<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 JUNE 30, 1998
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 of incorporation (I.R.S. Employer
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)
------------------------------------------------------
(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 August 11, 1998, the Registrant had 53,325,363 shares of common stock
outstanding. Consisting of 12,026,715 shares of Series A Common Stock,
41,298,648 shares of Series B Common Stock.
===============================================================================
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
INDEX
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Condensed Consolidated Balance Sheets as of December 31, 1997 and June 30, 1998 (unaudited).. 1
Condensed Consolidated Statements of Operations for the Three and Six Months Ended
June 30, 1997 (Predecessor Company) and 1998 (unaudited).................................... 3
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1997 (Predecessor Company) and 1998 (unaudited).................................... 4
Notes to Condensed Consolidated Financial Statements......................................... 5
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings 14
ITEM 2. Changes in Securities 14
ITEM 3. Defaults Upon Senior Securities 14
ITEM 4. Submission of Matters to a Vote of Security Holders 14
ITEM 5. Other Information 14
ITEM 6. Exhibits and reports on Form 8-K 14
Signatures 15
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HEARST-ARGYLE TELEVISION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1998
1997 (UNAUDITED)
-------------------------------------------------------
(In thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $12,759 $13,938
Accounts receivable, net 89,988 85,938
Program and barter rights 35,737 12,567
Deferred income taxes 5,975 5,975
Related party receivable 3,695 2,303
Net assets held for sale 72,019 --
STC note receivable (see note 2) -- 51,055
Other 7,070 6,503
----- ------
Total current assets 227,243 178,279
------- -------
Property, plant and equipment, net 97,804 124,043
------ -------
Intangible assets, net 661,326 716,736
------- -------
Other assets:
Deferred acquisition and financing costs,
net 27,796 28,033
Program and barter rights, noncurrent 3,511 3,904
Other 26,429 27,134
------ ------
Total other assets 57,736 59,071
------ ------
Total assets $1,044,109 $1,078,129
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1998
1997 (UNAUDITED)
---------------------------------------------------------
(In thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $36,048 $41,460
Program and barter rights payable 35,769 13,472
Other 51 433
------- -------
Total current liabilities 71,868 55,365
------- -------
Program and barter rights payable 4,923 3,755
Long-term debt 490,000 531,596
Deferred income taxes 150,274 152,428
Other liabilities 390 630
------- -------
Total noncurrent liabilities 645,587 688,409
------- -------
Stockholders' equity:
Series A preferred stock 1 1
Series B preferred stock 1 1
Series A common stock 125 125
Series B common stock 413 413
Additional paid-in capital 363,404 363,093
Accumulated deficit (37,290) (20,972)
Treasury stock ------ (8,306)
Total stockholders' equity 326,654 334,355
------- -------
Total liabilities and stockholders' equity $1,044,109 $1,078,129
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------------------------------------------
1997 1998 1997 1998
(PREDECESSOR (PREDECESSOR
COMPANY) COMPANY)
------------------------------------------------------------------------------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Total revenues $21,886 $109,713 $39,765 $196,965
Station operating expenses 10,586 41,506 21,367 83,948
Amortization of program rights 1,062 10,846 2,119 21,669
Depreciation and amortization 6,202 8,800 12,760 17,641
------------------------------------------------------------------------------
Station operating income 4,036 48,561 3,519 73,707
Corporate general and administrative expenses 896 3,119 1,904 6,554
Non-cash compensation expense 244 -- 503 --
------------------------------------------------------------------------------
Operating income 2,896 45,442 1,112 67,153
Interest expense, net 4,989 8,867 9,407 19,827
------------------------------------------------------------------------------
Income (loss) before extraordinary item and
income taxes (2,093) 36,575 (8,295) 47,326
Income taxes -- 15,313 -- 20,229
-------------------------------------------------------------------------------
Income (loss) before extraordinary item (2,093) 21,262 (8,295) 27,097
Extraordinary item, loss on early retirement of
debt, net of income tax benefit -- (808) -- (10,777)
------------------------------------------------------------------------------
Net income (loss) (2,093) 20,454 (8,295) 16,320
Less preferred stock dividends (355) (355) (711) (711)
------------------------------------------------------------------------------
Income (loss) applicable to common stockholders $(2,448) $20,099 $(9,006) $15,609
=============================================================================
Income (loss) per common share basic:
Before extraordinary item $(0.22) $0.39 $(0.79) $0.49
Extraordinary item -- (0.02) -- (0.20)
------------------------------------------------------------------------------
Net income (loss) $(0.22) $0.37 $(0.79) $0.29
=============================================================================
Number of common shares used in the calculation 11,347 53,798 11,347 53,815
Income (loss) per common share diluted:
Before extraordinary item $(0.22) $0.39 $(0.79) $0.49
Extraordinary item -- (0.02) -- ($0.20)
----------------------------------------------------------------------------
Net income (loss) $(0.22) $0.37 $(0.79) $0.29
============================================================================
Number of common shares used in calculation 11,347 54,095 11,347 54,080
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------------------
1997 1998
(PREDECESSOR)
COMPANY
-------------------------------------
OPERATING ACTIVITIES (In thousands)
<S> <C> <C>
Net income (loss) $(8,295) $16,320
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Extraordinary item, loss on early retirement of debt -- 17,191
Depreciation 2,798 6,364
Amortization of intangible assets 9,962 11,277
Amortization of deferred financing costs 325 1,236
Amortization of program rights 2,119 21,669
Program payments (2,338) (21,936)
Deferred income taxes -- 2,154
Compensation element of stock options 504 --
Fair value adjustments of interest rate protection agreements (328) 76
Changes in operating assets and liabilities, net (3,146) 11,880
---------------------------------------
Net cash provided by operating activities 1,601 66,231
INVESTING ACTIVITIES
Acquisition of stations (23,088) (20,136)
Acquisition costs -- (124)
Purchases of property, plant, and equipment:
Special projects/buildings -- (2,504)
Digital -- (1,151)
Maintenance (4,091) (4,299)
----------------------------------------------
Net cash used in investing activities (27,179) (28,214)
FINANCING ACTIVITIES
Issuance of Senior Notes -- 200,000
Repayment of Senior Subordinated Notes -- (116,621)
Proceeds from issuance of long-term debt 33,000 29,000
Payment of long-term debt (5,500) (85,000)
Issuance of STC note receivable -- (51,055)
Financing costs and other -- (4,374)
Series A Common stock:
Issuances -- 229
Repurchases -- (8,306)
Dividends paid on preferred stock (711) (711)
----------------------------------------------
Net cash provided by (used in) financing activities 26,789 (36,838)
---------------------------------------------
Increase in cash and cash equivalents 1,211 1,179
Cash and cash equivalents at beginning of period 949 12,759
---------------------------------------------
Cash and cash equivalents at end of period $ 2,160 $ 13,938
=============================================
Businesses acquired in purchase transaction:
Fair market value of assets acquired $23,102 $ 20,632
Liabilities assumed 14 496
Issuance of preferred stock --
Issuance of common stock --
---------------------------------------------
Net cash paid for acquisitions $23,088 $ 20,136
=============================================
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1998
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. As
more fully discussed in Note 2, the Predecessor Company was acquired in a
business combination accounted for as a purchase. As a result of the
acquisition, the condensed consolidated financial statements for the period
subsequent to the acquisition are presented on a different basis of accounting
than those for the periods prior to the acquisition and, therefore, are not
directly comparable.
The accompanying unaudited condensed consolidated financial statements 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 six-month periods ended June
30, 1997 and 1998 are not necessarily indicative of the results that may be
expected for a full year.
Certain reclassifications have been made to the December 31, 1997 condensed
consolidated balance sheet to conform to the June 30, 1998 presentation.
2. ACQUISITIONS
The Company is the successor to the combined operations of Argyle Television,
Inc. ("Argyle" and "Predecessor Company") 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 owned approximately 41.3 million shares of the
Company's Series B Common Stock, comprising approximately 77% of the total
outstanding common stock of the Company. During 1998, Hearst purchased
approximately 1.1 million shares of the Company's Series A Common Stock (See
Note 5), increasing its ownership to approximately 79.1% as of June 30, 1998.
For accounting purposes, Hearst has been deemed to be the acquiror of Argyle.
Accordingly, the assets and liabilities of Argyle have been adjusted to the
extent acquired by Hearst to their estimated fair values based upon preliminary
purchase price allocation. The net assets of the Hearst Broadcast Group have
been reflected at their historical cost basis. 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 goodwill. The final asset and liability fair values may differ
from those set forth in the accompanying condensed consolidated balance sheets
at December 31, 1997 and June 30, 1998; however, the changes, if any, are not
expected to have a material effect on the condensed 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.
On January 31, 1997, Argyle exchanged WZZM and WGRZ under the terms of an
agreement (the "Gannett Swap") for WLWT and KOCO with Gannett Co., Inc.
("Gannett").
On April 24, 1998, the Company loaned STC $70.5 million ("STC Note Receivable").
The loan, which bears interest at 7.75% per year and is collateralized by the
stock of the STC subsidiary that owns the assets comprising WPTZ/WNNE. On July
2, 1998, STC repaid this $70.5 million loan along with accrued interest.
Effective June 1, 1998, the Company exchanged its WDTN and WNAC stations with
STC Broadcasting, Inc. ("STC") for KSBW, the NBC affiliate serving the Monterey
Salinas, CA, television market, and WPTZ/WNNE, the NBC affiliates serving the
Burlington, VT Plattsburgh, NY, television market and cash of approximately $20
million (the "STC Swap"), net of certain working capital adjustments.
5
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
JUNE 30, 1998
2. ACQUISITIONS (CONTINUED)
Giving effect to the Hearst Transaction, the Gannett Swap and the STC Swap
discussed above, unaudited pro forma results of operations reflect combined
historical results for WCVB, WTAE, WBAL, KMBC, WISN, WAPT, KITV, WLWT, KOCO,
KHBS/KHOG, KSBW, WPTZ/WNNE and fees for providing management services to the
Managed Stations (WWWB, WPBF, KCWB and WBAL-AM and WIYY-FM) pursuant to a
management agreement (See Note 6), as if all acquisitions and financings (See
Note 3) occurred as of January 1, 1997, are as follows:
<TABLE>
<CAPTION>
PRO FORMA
SIX MONTHS ENDED JUNE 30,
1997 1998
------------------------------------
(In thousands, except per share data)
<S> <C> <C>
Total revenues $185,271 $197,016
Net income $23,928 $26,997
Income from continuing operations applicable to common stockholders $23,217 $26,286
Income per common share - basic $0.43 $0.49
======== =========
- diluted $0.43 $0.49
======== =========
Pro forma number of shares used in calculations - basic 53,815 53,815
- diluted 54,080 54,080
======== =========
</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
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
--------------------------------------
(In thousands)
<S> <C> <C>
Credit Facility dated August 29, 1997 $85,000 $29,000
Senior Notes 300,000 500,000
Senior Subordinated Notes 105,000 2,596
-----------------------------------------
$490,000 $531,596
=========================================
</TABLE>
SENIOR SUBORDINATED NOTES
During February 1998, the Company repaid $102.4 million of the Senior
Subordinated Notes ("Notes") at a premium of approximately $13.9 million. In
addition, the Company wrote-off the remaining deferred financing fees related to
the Notes and incurred expenses related to the repayment of the Notes. The
premium paid, the deferred financing fees relating to the Notes and the expenses
incurred were classified as an extraordinary item in the accompanying condensed
consolidated statement of operations for the six months ended June 30, 1998.
6
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
JUNE 30, 1998
3. LONG-TERM DEBT (CONTINUED)
SENIOR NOTES
On January 13, 1998, the Company issued $200 million aggregate principal amount
of 7.0% Senior Notes Due 2018 (the "$200 million Senior Notes"). The $200
million Senior Notes are senior and unsecured obligations of the Company. In
addition, the indenture governing the Senior Notes imposes various conditions,
restrictions and limitations on the Company and its subsidiaries. Proceeds from
the $200 million Senior Notes offering were used to repay existing indebtedness
of the Company (See Senior Subordinated Notes, above).
INTEREST RATE RISK MANAGEMENT
The Company has two interest rate protection agreements effectively fixing the
Company's interest rate at approximately 7% on $35 million of its borrowings
under the Credit Facility until June 1999.
Additional information regarding these interest rate protection agreements in
effect at June 30, 1998 follows:
<TABLE>
<CAPTION>
AVERAGE AVERAGE ESTIMATED FAIR
NOTIONAL AMOUNT RECEIVE RATE PAY RATE VALUE
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest rate swap agreements:
Fixed rate agreement $20,000,000 LIBOR 7.01% $(255,973)
Fixed rate agreement $15,000,000 LIBOR 6.98% $(188,473)
</TABLE>
The Company is exposed to credit risk in the event of nonperformance by
counterparties to its interest rate swap agreements. Credit risk is limited by
entering into such agreements with primary dealers only; therefore, the Company
does not anticipate that nonperformance by counterparties will occur.
