<PAGE>
RULE NO. 424(b)(5)
REGISTRATION NO. 333-36659
PROSPECTUS SUPPLEMENT
(To Prospectus Dated October 17, 1997)
HEARST-ARGYLE
- ---------------
TELEVISION, INC.
$200,000,000
7% Senior Notes due 2018
Interest payable July 15 and January 15
ISSUE PRICE: 98.887%
Interest on the 7% Senior Notes due January 15, 2018 (the "Notes") of Hearst-
Argyle Television, Inc. (the "Company") offered hereby (the "Offering") is pay-
able on July 15 and January 15 in each year, commencing July 15, 1998. The
Notes may be redeemed at any time at the option of the Company, in whole or in
part, at a redemption price equal to the greater of (i) 100% of the principal
amount and (ii) the sum of the present values of the remaining scheduled pay-
ments of principal and interest thereon discounted to the date of redemption on
a semiannual basis at the applicable Treasury Yield (as defined herein) plus 15
basis points, plus accrued interest to the date of redemption. See "Description
of Notes."
The Notes will be represented by one or more Global Securities registered in
the name of The Depository Trust Company (the "Depositary") or its nominee. In-
terests in the Global Securities will be shown on, and transfers thereof will
be effected only through, records maintained by the Depositary and its partici-
pants. Except as described herein and in the accompanying Prospectus, Notes in
definitive form will not be issued. See "Description of Notes--Book-Entry Sys-
tem" in this Prospectus Supplement and "Description of Debt Securities--Global
Securities" in the accompanying Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC (1) COMMISSIONS (2) COMPANY (1) (3)
- ------------------------------------------------------
<S> <C> <C> <C>
Per Note 98.887% .875% 98.012%
- ------------------------------------------------------
Total $197,774,000 $1,750,000 $196,024,000
- ------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from January 13, 1998.
(2) The Company has agreed to indemnify the several Underwriters against cer-
tain liabilities, including liabilities under the Securities Act of 1933,
as amended. See "Underwriting."
(3) Before deduction of expenses payable by the Company estimated at $200,000.
The Notes are offered, subject to prior sale, when, as and if accepted by the
Underwriters and subject to approval of certain legal matters by Dow, Lohnes &
Albertson, PLLC, counsel for the Underwriters. It is expected that delivery of
the Notes will be made on or about January 13, 1998 through the facilities of
the Depositary, against payment therefor in immediately available funds.
J.P. MORGAN & CO.
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
January 8, 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, THE NOTES IN THE OPEN MARKET. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus Supplement and the accompanying Prospectus in connection with the
offer contained in this Prospectus Supplement and the accompanying Prospectus,
and, if given or made, such other information or representations must not be
relied upon as having been authorized by the Company or the Underwriters. This
Prospectus Supplement and the accompanying Prospectus do not constitute an
offer by the Company or by any Underwriter to sell securities in any state to
any person to whom it is unlawful for the Company or such Underwriter to make
such offer in such state. Neither the delivery of this Prospectus Supplement
and the accompanying Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the date hereof.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT PAGE
<TABLE>
<S> <C>
The Company................................................................ S-3
Recent Developments........................................................ S-5
Use of Proceeds............................................................ S-6
Capitalization............................................................. S-7
Ratio of Earnings to Fixed Charges......................................... S-8
Description of Notes....................................................... S-9
Underwriting............................................................... S-12
Notice to Canadian Residents .............................................. S-13
Cautionary Statement Concerning Forward-Looking Statements................. S-15
</TABLE>
PROSPECTUS PAGE
<TABLE>
<S> <C>
Available Information....................................................... 2
Incorporation of Certain Documents by Reference............................. 2
The Company................................................................. 4
Use of Proceeds............................................................. 5
Ratio of Earnings to Fixed Charges.......................................... 6
General Description of Securities and Risk Factors.......................... 7
Description of Debt Securities.............................................. 7
Description of Capital Stock................................................ 16
Plan of Distribution........................................................ 19
Legal Matters............................................................... 20
Experts..................................................................... 21
</TABLE>
S-2
<PAGE>
THE COMPANY
General. The Company owns or manages 15 network-affiliated television stations
reaching approximately 11.5% of U.S. Television households. The Company is the
largest, "pure-play" publicly owned television broadcast group in the U.S.,
and is the third-largest, non-network owned television group in terms of audi-
ence delivered.
The Hearst Transaction. The Company was formed in 1994 as a Delaware corpora-
tion under the name Argyle Television, Inc. ("Argyle"), and its business oper-
ations began in January 1995 with the consummation of its acquisition of three
television stations. The Company is the successor to the combined operations
of Argyle and the television broadcast group of The Hearst Corporation
("Hearst") pursuant to a merger transaction that was consummated on August 29,
1997 (the "Hearst Transaction"). In that transaction, Hearst 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 and
related transactions, Hearst currently owns 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. Through its ownership of the
Company's Series B Common Stock, Hearst has the right to elect nine of the 11
members of the Company's Board of Directors.
The Hearst Corporation. Hearst, one of the nation's largest privately-held
companies, is a diversified communications company engaged in a broad range of
publishing, broadcasting, cable television networks and other communications
activities. Hearst publishes 14 monthly consumer magazines that include Cosmo-
politan, Harper's Bazaar, Town & Country, Red Book, Good Housekeeping, Country
Living, Esquire and Popular Mechanics, among others. Hearst's 12 daily and
seven weekly newspapers include The Houston Chronicle, The San Francisco Exam-
iner, The Seattle Post-Intelligencer, The San Antonio Express-News and The Al-
bany Times Union. Hearst was a founding partner in Lifetime, A&E and The His-
tory Channel cable networks. Hearst and The Walt Disney Company, through ABC,
Inc., wholly own the Lifetime network as equal partners, and are equal part-
ners in the A&E network, in which NBC owns a 25% interest. Hearst also owns
20% of ESPN, which includes ESPN2 and ESPNews. Hearst's book publishing busi-
nesses include William Morrow and Avon Books, and its entertainment activities
include the production of made-for-television movies and television series, as
well as the syndication and licensing of cartoon characters and features.
The Stations. The Company owns 12 television stations, eight of which are in
the top 50 of the 211 generally recognized geographic designated market areas
("DMAs") according to A.C. Nielsen Co. ("Nielsen"). In addition, the Company
manages two television stations and two radio stations that are owned by
Hearst: WWWB-TV in Tampa, Florida, WPBF-TV in West Palm Beach, Florida and
WBAL(AM) and WIYY(FM) in Baltimore, Maryland. The Company also provides man-
agement services to Hearst in order to allow Hearst to fulfill its obligations
under a program services and time brokerage agreement between Hearst and the
permittee of KCWB-TV in Kansas City, Missouri (the "Missouri LMA"). For the
year ended December 31, 1996, on a pro forma basis after giving effect to the
consummation of the Hearst Transaction, the Company's total revenues and
broadcast cash flow were $370.2 million and $160.0 million, respectively, of
which approximately 28% and 26%, respectively, were attributable to WCVB-TV in
Boston, Massachusetts, the nation's 6th largest DMA .
Under the order of the Federal Communications Commission (the "FCC") approving
the Hearst Transaction, because of signal overlaps the Company must divest two
of its television stations (WNAC-TV in Providence, Rhode Island, and WDTN-TV
in Dayton, Ohio) and file by February 28, 1998 an application with the FCC for
the transfer of ownership of such stations. The Company is negotiating with a
third party for the divestiture of WNAC and WDTN. The Company is seeking to
complete these divestitures through a tax-deferred exchange of such stations
for one or more television stations of a third party, although there can be no
assurance that the Company will be able to accomplish such exchange on a fully
tax-deferred basis, if at all.
S-3
<PAGE>
The following table sets forth certain information for each of the Company's
owned and managed television stations:
<TABLE>
<CAPTION>
PERCENTAGE
OF U.S.
MARKET NETWORK TELEVISION
MARKET RANK(1) STATION AFFILIATION CHANNEL HOUSEHOLDS(2)
------ ------ --------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
*Boston, MA 6 WCVB ABC 5 2.22%
*Tampa, FL(3) 15 WWWB WB 32 1.47%
*Pittsburgh, PA 19 WTAE ABC 4 1.16%
*Baltimore, MD 23 WBAL NBC 11 1.01%
Cincinnati, OH 30 WLWT NBC 5 0.81%
*Kansas City, MO 31 KMBC ABC 9 0.81%
*Kansas City, MO(3) 31 KCWB WB 29 ***
*Milwaukee, WI 32 WISN ABC 12 0.81%
*West Palm Beach, FL(3) 43 WPBF ABC 25 0.61%
Oklahoma City, OK 44 KOCO ABC 5 0.61%
Providence, RI(4)(5) 49 WNAC FOX 64 0.57%
*Dayton, OH(4) 53 WDTN ABC 2 0.52%
Honolulu, HI 71 KITV ABC 4 0.39%
Jackson, MS 90 WAPT ABC 16 0.30%
Fort Smith/Fayetteville,
AR 116 KHBS/KHOG ABC/ABC 40/29 0.22%
-----
Total 11.51%
=====
</TABLE>
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*Denotes a station owned or operated by the Company as a consequence of the
Hearst Transaction.
(1) Market rank is based on the relative size of the DMA among the 211 gener-
ally recognized DMAs in the U.S., based on Nielsen estimates for the 1997-
98 season.
(2) Based on Nielsen estimates for the 1997-98 season.
(3) WWWB-TV and WPBF-TV are managed by the Company under a management agree-
ment with Hearst. In addition, the Company provides certain management
services to Hearst in order to allow Hearst to fulfill its obligations un-
der the Missouri LMA with KCWB.
(4) WNAC-TV's (Providence, RI) broadcast signal overlaps with WCVB-TV's (Bos-
ton, MA) broadcast signal, and WDTN-TV's (Dayton, OH) broadcast signal
overlaps with WLWT-TV's (Cincinnati, OH) broadcast signal. Under FCC
rules, a single entity cannot own stations with overlapping signals. The
Company will divest WNAC and WDTN.
(5) Subject to a Joint Marketing and Programming Agreement with Clear Channel
Communications, Inc.
The Company has an option to acquire WWWB-TV and Hearst's interests and option
with respect to KCWB-TV (together with WWWB-TV, the "Option Properties"), as
well as a right of first refusal until approximately August 2000 with respect
to WPBF-TV (if such station is proposed by Hearst to be sold to a third par-
ty). The option period for each Option Property commences in February 1999 and
terminates in August 2000 and the purchase price is the fair market value of
the station as determined by the parties, or an independent third-party ap-
praisal, subject to certain specified parameters. If Hearst elects to sell an
Option Property prior to the commencement of, or during, the option period,
the Company will have a right of first refusal to acquire such Option Proper-
ty. The exercise of the option and the right of first refusal will be by ac-
tion of the independent directors of the Company, and any option exercise may
be withdrawn by the Company after receipt of the third-party appraisal.
Business Strategy. The Company's strategic objective is to maintain and build
on its position as the largest, "pure-play" publicly owned television broad-
cast group in the United States. To facilitate this strategy, the Company fo-
cuses on the following key areas:
. Size and Market Presence. The Company's newly-expanded station group pro-
vides the Company with the critical mass necessary to remain competitive with
other station group owners. The Company intends to take advantage of the ben-
efits of scale to obtain attractive programming pricing and terms, strengthen
relationships with networks and national advertising sales representatives,
attract and retain talent and obtain timely performance and satisfactory
service from equipment suppliers.
. Growth. As a consequence of the consolidation of ownership occurring in the
television broadcast industry, the Company believes continued growth is nec-
essary in order to achieve its strategic objective. The Company intends to
generate growth both internally through continuous improvement of existing
operations, as well as externally through acquisitions of television station
groups and individual stations. The Company intends to finance such
S-4
<PAGE>
acquisitions through a combination of debt and equity in a manner that will
permit continued growth in the Company's business and provide flexibility in
its capital structure. In combination with such financing, the Company will
seek to complete acquisitions at price levels that will increase after-tax
cash flow per share.
. Geographic and Network Diversity. Ten of the Company's existing stations are
affiliated with ABC, two with NBC, two with the WB Network and one with Fox.
The stations are located in several distinct regions of the United States,
mitigating any potential adverse effect on the Company of any regional eco-
nomic fluctuations. In pursuing external growth opportunities, the Company in-
tends to focus on network-affiliated television stations in the top 100 mar-
kets, with a view to enhancing the geographic and network diversity of its
stations.
. Strong News and Local Station Identities. The Company positions each of its
stations within the station's market to create and enhance a local "brand"
with which viewers and advertisers can identify, thereby seeking to build the
franchise value of the station and attain the number one or strong number two
position in the market in terms of audience delivery, revenue share and prof-
itability. The Company considers strong news and local events programming to
be critical in station branding.
