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FILED PURSUANT TO RULE 424(B)(3)
REGISTRATION NO. 333-21471
PROSPECTUS
1,673,975 Shares
LIN TELEVISION CORPORATION
Common Stock
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This Prospectus relates to 1,673,975 shares (the "Shares") of Common Stock,
par value $.01 per share (the "Common Stock"), of LIN Television Corporation, a
Delaware corporation ("LIN Television" or the "Company"). The Shares may be
offered by Cook Inlet Communications Corp., a Delaware corporation ("CICC" or
the "Selling Stockholder"), from time to time in transactions on the Nasdaq
National Market, in negotiated transactions or otherwise, at fixed prices which
may be changed, at market prices prevailing at the time of sale, at prices
related to prevailing market prices or at negotiated prices or otherwise. The
Selling Stockholder may effect such transactions by selling the Shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Stockholder
and/or the purchasers of the Shares for whom such broker-dealers may act as
agents or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). The
Selling Stockholder, and any agents or broker-dealers that participate with the
Selling Stockholder in a distribution of the Shares, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and any commissions received by them and any profit on their
resale of the Shares may be deemed to be underwriting commissions or discounts
under the Securities Act. See "The Selling Stockholder" and "Plan of
Distribution."
None of the proceeds from the sale of the Shares by the Selling Stockholder
will be received by the Company. The Company has agreed to bear certain expenses
(other than selling commissions and discounts) in connection with the
registration of the Shares.
The Common Stock of the Company is quoted on the Nasdaq National Market
under the symbol "LNTV." On February 25, 1997, the per share closing price of
the Common Stock as reported on the Nasdaq National Market was $41.75.
SEE "RISK FACTORS" BEGINNING AT PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMIS-
SION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is February 27, 1997
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AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with any amendments and supplements thereto and any other
registration statements for the same offering, the "Registration Statement")
under the Securities Act with respect to the Company's Common Stock offered
hereby. This Prospectus, which constitutes part of the Registration Statement,
omits certain information contained in the Registration Statement and the
exhibits and schedules thereto on file with the Commission pursuant to the
Securities Act and the rules and regulations of the Commission thereunder. The
Registration Statement, including exhibits and schedules thereto, may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the Commission's Regional Offices at 7 World Trade Center, Suite 1300, New York,
New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and copies may be obtained at the prescribed rates from
the Public Reference Section of the Commission at its principal office in
Washington, D.C.
Statements contained in this Prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete, and in
each instance reference is made to the copy of such contract, agreement or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
Regional Offices at Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material also can be obtained from the Public
Reference Section of the Commission, Washington, D.C. 20549 at prescribed rates.
Such material may also be accessed electronically by means of the Commission's
home page on the Internet at http://www.sec.gov. In addition, material filed by
the Company can be inspected at the offices of The Nasdaq Stock Market, Reports
Section, 1735 K Street N.W., Washington, D.C. 20006.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER WOULD
BE UNLAWFUL. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Annual Report on Form 10-K of the Company for the fiscal year ended
December 31, 1995, the Company's Quarterly Reports on Form 10-Q for the
quarterly periods ended March 31, 1996, June 30, 1996, September 30, 1996, the
Company's Current Report on Form 8-K dated January 28, 1997 and the description
of the Common Stock contained in the Company's registration statement filed
pursuant to Section 12(g) of the Exchange Act, including any amendment or
reports filed for the purpose of updating such description filed by the Company,
all of which are on file with the Commission, are incorporated in this
Prospectus by reference and made a part hereof.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of the
offering of the shares of Common Stock hereunder shall be deemed to be
incorporated herein by reference and shall be a part hereof from the date of the
filing of such documents. Any statements contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
replaced for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which
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also is or is deemed to be incorporated by reference herein modifies or replaces
such statement. Any such statement so modified or replaced shall not be deemed,
except as so modified or replaced, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of the documents incorporated by reference
herein, other than exhibits to such documents not specifically incorporated by
reference. Such requests should be directed to LIN Television Corporation, Four
Richmond Square, Suite 200, Providence, Rhode Island 02906, Attention: Vice
President of Finance (Telephone: (401) 454-2880).