Notwithstanding this, the Company's treasury department monitors counterparty
credit ratings at least quarterly through reviewing independent credit agency
reports. Both current and potential exposure are evaluated, as necessary, by
obtaining replacement cost information from alternative dealers. Potential loss
to the Company from credit risk on these agreements is limited to amounts
receivable, if any. The Company enters into these agreements solely to hedge
its interest rate risk.
4. NET ASSETS HELD FOR SALE
Upon completion of the Hearst Transaction, the Company owned 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 was 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 December 31, 1997, are the net assets of the stations
located in Providence and Dayton at their carrying values. The Company
exchanged these assets during the second quarter of 1998, for two television
stations in markets without overlapping service contours (See Note 2).
5. COMMON STOCK
During the second quarter of 1998, the Company's Board of Directors authorized
the repurchase of up to $300 million of its outstanding Series A Common Stock.
The Company expects such repurchases to be effected from time to time in the
open market or in private transactions, subject to market conditions. During
the three months ended June 30, 1998, the Company spent approximately $8.3
million to repurchase approximately 238,000 shares of Series A Common Stock, at
an average price of $34.96. Hearst has also notified the Company of its
intention to purchase up to 10 million shares of the Company's Series A Common
Stock from time to time in the open market, in private transactions or
otherwise. (See Note 2.)
7
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
JUNE 30, 1998
6. RELATED PARTY TRANSACTIONS
The Predecessor Company entered into separate agreements with one of its
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 the Company for expenses and costs
allocated to providing these services to the Partnerships. During the three and
six-months ended June 30, 1997, the Company recognized total reimbursements of
approximately $224,000 and $420,000, respectively, under these agreements. Such
reimbursements were offset against corporate general and administrative expenses
in the accompanying condensed consolidated statements of operations. Subsequent
to the Hearst Transaction such Partnerships are no longer shareholders of the
Company, and these agreements are no longer in effect.
The Company recorded revenues of approximately $946,000 and $1.3 million,
respectively during the three and six-months ended June 30, 1998, relating to
the 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); and expenses of approximately $536,000 and $1.1 million,
respectively, relating to the Services Agreement (whereby Hearst provides the
Company certain administrative services such as accounting, financial, legal,
tax, insurance, data processing and employee benefits), during the three and
six-months ended June 30, 1998. 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.
7. SUBSEQUENT EVENTS
In May 1998, the Company announced that it entered into an agreement to acquire
the nine television and five radio stations of Pulitzer Publishing ("Pulitzer")
in a merger transaction. The Company will issue $1.15 billion in Series A
Common Stock to Pulitzer shareholders and assume $700 million in debt. The
Company expects the transaction which is subject to a regulatory and shareholder
approval and certain other conditions, to close during the fourth quarter of
1998.
8
<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") (the "Hearst
Transaction"). In addition, the Company agreed to provide management services
with respect to WWWB, WPBF, KCWB and WBAL-AM and WIYY-FM (the "Managed
Stations"), three 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 6 to the condensed consolidated
financial statements).
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 (the "Arkansas Stations"). On
July 1, 1996, Argyle entered into a Joint Marketing and Programming Agreement
(the "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 exchanged WZZM and
WGRZ under the terms of an agreement (the "Gannett Swap") for WLWT and KOCO with
Gannett Co., Inc. ("Gannett"). (See Note 2 to the condensed consolidated
financial statements.) Effective June 1, 1998, the Company exchanged WDTN and
WNAC under the terms of an agreement (the "STC Swap") for KSBW and WPTZ/WNNE.
(See Note 2 to the condensed consolidated financial statements.)
The following discussion of results of operations does not include the pro forma
effects of the Hearst Transaction for the three and six-months ended June 30,
1997.
Results of operations for the three and six-months ended June 30, 1998 include:
(i) KITV, WAPT and the Arkansas Stations WLWT, KOCO, the Hearst Broadcast
Group for the entire period ; (ii) fees derived by the Company from the Managed
Stations for the entire period; (iii) WDTN and the Company's share of broadcast
cash flows from the Clear Channel Venture from January 1 to May 31; and (iv)
KSBW and WPTZ/WNNE for June, only. Results of operations for the three and six-
months ended June 30, 1997 include: (i) WAPT, KITV, the Arkansas Stations and
Argyle's share of broadcast cash flows from the Clear Channel Venture for the
entire period; (ii) WZZM and WGRZ for January, only; and, (iii) WLWT and KOCO
from February 1 through June 30. 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.
Three Months Ended June 30, 1998 (The Company)
Compared to Three Months Ended June 30, 1997 (Predecessor Company)
Total revenues. Total revenues in the three months ended June 30, 1998 were
$109.7 million, as compared to $21.9 million in the three months ended June 30,
1997, an increase of $87.8 million or 401%. The increase was primarily
attributable to the Hearst Transaction which added $84.1 million to 1998 total
revenues. In addition: (i), WAPT and WLWT experienced an increase in total
revenues mainly due to an increase in local and political advertising; and, (ii)
the STC Swap had a favorable impact on total revenues period to period.
Station operating expenses. Station operating expenses in the three months
ended June 30, 1998 were $41.5 million, as compared to $10.6 million in the
three months ended June 30, 1997, an increase of $30.9 million or 292%. The
increase was primarily attributable to the Hearst Transaction, which added $29.7
million to station operating expenses during 1998.
Amortization of program rights. Amortization of program rights in the three
months ended June 30, 1998 was $10.8 million, as compared to $1.1 million in the
three and six-months ended June 30, 1997, an increase of $9.7 million or 882%.
The increase was primarily attributable to the Hearst Transaction, which added
$9.4 million to amortization of program rights during 1998.
9
<PAGE>
Depreciation and amortization. Depreciation and amortization of intangible
assets was $8.8 million in the three months ended June 30, 1998, as compared to
$6.2 million in the three months ended June 30, 1997, an increase of $2.6
million or 41.9%. The increase was primarily attributable to the Hearst
Transaction, which added $4.4 million to depreciation and amortization of
intangibles during 1998. In connection with the Hearst Transaction, the Argyle
Stations' fixed and intangible assets were stepped-up to fair-market value. In
addition, the Argyle Stations increased the estimated useful lives of their
fixed and intangible assets to conform with the lives used by the Hearst
Broadcast Group. This caused a $2.1 million net decrease in depreciation and
amortization of intangibles during the 1998 period.
Station operating income. Station operating income in the three months ended
June 30, 1998 was $48.6 million, as compared to $4.0 million in the three months
ended June 30, 1997, an increase of $44.6 million. The increase in station
operating income was primarily attributable to the Hearst Transaction.
Corporate general and administrative expenses. Corporate general and
administrative expenses were $3.1 million for the three months ended June 30,
1998, as compared to $0.9 million for the three months ended June 30, 1997, an
increase of $2.2 million or 244%. The increase was primarily attributable to
the increase in corporate staff following the Hearst Transaction and other costs
associated with the Hearst Transaction.
Non-cash compensation expense. Non-cash compensation expense of $0.2 million
during 1997, represents stock option expense recorded in compliance with SFAS
No. 123. Subsequent to the Hearst Transaction, the Company has elected to
account for employee stock-based compensation under APB No. 25 and related
interpretations. Under APB No. 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized.
Interest expense, net. Interest expense, net was $8.9 million in the three
months ended June 30, 1998, as compared to $5.0 million in the three months
ended June 30, 1997, an increase of $3.9 million or 78%. This increase in
interest expense was primarily attributable to a larger outstanding debt balance
in 1998 than in 1997, which was the result of the Hearst Transaction. Interest
expense, net for the three months ended June 30, 1998 was decreased by $0.4
million as a result of the interest rate protection agreements. Interest rate
protection agreements were accounted for using hedge accounting during 1997;
however, because the floating rate debt at June 30, 1998, was lower than the
notional amounts of the interest rate protection agreements, the Company was
required to mark-to-market a portion of the interest rate protection agreements,
in compliance with SFAS No. 119. In addition, interest expense, net was
decreased for the three months ended June 30, 1998 due to approximately $0.9
million in interest income recorded relating to the note receivable from the STC
Swap. (See Note 2 to the condensed consolidated financial statements.)
Income taxes. Income tax expense was $15.3 million for the three months ended
June 30, 1998. This represents federal and state taxes as calculated on the
Company's net income before taxes and extraordinary item. The Company incurred
losses for all prior periods presented and therefore, did not record any federal
or state income tax benefit or expense.
Extraordinary item. The Company recorded an extraordinary item of $0.8 million,
net of the related income tax benefit, in the three months ended June 30, 1998.
This extraordinary item resulted from an early repayment of the Company's $102.4
million Senior Subordinated Notes. The extraordinary item includes certain
expenses associated with the early repayment of the Senior Subordinated Notes.
Net income (loss). Net income was $20.4 million in the three months ended June
30, 1998, as compared to a net loss of $2.1 million in the three months ended
June 30, 1997, an increase of $22.5 million or 1077%. This increase in net
income was attributable to the items discussed above.
Broadcast Cash Flow. Broadcast cash flow was $57.4 million in the three months
ended June 30, 1998, as compared to $10.2 million in the three months ended June
30, 1997, an increase of $47.2 million or 463%. The broadcast cash flow
increase resulted primarily from the Hearst Transaction and to a lesser degree,
improved total revenues at WAPT and WLWT and the favorable net effect of
the STC Swap. Broadcast cash flow margin increased to 52.3% in 1998 from 46.6%
in 1997. Broadcast cash flow does not purport to represent cash provided by
operating activities and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with generally
accepted accounting principles.
10
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Six Months Ended June 30, 1998 (The Company)
Compared to Six Months Ended June 30, 1997 (Predecessor Company)
Total revenues. Total revenues in the six months ended June 30, 1998 were $197
million, as compared to $39.8 million in the six months ended June 30, 1997, an
increase of $157.2 million or 395%. The increase was primarily attributable to
the Hearst Transaction which added $152.2 million to 1998 total revenues. In
addition, WAPT and WLWT experienced an increase in total revenues mainly
due to an increase in local and political advertising. Also, the two exchange
transactions (the Gannett Swap and the STC Swap) had a favorable impact on total
revenues period to period.
Station operating expenses. Station operating expenses in the six months ended
June 30, 1998 were $83.9 million, as compared to $21.4 million in the six months
ended June 30, 1997, an increase of $62.5 million or 292%. The increase was
primarily attributable to the Hearst Transaction, which added $60.9 million to
station operating expenses during 1998.
Amortization of program rights. Amortization of program rights in the six
months ended June 30, 1998 was $21.7 million, as compared to $2.1 million in the
six months ended June 30, 1997, an increase of $19.6 million or 933%. The
increase was primarily attributable to the Hearst Transaction, which added $19.1
million to amortization of program rights during 1998.
Depreciation and amortization. Depreciation and amortization of intangible
assets was $17.6 million in the six months ended June 30, 1998, as compared to
$12.8 million in the six months ended June 30, 1997, an increase of $4.8 million
or 37.5%. The increase was primarily attributable to the Hearst Transaction,
which added $8.2 million to depreciation and amortization of intangibles during
1998. In connection with the Hearst Transaction, the Argyle Stations' fixed and
intangible assets were stepped-up to fair-market value. In addition, the Argyle
Stations increased the estimated useful lives of their fixed and intangible
assets to conform with the lives used by the Hearst Broadcast Group. This
caused a $3.6 million net decrease in depreciation and amortization of
intangibles during 1998.
Station operating income. Station operating income in the six months ended June
30, 1998 was $73.7 million, as compared to a station operating loss of $3.5
million in the six months ended June 30, 1997, an increase of $70.2 million.
The increase in station operating income was primarily attributable to the
Hearst Transaction.
Corporate general and administrative expenses. Corporate general and
administrative expenses were $6.6 million for the six months ended June 30,
1998, as compared to $1.9 million for the six months ended June 30, 1997, an
increase of $4.7 million or 247%. The increase was primarily attributable to
the increase in corporate staff following the Hearst Transaction and other costs
associated with the Hearst Transaction.
Non-cash compensation expense. Non-cash compensation expense of $0.5 million
during 1997, represents stock option expense recorded in compliance with SFAS
No. 123. Subsequent to the Hearst Transaction, the Company has elected to
account for employee stock-based compensation under APB No. 25 and related
interpretations. Under APB No. 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized.
