<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO ______
COMMISSION FILE NUMBER: 0-27000
HEARST-ARGYLE TELEVISION, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 74-2717523
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
959 EIGHTH AVENUE (212) 649-2307
NEW YORK, NY 10019 (Registrant's telephone number,
(Address of principal executive offices) including area code)
Argyle Television, Inc.
200 Concord Plaza, Suite 700, San Antonio, TX
--------------------------------------------------------------
78216 (Former name, former address, and former fiscal year, if
changed since last report)
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 twelve 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 [_]
As of November 13, 1997, the Registrant had 50,902,206 shares of common stock
outstanding. Consisting of 12,291,204 shares of Series A Common Stock and
38,611,002 shares of Series B Common Stock.
================================================================================
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<S> <C>
Condensed Consolidated Balance Sheets at December 31, 1996 and
September 30, 1997 (Unaudited)..................................................1
Condensed Consolidated Statements of Operations for the
three months and nine months ended September 30, 1996,
and two months and eight months ended August 31, 1997
(Predecessor)
and one month ended September 30, 1997 (Unaudited)..............................3
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 1996, eight months ended August 31, 1997
(Predecessor) and one month ended September 30, 1997.
(Unaudited).....................................................................4
Notes to Condensed Consolidated Financial Statements
(Unaudited).....................................................................5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS..........................................................12
PART II OTHER INFORMATION
Item 1. Legal Proceedings.................................................................18
Item 2. Changes in Securities.............................................................18
Item 3. Defaults Upon Senior Securities...................................................19
Item 4. Submission of Matters to a Vote of Security Holders...............................19
Item 5. Other Information.................................................................20
Item 6. Exhibits and Reports on Form 8-K..................................................20
SIGNATURES..............................................................................................22
</TABLE>
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 SEPTEMBER 30, 1997
(PREDECESSOR) (UNAUDITED)
-----------------------------------------------------
(In thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 949 $ 30,664
Accounts receivable, net 14,936 72,270
Barter program rights 5,912 7,364
Program rights 3,934 37,676
Deferred taxes -- 1,589
Net assets held for sale -- 20,818
Other 1,895 6,802
-----------------------------------------------------
Total current assets 27,626 177,183
Property, plant and equipment, net 39,213 88,457
Intangible assets, net 231,855 615,426
Other assets:
Pension asset -- 25,101
Deferred acquisition and financing costs,
net 5,788 10,163
Barter program rights, noncurrent 5,334 2,871
Program rights, noncurrent 3,580 2,767
Other 15,212 15,374
-----------------------------------------------------
Total assets $328,608 $937,342
=====================================================
</TABLE>
1
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SEPTEMBER 30, 1997
(PREDECESSOR) (UNAUDITED)
-----------------------------------------
(In thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,001 $ 4,843
Accrued liabilities 5,612 41,565
Barter program rights payable 6,776 7,364
Program rights payable 4,251 37,665
Other 868 1,122
-----------------------------------------
Total current liabilities 18,508 92,559
Barter program rights payable 5,333 2,871
Program rights payable 3,610 3,301
Long-term debt 171,500 565,000
Deferred taxes -- 51,371
Due to The Hearst Corporation -- 71,626
Other liabilities 505 465
Stockholders' equity:
Series A Preferred stock 1 1
Series B Preferred stock 1 1
Series A common stock 38 82
Series B common stock 2 386
Series C common stock 73 --
Additional paid-in capital 159,454 186,994
Accumulated deficit (30,417) (37,315)
-----------------------------------------
Total stockholders' equity 129,152 150,149
Total liabilities and stockholders'
equity $ 328,608 $ 937,342
========================================
</TABLE>
See accompanying notes.
2
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS NINE MONTHS EIGHT MONTHS ONE MONTH
ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30 AUGUST 31 SEPTEMBER 30 AUGUST 31 SEPTEMBER 30
------------------------------------------------------------------------------------------
1996 1997 1996 1997 1997
(PREDECESSOR)
------------------------------------------------------------------------------------------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Total revenues $ 17,439 $ 12,061 $ 51,496 $ 51,826 $ 34,075
Station operating expenses 9,172 6,243 27,544 27,610 14,816
Amortization of program rights 1,137 714 3,708 2,833 3,724
Depreciation and amortization 6,503 4,195 17,227 16,955 2,920
------------------------------------------------------------------------------------------
Station operating income 627 909 3,017 4,428 12,615
Corporate general and administrative
Expenses 1,636 796 3,503 2,700 537
Non-cash compensation expense 169 3,015 506 3,518 --
------------------------------------------------------------------------------------------
Operating income/(loss) (1,178) (2,902) (992) (1,790) 12,078
Interest expense, net 4,741 3,342 12,045 12,749 3,870
------------------------------------------------------------------------------------------
Income/(loss) before taxes (5,919) (6,244) (13,037) (14,539) 8,208
Income taxes -- -- -- -- (3,418)
------------------------------------------------------------------------------------------
Net income/(loss) (5,919) (6,244) (13,037) (14,539) 4,790
Less preferred stock dividends (356) -- (474) (711) (355)
------------------------------------------------------------------------------------------
Income/(loss) applicable to common
Stockholders $ (6,275) $ (6,244) $(13,511) $(15,250) $ 4,435
==========================================================================================
Earnings/(loss) per common share $ (0.55) $ (0.55) $ (1.21) $ (1.34) $ 0.09
==========================================================================================
Weighted average number of common
shares outstanding 11,347 11,347 11,212 11,347 46,888
==========================================================================================
</TABLE>
See accompanying notes.
3
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS EIGHT MONTHS ONE MONTH
ENDED ENDED ENDED
SEPTEMBER 30, AUGUST 31, SEPTEMBER 30,
-------------------------------------------------
1996 1997 1997
(PREDECESSOR)
-------------------------------------------------
(In thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income/(loss) $ (13,037) $ (14,539) $ 4,790
Adjustments to reconcile net income/(loss) to net cash
provided by operating activities:
Depreciation 3,369 3,766 1,034
Amortization of intangible assets 13,858 13,189 1,886
Amortization of deferred financing costs 680 434 975
Amortization of program rights 3,708 2,833 3,724
Program payments (2,761) (3,034) (3,989)
Deferred income taxes -- -- 2,940
Compensation element of stock options 506 3,518 --
Fair value adjustments of interest rate protection
Agreements 1,082 -- --
Changes in operating assets and liabilities, net (933) 5,956 (3,206)
-------------------------------------------------
Net cash provided by operating activities 6,472 12,123 8,154
INVESTING ACTIVITIES
Clear Channel Venture Payment (13,031) -- --
Acquisition of stations (5,889) (24,365) --
Purchases of property, plant, and equipment (5,328) (12,138) (132)
Partial payment on relocation of studio (1,664) -- --
-------------------------------------------------
Net cash used in investing activities (25,912) (36,503) (132)
FINANCING ACTIVITIES
Financing costs and other (125) (5,261) --
Dividends paid on preferred stock (474) (711) (355)
Payment to shareholders relating to Hearst Transaction -- -- (91,910)
Proceeds from issuance of long-term debt 28,500 88,000 100,000
Payment of long-term debt (7,000) (54,500) (15,000)
-------------------------------------------------
Net cash provided by (used in) financing activities 20,901 27,528 (7,265)
-------------------------------------------------
Increase in cash and cash equivalents 1,461 3,148 757
Cash and cash equivalents at beginning of period 2,206 949 29,907
Cash and cash equivalents at end of period $ 3,667 $ 4,097 $ 30,664
=================================================
Businesses acquired in purchase transaction:
Fair market value of assets acquired $ 38,259 $ 24,379 $ --
Liabilities assumed (4,773) (14) --
Issuance of preferred stock (21,876) -- --
Issuance of common stock (5,721) -- --
-------------------------------------------------
Net cash paid for acquisitions $ 5,889 $ 24,365 $ --
=================================================
Supplemental Cash Flow Information:
Net purchase price valuation adjustment affecting equipment
and FCC licenses, intangibles and working capital $ 1,556 -- $24,050
</TABLE>
See accompanying notes
4
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1997
1. SUMMARY OF ACCOUNTING POLICIES
The condensed consolidated financial statements include the accounts of
Hearst-Argyle Television, Inc. (the "Company") and its wholly owned
subsidiaries. All significant intercompany accounts have been eliminated in
consolidation. References herein to the Company include its subsidiaries, unless
the context requires otherwise.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. Operating
results for the three and nine-month periods ended September 30, 1997 are not
necessarily indicative of the results that may be expected for a full year.
2. ACQUISITIONS
The Company is the successor to the combined operations of Argyle
Television, Inc. ("Argyle" and "Predecessor") and the television broadcast group
of The Hearst Corporation ("Hearst") pursuant to a merger transaction that was
consummated on August 29, 1997, effective September 1, 1997 for accounting
purposes (the "Hearst Transaction"). In that transaction, Hearst (the accounting
acquiror) contributed its television broadcast group and related broadcast
operations (the "Hearst Broadcast Group") to Argyle and merged a wholly-owned
subsidiary of Hearst with and into Argyle, with Argyle as the surviving
corporation (renamed "Hearst-Argyle Television, Inc."). As a result of the
Hearst Transaction, Hearst currently owns approximately 38.6 million shares of
the Company's Series B Common Stock, comprising approximately 76% of the total
outstanding common stock of the Company.
In November 1996, Argyle entered into a definitive agreement (the
"Gannett Swap") with Gannett Co., Inc. ("Gannett") to swap the Company's WZZM
and WGRZ for Gannett's WLWT, the NBC affiliate in Cincinnati, Ohio, and KOCO,
the ABC affiliate in Oklahoma City, Oklahoma. In connection with this
transaction, Argyle agreed to pay Gannett $20 million in additional
consideration, funded by borrowings under Argyle's Bank Credit Agreement dated
October 27, 1995 ("Old Credit Agreement"). This transaction closed on January
31, 1997.
These transactions were accounted for as a purchase and, accordingly, the
purchase price and related acquisition costs have been allocated to the acquired
assets and liabilities based upon their preliminarily determined fair market
values. The excess of the purchase price over the net fair market value of the
tangible assets acquired and the liabilities assumed was allocated to
identifiable intangible assets including FCC licenses and network affiliation
agreements and goodwill. The final asset and liability fair values may differ
from those set forth in the
5
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1997
accompanying condensed consolidated balance sheet at September 30, 1997;
however, the changes, if any, are not expected to have a material effect on the
consolidated financial statements of the Company. The condensed consolidated
financial statements include the results of operations of the acquired stations
since the date of the acquisition.
Giving effect to the Hearst Transaction and the Gannett Swap discussed
above, unaudited pro forma results of operations reflecting combined historical
results for WCVB, WTAE, WBAL, KMBC, WISN, WDTN, (the "Hearst Broadcast Group"),
WAPT, KITV, WLWT, KOCO, the Arkansas Stations and the Company's share of the
combined broadcast cash flows from the Clear Channel Venture and fees for
managing certain stations owned by Hearst pursuant to a management agreement
(See Note 5. Related Party Transactions) as if all acquisitions, transactions
and financings occurred as of January 1, 1996, are as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
---------------------------------------------
1996 1997
---------------------------------------------
(In thousands, except per share data)
<S> <C> <C>
Total revenues $266,172 $ 275,417
Income from continuing operations attributable to
common stock $ 26,023 $ 31,072
Income from continuing operations per share attributable
to common stock
$ 0.49 $ 0.58
Pro Forma number of shares used in calculations
53,576 53,576
</TABLE>
The above pro forma results are presented in response to applicable
accounting rules relating to business acquisitions and are not necessarily
indicative of the actual results that would be achieved had each of the stations
been acquired at the beginning of the periods presented, nor are they indicative
of future results of operations.
3. LONG-TERM DEBT
Upon consummation of the Hearst Transaction, the Company entered into a
$1 billion credit facility (the "Credit Facility") with the Chase Manhattan Bank
("Chase"). The Credit Facility will mature on December 31, 2004 (the "Maturity
Date"). On December 31, 1999 (the "Conversion Date"), outstanding principal
indebtedness under the Credit Facility up to $750 million will be converted into
a five-year term loan (the "Term Loan"). The outstanding principal balance of
the Term Loan on the Conversion Date (the "Initial Term Loan Balance") is to be
repaid in quarterly installments on the following schedule for the years
indicated: 2000-2.5% of the Initial Term Loan Balance per quarter; 2001-3.75% of
the Initial Term Loan Balance per quarter; 2002-5% of the Initial Term Loan
Balance per quarter; 2003-6.25% of the
6
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1997
Initial Term Loan Balance per quarter; and, 2004-7.5% of the Initial Term Loan
Balance per quarter. On the Conversion Date and through the Maturity Date, Chase
will also provide a $250 million revolving credit facility (the "Revolving
Facility") to the Company. As of September 30, 1997, the Company had $860.0
million available under the Credit Facility.
The Credit Facility is unsecured, but the Company provided a negative
pledge on (or, in other words, will not grant to any third party a security
interest in) its assets and the stock of its subsidiaries.
Outstanding principal balances under the Credit Facility (including,
after the Conversion Date, borrowings under the Term Loan and the Revolving
Facility) will bear interest at the "applicable margin" plus either, at the
Company's option, LIBOR or the "alternate base rate." The "applicable margin"
will vary depending on the ratio of the Company's total debt to operating cash
flow ("leverage ratio"). The "alternate base rate" is the higher of (i) Chase's
prime rate, (ii) 1% plus the secondary market rate for three month certificates
of deposit, or (iii) 0.5% plus the rates on overnight federal funds transactions
with members of the Federal Reserve System. The Company will also be required to
pay an annual commitment fee based on the unused portion of the Credit Facility
and the applicable margin ranging from 0.1875% to 0.1250% (but after the
Conversion Date, only on the unused portion of the Revolving Facility).
The Credit Facility contains certain financial and other covenants and
restrictions that the Company, among other things, (i) limit the Company's ratio
of total debt to operating cash flow to not greater than 5.5 through December
30, 1999; 5.0 from December 31, 1999 through December 30, 2000; 4.5 from
December 31, 2000 through December 30, 2001; and 4.0 from December 31, 2001
through the Maturity Date; (ii) require the Company to maintain a ratio of
operating cash flow to interest expense of not less than 2.0 through December
31, 1999, and not less than 2.5 thereafter; (iii) require the Company to
maintain a ratio of operating cash flow to "fixed charges" (generally, interest
expense, scheduled repayments of principal, taxes and capital expenditures) of
not less than 1.15; (iv) restrict the amount of operating cash flow from
businesses other than the broadcast business to 25% or less of the Company's
total operating cash flow; and, (v) at such times when the ratio of total debt
to operating cash flow is greater than or equal to 4.0, restrict the payment of
dividends and the repurchase of stock to the sum of (x) $100 million; (y)
proceeds from future stock issuances; and, (z) one-third of cash provided by
operations in excess of fixed charges.
The Credit Facility will also provide that all outstanding balances
will become due and payable at such time as Hearst's (and certain of its
affiliates') equity ownership in the Company becomes less than 35% of the total
equity of the Company and Hearst and such affiliates no longer have the right to
elect a majority of the members of the Company's Board.
On August 29, 1997, the Old Credit Agreement was retired and related
deferred financing fees were written-off.
7
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1997
As part of the Hearst Transaction, the Company assumed $275 million of
Hearst Private Placement Debt. The holders of the Private Placement Debt are
Metropolitan Life Insurance Company and The Prudential Insurance Company of
America. The Private Placement Debt consists of three series of notes having the
following terms:
<TABLE>
<CAPTION>
SERIES AMOUNT INTEREST RATE DUE DATE
------ ------ ------------- --------
<S> <C> <C> <C>
A.......................... $ 47,500,000 7.87% 12/22/01
B.......................... $180,000,000 8.01% 12/22/02
C.......................... $ 47,500,000 8.04% 12/22/03
</TABLE>
The Company intends to repay the Private Placement Debt prior to December 31,
1997 using funds available under the Credit Facility. Under the terms of the
Private Placement Debt, when the Company repays this debt the Company will have
to pay the holders thereof a "make-whole" premium. The amount of the make-whole
premium is determined by a formula based on the yield for U.S. Treasury
securities having a maturity equal to then-remaining maturity of the notes
comprising the Private Placement Debt plus 50 basis points. Generally, the
make-whole premium decreases with the passage of time and an increase in market
interest rates, and increases with a decrease in market interest rates. Assuming
repayment of the Private Placement Debt on November 14, 1997, the make-whole
premium would be approximately $19 million.
<TABLE>
<CAPTION>
Long-term debt consists of the following:
December 31, 1996 September 30, 1997
--------------------------------------------------
<S> <C> <C>
Old Credit Agreement dated October 27, 1995:
Revolving credit facility $ 21,500,000 --
Credit Facility dated August 29, 1997:
Revolving credit facility -- $140,000,000
Senior Subordinated Notes 150,000,000 150,000,000
Private Placement Debt 275,000,000
Less current maturities -- --
--------------------------------------------------
$171,500,000 $565,000,000
==================================================
</TABLE>
Under the terms of the Old Credit Agreement, Argyle was required to enter
into interest rate protection agreements to modify the interest characteristics
of a portion (approximately 50%) of its outstanding borrowings thereunder from a
floating rate to a fixed rate.
Argyle wrote two options that gave the option holder the right to enter
into two interest rate swap agreements with Argyle during May and June 1996.
Option premiums for these two options were $1,000,477. The option holder
exercised these options in May and June 1996, effectively fixing Argyle's
interest rate at approximately 7% on $35 million of its borrowings until June
1999.
8
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1997
Additional information regarding these interest rate protection
agreements in effect at September 30, 1997 follows:
<TABLE>
<CAPTION>
NOTIONAL AMOUNT AVERAGE AVERAGE ESTIMATED FAIR
RECEIVE RATE PAY RATE VALUE
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest rate swap agreements:
Fixed rate agreement $20,000,000 LIBOR 7.01% $ (351,855)
Fixed rate agreement $15,000,000 LIBOR 6.98% $ (265,412)
</TABLE>
The Company is exposed to credit loss in the event the other parties on
the above agreements do not perform, but the Company does not anticipate
non-performance by any of these counter parties, all of which are major
financial institutions.
4. INCOME TAXES
For periods ending prior to August 29, 1997, the Company will file
stand-alone Federal, state and local income tax returns. For the period from
August 29, 1997 through November 12, 1997 the Company will be included in
Hearst's consolidated Federal, state and local income tax returns. Subsequent to
November 13, 1997 when Hearst's ownership percentage of the Company fell below
80% as a result of the issuance of additional shares by the Company (see Note
8), the Company will file stand-alone Federal, state and local income tax
returns.
5. STOCK OPTIONS
The Company's Board of Directors approved the amendment and restatement
of Argyle's second amended and restated 1994 Stock Option Plan and adopted such
plan as the resulting 1997 Stock Option Plan.
The amendment amends and restates Argyle's existing option plan to, among
other things, (i) increase the number of shares reserved for issuance under the
plan from 1,022,727 to 3 million; (ii) reduce the antidilution adjustment
provision from 12% to 6.25% of the fully-diluted shares reserved for issuance
under the plan; (iii) provide for the administration of the plan by the Board of
Directors; (iv) reduce the limit on the maximum number of shares of common stock
for which options may be granted under the Option Plan to any participant during
any year from 1,022,727 to 500,000 shares; (v) permit the Board of Directors to
approve the termination of a participant's employment or service and accelerate
the exercisability of any then unexercisable options, extend the exercise period
following termination of employment during which any outstanding options may be
exercised (but not beyond the original exercise period thereof) or modify the
vesting terms and extend the exercise period of the grant; (vi) permit a
participant to transfer exercise rights to any outstanding non-qualified stock
options to immediate family members for bona fide estate planning purposes;
(vii) amend the definition of "change of
9
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1997
control" to include any transaction or series of transactions such as a going-
private transaction contemplated by Rule 13e-3 of the Exchange Act; and, (viii)
provide for the annual award of options covering a fixed number of shares to
each non-employee director for each year that he or she continues to serve as a
director.
As of September 30, 1997, the Company has approximately 1.8 million stock
options outstanding which were granted at fair market value and are exercisable
over 3 years. Currently approximately 200,000 are vested.