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PROSPECTUS SUMMARY
THE OFFERING
On December 28, 1994, the Company acquired station WTNH-TV, New
Haven-Hartford, Connecticut from Cook Inlet Communications, Inc. ("CICI") and
its subsidiary, Cook Inlet Communications Corp. ("CICC" or the "Selling
Stockholder") for approximately $120.2 million in cash plus approximately 3.4
million shares of common stock of the Company (the "WTNH Acquisition"). In
connection with the WTNH Acquisition, the Company entered into a Registration
Rights Agreement, dated December 28, 1994, as amended (the "Registration Rights
Agreement"), pursuant to which the Selling Shareholder has elected to cause the
Company to register the Shares offered hereby.
The Shares may be offered for sale from time to time by the Selling
Stockholder to various purchasers, or they may be retained. The Selling
Stockholder may elect to sell the Shares in negotiated transactions or
otherwise, at prices and on terms related to the then-current market price or
otherwise, in market transactions or otherwise, in each case with or without the
participation of underwriters, brokers or dealers. The Selling Stockholder will
act independently of the Company in making decisions with respect to the timing,
manner and size of each sale; provided that, pursuant to the terms of the
Registration Rights Agreement, the number of shares proposed to be sold in any
distribution may not be less than 291,810 and that any distribution other than a
public offering resulting in at least $2,000,000 of gross proceeds effected
through customary firm commitment underwriting arrangements made with
underwriters deemed reasonably satisfactory to the Company shall be completed
within 45 days from the date on which the Selling Stockholder is permitted to
commence such distribution under the terms of the Registration Rights Agreement.
See "Plan of Distribution." The Company will not receive any proceeds from the
sale of shares by the Selling Stockholder. The Company has agreed to bear
certain expenses (other than selling commissions and discounts) in connection
with the registration of the Shares.
THE COMPANY
For substantially all of 1994, the Company operated as an indirect
wholly-owned subsidiary of LIN Broadcasting Corporation ("LIN Broadcasting"),
which was engaged in the cellular communications business. On December 28, 1994
the Company became an independent public entity when its common stock was
distributed to LIN Broadcasting shareholders on a tax-free basis (the
"Spin-Off"). The Company's common stock was distributed to the LIN Broadcasting
shareholders on the basis of one share of the Company's Common Stock for every
two shares of LIN Broadcasting common stock.
After the Spin-Off and the WTNH Acquisition were completed on December 28,
1994, AT&T Wireless Services, Inc. ("AT&T Wireless"), a wholly-owned subsidiary
of AT&T Corp. ("AT&T"), became the Company's largest stockholder and currently
holds approximately 45.4% of the outstanding shares of the Company's common
stock. CICC owns approximately 5.7% of the Company's common stock.
The Company owns and operates eight network-affiliated television stations
(the "Stations"), including five in the forty largest domestic television
markets. Additional programming outlets are served through programming and
marketing services provided to four other stations pursuant to local marketing
agreements ("LMAs") and through operation of low-power television stations
("LPTVs") and satellite broadcasting facilities.
The following table provides a brief overview of the Stations:
MARKET NETWORK
MARKET RANK STATION CHANNEL AFFILIATION
------ ---- ------- ------- -----------
Dallas-Fort Worth, TX 8 KXAS-TV 5 (VHF) NBC
Indianapolis, IN 25 WISH-TV 8 (VHF) CBS
New Haven-Hartford, CT 27 WTNH-TV 8 (VHF) ABC
Buffalo, NY 39 WIVB-TV 4 (VHF) CBS
Norfolk-Portsmouth, VA 40 WAVY-TV 10 (VHF) NBC
Austin, TX 63 KXAN-TV 36 (UHF) NBC
Decatur-Champaign, IL 82 WAND-TV 17 (UHF) ABC
Fort Wayne, IN 103 WANE-TV 15 (UHF) CBS
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The Company, with its predecessors, has been engaged in commercial
television broadcasting since 1966. The Company is a Delaware corporation
incorporated in 1990. Its principal executive office is at 4 Richmond Square,
Floor 2, Providence, Rhode Island 02906, telephone (401) 454-2880.