. Cost Control. The Company closely monitors costs and implements cost controls
at each station it operates in a manner consistent with building each sta-
tion's market position. The Company also intends to capitalize on its newly-
expanded station group to generate cost savings through the group acquisition
of programming, equipment and services.
Principal Offices. The principal executive offices of the Company are located
at 888 Seventh Avenue, New York, New York 10106; its telephone number is 212-
649-2300.
RECENT DEVELOPMENTS
Common Stock Offering and Debt Offering. On November 12, 1997, the Company com-
pleted an underwritten public offering of 4,232,000 shares (giving effect to
the exercise of the Underwriters' over-allotment option) of Series A Common
Stock, par value $.01 per share, at $27.00 per share (the "Common Stock Offer-
ing"). The Series A Common Stock is traded on the Nasdaq National Market under
the symbol "HATV." On November 13, 1997, the Company completed an underwritten
public offering of $300 million aggregate principal amount of 7% Senior Notes
due 2007 and 7 1/2% Debentures due 2027 (the "Debt Offering"). The aggregate
net proceeds of approximately $397.0 million from the Common Stock Offering and
the Debt Offering were used to repay outstanding indebtedness.
Subordinated Notes. On December 29, 1997, the Company completed the redemption
of $45 million principal amount of the then outstanding $150 million principal
amount of 9 3/4% Senior Subordinated Notes, which the Company issued in October
1995 (the "Subordinated Notes"). The Company intends to commence, as soon as
practicable after the completion of the Offering, a tender offer to repurchase
the remaining $105 million principal amount of Subordinated Notes with a por-
tion of the net proceeds of the Offering. See "Use of Proceeds."
S-5
<PAGE>
USE OF PROCEEDS
The net proceeds from the Offering are estimated to be approximately $195.8
million after giving effect to underwriting discounts and commissions and ex-
penses payable by the Company. The Company expects to utilize the net proceeds
from the Offering to repay outstanding indebtedness as follows:
<TABLE>
<CAPTION>
PERCENTAGE
APPROXIMATE OF NET
INDEBTEDNESS DOLLAR AMOUNT PROCEEDS
- ------------ -------------- ----------
<S> <C> <C>
Subordinated Notes $120.0 million(/1/) 61.3%(/1/)
Credit Facility 75.8 million(/2/) 38.7%(/1/)
-------------- ------
Total $195.8 million 100.0%
============== ======
</TABLE>
- -------
(1) Includes the $105 million principal amount of outstanding Subordinated
Notes, plus an estimated premium and expenses of approximately $15 million.
(2) Morgan Guaranty Trust Company, an affiliate of J.P. Morgan Securities
Inc., is an agent and a lender under the Company's Credit Facility and is
expected to receive approximately $3.4 million of repayment under the Credit
Facility from the net proceeds of the Offering. See "Underwriting."
Subordinated Notes. The Company currently has outstanding $105 million princi-
pal amount of its Subordinated Notes. The Subordinated Notes, which were is-
sued in the principal amount of $150 million in October 1995, are due in 2005
and bear interest at 9 3/4% payable semiannually. On December 29, 1997 the
Company redeemed $45 million principal amount of the Subordinated Notes, at a
redemption price equal to 109.75% of the principal amount of the Subordinated
Notes plus accrued and unpaid interest to the redemption date. As soon as
practicable following the completion of the Offering, the Company intends to
commence a tender offer to repurchase the remaining $105 million principal
amount of Subordinated Notes. The terms of such tender offer have not yet been
finalized and there can be no assurance that the tender offer will be consum-
mated. If the tender offer is not consummated, the Company may repurchase the
Subordinated Notes in the open market or in privately negotiated purchases.
Credit Facility. Upon consummation of the Hearst Transaction, the Company en-
tered into a $1 billion credit facility with the Chase Manhattan Bank, which
matures on December 31, 2004 (the "Credit Facility"). At December 31, 1997,
outstanding indebtedness under the Credit Facility was approximately $85 mil-
lion as a result of borrowings made in connection with the Hearst Transaction
and related transactions. Such borrowings bear interest at an applicable mar-
gin that varies based on the Company's ratio of total debt to operating cash
flow, plus, at the Company's option, LIBOR or an alternate base rate (such in-
terest being approximately 6% at December 31, 1997). The Company expects to
use the remaining net proceeds from the Offering to repay borrowings under the
Credit Facility.
S-6
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of Septem-
ber 30, 1997 (i) on a pro forma basis to give effect to the Common Stock Offer-
ing, the Debt Offering and certain share issuances and debt repayment subse-
quent to the Hearst Transaction; and (ii) on a pro forma basis as adjusted to
give effect to the consummation of the Offering and the application of the net
proceeds therefrom as discussed under "Use of Proceeds."
<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
------------------------------
PRO FORMA
PRO FORMA FOR
(/1/)(/3/)(/4/) OFFERING(/2/)
--------------- -------------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Long-term debt:
Notes $300,000 $500,000
Credit Facility 85,000 9,200
Subordinated Notes 105,000 --
-------- --------
Total long-term debt $490,000 $509,200
-------- --------
Shareholders' equity:
Preferred Stock, $.01 par value; 1,000,000
shares authorized:
Series A preferred stock, 10,938 shares
issued and outstanding 1 1
Series B preferred stock, 10,938 shares
issued and outstanding 1 1
Series A common stock, $.01 par value;
100,000,000 shares authorized;
12,529,204 shares issued and
outstanding(/3/) 125 125
Series B common stock, $.01 par value;
100,000,000 shares authorized;
41,298,648 shares issued and
outstanding(/4/) 413 413
Additional paid-in capital 298,305 298,305
Retained deficit (40,166) (40,166)
-------- --------
Total shareholders' equity 258,679 258,679
-------- --------
Total capitalization $748,679 $767,879
======== ========
</TABLE>
- -------
(1) Pro forma for (i) the Common Stock Offering; (ii) the Debt Offering; (iii)
the refinancing of debt assumed by the Company in the Hearst Transaction;
(iv) a partial redemption of the Subordinated Notes; (v) reduction in the
outstanding balance of the Credit Facility; and, (vi) the share issuances
described in footnote (4).
(2) The pro forma as adjusted information gives effect to (i) the items de-
scribed in footnote (1); (ii) the share issuances described in footnote
(4); and, (iii) the application of the net proceeds from the Offering. See
"Use of Proceeds."
(3) Excludes 1,794,125 shares of Series A Common Stock issuable upon exercise
of stock options. Options for 216,125 shares of Series A Common Stock are
currently exercisable.
(4) Includes 2.7 million shares of Series B Common Stock issued to Hearst in
December 1997 in connection with the Hearst Transaction and related trans-
actions.
S-7
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The earnings for the Company and its consolidated subsidiaries for the nine
months ended September 30, 1997 are inadequate to cover fixed charges by $16.8
million. The ratio was derived from the unaudited combined condensed financial
statements for Argyle for the eight months ended August 31, 1997 and from the
unaudited combined condensed financial statements for the Company for the one
month ended September 30, 1997.
For purposes of computing the foregoing ratio: (i) Earnings consist of income
from continuing operations before income tax expense plus Fixed Charges (ex-
cluding capitalized interest); and (ii) Fixed Charges consist of interest,
whether expended or capitalized, and the portion of operating rental expenses
estimated to represent an interest component.
S-8
<PAGE>
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered hereby
supplements and, to the extent inconsistent therewith, replaces the descrip-
tion of the general terms and provisions of the Notes set forth in the accom-
panying Prospectus under the caption "Description of Debt Securities," to
which description reference is hereby made. The following summary is qualified
in its entirety by reference to the Indenture referred to in the accompanying
Prospectus.
GENERAL
The Notes offered hereby will mature on January 15, 2018.
The Notes will bear interest from January 13, 1998 at the rate shown in their
title, payable semi-annually (to holders of record at the close of business on
July 1 or January 1 immediately preceding the interest payment date) on July
15 and January 15 of each year beginning July 15, 1998. Upon issuance, the
Notes will be represented by one or more registered Global Securities that
will be deposited with, or on behalf of, the Depositary and will be registered
in the name of the Depositary or its nominee. For so long as the Notes are
registered in the name of the Depositary, or its nominee, the principal and
interest due on the Notes will be payable by the Company or its agent to the
Depositary for payment to its participants for subsequent disbursement to the
beneficial owners. See "Book-Entry System" below and "Description of Debt Se-
curities--Global Securities" in the accompanying Prospectus.
The Notes will be unsubordinated and unsecured obligations of the Company
ranking pari passu with all existing and future unsubordinated and unsecured
obligations of the Company. Claims of holders of Notes will be effectively
subordinated to the claims of direct creditors (including the holders of the
Subordinated Notes) of the Company's subsidiaries. The Company had approxi-
mately $85 million of indebtedness outstanding under its Credit Facility as of
December 31, 1997. See "Use of Proceeds."
The defeasance and covenant defeasance provisions of the Indenture described
under the caption "Description of Debt Securities--Defeasance and Covenant De-
feasance" in the accompanying Prospectus will apply to the Notes.
OPTIONAL REDEMPTION
The Notes will be redeemable as a whole or in part, at the option of the Com-
pany at any time, at a redemption price equal to the greater of (i) 100% of
their principal amount or (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the date of
redemption on a semiannual basis (assuming a 360-day year consisting of twelve
30-day months) at the Treasury Yield plus 15 basis points, plus accrued inter-
est to the date of redemption. The Notes are not subject to any mandatory
sinking fund.
"Treasury Yield" means, with respect to any redemption date, the rate per an-
num equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury
Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security selected
by an Independent Investment Banker as having a maturity comparable to the re-
maining term of the Note or Debenture that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining
term of the Notes. "Independent Investment Banker" means J.P. Morgan Securi-
ties Inc. or, if such firm is unwilling or unable to select the Comparable
Treasury Issue, an independent investment banking institution of national
standing appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue (ex-
pressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily statis-
tical release (or any successor release) published by the Federal Reserve Bank
of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government
Securities" or (ii) if such release (or any successor release) is not pub-
lished or does not contain such prices on such business day, (A) the average
of the five Reference Treasury Dealer Quotations for such redemption date, af-
ter excluding the highest and lowest such Reference Treasury Dealer Quota-
tions, or (B) if the Trustee obtains fewer than five such Reference Treasury
Dealer Quotations, the average of all such Quotations. "Reference
S-9
<PAGE>
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average as determined by the Trustee of the
bid and asked prices for the Comparable Treasury Issue (expressed in each case
as a percentage of its principal amount) quoted in writing to the Trustee by
the Reference Treasury Dealer at 5:00 p.m. on the third business day preceding
such redemption date.
"Reference Treasury Dealer" means (i) J.P. Morgan Securities Inc., Credit
Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated and Salomon
Brothers Inc and their respective successors, provided however, that if any of
the foregoing shall cease to be a primary U.S. Government securities dealer in
New York City (a "Primary Treasury Dealer"), the Company shall substitute
therefor another Primary Treasury Dealer and (ii) any other Primary Treasury
Dealer selected by the Trustee after consultation with the Company.
Holders of the Notes to be redeemed will receive notice thereof by first-class
mail at least 30 and not more than 60 days prior to the date fixed for redemp-
tion.
Unless the Company defaults in payment of the redemption price, on or after the
applicable redemption date, interest will cease to accrue on Notes or portions
thereof called for redemption.
BOOK-ENTRY SYSTEM
The Notes will be represented by one or more Global Securities registered in
the name of Cede & Co., the nominee of The Depository Trust Company, the Depos-
itary. The Depositary is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing corpora-
tion" within the meaning of the New York Uniform Commercial Code, and a "clear-
ing agency" registered pursuant to the provisions of Section 17A of the Ex-
change Act. The Depositary holds securities that its participants (the "Direct
Participants") deposit with the Depositary. The Depositary also facilitates the
settlement among Direct Participants of securities transactions, such as trans-
fers and pledges, in deposited securities through electronic computerized book-
entry changes in Direct Participants' accounts, thereby eliminating the need
for physical movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. The Depositary is owned by a number of its Di-
rect Participants and by The New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the Depositary's system is also available to others such as securities bro-
kers and dealers, banks and trust companies that clear through, or maintain a
custodial relationship with, a Direct Participant, either directly or indi-
rectly (the "Indirect Participants," and together with the Direct Participants,
the "Participants"). The rules applicable to the Depositary and its Partici-
pants are on file with the U.S. Securities and Exchange Commission.
