attorney and Custody Agreement and to sell,
transfer and deliver the Shares to be sold by such Selling Shareholder.

(d) The Power of Attorney and Custody Agreement has been duly
authorized, executed and delivered by such Selling Shareholder and is a
valid and binding agreement of such Selling Shareholder.

(e) Delivery of the Shares to be sold by such Selling Shareholder
pursuant to this Agreement will pass title to such Shares free and clear of
any security interests, claims, liens, equities and other encumbrances.

(f) All information furnished in writing by or on behalf of such
Selling Shareholder for use in the Registration Statement and Prospectus
is, and on the Closing Date will be, true, correct, and complete, and does
not, and on the Closing Date will not, contain any untrue statement of a
material fact or omit to state any material fact necessary to make such
information not misleading.

3. Agreements to Sell and Purchase. Each Selling Shareholder, severally
and not jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Selling Shareholder at U.S.$_____ a share
(the "Purchase Price"), the number of Firm Shares (subject to such adjustments
to

7
<PAGE>

eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Firm Shares to be sold by such Selling Shareholder as the
number of Firm Shares set forth in Schedule II and Schedule III hereto opposite
the name of such Underwriter bears to the total number of Firm Shares.

On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, each Selling Shareholder
agrees, severally and not jointly, to sell to the U.S. Underwriters the number
of Additional Shares set forth opposite such Selling Shareholder's name in
Schedule I hereto, and the U.S. Underwriters shall have a one-time right to
purchase, severally and not jointly, up to 307,139 Additional Shares at the
Purchase Price. If the U.S. Representatives, on behalf of the U.S. Underwriters,
elect to exercise such option, the U.S. Representatives shall so notify the
Company and the Selling Shareholders in writing not later than 30 days after the
date of this Agreement, which notice shall specify the number of Additional
Shares to be purchased by the U.S. Underwriters and the date on which such
shares are to be purchased. Such date may be the same as the Closing Date but
not earlier than the Closing Date nor later than ten business days after the
date of such notice. Additional Shares may be purchased as provided in Section 5
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. If any Additional Shares are to be
purchased, each U.S. Underwriter agrees, severally and not jointly, to purchase
the number of Additional Shares (subject to such adjustments to eliminate
fractional shares as the U.S. Representatives may determine) that bears the same
proportion to the total number of Additional Shares to be purchased as the
number of U.S. Firm Shares set forth in Schedule II hereto opposite the name of
such U.S. Underwriter bears to the total number of U.S. Firm Shares.

Each of the Company and the Selling Shareholders hereby agrees that,
without the prior written consent of Morgan Stanley & Co. Incorporated on behalf
of the Underwriters, it will not, during the period ending 90 days (180 days in
the case of each of the Selling Shareholders) after the date of the Prospectus,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of, directly or indirectly,
any shares of Class A Common Stock or any securities convertible into or
exercisable or exchangeable for Class A Common Stock or (ii) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Class A Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Class A Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (A) the Shares to be sold hereunder, (B)
the issuance by the Company of options under plans existing on the date hereof
or (C) the issuance by the Company of shares of Class A Common Stock upon the
exercise of an

8
<PAGE>

option or warrant or the conversion of a security outstanding on the date hereof
of which the Underwriters have been advised in writing.

4. Terms of Public Offering. The Company and the Selling Shareholders
are advised by you that the Underwriters propose to make a public offering of
their respective portions of the Shares as soon after the Registration Statement
and this Agreement have become effective as in your judgment is advisable. The
Company and the Selling Shareholders are further advised by you that the Shares
are to be offered to the public initially at U.S.$_____ a share (the "Public
Offering Price") and to certain dealers selected by you at a price that
represents a concession not in excess of U.S.$_____ a share under the Public
Offering Price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of U.S.$_____ a share, to any Underwriter
or to certain other dealers.

5. Payment and Delivery. Payment for the Firm Shares to be sold by each
Selling Shareholder shall be made to such Selling Shareholder in Federal or
other funds immediately available against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 A.M., New York City
time, on June ___, 1997, or at such other time on the same or such other date,
not later than June ___, 1997, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "Closing Date."

Payment for any Additional Shares to be sold by each Selling Shareholder
shall be made to such Selling Shareholder in Federal or other funds immediately
available against delivery of such Additional Shares for the respective accounts
of the several U.S. Underwriters at 10:00 A.M., New York City time, on the date
specified in the notice described in Section 3 or at such other time on the same
or on such other date, in any event not later than July _____, 1997, as shall be
designated in writing by the U.S. Representatives. The time and date of such
payment are hereinafter referred to as the "Option Closing Date."

Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.

9
<PAGE>

6. Conditions to the Underwriters' Obligations. The obligations of the
Selling Shareholders to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than _______ (New York City time) on the date
hereof.

The several obligations of the Underwriters are subject to the following
further conditions:

(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:

(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and

(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.

(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in clause (a)(i) above and to the
effect that the representations and warranties of the Company contained in
this Agreement are true and correct as of the Closing Date and that the
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before
the Closing Date.

The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.

