CENTRAL NEWSPAPERS INC, S-3, 1997-04-30

CENTRAL NEWSPAPERS INC
S-3, 1997-04-30
NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1997.

REGISTRATION NO. 333-[ ]
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
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. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED (1) PER SHARE (2) OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Class A Common Stock 2,354,733
(without par value).... shares $50.19 $118,184,049.30 $35,814
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</TABLE>
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(1) Includes 307,139 shares to cover options which the Selling Shareholders
have granted the Underwriters solely to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c). Based on the average of the high and low prices
reported on the New York Stock Exchange Composite Tape on April 23, 1997.

--------------
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 April 30, 1997

2,047,594 Shares

[LOGO]
Central Newspapers, Inc.

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
APRIL 29, 1997, THE REPORTED LAST SALE PRICE OF THE CLASS A
COMMON STOCK ON THE NEW YORK STOCK EXCHANGE WAS $54 1/8 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
25,177,044 SHARES OF CLASS A COMMON STOCK OUTSTANDING AS OF APRIL 25,
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

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<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) SELLING SHAREHOLDERS(2)
---------- -------------- -----------------------
<S> <C> <C> <C>
Per Share..................... $ $ $
Total (3)..................... $ $ $
</TABLE>
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(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 $ will be paid by the Selling Shareholders and
expenses estimated at $ 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
, 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

May , 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

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."

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>

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 407,551 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 are to receive 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. In
April 1997, the Company entered into an agreement with each Selling Shareholder
to purchase an aggregate of 1,177,367 shares of Class A Common Stock from the
Selling Shareholders at $49.50 per share (the "Goodrich Repurchase") which
purchase is expected to be consummated no later than May 31, 1997. 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........... 22,040,744 shares(2)
Class B Common Stock........... 31,363,000 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 April 25, 1997, after giving effect to the Goodrich Repurchase.
Excludes 1,549,475 shares of Class A Common Stock reserved for issuance
upon the exercise of outstanding options of which 598,000 are currently
exercisable.
(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 25,177,044 shares of Class A
Common Stock outstanding as of April 25, 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 April 29,
1997)................................. 54 1/2 47 7/8
</TABLE>

On April 29, 1997, the reported closing price for the Class A Common Stock
was $54 1/8 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 will
come from a combination of cash and short-term borrowings.

<TABLE>
<CAPTION>
MARCH 30, 1997
---------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................. $ 59,447 $ 40,167
======== ========
Short-term borrowings..................................... $ -- $ 39,000
======== ========
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....................................... 372,070 315,097
Unamortized value of restricted stock................... (1,800) (1,800)
Net unrealized gain on available-for-sale securities.... 1,878 1,878
-------- --------
Total shareholders' equity............................ 397,974 339,694
-------- --------
Total capitalization...................................... $419,572 $361,292
======== ========
</TABLE>

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.......... 17.73% 19.92% 21.06% 20.30% 22.72% 17.74% 27.93%
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, EXCEPT PER SHARE DATA)
<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 April 14, 1997, the Company entered into definitive agreements with each
of the Selling Shareholders to purchase an aggregate of 1,177,367 shares of
Class A Common Stock at $49.50 per share. The transactions are expected to
close by May 31, 1997.

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 costs 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............. 457,846 461,101 456,555 .7% (1.0)%
Indianapolis........ 317,246 302,138 285,355 (4.8) (5.6)
<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............. 591,087 585,226 584,496 (1.0)% (.1)%
Indianapolis........ 404,468 399,347 402,884 (1.3) .9
</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 acquisition of McCormick 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>

In the second quarter of 1997, the Company intends to obtain a $60.0 million
unsecured, uncommitted, short-term credit facility to fund a portion of the
purchase price of the Goodrich Repurchase. The balance of the purchase price
will be 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

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.

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 each of the Company's major newspapers.

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 49,004. 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>
52 WEEKS 53 WEEKS 52 WEEKS 13 WEEKS ENDED
ENDED ENDED ENDED -------------------
DECEMBER 25, DECEMBER 31, DECEMBER 29, MARCH 31, MARCH 30,
1994 1995(1) 1996(1) 1996 1997
------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
The Arizona Republic
(Sunday)............... 587,919 581,337 584,496 621,310 618,546
The Arizona Republic
(Daily)................ 379,093 387,986 407,551 430,628 487,050
The Phoenix Gazette
(Daily)................ 75,494 71,123 49,004 63,719 --
Net circulation revenue
(in thousands)......... $77,537 $84,212 $87,790 $23,378 $23,070(2)
</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) 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:

<TABLE>
<CAPTION>
52 WEEKS 53 WEEKS 52 WEEKS 13 WEEKS ENDED
ENDED ENDED ENDED -------------------
DECEMBER 25, DECEMBER 31, DECEMBER 29, MARCH 31, MARCH 30,
1994 1995 1996 1996(1) 1997(1)
------------ ------------ ------------ --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Advertising linage--run-
of-paper in
six column inches
Full-run.............. 4,014 4,513 4,518 652 687
Part-run.............. 2,350 2,278 2,164 251 288
Weekly................ 269 245 243 66 66
Net advertising revenue. $248,528 $284,468 $302,294 $73,851 $80,534
</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 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.

<TABLE>
<CAPTION>
52 WEEKS 53 WEEKS 52 WEEKS 13 WEEKS ENDED
ENDED ENDED ENDED -------------------
DECEMBER 25, DECEMBER 31, DECEMBER 29, MARCH 31, MARCH 30,
1994 1995 1996 1996 1997
------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
The Indianapolis Star
(Sunday)............... 404,468 399,539 402,710 403,134 393,219
The Indianapolis Star
(Daily)................ 229,876 227,849 231,280 229,984 230,111
The Indianapolis News
(Daily)................ 87,468 73,141 54,263 60,127 44,549
Net circulation revenue
(in thousands)......... $38,886 $39,507 $37,205 $9,089 $9,980
</TABLE>

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 $1.50, 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:

<TABLE>
<CAPTION>
52 WEEKS 53 WEEKS 52 WEEKS 13 WEEKS ENDED
ENDED ENDED ENDED -------------------
DECEMBER 25, DECEMBER 31, DECEMBER 29, MARCH 31, MARCH 30,
1994 1995 1996 1996 1997
------------ ------------ ------------ --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Advertising linage--run-
of-paper in six column
inches
Full-run................ 2,716 2,937 2,976 634 807
Net advertising revenue
....................... $131,288 $145,267 $149,658 $33,875 $39,195
</TABLE>

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 1,450 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. As of December 29, 1996, the average paid circulation
of the Alexandria Daily Town Talk was 38,758 daily and 41,504 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. As of December 29, 1996, the
average paid circulation of The Star Press was 36,200 daily and 41,318 on
Sunday.

The Company, through its subsidiary, Topics Newspapers, Inc., publishes The
Daily Ledger (which for 1996 had an average daily circulation of 10,506) 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. As of December 29, 1996, the average paid circulation of the Vincennes
Sun-Commercial was 15,326 daily (five days) and 17,604 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 April 25, 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 March 30, 1997, 23,197,911 shares of Class A Common
Stock were issued and outstanding, 31,553,000 shares of Class B Common Stock
(convertible into 3,155,300 shares of Class A Common Stock) were issued and
outstanding, and no shares of Preferred Stock have been issued. As of March
30, 1997, the Class A Common Stock was held by 335 shareholders of record and
the Class B Common Stock was held by 24 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 93.1% 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 March 30, 1997, the Trust owned
22,907,500 shares of Class B Common Stock representing 72.6% of the outstanding
Class B Common Stock and 67.6% 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 April 25, 1997 and to be sold by the
Selling Shareholders (which assumes the distribution of shares from the Estate,
which is expected to occur in May 1997). 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 (1)
----------------- ---------- ---------------- ----------------------
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 54,026 *
The Children's Museum of
Indianapolis........... 621,300 2.7 207,100 360,174 54,026 *
Liberty Fund, Inc....... 2,389,500 10.3 763,167 1,327,246 299,087 1.4
</TABLE>
- --------
(1) Assumes no exercise of the U.S. Underwriters' over-allotment option. If the
option is exercised in full, the Indianapolis Museum of Art, Inc., The
Children's Museum of Indianapolis and the Liberty Fund, Inc. will own 0, 0
and 100,000 shares, respectively.
*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. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of $
a share to other Underwriters or to certain 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, each shareholder holding combined voting power in excess of
percent ( %) 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, including the
period ending 90 days 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> <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>

PROSPECTUS (Subject to Completion)
Issued April 30, 1997

2,047,594 Shares

[LOGO]
Central Newspapers, Inc.