Interest expense, net. Interest expense, net was $19.8 million in the six
months ended June 30, 1998, as compared to $9.4 million in the six months ended
June 30, 1997, an increase of $10.4 million or 111%. This increase in interest
expense was primarily attributable to a larger outstanding debt balance in 1998
than in 1997, which was the result of the Hearst Transaction. Interest expense,
net for the six months ended June 30, 1998 was increased by $0.3 million as a
result of the interest rate protection agreements. Interest rate protection
agreements were accounted for using hedge accounting during 1997; however,
because the floating rate debt at June 30, 1998, was lower than the notional
amounts of the interest rate protection agreements the Company was required to
mark-to-market a portion of the interest rate protection agreements, in
compliance with SFAS No. 119. In addition, interest expense, net was decreased
for the six months ended June 30, 1998 due to approximately $0.9 million in
interest income recorded relating to the note receivable from the STC Swap.
(See Note 2 to the condensed consolidated financial statements.)
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Income taxes. Income tax expense was $20.2 million for the six months ended
June 30, 1998. This represents federal and state taxes as calculated on the
Company's net income before taxes and extraordinary item. The Company incurred
losses for all prior periods presented and therefore, did not record any federal
or state income tax benefit or expense.
Extraordinary item. The Company recorded an extraordinary item of $10.8 million
net of the related income tax benefit, in 1998. This extraordinary item
resulted from an early repayment of the Company's $102.4 million Senior
Subordinated Notes. The extraordinary item includes the write-off of the
unamortized deferred financing costs associated with the Senior Subordinated
Notes, the payment of a premium for the early repayment and certain expenses
associated with the early repayment.
Net income (loss). Net income was $16.3 million in the six months ended June
30, 1998, as compared to a net loss of $8.3 million in the six months ended June
30, 1997, an increase of $24.6 million or 297%. This increase in net income was
attributable to the items discussed above.
Broadcast Cash Flow. Broadcast cash flow was $91.1 million in the six months
ended June 30, 1998, as compared to $16.1 million in the six months ended June
30, 1997, an increase of $75 million or 466%. The broadcast cash flow increase
resulted primarily from the Hearst Transaction and to a lesser degree the
increase in total revenues at WAPT and WLWT and the incremental total
revenues from the Gannett Swap and the STC Swap. Broadcast cash flow margin
increased to 46.2% in 1998 from 40.4% in 1997. Broadcast cash flow does not
purport to represent cash provided by operating activities and should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with generally accepted accounting principles.
LIQUIDITY AND CAPITAL RESOURCES
Upon completion of the Hearst Transaction on August 29, 1997, the Company
retired its existing credit agreement (the "Old Credit Agreement") and entered
into a $1 billion syndicated credit facility with Chase Manhattan Bank (the
"Credit Facility"). As of June 30, 1998, $29 million was 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.
Capital expenditures were $30.4 million in 1997 and approximately $3.0 million
and $8.0 million, respectively, during the three and six-months ended June 30,
1998. The Company expects to invest approximately $12.7 million in special
projects/buildings including its new station facility at WLWT, approximately
$6.7 million in digital conversion projects at various stations and $10.3
million in maintenance projects, during 1998.
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.
IMPACT OF INFLATION
The impact of inflation on the Company's operations has not been significant to
date. There can be no assurance, however, that a high rate of inflation in the
future would not have an adverse impact on the Company's operating results.
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.
YEAR 2000
The Company has evaluated the potential impact of the situation commonly
referred to as the "Year 2000 problem." The Year 2000 problem, which is common
to most corporations, concerns the inability of information systems, primarily
computer software programs, to properly recognize and process date sensitive
information related to the year 2000. Preliminary assessment indicates that
solutions will involve a mix of modifying existing systems, replacing obsolete
systems and
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confirming vendor compliance. The Company currently does not anticipate any
significant incremental capital expenditures associated with the Year 2000
problem. However, Year 2000 assessments will continue and capital expenditure
estimates could change. The Company has initiated formal communications with all
of its significant suppliers and large customers to determine the extent to
which the Company's systems are vulnerable to those third parties' failure to
remediate their own Year 2000 issue. There can be no guarantee that the systems
of other companies on which the Company's systems rely will be converted timely
and would not have an adverse effect on the Company's systems. The Company will
utilize both internal and external resources to upgrade or replace, and test the
software for Year 2000 modifications.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS
131"). SFAS 131 establishes standards for reporting certain financial and
descriptive information for reportable segments on the same basis that is used
internally for evaluating segment performance and the allocation of resources to
segments. This statement is effective for fiscal years beginning after December
15, 1997. In February 1998, the Financial Accounting Standards Board issued
SFAS No. 132, "Employers' Disclosures About Pensions and Other Postretirement
Benefits", which becomes effective for the Company's 1998 consolidated financial
statements. SFAS No. 132 standardizes the disclosure requirements for pensions
and other postretirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis, and eliminates certain previously
required disclosures. In June 1998, the Financial Accounting Standards Board
issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"), which becomes effective for the Company's 2000
consolidated financial statements. SFAS 133 requires that derivative
instruments be measured at fair value and recognized as assets or liabilities in
a company's statement of financial position. The adoption of these statements
will not have a material effect on the Company's consolidated financial
statements.
In April 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position ("SOP") No. 98-5, Reporting on the Costs of Start-
Up Activities ("SOP 98-5"). SOP 98-5 requires that entities expense start-up
costs and organization costs as they are incurred. In March 1998, the AICPA
issued SOP No. 98-1, Accounting for the costs of computer software developed or
obtained for internal use ("SOP 98-1"). SOP 98-1 was issued to remedy the
diversity in the approaches to accounting for internaluse software by providing
guidance on expensing versus capitalization of costs, accounting for the costs
incurred in the upgrading and amortization of capitalized software costs. These
statements are effective for fiscal years beginning after December 15, 1998. The
Company's accounting practices are in compliance with these Statements.
13
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - Not Applicable
ITEM 2. CHANGES IN SECURITIES - Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - Not Applicable
ITEM 5. OTHER INFORMATION - Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
--------
EXHIBIT NO. DESCRIPTION
----------- -----------
10.1 Affiliation Agreement between Smith Television
of Salinas Monterey License, L.P. (re: KSBW) and
the National Broadcasting Company, Inc. dated
March 20, 1996.
10.2 Affiliation Agreement between Heritage Media
Corp. (re: WPTZ) and the National Broadcasting
Company, Inc., dated August 28, 1995.
10.3 Amendment to Affiliation Agreement between
Heritage Media Corp. (re: WPTZ) and the National
Broadcasting Company, Inc. dated August 28,
1996.
10.4 Affiliation Agreement between Heritage Media
Corp. (re: WNNE) and the National Broadcasting
Company, Inc., dated August 28, 1995.
10.5 Amendment to Affiliation Agreement between
Heritage Media Corp. (re: WNNE) and the National
Broadcasting Company, Inc., dated January 1,
1996.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K:
------------------
On May 26, 1998, the Company filed a Form 8-K, relating to the Agreement
and Plan of Merger, dated as of May 26, 1998, by and among Pulitzer
Publishing Company, Pulitzer Inc. and the Company and certain other
agreements related thereto.
14
<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
August 14, 1998 By: /s/ Harry T. Hawks
- --------------- ------------------
Date Harry T. Hawks, Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
August 14, 1998 By: /s/ Teresa D. Lopez
- --------------- -------------------
Date Teresa D. Lopez, Vice President and Controller
(Principal Accounting Officer)
15
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EXHIBIT 10.1
------------
[NBC TV NETWORK LETTERHEAD]
March 20, 1996
Smith Television of Salinas
Monterey License, L.P.
and
c/o KSBW
238 John Street
Salinas, California 93901
RE: KSBW (Salinas, California)
Gentlemen:
The following shall comprise the agreement between us for the
affiliation of your television broadcasting station Smith Television of Salinas-
Monterey License, L.P. and KSBW 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 17th day of January, 1996 (the "Effective Date"), and,
unless sooner terminated as provided in this Agreement, it shall remain in
effect through December 31, 2005. It shall then be renewed on the same terms
and conditions for a further period of five (5) years and for successive further
periods of five (5) 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.
2. NBC Programming.
(a) NBC shall deliver to Station for free, over-the-air television
broadcasting all programming which NBC makes available for broadcasting in the
community to which Station is presently licensed by the FCC, except as otherwise
expressly provided herein.
(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 - 5:30-6:00 A.M.,
7:00-9:00 A.M. and 5:30-6:00 P.M.
Saturday - 7:00-9:00 A.M. and 5:30-6:00 P.M.
Sunday - 7:30-9:30 A.M. and 5:30-6:00 P.M.
Daytime: Monday thru Friday - 10:00-11:00 A.M.
and 12:00 Noon-2:00 P.M.
Saturday - 9:00-9:30 A.M. and 10:00-11:30 A.M.
<PAGE>
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 any such programming good for
seventy-two (72) hours as against any other television station located in
Station's community of license or any television program transmission service
furnishing a television signal to Station's community of license, including, but
not limited to, any 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. Notwithstanding any
other provision in this Agreement, no pre-existing acceptance of NBC programming
shall be superseded or otherwise affected by this Agreement, and those
acceptances shall remain in full force and effect. 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.
(a) Station agrees that, subject only to the preemption rights
contained in Paragraph 4(c) below, including Station's unqualified right to
preempt for local live coverage of news events, 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, except to the extent that Station is actually broadcasting
programming pursuant to (and within the specified limits of) a commitment
contemplated by Paragraph 3(b) below. As used herein, the "live coverage of
local news events" with respect to Station's preemption rights shall in no event
refer to the addition of scheduled local news programs as part of Station's
regular continuing program schedule.
(b) As an inducement for NBC to enter into this Agreement, Station
covenants, represents and warrants to NBC that during any Broadcast Year (as
hereinafter defined) during the term hereof, Station shall preempt no more than
fifteen (15) hours in the aggregate of NBC programs during the Prime Time
Programmed Time Period for any reason other than for the live coverage of news
events (the "Prime Time Preemption Amount"). For the 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) The Station hereby agrees to accept and clear all sports
programming offered to the Station by NBC outside the Programmed Time Periods
("NBC Sports Programming"), except for NBC sports programming which directly
conflicts with Station's coverage of sports events and special events of
particular local interest (collectively, such coverage of such sports events and
special events are referred to below as "Special Programs"). Station
acknowledges the substantial investment in network sports programming to be
incurred during the term of this Agreement in order to provide Station with
network-quality sports
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<PAGE>
programming. Station further acknowledges that in view of NBC's substantial
investment in network sports programming and Station's rights under this
Paragraph 3(c), Station does not foresee any need to substitute programming of
any kind for NBC Sports Programming, except as follows with respect to Special
Programs. Station agrees not to broadcast more than three (3) hours of Special
Programs outside the Programmed Time Periods in the aggregate during any
Broadcast Year during the term of this Agreement which would conflict with NBC
Sports Programming outside the Programmed Time Periods (the "Sports Preemption
Amount"); provided, however, that in the event that, in any Broadcast Year
during the term of this Agreement, NBC schedules a substantially greater number
of hours of NBC Sports Programming than scheduled during the 1993-1994 Broadcast
Year, NBC agrees that the Sports Preemption Amount shall be increased
proportionately for such Broadcast Year to reflect such increase in the
aggregate number of hours of NBC Sports Programming in such Broadcast Year.
(d) Notwithstanding the foregoing provisions of subparagraphs (b) and
(c) above and without limiting the provisions thereof, Station agrees that, in
any three (3) month period during a Broadcast Year, Station's preemptions of NBC
Prime Time programs and NBC Sports Programming shall not exceed 50% of,
respectively, the Prime Time Preemption Amount and the Sports Preemption Amount,
unless otherwise consistent with Station's programming practice.
(e) Commencing as of the earlier of (i) September 15, 1996 or (ii) the
expiration or termination (without giving effect to any renewal term) of any of
Station's existing contractual commitments for non-NBC programming currently
broadcast by Station Monday through Friday during the hours 9:00 A.M.-2:00 P.M.
and which were in existence as of September 15, 1995, Station shall clear one
(1) additional hour of NBC programming Monday through Friday, during the hours
of 9:00 A.M.-2:00 P.M. (the "Fourth Daytime Hour"); provided, that Station shall
broadcast such additional NBC programming in the same sequence as scheduled by
NBC. The Fourth Daytime Hour shall then become part of the Daytime Programmed
Time Period for purposes of Paragraphs 2(b) and 3(a) hereof.
(f) It is expressly understood that commencing with the Effective
Date, Station will, subject to the next sentence, be compensated on the basis
that station is clearing the Fourth Daytime Hour notwithstanding that such
clearance may be deferred as provided for in Paragraph 3(e) hereof. In the
event that Station fails to comply with its obligation to clear the Fourth
Daytime Hour as of September 15, 1996, NBC shall deduct $35,000, on an
annualized basis, from the compensation payable to Station hereunder, which
amount represents the approximate net amount of NBC's lost advertising revenues
by reason of Station's non-clearance of four hours of NBC Daytime programming;
such deduction shall continue until such clearance by Station. A prorated
portion of such amount shall be deducted on a quarterly basis from Station's
quarterly compensation payments payable pursuant to Paragraph 5 hereof.