6. NET ASSETS HELD FOR SALE
Upon completion of the Hearst Transaction, the Company owns television
stations in two areas (Boston and Providence, and Dayton and Cincinnati) with
overlapping service contours in violation of the FCC's local ownership rules.
The FCC's rules prohibit the ownership of two stations in the same geographic
area whose service contours overlap. To comply with these rules, the Company
will be required to divest one station in each of the aforementioned areas.
Included in the caption Net Assets Held for Sale on the accompanying condensed
consolidated balance sheet as of September 30, 1997, are the net assets of the
stations located in Providence and Dayton at their carrying values. The Company
expects to complete the sale or exchange of these assets within one year.
7. RELATED PARTY TRANSACTIONS
Argyle entered into separate agreements with one of its former
shareholders, Argyle Television Investors, L.P., and the shareholder's general
partner, ATI General Partner, L.P. (the "Partnerships"), under which Argyle
provided to the Partnerships personnel, office, property, services, expertise,
systems and other assets and amenities. In consideration for such, the
Partnerships were required to reimburse Argyle for expenses and costs allocated
to providing those services to the Partnerships. During the two and eight months
ended August 31, 1997, Argyle recognized total reimbursements of $0 and
$424,000, respectively under these agreements. Such reimbursements were offset
against corporate general and administrative expenses in the accompanying
condensed consolidated statements of operations. Such Partnerships are no longer
shareholders of the Company and no such agreement currently exists.
The Company has entered into a series of agreements with Hearst including
a Management Agreement (whereby the Company provides certain management
services, such as sales, news, programming and financial and accounting
management services, with respect to certain Hearst owned or operated television
and radio stations); an Option Agreement (whereby Hearst has granted the Company
an option to acquire certain Hearst owned or operated television stations, as
well as a right of first refusal with respect to another television station if
Hearst proposes to sell such station within 36 months of its acquisition); a
Studio Lease Agreement (whereby Hearst leases from the Company certain premises
for Hearst's radio broadcast stations); a Tax Sharing
10
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1997
Agreement (whereby Hearst and the Company have established the sharing of
federal, state and local taxes after the Company became part of the consolidated
tax return of Hearst); a Name License Agreement (whereby Hearst permits the
Company to use the Hearst name in connection with the Hearst-Argyle name and
operation of its business); and a Services Agreement (whereby Hearst provides
the company certain administrative services such as accounting, financial,
legal, tax, insurance, data processing and employee benefits). The Company
recorded expenses of approximately $200,000 relating to the Services Agreement,
during the month of September 1997. The Company believes that the terms of all
these agreements are reasonable to both sides; there can be no assurance,
however, that more favorable terms would not be available from third parties
where applicable.
In connection with the Hearst Transaction and related transactions,
Hearst may receive approximately 2.7 million additional shares of Series B
common Stock. As of September 30, 1997, none of these shares had been issued.
The Company has recorded a payable to Hearst until the shares are issued.
8. SUBSEQUENT EVENTS
On November 12, 1997, the Company sold an aggregate of 4,000,000 shares
of Series A Common Stock, par value $.01 per share at $27 per share. In
connection with the offering of such shares, the Company granted the
underwriters a 30-day option to purchase up to an additional 600,000 shares at
the offering price of $27 per share. This option expires on December 4, 1997.
On November 13, 1997 the Company issued $125,000,000 aggregate principal amount
of 7.0% Senior Notes due 2007 and $175,000,000 aggregate principal amount of
7.50% Senior Notes due 2027 (collectively, the "Senior Notes"). The net proceeds
from both issuances were used to reduce borrowings under the Credit Facility.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
RESULTS OF OPERATIONS
- ---------------------
On August 29, 1997 (September 1, 1997 for accounting purposes), Argyle
consummated an agreement with The Hearst Corporation (Hearst) to combine the
Hearst Broadcast Group (WCVB, WBAL, WTAE, WISN, WDTN and KMBC) with and into
Argyle to form Hearst-Argyle Television, Inc. (The "Company"). In addition, the
Company agreed to manage WWWB, WPBF and KCWB (the "Managed Stations"), two of
which stations are owned by Hearst and the other of which Hearst provides
certain services to under a local marketing agreement, in exchange for a
management fee. (See Notes 2 and 7 to the financial statements). The Company is
currently reviewing whether or not the Hearst Transaction will result in a
one-time restructuring charge to the Company, which could amount to
approximately $10.0 million.
In January 1995, Argyle acquired three television stations -- WZZM, WNAC
and WAPT. Argyle acquired KITV in June 1995 and WGRZ in December 1995. In June
1996, Argyle acquired KHBS and its satellite KHOG (Arkansas Stations). On July
1, 1996, Argyle entered into a Joint Marketing and Programming Agreement (Clear
Channel Venture) with Clear Channel Communications, Inc. involving WNAC and
WPRI, the CBS affiliate in Providence, Rhode Island, owned by Clear Channel
Communications, Inc. On January 31, 1997, Argyle swapped WZZM and WGRZ under the
terms of an agreement (Gannett Swap) for WLWT and KOCO with Gannett Co., Inc.
(Gannett). (See Note 2 to the financial statements.)
The following discussion of results of operations does not include the
full-year pro forma effects of the Hearst Transaction.
For comparative purposes, results of operations for the three and nine
months ended September 30, 1997 include (i) WZZM and WGRZ for January; (ii)
KITV, WAPT, the Arkansas Stations, and the Company's share of broadcast cash
flows from the Clear Channel Venture for both periods presented; (iii) WLWT and
KOCO from February through September; (iv) the Hearst Broadcast Group for
September only; and, (v) fees from the Managed Stations for September only and
results for the three and nine months ended September 30, 1996 include:
(i) WZZM, WAPT, KITV, and WGRZ for both periods presented; (ii) the Arkansas
Stations from June through September; (iii) the Company's share of broadcast
cash flows from the Clear Channel Venture for the three month period; and, (iv)
WNAC from January through June. As a result of the Hearst Transaction, the
condensed consolidated financial statements for the period subsequent to the
Hearst Transaction are presented on a different basis of accounting than those
for the period prior to the Hearst Transaction and, therefore, are not directly
comparable.
12
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------------------------------------
1996 1997 1996 1997
(In thousands)
<S> <C> <C> <C> <C>
Total revenues $ 17,439 $ 46,136 $ 51,496 $ 85,901
Station operating expenses 9,172 21,059 27,544 42,426
Amortization of program rights 1,137 4,438 3,708 6,557
Depreciation and amortization of intangibles 6,503 7,115 17,227 19,875
---------------------------------------------------------
Station operating income 627 13,524 3,017 17,043
Corporate general and administrative expenses 1,636 1,333 3,503 3,237
Non-cash compensation expense 169 3,015 506 3,518
---------------------------------------------------------
Operating income /(loss) (1,178) 9,176 (922) 10,288
Interest expense, net 4,741 7,212 12,045 16,619
---------------------------------------------------------
Income/(loss) before taxes (5,919) 1,964 (13,037) (6,331)
Income taxes -- (3,418) -- (3,418)
---------------------------------------------------------
Net income/(loss) $ (5,919) $ (1,454) $(13,037) $ (9,749)
---------------------------------------------------------
</TABLE>
Three Months Ended September 30, 1997 Compared to Three Months Ended September
- ------------------------------------------------------------------------------
30, 1996
- --------
Total Revenues. Total revenues for the three months ended September 30,
1997 were $46.1 million, as compared to $17.4 million for the three months ended
September 30, 1996, an increase of $28.7 million, or 164.9%. The increase was
primarily attributable to the Hearst Transaction which added $25.7 million to
total revenues for the 1997 period. In addition, the Gannett Swap added $2.3
million to total revenues for the 1997 period.
Station Operating Expenses. Station operating expenses for the three
months ended September 30, 1997 were $21.1 million, as compared to $9.2 million
for the three months ended September 30, 1996, an increase of $11.9 million, or
129.3%. The increase was primarily attributable to the Hearst Transaction, which
added $10.2 million to station operating expenses during the 1997 period. In
addition, the Gannett Swap added $1.6 million to station operating expenses for
the 1997 period.
Depreciation and Amortization of Intangibles. Depreciation and
amortization of intangible assets for the three months ended September 30, 1997
was $7.1 million, as compared to $6.5 million for the three months ended
September 30, 1996, an increase of $0.6 million, or 9.2%. The increase was
primarily attributable to the Hearst Transaction.
Station Operating Income. Station operating income for the three months
ended September 30, 1997 was $13.5 million, as compared to station operating
income of $0.6 million for the three months ended September 30, 1996, an
increase of $12.9 million, or 2,150%. This increase was primarily attributable
to the Hearst Transaction and to a lesser extent the Gannett Swap.
13
<PAGE>
Corporate General and Administrative Expenses. Corporate general and
administrative expenses for the three months ended September 30, 1997 were $1.3
million, and as compared to $1.6 million for the three months ended September
30, 1996, a decrease of $0.3 million, or 18.8%.
Non-cash Compensation Expense. Non-cash compensation expense was $3.0
million in the three months ended September 30, 1997 as compared to $0.2 million
in the three months ended September 30, 1996, an increase of $2.8 million, or
1400%. This represents stock option compensation expense recorded in compliance
with FASB Statement 123. As a result of the Hearst Transaction, all stock
options outstanding were vested and either were cancelled in exchange for
consideration or rolled-over into the 1997 Stock Option Plan. Because of this,
the FASB Statement 123 expense, which would have been recorded over time, was
recorded in August 1997.
Interest Expense, Net. Interest expense, net was $7.2 million for the
three months ended September 30, 1997, as compared to $4.7 million for the three
months ended September 30, 1996, an increase of $2.5 million, or 53.2%. This
increase in interest expense, net was primarily attributable to a larger
outstanding debt balance in 1997 than 1996, which was the result of the
financing of the Hearst Transaction and the Gannett Swap.
Net Loss. As a result of the factors discussed above, the net loss for
the three months ended September 30, 1997 was $1.5 million, as compared to $5.9
million for the three months ended September 30, 1996.
Broadcast Cash Flow. Broadcast cash flow is defined as station operating
income, plus depreciation and amortization, plus amortization of program rights,
minus program payments. Broadcast cash flow was $20.4 million for the three
months ended September 30, 1997 as compared to $7.4 million for the three months
ended September 30, 1996, an increase of $13.0 million, or 175.7%. The broadcast
cash flow increase resulted primarily from the Hearst Transaction and to a
lesser degree, the Gannett Swap. Broadcast cash flow margin increased to 44.2%
for the three months ended September 30, 1997, from 42.5% for the three months
ended September 30, 1996.
14
<PAGE>
Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30,
- --------------------------------------------------------------------------------
1996
- ----
Total Revenues. Total revenues for the nine months ended September 30,
1997 were $85.9 million, as compared to $51.5 million for the nine months ended
September 30, 1996, an increase of $34.4 million, or 66.8%. The increase was
primarily attributable to (i) the Hearst Transaction which added $25.7 million
to total revenues for the 1997 period; (ii) the Gannett Swap, which added $6.5
million, net to total revenues for the 1997 period; and (iii) the acquisition of
the Arkansas Stations, which added $3.7 million to total revenues for the 1997
period. These revenue gains were offset by the net effects of the Clear Channel
Venture, which accounted for a $2.5 million decrease in recorded total revenues,
because only the Company's share of the Clear Channel Venture broadcast cash
flows is included in total revenues.
Station Operating Expenses. Station operating expenses for the nine
months ended September 30, 1997 were $42.4 million, as compared to $27.5 million
for the nine months ended September 30, 1996, an increase of $14.9 million, or
54.2%. The increase was primarily attributable to (i) the Hearst Transaction
which added $10.2 million to station operating expenses for the 1997 period;
(ii) the Gannett Swap, which added $3.2 million , net to station operating
expenses for the 1997 period; (iii) the acquisition of the Arkansas Stations,
which added $2.7 million to station operating expenses during the 1997 period;
and (iv) a slight increase in trade and barter expenses at WAPT and KITV. This
was offset by the Clear Channel Venture, which accounted for a $2.0 million
decrease in station operating expenses during the 1997 period as a result of
WNAC expenses being eliminated (netted with total revenues), and only the
Company's share of the Clear Channel Venture broadcast cash flows being included
in total revenues.
Depreciation and Amortization of Intangibles. Depreciation and
amortization of intangibles for the nine months ended September 30, 1997 was
$19.9 million, as compared to $17.2 million for the nine months ended September
30, 1996, an increase of $2.7 million, or 15.7%. The increase was primarily
attributable to the Hearst Transaction
Station Operating Income. Station operating loss for the nine months
ended September 30, 1997 was $17.0 million, as compared to $3.0 million for the
nine months ended September 30, 1996, an increase of $14.0 million, or 466.7%.
This increase was primarily attributable to the increase in total revenues,
which more than offset the increase in station operating expenses and
depreciation and amortization of intangible assets due to the Hearst Transaction
and to a lesser extent, the Gannett Swap.
Corporate General and Administrative Expenses. Corporate general and
administrative expenses were $3.3 million for the nine months ended September
30, 1997 as compared to $3.5 million for the nine months ended September 30,
1996, a decrease of $0.2 million or 5.7%.
Non-cash Compensation Expense. Non-cash compensation expense was $3.5
million in the nine months ended September 30, 1997, as compared to $0.5 million
in the nine months ended September 30, 1996, an increase of $3.0 million or
600%. This represents non-cash stock option compensation expense recorded in
compliance with FASB Statement 123. As a result of the Hearst Transaction, all
stock options outstanding were vested and either were cancelled in exchange for
consideration or rolled-over into the 1997 Stock Option Plan. Because of this,
the
15
<PAGE>
FASB Statement 123 expense, which would have been recorded over time, was
recorded in August 1997.
Interest Expense, Net. Interest expense, net was $16.6 million for the
nine months ended September 30, 1997, as compared to $12.0 million for the nine
months ended September 30, 1996, an increase of $4.6 million, or 38.3%. This
increase in interest expense, net was primarily attributable to a larger
outstanding debt balance in 1997 than 1996, which was the result of the
transactions, acquisitions and related financings of the Hearst Transaction and
the Gannett Swap. Interest expense, net for the nine months ended September 30,
1996 was reduced by $1.1 million which reflects the change in fair market value
of interest rate protection agreements since December 31, 1995 recorded in
compliance with FASB Statement 119. Interest rate protection agreements were
accounted for using hedge accounting during the nine months ended September 30,
1997 due to the increase in debt over the notional amounts of the agreements.
Net Loss. As a result of the factors discussed above, the net income for
the nine months ended September 30, 1997 was $9.7 million, as compared to $13.0
million for the nine months ended September 30, 1996.
Broadcast Cash Flow. Broadcast cash flow is defined as station operating
income, plus depreciation and amortization, plus amortization of program rights,
minus program payments. Broadcast cash flow was $36.5 million for the nine
months ended September 30, 1997 as compared to $21.2 million for the nine months
ended September 30, 1996, an increase of $15.3 million, or 72.2%. The broadcast
cash flow increase resulted primarily from the Hearst Transaction, the inclusion
of the Arkansas Stations for the entire 1997 period, and the effect of the
Gannett Swap, net. Broadcast cash flow margin increased to 42.4% for the nine
months ended September 30, 1997, from 41.2% for the nine months ended September
30, 1996
LIQUIDITY AND CAPITAL RESOURCES
Upon completion of the Hearst Transaction on August 29, 1997, the Company
retired its Old Credit Agreement and entered into a $1 billion Credit Facility
with Chase. As of September 30, 1997, there was $140.0 million outstanding under
the Credit Facility. The Company may borrow amounts under the Credit Facility
from time to time for additional acquisitions, capital expenditures and working
capital, subject to the satisfaction of certain conditions on the date of
borrowing.
The Company plans to refinance its Private Placement Debt, assumed in the
Hearst Transaction, using the Credit Facility, prior to December 31, 1997. In
addition, the Company may elect to refinance its Senior Subordinated Notes
pursuant to provisions of the indenture sometime during 1997 or 1998. This
refinancing would be funded by advances under the Credit Facility.
On November 12, 1997 the company sold 4,000,000 shares (assuming the
underwriters' over-allotment option is not exercised) of Series A Common Stock
at $27 per share. On November 13, 1997, the Company issued $125,000,000
aggregate principal amount of 7.0% Senior Notes due 2007 and $175,000,000
aggregate principal amount of 7.5% Senior Notes due
16
<PAGE>
2027. The Company intends to use these proceeds to pay down existing debt
pursuant to its refinancing plans mentioned above.
Capital expenditures were $6.6 million in 1996 and are $12.3 million
through September 30, 1997. The Company expects to invest approximately $9.3
million in 1997, of which approximately $5.0 million has been spent during 1997,
related to the construction of a new all-digital studio and station facility for
KITV. Approximately $1.8 million was escrowed in 1996. During 1997, KITV will
vacate its leased facility and terminate such lease.
The Company anticipates that its primary sources of cash, those being,
current cash balances, operating cash flow and amounts available under the
Credit Facility, will be sufficient to finance the operating and working capital
requirements of its stations, the Company's debt service requirements and
anticipated capital expenditures for the Company for both the next 12 months and
the foreseeable future thereafter.
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition. These
statements are based upon a number of assumptions and estimates which are
inherently subject to uncertainties and contingencies, many of which are beyond
the control of the Company, and reflect future business decisions which are
subject to change. Some of the assumptions may not materialize and unanticipated
events may occur which can affect the Company's results.
17
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - Not Applicable
-----------------
ITEM 2. CHANGES IN SECURITIES
---------------------
On August 29, 1997 upon the effectiveness (the "Effective Time") of the
merger (the "Merger") of Argyle Television, Inc. ("Argyle") and certain
wholly-owned subsidiaries of The Hearst Corporation, the stockholders of Argyle
became stockholders of Hearst-Argyle Television, Inc. (the "Company"). As
stockholders of Hearst-Argyle, their rights are governed by the Delaware General
Corporation Law (the "DGCL") and Hearst-Argyle's Certificate of Incorporation
and bylaws. Because Argyle was the surviving corporation in the Merger, any
differences between the rights of holders of Argyle capital stock and
Hearst-Argyle capital stock resulted solely from differences in the respective
Certificates of Incorporation and bylaws of Argyle and Hearst-Argyle prior to
and after the Effective Time. As part of the Hearst Transaction, Argyle's
Certificate of Incorporation was amended and restated prior to the Effective
Time, pursuant to which, among other things, (i) Argyle's authorized common
stock increased from 50 million to 200 million shares; (ii) Argyle's existing
Series B Common Stock and Series C Common Stock was reclassified as and changed
into an equal number of shares of Series A Common Stock; (iii) a Series B Common
Stock was authorized and thereafter issued to Hearst in connection with the
Hearst Transaction; and, (iv) the terms of Argyle's Series A Preferred Stock and
Series B Preferred Stock were amended to add certain voting rights.
Authorized Capital Stock. The Argyle Certificate of Incorporation
provided for 51 million authorized shares of capital stock, consisting of 50
million shares of common stock, par value $.01 per share, and 1 million shares
of preferred stock, par value $.01 per share ("Argyle Preferred Stock"). The
Hearst-Argyle Certificate of Incorporation provides for 201 million authorized
shares of capital stock, consisting of 200 million shares of common stock, par
value $.01 per share ("Hearst-Argyle Common Stock"), and 1 million shares of
Hearst-Argyle Preferred Stock.
Common Stock. Under the Argyle Certificate of Incorporation, 35 million
shares of the authorized Argyle Common Stock were designated as Series A Common
Stock, 200,000 shares were designated as Series B Common Stock and 14.8 million
shares were designated as Series C Common Stock. Under the Hearst-Argyle
Certificate of Incorporation, 100 million shares of the authorized Hearst-Argyle
Common Stock are designated as Series A Common Stock and 100 million shares are
designated as Series B Common Stock. All of Hearst-Argyle's Series B Common
Stock is held by Hearst. The Hearst-Argyle Certificate of Incorporation provides
that if at any time Hearst first owns less than 20% of all shares of
Hearst-Argyle Common Stock then issued and outstanding, the issued and
outstanding shares of Hearst-Argyle Series B Common Stock automatically will be
converted into shares of Hearst-Argyle Series A Common Stock and Hearst-Argyle
will not be entitled to issue any additional shares of Hearst-Argyle Series B
Common Stock.