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RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should review carefully the following risks concerning the
Company and the television broadcast industry before purchasing shares of Common
Stock in the Company.
OUTSTANDING INDEBTEDNESS AND SUBSTANTIAL LEVERAGE
The Company has, and will continue to have, consolidated indebtedness that
is substantial in relation to its total stockholders' equity.
In August 1996, the Company renegotiated the terms of its long-term bank
credit facility (the "Bank Credit Facility") primarily to reduce the interest
attributable to outstanding debt. The Bank Credit Facility, as amended, permits
the Company to borrow up to $600 million of an eight-year, reducing revolving
credit facility. The Company had outstanding indebtedness as of December 31,
1996 of $350 million under the Bank Credit Facility. The Company is required to
repay the indebtedness outstanding through semi-annual installments under the
revolving facility, commencing on December 31, 2001 and continuing through
December 31, 2004, at which time the debt will be fully repaid. The Company is
required to apply cash proceeds from certain sales of assets which are not
reinvested in similar assets and excess cash flow to the prepayment of loans.
The Bank Credit Facility, as amended, also permits the Company to solicit
commitments for an incremental $300 million, eight-year, reducing revolving
credit facility (the "Incremental Facility"). Aggregate commitments to the
Incremental Facility, if any, will reduce in eight equal semi-annual amounts
beginning 2001 and ending 2004.
The Company has and will continue to have significant cash interest expense
relating to the Bank Credit Facility, and a significant amount of the Company's
cash flow will be required to service its debt. The Company, on a consolidated
basis, reported interest expense of $26.6 million for the year ended December
31, 1996.
The Company's current and future debt service obligations could have
adverse consequences to holders of the Company's Common Stock, including the
following: (i) the Company's ability to obtain financing for future working
capital needs or additional acquisitions or other purposes may be limited; (ii)
a substantial portion of the Company's cash flow from operations will be
dedicated to the payment of principal and interest on its indebtedness, thereby
reducing funds available for operations; and (iii) the Company may be more
vulnerable to adverse economic conditions than less leveraged competitors and,
thus, may be limited in its ability to withstand competitive pressures.
The Company expects to be able to satisfy its future debt service
obligations and other commitments with cash flow from operations. However, there
can be no assurance that the future cash flow of the Company will be sufficient
to meet such obligations and commitments. If the Company is unable to generate
sufficient cash flow from operations in the future to service its indebtedness
and to meet its other commitments, it may be required to refinance all or a
portion of its existing indebtedness or to obtain additional financing. There
can be no assurance that any such refinancing or additional financing could be
obtained on acceptable terms. If the Company is unable to service or refinance
its indebtedness, it may be required to sell one or more of its stations to
reduce debt service obligations.
RESTRICTIONS IMPOSED BY THE TERMS OF INDEBTEDNESS
The Bank Credit Facility contains covenants restricting certain activities,
including (i) acquisitions and investments, (ii) incurrence of debt, (iii)
distributions and dividends to stockholders, (iv) mergers and sales of assets,
(v) prepayments and subordinated indebtedness, (vi) creations of liens, and
(vii) issuance of preferred stock. As security under the Bank Credit Facility,
the Company has given a negative pledge on the assets and capital stock of each
of its subsidiaries, which own all of the Company's television properties. Such
subsidiaries are restricted from making certain distributions or payments to the
Company. Under the Bank Credit Facility, the Company must remain in compliance
with a series of financial covenants, which compare the levels of the company's
indebtedness to its cash flows as of the end of each quarter. The Company's
ability to meet these financial ratios and financial condition tests can be
affected by events beyond its control, and there can be no assurance that the
Company will meet those tests. As of December 31, 1996, the Company was in
compliance with
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all covenants. The breach of any of these covenants could result in a default
under the Bank Credit Agreement. In addition, an event of default will occur if
any person or group other than AT&T Wireless acquires the ability to elect a
majority of the members of the Company's Board, absent the consent of lenders
holding a majority of the principal balance outstanding. In the event of a
default under the Bank Credit Facility, the lenders could seek to declare all
amounts outstanding under the Bank Credit Facility, together with accrued and
unpaid interest, to be immediately due and payable. If the Company were unable
to repay those amounts, the lenders under the Bank Credit Facility could proceed
against the collateral granted to them to secure that indebtedness. If the
indebtedness under the Bank Credit Facility were to be accelerated, there can be
no assurance that the assets of the Company would be sufficient to repay in full
that indebtedness and the other indebtedness of the Company. Substantially all
of the assets of the Company and its Subsidiaries are pledged as security under
the Bank Credit Facility.