(g) Upon the expiration or termination (without giving effect to any
renewal) of any of Station's existing contractual commitments for non-NBC
programming currently broadcast by Station on Saturday mornings and for the
remaining term of this Agreement, Station agrees to consider in good faith,
prior to entering into any new or renewed commitments for the broadcast of non-
NBC programming on Saturday mornings, the clearance of additional NBC daytime
programming on Saturdays (the "Additional Saturday Daytime Programming") so that
station would clear up to a maximum of two and one-half (2 1/2) hours of
Saturday NBC Daytime programming. In the event that Station clears any
Additional Saturday Daytime Programming, such programming shall then become part
of the Saturday Daytime Programmed Time Period for purposes of Paragraphs 2(b)
and 3(a) hereof.
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 broadcast
such omitted programming and the commercial announcements contained therein (or
any replacement programming and the commercial announcements contained therein)
during a time period or periods which the parties shall promptly and mutually
agree upon and which shall, to the extent possible, be of a quality
3
<PAGE>
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) For the purposes of this Agreement, an "Authorized Preemption"
shall mean: any failure to broadcast due to force majeure as provided for in
Paragraph 12 below, any preemption permitted by Paragraphs 3(b), 3(c) or 3(d)
above, and any preemption permitted by Paragraph 4(c) below. Any other
preemption or failure to broadcast any NBC programming shall be deemed an
"Unauthorized Preemption" and, without limiting any other rights of NBC under
this Agreement or otherwise, 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 equivalent to NBC's loss in net
advertising revenues attributable to the failure of Station to broadcast such
program in Station's market as scheduled by NBC, which amount shall be
calculated in accordance with Exhibit A hereto; provided, however, NBC agrees
that in the event Station broadcasts such preempted NBC program in another time
period as NBC and Station may agree upon pursuant to Paragraph 4(a) hereof, a
portion of such amount equivalent to NBC's loss in net advertising revenues may
be offset by any increase in NBC's net advertising revenues attributable to such
broadcast by Station. Any failure by station to pay any amount due under this
Paragraph 4(b) 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 (i) 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 (ii) unless the breach is
cured within such thirty (30) day period, terminate this Agreement.
(c) With respect to programs offered or already contracted for
pursuant to this Agreement, nothing herein contained shall be construed to
prevent or hinder Station 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 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 the
justification therefor at least three (3) weeks in advance of the scheduled
broadcasts or, if such notice is not possible, as soon thereafter as possible
(including an explanation of the cause for any lesser notice). Programming
shall be deemed to be unsatisfactory or unsuitable or contrary to the public
interest only if it: (A) is delivered in a form which does not meet accepted
standards of good engineering practice; (B) does not comply with the rules and
regulations of the FCC; or (C) differs substantially in style and content from
NBC programming which Station has broadcast previously and which Station
reasonably believes would not meet prevailing contemporary standards of good
taste in its community of license. Station confirms that no NBC programming
shall be deemed to be unsatisfactory, unsuitable or contrary to the public
interest based on programming performance or ratings, advertiser reaction or the
availability of alternative programming (including, but not limited to, sporting
events, program length commercials and infomercials, and other paid programming)
which Station believes to be more profitable or more attractive. Station
acknowledges the substantial investment in network programming to be incurred
during the term of this Agreement in order to provide Station with network-
quality news, public affairs, entertainment, sports, children's and other
programming during the Programmed Time Periods. Station further acknowledges
that in view of NBC's substantial investment in network programming, the amount
of broadcast time available to Station outside the Programmed Time Periods and
Station's rights under Paragraph 3(b) above, Station does not foresee any need
to substitute programming of any kind for NBC programming, except in those
circumstances requiring local live coverage of news events.
5. Station Compensation. In further consideration of Station's
performance of its obligations under this Agreement NBC shall compensate Station
as follows:
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<PAGE>
(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 the amount resulting from multiplying the following:
(A) Station's Network Station Rate, which is $1,210; by
(B) The percentage set forth in the compensation matrix table
attached hereto as Exhibit B (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
reserves the right, in its sole discretion, to withhold payment of
compensation for such program. If NBC does not withhold payment of
compensation for such program, NBC shall pay Station as if Station had
broadcast the program or portion thereof during such Live Time Period,
except that if the percentage set forth in the Compensation Table
opposite the time period during which Station broadcasts the program
or portion thereof is less than that set forth opposite such Live Time
Period, NBC shall pay Station on the basis of the time period 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 shall determine, an
estimate of the amounts due hereunder for such calendar quarter. NBC
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 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 of 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").
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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) NBC reserves the right as part of a general rate revision 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 NBC 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 further 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 C and D attached hereto, which Exhibits are incorporated
herein by this reference. In the event that Station does not fulfill
(A) the commitments set forth in Exhibit C or (B) such commitments as
are set forth in Exhibit D in all years during the term of this
Agreement, NBC reserves the right to decrease Station's Network
Station Rate by notifying Station in writing at least ninety (90) days
prior to the effective date of such change; provided that NBC
acknowledges that it shall act in a reasonable manner consistent with
its evaluation of NBC affiliated broadcast stations generally.
6. Additional Consideration. In consideration of Station entering into
this Agreement and Station's performance of its obligations under this
Agreement, NBC agrees to pay to Station the additional amounts (the "Additional
Payments") set forth on Exhibit E hereto, subject to the provisions thereof.
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 F 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 Authorized Preemptions, 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.
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9. Conditions of Station's Broadcast. Station's broadcast of NBC
programming shall be subject to the following terms and conditions:
(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.
(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, it being understood that the amount withheld for any violation shall
not exceed the total compensation due Station for the week in which such
violation occurs. 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 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 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
7
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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 or
other material as furnished by NBC hereunder, provided that Station promptly
notifies NBC of any claim or litigation to which this indemnity shall apply, and
that Station cooperates fully with NBC 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. Except as otherwise provided herein, neither
Station nor NBC shall have any rights against the other for claims by third
persons, or for the non-operation of facilities or the non-furnishing of
programs for broadcasting, if such non-operation or non-furnishing is due to
failure of equipment, actions or claims by any third person, labor disputes, or
any cause beyond such party's reasonable control.
14. Station's Right of First Negotiation. Throughout the term of this
Agreement, 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 (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) This Agreement shall not be assigned without the prior written
consent of NBC, and any permitted assignment shall not relieve Station of its
obligations hereunder; provided, however, NBC agrees that it shall not
unreasonably withhold its consent to an assignment by Station. Any purported
assignment by Station without such consent shall be null and void and not
enforceable against NBC.
(b) Station agrees to include as a condition of any proposed
assignment, sale or transfer of ownership or control of Station (including,
without limitation, any assignment or transfer referred to in Paragraph 16(c)
below other than a "short-form" assignment) a contractually binding provision
that the assignee or transferee shall assume and become bound by this Agreement
for (i) the remainder of the then-current term of this Agreement or (ii) three
(3) years from the date of said assignment or transfer, whichever period is
greater. Station acknowledges that any such assignment, sale or transfer which
does not so provide for such assumption and for NBC's right to extend 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
8
<PAGE>
injunction or similar relief from any court of competent jurisdiction
restraining Station from committing any violation of this Paragraph 16(b).
(c) 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 current FCC Rules, NBC
shall have the right to terminate this Agreement in the event of any assignment
or transfer; provided that NBC agrees not to unreasonably exercise such right of
termination. Station agrees that promptly following Station's notice to NBC,
Station (i) except in the case of "short form" assignments or transfers of
control, shall arrange for a meeting between NBC and the proposed assignee or
transferee to review the financial and operating plans of the proposed assignee
or transferee, and (ii) shall procure and deliver to NBC, in form 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. If Station complies with its
obligations set forth in the preceding sentence and NBC does not terminate this
Agreement upon written notice to Station within the thirty (30) day period
following the later of the meeting with the proposed assignee or transferee or
the delivery to NBC of a satisfactory assumption agreement, NBC shall be deemed
to have consented to the assignment or transfer of control.
(d) 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 such assignment and assumption, NBC
shall have no liability under this Agreement with respect to obligations arising
after the effective date of such assignment and assumption.
17. Unauthorized Copying and Transmission. Station shall not authorize,
cause, or permit, without 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. Notwithstanding the foregoing, 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 Area of
Dominant Influence ("ADI"), as defined by Arbitron, 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 license by NBC; 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, 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 law, rule or regulation.
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-Dupe 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
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"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 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.
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.
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 (without regard to principles of conflicts of laws).
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 (and, with respect to Station, with a copy to Hogan & Hartson, 555
13th Street, N.W., Washington, DC 20004, Attention: William S. Reyner, Jr.) or
at such other address or addresses as may be specified in writing by the party
to whom the notice is given. 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 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-Dupe Amendment. This
Agreement shall supersede the provisions of the Agreement dated June 13, 1995
between NBC and EP Communications, Inc. (as the prior owner of KSBW), which
Agreement was assigned to and assumed by Smith Television of Salinas-Monterey
License, L.P. 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. Confidentiality. The parties agree to use their best efforts to
preserve the confidentiality of this Agreement and of the terms and conditions
set forth herein, and the exhibits annexed hereto, to the fullest extent
permissible by law. The parties recognize that Section 73.3613 of the FCC's
Rules and Regulations requires the filing with the FCC of television network
affiliation agreements by each affiliate, but are unaware of any requirement for
the filing of exhibits annexed to such affiliation agreements. In the event
that the FCC should request either party to file said exhibits, that party shall
give prompt notice to the other, and shall submit said exhibits to the FCC with
a request that said exhibits be withheld from public inspection pursuant to
Section 0.459 of the FCC's Rules and Regulations on the grounds that said
exhibits contain confidential commercial or financial information that would
customarily be guarded from competitors and not be released to the public.
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26. 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.
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/ [ILLEGIBLE]
_____________________________________
AGREED:
By: Smith Broadcasting Partners, L. P.
Its General Partner
/s/ DAVID A. FITZ
____________________________________
By: Smith Broadcasting Group, Inc.
Its General Partner
/s/ DAVID A. FITZ
____________________________________
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EXHIBIT 10.2
------------
[NBC TV NETWORK LETTERHEAD]
August 28, 1995
Heritage Media Corp.
c/o WPTZ
5 Television Drive
Plattsburgh, New York 12901
RE: WPTZ (Plattsburgh, New York)
---------------------------
Gentlemen:
The following shall comprise the agreement between us for the
affiliation of your television broadcasting station WPTZ (you and WPTZ
collectively herein called "Station") with the NBC Television Network (herein
called "NBC") and shall supersede and replace our prior agreement dated JULY 1,
1989, except for the most recent amendment with respect to network non-
duplication protection under Federal Communications Commission ("FCC") Rules
Section 76.92.
1. Term. This Agreement shall be deemed effective as of 3:00 A.M.,
----
New York City time on the 1st day of January, 1995, 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.
2. NBC Programming.
---------------
(a) NBC shall deliver to Station for free, over-the-air television
broadcasting all programming which NBC makes available for broadcasting in the
community to which Station is presently licensed by the FCC, except as otherwise
expressly provided herein.
(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 A.M.
<PAGE>
News: Monday thru Friday - 5:30 - 6:00 A.M.,
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 - 11:00 A.M.-12:00
Noon and 1:00 P.M. - 3:00 P.M.
Saturday - 10:00 A.M.-11:00 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 any such programming good for
seventy-two (72) hours as against any other television station located in
Station's community of license or any television program transmission service
furnishing a television signal to Station's community of license, including, but
not limited to, any 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. Notwithstanding any
other provision in this Agreement, no preexisting acceptance of NBC programming
shall be superseded or otherwise affected by this Agreement, and those
acceptances shall remain in full force and effect. 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.
-------------------------------------------
(a) Station agrees that, subject only to the preemption rights set
forth herein, including Station's unqualified right to preempt for local live
coverage of news events, 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, except to the
extent that Station is actually broadcasting programming pursuant to (and within
the specified limits of) a commitment contemplated by Paragraph 3(b) below.
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(b) As an inducement for NBC to enter into this Agreement, Station
covenants, represents and warrants to NBC that during any Broadcast Year (as
hereinafter defined) during the term hereof, Station shall preempt no more than
fifteen (15) hours in the aggregate of NBC programs during the Prime Time
Programmed Time Period for any reason other than for the live coverage of news
events (the "Prime Time Preemption Amount"). For the 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) The Station hereby agrees to accept and clear all sports
programming offered to the Station by NBC outside the Programmed Time Periods
("NBC Sports Programming"), except for NBC sports programming which directly
conflicts with Station's coverage of sports events and special events of
particular local interest (collectively, such coverage of such sports events and
special events are referred to below as "Special Programs"). Station agrees not
to broadcast more than fifteen (15) hours of Special Programs outside the
Programmed Time Periods in the aggregate during any Broadcast Year during the
term of this Agreement which would conflict with NBC Sports Programming outside
the Programmed Time Periods (the "Sports Preemption Amount").