10
<PAGE>

(c) The Underwriters shall have received on the Closing Date an
opinion of Henderson, Daily, Withrow & DeVoe, outside counsel for the
Company, dated the Closing Date, to the effect that:

(i) the Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction
of its incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole;

(ii) each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;

(iii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;

(iv) the outstanding shares of common stock of the Company have
been duly authorized and are validly issued, fully paid and non-
assessable;

(v) all of the issued shares of capital stock of each subsidiary
of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and, except as disclosed in the
Prospectus, are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims;

11
<PAGE>

(vi) this Agreement has been duly authorized, executed and
delivered by the Company;

(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the articles of
incorporation or by-laws of the Company or, to the best of such
counsel's knowledge, any agreement or other instrument binding upon
the Company or any of its subsidiaries that is material to the Company
and its subsidiaries, taken as a whole, or, to the best of such
counsel's knowledge, any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for
the performance by the Company of its obligations under this
Agreement, except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale
of the Shares by the U.S. Underwriters;

(viii) the statements (A) in the Prospectus under the captions
"Certain United States Federal Tax Considerations for Non-U.S.
Holders," "Description of Capital Stock" and "Underwriters" insofar as
it relates to this Agreement and (B) in the Registration Statement in
Item 15, in each case insofar as such statements constitute summaries
of the legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the matters
referred to therein;

(ix) to such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened to which the Company or
any of its subsidiaries is a party or to which any of the properties
of the Company or any of its subsidiaries is subject that are required
to be described in the Registration Statement or the Prospectus and
are not so described or of any statutes, regulations, contracts or
other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required;

(x) the Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds

12
<PAGE>

thereof as described in the Prospectus, will not be an "investment
company" as such term is defined in the Investment Company Act of
1940, as amended; and

(xi) such counsel (A) is of the opinion that each document, if
any, filed pursuant to the Exchange Act and incorporated by reference
in the Registration Statement and the Prospectus (except for financial
statements and schedules and other financial and statistical data as
to which such counsel need not express any opinion) complied when so
filed as to form in all material respects with the Exchange Act and
the rules and regulations of the Commission thereunder, (B) is of the
opinion that the Registration Statement and Prospectus (except for
financial statements and schedules and other financial and statistical
data included therein as to which such counsel need not express any
opinion) comply as to form in all material respects with the
Securities Act and the applicable rules and regulations of the
Commission thereunder, (C) has no reason to believe that (except for
financial statements and schedules and other financial and statistical
data as to which such counsel need not express any belief) the
Registration Statement and the prospectus included therein at the time
the Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (D) has no reason to believe that (except
for financial statements and schedules and other financial and
statistical data as to which such counsel need not express any belief)
the Prospectus contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.

(d) The Underwriters shall have received on the Closing Date an
opinion of Baker & Daniels, counsel for the Selling Shareholders, dated the
Closing Date, to the effect that:

(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Shareholders;

(ii) the execution and delivery by each Selling Shareholder of,
and the performance by such Selling Shareholder of its obligations
under, this Agreement and the Power of Attorney and Custody Agreement
of such Selling Shareholder will not contravene

13
<PAGE>

any provision of applicable law, or the articles of incorporation or
by-laws of such Selling Shareholder (if such Selling Shareholder is a
corporation), or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon such Selling Shareholder
or, to the best of such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over such Selling Shareholder, and no consent, approval, authorization
or order of, or qualification with, any governmental body or agency is
required for the performance by such Selling Shareholder of its
obligations under this Agreement or the Power of Attorney and Custody
Agreement of such Selling Shareholder, except such as may be required
by the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares by the U.S. Underwriters;

(iii) each of the Selling Shareholders has valid title to the
Shares to be sold by such Selling Shareholder and the legal right and
power, and all authorization and approval required by law, to enter
into this Agreement and the Power of Attorney and Custody Agreement of
such Selling Shareholder and to sell, transfer and deliver the Shares
to be sold by such Selling Shareholder;

(iv) the Power of Attorney and Custody Agreement of each Selling
Shareholder has been duly authorized, executed and delivered by such
Selling Shareholder and, assuming due authorization, execution and
delivery by the Custodian and the Attorneys-in-Fact in the Power of
Attorney and Custody Agreement, is a valid and binding agreement of
such Selling Shareholder; and

(v) delivery of the Shares to be sold by each Selling
Shareholder pursuant to this Agreement will pass marketable title to
such Shares to the several Underwriters free and clear of any security
interests, claims, liens, equities and other encumbrances, assuming
that the several Underwriters are purchasing the Shares in good faith
and without notice of any adverse claim within the meaning of the
Uniform Commercial Code, as currently in effect under the laws of the
State of New York.

(e) The Underwriters shall have received on the Closing Date an
opinion of Davis Polk & Wardwell, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in subparagraphs (vi) and
(viii) (but only as to the statements in the Prospectus under "Description
of

14
<PAGE>

Capital Stock" and "Underwriters") and clauses (B), (C) and (D) of
subparagraph (xii) of paragraph (c) above.

With respect to paragraph (c) above, Henderson, Daily, Withrow & DeVoe
may, with respect to factual matters, rely upon certificates of public
officials and the representations of the Company contained herein. With
respect to subparagraph (xi) of paragraph (c) above, Henderson, Daily,
Withrow & DeVoe and Davis Polk & Wardwell may state that their opinion and
belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto (other than the documents incorporated therein by reference) and
review and discussion of the contents thereof (including documents
incorporated therein by reference), but are without independent check or
verification, except as specified.

With respect to paragraph (d) above, Baker & Daniels may rely upon an
opinion or opinions of counsel for any Selling Shareholders and, with
respect to factual matters and to the extent such counsel deems
appropriate, upon certificates of public officials and the representations
of each Selling Shareholder contained herein and in the Power of Attorney
and Custody Agreement of such Selling Shareholder and in other documents
and instruments; provided that (A) each such counsel for the Selling
Shareholders is satisfactory to your counsel, (B) a copy of each opinion so
relied upon is delivered to you and is in form and substance satisfactory
to your counsel, (C) copies of such Power of Attorney and Custody
Agreements and of any such other documents and instruments shall be
delivered to you and shall be in form and substance satisfactory to your
counsel and (D) Baker & Daniels shall state in their opinion that they are
justified in relying on each such other opinion.