Purchases of the Notes within the Depositary's system must be made by or
through Direct Participants, which will receive a credit for the Notes on the
Depositary's records. The ownership interest of each actual purchaser of each
Note (a "Beneficial Owner") is in turn to be recorded on the Direct and Indi-
rect Participants' respective records. Beneficial Owners will not receive writ-
ten confirmation from the Depositary of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the transac-
tion, as well as periodic statements of their holdings, from the Direct or In-
direct Participant through which the Beneficial Owner entered into the transac-
tion. Transfers of ownership interest in the Notes are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial Own-
ers. Beneficial Owners will not receive certificates representing their owner-
ship interest in Notes except in the event that use of the book-entry system
for the Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by Direct Participants
with the Depositary will be registered in the name of Cede & Co. The deposit of
the Notes with the Depositary and their registration in the name of Cede & Co.
effect no change in beneficial ownership. The Depositary has no knowledge of
the actual Beneficial Owners of the Notes; the Depositary's records reflect
only the identity of the Direct Participants to whose accounts such Notes are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by the Depositary to Direct Par-
ticipants, by Direct Participants to Indirect Participants, and by Direct Par-
ticipants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
S-10
<PAGE>
Redemption notices shall be sent to Cede & Co. If less than all of the Notes
are being redeemed, the Depositary's practice is to determine by lot the amount
of the interest of each Direct Participant in such series to be redeemed.
Neither the Depositary nor Cede & Co. will consent or vote with respect to the
Notes. Under its usual procedures, the Depositary mails an omnibus proxy (an
"Omnibus Proxy") to the Participants as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Di-
rect Participants to whose accounts the Notes are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal, redemption premium, if any, and interest payments on the Notes will
be made to the Depositary. The Depositary's practice is to credit Direct Par-
ticipants' accounts on the relevant payment date in accordance with their re-
spective holdings shown on the Depositary's records unless the Depositary has
reason to believe that it will not receive payment on such payment date. Pay-
ments by Participants to Beneficial Owners will be governed by standing in-
structions and customary practices, as is the case with securities for the ac-
counts of customers in bearer form or registered in "street-name," and will be
the responsibility of such Participant and not of the Depositary, the Under-
writers, or the Company, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal, redemption premium,
if any, and interest to the Depositary is the responsibility of the Company or
the respective trustees. Disbursement of such payments to Direct Participants
is the responsibility of the Depositary, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct and Indirect Partici-
pants. Registered Global Securities will settle in immediately available funds
in the secondary trading market. No assurance can be given as to the effect, if
any, of settlement in immediately available funds on trading activity in the
Notes.
The Depositary may discontinue providing its services as securities depository
with respect to the Notes at any time by giving reasonable notice to the Compa-
ny. Under such circumstances and in the event that a successor securities de-
pository is not obtained, Notes certificates are required to be printed and de-
livered. In addition, the Company may decide to discontinue use of the system
of book-entry transfers through the Depositary (or a successor securities de-
pository). In that event, Notes certificates will be printed and delivered.
The Company will not have any responsibility or obligation to Participants or
the persons for whom they act as nominees with respect to the accuracy of the
records of the Depositary, its nominee or any Direct or Indirect Participant
with respect to any ownership interest in the Notes, or with respect to pay-
ments to or providing of notice for the Direct Participants, the Indirect Par-
ticipants or the Beneficial Owners.
The information contained herein under the caption "Description of Notes--Book-
Entry System" concerning the Depositary and the Depositary's book-entry system
has been obtained from the Depositary. Neither the Company, the Trustee nor the
Underwriters, dealers or agents take responsibility for the accuracy or com-
pleteness thereof.
THE TRUSTEE
The Notes will be issued under an Indenture entered into by and between the
Company and Bank of Montreal Trust Company, as Trustee (the "Trustee"). Harris
Trust and Savings Bank, an affiliate of the Trustee, acts as the Company's
transfer agent and registrar, and acted as exchange agent in connection with
the Hearst Transaction.
S-11
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement (the "Underwriting Agreement"), the Underwriters named below (the
"Underwriters"), for whom J.P. Morgan Securities Inc. is acting as representa-
tive (the "Representative"), have severally but not jointly agreed to purchase
from the Company the following respective principal amounts of the Notes:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER NOTES
- ----------- ------------
<S> <C>
J.P. Morgan Securities Inc........................................ $ 50,000,000
Credit Suisse First Boston Corporation............................ 50,000,000
Morgan Stanley & Co. Incorporated................................. 50,000,000
Salomon Brothers Inc.............................................. 50,000,000
------------
Total........................................................... $200,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all the Notes, if any are purchased. The Underwriting
Agreement provides that, in the event of a default by an Underwriter, in cer-
tain circumstances the purchase commitments of non-defaulting Underwriters may
be increased or the Underwriting Agreement may be terminated.
The Company has been advised by the Representative that the Underwriters pro-
pose to offer the Notes to the public initially at the public offering prices
set forth on the cover page of this Prospectus Supplement and to certain deal-
ers at such prices less a concession of .50% of principal amount per Note. The
Underwriter and such dealers may allow a discount of .25% of principal amount
per Note on sales to certain other dealers. After the initial public offering,
the public offering prices and concessions and discounts to dealers may be
changed by the Underwriters.
The Notes are a new issue of securities with no established trading market. The
Underwriters have advised the Company that they intend to act as market makers
for the Notes. However, the Underwriters are not obligated to do so and may
discontinue any market making in the Notes at any time without notice. No as-
surance can be given as to the liquidity of the trading market for the Notes.
The Company has agreed to indemnify the Underwriters against certain liabili-
ties, including civil liabilities under the Securities Act, or contribute to
payments which the Underwriters may be required to make in respect thereof.
The Representative, on behalf of the Underwriters, may engage in over-allot-
ment, stabilizing transactions, syndicate covering transactions, and penalty
bids. Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position. Stabilizing transactions permit bids
to purchase the underlying security so long as the stabilizing bids do not ex-
ceed a specified maximum. Syndicate covering transactions involve purchases of
the Notes in the open market after the distribution has been completed in order
to cover syndicate short positions. Penalty bids permit the Representatives to
reclaim a selling concession from a syndicate member when the Notes originally
sold by such syndicate member are purchased in a syndicate covering transaction
to cover syndicate short positions. Such stabilizing transactions, syndicate
covering transactions and penalty bids may cause the price of the Notes to be
higher than it would otherwise be in the absence of such transactions.
From time to time certain of the Underwriters or their affiliates engage in
transactions, including commercial banking and investment banking transactions,
with and perform services for the Company and its affiliates in the ordinary
course of business, for which they have received and will continue to receive
customary fees. In addition, in the ordinary course of business the Underwrit-
ers may actively trade securities of the Company for such Underwriter's own ac-
count and for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities. For its advisory services to Ar-
gyle Television Investors, L.P., the Company's largest stockholder prior to the
Hearst Transaction, the Company paid Credit Suisse First Boston Corporation a
fee of $800,000, reimbursed Credit Suisse First Boston Corporation for its out-
of-pocket expenses and agreed to indemnify Credit Suisse First Boston Corpora-
tion and certain related persons against certain liabilities, including certain
liabilities under the federal securities laws, arising out of its engagement.
For its advisory services to Hearst in connection with the Hearst Transaction,
Hearst paid J.P. Morgan Securities Inc. a fee of $1.5 million, reimbursed J.P.
Morgan Securities Inc. for its out-of-pocket expenses and agreed to indemnify
J.P. Morgan Securities Inc. and certain related persons
S-12
<PAGE>
against certain liabilities, including certain liabilities under the federal
securities laws, arising out of its engagement. The Company reimbursed Hearst
for amounts paid to J.P. Morgan Securities Inc. In addition, J.P. Morgan Secu-
rities Inc. and Credit Suisse First Boston Corporation acted as underwriters
in connection with the Common Stock Offering and the Debt Offering, for which
they received customary fees and commissions. Morgan Stanley & Co. Incorpo-
rated also acted as an underwriter in connection with the Common Stock Offer-
ing, for which it received customary fees and commissions.
Merchant GP, Inc., an affiliate of Credit Suisse First Boston Corporation (the
"CSFB Fund"), owns 3% of the Company's Series A Common Stock and is a party to
a Registration Rights Agreement with the Company and certain other holders of
the Company's Series A Common Stock providing the CSFB Fund and such other
holders with piggyback registration rights with respect to any proposed offer-
ing of the Company's Series A Common Stock for cash through a firm commitment
underwriting sought by the Company, and, subject to certain limitations and
conditions, with the right to require the Company to register for distribution
through a firm commitment underwriting of all or any portion of the Company's
Series A Common Stock issued to them in the Hearst Transaction.
Morgan Guaranty Trust Company of New York, an affiliate of J.P. Morgan Securi-
ties Inc., acts as the documentation agent and a lender under the Company's
Credit Facility, for which it has received and will continue to receive cus-
tomary fees. It is expected that Morgan Guaranty Trust Company will receive
approximately $3.4 million of repayment under the Credit Facility from the net
proceeds of the Offering. The Company believes it is in compliance under the
terms of the Credit Facility. See "Use of Proceeds." The decision of J.P. Mor-
gan Securities Inc. to underwrite the Offering was made independently of Mor-
gan Guaranty Trust Company of New York, which had no involvement in determin-
ing whether or when to underwrite the Offering or the terms of the Offering.
J.P. Morgan Securities Inc. will not receive any benefit from the Offering
other than its respective portion of the underwriting discounts and commis-
sions payable by the Company.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private place-
ment basis exempt from the requirement that the Company prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of Notes are effected. Accordingly, any resale of the Notes in Canada
must be made in accordance with applicable securities laws which will vary de-
pending on the relevant jurisdiction, and which may require resales to be made
in accordance with available statutory exemptions or pursuant to a discretion-
ary exemption granted by the applicable Canadian securities regulatory author-
ity. Purchasers are advised to seek legal advice prior to any resale of the
Notes.
REPRESENTATION OF PURCHASERS
Each purchaser of Notes in Canada who receives a purchase confirmation will be
deemed to represent to the Company and the dealer from whom such purchase con-
firmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Notes without the benefit of a
prospectus qualified under such securities laws, (ii) where required by law,
that such purchaser is purchasing as principal and not as agent, and (iii)
such purchaser has reviewed the text above under "Resale Restrictions."
The securities being offered are those of a foreign issuer and Ontario pur-
chasers will not receive the contractual right of action prescribed by section
32 of the Regulation under the Securities Act (Ontario). As a result, Ontario
purchasers must rely on other remedies that may be available, including common
law rights of action for damages or rescission or rights of action under the
civil liability provisions of the U.S. federal securities laws.
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer and Ontario pur-
chasers will not receive the contractual right of action prescribed by section
32 of the Regulation under the Securities Act (Ontario). As a result, Ontario
purchasers must rely on other remedies that may be available, including common
law rights of action for damages or rescission or rights of action under the
civil liability provisions of the U.S. federal securities laws.
S-13
<PAGE>
ENFORCEMENT OF LEGAL RIGHTS
All of the Company's directors and officers as well as the experts named herein
may be located outside of Canada and, as a result, it may not be possible for
Canadian purchasers to effect service of process within Canada upon the issuer
or such persons. All or a substantial portion of the assets of the Company and
such persons may be located outside of Canada and, as a result, it may not be
possible to satisfy a judgment against the Company or such persons in Canada or
to enforce a judgment obtained in Canadian courts against such issuer or per-
sons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Notes to whom the Securities Act (British Columbia) applies is
advised that such purchaser is required to file with the British Columbia Secu-
rities Commission a report within ten days of the sale of any Notes acquired by
such purchaser pursuant to this Debt Offering. Such report must be in the form
attached to British Columbia Securities Commission Blanket Order BOR #95/17, a
copy of which may be obtained from the Company. Only one such report must be
filed in respect of Notes acquired on the same date and under the same prospec-
tus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of Notes should consult their own legal and tax advisors
with respect to the tax consequences of an investment in the Notes in their
particular circumstances and with respect to the eligibility of the Notes for
investment by the purchaser under relevant Canadian Legislation.
S-14
<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Prospectus Supplement contains forward-looking statements that are subject
to risks and uncertainties. Forward-looking statements include the information
concerning possible or assumed future results of operations of the Company set
forth under "The Company" and "Recent Developments," and those preceded by,
followed by or that include the words "believes," "expects," "anticipates" or
similar expressions. For those statements, the Company claims the protection of
the safe harbor for forward-looking statements contained in the Private Securi-
ties Litigation Reform Act of 1995. Prospective purchasers should understand
that the following important factors, in addition to those discussed elsewhere
in this Prospectus Supplement and in the documents that are incorporated by
reference, could affect the future results of the Company and could cause those
results to differ materially from those expressed in each forward-looking
statement: material adverse changes in economic conditions in the markets
served by the Company; future regulatory actions and conditions in the televi-
sion stations operating areas; the possibility that currently unanticipated
difficulties may arise in integrating the operations of the Company's predeces-
sors; and, competition from others in the broadcast television markets served
by the businesses.