(d) Notwithstanding the foregoing provisions of subparagraphs (b) and
(c) above and without limiting the provisions thereof, Station agrees that, in
any one (1) month period during a Broadcast Year, Station's preemptions of NBC
Prime Time programs and NBC Sports Programming shall not exceed 20% of,
respectively, the Prime Time Preemption Amount and the Sports Preemption Amount,
unless otherwise consistent with Station's programming practice.
(e) Throughout the term of this Agreement, upon the expiration or
termination (without giving effect to any renewal term) of any of Station's
existing contractual commitments for non-NBC programming broadcast by Station
during the hours 9:00 A.M.-4:00 P.M., Monday through Friday, and for the
remaining term of this Agreement, Station agrees to give good faith
consideration to the clearance of an additional one (1) hour of NBC daytime
programming Monday through Friday during such 9:00 A.M.-4:00 P.M. time period so
that Station would clear up to a maximum of four (4) hours of NBC Daytime
weekday programming during such hours. In the event Station agrees to clear
such additional one (1) hour of NBC Monday through Friday Daytime Programming,
such additional one (1) hour shall then become part of the Daytime Programmed
Time Period for purposes of Paragraphs 2 (b) and 3 (a) hereof.
(f) Throughout the term of this Agreement, upon the expiration or
termination (without giving effect to any renewal term) of any of Station's
existing contractual commitments for non-NBC programming currently broadcast on
Saturday mornings and for the remaining term of this Agreement, Station agrees
to give good faith consideration to clearance of "Saturday Today" (or any
replacement programming) in the Live Time Period for such programming as
scheduled by NBC. In the event that Station clears "Saturday Today" (or any
replacement programming), "Saturday Today" (or any replacement programming)
shall then become part of the Saturday News Programmed Time Period for purposes
of Paragraphs 2(b) and 3(a) hereof.
(g) Throughout the term of this Agreement, upon the expiration or
termination (without giving effect to any renewal term) of any of Station's
contractual commitments for non-NBC programming broadcast by Station on Saturday
mornings and for the remaining term of this Agreement, Station agrees to give
good faith consideration to the clearance of additional one-half hours of NBC
Saturday Daytime programming so that Station would clear up to a maximum of two
3
<PAGE>
and one-half (2 1/2) hours of NBC Saturday Daytime programming. In the event
Station agrees to clear such additional one-half hours of NBC Saturday Daytime
Programming, such additional one-half hours shall then become part of the
Saturday Daytime Programmed Time Period for purposes of Paragraphs 2(b) and 3(a)
hereof.
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 broadcast
such omitted programming and the commercial announcements contained therein (or
any replacement programming and the commercial announcements contained therein)
during a time period or periods which the parties shall promptly and mutually
agree upon 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 programming as provided herein for any reason other than: (i) the live
coverage of local news events, (ii) as permitted by Paragraphs 3(b), 3(c) or
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, without limiting any other rights of NBC
under this Agreement or otherwise, 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 equivalent to NBC's
loss in net advertising revenues attributable to the failure of Station to
broadcast such program in Station's market as scheduled by NBC, which amount
shall be calculated in accordance with Exhibit A hereto. Without limiting or
affecting any other determination of a material breach hereunder, any failure by
Station to pay any amount due under this Paragraph 4(b) 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) unless the breach is cured within such thirty (30)
day period, terminate this Agreement. Station acknowledges that NBC 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 NBC 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
4
<PAGE>
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 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 the
amount resulting from multiplying the following:
(A) Station's Network Station Rate, which is $1150; by
(B) The percentage set forth in the compensation matrix table
attached hereto as Exhibit B (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 reserves
the right, in its sole discretion, to withhold payment of compensation for
such program. If NBC does not withhold payment of compensation for such
program, NBC shall pay Station as if Station had broadcast the program or
portion thereof during such Live Time Period, except that if the percentage
set forth in the Compensation Table opposite the time period during which
Station broadcasts the program or portion thereof is less than that set
forth opposite such Live Time Period, NBC shall pay Station on the basis of
the time period 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:
5
<PAGE>
(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 shall determine, an estimate
of the amounts due hereunder for such calendar quarter. NBC 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
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 of 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 below, NBC reserves the
right as part of a general rate revision to reevaluate and change at any
time: (A) the percentages set forth in the Compensation Table, or (B) 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. Notwithstanding the foregoing, NBC agrees that
(X) the Compensation Table attached hereto as Exhibit B shall be
modified during the term of this Agreement only as mutually agreed to by NBC and
Station; and
(Y) NBC 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 C and D
attached hereto, which Exhibits are incorporated herein by this reference.
In the event that Station (A) materially reduces its local news program
schedule as set forth in Exhibit C or (B) does not fulfill such commitments
as are set forth in Exhibit D in all years during the term of this
Agreement, NBC reserves the right to decrease Station's Network Station
Rate by notifying Station in writing at least ninety (90) days prior to the
effective date of such change.
6
<PAGE>
6. Additional Consideration. In consideration of Station entering into
------------------------
this Agreement and Station's performance of its obligations under this
Agreement, NBC agrees to pay Station the additional amounts (the "Additional
Payments") set forth on Exhibit E hereto, subject to the provisions thereof.
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 F 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 permitted under 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:
(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.
(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
7
<PAGE>
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, it being understood that the amount withheld for any violation shall
not exceed the total compensation due Station for the week in which such
violation occurs. 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 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 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 or
other
8
<PAGE>
material as furnished by NBC hereunder, provided that Station promptly notifies
NBC of any claim or litigation to which this indemnity shall apply, and that
Station cooperates fully with NBC 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. Except as otherwise provided herein, neither
Station nor NBC shall have any rights against the other for claims by third
persons, or for the non-operation of facilities or the non-furnishing of
programs for broadcasting, if such non-operation or non-furnishing is due to
failure of equipment, actions or claims by any third person, labor disputes, or
any cause beyond such party's reasonable control.
14. Station's Right of First Negotiation. Throughout the term of this
------------------------------------
Agreement, 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 (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) This Agreement shall not be assigned without the prior written
consent of NBC, and any permitted assignment shall not relieve Station of its
obligations-hereunder. Any purported assignment by Station without such consent
shall be null and void and not enforceable against NBC.
(b) Station agrees to include as a condition of any proposed
assignment, sale or transfer of Station (including any assignment or transfer
referred to in Paragraph 16(c) below other than a "short-form" assignment) a
contractually binding provision that the assignee or transferee shall assume and
become bound by this Agreement for (i) the remainder of the then-current term of
this Agreement or (ii) three (3) years from the date of said assignment or
transfer, whichever period is greater. Station acknowledges that any such
assignment, sale or transfer which does not so provide for such assumption and
for NBC's right to extend 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
9
<PAGE>
restraining Station from committing any violation of this Paragraph 16(b).
(c) 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, NBC shall have
the right to terminate this Agreement in the event of any assignment or
transfer. Station agrees, except in the case of "short form" assignments or
transfers of control, that promptly following Station's notice to NBC, Station
(i) shall arrange for a meeting between NBC and the proposed assignee or
transferee to review the financial and operating plans of the proposed assignee
or transferee, and (ii) shall procure and deliver to NBC, in form 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. If Station complies with its
obligations set forth in the preceding sentence and NBC does not terminate this
Agreement upon written notice to Station within the thirty (30) day period
following the later of the meeting with the proposed assignee or transferee or
the delivery to NBC of a satisfactory assumption agreement, NBC shall be deemed
to have consented to the assignment or transfer of control.
(c) 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 such assignment and assumption, NBC
shall have no liability to Station under this Agreement with respect to
obligations arising after the effective date of such assignment and assumption.
17. Unauthorized Copying and Transmission. Station shall not authorize,
-------------------------------------
cause, or permit, without 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. Notwithstanding the foregoing, 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 Area of
Dominant Influence ("ADI"), as defined by Arbitron, 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 license by NBC; 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, 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 law, rule or regulation.
18. Limitations on Retransmission Consent. In consideration of the grant
-------------------------------------
by NBC to Station of the non-duplication protection provided in the most recent
amendment to this Agreement, Station hereby agrees as follows:
10
<PAGE>
(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 this 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 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.
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.
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 (without regard to principles of conflicts of laws).
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. 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 constitutes the entire agreement
----------------
between Station and NBC with respect to the subject matter hereof, all prior
understandings being merged herein, except for the most recent amendment with
respect to network nonduplication protection under FCC Rules Section 76.92. 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.
11
<PAGE>
25. Confidentiality. The parties agree to use their best efforts to
---------------
preserve the confidentiality of this Agreement and of the terms and conditions
set forth herein, and the exhibits annexed hereto, to the fullest extent
permissible by law. The parties recognize that Section 73.3613 of the FCC's
Rules and Regulations requires the filing with the FCC of television network
affiliation agreements by each affiliate, but are unaware of any requirement for
the filing of exhibits annexed to such affiliation agreements. In the event
that the FCC should request either party to file said exhibits, that party shall
give prompt notice to the other, and shall submit said exhibits to the FCC with
a request that said exhibits be withheld from public inspection pursuant to
Section 0.459 of the FCC's Rules and Regulations on the grounds that said
exhibits contain confidential commercial or financial information that would
customarily be guarded from competitors and not be released to the public.
26. 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.
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/ [ILLEGIBLE]
---------------
AGREED:
HERITAGE MEDIA CORP.
By: /s/ [ILLEGIBLE]
-------------------------------------
12
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EXHIBIT "A"
-----------
ECONOMIC ADJUSTMENTS
Adjustments due to a preemption of an NBC program referred to in
Paragraph 4(b) of this Agreement will be calculated using the following two
factors:
1. "Station's NBC delivery percentage" which is the Station's
audience contribution to NBC Network programs expressed as a percentage. (This
is the same NBC delivery percentage used in the annual compensation evaluation.)
2. "Program revenue" which is the average NBC Network revenue for
the preempted program. (NOTE: Program revenue will be the average revenue per
program based on total annual revenue for that program, except revenue for each
prime time program, which will be adjusted for the day of the week and the
quarter in which the program is aired.)
Station's preempts "Program X"
Station's NBC Network delivery % = 2.1%
NBC revenue for "Program X" = $900,000
$900,000 x 2.1% = $18,900 payment to NBC
13
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EXHIBIT "B"
WPTZ, PLATTSBURGH, NEW YORK
<TABLE>
<CAPTION>
Compensation Matrix
-------------------
(NETWORK STATION RATE ____________ X HOURS CARRIED X % BELOW)
<S> <C> <C>
MON - SUN 6PM - 11PM* 30%
- ------------------------------------------------------------------------------
MON - SUN 5PM - 6PM* 15%
11PM - 1AM
SAT - SUN 4PM - 5PM
- ------------------------------------------------------------------------------
MON - FRI 9AM - 5PM 12.81%
- ------------------------------------------------------------------------------
SUN 7AM - 4PM** 10.5%
SAT 2PM - 4PM
- ------------------------------------------------------------------------------
SAT 7AM - 2PM** 7.88%
- ------------------------------------------------------------------------------
NIGHTLY NEWS MON - FRI 0%
NIGHTLY NEWS SAT - SUN 10%
- ------------------------------------------------------------------------------
TONIGHT SHOW 7.5%
- ------------------------------------------------------------------------------
LATE NIGHT 10.25%
- ------------------------------------------------------------------------------
FRIDAY NIGHT 4.75%
- ------------------------------------------------------------------------------
LATER 4%
- ------------------------------------------------------------------------------
SATURDAY NIGHT LIVE 6.67%
- ------------------------------------------------------------------------------
</TABLE>
* EXCLUDING NIGHTLY NEWS
** EXCLUDING SATURDAY AND SUNDAY TODAY
All times above are expressed in terms of your station's then current local
time.
14
<PAGE>
EXHIBIT "C"
-----------
WPTZ NEWS PROGRAMS
Monday - Friday
---------------
12:00 Noon-12:30 P.M.
6:00-6:30 P.M.
11:00-11:35 P.M.
Saturday
--------
6:00-6:30 P.M.
11:00-11:30 P.M.
15
<PAGE>
[NBC TV NETWORK LETTERHEAD]
December 6, 1994
Mr. Robert D. Shields
President and General Manager
WPTZ
Television Drive
Plattsburgh, N.Y. 12901
Dear Bob:
This letter agreement is to confirm our understanding regarding the long-term
affiliation of the NBC Television Network and WPTZ.
1. Term
----
(a) Initial Term: Seven (7) years, commencing on January 1, 1995.