The opinions of Henderson, Daily, Withrow & DeVoe and Baker & Daniels
described in paragraphs (c) and (d) above (and any opinions of counsel for
any Selling Shareholder referred to in the immediately preceding paragraph)
shall be rendered to the Underwriters at the request of the Company or one
or more of the Selling Shareholders, as the case may be, and shall so state
therein.

(f) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from each of Geo. S. Olive & Co., LLC and Price Waterhouse LLP, independent
public accountants, containing statements and information of the type
ordinarily included in accountants' "comfort

15
<PAGE>

letters" to underwriters with respect to the financial statements and
certain financial information contained in or incorporated by reference
into the Registration Statement and the Prospectus; provided that the
letter delivered on the Closing Date shall use a "cut-off date" not earlier
than the date hereof.

(g) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other dispositions
of shares of Class A Common Stock or certain other securities, delivered to
you on or before the date hereof, shall be in full force and effect on the
Closing Date.

The several obligations of the U.S. Underwriters to purchase Additional
Shares hereunder are subject to the delivery to the U.S. Representatives on the
Option Closing Date of such documents as they may reasonably request with
respect to the good standing of the Company, and other matters related to the
issuance of the Additional Shares.

7. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:

(a) To furnish you, without charge, eight signed copies of the
Registration Statement (including exhibits thereto and documents
incorporated therein by reference) and to each other Underwriter a copy of
the Registration Statement (without exhibits thereto but including
documents incorporated therein by reference) and to furnish to you in New
York City, without charge, prior to 10:00 A.M. New York City time on the
business day next succeeding the date of this Agreement and during the
period mentioned in paragraph (c) below, as many copies of the Prospectus,
any documents incorporated therein by reference, and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request. The terms "supplement" and "amendment" or "amend" as used in this
Agreement shall include all documents subsequently filed by the Company
with the Commission pursuant to the Exchange Act that are deemed to be
incorporated by reference in the Prospectus.

(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably and timely object, and to file with the

16
<PAGE>

Commission within the applicable period specified in Rule 424(b) under the
Securities Act any prospectus required to be filed pursuant to such Rule.

(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.

(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.

(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the twelve-
month period ending June 30, 1998 that satisfies the provisions of Section
11(a) of the Securities Act and the rules and regulations of the Commission
thereunder.

(f) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid
all expenses incident to the performance of its obligations under this
Agreement, except those expenses to be paid by the Selling Shareholders as
provided in Section 8 below, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in
connection with the registration and delivery of the Shares under the
Securities Act and all other fees or expenses in connection with the
preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the
mailing and delivering of copies thereof to the Underwriters and dealers,
in the

17
<PAGE>

quantities hereinabove specified, (ii) all costs and expenses related to
the transfer and delivery of the Shares to the Underwriters, including any
transfer or other taxes payable thereon, (iii) the cost of printing or
producing any Blue Sky or Legal Investment memorandum in connection with
the offer and sale of the Shares under state securities laws and all
expenses in connection with the qualification of the Shares for offer and
sale under state securities laws as provided in Section 7(d) hereof,
including filing fees and the reasonable fees and disbursements of counsel
for the Underwriters in connection with such qualification and in
connection with the Blue Sky or Legal Investment memorandum, (iv) all
filing fees and the reasonable fees and disbursements of counsel to the
Underwriters incurred in connection with the review and qualification of
the offering of the Shares by the National Association of Securities
Dealers, Inc., (v) the cost of printing certificates representing the
Shares, (vi) the costs and charges of any transfer agent, registrar or
depositary, (vii) the costs and expenses of the Company relating to
investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including without limitation,
expenses associated with the production of road show slides and graphics,
fees and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any
such consultants, and the cost of any aircraft chartered in connection with
the road show, and (viii) all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which provision
is not otherwise made in this Section. It is understood, however, that
except as provided in this Section, Section 9 entitled "Indemnity and
Contribution," and the last paragraph of Section 11 below, the Underwriters
will pay all of their costs and expenses, including fees and disbursements
of their counsel, stock transfer taxes payable on resale of any of the
Shares by them and any advertising expenses connected with any offers they
may make.

8. Covenants of Selling Shareholders. Each Selling Shareholder,
severally and not jointly, agrees to pay or cause to be paid, (i) all taxes, if
any, on the transfer and sale of the Shares being sold by such Selling
Shareholder and (ii) such Selling Shareholder's pro rata share (determined by
dividing the number of Shares sold by such Selling Shareholder by the total
number of Shares sold by all Selling Shareholders) of all costs and expenses
incident to the performance of the obligations of the Selling Shareholders under
this Agreement, the fees, disbursements and expenses of counsel for the Selling
Shareholders and those expenses enumerated in Section 7(f) above that such
Selling Shareholder has

18
<PAGE>

agreed to pay in the Stock Purchase Agreement dated April 11, 1997 between the
Company and such Selling Shareholder.

9. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.

(b) The Company agrees to indemnify and hold harmless each Selling
Shareholder and each person, if any, who controls any Selling Shareholder
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to any Selling Shareholder furnished to the Company in
writing by such Selling Shareholder expressly for use therein.