Preferred Stock. Under the Argyle Certificate of Incorporation, 12,500
shares of the authorized Argyle Preferred Stock were designated as Series A
Preferred Stock and 12,500
18
<PAGE>
shares were designated as Series B Preferred Stock. Under the Hearst-Argyle
Certificate of Incorporation, 12,500 shares of the authorized Hearst-Argyle
Preferred Stock are designated as Hearst-Argyle Series A Preferred Stock and
12,500 shares are designated as Hearst-Argyle Series B Preferred Stock. Unlike
the Argyle Preferred Stock, the Hearst-Argyle Preferred Stock has certain voting
rights as described below.
Voting. Under Argyle's Certificate of Incorporation, holders of Series A
Common Stock or Series B Common Stock were entitled to vote on all matters
submitted to a vote of stockholders. Argyle's Series C Common Stock was entitled
to vote only with respect to (i) amendments to the Argyle Certificate of
Incorporation that altered or changed the powers, preferences or special rights
of their respective series so as to affect them adversely, and (ii) such other
matters as required class votes under the DGCL and Argyle's Certificate of
Incorporation. Likewise, holders of Argyle Preferred Stock were entitled to vote
only with respect to amendments to the Argyle Certificate of Incorporation that
adversely altered or changed the rights, preferences, privileges or powers of
their respective preferred series. Under the Hearst-Argyle Certificate of
Incorporation, holders of Hearst-Argyle Common Stock are entitled to vote on all
matters submitted to a vote of the stockholders and holders of Hearst-Argyle
Preferred Stock are entitled to vote on all matters on which the holders of
Series A Common Stock are entitled to vote.
With respect to any election of directors by the Argyle stockholders, the
holders of Series B Common Stock were entitled to elect a majority of the Argyle
Board and the holders of Series A Common Stock were entitled to elect the
balance of the Argyle Board. Under the Hearst-Argyle Certificate of
Incorporation, however, the holders of Hearst-Argyle Series A Common Stock elect
only two directors of the Hearst-Argyle Board and the holders of Hearst-Argyle
Series B Common Stock elect the balance of the Hearst-Argyle Board. Under the
Argyle Certificate of Incorporation, only the holders of Series A Common Stock
could remove a Series A Director for cause and only the holders of Series B
Common Stock could remove a Series B Director for cause. Under the Hearst-Argyle
Certificate of Incorporation, a Series A Director and a Series B Director can
only be removed for cause by the vote of a majority of the holders of
Hearst-Argyle Common Stock voting together as a class.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - Not Applicable
-------------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
The Annual Meeting of Shareholders was held on August 28, 1997. All
nominees standing for election as directors were elected. The following chart
indicates the number of votes cast with respect to each nominee for director:
<TABLE>
<CAPTION>
NOMINEE FOR AGAINST ABSTAIN
------- --- ------- -------
<S> <C> <C> <C>
David Pulver (1) 11,028,986 49,630 -0-
Blake Byrne (2) 36,000 -0- -0-
</TABLE>
- --------------------
(1) Series A Director. To be elected by the holders of Series A shares
voting as a class.
(2) Series B Director. To be elected by the holders of Series B shares
voting as a class.
19
<PAGE>
In addition to the election of directors, two additional proposals were
approved by the Company's shareholders. The following chart indicates the
number of votes cast for and against and the number of absentions with
respect to the proposal to approve and adopt the Amended and Restated
Agreement and Plan of Merger dated as of March 26, 1997 among Argyle
Television, Inc., The Hearst Corporation ("Hearst"), and certain
wholly-owned subsidiaries of Hearst, and related transactions:
PROPOSAL TWO
------------
For 10,253,299
Against 20
Abstain 825,297
The following chart indicates the number of votes cast for and against
and the number of absentions with respect to the proposal to amend and restate
Argyle's second amended and restated 1994 Stock Option Plan and adopt such
amendment and restatement as the resulting 1997 Stock Option Plan. (See "Plan
Proposal")
PROPOSAL THREE
--------------
For 10,245,869
Against 7,440
Abstain 825,297
ITEM 5. OTHER INFORMATION - Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No.
10.1 Primary Television Affiliation Agreement for television
Station KMBC, dated April 26, 1988, by and between Capital
Cities/ABC, Inc. and The Hearst Corporation.
10.2 Primary Television Affiliation Agreement for television
Station WCVB, dated November 21, 1989, by and between Capital
Cities/ABC, Inc. and The Hearst Corporation.
10.3 Primary Television Affiliation Agreement for television
Station WISN, dated November 2, 1990, by and between Capital
Cities/ABC, Inc. and The Hearst Corporation.
10.4 Primary Television Affiliation Agreement for television
Station WTAE, dated July 14, 1989, by and between Capital
Cities/ABC, Inc. and The Hearst Corporation.
20
<PAGE>
10.5 Television Affiliation Agreement for Television Broadcasting
Station WBAL-TV, dated January 2, 1995, by and between
National Broadcasting Company, Inc. and The Hearst
Corporation.
10.6 Amendment to the Television Affiliation Agreement for
Television Broadcasting Station WBAL-TV, dated January 2,
1995, by and between National Broadcasting Company, Inc. and
The Hearst Corporation.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
On September 15, 1997, the Company filed a Form 8-K, which
was subsequently amended on September 26, 1997, relating to
the Hearst Transaction, which filing included information
under Item 2 thereof relating to such transaction and
attached as exhibits the press release relating to such
transaction and the consent of independent accountants.
On October 16, 1997, the Company filed a Form 8-K, which was
subsequently amended on October 20, 1997, relating to the
change in accountants and certain matters associated with the
Hearst Transaction.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Hearst-Argyle Television, Inc.
--------------------------------
Registrant
November 14,1997 By: /s/ Harry T. Hawks
- -------------------------------- --------------------------------
Date Harry T. Hawks, Chief Financial
Officer, Assistant Secretary,
and Treasurer
(Principal Financial Officer)
November 14, 1997 By: /s/ Teresa D. Lopez
- -------------------------------- ---------------------------------
Date Teresa D. Lopez, Controller and
Assistant Secretary
(Principal Accounting Officer)
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE EIGHT MONTHS ENDED AUGUST 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 30,664
<SECURITIES> 0
<RECEIVABLES> 72,270
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 177,183
<PP&E> 88,457
<DEPRECIATION> 0
<TOTAL-ASSETS> 937,342
<CURRENT-LIABILITIES> 92,559
<BONDS> 565,000
0
2
<COMMON> 468
<OTHER-SE> 149,679
<TOTAL-LIABILITY-AND-EQUITY> 937,342
<SALES> 0
<TOTAL-REVENUES> 51,826
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 27,610
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,749
<INCOME-PRETAX> (14,539)
<INCOME-TAX> 0
<INCOME-CONTINUING> (14,539)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,539)
<EPS-PRIMARY> (1.34)
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TWO MONTHS ENDED AUGUST
31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> AUG-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 12,061
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,243
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,342
<INCOME-PRETAX> (6,244)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,244)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,244)
<EPS-PRIMARY> (0.55)
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE ONE MONTH ENDED SEPTEMBER
30,1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENT.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> SEP-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 34,075
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,816
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,870
<INCOME-PRETAX> 8,208
<INCOME-TAX> 3,418
<INCOME-CONTINUING> 4,790
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,790
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 10.1
[CAPITAL CITIES/ABC, INC. LETTERHEAD]
April, 26, 1988
PRIMARY TELEVISION AFFILIATION AGREEMENT
The Hearst Corporation
Kansas City, MO.
TELEVISION STATION: KMBC
Gentlemen:
In order that your station may continue to serve the public interest,
convenience and necessity, this Company and your Television Station KMBC hereby
mutually agree upon the following plan of network cooperation, which shall
replace the affiliation agreement between you and us dated May 15, 1986, as
amended.
I. NETWORK AFFILIATION AND PROGRAM SERVICE
A. FIRST CALL. We will offer you, for television broadcasting by your
station, the first call on all our network television programs which are to be
broadcast on a network basis in the community to which your station is licensed
by the Federal Communications Commission. Notwithstanding the foregoing, ABC
shall have the right to authorize any television broadcasting station regardless
of the community to which it is licensed by the FCC, to broadcast any network
presentation of a subject we deem to be of immediate national significance
including, but not limited to, a Presidential address.
B. PROGRAM SERVICE. The program service we are offering will be as follows:
1. Network Sponsored Programs. "Network sponsored programs", as used in
this agreement, shall mean those television network programs which contain
one or more commercial announcements paid for by or on behalf of one or
more ABC Network advertisers.
a) We will offer you all ABC television network sponsored programs for
which sponsors may request broadcasting in the community to which your
station is licensed.
b) You agree to broadcast network sponsored programs in their entirety,
including but not limited to the network
<PAGE>
2
commercial announcements, network identifications, program promotional
material or credit announcements contained in such programs which you
accept, without interruption or deletion or addition of any kind.
Notwithstanding the foregoing, you may substitute other ABC-TV
promotional announcements in lieu of program promotional material
concerning a network program for which your station has not been
ordered or in lieu of program promotional material which is inaccurate
as it pertains to your station. It is also understood that no
commercial announcement, promotional announcement or public service
announcement will be broadcast by you during any interval within a
network program designated by ABC as being for the sole purpose of
making a station identification announcement.
2. Network Sustaining, Cooperative and Spot Carrier Programs.
a) We will from time to time offer you live or recorded network
programs identified as sustaining programs, cooperative programs or
spot carrier programs. Except as set forth below in subparagraphs (b)
and (c), you agree to broadcast such programs which you accept in
their entirety without interruption or deletion or addition of any
kind.
b) The network sustaining programs which we may offer to you may not,
without our prior written consent, be sold by your station for
commercial sponsorship or interrupted for commercial announcements or
used for any purpose other than sustaining broadcasting. The charges
to you for recorded sustaining programs will be as follows:
$100. per clock hour for film or taped programs
(black and white)
$200. per clock hour for film or taped programs
(color)
c) You may carry the cooperative or spot carrier programs on the same
basis as regular sustaining programs or you may offer them for
commercial sponsorship on terms and conditions specified by us at the
time such programs are offered to you.
C. PROGRAM ACCEPTANCE. You agree that you will advise us within 15 days of
the date of our offer of your acceptance or rejection of any offer by us
relating to a regularly scheduled network program. With respect to any network
program not regularly scheduled, you will advise us of your acceptance or
rejection of our offer within 72 hours (exclusive of Saturdays, Sundays and
holidays) after such offer has been received at your station. However, if the
first broadcast referred to in our offer is scheduled to occur within less than
15 days after the date of our
<PAGE>
3
offer with respect to regularly scheduled network programs or less than 72 hours
after our offer has been received at your station with respect to network
programs not regularly scheduled, you shall notify us of your acceptance or
rejection of such offer as promptly as possible, but in no event after the first
broadcast time specified in such offer. Acceptance by you of our offer of a
network program(s) shall constitute your agreement to broadcast such network
program(s) in accordance with the terms of this agreement and of our offer to
you.
D. PROGRAM DELIVERY. By means satisfactory to us, we will arrange, at our
own expense, for programs to be delivered, at our election, either to your
control board at your main studios or to your satellite earth station. It is
understood that if ABC elects to use any carrier facilities, then ABC shall be
the customer for the connection facilities between the carrier and your main
studios; and in the event that you desire to use said carrier facilities,
purchased by ABC, for other than ABC live service, it is agreed that any such
use will require our prior written approval. Upon such approval by us, if any,
we will bill you and you agree to reimburse us for our costs for such use of
these facilities.
II. NETWORK STATION RATE
1. The network station rate for your station shall be $1,800.00 and shall
be used by us in determining your station compensation in accordance with the
formula set forth in Schedule A hereto.
2. We reserve the right to reevaluate and change at any time your network
station rate from that set forth in Subparagraph 1 above by notice to you in
writing to such effect. Any increase in your station rate will become effective
at the date specified in our notice to you. Should we decrease your network
station rate below that set forth in Subparagraph 1 above, we will notify you in
writing at least six months prior to the effective date of such reduction, and
you may, if you so elect, terminate this affiliation agreement as of the
effective date of such reduction in your station rate by giving us prior written
notification within 90 days after the date of our notice to you of such
reduction. However, if such decrease is part of a general rate revision on the
ABC Network, we will notify you in writing at least 30 days prior to the
effective date of such reduction, and you may, if you so elect, terminate this
affiliation agreement as of the effective date of such reduction in your station
rate by giving us prior written notification within 15 days after the date of
our notice to you of such reduction.
<PAGE>
4
III. NETWORK STATION COMPENSATION
1. We agree to pay you, and you agree to accept, compensation in accordance
with the provisions set forth in Schedule A attached hereto and hereby made a
part hereof.
2. If you should be unable, for any reason to broadcast any sponsored
program(s), or any portion thereof, your compensation hereunder from us for that
period shall be reduced accordingly.
3. We may at any time, upon notice to you, substitute for any scheduled
network program another network program, except that if such other network
program in our judgment involves a special event of public interest or
importance, no such notice is required. No compensation will be paid to you for
the scheduled program or for the substitute program unless such substitute
program is a "network sponsored program" in which event you shall be compensated
in accordance with the terms or formula, whichever is applicable, set forth in
Schedule A hereof.
4. Nothing contained in this agreement shall be construed to prevent or
hinder us, at any time upon notice to you as soon as practicable, from
cancelling one or more network programs, whether sponsored or sustaining, in
which event you shall receive no compensation for any such cancelled network
sponsored program(s).
5. With respect to network programs offered or already contracted for
pursuant to this affiliation agreement, nothing herein contained shall be
construed to prevent or hinder you from (a) rejecting or refusing network
programs which you reasonably believe to be unsatisfactory, unsuitable or
contrary to the public interest, or (b) substituting program, which in your
opinion, is of greater local or national importance. You shall give us prompt
telegraphic notification of any such refusal, rejection or substitution, and we
shall be under no obligation to compensate you for any such program you have
refused or rejected or for which you have substituted a program which is of
greater local or national importance.
IV. CUT-IN ANNOUNCEMENTS AND LOCAL TAG SERVICES
A. CUT-IN ANNOUNCEMENTS. "Cut In Announcements", as used herein, shall mean
the substitution of a special commercial in place of a regularly scheduled
network commercial.
1. Upon at least twenty-four (24) hours' notice, you shall, at our request,
furnish such personnel and equipment as may be necessary to (a) broadcast
cut-in announcements from your station alone, or (b) originate from your
station cut-in announcements to one or more other stations, without regard
to
<PAGE>
5
whether or not your station is requested to broadcast said cut-in
announcement(s). Notwithstanding anything contained in this agreement, you
may refuse to broadcast any such cut-in announcement in the community to
which your station is licensed by the FCC if, in your opinion, it is not in
the public interest, convenience or necessity, but you shall nevertheless
furnish such personnel and equipment as may be necessary to originate such
cut-in announcement(s) from your station to one or more other stations.
2. Cut-in announcements shall be broadcast only when authorized by us and
then only in accordance with the instructions furnished to you. You will be
supplied, as promptly as possible, with the material and instructions for
these announcements.
3. We may cancel any order for cut-in announcements without liability on
our part, provided we do so upon not less than twenty-four (24) hours'
notice to you, failing which, we will pay you the compensation you would
have received if the announcement(s) had continued as scheduled for
twenty-four (24) hours following receipt by you of such notice of
cancellation.
4. For each program during which such cut-in announcements are included, we
shall pay you in accordance with the applicable table set forth in Schedule
B hereto.
B. LOCAL TAG SERVICES. "Local Tag Announcements", as used herein, shall
mean a visual commercial announcement, made by you on behalf of a local dealer
of a network advertiser, not exceeding ten seconds of a one-minute network
commercial announcement or five seconds of a thirty-second network commercial
announcement projected by means of a slide and not utilizing more than two (2)
slides.
1. Upon at least twenty-four (24) hours' notice, you shall, at our request,
furnish such personnel and equipment as may be necessary to broadcast
"local tag announcements".
2. Local tag announcements shall be broadcast in accordance with our
instructions. The network advertiser shall supply to you or purchase from
you, as promptly as possible, the slide(s) for each local tag announcement.
Local tag announcements shall not be accompanied by oral announcements
unless the network advertiser shall make direct requests of you therefor
and shall have assumed sole responsibility for payment of such oral
announcements.
3. We may cancel any order for local tag announcements without liability on
our part provided we do so upon not less than twenty-four (24) hours'
notice to you, failing which we will
<PAGE>
6
pay you the compensation you would have received if the local tag
announcement(s) had continued as scheduled for twenty-four (24) hours
following receipt by you of such notice of cancellation.
4. For each local tag announcement which you broadcast, we shall compensate
you in accordance with the applicable table set forth in Schedule B hereto.
V. GENERAL
1. You will submit to us in writing, upon forms provided by us for that
purpose, such reports covering network programs broadcast by your station as ABC
may request from time to time.
2. Subject to Subparagraph 2 of Section III of this agreement, neither you
nor ourselves shall incur any liability hereunder because of our failure to
deliver, or your failure to broadcast, any or all network programs due to:
(a) failure of facilities
(b) labor disputes, or
(c) causes beyond the control of the party so failing to broadcast.
3. In the event that the transmitter location, power, frequency or hours of
operation of your station are changed at any time so that your station is of
less value to us as a network outlet than it is as of the date of this
agreement, we will have the right to terminate this agreement upon thirty (30)
days' advance written notice.
4. You agree not to assign or to transfer any of the rights or privileges
granted to you under this agreement without our prior consent in writing. You
also agree that if any application is made to the Federal Communications
Commission pertaining to an assignment or a transfer of control of your license,
or any interest therein, you shall notify us in writing immediately of the
filing of such application. Except as to assignments or transfers of control
comprehended by Section 73.3540(e) of the Rules and Regulations of the Federal
Communications Commission, we shall have the right to terminate this agreement
effective as of the effective date of any assignment or transfer of control
(voluntary or involuntary) of your license or any interest therein, provided ABC
shall have given you notice in writing of such termination within thirty (30)
days after we have been advised that such application for assignment or transfer
has been filed with the Federal Communications Commission. If we do not so
terminate this agreement, you agree, prior to the effective date of any such
assignment or transfer of control of your stations to procure and deliver to us,
in form satisfactory to us, the agreement of the
<PAGE>
7
proposed assignee or transferee that, upon consummation of the assignment or
transfer of control of your station's authorization, the assignee or transferee
will assume and perform this agreement in its entirety without limitation of any
kind. If you fail to notify us of the proposed assignment or transfer of control
of your station's authorization, or fail to procure the agreement of the
proposed assignee or transferee in accordance with the preceding sentence, we
shall have the right to terminate this agreement upon thirty (30) days' notice
in writing to you and the transferee or assignee, after the effective date of
such assignment or transfer or the date on which we learn of such assignment or
transfer, whichever is later.
5. You agree not to authorize, cause, permit or enable anything to be done
whereby any program which we supply to you herein may be used for any purpose
other than broadcasting by your station in the community to which it is
licensed, which broadcast is intended for reception by the general public in
places to which no admission is charged. You agree when you are authorized to
tape a program for subsequent broadcast that the recording will be broadcast not
more than once in its entirety and will be erased within six (6) hours of use.
6. Except with our prior written consent and except upon such terms and
conditions as we may impose, you agree not to authorize, cause, permit or enable
anything to be done whereby a recording on film, tape or otherwise is made or a
recording is broadcast, of a program which has been, or is being, broadcast on
our network, or a rebroadcast is made of the broadcast transmission of your
station during any hours when your station is broadcasting a program provided by
ABC.
7. With respect to any and all promotional material issued by you or under
your direction or control, you agree to abide by any and all restrictions of
which we advise you pertaining to the promotion of a network program(s)
scheduled to be broadcast by you in your community, including, but without
limitation, on-the-air promotion, billboards, and newspaper or other printed
advertisements, announcements or promotions.
8. You agree to maintain for your television station such licenses,
including performing rights licenses as now are or hereafter may be in general
use by television broadcasting stations and necessary for you to broadcast the
television programs which we furnish to you hereunder. We will clear at the
source all music in the repertory of ASCAP and of BMI used on our network
programs, thereby licensing the broadcasting of such music on such programs over
your station.