(b) Renew for an additional three (3) years if neither party gives 12-
month notice before expiration of the initial term.
(c) Except for notice of non-renewal and other rights of termination
specified in the agreement, firm contract on both sides (removing each
party's rolling right of termination on 12-month notice).
2. Programmed Time Periods:
-----------------------
NBC will continue to provide programming for all the time periods it
currently programs.
3. Clearance:
---------
WPTZ will clear live all. NBC programming in time periods in which such
programming is currently offered, subject to WPTZ's preemption rights get
forth below
4. Preemptions:
------------
(a) WPTZ has the unqualified right to preempt NBC programming for live
coverage of news events.
(b) WPTZ will have complete discretion on preemptions in Prime Time up to
a total of 30 hours per year in addition to live coverage of news
events.
(c) WPTZ agrees to clear all NBC Weekend Sports programs; provided,
---------
however, that WPTZ will have complete discretion on preemptions of NBC
-------
Weekend Sports up to a total of 15 hours per year.
16
<PAGE>
(d) WPTZ agrees that no more than 20% of the foregoing permitted
preemptions per year shall occur in any one (1) month period.
(e) NBC may withhold compensation for any program not broadcast live. In
addition to any compensation permitted to be withhold by NBC, in the
event of any preemption in excess of the amounts provided in
Paragraphs 4(b), (c) and (d) above, WPTZ will pay NBC a sum equivalent
to NBC's loss in net advertising revenues attributable to WPTZ's
failure to broadcast the program as scheduled by NBC. (The formula
for calculating such sum will be specified in the long-form
affiliation agreements.)
5. Compensation and Additional Consideration:
-----------------------------------------
The Compensation Rate of WPTZ will remain at current levels, subject to
NBC's customary right of review. Subject to WM's compliance with its
commitments regarding clearance and preemption as set forth herein, NBC
will pay WPTZ as additional consideration, on a pro rata basis for each
hour of NBC Prime Time programming broadcast live by WPTZ for which
compensation is payable, the following amounts:
<TABLE>
<S> <C> <C>
1995 - $100,000 1999 - $266,700
1996 - $141,700 2000 - $308,400
1997 - $183,400 2001 - $350,000
1998 - $225,000
</TABLE>
In the event the agreement is renewed for an additional three-year period
commencing January 1, 2002, compensation and additional consideration will be
payable as provided above, except that the amount of additional consideration
payable on a pro rata, basis for each hour of NBC Prime Time programming
broadcast live by WPTZ for which compensation is payable will be as follows:
2002 - $390,000
2003 - $432,000
2004 - $476,100
17
<PAGE>
6. Local Inventory:
----------------
NBC agrees that the format of local avails in its regularly scheduled
programming will continue during the term or be offset with a comparable
economic benefit to WPTZ.
7. Right of First Negotiation:
--------------------------
WPTZ will have the right of first negotiation with respect to any new NBC
over-the-air broadcast venture (whether or not involving the transmission
of television programs) which requires participation on a financial or
operating basis by a Third Party (i.e., a party other than a parent,
subsidiary or affiliated entity of NBC, Inc.) within WPTZ's community of
license.
8. Change of Control:
-----------------
WPTZ will notify NBC of any application for FCC approval of assignment or
transfer of control of WPTZ's license and, subject to NBC's right of
termination, will adhere to an orderly procedure regarding the assignment
of the affiliation agreement, including securing the now owner's assumption
of the affiliation agreement and assuring that the term of the new owner's
affiliation will be at least three years.
9. Confidentiality:
---------------
Each party will treat this term sheet as confidential and will not disclose
any of its terms without the other party's prior consent.
10. Other Provisions:
----------------
This is a binding letter agreement. The parties contemplate entering into
long-form affiliation agreements which with incorporate the provisions
contained herein and other terms and conditions of WPTZ's affiliation with
NBC not inconsistent with such provisions.
Sincerely,
/s/ Jean Dietze
-----------------------------------
Jean Dietze
Agreed and Accepted:
HERITAGE MEDIA INC.
Licensee of WPTZ
By: /s/ [ILLEGIBLE]
-----------------------------------
18
<PAGE>
[NBC TV NETWORK LETTERHEAD]
May 27, 1993
HERITAGE MEDIA,INC.
PLATTSBURGH, NEW YORK
Re: WPTZ
Gentlemen:
The following shall constitute an amendment to the television network
affiliation agreement (the "Agreement") between the licensee of Station WPTZ
("Station") and National Broadcasting Company, Inc. ("NBC"), effective as of
January 01, 1990.
1. During the term of the Agreement, Station shall, by the terms of this
amendment, be entitled to invoke protection against the simultaneously
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 such termination, but only in the evenly of the following:
(i) Station grants consent to the retransmission of its broadcast
signal by and cable television system or, except as provided in subparagraph
2(b) (ii) below, to any other multichannel video program distributor ("MVPD"), a
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) 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; or
(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.
19
<PAGE>
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 notified by this
amendment, the Agreement shall remain in full force and effect.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ [ILLEGIBLE]
---------------
AGREED AND ACCEPTED:
HERITAGE MEDIA, INC.
By: /s/ [ILLEGIBLE]
------------------------------
20
<PAGE>
EXHIBIT 10.3
------------
[NBC TV NETWORK LETTERHEAD]
January 1, 1996
Heritage Media Corp.
c/o WPTZ
5 Television Drive
Plattsburgh, New York 12901
Re: WPTZ (Plattsburgh, New York)
----------------------------
Reference is made to the Affiliation Agreement dated August 28, 1995
(the "Agreement") between the NBC Television Network ("NBC") and Heritage Media
Corp. ("Heritage"), licensee of WPTZ (Plattsburgh, New York) (collectively, the
"Station") relating to the affiliation of WPTZ with NBC. In consideration of
the mutual agreements of the parties as set forth herein, NBC and the Station
hereby agree to amend the Agreement as set forth below:
A. Extension of Term. The parties hereby agree to extend the initial term of
-----------------
the Agreement until January 1, 2006. Paragraph 1 of the Agreement is hereby
amended by deleting the reference to "seven (7)" and substituting "eleven (11)"
in its place.
B. Clearance of "Saturday Today. "Station agrees to immediately commence
----------------------------
clearance of "Saturday Today" and to continue clearance of "Saturday Today" (or
replacement programming) during the remaining term of the Agreement. The
parties hereby agree to delete Paragraph 3(f) of the Agreement in its entirety
and to renumber existing Paragraph "3(g)" as Paragraph "3(f)".
C. Clearance of Fourth Daytime Hour. Station agrees to clear a fourth hour of
--------------------------------
NBC weekday daytime programming (the "Fourth Daytime Hour") no later than
September 1, 1997 and to continue such clearance during the remaining term of
the Agreement. The parties hereby agree to delete Paragraph 3(e) of the
Agreement in its entirety and substitute the following in its place:
"(e) Upon the earlier of (i) September 1, 1997 or (ii) the expiration
or termination (without giving effect to any renewal term) of any of
Station's existing contractual commitments for non-NBC programming
broadcast by Station during the hours 9:00 A.M.-4:00 P.M., Monday
through Friday, Station agrees to clear an additional one (1) hour of
NBC Daytime programming Monday through Friday during such 9:00 A.M.-
4:00 P.M. time period so that Station would clear a total of four (4)
hours of NBC Daytime weekday programming during such hours. Upon
Station's clearance of such additional one (1) hour of NBC Monday
through Friday Daytime Programming, such additional one (1) hour shall
then become part of the Daytime Programmed Time Period for purposes of
Paragraphs 2(b) and 3(a) hereof."
In consideration of Station's agreements set forth herein, effective as of
January 1, 1996, NBC agrees to pay Station regular network compensation pursuant
to Paragraph 5 of the Agreement as if Station is
<PAGE>
clearing such Fourth Daytime Hour, notwithstanding that Station shall not be
obligated to clear such programming until the earlier of the dates set forth in
the foregoing amended Paragraph 3(e) of the Agreement.
D. Additional Payment Amount. Effective as of January 1, 1996, the parties
-------------------------
hereby agree to delete "EXHIBIT E" to the Agreement in its entirety and to
substitute the "AMENDED EXHIBIT E"' set forth as Attachment I hereto in its
place.
E. Ownership and Control of WNNE-TV. Notwithstanding anything contained
--------------------------------
herein or in the Agreement to the contrary, in the event that WNNE-TV is not
owned and controlled by Heritage or an entity controlled by, controlling or
under common control with Heritage, as licensee of WPTZ, then NBC shall have the
right to reduce Station's Network Station Rate (as set forth in Paragraph 5 of
the Agreement) and/or the Additional Payment Amounts (as set forth on Amended
Exhibit E set forth as Attachment I to this letter agreement) as may be
appropriate to reflect the reduced coverage area of WPTZ, on a combined basis
with WNNE-TV.
F. Except as otherwise provided herein, the Agreement shall remain in full
force and effect. Each defined term used herein without definition shall have
the meaning assigned to such term in the Agreement.
Please indicate your agreement to the foregoing by signing in the
space indicated below.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ John F. Damiano
-------------------
Name: John F. Damiano
Title: VP, Affiliate Relations
AGREED AND ACKNOWLEDGED:
HERITAGE MEDIA CORP.
By: /s/ [ILLEGIBLE]
---------------------------
Name:
Title:
2
<PAGE>
EXHIBIT "A"
-----------
ECONOMIC ADJUSTMENTS
Adjustments due to a preemption of an NBC program referred to in
Paragraph 4(b) of this Agreement will be calculated using the following two
factors:
1. "Station's NBC delivery percentage" which is the Station's
audience contribution to NBC Network programs expressed as a percentage. (This
is the same NBC delivery percentage used in the annual compensation evaluation.)
2. "Program revenue" which is the average NBC Network revenue for
the preempted program. (NOTE: Program revenue will be the average revenue per
program based on total annual revenue for that program, except revenue for each
prime time program, which will be adjusted for the day of the week and the
quarter in which the program is aired.)
Station's NBC delivery percentage is multiplied by the program
revenue to yield the dollar adjustment. An example:
Station preempts "Program X"
Station's NBC Network delivery % = 2.1%
NBC'S revenue for "Program XI" = $900,000
$900,000 x 2.1% = $18,900 payment to NBC
3
<PAGE>
EXHIBIT "B"
WPTZ, PLATTSBURGH, NEW YORK
<TABLE>
<CAPTION>
Compensation Matrix
-----------------------------
(NETWORK STATION RATE ____________ X HOURS CARRIED X % BELOW)
<S> <C> <C>
MON - SUN 6PM - 11PM* 30%
MON - SUN 5PM - 6PM* 15%
11PM - 1AM
SAT - SUN 4PM - 5PM
MON - FRI 9AM - 5PM 12.81%
SUN 7AM - 4PM** 10.5%
SAT 2PM - 4PM
SAT 7AM - 2PM** 7.88%
NIGHTLY NEWS MON - FRI 0%
NIGHTLY NEWS SAT - SUN 10%
TONIGHT SHOW 7.5%
LATE NIGHT 10.25%
FRIDAY NIGHT 4.75%
LATER 4%
SATURDAY NIGHT LIVE 6.67%
</TABLE>
* EXCLUDING NIGHTLY NEWS
** EXCLUDING SATURDAY AND SUNDAY TODAY
All times above are expressed in terms of your station's then current local
time.
4
<PAGE>
EXHIBIT "C"
-----------
WPTZ NEWS PROGRAMS
Monday - Friday
---------------
12:00 Noon-12:30 P.M.
6:00-6:30 P.M.
11:00-11:35 P.M.
Saturday
--------
6:00-6:30 P.M.
11:00-11:30 P.M.
5
<PAGE>
ATTACHMENT I
AMENDED EXHIBIT "E"
In consideration of Station entering into this Agreement and the
Station's performance of its obligations thereunder, and subject to the
Station's compliance with each and every of its commitments regarding clearance
and preemption of NBC programming as set forth in this Agreement (which the
parties expressly agree and acknowledge are the essence of this Agreement), NBC
agrees to pay Station, for each quarter during the term of this Agreement, an
Additional Payment Amount as calculated herein.
1. The "Additional Payment Amount" for each quarter shall equal the
product of (a) the total during such quarter of the hours broadcast live by the
Station of NBC Prime Time programming for which compensation is payable
multiplied by (b) the Station's Additional Payment Rate (as defined below).
- -------------
2. The Station's "Additional Payment Rate" shall be calculated by
dividing (a) the Additional Consideration for the Station as set forth below by
- -------- --
(b) 1070 hours (representing the stipulated total number of Prime Time hours for
which compensation is payable to be cleared by Station in a Broadcast Year).