S-15
<PAGE>
PROSPECTUS
HEARST-ARGYLE TELEVISION, INC.
$600,000,000
DEBT SECURITIES
---------------
10,000,000 SHARES
SERIES A COMMON STOCK
---------------
Hearst-Argyle Television, Inc., a Delaware corporation (the "Company"), may
issue, from time to time, together or separately, (i) up to an initial
aggregate offering price or purchase price of $600,000,000 (or the equivalent
thereof if any of the Debt Securities are denominated in a foreign currency or
composite currency such as the European Currency Unit ("ECU")) of its
unsecured debt securities ("Debt Securities"), in one or more series,
consisting of debentures, notes or other evidences of indebtedness and having
such prices and terms as are determined at the time of sale and (ii) shares of
Series A Common Stock, par value $.01 per share ("Series A Common Stock"). The
Debt Securities and the Series A Common Stock are collectively referred to
herein as "Securities." The Securities may be issued as units and in any
combination.
Specific terms of the Securities ("Offered Securities") in respect of which
this Prospectus is being delivered will be set forth in an applicable
Prospectus Supplement ("Prospectus Supplement"), together with the terms of
the offering of the Offered Securities and the initial price and net proceeds
to the Company from the sale thereof. The Prospectus Supplement will set forth
with regard to the particular Offered Securities, without limitation, the
following: (i) in the case of Debt Securities, the specific designation,
aggregate principal amount, purchase price, authorized denomination, maturity,
rate or rates of interest (or method of calculation thereof) and dates for
payment thereof, dates from which interest shall accrue, any exchangeability,
conversion, redemption, prepayment or sinking fund provisions, the currency or
currencies or currency unit or currency units in which principal, premium, if
any, or interest, if any, is payable, and any listing on a national securities
exchange; and (ii) in the case of the Series A Common Stock, the number of
shares of Series A Common Stock and the terms of the offering and sale thereof
and any listing on a national securities exchange. The Series A Common Stock
is quoted on the Nasdaq National Market. The Company contemplates making an
application for the quotation of any additional issuances of Series A Common
Stock on the Nasdaq National Market or on any other national securities
exchange on which the Series A Common Stock may then be listed.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Securities may be sold by the Company directly to purchasers, through
agents designated from time to time, or to or through underwriters or dealers.
If underwriters or agents are involved in the offering of Securities, the
names of the underwriters or agents will be set forth in the Prospectus
Supplement. If an underwriter, agent or dealer is involved in the offering of
any Securities, the underwriter's discount, agent's commission or dealer's
purchase price will be set forth in, or may be calculated from the information
set forth in, the Prospectus Supplement, and the net proceeds to the Company
from such offering will be the public offering price of the Securities less
such discount, in the case of an offering through an underwriter, or the
purchase price of the Securities less such commission, in the case of an
offering through an agent, and less, in each case, the other expenses of the
Company associated with the issuance and distribution of the Securities. See
"Plan of Distribution."
---------------
Prior to issuance there will have been no market for the Debt Securities,
and there can be no assurance that a secondary market for any such Debt
Securities will develop. This Prospectus may not be used to consummate sales
of any Offered Securities unless accompanied by a Prospectus Supplement.
---------------
The date of this Prospectus is October 17, 1997.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE OFFERED
SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices located at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and Seven World Trade Center,
New York, New York 10048. Copies of such materials can be obtained upon
written request from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Series A
Common Stock is listed on the Nasdaq National Market. In addition, such
materials may also be inspected and copied at the offices of the Nasdaq Stock
Market, Inc. Listing Section, 1735 K Street, N.W., Washington, DC 20006, where
copies may be obtained at prescribed rates. Copies of reports, proxy
statements and other information electronically filed with the Commission by
the Company may be inspected by accessing the Commission's World Wide Web site
at http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement. Such
additional information may be obtained from the Commission's principal office
in Washington, D.C. Statements contained in this Prospectus as to the contents
of any contract or other document referred to herein or therein are not
necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement or such other document. A copy of the Registration Statement and the
exhibits and schedules thereto may be examined without charge at the
Commission's principal offices at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and copies of such materials can be obtained from the
Public Reference Section of the Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-27000) pursuant to the Exchange Act are incorporated herein by reference:
(i) Annual Report on Form 10-K for the year ended December 31, 1996; (ii)
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; (iii)
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997; (iv)
Current Report on Form 8-K dated January 31, 1997, filed on February 14, 1997,
as amended by Current Report on Form 8-K/A dated January 31, 1997, filed on
April 15, 1997; (v) Proxy Statement/Prospectus filed on July 31, 1997; (vi)
Form 8-A/A filed on September 4, 1997; (vii) Current Report on Form 8-K dated
August 29, 1997, filed on September 15, 1997, as amended by Current Report on
Form 8-K/A dated August 29, 1997, filed on September 26, 1997; (viii) Current
Report on Form 8-K dated August 29, 1997, filed on October 16, 1997; and (ix)
all documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents which are incorporated
2
<PAGE>
herein by reference, other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference into such documents).
Requests should be directed to Hearst-Argyle Television, Inc., 888 Seventh
Avenue, New York, New York 10106, Attention: Corporate Secretary (tel. (212)
649-2300).
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified shall not be deemed to
constitute a part of this Prospectus except as so modified, and any statement
so superseded shall not be deemed to constitute part of this Prospectus.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement. The delivery of this Prospectus
together with a Prospectus Supplement relating to particular Offered
Securities in any jurisdiction shall not constitute an offer in the
jurisdiction of any other securities covered by this Prospectus.
3
<PAGE>
THE COMPANY
The Company owns or manages 15 television stations reaching approximately
11.5% of U.S. television households. The Company is the largest "pure-play"
publicly owned television broadcast company in the U.S. and is the third-
largest, non-network owned television group in terms of audience delivered.
Formed as a Delaware corporation in 1994 under the name Argyle Television,
Inc. ("Argyle"), the Company is the successor to the combined operations of
Argyle and the television broadcast group of The Hearst Corporation ("Hearst")
pursuant to a merger transaction that was consummated on August 29, 1997 (the
"Hearst Transaction"). In that transaction, Hearst 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.").
The Company owns 12 television stations, and manages three additional
television stations and two radio stations that are owned or operated by
Hearst. The Company has an option to acquire one of the managed television
stations and Hearst's interests in another of the managed television stations,
and has a right of first refusal with respect to the third managed television
station. Under Federal Communications Commission ("FCC") regulations, the
Company must divest two of its television stations (WNAC in Providence, Rhode
Island; and WDTN-TV in Dayton, Ohio). A letter of intent has been signed for
the divestiture of WNAC-TV and the Company is negotiating with a third party
for the divestiture of WDTN.
The following table sets forth certain information for each of the Company's
owned and managed television stations:
<TABLE>
<CAPTION>
PERCENTAGE OF
MARKET NETWORK U.S. TELEVISION
MARKET RANK(1) STATION AFFILIATION CHANNEL HOUSEHOLDS(2)
------ ------- --------- ----------- ------- ---------------
<S> <C> <C> <C> <C> <C>
*Boston, MA.............. 6 WCVB ABC 5 2.22%
*Tampa, FL(3)............ 15 WWWB WB 32 1.47%
*Pittsburgh, PA.......... 19 WTAE ABC 4 1.16%
*Baltimore, MD........... 23 WBAL NBC 11 1.01%
Cincinnati, OH.......... 30 WLWT NBC 5 0.81%
*Kansas City, MO......... 31 KMBC ABC 9 0.81%
*Kansas City, MO(3)...... 31 KCWB WB 29 ***
*Milwaukee, WI........... 32 WISN ABC 12 0.81%
*West Palm Beach, FL(3).. 43 WPBF ABC 25 0.61%
Oklahoma City, OK....... 44 KOCO ABC 5 0.61%
Providence, RI(4)(5).... 49 WNAC FOX 64 0.57%
*Dayton, OH(4)........... 53 WDTN ABC 2 0.52%
Honolulu, HI............ 71 KITV ABC 4 0.39%
Jackson, MS............. 90 WAPT ABC 16 0.30%
Fort Smith/Fayetteville,
AR...................... 116 KHBS/KHOG ABC/ABC 40/29 0.22%
-----
Total................ 11.51%
=====
</TABLE>
- --------
*Denotes a station owned or operated by the Company as a consequence of the
Hearst Transaction.
(1) Market rank is based on the relative size of the Designated Market Area
defined by A.C. Nielsen Co. ("Nielsen") as geographic markets for the sale
of national "spot" and local advertising time ("DMA") among the 211
generally recognized DMAs in the U.S., based on Nielsen estimates for the
1997-98 season.
(2) Based on Nielsen estimates for the 1997-98 season.
(3) WWWB-TV and WPBF-TV are managed by the Company under a management
agreement with Hearst. In addition, the Company provides certain
management services to Hearst in order to allow Hearst to fulfill its
obligations under a Program Services and Time Brokerage Agreement with
KCWB-TV, Inc., the permittee of KCWB.
(4) WNAC-TV's (Providence, RI) broadcast signal overlaps with WCVB-TV's
(Boston, MA) broadcast signal, and WDTN-TV's (Dayton, OH) broadcast signal
overlaps with WLWT-TV's (Cincinnati, OH) broadcast signal. Under FCC
rules, a single entity cannot own stations with overlapping signals. The
Company will divest WNAC and WDTN, and has entered into a letter of intent
to divest WNAC.
(5)Subject to a Joint Marketing and Programming Agreement with Clear Channel
Communications, Inc.
4
<PAGE>
As a result of the Hearst Transaction, Hearst currently owns approximately
38.6 million shares of the Company's Series B Common Stock, comprising
approximately 82% of the total outstanding common stock of the Company. In
connection with the Hearst Transaction and related transactions, Hearst may
receive up to an additional 2.7 million shares of Series B Common Stock which
would result in Hearst's ownership of approximately 83% of the Company's total
outstanding common stock. Through its ownership of the Company's Series B
Common Stock, Hearst has the right to elect nine of the 11 members of the
Company's Board of Directors. The remaining common stock of the Company is in
the form of Series A Common Stock, which is quoted on the Nasdaq National
Market under the symbol "HATV."
The principal executive offices of the Company are located at 888 Seventh
Avenue, New York, New York 10106; its telephone number is 212-649-2300.
USE OF PROCEEDS
Except as may be set forth in an accompanying Prospectus Supplement, the
Company expects to add substantially all of the net proceeds from the sale of
the Securities to its funds to be used for general corporate purposes, which
may include repayment of long-term and short-term debt, capital expenditures,
working capital and the financing of acquisitions. Funds not required
immediately may be invested in short-term marketable securities.
5
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
(i) the Company and its consolidated subsidiaries on a pro forma basis
(Hearst-Argyle) giving effect to the consummation of the Hearst Transaction
for each of the periods indicated, (ii) the Hearst Broadcast Group (the
accounting acquiror in the Hearst Transaction) on a historical basis for each
of the periods indicated and (iii) Argyle and its consolidated subsidiaries on
a historical basis. The ratios for the Company on a pro forma basis giving
effect to the Hearst Transaction for the periods indicated were derived from
the unaudited pro forma combined condensed financial statements of the
Company. The ratios for the Hearst Broadcast Group were derived from the
audited historical combined financial statements of the Hearst Broadcast group
for the years ended December 31, 1994, 1995 and 1996, and from the unaudited
combined financial statements for the years ended December 31, 1992 and 1993
and the six months ended June 30, 1996 and 1997. The ratios for Argyle on a
historical basis for the periods indicated were derived from Argyle's audited
and unaudited historical financial statements.
<TABLE>
<CAPTION>
PRO FORMA
-----------------------
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------
<S> <C> <C>
The Company Pro Forma Ratio of Earnings to Fixed
Charges.............................................. 2.66x 2.73x
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------- ------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Hearst Broadcast Group Ratio of
Earnings to Fixed Charges........ 2.01x 2.21x 3.51x 4.06x 4.43x 3.56x 3.98x
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED ENDED
DECEMBER 31, JUNE 30,
------------ ------------
1995(1) 1996 1996 1997
------- ---- ----- -----
<S> <C> <C> <C> <C>
Argyle Ratio of Earnings to Fixed Charges............ (2) (2) (2) (2)
</TABLE>
- --------
(1) Argyle was formed in August 1994.
(2) Argyle's earnings are inadequate to cover fixed charges by $7,965 and
$14,560 for the years ended December 31, 1995 and 1996, respectively and by
$7,118 and $8,295 for six months ended June 30, 1996 and 1997, respectively.