9. The furnishing of film or tape recorded programs hereunder is contingent
upon our ability to make arrangements satisfactory to us for the film or tape
recordings necessary to deliver the
<PAGE>
8
programs to you. Such film or tape recorded programs shall be used only for a
single television broadcast over your station. Positive prints of film or tape
recorded programs are to be shipped by us, shipping charges prepaid, and you
agree to return to us or to forward to such television station as we designate,
shipping charges prepaid, each print or copy of said film or tape recording
received by you hereunder, together with the original reels and containers
furnished therewith. You will return or forward all prints in the same condition
as received by you, ordinary wear and tear excepted, immediately after a single
TV broadcast over your station. In the event you damage a print of any film or
tape recorded program which is delivered to you, or fail to return or forward
the original reels and containers furnished therewith, as aforesaid, you agree
to pay the cost of replacing the complete print, original reels and/or
containers as and when billed by us.
10. No inducements, representations or warranties except as specifically
set forth herein have been made by any of the parties to this agreement. This
agreement constitutes the entire contract between the parties hereto and no
provision thereof shall be changed or modified, nor shall this agreement be
discharged in whole or in part, except by an agreement in writing, signed by the
party against whom the change, modification or discharge is claimed or sought to
be enforced; nor shall any waiver of any of the conditions or provisions of this
agreement be effective and binding unless such waiver shall be in writing and
signed by the party against whom the waiver is asserted, and no waiver of any
provision of this agreement shall be deemed to be a waiver of any preceding or
succeeding breach of the same or of any other provision.
11. This agreement shall be governed by and construed in accordance with
the laws of the State of New York.
12. Upon termination of this agreement, the consent theretofore granted to
broadcast our Network programs shall be deemed immediately withdrawn and you
shall have no further rights of any nature whatsoever in such programs.
13. We agree to indemnify, defend and hold you harmless against and from
all claims, damages, liabilities, costs and expenses arising out of the use or
exercise by you, in accordance with this agreement, of any rights or material
furnished by us hereunder, provided that you promptly notify us of any claim or
litigation to which this indemnity shall apply, and that you cooperate fully
with us in the defense at our request. You similarly agree to indemnify, defend
and hold us harmless with respect to material furnished by you.
<PAGE>
9
VI. TERM
This agreement shall become effective at 3:00 AM, NYT, on the 1st day of
October , 1988, and it shall continue until 3:00 AM, NYT, on the 1st day of
October , 1990. It is understood and agreed, however, that this agreement may be
terminated by either party upon giving the other party six (6) months advance
written notice of its intention to do so.
If, after examination, you find that the arrangement herein proposed is
satisfactory to you, please indicate your acceptance on the copy of this letter
enclosed for that purpose and return that copy to us.
Very sincerely yours,
AMERICAN BROADCASTING COMPANIES, INC.
By: /s/ American Broadcasting Companies,Inc.
----------------------------------------
Senior Vice President, In Charge of
Affiliate Relations
Accepted this 24th day of May, 1988.
Television Station: KMBC-TV
By: /s/ The Hearst Corporation
--------------------------------
<PAGE>
EXHIBIT 10.2
[CAPITAL CITIES/ABC, INC. LETTERHEAD]
November 21, 1989
PRIMARY TELEVISION AFFILIATION AGREEMENT
The Hearst Corporation
Boston, Massachusetts
TELEVISION STATION: WCVB
Gentlemen:
In order that your station may continue to serve the public interest,
convenience and necessity, this Company and your Television Station WCVB hereby
mutually agree upon the following plan of network cooperation, which shall
replace the affiliation agreement between you and us dated August 11, 1987, as
amended.
I. NETWORK AFFILIATION AND PROGRAM SERVICE
A. FIRST CALL. We will offer you, for television broadcasting by your
station, the first call on all our network television programs which are to be
broadcast on a television network basis in the community to which your station
is licensed by the Federal Communications Commission, except as hereinafter
provided in Paragraph V.3. Notwithstanding the foregoing, ABC shall have the
right to authorize any television broadcasting station regardless of the
community to which it is licensed by the FCC, to broadcast any network
presentation of a subject we deem to be of immediate national significance
including, but not limited to, a Presidential address.
B. PROGRAM SERVICE. The program service we are offering will be as follows:
1. Network Sponsored Programs. "Network sponsored programs," as used in
this agreement, shall mean those television network programs which contain one
or more commercial announcements paid for by or on behalf of one or more ABC
Network advertisers.
You agree to broadcast network sponsored programs in their entirety, including
but not limited to the network commercial announcements ordered for your
station, network identifications, program promotional material or credit
announcements contained in such programs which you accept, without interruption
or deletion or addition of any kind. Notwithstanding the foregoing, you may
substitute other ABC-TV promotional announcements in lieu of
<PAGE>
program promotional material for programs which your station has not ordered or
which is inaccurate as it pertains to your station. It is also understood that
no commercial announcement, promotional announcement or public service
announcement will be broadcast by you during any interval within a network
program designated by ABC as being for the sole purpose of making a station
identification announcement.
2. Network Sustaining, Cooperative and Spot Carrier Programs.
a) We will from time to time offer you live or recorded network
programs identified as sustaining programs, cooperative programs or spot
carrier programs. Except as set forth below in subparagraphs (b) and (c),
you agree to broadcast such programs which you accept in their entirety
without interruption or deletion or addition of any kind.
b) The network sustaining programs which we may offer to you may not,
without our prior written consent, be sold by your station for commercial
sponsorship or interrupted for commercial announcements or used for any
purpose other than sustaining broadcasting.
c) You may carry the cooperative or spot carrier programs on the same
basis as regular sustaining programs or you may offer them for commercial
sponsorship on terms and conditions specified by us at the time such
programs are offered to you.
C. PROGRAM ACCEPTANCE. You agree that you will advise us within 15 days of
the date of our offer of your acceptance (if requested to do so by the terms of
our offer) or rejection of any offer by us relating to a regularly scheduled
network program. With respect to any network program not regularly scheduled,
you will advise us of your acceptance or rejection of our offer within 72 hours
(exclusive of Saturdays, Sundays and holidays) after such offer has been
received at your station. However, if the first broadcast referred to in our
offer is scheduled to occur within less than 15 days after the date of our offer
with respect to regularly scheduled network programs or less than 72 hours after
our offer has been received at your station with respect to network programs not
regularly scheduled, you shall notify us of your acceptance or rejection of such
offer as promptly as possible, but in no event after the first broadcast time
specified in such offer. Acceptance by you of our offer of a network program(s)
shall constitute your agreement to broadcast such network program(s) in
accordance with the terms of this agreement and of our offer to you.
D. PROGRAM DELIVERY. By means satisfactory to us, we will arrange, at our
own expense, for programs to be delivered to your station.
2
<PAGE>
II. NETWORK STATION COMPENSATION
1. We agree to pay you, and you agree to accept, compensation in accordance
with the provisions set forth in Schedule A attached hereto and hereby made a
part hereof. The network station rate for your station shall be $4,400.00 and
shall be used by us in determining your station compensation in accordance with
the formula set forth in Schedule A.
2. If you should be unable, for any reason to broadcast any network
sponsored program(s), or any portion thereof, your compensation hereunder from
us for that period shall be reduced accordingly.
3. We reserve the right to reevaluate and change at any time (a) the
network station rate set forth in Subparagraph 1 above, (b) the percentage(s)
set forth in the Table in Schedule A, or (c) your network weekly deduction, by
notice to you in writing to such effect. Any increase in your station rate or in
the percentage(s) in Schedule A, or any decrease in your network weekly
deduction, will become effective on the date specified in our notice to you.
Should we (a) decrease the network station rate below that set forth in
Subparagraph 1 above, (b) decrease the percentage(s) in Schedule A, or (c)
increase your network weekly deduction, we will notify you in writing at least
one hundred eighty (180) days prior to the effective date of such change, and
you may, if you so elect, terminate this affiliation agreement as of the
effective date by giving us prior written notification within ninety (90) days
after the date of our notice to you. However, if such reduction in compensation
is part of a general rate revision on the ABC Network, we will notify you in
writing at least thirty (30) days prior to the effective date of such change,
and you may, if you so elect, terminate this affiliation agreement as of the
effective date by giving us prior written notification within fifteen (15) days
after the date of our notice to you of such change. You agree that a general
rate revision on the ABC Television Network may be expressed by us as a
modification of your network rate, and/or as a modification of the percentage(s)
set forth in Schedule A and/or as a modification of your network weekly
deduction.
III. NETWORK NON-DUPLICATION PROTECTION
As of January 1, 1990 (or such other effective date established by the
Federal Communications Commission for operation of the revised network
non-duplication rules), you shall be entitled to network non-duplication
protection provided as and to the extent set forth in Rider One to this
agreement, which is attached hereto and made a part hereof.
IV. CUT-IN ANNOUNCEMENTS AND LOCAL TAG SERVICES
3
<PAGE>
A. CUT-IN ANNOUNCEMENTS. "Cut-In Announcements," as used herein, shall mean
the substitution of a special commercial in place of a regularly scheduled
network commercial.
1. Upon at least twenty-four (24) hours' notice, you shall, at our request,
furnish such personnel and equipment as may be necessary to (a) broadcast cut-in
announcements from your station alone, or (b) originate from your station cut-in
announcements to one or more other stations, without regard to whether or not
your station is requested to broadcast said cut-in announcement(s).
Notwithstanding anything contained in this agreement, you may refuse to
broadcast any such cut-in announcement in the community to which your station is
licensed by the FCC if, in your opinion, it is not in the public interest,
convenience or necessity, but you shall nevertheless furnish such personnel and
equipment as may be necessary to originate such cut-in announcement(s) from your
station to one or more other stations.
2. Cut-in announcements shall be broadcast only when authorized by us and
then only in accordance with the instructions furnished to you. You will be
supplied, as promptly as possible, with the material and instructions for these
announcements.
3. We may cancel any order for cut-in announcements without liability on
our part, provided we do so upon not less than twenty-four (24) hours' notice to
you, failing which, we will pay you the compensation you would have received if
the announcement(s) had continued as scheduled for twenty-four (24) hours
following receipt by you of such notice of cancellation.
4. For each program during which such cut-in announcements are included, we
shall pay you in accordance with the applicable table set forth in Schedule B
hereto and hereby made a part hereof.
B. LOCAL TAG SERVICES. "Local Tag Announcements," as used herein, shall
mean a visual commercial announcement, made by you on behalf of a local dealer
of a network advertiser, not exceeding ten seconds of a one-minute network
commercial announcement or five seconds of a thirty-second network commercial
announcement projected by means of a slide and not utilizing more than two (2)
slides.
1. Upon at least twenty-four (24) hours' notice, you shall, at our request,
furnish such personnel and equipment as may be necessary to broadcast "local tag
announcements."
2. Local tag announcements shall be broadcast in accordance with our
instructions. The network advertiser shall supply to you or purchase from you,
as promptly as possible, the slide(s) for each local tag announcement. Local tag
announcements shall not be accompanied by oral announcements unless the network
advertiser shall make direct requests of you therefor and shall
4
<PAGE>
have assumed sole responsibility for payment of such oral announcements.
3. We may cancel any order for local tag announcements without liability on
our part provided we do so upon not less than twenty-four (24) hours' notice to
you, failing which we will pay you the compensation you would have received if
the local tag announcement(s) had continued as scheduled for twenty-four (24)
hours following receipt by you of such notice of cancellation.
4. For each local tag announcement which you broadcast, we shall compensate
you in accordance with the applicable table set forth in Schedule B hereto and
hereby made a part hereof.
V. GENERAL
1. We may at any time, upon notice to you, substitute for any scheduled
network program another network program, except that if such other network
program in our judgment involves a special event of public interest or
importance, no such notice is required. No compensation will be paid to you for
the scheduled program or for the substitute program unless such substitute
program is a "network sponsored program" in which event you shall be compensated
in accordance with the terms or formula, whichever is applicable, set forth in
Schedule A hereof.
2. Nothing contained in this agreement shall be construed to prevent or
hinder us, at any time upon notice to you as soon as practicable, from
cancelling one or more network programs, whether sponsored or sustaining, in
which event you shall receive no compensation for any such canceled network
sponsored program(s).
3. With respect to network programs offered or already contracted for
pursuant to this affiliation agreement, nothing herein contained shall be
construed to prevent or hinder you from:
a) rejecting or refusing network programs which you reasonably believe
to be unsatisfactory, unsuitable or contrary to the public interest; or
b) substituting a program, which in your good faith opinion, is of
greater local or national importance.
We shall not compensate you for any such program you have refused or rejected or
for which you have substituted a program which is of greater local or national
importance. With respect to programs already contracted for hereunder, you shall
give us prompt telegraphic notification of any such refusal, rejection or
substitution no later than fourteen (14) days prior to the air date of such
programming, except where the nature of the substitute program makes such notice
impracticable (e.g., coverage of breaking news or other unscheduled events), in
which case you agree to give
5
<PAGE>
us as much advance notice as possible under the circumstances. Such notice shall
include a statement of the reason(s) you believe that a rejected or refused
network program is unsatisfactory, unsuitable or contrary to the public
interest, and/or that a substituted program is of greater local or national
importance.
In addition to all other remedies, we shall have the right, upon thirty
(30) days' notice, to terminate your "First Call" rights on any program series
already contracted for hereunder and withdraw all future episodes of that series
if one or more individual program episode(s) is pre-empted by you in violation
of this Paragraph.
We shall also have the right, upon thirty (30) days' notice, to terminate
your "First Call" rights concerning any program series already contracted for
hereunder and to withdraw all future episodes of that series if three or more
individual program episodes are pre-empted by you in any thirteen-week period,
whether or not such pre-emptions are for the reasons set forth in (a) and (b)
above. Such thirteen-week periods shall be measured consecutively from the first
broadcast date of the program series in question.
We reserve the right not to offer you the "First Call" for the next
broadcast season on any program series as to which we have terminated your
"First Call" rights and withdrawn future episodes of that series pursuant to
this Paragraph and which has been placed by ABC on another station serving your
market.
4. You will submit to us in writing, upon forms provided by us for that
purpose, such reports covering network programs broadcast by your station as ABC
may request from time to time.
5. Subject to Subparagraph 2 of Section II of this agreement, neither you
nor we shall incur any liability hereunder because of our failure to deliver, or
your failure to broadcast, any or all network programs due to:
(a) failure of facilities
(b) labor disputes, or
(c) causes beyond the control of the party so failing to
broadcast.
6. In the event that the transmitter location, power, frequency or hours of
operation of your station are changed at any time so that your station is of
less value to us as a network outlet than it is as of the effective date of this
agreement, we will have the right to terminate this agreement upon thirty (30)
days' advance written notice.
7. You agree not to assign or to transfer any of the rights or privileges
granted to you under this agreement without our prior consent in writing. You
also agree that if any
6
<PAGE>
application is made to the Federal Communications Commission pertaining to an
assignment or a transfer of control of your license, or any interest therein,
you shall notify us in writing immediately of the filing of such application.
Except as to assignments or transfers of control comprehended by Section
73.3540(f) of the Rules and Regulations of the Federal Communications
Commission, we shall have the right to terminate this agreement effective as of
the effective date of any assignment or transfer of control (voluntary or
involuntary) of your license or any interest therein, provided ABC shall have
given you notice in writing of such termination within thirty (30) days after we
have been advised that such application for assignment or transfer has been
filed with the Federal Communications Commission.
If we do not so terminate this agreement, you agree, prior to the effective
date of any such assignment or transfer of control of your station to procure
and deliver to us, in form satisfactory to us, the agreement of the proposed
assignee or transferee that, upon consummation of the assignment or transfer of
control of your station's authorization, the assignee or transferee will assume
and perform this agreement in its entirety without limitation of any kind. If
you fail to notify us of the proposed assignment or transfer of control of your
station's authorization, or fail to procure the agreement of the proposed
assignee or transferee in accordance with the preceding sentence, we shall have
the right to terminate this agreement upon thirty (30) days' advance written
notice to you and the transferee or assignee, after the effective date of such
assignment or transfer or the date on which we learn of such assignment or
transfer, whichever is later.
8. You agree not to authorize, cause, permit or enable anything to be done
whereby any program which we supply to you herein may be used for any purpose
other than broadcasting by your station in the community to which it is
licensed, which broadcast is intended for reception by the general public in
places to which no admission is charged. You agree when you are authorized to
tape a program for subsequent broadcast that the recording will be broadcast not
more than once in its entirety and will be erased within six (6) hours of use.
9. Except with our prior written consent and except upon such terms and
conditions as we may impose, you agree not to authorize, cause, permit or enable
anything to be done whereby a recording on film, tape or otherwise is made or a
recording is broadcast, of a program which has been, or is being, broadcast on
our network, or a rebroadcast is made of the broadcast transmission of your
station during any hours when your station is broadcasting a program provided by
ABC.
10. With respect to any and all promotional material issued by you or under
your direction or control, you agree to abide by any and all restrictions of
which we advise you pertaining to the promotion of a network program(s)
scheduled to be broadcast by you in your community, including, but without
limitation,
7
<PAGE>
on-the-air promotion, billboards, and newspaper or other printed advertisements,
announcements or promotions.
11. You agree to maintain for your television station such licenses,
including performing rights licenses as now are or hereafter may be in general
use by television broadcasting stations and necessary for you to broadcast the
television programs which we furnish to you hereunder. We will clear all music
in the repertory of ASCAP and of BMI used in our network programs, thereby
licensing the broadcasting of such music in such programs over your station. You
will be responsible for all music license requirements for any commercial or
other material inserted by you within or adjacent to our network programs in
accordance with this agreement.
12. The furnishing of film or tape recorded programs hereunder is
contingent upon our ability to make arrangements satisfactory to us for the film
or tape recordings necessary to deliver the programs to you. Such film or tape
recorded programs shall be used only for a single television broadcast over your
station. Positive prints of film or tape recorded programs are to be shipped by
us, shipping charges prepaid, and you agree to return to us or to forward to
such television station as we designate, shipping charges prepaid, each print or
copy of said film or tape recording received by you hereunder, together with the
original reels and containers furnished therewith. You will return or forward
all prints in the same condition as received by you, ordinary wear and tear
excepted, immediately after a single TV broadcast over your station. In the
event you damage a print of any film or tape recorded program which is delivered
to you, or fail to return or forward the original reels and containers furnished
therewith, as aforesaid, you agree to pay the cost of replacing the complete
print, original reels and/or containers as and when billed by us.
13. No inducements, representations or warranties except as specifically
set forth herein have been made by any of the parties to this agreement. This
agreement constitutes the entire contract between the parties hereto and no
provision thereof shall be changed or modified, nor shall this agreement be
discharged in whole or in part, except by an agreement in writing, signed by the
party against whom the change, modification or discharge is claimed or sought to
be enforced; nor shall any waiver of any of the conditions or provisions of this
agreement be effective and binding unless such waiver shall be in writing and
signed by the party against whom the waiver is asserted, and no waiver of any
provision of this agreement shall be deemed to be a waiver of any preceding or
succeeding breach of the same or of any other provision.
14. This agreement shall be governed by and construed in accordance with
the laws of the State of New York.
15. Upon termination of this agreement, the consent theretofore granted to
broadcast our Network programs shall be
8
<PAGE>
deemed immediately withdrawn and you shall have no further rights of any nature
whatsoever in such programs.
16. We agree to indemnify, defend and hold you harmless against and from
all claims, damages, liabilities, costs and expenses arising out of the use or
exercise by you, in accordance with this agreement, of any rights or material
furnished by us hereunder, provided that you promptly notify us of any claim or
litigation to which this indemnity shall apply, and that you cooperate fully
with us in the defense at our request. You similarly agree to indemnify, defend
and hold us harmless with respect to material furnished by you.
VI. TERM
This agreement shall become effective at 3:00 AM, NYT, on the 19th day of
March, 1990, and it shall continue until 3:00 AM, NYT, on the 19th day of March,
1992. It shall then be renewed on the same terms and conditions for a further
period of two years, and so on for successive further periods of two years each,
unless and until either party hereto shall, at least six (6) months prior to the
expiration of the then current term, give the other party written notice that it
does not desire the contract renewed for a further period. It is understood and
agreed, however, that this agreement may be terminated at any time, both during
the initial term and any subsequent renewal term, by either party upon giving
the other party six (6) months' advance written notice.