3. The Gross Additional Consideration for Station in any year during
the initial term of this Agreement shall be the difference between (a) $830,000
and (b) the amount of compensation payable to Station for such year calculated
on the basis of Station's Network Station Rate and Compensation Matrix (as in
effect as of the date hereof) and Station's agreed clearance levels for NBC
programming for such year (without giving effect to any preemptions permitted
under Paragraphs 3(b), 3(c) and 3(d) of this Agreement) and assuming that
Station is clearing the Fourth Daytime Hour as of January 1, 1996. For 1996 and
other years in which there are Olympic or other special event programs for which
compensation is not payable, such programs will be treated as if they are
compensable for purposes of calculating the amount of Station's compensation
pursuant to the foregoing clause (b) of this Paragraph 3.
4. Additional Payment Amounts payable to the Station hereunder shall
be due and payable at the same time as compensation is payable to the Station.
5. The formula relating to the Additional Payments as set forth on
this Exhibit E has been calculated based on the Station achieving, commencing as
of January 1, 1996, a total aggregate target amount of annual consideration
(including (x) compensation payable pursuant to Paragraph 5 of this Agreement
and (y) Additional Payment Amounts) of $830,000.
The foregoing total target amount is based on the following assumptions:
(i) The Station performs all of its obligations and commitments under
this Agreement and complies with each and every of its commitments regarding
clearance (without any preemptions) of NBC programming as set forth in this
Agreement; specifically, the foregoing amounts assume that the Station is
broadcasting NBC programming live in all of the Programmed Time Periods
applicable to the Station and NBC Sports Programming as provided for in this
Agreement, and is not preempting any such NBC programming (i.e. Station is not
utilizing the permitted "Prime
6
<PAGE>
Time Preemption Amounts" and "Sports Preemption Amounts" (as such terms are
defined in this Agreement));
(ii) The Station fulfills its commitments set forth in this Agreement
regarding local news programming and NBC promotion (i.e. 2600 GRPs promotion
plan); and
(iii) The foregoing total target amount may not be achieved in
years in which NBC offers Olympic programming and/or in years in which a
significant portion of NBC programming consists of news coverage in addition to
regularly scheduled news programming.
7
<PAGE>
EXHIBIT 10.4
------------
[NBC TV NETWORK LETTERHEAD]
August 28, 1995
Heritage Media Corp.
c/o WNNE-TV
BOX 1310
White River Junction, Vermont 05001
RE: WNNE-TV (Hartford, Vermont)
---------------------------
Gentlemen:
The following shall comprise the agreement between us for the
affiliation of your television broadcasting station WNNE-TV (you and WNNE-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 list day of January, 1995, 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.
2. NBC Programming.
---------------
(a) NBC shall deliver to Station for free, over-the-air television
broadcasting all programming which NBC makes available for broadcasting in the
community to which Station is presently licensed by the FCC, except as otherwise
expressly provided herein.
(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.
<PAGE>
Saturday - 11:30 P.M.-1 A.M.
News: Monday thru Friday - 5:30-6:00 A.M.,
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 - 11:00 A.M.-12:00
Noon and 1:00 P.M. - 3:00 P.M.
Saturday - 10:00 A.M.-11:00 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 any such programming good for
seventy-two (72) hours as against any other television station located in
Station's community of license or any television program transmission service
furnishing a television signal to Station's community of license, including, but
not limited to, any 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. Notwithstanding any
other provision in this Agreement, no preexisting acceptance of NBC programming
shall be superseded or otherwise affected by this Agreement, and those
acceptances shall remain in full force and effect. 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.
-------------------------------------------
(a) Station agrees that, subject only to the preemption rights set
forth herein, including Station's unqualified right to preempt for local live
coverage of news events, 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, except to the
extent that Station is actually broadcasting programming pursuant to (and within
the specified limits of) a commitment contemplated by Paragraph 3(b) below.
2
<PAGE>
(b) As an inducement for NBC to enter into this Agreement, Station
covenants, represents and warrants to NBC that during any Broadcast Year (as
hereinafter defined) during the term hereof, Station shall preempt no more than
eighty (80) hours in the aggregate of NBC programs during the Prime Time
Programmed Time Period for any reason other than for the live coverage of news
events (the "Prime Time Preemption Amount"). For the purposes of this
Agreement, a "Broadcast Year" shall mean a twelve (12) month period during the
term hereof which commences on any September I 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) The Station hereby agrees to accept and clear all sports
programming offered to the Station by NBC outside the Programmed Time Periods
("NBC Sports Programming"), except for NBC sports programming which directly
conflicts with Station's coverage of sports events and special events of
particular local interest (collectively, such coverage of such sports events and
special events are referred to below as "Special Programs"). Station agrees not
to broadcast more than fifteen (15) hours of Special Programs outside the
Programmed Time Periods in the aggregate during any Broadcast Year during the
term of this Agreement which would conflict with NBC Sports Programming outside
the Programmed Time Periods (the "Sports Preemption Amount").
(d) Notwithstanding the foregoing provisions of subparagraphs (b) and
(c) above and without limiting the provisions thereof, Station agrees that, in
any one (1) month period during a Broadcast Year, Station's preemptions of NBC
Prime Time programs and NBC Sports Programming shall not exceed 20% of,
respectively, the Prime Time Preemption Amount and the Sports Preemption Amount,
unless otherwise consistent with Station's programming practice.
(e) Throughout the term of this Agreement, upon the expiration or
termination (without giving effect to any renewal term) of any of Station's
existing contractual commitments for non-NBC programming broadcast by Station
during the hours 9:00 A.M.-4:00 P.M., Monday through Friday, and for the
remaining term of this Agreement, Station agrees to give good faith
consideration to the clearance of an additional one (1) hour of NBC daytime
programming Monday through Friday during such 9:00 A.M.-4:00 P.M. time period so
that Station would clear up to a maximum of four (4) hours of NBC Daytime
weekday programming during such hours. In the event Station agrees to clear
such additional one (1) hour of NBC Monday through Friday Daytime Programming,
such additional one (1) hour shall then become part of the Daytime Programmed
Time Period for purposes of Paragraphs 2 (b) and 3 (a) hereof.
(f) Throughout the term of this Agreement, upon the expiration or
termination (without giving effect to any renewal term) of any of Station's
existing contractual commitments for non-NBC programming currently broadcast on
Saturday mornings and for the remaining term of this Agreement, Station agrees
to give good faith consideration to clearance of "Saturday Today" (or any
replacement programming) in the Live Time Period for such programming as
scheduled by NBC. In the event that Station clears "Saturday Today" (or any
replacement programming), "Saturday Today" (or any replacement programming)
shall then become part of the Saturday News Programmed Time Period for purposes
of Paragraphs 2(b) and 3(a) hereof.
(g) Throughout the term of this Agreement, upon the expiration or
termination (without giving effect to any renewal term) of any of Station's
contractual commitments for non-NBC programming broadcast by Station on Saturday
mornings and for the remaining term of this Agreement, Station agrees to give
good faith consideration to the clearance of additional one-half hours of NBC
Saturday Daytime programming so that Station would clear up to a maximum of two
and one-half (2 1/2)
3
<PAGE>
hours of NBC Saturday Daytime programming. In the event Station agrees to clear
such additional one-half hours of NBC Saturday Daytime Programming, such
additional one-half hours shall then become part of the Saturday Daytime
Programmed Time Period for purposes of Paragraphs 2(b) and 3(a) hereof.
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 broadcast
such omitted programming and the commercial announcements contained therein (or
any replacement programming and the commercial announcements contained therein)
during a time period or periods which the parties shall promptly and mutually
agree upon 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 programming as provided herein for any reason other than: (i) the live
coverage of local news events, (ii) as permitted by Paragraphs 3(b), 3(c) or
3(d) above, (iii) force majeure as provided for in Paragraph 11 below, or (v)
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, without limiting any other rights of NBC
under this Agreement or otherwise, upon NBC's request, Station shall pay NBC, or
NBC may deduct or offset from any amounts payable to Station under any other
agreement between Station and NBC (or an entity controlling, controlled by or
under common control with NBC), an amount equivalent to NBC's loss in net
advertising revenues attributable to the failure of Station to broadcast such
program in Station's market as scheduled by NBC, which amount shall be
calculated in accordance with Exhibit A hereto. Without limiting or affecting
any other determination of a material breach hereunder, any failure by Station
to pay any amount due under this Paragraph 4(b) 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) unless the breach is cured within such thirty (30)
day period, terminate this Agreement. Station acknowledges that NBC 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 NBC 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 the reason therefor, at least three (3) weeks in advance of the
4
<PAGE>
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. No Station Compensation. Station's agreements hereunder are in
-----------------------
consideration of NBC's agreement to make the programming referred to herein
available to Station on the terms and conditions set forth herein. Accordingly,
Station shall not be entitled to any monetary compensation in connection with
its broadcast of NBC programming as provided for herein. The parties
acknowledge that NBC's agreements to Station hereunder are also 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 (A) materially reduces its
local news program schedule as set forth in Exhibit B or (B) does not fulfill
such commitments as are set forth in Exhibit C in all years during the term of
this Agreement, NBC reserves the right to terminate this Agreement on ninety
(90) days' prior written notice to Station.
6. 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 D 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 permitted under Paragraphs 3(b), 3(c) or 3(d)
hereof, or other form of benefit. The foregoing provisions of this Paragraph 6
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.
7. 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.
8. Conditions of Station's Broadcast. Station's broadcast of NBC
---------------------------------
programming shall be subject to the following terms and conditions:
(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
5
<PAGE>
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.
(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 Federal Communications Commission ("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 8, NBC may, in addition to
any other remedies hereunder or at law, assess damages against Station in an
amount 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.
9. Station Reports. Station shall submit to NBC in writing, upon
---------------
forms provided by NBC, such reports as NBC may request covering the broadcast by
Station of programs furnished to Station hereunder.
10. 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 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.
11. 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
6
<PAGE>
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.
12. 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 or
other material as furnished by NBC hereunder, provided that Station promptly
notifies NBC of any claim or litigation to which this indemnity shall apply, and
that Station cooperates fully with NBC 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. Except as otherwise provided herein, neither
Station nor NBC shall have any rights against the other for claims by third
persons, or for the non-operation of facilities or the non-furnishing of
programs for broadcasting, if such non-operation or non-furnishing is due to
failure of equipment, actions or claims by any third person, labor disputes, or
any cause beyond such party's reasonable control.
13. Station's Right of First Negotiation. Throughout the term of
------------------------------------
this Agreement, 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 (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.
14. 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.
15. Assignment.
----------
(a) This Agreement shall not be assigned without the prior written
consent of NBC, and any permitted assignment shall not relieve Station of its
obligations hereunder. Any purported assignment by Station without such consent
shall be null and void and not enforceable against NBC.
(b) Station agrees to include as a condition of any proposed
assignment, sale or transfer of Station (including any assignment or transfer
referred to in Paragraph 15(c) below other than a "short-form" assignment) a
contractually binding provision that the assignee or transferee shall assume and
become bound by this Agreement for (i) the remainder of the then-current term of
this Agreement or (ii) three (3) years from the date of said assignment or
transfer, whichever period is greater. Station
7
<PAGE>
acknowledges that any such assignment, sale or transfer which does not so
provide for such assumption and for NBC's right to extend 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 Paragraph 15(b).
(c) 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, NBC shall have
the right to terminate this Agreement in the event of any assignment or
transfer. Station agrees, except in the case of "short form" assignments or
transfers of control, that promptly following Station's notice to NBC, Station
(i) shall arrange for a meeting between NBC and the proposed assignee or
transferee to review the financial and operating plans of the proposed assignee
or transferee, and (ii) shall procure and deliver-to NBC, in form 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. If Station complies with its
obligations set forth in the preceding sentence and NBC does not terminate this
Agreement upon written notice to Station within the thirty (30) day period
following the later of the meeting with the proposed assignee or transferee or
the delivery to NBC of a satisfactory assumption agreement, NBC shall be deemed
to have consented to the assignment or transfer of control.
(d) 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 such assignment and assumption, NBC
shall have no liability to Station under this Agreement with respect to
obligations arising after the effective date of such assignment and assumption.
16. Unauthorized Copying and Transmission. Station shall not
-------------------------------------
authorize, cause, or permit, without 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. Notwithstanding the foregoing, 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 Area of Dominant Influence ("ADI"), as defined by Arbitron, 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 license by NBC; 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,
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 law, rule or regulation.
17. Limitations on Retransmission Consent. In consideration of the
-------------------------------------
grant by NBC to Station of the non-duplication protection provided in recent
amendment to this Agreement of even date herewith
8
<PAGE>
with respect to non-duplication protection under FCC Rules Section 76.92 (the
"Non-Dupe 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 17(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 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.
18. Remedies for Unauthorized Copying and Transmission. If Station
--------------------------------------------------
violates any of the provisions set forth in Paragraphs 16 and 17 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.
19. 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 (without regard to principles of conflicts of laws).
20. 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.