For purposes of computing the foregoing ratios: (i) Earnings consist of
income from continuing operations before income tax expense plus Fixed Charges
(excluding capitalized interest); and (ii) Fixed Charges consist of interest,
whether expended or capitalized, and the portion of operating rental expenses
estimated to represent an interest component.
6
<PAGE>
GENERAL DESCRIPTION OF SECURITIES AND RISK FACTORS
The Company may offer shares of Series A Common Stock or Debt Securities
individually or as units consisting of one or more Securities under this
Prospectus.
CERTAIN OF THE SECURITIES TO BE OFFERED HEREBY THEMSELVES MAY INVOLVE A
SIGNIFICANT DEGREE OF RISK. SUCH RISKS WILL BE SET FORTH IN THE PROSPECTUS
SUPPLEMENT RELATING TO SUCH SECURITY, IF APPLICABLE.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Debt Securities will be issued under an Indenture, as supplemented from
time to time in accordance with its terms (the "Indenture"), to be entered
into between the Company and a trustee to be appointed (the "Trustee"). The
following brief summary of the Indenture and the Debt Securities is subject to
the detailed provisions of the Indenture, a copy of which is an exhibit to the
Registration Statement. Wherever references are made to particular provisions
of the Indenture, such provisions are incorporated by reference as a part of
the statements made herein and such statements are qualified in their entirety
by such reference. Certain defined terms in the Indenture are capitalized
herein. Italicized references appearing in parenthesis are to section numbers
of the Indenture.
The Indenture does not limit the amount of Debt Securities that may be
issued thereunder. It provides that Debt Securities may be issued from time to
time in series. The Debt Securities will be unsecured obligations of the
Company and will rank pari passu with all other unsecured and unsubordinated
indebtedness of the Company. Reference is made to the Prospectus Supplement
for a description of the following additional terms of the Debt Securities in
respect of which this Prospectus is being delivered: (i) the title of such
Debt Securities; (ii) the limit, if any, upon the aggregate principal amount
of such Debt Securities; (iii) the dates on which or periods during which such
Debt Securities may be issued and the date or dates on which the principal of
(and premium, if any, on) such Debt Securities will be payable; (iv) the rate
or rates, if any, or the method of determination thereof, at which such Debt
Securities will bear interest, if any; the date or dates from which such
interest will accrue; the dates on which such interest will be payable; and
the regular record dates for the interest payable on such interest payment
dates; (v) the obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous provisions or
at the option of a holder and the periods within which or the dates on which,
the prices at which and the terms and conditions upon which such Debt
Securities will be redeemed, repaid or purchased, in whole or in part,
pursuant to such obligation; (vi) the periods within which or the dates on
which, the prices, if any, at which and the terms and conditions upon which
such Debt Securities may be redeemed, in whole or in part, at the option of
the Company; (vii) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which such Debt Securities will be
issuable; (viii) whether such Debt Securities are to be issued at less than
the principal amount thereof and the amount of discount with which such Debt
Securities will be issued; (ix) provisions, if any, for the defeasance of such
Debt Securities; (x) if other than United States dollars, the currency or
composite currency in which such Debt Securities are to be denominated, or in
which payment of the principal of (and premium, if any) and interest on such
Debt Securities will be made and the circumstances, if any, when such currency
of payment may be changed; (xi) if the principal of (and premium, if any) or
interest on such Debt Securities are to be payable, at the election of the
Company or a holder, in a currency or composite currency other than that in
which such Debt Securities are denominated or stated to be payable, the
periods within which, and the terms and conditions upon which, such election
may be made and the time and the manner of determining the exchange rate
between the currency or composite currency in which such Debt Securities are
denominated or stated to be payable and the currency in which such Debt
Securities are to be paid pursuant to such election; (xii) if the amount of
payments of principal of (and premium, if any) or interest on the Debt
Securities may be determined with reference to an index including, but not
limited to an index based on a currency or currencies other than that in which
such Debt
7
<PAGE>
Securities are stated to be payable, the manner in which such amounts shall be
determined; (xiii) whether such Debt Securities will be issued in the form of
one or more Global Securities and, if so, the identity of the depository for
such Global Securities; (xiv) any additions to or changes in the Events of
Default or covenants relating solely to such Debt Securities or any Events of
Default or covenants generally applicable to Debt Securities which are not to
apply to the particular series of Debt Securities in respect of which the
Prospectus Supplement is being delivered; (xv) if the Company will pay
additional amounts on any of the Debt Securities of any series to any Holder
who is a United States Alien, in respect of any tax or assessment withheld,
under what circumstances and with what procedures the Company will pay such
amounts; (xvi) any terms applicable to original issue discount, if any,
including the rate or rates at which such original issue discount, if any,
shall accrue; (xvii) the exchange or conversion of the Securities of that
series, at the option of the Holders thereof, for or into new Securities of a
different series or other securities or other property, including shares of
capital stock of the Company or any subsidiary of the Company or securities
directly or indirectly convertible into or exchangeable for any such shares;
and (xviii) any other terms of such Debt Securities not inconsistent with the
provisions of the Indenture. (Section 3.1) Unless otherwise indicated in the
Prospectus Supplement, the Indenture does not afford the holder of any series
of Debt Securities the right to tender such Debt Securities to the Company for
repurchase, or provide for any increase in the rate or rates of interest per
annum at which such Debt Securities will bear interest, in the event the
Company should become involved in a highly leveraged transaction.
The Debt Securities may be issued under the Indenture bearing no interest or
interest at a rate below the prevailing market rate at the time of issuance,
to be offered and sold at a discount below their stated principal amount.
Federal income tax consequences and other special considerations applicable to
any such discounted Debt Securities or to other Debt Securities offered and
sold at par which are treated as having been issued at a discount for federal
income tax purposes will be described in the Prospectus Supplement relating
thereto.
A substantial portion of the assets of the Company is held by subsidiaries.
The Company's right and the rights of its creditors, including the holders of
Debt Securities, to participate in the assets of any subsidiary upon its
liquidation or recapitalization would be subject to the prior claims of such
subsidiary's creditors, except to the extent that the Company may itself be a
creditor with recognized claims against such subsidiary. There is no
restriction in the Indenture against subsidiaries of the Company incurring
unsecured indebtedness.
Unless otherwise described in the Prospectus Supplement, the Debt Securities
will be issued only in registered form without coupons, in denominations of
$1,000 and multiples of $1,000, and will be payable only in United States
dollars. (Section 3.2) In addition, all or a portion of the Debt Securities of
any series may be issued as permanent registered Global Securities which will
be exchangeable for definitive Debt Securities only under certain conditions.
(Section 2.3) The Prospectus Supplement indicates the denominations to be
issued, the procedures for payment of interest and principal thereon, and
other matters. No service charge will be made for any registration of transfer
or exchange of the Debt Securities, but the Company may, in certain instances,
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. (Section 3.5)
The Company shall deliver Debt Securities of any series, duly executed by
the Company, to the Trustee for authentication, together with an order for the
authentication and delivery of such Debt Securities. The Trustee, in
accordance with such order, shall authenticate and deliver such Debt
Securities. No Debt Securities of any series shall be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose unless there
appears thereon a certificate of authentication substantially in the form
provided for in the Indenture and manually executed by the Trustee or an
authenticating agent duly appointed by the Trustee. Such certificate shall be
conclusive evidence, and the only evidence, that such Debt Securities have
been duly authenticated and delivered under, and are entitled to the benefits
of, the Indenture. (Section 3.3)
GLOBAL SECURITIES
The Debt Securities of a particular series may be issued in the form of one
or more Global Securities which will be deposited with a depository (the
"Depositary"), or its nominee, each of which will be identified in the
8
<PAGE>
Prospectus Supplement relating to such series. Unless and until exchanged, in
whole or in part, for Debt Securities in definitive registered form, a Global
Security may not be transferred except as a whole by the Depositary for such
Global Security to a nominee of such Depositary, by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor of such Depositary or a nominee
of such successor. (Section 2.3) The specific terms of the depository
arrangement with respect to any portion of a particular series of Debt
Securities to be represented by a Global Security will be described in the
Prospectus Supplement relating to such series. The Company anticipates that
the following provisions will apply to all depository arrangements.
Upon the issuance of a Global Security, the Depositary therefor or its
nominee will credit, on its book entry and registration system, the respective
principal amounts of the Debt Securities represented by such Global Security
to the accounts of such persons having accounts with such Depositary
("participants") as shall be designated by the underwriters or agents
participating in the distribution of such Debt Securities or by the Company if
such Debt Securities are offered and sold directly by the Company. Ownership
of beneficial interests in a Global Security will be limited to participants
or persons that may hold beneficial interests through participants. Ownership
of beneficial interests in a Global Security will be shown on, and the
transfer of such ownership will be effected only through, records maintained
by the Depositary therefor or its nominee (with respect to beneficial
interests of participants) or by participants or persons that hold through
participants (with respect to interests of persons other than participants).
The laws of some states require certain purchasers of securities to take
physical delivery thereof in definitive form. Such depository arrangements and
such laws may impair the ability to transfer beneficial interests in a Global
Security.
So long as the Depositary for a Global Security or its nominee is the
registered owner thereof, such Depositary or such nominee, as the case may be,
will be considered the sole owner or holder of the Debt Securities represented
by such Global Security for all purposes under the Indenture. Except as
provided below, owners of beneficial interests in a Global Security will not
be entitled to have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in definitive form and
will not be considered the owners or holders thereof under the Indenture for
any other purpose.
Principal, premium, if any, and interest payments on a Global Security
registered in the name of a Depositary or its nominee will be made to such
Depositary or nominee, as the case may be, as the registered owner of such
Global Security. None of the Company, the Trustee or any paying agent for Debt
Securities of the series represented by such Global Security will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in such Global Security or
for maintaining, supervising or reviewing any records relating to such
beneficial interests.
The Company expects that the Depositary for a Global Security or its
nominee, upon receipt of any payment of principal, premium or interest, will
immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of such Depositary or its
nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers registered in
"street name," and will be the responsibility of such participants.
If the Depositary for a Global Security representing Debt Securities of a
particular series is at any time unwilling or unable to continue as Depositary
and a successor Depositary is not appointed by the Company within 90 days, the
Company will issue Debt Securities of such series in definitive form in
exchange for such Global Security. In addition, the Company may at any time
and in its sole discretion determine not to have the Debt Securities of a
particular series represented by one or more Global Securities and, in such
event, will issue Debt Securities of such series in definitive form in
exchange for all of the Global Securities representing Debt Securities of such
series.