If, after examination, you find that the arrangement herein proposed is
satisfactory to you, please indicate your acceptance on the copy of this letter
enclosed for that purpose and return that copy to us.
Very sincerely yours,
AMERICAN BROADCASTING COMPANIES, INC.
By: /s/ American Broadcasating Companies, Inc.
-------------------------------------------
Vice President, In Charge
Of Affiliate Relations
Accepted this 21st day of
November, 1989
Television Station: WCVB-TV
By:/s/ The Hearst Corporation
--------------------------
9
<PAGE>
RIDER ONE
As of January 1, 1990 (or such other effective date established by the
Federal Communications Commission for operation of the revised network
non-duplication rules), you shall be entitled to network non-duplication
protection (against simultaneous or non-simultaneous presentation of ABC
Television Network programs via cable pursuant to the compulsory license) as
follows:
a. The geographic zone of network non-duplication protection shall be
the Area of Dominant Influence ("ADI") (as defined by Arbitron) in which
your station is located, or any lesser zone pursuant to any geographic
restrictions contained in the Federal Communications Commission rules and
regulations, now or as subsequently modified.
b. Network non-duplication protection shall extend to all ABC
Television Network programs that you broadcast in accordance with this
agreement. Protection shall not extend to individually pre-empted programs
of an otherwise cleared series.
c. Network non-duplication protection shall begin 48 hours prior to
the live time period designated by us for broadcast of that network program
by your station, and shall end at 12:00 Midnight on the seventh day
following that designated time period.
You are under no obligation to exercise in whole or in part the network
non-duplication rights granted under this agreement.
AMERICAN BROADCASTING COMPANIES, INC.
By: /s/ American Broadcasting Companies, Inc.
------------------------------------------
Vice President, In Charge
Of Affiliate Relations
Accepted this 21st day of
November, 1989
Television Station: WCVB-TV
By: /s/ The Hearst Corporation
---------------------------
10
<PAGE>
EXHIBIT 10.3
[CAPITAL CITIES/ABC, INC. LETTERHEAD]
November 2, 1990
PRIMARY TELEVISION AFFILIATION AGREEMENT
Hearst Corporation
Milwaukee, Wisconsin
TELEVISION STATION: WISN
Gentlemen:
In order that your station may continue to serve the public interest,
convenience and necessity, this Company and your Television Station WISN hereby
mutually agree upon the following plan of network cooperation, which shall
replace the affiliation agreement between you and us dated September 30, 1988,
as amended.
I. NETWORK AFFILIATION AND PROGRAM SERVICE
A. FIRST CALL. We will offer you, for television broadcasting by your
station, the first call on all our network television programs which are to be
broadcast on a television network basis in the community to which your station
is licensed by the Federal Communications Commission, except as hereinafter
provided in Paragraph V.3. Notwithstanding the foregoing, ABC shall have the
right to authorize any television broadcasting station regardless of the
community to which it is licensed by the FCC, to broadcast any network
presentation of a subject we deem to be of immediate national significance
including, but not limited to, a Presidential address.
B. PROGRAM SERVICE. The program service we are offering will be as follows:
1. Network Sponsored Programs. "Network sponsored programs", as used
in this agreement, shall mean those television network programs which
contain one or more commercial announcements paid for by or on behalf of
one or more ABC Network advertisers.
You agree to broadcast network sponsored programs in their entirety,
including but not limited to the network commercial announcements ordered
for your station, network identifications, program promotional material or
credit
<PAGE>
2
announcements contained in such programs which you accept, without
interruption or deletion or addition of any kind. Notwithstanding the
foregoing, you may substitute other ABC-TV promotional announcements in
lieu of program promotional material which is inaccurate as it pertains to
your station. It is also understood that no commercial announcement,
promotional announcement or public service announcement will be broadcast
by you during any interval within a network program designated by ABC as
being for the sole purpose of making a station identification announcement.
2. Network Sustaining, Cooperative and Spot Carrier Programs.
a) We will from time to time offer you live or recorded network
programs identified as sustaining programs, cooperative programs or spot
carrier programs. Except as set forth below in subparagraphs (b) and (c),
you agree to broadcast such programs which you accept in their entirety
without interruption or deletion or addition of any kind.
b) The network sustaining programs which we may offer to you may not,
without our prior written consent, be sold by your station for commercial
sponsorship or interrupted for commercial announcements or used for any
purpose other than sustaining broadcasting.
c) You may carry the cooperative or spot carrier programs on the same
basis as regular sustaining programs or you may offer them for commercial
sponsorship on terms and conditions specified by us at the time such
programs are offered to you.
C. PROGRAM ACCEPTANCE. You agree that you will advise us within 15 days of
the date of our offer of your acceptance (if requested to do so by the terms of
our offer) or rejection of any offer by us relating to a regularly scheduled
network program. With respect to any network program not regularly scheduled,
you will advise us of your acceptance or rejection of our offer within 72 hours
(exclusive of Saturdays, Sundays and holidays) after such offer has been
received at your station. However, if the first broadcast referred to in our
offer is scheduled to occur within less than 15 days after the date of our offer
with respect to regularly scheduled network programs or less than 72 hours after
our offer has been received at your station with respect to network programs not
regularly scheduled, you shall notify us of your acceptance or rejection of such
offer as promptly as possible, but in no event after the first broadcast time
specified in such offer. Acceptance by you of our offer of a network program(s)
shall constitute your agreement to broadcast such network program(s) in
<PAGE>
3
accordance with the terms of this agreement and of our offer to you.
D. PROGRAM DELIVERY. By means satisfactory to us, we will arrange, at our
own expense, for programs to be delivered to your station.
II. NETWORK STATION COMPENSATION
1. We agree to pay you, and you agree to accept, compensation in accordance
with the provisions set forth in Schedule A attached hereto and hereby made a
part hereof. The network station rate for your station shall be $1,850.00 and
shall be used by us in determining your station compensation in accordance with
the formula set forth in Schedule A.
2. If you should be unable, for any reason to broadcast any network
sponsored program(s), or any portion thereof, your compensation hereunder from
us for that period shall be reduced accordingly.
3. We reserve the right to reevaluate and change at any time (a) the
network station rate set forth in Subparagraph 1 above, (b) the percentage(s)
set forth in the Table in Schedule A, or (c) your network weekly deduction, by
notice to you in writing to such effect. Any increase in your station rate or in
the percentage(s) in Schedule A, or any decrease in your network weekly
deduction, will become effective on the date specified in our notice to you.
Should we (a) decrease the network station rate below that set forth in
Subparagraph 1 above, (b) decrease the percentage(s) in Schedule A, or (c)
increase your network weekly deduction, we will notify you in writing at least
ninety (90) days prior to the effective date of such change, and you may, if you
so elect, terminate this affiliation agreement as of the effective date by
giving us prior written notification within forty-five (45) days after the date
of our notice to you. However, if such reduction in compensation is part of a
general rate revision on the ABC Network, we will notify you in writing at least
thirty (30) days prior to the effective date of such change, and you may, if you
so elect, terminate this affiliation agreement as of the effective date by
giving us prior written notification within fifteen (15) days after the date of
our notice to you of such change. You agree that a general rate revision on the
ABC Television Network may be expressed by us as a modification of your network
rate, and/or as a modification of the percentage(s) set forth in Schedule A
and/or as a modification of your network weekly deduction.
<PAGE>
4
III. NETWORK NON-DUPLICATION PROTECTION
You shall be entitled to network non-duplication protection provided as and
to the extent set forth in Rider One to this agreement, which is attached hereto
and made a part hereof.
IV. CUT-IN ANNOUNCEMENTS AND LOCAL TAG SERVICES
A. CUT-IN ANNOUNCEMENTS. "Cut In Announcements", as used herein, shall mean
the substitution of a special commercial in place of a regularly scheduled
network commercial.
1. Upon at least twenty-four (24) hours' notice, you shall, at our request,
furnish such personnel and equipment as may be necessary to (a) broadcast
cut-in announcements from your station alone, or (b) originate from your
station cut-in announcements to one or more other stations, without regard
to whether or not your station is requested to broadcast said cut-in
announcement(s). Notwithstanding anything contained in this agreement, you
may refuse to broadcast any such cut-in announcement in the community to
which your station is licensed by the FCC if, in your opinion, it is not in
the public interest, convenience or necessity, but you shall nevertheless
furnish such personnel and equipment as may be necessary to originate such
cut-in announcement(s) from your station to one or more other stations.
2. Cut-in announcements shall be broadcast only when authorized by us and
then only in accordance with the instructions furnished to you. You will be
supplied, as promptly as possible, with the material and instructions for
these announcements.
3. We may cancel any order for cut-in announcements without liability on
our part, provided we do so upon not less than twenty-four (24) hours'
notice to you, failing which, we will pay you the compensation you would
have received if the announcement(s) had continued as scheduled for
twenty-four (24) hours following receipt by you of such notice of
cancellation.
4. For each program during which such cut-in announcements are included, we
shall pay you in accordance with the applicable table set forth in Schedule
B hereto and hereby made a part hereof.
B. LOCAL TAG SERVICES. "Local Tag Announcements", as used herein, shall
mean a visual commercial announcement, made by you on behalf of a local dealer
of a network advertiser, not exceeding ten seconds of a one-minute network
commercial announcement or five seconds of a thirty-second network commercial
announcement
<PAGE>
5
projected by means of a slide and not utilizing more than two (2) slides.
1. Upon at least twenty-four (24) hours' notice, you shall, at our request,
furnish such personnel and equipment as may be necessary to broadcast
"local tag announcements".
2. Local tag announcements shall be broadcast in accordance with our
instructions. The network advertiser shall supply to you or purchase from
you, as promptly as possible, the slide(s) for each local tag announcement.
Local tag announcements shall not be accompanied by oral announcements
unless the network advertiser shall make direct requests of you therefor
and shall have assumed sole responsibility for payment of such oral
announcements.
3. We may cancel any order for local tag announcements without liability on
our part provided we do so upon not less than twenty-four (24) hours'
notice to you, failing which we will pay you the compensation you would
have received if the local tag announcement(s) had continued as scheduled
for twenty-four (24) hours following receipt by you of such notice of
cancellation.
4. For each local tag announcement which you broadcast, we shall compensate
you in accordance with the applicable table set forth in Schedule B hereto
and hereby made a part hereof.
V. GENERAL
1. We may at any time, upon notice to you, substitute for any scheduled
network program another network program, except that if such other network
program in our judgment involves a special event of public interest or
importance, no such notice is required. No compensation will be paid to you for
the scheduled program or for the substitute program unless such substitute
program is a "network sponsored program" in which event you shall be compensated
in accordance with the terms or formula, whichever is applicable, set forth in
Schedule A hereof.
2. Nothing contained in this agreement shall be construed to prevent or
hinder us, at any time upon notice to you as soon as practicable, from
cancelling one or more network programs, whether sponsored or sustaining, in
which event you shall receive no compensation for any such canceled network
sponsored program(s).
3. With respect to network programs offered or already contracted for
pursuant to this affiliation agreement, nothing herein contained shall be
construed to prevent or hinder you from:
<PAGE>
6
a) rejecting or refusing network programs which you reasonably believe to
be unsatisfactory, unsuitable or contrary to the public interest; or
b) substituting a program, which in your good faith opinion, is of greater
local or national importance.
We shall not compensate you for any such program you have refused or rejected or
for which you have substituted a program which is of greater local or national
importance. With respect to programs already contracted for hereunder, you shall
give us prompt telegraphic notification of any such refusal, rejection or
substitution no later than fourteen (14) days prior to the air date of such
programming, except where the nature of the substitute program makes such notice
impracticable (e.g., coverage of breaking news or other unscheduled events), in
which case you agree to give us as much advance notice as possible under the
circumstances. Such notice shall include a statement of the reason(s) you
believe that a rejected or refused network program is unsatisfactory, unsuitable
or contrary to the public interest, and/or that a substituted program is of
greater local or national importance.
In addition to all other remedies, we shall have the right, upon thirty
(30) days' notice, to terminate your "First Call" rights on any program series
already contracted for hereunder and withdraw all future episodes of that series
if one or more individual program episode(s) is pre-empted by you in violation
of this Paragraph.
We shall also have the right, upon thirty (30) days' notice, to terminate
your "First Call" rights concerning any program series already contracted for
hereunder and to withdraw all future episodes of that series if three or more
individual program episodes are pre-empted by you in any thirteen-week period,
whether or not such pre-emptions are for the reasons set forth in (a) and (b)
above. Such thirteen-week periods shall be measured consecutively from the first
broadcast date of the program series in question.
We reserve the right not to offer you the "First Call" for the next
broadcast season on any program series as to which we have terminated your
"First Call" rights and withdrawn future episodes of that series pursuant to
this Paragraph and which has been placed by ABC on another station serving your
market.
4. You will submit to us in writing, upon forms provided by us for that
purpose, such reports covering network programs broadcast by your station as ABC
may request from time to time.
5. Subject to Subparagraph 2 of Section II of this agreement, neither you
nor we shall incur any liability hereunder
<PAGE>
7
because of our failure to deliver, or your failure to broadcast, any or all
network programs due to:
(a) failure of facilities
(b) labor disputes, or
(c) causes beyond the control of the party so failing to broadcast.
6. In the event that the transmitter location, power, frequency or hours of
operation of your station are changed at any time so that your station is of
less value to us as a network outlet than it is as of the effective date of this
agreement, we will have the right to terminate this agreement upon thirty (30)
days' advance written notice.
7. You agree not to assign or to transfer any of the rights or privileges
granted to you under this agreement without our prior consent in writing. You
also agree that if any application is made to the Federal Communications
Commission pertaining to an assignment or a transfer of control of your license,
or any interest therein, you shall notify us in writing immediately of the
filing of such application. Except as to assignments or transfers of control
comprehended by Section 73.3540(f) of the Rules and Regulations of the Federal
Communications Commission, we shall have the right to terminate this agreement
effective as of the effective date of any assignment or transfer of control
(voluntary or involuntary) of your license or any interest therein, provided ABC
shall have given you notice in writing of such termination within thirty (30)
days after we have been advised that such application for assignment or transfer
has been filed with the Federal Communications Commission.
If we do not so terminate this agreement, you agree, prior to the effective date
of any such assignment or transfer of control of your station to procure and
deliver to us, in form satisfactory to us, the agreement of the proposed
assignee or transferee that, upon consummation of the assignment or transfer of
control of your station's authorization, the assignee or transferee will assume
and perform this agreement in its entirety without limitation of any kind. If
you fail to notify us of the proposed assignment or transfer of control of your
station's authorization, or fail to procure the agreement of the proposed
assignee or transferee in accordance with the preceding sentence, we shall have
the right to terminate this agreement upon thirty (30) days' advance written
notice to you and the transferee or assignee, after the effective date of such
assignment or transfer or the date on which we learn of such assignment or
transfer, whichever is later.
8. You agree not to authorize, cause, permit or enable anything to be done
whereby any program which we supply to you herein may be used for any purpose
other than broadcasting by your station in the community to which it is
licensed, which broadcast
<PAGE>
8
is intended for reception by the general public in places to which no admission
is charged. You agree when you are authorized to tape a program for subsequent
broadcast that the recording will be broadcast not more than once in its
entirety and will be erased within six (6) hours of use.
9. Except with our prior written consent and except upon such terms and
conditions as we may impose, you agree not to authorize, cause, permit or enable
anything to be done whereby a recording on film, tape or otherwise is made or a
recording is broadcast, of a program which has been, or is being, broadcast on
our network, or a rebroadcast is made of the broadcast transmission of your
station during any hours when your station is broadcasting a program provided by
ABC.
10. With respect to any and all promotional material issued by you or under
your direction or control, you agree to abide by any and all restrictions of
which we advise you pertaining to the promotion of a network program(s)
scheduled to be broadcast by you in your community, including, but without
limitation, on-the-air promotion, billboards, and newspaper or other printed
advertisements, announcements or promotions.
11. You agree to maintain for your television station such licenses,
including performing rights licenses as now are or hereafter may be in general
use by television broadcasting stations and necessary for you to broadcast the
television programs which we furnish to you hereunder. We will clear all music
in the repertory of ASCAP and of BMI used in our network programs, thereby
licensing the broadcasting of such music in such programs over your station. You
will be responsible for all music license requirements for any commercial or
other material inserted by you within or adjacent to our network programs in
accordance with this agreement.
12. The furnishing of film or tape recorded programs hereunder is
contingent upon our ability to make arrangements satisfactory to us for the film
or tape recordings necessary to deliver the programs to you. Such film or tape
recorded programs shall be used only for a single television broadcast over your
station. Positive prints of film or tape recorded programs are to be shipped by
us, shipping charges prepaid, and you agree to return to us or to forward to
such television station as we designate, shipping charges prepaid, each print or
copy of said film or tape recording received by you hereunder, together with the
original reels and containers furnished therewith. You will return or forward
all prints in the same condition as received by you, ordinary wear and tear
excepted, immediately after a single TV broadcast over your station. In the
event you damage a print of any film or tape recorded program which is delivered
to you, or fail to return or forward the original reels and containers furnished
therewith, as aforesaid, you agree to pay the cost of
<PAGE>
9
replacing the complete print, original reels and/or containers as
and when billed by us.
13. No inducements, representations or warranties except as specifically
set forth herein have been made by any of the parties to this agreement. This
agreement constitutes the entire contract between the parties hereto and no
provision thereof shall be changed or modified, nor shall this agreement be
discharged in whole or in part, except by an agreement in writing, signed by the
party against whom the change, modification or discharge is claimed or sought to
be enforced; nor shall any waiver of any of the conditions or provisions of this
agreement be effective and binding unless such waiver shall be in writing and
signed by the party against whom the waiver is asserted, and no waiver of any
provision of this agreement shall be deemed to be a waiver of any preceding or
succeeding breach of the same or of any other provision.
14. This agreement shall be governed by and construed in accordance with
the laws of the State of New York.
15. Upon termination of this agreement, the consent theretofore granted to
broadcast our Network programs shall be deemed immediately withdrawn and you
shall have no further rights of any nature whatsoever in such programs.
16. We agree to indemnify, defend and hold you harmless against and from
all claims, damages, liabilities, costs and expenses arising out of the use or
exercise by you, in accordance with this agreement, of any rights or material
furnished by us hereunder, provided that you promptly notify us of any claim or
litigation to which this indemnity shall apply, and that you cooperate fully
with us in the defense at our request. You similarly agree to indemnify, defend
and hold us harmless with respect to material furnished by you.
VI. TERM
This agreement shall become effective at 3:00 AM, NYT, on the 27th day of
March , 1991, and it shall continue until 3:00 AM, NYT, on the 27th day of
March, 1993. It shall then be renewed on the same terms and conditions for a
further period of two years, and so on for successive further periods of two
years each, unless and until either party hereto shall, at least six (6) months
prior to the expiration of the then current term, give the other party written
notice that it does not desire the contract renewed for a further period. It is
understood and agreed, however, that this agreement may be terminated at any
time, both during the initial term and any subsequent renewal term, by either
party upon giving the other party six (6) months' advance written notice.
<PAGE>
10
If, after examination, you find that the arrangement herein proposed is
satisfactory to you, please indicate your acceptance on the copy of this letter
enclosed for that purpose and return that copy to us.
Very sincerely yours,
AMERICAN BROADCASTING COMPANIES, INC.
By: /s/ American Broadcasting Company, Inc.
-----------------------------------------
Executive Vice President, In Charge
Of Affiliate Relations
Accepted this 2nd day of November, 1990.
Television Station: WISN
By: /s/ The Hearst Corporation
--------------------------
<PAGE>
RIDER ONE
You shall be entitled to network non-duplication protection (against
simultaneous or non-simultaneous presentation of ABC Television Network programs
via cable pursuant to the compulsory license) as follows:
a. The geographic zone of network non-duplication protection shall be the
Area of Dominant Influence ("ADI") (as defined by Arbitron) in which your
station is located, or any lesser zone pursuant to any geographic
restrictions contained in the Federal Communications Commission rules and
regulations, now or as subsequently modified.
b. Network non-duplication protection shall extend to all ABC Television
Network programs that you broadcast in accordance with this agreement.