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 APRIL 29, 1997, THE REPORTED LAST SALE PRICE OFTHE CLASS A
COMMON STOCK ON THE NEW YORK STOCK EXCHANGE WAS $54 1/8 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 25,177,044 SHARES OF CLASS A
COMMON STOCK OUTSTANDING AS OF APRIL 25, 1997 AFTER GIVING
EFFECT TO THE GOODRICH REPURCHASE (AS DEFINED HEREIN). SEE
"SELLING SHAREHOLDERS."

-----------

PRICE $ A SHARE

-----------

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) SHAREHOLDERS(2)
---------- -------------- ---------------
<S> <C> <C> <C>
Per Share............................. $ $ $
Total (3)............................. $ $ $
</TABLE>
- -----
(1) The Company and the 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 $ will be paid by the Selling
Shareholders and expenses estimated at $ 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."

-----------

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...................................... *
Legal fees and expenses........................................... *
Accounting fees and expenses...................................... *
Printing expenses................................................. *
Miscellaneous..................................................... *
-------
Total......................................................... *
=======
</TABLE>
- --------
*To be completed by amendment.

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.
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 (included on the signature pages hereof)
</TABLE>
- --------
*To be filed by amendment.

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 REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN INDIANAPOLIS, INDIANA ON THE 29TH DAY OF APRIL, 1997.

Central Newspapers, Inc.

/s/ Thomas K. MacGillivray
By: _________________________________

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas K. MacGillivray and Eric S. Tooker his
or her true and lawful attorneys-in-fact and agents, each acting alone, with
full powers of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including post-effective
amendments, as well as any related registration statement (or amendment
thereto) filed pursuant to Rule 462 promulgated under the Securities Act of
1933, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, and hereby ratifies and
confirms all his or her said attorneys-in-fact and agents or any of them or
his or her substitute or substitutes may lawfully do or cause to be done by
virtue thereof.

This Power of Attorney may be executed in multiple counterparts, each of
which shall be deemed an original, but which taken together shall constitute
one instrument.

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>
/s/ Louis A. Weil, III President, Chief Executive April 29, 1997
____________________________________ Officer and Director
Louis A. Weil, III (Principal Executive
Officer)

/s/ Thomas K. MacGillivray Vice President, Treasurer April 29, 1997
____________________________________ and Chief Financial Officer
Thomas K. MacGillivray (Principal Financial and
Accounting Officer)

/s/ William A. Franke Director April 29, 1997
____________________________________
William A. Franke

/s/ L. Ben Lytle Director April 29, 1997
____________________________________
L. Ben Lytle

/s/ Eugene S. Pulliam Director April 29, 1997
____________________________________
Eugene S. Pulliam

</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Dan Quayle Director April 29, 1997
____________________________________
Dan Quayle

/s/ Frank E. Russell Director April 29, 1997
____________________________________
Frank E. Russell

/s/ Richard Snell Director April 29, 1997
____________________________________
Richard Snell

</TABLE>

II-5
<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.
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 (included on the signature pages
hereof)
</TABLE>
- --------
*To be filed by amendment.

<PAGE>

EXHIBIT 4.2

Adopted July 12, 1988
Revised July 28, 1989
Revised Dec. 18, 1991
Revised April 8, 1994
Revised December 13, 1995
Revised August 9, 1996
Revised April 24, 1997

AMENDED AND RESTATED
--------------------
CODE OF BY-LAWS
---------------
OF
--
CENTRAL NEWSPAPERS. INC.
------------------------

ARTICLE 1
---------
Identification, Records, Seal and Fiscal Year
---------------------------------------------

Section 1.01. Name. The name of the Corporation is Central Newspapers,
Inc. (the "Corporation").

Section 1.02. Place of Keeping Corporate Books and Records. The
Corporation shall keep at its principal office a copy of (a) its Articles of
Incorporation and all amendments thereto currently in effect (the "Articles");
(b) its Code of By-Laws and all amendments thereto currently in effect (the "By-
Laws"); (c) resolutions adopted by the Board of Directors (the "Board") with
respect to one or more classes or series of shares and fixing their relative
rights, preferences, and limitations, if shares issued pursuant to these
resolutions are outstanding; (d) minutes of all meetings of the shareholders of
the Corporation (the "Shareholders") and records of all actions taken by the
Shareholders without a meeting (collectively, "Shareholders Minutes") for the
prior three years; (e) all written communications by the Corporation to the
Shareholders including the financial statements furnished by the Corporation to
the Shareholders for the prior three years; (f) a list of the names and business
addresses of the current directors of the Corporation (the "Directors") and the
current officers of the Corporation (the "Officers"); and (g) the most recent
Annual Report of the Corporation as filed with the Secretary of State of
Indiana. The Corporation shall also keep and maintain at its principal office,
or at such other place or places within or without the State of Indiana as may
be provided, from time to time, in these By-Laws, (a) minutes of all meetings of
the Board and of each committee, and records of all actions taken by the Board
and by each committee without a meeting; (b) Shareholders Minutes; (c)
appropriate accounting records of the Corporation; and (d) a record of the
Shareholders in a form that permits preparation of a list of the names and
addresses of all the Shareholders, in alphabetical order by class of shares,
stating the number and class of shares held by each Shareholder. All of the
records of the Corporation described in this Section shall be maintained in
written form or in another form capable of conversion into written form within a
reasonable time.
<PAGE>

Section 1.03. Seal. The corporate seal of the Corporation shall be in
circular form and mounted upon a metal die, suitable for impressing upon paper,
and about the upper periphery of the seal shall appear the words "Central
Newspapers, Inc." and about the lower periphery thereof shall appear the word
"Indiana" and in the center thereof shall appear the word "Seal" and the year
"1934". The corporate seal shall be used for ceremonial or traditional purposes
in such circumstances as the Secretary or Assistant Secretary shall deem
appropriate. The Corporation shall not be required to use the corporate seal
for any purpose whatsoever, and the absence of the impression of the corporate
seal from any document shall not affect in any way the validity or effect of
such document.

Section 1.04. Fiscal Year. Each fiscal year of the Corporation shall end
on the last Sunday of each calendar year, and the next fiscal year shall begin
on the Monday following the last Sunday in each calendar year.

ARTICLE 2
---------
Shares
------

Section 2.01. Certificates for Shares. Each holder of the shares of the
Corporation shall be entitled to a certificate in such form as the Board may
prescribe from time to time. However, unless the Articles provide otherwise, the
Board may authorize the issue of some or all of the shares of any or all of the
Corporation's classes or series without certificates. Within a reasonable time
after the issue or transfer of shares without certificates, the Corporation
shall send the Shareholder a written statement of the information required on
certificates by the Indiana Business Corporation Law, as amended from time to
time (the "Act"), and the information required by the Indiana Uniform Commercial
Code, as in effect from time to time. A holder of such shares may request that a
certificate be provided to him by giving notice to the Secretary of the
Corporation. The certificate shall be provided in the form prescribed by the
Board.

Section 2.02. Transfer of Shares. The shares of the Corporation shall be
transferable only on the books of the Corporation upon delivery to the
Corporation of the certificate(s) representing the same or, in the case of
shares without certificates, an instrument of assignment in respect of the
shares being transferred, in form and substance satisfactory to the Corporation,
properly endorsed by the registered holder or by his duly authorized attorney,
such endorsement to be guaranteed by a bank or registered securities broker or
dealer. The requirement for such guarantee may be waived in writing upon the
form of endorsement by the President of the Corporation.

Section 2.03. Lost, Stolen or Destroyed Certificates. The Corporation
may issue a new certificate for shares in the place of any certificate
theretofore issued and alleged to have been lost, stolen or destroyed, but the
Board may require the owner of such lost, stolen or

-2-
<PAGE>

destroyed certificate, or his legal representative, to furnish affidavit as to
such loss, theft or destruction and to give a bond in such form and substance,
and with such surety or sureties, with fixed or open penalty, as it may direct
to indemnify the Corporation against any claim that may be made on account of
the alleged loss, theft or destruction of such certificate. A new certificate
may be issued without requiring any bond when, in the judgment of the Board, it
is not imprudent to do so.

