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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 0-23592
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NWCG HOLDINGS CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3771996 90025
(State or other jurisdiction of (I.R.S. Employer (Zip Code)
incorporation or organization) Identification No.)
1999 SOUTH BUNDY DRIVE
LOS ANGELES, CALIFORNIA
(Address of Principal Executive Offices)
(310) 584-2000
(Registrant's telephone number, including area code)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
NONE NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /x/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
No voting stock of the Registrant was held by non-affiliates. As of March
14, 1997, the Registrant was a wholly owned subsidiary of Fox Television
Stations, Inc..
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes / / No /X/
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As of March 14, 1997, the Registrant had 100 shares of common stock, par
value $.01 per share outstanding.
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NWCG HOLDINGS CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
TABLE OF CONTENTS
PART I
<TABLE>
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PAGE
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<S> <C>
Item 1. Business......................................................... 1
Item 2. Properties....................................................... 14
Item 3. Legal Proceedings................................................ 14
Item 4. Submission of Matters to a Vote of Security Holders.............. 15
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.......................................................... 15
Item 6. Selected Historical Consolidated Financial Data.................. 16
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................ 16
Item 8. Financial Statements and Supplementary Data...................... 20
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................. 47
PART III
Item 10. Directors and Executive Officers of the Registrant.............. 47
Item 11. Executive Compensation.......................................... 48
Item 12. Security Ownership of Certain Beneficial Owners and Management.. 53
Item 13. Certain Relationships and Related Transactions.................. 54
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K... 56
</TABLE>
<PAGE>
ITEM I. BUSINESS
BUSINESS OF THE COMPANY
NWCG Holdings Corporation (the "Company" or "Holdings"), a Delaware
corporation, was formed and incorporated on June 2, 1994 by NWCG (Parent)
Holdings Corporation ("Parent"), which is a wholly owned subsidiary of Andrews
Group Incorporated ("Andrews"). Andrews transferred its 37,192,236 shares of
New World Communications Group Incorporated ("NWCG") Class B Common Stock, $.01
par value to the Company. Subsequently, 2,682,236 shares thereof were
transferred to Parent and are reflected in the accompanying financial statements
as a dividend. Holdings was incorporated for the purpose of issuing Senior
Secured Discount Notes due 1999 (the "Discount Notes"), which are currently
secured by a first priority pledge of Holdings' equity interest in NWCG
represented by 34,510,000 shares (the "Security Shares") of NWCG Class A Common
Stock, par value $.01 per share.
On June 30, 1994, Holdings issued and sold Discount Notes of $420.5 million
principal amount at maturity. The net proceeds of the offering of $212.3
million were distributed to Parent. Parent distributed such dividend to Andrews
as a dividend. Andrews used such dividend to pay indebtedness of an affiliate
of Holdings, other than the indebtedness of Holdings and its subsidiaries, and
for general corporate purposes. None of the net proceeds were available to NWCG
or its subsidiaries.
For revenue and related financial data and business segment information, see
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations " and Item 8, "Financial Statements and Supplementary Data"
included herein. For the history of the Company and NWCG, see "--History of
Holdings and History of NWCG."
RECENT DEVELOPMENTS
On January 22, 1997 (the "Fox Merger Date"), a special meeting (the
"Special Meeting") of stockholders of NWCG was held. At the Special Meeting,
the Agreement and Plan of Merger dated as of September 24, 1996 (the "Fox Merger
Agreement"), by and among NWCG, The News Corporation Limited, a South Australian
corporation ("News Corp."), Fox Television Stations, Inc., a Delaware
corporation in which News Corp. has an indirect interest ("Fox"), and Fox
Acquisition Co., Inc., a Delaware corporation and a wholly owned subsidiary of
Fox ("Merger Sub"), was approved. Immediately following the Special Meeting,
the transactions contemplated by the Fox Merger Agreement were consummated,
including the merger of Merger Sub with and into NWCG and a stock purchase
pursuant to the Stock Purchase Agreement dated as of September 24, 1996 (the
"Stock Purchase Agreement"), by and among News Corp., Fox and Parent (the
transactions contemplated by the Fox Merger Agreement and the Stock Purchase
Agreement, collectively, the "Fox Merger").
Pursuant to the Stock Purchase Agreement, Fox purchased from Parent 2,682,236
shares of common stock of NWCG owned by Parent and all of the outstanding shares
of capital stock of the Company. The consideration for such purchase was 1.45
American Depositary Shares of News Corp. ("ADSs"), each of which represents four
fully paid and non-assessable Preferred Limited Voting Ordinary Shares of A$.50
of News Corp., for each share of common stock of NWCG directly or indirectly
acquired by Fox, pursuant to the Stock Purchase Agreement, with the aggregate
number of ADSs issued to Parent reduced to approximate the accreted amount of
the Discount Notes outstanding at the effective time of the Fox Merger.
As a result of the Fox Merger, Fox has acquired, both directly and through its
investment in Holdings, all of the shares of common stock of NWCG (other than
any shares previously owned, directly or indirectly, by News Corp. or any News
Corp. Subsidiary) and both the Company and NWCG have become subsidiaries of Fox.
Holdings' interest in NWCG, its only asset, represents an equity and voting
interest of approximately 93% of NWCG based upon outstanding equity on March 14,
1997. The Fox Merger has resulted in a change of control of the Company. The
Company and NWCG currently operate as part of the Fox Television and Fox Filmed
Entertainment divisions of News Corp.
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Prior to the consummation of the Fox Merger, the Company was an affiliate of
Mafco Holdings, Inc. ("Mafco"), a Delaware corporation which is wholly owned by
Mr. Ronald O. Perelman, the former Chairman of the Board of the Company and
NWCG.
The descriptions of the Company's and NWCG's businesses which appear in this
Item 1 are provided as of March 14, 1997, unless otherwise indicated.
BUSINESS OF NWCG
GENERAL. NWCG is a vertically integrated entertainment company which, through
its principal operating subsidiaries New World Television Incorporated ("NW
Television"), NWC Acquisition Corporation ("NW Acquisition") and New World
Entertainment, Ltd. ("NW Entertainment"), is engaged in the ownership and
operation of ten FOX network affiliated broadcast television stations throughout
the United States, the production and distribution of filmed entertainment and
the exploitation of its filmed entertainment libraries.
TELEVISION BROADCASTING OPERATIONS. NWCG's broadcasting operations are
conducted through NW Television and NW Acquisition. NWCG currently owns and
operates the following television stations: KDFW-TV (Dallas-Ft. Worth), WJBK-TV
(Detroit), WAGA-TV (Atlanta), WJW-TV (Cleveland), WTVT-TV (Tampa), KSAZ-TV
(Phoenix), KTVI-TV (St. Louis), WITI-TV (Milwaukee), WDAF-TV (Kansas City) and
KTBC-TV (Austin) (the "Stations"). All of the Stations are affiliated with the
FOX network.
NWCG purchased certain debt and equity securities of Argyle Television Holding
Inc. ("Argyle" or the "Argyle Stations") for total consideration of
approximately $750.4 million, including $100 million in cash paid for an option
in 1994 and assumption of debt of approximately $283.6 million. Argyle
controlled four VHF television stations, KDFW-TV (Dallas), KTBC-TV (Austin),
KTVI-TV (St. Louis) and WVTM-TV (Birmingham). For financial reporting purposes,
the acquisition occurred on March 31, 1995. Federal Communications Commission
("FCC") approval for change in control of the Argyle Stations occurred on April
14, 1995.
In March 1995 NWCG entered into a purchase agreement with Fox with respect to
WBRC-TV (Birmingham) and WGHP-TV (Greensboro-Highpoint), two stations originally
purchased from CitiCasters Inc. (the "CitiCasters Stations"), providing for the
acquisition of the CitiCasters Stations from NWCG at a price equal to the price
paid by NWCG therefor, together with the excess, if any, of the aggregate
marginal financing costs incurred by NWCG with respect to its acquisition of the
CitiCasters Stations over the net cash generated (other than through financing
activities) by the CitiCasters Stations, in each case for the period through the
date the CitiCasters Stations were purchased by Fox. NWCG borrowed $40.4
million from Fox, non-recourse to NWCG, secured by an interest in a trust which
held the stock of the entities which owned the CitiCasters Stations. As of
January 1996, Fox completed the purchase of the CitiCasters Stations for
approximately $140 million including the extinguishment of such debt, subject to
certain adjustments.
NWCG sold the assets constituting WSBK-TV (the "Boston Station"), WVTM-TV (the
"Birmingham Station") and KNSD-TV (the "San Diego Station") in March 1995,
August 1996 and November 1996, respectively.
NWCG has focused on research to determine viewer preferences in its markets to
select programming which (i) enhances the image of the Stations as FOX network
affiliates and (ii) focuses on identified local market and demographic choices.
These efforts, along with efforts to promote viewer awareness of the Stations'
network affiliation, generally have resulted in improved audience viewing shares
of targeted demographic groups. The affiliation with the FOX network allows the
Stations to offer substantially more locally produced programming since, on a
weekly basis, the FOX network programs approximately 15 hours of prime-time
programming, one hour of late night programming on Saturday and sports
programming during certain times of the year. Further, the Stations are used as
a platform for distributing programming developed by companies affiliated with
Fox and by NW Entertainment, giving NWCG a greater ability to develop and
produce programming which has been
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pre-cleared for broadcast not only to the households served by NWCG's stations
and other stations owned and operated by Fox but also by other stations on a
national basis through syndication arrangements.
TELEVISION PROGRAMMING PRODUCTION AND LIBRARY OPERATIONS. Through NW
Entertainment and its subsidiary production companies, NWCG developed, acquired,
produced and distributed on a world wide basis (including, under certain
circumstances, for broadcast on NWCG's television stations), movies of the week
("MOWs"), series, mini-series, soap operas and low-cost programs, such as game
shows, reality programming and talk shows, and animated programming (including
programs developed in conjunction with Marvel Entertainment - see Item 13 -
"Certain Relationships and Related Transactions"). As a result of the Fox
Merger, NW Entertainment's operations consist primarily of the continued
production of certain programming under production as of the Fox Merger Date and
the exploitation of its library operations.
NW Entertainment includes the operations of its primary subsidiaries, New
World Television Programming ("NW Television Programming"), New World Animation
Ltd. ("New World Animation"), Moving Target Productions, Inc., Cannell
Entertainment, Inc. ("Cannell"), New World/Genesis Distribution ("NW Genesis"),
a 37.5% ownership interest in Guthy-Renker Corporation ("Guthy-Renker"), and,
until January 31, 1997, New World Sales and Marketing, Inc., a sales and
marketing firm ("NW Sales and Marketing").
On January 31, 1997, NW Entertainment sold its interest in NW Sales and
Marketing, exclusive of certain assets and liabilities, to a subsidiary of Petry
Media Corporation ("Petry"). Petry will replace NW Sales and Marketing as the
advertising representation firm for the Stations.
INDUSTRY OVERVIEW. Television Broadcasting Industry Overview. The United
States television market, the largest in the world, is primarily served by three
distribution channels: (1) the ABC, CBS, NBC and FOX networks ("Major
Networks"); (2) independent commercial television stations; and (3) cable
television services (including pay cable). ABC, CBS and NBC provide their
affiliates with approximately 22 hours of prime time programming per week, as
well as with a substantial amount of programming for other time periods. The
FOX network provides its affiliates with approximately 15 hours of prime time
programming per week, as well as one hour of late night programming on Saturday,
and sports events programming during certain times of the year. This
relationship results in the network being able to reach virtually all of the
significant television markets in the United States. Over the past several
years the United Paramount Network ("UPN") and the Warner Brothers Network
("WB") have formed affiliation agreements with certain independent commercial
television stations and stations formerly affiliated with one of the Major
Networks to provide up to seven hours of prime-time programming per week; both
networks have announced programming expansion. Cable services are generally
classified as being in one of three categories: super stations (such as WGN),
basic cable (advertiser-supported) and pay cable networks (Showtime, HBO). The
most successful cable networks each can reach more than two-thirds of United
States television households.
Revenues of television stations are derived primarily from (i) national spot
advertising, which consists of advertising time sold to national and regional
advertisers; (ii) local advertising, which consists of advertising time sold to
local advertisers; and (iii) network compensation payments, which are made by a
network to an affiliated station in consideration for its broadcasting of
network commercial programs. Network compensation payments are not made to the
Stations. Advertising rates are related to the population and number of
television receivers located in the area served by a station and to the
demographic characteristics of such population, as well as to the audience's
acceptance of a station's programming as reflected in surveys by independent
rating services. Many national spot and local advertising contracts are short-
term and revenues from such contracts are sensitive to changes in prevailing
economic conditions.
Television Production Industry Overview. The United States television
production industry serves the largest television programming market in the
world, consisting of the principal broadcast networks, their affiliates,
independent television stations, cable and direct satellite-delivered
television. Growing international broadcasting, cable and direct satellite-
delivered television markets offer further opportunities for the exploitation of
television programming. The international television industry is currently
experiencing dynamic growth fueled by the onset of new television distribution
systems outside of the United States. The proliferation of television
distribution
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platforms in Asia and Latin America is the most striking example of this growth
in programming outlets. These new distribution platforms have had the effect of
raising programming prices by contributing to the overall competitiveness in the
market.
In the United States, ABC, CBS and NBC currently order or produce
approximately 22 hours of prime time programming and approximately 30 hours of
daytime programming each week. The FOX network orders or produces approximately
15 hours of prime time programming, one hour of late night programming on
Saturday, and sports programming during certain times of the year. In addition,
other networks such as UPN and WB require primetime programming. Prime time
programming generally consists of half-hour series (usually situation comedies),
reality shows, hour-length series and long-form programming. Long-form
programming can be divided into two categories based on length: MOWs (films of
three hours or less) and mini-series (dramatic epics of four hours or more).
Suppliers of television programming include the production divisions or
affiliated companies of the networks, major film studios, station owners,
advertising agencies and independent production companies. Because the price
paid by a television network for a television series generally does not fully
cover production costs, television series are typically not profitable unless
and until they are licensed (i) for exhibition in international markets and (ii)
for non-network exhibition in the United States (including in syndication or to
cable and direct broadcast satellite ("DBS") programmers). Generally speaking,
a series must be broadcast for at least three to four television seasons for
there to be a sufficient number of episodes to offer the series in syndication
in the United States or to cable and DBS programmers in the United States.
Foreign syndication typically occurs simultaneously with network syndication.
The decision of a network to continue a series through an entire television
season or to renew a series for another television season depends largely on the
series' audience ratings, which are generally unpredictable. Moreover, there is
no certainty that series programming which is broadcast for at least three
television seasons will be profitable, inclusive of syndication revenues, due to
volatility of demand in the syndication marketplace and productions costs, among
other factors.
Syndication is the process of furnishing programming directly to stations as
opposed to the network system for distribution to its affiliated stations.
Producers/syndicators earn license fees for distributing programs based on
granting local television stations the right to broadcast a particular program.
Originally, syndication fees were collected on a cash-only basis whereby the
station paid the producer/syndicator a cash license fee for the right to run a
show. However, since the early 1980's, syndication agreements have increasingly
emphasized "barter" contracts or a combination of cash and barter.
Under barter sales the syndicator is paid as advertising time is sold and
episodes are aired. The value of this advertising time varies based upon viewer
rating points (as determined by the A.C. Nielsen Company) of the specific
program in which the advertising time is aired. The chief advantage of the
barter system is that it provides stations with a new source of funds for
programming by using its valuable advertising units as currency. The increasing
emphasis on barter transactions has helped fuel the increasing demand for
syndicated programs.
First-run programs have become increasingly attractive to television stations
because their contracts typically require only a one-year commitment as compared
with a three to five-year commitment for off-network rerun programming. In
addition, greater viewer demand for television programming in general and
heightened competition among television and cable channels has increased the
demand for original programming outside the networks' standard offerings.
Furthermore, the advent of barter sales has enabled stations to more efficiently
purchase quality programming without committing to large up-front license fees.
In contrast to off-network, first-run programming provides stations with fresh,
original programs.
Based on their play on network in prime time, off-network programs have
traditionally been the higher profile programs of syndication. Network programs
prior to being syndicated are produced for weekly airings (usually 22 episodes a
year). In syndication, off-network series are scheduled on a strip basis
(Monday through Friday), requiring the production of a minimum of 66 episodes
(equivalent to about a three-year run on network).
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BROADCASTING. The Stations. NWCG currently owns and operates ten Stations
affiliated with the FOX network. Data presented below regarding television
ratings and market share data are based on published industry data for November
1996.
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<CAPTION>
NATIONAL COMMERCIAL % OF EXPIRATION
RANKING OF TV HOMES TV TOTAL DATE
DMA MARKET IN STATIONS IN U.S. TV OF FCC
MARKET STATION(1) SERVED (2)(3) DMA(3) MARKET(3) HOMES AUTHORIZATION(4)
- ------ ---------- -------------- -------- ------------ ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Dallas-Ft. Worth, TX KDFW, Channel 4 8 1,848,550 12 1.907 8/1/98
Detroit, MI WJBK, Channel 2 9 1,771,950 7 1.828 10/1/97
Atlanta, GA WAGA, Channel 5 10 1,625,230 9 1.677 4/1/97 (5)
Cleveland, OH WJW, Channel 8 13 1,461,410 9 1.508 10/1/97
Tampa St. Petersburg, FL WTVT, Channel 13 15 1,411,440 8 1.456 2/1/97 (5)
Phoenix, AZ KSAZ, Channel 10 17 1,212,850 11 1.251 10/1/98
St. Louis, MO KTVI, Channel 2 21 1,110,150 7 1.145 2/1/98
Milwaukee, WI WITI, Channel 6 31 786,970 9 .812 12/1/97
Kansas City, MO WDAF, Channel 4 32 786,740 6 .812 2/1/98
Austin, TX KTBC, Channel 7 63 417,090 5 .450 8/1/98
</TABLE>
(1) All of the Stations operate on VHF channels (channels 2 through 13).
(2) National ranking of metropolitan areas is based on estimates of television
households in the Designated Market Area ("DMA"), a standard industry
ranking method as published by A.C. Nielsen Company, an independent media
data service.
(3) As published by A.C. Nielsen Company in November 1996.
(4) See "Federal Regulation of Television Broadcasting" below.
(5) In October and December 1996, the Company timely filed applications to renew
the licenses of WTVT and WAGA, respectively. No petitions to deny the
applications were filed. WTVT's and WAGA's licenses remain in effect until
the FCC acts on the renewal applications.
PRODUCTION AND LIBRARY OPERATIONS General. The operations of NW
Entertainment consist primarily of the continued production of certain
programming under production as of the Fox Merger Date and the exploitation of
its library operations. NW Entertainment plans to utilize the domestic and
foreign distribution capabilities of units of the Fox Television and Fox Filmed
Entertainment divisions of News Corp. to increase revenues from NW
Entertainment's production efforts and extensive library. (See Item 13 -
"Certain Relationships and Related Transactions").
Projects currently in production include the first-run NBC co-production
"Access Hollywood," and "Silk Stalkings," which is being produced for the USA
cable network. New World Animation produces animated films utilizing properties
licensed to it from Marvel Entertainment. New World Animation is under contract
to provide "Spiderman", which airs exclusively on the FOX network and has been a
top rated children's show since its debut. New World Animation produced the
"Marvel Action Universe" featuring "Iron Man", "Fantastic Four" and "The Biker
Mice from Mars". Further, New World Animation is currently producing "Hulk" for
UPN.
NW Entertainment's library, including the libraries of NW Television
Programming and New World Animation, includes approximately 100 titles,
representing more than 2,000 hours of programming. NW Entertainment's library
includes "Santa Barbara", "The Wonder Years" and "Zorro". Other past
programming include the mini-series "Op Center", "Elvis & Me" and "In a Child's
Name," and the series "Judith Krantz's Secrets". The following table sets forth
information concerning selected programs included in NW Entertainment's library:
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HIGHLIGHTS OF NW ENTERTAINMENT'S LIBRARY
SEASONS IN
SERIES NETWORK PRODUCTION CAST
- ------ ------- ---------- ----
<S> <C> <C> <C>
The Wonder Years ABC 1987-1993 Fred Savage
Tour of Duty CBS 1987-1990 Terence Knox,
Carl Weathers
Crime Story NBC 1986-1988 Dennis Farina,
Anthony
Dennison
Sledge Hammer NBC 1986-1988 David Rasche
Zorro Family 1989-1992 Duncan Regehr,
Channel Efrem
Zimbalist, Jr.
Judith Krantz's Secrets Syndicated 1991-1992 David Birney,
Peggy Lipton
Strange Luck Fox 1995-1996 D.B. Sweeney
Second Noah ABC 1995-1997 Daniel Hugh
Kelly, Betsy
Brantley
Silk Stalkings USA 1995-Present Nick
Kokotokis,
Tyler Layton
The Commish ABC 1995-1996 Michael
Chiklis,
Theresa Saldana
<CAPTION>
SEASONS IN
SOAP OPERAS NETWORK PRODUCTION CAST
- ----------- ------- ---------- ----
<S> <C> <C> <C>
Santa Barbara NBC 1984-1993 A. Martinez,
Marcy Walker
The Bold and the Beautiful CBS 1987-Present Ronn Moss
Paradise Beach Syndicated 1993-1994 Matt Lattanzi
Pacific Drive Syndicated 1995-1996 Lloyd Morris,
Melissa Trautz
<CAPTION>
SEASONS IN EPISODES
ANIMATION NETWORK PRODUCTION PRODUCED
- --------- ------- ---------- --------
<S> <C> <C> <C>
Incredible Hulk UPN 1996-Present 13 1/2-hour
episodes
Spiderman Fox 1994-Present 65 1/2-hour
episodes
Biker Mice From Mars Syndicated 1993-1995 65 1/2-hour
episodes
Incredible Hulk Syndicated 1987 13 1/2-hour
episodes
Fantastic Four Syndicated 1987 13 1/2-hour
episodes
Robocop Syndicated 1987 12 1/2-hour
episodes
Marvel Action Universe Syndicated 1993-1995 52 1/2-hour
episodes
</TABLE>
NW Entertainment leases production facilities, of which there has been an
adequate supply to meet its needs. NW Entertainment, through its production
subsidiaries, meets its personnel needs by retaining directors, actors,
technicians and other specialized personnel on a per production, periodic or a
per diem basis. Successful television production is dependent upon the talents
of persons that can be difficult to replace. However, there has always been an
adequate supply of personnel to meet NW Entertainment's needs. The writers,
directors and actors retained may be hired pursuant to the agreements between
the Alliance of Motion Picture and Television Producers ("AMPTP") and each of
the Writers Guild of America ("WGA") (which expires on May 1, 1998), the
Directors Guild of America ("DGA") (which expires on June 30, 1997), the Screen
Actors Guild ("SAG") (which expires on June 30, 1998) and the American
Federation of Television and Radio Artists ("AFTRA") (which expires on November
15, 1997). In addition, NW Entertainment's production subsidiary companies
utilize members of the International Alliance of Theatrical Stage Employees
("IATSE") (which has an agreement which expires on July 31, 2000). There have
been labor disruptions in the past (the most recent being the strike by the WGA
in the Spring and Summer of 1988), none of which has materially affected NW
Entertainment, although any future work interruptions could hinder NW
Entertainment's activities and may have a material adverse effect on NW
Entertainment.
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NW Genesis
NW Genesis was a syndicator of television programming in the United States,
distributing first-run programming and syndicated off-network programs to a wide
range of commercial and public television stations, as well as cable channels.
Providing programming in various formats, program lengths and time slots, NW
Genesis had one of the broader product offerings in the television syndication
business. Currently, the distribution and syndication of programs in NW
Genesis' library is accomplished through a reliance upon the distribution
capabilities of units of the Fox Television and Fox Filmed Entertainment
divisions of News Corp. (see Item 13 - "Certain Relationships and Related
Transactions").
The chart below sets forth summary information about NW Genesis' current and
previously syndicated programs.
<TABLE>
<CAPTION>
NW GENESIS' LIBRARY
TARGET MARKET
CURRENTLY SYNDICATED PROGRAMS FIRST SEASON PROGRAM TYPES (CURRENT/FUTURE)
- ----------------------------- ------------ ------------- -------------------
<S> <C> <C> <C>
Real Stories of the Highway Patrol 1992-93 First-run strip Commercial/Cable
Top Cops 1994-95 Off-network strip Commercial/Cable
Tales From the Crypt 1995-96 Off-cable weekly Commercial
Lovelines 1996-97 Cable strip Cable
Two 1996-97 First-run weekly Commercial/Cable
Access Hollywood 1996-97 First-run strip Commercial
<CAPTION>
PREVIOUSLY SYNDICATED PROGRAMS YEARS PROGRAM TYPES TARGET MARKET(S)
- ------------------------------ ----- ------------- ----------------
<S> <C> <C> <C>
Juvenile Justice 1995-96 First-run weekly Commercial/Cable
Reality Check 1995-96 FCC children show Commercial/Cable
The Mark Walberg Show 1995-96 First-run strip Commercial/Cable
U.S. Customs Classified 1995-96 First-run weekly Commercial/Cable
Emergency Call 1991-92 First-run weekly Commercial/Cable
Marvel Action Universe 1994-95 First-run weekly animation Commercial/Cable
Biker Mice From Mars 1993-94 First-run strip animation Commercial/Cable
The Best of National Geographic 1986-87 Specials Commercial/PBS
Adventures, Journeys & Archives 1992-93 First-run strip PBS/Cable
The Byron Allen Show 1988-91 First-run weekly Commercial
Guilty or Innocent 1985 First-run strip Commercial
Sale of the Century 1984-86 First-run strip Commercial
Classic Country 1983-90 Off-syndication weekly Commercial/PBS
World War II: GI Diary 1983-88 Off-syndication weekly Commercial/PBS
Wilderness Alive 1983-88 Off-syndication specials Commercial/PBS
Wild World of Animals 1983-88 Off-syndication strip Commercial/PBS
The Africans 1983-88 Off-syndication specials Commercial/PBS
Life Around Us 1983-88 Off-syndication specials Commercial/PBS
The Whoopi Goldberg Show 1992-93 First-run strip Commercial/Cable
Infatuation 1992-93 First-run strip Commercial/Cable
Grudge Match 1991-92 First-run weekly Commercial/Cable
Highway to Heaven 1989-93 Off-network strip Commercial/Cable
The Great Escape 1988-89 First-run weekly Commercial/Cable
The Judge 1986-93 First-run strip Commercial/Cable
Paradise Beach 1993 First-run strip Commercial/Cable
</TABLE>
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Cannell
NWCG acquired Cannell in July 1995. In connection with this acquisition, NWCG
acquired distribution rights to the extensive Cannell library of television
programming, the wardrobe and properties of the Cannell Studio in Canada, and
the production capabilities of Cannell personnel.
Guthy-Renker
Guthy-Renker is engaged in marketing various products through long-form
television advertisements. NW Entertainment currently owns a 37.5% interest in
Guthy-Renker. The acquisition of this interest by NW Entertainment has enhanced
NWCG's ability to capture the growing source of revenues represented by direct
response television marketing.
COMPETITION
Each of NWCG's business segments competes in its particular market; further,
as part of the overall operations of News Corp., NWCG competes with other
integrated entertainment companies such as Time Warner Inc., Viacom Inc. and The
Walt Disney Company.
Broadcasting. Each of the Stations competes for audiences and advertising
revenues with radio and television stations and cable systems in its market area
and with other advertising media such as newspapers, magazines, outdoor
advertising and direct mail. All of the Stations are located in highly
competitive markets. Competition for sales of broadcast advertising time is
based primarily on the anticipated and actually delivered size and demographic
characteristics of audiences as determined by various rating services, price,
the time of day when the advertising is to be broadcast, competition from other
television stations, cable television systems, DBS services and other media and
general economic conditions. Competition for audiences is based primarily on
the selection of programming, the acceptance of which is dependent on the
reaction of the viewing public which is often difficult to predict. Additional
elements which are material to the competitive position of television stations
include management experience, authorized power and assigned frequency. The
broadcasting industry is continuously faced with technical changes and
innovations, the popularity of competing entertainment and communications media,
changes in labor conditions and governmental restrictions or actions of Federal
regulatory bodies, including the FCC and the Federal Trade Commission, any of
which could possibly have a material effect on NWCG's operations and profits.
(See "Federal Regulation of Television Broadcasting" below). There are sources
of television service other than conventional television stations, including
cable television, which can increase competition for a broadcasting station by
bringing into its market distant broadcasting signals not otherwise available to
the station's audience, serving as a distribution system for national DBS
programming and other non-broadcast programming originated on a cable system and
selling advertising time to local advertisers. All of the Stations are
presently carried by some cable television systems both within and outside of
their respective market areas. Other principal sources of competition include
DBS entertainment services and home video exhibition.
Each of the Stations is believed to compete satisfactorily within its market
with respect to technical facilities, programming and promotional and marketing
activities.
Production and Library Operations. Production and distribution of television
programming is extremely competitive, especially for the limited amount of prime
time. Television entertainment programming produced by NW Entertainment
competes generally with television programming produced by numerous large and
small television producers, including certain major motion picture companies, as
well as the ABC, CBS, NBC, UPN and WB networks and independent television
production companies. Other television program producers compete with NW
Entertainment for available talent and product. Further, as the success of
television programs depends largely on audience response as measured by ratings,
a program's chances for success are directly affected by other programs being
telecast at the same time or in adjacent time periods. (See also "Federal
Regulation of Television Broadcasting").
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Management believes that NW Entertainment's competitive advantage arises from
the ability to focus efforts on the maximization of value from its existing
library through its relationship with the Fox Television and Fox Filmed
Entertainment divisions of News Corp.