Protection shall not extend to individually pre-empted programs of an
otherwise cleared series.
c. Network non-duplication protection shall begin 48 hours prior to the
live time period designated by us for broadcast of that network program by
your station, and shall end at 12:00 Midnight on the seventh day following
that designated time period.
You are under no obligation to exercise in whole or in part the network
non-duplication rights granted under this agreement.
AMERICAN BROADCASTING COMPANIES, INC.
By: /s/ American Broadcasting Companies, Inc.
------------------------------------------
Executive Vice President, In Charge
Of Affiliate Relations
Accepted this 2nd day of
November, 1996
Television Station WISN
By: /s/ The Hearst Corporation
------------------------------------
<PAGE>
EXHIBIT 10.4
[CAPITAL CITIES/ABC, INC. LETTERHEAD]
July 14, 1989
PRIMARY TELEVISION AFFILIATION AGREEMENT
WTAE Division/The Hearst Corporation
Pittsburgh, Pa.
TELEVISION STATION: WTAE
Gentlemen:
In order that your station may continue to serve the public interest,
convenience and necessity, this Company and your Television Station WTAE hereby
mutually agree upon the following plan of network cooperation, which shall
replace the affiliation agreement between you and us dated May 5, 1987.
I. NETWORK AFFILIATION AND PROGRAM SERVICE
A. FIRST CALL. We will offer you, for television broadcasting by your
station, the first call on all our network television programs which are to be
broadcast on a television network basis in the community to which your station
is licensed by the Federal Communications Commission, except as hereinafter
provided in Paragraph V.3. Notwithstanding the foregoing, ABC shall have the
right to authorize any television broadcasting station regardless of the
community to which it is licensed by the FCC, to broadcast any network
presentation of a subject we deem to be of immediate national significance
including, but not limited to, a Presidential address.
B. PROGRAM SERVICE. The program service we are offering will be as follows:
1. Network Sponsored Programs. "Network sponsored programs", as used
in this agreement, shall mean those television network programs which
contain one or more commercial announcements paid for by or on behalf of
one or more ABC Network advertisers. You agree to broadcast network
sponsored programs in their entirety, including but not limited to the
network commercial announcements ordered for your station, network
identifications, program promotional material or credit announcements
contained in such programs which you accept, without interruption or
deletion or addition of any kind. Notwithstanding the foregoing, you may
substitute other ABC-TV promotional announcements in lieu of program
promotional material which is inaccurate as it
<PAGE>
pertains to your station. It is also understood that no commercial
announcement, promotional announcement or public service announcement will
be broadcast by you during any interval within a network program designated
by ABC as being for the sole purpose of making a station identification
announcement.
2. Network Sustaining, Cooperative and Spot Carrier Programs.
a) We will from time to time offer you live or recorded network
programs identified as sustaining programs, cooperative programs or
spot carrier programs. Except as set forth below in subparagraphs (b)
and (c), you agree to broadcast such programs which you accept in
their entirety without interruption or deletion or addition of any
kind.
b) The network sustaining programs which we may offer to you may
not, without our prior written consent, be sold by your station for
commercial sponsorship or interrupted for commercial announcements or
used for any purpose other than sustaining broadcasting.
c) You may carry the cooperative or spot carrier programs on the
same basis as regular sustaining programs or you may offer them for
commercial sponsorship on terms and conditions specified by us at the
time such programs are offered to you.
C. PROGRAM ACCEPTANCE. You agree that you will advise us within 15 days of
the date of our offer of your acceptance (if requested to do so by the terms of
our offer) or rejection of any offer by us relating to a regularly scheduled
network program. With respect to any network program not regularly scheduled,
you will advise us of your acceptance or rejection of our offer within 72 hours
(exclusive of Saturdays, Sundays and holidays) after such offer has been
received at your station. However, if the first broadcast referred to in our
offer is scheduled to occur within less than 15 days after the date of our offer
with respect to regularly scheduled network programs or less than 72 hours after
our offer has been received at your station with respect to network programs not
regularly scheduled, you shall notify us of your acceptance or rejection of such
offer as promptly as possible, but in no event after the first broadcast time
specified in such offer. Acceptance by you of our offer of a network program(s)
shall constitute your agreement to broadcast such network program(s) in
accordance with the terms of this agreement and of our offer to you.
D. PROGRAM DELIVERY. By means satisfactory to us, we will arrange, at our
own expense, for programs to be delivered to your station.
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II. NETWORK STATION COMPENSATION
1. We agree to pay you, and you agree to accept, compensation in accordance
with the provisions set forth in Schedule A attached hereto and hereby made a
part thereof. The network station rate for your station shall be $3,100.00 and
shall be used by us in determining your station compensation in accordance with
the formula set forth in Schedule A.
2. If you should be unable, for any reason to broadcast any network
sponsored program(s), or any portion thereof, your compensation hereunder from
us for that period shall be reduced accordingly.
3. We reserve the right to reevaluate and change at any time (a) the
network station rate set forth in Subparagraph 1 above, (b) the percentage(s)
set forth in the Table in Schedule A, or (c) your network weekly deduction, by
notice to you in writing to such effect. Any increase in your station rate or in
the percentage(s) in Schedule A, or any decrease in your network weekly
deduction, will become effective on the date specified in our notice to you.
Should we (a) decrease the network station rate below that set forth in
Subparagraph 1 above, (b) decrease the percentage(s) in Schedule A, or (c)
increase your network weekly deduction, we will notify you in writing at least
ninety (90) days prior to the effective date of such change, and you may, if you
so elect, terminate this affiliation agreement as of the effective date by
giving us prior written notification within forty-five (45) days after the date
of our notice to you. However, if such reduction in compensation is part of a
general rate revision on the ABC Network, we will notify you in writing at least
thirty (30) days prior to the effective date of such change, and you may, if you
so elect, terminate this affiliation agreement as of the effective date by
giving us prior written notification within fifteen (15) days after the date of
our notice to you of such change. You agree that a general rate revision on the
ABC Television Network may be expressed by us as a modification of your network
rate, and/or as a modification of the percentage(s) set forth in Schedule A
and/or as a modification of your network weekly deduction.
III. NETWORK NON-DUPLICATION PROTECTION
As of January 1, 1990 (or such other effective date established by the
Federal Communications Commission for operation of the revised network
non-duplication rules), you shall be entitled to network non-duplication
protection provided as and to the extent set forth in Rider One to this
agreement, which is attached hereto and made a part hereof.
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IV. CUT-IN ANNOUNCEMENTS AND LOCAL TAG SERVICES
A. CUT-IN ANNOUNCEMENTS. "Cut-In Announcements", as used herein, shall mean
the substitution of a special commercial in place of a regularly scheduled
network commercial.
1. Upon at least twenty-four (24) hours' notice, you shall, at our
request, furnish such personnel and equipment as may be necessary to (a)
broadcast cut-in announcements from your station alone, or (b) originate
from your station cut-in announcements to one or more other stations,
without regard to whether or not your station is requested to broadcast
said cut-in announcement(s). Notwithstanding anything contained in this
agreement, you may refuse to broadcast any such cut-in announcement in the
community to which your station is licensed by the FCC if, in your opinion,
it is not in the public interest, convenience or necessity, but you shall
nevertheless furnish such personnel and equipment as may be necessary to
originate such cut-in announcement(s) from your station to one or more
other stations.
2. Cut-in announcements shall be broadcast only when authorized by us
and then only in accordance with the instructions furnished to you. You
will be supplied, as promptly as possible, with the material and
instructions for these announcements.
3. We may cancel any order for cut-in announcements without liability
on our part, provided we do so upon not less than twenty-four (24) hours'
notice to you, failing which, we will pay you the compensation you would
have received if the announcement(s) had continued as scheduled for
twenty-four (24) hours following receipt by you of such notice of
cancellation.
4. For each program during which such cut-in announcements are
included, we shall pay you in accordance with the applicable table set
forth in Schedule B hereto and hereby made a part hereof.
B. LOCAL TAG SERVICES. "Local Tag Announcements", as used herein, shall
mean a visual commercial announcement, made by you on behalf of a local dealer
of a network advertiser, not exceeding ten seconds of a one-minute network
commercial announcement or five seconds of a thirty-second network commercial
announcement projected by means of a slide and not utilizing more than two (2)
slides.
1. Upon at least twenty-four (24) hours' notice, you shall, at our
request, furnish such personnel and equipment as may be necessary to
broadcast "local tag announcements".
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2. Local tag announcements shall be broadcast in accordance with our
instructions. The network advertiser shall supply to you or purchase from
you, as promptly as possible, the slide(s) for each local tag announcement.
Local tag announcements shall not be accompanied by oral announcements
unless the network advertiser shall make direct requests of you therefor
and shall have assumed sole responsibility for payment of such oral
announcements.
3. We may cancel any order for local tag announcements without
liability on our part provided we do so upon not less than twenty-four (24)
hours' notice to you, failing which we will pay you the compensation you
would have received if the local tag announcement(s) had continued as
scheduled for twenty-four (24) hours following receipt by you of such
notice of cancellation.
4. For each local tag announcement which you broadcast, we shall
compensate you in accordance with the applicable table set forth in
Schedule B hereto and hereby made a part hereof.
V. GENERAL
1. We may at any time, upon notice to you, substitute for any scheduled
network program another network program, except that if such other network
program in our judgment involves a special event of public interest or
importance, no such notice is required. No compensation will be paid to you for
the scheduled program or for the substitute program unless such substitute
program is a "network sponsored program" in which event you shall be compensated
in accordance with the terms or formula, whichever is applicable, set forth in
Schedule A hereof.
2. Nothing contained in this agreement shall be construed to prevent or
hinder us, at any time upon notice to you as soon as practicable, from
cancelling one or more network programs, whether sponsored or sustaining, in
which event you shall receive no compensation for any such canceled network
sponsored program(s).
3. With respect to network programs offered or already contracted for
pursuant to this affiliation agreement, nothing herein contained shall be
construed to prevent or hinder you from:
a) rejecting or refusing network programs which you reasonably believe
to be unsatisfactory, unsuitable or contrary to the public interest; or
b) substituting a program, which in your good faith opinion, is of
greater local or national importance.
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We shall not compensate you for any such program you have refused or rejected or
for which you have substituted a program which is of greater local or national
importance. With respect to programs already contracted for hereunder, you shall
give us prompt telegraphic notification of any such refusal, rejection or
substitution no later than fourteen (14) days prior to the air date of such
programming, except where the nature of the substitute program makes such notice
impracticable (e.g., coverage of breaking news or other unscheduled events), in
which case you agree to give us as much advance notice as possible under the
circumstances. Such notice shall include a statement of the reason(s) you
believe that a rejected or refused network program is unsatisfactory, unsuitable
or contrary to the public interest, and/or that a substituted program is of
greater local or national importance.
In addition to all other remedies, we shall have the right, upon thirty
(30) days' notice, to terminate your "First Call" rights on any program series
already contracted for hereunder and withdraw all future episodes of that series
if one or more individual program episode(s) is pre-empted by you in violation
of this Paragraph.
We shall also have the right, upon thirty (30) days' notice, to terminate
your "First Call" rights concerning any program series already contracted for
hereunder and to withdraw all future episodes of that series if three or more
individual program episodes are pre-empted by you in any thirteen-week period,
whether or not such pre-emptions are of the reasons set forth in (a) and (b)
above. Such thirteen-week periods shall be measured consecutively from the first
broadcast date of the program series in question.
We reserve the right not to offer you the "First Call" for the next
broadcast season on any program series as to which we have terminated your
"First Call" rights and withdrawn future episodes of that series pursuant to
this Paragraph and which has been placed by ABC on another station serving your
market.
4. You will submit to us in writing, upon forms provided by us for that
purpose, such reports covering network programs broadcast by your station as ABC
may request from time to time.
5. Subject to Subparagraph 2 of Section II of this agreement, neither you
nor we shall incur any liability hereunder because of our failure to deliver, or
your failure to broadcast, any or all network programs due to:
(a) failure of facilities
(b) labor disputes, or
(c) causes beyond the control of the party so failing to
broadcast.
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6. In the event that the transmitter location, power, frequency or hours of
operation of your station are changed at any time so that your station is of
less value to us as a network outlet than it is as of the effective date of this
agreement, we will have the right to terminate this agreement upon thirty (30)
days' advance written notice.
7. You agree not to assign or to transfer any of the rights or privileges
granted to you under this agreement without our prior consent in writing. You
also agree that if any application is made to the Federal Communications
Commission pertaining to an assignment or a transfer of control of your license,
or any interest therein, you shall notify us in writing immediately of the
filing of such application. Except as to assignments or transfers of control
comprehended by Section 73.3540(f) of the Rules and Regulations of the Federal
Communications Commission, we shall have the right to terminate this agreement
effective as of the effective date of any assignment or transfer of control
(voluntary or involuntary) or your license or any interest therein, provided ABC
shall have given you notice in writing of such termination within thirty (30)
days after we have been advised that such application for assignment or transfer
has been filed with the Federal Communications Commission.
If we do not so terminate this agreement, you agree, prior to the effective date
of any such assignment or transfer of control of your station to procure and
deliver to us, in form satisfactory to us, the agreement of the proposed
assignee or transferee that, upon consummation of the assignment or transfer of
control of your station's authorization, the assignee or transferee will assume
and perform this agreement in its entirety without limitation of any kind. If
you fail to notify us of the proposed assignment or transfer of control of your
station's authorization, or fail to procure the agreement of the proposed
assignee or transferee in accordance with the preceding sentence, we shall have
the right to terminate this agreement upon thirty (30) days' advance written
notice to you and the transferee or assignee, after the effective date of such
assignment or transfer or the date on which we learn of such assignment or
transfer, whichever is later.
8. You agree not to authorize, cause, permit or enable anything to be done
whereby any program which we supply to you herein may be used for any purpose
other than broadcasting by your station in the community to which it is
licensed, which broadcast is intended for reception by the general public in
places to which no admission is charged. You agree when you are authorized to
tape a program for subsequent broadcast that the recording will be broadcast not
more than once in its entirety and will be erased within six (6) hours of use.
9. Except with our prior written consent and except upon such terms and
conditions as we may impose, you agree not to authorize, cause, permit or enable
anything to be done whereby a recording on film, tape or otherwise is made or a
recording is
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broadcast, of a program which has been, or is being, broadcast on our network,
or a rebroadcast is made of the broadcast transmission of your station during
any hours when your station is broadcasting a program provided by ABC.
10. With respect to any and all promotional material issued by you or under
your direction or control, you agree to abide by any and all restrictions of
which we advise you pertaining to the promotion of a network program(s)
scheduled to be broadcast by you in your community, including, but without
limitation, on-the-air promotion, billboards, and newspaper or other printed
advertisements, announcements or promotions.
11. You agree to maintain for your television station such licenses,
including performing rights licenses as now are or hereafter may be in general
use by television broadcasting stations and necessary for you to broadcast the
television programs which we furnish to you hereunder. We will clear all music
in the repertory of ASCAP and of BMI used in our network programs, thereby
licensing the broadcasting of such music in such programs over your station. You
will be responsible for all music license requirements for any commercial or
other material inserted by you within or adjacent to our network programs in
accordance with this agreement.
12. The furnishing of film or tape recorded programs hereunder is
contingent upon our ability to make arrangements satisfactory to us for the film
or tape recordings necessary to deliver the programs to you. Such film or tape
recorded programs shall be used only for a single television broadcast over your
station. Positive prints of film or tape recorded programs are to be shipped by
us, shipping charges prepaid, and you agree to return to us or to forward to
such television station as we designate, shipping charges prepaid, each print or
copy of said film or tape recording received by you hereunder, together with the
original reels and containers furnished therewith. You will return or forward
all prints in the same condition as received by you, ordinary wear and tear
excepted, immediately after a single TV broadcast over your station. In the
event you damage a print of any film or tape recorded program which is delivered
to you, or fail to return or forward the original reels and containers furnished
therewith, as aforesaid, you agree to pay the cost of replacing the complete
print, original reels and/or containers as and when billed by us.
13. No inducements, representations or warranties except as specifically
set forth herein have been made by any of the parties to this agreement. This
agreement constitutes the entire contract between the parties hereto and no
provision thereof shall be changed or modified, nor shall this agreement be
discharged in whole or in part, except by an agreement in writing, signed by the
party against whom the change, modification or discharge is claimed or sought to
be enforced; nor shall any waiver of any of the conditions or provisions of this
agreement be effective and binding unless such waiver shall be in writing and
signed by the party
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against whom the waiver is asserted, and no waiver of any provision of this
agreement shall be deemed to be a waiver of any preceding or succeeding breach
of the same or of any other provision.
14. This agreement shall be governed by and construed in accordance with
the laws of the State of New York.
15. Upon termination of this agreement, the consent theretofore granted to
broadcast our Network programs shall be deemed immediately withdrawn and you
shall have no further rights of any nature whatsoever in such programs.
16. We agree to indemnify, defend and hold you harmless against and from
all claims, damages, liabilities, costs and expenses arising out of the use or
exercise by you, in accordance with this agreement, of any rights or material
furnished by us hereunder, provided that you promptly notify us of any claim or
litigation to which this indemnity shall apply, and that you cooperate fully
with us in the defense at our request. You similarly agree to indemnify, defend
and hold us harmless with respect to material furnished by you.
VI. TERM
This agreement shall become effective at 3:00 AM, NYT, on the 31st day of
August, 1989, and it shall continue until 3:00 AM, NYT, on the 31st day of
August, 1991. It shall then be renewed on the same terms and conditions for a
further period of two years, and so on for successive further periods of two
years each, unless and until either party hereto shall, at least six (6) months
prior to the expiration of the then current term, give the other party written
notice that it does not desire the contract renewed for a further period. It is
understood and agreed, however, that this agreement may be terminated at any
time, both during the initial term and any subsequent renewal term, by either
party upon giving the other party six (6) months' advance written notice.
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If, after examination, you find that the arrangement herein proposed is
satisfactory to you, please indicate your acceptance on the copy of this letter
enclosed for that purpose and return that copy to us.
Very sincerely yours,
AMERICAN BROADCASTING COMPANIES, INC.
By:/s/ American Broadcasting Companies, Inc.
-----------------------------------------
Executive Vice President, In Charge
Of Affiliate Relations
Accepted this 14th day of
July, 1989
Television Station: WTAE
By:/s/ The Hearst Corporation
--------------------------
<PAGE>
RIDER ONE
As of January 1, 1990 (or such other effective date established by the
Federal Communications Commission for operation of the revised network
non-duplication rules), you shall be entitled to network non-duplication
protection (against simultaneous or non-simultaneous presentation of ABC
Television Network programs via cable pursuant to the compulsory license) as
follows:
a. The geographic zone of network non-duplication protection shall be
the Area of Dominant Influence ("ADI") (as defined by Arbitron) in which
your station is located, or any lesser zone pursuant to any geographic
restrictions contained in the Federal Communications Commission rules and
regulations, now or as subsequently modified.
b. Network non-duplication protection shall extend to all ABC
Television Network programs that you broadcast in accordance with this
agreement. Protection shall not extend to individually pre-empted programs
of an otherwise cleared series.
c. Network non-duplication protection shall begin 48 hours prior to
the live time period designated by us for broadcast of that network program
by your station, and shall end at 12:00 Midnight on the seventh day
following that designated time period.
You are under no obligation to exercise in whole or in part the network
non-duplication rights granted under this agreement.
AMERICAN BROADCASTING COMPANIES, INC.
By: /s/ American Broadcasting Companies, Inc.
------------------------------------------
Executive Vice President, In Charge
Of Affiliate Relations
Accepted this 14th day of
July, 1989
Television Station
By: /s/ The Hearst Corporation
--------------------------
<PAGE>
EXHIBIT 10.5
[NBC TV NETWORK LETTERHEAD]
As of January 2, 1995
The Hearst Corporation
c/o WBAL-TV
11 TV Hill
Baltimore, Maryland 21211
RE: WBAL-TV (Baltimore, Maryland)
Gentlemen:
The following shall comprise the agreement between us for the affiliation
of your television broadcasting station WBAL-TV (you and WBAL-TV collectively
herein called "Station") with the NBC Television Network (herein called "NBC").
