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[NBC LETTERHEAD]
[NBC LOGO]
June 30, 2000
Hearst-Argyle Television Incorporated
888 Seventh Avenue
New York, New York 10106
Re: Agreement for NBC Affiliation
Ladies and Gentlemen:
This letter sets forth the agreement (the "Letter Agreement") between the NBC
Television Network ("NBC") and Hearst-Argyle Television Incorporated
("Hearst-Argyle") regarding the affiliation with NBC of television broadcasting
stations WBAL (Baltimore, Maryland), WLWT (Cincinnati, Ohio), WYFF (Greenville,
South Carolina), WGAL (Lancaster, Pennsylvania), WXII (Winston-Salem, North
Carolina), WPTZ (Plattsburgh, New York), KSBW (Salinas, California), KCRA
(Sacramento, California), WESH (Orlando, Florida), and WDSU (New Orleans,
Louisiana) (collectively, "Stations"):
1. Affiliation of Stations. Each Station shall be affiliated with NBC on
the terms and subject to the conditions set forth in the term sheet attached as
Exhibit A hereto, which is incorporated herein by reference. The parties intend
to negotiate one or more long-form agreement(s) containing such terms and
conditions (the "Definitive Documentation") within ninety (90) days from the
date of execution of this Letter Agreement; to the extent that the parties fail
to execute the Definitive Documentation, this Letter Agreement shall govern.
2. Binding Agreement. This Letter Agreement shall be binding upon NBC and
Hearst-Argyle and each of their respective subsidiaries and affiliates upon
execution hereof by each of NBC and Hearst-Argyle.
3. Termination. In the event that this Letter Agreement has not been
executed by Hearst-Argyle by 6:00 P.M. New York City time on June 30, 2000, the
offer set forth in this Letter Agreement shall automatically terminate at such
time.
4. Miscellaneous. This Letter Agreement and the term sheet (Exhibit A) and
Attachments 1 and 2 attached thereto constitute the entire agreement and
understanding of the parties relating to the affiliation of Stations with NBC
and supersede all prior agreements, negotiations, and understandings between the
parties, both oral and written, relating to the affiliation of Stations with
NBC, other than with respect to the Inventory Management Plan, the NBC Affiliate
Promotion Plan and the most recent amendment to each Station's existing
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Page 2 June 30, 2000
affiliation agreement with respect to network non-duplication protection under
Federal Communications Commission Rules Section 76.92, all of which agreements
shall continue in accordance with their terms. No waiver or modification of any
provision of this Letter Agreement shall be effective unless in writing and
signed by both parties. The terms of this Letter Agreement shall apply to the
parties hereto and any of their successors or assigns; provided, however, that
except as set forth on Exhibit A, this Letter Agreement may not be transferred
or assigned by Hearst-Argyle without the prior written consent of NBC. This
Letter Agreement may be executed in counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute the same agreement.
5. Governing Law and Jurisdiction. This Letter Agreement shall be governed
by and construed under the laws of the State of New York applicable to contracts
fully performed in New York, without regard to New York conflicts law. The
parties hereto irrevocably consent to and submit to the exclusive jurisdiction
of the federal and state courts located in the County of New York. The parties
hereto irrevocably waive any and all rights to trial by jury in any proceeding
arising out of or relating to this Agreement.
If you are in agreement with the above terms and conditions, please
indicate your acceptance by signing in the space provided below, and return one
original to us. In accordance with Paragraph 3 above, this Letter Agreement
shall be null and void if not signed and returned to us by 5:00 P.M. New York
City time on June 30, 2000.
Very truly yours,
NBC TELEVISION NETWORK
By: /s/ Randel A. Falco
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Name: Randel A. Falco
Title: President
ACCEPTED AND AGREED:
HEARST-ARGYLE TELEVISION INCORPORATED
By: /s/ David J. Barrett
------------------------------------
Name: David J. Barrett
Title: President
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EXHIBIT A
NBC AFFILIATION AGREEMENT TERMS: HEARST-ARGYLE TELEVISION
Stations: WBAL (Baltimore), WLWT (Cincinnati), WYFF
(Greenville), WQAL (Lancaster), WXII (Winston-Salem),
WPTZ (Plattsburgh), KSBW (Salinas), KCRA
(Sacramento), WESH (Orlando), and WDSU (New Orleans).
Term: 9 years, 6 months: from 7/1/00 -- 12/31/09.