HISTORY OF HOLDINGS
Holdings was incorporated in Delaware on June 2, 1994 for the purpose of
issuing the Discount Notes, which are secured by a first priority pledge of the
Security Shares. Andrews subsequently transferred its 37,192,236 shares of NWCG
Class B Common Stock to Holdings. In August 1994, Holdings transferred
2,682,236 shares thereof to Parent as a dividend. The remaining 34,510,000
shares, which currently consist of NWCG Class A Common Stock, represent the
Security Shares and are Holdings' only asset.
Holdings' financial statements reflect the historical results associated with
Andrews' investment in NWCG. In 1983, Andrews acquired a controlling interest
in Four Star International, Inc. ("Four Star") and acquired all of Four Star in
1986. Four Star is the successor to a California corporation initially
organized in 1954 as Four Star Films, Inc. In June 1989, Andrews acquired NW
Entertainment. NW Entertainment is the successor to a California corporation
initially organized in December 1982 as Epic Productions, Inc., and began
operations in February 1983 after acquiring the name "New World Entertainment"
and certain distribution assets from New World Pictures, Inc. Prior to its
acquisition by Andrews in 1989, NW Entertainment was an international developer,
producer and distributor of home video products. In March 1993, Andrews
acquired a 50% interest in NW Genesis. In May 1993, Andrews acquired a majority
interest in NW Television as part of NW Television's "pre-packaged" bankruptcy
plan.
On June 30, 1994, Holdings issued and sold Discount Notes of $420.5 million
principal amount at maturity. The net proceeds of the offering of $212.3
million were distributed to Parent, and Parent distributed such dividend to
Andrews as a dividend. Andrews used such dividend to pay indebtedness of an
affiliate of Holdings, other than the indebtedness of Holdings and its
subsidiaries, and for general corporate purposes. None of the net proceeds were
available to NWCG or its subsidiaries.
HISTORY OF NWCG
NWCG was incorporated in Delaware on November 18, 1993 in order to effectuate
the transactions contemplated by an Agreement and Plan of Reorganization and
Merger, dated as of November 23, 1993 (as amended, the "NWCG Merger Agreement"),
by and among NW Television, Andrews, NWCG and SCI Merger Sub Incorporated
("Merger Sub"). The basic features of the NWCG Merger Agreement were as
follows:
1. NW Television formed a wholly owned subsidiary, SCI Subsidiary
Corporation ("SCI Subsidiary").
2. SCI Subsidiary formed NWCG as a wholly owned subsidiary.
3. NWCG formed Merger Sub as a wholly owned subsidiary.
4. On March 7, 1994, Merger Sub was merged with and into NW Television (the
"NWCG Merger"), with NW Television being the surviving corporation. In
the NWCG Merger, all of the then outstanding shares of common stock of
NW Television, $.01 par value ("NW Television Common Stock"), were
converted into a like number of shares of NWCG's Class B Common Stock,
$.01 par value ("NWCG Class B Common Stock"). In addition, the holders
of NW Television's Class A Warrants, exercise price $.01 ("Existing $.01
Warrants") and NW Television's Class B Warrants, exercise price $8.47
("$8.47 Warrants" and together with the Existing $.01 Warrants, the
"Existing Warrants"), as a result of the NWCG Merger had the right to
acquire and receive, upon the exercise thereof, in lieu of the shares of
NW Television Common Stock immediately theretofore acquirable
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and receivable upon the exercise of the Existing Warrants, a like number
of shares of NWCG Class B Common Stock.
NWCG purchased all of the capital stock of NW Entertainment and Four Star and
entered into a Non-Competition Agreement (the "Non-Competition Agreement") and
an Indemnification Agreement (the "Indemnification Agreement") with Andrews (as
such agreements are contemplated by the NWCG Merger Agreement), in exchange for
the issuance by NWCG to Andrews of 25,383,707 shares of NWCG Class B Common
Stock (the "NW Entertainment Transaction") on March 9, 1994. On March 17, 1994
NWCG entered into an exchange agreement (the "NW Genesis Agreement"), pursuant
to which NWCG exchanged 2,035,486 shares of NWCG Class B Common Stock and
certain other consideration for the 50% of the capital stock of NW Genesis not
owned by Four Star and a note made by Four Star in the principal amount of
approximately $2.2 million (the "NW Genesis Transaction"). Four Star previously
owned the other 50% of the equity of NW Genesis and accordingly NWCG currently
beneficially owns 100% of NW Genesis. In November 1993, Andrews acquired a
37.5% ownership interest in Guthy-Renker. The purchase price was $7 million in
cash paid to Guthy-Renker shareholders and a note from Andrews in an original
amount of $18 million issued to Guthy-Renker (the "Guthy-Renker Note"). On
March 16, 1994, NW Entertainment acquired the entire interest of Andrews in
Guthy-Renker, by incurring a $7 million payable to Andrews and assuming Andrews'
obligations under the Guthy-Renker Note (including reimbursing Andrews for the
funds already pre-paid under the Guthy-Renker Note) (the "Guthy-Renker
Transaction"). NW Acquisition was formed by NWCG in 1993 to acquire broadcast
television stations.
In March 1994, NWCG completed an equity offering ("Rights Offering") pursuant
to which each holder of record, other than Andrews, of NWCG Class B Common Stock
or of Existing $.01 Warrants, on March 9, 1994 was entitled, in accordance with
NWCG's Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") and the Reorganization Agreement, to subscribe for 1.90732627
shares of NWCG Class B Common Stock (or, under certain circumstances, Class A
Warrants, Series 2 of NWCG, exercise price $.01 per share (the "New $.01
Warrants"), together with such shares of NWCG Class B Common Stock (the "Offered
Shares")), for each share of NWCG Class B Common Stock or Existing $.01 Warrant
owned by such record holder as of the close of business on the relevant record
date. The Rights Offering, which expired on March 31, 1994, was made pursuant
to a registration statement filed with the Securities and Exchange Commission
(the "Commission").
FEDERAL REGULATION OF TELEVISION BROADCASTING
Television broadcasting is subject to the jurisdiction of the FCC under the
Communications Act of 1934, as amended (the "Communications Act"). The
Communications Act prohibits the operation of television broadcasting stations
except under a license issued by the FCC and empowers the FCC, among other
things, to issue, revoke and modify broadcasting licenses, determine the
locations of stations, regulate the equipment used by stations, adopt
regulations to carry out the provisions of the Communications Act and impose
penalties for violation of such regulations. The Communications Act prohibits
the assignment of a license or the transfer of control of a licensee without
prior approval of the FCC. The Communications Act also empowers the FCC to
adopt such regulations as may be necessary to carry out the provisions of the
Communications Act and to impose certain penalties for violation of its
regulations. On February 8, 1996, the Telecommunications Act of 1996 (the
"Telecommunications Act"), which substantially amended the Communications Act,
was enacted. Set forth below is a general description of some of the principal
areas of FCC regulation of the broadcast and cable television industries.
License Grant and Renewal. Broadcast stations must seek renewal of their
licenses from the FCC at the end of each license term. On January 24, 1997,
pursuant to the Telecommunications Act, the FCC increased the terms of such
licenses and their renewal to eight years. The Telecommunications Act directs
the FCC to grant renewal of a broadcast license if it finds that the station has
served the public interest, convenience, and necessity and that there have been
no serious violations (or other violations which would constitute a "pattern of
abuse") by the licensee of the Communications Act or FCC rules. If the FCC
finds that a licensee has failed to meet these standards, and there are no
sufficient mitigating factors, it may deny renewal or condition renewal
appropriately,
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including renewing for less than a full term. Any other party with standing may
petition the FCC to deny a broadcaster's application for renewal. However, only
if the FCC issues an order denying renewal will it accept and consider
applications from other parties for a construction permit for a new station to
operate on the channel subject to such denial. The FCC may not consider any such
applicant in making determinations concerning the grant or denial of the
licensee's renewal application.
The Company is not aware of any facts or circumstances that would prevent the
renewal of the licenses for the Stations at the end of the respective license
terms. The Telecommunications Act provides that licenses continue in effect
until the FCC acts upon the renewal application and any petition for rehearing.
Multiple- and Cross-Ownership Restrictions. Current FCC regulations also
impose significant restrictions on certain positional and ownership interests in
broadcast and other media. The officers, directors and certain equity owners of
a broadcasting company are deemed to have "attributable interests" in the
broadcasting company. In the case of a corporation controlling or operating
television stations, ownership is attributed only to officers, directors and
stockholders who own 5% or more of the company's outstanding voting stock.
Institutional investors, including mutual funds, insurance companies and banks
acting in a fiduciary capacity, may own up to 10% of the outstanding voting
stock without being subject to attribution, provided that such stockholders
exercise no control over the management or policies of the broadcasting company.
Under current FCC rules governing multiple ownership of broadcast stations, a
license to operate a television station will not be granted (unless established
waiver standards are met) to any party (or parties under common control) that
has an attributable interest in another television station with an overlapping
service area (the "Duopoly Rule"). FCC regulations prohibit one owner from
having attributable interests in television broadcast stations that reach in the
aggregate more than 35% of the nation's television households. For purposes of
this calculation, stations in the UHF band (channels 14-69) are attributed only
50% of the households attributed to stations in the VHF band (channels 2-13).
The rules also currently prohibit (with certain qualifications) the holder of an
attributable interest in a television station from also having an attributable
interest in a radio station, daily newspaper or cable television system serving
a community located within the relevant coverage area of that television
station. Separately, the FCC's "cross-interest" policy may, in certain
circumstances, prohibit the common ownership of an attributable interest in one
media outlet and a non-attributable equity interest in another media outlet in
the same market. In pending rulemaking proceedings, the FCC is considering (a)
the modification of its attribution rules and the "cross-interest" policy and
(b) the modification of the Duopoly Rule in addition to certain other changes.
Review of "Must-Carry" Rules. FCC regulations implementing the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act") require each television broadcaster to elect, at three year intervals
beginning June 17, 1993, to either (i) require carriage of its signal by cable
systems in the station's market ("must-carry") or (ii) negotiate the terms on
which such broadcast station would permit transmission of its signal by the
cable systems within its market ("retransmission consent"). In a 2-1 decision
issued on December 13, 1995, a special three-judge panel of the U.S. District
Court for the District of Columbia upheld the constitutionality of the must-
carry provisions. The District Court's decision has been appealed to the U.S.
Supreme Court, which has heard the appeal and is expected to issue a decision
prior to June 30, 1997.
Children's Television. On August 8, 1996 the FCC amended its rules
implementing the Children's Television Act of 1990 (the "CTA") to establish a
"processing guideline" for broadcast television stations of at least three hours
per week, averaged over a six-month period, of "programming that furthers the
educational or informational needs of children 16 and under in any respect,
including the child's intellectual/cognitive or social/emotional needs." "Core
Programming" has been defined as educational or informational programming that,
among other things, (a) has, as a "significant purpose," serving the educational
or informational needs of children, (b) has a specified educational or
informational objective and a specified target child audience, (c) is regularly
scheduled, weekly programming, (d) is at least 30 minutes in length, and (e)
airs between 7:00 a.m. and 10:00 p.m. A television station ultimately found not
to have complied with the CTA could face sanctions, including monetary fines and
the possible non-renewal of its broadcast license. The Company does not believe
that these changes will adversely affect its operations.
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<PAGE>
The CTA and FCC rules require television station licensees to identify
programs specifically designed to educate or inform children at the beginning of
each program and in published listings. In addition, the Telecommunications Act
directed the broadcast and cable television industries to develop and transmit
an encrypted rating in all video programming that, when used in conjunction with
so-called "V-Chip" technology, would permit the blocking of programs with a
common rating. On January 17, 1997, an industry proposal was submitted to the
FCC describing a voluntary ratings system under which all video programming
would be designated in one of six categories. Pursuant to the
Telecommunications Act, the FCC has initiated a proceeding to determine whether
to accept the industry proposal or to establish and implement an alternative
system for rating and blocking video programming. The FCC has indicated that it
will commence a separate proceeding shortly addressing technical issues related
to the "V-Chip". The Company cannot predict whether the FCC will accept the
industry proposal regarding the rating and blocking of video programming, or
how changes in this proposal could affect the Company's business.
Distribution of Video Services by Telephone Companies. The Telecommunications
Act allows local telephone companies to provide multichannel program
distribution services within their telephone service areas and in competition
with cable television systems. Local telephone companies serving most or all of
the markets in which the Company operates television stations have indicated
that they intend to enter the video distribution market. Before the
Telecommunications Act, under prior court and FCC rulings, certain local
telephone companies had announced or had initiated multichannel video
distribution market trials. The Company cannot predict the impact of these
developments.
Advanced Television Service. The FCC has proposed the adoption of rules for
implementing digital advanced television ("DTV") service in the United States.
Implementation of digital DTV will improve the technical quality of television
signals and will provide broadcasters the flexibility to offer new services,
including high-definition television ("HDTV") and data broadcasting.
Before DTV services can be implemented the FCC must determine the eligibility
for DTV licenses, adopt a table of DTV allotments, assign DTV licenses, and
adopt DTV service rules. The FCC is conducting a rulemaking proceeding to
devise a table of channel allotments. The FCC has issued a preliminary table,
subject to public comment and further modification, allotting a second broadcast
channel to each full-power television station for DTV operation. Under the
FCC's preliminary decisions, stations would be permitted to phase in their DTV
operations over a period of years following the adoption of a final table of
allotments, after which they would be required to surrender their non-DTV
channel. A proposal is currently under consideration whereby broadcasters in
the top ten DMAs would initiate DTV service within an eighteen to thirty-six
month period following the adoption of a final table of allotments. Meanwhile,
Congress has from time to time considered proposals that would require incumbent
broadcasters to bid at auction for the additional spectrum required to effect a
transition to DTV, or, alternatively, would assign DTV spectrum to incumbent
broadcasters and require the early surrender of their non-DTV channel for sale
by public auction.
The Telecommunications Act imposes certain conditions on the FCC's
implementation of DTV service. Among other requirements, the FCC must (i) limit
the initial eligibility for such licenses to existing television broadcast
licensees or permittees; (ii) allow DTV licensees to offer ancillary and
supplementary services; (iii) charge appropriate fees to broadcasters that
supply ancillary and supplementary services for which such broadcasters derive
certain non-advertising revenues; and (iv) recover at an unspecified time either
the DTV license or the original license (the "NTSC" license) held by the
broadcaster. These requirements are generally consistent with the FCC's
tentative proposals.
Conversion to DTV operations could reduce a station's geographical coverage
area. Equipment and other costs associated with the DTV transition, including
the necessity of temporary dual-mode operations, will impose some near-term
financial costs on television stations providing the service. The potential
also exists for new sources of revenue to be derived from DTV. Although the
Company believes the FCC will authorize DTV, the Company cannot predict when or
under what conditions the authorization might be given, whether, or the amount,
broadcasters will be required to pay direct compensation to the government as a
condition of transitioning to DTV
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operations, when NTSC broadcasting might cease, or the overall effect the
transition to DTV might have on the Company's business.
Other Pending FCC Proceedings. In 1995 the FCC issued notices of proposed
rulemaking, proposing to modify or eliminate most of its remaining rules
governing the broadcast network-affiliate relationship. The network-affiliate
rules were originally intended to limit networks' ability to control programming
aired by affiliates or to set station advertising rates and to reduce barriers
to entry by new networks. These proceedings are pending. The dual network
rule, which generally prevents a single entity from owning more than one
broadcast television network, is among the rules under consideration in these
proceedings. However, the Telecommunications Act substantially relaxed the dual
network rule by providing that an entity may own more than one television
network; however, no two national television networks in existence on February
8, 1996 may merge or be acquired by the same party. The Company is unable to
predict how or when the FCC proceedings will be resolved or how those
proceedings or the relaxation of the dual network rule may affect the Company's
business.
Pursuant to a Congressional directive contained in the Telecommunications Act,
the FCC has commenced a proceeding to devise rules and an implementation
schedule for universal closed captioning of video programming.
The FCC continues to enforce strictly its regulations concerning broadcasters'
equal employment obligations, "indecent" programming, political advertising,
environmental concerns, technical operating matters and antenna tower
maintenance. In particular, the FCC has indicated its intent to enforce
strictly its limits with respect to the amount of commercial matter presented
during children's programming by levying substantial monetary forfeitures for
commercial overages. The FCC also has indicated its intent to enforce equal
employment guidelines and recruitment efforts and record-keeping requirements,
by imposing substantial monetary forfeitures, periodic reporting conditions, and
short-term license renewals.
There are additional FCC regulations and policies, and regulations and
policies of other federal agencies, affecting the business and operations of
broadcast stations. Proposals for additional or revised rules are considered by
federal regulatory agencies and Congress from time to time. It is not possible
to predict the resolution of these issues or other issues discussed above,
although their outcome could, over a period of time, affect, either adversely or
favorably, the broadcasting industry generally or the Company specifically.
The foregoing does not purport to be a complete summary of all the provisions
of the Communications Act, the Telecommunications Act or other Congressional
acts or of the regulations and policies of the FCC thereunder. Reference is
made to the Communications Act, the Telecommunications Act, other Congressional
acts, such regulations and policies, and the public notices promulgated by the
FCC for further information.
EMPLOYEES
Holdings is a holding company and, as such, has no employees. As of December
31, 1996, NWCG had approximately 2,800 employees, 632 of whom belonged to
collective bargaining units. Renewals of collective bargaining agreements
covering approximately 291 employees were being negotiated as of December 31,
1996, and collective bargaining agreements covering approximately 320 employees
are due for renewal in 1997. NWCG believes its relationships with its employees
are satisfactory.
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ITEM 2. PROPERTIES
The principal offices of Holdings, NWCG, NW Television and NW Acquisition are
located at 1999 South Bundy Drive, Los Angeles, California 90025, telephone
(310)584-2000. The broadcasting segment's other principal facilities are as
follows:
<TABLE>
<CAPTION>
LOCATION OWNERSHIP USE
- -------- --------- ---
<S> <C> <C>
Dallas, TX (KDFW-TV) Owned Office and Studio
Dallas, TX (KDFW-TV) Co-owned Tower
Southfield, MI (WJBK-TV) Owned Office, Studio and Tower
Atlanta, GA (WAGA-TV) Owned Office, Studio and Tower
Cleveland, OH (WJW-TV) Owned Office and Studio
Parma, OH (WJW-TV) Owned Tower
Tampa, FL (WTVT-TV) Owned Office and Studio
Riverview, FL (WTVT-TV) Owned Tower
St. Petersburg, FL (WTVT-TV) Leased Office -- News bureau
Phoenix, AZ (KSAZ-TV) Owned Office, Studio and Tower
St. Louis, MO (KTVI-TV) Owned Office and Studio
Sappington, MO (KTVI-TV) Owned Tower
Milwaukee, WI (WITI-TV) Owned Office and Studio
Shorewood, WI (WITI-TV) Owned Tower
Kansas City, MO (WDAF-TV) Owned Office, Studio and Tower
Austin, TX (KTBC-TV) Owned Office, Studio and Tower
</TABLE>
The principal executive offices of NW Entertainment are located at 1440 South
Sepulveda Boulevard, Los Angeles, California 90025, telephone (310) 444-8100.
See Item 13, "Certain Relationships and Related Transactions".
Management believes that its properties are currently adequate and suitable to
conduct its business and will remain so in the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
On March 10, 1994, Steven Cooperman commenced an action, on behalf of himself
and purportedly derivatively on behalf of SCI Television, Inc. (or its purported
successor corporation, NWCG) and as a class action, against certain of the
officers and directors of NWCG, certain of their respective affiliates and
certain of their advisors, asserting, among other things, breaches of fiduciary
duty, unjust enrichment, constructive fraud and abuse of control in connection
with the transactions contemplated by the NWCG Merger Agreement (the "Action").
The Action is entitled Steven Cooperman, On Behalf of Himself and Derivatively
on Behalf of SCI Television, Inc., a Delaware corporation (or its successor
corporation, SCI Parent Corporation to be re-named New World Communications
Group, Inc.) v. Ronald O. Perelman, et al., and SCI Television, Inc., a Delaware
corporation (or its successor corporation, SCI Parent Corporation to be re-named
New World Communications Group, Inc.), Case No. BC100359 (Superior Court of the
State of California, County of Los Angeles). The Action sought equitable relief
and damages. Settlement of this litigation has been reached and approved by the
Court. Under the terms of the settlement, NWCG was to issue 2 million warrants
(the "Settlement Warrants") for the purchase of one share of NWCG common stock
each at the market price on the day of issue. The Settlement Warrants will be
exercisable over a 90-day period, 5 years from the date of issue. There was
also a payment of cash consideration the majority of which was expensed in 1994.
In addition, as part of the settlement, an affiliate of NWCG contributed the
stock of L.C. Holding Corporation, a company with an educational film library,
to NWCG. Subsequent to the approval of the settlement by the Court, the lone
objector to the settlement has filed an appeal. The Company believes that the
appeal is without merit and does not believe that success by the objector
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on appeal would have a material adverse effect on the business, assets,
financial or other condition, or results of operations of the Company and its
subsidiaries, taken as a whole. The Company is unable to predict whether the
settlement terms or the terms of the Settlement Warrants will be modified as a
result of the consummation of the Fox Merger.
In connection with the acquisition of NWCG by News Corp., three suits were
filed in the Court of Chancery of the State of Delaware in and for New Castle
County. All three suits assert claims against NWCG and members of NWCG's board
of directors, and one of the suits also names News Corp. as a defendant. These
cases have been consolidated under the caption In re New World Communications
------------------------------
Group Incorporated Shareholders Litigation, Consolidated Civil Action No. 15137.
- ------------------------------------------
The plaintiffs allege, in general, that the price being paid by News Corp. for
NWCG's stock is inadequate, and that in agreeing to the acquisition NWCG's
directors breached their fiduciary duties as directors of NWCG by failing to act
with appropriate care or with independent judgment. News Corp. is alleged to
have taken unfair advantage of its ownership of NWCG capital stock. Plaintiffs
seek (i) rescission of the acquisition, (ii) full and fair disclosure, and (iii)
money damages and recovery of fees and disbursements of counsel. Plaintiffs
have advised the Court that a stipulation of dismissal without prejudice will be
filed shortly. The defendants believe that this litigation is without merit,
and will contest the action vigorously if plaintiffs pursue the action.
The Company is a party to a number of other pending legal proceedings. The
Company does not expect that the outcome of such proceedings, either
individually or in the aggregate, will have a material effect on the Company's
operations or financial results.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the quarter
ended December 31, 1996.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for any of the Company's equity
securities.
As of March 14, 1997, there were 100 outstanding shares of Common Stock, par
value $0.01 per share.
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ITEM 6. SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following tables set forth, for the periods and for the dates indicated,
summary historical consolidated financial data derived from the consolidated
financial statements of the Company and should be read in connection with the
consolidated financial statements and related notes included elsewhere herein.
The following financial information is obtained from the consolidated
financial statements. (In millions)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1996 1995 1994 1993(a) 1992
--------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Net revenue . . . . . . . . . $ 671.5 $ 605.0 $ 396.9 $ 246.4 $ 163.3
Income (loss) before extraordinary item
and change in accounting principle (10.9) (54.4) 50.1 (30.0) (41.1)
BALANCE SHEET DATA
Total assets . . . . . . . . . 2,148.9 2,239.3 1,788.9 1,153.8 161.7
Long-term debt including capital lease
obligations (including current
maturities), and redeemable preferred
stock . . . . . . . . . . . 1,465.1 1,588.2 1,124.0 703.7 114.1
</TABLE>
(a) Includes the results of NW Television since its acquisition on May 25,
1993.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
As of December 31, 1996, the Company owned approximately 48% of the equity
of NWCG and controlled approximately 83% of its voting power, based upon
outstanding equity on such date. As a result of the Fox Merger, the Company
controls approximately 93% of both the equity and voting power of NWCG based on
outstanding equity, with the remainder controlled by Fox. NWCG is engaged in
the ownership and operation of ten broadcast stations, the production and
distribution of filmed entertainment and the exploitation of its filmed
entertainment libraries.
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the accompanying consolidated
financial statements and related notes of the Company which provide additional
information on financial activities and conditions.
RESULTS OF OPERATIONS
Year ended December 31, 1996 Compared to the Year Ended December 31, 1995.
Net revenue increased $66.5 million or 11.0% in 1996 over 1995. The increase in
broadcasting revenue of $48.6 million reflects an increase of $24.3 million for
three of the stations acquired in March 1995 from Argyle, an increase of $28.7
million for the seven stations owned for both periods and an increase of $1.4
million reflecting increased revenue from the San Diego and Birmingham Stations
which were sold in 1996, offset by a decrease of $5.7 million reflecting the
sale of the Boston Station in March of 1995. NWCG had expected the conversion
of certain stations' network affiliation to the FOX network to result in an
initial decline in revenues. The increase in revenue for the seven stations
owned for both periods reflects significant political revenues in the 1996
presidential election year and an increase in local revenue due to both improved
ratings and increased advertiser spending in the local markets. Production and
distribution revenue increased $17.9 million or 7.8% primarily due to increases
in domestic syndication, network and foreign syndication revenues, production
activity and the continued exploitation of NWCG's library.
16
<PAGE>
Total direct costs and selling, general and administrative costs increased
$32.5 million in 1996. The television broadcasting expense increase of $9.7
million includes an increase of $17.8 million from three of the stations
acquired in March 1995 from Argyle and an increase of $.7 million for the seven
stations owned for both periods, offset by a decrease of $8.8 million reflecting
the sale of the Boston Station in March 1995 and the sale of the San Diego and
Birmingham Stations in 1996. The increase in the television broadcasting
expense for the seven stations owned for both periods resulted primarily from
higher employee benefit costs. Production and distribution operating expenses
increased $22.8 million due to greater production activity in 1996.
Depreciation and amortization of intangible assets increased $8.8 million
in 1996 due primarily to the acquisition of the broadcast television stations in
March 1995 offset by the sale of the Birmingham and San Diego Stations in 1996.
Corporate expenses increased $4.7 million in 1996 principally due to increased
personnel and compensation costs.
Interest expense increased $8.4 million primarily due to higher debt
balances for the acquisition of the broadcast television stations and the
Entertainment Credit Agreement used primarily to fund the increased production
activity, offset by a decrease resulting from the debt principal payments made
with the proceeds from the sales of the Birmingham and San Diego Stations.
The gain on the sale of stations reflects the 1996 sale of substantially
all of the assets of the Birmingham and San Diego Stations for gross proceeds of
$436.2 million.
The gain on sale of interest in NWCG represents the excess of the Company's
carrying value of NWCG over the Company's historical book value, primarily as a
result of the conversion of certain of NWCG's redeemable preferred stock to
common stock. Fox Merger costs represents costs incurred or accrued by NWCG in
connection with the Fox Merger.
The income tax expense resulted primarily from the recognition of income
taxes on the sale of the Birmingham and San Diego Stations. The liability
associated with these taxes will be offset by utilization of net operating
losses. The utilization of a significant portion of the net operating losses
has been reflected as a reduction of excess reorganization value and goodwill.
Further, the amortization expense related to the majority of the intangible
assets acquired in the purchase of the Argyle Stations, as well as the
intangible assets of NW Television, is not deductible for tax purposes which has
the effect of increasing NWCG's effective income tax rate.
Year ended December 31, 1995 Compared to the Year Ended December 31, 1994.
Net revenue increased $208.1 million or 52.4% in 1995 over 1994. The increase
in broadcasting revenue of $74.6 million reflects an increase of $129.7 million
for the two stations acquired in September of 1994 from CitiCasters and the four
stations acquired on March 31, 1995 from Argyle, a decrease of $16.9 million for
NW Television's six original stations owned for both periods and a decrease of
$38.2 million reflecting the sale of the Boston Station in March of 1995. NWCG
had expected the conversion of certain stations' network affiliation to the FOX
network to result in an initial decline in revenues. The decrease in revenue
for NW Television's six original stations reflects a temporary reduction of
revenue due to the conversion to the FOX network, a softening of national and
local revenues in the third quarter and fourth quarter of 1995 and higher
revenues in 1994, a year with significant political revenue and in which the
majority of the stations broadcast the 1994 Winter Olympics. Production and
distribution revenue increased $133.5 million or greater than 100% primarily due
to increases in domestic syndication, network and foreign syndication revenues,
production activity and the continued exploitation of NWCG's library.
Total direct costs and selling, general and administrative costs increased
$151.5 million in 1995. The television broadcasting expense increase of $51.6
million includes an increase of $80.0 million from the Argyle and CitiCasters
stations and an increase of $7.5 million for NW Television's original six
stations due to higher staffing levels to support the increase in locally
produced programming and increased promotional and advertising activities offset
by a decrease of $35.9 million reflecting the sale of the Boston Station in
March of 1995. Production and distribution operating expenses increased $99.9
million due to substantially greater production
17
<PAGE>
activity in 1995, the start-up of the sales and marketing firm in May of 1994
and higher overhead to support the production activity. Both of NWCG's business
segments incurred operating expenses associated with NWCG's conversion of
certain stations' network affiliation to the FOX network, which allows the
broadcast stations to provide more locally-produced programming.
Depreciation and amortization of intangible assets increased $23.6 million
in 1995 due primarily to the acquisition of the broadcast television stations.
Corporate expenses decreased $2.7 million in 1995 principally due to a decrease
in litigation related expenses offset by increased personnel and salaries.
Interest expense increased $38.7 million primarily due to the issuance of
the Company's Discount Notes on June 30, 1994, higher debt balances for the
acquisition of the broadcast television stations and the Entertainment Credit
Agreement used primarily to fund the increased production activity, offset by a
decrease resulting from the debt principal payments made with the proceeds from
the sale of WSBK.
The gain on the sale of stations reflects the March 7, 1995 sale of NWCG's
investment in the Boston Station for gross proceeds of $107.5 million.
The loss on sale of interest in NWCG represents the deficit of the
Company's carrying value of NWCG over the Company's historical book value,
primarily as a result of NWCG's adjustment of its basis in certain NWCG
preferred stock.