DEPENDENCE UPON KEY PERSONNEL
The Company believes that its success will continue to be dependent upon
its ability to attract and retain skilled managers and other personnel,
including its present officers, regional directors and general managers. The
loss of the services of the Company's President and Chief Executive Officer,
Gary R. Chapman, may have a material adverse effect on the operations of the
Company.
GROWTH THROUGH ACQUISITIONS; FUTURE CAPITAL REQUIREMENTS
The Company intends to actively explore strategic opportunities for the
acquisition of additional broadcast properties. Inherent in any future
acquisitions are certain risks such as increasing leverage and debt service
requirements and combining company cultures and facilities which could have a
material adverse effect on the Company's operating results, particularly during
the period immediately following such acquisitions. Additional debt or capital
may be required to complete future acquisitions, and there can be no assurance
the Company will be able to obtain such financing or raise the required capital.
DEPENDENCE ON CERTAIN EXTERNAL FACTORS
The Company's operating results are primarily dependent on advertising
revenues which, in turn, depend on national and local economic conditions, the
relative popularity of the Company's programming, the demographic
characteristics of the Company's markets, the activities of competitors and
other factors which are outside the Company's control. The television industry
is cyclical in nature, and the Company's revenues could be adversely affected by
a future local, regional or national recessionary environment.
RELIANCE ON PROGRAMMING
The Company's most significant operating cost is syndicated programming.
There can be no assurance that the Company will not be exposed in the future to
increased syndicated programming costs which may adversely affect the Company's
operating results. Acquisition of program rights are often made two or three
years in advance, making it difficult to accurately predict how a program will
perform. In some instances, programs must be replaced before their costs have
been fully amortized, resulting in write-offs that increase station operating
costs.
CERTAIN AFFILIATION AGREEMENTS
Three of the Company's existing owned and operated stations are affiliated
with NBC, three with CBS, and two with ABC. Each of these networks generally
provide these stations with up to 22 hours of prime time programming per week.
In return, the stations broadcast network-inserted commercials in these
programs. Although network affiliates generally have achieved higher ratings
than unaffiliated independent stations in the same market, there can be no
assurance as to the future success of each network's programming or the
continuation of such programming. The Company's network affiliation agreements
are subject to termination by such networks under certain circumstances. The
Company believes it presently enjoys a good relationship with each of the three
networks. However, there can be no assurance that such affiliation
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agreements will remain in place or that each network will continue to provide
programming to affiliates on the same basis that currently exists. The
non-renewal or termination of a network affiliation agreement could have a
material adverse effect on the Company's operations.
COMPETITION
The television broadcasting industry is highly competitive and is
undergoing a period of consolidation and significant change. Many of the
Company's current and potential competitors have significantly greater
financial, marketing, programming and broadcasting resources than the Company.
Technological innovation and the resulting proliferation of programming
alternatives, such as cable television, wireless cable, in home
satellite-to-home distribution services, pay-per- view and home video and
entertainment systems, have fractionalized television viewing audiences and have
subjected free over-the-air television broadcast stations to new types of
competition.
The Company's stations face strong competition for market share and
advertising revenues in their respective markets from other local free
over-the-air broadcast stations, cable television, over-the-air wireless cable
television, radio stations, newspapers, periodicals and other entertainment
media. Some competitors are part of larger companies with greater resources than
the Company. In addition, the FCC has adopted rules which permit telephone
companies to provide video services to homes on a common-carrier basis, and
proposed legislation could relax or repeal the telephone cable ownership
prohibition for all systems.