1. Term. This Agreement shall be deemed effective as of 3:00 A.M., New York
City time on the 2nd day of January, 1995 (the "Effective Time") and, unless
sooner terminated as provided in this Agreement, it shall remain in effect for a
period of seven (7) years thereafter. It shall then be renewed on the same terms
and conditions for a further period of three (3) years and for successive
further periods of three (3) years each, unless and until either party shall, at
least twelve (12) months prior to the expiration of the then current term, give
the other party written notice that it does not desire to have this Agreement
renewed for a further period. Station represents and warrants that its
affiliation agreement with the CBS Television Network and any and all related
commitments, agreements, and understandings shall be terminated and of no
further force or effect as of the Effective Time. NBC represents and warrants
that its affiliation agreement with another broadcast television station in
Station's community of license and any and all related commitments, agreements,
and understandings shall also be terminated and of no further force or effect as
of the Effective Time.
2. NBC Programming.
(a) NBC shall deliver to Station for free, over-the-air television
broadcasting all programming which NBC makes available for broadcasting
nationally and/or in the community to which Station is presently licensed by the
FCC, except as otherwise expressly provided herein.
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(b) NBC commits to supply sufficient programming throughout the term of
this Agreement for the hours presently programmed by it (the "Programmed Time
Periods"), which Programmed Time Periods are as follows (the specified times are
all local time in Station's community of license):
Prime Time: Monday thru Saturday - 8:00-11:00 P.M.
Sunday - 7:00-11:00 P.M.
Late Night: Monday thru Thursday - 11:35 P.M.-
2:05 A.M.
Friday - 11:35 P.M. - 2:35 A.M.
Saturday - 11:30 P.M. - 1:00 A.M.
News: Monday thru Friday - 7:00-9:00 A.M.
and 6:30-7:00 P.M.
Saturday - 6:30-7:00 P.M.
Sunday - 9:00-11:00 A.M.
and 6:30-7:00 P.M.
Daytime: Monday thru Friday - 10:00-11:00 A.M. and
1:00-3:00 P.M. Saturday -
6:00-7:00 A.M. Sunday -
6:00-7:00 A.M.
Notwithstanding such "Late Night" Programmed Time Periods, during the
period ending on December 31, 1996, such Programmed Time Periods shall be
11:35 P.M. - 12:35 A.M. and 1:35 - 2:35 A.M.
The selection, scheduling, substitution and withdrawal of any program or
portion thereof delivered to Station during the Programmed Time Periods shall at
all times remain within the sole discretion and control of NBC. The parties
acknowledge that local and network programming needs may change during the term
of this Agreement, and each party agrees throughout the term to negotiate in
good faith with the other party any proposed modification of the Programmed Time
Periods.
(c) In addition to the programming supplied pursuant to Paragraph 2(b)
above, NBC shall offer Station throughout the term of this Agreement a variety
of sports, special events and overnight news programming for television
broadcast at times other than the Programmed Time Periods. Station shall have
the right of first refusal with respect to all "NBC Television Network"
programming good for seventy-two (72) hours as against any other television
station located in Station's community of license and any television program
transmission or delivery service (now known or hereafter developed) furnishing a
television signal or programs to Station's Area of Dominant Influence ("ADI"),
as defined by Arbitron (provided, that at such time as NBC adopts a term in
substitution for the term "ADI" pursuant to Paragraph 17 hereof, such substitute
term shall not increase the geographic territory included pursuant to such term,
as compared with Station's ADI), including, but not limited to, any
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community antennae television system, subscription television service,
multipoint distribution system and satellite transmission service. Station shall
notify NBC of its acceptance or rejection of NBC's offer of such programming as
promptly as possible. Station's acceptance of NBC's offer shall constitute
Station's agreement to broadcast such programming in accordance with the terms
of such offer and this Agreement.
With respect to NBC programs outside the Programmed Time Periods (either
offered or already contracted for pursuant to this Agreement), nothing herein
contained shall prevent or hinder NBC from (i) substituting one or more
sponsored or sustaining programs, in which event NBC shall offer such
substituted program or programs to Station in accordance with the provisions of
this Paragraph 2(c), or (ii) canceling one or more such NBC programs; provided,
however, that NBC shall exercise all reasonable efforts to give Station at least
three (3) weeks prior written notice of such substitution or cancellation.
Station shall not be obligated to broadcast, and NBC shall not be obligated to
continue to deliver, subsequent to the termination of this Agreement, any
programs which NBC may have offered and which Station may have accepted during
the term hereof.
3. Station Carriage in Programmed Time Periods.
Subject only to the preemption rights contained in Paragraph 4(c) below and
elsewhere in this Agreement, including Station's unqualified and unlimited right
to preempt for live coverage of news events:
(a) Station shall broadcast over Station's facilities all NBC
programming supplied to Station for broadcast in the Programmed Time
Periods on the dates and at the times the programs are scheduled by NBC;
(b) Station shall be entitled, during each Broadcast Year (as
hereinafter defined) during the term hereof, to preempt up to twenty (20)
hours in the aggregate of NBC programs during the Prime Time Programmed
Time Period, in addition to preemptions for the live coverage of news
events (the "Prime Time Preemption Amount"). For purposes of this
Agreement, a "Broadcast Year" shall mean a twelve (12) month period during
the term hereof which commences on any September 1 during the term hereof
and which ends on August 31 of the immediately following year. Station
hereby confirms that its rights and obligations under this Paragraph 3(b)
are consistent with its rights and obligations referred to in Paragraph
4(c) below;
(c) Station hereby agrees to accept and clear all sports programming
offered to the Station by NBC outside the Programmed Time Periods ("NBC
Sports Programming"); provided, however, that Station shall be entitled
during each Broadcast Year during the term hereof to preempt up to thirty
(30) hours in the aggregate of NBC Sports Programming in addition to
preemptions for the live coverage of news events (the "Sports Preemption
Amount"). Station agrees to regularly discuss with NBC the coordination of
the scheduling of such
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preemptions of NBC Sports Programming in order to set program priorities
and reduce the impact of preemptions of NBC Sports Programming by Station;
and
(d) If programming scheduled by NBC overruns any Prime Time Programmed
Time Period programmed by Station (provided that such overruns are caused
for reasons other than NBC coverage of live sporting or other events), then
to the extent that, in any Broadcast Year during the term of this
Agreement, the number of days on which any such NBC scheduled overrun
programming furnished to Station exceeds five (5) days (the "Excess Days"),
then Station shall be entitled to preempt any such NBC scheduled overrun
programming on the Excess Days.
4. Preemptions.
(a) In the event that Station, for any reason, fails to broadcast or
advises NBC that it will not broadcast any NBC programming as provided herein,
then, in each case, Station, upon notice from NBC to Station, shall discuss in
good faith with NBC broadcasting such omitted programming and the commercial
announcements contained therein (or any replacement programming and the
commercial announcements contained therein) during another time period or
periods and which shall, to the extent possible, be of a quality and rating
value comparable to that of the time period or periods at which such omitted
programming was not broadcast as provided herein. In the event that the parties
do not promptly agree upon a time period or periods as provided in the preceding
sentence, then, without limitation to any other rights of NBC under this
Agreement or otherwise, NBC shall have the right to license the broadcast rights
to the applicable omitted programming (or replacement programming) to another
television station located in Station's community of license.
(b) In the event that Station preempts or fails to clear or broadcast any
NBC Prime Time programming as provided herein for any reason other than: (i) the
live coverage of news events, (ii) as permitted by Paragraphs 3(b) and 3(d)
above, (iii) force majeure as provided for in Paragraph 12 below, or (iv)
because: (A) the programming is delivered in a form which does not meet accepted
standards of good engineering practice; (B) the programming does not comply with
the rules and regulations of the FCC; or (C) Station reasonably believes that
such programming would not meet prevailing contemporary standards of good taste
in its community of license, then, upon NBC's request, Station shall pay NBC, or
NBC may deduct or offset from any amounts payable to Station hereunder or under
any other agreement between Station and NBC (or an entity controlling,
controlled by or under common control with NBC), an amount equal to the
applicable per program payments that would have been payable by NBC to Station
pursuant to Paragraph 5 hereof and any additional consideration that would have
been payable pursuant to Paragraph 6 hereof if Station had cleared such NBC
Prime Time programming in its Live Time Period; provided that Station shall not
be deemed to have made a preemption of NBC Prime Time programming in violation
of
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Paragraph 3(b) hereof unless Station has preempted an additional five (5) hours
of NBC programs during the Prime Time Programmed Time Period in excess of the
Prime Time Preemption Amount permitted thereunder. Notwithstanding the foregoing
provisions of this Paragraph 4(b), nothing contained in this Paragraph 4(b)
shall limit or modify NBC's rights to withhold compensation pursuant to
Paragraph 5 hereof or, if applicable, the additional consideration referred to
in Paragraph 6 hereof for any preemption of NBC programming. Such withholding
shall be NBC's sole remedy for a preemption of NBC programming other than a
preemption of NBC Prime Time programming, the sole remedy for which is set forth
above. Any failure by Station to pay any amount due under this Paragraph 4(b),
unless such amount is contested in good faith by Station, shall be deemed a
material breach of this Agreement, and NBC shall have the option, exercisable in
its sole discretion upon thirty (30) days' written notice to Station, to either
(x) terminate Station's right to broadcast any one or more series or other NBC
programs, as NBC shall elect, and, to the extent and for the period(s) that NBC
elects, thereafter license the broadcast rights to such series or other NBC
program(s) to any other television station or stations located in Station's
community of license or (y) terminate this Agreement, unless the breach is cured
within such thirty (30) day period. Station acknowledges that network
programming previously broadcast by Station has been consistent with the
standards set forth in the foregoing clause (C); Station also agrees that
Station's reasonable belief that an NBC program does not meet such standards
will be based on a substantial difference in such program's style and content
from network programs previously broadcast by Station, unless the relevant
standards in the Station's community of license have changed.
(c) With respect to programs offered or already contracted for pursuant to
this Agreement, nothing herein contained shall be construed to prevent or hinder
Licensee from: (i) rejecting or refusing any NBC program which Station
reasonably believes to be unsatisfactory or unsuitable or contrary to the public
interest, or (ii) substituting a program which, in Station's opinion, is of
greater local or national importance; provided, however, that Station shall give
NBC written notice of each such rejection, refusal or substitution, and a brief
statement of the reason therefor, at least three (3) weeks in advance of the
scheduled broadcast, or as soon thereafter as possible (including an explanation
of the cause for any lesser notice). Station confirms that its determination
that a substitute program is of greater local or national importance shall be
based on Station's reasonable good faith judgment.
5. Station Compensation. In further consideration of Station's performance
of its obligations under this Agreement NBC shall compensate Station as follows;
(a) (i) NBC shall pay Station for Station's broadcast of each network
sponsored program or portion thereof (except those specified in Paragraph
5(b) below) which is broadcast during the Live Time Period therefor (or
such other mutually agreed upon
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time period pursuant to Paragraph 4(a) above) the amount resulting from
multiplying the following:
(A) Station's Network Station Rate, which is $2700; by
(B) The percentage set forth in the applicable compensation matrix
table attached hereto as Exhibit A (the "Compensation Table")
opposite the applicable time period; by
(C) The fraction of an hour substantially occupied by such program or
portion thereof; by
(D) The fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof occupied by
Network Commercial Announcements.
As used herein, "Live Time Period" shall mean the time period or
periods as specified by NBC for the broadcast of a program by Station;
"Commercial Availability" shall mean a period of time made available by NBC
during a network sponsored program for one or more Network Commercial
Announcements; and "Network Commercial Announcement" shall mean a
commercial announcement broadcast over Station during a Commercial
Availability and paid for by or on behalf of one or more of NBC's network
advertisers, not including, however, announcements consisting of
billboards, credits, public service announcements, promotional
announcements and announcements required by law.
(ii) For each network sponsored program or portion thereof (except
those specified in Paragraph 5(b) below) which is broadcast by Station
during a time period other than the Live Time Period therefor, NBC shall
pay Station on the basis of the time period mutually agreed upon by NBC and
Station during which Station broadcasts the program or portion thereof.
(b) NBC shall pay Station such amounts as NBC and Station shall agree
upon for all network sponsored programs broadcast by Station consisting of:
(i) Sports programs;
(ii) Special events programs, and
(iii) Programs for which NBC specifies a Live Time Period
which straddles any of the time period categories in
the Compensation Table.
(c) (i) On or about the fifteenth day of the last month of each
calendar quarter during the term hereof, subject to the timely receipt of
reports requested under Paragraph 10 below, NBC shall pay Station, by
electronic transfer or such other means as NBC and Station shall mutually
agree upon, an estimate of the amounts due hereunder for such calendar
quarter. NBC
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shall make the appropriate adjustment for the payment actually due for such
calendar quarter in the payment of the estimated amount due for the next
calendar quarter. NBC shall calculate the amounts due hereunder on a weekly
basis and shall report such amounts to Station within a reasonable period
of time (as applicable to all other NBC affiliates) after the close of each
month during the term.
(ii) From the amounts otherwise payable to Station hereunder, NBC
shall deduct for each week during each calendar quarter during the term
hereof a sum equal to 217% of Station's Network Station Rate provided in
subparagraph 5(a)(i)(A) above (the "Waiver Percentage"). This deduction
shall be calculated on a weekly basis, with 4.2857 as the agreed number of
weeks per month, and shall be reported to Station with the reports due
under subparagraph 5(c)(i) above. NBC shall make other deductions from the
amounts otherwise payable to Station hereunder for additional services made
available by NBC and utilized by Station such as, but not limited to, NBC
News Channel.
(d) (i) Subject to the limitations set forth in the following
sentence, NBC reserves the right to reevaluate and change at any time the
Waiver Percentage set forth in subparagraph 5(c)(ii) above, by giving
written notice to Station at least thirty (30) days prior to the effective
date of such change, provided that any increase to the Waiver Percentage
shall be generally applicable to NBC affiliated stations. Notwithstanding
the foregoing, NBC agrees that it may increase the Waiver Percentage only
by reason of an increase in NBC's technical costs of delivering programming
to the NBC Television Network; provided that any such increase in the
Waiver Percentage shall be subject to review by the NBC Affiliate Board.
(ii) Notwithstanding anything contained in subparagraph 5(d)(i) to the
contrary, the parties acknowledge that the payment of compensation to
Station hereunder is in consideration of certain commitments by Station,
including commitments regarding Station's local news program schedule and
promotion of NBC programming as respectively set forth in Exhibits B and C
attached hereto, which Exhibits are incorporated herein by this reference.
In the event that Station does not fulfill (A) the commitments regarding
its local news program schedule as set forth in Exhibit B or (B) such
commitments are as set forth in Exhibit C in all years during the term of
this Agreement, NBC reserves the right to decrease Station's Network
Station Rate and the percentages in the Compensation Table by notifying
Station in writing at least ninety (90) days prior to the effective date of
such change; provided, however, that if at any time during the ninety (90)
day period following such notice Station resumes compliance with its
commitments set forth in said Exhibits B and C, then at such
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time NBC will restore Station's original Network Station Rate and original
percentages in the Compensation Table.
6. Additional Consideration. In consideration of Station's entering into
this Agreement and Station's performance of its obligations under this
Agreement, NBC agrees to pay to The Hearst Corporation the additional amounts
(the "Additional Payments") set forth on Exhibit D hereto.
7. Local Commercial Announcements. Subject to the following sentence, NBC
agrees that during each quarter during the term of this Agreement, the average
weekly number of minutes available for Station's local commercial announcements
in and adjacent to regularly scheduled NBC programming in each daypart (with
pro-rated adjustments for national sports programming, special news coverage or
other special events) shall not be less than ninety-five percent (95%) of the
average weekly number of minutes for the applicable daypart during the 1993-94
Broadcast Year as set forth in Exhibit E attached hereto (except if the
reduction is due to a change in applicable government regulations). In the event
of a reduction in the average weekly number of minutes available for Station's
local commercial announcements in and adjacent to regularly scheduled NBC
programming which causes NBC not to be in compliance with the foregoing
provision, NBC agrees to offset the effects of such reduction by providing
Station with a comparable economic benefit, which benefit may take the form of
local coverage of NBC promotional announcements, an increase in the amount of
Station's preemptions pursuant to Paragraphs 3(b), 3(c) or 3(d) hereof, or other
form of benefit. The foregoing provisions of this Paragraph 7 are not intended
to facilitate any disproportionate change by NBC in the allocation of the number
of minutes available for Station's local commercial announcements in and
adjacent to regularly scheduled NBC programming among different time periods in
any daypart, if such change is solely for NBC's economic benefit.
8. Delivery. NBC shall transmit the programming hereunder by satellite and
shall notify Station as to both the satellite and transponder being used for
such transmission, and the programming shall be deemed delivered to Station when
transmitted to the satellite. Where, in the opinion of NBC, it is impractical or
undesirable to furnish a program over satellite facilities, NBC may deliver the
program to Station in any other manner, including but not limited to, in the
form of motion picture film, video tape or other recorded version, postage
prepaid, in sufficient time for Station to broadcast the program at the time
scheduled. Such recordings shall be used only for a single television broadcast
over Station, and Station shall comply with all NBC instructions concerning the
disposition to be made of each such recording received by Station hereunder.
9. Conditions of Station's Broadcast. Station's broadcast of NBC
programming shall be subject to the following terms and conditions:
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(a) Station shall not make any deletions from, or additions or
modifications to, any NBC program furnished to Station hereunder or any
commercial, NBC identification, program promotional or production credit
announcements or other interstitial material contained therein, nor
broadcast any commercial or other announcements (except emergency
bulletins) during any such program, without NBC's prior written
authorization. Station may, however, delete announcements promoting any NBC
program which is not to be broadcast by Station, provided that such
deletion shall be permitted only in the event and to the extent that
Station substitutes for any such deleted promotional announcements other
announcements promoting NBC programs to be broadcast by Station. Station's
broadcast of NBC programming does not contemplate, without Station's prior
written approval, the incidental or other use by NBC of the Vertical
Blanking Interval of Station's television signal.
(b) For purposes of identification of Station with the NBC programs,
and until written notice to the contrary is given by NBC, Station may
superimpose on various Entertainment programs, where designated by NBC, a
single line of type, not to exceed fifty (50) video lines in height and
situated in the lower eighth raster of the video screen, which single line
shall include (and be limited to) Station's call letters, community of
license or home market, channel number, and the NBC logo. No other addition
to any Entertainment program is contemplated by this consent, and the
authorization contained herein specifically excludes and prohibits any
addition whatsoever to News and Sports programs, except identification of
Station as provided in the preceding sentence as required by the FCC.
(c) The placement and duration of station-break periods provided for
locally originated announcements between NBC programs or segments thereof
shall be designated by NBC. Station shall broadcast each NBC program
delivered to Station hereunder from the commencement of network origination
until the commencement of the terminal station break.
(d) In the event of the confirmation by NBC of any violation by
Station of any of the provisions of this Paragraph 9, NBC may, in its
reasonable discretion, withhold an amount of compensation otherwise due
Station under Paragraph 5 above which is appropriate in view of the nature
of the specific violation. Nothing herein contained shall limit the rights
of Station under Paragraph 4(c) above.
10. Station Reports. Station shall submit to NBC in writing, upon forms
provided by NBC, such reports as NBC may reasonably request covering the
broadcast by Station of programs furnished to Station hereunder.
11. Music Performance Rights. All programs delivered to Station pursuant to
this Agreement shall be furnished with all music performance rights necessary
for broadcast by Station included. Station shall have no responsibility for
obtaining such rights from ASCAP, BMI or other music licensing societies insofar
as the programs
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delivered by NBC to Station for broadcasting are concerned. As used in this
paragraph, "programs" shall include, but shall not be limited to, program and
promotional material and commercial and public service announcements furnished
by NBC. Station shall be responsible for all music license requirements for any
commercial and public service announcements or other material inserted by
Station within or adjacent to the programs as permitted under the terms of this
Agreement, except for cut-ins produced by or on behalf of NBC and inserted by
Station at NBC's direction.