The income tax expense resulted primarily from the recognition of income
taxes on the sale of the Boston Station. The liability associated with these
taxes was offset by utilization of net operating losses. The utilization was
reflected as a reduction of NW Television's excess reorganization value.
Further, the amortization expense related to the majority of the intangible
assets acquired in the purchase of the Argyle Stations, as well as the
intangible assets of NW Television, is not deductible for tax purposes which has
the effect of increasing NWCG's effective income tax rate.
LIQUIDITY AND CAPITAL RESOURCES
Holdings' Discount Notes
Holdings is a holding company with no business operations or source of
income of its own other than its interest in NWCG. NWCG or other affiliated
entities are not required to declare dividends or make distributions to
Holdings. Holdings currently anticipates that in order to make required
payments under the Discount Notes, Holdings will be required to seek cash
contributions from Fox. Terms of the indenture of the Discount Notes limit the
amount of additional debt the Company and its subsidiaries may incur.
On February 13, 1997, the Company made an offer to purchase all or part of
the of the Discount Notes at a repurchase price in cash equal to their accreted
value on the date of repurchase.
The following discussion relates to NWCG and its liquidity and capital
resources.
NWCG
At December 31, 1996, NWCG had total debt outstanding of approximately
$853.7 million of which approximately $42.8 million is due in 1997. On January
6, 1997, in conjunction with the sale of the San Diego Station, NW Television
repaid $41 thousand of the 11% Notes. Further, the balance of the excess net
proceeds from the station sale of $193.2 million, which is reflected as
restricted cash at December 31, 1996, reverted to NW Television free of any
liens for use as permitted under the terms of the Step-up Notes and the 11%
Notes.
Simultaneous with the Fox Merger, NWCG repaid the Acquisition Credit
Agreement and the Entertainment Credit Agreement using available cash and $285.7
million made available to the Company by Fox.
18
<PAGE>
On March 6, 1997, NW Television used a portion of the excess net proceeds from
the San Diego Station sale to redeem the Step-up Notes for a purchase price in
cash equal to 100% of the outstanding principal balance of the notes of $107.9
million. As a result of the Fox Merger, on February 13, 1997 NW Television made
an offer to purchase the outstanding balance of the 11% Notes at a repurchase
price in cash equal to 100% of the principal amount outstanding. Currently the
11% Notes are the only debt outstanding at NWCG.
To service the 11% Notes, NWCG plans to utilize broadcasting operating cash
flow of NW Television. NWCG believes that operating cash flow will be
sufficient to satisfy current requirements for operating, investing and
financing activities of NW Television, including debt service prior to final
maturity. NWCG expects that the funds required to meet principal payments upon
the final maturity of the 11% Notes in 2004 and 2005 will be provided by a
combination of broadcasting operating cash flow of NWCG, excess net proceeds
from the San Diego Station sale and cash to be made available by Fox.
Provisions of the 11% Notes limit the amount of additional debt NW Television
may incur.
NWCG's capital budget for 1997 of approximately $16 million will be used
primarily in the broadcasting segment to support the news gathering and
reporting operations.
19
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Page
----
<S> <C>
NWCG Holdings Corporation
Report of Independent Auditors........................................... 21
Consolidated Balance Sheet as of December 31, 1996 and 1995.............. 22
Consolidated Statement of Operations for the years ended
December 31, 1996, 1995 and 1994........................................ 23
Consolidated Statement of Stockholder's Equity (Deficit) for the years
ended December 31, 1996, 1995 and 1994.................................. 24
Consolidated Statement of Cash Flows for the years ended
December 31, 1996, 1995 and 1994....................................... 25
Notes to Consolidated Financial Statements.............................. 27
Supplemental Financial Information...................................... 46
</TABLE>
20
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholder
NWCG Holdings Corporation
We have audited the accompanying consolidated balance sheet of NWCG
Holdings Corporation as of December 31, 1996 and 1995 and the related
consolidated statements of operations, stockholder's equity (deficit) and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these 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 any
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
NWCG Holdings Corporation at December 31, 1996 and 1995 and the consolidated
results of operations and its cash flows for each of the three years in the
period ended December 31, 1996 in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Atlanta, Georgia
March 13, 1997
21
<PAGE>
NWCG HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . $ 139,861 $ 75,361
Restricted cash. . . . . . . . 193,163 -
Receivables . . . . . . . . 206,676 175,210
Television program contract rights . 21,514 23,735
Film costs . . . . . . . . . 63,573 83,761
Prepaid expenses. . . . . . . 2,680 3,876
Deferred income taxes . . . . . 5,306 4,410
----------- -----------
Total current assets . . . . 632,773 366,353
Property, plant and equipment. . . . 187,583 213,059
Long-term receivables . . . . . . 13,424 22,819
Television program contract rights . 5,368 5,419
Film costs . . . . . . . . . 47,329 35,393
Intangible assets . . . . . . . 1,186,935 1,508,870
Equity investments. . . . . . . 40,237 36,549
Other assets . . . . . . . . . 35,257 34,076
Assets held for sale . . . . . . - 16,727
----------- -----------
$ 2,148,906 $ 2,239,265
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 96,763 $ 82,553
Television program contracts payable 22,669 26,872
Deferred income . . . . . . . 22,667 35,532
Participations and residuals payable 57,155 43,434
Current notes payable . . . . . - 16,727
Current portion of long-term debt . 42,816 15,342
----------- -----------
Total current liabilities . . . 242,070 220,460
Non-current television program
contracts payable . . . . 7,423 7,448
Long-term debt . . . . . . . . 1,110,569 1,237,511
Other non-current liabilities . . . 21,368 26,257
Participations and residuals payable . 6,006 23,908
Deferred tax credits . . . . . . 80,436 77,510
Minority interest . . . . . . . 422,970 353,692
Subsidiary's redeemable preferred stock 311,746 335,311
Commitments and contingencies
Stockholder's equity:
Preferred stock, $.01 par value,
1,000 shares
authorized, none issued and
outstanding . . . . . - -
Common stock, $.01 par value, 1,000
shares
authorized, 100 issued and
outstanding . . . . . .
Additional paid-in capital . . . 519,809 519,767
Accumulated deficit . . . . . . (573,491) (562,599)
----------- -----------
Total stockholder's equity
(deficit) . . . . . . (53,682) (42,832)
----------- -----------
$ 2,148,906 $ 2,239,265
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
22
<PAGE>
NWCG HOLDINGS CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
---------- ---------- ---------
<S> <C> <C> <C>
Net revenue:
Broadcasting . . . . . . . . $ 425,367 $ 376,766 $ 302,115
Television production and distribution 246,118 228,244 94,783
---------- ---------- ---------
671,485 605,010 396,898
Operating expenses:
Direct costs:
Broadcasting . . . . . . . . 175,335 175,802 144,001
Television production and
distribution . . . . . . . 204,282 186,286 90,105
Selling, general and administrative:
Broadcasting . . . . . . . . 85,690 75,503 55,675
Television production and
distribution . . . . . . . 42,429 37,620 33,915
Depreciation and amortization of
intangible assets . . . . 75,369 66,608 42,997
Corporate expenses . . . . . . . 25,186 20,506 23,201
---------- ---------- ---------
Income from operations . . . . . 63,194 42,685 7,004
Other income (expense):
Interest expense . . . . . . . (128,710) (120,297) (81,607)
Gain on sale of stations. . . . . 230,393 41,671 -
Gain (loss) on sale of interest in
NWCG . . . . . . 3,935 (7,379) 86,648
Fox Merger costs . . . . . . . (15,516) - -
Interest and investment income . . 8,004 8,155 9,176
Other . . . . . . . . . . . (6,964) (4,957) (2,207)
---------- ---------- ---------
Other income (expense), net . . 91,142 (82,807) 12,010
---------- ---------- ---------
Income (loss) before income taxes,
minority interest, and
equity in earnings . . . . . . 154,336 (40,122) 19,014
Benefit (provision) for income taxes . (128,288) (34,500) 2,570
Minority interest in (income) loss of
consolidated subsidiary . (40,413) 20,839 29,298
Equity in earnings (loss) of affiliates 3,473 (607) (811)
---------- ---------- ---------
Net income (loss) . . . . . . . $ (10,892) $ (54,390) $ 50,071
========== ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
23
<PAGE>
NWCG HOLDINGS CORPORATION
CONSOLIDATED STATEMENT OF
STOCKHOLDER'S EQUITY (DEFICIT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL PAID-IN
COMMON STOCK CAPITAL ACCUMULATED DEFICIT TOTAL
-------------- -------------------- --------------------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1993 $ $ 446,845 $ (325,658) $ 121,187
Capital contribution . . . . . - 63,324 - 63,324
Dividends . . . . . . . . - - (232,622) (232,622)
Net income . . . . . . . . - - 50,071 50,071
-------------- -------------------- --------------------- ----------
Balance at December 31, 1994 510,169 (508,209) 1,960
Capital contribution . . . . . - 9,598 - 9,598
Net loss . . . . . . . . . - - (54,390) (54,390)
-------------- -------------------- --------------------- ----------
Balance at December 31, 1995 519,767 (562,599) (42,832)
Capital contribution . . . . . - 42 - 42
Net loss . . . . . . . . . - - (10,892) (10,892)
-------------- -------------------- --------------------- ----------
Balance at December 31, 1996 $ $ 519,809 $ (573,491) $ (53,682)
============== ==================== ===================== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
24
<PAGE>
NWCG HOLDINGS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Cash flow from operating activities:
Net income (loss) . . . . . . . $ (10,892) $ (54,390) $ 50,071
Adjustments to reconcile net income
(loss) to net
cash used in operating activities:
Minority interest in income (loss) of
consolidated
subsidiary . . . . . . . . 40,413 (20,839) (29,298)
(Gain) loss on sale of interest in
NWCG . . . . . . (3,935) 7,379 (86,648)
Gain on sale of stations . . . . (230,393) (41,671) -
Deferred taxes . . . . . . . . 106,087 29,430 (4,460)
Depreciation and amortization of
intangible and other
assets . . . . . . . . . . 75,369 66,608 42,997
Television program contract
amortization, net of payments . . (379) 4,437 4,399
Film cost amortization, net of
additions . . . . . . . . . 9,078 (15,653) (20,990)
Noncash interest expense and
compensation . . . . . 42,377 35,974 16,901
Changes in assets and liabilities, net
of acquisitions and dispositions:
Receivables and other assets . . (41,299) (41,082) 15,413
Liabilities . . . . . . . . (7,884) (6,290) (12,714)
---------- ---------- ----------
Total adjustments . . . . . . (10,566) 18,293 (74,400)
---------- ---------- ----------
Net cash used in operating activities (21,458) (36,097) (24,329)
Cash flow from investing activities:
Capital expenditures and equity
investments . . . . . (27,694) (40,848) (23,204)
Proceeds from sale of stations . . 436,212 207,500 -
Acquisitions, net of cash acquired . - (360,511) (459,980)
Increase in restricted cash. . . . (193,163) - -
Other . . . . . . . . . . . - 749 (480)
---------- ---------- ----------
Net cash provided by (used in) 215,355 (193,110) (483,664)
investing activities . . .
Cash flow from financing activities:
Capital contributions . . . . . 42 9,598 63,324
Issuance of debt . . . . . . . - 495,429 228,014
Stock dividends paid . . . . . . - - (212,300)
Repayment of debt . . . . . . . (138,065) (401,468) (65,552)
Subsidiary's issuance of preferred and
common stock . . 8,626 45,310 630,859
---------- ---------- ----------
Net cash provided by (used in)
financing activities . . . (129,397) 148,869 644,345
---------- ---------- ----------
Net increase (decrease) in cash . . 64,500 (80,338) 136,352
Cash balance, beginning of period . . 75,361 155,699 19,347
---------- ---------- ----------
Cash balance, end of period . . . . $ 139,861 $ 75,361 $ 155,699
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
25
<PAGE>
NWCG HOLDINGS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
--------- ---------- ----------
<S> <C> <C> <C>
Supplemental disclosures of cash flow
information:
Cash paid for interest . . . . . $ 91,541 $ 81,395 $ 64,470
========= ========== ==========
Cash paid for income taxes . . . $ 15,294 $ 4,195 $ 2,074
========= ========== ==========
Supplemental schedule of noncash
investing and financing activities:
Purchase of television program
contract rights . . . . $ 37,822 $ 37,723 $ 29,565
========= ========== ==========
Addition to film costs . . . . . $ 118,373 $ 113,363 $ 60,652
========= ========== ==========
Genesis and Moving Target Purchases:
Fair value of assets acquired . . $ 59,082
Fair value of NWCG stock and warrants
issued . . . (25,405)
----------
Liabilities assumed . . . . . . $ 33,677
==========
CitiCasters' Stations Purchase:
Fair value of assets acquired . . $ 377,990
NWCG common stock warrants issued . (10,000)
Cash payments . . . . . . . . (359,449)
----------
Liabilities assumed . . . . . . $ 8,541
==========
Argyle stations purchase:
Fair value of assets acquired . . $ 778,527
Purchase option applied to purchase
price . . . . . (100,000)
Cash paid, net of cash received . . (360,084)
----------
Liabilities assumed . . . . . . $ 318,443
==========
Cannell purchase:
Fair value of assets acquired. . . $ 38,703
NWCG preferred stock issued . . . (30,000)
----------
Liabilities assumed . . . . . . $ 8,703
==========
</TABLE>
See accompanying notes to consolidated financial statements.
26
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
NWCG Holdings Corporation (the "Company" or "Holdings") was formed and
incorporated on June 2, 1994 by NWCG (Parent) Holdings Corporation ("Parent"),
which is a wholly-owned subsidiary of Andrews Group Incorporated ("Andrews").
Andrews transferred its 37,192,236 shares of New World Communications Group
Incorporated ("NWCG") Class B Common Stock, $.01 par value, to the Company.
Subsequently, 2,682,236 shares thereof were transferred to Parent and are
reflected in the accompanying financial statements as a dividend. As of
December 31, 1996, Holdings' interest in NWCG, its only asset, represented an
equity interest of approximately 48% of NWCG, and approximately 83% of its
voting power, based upon outstanding equity on such date.
On January 22, 1997 (the "Fox Merger Date"), a special meeting (the
"Special Meeting") of stockholders of NWCG was held. At the Special Meeting,
the Agreement and Plan of Merger dated as of September 24, 1996 (the "Fox Merger
Agreement"), by and among NWCG, The News Corporation Limited, a South Australian
corporation ("News Corp."), Fox Television Stations, Inc., a Delaware
corporation in which News Corp. has an indirect interest ("Fox"), and Fox
Acquisition Co., Inc., a Delaware corporation and a wholly-owned subsidiary of
Fox ("Merger Sub"), was approved. Immediately following the Special Meeting,
the transactions contemplated by the Fox Merger Agreement were consummated,
including the merger of Merger Sub with and into NWCG and a stock purchase
pursuant to the Stock Purchase Agreement dated as of September 24, 1996 (the
"Stock Purchase Agreement"), by and among News Corp., Fox and Parent (the
transactions contemplated by the Fox Merger Agreement and the Stock Purchase
Agreement, collectively, the "Fox Merger").
Pursuant to the Stock Purchase Agreement, Fox purchased from Parent
2,682,236 shares of common stock of NWCG owned by Parent and all of the
outstanding shares of capital stock of the Company. The consideration for such
purchase was 1.45 American Depositary Shares of News Corp. ("ADSs"), each of
which represents four fully paid and non-assessable Preferred Limited Voting
Ordinary Shares of A$.50 of News Corp., for each share of common stock of NWCG
directly or indirectly acquired by Fox, pursuant to the Stock Purchase
Agreement, with the aggregate number of ADSs issued to Parent reduced to
approximate the accreted amount of the Discount Notes outstanding at the
effective time of the Fox Merger.
As a result of the Fox Merger, Fox, both directly and through its
investment in Holdings, has acquired all of the shares of common stock of NWCG
(other than any shares previously owned, directly or indirectly, by News Corp.
or any News Corp. Subsidiary) and both the Company and NWCG have become
subsidiaries of Fox. Holdings' interest in NWCG, which currently consists of
NWCG Class A Common Stock, represents an equity and voting interest of
approximately 93% of NWCG based upon outstanding equity as of the Fox Merger
Date. The Fox Merger has resulted in a change of control of the Company. Prior
to the consummation of the Fox Merger, the Company was an affiliate of Mafco
Holdings, Inc. ("Mafco"), a Delaware corporation which is wholly-owned by Mr.
Ronald O. Perelman, the former Chairman of the Board of the Company.
The accompanying consolidated financial statements reflect the historical
results associated with Andrews' investment in NWCG prior to the Company's
formation. The investment was primarily comprised of (i) New World
Entertainment, Ltd. and Four Star International, Inc. (collectively, "NW
Entertainment") and (ii) commencing May 25, 1993, a majority interest in New
World Television Incorporated ("NW Television"). The accompanying consolidated
financial statements are derived from the historical books and records of the
Company and do not give effect to any purchase accounting adjustments which Fox
may record as a result of the Fox Merger.
27
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
At December 31, 1996, the Company, through NWCG and its primary wholly-
owned subsidiaries NW Television, NWC Acquisition Corporation ("NW Acquisition")
and NW Entertainment, was engaged in the ownership and operation of ten FOX
network affiliated broadcast television stations throughout the United States,
the production and distribution (both domestically and internationally) of
filmed entertainment and the exploitation of its filmed entertainment libraries.
See Note 2 for a discussion of dispositions and acquisitions.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation. The accompanying consolidated financial
statements include the accounts of the Company and its subsidiaries. All
material intercompany accounts and transactions have been eliminated. Minority
interest represents the minority stockholders' share of results of operations of
NWCG. Certain prior period amounts have been reclassified to conform to current
presentation.
Use of estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Cash and cash equivalents. Cash equivalents are highly liquid investments
with original maturities of three months or less.
Restricted cash. Restricted cash represents highly-liquid investments with
original maturities of three months or less, the use of which is restricted
under the terms of the Company's long-term debt agreements. See Notes 2 and 4
for a further discussion of restricted cash.
Television program contract rights. The rights to broadcast non-network
programs are stated at the lower of cost, less accumulated amortization, or net
realizable value. Costs are amortized based upon the usage of programs under
methods which generally result in straight-line amortization. The cost of
program rights expected to be used and amortized within one year is classified
as a current asset. Sports broadcast rights are generally expensed when the
events are televised.
Film costs. Film costs consist of story rights, screenplays, acquisition
and production costs (which benefit future periods) and capitalized overhead
costs, and are stated at the lower of cost, net of accumulated amortization, or
estimated net realizable value. Abandoned story and development costs are
expensed to production direct costs. The current portion of film costs include
unamortized costs of film inventory released and allocated to the Company's
primary markets and television films in production that are under contract of
sale.
Film costs are amortized and estimated total costs of participations and
residuals are accrued in the same ratio that current gross revenues bear to
management's estimated gross revenues from all sources on an individual film or
series basis. Such estimates are revised quarterly and estimated losses, if
any, are provided for in full when known. Based on management's estimates of
future revenues, approximately 80% of unamortized film costs will be amortized
over the next three years.
Property, plant and equipment. The property, plant and equipment of the
Company are carried at cost net of accumulated depreciation. Depreciation is
computed on the straight-line method for financial accounting purposes using
lives of 26 to 30 years for buildings, 11 to 19 years for land improvements, 14
to 17 years for towers, 4 to 8 years for broadcast equipment, 8 to 12 years for
office furniture and fixtures, 4 to 8 years for automobiles and other assets and
5 to 7 years for leasehold improvements.
28
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
Deferred financing costs. Costs incurred with the issuance of debt are
included in other assets net of accumulated amortization. Amortization is
reflected as interest expense over the respective lives of the applicable
issues; unamortized costs will be written off when the related debt is retired.
Intangible assets. Intangible assets include network affiliation
agreements, broadcast licenses, goodwill and excess reorganization value. The
components of intangible assets are amortized on a straight-line basis over 10-
40 years.
The carrying values of intangible assets as well as other long-lived assets
are reviewed if the facts and circumstances suggest that they may be impaired.
If this review indicates that the assets will not be recoverable, as determined
based on undiscounted estimated cash flows over the remaining amortization
period, the Company's carrying value of the assets would be reduced to their
estimated fair value.
Production and distribution revenue. Revenues from broadcast television,
home video, pay and cable television licensing contracts, which may provide for
the receipt of non-refundable guaranteed amounts, are recognized when the film
is available for exploitation, provided other conditions of sale have been met.
Recognition of revenues related to deposits and cash advances received on pre-
sales are deferred until all material conditions of the sale have been met.
Deferred income consists primarily of advance payments received on contracts for
which the programs are not yet available for broadcast or exploitation. The
Company enters into contracts for the licensing of television products for which
the revenue and related accounts receivable will be recorded in future periods
when the products are available for broadcast or exploitation. These contracts
aggregated $89.2 million and $58.7 million at December 31, 1996 and 1995,
respectively.
Fair market value of financial instruments. The carrying values of all
financial instruments, excluding long-term debt, approximate fair value. The
fair value of the Company's long-term debt is estimated using discounted cash
flow analyses, based on the Company's current incremental borrowing rates for
similar types of borrowing arrangements, or quoted market rates (Note 4).
Income taxes. The Company accounts for income taxes using Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"). SFAS No. 109 requires an asset and liability approach for financial
accounting and reporting for income taxes and allows the recognition and
measurement of deferred tax assets based upon the likelihood of realization of
tax benefits in future years.
Stock options. The Company has elected to follow Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and
related Interpretations in accounting for employee stock options issued by NWCG
to certain employees of NWCG and its subsidiaries because the alternative fair
value accounting provided for under FASB Statement No. 123, "Accounting for
Stock-Based Compensation", requires use of option valuation models that were not
developed for use in valuing employee stock options. Under APB 25, because the
exercise price of NWCG's stock options equals the market price of the underlying
stock on the date of the grant, no compensation expense is recognized.
2. ACQUISITIONS, DISPOSITIONS AND PRO FORMA FINANCIAL INFORMATION
On March 7, 1994, in accordance with the November 1993 Agreement and Plan
of Reorganization and Merger (as amended, the "NWCG Merger Agreement") between
NW Television, NWCG, and Andrews, NW Television merged into a subsidiary of NWCG
and all outstanding shares of common stock of NW Television were converted into
a like number of shares of NWCG common stock. Further, the holders of the NW
Television
29
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Class A Warrants and Class B Warrants obtained the right to acquire and receive
a like number of shares of NWCG common stock. As a result of the NWCG Merger, NW
Television became a wholly-owned subsidiary of NWCG. On March 9, 1994, NWCG
purchased all of the capital stock of NW Entertainment and Four Star and entered
into a non-competition agreement and an indemnification agreement with Andrews
(as such agreements are contemplated by the NWCG Merger Agreement), in exchange
for the issuance by NWCG to Andrews of 25,383,707 shares of Class B Common
Stock. Due to the Company's common control over NW Entertainment, Four Star,
Genesis and NWCG, in connection with this transaction, the Company recorded a
credit to goodwill of $20.7 million to reflect the excess of the Company's
carrying value of NWCG over its historical book value. The reduction in goodwill
is being amortized over a 40-year period.
In September and October 1994, NWCG consummated the acquisition of four
broadcast television stations, KSAZ-TV (Phoenix), WDAF-TV (Kansas City), WGHP-TV
(Greensboro-High Point) and WBRC-TV (Birmingham) from CitiCasters (the
"CitiCasters' Stations") for consideration of approximately $359.4 million plus
the NWCG Class D Warrant with an estimated fair value of $10.0 million. In
March 1995 NWCG entered into a purchase agreement with Fox with respect to WBRC-
TV and WGHP-TV providing for the acquisition of the stations from NWCG at a
price equal to the price paid by NWCG therefor, together with the excess, if
any, of the aggregate marginal financing costs incurred by NWCG with respect to
its acquisition of the stations over the net cash generated (other than through
financing activities) by the stations, in each case for the period through the
date the stations were purchased by Fox. NWCG borrowed $40.4 million from Fox,
non-recourse to NWCG, secured by an interest in a trust which held the stock of
the entities which owned WBRC-TV and WGHP-TV. As of January 1996, Fox completed
the purchase of WBRC-TV and WGHP-TV for approximately $140 million including the
extinguishment of such debt, subject to certain adjustments.
In March 1995, NW Television sold its investment in WSBK-TV (the "Boston
Station") for gross proceeds of $107.5 million. NW Television recorded a gain
on the sale of $41.7 million. NW Television repaid $19.5 million of the Bank
Credit Agreement Loans in March 1995 and $77.3 million of the Step-up Notes in
April 1995 from the net proceeds of the Boston Station sale.
NWCG purchased certain debt and equity securities of Argyle Television
Holding, Inc. ("Argyle") for total consideration of approximately $750.4
million, including $100 million in cash paid for an option in 1994 and
assumption of debt of approximately $283.6 million. For financial reporting
purposes, the acquisition occurred on March 31, 1995. FCC approval for change
in control of the television stations occurred on April 14, 1995. Argyle
controlled four VHF television stations, KDFW-TV (Dallas), KTBC-TV (Austin),
KTVI-TV (St. Louis), and WVTM-TV (Birmingham). NWCG changed the network
affiliation of three of these stations to the FOX network. Upon consummation of
the affiliation changes, NWCG issued Series C Preferred Stock to Fox for
consideration of approximately $62.8 million.
In July 1995 NWCG purchased Cannell Entertainment Inc. ("Cannell") for NWCG
Series E Cumulative Preferred Stock valued at approximately $30 million and
certain other consideration.
In August 1996, NWCG sold the assets constituting WVTM-TV (the "Birmingham
Station") for gross proceeds of $204.5 million. NWCG recorded a gain on the
sale of $103.3 million. In August and September 1996, NW Acquisition repaid a
total of $95.0 million of the Acquisition Credit Agreement from the net proceeds
of the Birmingham Station sale.
In November 1996, NWCG sold the assets constituting KNSD-TV (the "San Diego
Station") for gross proceeds of $231.7 million. NWCG recorded a gain on the
sale of $127.1 million. NW Television repaid the outstanding balance of $27.6
million of the Bank Credit Agreement Loans in November 1996 and $1.7 million of
the Step-up Notes in December 1996 from the net proceeds of the San Diego
Station sale. The use of the
30
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
remaining net proceeds of $193.2 million from the San Diego Station sale was
restricted at December 31, 1996 under the terms of the NW Television debt
agreements pending the outcome of the NW Television's offer to purchase a
portion of the 11% Notes (Note 4).
The following condensed pro forma consolidated statement of operations
information gives effect, as of January 1, 1995 and 1996, to the disposal of
WGHP-TV and WBRC-TV, the sales of the Boston Station, the Birmingham Station and
the San Diego Station, the repayment of a portion of NW Television's debt and
NWC Acquisition's debt, the acquisition of the Argyle stations and the issuance
of NWCG preferred stock. The pro forma financial results do not necessarily
reflect either future results or the results that would have occurred had the
transactions discussed above actually occurred on the date indicated. (In
thousands):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1996 1995
--------------------------------
(UNAUDITED)
<S> <C> <C>
Statement of Operations Data
----------------------------
Net revenues . . . . $ 618,225 $ 572,698
Net loss . . . . . . (49,900) (46,569)
</TABLE>
3. SUPPLEMENTAL BALANCE SHEET INFORMATION
The composition of receivables at December 31, 1996 and 1995 was as follows
(in thousands):
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Broadcast receivables . . . . $ 103,587 $ 107,825
Production receivables . . . . 107,607 73,117
Other receivables . . . . . 9,848 6,468
--------- ---------
221,042 187,410
Less: Allowance for doubtful
accounts . . . . . . . (14,366) (12,200)
--------- ---------
$ 206,676 $ 175,210
========= =========
<CAPTION>
The composition of long-term receivables at December 31, 1996 and 1995 was
as follows (in thousands):
1996 1995
--------- ---------
<S> <C> <C>
Production receivables . . . . $ 16,326 $ 23,917
Allowance for doubtful accounts . (2,902) (1,098)
--------- ---------
$ 13,424 $ 22,819
========= =========
</TABLE>
The broadcast television stations sell advertising time to a variety of
customers in diversified industries; the production and distribution segment
distributes film products to broadcast networks' affiliates, independent
television stations and cable television companies domestically and overseas.
The Company performs periodic credit evaluations of its customers' financial
condition and generally does not require collateral. Receivables for the
broadcasting segment are generally due within 30 days; receivables for the
production and distribution segment
31
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
are payable under the terms of the contracts for periods frequently exceeding
one year. Credit losses have consistently been within management's expectations
and industry standards.
The composition of property, plant and equipment at December 31, 1996 and
1995 was as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Land, buildings and land
improvements . . . . . . $ 68,080 $ 73,428
Broadcast towers . . . . . . 9,052 11,133
Other broadcast and news gathering
equipment . . . . 126,780 128,092
Office furniture and fixtures . 33,308 27,849
Automobiles . . . . . . . 8,597 8,139
Leasehold improvements . . . . 6,402 5,755
Construction in progress . . . 1,503 4,655
--------- ---------
253,722 259,051
Total accumulated depreciation and
amortization . . . (66,139) (45,992)
--------- ---------
$ 187,583 $ 213,059
========= =========
<CAPTION>
The composition of other assets at December 31, 1996 and 1995 was as
follows (in thousands):
1996 1995
-------- --------
<S> <C> <C>
Deferred financing costs . . . $ 12,598 $ 13,517
Local marketing agreement . . . 18,567 15,705
Other . . . . . . . . . 4,092 4,854
-------- --------
$ 35,257 $ 34,076
======== ========
</TABLE>
In May 1994, KDFW-TV (KDFW) entered into a ten year time brokerage
agreement (commonly referred to as a local marketing agreement or LMA) with
KDFI-TV (KDFI), an independent television station in Dallas, Texas at a total
cost of $20.6 million. Under the LMA, KDFW provides substantially all of the
programming for KDFI and is responsible for the sales and marketing of all the
commercial air time within specified programs. In return, KDFW retains the
revenue derived from such advertising and is obligated to reimburse KDFI
quarterly for certain operating and other expenses during the term of the
agreement. In addition, KDFW paid $4.0 million for an assignable option to
acquire substantially all of KDFI's broadcasting assets. In May 1996, KDFW
entered into a series of transactions whereby KDFW assigned the option to a
third party which in turn purchased the broadcast assets of KDFI, assumed the
time brokerage agreement and granted KDFW an option to acquire all of the debt
and equity securities of the assignee for $1.2 million. Such option expires May
31, 2004. The total cost of the LMA and option agreement is being amortized on
a straight-line basis over 10 years.