9
<PAGE>
CERTAIN COVENANTS OF THE COMPANY
Limitation on Indebtedness Secured by a Mortgage. The Indenture provides
that neither the Company nor any Restricted Subsidiary will create, assume,
guarantee or suffer to exist any Indebtedness secured by any mortgage, pledge,
lien, security interest, conditional sale or other title retention agreement
or other similar encumbrance ("Mortgage") on any assets of the Company or a
Restricted Subsidiary unless the Company secures or causes such Restricted
Subsidiary to secure the Debt Securities equally and ratably with, or prior
to, such secured Indebtedness. This restriction will not apply to Indebtedness
secured by (i) Mortgages on the property of any corporation which Mortgages
existed at the time such corporation became a Restricted Subsidiary; (ii)
Mortgages in favor of the Company or a Restricted Subsidiary; (iii) Mortgages
on property of the Company or a Restricted Subsidiary in favor of the United
States of America or any state or political subdivision thereof, or in favor
of any other country or any political subdivision thereof, to secure payment
pursuant to any contract or statute or to secure any indebtedness incurred for
the purpose of financing all or part of the purchase price or the cost of
construction or improvement of the property subject to such Mortgages; (iv)
Mortgages on any property subsequently acquired by the Company or any
Restricted Subsidiary, contemporaneously with such acquisition or within 120
days thereafter, to secure or provide for the payment of any part of the
purchase price, construction or improvement of such property, or Mortgages
assumed by the Company or any Restricted Subsidiary upon any property
subsequently acquired by the Company or any Restricted Subsidiary which were
existing at the time of such acquisition, provided that the amount of any
Indebtedness secured by any such Mortgage created or assumed does not exceed
the cost to the Company or Restricted Subsidiary, as the case may be, of the
property covered by such Mortgage; (v) Mortgages on the property of the
Company or a Restricted Subsidiary existing at the date of issuance of the
first series of Debt Securities under the Indenture; (vi) Mortgages
representing the extension, renewal or refunding of any Mortgage referred to
in the foregoing clauses (i) through (v), inclusive, or of any Indebtedness
secured thereby; and (vii) any other Mortgage, other than Mortgages referred
to in the foregoing clauses (i) through (vi), inclusive, so long as the
aggregate of all Indebtedness secured by Mortgages pursuant to this clause
(vii) and the aggregate Value of the Sale and Lease-Back Transactions in
existence at that time (not including those in connection with which the
Company has voluntarily retired funded Indebtedness as provided in the
Indenture) does not exceed 15% of Consolidated Net Tangible Assets. (Section
10.7)
Limitation on Sale and Lease-Back Transactions. The Indenture provides that
neither the Company nor any Restricted Subsidiary will enter into any Sale and
Lease-Back Transaction with respect to any Principal Property unless either
(i) the Company or such Restricted Subsidiary would be entitled, pursuant to
the foregoing covenant relating to "Limitation on Indebtedness Secured by a
Mortgage," to create, assume, guarantee or suffer Indebtedness in a principal
amount equal to or exceeding the Value of such Sale and Lease-Back Transaction
secured by a Mortgage on the property to be leased without equally and ratably
securing the Debt Securities or (ii) the Company or such Restricted
Subsidiary, within four months after the effective date of such transaction,
applies an amount equal to the greater of (x) the net proceeds of the sale of
the property subject to the Sale and Lease-Back Transaction and (y) the Value
of such Sale and Lease-Back Transaction, to the voluntary retirement of the
Debt Securities or other unsubordinated funded Indebtedness of the Company or
such Restricted Subsidiary. (Section 10.8)
Certain Definitions. "Consolidated Net Tangible Assets" is defined in the
Indenture to mean total consolidated assets of the Company and its Restricted
Subsidiaries, less (i) current liabilities of the Company and its Restricted
Subsidiaries, and (ii) the net book amount of all intangible assets of the
Company and its Restricted Subsidiaries. (Section 10.7)
"Consolidated Subsidiary" is defined in the Indenture to mean a Subsidiary
the accounts of which are consolidated with those of the Company for public
financial reporting purposes. (Section 1.1)
"Designated Subsidiaries" is defined in the Indenture to mean any Subsidiary
of the Company (other than a Subsidiary holding any Station Licenses or the
operating assets of any Stations) designated by the Company as a "Designated
Subsidiary" for purposes of the Indenture, by delivery to the Trustee of a
certificate of a senior
10
<PAGE>
officer of the Company identifying such Subsidiary, stating that such
Subsidiary shall be treated as a "Designated Subsidiary" for all purposes
under the Indenture and certifying that, after giving effect to such
designation, the Company will be in compliance with the provisions of the
Indenture applicable to such Designated Subsidiary, and such designation will
not result in an Event of Default under the Indenture; provided that the value
of the capital stock, partnership or other ownership interest directly or
indirectly held by the Company in all Designated Subsidiaries shall not exceed
at any one time an aggregate amount in excess of $250,000,000. Any Subsidiary
of a Designated Subsidiary is deemed to be a "Designated Subsidiary". (Section
10.11)
"Indebtedness" is defined in the Indenture to mean (i) all items which in
accordance with generally accepted accounting principles would be included in
determining long-term liabilities representing borrowed money or purchase
money obligations as shown on the liability side of a balance sheet (other
than liabilities evidenced by obligations under leases and contracts payable
for broadcast rights); (ii) to the extent not included in (i) above,
indebtedness secured by any Mortgage existing on property owned subject to
such Mortgage, whether or not such secured indebtedness has been assumed; and,
(iii) to the extent not included in (i) or (ii) above, contingent obligations
in respect of, or to purchase or otherwise acquire, any such indebtedness of
others described in the foregoing clauses (i) or (ii) above, including
guarantees and endorsements (other than for purposes of collection in the
ordinary course of business of any such indebtedness). (Section 10.7)
"Principal Property" is defined in the Indenture to mean any office
building, television station or transmission facility owned by the Company or
any Restricted Subsidiary or any other property or right owned by or granted
to the Company or any Restricted Subsidiary and used or held for use in the
television business conducted by the Company or any Restricted subsidiary,
except for any such property or right which, in the opinion of the Board of
Directors of the Company as set forth in a Board Resolution adopted in good
faith, is not material to the total business conducted by the Company and its
Restricted Subsidiaries considered as one enterprise. (Section 1.1)
"Restricted Subsidiary" is defined in the Indenture to mean any Subsidiary
of the Company other than a Designated Subsidiary. (Section 10.7)
"Sale and Lease-Back Transaction" is defined in the Indenture as the leasing
by the Company or a Subsidiary for a period of more than three years of any
principal property which has been sold or is to be sold or transferred by the
Company or any such subsidiary to any party (other than the Company or a
Subsidiary). (Section 10.8)
"Significant Subsidiary" is defined in the Indenture to mean any Subsidiary
(i) which, as of the close of the fiscal year of the Company immediately
preceding the date of determination, contributed more than 10% of the
consolidated net operating revenues of the Company and its Consolidated
Subsidiaries for such year or (ii) the total assets of which as of the close
of such immediately preceding fiscal year exceeded 10% of the Consolidated Net
Tangible Assets of the Company and its Consolidated Subsidiaries. (Section
5.1)
"Stations" is defined in the Indenture to mean the television broadcasting
stations from time to time owned by the Company or any of its Restricted
Subsidiaries. (Section 10.11)
"Station Licenses" is defined in the Indenture to mean all authorization,
licenses or permits issued by the FCC and granted or assigned to the Company
or any Restricted Subsidiary thereof, or under which the Company or any
Restricted Subsidiary thereof has the right to operate any Station, together
with any extensions or renewals thereof. (Section 10.11)
"Subsidiary" is defined in the Indenture to mean (i) a corporation more than
50% of the outstanding voting stock of which is owned, directly or indirectly,
by the Company or by one or more other Subsidiaries or by the Company and one
or more other Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which the Company or one or more Subsidiaries of
the Company has more than a 50% equity interest at the time or as to which the
Company or one or more of its Subsidiaries has the power to direct or cause
the direction
11
<PAGE>
of the management and policies of such entity by contract or otherwise. For
the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors or other governing body of such
corporation, whether at all times or only so long as no senior class of stock
has such voting power by reason of any contingency. (Section 1.1)
"Value" is defined in the Indenture to mean, with respect to any particular
Sale and Lease-Back Transaction, as of any particular time, the amount equal
to the greater of (i) the net proceeds of the sale or transfer of the property
leased pursuant to such Sale and Lease-Back Transaction or (ii) the fair value
in the opinion of the Board of Directors of the Company of such property at
the time of the Company's entering into such Sale and Lease-Back Transaction,
subject to adjustment at any particular time for the length of the remaining
initial lease term. (Section 10.8)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that the Company may not consolidate with or merge
into any other corporation, or convey, transfer or lease its properties and
assets substantially as an entirety to any other party, unless, among other
things, (i) the corporation formed by such consolidation or into which the
Company is merged or the party which acquires by conveyance or transfer, or
which leases the properties and assets of the Company substantially as an
entirety, is organized and existing under the laws of the United States, any
State thereof or the District of Columbia and expressly assumes the Company's
obligations on the Debt Securities and under the Indenture by means of an
indenture supplemental to the Indenture and (ii) immediately after giving
effect to such transaction no Event of Default, and no event which, after
notice or lapse of time, or both, would become an Event of Default, shall have
occurred and be continuing. (Section 8.1)
EVENTS OF DEFAULT, WAIVER AND NOTICE
With respect to the Debt Securities of any series, an Event of Default is
defined in the Indenture as being (i) default for 30 days in payment of any
interest upon the Debt Securities of such series; (ii) default in payment of
the principal of or premium, if any, on the Debt Securities of such series
when due either at maturity or upon acceleration, redemption or otherwise;
(iii) default by the Company in the performance of any other of the covenants
or warranties in the Indenture for the benefit of such series applicable to
the Company which shall not have been remedied for a period of 60 days after
Notice of Default; (iv) the failure to pay when due any indebtedness for money
borrowed (including indebtedness under Debt Securities other than that series)
with a principal amount then outstanding in excess of $20,000,000 under any
mortgage, indenture or instrument under which any such indebtedness is issued
or secured (including the Indenture), or any other default which results in
the acceleration of maturity of such indebtedness, unless such indebtedness or
acceleration shall have been discharged or annulled within 10 days after due
notice by the Trustee or by Holders of at least 10% in principal amount of the
Outstanding Debt Securities of that series; (v) certain events of bankruptcy,
insolvency or reorganization of the Company or any Significant Subsidiary;
(vi) default in the deposit of any sinking fund payment when and as due by the
terms of any Debt Securities of such series; and (vii) any other Event of
Default provided in the supplemental indenture under which such series of Debt
Securities is issued or in the form of security for such series. (Section 5.1)
Within 90 days after the occurrence of any default under the Indenture with
respect to Debt Securities of any series, the Trustee is required to notify
the Holders of Debt Securities of any default unless, in the case of any
default other than a default in the payment of principal of or premium, if
any, or interest on any Debt Securities, a trust committee of the Board of
Directors or Responsible Officers of the Trustee in good faith considers it in
the interest of the Holders of Debt Securities not to do so. (Section 6.2)
The Indenture provides that if an Event of Default, other than an Event of
Default as described in clauses (iv) or (v) in the above paragraph with
respect to Debt Securities of any series shall have occurred and be
continuing, either the Trustee or the Holders of at least 25% in aggregate
principal amount of the Debt Securities of that series then outstanding may
declare the entire principal and accrued interest of all Debt Securities of
such series (or, if any of the Debt Securities of that series are Original
Issue Discount Securities, such portion of the principal amount of such Debt
Securities as may be specified by the terms thereof) to be due and payable
12
<PAGE>
immediately. If an Event of Default described in clauses (iv) or (v) in the
above paragraph with respect to any series of Debt Securities Outstanding
under the Indenture occurs and is continuing, the principal amount (or, if any
of the Debt Securities of that series are Original Issue Discount Securities,
such portion of the principal amount of such Debt Securities as may be
specified by the terms thereof) shall automatically, and without any
declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable. Any time after acceleration with respect to the
Debt Securities of any series has been made, but before a judgment or decree
for the payment of money based on such acceleration has been obtained by the
Trustee, the Holders of a majority in principal amount of the Outstanding Debt
Securities of that series, may, under certain circumstances, rescind and annul
such acceleration. The Holders of a majority in principal amount of the
Outstanding Debt Securities of any series may waive any past defaults under
the Indenture with respect to the Debt Securities of such series, except
defaults in payment of principal of or premium, if any (other than by a
declaration of acceleration), or interest on the Debt Securities or provisions
of such series that may not be modified or amended without the consent of the
Holders of all Outstanding Debt Securities of such series. (Sections 5.2 and
5.13)
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of its covenants and agreements under the
Indenture. (Section 10.9)
Subject to certain conditions set forth in the Indenture, the Holders of a
majority in principal amount of the then Outstanding Debt Securities of any
series with respect to which an Event of Default has occurred shall have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee under the Indenture in respect of such
series. No Holder of any Debt Securities shall have any right to cause the
Trustee to institute any proceedings, judicial or otherwise, with respect to
the Indenture or any remedy thereunder unless, among other things, the Holder
or Holders of Debt Securities shall have offered to the Trustee indemnity
satisfactory to it against costs, expenses and liabilities relating to such
proceedings. (Sections 5.12 and 5.7)
The Indenture provides that, in determining whether the Holders of the
requisite aggregate principal amount of the Outstanding Debt Securities have
given, made or taken any request, demand, authorization, direction, notice,
consent, waiver or other action thereunder as of any date, (a) the principal
amount of an Original Issue Discount Security which shall be deemed to be
Outstanding shall be the amount of the principal thereof which would be due
and payable as of such date upon acceleration of the Maturity thereof to such
date, (b) if, as of such date, the principal amount payable at the Stated
Maturity of a Debt Security is not determinable, the principal amount of such
Debt Security which shall be deemed to be Outstanding shall be the amount as
established in or pursuant to a Board Resolution and set forth, or determined
in the manner provided, in an Officers' Certificate, or established in one or
more supplemental indentures, prior to the issuance of such Debt Securities,
(c) the principal amount of a Debt Security denominated in one or more foreign
currencies or currency units which shall be deemed to be Outstanding shall be
the U.S. dollar equivalent, determined as of such date in the manner as
described in clause (b) above, of the principal amount of such Debt Security
(or, in the case of a Debt Security described in clause (a) or (b) above, of
the amount determined as provided in such clause), and (d) Debt Securities
owned by the Company or any other obligor upon the Debt Securities or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent, waiver or other action, only Debt Securities which
the Trustee knows to be so owned shall be so disregarded. Debt Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Debt Securities and that the pledgee is not the
Company or any other obligor upon the Debt Securities or any Affiliate of the
Company or of such other obligor. (Section 1.1)
MODIFICATION OF THE INDENTURE
The Indenture provides that the Company and the Trustee may, without the
consent of the Holders, modify or amend the Indenture in order to (i) evidence
the succession of another corporation to the Company and the assumption by any
such successor corporation of the covenants of the Company in the Indenture
and in the Debt Securities; (ii) add to the covenants, agreements and
obligations of the Company for the benefit of the Holders
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of all or any series of Debt Securities; (iii) add any additional Events of
Default to the Indenture; (iv) add to or change any of the provisions of the
Indenture necessary to permit the issuance of Debt Securities in bearer form,
registrable as to principal, and with or without interest coupons; (v) add to,
change or eliminate any of the provisions of the Indenture, in respect of one
or more series of Debt Securities, provided that any such addition, change or
elimination may not apply to any Debt Security of any series created prior to
such addition, change or elimination; (vi) establish the form or terms of Debt
Securities of any series as permitted under the Indenture; (vii) evidence and
provide for the acceptance of appointment under the Indenture by a successor
Trustee with respect to the Debt Securities of one or more series; or, (viii)
cure any ambiguity, or correct or supplement any provision of the Indenture
which may be inconsistent with any other provision of the Indenture, provided
such action does not adversely affect the interest of the Holders of Debt
Securities of any series. (Section 9.1)
With respect to the Debt Securities of any series, modification or amendment
of the Indenture may be made by the Company and the Trustee with the consent
of the Holders of a majority in aggregate principal amount of the Debt
Securities of such series, except that no such modification or amendment may,
without the consent of the Holders of all then Outstanding Debt Securities of
such series (i) change the due date of the principal of, or any installment of
principal of or interest on, any Debt Securities of such series; (ii) reduce
the principal amount of, or any installment of principal or interest or rate
of interest on, or any premium payable on redemption of any Debt Securities of
such series; (iii) reduce the principal amount of any Debt Securities of such
series payable upon acceleration of the maturity thereof; (iv) change the
place or the currency of payment of principal of, or any premium or interest
on, any Debt Securities of such series; (v) impair the right to institute suit
for the enforcement of any payment on or with respect to any Debt Securities
of such series on or after the due date thereof (or, in the case of
redemption, on or after the redemption date thereof); (vi) reduce the
percentage in principal amount of Debt Securities of such series then
outstanding, the consent of whose holders is required for modification or
amendment of the Indenture or for waiver of compliance with certain provisions
of the Indenture or for waiver of certain defaults; or, (vii) modify certain
provisions of the Indenture regarding the amendment or modification of, or
waiver with respect to, any provision of the Indenture or the Debt Securities.