IMPACT OF NEW TECHNOLOGIES
The Federal Communications Commission (the "FCC") has proposed the adoption
of rules for implementing Advanced Television ("ATV") in the United States.
Implementation of ATV will improve the technical quality of over-the-air
broadcast television. Under certain circumstances, however, conversion to ATV
operations may reduce a station's geographical coverage area. The FCC is
considering an implementation proposal that would allot a second broadcast
channel to each regular commercial television station for ATV operation.
Stations would be required to phase in their ATV operations on the second
channel, with a three-year period to build necessary ATV facilities and a
consecutive three-year period in which to begin operations. Such stations would
be required to surrender their non-ATV channel 15 years after the commencement
of the first three-year period. Implementation of ATV will impose additional
costs on television stations providing the new service due to increased
equipment costs. The Company estimates that the adoption of ATV would require
average capital expenditures of approximately $2 million per Station to provide
facilities necessary to pass along an ATV signal. The conversion of a Station's
equipment enabling it, for example, to produce and transmit ATV programming
would be substantially more expensive. The introduction of this new technology
will require that consumers purchase new receivers (television sets) for ATV
signals or, if available by that time, adapters for their existing receivers.
The FCC has also proposed to assign to full-power ATV stations the channels
currently occupied by LPTVs and both the FCC and certain Congressmen have
proposed to "clear" a portion of the current broadcast spectrum (e.g. channels
60-69) and auction it off to other users, proposals which could adversely
affect the Company's LPTV channels. The Company believes that it is essential
to the long-term viability of the Company and the broadcast industry that the
FCC authorize ATV in the United States, but the Company cannot otherwise
predict when such authorization might be given or the precise effect such
authorization might have on the Company's business.
Budget legislation has been proposed in both the House and Senate which
would require the FCC to raise revenue for the federal government by auctioning
radio frequencies in bands which encompass those currently licensed for use by
broadcasters, including those channels used for "auxiliary" purposes, such as
remote pickups in electronic news gathering and studio-to-transmitter links, and
which would require immediate auctioning of ATV spectrum or accelerated
give-back by broadcasters of their existing analog channels.
Further advances in technology may also increase competition for household
audiences and advertisers. The video compression techniques now under
development for use with current cable television channels or direct broadcast
satellites which do not carry local television signals (some of which commenced
operation in 1994) are expected to reduce the bandwidth which is required for
television signal transmission. These compression techniques, as well as other
technological developments, are applicable to all video delivery systems,
including over-the-air broadcasting, and have the potential to provide vastly
expanded programming to highly targeted audiences. Reduction in the cost of
creating additional channel capacity could lower entry barriers for new channels
and encourage the development of increasingly specialized "niche"
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programming. This ability to reach a very defined audience may alter the
competitive dynamics for advertising expenditures. The Company is unable to
predict the effect that technological changes will have on the broadcast
television industry or the future results of the Company's operations.
GOVERNMENTAL REGULATIONS
The broadcasting industry is subject to regulation by the FCC pursuant to
the Communications Act of 1934, as amended (the "Communications Act"). Approval
by the FCC is required for the issuance, renewal and assignment of station
operating licenses and the transfer of control of station licensees. In
particular, the Company's business will be dependent upon its continuing to hold
television broadcast licenses from the FCC that are issued for maximum terms of
five years. While in the vast majority of cases such licenses are renewed by the
FCC, there can be no assurance that the Company's licenses or the licenses owned
by the owner-operators of the stations with which the Company has LMAs will be
renewed at their expiration dates. All of the Company's stations are presently
operating under regular five-year FCC licenses.
CONTROL BY PRINCIPAL SHAREHOLDER; PRIVATE MARKET VALUE GUARANTEE
AT&T, through its indirect wholly owned subsidiary AT&T Wireless, holds
approximately 45.4% of the outstanding Common Stock. The Company, AT&T Wireless
and CICC have entered into a Stockholders Agreement pursuant to which the
parties have agreed to take all necessary action to cause the Company's Board of
Directors to consist of 10 members, six of whom will be designated by AT&T
Wireless so long as AT&T Wireless beneficially owns at least 25% of the
outstanding Common Stock, one of whom will be designated by CICC so long as CICC
holds at least 3 1/2% of the outstanding Common Stock and three of whom will be
independent directors in accordance with the PMVG (as defined below). As a
result of the Stockholders Agreement, AT&T, through AT&T Wireless, controls the
election of a majority of the Board of Directors and the direction of the
affairs of the Company.