(c) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act and each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either such Section, from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only with reference to information
relating to such Selling Shareholder furnished in writing by or on behalf of
such Selling Shareholder expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto.

(d) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Selling Shareholders, the directors of the

19
<PAGE>

Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Shareholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.

(e) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to paragraph (a), (b), (c) or (d) of this Section 9, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, (ii) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Company,
its directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of either such Section and
(iii) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Selling Shareholders and all persons, if any, who

20
<PAGE>

control any Selling Shareholder within the meaning of either such Section, and
that all such fees and expenses shall be reimbursed as they are incurred. In the
case of any such separate firm for the Underwriters and such control persons of
any Underwriters, such firm shall be designated in writing by Morgan Stanley &
Co. Incorporated. In the case of any such separate firm for the Company, and
such directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Selling Shareholders and such control persons of any Selling Shareholders,
such firm shall be designated in writing by Liberty Fund, Inc. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.

(f) To the extent the indemnification provided for in paragraph (a), (b),
(c) or (d) of this Section 9 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand from the offering of the
Shares or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits

21
<PAGE>

received by the Selling Shareholders and the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Shares
shall be deemed to be in the same respective proportions as the net proceeds
from the offering of the Shares (before deducting expenses) received by each
Selling Shareholder and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Shares; provided that for the purpose of this sentence, the Company's benefit
shall be deemed to be the net proceeds from the offering of the Shares (before
deducting expenses) received by the Selling Shareholders. The relative fault of
the Company, each Selling Shareholder and the Underwriters shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, each such Selling
Shareholder or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to contribute pursuant to
this Section 9 are several in proportion to the respective number of Shares they
have purchased hereunder, and not joint.

(g) The Company, the Selling Shareholders and the Underwriters agree that
it would not be just or equitable if contribution pursuant to this Section 9
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (f) of
this Section 9. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 9 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.

(h) The indemnity and contribution provisions contained in this Section 9
and the representations, warranties and other statements of the Company and the

22
<PAGE>

Selling Shareholders contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, any Selling Shareholder or any person controlling
any Selling Shareholder, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.

10. Termination. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.

11. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.

If, on the Closing Date or the Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule II and Schedule III bears to the
aggregate number of Firm Shares set forth opposite the names of all such non-
defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no event shall the
number of Shares that any Underwriter has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 11 by an amount in excess of
one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail
or refuse to purchase Firm Shares and

23
<PAGE>

the aggregate number of Firm Shares with respect to which such default occurs is
more than one-tenth of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to you, the Company and the Selling Shareholders for
the purchase of such Firm Shares are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Shareholders. In any such
case either you or the relevant Selling Shareholders shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. If, on the
Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Additional Shares or (ii) purchase not less than the number of Additional Shares
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.

If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company or any Selling
Shareholder to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company or any Selling Shareholder shall be
unable to perform its obligations under this Agreement, the Company and the
Selling Shareholders will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.

12. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.

14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.

24
<PAGE>

Very truly yours,

CENTRAL NEWSPAPERS, INC.

By:
---------------------------------------
Name:
Title:

The Selling Shareholders named in Schedule
I attached hereto, acting severally

By:
---------------------------------------
Name:
Attorney-in-Fact

Accepted as of the date hereof:

MORGAN STANLEY & CO. INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
PAINEWEBBER INCORPORATED

Acting severally on behalf of themselves and the
several U.S. Underwriters named in Schedule
II attached hereto.

By Morgan Stanley & Co. Incorporated

By:
----------------------------------------------
Name:
Title:
<PAGE>

MORGAN STANLEY & CO.
INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH INTERNATIONAL
PAINEWEBBER INTERNATIONAL
(U.K.) LTD.

Acting severally on behalf of themselves and the
several International Underwriters named in
Schedule III attached hereto.

By Morgan Stanley & Co. International Limited

By:
---------------------------------------------
Name:
Title:

<PAGE>

SCHEDULE I

Selling Shareholders

<TABLE>
<CAPTION>
Number of
Number of Additional
Firm Shares Shares To Be
Selling Shareholder To Be Sold Sold
- ------------------- ----------- ------------
<S> <C> <C>
Liberty Fund, Inc..........................
The Children's Museum of Indianapolis......
Indianapolis Museum of Art, Inc............

Total............................... =========== ============
</TABLE>
<PAGE>

SCHEDULE II

U.S. Underwriters
<TABLE>
<CAPTION>

Number of
Firm Shares
To Be
U.S. Underwriter Purchased
- ---------------- -----------
<S> <C>
Morgan Stanley & Co. Incorporated....................
Donaldson, Lufkin & Jenrette Securities Corporation..
Merrill Lynch, Pierce, Fenner & Smith Incorporated...
PaineWebber Incorporated.............................

-----------

Total U.S. Firm Shares..........................
===========
</TABLE>
<PAGE>

SCHEDULE III

International Underwriters
<TABLE>
<CAPTION>

Number of
Firm Shares
To Be
International Underwriter Purchased
- ------------------------- -----------
<S> <C>
Morgan Stanley & Co. International Limited..............
Donaldson, Lufkin & Jenrette Securities Corporation.....
Merrill Lynch International.............................
PaineWebber International (U.K.) Ltd....................