Section 2.04. Issue and Consideration for Shares. The Board may
authorize shares to be issued for consideration consisting of any tangible or
intangible property or benefit to the Corporation, including cash, promissory
notes, services performed, contracts for services to be performed, or other
securities of the Corporation. If shares are issued for promissory notes or for
promises to render services in the future, the Corporation shall report in
writing to the Shareholders the number of shares authorized to be so issued with
or before the notice of the next Shareholders' meeting. However, if the
Corporation is subject to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), these reporting requirements are satisfied by complying with
the proxy disclosure provisions of the Exchange Act. The adequacy of the
consideration is to be determined by the Board, and that determination is
conclusive insofar as the adequacy of the shares relates to whether the shares
are validly issued, fully paid, and nonassessable. Once the Corporation receives
the consideration for which the Board authorized the issuance of the shares, the
shares are fully paid and nonassessable.

ARTICLE 3
---------
Meetings of Shareholders
------------------------

Section 3.01. Place of Meetings. All meetings of Shareholders shall be
held at the principal office of the Corporation or at such other place, within
or without the State of Indiana, as may be specified in the respective notices
or waivers of notice thereof.

Section 3.02. Annual Meeting. Unless otherwise determined by the Board,
the annual meeting of the Shareholders for the election of Directors, and for
the transaction of such other business as may properly come before the meeting,
shall be held at 10:00 in the forenoon of the second Wednesday in May of each
year, if such day is not a legal holiday, and if a holiday then on the first
following day that is not a legal holiday. Failure to hold the Annual Meeting at
the designated time does not affect the validity of any corporate action.

Section 3.03. Special Meetings. Special meetings, for any purpose or
purposes (unless otherwise prescribed by law), may be called by the Board or the
President, and shall be called by the President or any Vice-President at (a) the
request in writing of a majority of the Board, or (b) at the written demand,
delivered to the Secretary, of Shareholders holding of record not less than 25%
of the voting power of all the shares of the Corporation issued and outstanding
and entitled by the Articles to vote on the business proposed to be transacted
thereat. All

-3-
<PAGE>

requests or demands for special meetings shall state the purpose or purposes
thereof, and the business transacted at such meeting shall be confined to the
purposes stated in the call and matters germane thereto.

Section 3.04. Record Date. The Board may fix a record date, not exceeding
seventy (70) days prior to the date of any meeting of the Shareholders, for the
purpose of determining the Shareholders entitled to notice of and to vote at
such meeting. In the absence of action by the Board fixing a record date as
herein provided, the record date shall be the fourteenth (14th) day prior to the
date of the meeting. A new record date must be fixed if a meeting of
Shareholders is adjourned to a date more than 120 days after the date fixed for
the original meeting.

Section 3.05. Notice of Meetings. A written or printed notice, stating
the place, day and hour of the meeting, and, in the case of a special meeting or
when otherwise required by any provision of the Act, the Articles or these By-
Laws, the purpose or purposes for which the meeting is called, shall be
delivered or mailed by the Secretary or by the persons calling the meeting to
each Shareholder at the time entitled to vote, at such address as appears on the
records of the Corporation, at least ten (10) and not more than sixty (60) days
before the date of the meeting. Notice of any special meeting called at the
written demand of Shareholders shall be delivered or mailed within sixty (60)
days of the Secretary's receipt of such demand. Each Shareholder who has in the
manner provided in Section 3.06 of these By-Laws waived notice of a
Shareholders' meeting, or who personally attends a Shareholders' meeting, or is
represented thereat by a proxy duly authorized to appear by an instrument of
proxy complying with the requirements hereinafter set forth, shall be
conclusively presumed to have been given due notice of such meeting.

Section 3.06. Waiver of Notice. Notice of any annual or special meeting
may be waived in writing by any Shareholder, before or after the date and time
of the meeting specified in the notice thereof, by a written waiver delivered to
the Corporation for inclusion in the minutes or filing with the corporate
records. A Shareholder's attendance at any meeting in person or by proxy shall
constitute a waiver of any objection to (a) notice of such meeting, unless the
Shareholder at the beginning of the meeting objects to the holding of or the
transaction of business at the meeting, and (b) consideration at such meeting of
any business that is not within the purpose or purposes described in the meeting
notice, unless the Shareholder objects to considering the matter when it is
presented.

Section 3.07. Proxies. A Shareholder entitled to vote at any meeting may
vote either in person or by proxy executed in writing by the Shareholder or a
duly authorized attorney-in-fact of such Shareholder. For purposes of this
Section, a proxy granted by telegram, telex, telecopy or other document
transmitted electronically for or by a Shareholder shall be deemed "executed in
writing by the Shareholder." The general proxy of a fiduciary shall be given the
same effect as the general proxy of any other Shareholder. No proxy shall be
valid after eleven months

-4-
<PAGE>

from the date of its execution unless a longer or shorter time is expressly
provided therein. An appointment of a proxy is revocable by a Shareholder unless
the appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest.

Section 3.08. Quorum. At any meeting of Shareholders, the holders of
outstanding shares representing a majority of the votes entitled to be cast with
respect to the business to be transacted at such meeting, represented thereat in
person or by proxy, shall constitute a quorum, and a majority vote of such
quorum shall be necessary for the transaction of any business by the meeting,
unless a greater number is required by law, the Articles or these By-Laws. In
case a quorum shall not be present at any meeting, the holders of record
representing a majority of the votes so present in person or by proxy may
adjourn the meeting from time to time, without notice, other than announcement
at the meeting, unless the date of the adjourned meeting requires that the Board
fix a new record date therefore, in which case notice of the adjourned meeting
shall be given. At any such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might have been transacted
at the meeting as originally scheduled.

Section 3.09. Shareholder List. The Secretary shall cause to be prepared
before each meeting of Shareholders a complete list of the Shareholders entitled
to notice of such meeting, arranged in alphabetical order by class of shares
(and each series within a class), and showing the address of, and the number of
shares entitled to vote held by, each Shareholder (the "Shareholder List").
Beginning five business days before the meeting and continuing throughout the
meeting, the Shareholder List shall be on file at the principal office or at a
place identified in the meeting notice as the city where the meeting will be
held, and shall be available for inspection by any Shareholder entitled to vote
at the meeting. On written demand, made in good faith and for a proper purpose
and describing with reasonable particularity the Shareholder's purpose, and if
the Shareholder List is directly connected with the Shareholder's purpose, a
Shareholder (or such Shareholder's agent or attorney authorized in writing)
shall be entitled to inspect and to copy the Shareholder List, during regular
business hours and at the Shareholder's expense, during the period the
Shareholder List is available for inspection. The original stock register or
transfer book, or a duplicate thereof kept in the State of Indiana, shall be the
only evidence as to who are the Shareholders entitled to examine the Shareholder
List, or to notice of or to vote at any meeting.

Section 3.10. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Shareholders may be taken without a meeting if
the action is taken by all the Shareholders entitled to vote on the action. The
action must be evidenced by one (1) or more written consents describing the
action taken, signed by all the Shareholders entitled to vote on the action, and
delivered to the Corporation for inclusion in the minutes or filing with the
corporate records. Action taken under this Section is effective when the last
Shareholder signs a written consent, unless the consent specifies a different
prior or subsequent effective date.

-5-
<PAGE>

Section 3.11. Voting Rights of Shareholders. The Shareholders of the
Corporation shall have the voting rights set forth in the Articles.

Section 3.12. Order of Business. The order of business at the annual
meetings, and so far as practicable at all other meetings, of Shareholders,
shall be:

Item (1). Proof of due notice of meeting.

Item (2). Call of roll.

Item (3). Reading and disposal of any unapproved minutes.

Item (4). Annual reports of Officers and Committees.

Item (5). Unfinished business.

Item (6). New business.

Item (7). Election of Directors.

Item (8). Adjournment.