The composition of intangible assets at December 31, 1996 and 1995 was as
follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Network affiliation agreements,
broadcast licenses, goodwill
and excess reorganization value $ 1,308,893 $ 1,593,182
Total accumulated amortization . (121,958) (84,312)
----------- -----------
$ 1,186,935 $ 1,508,870
=========== ===========
</TABLE>
32
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The composition of film costs, net of accumulated amortization, at December
31, 1996 and 1995 was as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Current
- -------
Released . . . . . . . . $ 55,101 $ 55,166
In process and development . . 8,472 28,595
-------- --------
$ 63,573 $ 83,761
======== ========
1996 1995
-------- --------
Non-current
- -----------
Released . . . . . . . . $ 42,821 $ 31,839
In process and development . . 4,508 3,554
-------- --------
$ 47,329 $ 35,393
======== ========
</TABLE>
Accumulated amortization of film costs was $775.4 million and $649.0
million at December 31, 1996 and 1995, respectively.
The composition of accounts payable and accrued expenses at December 31,
1996 and 1995 was as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Trade payables . . . . . . $ 10,087 $ 14,129
Accrued interest . . . . . . 12,247 14,392
Accrued salaries and wages . . 16,523 15,536
Income taxes payable . . . . 11,728 5,637
Other payables . . . . . . 46,178 32,859
-------- --------
$ 96,763 $ 82,553
======== ========
</TABLE>
4. LONG-TERM DEBT
Long-term debt at December 31, 1996 and 1995 was as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Acquisition Credit Agreement . . $ 297,375 $ 400,000
Bank Credit Agreement Loans . . - 27,619
Step-up Notes . . . . . . . 107,891 114,380
11% Notes . . . . . . . . 373,735 373,735
Discount Notes . . . . . . 299,716 261,119
Entertainment Credit Agreement . 74,668 76,000
----------- -----------
1,153,385 1,252,853
Less current portion . . . . 42,816 15,342
----------- -----------
$ 1,110,569 $ 1,237,511
=========== ===========
</TABLE>
33
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Acquisition Credit Agreement --The Company has a $400 million revolving
credit facility with final maturity on September 29, 2001 and interest, at the
Company's option, at a Eurodollar rate plus 1.5% to 2.75% or a prime rate plus
.25% to 1.5%. The Company's debt leverage ratio determined the premium above
those rates. Up to $25 million of the facility was available for working capital
needs, (the "Working Capital Line"); up to $375 million was available for
qualifying acquisitions of broadcast television stations (the "Acquisition
Line") through September 29, 1996. On September 30, 1996, the Acquisition Line
commitment was reduced to $305 million, with additional quarterly reductions
beginning December 31, 1996 through March 31, 1997, at which time the
Acquisition Line would convert to a term loan with mandatory quarterly payments.
Both the Working Capital Line and the Acquisition Line mature in 2001. This
facility is secured by a lien on common stock and intercompany notes of
subsidiaries holding the assets and liabilities of the acquired stations, as
defined. The weighted average interest rate in effect at December 31, 1996 was
8.10%.
Bank Credit Agreement Loans -- The Bank Credit Agreement Loans were paid in
full in connection with the sale of the San Diego Station (Note 2). The Bank
Credit Agreement Loans were secured by a lien on common stock and intercompany
notes of the broadcast stations held by NW Television (the "Pledged
Collateral").
Step-up Notes -- Senior secured notes maturing on June 30, 1998; interest
at 7 1/2% to May 25, 1996, 8 1/2% to May 25, 1997 and 9 1/2% thereafter, payable
quarterly; minimum annual principal payments of $4.7 million in 1997 and $103.2
million in 1998 (as adjusted for mandatory payments made in 1995 and 1996), plus
mandatory annual prepayments based upon the excess cash flow of NW Television,
as defined; redeemable at NW Television's option at any time prior to maturity
at 100% of outstanding principal plus accrued interest; secured by the Pledged
Collateral. Interest expense on the Step-up Notes was accrued at 7.82%, which
represents the effective interest rate over the term of the notes. The excess
of interest accrued at the effective rate over interest at the stated rate of
the notes is included in other noncurrent liabilities. Prior to the repayment
of the Bank Credit Agreement Loans, the minimum annual principal payments and
all mandatory payments were required to be shared with the Bank Credit Agreement
Loans on a pro rata basis, and the security interest in the Pledged Collateral
was held on a pari passu basis with the Bank Credit Agreement Loans.
On March 6, 1997, NWCG used a portion of the excess net proceeds from the
San Diego Station sale to redeem the Step-up Notes for a purchase price equal to
100% of the outstanding principal balance of the notes.
11% Notes -- Secured senior notes maturing June 30, 2005; interest at 11%
to maturity, payable semi-annually; redeemable at NW Television's option at any
time on or after June 30, 1998 at 101% of outstanding principal amount prior to
June 30, 1999 and 100% thereafter, plus accrued interest; mandatory redemption
of 50% of original principal amount on June 30, 2004 at 100% of outstanding
principal amount plus accrued interest; remaining balance due at maturity;
secured by lien on Pledged Collateral, third in priority behind permitted
letters of credit and Step-up Notes.
On January 6, 1997, in conjunction with the sale of the San Diego Station,
NWCG repaid $41 thousand of the 11% Notes. Further, the balance of the excess
net proceeds from the sale of the San Diego Station, which is reflected as
restricted cash at December 31, 1996, reverted to NW Television for use as
permitted under the terms of the Step-up Notes and the 11% Notes.
As a result of the Fox Merger, on February 13, 1997 the Company made an
offer to purchase the outstanding balance of the 11% Notes at a repurchase price
in cash equal to 100% of the principal amount outstanding.
34
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Discount Notes. Senior Secured Discount Notes due 1999 with the principal
amount of $420.5 million for which the Company received net proceeds of $212.3
million. The Discount Notes require no cash interest payments until maturity on
June 15, 1999 and yield approximately 13.5% per annum. The Discount Notes are
secured by a first priority pledge of 34,510,000 shares of NWCG Class A Common
Stock and limit the Company's and NWCG's ability to incur additional
indebtedness. All of the proceeds were remitted to Andrews in the form of a
dividend in 1994.
As a result of the Fox Merger, on February 13, 1997 the Company made an
offer to purchase all or part of the Discount Notes at a repurchase price in
cash equal to their accreted value on the date of repurchase.
Entertainment Credit Agreement. The Company has a $100 million revolving
credit facility with a final maturity on March 24, 1999 with interest at
Eurodollar rate plus 1 1/2% or a prime rate plus 1/2%. The Company has the
option of the Eurodollar or prime rates. Borrowings are based on eligible
accounts receivable and are secured by film costs, receivables and other assets.
The weighted average interest rate in effect at December 31, 1996 was 7.09%.
Simultaneous with the Fox Merger, NWCG repaid the Acquisition Credit
Agreement and the Entertainment Credit Agreement using available cash and
approximately $285.7 million made available to the Company by Fox. In
conjunction with the repayment of the Acquisition Credit Agreement and the
Entertainment Credit Agreement and the partial repayment of the 11% Notes, the
Company wrote off approximately $7.7 million of deferred financing costs in
1997.
Maturities of long-term debt as of December 31, 1996 are as follows, using
the fully accreted value of the Discount Notes (in thousands):
<TABLE>
<S> <C>
Year Ending December 31:
1997 $ 42,816
1998 164,200
1999 559,954
2000 76,250
2001 57,188
Thereafter 373,735
-----------
$ 1,274,143
===========
</TABLE>
The Company's debt agreements include various ratios and covenants,
including restrictions on additional indebtedness, investments, capital
expenditures, transactions with affiliated companies and payment of dividends.
The fair value of the Company's long-term debt at December 31, 1996 is
approximately $1,224.3 million.
35
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
5. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
On March 10, 1994, Steven Cooperman commenced an action, on behalf of
himself and purportedly derivatively on behalf of SCI Television, Inc. (or its
purported successor corporation, NWCG) and as a class action, against certain of
the officers and directors of NWCG, certain of their respective affiliates and
certain of their advisors, asserting, among other things, breaches of fiduciary
duty, unjust enrichment, constructive fraud and abuse of control in connection
with the transactions contemplated by the Agreement (the "Action"). A settlement
was reached and approved by the Court. Under the terms of the settlement, NWCG
was to issue 2 million warrants (the "Settlement Warrants") for the purchase of
one share of NWCG stock each at the market price on the day of issue. The
Settlement Warrants will be exercisable over a 90-day period, 5 years from the
date of issue. There was also a payment of cash consideration, the majority of
which was expensed in 1994. In addition, as part of the settlement, an
affiliate of NWCG contributed the stock of L.C. Holding Corporation, a company
with an educational film library, to NWCG. Subsequent to the approval of the
settlement by the Court, the lone objector to the settlement has filed an
appeal. The Company believes that the appeal is without merit and does not
believe that success by the objector on appeal would have a material adverse
effect on the business, assets, financial or other condition, or results of
operations of the Company and its subsidiaries, taken as a whole. However, the
Company is unable to predict whether the settlement terms or the terms of the
Settlement Warrants will be modified as a result of the consummation of the Fox
Merger.
In connection with the acquisition of NWCG by News Corp., three suits were
filed asserting claims against NWCG and members of NWCG's board of directors,
and one of the suits also names News Corp. as a defendant. The plaintiffs
allege, in general, that the price being paid by News Corp. for NWCG's stock is
inadequate, and that in agreeing to the acquisition NWCG's directors breached
their fiduciary duties as directors of NWCG by failing to act with appropriate
care or with independent judgment. News Corp. is alleged to have taken unfair
advantage of its ownership of NWCG capital stock. Plaintiffs seek (i)
rescission of the acquisition, (ii) full and fair disclosure, and (iii) money
damages and recovery of fees and disbursements of counsel. Plaintiffs have
advised the Court that a stipulation of dismissal without prejudice will be
filed shortly. The defendants believe that this litigation is without merit,
and will contest the action vigorously if plaintiffs pursue the action.
The Company is a party to a number of other pending legal proceedings. The
Company does not expect that the outcome of such proceedings, either
individually or in the aggregate, will have a material effect on the Company's
operations or financial results.
Programming Commitments
As of December 31, 1996, the broadcast segment has commitments aggregating
approximately $17.5 million for various broadcast programming rights through
2001. Certain agreements require the Company to purchase programming that has
not yet been produced; the dollar amount of such contracts is not estimable.
36
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
6. INCOME TAXES
The Company's operations, excluding NWCG's, are included in the
consolidated federal and certain state income tax returns of Mafco and its
subsidiaries. The Company makes tax sharing payments in amounts equivalent to
the tax liability that would have been made had the Company filed separate tax
returns. No such payments were required in 1996, 1995 and 1994. The Company
has provided income tax expense as if its subsidiaries were separate taxpayers.
NWCG began filing consolidated federal and certain state income tax returns
effective January 1, 1994. Prior to this date, tax returns were filed by NWCG's
predecessor, NW Television. Effective March 1994, with the purchase of the
capital stock of NW Entertainment and Four Star and the purchase of the
remaining 50% of Genesis, NW Entertainment, Four Star and Genesis are included
in NWCG's consolidated federal and certain state income tax returns. Prior to
this date, NW Entertainment and Four Star were included in the consolidated
income tax returns of Mafco.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and income tax purposes. Significant components of the Company's
deferred tax liabilities and assets are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------------
CURRENT NONCURRENT
ASSETS ASSETS
(LIABILITIES) (LIABILITIES)
-------------- --------------
<S> <C> <C>
Accounts receivable . . . . . $ 2,143 $ 1,035
Film costs . . . . . . . . 12,811 29,892
Property, plant and equipment . - (14,953)
Intangible assets . . . . . - (105,222)
Long-term debt discount . . . - 2,367
Financial reporting accruals and
reserves . . . . . . (2,006) 5,616
Other temporary differences . . 2,519 (11,011)
AMT credit carryover . . . . - 7,898
NOL carryover . . . . . . . - 102,888
Valuation allowance . . . . . (10,161) (98,946)
-------------- --------------
$ 5,306 $ (80,436)
============== ==============
</TABLE>
37
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1995
--------------------------------
CURRENT NONCURRENT
ASSETS ASSETS
(LIABILITIES) (LIABILITIES)
-------------- --------------
<S> <C> <C>
Accounts receivable . . . . . $ 2,420 $ 1,671
Film costs . . . . . . . . 22,323 32,960
Property, plant and equipment . - (11,661)
Intangible assets . . . . . - (119,738)
Long-term debt discount . . . - 3,033
Financial reporting accruals and
reserves . . . . . . (12,059) (426)
Other temporary differences . . 2,026 (7,211)
AMT credit carryover . . . . - 1,000
NOL credit carryover . . . . - 218,520
Valuation allowance . . . . . (10,300) (195,658)
-------------- --------------
$ 4,410 $ (77,510)
============== ==============
</TABLE>
At December 31, 1995, the Company, excluding NWCG, had NOL for federal
income tax purposes of approximately $49.4 million and NWCG had NOL of $510.9
million, all of which expires in 2002 through 2009. At December 31, 1996, the
Company, excluding NWCG, had NOL and a related valuation allowance of
approximately $88.8 million. NWCG's consolidated NOL at December 31, 1996 was
approximately $175.0 million, of which approximately $175.0 million is subject
to certain limitations under Section 382 described below. Limitations imposed
by Section 382 of the Internal Revenue Code of 1986, as amended, (the "Code")
after a change of control, will limit the amount of NOL which will be available
to offset future taxable income. At December 31, 1996, NWCG has a valuation
allowance against such restricted NOL for the excess of the NOL over the amount
of taxable temporary differences which will reverse during the permitted
carryover period. As a result of the Fox Merger, another change of control
under Section 382 of the Internal Revenue Code has occurred. Management
believes such ownership change will not have a material affect on the use of
NOL's.
Significant components of the provision (benefit) for income taxes are as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
--------- --------- --------
<S> <C> <C> <C>
Current
Federal . . . . . . . . $ 6,898 $ 1,000 $ (560)
State . . . . . . . . . . 13,439 1,078 1,018
Foreign . . . . . . . . 1,864 2,992 1,432
--------- --------- --------
22,201 5,070 1,890
Deferred
Federal . . . . . . . . 88,270 19,567 (3,926)
State . . . . . . . . . 17,817 9,863 (534)
--------- --------- --------
106,087 29,430 (4,460)
--------- --------- --------
Total provision (benefit) for income
taxes . . . $ 128,288 $ 34,500 $ (2,570)
========= ========= ========
</TABLE>
38
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
A reconciliation of the income tax provisions (benefits) is as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Provision assuming federal income tax
rate . . $ 54,017 $ (14,043) $ 6,655
Amortization of and sale of intangibles 40,558 25,009 5,375
State income tax . . . . . . . 20,316 7,112 148
Foreign income tax . . . . . . . 1,864 2,992 1,432
Loss (gain) on sale of NWCG . . . . (1,377) 2,583 (30,327)
Losses without benefit . . . . . 10,172 11,883 13,650
Other . . . . . . . . . . . 2,738 (1,036) 497
--------- --------- ---------
$ 128,288 $ 34,500 $ (2,570)
========= ========= =========
</TABLE>
Income tax expense in 1996 and 1995 resulted primarily from the recognition
of income taxes on the sales of the San Diego Station and the Birmingham Station
in 1996 and the Boston Station in 1995 due to the lower historical tax bases of
the stations' net assets. The liability associated with these taxes will be
offset by utilization of NWCG's net operating losses. A portion of the
utilization has been reflected as a reduction of goodwill and excess
reorganization value of approximately $104.1 million in 1996 and $12.1 million
in 1995.
7. EMPLOYEE BENEFITS
Defined Benefit Plans
Certain employees of the Company not participating in union sponsored plans
who meet eligibility requirements are included in one of two Company sponsored
defined benefit pension plans (the "Pension Plans").
Under the provisions of the Pension Plans, benefits are earned based on
years of service and the participants' average earnings during the three to five
consecutive highest paid calendar years of employment.
Data relating to the Pension Plans are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
-------------- ---------------
<S> <C> <C>
Actuarial present value of benefit
obligations:
Accumulated benefit obligation,
including vested benefits of
$58,857 and $52,752 . . . . . $ 59,478 $ 53,758
============== =============
Projected benefit obligation for
services rendered to date . . . . $ 75,884 $ 74,663
Assets of Pension Plans at fair value,
primarily listed stocks and
U.S. bonds . . . . . . . . . (58,623) (55,707)
-------------- -------------
Projected benefit obligation in
excess of the assets of Pension
Plans . . . . . . . . . . 17,261 18,956
Unrecognized prior service cost . . 3,043 3,861
Unrecognized net loss . . . . . (8,040) (11,635)
-------------- -------------
Accrued pension liability recognized
in consolidated balance sheet . . $ 12,264 $ 11,182
============== =============
</TABLE>
39
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1996 1995 1994
-------------- --------- ----------
<S> <C> <C> <C>
Net pension cost includes the following
components:
Service cost -- benefits earned during $ 4,146 $ 2,901 $ 3,193
the period
Interest cost on projected benefit 5,470 4,546 4,053
obligation . .
Actual (return) loss on the assets of (2,377) (8,681) 1,836
Pension Plans
Amortization of prior service cost . (284) (291) (175)
Unrecognized gain (loss) subject to (2,503) 4,372 (5,103)
amortization
-------------- --------- ----------
Net periodic pension cost . . . . $ 4,452 $ 2,847 $ 3,804
============== ========= ==========
</TABLE>
The weighted average discount rates used in determining the actuarial
present value of the projected benefit obligation and net pension cost are 7.5%,
7.25%, and 8.5% at December 31, 1996, 1995, and 1994, respectively. The rate of
increase in future compensation levels and the expected long-term rate of return
on assets range from 3% to 5% and 9% to 10%, respectively, in all periods
presented. The Company funds minimum amounts required by ERISA.
The Pension Plans experienced a curtailment as a result of the sale of the
San Diego and Birmingham stations. The related curtailment gain of $.7 million
has been included in the calculation of the gain on the sale of the stations.
Other Plans
Certain subsidiaries of the Company participate in 401k Plans. Those
subsidiaries match contributions to the 401k Plans equal to a percentage of each
participant's contributions under certain circumstances. Contributions by the
Company under the 401k Plans are not significant.
The Company provides certain additional benefits to retired or
involuntarily terminated employees of certain subsidiaries based on years of
service. As of December 31, 1996 and 1995, the Company had a liability of
approximately $4.8 million and $5.4 million, respectively, related to these
benefits.
In conjunction with the Fox Merger, on March 31, 1997 the Company has
announced that it will cease the accrual of benefits under the Pension Plans.
Immediately thereafter, substantially all of the participants in the Pension
Plans will become participants in the Fox Inc. Pension Plan, which offers
benefits which are substantially similar to the benefits offered by the Pension
Plans. In addition, Fox plans to merge the Pension Plans into the Fox Inc.
Pension Plan. No curtailment is expected to occur as a result of the foregoing.
8. EQUITY TRANSACTIONS
NWCG completed an equity offering (the "NWCG Offering") pursuant to which
each holder of record other than Andrews ("Record Holders") of the Class B
Common Stock or of Existing $.01 Warrants on March 9, 1994 (the "Record Date")
was entitled, in accordance with NWCG's Amended and Restated Certificate of
Incorporation and the NWCG Merger Agreement, to subscribe for 1.90732627 shares
of Class B Common Stock (or, under certain circumstances, Class A Warrants,
Series 2 of NWCG, exercise price $.01 per share (the "new $.01 Warrants" and,
together with the Existing Warrants, the "Warrants")) for each share of Class B
Common Stock or Existing $.01 Warrant owned by such Record Holder as of the
close of business on the Record Date.
40
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The NWCG Offering, which expired on March 31, 1994, resulted in a non-cash gain
to the Company of approximately $31.0 million.
NWCG Redeemable Preferred Stock
On March 28, 1994, an entity affiliated with Apollo Advisors ("Apollo")
made an equity investment in NWCG of $60.0 million. Such investment was in the
form of 1,200,000 shares of Series A redeemable preferred stock bearing a
dividend of 6 3/8% per annum that is convertible into shares of Class B Common
Stock at a conversion price of $10.164 per share (subject to adjustment), is
mandatorily redeemable on the 15th anniversary of issuance, is noncallable for
four years, is callable thereafter at specified premiums declining to par on the
tenth anniversary of issuance and is subject to a mandatory offer to purchase at
specified prices in the event of a change in control at NWCG ("NWCG Series A
Preferred"). Apollo was also granted certain registration, preemptive and tag-
along rights. In connection with such investment, Apollo agreed not to exercise
its right to purchase shares offered pursuant to the NWCG Offering. During
1996, Apollo converted 487,872 shares of NWCG Series A Preferred into Class B
Common Stock and sold 612,128 shares of NWCG Series A Preferred to a third
party. As of December 31, 1996, Apollo held 100,000 shares of NWCG Series A
Preferred.
Fox invested $250.0 million in NWCG through the purchase of NWCG Series C
Preferred Stock and warrants to purchase up to 1,250,000 shares of NWCG Class A
Common Stock at $15 per share and up to 4,625,000 shares of NWCG Class A Common
Stock at $50 per share. This investment was made over 1994 and 1995, upon the
effectiveness of affiliation agreements between the Company's television
stations and the FOX network. The NWCG Series C Preferred Stock is non-voting
and mandatorily redeemable on the seventh anniversary of issuance at its
aggregate liquidation preference of $250.0 million.
In July 1995, NWCG issued 300,000 shares of NWCG Series E Cumulative
Convertible Redeemable Preferred Stock, $.01 par value per share ("NWCG Series E
Preferred") as consideration for the acquisition of Cannell. The NWCG Series E
Preferred is redeemable at the option of the Company after July 1998, bears a
dividend rate of 7% per annum and is convertible to NWCG Class A Common Stock at
$19.95 per share. The NWCG Series E Preferred Stock is non-voting and has a
liquidation preference of $30 million.
Stock Options
NWCG has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related Interpretations
in accounting for employee stock options issued by NWCG to certain of NWCG's
employees because, as discussed below, the alternative fair value accounting
provided for under FASB Statement No. 123, "Accounting for Stock-Based
Compensation" ("Statement 123"), requires use of option valuation models that
were not developed for use in valuing employee stock options. Under APB 25,
because the exercise price of NWCG's stock options equals the market price of
the underlying stock on the date of the grant, no compensation expense is
recognized.
NWCG's 1994 Stock Option Plan had authorized the grant of options to
management personnel for up to 6.0 million shares of NWCG's common stock. All
options granted have maximum 10 year terms and vested over a three year period,
becoming fully vested at the end of 3 years of continued employment. Options
granted expire within 90 days of an employee's termination.
As a result of the Fox Merger, all unvested stock options on the Fox Merger
Date became fully vested and exercisable and all outstanding options were
assumed by Fox and became exercisable to purchase ADSs in a ratio of 1.45 ADSs
for each share of NWCG common stock. In addition, if an option holder's
employment with
41
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
NWCG is terminated within six months of the Fox Merger Date, the option
expiration date will be extended from 90 days to one year after the employee's
termination date.
Pro forma information regarding net income and earnings per share is
required by Statement 123, which also requires that the information be
determined as if the Company has accounted for employee stock options granted
subsequent to December 31, 1994 under the fair value method of Statement 123.
The fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions for 1996 and 1995, respectively: risk-free interest rates of 6.1%
and 6.4%, a dividend yield of 0%; volatility factors of the expected market
price of NWCG's common stock of 51.6% and 53.1%; and a weighted average expected
life of the option of 5 years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because NWCG's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of NWCG's employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma net loss for the years ended December 31, 1996 and 1995, assuming
Statement 123 was adopted on January 1, 1995, was $(12.9) million and $(55.5)
million, respectively.
A summary of NWCG's stock option activity, and related information for the
years ended December 31 follows:
<TABLE>
<CAPTION>
1996 1995 1994
------------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Options Exercise Price Options Exercise Price Options Exercise Price
(000) (000) (000)
<S> <C> <C> <C> <C> <C> <C>
Outstanding - beginning of year 5,473 $12.50 4,235 $ 9.88 - $
Granted - Class A 163 $16.66 1,549 $19.11 4,418 $ 9.82
Exercised (880) $ 9.76 (231) $ 8.68 (6) $ 8.47
Forfeited (203) $15.04 (80) $12.28 (177) $ 8.54
----- ----- -----
Outstanding - end of year 4,553 $13.07 5,473 $12.50 4,235 $ 9.88
Exercisable at end of year 2,594 $11.73 1,811 $10.21 826 $10.34
Weighted average fair value of
options granted during the year $ 8.70 $10.16
</TABLE>
Exercise prices for options outstanding as of December 31, 1996 ranged from
$8.47 to $22.69. The weighted-average remaining contractual life of those
options is 7.7 years.
42
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
9. RELATED PARTY TRANSACTIONS
As of December 31, 1996, the Company was a wholly-owned subsidiary of
Parent, which is a wholly-owned subsidiary of Andrews. Andrews is a wholly-
owned subsidiary of Mafco. Mafco is wholly-owned by Ronald O. Perelman.
Certain of the executives of the Company at December 31, 1996 were officers
of Andrews and other affiliated companies. These executives were compensated
directly by Andrews. For the years ended December 31, 1996, 1995 and 1994, NWCG
expensed $5.5 million, $5.0 million and $4.0 million, respectively, representing
NWCG's portion of the salaries and certain benefits of these executives as well
as other costs.
Prior to the Fox Merger, the Company and certain affiliates of Mafco were
afforded coverage under selected common insurance policies obtained by a
subsidiary of Mafco. The Company paid Mafco its allocable portion of the cost
of this insurance coverage.
Until the Fox Merger Date, NW Entertainment leased its principal offices
(the "Real Property") from an affiliate of Mafco (the "1440 Sepulveda Limited
Partnership") under a lease agreement with annual lease payments of
approximately $3.0 million which expires in 2005 and had a five-year renewal
option. Immediately after the effective time of the Fox Merger, pursuant to a
Purchase and Sale Agreement, dated as of September 24, 1996, between 1440
Sepulveda Limited Partnership and Fox (the "Real Estate Agreement"), NWCG, as
the assignee of Fox, purchased the Real Property for $40.0 million in cash made
available to NWCG by Fox plus the assignment by NWCG of a $9.8 million
promissory note in favor of NWCG from a former executive officer of NWCG to the
1440 Sepulveda Limited Partnership.
Andrews leases certain office space in the Company's Atlanta, Georgia
office. Andrews pays NWCG its allocable portion of lease costs.
10. SEGMENT INFORMATION
The Company principally operates in two businesses, (1) broadcasting and
(2) production and distribution of filmed entertainment. The broadcasting
business operates ten broadcast television stations; the production and
distribution business involves the production and distribution of filmed
entertainment and includes the significant equity investments of the Company.
Intersegment activity represents primarily syndication of programming.
Substantially all of the net assets of NWCG are pledged as security under debt
agreements and are generally not available for distribution.