The Company and AT&T Wireless have entered into a Private Market Value
Guarantee (the "PMVG"), which places certain obligations on AT&T Wireless for
the benefit of the Company's stockholders other than AT&T Wireless and its
affiliates. Under the PMVG, AT&T Wireless may, under certain circumstances and
subject to approval by the Company's stockholders (other than AT&T Wireless),
offer to acquire the remaining publicly owned shares of the Company's Common
Stock in 1998 for their "private market value," as then determined pursuant to
an appraisal process. If AT&T Wireless does not agree to acquire such remaining
shares, the Company will be offered for sale in its entirety in a manner
intended to maximize stockholder value. There is no assurance that AT&T Wireless
will agree to acquire shares of the Company's Common Stock for private market
value. If AT&T Wireless does not offer to acquire such shares, there is no
assurance that the Company will be sold in its entirety or, if sold, that the
consideration obtained will be considered favorable by holders of shares of the
Company's Common Stock. The obligations of AT&T Wireless under the PMVG remains
in effect so long as AT&T Wireless and its affiliates (other than the Company)
beneficially own in the aggregate at least 25% of the outstanding shares of the
Company's Common Stock or AT&T Wireless designees constitute a majority of the
Company's Board of Directors.
On December 9, 1996, AT&T issued a press release stating that AT&T will
review its investment in the Company and will evaluate alternatives which could
result in the disposition, either through private or public sales of some or all
of the shares of the Company's Common Stock held by AT&T Wireless.
VOLATILITY OF STOCK PRICE AND DEPTH OF TRADING MARKET
The Common Stock is traded on the Nasdaq National Market. The stock market
in general and the market price of the Common Stock, like the shares of many
other companies, has been and may continue to be volatile and experience
significant price fluctuations. These broad market and industry fluctuations may
adversely affect the market price of the Common Stock. Factors such as changes
in government regulations and general conditions in the industry may have a
significant impact on the market price of the Common Stock. In addition, the
market price of the Common Stock may be affected by quarterly fluctuations in
the Company's results of operations, which may be expected to occur due to the
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seasonality of advertisers' purchases of advertising time.
MULTIPLE OWNERSHIP RULES AND EFFECT ON LMAS
The FCC has initiated rulemaking proceedings to consider proposals to
relax its television ownership restrictions, including proposals that would
permit the ownership, in some circumstances, of two television stations with
overlapping service areas. The FCC may also consider in these proceedings
whether to adopt new restrictions on television LMAs. The "duopoly" rules
currently prevent the Company from acquiring the FCC licenses of its LMA
stations, thereby preventing the Company from directly fulfilling its
obligations under put options that such LMA stations have with the Company. If
the Company should be unable to fulfill its obligation under a put option, it
would be required to find an assignee who could perform such obligation. There
is no assurance that the Company could find an assignee to fulfill the
Company's obligations under the put options on favorable terms. Under the
Telecommunications Act of 1996, the Company's LMAs were "grandfathered." The
precise extent to which the FCC may nevertheless restrict existing LMAs or make
them attributable ownership interests is uncertain. In the rulemaking, the FCC
has proposed, for example, to make LMAs fully attributable ownership interests
and thus prohibited unless the two stations would qualify for dual ownership
under certain specified criteria (e.g., VHF-UHF or UHF-UHF combinations;
start-up stations; failed or failing stations) on a case-by-case basis.