(Section 9.2)
DISCHARGE OF THE INDENTURE
The Indenture, with respect to the Debt Securities of any series (if all
series issued under the Indenture are not to be affected), shall upon the
written request or order of the Company cease to be of further effect (except
as to any surviving rights of registration of transfer or exchange of Debt
Securities therein expressly provided for), when (i) either (A) all Debt
Securities theretofore authenticated and delivered (other than (1) Debt
Securities which have been destroyed, lost or stolen and which have been
replaced or paid and (2) Debt Securities for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust)
have been delivered to the Trustee for cancellation or (B) all such Debt
Securities not theretofore delivered to the Trustee for cancellation (1) have
become due and payable, (2) will become due and payable at their stated
maturity within one year or (3) if the Debt Securities of such series are
denominated and payable only in United States dollars and such Debt Securities
are to be called for redemption within one year, and the Company in the case
of (1), (2) or (3) above, has deposited or caused to be deposited with the
Trustee an amount in United States dollars sufficient to pay and discharge the
entire indebtedness on such Debt Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and interest to
the date of such deposit (in the case of Debt Securities which have become due
and payable) or to the stated maturity or any redemption date, as the case may
be; (ii) the Company has paid or caused to be paid all other sums payable
under the Indenture by the Company; and (iii) the Company has delivered to the
Trustee an officers' certificate and an opinion of counsel, each stating that
all conditions precedent provided for in the Indenture relating to the
satisfaction and discharge of the Indenture have been complied with. (Section
4.1)
DEFEASANCE AND COVENANT DEFEASANCE
Unless otherwise specified in the Prospectus Supplement, the following
provisions relating to defeasance and discharge of indebtedness, or relating
to defeasance of certain covenants in the Indenture, will apply to the Debt
Securities of any series, or to any specified part of a series. (Section 13.1)
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Defeasance and Discharge. The Indenture provides that the Company will be
discharged from all its obligations with respect to such Debt Securities
(except for certain obligations to exchange or register the transfer of Debt
Securities, to replace stolen, lost or mutilated Debt Securities, to maintain
paying agencies and to hold moneys for payment in trust) upon the deposit in
trust for the benefit of the Holders of such Debt Securities of money or U.S.
Government Obligations, or both, which, through the payment of principal and
interest in respect thereof in accordance with their terms, will provide money
in an amount sufficient to pay any installment of principal of and any premium
and interest on and any mandatory sinking fund payments in respect of such
Debt Securities on the respective Stated Maturities in accordance with the
terms of the Indenture and such Debt Securities. Such defeasance or discharge
may occur only if, among other things, the Company has delivered to the
Trustee an opinion of counsel to the effect that the Company has received
from, or there has been published by, the United States Internal Revenue
Service a ruling, or there has been a change in tax law, in either case to the
effect that Holders of such Debt Securities will not recognize gain or loss
for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred. (Sections 13.1 and 13.2)
Defeasance of Certain Covenants. The Indenture provides that the Company may
omit to comply with certain restrictive covenants described under the captions
"Certain Covenants of the Company--Limitation on Indebtedness Secured by a
Mortgage" and "Certain Covenants of the Company--Limitation on Sale and
Leaseback Transactions" above and any that may be described in the Prospectus
Supplement, and that such omission will be deemed not to be or result in an
Event of Default, in each case with respect to such Debt Securities. In order
to do so, the Company will be required to deposit, in trust for the benefit of
the Holders of such Debt Securities, money or U.S. Government Obligations, or
both, which through the payment of principal and interest in respect thereof
in accordance with their terms, will provide money in an amount sufficient to
pay any installment of the principal of and any premium and interest on and
any mandatory sinking fund payments in respect of such Debt Securities on the
respective Stated Maturities in accordance with the terms of the Indenture and
such Debt Securities. The Company will also be required, among other things,
to deliver to the Trustee an opinion of counsel to the effect that Holders of
such Debt Securities will not recognize gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain obligations and
will be subject to federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit and
defeasance had not occurred. In the event the Company exercises this option
with respect to any Debt Securities and such Debt Securities are declared due
and payable because of the occurrence of any Event of Default, the amount of
money and U.S. Government Obligations so deposited in trust will be sufficient
to pay amounts due on such Debt Securities at the time of their respective
Stated Maturities but may not be sufficient to pay amounts due on such Debt
Securities upon any acceleration resulting from such Event of Default. In such
case, the Company will remain liable for such payments. (Sections 13.1 and
13.2)
THE DEBT TRUSTEE
Prior to the offering of any Debt Securities, a trustee will be appointed by
the Company to serve as Trustee under the Indenture. The Trustee may be a
depository for funds of and perform other services for and transact other
banking business with the Company in the normal course of business.
The Trustee may serve as a trustee under other indentures entered into by
the Company. Upon the occurrence of an Event of Default under the Indenture or
an event which, after notice or lapse of time or both, would become such an
Event of Default, or upon the occurrence of a default under any such other
indenture, the Trustee may be deemed to have a conflicting interest with
respect to the Debt Securities for purposes of the Trust Indenture Act and,
unless the Trustee is able to eliminate any such conflicting interest, the
Trustee may be required to resign as Trustee under the Indenture. In that
event, the Company would be required to appoint a successor Trustee for the
Indenture.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York. (Section 1.12)
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DESCRIPTION OF CAPITAL STOCK
Set forth below is a description of the capital stock of the Company
pursuant to the Company's Amended and Restated Certificate of Incorporation.
Common Stock. The Company has 200 million shares of authorized common stock,
par value $.01 per share, with 100 million shares designated as Series A
Common Stock and 100 million shares designated as Series B Common Stock.
Except as otherwise described below, the issued and outstanding shares of
Series A Common Stock and Series B Common Stock will vote together as a single
class on all matters submitted to a vote of stockholders, with each issued and
outstanding share of Series A Common Stock and Series B Common Stock entitling
the holder thereof to one vote on all such matters. With respect to any
election of directors, (i) the holders of the shares of Series A Common Stock
will be entitled to vote separately as a class to elect two members of the
Company's Board of Directors (the Series A Directors) and (ii) the holders of
the shares of Series B Common Stock will be entitled to vote separately as a
class to elect the balance of the Company's Board of Directors (the Series B
Directors); provided, however, that the number of Series B Directors shall not
constitute less than a majority of the Company's Board of Directors. Any
director may resign at any time upon giving written notice to the Company. The
directors may only be removed for cause by a vote of the holders of a majority
of the Company's Common Stock voting together as a class. Any Series A
Director who resigns or is removed may be replaced only by the remaining
Series A Director or, if there are no remaining Series A Directors, by a vote
of the holders of a majority of the Series A Common Stock voting separately as
a class. Similarly, any Series B Director who resigns or is removed may be
replaced only by the remaining Series B Directors or, if there are no
remaining Series B Directors, by a vote of the holders of a majority of the
Series B Common Stock voting separately as a class. If no shares of Series A
Common Stock are issued and outstanding at any given time, then the holders of
shares of Series B Common Stock will elect all of the Company's directors.
Conversely, if no shares of Series B Common Stock are issued and outstanding,
then the holders of the shares of Series A Common Stock will elect all of the
Company's directors.
All of the outstanding shares of Series B Common Stock are required to be
held by Hearst or a Permitted Transferee (as defined below). No holder of
shares of Series B Common Stock may transfer any such shares to any person
other than to (i) Hearst; (ii) any corporation into which Hearst is merged or
consolidated or to which all or substantially all of Hearst's assets are
transferred; or (iii) any entity controlled by Hearst (each a "Permitted
Transferee"). Series B Common Stock, however, may be converted at any time
into Series A Common Stock and freely transferred, subject to the terms and
conditions of the Company's Amended and Restated Certificate of Incorporation
and to applicable securities laws limitations. If at any time the Permitted
Transferees first hold in the aggregate less than 20% of all shares of the
Company's Common Stock that are then issued and outstanding, then each issued
and outstanding share of Series B Common Stock automatically will be converted
into one fully-paid and nonassessable share of Series A Common Stock, and the
Company will not be authorized to issue any additional shares of Series B
Common Stock. Notwithstanding any other provision to the contrary, no holder
of Series B Common Stock shall (i) transfer any shares of Series B Common
Stock; (ii) convert Series B Common Stock; or (iii) be entitled to receive any
cash, stock, other securities or other property with respect to or in exchange
for any shares of Series B Common Stock in connection with any merger or
consolidation or sale or conveyance of all or substantially all of the
property or business of the Company as an entity, unless all necessary
approvals of the Federal Communications Commission ("FCC") as required by the
Communications Act of 1934, as amended (the "Communications Act"), and the
rules and regulations thereunder have been obtained or waived.
Preferred Stock. The Company has one million shares of authorized preferred
stock, par value $.01 per share. Under the Company's Amended and Restated
Certificate of Incorporation, the Company has two issued and outstanding
series of preferred stock, Series A Preferred Stock and Series B Preferred
Stock (collectively, the "Preferred Stock"). Each series of Preferred Stock
has 10,938 shares issued and outstanding. The Preferred Stock has a cash
dividend feature whereby each share will accrue $65 per share annually, to be
paid quarterly. The Series A Preferred Stock is convertible at the option of
the holders, at any time, into Series A Common
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Stock at a conversion price of (i) on or before December 31, 2000, $35; (ii)
during the calendar year December 31, 2001, the product of 1.1 times $35; and
(iii) during each calendar year after December 31, 2001, the product of 1.1
times the preceding year's conversion price. The Company has the option to
redeem all or a portion of the Series A Preferred Stock at any time after June
11, 2001 at a price equal to $1,000 per share plus any accrued and unpaid
dividends.
The holders of Series B Preferred Stock have the option to convert such
Series B Preferred Stock into shares of Series A Common Stock at any time
after June 11, 2001 at the average of the closing prices for the Series A
Common Stock for each of the 10 trading days prior to such conversion date.
The Company has the option to redeem all or a portion of the Series B
Preferred Stock at any time on or after June 11, 2001, at a price equal to
$1,000 per share plus any accrued and unpaid dividends.