43
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Segment information for these businesses not disclosed elsewhere in the
consolidated financial statements follows (in thousands):
<TABLE>
<CAPTION>
PRODUCTION AND
YEAR ENDED DECEMBER 31, 1996 BROADCASTING DISTRIBUTION CORPORATE TOTAL
- ------------------------------------ -------------- ---------------- ----------- -----------
<S> <C> <C> <C> <C>
Total revenue $ 425,367 $ 248,123 $ - $ 673,490
Intersegment revenue - (2,005) - (2,005)
-------------- ---------------- ----------- -----------
Revenue from outside parties 425,367 246,118 - 671,485
Operating income (loss) 71,585 (9,183) 136 62,538
Intersegment (income) loss 776 (120) - 656
-------------- ---------------- ----------- -----------
Total operating income (loss) 72,361 (9,303) 136 63,194
============== ================ =========== ===========
Depreciation and amortization
of intangible assets 69,306 6,323 (260) 75,369
Capital expenditures 19,855 2,345 - 22,200
AS OF DECEMBER 31, 1996
Identifiable assets $ 1,718,713 $ 350,200 $ 79,993 $ 2,148,906
</TABLE>
<TABLE>
<CAPTION>
PRODUCTION AND
YEAR ENDED DECEMBER 31, 1995 BROADCASTING DISTRIBUTION CORPORATE TOTAL
- ------------------------------------ -------------- ---------------- ----------- -----------
<S> <C> <C> <C> <C>
Total revenue $ 376,766 $ 230,995 $ - $ 607,761
Intersegment revenue - (2,751) - (2,751)
-------------- ---------------- ----------- -----------
Revenue from outside parties 376,766 228,244 - 605,010
Operating income (loss) 51,729 (628) (7,941) 43,160
Intersegment (income) loss (896) 421 - (475)
-------------- ---------------- ----------- -----------
Total operating income (loss) 50,833 (207) (7,941) 42,685
============== ================ =========== ===========
Depreciation and amortization
of intangible assets 62,483 4,545 (420) 66,608
Capital expenditures 23,250 4,910 652 28,812
AS OF DECEMBER 31, 1995
Identifiable assets $ 1,843,310 $ 345,773 $ 50,182 $ 2,239,265
</TABLE>
44
<PAGE>
NWCG HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
PRODUCTION AND
YEAR ENDED DECEMBER 31, 1994 BROADCASTING DISTRIBUTION CORPORATE TOTAL
- ------------------------------------ -------------- ---------------- ----------- -----------
<S> <C> <C> <C> <C>
Total revenue $ 302,115 $ 96,403 $ - $ 398,518
Intersegment revenue - (1,620) - (1,620)
-------------- ---------------- ----------- -----------
Revenue from outside parties 302,115 94,783 - 396,898
Operating income (loss) 53,934 (30,980) (15,719) 7,235
Intersegment (income) loss 896 (1,127) - (231)
-------------- ---------------- ----------- -----------
Total operating income (loss) 54,830 (32,107) (15,719) 7,004
============== ================ =========== ===========
Depreciation and amortization
of intangible assets 40,505 2,870 (378) 42,997
Capital expenditures 18,199 5,005 - 23,204
AS OF DECEMBER 31, 1994
Identifiable assets $ 1,437,068 $ 251,574 $ 90,284 $ 1,778,926
</TABLE>
* * * * *
45
<PAGE>
NWCG HOLDINGS CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION
Summarized unaudited quarterly financial information for the years ended
December 31, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------
DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
1996 1996 1996 1996
-------------- --------------- ---------- -----------
<S> <C> <C> <C> <C>
Net revenue . . . . . . $ 193,080 $ 142,931 $ 173,605 $ 161,869
Income (loss) from operations . . 34,393 (1,113) 27,042 2,872
Net income (loss) . . . . . 10,571 2,832 (8,774) (15,521)
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------
DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
1995 1995 1995 1995
-------------- --------------- ---------- -----------
<S> <C> <C> <C> <C>
Net revenue . . . . . . . $ 184,104 $ 138,494 $ 167,548 $ 114,864
Income (loss) from operations . . 20,897 803 22,897 (1,912)
Net loss . . . . . . . . (17,199) (16,216) (9,747) (11,228)
</TABLE>
46
<PAGE>
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSUREITEM 9: CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE
The following table sets forth certain information with respect to the
directors and executive officers of the Company as of March 15, 1997.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
K. Rupert Murdoch.. 66 Director of the Company and NWCG
Chase Carey........ 43 Director and Chairman of the Company and NWCG
David F. DeVoe..... 50 Director of the Company and NWCG
Lawrence Jacobson.. 38 Executive Vice President and Assistant Treasurer
of the Company and NWCG
Mitchell Stern..... 42 President and Chief Operating Officer of the
Company and NWCG
</TABLE>
K. Rupert Murdoch, Director. Director of the Company and NWCG since January
22, 1997. Chairman of the Board of Directors of News Corp. since August 1991.
Executive Director and Chief Executive of News Corp. since 1979. Director of
News Limited, News Corp.'s principal subsidiary in Australia, since 1953.
Director of News International plc ("News International"), News Corp.'s
principal subsidiary in the United Kingdom, since 1969. Director of News
America Holdings Incorporated ("NAHI"), News Corp.'s principal subsidiary in the
United States, since January 1985. Chairman, Chief Executive Officer and
President of NAHI from January 1985 until October 1996. Chairman and a Director
of Satellite Television Asian Region Limited ("STAR TV") since July 1993.
Member of the Board of British Sky Broadcasting Group plc ("BSkyB") since
November 1990. Member of Share Option and Nominating Committees of News Corp.
Chase Carey, Director and Chairman. Director and Chairman of the Company and
NWCG since January 22, 1997. Executive Director and Co-Chief Operating Officer
of News Corp. since October 1996. Director and Executive Vice President of NAHI
since December 1996. Chairman and Chief Executive Officer of Fox Television
since July 1994. Chief Operating Officer of Fox, Inc. since May 1992 and
Executive Vice President since June 1988.
David F. DeVoe, Director. Director of the Company and NWCG since January 22,
1997. Executive Director of News Corp. since October 1990. Senior Executive
Vice President of News Corp. since January 1996 and Chief Financial Officer and
Finance Director since October 1990. Executive Vice President of News Corp.
from October 1990 until January 1996. Director and Executive Vice President of
NAHI since July 1991. Director of STAR TV since July 1993. Director of BSkyB
since December 1994.
Lawrence Jacobson, Executive Vice President and Assistant Treasurer.
Executive Vice President and Assistant Treasurer of the Company and NWCG since
January 22, 1997. Executive Vice President of Fox Television since May 1996.
Executive Vice President and Chief Financial Officer of Fox Broadcasting Company
since July 1994. Senior Vice President, Finance of Fox, Inc. since July 1992
and Vice President, Finance of Fox, Inc. from December 1990 to July 1992.
Mitchell Stern, President and Chief Operating Officer. President and Chief
Operating Officer of the Company and NWCG since January 22, 1997. President and
Chief Operating Officer of Fox since January 1993. Executive Vice President and
Chief Operating Officer of Fox from May 1992 to January 1993. Senior Vice
47
<PAGE>
President, Fox and Station Manager of KTTV/Fox 11 from May 1990 to May 1992.
Vice President and Chief Financial Officer of Fox from July 1986 to May 1990.
ITEM 11: EXECUTIVE COMPENSATION
The executive officers of the Company do not receive any compensation from the
Company for serving in such capacities. Information required by this Item 11,
as it relates to the Company's principal operating subsidiary, NWCG, is
discussed below.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The current executive officers of the Company were appointed as of the date of
the Fox Merger. The following table sets forth certain information concerning
the compensation of NWCG's Chief Executive Officer and each of the other four
most highly compensated executive officers of the Company serving as of December
31, 1996 and one former executive who resigned during 1996 (these six
individuals, collectively, the "named executive officers") for services rendered
in all capacities to the Company and its subsidiaries during the fiscal years
ended December 31, 1996, 1995 and 1994. The employment of the named executive
officers was either terminated or they have been removed as officers of NWCG in
January 1997 as a result of the Fox Merger. Any payments which were required to
be made to such executives as a result of their termination are not reflected in
the 1996 financial results of the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- AWARDS
OTHER ------------------------
ANNUAL SECURITIES ALL OTHER
NAME AND SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) OPTIONS AND WARRANTS(#) ($)
- -------------------------------------- ---- --------- ------- ------------ ------------------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
William C. Bevins 1996 1,000,000 -
Chief Executive Officer (1) 1995 1,000,000 - 0
1994 1,000,000 - 520,500 250,000 0
Arthur H. Bilger 1996 1,000,000 750,000 228,330 - 3,000
President and Chief Operating 1995 1,000,000 500,000 - 1,225,000 0
Officer (2) 1994 45,513 - - - 0
Terry C. Bridges 1996 572,000 400,000 - - -
Executive Vice President and 1995 541,600 160,000 - - -
Chief Administrative Officer (3) 1994 496,666 200,000 - 200,000 -
David A. Ramon 1996 551,123 500,000 - - -
President and Chief Operating 1995 536,293 200,000 - - -
Officer of the Broadcast Group (4) 1994 202,567 200,000 - 200,000 -
Farrell E. Reynolds 1996 900,000 312,500 - - 3,000
Chairman and Chief Executive 1995 784,615 500,000 - - 3,000
Officer of the Broadcast Group (5) 1994 375,000 500,000 - 200,000 3,000
Brandon R. Tartikoff 1996 583,333 - - - 430,307
Chairman of New World 1995 1,000,000 - - - 13,640
Entertainment, Ltd. (7) 1994 572,435 - - - 0
</TABLE>
(1) Mr. Bevins provided services to NWCG pursuant to an employment agreement
entered into with Andrews and is compensated directly by Andrews. Amounts
reflected as Salary and Bonus in the above table for Mr. Bevins are the
amounts NWCG reimbursed Andrews for the services provided by Mr. Bevins to
NWCG and it subsidiaries during 1994, 1995 and 1996. See "Employment
Agreements." Other Annual Compensation for Mr. Bevins in 1994 includes
$467,500 of non-cash compensation associated with NWCG's sale of 1,000,000
shares of NWCG Class A Common
48
<PAGE>
Stock to Mr. Bevins (see "Certain Relationships and Related Transactions -
Certain Other Relationships"), and $39,000 of automobile allowances, with
the remainder representing insurance premiums paid on behalf of Mr. Bevins.
(2) Salary reflects compensation from December 15, 1994, the date on which Mr.
Bilger commenced employment (see "Employment Agreements"). Other Annual
Compensation in 1996 includes $28,800 for a leased automobile, $95,450 for
estate planning services, $70,130 for tax planning services, and $33,950
for country club fees and dues.
(3) Mr. Bridges provided services to NWCG pursuant to an employment agreement
entered into with Andrews and is compensated directly by Andrews. Amounts
reflected as Salary and Bonus in the above table for Mr. Bridges are the
amounts NWCG reimbursed Andrews for the services provided by Mr. Bridges to
NWCG and it subsidiaries during 1994, 1995 and 1996. See "Employment
Agreements."
(4) Pursuant to employment agreements between Gillett Holdings, Inc., a former
affiliate, ("GHI") and certain of its affiliates and Mr. Ramon, GHI paid Mr.
Ramon an annual salary of $300,000 through December 31, 1994.
(5) Salary reflects compensation from July 1, 1994, the date on which Mr.
Reynolds commenced employment. During the period from July 1, 1994 to
January 1996, Mr. Reynolds served as President of NW Sales and Marketing,
Inc. He became Chairman and Chief Executive Officer of the Broadcast Group
in January 1996. Amounts reflected as All Other Compensation for 1994, 1995
and 1996 represents the employer matching contributions under the NW Sales &
Marketing 401(k) Plan.
(6) Salary reflects compensation from June 6, 1994, the date on which Mr.
Tartikoff commenced employment until his resignation from NWCG on July 16,
1996. All Other Compensation in 1996 includes $416,667 paid to Mr.
Tartikoff in connection with his resignation from NWCG. Other amounts
reflected as All Other Compensation for 1996 and 1995 represents life
insurance premiums of $11,790 and $10,640, respectively, paid on his behalf
and the balance represents the employer matching contribution under the NWCG
401(k) Plan. Mr. Tartikoff was also granted a warrant to purchase
1,000,000 shares of NWCG Class A Common Stock in connection with NWCG's
purchase of Moving Target Productions, Inc.
STOCK OPTION GRANTS
There were no stock option grants of NWCG Class A Common Stock to the named
executive officers during the year ending December 31, 1996.
AGGREGATED STOCK OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES
The following table sets forth information concerning the value of unexercised
options and warrants to purchase NWCG Class A Common Stock held by the named
executive officers as of December 31, 1996. No options or warrants were
exercised during the year ended December 31, 1996.
<TABLE>
<CAPTION>
TOTAL NUMBER OF UNEXERCISED OPTIONS AND VALUE OF UNEXERCISED IN-THE-MONEY OPTIONS AND
WARRANTS AT YEAR-END (#) WARRANTS AT YEAR-END ($) (1)
--------------------------------------- ---------------------------------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ------------------------ -------------------------------------- --------------------------------------------
<S> <C> C>
William C. Bevins....... 166,667/83,333 2,796,672/1,398,328
Arthur H. Bilger(2)..... 150,000/75,000 2,006,250/1,003,125
Terry C. Bridges........ 133,334/66,666 2,002,010/1,000,990
David A. Ramon.......... 166,667/33,333 2,561,338/441,662
Farrell E. Reynolds..... 133,334/66,666 1,977,010/988,490
Brandon R. Tartikoff (3) 0/0 0/0
</TABLE>
49
<PAGE>
(1) This column represents the excess of the fair market value of NWCG Class A
Common Stock of $25.25 per share as of December 31, 1996 above the exercise
price of the options. One column reports the "value" of the options that
are vested and therefore could be exercised; the other the "value" of
options that are not vested and therefore could not be exercised as of
December 31, 1996.
(2) This tables does not reflect warrants issued to Mr. Bilger in December 1994
for the purchase of 1,000,000 shares of NWCG Class A Common Stock (see
"Employment Agreements").
(3) This table does not reflect warrants with respect to 1,000,000 shares of
NWCG Class A Common Stock issued to an affiliate of Mr. Tartikoff in
connection with NWCG's acquisition of Moving Target Productions, Inc.
DEFINED BENEFIT RETIREMENT PLAN
Mr. Ramon is the only named executive officer who participated in a Company
sponsored defined benefit retirement plan (the "NW Television Pension Plan").
The table below illustrates the estimated annual standard pension benefit
payable upon retirement in 1996 at specified compensation levels and years of
service classifications.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
- ------------------------------------------------------------------------------------
YEARS OF BENEFIT SERVICE
------------------------------------------------------------
REMUNERATION 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
- ---------------------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 125,000 $11,528 $23,056 $34,584 $46,113 $57,641 $57,641
150,000 13,966 27,931 41,897 55,863 69,828 69,828
175,000 and over 14,291 28,581 42,872 57,163 71,453 71,453
</TABLE>
Mr. Ramon's compensation covered by the defined benefit plan for which the
above table is provided includes the salary and bonus information set forth in
the Summary Compensation Table. However, in 1996, covered compensation was
limited by the Tax Reform Act of 1986 to $150,000. As of January 1, 1997, Mr.
Ramon had nine credited years of service. Benefits set forth in the table are
straight life annuity amounts and are subject to deductions for the satisfaction
of Social Security obligations.
COMPENSATION OF DIRECTORS
As of December 31, 1996, all of the directors of Holdings were officers of
Mafco and did not receive incremental compensation in their capacity as
directors.
EMPLOYMENT AGREEMENTS
Mr. Bevins, Mr. Bridges and certain other executives of NWCG are employed as
executive officers of Andrews and, until the Fox Merger Date, each served as an
executive officer of NWCG pursuant to employment agreements with Andrews. NWCG
reimbursed Andrews for a portion of the base salary and bonus paid to such
individuals by Andrews. In determining the amount of the allocation, a number
of factors were taken into account, including the services performed by these
executives for NWCG and the relative time spent by these individuals on NWCG's
business and the business of Andrews and other of its affiliates.
NWCG had entered into an employment agreement with Arthur H. Bilger as of
December 15, 1994, providing for Mr. Bilger's employment as NWCG's President and
Chief Operating Officer through December 14, 1997, with provisions for automatic
extensions of the term absent notice of termination from either party. The
employment
50
<PAGE>
agreement provided for an annual base salary of $1,000,000 (subject to upward
adjustment at the discretion of the Board of Directors); discretionary bonuses
which might be granted, and, if granted, the amount and terms of which were
determined, by the Board of Directors; options for 225,000 shares of NWCG Class
A Common Stock; and warrants to purchase 1,000,000 shares of NWCG Class A Common
Stock. The employment agreement also provided certain retirement, business
expense, insurance and other benefits, including a $10,000,000 split-dollar life
insurance policy for Mr. Bilger. In the event Mr. Bilger terminated his
employment upon the occurrence of a Change in Control of NWCG or if his
employment was terminated without Cause (as those terms are defined in the
employment agreement), his options immediately vested and became exercisable. In
the event that NWCG breached any material provision of the agreement or
terminated the agreement without Cause (as defined), Mr. Bilger was entitled to
receive at the end of a 45 day notice period, at Mr. Bilger's option, either an
amount equal to the sum of base salary payable to the date of termination and an
additional year's base salary or payment of the base salary over the remaining
term of the employment agreement, plus benefits, all subject to mitigation.
Under the employment agreement, Mr. Bilger was prohibited from competing with
NWCG during the term of the employment agreement and for a period of one year
after termination thereof for Cause (as defined therein). On January 27, 1997,
Mr. Bilger notified NWCG of certain material breaches of his employment
agreement. Pursuant to a severance agreement dated March 14, 1997, NWCG paid Mr.
Bilger $1,000,000 in full settlement of all claims under his employment
agreement. Mr. Bilger also served as Executive Vice President and Chief
Operating Officer of Andrews pursuant to a separate employment agreement.
Certain business travel expenses and medical benefits provided to Mr. Bilger
under the terms of his employment agreement with Andrews were chargeable to
NWCG.
From June 6, 1994 until July 16, 1996, Brandon Tartikoff was employed by NWCG
as Chairman of NW Entertainment. Mr. Tartikoff or his beneficiaries will
continue to be paid the base salary and certain other benefits under the terms
of his employment agreement, which provided for an annual base salary of
$1,000,000 through June 30, 1999.
NW Television had an agreement with Farrell Reynolds providing for his
employment as Chairman and Chief Executive Officer for the period January 1,
1996 through December 31, 1998. The employment agreement provided for an
initial annual base salary of $900,000, increased to $975,000 in 1997 and to
$1,050,000 in 1998, with potential annual bonus amounts of up to $750,000 per
year based on the achievement of certain financial goals. The employment
agreement also provided for the grant of options for 100,000 shares of NWCG
Class A Common Stock under NWCG's 1994 Stock Option Plan, as well as for certain
retirement, insurance and other benefits. Further, his employment agreement
provided that in the event Mr. Reynolds was terminated without Cause (as defined
in his employment agreement) or if the Company breaches his contract, the
Company shall (i) retain Mr. Reynolds' services as an independent consultant
through March 1, 1997 for a monthly retainer plus reasonable out-of-pocket
expenses and (ii) pay Mr. Reynolds an amount equal to (a) all unearned and
unpaid amounts of base salary and bonus to the date of termination, (b) a
portion of his then current year bonus (as defined in Mr. Reynolds' employment
agreement), and (c) the difference between (x) the lesser of one year's base
salary or the remaining base salary to be paid for the balance of the term of
the employment agreement and (y) the present value of the aggregate consulting
fees payable to Mr. Reynolds under (i) above. Under the agreement, Mr. Reynolds
is prohibited from competing with NWCG during the term of such agreement and for
a period of one year after termination thereof. Mr. Reynolds employment was
terminated on January 31, 1997, and he was paid $975,000 pursuant to the terms
of his employment agreement.
NW Television had an employment agreement with David Ramon, with the initial
three-year term of employment beginning May 25, 1993 (the "Effective Date"), and
with such term automatically extending in successive one-month increments each
month after the second anniversary of the Effective Date, unless either NW
Television or Mr. Ramon gave notice to the other of its intention not to renew
the employment term. The employment agreement provided for, among other things,
a signing bonus, a base salary (adjusted on the basis of the consumer price
index, with such adjustment capped at 5% per year), annual performance-based
bonuses, certain perquisites, life insurance during the term of employment in
specified amounts and a grant of options to purchase shares of NWCG Class A
Common Stock in an amount to be specified (such options vesting over three
years). In the event that Mr. Ramon was terminated without Cause (as defined in
the Employment Agreements) or resigned with
51
<PAGE>
Good Reason (as defined in the employment agreement) (i) he would be paid his
bonus for the year of termination, (ii) his base salary and benefits would
continue for the lesser of two years or the remaining term of the employment
agreement and (iii) he would have the right to put his options to NWCG. Mr.
Ramon's employment was terminated on January 23, 1997. Under the terms of his
employment agreement, Mr. Ramon will be paid his base salary plus certain
benefits through January 22, 1998, all subject to mitigation.
COMPENSATION COMMITTEE
Since the Company did not compensate its executive officers for serving in
such capacities, the Company did not have a compensation committee. Information
with respect to NWCG's compensation committee prior to the Fox Merger is
discussed below.
Prior to the Fox Merger, the members of the compensation committee of NWCG
(the "Compensation Committee") were David N. Dinkins, James D. Robinson III and
Howard Gittis, all of whom were non-employee directors of NWCG. During 1996,
Mr. Dinkins provided certain consulting services to Mafco and various of its
affiliates. Mr. Gittis, a director of the Company, NWCG and NW Television prior
to the Fox Merger, serves as a director of Mafco and various of its affiliates.
EXECUTIVE COMPENSATION POLICIES
Prior to the Fox Merger, the basic elements of NWCG's executive compensation
package, which were reflected in the various employment agreements among NWCG or
its affiliates and the executive officers, were annual base salary, annual
incentive bonuses and long-term incentive bonuses.
Annual Salary and Incentive Bonuses. The base salary levels of NWCG's
executive officers, other than the Andrews officers, were negotiated
individually with each executive officer and were fixed by contract. Base salary
of an executive officer was determined subjectively and was not subject to
specific measurable criteria or performance goals. The emphasis was placed upon
fixing salary at the level necessary to attract the particular executive sought
and retain his services for a certain term. In that regard, consideration was
given to the individual's then existing compensation arrangements as well as
other alternative employment opportunities which were then reasonably available
to that person.
With certain exceptions, bonuses for NWCG's executive management was within
the discretion of the Compensation Committee, based on the recommendations of
management. Discretionary bonuses were available based on criteria tailored in
each case to reward and motivate the individual executives. For example, the
broadcast television operating executives participated along with other
broadcast operating personnel in a bonus pool which approximated a percentage of
operating cash flow of the station group for a given year. Other executives,
including those employed by Andrews, had bonus criteria which were specifically
tailored to levels of achievement of their job tasks or to levels of achievement
of overall tasks by employee groups which they managed. Where bonuses were
contractually set, the criteria used to determine variable bonus amounts related
to financial performance levels of projects or business units which the
executives managed.
Long-Term Incentive Compensation. The Compensation Committee believed that
executive management played a decisive role in NWCG's long-term business success
and the creation of stockholder value. Because the value of a stock option had
a direct relationship to the price of shares of NWCG Class A Common Stock, stock
options encouraged executives and other key management employees to increase
long-term stockholder value. NWCG emphasized this link with stockholder
interests by encouraging the personal accumulation of an equity interest by NWCG
executives. The Compensation Committee had, therefore, employed stock options
granted pursuant to the NWCG 1994 Stock Option Plan as the predominant form of
long-term incentive compensation and as a major portion of the executive
compensation package. No stock options to purchase NWCG Class A Common Stock
were granted during 1996.
52
<PAGE>
Other Compensation. NWCG's executive compensation program included a benefits
component, in addition to base salary, bonuses and long-term incentives. This
component included, among other things, automobile allowances, enhanced
insurance and medical benefits. These benefits were viewed as less important
than the salary, bonus and stock-based elements of compensation and, therefore,
received far less emphasis.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
NWCG's Chief Executive Officer until the Fox Merger Date, William C. Bevins,
is also President, Chief Executive Officer and a director of Andrews. Mr.
Bevins performed his services for Andrews and other affiliated companies,
including NWCG, pursuant to an employment agreement with Andrews. Accordingly,
Mr. Bevins' compensation was based on an apportionment arrangement with Andrews,
which served as the common source of payment for all of the services rendered by
Mr. Bevins to NWCG and to other affiliates of Mafco. While his entire salary
was paid by Andrews, a portion of Mr. Bevins' compensation was allocated to NWCG
by Andrews. In determining the amount of the allocation, a number of factors
were taken into account, including the services performed by Mr. Bevins for
NWCG, NWCG's financial performance and achievement of strategic objectives
during the relevant time period, the relative time spent by Mr. Bevins on NWCG's
business and the business of Andrews and its other affiliates, and the concern
that the allocation be established at a level which reflected due concern for
the interests of the public minority stockholders of NWCG prior to the Fox
Merger.
COMPENSATION OF OTHER ANDREWS GROUP OFFICERS
Until the Fox Merger Date, three other executive officers of NWCG were
compensated for their services to NWCG by Andrews pursuant to Andrews employment
agreements, which payments were reimbursed by NWCG. The amounts paid to these
other executive officers relating to their services to NWCG were determined in
the same general manner as Mr. Bevins' allocable compensation.
LIMIT ON DEDUCTIBILITY OF COMPENSATION
Pursuant to the Omnibus Budget Reconciliation Act of 1993 ("OBRA"), annual
compensation payable after January 1, 1994 to the Chief Executive Officer and
each of the four highest paid executive officers is not deductible by NWCG for
federal income tax purposes to the extent any such officer's overall
compensation exceeds $1,000,000. Certain types of compensation, however,
including qualifying performance-based incentive compensation, are both
deductible and excluded for purposes of calculating the $1,000,000 base. OBRA
recognizes stock option plans as performance-based if such plans meet certain
requirements.
It has been the general policy of NWCG to preserve the tax deductibility of
compensation paid to its executive officers. NWCG believes that compensation
that may be realized from stock options granted pursuant to the NWCG 1994 Stock
Option Plan is tax deductible under the provisions of OBRA.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As a result of the Fox Merger on the Fox Merger Date, the Company became a
wholly owned subsidiary of Fox, which is a wholly owned subsidiary of Twentieth
Holdings Corporation ("THC"). K. Rupert Murdoch holds voting preferred shares
of THC representing 76% of the voting power thereof. Such preferred stock is
redeemable at the option of Fox, Inc. News Corp., through Fox, Inc., holds all
of the common stock of THC (representing substantially all of the equity thereof
and 24% of the voting power thereof).
As of March 20, 1997, Cruden Investments Pty. Limited ("Cruden") (a
corporation organized under the laws of the State of Victoria, Australia), a
subsidiary thereof, Mr. Murdoch, members of his family and a corporation which
is controlled by the trustees of settlements and trusts set up for the benefit
of the Murdoch family, certain charities and other persons owned 599,988,254
Ordinary Shares, A$.50 each, of News Corp. (approximately
53
<PAGE>
30.85% of the total thereof outstanding). Cruden is a private Australian
incorporated investment company owned by Mr. Murdoch, members of his family and
various corporations and trusts, the beneficiaries of which include Mr. Murdoch,
members of his family and charities. By virtue of shares of News Corp. owned by
corporations which are controlled by the trustees of settlements and trusts set
up for the benefit of the Murdoch family, certain charities and other persons,
and Mr. Murdoch's positions as Chairman and Chief Executive of News Corp., Mr.
Murdoch may be deemed to control the operations of News Corp. The business
address of THC and Mr. Murdoch is 10201 West Pico Boulevard, Los Angeles,
California 90035, and the business address of News Corp. is 2 Holt Street,
Sydney, New South Wales, Australia.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP OF THE COMPANY WITH MAFCO
Mafco is wholly-owned by Ronald O. Perelman. Andrews, an affiliate of Mafco,
is subject to the reporting requirements of the Exchange Act and in accordance
therewith, files periodic reports and other information with the Commission.
These reports can be inspected and copied at certain Commission facilities.
Mr. Bevins, Mr. Bridges and two other executives of NWCG are employed as
executive officers of Andrews and, until the Fox Merger Date, served as
executive officers of NWCG pursuant to employment agreements with Andrews. NWCG
reimbursed Andrews for a portion of the salary and bonus paid to such
individuals by Andrews (see "Summary Compensation Table" for the amounts of such
reimbursement with respect to Mr. Bevins and Mr. Bridges). In addition, Mr.
Bilger has a separate agreement with Andrews pursuant to which he is employed as
an Executive Vice President and Chief Operating Officer of Andrews.
Until the Fox Merger Date, NW Entertainment leased its principal offices (the
"Real Property") from an affiliate of Mafco (the "1440 Sepulveda Limited
Partnership") under a lease agreement which provided for annual lease payments
of approximately $3.0 million. Immediately after the effective time of the Fox
Merger, pursuant to a Purchase and Sale Agreement, dated as of September 24,
1996, between 1440 Sepulveda Limited Partnership and Fox (the "Real Estate
Agreement"), NWCG, as the assignee of Fox, purchased the Real Property for $40.0
million in cash made available to NWCG by Fox plus the assignment by NWCG of a
$9.8 million promissory note in favor of NWCG from a former executive officer of
NWCG to the 1440 Sepulveda Limited Partnership.
NW Entertainment and certain of its subsidiaries occupy office space leased by
an affiliate of Andrews in New York, New York with an annual lease payment of
approximately $1.5 million, for the year ended December 31, 1996. Certain
office space in NWCG's Atlanta, Georgia offices is made available to Andrews.
Andrews reimburses NWCG for its allocable share of rent for such space.
NW Entertainment has entered into certain agreements for the production and
distribution of animated programs based upon certain Marvel Entertainment
characters. Management believes that the terms of these agreements are no more
or less favorable to NWCG than could have been obtained through arm's-length
negotiations with an unaffiliated third party. NWCG made no payments pursuant
to these arrangements in 1996.
INDEMNIFICATION AGREEMENT; NON-COMPETITION AGREEMENT
Pursuant to and as part of the consideration under the NWCG Merger, Andrews
entered into an Indemnification Agreement and a Non-Competition Agreement with
NWCG. Pursuant to the Indemnification Agreement, Andrews was obligated to
indemnify NWCG on a net basis generally against (i) certain liabilities of the
Acquired Entities, as defined in the Indemnification Agreement and generally
including New World Entertainment and its then subsidiaries (other than NW
Genesis), which existed as of September 30, 1993 or arose from facts existing on
that date but were not reflected on or reserved against in the relevant balance
sheets for such entities provided as of that date and (ii) liabilities of
certain discontinued operations. The Indemnification
54
<PAGE>
Agreement also required Andrews to indemnify NWCG with respect to certain notes
issued in connection with the purchase of stock of Genesis Entertainment (now NW
Genesis). During 1996, no payments were made to NWCG with respect to liabilities
covered by the Indemnification Agreement. These agreements were terminated on
the Fox Merger Date.
Prior to the Fox Merger, the Company and certain affiliates of Mafco were
afforded coverage under selected common insurance policies obtained by a
subsidiary of Mafco. The Company paid Mafco its allocable portion of the cost
of this insurance coverage.
CERTAIN RELATIONSHIPS WITH FOX
On the Fox Merger Date, Fox, an entity in which News Corp. has an indirect
interest, acquired all of the shares of common stock of the Company and NWCG
(other than shares previously owned, directly or indirectly by News Corp. or any
News Corp. subsidiary), in a transaction referred to as the Fox Merger (see
"Business - Recent Developments").