Programmed Time Periods: Consistent with current practices, subject to
changes from time to time at NBC's discretion.
Program Clearance: Full, in pattern clearance of all Network
programming.
Full clearance of special programming, including
Sports.
Subject only to preemptions strictly in accordance
with FCC rules and regulations.
Stations to reimburse NBC for lost network gross ad
revenue pursuant to Attachment 1, for any
non-clearances other than preemptions due to live
breaking news.
Local Inventory Level: Average weekly number of thirty-second units
available for each Station's local announcements
during Prime Time shall be not fewer than 100 per
week (with adjustments for national sports
programming, Olympics programming, special news
coverage, and other special events).
Change in Operations: Each Station shall guarantee local news programming
lead-ins.
Branding: NBC and Stations agree to on-air promotion, unified
Graphic design, NBC Peacock logo, and NBC
identification in a cooperative effort to brand as
'NBC Station'.
On-air Network Promotion: Each Station shall contribute a total of 23,000 GRP's
per year of Network promotion (minimum 40%, maximum
50% allocated to Prime). Stations shall provide NBC
with appropriate documentation to substantiate GRP
delivery.
Station Compensation: Through 2005 in accordance with Attachment 2; no
compensation thereafter. Subject to adjustment in
accordance with Attachment 2 upon transfer,
assignment or termination of one or more Stations.
Payable twice yearly by single payment to
Hearst-Argyle for all Stations.
Promotion Reimbursement: None from NBC TV Network -- NBC Affiliate Promotion
plan continues subject to yearly evaluation, per
current practice.
Program Development Costs: Hearst-Argyle shall engage in good faith discussions
with NBC to financially support potential future NBC
efforts to secure major sports and entertainment
program opportunities for the Network.
Station Payments: Stations' obligations per News Channel Agreement.
Stations' obligations to the Inventory Management
Plan.
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Stations' contributions to NBC Distribution Costs
(including agreement to Genesis funding plan)
pursuant to Distribution Contribution Agreement.
Digital Program Delivery: Stations shall deliver NBC content (including
program-related material) in high definition format,
without alteration and as provided by NBC, subject
to any Station's currently existing digital spectrum
commitments, provided, that in the event of any
conflict with respect to digital spectrum capacity,
Stations shall carry NBC's primary network feed.
Hearst-Argyle will in good faith discuss with NBC
the carriage of multiplexed programming and
additional ancillary data beyond program-related
material. Stations shall transmit digital signal by
the later of (i) May 1, 2002 or (ii) any extension
or postponement of such date mandated or approved by
the FCC.
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EXHIBIT A
ASSIGNMENT:
(A) Hearst-Argyle and/or Station shall be entitled to assign this
Agreement without NBC's consent in connection with the assignment
or transfer of Station's FCC licenses or all or substantially all
of the assets used primarily in the operation of Station,
including assignments or transfers:(i) to a parent, subsidiary or
entity controlling, controlled by or under common control with
Hearst-Argyle Television, Inc. or Station, (ii) in connection with
or as part of a larger transaction or series of related
transactions involving the disposition of a substantial portion of
the assets or properties owned or controlled by Hearst-Argyle
Television, Inc., (iii) subject to paragraphs B and C below, in
connection with the transfer of control of Hearst-Argyle
Television Inc., or (iv) in connection with an FCC "short form"
assignment application. Hearst-Argyle shall provide NBC with
written notice within five (5) business days after entering into
any binding agreement or arrangement relating to a proposed
assignment of this agreement or transfer of control of a Station,
including transactions of the nature described in clauses (ii),
(iii) or (iv) above, which notice shall identify the proposed
transferee or assignee. Any assignment shall not relieve Station
of its obligations hereunder.
(B) Notwithstanding the foregoing, the Agreement may not be
transferred or assigned with respect to any Station, without NBC's
consent (i) to any Network, or any entity controlling, controlled
by or under common control with, a Network (as used herein,
"Network" means the ABC, CBS, Fox, WB or UPN broadcast television
networks and any successor(s)(analog, digital or otherwise)
thereto) or (ii) if the proposed transferee or assignee will not
have the financial capability to fund an operating budget for the
Station's promotion, marketing and news functions comparable to
such Station's operating budget for such functions at the time of
such proposed transfer or assignment. In connection with any
assignment or transfer of control of a Station other than as
contemplated in paragraphs A(i) through (iv) above, Hearst-Argyle
and the proposed assignee or transferee shall promptly supply to
NBC such financial and operational due diligence materials
concerning the proposed assignee or transferee as NBC reasonably
requests.