-----------

Total International Firm Shares...................
===========

</TABLE>
<PAGE>

EXHIBIT A

[Form of Lock-Up Letter]

____________, 1997

Morgan Stanley & Co. Incorporated
Donaldson, Lufkin & Jenrette
Securities Corporation
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
PaineWebber Incorporated
as representatives of the several
U.S. Underwriters named in the
Underwriting Agreement referred
to below
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036

Morgan Stanley & Co. International Limited
Donaldson, Lufkin & Jenrette
Securities Corporation
Merrill Lynch International
PaineWebber International (U.K.) Ltd.
as representatives of the several
International Underwriters named in
the Underwriting Agreement referred
to below
c/o Morgan Stanley & Co. International Limited
25 Cabot Street
Canary Wharf
London E14 4QA
England

Dear Sirs and Mesdames:

The undersigned understands that Morgan Stanley & Co. Incorporated ("Morgan
Stanley") and Morgan Stanley & Co. International Limited ("MSIL")

A-1
<PAGE>

propose to enter into an Underwriting Agreement with Central Newspapers, Inc.,
an Indiana corporation (the "Company") and certain shareholders of the Company
providing for the public offering (the "Public Offering") by the several
Underwriters named therein, including yourselves, of 2,047,594 shares (the
"Shares") of the Class A Common Stock, without par value, of the Company (the
"Class A Common Stock") (not including 307,139 shares of Class A Common Stock
subject to the Underwriters' over-allotment option).

To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the final prospectus relating
to the Public Offering (the "Prospectus"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Class A Common Stock or any
securities convertible into or exercisable or exchangeable for Class A Common
Stock, or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Class A Common Stock, whether any such transaction described in clause (1)
or (2) above is to be settled by delivery of Class A Common Stock or such other
securities, in cash or otherwise. In addition, the undersigned agrees that,
without the prior written consent of Morgan Stanley on behalf of the
Underwriters, it will not, during the period commencing on the date hereof and
ending 90 days after the date of the Prospectus, make any demand for or exercise
any right with respect to, the registration of any shares of Class A Common
Stock or any security convertible into or exercisable or exchangeable for Class
A Common Stock.

Very truly yours,

---------------------------
(Name)

---------------------------
(Address)

A-2

<PAGE>

Exhibit 5.1

[LETTERHEAD OF HENDERSON, DAILY, WITHROW & DEVOE]

May 27, 1997

Central Newspapers, Inc.
135 North Pennsylvania Street, Suite 1200
Indianapolis, Indiana 46204

Ladies and Gentlemen:

In connection with the sale by certain selling shareholders of up to
2,354,733 shares of Class A common stock, no par value ("Common Stock") of
Central Newspapers, Inc. (the "Company"), including 307,139 shares to be sold by
the Selling Shareholders in the event of exercise of an over-allotment option by
the underwriters, we have examined the Company's Amended and Restated Articles
of Incorporation, its Amended and Restated Code of Bylaws, applicable
resolutions adopted by the Board of Directors of the Company and such other
documents and records as we have deemed necessary for the giving of this
opinion. We have also examined the Registration Statement on Form S-3, No. 333-
26165 (the "Registration Statement"), filed with the Securities and Exchange
Commission pursuant to the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), for the purpose of registering the shares of
Common Stock for sale. Based on our examination, we are of the opinion that:

(1) The Company has been duly formed and is validly existing as a
corporation under the laws of the State of Indiana with full power and
authority to conduct the business in which it is engaged as described
in the Registration Statement.

(2) All necessary action has been taken by the Company's Board of
Directors to authorize the registration of the Common Stock and no
action by the Company's shareholders is required.

(3) The Common Stock will be validly issued, fully paid and non-assessable
when (i) the Registration Statement has become effective and (ii) the
shares of Common Stock have been sold and paid for as provided in the
Registration Statement.

We hereby consent to the use of our name under the caption "Legal Matters"
in the prospectus constituting a part of the Registration Statement and further
consent to the filing of this opinion as an exhibit to the Registration
Statement.

Very truly yours,

/s/ Henderson, Daily, Withrow & DeVoe

<PAGE>
Exhibit 10.4

ADDITIONAL PURCHASE AGREEMENT
-----------------------------

This Agreement is made as of this 27th day of May, 1997, by and between
LIBERTY FUND, INC., an Indiana nonprofit corporation ("Liberty Fund"), and
CENTRAL NEWSPAPERS, INC., an Indiana corporation (the "Company").

Recitals
--------

A. Prior to the distribution by the Estate (as defined below), the
Liberty Fund was the record owner of 1,146,900 shares of the Class A common
stock of the Company.

B. On or about May 20, 1997, the Estate of Enid Goodrich (the "Estate")
distributed 1,242,600 shares of Class A common stock of the Company to the
Liberty Fund.

C. On April 11, 1997, the Liberty Fund and the Company entered into that
certain stock purchase agreement (the "Stock Purchase Agreement") whereby the
Company agreed to purchase, and the Liberty Fund agreed to sell, 763,167 shares
of Class A common stock, which transaction closed on May 20, 1997. The Stock
Purchase Agreement also obligated the Company to use its best efforts to enable
the Liberty Fund to sell substantially all of its remaining shares of the
Company's Class A common stock in an underwritten registered public offering.

D. The Liberty Fund is selling 1,327,246 shares of the Class A common
stock of the Company in an underwritten secondary offering of the Company's
Class A common stock (the "Secondary Offering").

E. The Liberty Fund has granted the underwriters of the Secondary
Offering the right and option to purchase up to an additional 199,087 shares of
Class A common stock of the Company (the "Shares"), for the same price per share
as provided for in the Secondary Offering, pursuant to an over-allotment option
(the "Option").