Pursuant to an agreement dated as of May 21, 1994 (as amended, the "Fox
Agreement" and the transactions contemplated thereby, the "Fox Transaction"),
which agreement was effectively terminated on the Fox Merger Date, Fox agreed to
invest $500 million (the "Fox Investment") in NWCG. Of the Fox Investment, $250
million was made on May 27, 1994 in exchange for 250,000 shares of Series B
Preferred Stock. The remaining half of the Fox Investment was made through the
purchase by Fox of up to 25,000 units (the "Units"), each consisting of one
share of NWCG's Series C Senior Preferred Stock, par value $.01 per share (the
"Series C Preferred Stock"), 50 of NWCG's Series E Warrants, and 185 of NWCG's
Series F Warrants, at a price of $10,000 per Unit.
Fox sold its television stations in Dallas, Texas and Atlanta, Georgia. With
respect to the Fox television stations in Dallas, Texas and Atlanta, Georgia,
the Fox Agreement provided that if the Net Proceeds (as defined in the Fox
Agreement) from Fox's sale of such television stations exceeded a Target Amount
(as defined in the Fox Agreement), Fox was to pay NWCG 50% of such excess. If
the Net Proceeds from such sale were less than the Target Amount, NWCG was to
pay Fox 50% of such deficiency (the "Deficit Payment"). The Target Amount was to
be ten times the Operating Cash Flow (as defined in the Fox Agreement) of the
applicable station for the fiscal year ended June 30, 1994. NWCG paid Fox
approximately $19.8 million as the Deficit Payment in December 1995.
The Fox Agreement afforded Fox certain rights of first negotiation with
respect to any disposition of a television station by NWCG and limited NWCG's
right to dispose of certain television stations without the prior written
consent of Fox. Fox did not exercise its right of first negotiation with
respect to the San Diego Station and the Birmingham Station sales.
Pursuant to the Fox Agreement, in March 1995 NWCG entered into a purchase
agreement with Fox with respect to WBRC-TV (Birmingham) and WGHP-TV (Greensboro-
Highpoint), two stations originally purchased from CitiCasters Inc. (the
"CitiCasters Stations"), providing for the acquisition of the CitiCasters
Stations from NWCG at a price equal to the price paid by NWCG therefor, together
with the excess, if any, of the aggregate marginal financing costs incurred by
NWCG with respect to its acquisition of the CitiCasters Stations over the net
cash generated (other than through financing activities) by the CitiCasters
Stations, in each case for the period through the date the CitiCasters Stations
were purchased by Fox. NWCG borrowed $40.4 million from Fox, non-recourse to
NWCG, secured by an interest in a trust which held the stock of the entities
which owned the CitiCasters Stations. As of January 1996, Fox completed the
purchase of the CitiCasters for approximately $140 million including the
extinguishment of such debt, subject to certain adjustments.
The Stations are affiliated with the FOX network pursuant to affiliation
agreements which provide for an initial term of ten years, which term may be
extended for additional successive periods of five years each by agreement of
the Fox Broadcasting Company, which operates the FOX network and NWCG. The
affiliation agreements provide
55
<PAGE>
for the carriage by NWCG stations of FOX network programming during certain
specified time periods and otherwise contain terms customary for such
agreements.
The distribution and syndication of programs in NW Entertainment's library is
primarily accomplished through a reliance upon the distribution capabilities of
units of the Fox Television and Fox Filmed Entertainment divisions of News Corp.
In addition, the Stations license certain programming from a unit of the Fox
Television division of News Corp., and certain other stations owned and operated
by Fox license programming from NW Entertainment. Such licensing agreements are
currently in effect and were established prior to the Fox Merger.
The Company and its subsidiaries are insured under policies maintained by News
Corp. and Fox, Inc., an indirect wholly owned subsidiary of News Corp. During
1997, Fox will begin to provide health and retirement benefits to the employees
of the Company and its subsidiary under plans administered by Fox, Inc. The
Company and its subsidiaries will reimburse Fox, Inc. for the portion of such
costs attributable to the Company and its subsidiaries.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
(a)(1) Financial Statements commence on p. 21
(2) Supplemental Financial Statement Schedules
Report of Independent Auditors..................................... S-1
Schedule I ---Condensed Financial Information of Registrant........ S-2
Schedule II--Valuation and Qualifying Accounts..................... S-5
(3) Exhibits
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<S> <C>
2.1 -- Debtors' Joint Plan of Reorganization, dated March 4, 1993 as filed by
New World Television Incorporated ("NW Television"). GCI Partners, SCI-
GP Corp. and GCI-GP, Inc. (collectively, the "Debtors") (incorporated
by reference to Exhibit 2.1 of the NW Television Registration Statement
on Form S-1 (No. 33-64546) relating to NW Television's 11% Notes (the
"NW Television Registration Statement")).
2.2 -- Debtors' Modification to the Debtors' Joint Plan of Reorganization,
dated April 29, 1993 (incorporated by reference to Exhibit 2.2 of the
NW Television Registration Statement).
2.3 -- Debtors' Further Modifications to the Debtors' Joint Plan of
Reorganization, dated May 3, 1993 (incorporated by reference to Exhibit
2.3 of the NW Television Registration Statement).
2.4 -- Debtors' Additional Modifications to the Debtors' Joint Plan of
Reorganization, dated May 6, 1993 (incorporated by reference to Exhibit
2.4 of the NW Television Registration Statement).
2.5 -- Settlement Agreement, dated May 5, 1993 (incorporated by reference to
Exhibit 2.5 of the NW Television Registration Statement).
2.6 -- Stipulation Regarding Implementation of Settlement Agreement and
Resolution of Investment Advisor's Claim, dated May 25, 1993
(incorporated by reference to Exhibit 2.6 of the NW Television
Registration Statement).
2.7 -- Disclosure Statement, dated January 19, 1993 (incorporated by
reference to Exhibit 2.7 of the NW Television Registration Statement).
2.8 -- Disclosure Statement Supplement, dated February 12, 1993 (incorporated
by reference to Exhibit 2.8 of the NW Television Registration
Statement).
2.9 -- Disclosure Statement Second Supplement, dated February 19, 1993
(incorporated by reference to Exhibit 2.9 of the NW Television
Registration Statement).
2.10 -- Agreement and Plan of Reorganization and Merger, dated as of November
23, 1993, by and among NW Television, Andrews, the Registrant and
Merger Sub (the "Agreement and Plan of Reorganization
</TABLE>
56
<PAGE>
<TABLE>
<S> <C>
and Merger") (incorporated by reference to Exhibit 2.11 of the NWCG
Registration Statement on Form S-1 (No. 33-72738) relating to certain
Securities (the "NWCG Registration Statement")).
2.11 -- Amendment to Agreement and Plan of Reorganization and Merger, dated as
of December 30, 1993 (incorporated by reference to Exhibit 2.11 of the
NW Television Registration Statement).
2.12 -- Memorandum of Understanding among New World Communications Group,
Incorporated ("NWCG"), NWCG (Parent) Holdings Corporation ("NWCGP"),
NWCG Holdings Corporation (the "Company") and The News Corporation
Limited. ("News Corp."), dated as of July 17, 1996 (incorporated by
reference to Exhibit 2.1 of the NWCG Form 8-K, dated July 17, 1996).
2.13 -- Agreement and Plan of Merger, dated as of September 24, 1996, by and
among NWCG, News Corp., Fox Television Stations, Inc. ("Fox") and Fox
Acquisition Co., Inc. ("Merger Sub") (incorporated by reference to
Exhibit 2.2 of the NWCG Form 8-K, dated September 24, 1996).
2.14 -- Stock Purchase Agreement, dated as of September 24, 1996, by and among
NWCGP, News Corp. and Fox (incorporated by reference to Exhibit 2.3 of
the NWCG Form 8-K, dated September 24, 1996).
3.1 -- Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 of NWCG Holdings Corporation Registration
Statement on Form S-1 (No.33- 82274) relating to NWCG Holdings
Corporation Senior Discount Notes (the "Holdings Registration
Statement")).
3.2 -- Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 of
the Holdings Registration Statement).
4.1 -- Indenture, dated as of May 25, 1993, by and between NW Television, as
Issuer, and Continental Bank, National Association, as Trustee
(incorporated by reference to Exhibit 4.1 of the NW Television
Registration Statement).
4.2 -- Indenture, dated as of May 25, 1993, by and between NW Television, as
Issuer, and NationsBank of Georgia, National Association, as Trustee
(incorporated by reference to Exhibit 4.2 of the NW Television
Registration Statement).
4.3 -- Collateral Trust and Intercreditor Agreement, dated as of May 25, 1993,
among NW Television, the Secured Party Representatives named therein,
and Chemical Bank, as Collateral Trustee (incorporated by reference to
Exhibit 4.3 of the NW Television Registration Statement).
4.4 -- SCI Pledge and Security Agreement, dated as of May 25, 1993, by and
between NW Television, as Pledgor, and Chemical Bank, as Collateral
Trustee (incorporated by reference to Exhibit 4.4 of the NW Television
Registration Statement).
4.5 -- Subsidiary Pledge and Security Agreement by New World Communications of
Atlanta, Inc. in favor of and for the benefit of NW Television, dated
May 25, 1993 (incorporated by reference to Exhibit 4.5A of the NW
Television Registration Statement).
4.7 -- Subsidiary Pledge and Security Agreement by New World Communications of
Milwaukee, Inc. in favor of and for the benefit of NW Television, dated
as of May 24, 1993 (incorporated by reference to Exhibit 4.5C of the NW
Television Registration Statement).
4.8 -- Subsidiary Pledge and Security Agreement by New World Communications of
Detroit, Inc. in favor of and for the benefit of NW Television, dated
May 25, 1993 (incorporated by reference to Exhibit 4.5D of the NW
Television Registration Statement).
4.9 -- Subsidiary Pledge and Security Agreement by New World Communications of
Ohio, Inc. in favor of and for the benefit of NW Television, dated May
24, 1993 (incorporated by reference to Exhibit 4.5E of the NW
Television Registration Statement).
4.10 -- Subsidiary Pledge and Security Agreement by NW Communications of San
Diego, Inc. in favor of and for the benefit of NW Television, dated as
of May 25, 1993 (incorporated by reference to Exhibit 4.5F of the NW
Television Registration Statement).
4.11 -- Subsidiary Pledge and Security Agreement by New World Communications of
Tampa, Inc. in favor of and for the benefit of NW Television, dated as
of May 25, 1993 (incorporated by reference to Exhibit 4.5G of the NW
Television Registration Statement).
4.12 -- Deed to Secure Debt, Security Agreement, Financing Statement and
Assignment of Rents made May 25, 1993 by New World Communications of
Atlanta, Inc. in favor of NW Television (incorporated by reference to
Exhibit 4.5H of the NW Television Registration Statement).
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4.14 -- Mortgage, Security Agreement, Financing Statement and Assignment of
Rents made May 25, 1993 by New World Communications of Milwaukee, Inc.
in favor of NW Television (incorporated by reference to Exhibit 4.5J of
the NW Television Registration Statement).
4.15 -- Mortgage, Security Agreement, Financing Statement and Assignment of
Rents made May 25, 1993 by New World Communications of Detroit, Inc. in
favor of NW Television (incorporated by reference to Exhibit 4.5K of
the NW Television Registration Statement).
4.16 -- Mortgage, Security Agreement, Financing Statement and Assignment of
Rents made May 25, 1993 by New World Communications of Ohio, Inc. in
favor of NW Television (incorporated by reference to Exhibit 4.5L of
the NW Television Registration Statement).
4.17 -- Deed of Trust, Security Agreement, Financing Statement and Assignment
of Rents made May 25, 1993 by NW Communications of San Diego, Inc. in
favor of NW Television (incorporated by reference to Exhibit 4.5M of
the NW Television Registration Statement).
4.18 -- Mortgage, Security Agreement, Financing Statement and Assignment of
Rents made May 25, 1993 by New World Communications of Tampa, Inc. in
favor of NW Television (incorporated by reference to Exhibit 4.5N of
the NW Television Registration Statement).
4.19 -- New Intercompany Note made by New World Communications of Atlanta, Inc.
in favor of NW Television in the principal amount of $16,700,000, dated
May 25, 1993 (incorporated by reference to Exhibit 4.5O of the NW
Television Registration Statement).
4.20 -- Amended and Restated Intercompany Note made by New World Communications
of Atlanta, Inc. in favor of NW Television in the principal amount of
$161,500,000, dated May 25, 1993 (incorporated by reference to Exhibit
4.5P of the NW Television Registration Statement).
4.23 -- New Intercompany Note made by New World Communications of Milwaukee,
Inc. in favor of NW Television in the principal amount of $14,300,000,
dated May 25, 1993 (incorporated by reference to Exhibit 4.5S of the NW
Television Registration Statement).
4.24 -- Amended and Restated Intercompany Note made by New World Communications
of Milwaukee, Inc. in favor of NW Television in the principal amount of
$11,600,000, dated May 25, 1993 (incorporated by reference to Exhibit
4.5T of the NW Television Registration Statement).
4.25 -- New Intercompany Note made by New World Communications of Detroit, Inc.
in favor of NW Television in the principal amount of $18,400,000, dated
May 25, 1993 (incorporated by reference to Exhibit 4.5U of the NW
Television Registration Statement).
4.26 -- Amended and Restated Intercompany Note made by New World Communications
of Detroit, Inc. in favor of NW Television in the principal amount of
$39,100,000, dated May 25, 1993 (incorporated by reference to Exhibit
4.5V of the NW Television Registration Statement).
4.27 -- New Intercompany Note made by New World Communications of Ohio, Inc. in
favor of NW Television in the Principal amount of $14,500,000, dated
May 25, 1993 (incorporated by reference to Exhibit 4.5W of the NW
Television Registration Statement).
4.28 -- Amended and Restated Intercompany Note made by New World Communications
of Ohio, Inc. in favor of NW Television in the principal amount of
$75,000,000, dated May 25, 1993 (incorporated by reference to Exhibit
4.5X of the NW Television Registration Statement).
4.29 -- New Intercompany Note made by NW Communications of San Diego, Inc. in
favor of NW Television in the principal amount of $13,300,000, dated
May 25, 1993 (incorporated by reference to Exhibit 4.5Y of the NW
Television Registration Statement).
4.30 -- Amended and Restated Intercompany Note made by NW Communications of San
Diego, Inc. in favor of NW Television in the principal amount of
$75,000,000, dated May 25, 1993 (incorporated by reference to Exhibit
4.5Z of the NW Television Registration Statement).
4.31 -- Intercompany Note made by New World Communications of Tampa, Inc. in
favor of NW Television in the principal amount of $65,000,000, dated
May 25, 1993 (incorporated by reference to Exhibit 4.5AA of the NW
Television Registration Statement).
4.32 -- Junior Subordinated Intercompany Note made by New World Communications
of Tampa, Inc. in favor of NW Television in the principal amount of
$64,800,000, dated May 25, 1993 (incorporated by reference to Exhibit
4.5BB of the NW Television Registration Statement).
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4.33 -- Stockholders Agreement, dated as of May 25, 1993, among NW Television,
Andrews, and the Initial Executing Stockholders listed therein and
assumed by the Registrant in accordance with the provisions of the
Agreement and Plan of Reorganization and Merger filed as Exhibit 2.10
hereto (incorporated by reference to Exhibit 4.6 of the NW Television
Registration Statement).
4.34 -- Registration Rights Agreement, dated as of May 25, 1993, among NW
Television, and the Stockholders, Warrantholders, and Debtholders
listed on the Signature Pages thereto and assumed by NWCG in accordance
with the provisions of the Agreement and Plan of Reorganization and
Merger filed as Exhibit 2.10 hereto (incorporated by reference to
Exhibit 4.7 of the NW Television Registration Statement).
4.35 -- New Equity Stock Subscription Agreement, dated as of January 26, 1993,
by and between NW Television and Andrews Incorporated, as amended
January 29, 1993 and February 11, 1993 (incorporated by reference to
Exhibit 4.8 of the NW Television Registration Statement).
4.36 -- Purchase Agreement, dated May 20, 1993, among NW Television, Andrews
for the limited purpose of acknowledging the agreement set forth in
Section 2 thereto and Bear, Stearns & Co. Inc. (incorporated by
reference to Exhibit 4.9 of the NW Television Registration Statement).
4.37 -- Registration Agreement, dated May 20, 1993, by and between NW
Television and Bear, Stearns & Co. Inc. (incorporated by reference to
Exhibit 4.10 of the NW Television Registration Statement).
4.38 -- Form of Class A Warrant of NW Television assumed by the Registrant in
accordance with the provisions of the Agreement and Plan of
Reorganization and Merger filed as Exhibit 2.10 hereto (incorporated by
reference to Exhibit 4.11 of the NW Television Registration Statement).
4.39 -- Form of Class B Warrant of NW Television assumed by the Registrant in
accordance with the provisions of the Agreement and Plan of
Reorganization and Merger filed as Exhibit 2.10 hereto (incorporated by
reference to Exhibit 4.12 of the NW Television Registration Statement).
4.40 -- Form of Class A, Series 2 Warrants of the Registrant (incorporated by
reference to Exhibit 3.3 of the NWCG Form 8-K/A dated March 19, 1994).
4.41 -- Certificates of Designations of Preferences and Rights of 6.375%
Cumulative Redeemable Convertible Preferred Stock (incorporated by
reference to Exhibit 3.3 of the NWCG Annual Report on Form 10-K for the
year ended December 31, 1993).
4.42 -- Certificate of Designations of the Series B Preferred Stock
(incorporated by reference to Exhibit 8 of the NWCG May 20, 1994 Form
8-K).
4.43 -- Certificate of Designations of the Series C Preferred Stock
(incorporated by reference to Exhibit 9 of the NWCG May 20, 1994 Form
8-K).
4.44 -- Form of Certificate of Designations of the Series D Preferred Stock
(incorporated by reference to Exhibit 10 of the NWCG May 20, 1994 Form
8-K).
4.45 -- Certificates of Designations of the NWCG Series E Cumulative
Convertible Redeemable Preferred Stock (incorporated by reference to
Exhibit 1 of the NWCG Form 10-Q for the quarter ended June 30, 1995).
4.46 -- Indenture, dated as of June 30, 1994, and Amended and Restated
Indenture, dated as of June 30, 1994, as amended and restated as of
September 30, 1994, by and between the Registrant and NationsBank of
Georgia, National Association, as Trustee (including amended and
restated forms of the Old Notes and the New Notes) (incorporated by
reference to Exhibits 4.1 and 4.1A of the Holdings Registration
Statement).
10.1 -- Credit Agreement, dated as of May 25, 1993, among NW Television, the
Lenders listed therein and Canadian Imperial Bank of Commerce New York
Agency, as Agent (incorporated by reference to Exhibit 10.1 of the NW
Television Registration Statement).
10.2 -- First Amendment, dated as of December 22, 1993, by and among NW
Television, the Institutions listed on the Signature Pages thereof and
Canadian Imperial Bank of Commerce New York Agency (incorporated by
reference to Exhibit 10.1A of the NW Television Registration
Statement).
10.3 -- Affiliation Agreement dated as of June 26, 1995 by and between National
Broadcasting Company, Inc. and NW Communications of San Diego, Inc.
(incorporated by reference to Exhibit 10.3 of the Holdings 1995 Form
10-K ("Holdings 1995 Form 10-K")).
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10.4 -- Affiliation Agreement by and between Fox Broadcasting Company and WJBK
License, Inc. (incorporated by reference to Exhibit 10.9 of the
Holdings Registration Statement).
10.5 -- Affiliation Agreement by and between Fox Broadcasting Company and WAGA
License, Inc. (incorporated by reference to Exhibit 10.10 of the
Holdings Registration Statement).
10.6 -- Affiliation Agreement by and between Fox Broadcasting Company and WJW
License, Inc. (incorporated by reference to Exhibit 10.11 of the
Holdings Registration Statement).
10.7 -- Affiliation Agreement by and between Fox Broadcasting Company and TVT
License, Inc. (incorporated by reference to Exhibit 10.12 of the
Holdings Registration Statement).
10.8 -- Affiliation Agreement by and between Fox Broadcasting Company and WITI
License, Inc. (incorporated by reference to Exhibit 10.13 of the
Holdings Registration Statement).
10.9 -- Affiliation Agreement by and between Fox Broadcasting Company and KSAZ
License, Inc. (incorporated by reference to Exhibit 10.14 of the
Holdings Registration Statement).
10.10-- Affiliation Agreement by and between Fox Broadcasting Company and WDAF
License, Inc. (incorporated by reference to Exhibit 10.15 of the
Holdings Registration Statement).
10.13-- Employment Agreement, dated as of May 25, 1993, by and between NW
Television and Larry D. Haugen (incorporated by reference to Exhibit
10.11 of the NW Television Registration Statement).
10.14-- Employment Agreement, dated as of May 25, 1993, by and between NW
Television and James G. Gorman (incorporated by reference to Exhibit
10.12 of the NW Television Registration Statement).
10.15-- Employment Agreement, dated as of May 24, 1993, by and between NW
Television and David A. Ramon (incorporated by reference to Exhibit
10.13 of the NW Television Registration Statement).
10.16-- Employment Agreement, dated as of May 25, 1993, by and between NW
Television and George N. Gillett, Jr. (incorporated by reference to
Exhibit 10.14 of the NW Television Registration Statement).
10.17-- Letter Agreement, dated June 11, 1990 between New World Entertainment,
Ltd. and Turner Program Services, Inc. (incorporated by reference to
Exhibit 10.9 to the Andrew's Group 1990 10-K).
10.18-- Agreement, dated November 15, 1991, by and among TST Acquisition Corp.,
Sony Pictures Entertainment and New World Entertainment, Ltd. and
certain of its subsidiaries (incorporated by reference to Exhibit 10.8
to the Andrews 1991 10-K).
10.19-- Letter Agreement, dated as of February 27, 1992, between Turner Program
Services Inc. and New World Entertainment (incorporated by reference to
Exhibit 10.36 to the Andrews 1992 10-K).
10.20-- Agreement, dated November 15, 1991, by and among TST Acquisition Corp.,
Sony Pictures Entertainment and New World Entertainment, Ltd. and
certain of its subsidiaries (incorporated by reference to Exhibit 10.8
to the Andrews 1991 10-K).
10.22-- Indemnification Agreement, dated as of March 9, 1994, by and between
Andrews and NWCG, (incorporated by reference to Exhibit 2 of the NWCG
Form 8-K dated March 14, 1994).
10.23-- Non-Competition Agreement, dated as of March 9, 1994, by and between
Andrews and NWCG, (incorporated by reference to Exhibit 1 of the NWCG
Form 8-K dated March 14, 1994).
10.24-- Form of 1994 Stock Option Plan (incorporated by reference to Exhibit
10.22 of the NWCG 1993 Form 10-K).
10.25-- Registration Rights and Tag-Along Agreement, dated as of March 28, 1994
by and among NWCG, Andrews, Apollo TV Partners, L.P., and Apollo TV
Partners II, L.P. (incorporated by reference to Exhibit 10.23 of the
NWCG 1993 Form 10-K).
10.26-- Asset Purchase Agreement, dated as of May 4, 1994, by and between NWCG
and Great American Television and Radio Company, Inc., as amended a so
May 24, 1994 (incorporated by reference to Exhibit 1 of the NWCG Report
on Form 8-K dated May 20, 1994 (the "May 20, 1994 Form 8-K").
10.27-- Form of Class D Warrant (incorporated by reference to Exhibit 2 of the
NWCG May 20, 1994 Form 8-K).
10.28-- Option Agreement, dated as of May 20, 1994, by and among each of the
Persons listed on Schedule I thereto, Donaldson, Lufkin & Jenrette
Securities Corporation, as Agent for the Sellers, DLJ Merchant Banking,
Inc. and NWCG, as amended as of May 24, 1994 (incorporated by
reference to Exhibit 3 of the NWCG May 20, 1994 Form 8-K).
10.29-- Securities Purchase Agreement, dated as of May 21, 1994, by and among
NWCG and Fox (incorporated by reference to Exhibit 3 of the NWCG May
20, 1994 Form 8-K).
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10.30-- Amendment No. 1 to the Securities Purchase Agreement, dated as of May
27, 1994, by and among NWCG and Fox (incorporated by reference to
Exhibit 6 of the NWCG May 20, 1994 Form 8-K).
10.31-- Form of Station Affiliation Agreement entered into with Fox
Broadcasting Company (incorporated by reference to Exhibit 6 of the
NWCG May 20, 1994 Form 8-K).
10.32-- Registration Rights Agreement, dated as of May 27, 1994, by and between
NWCG and Fox (incorporated by reference to Exhibit 7 of the NWCG May
20, 1994 Form 8-K).
10.36-- Warrant Agreement, dated as of May 27, 1994, by and between NWCG and
Fox (incorporated by reference to Exhibit 11 of the NWCG May 20, 1994
Form 8-K).
10.37-- Understanding Regarding Programming Production, dated as of May 27,
1994, by and between NWCG and Fox (incorporated by reference to Exhibit
12 of the NWCG May 20, 1994 Form 8-K).
10.38-- Tag Along Rights Agreement, dated as of May 27, 1994, by and between
Andrews and Fox (incorporated by reference to Exhibit 13 of the NWCG
May 20, 1994 Form 8-K).
10.39-- Class D Warrant to Purchase NWCG Class A Common Stock (incorporated by
reference to Exhibit 11 of the NWCG May 20, 1994 Form 8-K).
10.40-- Credit Agreement, dated as of September 29, 1994, among NWC Acquisition
Corporation, the financial institutions from time to parties thereto,
the co-agents identified on the signature pages thereof, The Chase
Manhattan Bank, N.A. and Chemical Bank, as Managing Agents, The Chase
Manhattan Bank, N.A., as Documentation Agent, and Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 1 of the
NWCG Report on Form 8-K dated October 12, 1994 (the "NWCG October 12,
1994 Form 8-K")).
10.43-- Guarantee, dated as of September 29, 1994, made by NWTV Intermediate
Holdings Corporation, in favor of Chemical Bank, as Administrative
Agent (incorporated by reference to Exhibit 4 of the NWCG October 12,
1994 Form 8-K).
10.44-- Pledge Agreement, dated as of September 29, 1994, made by NWTV
Intermediate Holdings Corporation, in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 5 of the
NWCG October 12, 1994 Form 8-K).
10.45-- Pledge Agreement, dated as of September 29, 1994, made by NWC
Acquisition, in favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 6 of the NWCG October 12, 1994
Form 8-K).
10.46-- Security Agreement, dated as of September 29, 1994, made by NWC
Acquisition, in favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 7 of the NWCG October 12, 1994
Form 8-K).
10.47-- Subsidiaries' Guarantee, dated as of September 29, 1994, made by each
of the corporations that are signatories thereto, and NWC Acquisition,
in favor of Chemical Bank, as Administrative Agent (incorporated by
reference to Exhibit 8 of the NWCG October 12, 1994 Form 8-K).
10.48-- Security Agreement, dated as of September 29, 1994, made by NW
Communications of Phoenix, Inc., in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 10 of the
NWCG October 12, 1994 Form 8-K).
10.49-- Pledge Agreement, dated as of September 29, 1994, made by NW
Communications of Phoenix, Inc., in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 11 of the
NWCG October 12, 1994 Form 8-K).
10.50-- Security Agreement, dated as of September 29, 1994, made by New World
Communications of North Carolina, Inc., in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 12 of the
NWCG October 12, 1994 Form 8-K).
10.51-- Pledge Agreement, dated as of September 29, 1994, made by New World
Communications of North Carolina, Inc., in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 13 of the
NWCG October 12, 1994 Form 8-K).
10.52-- Security Agreement, dated as of September 29, 1994, made by NW
Communications of Birmingham, Inc., in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 14 of the
NWCG October 12, 1994 Form 8-K).
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10.53-- Pledge Agreement, dated as of September 29, 1994, made by NW
Communications of Birmingham, Inc., in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 15 of the
NWCG October 12, 1994 Form 8-K).
10.54-- Security Agreement, dated as of September 29, 1994, made by New World
Communications of Kansas City, Inc., in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 16 of the
NWCG October 12, 1994 Form 8-K).
10.55-- Pledge Agreement, dated as of September 29, 1994, made by New World
Communications of Kansas City, Inc., in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 17 of the
NWCG October 12, 1994 Form 8-K).
10.57-- Merger Agreement, dated as of November 28, 1994, by and between NW
Television and Viacom International Inc. (incorporated by reference to
Exhibit 1 of the NW Television's Report on Form 8-K dated March 7,
1995).
10.59-- Amendments 1 to 4 to Option Agreement by and among each of the persons
listed on Schedule I, Donaldson, Lufkin & Jenrette Securities
Corporation, as Agent for the Sellers, DLJ Merchant Banking Inc. and
NWCG (incorporated by reference to Exhibit 10.59 of the NWCG 1994 Form
10-K).
10.60-- Affiliation Agreement dated as of June 26, 1995 by and between National
Broadcasting Company, Inc. and WVTM Television, Inc. (incorporated by
reference to Exhibit 10.60 of the Holdings 1995 Form 10-K).
10.61-- Affiliation Agreement dated as of June 28, 1995 by and between Fox
Broadcasting Company and KDFW Television, Inc. (incorporated by
reference to Exhibit 10.61 of the Holdings 1995 Form 10-K).
10.62-- Affiliation Agreement dated as of June 28, 1995 by and between Fox
Broadcasting Company and KTVI Television, Inc. (incorporated by
reference to Exhibit 10.62 of the Holdings 1995 Form 10-K).
10.63-- Affiliation Agreement dated as of June 28, 1995 by and between Fox
Broadcasting Company and KTBC Television, Inc. (incorporated by
reference to Exhibit 10.63 of the Holdings 1995 Form 10-K).
10.64-- Registration Rights Agreement, dated as of December 8, 1995, by and
among NWCG and CitiCasters Co. (incorporated by reference to Exhibit
10.64 of the Holdings 1995 Form 10-K).
10.65-- Amendment, dated as of December 8, 1995 to Class D Warrant
(incorporated by reference to Exhibit 10.65 of the Holdings 1995 Form
10-K).