(C) NBC shall have no right to terminate the Agreement in the
event of an application to assign or transfer Station's FCC
license or upon a transfer of control of a Station except in the
event of a transfer of control of a Station to a party with
respect to whom NBC would have the right to consent to an
assignment of this Agreement pursuant to (B)(i) or (ii) above.
(D) In the event of a proposed assignment of this Agreement by
Hearst-Argyle in connection with the sale, solely in exchange for
cash, publicly tradeable securities or the assumption of debt, or
any combination thereof, of all or substantially all of the
assets, or the transfer of control, of a Station, other than (x) a
transaction covered by subsections (i) through (iv) above or (y)
which otherwise involves a like-kind exchange of operating assets,
other similar exchange of mutually unique operating assets or,
with respect to a transaction which presents unique benefits to
the parties involved (e.g., certain tax benefits to the
transaction between such parties), Hearst-Argyle shall provide NBC
with written notice prior to entering into any binding agreement
relating to such transaction. NBC shall have 45 days from the date
on which such notice was sent in which to submit to Hearst-Argyle
a written offer to purchase the Station. Hearst-Argyle will notify
NBC within 15 days of the date on which any such offer was sent
whether it accepts or rejects the offer or is willing to enter
into further negotiations with NBC concerning the assignment each
action which may be taken by Hearst-Argyle within its sole
discretion. If Hearst-Argyle rejects NBC's offer, than for a
period of 120 days from the date of such rejection, it shall not
accept a third party offer on financial terms (i.e., cash,
publicly
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EXHIBIT A
tradeable securities or assumption of debt) less attractive
to Hearst-Argyle than those terms offered by NBC. In the
event that during such 120-day period, Hearst-Argyle does
not accept any third party offer, then, following such
period, Hearst-Argyle shall again notify NBC with respect to
the proposed assignment of this Agreement in accordance with
the notification requirements set forth above. NBC agrees to
treat and hold in strict confidence all information provided
to it by Hearst-Argyle under this paragraph, including
notice by Hearst-Argyle of its intent to assign this
Agreement or sell any Station.
CONFIDENTIALITY: Hearst-Argyle and Stations, on the one hand, and NBC, on the
--------------- other hand, will give each other reasonable (at least 24
hours) advance notice and opportunity to review and comment
upon any press releases or public announcements relating to
this agreement.
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EXHIBIT A
ATTACHMENT 1
[Omitted and filed confidentially with the Securities and Exchange Commission]
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EXHIBIT A
ATTACHMENT 2
[Omitted and filed confidentially with the Securities and Exchange Commission]
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National Broadcasting 30 Rockafeller Plaza
Company, Inc. New York, NY 10112
212-664-4444
[NBC LOGO]
July 6, 2000
New York, New York 10106
RE: Term Sheet for Affiliation Agreement
Ladies and Gentlemen:
In connection with that certain Term Sheet for Affiliation Agreement
(the "Agreement") dated June 30, 2000 and effective as of July 1, 2000 between
Hearst-Argyle Television ("Hearst-Argyle") and the NBC Television Network
("NBC") regarding the affiliation with NBC of television broadcasting stations
WBAL (Baltimore, Maryland), WLWT (Cincinnati, Ohio), WYFF (Greenville, South
Carolina), WGAL (Lancaster, Pennsylvania), WXII (Winston-Salem, North Carolina),
WPTZ (Plattsburgh, New York), KSBW (Salinas, California), KCRA (Sacramento,
California), WESH (Orlando, Florida), and WDSU (New Orleans, Louisiana)
(collectively, "Stations"), Hearst-Argyle and NBC hereby agree that:
1. Notwithstanding the "Programmed Time Periods" and "Program Clearance"
provisions of the Agreement, NBC and Hearst-Argyle shall cooperate to identify
exceptions, on a market-by-market basis, to each Station's obligation in full,
in-pattern clearance of all (x) NBC special and Sports programming
(collectively, "NBC Sports Programming") and (y) NBC Network programming ((x)
and (y), collectively, "NBC Programming"). The nature of the NBC Programming
comprising the Programmed Time Periods shall be determined by NBC and, taken as
a whole, shall be generally consistent with the type of programming currently
provided by NBC.