Section 3.13. Notice of Shareholder Business. At any meeting of the
Shareholders, only such business or proposals ("Business") may be conducted as
shall have been properly brought before the meeting, and as shall have been
determined to be lawful and appropriate for consideration by Shareholders at the
meeting. To be properly brought before a meeting, Business must be (a)
specified in the notice of meeting (or supplement thereto) given in accordance
with Section 3.05 of these By-Laws, (b) brought before the meeting by or at the
direction of the Board or the President, or (c) brought before the meeting by a
Shareholder after giving timely notice thereof in writing to the Secretary of
the Corporation. To be timely, a Shareholder's notice must be delivered to or
mailed and received at the principal office of the Corporation, not less than
ten (10) days prior to the meeting. A Shareholder's notice to the Secretary
shall set forth as to each matter the Shareholder proposes to bring before the
meeting (a) a brief description of the Business desired to be brought before the
meeting, (b) the name and address, as they appear on the Corporation's
Shareholder List, of the Shareholder proposing such Business, (c) the class and
number of shares of the Corporation which are beneficially owned by the
Shareholder, and (d) any interest of the Shareholder in such Business. The
person presiding at the meeting shall, if the facts warrant, determine and
declare to the meeting that Business was not properly brought before the meeting
in accordance with the By-Laws, or that Business was not lawful or appropriate
for consideration by

-6-
<PAGE>

Shareholders at the meeting, and if he should so determine, he shall so declare
to the meeting, and any such Business shall not be transacted. (Section added
December 18, 1991)

Section 3.14. Notice of Shareholder Nominees. Nominations of persons for
election to the Board may be made at any meeting of Shareholders by or at the
direction of the Board or by any Shareholder of the Corporation entitled to vote
for the election of Directors at the meeting. Shareholder nominations shall be
made pursuant to timely notice given in writing to the Secretary of the
Corporation in accordance with Section 3.13 of this By-Laws. Such Shareholder's
notice shall set forth as to each person whom the Shareholder proposes to
nominate for election or re-election as a Director, (a) the name, age, business
address and residence address of such person, (b) the principal occupation or
employment of such person, (c) the class and number of shares of the Corporation
which are beneficially owned by such person, (d) any other information relating
to such person that is required to be disclosed in solicitation of proxies for
election of Directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
without limitation such person's written consent to being named in the proxy
statement as a nominee and to serving as a Director if elected), and (e) the
qualifications of the nominee to serve as a Director of the Corporation. The
Corporation may require any proposed nominee to furnish such other information
as may reasonably be required by the Corporation to determine the eligibility of
such proposed nominee to serve as a Director of the Corporation. No Shareholder
nomination shall be effective unless made in accordance with the procedures set
forth in this Section 3.14. The person presiding at the meeting shall, if the
facts warrant, determine and declare to the meeting that a Shareholder
nomination was not made in accordance with the By-Laws, and if he should so
determine, he shall so declare to the meeting and the defective nomination shall
be disregarded. (Section added December 18, 1991)

ARTICLE 4
---------
Board of Directors
------------------

Section 4.01. Duties and Number. The business and affairs of the
Corporation shall be managed under the direction of a Board of seven (7)
Directors.

Section 4.02. Election, Term of Office and Qualification. Directors shall
be elected at each annual meeting by the Shareholders entitled by the Articles
to elect Directors. Directors shall be elected for a term of one year and shall
hold office until their respective successors are elected and qualified.
Directors need not be residents of the State of Indiana or Shareholders of the
Corporation. No decrease in the number of Directors at any time provided for by
these By-Laws shall have the effect of shortening the term of any incumbent
Director.

Section 4.03. Powers of Directors. The Board shall exercise all the
powers of the Corporation, subject to the restrictions imposed by law, the
Articles, or these By-Laws.

-7-
<PAGE>

Section 4.04. Annual Meeting. Unless otherwise determined by the
President or the Board, the Board shall meet each year immediately after the
annual meeting of the Shareholders, at the place where such meeting of the
Shareholders has been held, for the purpose of organization, election of
Officers, and consideration of any other business that may properly be brought
before the meeting. No notice shall be necessary for the holding of this annual
meeting. If such meeting is not held as above provided, the election of
Officers may be held at any subsequent duly constituted meeting of the Board.

Section 4.05. Regular Board Meetings. Regular meetings of the Board may
be held at stated times or from time to time, and at such place, either within
or without the State of Indiana, as the Board may determine, without call and
without notice.

Section 4.06. Special Board Meetings. Special meetings of the Board may
be called at any time or from time to time, and shall be called on the written
request of at least two Directors or the President, by causing the Secretary or
any Assistant Secretary to give to each Director, either personally or by mall,
telephone, telegraph, teletype or other form of wire or wireless communication
at least two days' notice of the date, time and place of such meeting. Special
meetings shall be held at the principal office or at such other place, within or
without the State of Indiana, as shall be specified in the respective notices or
waivers of notice thereof. A Director may waive notice of any special meeting of
the Board before or after the date and time stated in the notice by a written
waiver signed by the Director and filed with the minutes or corporate records. A
Director's attendance at or participation in a special meeting waives any
required notice to the Director of the meeting unless the Director at the
beginning of the meeting (or promptly upon the Director's arrival) objects to
holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.

Section 4.07. Meeting by Telephone, etc. Any or all of the members of the
Board or of any committee designated by the Board may participate in a meeting
of the Board or the committee, or conduct a meeting through the use of, any
means of communication by which all persons participating may simultaneously
hear each other during the meeting, and participation in a meeting using these
means constitutes presence in person at the meeting.

Section 4.08. Quorum. At all meetings of the Board, a majority of the
number of Directors designated for the full Board shall be necessary to
constitute a quorum for the transaction of any business, except (a) that for the
purpose of filling of vacancies of the Board a majority of Directors then in
office shall constitute a quorum, and (b) that a lesser number may adjourn the
meeting from time to time until a quorum is present. The affirmative vote of a
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board, unless the act of a greater number is required by
law, the Articles or these By-Laws.

-8-
<PAGE>

Section 4.09. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if the action is taken by all members of the Board or of such
committee. The action must be evidenced by one (1) or more written consents
describing the action taken, signed by each member of the Board or of the
committee, and included in the minutes or filed with the corporate records
reflecting the action taken. Action taken under this Section is effective when
the last member of the Board or of the committee signs a written consent, unless
the consent specifies a different prior or subsequent effective date.

Section 4.10. Resignations. Any Director may resign at any time by
delivering written notice to the Board, its Chairman, the President, or the
Secretary. Such resignation shall take effect when the notice is delivered
unless the notice specifies a later effective date. If the resignation specifies
a later effective date, the Board may fill the pending vacancy before the
effective date, but the new Director may not take office until the vacancy
occurs.

Section 4.11. Removal. Any Director may be removed, with or without
cause, at any meeting of the Shareholders by the vote specified in the Articles,
if notice of the intention to act upon such matter shall have been given in the
notice calling such meeting.

Section 4.12. Vacancies. Any vacancy occurring in the Board, including a
vacancy resulting from an increase in the number of Directors, may be filled by
the Board, or if the Directors remaining in office constitute fewer than a
quorum of the Board, they may fill the vacancy by the affirmative vote of a
majority of all the Directors remaining in office. Each Director so chosen shall
hold office until the expiration of the term of the Director, if any, whom he
has been chosen to succeed, or, if none, until the expiration of the term
designated by the Board for the directorship to which he has been elected, or
until his earlier removal, resignation, death, or other incapacity.

Section 4.13. Compensation of Directors. The Board is empowered and
authorized to fix and determine the compensation of Directors for attendance at
meetings of the Board and additional compensation for such additional services
any of such Directors may perform for the Corporation.

Section 4.14. Interest of Directors in Contracts. Any contract or other
transaction between the Corporation and (a) any Director, or (b) any
corporation, unincorporated association, business trust, estate, partnership,
trust, joint venture, individual or other legal entity ("Legal Entity") (1) in
which any Director has a material financial interest or is a general partner, or
(2) of which any Director is a director, officer or trustee (collectively, a
"Conflict Transaction"), shall be valid for all purposes, if the material facts
of the Conflict Transaction and the Director's interest were disclosed or known
to the Board,' a committee with authority to act thereon, or the Shareholders
entitled to vote thereon, and the Board, such committee, or

-9-
<PAGE>

such Shareholders authorized, approved, or ratified the Conflict Transaction. A
Conflict Transaction is authorized, approved or ratified:

(a) By the Board or such committee, if it receives the affirmative
vote of a majority of the Directors who have no interest in the Conflict
Transaction, notwithstanding the fact that such majority may not constitute
a quorum or a majority of the Board or such committee or a majority of the
Directors present at the meeting, and notwithstanding the presence or vote
of any Director who does have such an interest; provided, however, that no
Conflict Transaction may be authorized, approved or ratified by a single
Director; or

(b) By such Shareholders, if it receives the vote of a majority of the
shares entitled to be counted, in which vote shares owned or voted under
the control of any Director who, or of any Legal Entity that, has an
interest in the Conflict Transaction may be counted.