10.66-- Warrant Agreement, dated as of December 15, 1994, by and between NWCG
and Arthur H. Bilger (incorporated by reference to Exhibit 10.66 of the
Holdings 1995 Form 10-K).
10.67-- Employment Agreement, dated as of December 15, 1994, by and between
NWCG and Arthur H. Bilger (incorporated by reference to Exhibit 10.67
of the Holdings 1995 Form 10-K).
10.68-- Amended Employment Agreement, dated December 31, 1994, between NW
Television and David A. Ramon (incorporated by reference to Exhibit
10.17 of the NW Television 1994 Form 10-K).
10.69-- Amended and Restated Trust Agreement by and between Brian N. Byrnes, as
Trustee, and NW Acquisition, as Grantor and Beneficiary, dated as of
January 30, 1995 and amended and restated as of March 31, 1995
(incorporated by reference to Exhibit 1 of the Company Form 8-K dated
March 31, 1995).
10.70-- Option Agreement by and between NW Acquisition and Fox Television
Stations, Inc., dated as of March 31, 1995 (incorporated by reference
to Exhibit 2 of the Company Form 8-K dated March 31, 1995).
10.71-- WBRC and WGHP Television Corporation Secured 18% Note due March 31,
2005 (incorporated by reference to Exhibit 3 of the Company Form 8-K
dated March 31, 1995).
10.72-- Subsidiary Security Agreement, dated as of March 30, 1995, made by KSAZ
Television, Inc. in favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 10.72 of the Holdings 1995 Form
10-K).
10.73-- Subsidiary Pledge Agreement, dated as of March 30, 1995, made by KSAZ
License, Inc. in favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 10.73 of the Holdings 1995 Form
10-K).
10.74-- Subsidiary Security Agreement, dated as of March 30, 1995, made by WDAF
Television, Inc. in favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 10.74 of the Holdings 1995 Form
10-K).
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10.75-- Subsidiary Pledge Agreement, dated as of March 30, 1995, made by WDAF
License, Inc. in favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 10.75 of the Holdings 1995 Form
10-K).
10.76-- Subsidiaries' Guarantee, dated as of June 1, 1995, by NWC Sub I
Holdings Corporation, NWC Sub II Holdings Corporation, NW
Communications of Texas, Inc., KDFW License, Inc., KDFW Television,
Inc., New World Communications of St. Louis, Inc., KTVI License, Inc.,
KTVI Television, Inc., NW Communications of Austin, Inc., KTBC License,
Inc., KTBC Television, Inc., New World WVTM Communications of Alabama,
Inc., WVTM License, Inc. and WVTM Television, Inc. in favor of Chemical
Bank, as Administrative Agent (incorporated by reference to Exhibit
10.76 of the Holdings 1995 Form 10-K).
10.77-- Pledge Agreement, dated as of June 1, 1995, made by NW Acquisition in
favor of Chemical Bank, as Administrative Agent (incorporated by
reference to Exhibit 10.77 of the Holdings 1995 Form 10-K).
10.78-- Subsidiary Pledge Agreement, dated as of June 1, 1995, made by NWC Sub
I Holdings Corporation in favor of Chemical Bank, as Administrative
Agent (incorporated by reference to Exhibit 10.78 of the Holdings 1995
Form 10-K).
10.79-- Subsidiary Pledge Agreement, dated as of June 1, 1995, made by NWC Sub
II Holdings Corporation in favor of Chemical Bank, as Administrative
Agent (incorporated by reference to Exhibit 10.79 of the Holdings 1995
Form 10-K).
10.80-- Subsidiary Pledge Agreement, dated as of June 1, 1995, made by New
World WVTM Communications of Alabama, Inc. in favor of Chemical Bank,
as Administrative Agent (incorporated by reference to Exhibit 10.80 of
the Holdings 1995 Form 10-K).
10.81-- Subsidiary Pledge Agreement, dated as of June 1, 1995, made by NW
Communications of Texas, Inc. in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 10.81 of the
Holdings 1995 Form 10-K).
10.82-- Subsidiary Pledge Agreement, dated as of June 1, 1995, made by New
World Communications of St. Louis, Inc. in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 10.82 of the
Holdings 1995 Form 10-K).
10.83-- Subsidiary Pledge Agreement, dated as of June 1, 1995, made by NW
Communications of Austin in favor of Chemical Bank, as Administrative
Agent (incorporated by reference to Exhibit 10.83 of the Holdings 1995
Form 10-K).
10.84-- Subsidiary Security Agreement, dated as of June 1, 1995, made by NWC
Sub I Holdings Corporation in favor of Chemical Bank, as Administrative
Agent (incorporated by reference to Exhibit 10.84 of the Holdings 1995
Form 10-K).
10.85-- Subsidiary Security Agreement, dated as of June 1, 1995, made by NWC
Sub II Holdings Corporation in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 10.85 of the
Holdings 1995 Form 10-K).
10.86-- Subsidiary Security Agreement, dated as of June 1, 1995, made by New
World WVTM Communications of Alabama, Inc. in favor of Chemical Bank,
as Administrative Agent (incorporated by reference to Exhibit 10.86 of
the Holdings 1995 Form 10-K).
10.87-- Subsidiary Security Agreement, dated as of June 1, 1995, made by NW
Communications of Texas, Inc. in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 10.87 of the
Holdings 1995 Form 10-K).
10.88-- Subsidiary Security Agreement, dated as of June 1, 1995, made by New
World Communications of St. Louis, Inc. in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 10.88 of the
Holdings 1995 Form 10-K).
10.89-- Subsidiary Security Agreement, dated as of June 1, 1995, made by NW
Communications of Austin in favor of Chemical Bank, as Administrative
Agent (incorporated by reference to Exhibit 10.89 of the Holdings 1995
Form 10-K).
10.90-- Subsidiary Security Agreement, dated as of June 1, 1995, made by WVTM
Television, Inc. in favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 10.90 of the Holdings 1995 Form
10-K).
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10.91-- Subsidiary Security Agreement, dated as of June 1, 1995, made by KDFW
Television, Inc. in favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 10.91 of the Holdings 1995 Form
10-K).
10.92-- Subsidiary Security Agreement, dated as of June 1, 1995, made by KTBC
Television, Inc. in favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 10.92 of the Holdings 1995 Form
10-K).
10.93-- Subsidiary Security Agreement, dated as of June 1, 1995, made by KTVI
Television, Inc. in favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 10.93 of the Holdings 1995 Form
10-K).
10.94-- Second Amendment and Consent Number 1, dated as of March 28, 1995, by
and among NW Acquisition, the financial institutions from time to time
parties thereto, the Co-Agents identified on the signature pages
thereof, The Chase Manhattan Bank, N.A. and Chemical Bank, as Managing
Agents, The Chase Manhattan Bank, N.A., as Documentation Agent, and
Chemical Bank, as Administrative Agent (incorporated by reference to
Exhibit 10.94 of the Holdings 1995 Form 10-K).
10.95-- Credit Agreement, dated as of March 24, 1995, with amendments dated
July 25, 1995 and December 31, 1995, by and among NW Entertainment, the
financial institutions parties thereto and Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 10.95 of the
Holdings 1995 Form 10-K).
10.96-- Registration Rights Agreement, dated July 31, 1995, by and among NWCG
and Stephen J. Cannell (incorporated by reference to Exhibit 10.96 of
the Holdings 1995 Form 10-K).
10.97-- Employment Agreement, dated as of January 1, 1996, by and between New
World Television Incorporated and Farrell Reynolds (incorporated by
reference to exhibit 10.1 of the NWCG form 10-Q for the quarter ended
March 31, 1996).
10.98-- Third Amendment, dated as of June 29, 1996, to the Credit Agreement,
dated as of September 29, 1994, by and among NW Acquisition, the
financial institutions from time to time parties thereto, the Co-Agents
named therein, the Managing Agents named therein, The Chase Manhattan
Bank (as successor by merger to the Chase Manhattan Bank, N.A.), as
Documentation Agent, and the Chase Manhattan Bank (formerly named
Chemical Bank), as Administrative Agent (incorporated by reference to
Exhibit 10.1 of the NWCG Form 10-Q for the quarter ended June 30,
1996).
10.99 -- NWCG Parent Voting Agreement, dated as of September 24, 1996, among
Fox, NWCGP and NWCG Holdings (incorporated by reference to Exhibit 10.1
of the NWCG Form 8-K dated September 24, 1996).
10.100-- Apollo Voting Agreement, dated as of September 24, 1996, among Fox,
News Corp. and Apollo Advisors L.P. ("Apollo") (incorporated by
reference to Exhibit 10.2 of the NWCG Form 8-K dated September 24,
1996).
10.101-- Guaranty, dated as of September 24, 1996, entered into by News Corp. in
favor of NWCG Holdings, NWCGP, Mafco Holdings Inc. ("Mafco"), 1440
Sepulveda Limited Partnership ("1440") and Andrews Inc. ("Andrews")
(incorporated by reference to Exhibit 10.3 of the NWCG Form 8-k dated
September 24, 1996).
10.102-- Guaranty, dated as of September 24, 1996, entered into by Mafco in
favor of News Corp. and Fox (incorporated by reference to Exhibit 10.4
of the NWCG Form 8-K dated September 24, 1996).
21.1 -- Subsidiaries of the Registrant.
24.1 -- Powers of Attorney.
27.1 -- Financial data schedule (for SEC use only).
(b) Reports filed on Form 8-K:
September 24, 1996 (Items 1 and 7)
November 20, 1996 (Items 2 and 7)
January 22, 1997 (Items 1, 5 and 7)
</TABLE>
64
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
NWCG HOLDINGS CORPORATION
(Registrant)
By: /s/ Mitchell Stern
-----------------------------------
Mitchell Stern
President and Chief Operating
Officer
By: /s/ Lawrence Jacobson
-----------------------------------
Lawrence Jacobson
Executive Vice President and
Assistant Treasurer
Dated: March 28, 1997
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on March 28, 1997 in the capacities
indicated.
By: K. Rupert Murdoch*
------------------------
K. Rupert Murdoch
Director
By: Chase Carey*
------------------------
Chase Carey
Director
By: David F. DeVoe*
------------------------
David F. DeVoe
Director
<PAGE>
* The undersigned by signing his name does hereby execute this Annual Report
pursuant to powers of attorney filed as exhibits to the Annual Report.
By: /s/ Lawrence Jacobson
-----------------------
Lawrence Jacobson
Attorney-in-fact
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholder:
NWCG Holdings Corporation
We have audited the consolidated financial statements of NWCG Holdings
Corporation as of December 31, 1996 and 1995 and for each of the three years in
the period ended December 31, 1996, and have issued our report thereon dated
March 13, 1997 (included elsewhere in this Form 10-K). Our audits also included
the financial statement schedules listed in Item 14a(2). These schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the consolidated financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
/s/ ERNST & YOUNG LLP
Atlanta, Georgia
March 13, 1997
S-1
<PAGE>
SCHEDULE I
NWCG HOLDINGS CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEET (REGISTRANT ONLY)
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Investments in and advances to
subsidiaries net of
cumulative losses and distributions $ 256,537 $ 228,381
Negative goodwill . . . . . . (13,119) (13,467)
Deferred charges and other assets . 2,626 3,383
---------- ----------
$ 246,044 $ 218,297
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 10 $ 10
---------- ----------
Total current liabilities . . . . 10 10
Long-term debt . . . . . . . . 299,716 261,119
Common stock . . . . . . . .
Additional paid-in capital . . . 519,809 519,767
Accumulated deficit . . . . . . (573,491) (562,599)
---------- ----------
Total stockholder's equity (deficit) (53,682) (42,832)
---------- ----------
$ 246,044 $ 218,297
========== ==========
</TABLE>
S-2
<PAGE>
SCHEDULE I
NWCG HOLDINGS CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF OPERATIONS (REGISTRANT ONLY)
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Corporate expenses . . . . . . . $ (213) $ (74) $ -
Amortization of negative goodwill . . 348 420 378
--------- --------- ---------
Income from operations . . . . . 135 346 378
Other income (expense):
Interest expense . . . . . . . (39,183) (33,877) (15,487)
Gain (loss) on sale of interest in
NWCG . . . . 3,935 (7,379) 86,648
Equity in earnings of subsidiaries . 24,221 (13,480) (21,468)
--------- --------- ---------
(11,027) (54,736) 49,693
--------- --------- ---------
Net (loss) income . . . . . . . $ (10,892) $ (54,390) $ 50,071
========= ========= =========
</TABLE>
S-3
<PAGE>
SCHEDULE I
NWCG HOLDINGS CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF CASH FLOWS (REGISTRANT ONLY)
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
--------- --------- ----------
<S> <C> <C> <C>
Cash flow from operating activities:
Net income (loss) . . . . . . $ (10,892) $ (54,390) $ 50,071
Adjustments to reconcile net income
(loss) to net cash
provided by (used in) operating
activities:
Amortization of negative goodwill . (348) (420) (378)
Noncash interest expense . . . . 39,183 33,877 15,487
Equity in net (income) loss of
subsidiaries . . . . . . . . (24,221) 13,480 21,468
Loss (gain) on sale of interest in
NWCG . . . . . . . . . . (3,935) 7,379 (86,648)
Decrease (increase) in deferred
charges and other
assets . . . . . . . . . 171 (4,809) -
Increase (decrease) in accounts
payable and accrued
expenses . . . . . . . . - (4,715) 200
--------- --------- ----------
10,850 44,792 (49,871)
--------- --------- ----------
Net cash provided by (used in)
operating activities . . (42) (9,598) 200
--------- --------- ----------
Cash flow from financing activities:
Issuance of debt, net of issuance
costs . . . . - - 209,043
Dividend paid . . . . . . . . - - (212,300)
Capital contribution . . . . . 42 9,598 3,057
--------- --------- ----------
Net cash provided by (used in)
financing activities . 42 9,598 (200)
--------- --------- ----------
Net increase in cash and cash
equivalents . . . . . - - -
Cash and cash equivalents at beginning
of the period . . - - -
--------- --------- ----------
Cash and cash equivalents at end of the
period . . . $ - $ - $ -
========= ========= ==========
</TABLE>
S-4
<PAGE>
SCHEDULE II
NWCG HOLDINGS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT NET ADDITIONS BALANCE AT
BEGINNING DISPOSITIONS CHARGED TO END OF
DESCRIPTIONS OF YEAR ACQUISITIONS EARNINGS DEDUCTIONS(1) YEAR
------------ ---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1996
Deducted from assets to which they
apply:
Allowance for doubtful accounts $13,298 $ (353) $6,377 $2,054 $17,268
FOR THE YEAR ENDED DECEMBER 31, 1995
Deducted from assets to which they
apply:
Allowance for doubtful accounts $13,856 $1,633 $2,243 $4,434 $13,298
FOR THE YEAR ENDED DECEMBER 31, 1994
Deducted from assets to which they
apply:
Allowance for doubtful accounts $ 9,482 $2,992 $1,919 $ 537 $13,856
</TABLE>
(1) Deductions made for purposes for which account was established.
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ----------------------- ------------
<C> <S> <C>
2.1 -- Debtors' Joint Plan of Reorganization, dated March 4,
1993 as filed by New World Television Incorporated ("NW
Television"). GCI Partners, SCI-GP Corp. and GCI-GP, Inc.
(collectively, the "Debtors") (incorporated by reference
to Exhibit 2.1 of the NW Television Registration
Statement on Form S-1 (No. 33-64546) relating to NW
Television's 11% Notes (the "NW Television Registration
Statement")).
2.2 -- Debtors' Modification to the Debtors' Joint Plan of
Reorganization, dated April 29, 1993 (incorporated by
reference to Exhibit 2.2 of the NW Television
Registration Statement).
2.3 -- Debtors' Further Modifications to the Debtors' Joint Plan
of Reorganization, dated May 3, 1993 (incorporated by
reference to Exhibit 2.3 of the NW Television
Registration Statement).
2.4 -- Debtors' Additional Modifications to the Debtors' Joint
Plan of Reorganization, dated May 6, 1993 (incorporated
by reference to Exhibit 2.4 of the NW Television
Registration Statement).
2.5 -- Settlement Agreement, dated May 5, 1993 (incorporated by
reference to Exhibit 2.5 of the NW Television
Registration Statement).
2.6 -- Stipulation Regarding Implementation of Settlement
Agreement and Resolution of Investment Advisor's Claim,
dated May 25, 1993 (incorporated by reference to Exhibit
2.6 of the NW Television Registration Statement).
2.7 -- Disclosure Statement, dated January 19, 1993
(incorporated by reference to Exhibit 2.7 of the NW
Television Registration Statement).
2.8 -- Disclosure Statement Supplement, dated February 12, 1993
(incorporated by reference to Exhibit 2.8 of the NW
Television Registration Statement).
2.9 -- Disclosure Statement Second Supplement, dated February
19, 1993 (incorporated by reference to Exhibit 2.9 of the
NW Television Registration Statement).
2.10 -- Agreement and Plan of Reorganization and Merger, dated as
of November 23, 1993, by and among NW Television,
Andrews, the Registrant and Merger Sub (the "Agreement
and Plan of Reorganization and Merger") (incorporated by
reference to Exhibit 2.11 of the NWCG Registration
Statement on Form S-1 (No. 33-72738) relating to certain
Securities (the "NWCG Registration Statement")).
2.11 -- Amendment to Agreement and Plan of Reorganization and
Merger, dated as of December 30, 1993 (incorporated by
reference to Exhibit 2.11 of the NW Television
Registration Statement).
2.12 -- Memorandum of Understanding among New World
Communications Group Incorporated ("NWCG"), NWCG (Parent)
Holdings Corporation ("NWCGP"), NWCG Holdings Corporation
(the "Company") and The News Corporation Limited ("News
Corp."), dated as of July 17, 1996 (incorporated by
reference to Exhibit 2.1 of the NWCG Form 8-K, dated July
17, 1996).
2.13 -- Agreement and Plan of Merger, dated as of September 24,
1996, by and among NWCG, News Corp., Fox Television
Stations, Inc. ("Fox") and Fox Acquisition Co., Inc.
("Merger Sub") (incorporated by reference to Exhibit 2.2
of the NWCG Form 8-K, dated September 24, 1996).
2.14 -- Stock Purchase Agreement, dated as of September 24, 1996,
by and among NWCGP, News Corp. and Fox (incorporated by
reference to Exhibit 2.3 of the NWCG Form 8-K, dated
September 24, 1996).
3.1 -- Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.1 of NWCG
Holdings Corporation Registration Statement on Form S-1
(No.33- 82274) relating to NWCG Holdings Corporation
Senior Discount Notes (the "Holdings Registration
Statement")).
3.2 -- Bylaws of the Registrant (incorporated by reference to
Exhibit 3.2 of the Holdings Registration Statement).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ----------------------- ------------
<C> <S> <C>
4.1 -- Indenture, dated as of May 25, 1993, by and between NW
Television, as Issuer, and Continental Bank, National
Association, as Trustee (incorporated by reference to
Exhibit 4.1 of the NW Television Registration Statement).
4.2 -- Indenture, dated as of May 25, 1993, by and between NW
Television, as Issuer, and NationsBank of Georgia,
National Association, as Trustee (incorporated by
reference to Exhibit 4.2 of the NW Television
Registration Statement).
4.3 -- Collateral Trust and Intercreditor Agreement, dated as of
May 25, 1993, among NW Television, the Secured Party
Representatives named therein, and Chemical Bank, as
Collateral Trustee (incorporated by reference to Exhibit
4.3 of the NW Television Registration Statement).
4.4 -- SCI Pledge and Security Agreement, dated as of May 25,
1993, by and between NW Television, as Pledgor, and
Chemical Bank, as Collateral Trustee (incorporated by
reference to Exhibit 4.4 of the NW Television
Registration Statement).
4.5 -- Subsidiary Pledge and Security Agreement by New World
Communications of Atlanta, Inc. in favor of and for the
benefit of NW Television, dated May 25, 1993
(incorporated by reference to Exhibit 4.5A of the NW
Television Registration Statement).
4.7 -- Subsidiary Pledge and Security Agreement by New World
Communications of Milwaukee, Inc. in favor of and for the
benefit of NW Television, dated as of May 24, 1993
(incorporated by reference to Exhibit 4.5C of the NW
Television Registration Statement).
4.8 -- Subsidiary Pledge and Security Agreement by New World
Communications of Detroit, Inc. in favor of and for the
benefit of NW Television, dated May 25, 1993
(incorporated by reference to Exhibit 4.5D of the NW
Television Registration Statement).
4.9 -- Subsidiary Pledge and Security Agreement by New World
Communications of Ohio, Inc. in favor of and for the
benefit of NW Television, dated May 24, 1993
(incorporated by reference to Exhibit 4.5E of the NW
Television Registration Statement).
4.10 -- Subsidiary Pledge and Security Agreement by NW
Communications of San Diego, Inc. in favor of and for the
benefit of NW Television, dated as of May 25, 1993
(incorporated by reference to Exhibit 4.5F of the NW
Television Registration Statement).
4.11 -- Subsidiary Pledge and Security Agreement by New World
Communications of Tampa, Inc. in favor of and for the
benefit of NW Television, dated as of May 25, 1993
(incorporated by reference to Exhibit 4.5G of the NW
Television Registration Statement).
4.12 -- Deed to Secure Debt, Security Agreement, Financing
Statement and Assignment of Rents made May 25, 1993 by
New World Communications of Atlanta, Inc. in favor of NW
Television (incorporated by reference to Exhibit 4.5H of
the NW Television Registration Statement).
4.14 -- Mortgage, Security Agreement, Financing Statement and
Assignment of Rents made May 25, 1993 by New World
Communications of Milwaukee, Inc. in favor of NW
Television (incorporated by reference to Exhibit 4.5J of
the NW Television Registration Statement).
4.15 -- Mortgage, Security Agreement, Financing Statement and
Assignment of Rents made May 25, 1993 by New World
Communications of Detroit, Inc. in favor of NW Television
(incorporated by reference to Exhibit 4.5K of the NW
Television Registration Statement).
4.16 -- Mortgage, Security Agreement, Financing Statement and
Assignment of Rents made May 25, 1993 by New World
Communications of Ohio, Inc. in favor of NW Television
(incorporated by reference to Exhibit 4.5L of the NW
Television Registration Statement).
4.17 -- Deed of Trust, Security Agreement, Financing Statement
and Assignment of Rents made May 25, 1993 by NW
Communications of San Diego, Inc. in favor of NW
Television (incorporated by reference to Exhibit 4.5M of
the NW Television Registration Statement).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ----------------------- ------------
<C> <S> <C>
4.18 -- Mortgage, Security Agreement, Financing Statement and
Assignment of Rents made May 25, 1993 by New World
Communications of Tampa, Inc. in favor of NW Television
(incorporated by reference to Exhibit 4.5N of the NW
Television Registration Statement).
4.19 -- New Intercompany Note made by New World Communications of
Atlanta, Inc. in favor of NW Television in the principal
amount of $16,700,000, dated May 25, 1993 (incorporated
by reference to Exhibit 4.5O of the NW Television
Registration Statement).
4.20 -- Amended and Restated Intercompany Note made by New World
Communications of Atlanta, Inc. in favor of NW Television
in the principal amount of $161,500,000, dated May 25,
1993 (incorporated by reference to Exhibit 4.5P of the NW
Television Registration Statement).
4.23 -- New Intercompany Note made by New World Communications of
Milwaukee, Inc. in favor of NW Television in the
principal amount of $14,300,000, dated May 25, 1993
(incorporated by reference to Exhibit 4.5S of the NW
Television Registration Statement).
4.24 -- Amended and Restated Intercompany Note made by New World
Communications of Milwaukee, Inc. in favor of NW
Television in the principal amount of $11,600,000, dated
May 25, 1993 (incorporated by reference to Exhibit 4.5T
of the NW Television Registration Statement).
4.25 -- New Intercompany Note made by New World Communications of
Detroit, Inc. in favor of NW Television in the principal
amount of $18,400,000, dated May 25, 1993 (incorporated
by reference to Exhibit 4.5U of the NW Television
Registration Statement).
4.26 -- Amended and Restated Intercompany Note made by New World
Communications of Detroit, Inc. in favor of NW Television
in the principal amount of $39,100,000, dated May 25,
1993 (incorporated by reference to Exhibit 4.5V of the NW
Television Registration Statement).
4.27 -- New Intercompany Note made by New World Communications of
Ohio, Inc. in favor of NW Television in the Principal
amount of $14,500,000, dated May 25, 1993 (incorporated
by reference to Exhibit 4.5W of the NW Television
Registration Statement).
4.28 -- Amended and Restated Intercompany Note made by New World
Communications of Ohio, Inc. in favor of NW Television in
the principal amount of $75,000,000, dated May 25, 1993
(incorporated by reference to Exhibit 4.5X of the NW
Television Registration Statement).
4.29 -- New Intercompany Note made by NW Communications of San
Diego, Inc. in favor of NW Television in the principal
amount of $13,300,000, dated May 25, 1993 (incorporated
by reference to Exhibit 4.5Y of the NW Television
Registration Statement).
4.30 -- Amended and Restated Intercompany Note made by NW
Communications of San Diego, Inc. in favor of NW
Television in the principal amount of $75,000,000, dated
May 25, 1993 (incorporated by reference to Exhibit 4.5Z
of the NW Television Registration Statement).
4.31 -- Intercompany Note made by New World Communications of
Tampa, Inc. in favor of NW Television in the principal
amount of $65,000,000, dated May 25, 1993 (incorporated
by reference to Exhibit 4.5AA of the NW Television
Registration Statement).
4.32 -- Junior Subordinated Intercompany Note made by New World
Communications of Tampa, Inc. in favor of NW Television
in the principal amount of $64,800,000, dated May 25,
1993 (incorporated by reference to Exhibit 4.5BB of the
NW Television Registration Statement).
4.33 -- Stockholders Agreement, dated as of May 25, 1993, among
NW Television, Andrews, and the Initial Executing
Stockholders listed therein and assumed by the Registrant
in accordance with the provisions of the Agreement and
Plan of Reorganization and Merger filed as Exhibit 2.10
hereto (incorporated by reference to Exhibit 4.6 of the
NW Television Registration Statement).
4.34 -- Registration Rights Agreement, dated as of May 25, 1993,
among NW Television, and the Stockholders,
Warrantholders, and Debtholders listed on the Signature
Pages thereto and assumed by NWCG in accordance with the
provisions of the Agreement and Plan of Reorganization
and
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ----------------------- ------------
<C> <S> <C>
Merger filed as Exhibit 2.10 hereto (incorporated by
reference to Exhibit 4.7 of the NW Television
Registration Statement).
4.35 -- New Equity Stock Subscription Agreement, dated as of
January 26, 1993, by and between NW Television and
Andrews Incorporated, as amended January 29, 1993 and
February 11, 1993 (incorporated by reference to Exhibit
4.8 of the NW Television Registration Statement).
4.36 -- Purchase Agreement, dated May 20, 1993, among NW
Television, Andrews for the limited purpose of
acknowledging the agreement set forth in Section 2
thereto and Bear, Stearns & Co. Inc. (incorporated by
reference to Exhibit 4.9 of the NW Television
Registration Statement).
4.37 -- Registration Agreement, dated May 20, 1993, by and
between NW Television and Bear, Stearns & Co. Inc.
(incorporated by reference to Exhibit 4.10 of the NW
Television Registration Statement).
4.38 -- Form of Class A Warrant of NW Television assumed by the
Registrant in accordance with the provisions of the
Agreement and Plan of Reorganization and Merger filed as
Exhibit 2.10 hereto (incorporated by reference to Exhibit
4.11 of the NW Television Registration Statement).
4.39 -- Form of Class B Warrant of NW Television assumed by the
Registrant in accordance with the provisions of the
Agreement and Plan of Reorganization and Merger filed as
Exhibit 2.10 hereto (incorporated by reference to Exhibit
4.12 of the NW Television Registration Statement).
4.40 -- Form of Class A, Series 2 Warrants of the Registrant
(incorporated by reference to Exhibit 3.3 of the NWCG
Form 8-K/A dated March 19, 1994).
4.41 -- Certificates of Designations of Preferences and Rights of
6.375% Cumulative Redeemable Convertible Preferred Stock
(incorporated by reference to Exhibit 3.3 of the NWCG
Annual Report on Form 10-K for the year ended December
31, 1993).
4.42 -- Certificate of Designations of the Series B Preferred
Stock (incorporated by reference to Exhibit 8 of the NWCG
May 20, 1994 Form 8-K).
4.43 -- Certificate of Designations of the Series C Preferred
Stock (incorporated by reference to Exhibit 9 of the NWCG
May 20, 1994 Form 8-K).
4.44 -- Form of Certificate of Designations of the Series D
Preferred Stock (incorporated by reference to Exhibit 10
of the NWCG May 20, 1994 Form 8-K).
4.45 -- Certificates of Designations of the NWCG Series E
Cumulative Convertible Redeemable Preferred Stock
(incorporated by reference to Exhibit 1 of the NWCG Form
10-Q for the quarter ended June 30, 1995).
4.46 -- Indenture, dated as of June 30, 1994, and Amended and
Restated Indenture, dated as of June 30, 1994, as amended
and restated as of September 30, 1994, by and between the
Registrant and NationsBank of Georgia, National
Association, as Trustee (including amended and restated
forms of the Old Notes and the New Notes) (incorporated
by reference to Exhibits 4.1 and 4.1A of the Holdings
Registration Statement).
10.1 -- Credit Agreement, dated as of May 25, 1993, among NW
Television, the Lenders listed therein and Canadian
Imperial Bank of Commerce New York Agency, as Agent
(incorporated by reference to Exhibit 10.1 of the NW
Television Registration Statement).