2. Notwithstanding the "Program Clearance" provision of the Agreement:
(a) no Station shall have any obligation to clear and broadcast more
than 583 hours of NBC Sports Programming (other than NBC Olympics
Programming and any additional NBC Sports programming
acquisitions that are either of the nature traditionally carried
by major broadcast networks (e.g. NFL) or are otherwise
calculated to have mass market appeal) on Saturdays and Sundays
during any one Broadcast Year.
(b) Stations may preempt, collectively in the aggregate, up to 100
hours of NBC Prime Time Programming (the "Prime Basket") and up
to 100 hours of NBC Sports Programming ("the Sports Basket") per
Broadcast Year;
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provided that no one Station may preempt more than twelve
(12) hours of NBC Prime Time Programming and twelve (12)
hours of NBC Sports Programming per Broadcast Year. The
Prime Basket and the Sports Basket shall be reduced to
ten (10) hours for each Station to the extent such
Station is assigned or transferred by Hearst-Argyle in
accordance otherwise terminated with respect to a
Station. Any such assignee or transferee shall be
entitled to a Prime Basket and a Sports Basket of ten
(10) hours per year.
(c) NBC will increase the Prime Basket for a Broadcast Year
by one-half hour for each time beyond 39 times that a
Station's local Saturday or Sunday early evening newscast
or daily late evening newscast is preempted by more than
7 1/2 minutes by NBC Programming during that Broadcast
Year. NBC will have no obligation to increase the Prime
Basket pursuant to this paragraph as a result of
preemptions caused by NBC Olympics Programming or
breaking news, or as a result of a Station's preemption
of NBC Nightly News (or any replacement programming) in
order to air its local newscast or other non-NBC
Programming.
(d) To the extent that a Station has a contractual obligation
which prohibits that Station from complying with its
obligation to full, in-pattern clearance of all NBC
Programming, such Station shall provide NBC with
documentation of such obligation and for a period of the
shorter of three years or the duration of such
obligation, Station's failure to clear and broadcast the
affected NBC Programming will not count toward the Prime
Basket or the Sports Basket, as applicable, NBC and
Hearst-Argyle agree to mutually develop a long term plan
to address Stations' existing out-of-pattern clearances,
which plan will include the retention of any mutually
agreeable out-of-pattern clearances.
3. Notwithstanding the "Local Inventory Level" provision of the Agreement,
NBC agrees that the average number of thirty-second units available to each
Station for local commercial announcements during Prime Time (i.e. 8 pm to 11 pm
Monday through Saturday and 7 pm to 11 pm Sunday) shall be not fewer than 106
per week, and such announcements shall be distributed so that each hour of Prime
Time includes not fewer than four units; provided, that NBC shall be entitled to
reduce the Stations' units to the minimum extent necessary for national sports
programming, Olympics programming and breaking news coverage which for reasons
beyond NBC's control limits NBC's ability to make time available for local
commercial announcements. Each Station shall also be entitled to a minimum of
90% of the average weekly number of thirty-second units provided during the
1999-2000 broadcast season with respect to other Network program dayparts.
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4. Notwithstanding the "Branding" provision of the Agreement, NBC and
Hearst-Argyle agree to cooperate in good faith to develop a mutually acceptable
branding plan to replace Stations' obligations set forth in such provision.
5. Notwithstanding the "On-air Networks Promotion" provision of the
Agreement:
(a)for the Broadcast Years 2000-2001 and 2001-2002, each Station shall
be obligated to contribute a total of at least 15,000 GRP's per year
of Network promotion, with a minimum of 40% and a maximum of 60%
allocated to Prime Time. For the Broadcast Year 2002-2003, each
Station shall be obligated to contribute at least the lesser of (x)
15,000 GRP's per year or (y) such number of GRP's per year as
equals, on a percentage basis in regard to the total average GRP's
available to such Station, 15,000 divided by the total average GRP's
available to such Station for the preceding Broadcast Year, in
either case with a minimum of 40% and a maximum of 60% allocated to
Prime Time (the foregoing calculation of (x) and (y), the
"Formula").
Stations' minimum GRP contribution for the Broadcast Years
2003-2004 and 2004-2005 shall be the same amount as required for the
Broadcast Year 2002-2003. Stations' minimum GRP contribution for the
Broadcast Year 2005-2006 shall be determined in accordance with the
Formula, and that result will also constitute Stations' minimum GRP
contribution for the Broadcast Years 2006-2007 and 2007-2008.