F. In the event the underwriters of the Secondary Offering do not elect
to purchase any or all of the Shares pursuant to the Option, the Company desires
to purchase, and the Liberty Fund desires to sell, all of the Shares not
purchased by the underwriters as provided herein.

Agreement
---------

NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and subject to and upon the terms and conditions hereinafter
set forth, it is hereby agreed as follows:

<PAGE>

Article I
---------
Purchase of Shares
------------------

In the event that the underwriters do not purchase any or all of the Shares
pursuant to the Option, the Company hereby agrees to purchase, and the Liberty
Fund hereby agrees to sell, all the Shares not purchased by the underwriters.
The purchase price (the "Purchase Price") for each of the Shares shall be the
same price as the per share exercise price of the Option. Closing shall take
place at the Company's offices in Indianapolis, Indiana, within five (5) days of
the expiration of the Option (the "Closing Date"). At the closing, the Liberty
Fund shall deliver to the Company the certificate or certificates representing
the Shares being sold, a stock power duly executed in blank and such other
instruments as the Company shall deem necessary to transfer ownership of the
Shares to the Company and the Company shall deliver to the Liberty Fund
immediately available funds for the full amount of the Purchase Price.

Article II
----------
Representations and Covenants of the Liberty Fund
-------------------------------------------------

The Liberty Fund hereby represents and warrants as follows:

(a) As of the Closing Date, the Liberty Fund will be the sole owner
of the Shares not purchased by the underwriters, and that each
of such Shares will be free and clear of liens, encumbrances,
claims of others and transfer restrictions of any kind; and

(b) The Liberty Fund has full power and authority to sell the
Shares not purchased by the underwriters to the Company in
accordance with the provisions hereof; and

(c) This Agreement is the valid and binding obligation of the
Liberty Fund, enforceable in accordance with its terms, and the
execution and performance of this Agreement by the Liberty Fund
will not result in any violation of or be in conflict with or
constitute a default under any contract, agreement, instrument,
judgment, decree or other indenture to which the Liberty Fund
is a party or by which the Liberty Fund otherwise is bound; and

(d) No person, corporation or other entity has, nor as a result of
the transactions contemplated hereby will have, any right,
interest, or valid claim against the Liberty Fund, the Company
or any other person, for any commission, fee or other
compensation as a finder or broker or in any similar capacity
arising out of any action taken by the Liberty Fund; and

2
<PAGE>

(e) The Liberty Fund has had access to all public information it
desires concerning the Company and its subsidiaries and
operations and has had the opportunity to ask such questions of
officers of the Company as the Liberty Fund has deemed necessary
or appropriate in order to enable the Liberty Fund to determine
whether to authorize the sale of the Shares. The Liberty Fund has
reviewed all information it deems material to making its decision
to sell the Shares.

Article III
-----------
Representations and Covenants of the Company
--------------------------------------------

The Company hereby represents and warrants as follows:

(a) This Agreement is the valid and binding obligation of the
Company, enforceable in accordance with its terms, and the
execution and performance of this Agreement by the Company will
not result in any violation of or be in conflict with or
constitute a default under any contract, agreement, instrument,
judgment, decree or other indenture to which the Company is a
party or by which the Company otherwise is bound; and

(b) No person, corporation or other entity has, or as a result of the
transactions contemplated hereby will have, any right, interest,
or valid claim against the Liberty Fund, the Company or any other
person, for any commission, fee or other compensation as a finder
or broker or in any similar capacity arising out of any action
taken by the Company; and

(c) The Company's purchase of the Shares pursuant to this Agreement
is a permissible distribution within the limits of IC 23-1-28-3
and does not violate any provisions of the Company's articles of
incorporation as amended.

Article IV
----------
General
-------

4.1. This Agreement constitutes the entire Agreement between the parties
with respect to the subject matter hereof and supersedes and merges all prior
understanding and agreements concerning the subject matter hereof. This
Agreement may only be modified or amended in writing.

4.2 This Agreement shall be governed and construed in all respects under
the laws of the State of Indiana.

3
<PAGE>

4.3 This Agreement may be executed in counterparts, each one of which
shall constitute one and the same Agreement and each one of which shall be
deemed an original.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

CENTRAL NEWSPAPERS, INC.

By: /s/ ERIC TOOKER
-------------------------------------
Printed: Eric Tooker
--------------------------------
Title: Secretary
----------------------------------

LIBERTY FUND, INC.

By: /s/ T. ALAN RUSSELL
-------------------------------------
Printed: T. Alan Russell
--------------------------------
Title: Chairman and CEO
----------------------------------

<PAGE>

Exhibit 10.5

ADDITIONAL PURCHASE AGREEMENT
-----------------------------

This Agreement is made as of this 27th day of May, 1997, by and between
CHILDREN'S MUSEUM OF INDIANAPOLIS, an Indiana nonprofit corporation ("Children's
Museum"), and CENTRAL NEWSPAPERS, INC., an Indiana corporation (the "Company").

Recitals
--------

A. On or about May 20, 1997, the Estate of Enid Goodrich distributed
621,300 shares of Class A common stock of the Company to the Children's Museum.

B. On April 11, 1997, the Children's Museum and the Company entered into
that certain stock purchase agreement (the "Stock Purchase Agreement") whereby
the Company agreed to purchase, and the Children's Museum agreed to sell,
207,100 shares of Class A common stock, which transaction closed on May 20,
1997. The Stock Purchase Agreement also obligated the Company to use its best
efforts to enable the Children's Museum to sell substantially all of its
remaining shares of the Company's Class A common stock in an underwritten
registered public offering.