This Section shall not be construed to require authorization, ratification or
approval by the Shareholders of any Conflict Transaction, or to invalidate any
Conflict Transaction that would otherwise be valid under the common and
statutory law applicable thereto.

ARTICLE 5
---------
Executive Committee and Other Committees
----------------------------------------

Section 5.01. Designation of Committees. The Board may, by resolution
adopted by a majority of the actual number of Directors elected and qualified,
from time to time, designate (i) any two (2) or more of its members to
constitute an Executive Committee, and (ii) any one (1) or more of its members
to constitute any other Committee. The Board shall have the power at any time to
increase or decrease the number of members of the Executive Committee or any
other Committee, to fill vacancies thereon, to change any member thereof and to
change the functions or terminate the existence thereof.

Section 5.02. Powers of Committees. During the intervals between meetings
of the Board, and subject to such limitations as may be required by law or by
resolution of the Board, the Executive Committee shall have and may exercise all
of the authority of the Board, and any other Committee shall have and may
exercise such authority of the Board as may be provided in the resolution
designating such Committee; provided, however, that neither the Executive
Committee nor any other Committee shall have authority to do any of the
following:

(a) authorize dividends or other distributions, except that the
Executive Committee (or an Officer designated by the Board) may authorize
or approve a

-10-
<PAGE>

reacquisition of Shares if done according to a formula or method prescribed
by the Board;

(b) approve or propose to the Shareholders action required by the law
to be submitted to the Shareholders for approval;

(d) amend the Articles, except to the extent authorized in subsection
(g);

(e) adopt, amend or repeal these By-Laws;

(f) approve a plan of merger not requiring Shareholder approval; or

(g) authorize or approve the issuance or sale or of Shares, or
determine the designation and relative rights, preferences and limitations
of a class or series of Shares, except that the Executive Committee (or an
Officer designated by the Board) may take the actions described in this
subsection within limits prescribed by the Board.

The members of any Committee shall act only as a Committee, and the individual
members shall have no power as such. All minutes of Committee Meetings shall be
submitted to the next succeeding Board Meeting; but failure to submit the same
shall not invalidate any completed or incomplete action taken by the Corporation
upon proper authorization by such Committee prior to the time when the same
should have been or were submitted as above provided.

Section 5.03. Meetings; Procedure; Quorum. Sections 4.05 through 4.09 of
these By-Laws dealing with meetings, action without a meeting, notice and waiver
of notice, and quorum and voting requirements of the Board apply to the
committees and their members as well.

ARTICLE 6
---------
Officers
--------

Section 6.01. Number. The Officers of the Corporation shall consist of
the President, the Executive Vice President, one (1) or more Vice-Presidents,
the Secretary, the Treasurer, and such other officers as may be chosen by the
Board at such time and in such manner and for such terms as the Board may
prescribe. Any two (2) or more offices may be held by the same person.

-11-
<PAGE>

Section 6.02. Election and Term of Office. The Officers shall be chosen
by the Board or by an Officer duly elected or appointed and duly authorized by
the Board. Each Officer shall hold office until his successor is chosen and
qualified, until his death, until he shall have resigned, or until he shall have
been removed pursuant to Section 6.04 of these By-Laws.

Section 6.03. Resignations. Any Officer may resign at any time by
delivering written notice to the Board, its Chairman, the President, or the
Secretary. Such resignation shall take effect when the notice is delivered
unless the notice specifies a later effective date. If a resignation is made
effective at a later date and the Corporation accepts the future effective date,
the Board may fill the pending vacancy before the effective date if the Board
provides that the successor does not take office until the effective date.

Section 6.04. Removal. Any Officer may be removed either with or without
cause, at any time, by the vote of a majority of the actual number of Directors
elected and qualified from time to time, or by the Officer who appointed that
Officer.

Section 6.05. Vacancies. Whenever any vacancy shall occur in any office,
the same shall be filled by the Board, the President, or by an Officer duly
appointed by the Board, and the Officer so chosen shall hold office during the
remainder of the term for which his predecessor was chosen or as otherwise
provided herein.

Section 6.06. President. Subject to the general control of the Board,
the President shall manage and supervise all the affairs and personnel of the
Corporation and shall discharge all the usual functions of the chief executive
officer of a corporation. He shall preside at all meetings of Shareholders and
Directors, discharge all the duties which devolve upon a presiding officer, and
shall exercise and perform such other powers and duties as these By-Laws or the
Board may prescribe. The President shall have full authority to execute proxies
in behalf of the Corporation, to vote stock owned by it in any other
corporation, and to execute, with the Secretary, powers of attorney appointing
other corporations, partnerships, or individuals the agent of the Corporation,
all subject to the provisions of the Act, the Articles and these By-Laws.

Section 6.07. The Executive Vice-President and Vice-Presidents. The
Executive Vice-President shall perform all duties incumbent upon the President
during the absence or disability of the President, and perform such other duties
as the By-Laws may require or the Board of Directors or President may prescribe.
The Vice-Presidents shall perform all duties incumbent upon the Executive Vice-
President during the absence or disability of the Executive Vice-President, and
perform such other duties as these By-Laws may require or the Board of Directors
or President may prescribe.

Section 6.08 Secretary. The Secretary shall attend all meetings of the
Shareholders and of the Board, and shall keep or cause to be kept in a book
provided for the purpose a true

-12-
<PAGE>

and complete record of the proceedings of such meetings, and shall perform a
like duty, when required, for all committees created by the Board. He shall
authenticate the records of the Corporation when necessary and shall exercise
and perform such other powers and duties as these By-Laws, the Board, or the
President may prescribe. He shall give all notices of the Corporation and, in
case of his absence, negligence, or refusal so to do, any notice may be given by
a person so directed by the President or by the requisite number of Directors or
Shareholders upon whose request the meeting is called as provided by these By-
Laws.

Section 6.09. Treasurer. The Treasurer shall keep correct and complete
records of account, showing accurately at all times the financial condition of
the Corporation. He shall be the legal custodian of all moneys, notes,
securities and other valuables that may from time to time come into the
possession of the Corporation. He shall immediately deposit all funds of the
Corporation coming into his hands in some reliable bank or other depository to
be designated by the Board, and shall keep such bank account in the name of the
Corporation. He shall furnish at meetings of the Board, or whenever requested
thereby, a statement of the financial condition of the Corporation, and shall
exercise and perform such other powers and duties as these By-Laws, the Board,
or the President may prescribe. The Treasurer may be required to furnish bond in
such amount as shall be determined by the Board.

Section 6.10. Chairman of the Board. The Chairman of the Board shall be
elected from the Directors of the Corporation and shall have the usual duties of
a Chairman of the Board.

Section 6.11. Assistant Officers. The Board or an Officer duly appointed
by the Board may from time to time designate assistant Officers who shall
exercise and perform such powers and duties as the Officers whom they are
elected to assist shall specify and delegate to them, and such other powers and
duties as these By-Laws, the Board, or the President may prescribe. An Assistant
Secretary may, in the absence or disability of the Secretary, attest the
execution of all documents by the Corporation.

Section 6.12. Delegation of Authority. In case of the absence of any
Officer of the Corporation, or for any other reason that the Board may deem
sufficient, the Board may delegate the powers or duties of such Officer to any
other Officer or to any Director, for the time being.

ARTICLE 7
---------
Negotiable Instruments, Deeds, Contracts,
-----------------------------------------
Stock and Limitation of Liability
---------------------------------

Section 7.01. Execution of Negotiable Instruments. All checks, drafts,
bills of exchange and orders for the payment of money by the Corporation shall,
unless otherwise

-13-
<PAGE>

directed by the Board, or unless otherwise required by law, be signed by any two
of the following Officers: the President, the Executive Vice-President, any
Vice-President, the Secretary or the Treasurer. The Board may, however,
authorize any one or more of such Officers to sign checks, drafts, bills of
exchange and orders for the payment of money by the Corporation singly and
without necessity of countersignature; and the Board may designate any other
employee or employees of the Corporation, who may, in the name of the
Corporation, execute checks, drafts, bills of exchange and orders for the
payment of money by the Corporation or in its behalf.