Stations' minimum GRP contribution for the Broadcast Year 2008-2009
shall also be determined in accordance with the Formula, and that
result will also constitute Stations' minimum GRP contribution for
the remaining term of the Agreement.
(b)NBC will continue to provide Stations with the inventory provided
to Stations pursuant to the year-round "SWAP Program", provided,
that Hearst-Argyle and Stations acknowledge that the "co-op
payments" under the SWAP Program may be discontinued at NBC's
discretion.
6. Notwithstanding the "Station Payments" provision of the Agreement,
neither Hearst-Argyle nor any Station shall owe NBC any amounts in respect of
Stations' (i) annual participation fee for NBC News Channel, (ii) annual
contribution to NBC Distribution Costs pursuant to the Distribution Contribution
Agreement, and (iii) participation fees for the Inventory Management Plan.
7. NBC agrees to continue to provide WBAL with access to the "AVOC" switcher
system located at WRC, and to pay Hearst-Argyle not later than December 31 of
each year throughout the term of the Agreement for the costs of the fiber
inter-connect between WRC and WBAL; provided that such costs shall not exceed
$100,000 per year. In the event that NBC determines, in its good faith judgment,
to replace the "AVOC" switcher system with a
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transmission system of comparable technical quality and efficiency, NBC may do
so. If any direct costs are incurred by Hearst-Argyle for access to the
transmission system, NBC shall reimburse Hearst-Argyle up to a maximum of
$100,000 per year. If Hearst-Argyle is able to access the transmission system at
no cost, then NBC shall not be required to reimburse Hearst-Argyle. In addition
to the foregoing, NBC's obligations pursuant to this paragraph shall terminate
upon the transfer or assignment of WBAL or the termination of the Agreement in
respect of WBAL.
8. In accordance with the "Digital Program Delivery" provision of the
Agreement, Hearst-Argyle and NBC agree that "program-related material" as used
therein shall mean (i) closed-captioning information, (ii) program
identification codes, (iii) program ratings information, (iv) alternative
language feeds related to the programming, (v) Nielsen data, (vi) programming,
data and other enhancements which are related to the programming and network
advertisements provided in the primary Network feed and which are intended to be
viewed in conjunction with such programming and advertisements, and are
transmitted concurrently or substantially concurrently therewith, (vii) such
other material as has been agreed by a majority of NBC affiliated stations
(calculated by excluding the affiliated television stations owned and operated
by NBC), (viii) such other material as may be essential to or necessary for the
delivery or distribution of the NBC Television Network programs in digital
format, (ix) information and material directly associated with specific network
commercial advertisements contained in the network programs, if such information
or material is transmitted concurrently or substantially concurrently with its
associated commercial advertisement, and (x) information and material designed
to promote network programming, provided, that in no case shall such promotional
and informational material supersede or substantially interfere with the primary
Network feed then being transmitted for viewing by the audience.
9. Hearst-Argyle, on the one hand, and NBC and NBC Television Stations
division, on the other hand, agree to explore new opportunities. To that end,
the parties will, to the extent commercially feasible in their respective
discretion, notify each other of and offer participation in new undertakings and
ventures within Stations' communities of license, whether or not involving the
transmission of television programs, but excluding any existing or contemplated
arrangements (including without limitation arrangements with Paxson
Communications Corporation and/or PaxTV) and excluding direct or indirect
acquisitions of any ownership interest in a broadcast television station.
10. Hearst-Argyle and NBC agree that the Agreement includes provisions in
form and substance substantially equivalent to the provisions set forth in the
NBC Affiliation Agreement between NBC and WBAL-TV dated as of January 2, 1995;
(i) Station's right of first refusal to NBC programming; (ii) music performance
rights; (iii) force majeure; (iv) indemnification (including for copyright
infringement and defamation; (v) first negotiation rights; (vi) network
non-duplication rights (increased as customarily provided to "small market"
stations; (vii) retransmission consent and (viii) the standard terms and
conditions included in paragraphs 19 through 25 of said WBAL-TV Affiliation
Agreement.
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Please indicate your acceptance of the foregoing by signing in the space
indicated below.
Very truly yours,
NBC TELEVISION NETWORK
By: /s/ Randel A. Falco
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Name: Randel A. Falco
Title: President
ACCEPTED AND AGREED:
HEARST-ARGYLE TELEVISION INCORPORATED
By:/s/ David J. Barrett
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Name: David J. Barrett
Title: President
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