"Grandfathering" rights for current LMAs which do not qualify for conversion to
ownership would be limited to fulfilling the current lease term, with renewal
rights and transferability rights eliminated. The Company's LMAs all involve
leased stations which are UHF stations and which were either start-up stations
or existing stations which were failing financially and would appear to qualify
for conversion to ownership under the proposed standards. Nevertheless, it is
possible that the FCC could deny the Company the ability to convert its LMAs to
full ownership or require the Company to modify its LMAs in ways which impair
their viability. Further, if the FCC were to find that the licensee of one of
the Company's LMA stations failed to maintain control over their operations,
the licensee of the LMA station and/or the Company could be fined. The Company
is unable to predict the ultimate outcome of possible changes to these FCC
rules and the impact such FCC rules may have on its broadcasting operations.
All of the Company's LMAs allow, in accordance with FCC rules,
regulations and policies, preemptions of the Company's programming by the
owner-operator and FCC licensee of each station with which the Company has an
LMA. Accordingly, the Company cannot be assured that it will be able to air all
of the programming expected to be aired on those stations with which it has an
LMA or that the Company will receive the anticipated advertising revenue from
the sale of advertising spots in such programming. Although the Company believes
that the terms and conditions of each of its LMAs should enable the Company to
air its programming and utilize the programming and other non-broadcast license
assets acquired for use on the LMA stations, there can be no assurance that
early terminations of the LMAs or unanticipated preemptions of all or a
significant portion of the programming by the owner-operator and FCC licensee of
such stations will not occur. An early termination of one of the Company's LMAs,
or repeated and material preemptions of programming thereunder, could adversely
affect the Company's operations.
The Company cannot predict what other matters might be considered in the
future, nor can it judge in advance what impact, if any, the implementation of
any of these proposals or changes might have on its business.
DIVIDEND RESTRICTION
The terms of the Company's Bank Credit Facility restrict the Company from
paying dividends on its Common Stock. The Company does not expect to pay
dividends on its Common Stock in the foreseeable future.
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<PAGE> 11
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by
the Selling Stockholder.
<TABLE>
SELLING STOCKHOLDER
The following table sets forth the name of the Selling Stockholder and
certain information with respect to its beneficial ownership of the Company's
Common Stock as of February 25, 1997 and as adjusted to reflect the sale of the
Shares by the Selling Stockholder.
<CAPTION>
Shares Shares Shares
Name and Address Beneficially Owned Offered Beneficially Owned
of Selling Stockholder Prior to the Offering Hereby After the Offering
- ---------------------- --------------------- ------- ------------------
Number Percent Number Percent
<S> <C> <C> <C> <C> <C>
Cook Inlet
Communications Corp.
P.O. Box 93330
Anchorage, AK 99509(1) 1,673,975 5.7% 1,673,975 0 --
- ----------
<FN>
(1) CICC is an indirect wholly-owned subsidiary of Cook Inlet Region Inc. The
shares beneficially owned by CICC do not include 12,500 options granted to Mr.
Huhndorf in connection with his service as director of the Company. As a result
of the Stockholders Agreement, pursuant to which AT&T and CICC have agreed to
vote their shares as provided therein, CICC may be deemed to share beneficial
ownership of 13,494,750 shares held by AT&T through AT&T Wireless, its indirect
wholly-owned subsidiary. CICC disclaims beneficial ownership of such shares.
</TABLE>
PLAN OF DISTRIBUTION
The Shares may be offered for sale from time to time by the Selling
Stockholder to various purchasers, or they may be retained. The Selling
Stockholder may elect to sell the Shares in negotiated transactions or
otherwise, at prices and on terms related to the then-current market price or
otherwise, in market transactions or otherwise, in each case with or without the
participation of underwriters, brokers or dealers. The Selling Stockholder will
act independently of the Company in making decisions with respect to the timing,
manner and size of each sale; provided that, pursuant to the terms of the
Registration Rights Agreement, the number of shares proposed to be sold in any
distribution may not be less than 291,810 and that any distribution other than a
public offering resulting in at least $2,000,000 of gross proceeds effected
through customary firm commitment underwriting arrangements made with
underwriters deemed reasonably satisfactory to the Company shall be completed
within 45 days from the date on which the Selling Stockholder is permitted to
commence such distribution under the terms of the Registration Rights Agreement.