The issued and outstanding shares of Series A Preferred Stock and Series B
Preferred Stock are entitled to vote on all matters submitted to a vote of
holders of Series A Common Stock, with such shares of Series A Preferred Stock
and Series B Preferred Stock voting together as a single class with the shares
of Series A Common Stock. Each share of Series A Preferred Stock is entitled
to the number of votes (rounded up to the next whole number) equal to the
number of shares of Series A Common Stock into which such share is
convertible. Each share of Series B Preferred Stock is entitled to (i) 29
votes, if the record date for the stockholder meeting at which such votes are
to be cast is before July 11, 2001 or (ii) thereafter, the number of votes
(rounded up to the next whole number) equal to the number of shares of Series
A Common Stock into which such share is convertible. Except with respect to
any proposal to amend the Company's Amended and Restated Certificate of
Incorporation that may adversely affect the rights of the respective series of
Preferred Stock and except as may be required by Delaware General Corporation
Law ("DGCL"), neither the Series A Preferred Stock nor the Series B Preferred
Stock is entitled to vote separately as a class.
FOREIGN OWNERSHIP
Pursuant to the Company's Amended and Restated Certificate of Incorporation
and in order to comply with FCC rules and regulations, the Company will not be
permitted to issue any shares of capital stock of the Company to (i) a person
who is a citizen of a country other than the U.S.; (ii) any entity organized
under the laws of a government other than the government of the U.S. or any
state, territory or possession of the U.S.; (iii) a government other than the
government of the U.S. or any state, territory or possession of the U.S.; (iv)
a representative of, or an individual or entity controlled by, any of the
foregoing; or (v) any other person or entity whose alien status would be
cognizable under the Communications Act (individually, an "Alien;"
collectively, "Aliens"), any shares of capital stock of the Company if such
issuance would result in the total number of shares of such capital stock held
or voted by Aliens exceeding 25% of (x) the capital stock outstanding at any
time and from time to time or (y) the total voting power of all shares of such
capital stock outstanding and entitled to vote at any time and from time to
time. In addition, the Company will not be permitted to transfer on the books
of the Company any capital stock to any Alien that would result in the total
number of shares of such capital stock held or voted by Aliens exceeding such
25% limits. The Company's Amended and Restated Certificate of Incorporation
also provides that no Alien or Aliens, individually or collectively, will be
entitled to vote or direct or control the vote of more than 25% of (i) the
total number of all shares of capital stock of the Company outstanding at any
time and from time to time or (ii) the total voting power of all shares of
capital stock of the Company outstanding and entitled to vote at any time and
from time to time (or such limits greater or lesser than 25% as may be
subsequently imposed by statute or regulation). The Company's Board of
Directors will have the right to redeem any shares determined to be owned by
an Alien or Aliens, at the fair market value of the shares to be redeemed, if
the Board of Directors determines such redemption is necessary to comply with
these Alien ownership restrictions of the Communications Act and rules of the
FCC.
CERTAIN ANTI-TAKEOVER MATTERS
General. Certain provisions of the Company's Amended and Restated
Certificate of Incorporation and the DGCL may have the effect of impeding the
acquisition of control of the Company by means of a tender offer, a proxy
fight, open market purchases or otherwise in a transaction not approved by the
Company's Board of Directors.
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The provisions of the Company's Amended and Restated Certificate of
Incorporation and the DGCL described below are designed to reduce, or have the
effect of reducing, the vulnerability of the Company to an unsolicited
proposal for the restructuring or sale of all or substantially all of the
assets of the Company or an unsolicited takeover attempt that is unfair to the
Company's stockholders. The summary of such provisions set forth below does
not purport to be complete and is subject to and qualified in its entirety by
reference to the Company's Amended and Restated Certificate of Incorporation,
the Company's bylaws and the DGCL.
The Company's Board of Directors has no present intention to introduce
additional measures that might have an anti-takeover effect. The Company's
Board of Directors, however, expressly reserves the right to introduce such
measures in the future.
Classified Board; Removal of Directors. The Company's Amended and Restated
Certificate of Incorporation provides that the Company's Board of Directors
shall consist of not less than seven directors, with the exact number of
directors to be determined from time to time by the Company's Board of
Directors and designated in the bylaws. The Company's bylaws provide that the
number of directors will be 11 and thereafter the minimum number of directors
will be seven and the maximum number of directors will be 15. The Company's
Amended and Restated Certificate of Incorporation further provides that the
Company's Board of Directors will be divided into two classes, as long as
there are no more than two Series A Directors, and that, after an initial
term, each director will be elected for a two-year term. The Company's Amended
and Restated Certificate of Incorporation also provides that, in the event
there are three or more Series A directors, the Company's Board of Directors
will be divided into three classes, and that, after an initial term, each
director will be elected for a three-year term. Whether there are two or three
classes of directors, the Series A Directors are to be divided among the
classes as equally as possible. A classified Board of Directors is intended to
assure the continuity and stability of the Company's Board of Directors and
the Company's business strategies and policies. The classified board provision
could increase the likelihood that, in the event of a takeover of the Company,
incumbent directors will retain their positions. In addition, the classified
board provision helps ensure that the Company's Board of Directors, if
confronted with an unsolicited proposal from a third party that has acquired a
block of the voting stock of the Company, will have sufficient time to review
the proposal and appropriate alternatives and to seek the best available
result for all stockholders. The directors may only be removed for cause by a
vote of the holders of a majority of the Company's Common Stock voting
together as a class.
Business Combinations. The Company, as a Delaware corporation, is subject to
Section 203 ("Section 203") of the DGCL. In general, subject to certain
exceptions, Section 203 prohibits a Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years following the date that such stockholder became an interested
stockholder, unless (i) prior to such date the Board approved either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder; (ii) upon consummation of the transaction
that resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding for
purposes of determining the number of shares outstanding those shares owned by
(x) persons who are directors and also officers and (y) employee stock plans
in which employee participants do not have the right to determine
confidentially whether or not shares held subject to the plan will be tendered
in a tender or exchange offer); or (iii) at or subsequent to such time, the
business combination is approved by the Board and authorized at an annual or
special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66% of the outstanding voting stock that is not
owned by the interested stockholder. Section 203 defines a "business
combination" to include certain mergers, consolidations, asset sales and stock
issuances and certain other transactions resulting in a financial benefit to
an "interested stockholder." In addition, Section 203 defines an "interested
stockholder" to include any entity or person beneficially owning 15% or more
of the outstanding voting stock of the corporation and any entity or person
affiliated with such an entity or person.
Controlling Stockholder. Hearst currently owns 100% of the Company's issued
and outstanding Series B Common Stock, initially constituting in excess of 80%
of the outstanding shares of the Company's Common
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Stock. The holders of the shares of Series A Common Stock are entitled to vote
to elect two members of the Company's Board of Directors. As the holder of all
of the Company's outstanding shares of Series B Common Stock, Hearst is
entitled to vote to elect the balance of the members of the Company's Board of
Directors (the Series B Directors); provided, however, that the Series B
Directors shall not constitute less than a majority of the Company's Board of
Directors. Hearst's ownership of the Series B Common Stock may have the effect
of impeding the acquisition of control of the Company.
REGISTRATION RIGHTS
The Company has executed a Registration Rights Agreement for the benefit of
certain holders of Series A Common Stock that are former partners of Argyle
Television Investors, L.P. (collectively, the "ATI Holders"). The Registration
Rights Agreement provides that the ATI Holders will have the right, subject to
certain limitations and conditions, to require the Company to register for
distribution through a firm commitment underwriting all or any portion of
Series A Common Stock issued to them in the Merger. In addition, the ATI
Holders also will have piggyback registration rights with respect to any
proposed offering of Series A Common Stock for cash through a firm commitment
underwriting sought by the Company.
LIMITATIONS ON DIRECTOR LIABILITY
The Company's Amended and Restated Certificate of Incorporation provides
that, to the fullest extent permitted by the DGCL, a director or former
director of the Company shall not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar of Series A Common Stock is Harris Trust
and Savings Bank.
PLAN OF DISTRIBUTION
The Company may sell the Securities in any one or more of the following
three ways: (i) to or through underwriters or dealers; (ii) through agents; or
(iii) directly to one or more purchasers. With respect to each series of
Securities being offered hereby, the terms of the offering of the Securities
of such series, including the name or names of any underwriters, dealers or
agents, the purchase price of such Securities and the proceeds to the Company
from such sale, any underwriting discounts, selling commissions and other
items constituting underwriters', dealers' or agents' compensation, any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers or agents, and any securities exchanges on which
the Securities of such series may be listed, will be set forth in, or may be
calculated from the information set forth in, the Prospectus Supplement. Only
underwriters so named in the Prospectus Supplement will be deemed to be
underwriters in connection with the Securities offered thereby.
If underwriters are used to sell any of the Securities, the Securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time
of sale. The Securities may be offered to the public either through
underwriting syndicates represented by managing underwriters or by
underwriters without a syndicate. Unless otherwise set forth in the Prospectus
Supplement, the obligations of the underwriters to purchase Securities will be
subject to certain conditions precedent and the underwriters will be obligated
to purchase all the Securities offered by the Prospectus Supplement if any of
such Securities are purchased. In connection with the sale of Securities,
underwriters may be deemed to have received compensation from the Company in
the form of underwriting discounts or commissions and may also receive
commissions from purchasers of Securities for whom they may act as agent.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
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the underwriters and/or commissions (which may be changed from time to time)
from the purchasers for whom they may act as agent. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid
to dealers may be changed from time to time.
The Company may grant an option to the underwriters named in the Prospectus
Supplement, exercisable during a fixed period after the date of the Prospectus
Supplement, to purchase in the aggregate up to a maximum of 1,500,000
additional shares of Series A Common Stock to cover overallotments, if any, at
the same price per share as the initial shares to be purchased by the
underwriters. The underwriters may purchase such shares only to cover the
overallotments made in connection with an offering of Series A Common Stock.
Securities may also be sold directly by the Company or through agents (which
may also act as principals) designated by the Company from time to time. Any
agent involved in the offer or sale of the Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth in, or may be calculated from the
information set forth in, the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a
best efforts basis for the period of its appointment. In the case of sales
made directly by the Company, no commission will be payable.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a future date specified in the
Prospectus Supplement. Such contracts will be subject to the conditions set
forth in the Prospectus Supplement, and the Prospectus Supplement will set
forth the commissions payable for solicitation of such contracts.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that the agents or underwriters may be
required to make in respect thereof. Agents and underwriters may be customers
of, engage in transactions with, or perform services for the Company or its
affiliates in the ordinary course of business.
The Company's Series A Common Stock is currently quoted on the Nasdaq
National Market under the symbol "HATV." The Debt Securities may or may not be
listed on a national securities exchange or a foreign securities exchange. The
Debt Securities will be a new issue of securities with no established trading
market. In the event that the Debt Securities are not listed on a national
securities exchange, certain broker-dealers may make a market in the Debt
Securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given that any broker-
dealer will make a market in the Debt Securities or as to the liquidity of the
trading market for the Debt Securities. The Prospectus Supplement with respect
to the Debt Securities of any series will state, if known, whether or not any
broker-dealer intends to make a market in such Securities. If no such
determination has been made, the Prospectus Supplement will so state.
LEGAL MATTERS
Certain legal matters relating to the Securities will be passed upon for the
Company by Rogers & Wells, New York, New York. Certain legal matters relating
to the Securities will be passed upon for any underwriters, dealers or agents
by Dow, Lohnes & Albertson, PLLC, Washington, D.C.
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EXPERTS
The consolidated financial statements of Argyle appearing in the Argyle's
Form 10-K for the year ended December 31, 1996 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon
such reports given upon the authority of such firm as experts in accounting
and auditing.
The combined financial statements of the Selected Gannett Television
Stations and the financial statements of Multimedia Entertainment, Inc.
(d.b.a. WLWT-TV) a subsidiary of Multimedia, Inc., appearing in Argyle
Television Inc.'s Proxy Statement/Prospectus filed on July 31, 1997 and
appearing in the Argyle Television, Inc. Current Report on Form 8-K/A filed on
April 15, 1997, and incorporated by reference in this Prospectus, have been so
incorporated in reliance on the reports of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The combined financial statements as of December 31, 1995 and 1996 and for
each of the three years in the period ended December 31, 1996 of the Hearst
Broadcast Group of The Hearst Corporation appearing in the Company's Proxy
Statement/Prospectus filed on July 31, 1997 and the related financial
statement schedule included elsewhere therein have been audited by Deloitte &
Touche LLP, independent auditors, as set forth in their reports thereon
included therein and incorporated herein by reference. Such combined financial
statements and financial statement schedule are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
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