10.2 -- First Amendment, dated as of December 22, 1993, by and
among NW Television, the Institutions listed on the
Signature Pages thereof and Canadian Imperial Bank of
Commerce New York Agency (incorporated by reference to
Exhibit 10.1A of the NW Television Registration
Statement).
10.3 -- Affiliation Agreement dated as of June 26, 1995 by and
between National Broadcasting Company, Inc. and NW
Communications of San Diego, Inc. (incorporated by
reference to Exhibit 10.3 of the Holdings 1995 Form 10-K
(Holdings 1995 Form 10-K)).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ----------------------- ------------
<C> <S> <C>
10.4 -- Affiliation Agreement by and between Fox Broadcasting
Company and WJBK License, Inc. (incorporated by reference
to Exhibit 10.9 of the Holdings Registration Statement).
10.5 -- Affiliation Agreement by and between Fox Broadcasting
Company and WAGA License, Inc. (incorporated by reference
to Exhibit 10.10 of the Holdings Registration Statement).
10.6 -- Affiliation Agreement by and between Fox Broadcasting
Company and WJW License, Inc. (incorporated by reference
to Exhibit 10.11 of the Holdings Registration Statement).
10.7 -- Affiliation Agreement by and between Fox Broadcasting
Company and TVT License, Inc. (incorporated by reference
to Exhibit 10.12 of the Holdings Registration Statement).
10.8 -- Affiliation Agreement by and between Fox Broadcasting
Company and WITI License, Inc. (incorporated by reference
to Exhibit 10.13 of the Holdings Registration Statement).
10.9 -- Affiliation Agreement by and between Fox Broadcasting
Company and KSAZ License, Inc. (incorporated by reference
to Exhibit 10.14 of the Holdings Registration Statement).
10.10-- Affiliation Agreement by and between Fox Broadcasting
Company and WDAF License, Inc. (incorporated by reference
to Exhibit 10.15 of the Holdings Registration Statement).
10.13-- Employment Agreement, dated as of May 25, 1993, by and
between NW Television and Larry D. Haugen (incorporated
by reference to Exhibit 10.11 of the NW Television
Registration Statement).
10.14-- Employment Agreement, dated as of May 25, 1993, by and
between NW Television and James G. Gorman (incorporated
by reference to Exhibit 10.12 of the NW Television
Registration Statement).
10.15-- Employment Agreement, dated as of May 24, 1993, by and
between NW Television and David A. Ramon (incorporated by
reference to Exhibit 10.13 of the NW Television
Registration Statement).
10.16-- Employment Agreement, dated as of May 25, 1993, by and
between NW Television and George N. Gillett, Jr.
(incorporated by reference to Exhibit 10.14 of the NW
Television Registration Statement).
10.17-- Letter Agreement, dated June 11, 1990 between New World
Entertainment, Ltd. and Turner Program Services, Inc.
(incorporated by reference to Exhibit 10.9 to the
Andrew's Group 1990 10-K).
10.18-- Agreement, dated November 15, 1991, by and among TST
Acquisition Corp., Sony Pictures Entertainment and New
World Entertainment, Ltd. and certain of its subsidiaries
(incorporated by reference to Exhibit 10.8 to the Andrews
1991 10-K).
10.19-- Letter Agreement, dated as of February 27, 1992, between
Turner Program Services Inc. and New World Entertainment
(incorporated by reference to Exhibit 10.36 to the
Andrews 1992 10-K).
10.20-- Agreement, dated November 15, 1991, by and among TST
Acquisition Corp., Sony Pictures Entertainment and New
World Entertainment, Ltd. and certain of its subsidiaries
(incorporated by reference to Exhibit 10.8 to the Andrews
1991 10-K).
10.22-- Indemnification Agreement, dated as of March 9, 1994, by
and between Andrews and NWCG, (incorporated by reference
to Exhibit 2 of the NWCG Form 8-K dated March 14, 1994).
10.23-- Non-Competition Agreement, dated as of March 9, 1994, by
and between Andrews and NWCG, (incorporated by reference
to Exhibit 1 of the NWCG Form 8-K dated March 14, 1994).
10.24-- Form of 1994 Stock Option Plan (incorporated by reference
to Exhibit 10.22 of the NWCG 1993 Form 10-K).
10.25-- Registration Rights and Tag-Along Agreement, dated as of
March 28, 1994 by and among NWCG, Andrews, Apollo TV
Partners, L.P., and Apollo TV Partners II, L.P.
(incorporated by reference to Exhibit 10.23 of the NWCG
1993 Form 10-K).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ----------------------- ------------
<C> <S> <C>
10.26-- Asset Purchase Agreement, dated as of May 4, 1994, by and
between NWCG and Great American Television and Radio
Company, Inc., as amended a so May 24, 1994 (incorporated
by reference to Exhibit 1 of the NWCG Report on Form 8-K
dated May 20, 1994 (the "May 20, 1994 Form 8-K").
10.27-- Form of Class D Warrant (incorporated by reference to
Exhibit 2 of the NWCG May 20, 1994 Form 8-K).
10.28-- Option Agreement, dated as of May 20, 1994, by and among
each of the Persons listed on Schedule I thereto,
Donaldson, Lufkin & Jenrette Securities Corporation, as
Agent for the Sellers, DLJ Merchant Banking, Inc. and
NWCG, as amended as of May 24, 1994 (incorporated by
reference to Exhibit 3 of the NWCG May 20, 1994 Form 8-
K).
10.29-- Securities Purchase Agreement, dated as of May 21, 1994,
by and among NWCG and Fox (incorporated by reference to
Exhibit 3 of the NWCG May 20, 1994 Form 8-K).
10.30-- Amendment No. 1 to the Securities Purchase Agreement,
dated as of May 27, 1994, by and among NWCG and Fox
(incorporated by reference to Exhibit 6 of the NWCG May
20, 1994 Form 8-K).
10.31-- Form of Station Affiliation Agreement entered into with
Fox Broadcasting Company (incorporated by reference to
Exhibit 6 of the NWCG May 20, 1994 Form 8-K).
10.32-- Registration Rights Agreement, dated as of May 27, 1994,
by and between NWCG and Fox (incorporated by reference to
Exhibit 7 of the NWCG May 20, 1994 Form 8-K).
10.36-- Warrant Agreement, dated as of May 27, 1994, by and
between NWCG and Fox (incorporated by reference to
Exhibit 11 of the NWCG May 20, 1994 Form 8-K).
10.37-- Understanding Regarding Programming Production, dated as
of May 27, 1994, by and between the Company and Fox
(incorporated by reference to Exhibit 12 of the NWCG May
20, 1994 Form 8-K).
10.38-- Tag Along Rights Agreement, dated as of May 27, 1994, by
and between Andrews and Fox (incorporated by reference to
Exhibit 13 of the NWCG May 20, 1994 Form 8-K).
10.39-- Class D Warrant to Purchase NWCG Class A Common Stock
(incorporated by reference to Exhibit 11 of the NWCG May
20, 1994 Form 8-K).
10.40-- Credit Agreement, dated as of September 29, 1994, among
NWC Acquisition Corporation, the financial institutions
from time to parties thereto, the co-agents identified on
the signature pages thereof, The Chase Manhattan Bank,
N.A. and Chemical Bank, as Managing Agents, The Chase
Manhattan Bank, N.A., as Documentation Agent, and
Chemical Bank, as Administrative Agent (incorporated by
reference to Exhibit 1 of the NWCG Report on Form 8-K
dated October 12, 1994 (the "NWCG October 12, 1994 Form 8-
K")).
10.43-- Guarantee, dated as of September 29, 1994, made by NWTV
Intermediate Holdings Corporation, in favor of Chemical
Bank, as Administrative Agent (incorporated by reference
to Exhibit 4 of the NWCG October 12, 1994 Form 8-K).
10.44-- Pledge Agreement, dated as of September 29, 1994, made by
NWTV Intermediate Holdings Corporation, in favor of
Chemical Bank, as Administrative Agent (incorporated by
reference to Exhibit 5 of the NWCG October 12, 1994 Form
8-K).
10.45-- Pledge Agreement, dated as of September 29, 1994, made by
NWC Acquisition, in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to
Exhibit 6 of the NWCG October 12, 1994 Form 8-K).
10.46-- Security Agreement, dated as of September 29, 1994, made
by NWC Acquisition, in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to
Exhibit 7 of the NWCG October 12, 1994 Form 8-K).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
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- ------- ----------------------- ------------
<C> <S> <C>
10.47-- Subsidiaries' Guarantee, dated as of September 29, 1994,
made by each of the corporations that are signatories
thereto, and NWC Acquisition, in favor of Chemical Bank,
as Administrative Agent (incorporated by reference to
Exhibit 8 of the NWCG October 12, 1994 Form 8-K).
10.48-- Security Agreement, dated as of September 29, 1994, made
by NW Communications of Phoenix, Inc., in favor of
Chemical Bank, as Administrative Agent (incorporated by
reference to Exhibit 10 of the NWCG October 12, 1994 Form
8-K).
10.49-- Pledge Agreement, dated as of September 29, 1994, made by
NW Communications of Phoenix, Inc., in favor of Chemical
Bank, as Administrative Agent (incorporated by reference
to Exhibit 11 of the NWCG October 12, 1994 Form 8-K).
10.50-- Security Agreement, dated as of September 29, 1994, made
by New World Communications of North Carolina, Inc., in
favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 12 of the NWCG
October 12, 1994 Form 8-K).
10.51-- Pledge Agreement, dated as of September 29, 1994, made by
New World Communications of North Carolina, Inc., in
favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 13 of the NWCG
October 12, 1994 Form 8-K).
10.52-- Security Agreement, dated as of September 29, 1994, made
by NW Communications of Birmingham, Inc., in favor of
Chemical Bank, as Administrative Agent (incorporated by
reference to Exhibit 14 of the NWCG October 12, 1994 Form
8-K).
10.53-- Pledge Agreement, dated as of September 29, 1994, made by
NW Communications of Birmingham, Inc., in favor of
Chemical Bank, as Administrative Agent (incorporated by
reference to Exhibit 15 of the NWCG October 12, 1994 Form
8-K).
10.54-- Security Agreement, dated as of September 29, 1994, made
by New World Communications of Kansas City, Inc., in
favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 16 of the NWCG
October 12, 1994 Form 8-K).
10.55-- Pledge Agreement, dated as of September 29, 1994, made by
New World Communications of Kansas City, Inc., in favor
of Chemical Bank, as Administrative Agent (incorporated
by reference to Exhibit 17 of the NWCG October 12, 1994
Form 8-K).
10.57-- Merger Agreement, dated as of November 28, 1994, by and
between NW Television and Viacom International Inc.
(incorporated by reference to Exhibit 1 of the NW
Television's Report on Form 8-K dated March 7, 1995).
10.59-- Amendments 1 to 4 to Option Agreement by and among each
of the persons listed on Schedule I, Donaldson, Lufkin &
Jenrette Securities Corporation, as Agent for the
Sellers, DLJ Merchant Banking Inc. and NWCG (incorporated
by reference to Exhibit 10.59 of the NWCG 1994 Form 10-
K).
10.60-- Affiliation Agreement dated as of June 26, 1995 by and
between National Broadcasting Company, Inc. and WVTM
Television, Inc. (incorporated by reference to Exhibit
10.60 of the Holdings 1995 Form 10-K).
10.61-- Affiliation Agreement dated as of June 28, 1995 by and
between Fox Broadcasting Company and KDFW Television,
Inc. (incorporated by reference to Exhibit 10.61 of the
Holdings 1995 Form 10-K).
10.62-- Affiliation Agreement dated as of June 28, 1995 by and
between Fox Broadcasting Company and KTVI Television,
Inc. (incorporated by reference to Exhibit 10.62 of the
Holdings 1995 Form 10-K).
10.63-- Affiliation Agreement dated as of June 28, 1995 by and
between Fox Broadcasting Company and KTBC Television,
Inc. (incorporated by reference to Exhibit 10.63 of the
Holdings 1995 Form 10-K).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ----------------------- ------------
<C> <S> <C>
10.64-- Registration Rights Agreement, dated as of December 8,
1995, by and among NWCG and CitiCasters Co. (incorporated
by reference to Exhibit 10.64 of the Holdings 1995 Form
10-K).
10.65-- Amendment, dated as of December 8, 1995 to Class D
Warrant (incorporated by reference to Exhibit 10.65 of
the Holdings 1995 Form 10-K).
10.66-- Warrant Agreement, dated as of December 15, 1994, by and
between NWCG and Arthur H. Bilger (incorporated by
reference to Exhibit 10.66 of the Holdings 1995 Form 10-
K).
10.67-- Employment Agreement, dated as of December 15, 1994, by
and between NWCG and Arthur H. Bilger (incorporated by
reference to Exhibit 10.67 of the Holdings 1995 Form 10-
K).
10.68-- Amended Employment Agreement, dated December 31, 1994,
between NW Television and David A. Ramon (incorporated by
reference to Exhibit 10.17 of the NW Television 1994 Form
10-K).
10.69-- Amended and Restated Trust Agreement by and between Brian
N. Byrnes, as Trustee, and NW Acquisition, as Grantor and
Beneficiary, dated as of January 30, 1995 and amended and
restated as of March 31, 1995 (incorporated by reference
to Exhibit 1 of the Company Form 8-K dated March 31,
1995).
10.70-- Option Agreement by and between NW Acquisition and Fox
Television Stations, Inc., dated as of March 31, 1995
(incorporated by reference to Exhibit 2 of the Company
Form 8-K dated March 31, 1995).
10.71-- WBRC and WGHP Television Corporation Secured 18% Note due
March 31, 2005 (incorporated by reference to Exhibit 3 of
the Company Form 8-K dated March 31, 1995).
10.72-- Subsidiary Security Agreement, dated as of March 30,
1995, made by KSAZ Television, Inc. in favor of Chemical
Bank, as Administrative Agent (incorporated by reference
to Exhibit 10.72 of the Holdings 1995 Form 10-K).
10.73-- Subsidiary Pledge Agreement, dated as of March 30, 1995,
made by KSAZ License, Inc. in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to
Exhibit 10.73 of the Holdings 1995 Form 10-K).
10.74-- Subsidiary Security Agreement, dated as of March 30,
1995, made by WDAF Television, Inc. in favor of Chemical
Bank, as Administrative Agent (incorporated by reference
to Exhibit 10.74 of the Holdings 1995 Form 10-K).
10.75-- Subsidiary Pledge Agreement, dated as of March 30, 1995,
made by WDAF License, Inc. in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to
Exhibit 10.75 of the Holdings 1995 Form 10-K).
10.76-- Subsidiaries' Guarantee, dated as of June 1, 1995, by NWC
Sub I Holdings Corporation, NWC Sub II Holdings
Corporation, NW Communications of Texas, Inc., KDFW
License, Inc., KDFW Television, Inc., New World
Communications of St. Louis, Inc., KTVI License, Inc.,
KTVI Television, Inc., NW Communications of Austin, Inc.,
KTBC License, Inc., KTBC Television, Inc., New World WVTM
Communications of Alabama, Inc., WVTM License, Inc. and
WVTM Television, Inc. in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to
Exhibit 10.76 of the Holdings 1995 Form 10-K).
10.77-- Pledge Agreement, dated as of June 1, 1995, made by NW
Acquisition in favor of Chemical Bank, as Administrative
Agent (incorporated by reference to Exhibit 10.77 of the
Holdings 1995 Form 10-K).
10.78-- Subsidiary Pledge Agreement, dated as of June 1, 1995,
made by NWC Sub I Holdings Corporation in favor of
Chemical Bank, as Administrative Agent (incorporated by
reference to Exhibit 10.78 of the Holdings 1995 Form 10-
K).
10.79-- Subsidiary Pledge Agreement, dated as of June 1, 1995,
made by NWC Sub II Holdings Corporation in favor of
Chemical Bank, as Administrative Agent (incorporated by
reference to Exhibit 10.79 of the Holdings 1995 Form 10-
K).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ----------------------- ------------
<C> <S> <C>
10.80-- Subsidiary Pledge Agreement, dated as of June 1, 1995,
made by New World WVTM Communications of Alabama, Inc. in
favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 10.80 of the
Holdings 1995 Form 10-K).
10.81-- Subsidiary Pledge Agreement, dated as of June 1, 1995,
made by NW Communications of Texas, Inc. in favor of
Chemical Bank, as Administrative Agent (incorporated by
reference to Exhibit 10.81 of the Holdings 1995 Form 10-
K).
10.82-- Subsidiary Pledge Agreement, dated as of June 1, 1995,
made by New World Communications of St. Louis, Inc. in
favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 10.82 of the
Holdings 1995 Form 10-K).
10.83-- Subsidiary Pledge Agreement, dated as of June 1, 1995,
made by NW Communications of Austin in favor of Chemical
Bank, as Administrative Agent (incorporated by reference
to Exhibit 10.83 of the Holdings 1995 Form 10-K).
10.84-- Subsidiary Security Agreement, dated as of June 1, 1995,
made by NWC Sub I Holdings Corporation in favor of
Chemical Bank, as Administrative Agent (incorporated by
reference to Exhibit 10.84 of the Holdings 1995 Form 10-
K).
10.85-- Subsidiary Security Agreement, dated as of June 1, 1995,
made by NWC Sub II Holdings Corporation in favor of
Chemical Bank, as Administrative Agent (incorporated by
reference to Exhibit 10.85 of the Holdings 1995 Form 10-
K).
10.86-- Subsidiary Security Agreement, dated as of June 1, 1995,
made by New World WVTM Communications of Alabama, Inc. in
favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 10.86 of the
Holdings 1995 Form 10-K).
10.87-- Subsidiary Security Agreement, dated as of June 1, 1995,
made by NW Communications of Texas, Inc. in favor of
Chemical Bank, as Administrative Agent (incorporated by
reference to Exhibit 10.87 of the Holdings 1995 Form 10-
K).
10.88-- Subsidiary Security Agreement, dated as of June 1, 1995,
made by New World Communications of St. Louis, Inc. in
favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 10.88 of the
Holdings 1995 Form 10-K).
10.89-- Subsidiary Security Agreement, dated as of June 1, 1995,
made by NW Communications of Austin in favor of Chemical
Bank, as Administrative Agent (incorporated by reference
to Exhibit 10.89 of the Holdings 1995 Form 10-K).
10.90-- Subsidiary Security Agreement, dated as of June 1, 1995,
made by WVTM Television, Inc. in favor of Chemical Bank,
as Administrative Agent (incorporated by reference to
Exhibit 10.90 of the Holdings 1995 Form 10-K).
10.91-- Subsidiary Security Agreement, dated as of June 1, 1995,
made by KDFW Television, Inc. in favor of Chemical Bank,
as Administrative Agent (incorporated by reference to
Exhibit 10.91 of the Holdings 1995 Form 10-K).
10.92-- Subsidiary Security Agreement, dated as of June 1, 1995,
made by KTBC Television, Inc. in favor of Chemical Bank,
as Administrative Agent (incorporated by reference to
Exhibit 10.92 of the Holdings 1995 Form 10-K).
10.93-- Subsidiary Security Agreement, dated as of June 1, 1995,
made by KTVI Television, Inc. in favor of Chemical Bank,
as Administrative Agent (incorporated by reference to
Exhibit 10.93 of the Holdings 1995 Form 10-K).
10.94-- Second Amendment and Consent Number 1, dated as of March
28, 1995, by and among NW Acquisition, the financial
institutions from time to time parties thereto, the Co-
Agents identified on the signature pages thereof, The
Chase Manhattan Bank, N.A. and Chemical Bank, as Managing
Agents, The Chase Manhattan Bank, N.A., as Documentation
Agent, and Chemical
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ----------------------- ------------
<C> <S> <C>
Bank, as Administrative Agent (incorporated by reference
to Exhibit 10.94 of the Holdings 1995 Form 10-K).
10.95-- Credit Agreement, dated as of March 24, 1995, with
amendments dated July 25, 1995 and December 31, 1995, by
and among NW Entertainment, the financial institutions
parties thereto and Chemical Bank, as Administrative
Agent (incorporated by reference to Exhibit 10.95 of the
Holdings 1995 Form 10-K).
10.96-- Registration Rights Agreement, dated July 31, 1995, by
and among NWCG and Stephen J. Cannell (incorporated by
reference to Exhibit 10.96 of the Holdings 1995 Form 10-
K).
10.97-- Employment Agreement, dated as of January 1, 1996, by and
between New World Television Incorporated and Farrell
Reynolds (incorporated by reference to exhibit 10.1 of
the NWCG form 10-Q for the quarter ended March 31, 1996).
10.98-- Third Amendment, dated as of June 29, 1996, to the Credit
Agreement, dated as of September 29, 1994, by and among
NW Acquisition, the financial institutions from time to
time parties thereto, the Co-Agents named therein, the
Managing Agents named therein, The Chase Manhattan Bank
(as successor by merger to the Chase Manhattan Bank,
N.A.), as Documentation Agent, and the Chase Manhattan
Bank (formerly named Chemical Bank), as Administrative
Agent (incorporated by reference to Exhibit 10.1 of the
NWCG Form 10-Q for the quarter ended June 30, 1996).
10.99-- NWCG Parent Voting Agreement, dated as of September 24,
1996, among Fox, NWCGP and NWCG Holdings (incorporated by
reference to Exhibit 10.1 of the NWCG Form 8-K dated
September 24, 1996).
10.100-- Apollo Voting Agreement, dated as of September 24, 1996,
among Fox, News Corp. and Apollo Advisors L.P. ("Apollo")
(incorporated by reference to Exhibit 10.2 of the NWCG
Form 8-K dated September 24, 1996).
10.101-- Guaranty, dated as of September 24, 1996, entered into by
News Corp. in favor of NWCG Holdings, NWCGP, Mafco
Holdings Inc. ("Mafco"), 1440 Sepulveda Limited
Partnership ("1440") and Andrews Inc. ("Andrews")
(incorporated by reference to Exhibit 10.3 of the NWCG
Form 8-k dated September 24, 1996).
10.102-- Guaranty, dated as of September 24, 1996, entered into by
Mafco in favor of News Corp. and Fox (incorporated by
reference to Exhibit 10.4 of the NWCG Form 8-K dated
September 24, 1996).
21.1 -- Subsidiaries of the Registrant.
24.1 -- Powers of Attorney.
27.1 -- Financial data schedule (for SEC use only).
</TABLE>
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF REGISTRANT
- --------------------------
<TABLE>
<CAPTION>
State of Doing
Name Incorporation Business As
- ---- -------------- -----------
<S> <C> <C>
New World Communications Group Incorporated Delaware
New World Television Incorporated Delaware
NW Management Incorporated Delaware
NW Programs Incorporated Delaware
SCI Subsidiary Corporation Delaware
NWC Holding Corporation Delaware
NWC Acquisition Corporation Delaware
SCI Sub I Incorporated Delaware
NWC Intermediate Holdings Corporation Delaware
NWTV Intermediate Holding Corporation Delaware
NWE Holdings Corporation Delaware
NWC Management Incorporated Delaware
WGHP and WBRC Television Corporation Delaware
SCI Merger Sub Incorporated Delaware
NW Communications of Austin, Inc. Texas KTBC-TV
NW Communications of Phoenix, Inc. Delaware KSAZ-TV
NW Communications of San Diego, Inc. Delaware KNSD-TV
NW Communications of Texas, Inc. Texas KDFW-TV
New World Communications of Milwaukee, Inc. Delaware WITI-TV
New World Communications of Ohio, Inc. Delaware WJW-TV
New World Communications of Detroit, Inc. Delaware WJBK-TV
New World Communications of Atlanta, Inc. Delaware WAGA-TV
New World Communications of St. Louis, Inc. Missouri KTVI-TV
New World Communications of Tampa, Inc. Delaware WTVT-TV
New World Communications of Kansas City, Inc. Delaware WDAF-TV
KDFW License, Inc. Nevada
KNSD License, Inc. Delaware
KSAZ License, Inc. Delaware
KTBC License, Inc. Nevada
KTVI License, Inc. Nevada
WAGA License, Inc. Delaware
WDAF License, Inc. Delaware
WITI License, Inc. Delaware
WJBK License, Inc. Delaware
WJW License, Inc. Delaware
TVT License, Inc. Delaware
KDFW Television, Inc. Nevada
KSAZ Television, Inc. Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
State of Doing
Name Incorporation Business As
- ---- -------------- -----------
<S> <C> <C>
KTBC Television, Inc. Nevada
KTVI Television, Inc. Nevada
WDAF Television, Inc. Delaware
Moving Target Productions, Inc. California
MT Services, Inc. California
MT2 Services, Inc. California
MT3 Services, Inc. California
MT4 Services, Inc. California
New World Entertainment, Ltd. Delaware
Ameristar Music Publishing Co. California
Cannell Entertainment, Inc. Delaware
Cannell Production Services, Inc. (Canada)
Constance Music, Inc. California
Dobsong Music Corp. California
Echoes in the Darkness Productions, Inc. (Canada)
Four Star Entertainment Corp. Delaware
Four Star International, Inc. California
Fourtel Music Publishing Co. California
FST Advertising, Inc. Delaware
Genesis Video Entertainment, Inc. Illinois
Gold Key Entertainment, Inc. Delaware
Guthy-Renker Holding Corporation Delaware
Highgate Pictures, Inc. Delaware
Highgate Productions, Inc Delaware
Junior High Productions, Inc. California
L.C. Holding Corporation Delaware
Leap Off Productions, Inc. California
Learning Corporation of America Delaware
Learning Corporation of America Films, Inc. Delaware
Library Holdings, Inc. Delaware
Marvel Music Groups, Inc. Delaware
Mighty Marvel Music Corporation Delaware
New World Administration California
New World Animation Ltd. Delaware
New World Distribution, Inc. California
New World/Genesis Distribution California
New World International (Aus) Ltd. Delaware
New World Knowledge, Inc. Delaware
New World Licensing, Inc. California
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
State of Doing
Name Incorporation Business As
- ---- -------------- -----------
<S> <C> <C>
New World Music Publishing Corp. California
New World Pictures, Ltd. Delaware
New World Sales & Marketing, Inc. Delaware
New World Song, Inc. California
New World Television Productions, Inc. California
New World Television Programming California
New World Television (NWT) France Sarl (France)
New World Video California
NWC Sub I Holdings Corporation Delaware
NWC Sub II Holdings Corporation Delaware
NWE Acquisition, Inc. Delaware
NWE Sub I Incorporated Delaware
Plaid Jacket Productions, Inc. California
Rags Productions, Inc. California
Shadow in the Sun USA California
Stronghold, Inc. California
Tour of Duty Productions, Inc. California
VNE, Inc. California
Vox Filmworks (Canada), Ltd. (Canada)
</TABLE>
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Mitchell Stern and Lawrence Jacobson or either
of them, each acting alone, his true and lawful attorney-in-fact and agent, with
full power of substitution, for him and in his name, place and stead, in any and
all capacities, in connection with the NWCG Holdings Corporation (the
"Corporation") Annual Report on Form 10-K for the year ended December 31, 1996
under the Securities Exchange Act of 1934, as amended, including, without
limiting the generality of the foregoing, to sign the Form 10-K in the name and
on behalf of the Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form 10-K and any
instrument, contract, document or other writing, of or in connection with the
Form 10-K or amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, including this power of
attorney, with the Securities and Exchange Commission and any applicable
securities exchange or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, 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 might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, each acting alone, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents this
28th day of March 1997.
\s\ K. Rupert Murdoch
---------------------
K. Rupert Murdoch
<PAGE>
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Mitchell Stern and Lawrence Jacobson or either
of them, each acting alone, his true and lawful attorney-in-fact and agent, with
full power of substitution, for him and in his name, place and stead, in any and
all capacities, in connection with the NWCG Holdings Corporation (the
"Corporation") Annual Report on Form 10-K for the year ended December 31, 1996
under the Securities Exchange Act of 1934, as amended, including, without
limiting the generality of the foregoing, to sign the Form 10-K in the name and
on behalf of the Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form 10-K and any
instrument, contract, document or other writing, of or in connection with the
Form 10-K or amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, including this power of
attorney, with the Securities and Exchange Commission and any applicable
securities exchange or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, 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 might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, each acting alone, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents this
28th day of March 1997.
\s\ Chase Carey
---------------
Chase Carey
<PAGE>
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Mitchell Stern and Lawrence Jacobson or either
of them, each acting alone, his true and lawful attorney-in-fact and agent, with
full power of substitution, for him and in his name, place and stead, in any and
all capacities, in connection with the NWCG Holdings Corporation (the
"Corporation") Annual Report on Form 10-K for the year ended December 31, 1996
under the Securities Exchange Act of 1934, as amended, including, without
limiting the generality of the foregoing, to sign the Form 10-K in the name and
on behalf of the Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form 10-K and any
instrument, contract, document or other writing, of or in connection with the
Form 10-K or amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, including this power of
attorney, with the Securities and Exchange Commission and any applicable
securities exchange or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, 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 might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, each acting alone, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents this
28th day of March 1997.
\s\ David F. DeVoe
------------------
David F. DeVoe
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1996 AND THE CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<CASH> 333,024<F1>
<SECURITIES> 0
<RECEIVABLES> 211,194
<ALLOWANCES> 14,366
<INVENTORY> 0
<CURRENT-ASSETS> 632,773
<PP&E> 187,583<F2>
<DEPRECIATION> 66,139
<TOTAL-ASSETS> 2,148,906
<CURRENT-LIABILITIES> 242,070
<BONDS> 1,110,569
311,746
0
<COMMON> 0
<OTHER-SE> (53,682)
<TOTAL-LIABILITY-AND-EQUITY> 2,148,906
<SALES> 0
<TOTAL-REVENUES> 671,485
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 379,617
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 128,710
<INCOME-PRETAX> 154,336
<INCOME-TAX> 128,288
<INCOME-CONTINUING> (10,892)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,892)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes $193,163 of restricted cash
<F2>PP&E is stated net of accumulated depreciation
</FN>
</TABLE>