The Selling Stockholder is required to provide the Company notice prior to any
proposed distribution of the Shares, and the Company, in certain circumstances
and subject to certain limitations, has the ability to postpone any offers or
sales for up to 21 days. The Selling Stockholder may also from time to time
offer the Shares through brokers, dealers, or agents, or through underwriters,
who may receive underwriting discounts, concessions or commissions from the
Selling Stockholder and/or the purchasers for whom they act as agent. In that
event, the offers or sales may be made on one or more exchanges or in the
over-the-counter market (i) by a block trade in which a broker or dealer,
engaged for the purpose, will attempt to sell the Shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction, (ii) by purchases by a broker or dealer as principal and resale by
such broker or dealer for its own account, (iii) by ordinary brokerage
transactions or transactions in which the broker solicits purchasers, (iv) in an
underwritten transaction, or (v) otherwise. In the event that brokers or dealers
are engaged by the Selling Stockholder, such brokers or dealers may arrange for
other brokers or dealers to participate. The Company has
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<PAGE> 12
been advised by the Selling Stockholder that it has not, as of the date hereof,
entered into any arrangement for an underwritten offering of the Shares or with
a broker-dealer for the sale of Shares through a block trade, special offering,
exchange distribution or secondary distribution of a purchase by a
broker-dealer.
Any Shares which qualify for sale pursuant to Rule 144 under the Securities
Act may be sold under Rule 144 rather than pursuant to this Prospectus.
In offering the Shares, the Selling Stockholder and any broker-dealers and
any other participating broker-dealers who execute sales for the Selling
Stockholder may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales, and any profits realized by the
Selling Stockholder and the compensation of such broker-dealers may be deemed to
be underwriting discounts and commissions.
The Registration Rights Agreement provides that the Company will indemnify
the Selling Stockholder and any underwriters against certain liabilities,
including civil liabilities under the Securities Act.
The Selling Stockholder has advised the Company that, during such time as
it may be engaged in a distribution of the Shares, it will comply with Rules
10b-6 and 10b-7 under the Exchange Act (as those Rules are described in more
detail below) and, in connection therewith, the Selling Stockholder has agreed
not to engage in any stabilization activity in connection with the Company's
securities, to furnish to each broker-dealer through which the Shares may be
offered copies of this Prospectus, and not to bid for or purchase any securities
of the Company or attempt to induce any person to purchase any of the Company's
securities except as permitted under the Exchange Act. The Selling Stockholder
has also agreed to inform the Company when the distribution of the Shares is
completed.
Rule 10b-6 under the Exchange Act prohibits participants in a distribution
from bidding for, or purchasing for, an account in which the participant has a
beneficial interest, any of the securities that are subject of the distribution.
Rule 10b-7 governs bids and purchases made in order to stabilize the price of a
security in connection with a distribution of the security.
Any public offering of the Shares by the Selling Stockholder will terminate
on the earlier of (a) two years from the date of this Prospectus or (b) the date
on which all Shares have been sold by the Selling Stockholder. The Company has
agreed with the Selling Stockholder to prepare and file with the Commission any
amendments or supplements to the Registration Statement and this Prospectus as
may be necessary to keep the Registration Statement effective through such
offering period.
EXPERTS
The consolidated financial statements and schedules of the Company at
December 31, 1995 and 1994, and for each of the three years in the period ended
December 31, 1995, appearing in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are,
and audited financial statements to be included in subsequently filed documents
will be, incorporated herein in reliance upon the reports of Ernst & Young LLP
pertaining to such financial statements (to the extent covered by consents filed
with the Securities and Exchange Commission) given upon the authority of such
firm as experts in accounting and auditing.
The financial statements of Buffalo Broadcasting Co. Inc. and subsidiary,
as of December 31, 1994 and for the year then ended, incorporated by reference
in this prospectus, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report (which report expressed an unqualified
opinion and included an explanatory paragraph relating to whether Buffalo
Broadcasting Co. Inc. and subsidiary will continue as a going concern), which is
incorporated herein by reference, and have been so included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
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<PAGE> 13
LEGAL MATTERS
The validity of the Shares will be passed upon for the Company by Hale and
Dorr LLP, Washington, D.C.