Section 7.02. Execution of Deeds, Contracts, Etc. All deeds, notes, bonds
and mortgages made by the Corporation and all other written contracts and
agreements, other than those executed in the ordinary course of corporate
business, to which the Corporation shall be a party shall be executed in its
name by the President, the Executive Vice-President, a Vice-President or by any
other Officer so authorized by the Board, acting by resolution; and the
Secretary, when necessary or required, shall attest the execution thereof.

Section 7.03. Ordinary Contracts and Agreements. All written contracts
and agreements into which the Corporation enters in the ordinary course of
business operations shall be executed by any Officer or by any other employee of
the Corporation designated by the President to execute such contracts and
agreements.

Section 7.04. Endorsement of Certificates for Shares. Unless otherwise
directed by the Board, any share or shares issued by any corporation and owned
by the Corporation (including reacquired shares of the Corporation) may, for
sale or transfer, be endorsed in the name of the Corporation by the President,
the Executive Vice-President or a Vice-President, and the Secretary, when
necessary or required, shall attest such endorsement.

Section 7.05. Voting of Shares Owned by Corporation. Unless otherwise
directed by the Board, any share or shares issued by any other corporation and
owned or controlled by the Corporation may be voted at any shareholders' meeting
of such other corporation by the President of the Corporation, or in his absence
by the Executive Vice-President of the Corporation. Whenever, in the judgment of
the President, it is desirable for the Corporation to execute a proxy or give a
shareholder's consent in respect to any share or shares issued by any other
corporation and owned by the Corporation, such proxy or consent shall be
executed in the name of the Corporation by the President or the Executive Vice-
President of the Corporation. Any person or persons designated in the manner
above stated as the proxy or proxies of the Corporation shall have full right,
power and authority to vote the share or shares issued by such other corporation
and owned by the Corporation in the same manner as such share or shares might be
voted by the Corporation.

Section 7.06. Limitation of Liability. The following provisions apply
with respect to liability on the part of a Director, a member of any committee
appointed by the Board (an

-14-
<PAGE>

"Appointed Committee"), Officer, employee or agent of the Corporation
(collectively, "Corporate Persons," and individually, a "Corporate Person") for
any loss or damage suffered on account of any action taken or omitted to be
taken by a Corporate Person:

(a) General Limitation. No Corporate Person shall be liable for any
loss or damage if, in taking or omitting to take any action causing such
loss or damage, either (1) such Corporate Person acted (A) in good faith,
(B) with the care an ordinarily prudent person in a like position would
have exercised under similar circumstances, and (C) in a manner such
Corporate Person reasonably believed was in the best interests of the
Corporation, or (2) such Corporate Person's breach of or failure to act in
accordance with the standards of conduct set forth in Clause (a)(1) above
(the "Standards of Conduct") did not constitute willful misconduct or
recklessness.

(b) Reliance on Corporate Records and Other Information. Any
Corporate Person shall be fully protected, and shall be deemed to have
complied with the Standards of Conduct, in relying in good faith, with
respect to any information contained therein, upon (1) the Corporation's
records, or (2) information, opinions, reports or statements (including
financial statements and other financial data) prepared or presented by (A)
one or more other Corporate Persons whom such Corporate Person reasonably
believes to be competent in the matters presented, (B) legal counsel,
public accountants or other persons as to matters that such Corporate
Person reasonably believes are within such person's professional or expert
competence, (C) an Appointed Committee, of which such Corporate Person is
not a member, if such Corporate Person reasonably believes such Appointed
Committee merits confidence, or (D) the Board, if such Corporate Person is
not a Director and reasonably believes that the Board merits confidence.

ARTICLE 8
---------
Amendments
----------

Section 8.01. Amendment of By-Laws. The power to make, alter, amend or
repeal these By-Laws is vested in the Board, but the affirmative vote of a
number of Directors equal to a majority of the number who would constitute a
full Board of Directors at the time of such action shall be necessary to take
any action for the making, alteration, amendment or repeal of these By-Laws.

-15-

<PAGE>

EXHIBIT 10.1

STOCK PURCHASE AGREEMENT
------------------------

This Agreement is made as of this 11th day of April, 1997, by and between
Liberty Fund, Inc., an Indiana nonprofit corporation ("Liberty Fund"), and
Central Newspapers, Inc., an Indiana corporation (the "Company").

Recitals
--------

A. The Liberty Fund is the record owner of 1,127,900 shares of the Class
A common stock of the Company and 190,000 Shares of Class B common stock which
Liberty Fund intends to convert to 19,000 shares of Class A common stock of the
Company (the "Shares").

B. The Estate of Enid Goodrich (the "Estate") is expected to distribute
1,242,600 Shares to the Liberty Fund on or before May 30, 1997.

C. The Company desires to purchase from the Liberty Fund and the Liberty
Fund desires to sell to the Company 763,167 Shares (the "Redeemed Shares").

D. The Liberty Fund desires for the Company to assist the Liberty Fund
and the Company desires to assist the Liberty Fund, in the sale and distribution
of substantially all of the Liberty Fund's remaining Shares (the "Secondary
Offering Shares") in an underwritten public offering (the "Secondary Offering"),
all as hereinafter more specifically 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:

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

1.1. On or before May 30, 1997 (the "Closing Date"), the Liberty Fund will
deliver to the Company, at the Company's offices in Indianapolis, Indiana, the
certificate or certificates representing the Redeemed Shares, a stock power duly
executed in blank and such other instruments as the Company shall deem necessary
to transfer ownership of the Redeemed Shares to the Company. The Company will
deliver to the Liberty Fund a certified or cashiers check or wire funds transfer
in an amount equal to $37,776,766.50 (or $49.50 per Redeemed Share) plus
interest at the per annum rate of 5.25% from the date hereof to, but not
including, the Closing Date (the "Purchase Price").
<PAGE>

1.2. The Company 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, 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 Company, except for the underwriters
selected for the Secondary Offering, which commissions and
discounts (not to exceed 5%) are to be paid by the Liberty Fund
with respect to the Shares sold by it; and

(c) The Company's purchase of the Redeemed 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 II
----------
Secondary Offering
------------------

2.1. The Company will use its best efforts to facilitate a Secondary
Offering in which the Liberty Fund may sell the Secondary Offering Shares. The
Secondary Offering will be managed by underwriters selected by the Company. The
Liberty Fund will be responsible for its own legal and/or accounting fees
incurred in connection with the Secondary Offering and for the underwriter's
discounts and commissions incurred with respect to its Secondary Offering
Shares. In addition, the Liberty Fund shall pay a pro rata share (based on the
total number of shares sold in the Secondary Offering) of the NASD filing fees,
printing costs, Securities and Exchange Commission filing fees, blue sky filing
fees, blue sky legal fees, and all other fees and expenses associated with the
Secondary Offering not specifically allocated to the Company herein
("Registration Expenses").

2.2. The Company will be responsible solely for roadshow expenses, the
Company's accounting and legal fees and any transfer agent and custodian fees
(the "Company Expenses"). Except as set forth in Section 3.4 hereof, in the
event that the Liberty Fund withdraws its Secondary Offering Shares from the
Secondary Offering, or otherwise fails or refuses to consummate the Secondary
Offering and the registration and sale of its Secondary Offering Shares, the
Liberty Fund shall be required to pay its pro rata share of the Registration

2
<PAGE>

Expenses and to reimburse the Company for the Liberty Fund's pro rata share of
the Company Expenses.

Article III
-----------
Representations and Covenants of Liberty Fund
---------------------------------------------

3.1. 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 Redeemed Shares, and that each of the Redeemed 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
Redeemed Shares 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, except for the underwriters
selected for the Secondary Offering, which commissions and
discounts (not to exceed 5%) are to be paid by the Liberty Fund
with respect to any Shares sold by it; and

(e) The Liberty Fund has had access to all public information it
desires concerning the Company and its subsidiaries and
operations and to certain non-public information concerning the
financial position and results of operation of the Company for
the first quarter of 1997, 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 Redeemed
Shares and Secondary Offering Shares on the terms herein
specified. Further, the Liberty Fund has received certain non-

3
<PAGE>

public information concerning the Company pursuant to that
certain Confidentiality Letter Agreement dated March 31, 1997,
between the Company and the Liberty Fund (the "Confidentiality
Agreement"). The Liberty Fund acknowledges that pursuant to the
Confidentiality Agreement, any material non-public information
received by the Liberty Fund for this transaction must be kept in
confidence in compliance with applicable federal securities law,
and the Liberty Fund must refrain from trading the Company's
stock while in possession of such non-public information. The
Liberty Fund has reviewed all information it deems material to
making its decision to sell the Redeemed Shares and Secondary
Offering Shares hereunder.