21. 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. 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.
22. Captions. The captions of the paragraphs in this Agreement are
--------
for convenience only and shall not in any way affect the interpretation hereof.
23. Entire Agreement. The foregoing 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-Dupe Amendment. This
Agreement may not be changed, modified, renewed, extended or
9
<PAGE>
discharged, except as specifically provided herein or by an agreement in writing
signed by the parties hereto.
24. Confidentiality. The parties agree to use their best efforts to
---------------
preserve the confidentiality of this Agreement and of the terms and conditions
set forth herein, and the exhibits annexed hereto, to the fullest extent
permissible by law. The parties recognize that Section 73.3613 of the FCC's
Rules and Regulations requires the filing with the FCC of television network
affiliation agreements by each affiliate, but are unaware of any requirement for
the filing of exhibits annexed to such affiliation agreements. In the event
that the FCC should request either party to file said exhibits, that party shall
give prompt notice to the other, and shall submit said exhibits to the FCC with
a request that said exhibits be withheld from public inspection pursuant to
Section 0.459 of the FCC's Rules and Regulations on the grounds that said
exhibits contain confidential commercial or financial information that would
customarily be guarded from competitors and not be released to the public.
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.
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/ [ILLEGIBLE]
----------
AGREED:
HERITAGE MEDIA CORP.
By:/s/ [ILLEGIBLE]
---------------
10
<PAGE>
EXHIBIT "A"
-----------
ECONOMIC ADJUSTMENTS
Adjustments due to a preemption of an NBC program referred to in
Paragraph 4(b) of the Agreement will be calculated using the following two
factors:
1. "Station's NBC delivery percentage" which is the Station's
audience contribution to NBC Network programs expressed as a percentage. (This
is the same NBC delivery percentage used in the annual compensation evaluation.)
2. "Program revenue" which is the average NBC Network revenue for the
preempted program. (NOTE: Program revenue will be the average revenue per
program based on total annual revenue for that program, except revenue for each
prime time program, which will be adjusted for the day of the week and the
quarter in which the program is aired.)
Station's NBC delivery percentage is multiplied by the program revenue
to yield the dollar adjustment. An example:
Station preempts "Program X"
Station's NBC Network delivery % = 2.1%
NBC'S revenue for "Program X" = $900,000
$900,000 x 2.1% = $18,900 payment to NBC
<PAGE>
EXHIBIT "B"
-----------
WNNE-TV NEWS PROGRAMS
Monday - Friday
---------------
12:00 Noon-12:30 P.M.
6:00-6:30 P.M.
11:00-11:35 P.M.
Saturday
--------
6:00-6:30 P.M.
11:00-11:30 P.M.
<PAGE>
EXHIBIT "C"
-----------
January 4, 1995
Mr. Robert D. Shields
President & Gen. Mgr.
WPTZ-TV
5 Television Drive
Plattsburgh, NY 12901
Dear Bob:
Enclosed is a supply of forms for the 1995 2,600 Promotion Plan. As we did last
year, you will have the added benefit of being able to count some or all of your
compensation GRP's towards a primetime promo swap depending on which plan you
choose with the Advertising & Promotion Department.
If you have any questions, please feel free to contact me.
Sincerely,
/s/ [ILLEGIBLE]
ML/me
cc: Dick Roberts
Attachments
<PAGE>
- -------------------------------------------------------------------------------
1995 PRIMETIME PROMOTION
PLANNING WORKSHEET
- -------------------------------------------------------------------------------
PLEASE RETURN COMPLETED FORM
TO YOUR REGIONAL DIRECTOR'S ATTENTION AT
FAX NO. (212) 664-2495
CALLS/MARKET: REGIONAL DIRECTOR:
------------------------------
PROMOTION PLAN ESTIMATE
------------------------------
HH GRP'S
2600
FIRST QUARTER GRP'S ______________
SECOND QUARTER GRP'S ______________
THIRD QUARTER GRP'S ______________
FOURTH QUARTER GRP'S ______________
TOTAL AMOUNT GRP'S ( )
--------------
TOTAL GRP'S
(OVER)/UNDER TARGET ==============
COMMENTS:
NOTE THAT THE GRP'S PER QUARTER SHOULD BE WITHIN A RANGE OF MINIMUM OF 325
HH GRP'S TO A MAXIMUM OF 975 HH GRP'S
<PAGE>
- -------------------------------------------------------------------------------
1995 PRIMETIME PROMOTION
- -------------------------------------------------------------------------------
PLEASE RETURN COMPLETED FORM NO LATER THAN THE
15TH OF THE MONTH FOLLOWING THE END OF EACH QUARTER
TO YOUR REGIONAL DIRECTOR'S ATTENTION AT
FAX NO. (212) 664-2495
CALLS/MARKET: REGIONAL DIRECTOR:
--------------------------
FIRST QUARTER SUBMISSION
DUE
APRIL 15, 1995
--------------------------
HH GRP'S
--------
TOTAL AMOUNT GRP'S 2600
FIRST QUARTER DELIVERY --------
BALANCE TO GO ========
SIGNED:
NAME:
TITLE:
NOTE THAT THE GRP'S PER QUARTER SHOULD BE WITHIN A
RANGE OF MINIMUM OF 325 HH GRP'S TO A MAXIMUM OF 975 HH GRP'S
<PAGE>
- -------------------------------------------------------------------------------
1995 PRIMETIME PROMOTION
- -------------------------------------------------------------------------------
PLEASE RETURN COMPLETED FORM NO LATER THAN THE
15TH OF THE MONTH FOLLOWING THE END OF EACH QUARTER
TO YOUR REGIONAL DIRECTOR'S ATTENTION AT
FAX NO. (212) 664-2495
CALLS/MARKET: REGIONAL DIRECTOR:
---------------------------
SECOND QUARTER SUBMISSION
DUE
JULY 15, 1995
---------------------------
HH GRP'S
--------
TOTAL AMOUNT GRP'S 2600
FIRST QUARTER DELIVERY ________
SECOND QUARTER DELIVERY
BALANCE TO GO ========
SIGNED:
NAME:
TITLE:
NOTE THAT THE GRP'S PER QUARTER SHOULD BE WITHIN A
RANGE OF MINIMUM OF 325 HH GRP'S TO A MAXIMUM OF 975 HH GRP'S
<PAGE>
- --------------------------------------------------------------------------------
1995 PRIMETIME PROMOTION
- --------------------------------------------------------------------------------
PLEASE RETURN COMPLETED FORM NO LATER THAN THE
15TH OF THE MONTH FOLLOWING THE END OF EACH QUARTER
TO YOUR REGIONAL DIRECTOR'S ATTENTION AT
FAX NO. (212) 664-2495
CALLS/MARKET: REGIONAL DIRECTOR:
------------------------
THIRD QUARTER SUBMISSION
DUE
OCTOBER 15, 1995
------------------------
HH GRP'S
--------
TOTAL AMOUNT GRP'S 2600
FIRST QUARTER DELIVERY
SECOND QUARTER DELIVERY
THIRD QUARTER DELIVERY
TOTAL GRP'S TO DATE ( )
--------
BALANCE TO GO ========
SIGNED:
NAME:
TITLE:
NOTE THAT THE GRP'S PER QUARTER SHOULD BE WITHIN A
RANGE OF MINIMUM OF 325 HH GRP'S TO A MAXIMUM OF 975 HH GRP'S
<PAGE>
1995 PRIMETIME PROMOTION
--------------------------
PLEASE RETURN COMPLETED FORM NO LATER THAN THE
15TH OF THE MONTH FOLLOWING THE END OF EACH QUARTER
TO YOUR REGIONAL DIRECTOR'S ATTENTION AT
FAX NO. (212) 664-2495
CALLS/MARKET: REGIONAL DIRECTOR:
---------------------------
FOURTH QUARTER SUBMISSION
DUE
JANUARY 15, 1995
---------------------------
HH GRP'S
--------
TOTAL AMOUNT GRP'S 2600
FIRST QUARTER DELIVERY
SECOND QUARTER DELIVERY
THIRD QUARTER DELIVERY
FOURTH QUARTER DELIVERY
TOTAL GRP'S TO DATE ( )
-----------
AMOUNT (OVER)/UNDER
ANNUAL TARGET
SIGNED:
NAME:
TITLE:
NOTE THAT THE GRP'S PER QUARTER SHOULD BE WITHIN A
RANGE OF MINIMUM OF 325 HH GRP'S TO A MAXIMUM OF 975 HH GRP'S
<PAGE>
EXHIBIT "D"
LOCAL INVENTORY
REGULAR SCHEDULED PROGRAMS
Weekly Weekly
Units Minutes
------ --------
Primetime 106 53'
Late Night 215 107' 30"
Daytime 115 57' 30"
News 219 109' 30"
<PAGE>
EXHIBIT 10.5
------------
[NBC TV NETWORK LETTERHEAD]
January 1, 1996
Heritage Media Corp.
c/o WNNE-TV
BOX 1310
White River Junction, Vermont 05001
Re: WNNE-TV (Hartford, Vermont)
---------------------------
Reference is made to the Affiliation Agreement dated August 28, 1995
(the "Agreement") between the NBC Television Network ("NBC") and Heritage Media
Corp., licensee of WNNE-TV (Hartford, Vermont) (collectively, the "Station")
relating to the affiliation of WNNE-TV with NBC. In consideration of the mutual
agreements of the parties as set forth herein, NBC and the Station hereby agree
to amend the Agreement as set forth below:
A. Extension of Term. The parties hereby agree to extend the initial term of
-----------------
the Agreement until January 1, 2006. Paragraph 3 of the Agreement is hereby
amended by deleting the reference to "seven (7)" and substituting "eleven (11)"
in its place.
B. Clearance of "Saturday Today." Station agrees to immediately commence
------------------------------
clearance of "Saturday Today" and to continue clearance of "Saturday Today" (or
replacement programming) during the remaining term of the Agreement. The
parties hereby agree to delete Paragraph 3(f) of the Agreement in its entirety
and to renumber existing Paragraph 1 "13(g)" as Paragraph 1 "13(f)".
C. Clearance of Fourth Daytime Hour. Station agrees to clear a fourth hour of
--------------------------------
NBC weekday Daytime programming no later than September 1, 1997 and to continue
such clearance during the remaining term of the Agreement. The parties hereby
agree to delete Paragraph 3(e) of the Agreement in its entirety and substitute
the following in its place:
"(e) Upon the earlier of (i) September 1, 1997 or (ii) the expiration
or termination (without giving effect to any renewal term) of any of
Station's existing contractual commitments for non-NBC programming
broadcast by Station during the hours 9:00 A.M.-4:00 P.M., Monday
through Friday, Station agrees to clear an additional one (1) hour of
NBC Daytime programming Monday through Friday during such 9:00 A.M.-
4:00 P.M. time period so that Station would clear a total. of four (4)
hours of NBC Daytime weekday programming during such hours. Upon
Station's clearance of such additional one (1) hour of NBC Monday
through Friday Daytime Programming, such additional one (1) hour shall
then become part of the Daytime Programmed Time Period for purposes of
Paragraphs 2(b) and 3(a) hereof."
<PAGE>
D. Except as otherwise provided herein, the Agreement shall remain in full
force and effect. Each defined term used herein without definition shall have
the meaning assigned to such term in the Agreement.
Please indicate your agreement to the foregoing by signing in the space
indicated below.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By:/s/ John F. Damiano
-------------------
Name: John F. Damiano
Title: Sr. VP, Affiliate Relations
AGREED AND ACKNOWLEDGED:
HERITAGE MEDIA CORP.
By:/s/ [ILLEGIBLE]
---------------
Name:
Title:
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDING JUNE 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> APR-01-1998 JAN-01-1998
<PERIOD-END> JUN-30-1998 JUN-30-1998
<CASH> 13,938 13,938
<SECURITIES> 0 0
<RECEIVABLES> 85,938 85,938
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 178,279 178,279
<PP&E> 124,043 124,043
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 1,078,129 1,078,129
<CURRENT-LIABILITIES> 55,365 55,365
<BONDS> 531,596 531,596
0 0
2 2
<COMMON> 538 538
<OTHER-SE> 342,121 342,121
<TOTAL-LIABILITY-AND-EQUITY> 1,078,129 1,078,129
<SALES> 0 0
<TOTAL-REVENUES> 109,713 196,965
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 41,506 83,948
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 8,867 19,827
<INCOME-PRETAX> 36,575 47,326
<INCOME-TAX> 15,313 20,229
<INCOME-CONTINUING> 21,262 27,097
<DISCONTINUED> 0 0
<EXTRAORDINARY> 808 10,777
<CHANGES> 0 0
<NET-INCOME> 20,454 16,320
<EPS-PRIMARY> 0.37 0.29
<EPS-DILUTED> 0.37 0.29
</TABLE>