C. The Children's Museum is selling 360,174 shares of the Class A common
stock of the Company in an underwritten secondary offering of the Company's
Class A common stock (the "Secondary Offering").

D. The Children's Museum has granted the underwriters of the Secondary
Offering the right and option to purchase up to an additional 54,026 of Class A
common stock of the Company (the "Shares"), for the same price per share as
provided for in the Secondary Offering, pursuant to an over-allotment option
(the "Option").

E. In the event the underwriters of the Secondary Offering do not elect to
purchase any or all of the Shares pursuant to the Option, the Company desires to
purchase, and the Children's Museum desires to sell, all of the Shares not
purchased by the underwriters as provided herein.

Agreement
---------

NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and subject to and upon the terms and conditions hereinafter
set forth, it is hereby agreed as follows:

<PAGE>

Article I
---------
Purchase of Shares
------------------

In the event that the underwriters do not purchase any or all of the Shares
pursuant to the Option, the Company hereby agrees to purchase, and the
Children's Museum hereby agrees to sell, all the Shares not purchased by the
underwriters. The purchase price (the "Purchase Price") for each of the Shares
shall be the same price as the per share exercise price of the Option. Closing
shall take place at the Company's offices in Indianapolis, Indiana, within five
(5) days of the expiration of the Option (the "Closing Date"). At the closing,
the Children's Museum shall deliver to the Company the certificate or
certificates representing the Shares being sold, a stock power duly executed in
blank and such other instruments as the Company shall deem necessary to transfer
ownership of the Shares to the Company and the Company shall deliver to the
Children's Museum immediately available funds for the full amount of the
Purchase Price.

Article II
----------
Representations and Covenants of the Children's Museum
------------------------------------------------------

The Children's Museum hereby represents and warrants as follows:

(a) As of the Closing Date, the Children's Museum will be the sole
owner of the Shares not purchased by the underwriters, and that
each of such Shares will be free and clear of liens,
encumbrances, claims of others and transfer restrictions of any
kind; and

(b) The Children's Museum has full power and authority to sell the
Shares not purchased by the underwriters to the Company in
accordance with the provisions hereof; and

(c) This Agreement is the valid and binding obligation of the
Children's Museum, enforceable in accordance with its terms, and
the execution and performance of this Agreement by the Children's
Museum will not result in any violation of or be in conflict with
or constitute a default under any contract, agreement,
instrument, judgment, decree or other indenture to which the
Children's Museum is a party or by which the Children's Museum
otherwise is bound; and

(d) No person, corporation or other entity has, nor as a result of
the transactions contemplated hereby will have, any right,
interest, or valid claim against the Children's Museum, the
Company or any other person, for any commission, fee or other
compensation as a

2
<PAGE>

finder or broker or in any similar capacity arising out of any
action taken by the Children's Museum; and

(c) The Children's Museum has had access to all public information it
desires concerning the Company and its subsidiaries and
operations and has had the opportunity to ask such questions of
officers of the Company as the Children's Museum has deemed
necessary or appropriate in order to enable the Children's Museum
to determine whether to authorize the sale of the Shares. The
Children's Museum has reviewed all information it deems material
to making its decision to sell the Shares.

Article III
-----------
Representations and Covenants of the Company
--------------------------------------------

The Company hereby represents and warrants as follows:

(b) No person, corporation or other entity has, nor as a result of
the transactions contemplated hereby will have, any right,
interest, or valid claim against the Children's Museum, the
Company or any other person, for any commission, fee or other
compensation as a finder or broker or in any similar capacity
arising out of any action taken by the Company; and

Article IV
----------
General
-------

4.1 This Agreement constitutes the entire Agreement between the parties
with respect to the subject matter hereof and supersedes and merges all prior
understandings and agreements concerning the subject matter hereof. This
Agreement may only be modified or amended in writing.
<PAGE>

4.2. This Agreement shall be governed and construed in all respects under
the laws of the State of Indiana.

4.3. This Agreement may be executed in counterparts, each one of which
shall constitute one and the same Agreement and each one of which shall be
deemed an original.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

CENTRAL NEWSPAPERS, INC.

By: /s/ ERIC TOOKER
------------------------------
Printed: Eric Tooker
--------------------------
Title: Secretary
---------------------------

CHILDREN'S MUSEUM OF INDIANAPOLIS

By: /s/ JOHN H. GROGAN
------------------------------
Printed: John H. Grogan
-------------------------
Title: Treas.
---------------------------

<PAGE>

Exhibit 10.6

ADDITIONAL PURCHASE AGREEMENT
-----------------------------

This Agreement is made as of this 27th day of May, 1997, by and between
INDIANAPOLIS MUSEUM OF ART, INC., an Indiana nonprofit corporation
("Indianapolis Museum"), and CENTRAL NEWSPAPERS, INC., and Indiana corporation
(the "Company").

Recitals
--------

A. On or about May 20, 1997, the Estate of Enid Goodrich distributed
621,300 shares of Class A common stock of the Company to the Indianapolis
Museum.

B. On April 11, 1997, the Indianapolis Museum and the Company entered into
that certain stock purchase agreement (the "Stock Purchase Agreement") whereby
the Company agreed to purchase, and the Indianapolis Museum agreed to sell,
207,100 shares of Class A common stock, which transaction closed on May 20,
1997. The Stock Purchase Agreement also obligated the Company to use its best
efforts to enable the Indianapolis Museum to sell substantially all of its
remaining shares of the Company's Class A common stock in an underwritten
registered public offering.