3.2. In order to induce the Company to purchase the Redeemed Shares, the
Liberty Fund hereby covenants and agrees not to trade, sell, transfer, encumber
or otherwise dispose of any of its Shares, except for a sale pursuant to the
Secondary Offering, for a period commencing on the date hereof and continuing
for six (6) months following the date on which the Estate delivers Shares to the
Liberty Fund; provided however, if the Shares are not legally distributable from
the Estate to the Liberty Fund on or before June 30, 1997, the restrictions
contained in this Section 3.2 shall nevertheless expire on December 31, 1997.

3.3. The Company hereby undertakes to use its best efforts to facilitate
the Secondary Offering, but the Liberty Fund understands and agrees that there
is no assurance that the Secondary Offering can be successfully completed or at
what price the Shares can be sold in the Secondary Offering. The Company shall
have no liability to the Liberty Fund in such events.

3.4. The Liberty Fund will cooperate with the Company to facilitate the
Secondary Offering and shall execute an underwriting agreement and other
documents with terms which are usual and customary for such agreements and
reasonably necessary to facilitate the Secondary Offering. In the event that
(a) any of the Shares are not legally distributable from the Estate on or before
June 30, 1997, or (b) the market price of the Shares on the date of commencement
of the roadshow is less than $48 per share, the Liberty Fund may withdraw from
the Secondary Offering without reimbursing its pro rata share of the Company
Expenses to the Company.

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.

4
<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.

[Rest of Page Intentionally Left Blank]

5
<PAGE>

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

CENTRAL NEWSPAPERS, INC.

/s/ Thomas K. MacGillivsay
By: ______________________________________
Thomas K. MacGillivsay
Printed: _________________________________
Chief Financial Officer
Title: ___________________________________

LIBERTY FUND, INC.

/s/ T. Alan Russell
By: ______________________________________
T. Alan Russell
Printed: _________________________________
Chairman
Title: ___________________________________

<PAGE>

EXHIBIT 10.2

STOCK PURCHASE AGREEMENT
------------------------

This Agreement is made as of this 11th day of April, 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. The Estate of Enid Goodrich (the "Estate") is expected to distribute
621,300 shares of the Class A common stock of the Company (the "Shares") to the
Children's Museum on or before May 30, 1997.

B. The Company desires to purchase from the Children's Museum and the
Children's Museum desires to sell to the Company 207,100 Shares (the "Redeemed
Shares").

C. The Children's Museum desires for the Company to assist the Children's
Museum and the Company desires to assist the Children's Museum, in the sale and
distribution of substantially all of the Children's Museum's remaining Shares
(the "Secondary Offering Shares") in an underwritten public offering (the
"Secondary Offering"), all as hereinafter more specifically 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:

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

1.1. On or before May 30, 1997 (the "Closing Date"), the Children's
Museum will deliver to the Company, at the Company's offices in Indianapolis,
Indiana, the certificate or certificates representing the Redeemed Shares, a
stock power duly executed in blank and such other instruments as the Company
shall deem necessary to transfer ownership of the Redeemed Shares to the
Company. The Company will deliver to the Children's Museum a certified or
cashiers check or wire funds transfer in an amount equal to $10,251,450 (or
$49.50 per Redeemed Share) plus interest at the per annum rate of 5.25% from the
date hereof to, but not including, the Closing Date (the "Purchase Price").

In the event that the 621,300 Shares are not legally distributable by the
Estate on or before May 30, 1997, the Closing Date shall be extended to on or
before June 30, 1997. If the Estate cannot legally distribute the 621,300 Shares
on or before June 30, 1997, this
<PAGE>

Agreement shall terminate and neither party shall have any obligations or
liability to the other party hereto.

1.2. The Company 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, 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, except for
the underwriters selected for the Secondary Offering, which commissions and
discounts (not to exceed 5%) are to be paid by the Children's Museum with
respect to the Shares sold by it; and

(c) The Company's purchase of the Redeemed 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 II
----------
Secondary Offering
------------------

2.1. The Company will use its best efforts to facilitate a Secondary
Offering in which the Children's Museum may sell the Secondary Offering Shares.
The Secondary Offering will be managed by underwriters selected by the Company.
The Children's Museum will be responsible for its own legal and/or accounting
fees incurred in connection with the Secondary Offering and for the
underwriter's discounts and commissions incurred with respect to its Secondary
Offering Shares. In addition, the Children's Museum shall pay a pro rata share
(based on the total number of shares sold in the Secondary Offering) of the NASD
filing fees, printing costs, Securities and Exchange Commission filing fees,
blue sky filing fees, blue sky legal fees, and all other fees and expenses
associated with the Secondary Offering not specifically allocated to the Company
herein ("Registration Expenses").

2.2. The Company will be responsible solely for roadshow expenses, the
Company's accounting and legal fees and any transfer agent and custodian fees
(the "Company Expenses"). Except as set forth in Section 3.4 hereof, in the
event that the Children's Museum withdraws its Secondary Offering Shares from
the Secondary Offering, or otherwise fails or refuses to consummate the
Secondary Offering and the registration and sale of its

2
<PAGE>

Secondary Offering Shares, the Children's Museum shall be required to pay its
pro rata share of the Registration Expenses and to reimburse the Company for the
Children's Museum's pro rata share of the Company Expenses.

Article III
-----------
Representations and Covenants of Children's Museum
--------------------------------------------------

3.1. 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 Redeemed Shares, and that each of the Redeemed
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
Redeemed Shares 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 finder or broker or in any similar capacity
arising out of any action taken by the Children's Museum, except
for the underwriters selected for the Secondary Offering, which
commissions and discounts (not to exceed 5%) are to be paid by
the Children's Museum with respect to any Shares sold by it; and

(e) The Children's Museum has had access to all public information it
desires concerning the Company and its subsidiaries and
operations and to certain non-public information concerning the
financial position and results of operation of the Company for
the first quarter of 1997, 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

3
<PAGE>

the Redeemed Shares and Secondary Offering Shares on the terms
herein specified. Further, the Children's Museum has received
certain non-public information concerning the Company pursuant to
that certain Confidentiality Letter Agreement dated March 31,
1997, between the Company and the Children's Museum (the
"Confidentiality Agreement"). The Children's Museum acknowledges
that pursuant to the Confidentiality Agreement, any material non-
public information received by the Children's Museum for this
transaction must be kept in confidence in compliance with
applicable federal securities law, and the Children's Museum must
refrain from trading the Company's stock while in possession of
such non-public information. The Children's Museum has reviewed
all information it deems material to making its decision to sell
the Redeemed Shares and Secondary Offering Shares hereunder.

3.2. In order to induce the Company to purchase the Redeemed Shares, the
Children's Museum hereby covenants and agrees not to trade, sell, transfer,
encumber or otherwise dispose of any of its Shares, except for a sale pursuant
to the Secondary Offering, for a period commencing on the date hereof and
continuing for six (6) months following the date on which the Estate delivers
Shares to the Children's Museum; provided however, if the Shares are not legally
distributable from the Estate to the Children's Museum on or before June 30,
1997, the restrictions contained in this Section 3.2 shall nevertheless expire
on December 31, 1997.

3.3. The Company hereby undertakes to use its best efforts to facilitate
the Secondary Offering, but the Children's Museum understands and agrees that
there is no assurance that the Secondary Offering can be successfully completed
or at what price the Shares can be sold in the Secondary Offering. The Company
shall have no liability to the Children's Museum in such events.

3.4. The Children's Museum will cooperate with the Company to facilitate
the Secondary Offering and shall execute an underwriting agreement and other
documents with terms which are usual and customary for such agreements and
reasonably necessary to facilitate the Secondary Offering. In the event that
the market price of the Shares on the date of commencement of the roadshow is
less than $48 per share, the Children's Museum may withdraw from the Secondary
Offering without reimbursing its pro rata share of the Company Expenses to the
Company.

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

4
<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.