12. Force Majeure. Neither Station nor NBC shall incur any liability
hereunder because of NBC's failure to deliver, or the failure of Station to
broadcast, any or all programs due to failure of facilities, labor disputes,
government regulations or causes beyond the reasonable control of the party so
failing to deliver or to broadcast. Without limiting the generality of the
foregoing, NBC's failure to deliver a program for any of the following reasons
shall be deemed to be for causes beyond NBC's reasonable control: cancellation
of a program because of the death, illness or refusal to appear or perform of a
star or principal performer thereon, or because of such person's failure to
conduct himself or herself with due regard to social conventions and public
morals and decency, or because of such person's commission of any act or
involvement in any situation or occurrence tending to degrade him or her in
society, or bringing him or her into public disrepute, contempt, scandal or
ridicule, or tending to shock, insult or offend the community, or tending to
reflect unfavorably upon NBC or the program sponsor.
13. Indemnification. NBC shall indemnify, defend and hold Station, its
parent, subsidiary and affiliated companies, and their respective directors,
officers and employees, harmless from and against all claims, damages,
liabilities, costs and expenses (including reasonable attorneys' fees) arising
out of the use by Station, in accordance with this Agreement, of any program,
commercial announcements or other material as furnished by NBC hereunder
(including, without limitation, claims based upon copyright infringement, libel,
defamation and invasion of privacy), provided that Station promptly notifies NBC
of any claim or litigation to which this indemnity shall apply, and that Station
cooperates fully with NBC, at no out-of-pocket cost and expense to Station, in
the defense or settlement of such claim or litigation. Similarly, Station shall
indemnify, defend and hold NBC, its parent, subsidiary and affiliated companies,
and their respective directors, officers and employees, harmless with respect to
material added to or deleted from any program by Station, except for cut-ins
produced by or on behalf of NBC and inserted by Station at NBC's direction.
These indemnities shall not apply to litigation expenses, including attorneys'
fees, which the indemnified party elects to incur on its own behalf.
14. Station's Right of First Negotiation. Throughout the term of this
Agreement (including extensions and renewals), NBC shall give Station prompt
notice of any determination by NBC to engage in new over-the-air broadcast
ventures within Station's community of license
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(whether or not involving the transmission of television programs, but excluding
any acquisition of an ownership interest in any broadcast television station) (a
"Broadcast Venture"). NBC shall negotiate exclusively with Station in good
faith, for a period of time following such notice to Station as shall be
determined by NBC to be appropriate to the circumstances and as shall be
specified in such notice, with respect to Station's participation on a financial
and/or operational basis in any such Broadcast Venture within Station's
community of license before NBC may enter into any such negotiations with a
Third Party (as defined below) within such community of license. "Third Party"
shall mean any person or entity other than an NBC Party; "NBC Party" shall mean
any of NBC, National Broadcasting Company, Inc. or their respective parent,
subsidiary, affiliated, related or successor entities.
15. Change in Operations. Station represents and warrants that it
holds a valid license granted by the FCC to operate the Station as a television
broadcast station; such representation and warranty shall constitute a
continuing representation and warranty by Station. In the event that Station's
transmitter location, power, frequency, programming format or hours of operation
are materially changed at any time so that Station is of less value to NBC as a
broadcaster of NBC programming than at the date of this Agreement, then NBC
shall have the right to terminate this Agreement upon thirty (30) days prior
written notice to Station.
16. Assignment. (a) Subject to subparagraph 16(c) below, in the event
of a proposed assignment, sale or transfer of the Station or WBAL-TV or all or
substantially all of the assets used in the operation of WBAL-TV, including the
Station's broadcast license (such event shall hereafter be referred to in this
Paragraph 16 as a "Station Assignment"), the following shall apply:
(i) The Station agrees to give notice ("Notice") to NBC in writing of
any proposed Station Assignment, which notice shall be given in accordance
with Paragraph 22 hereof. In the event that at the time it gives the
Notice, Station has identified the proposed purchaser or assignee with
respect to the proposed Station Assignment (the "Proposed Assignee"), such
Notice shall include the identity of such Proposed Assignee, but Station
shall have no obligation to disclose any other proposed elements, terms,
understandings or obligations relating or pertaining to such Station
Assignment. NBC agrees to treat the Notice as confidential, will not
disclose the identity of any Proposed Assignee to any other person, and
will disclose the information in the Notice to its employees only upon a
confidential and "need to know" basis, until such time as such information
is publicly disclosed other than through NBC; provided, however, that NBC
may, prior to such time, propose to a potential alternative purchaser or
assignee, Station's possible availability for purchase or assignment. NBC
further agrees that it will not communicate directly or indirectly with the
Proposed Assignee (if included in the Notice) with respect to the Notice or
the Station Assignment without the Station's prior written consent.
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(ii) In the event that the Notice identifies the Proposed
Assignee, as soon as possible but no later than three weeks from NBC's
receipt of the Notice, NBC will inform Station in writing whether or
not it endorses the Proposed Assignee as a potential NBC affiliate.
NBC agrees that its determination of whether or not to endorse a
Proposed Assignee will be made in good faith; that a determination not
to endorse a Proposed Assignee will be based upon considerations other
than NBC's desire to renegotiate the terms of this Agreement; and that
Station will be provided a written explanation of the reasons for
NBC's determination if NBC's determination is not to endorse the
Proposed Assignee.
(iii) Station agrees that during the period (the "Holdback
Period") ending on the earlier of (x) three (3) weeks from NBC's
receipt of the Notice (and any extension of such period as to which
Station and NBC both agree) or (y) Station's receipt of NBC's
endorsement of the Proposed Assignee, it will not enter into a Binding
Obligation with respect to a Station Assignment. If NBC does not
endorse the Proposed Assignee, Station will consider in good faith a
good faith request by NBC made during the Holdback Period that Station
consider an alternative to such assignment or transfer and extend the
Holdback Period. If Station agrees with such request, Station and NBC
will mutually agree on the extension of such Holdback Period and
Station will consider providing (but will not be obligated to provide)
NBC with financial materials and other information as NBC may request
pertaining to Station (and NBC and Station will enter into a
confidentiality agreement pertaining to the use and disclosure of such
materials and information to be then negotiated in good faith).
Following the Holdback Period and any extension thereof, Station shall
be free to enter into a Binding Obligation with respect to a Station
Assignment, subject to the provisions of clause (iv) below. "Binding
Obligation" shall mean any binding obligation, commitment or agreement
with respect to a Station Assignment, including any such obligation,
commitment or agreement which is subject to or contingent upon the
satisfaction of one or more conditions (including without limitation
FCC approval of the transfer of Station's broadcast license).
(iv) In the event that Station provides a Notice to NBC and
Station does not enter into a Binding Obligation with respect to a
Station Assignment within twelve (12) months after such Notice is
provided to NBC, Station shall not enter into a Binding Obligation
with respect to a Station Assignment without providing another Notice
and Holdback Period to NBC.
(b) (i) Except as provided in subparagraph (b)(ii) below, in the
event of a proposed Station Assignment (including any assignment or
transfer referred to in subparagraph (c) below), Station agrees to
include as a condition of any proposed assignment or transfer a
contractually binding provision that the assignee or transferee shall
assume and become bound by this Agreement for (x) the remainder of the
then-current term of this Agreement or (y) three (3) years from the
date of said assignment or transfer, whichever period is greater;
provided that in the event of an assignment or
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transfer referred to in clauses (c)(1), (c)(4) or (c)(5) below, the assignee or
transferee shall only become bound by this Agreement for the remainder of the
then current term of this Agreement. Station acknowledges that any such
assignment or transfer which does not so provide for such assumption and for
such extension of the term of this Agreement will cause NBC irreparable injury
for which damages are not an adequate remedy. Therefore, Station agrees that NBC
shall be entitled to seek an injunction or similar relief from any court of
competent jurisdiction restraining Station from committing any violation of this
subparagraph 16(b)(i).
(ii) In the event of a proposed Station Assignment, and NBC has notified
Station in writing during the Holdback Period (or during any mutually agreed
upon extension thereof) that NBC does not endorse the proposed assignee or
transferee, then and in such event Station agrees to include as a condition of
any proposed assignment or transfer a contractually binding provision that the
assignee or transferee shall assume and become bound by this Agreement for the
remainder of the then current term of this Agreement; provided that, if the
remainder of such term is less than three years, NBC shall have the option to
extend the term so that the remainder of the term equals a period of three years
from the effective date of such assignment or transfer. NBC shall notify Station
in writing of its exercise of such option no later than the end of the Holdback
Period (as same may be extended). Station acknowledges that any such assignment
or transfer which does not so provide NBC with such option will cause NBC
irreparable injury for which damages are not an adequate remedy. Therefore,
Station agrees that NBC shall be entitled to seek an injunction or similar
relief from any court of competent jurisdiction restraining Station from
committing any violation of this subparagraph 16(b)(ii).
(c) Notwithstanding anything else herein to the contrary, it is expressly
understood and agreed that the provisions of subparagraphs 16(a) and 16(b)(ii)
above shall not be applicable in the case of a Station Assignment, if such
assignment is: (1) to a company or other entity which is a parent or subsidiary
of The Hearst Corporation or to a company or other entity owned or controlled,
directly or indirectly, by The Hearst Corporation (a "Hearst Affiliate") or (2)
part of an assignment or transfer or other transaction in connection with any
substantial and material assets or property owned or controlled by The Hearst
Corporation other than properties or assets of Station or otherwise utilized
solely in connection with Station's operation or (3) in connection with any
transfer of control of The Hearst Corporation or (4) in connection with any
transfer of stock or assignment of licenses and assets of any kind which is part
of a corporate reorganization or restructuring of The Hearst Corporation
(provided that the assignee or transferee of this Agreement and WBAL-TV is a
Hearst Affiliate) or (5) in connection with any transfer of stock or assignment
of licenses and assets for which approval of the FCC may be requested by using
the "short form" assignment application permitted under the current rules and
policies of the FCC.
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(d) Station agrees that if any application is made to the FCC pertaining to
an assignment or a transfer of control of Station's license, or any interest
therein, Station shall immediately notify NBC in writing of the filing of such
application, except as to "short form" assignments or transfers of control made
pursuant to Section 73.3540(f) of the FCC Rules. Station agrees, except in the
case of "short form" assignments or transfers of control, that Promptly
following Station's notice to NBC, Station (A) shall arrange for a meeting
between NBC and the proposed assignee or transferee to review the financial and
operational plans of the proposed assignee or transferee, and (B) shall procure
and deliver to NBC, in form reasonably satisfactory to NBC, the agreement of the
proposed assignee or transferee that, upon consummation of the assignment or
transfer of control of the Station's license, the assignee or transferee will
assume and perform this Agreement in its entirety without limitation of any
kind. Upon such assignment and assumption Station shall not have any liability
to NBC under this Agreement with respect to obligations arising after the
effective date of such assignment and assumption and The Hearst Corporation
shall not have any such liability to NBC unless The Hearst Corporation is the
assignee of this Agreement.
(e) Station agrees that this Agreement may only be assigned by Station in
conjunction with an assignment, sale or transfer of WBAL-TV and its FCC
broadcast license; provided that Station complies with the provisions of this
Paragraph 16, as applicable.
(f) NBC agrees that in the event of a sale or transfer of all or
substantially all of the assets or business of NBC (whether structured as a sale
or transfer of equity or assets of NBC), NBC agrees to assign this Agreement to
the purchaser or transferee and to cause such purchaser or transferee to assume
NBC's obligations hereunder; provided that the foregoing agreement shall not
apply in the event that this Agreement becomes an obligation of such purchaser
or transferee by operation of law. Upon assignment and assumption pursuant to
this Paragraph 16, NBC shall have no liability to Station or The Hearst
Corporation under this Agreement with respect to obligations arising after the
effective date of such assignment and assumption.
(g) Neither NBC nor Station shall be relieved of its respective obligations
and agreements under this Agreement (including obligations and agreements made
in any documents or agreements signed contemporaneously herewith) in the event
of any assignment by the other party in accordance with the foregoing provisions
of this Paragraph 16. Additionally, NBC agrees that its obligations and
agreements hereunder shall continue with respect to Station's assignee
throughout any extension of the term of this Agreement, if the term is extended
pursuant to subparagraph (b) of this Paragraph 16.
17. Unauthorized Copying and Transmission. Except as provided for herein,
Station shall not authorize, cause, or permit, without
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NBC's consent, any program or other material furnished to Station hereunder to
be recorded, duplicated, rebroadcast or otherwise transmitted or used for any
purpose other than broadcasting by Station as provided herein. Station shall not
be restricted in the exercise of its signal carriage rights pursuant to any
applicable rule or regulation of the FCC with respect to retransmission of its
broadcast signal by any cable system or multichannel video program distributor
("MVPD"), as defined in Section 76.64(d) of the FCC Rules, which (a) is located
within the ADI as defined by Arbitron as of April 1, 1993, in which Station is
located, or (b) was actually carrying Station's signal as of April 1, 1993, or
(c) with respect to cable systems, serving an area in which Station is
"significantly viewed" (as determined by the FCC) as of April 1, 1993; provided,
however, that any such exercise pursuant to FCC Rules with respect to NBC
programs shall not be deemed to constitute a continuing license by NBC other
than pursuant to a compulsory license as provided for in Title 17 of the United
States Code; and provided, further, that at such time as NBC adopts a term in
substitution for the term "ADI," by reason of any similar action by the FCC or
other appropriate authority, which substitute term shall be generally applicable
to NBC affiliated stations, such substitute term shall replace the references to
"ADI" herein. NBC reserves the right to restrict such signal carriage with
respect to NBC programming in the event of a change in applicable laws, rules or
regulations; provided, however, that the parties mutually agree to negotiate in
good faith with respect to modifications to the foregoing provisions of this
Paragraph 17 in the event of any such change.
18. Limitations on Retransmission Consent. In consideration of the grant by
NBC to Station of the non-duplication protection provided in the amendment to
this Agreement of even date herewith (the "Non-Duplication Amendment"), Station
hereby agrees as follows:
(a) Station shall not grant consent to the retransmission of its broadcast
signal by any cable television system, or, except as provided in Paragraph 18(b)
below, to any other MVPD whose carriage of broadcast signals requires
retransmission consent, if such cable system or MVPD is located outside the ADI
to which Station is assigned, unless Station's signal was actually carried by
such cable system or MVPD as of April 1, 1993, or, with respect to such cable
system, is "significantly viewed" (as determined by the FCC) as of April 1,
1993; provided, however, that at each renewal of the Agreement, in the event
Station can demonstrate to NBC that it is "significantly viewed" (as determined
by the FCC) in areas in addition to those in which it was "significantly viewed"
as of April 1, 1993 ("Additional Viewing Areas"), NBC agrees that it will
negotiate in good faith with Station regarding a possible extension of Station's
grant of the right to retransmit its broadcast signal to cable systems in the
Additional Viewing Areas.
(b) Station shall not grant consent to the retransmission of its broadcast
signal by any MVPD with respect to distributions to any home satellite dish
user, unless such user is located within Station's own ADI or such broadcast
signal is used for "private home
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viewing" in an "unserved household" as defined in Section 119(d) or any
successor provision of Title 17 of the United States Code.
19. Remedies for Unauthorized Copying and Transmission. If Station violates
any of the provisions set forth in Paragraphs 17 and 18 above, NBC may, in
addition to any other of its rights or remedies at law or in equity under this
Agreement or any amendment thereto, terminate this Agreement by written notice
to Station given at least ninety (90) days prior to the effective date of such
termination unless such violations are promptly cured within such time period.
20. Applicable Law. The obligations of Station and NBC under this Agreement
are subject to all applicable federal, state, and local laws, rules and
regulations (including, but not limited to, the Communications Act of 1934, as
amended, and the rules and regulations of the FCC), and this Agreement and all
matters or issues collateral thereto shall be governed by the law of the State
of New York applicable to contracts negotiated, executed and performed entirely
therein.
21. Waiver. A waiver by either of the parties hereto of a breach of any
provision of this Agreement shall not be deemed to constitute a waiver of any
preceding or subsequent breach of the same provision or any other provision
hereof.
22. Notices. Any notices hereunder shall be in writing and shall be given
by personal delivery, overnight courier service, or registered or certified
mail, addressed to the respective addresses set forth on the first page of this
Agreement or at such other address or addresses as may be specified in writing
by the party to whom the notice is given. All notices to NBC shall be sent to
the attention of the President, NBC Television Network, with a copy to the NBC
Legal Department, Room 1022, National Broadcasting Company, Inc., 30 Rockefeller
Plaza, New York, New York 10112. Such notices shall be deemed given when
personally delivered, delivered to an overnight courier service or mailed,
except that notice of change of address shall be effective only from the date of
its receipt.
23. Captions. The captions of the paragraphs in this Agreement are for
convenience only and shall not in any way affect the interpretation hereof.
24. Entire Agreement. The foregoing, together with any documents or
agreements signed contemporaneously herewith, constitutes the entire agreement
between Station and NBC with respect to the subject matter hereof, all prior
understandings being merged herein, except for the Non-Duplication Amendment.
This Agreement may not be changed, modified, renewed, extended or discharged,
except as specifically provided herein or by an agreement in writing signed by
the parties hereto.
25. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature to each such counterpart
were upon the same instrument.
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If the foregoing is in accordance with your understanding, please indicate
your acceptance on the copy of this Agreement enclosed for that purpose and
return that copy to NBC.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ National Broadcasting Company, Inc.
----------------------------------------
AGREED:
THE HEARST CORPORATION
By: /s/ David J. Barrett
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EXHIBIT 10.6
[NBC TV NETWORK LETTERHEAD]
January 2, 1995
HEARST CORPORATION
BALTIMORE, MARYLAND
Re: WBAL-TV
Gentlemen:
The following shall constitute an amendment to the television network
affiliation agreement (the "Agreement") between the licensee of Station WBAL-TV
("Station") and National Broadcasting Company, Inc. ("NBC"), effective as of
January 2, 1995.
1. During the term of the Agreement, Station shall, by the terms of this
amendment, be entitled to invoke protection against the simultaneous duplication
of NBC's network programming as carried by Station imported within a radius from
Station's designated community of license as defined in Section 73.606 of the
Rules of the Federal Communications Commission ("FCC") to the maximum geographic
extent from said community of license permitted under the present Sections 76.92
and 73.658(m) of the FCC's Rules and in accordance with the terms and conditions
of said Rules.
2. Either party shall have the right to terminate this amendment (a) on
December 31, 1996, by written notice to the other on or before June 30, 1996,
for any reason whatsoever; or (b) at any other time during the term of the
Agreement, by written notice to the other given at least 60 days prior to the
effective date of such termination, but only in the event of the following:
(i) Station grants consent to the retransmission of its broadcast
signal by any cable television system or, except as provided in
subparagraph 2(b)(ii) below, to any other multichannel video program
distributor ("MVPD"), as defined in Section 76.64(d) of the FCC Rules,
whose carriage of broadcast signals requires retransmission consent, and
such cable system or MVPD is located outside the Area of Dominant Influence
("ADI"), as defined by Arbitron, to which Station is assigned, unless
Station's signal is actually carried by such cable system or MVPD as of
April 1, 1993, or, with respect to such cable system, is "significantly
viewed" (as determined by the FCC) in areas in addition to those in which
it was "significantly viewed" as of April 1, 1993 ("Additional Viewing
Areas"), NBC agrees that it will negotiate in good faith with Station
regarding a possible extension of Station's grant of the right to
retransmit its broadcast signal to cable systems in the Additional Viewing
Areas; or
<PAGE>
(ii) Station grants consent to the retransmission of its broadcast
signal by any MVPD that provides such signal to any home satellite dish
user, unless such user is located within Station's own ADI or is an
"unserved household" as defined in Section 119(d) or any successor
provision of Title 17 of the United States Code.
Any notice of termination under paragraph 2(b) hereof given by either party may
be withdrawn by such party if, as of the effective date provided therein, the
circumstances giving rise to such party's right of termination no longer exist.
To the extent that any term of the Agreement is inconsistent with the terms
of this amendment, this amendment shall prevail. Except as modified by this
amendment, the Agreement shall remain in full force and effect.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
BY: /s/ National Broadcasating Company, Inc.
------------------------------------------
AGREED AND ACCEPTED:
HEARST CORPORATION
BY: /s/ David J. Barrett
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