C. The Indianapolis Museum is selling 360,174 shares of the Class A common
stock of the Company in an underwritten secondary offering of the Company's
Class A common stock (the "Secondary Offering").

D. The Indianapolis Museum has granted the underwriters of the Secondary
Offering the right and option to purchase up to an additional 54,026 shares of
Class A common stock of the Company (the "Shares"), for the same price per share
as provided for in the Secondary Offering, pursuant to an over-allotment option
(the "Option").

E. In the event the underwriters of the Secondary Offering do not elect to
purchase any or all of the Shares pursuant to the Option, the Company desires to
purchase, and the Indianapolis Museum desires to sell, all of the Shares not
purchased by the Underwriters as provided herein.

Agreement
---------

NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and subject to and upon the terms and conditions hereinafter
set forth, it is hereby agreed as follows:
<PAGE>

Article I
---------
Purchase of Shares
------------------

In the event that the underwriters do not purchase any or all of the Shares
pursuant to the Option, the Company hereby agrees to purchase, and the
Indianapolis Museum hereby agrees to sell, all the Shares not purchased by the
underwriters. The purchase price (the "Purchase Price") for each of the Shares
shall be the same price as the per share exercise price of the Option. Closing
shall take place at the Company's offices in Indianapolis, Indiana, within five
(5) days of the expiration of the Option (the "Closing Date"). At the closing,
the Indianapolis Museum shall deliver to the Company the certificate or
certificates representing the Shares being sold, a stock power duly executed in
blank and such other instruments as the Company shall deem necessary to transfer
ownership of the Shares to the Company and the Company shall deliver to the
Indianapolis Museum immediately available funds for the full amount of the
Purchase Price.

Article II
----------
Representations and Covenants of the Indianapolis Museum
--------------------------------------------------------

The Indianapolis Museum hereby represents and warrants as follows:

(a) As of the Closing Date, the Indianapolis Museum will be the sole
owner of the Shares not purchased by the underwriters, and that
each of such Shares will be free and clear of liens,
encumbrances, claims of others and transfer restrictions of any
kind; and

(b) The Indianapolis Museum has full power and authority to sell the
Shares not purchased by the underwriters to the Company in
accordance with the provisions hereof; and

(c) This Agreement is the valid and binding obligation of the
Indianapolis Museum, enforceable in accordance with its terms,
and the execution and performance of this Agreement by the
Indianapolis Museum will not result in any violation of or be in
conflict with or constitute a default under any contract,
agreement, instrument, judgment, decree or other indenture to
which the Indianapolis Museum is a party or by which the
Indianapolis Museum otherwise is bound; and

(d) No person, corporation or other entity has, nor as a result of
the transactions contemplated hereby will have, any right,
interest, or valid claim against the Indianapolis Museum, the
Company or any other person, nor any commission, fee or other
compensation

2
<PAGE>

as a finder or broker or in any similar capacity arising out of
any action taken by the Indianapolis Museum; and

(e) The Indianapolis Museum has had access to all public information
it desires concerning the Company and its subsidiaries and
operations and has had the opportunity to ask such questions of
officers of the Company as the Indianapolis Museum has deemed
necessary or appropriate in order to enable the Indianapolis
Museum to determine whether to authorize the sale of the Shares.
The Indianapolis Museum has reviewed all information it deems
material to making its decision to sell the shares.

Article III
-----------
Representations and Covenants of the Company
-------------------------------------------

The Company hereby represents and warrants as follows:

(b) No person, corporation or other entity has, nor as a result of
the transactions contemplated hereby will have, any right,
interest, or valid claim against the Indianapolis Museum, the
Company or any other person, for any commission, fee or other
compensation as a finder or broker or in any similar capacity
arising out of any action taken by the Company; and

Article IV
----------
General
-------

4.1. This Agreement constitutes the entire Agreement between the parties
with respect to the subject matter hereof and supersedes and merges all prior
understandings and

3
<PAGE>

agreements concerning the subject matter hereof. This Agreement may only be
modified or amended in writing.

4.2. This Agreement shall be governed and construed in all respects under
the laws of the State of Indiana.

4.3. This Agreement may be executed in counterparts, each one of which
shall constitute one and the same Agreement and each one of which shall be
deemed an original.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

CENTRAL NEWSPAPERS, INC.

By: /s/ ERIC TOOKER
----------------------------
Printed: Eric Tooker
-----------------------
Title: Secretary
-------------------------

INDIANAPOLIS MUSEUM OF ART, INC.

By: /s/ E. KIRK MCKINNEY JR.
----------------------------
Printed: E. Kirk McKinney Jr.
-----------------------
Title: Treasurer
-------------------------

<PAGE>

EXHIBIT 23.1

CONSENT OF GEO. S. OLIVE & CO., LLC, INDEPENDENT AUDITORS

We consent to the reference to our Firm under the captions "Experts" and
"Selected Consolidated Financial Data" in this Amendment No. 1 to Registration
Statement on Form S-3 (File No. 333-26165) and to the incorporation by reference
therein of our report dated February 3, 1997, with respect to the consolidated
financial statements of Central Newspapers, Inc. as of December 31, 1995 and
December 29, 1996 and for each of the three fiscal years in the period ended
December 29, 1996, included in its Annual Report on Form 10-K for the fiscal
year ended December 29, 1996.

/s/ Geo. S. Olive & Co. LLC

Geo. S. Olive & Co. LLC

Indianapolis, Indiana
May 27, 1997