[Rest of Page Intentionally Left Blank]

5
<PAGE>

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

CENTRAL NEWSPAPERS, INC.

CHILDREN'S MUSEUM OF INDIANAPOLIS

/s/ John H. Grogan
By: ______________________________________
John H. Grogan
Printed: _________________________________
Treasurer
Title: ___________________________________

<PAGE>

EXHIBIT 10.3

STOCK PURCHASE AGREEMENT
------------------------

This Agreement is made as of this 11th day of April, 1997, by and between
Indianapolis Museum of Art, Inc., an Indiana nonprofit corporation
("Indianapolis Museum"), and Central Newspapers, Inc., an Indiana corporation
(the "Company").

Recitals
--------

A. The Estate of Enid Goodrich (the "Estate") is expected to distribute
621,300 shares of the Class A common stock of the Company (the "Shares") to the
Indianapolis Museum on or before May 30, 1997.

B. The Company desires to purchase from the Indianapolis Museum and the
Indianapolis Museum desires to sell to the Company 207,100 Shares (the
"Redeemed Shares").

C. The Indianapolis Museum desires for the Company to assist the
Indianapolis Museum and the Company desires to assist the Indianapolis Museum,
in the sale and distribution of substantially all of the Indianapolis Museum 's
remaining Shares (the "Secondary Offering Shares") in an underwritten public
offering (the "Secondary Offering"), all as hereinafter more specifically
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:

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

1.1. On or before May 30, 1997 (the "Closing Date"), the Indianapolis
Museum will deliver to the Company, at the Company's offices in Indianapolis,
Indiana, the certificate or certificates representing the Redeemed Shares, a
stock power duly executed in blank and such other instruments as the Company
shall deem necessary to transfer ownership of the Redeemed Shares to the
Company. The Company will deliver to the Indianapolis Museum a certified or
cashiers check or wire funds transfer in an amount equal to $10,251,450 (or
$49.50 per Redeemed Share) plus interest at the per annum rate of 5.25% from the
date hereof to, but not including, the Closing Date (the "Purchase Price").

Agreement shall terminate and neither party shall have any obligation or
liability to the other party hereto.

1.2. The Company 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, 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, except
for the underwriters selected for the Secondary Offering, which commissions
and discounts (not to exceed 5%) are to be paid by the Indianapolis Museum
with respect to the Shares sold by it; and

(c) The Company's purchase of the Redeemed 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 II
----------
Secondary Offering
------------------

2.1. The Company will use its best efforts to facilitate a Secondary
Offering in which the Indianapolis Museum may sell the Secondary Offering
Shares. The Secondary Offering will be managed by underwriters selected by the
Company. The Indianapolis Museum will be responsible for its own legal and/or
accounting fees incurred in connection with the Secondary Offering and for the
underwriter's discounts and commissions incurred with respect to its Secondary
Offering Shares. In addition, the Indianapolis Museum shall pay a pro rata
share (based on the total number of shares sold in the Secondary Offering) of
the NASD filing fees, printing costs, Securities and Exchange Commission filing
fees, blue sky filing fees, blue sky legal fees, and all other fees and expenses
associated with the Secondary Offering not specifically allocated to the Company
herein ("Registration Expenses").

2.2. The Company will be responsible solely for roadshow expenses, the
Company's accounting and legal fees and any transfer agent and custodian fees
(the "Company Expenses"). Except as set forth in Section 3.4 hereof, in the
event that the Indianapolis Museum withdraws its Secondary Offering Shares from
the Secondary Offering, or otherwise fails or refuses to consummate the
Secondary Offering and the registration and sale of its

2
<PAGE>

Secondary Offering Shares, the Indianapolis Museum shall be required to pay its
pro rata share of the Registration Expenses and to reimburse the Company for the
Indianapolis Museum 's pro rata share of the Company Expenses.

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

3.1. 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 Redeemed Shares, and that each of the Redeemed
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
Redeemed Shares 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, 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 Indianapolis Museum,
except for the underwriters selected for the Secondary Offering,
which commissions and discounts (not to exceed 5%) are to be paid
by the Indianapolis Museum with respect to any Shares sold by it;
and

(e) The Indianapolis Museum has had access to all public information
it desires concerning the Company and its subsidiaries and
operations and to certain non-public information concerning the
financial position and results of operation of the Company for
the first quarter of 1997, and has had the opportunity to ask
such questions of officers of the Company as the Indianapolis
Museum has deemed necessary or appropriate in

3
<PAGE>

order to enable the Indianapolis Museum to determine whether to
authorize the sale of the Redeemed Shares and Secondary Offering
Shares on the terms herein specified. Further, the Indianapolis
Museum has received certain non-public information concerning the
Company pursuant to that certain Confidentiality Letter Agreement
dated March 31, 1997, between the Company and the Indianapolis
Museum (the "Confidentiality Agreement"). The Indianapolis Museum
acknowledges that pursuant to the Confidentiality Agreement, any
material non-public information received by the Indianapolis
Museum for this transaction must be kept in confidence in
compliance with applicable federal securities law, and the
Indianapolis Museum must refrain from trading the Company's stock
while in possession of such non-public information. The
Indianapolis Museum has reviewed all information it deems
material to making its decision to sell the Redeemed Shares and
Secondary Offering Shares hereunder.

3.2. In order to induce the Company to purchase the Redeemed Shares, the
Indianapolis Museum hereby covenants and agrees not to trade, sell, transfer,
encumber or otherwise dispose of any of its Shares, except for a sale pursuant
to the Secondary Offering, for a period commencing on the date hereof and
continuing for six (6) months following the date on which the Estate delivers
Shares to the Indianapolis Museum; provided however, if the Shares are not
legally distributable from the Estate to the Indianapolis Museum on or before
June 30, 1997, the restrictions contained in this Section 3.2 shall nevertheless
expire on December 31, 1997.

3.3. The Company hereby undertakes to use its best efforts to facilitate
the Secondary Offering, but the Indianapolis Museum understands and agrees that
there is no assurance that the Secondary Offering can be successfully completed
or at what price the Shares can be sold in the Secondary Offering. The Company
shall have no liability to the Indianapolis Museum in such events.

3.4. The Indianapolis Museum will cooperate with the Company to facilitate
the Secondary Offering and shall execute an underwriting agreement and other
documents with terms which are usual and customary for such agreements and
reasonably necessary to facilitate the Secondary Offering. In the event that
the market price of the Shares on the date of commencement of the roadshow is
less than $48 per share, the Indianapolis Museum may withdraw from the Secondary
Offering without reimbursing its pro rata share of the Company Expenses to the
Company.

4
<PAGE>

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

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.

[Rest of Page Intentionally Left Blank]

5
<PAGE>

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

CENTRAL NEWSPAPERS, INC.

INDIANAPOLIS MUSEUM OF ART, INC.

/s/ E. Kirk McKinney, Jr.
By: ______________________________________
E. Kirk McKinney, Jr.
Printed: _________________________________
Treasurer
Title: ___________________________________

<PAGE>

EXHIBIT 15.1

April 29, 1997

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C 20549

Ladies and Gentlemen:

We are aware that Central Newspapers, Inc. has included our report dated April
28, 1997 (issued pursuant to the provisions of Statement on Auditing Standards
No. 71) in the Company's Quarterly Report on Form 10-Q for the quarter ended
March 30, 1997, which is incorporated by reference into the Company's
Registration Statement on Form S-3 to be filed on or about April 30, 1997. We
are also aware of our responsibilities under the Securities Act of 1933.

Yours very truly,

/s/ Price Waterhouse LLP

Price Waterhouse LLP
Indianapolis, Indiana

<PAGE>

EXHIBIT 15.2

AWARENESS LETTER OF GEO. S. OLIVE & CO. LLC

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

Ladies and Gentlemen:

We have reviewed, in accordance with standards established by the American
Institute of Certified Public Accountants, the unaudited interim financial
information of Central Newspapers, Inc. for the quarterly period ended March
31, 1996, as indicated in our report dated April 28, 1997; because we did not
perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which was included in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 30, 1997 is
incorporated by reference into the Company's Registration Statement on Form S-3
to be filed on or about April 30, 1997.

We also are aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.

Yours very truly,

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

Geo. S. Olive & Co. LLC
Indianapolis, Indiana
April 29, 1997

<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 Registration Statement on Form
S-3 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
April 28, 1997