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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period _________ to __________
Commission File No. 1-6383
MEDIA GENERAL, INC.
(Exact name of registrant as specified in its charter)
Commonwealth of Virginia 54-0850433
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 East Grace Street, Richmond, Virginia 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 649-6000
Securities registered pursuant to Section 12(b) of the Act:
Class A Common Stock American Stock Exchange
(Title of class) (Name of exchange on
which registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this form 10-K. [ ]
The aggregate market value of voting stock held by nonaffiliates of the
registrant was $683,207,910 as of March 2, 1997.
The number of shares of Class A Common Stock outstanding on March 2,
1997, was 26,055,573. The number of shares of Class B Common Stock outstanding
on March 2, 1997, was 556,574.
Part I, Part II and Part IV incorporate information by reference from
the Annual Report to Stockholders for the year ended December 29, 1996. Part III
incorporates information by reference from the proxy statement for the Annual
Meeting of Stockholders to be held on May 16, 1997.
Part I
Item 1. Business
General
Media General, Inc., is an independent, publicly owned communications
company situated primarily in the Southeast with interests in newspapers,
broadcast and cable television, recycled newsprint production and diversified
information services. The Company employs approximately 8,900 people on a full
or part-time basis as of March 1997. The Company's businesses are somewhat
seasonal; the second and fourth quarters are typically stronger than the first
and third quarters.
As part of expanding the Company's focus in the Southeast region, it
has completed several transactions since 1995. In August 1996, the Company
acquired, for approximately $38 million, the Danville Register & Bee, a daily
newspaper in Virginia (circulation - 23,000 daily, 27,000 Sunday), which
complements the Company's existing Virginia daily newspapers. In May 1996, the
Company acquired, for approximately $2 million, Professional Communications
Systems (PCS), a provider of equipment and studio design services for television
stations. PCS allows the Company to move into new income-generating areas that
are still closely related to its core business, while also bringing cost savings
in the purchase of broadcast television equipment.
In late October 1995, the Company acquired for approximately $232
million the assets of several Virginia newspapers (Virginia Newspapers) from
Worrell Enterprises, Inc., and its affiliates. Newspaper properties acquired
include four daily and Sunday newspapers (combined circulation -79,500 daily,
87,900 Sunday). In addition, the acquisition included a number of weekly and
other publications, located in Culpeper, Greene, Madison, Orange and Tazewell
Counties, Virginia.
On January 7, 1997, the Company acquired Park Acquisitions, Inc.,
parent of Park Communications, Inc. (Park). The total consideration approximated
$715 million, representing the purchase of all the issued and outstanding common
stock of Park, the assumption of $476 million of high coupon long-term debt, and
estimated transaction costs of $5 million. The acquisition of Park included ten
network affiliated television stations, 28 daily community newspapers and 82
weekly newspapers. Since that date, the Company has sold certain of the daily
newspapers and associated weekly newspapers acquired from Park, most all of
which were located outside of the Southeast. A portion of the sale proceeds was
used to purchase The Potomac News (Woodbridge, Virginia; daily circulation -
28,000), while another portion is expected to be used to purchase The Reidsville
Review, a daily newspaper in Reidsville, North Carolina, and The Messenger, a
weekly newspaper in Madison, North Carolina. The Company anticipates purchasing
the Times-Standard, a daily newspaper in Eureka, California, in April 1997. The
Company is also evaluating other newspapers for potential purchase.
In addition, due to the Federal Communication Commission's (FCC)
requirement that the WTVR-TV (Richmond, Virginia) station , also acquired from
Park, be sold within one year from its January 1997 purchase date, the Company
has entered into an exchange agreement to trade WTVR-TV for three other
stations: WSAV-TV (Savannah, Georgia), WJTV-TV (Jackson, Mississippi), and
WHLT-TV (Hattiesburg, Mississippi). The Company also has entered into an
agreement to sell another television station acquired from Park, WUTR-TV in
Utica, New York. All of these television station transactions are expected to
close by the end of the third quarter of 1997.
1
Industry Segments
The Company is engaged in four significant industry segments. For
financial information related to these segments see pages 33 and 34 of the 1996
Annual Report to Stockholders, which are incorporated herein by reference.
Additional information related to each of the Company's significant industry
segments is included below.
Publishing Business
At December 29, 1996, publishing operations included daily and Sunday
newspapers in Tampa, Florida; Winston-Salem, North Carolina; and Richmond,
Lynchburg, Charlottesville, Culpeper, Suffolk, and Danville, Virginia. Daily and
Sunday newspapers included the Richmond Times-Dispatch, The Tampa Tribune, the
Winston-Salem Journal, The News & Advance (Lynchburg), The Daily Progress
(Charlottesville), the Culpeper Star-Exponent, the Suffolk News Herald, and the
Danville Register & Bee. In addition, Hernando Today in Brooksville, Florida,
and Highlands Today in Sebring, Florida, are published every day except Sunday,
when subscribers are offered the Sunday edition of The Tampa Tribune.
Since the beginning of 1997, the Company has acquired and retained nine
additional daily newspapers in North Carolina, Virginia and Kentucky. The North
Carolina newspapers are The Concord Tribune, The (Eden) Daily News, The (Marion)
McDowell News, The (Morganton) News Herald, and the Statesville Record &
Landmark, for a combined statewide daily circulation of 61,300. The Virginia
newspapers are The Potomac (Woodbridge) News, The (Manassas) Journal Messenger,
and the (Waynesboro) News-Virginian for a combined statewide daily circulation
of 44,700. The Kentucky newspaper is The (Somerset) Commonwealth Journal, with a
daily circulation of 8,600.
The Company also owns weekly newspapers, shoppers and other
publications in Virginia, Florida, North Carolina and Kentucky.
All of the Company's newspapers compete for circulation and advertising
with other newspapers published nationally and in nearby cities and towns and
for advertising with magazines, radio, television and other promotional media.
All of the newspapers compete for circulation principally on the basis of
performance, service and price.
The primary raw material used by the Company in its publishing
operations is newsprint, which is purchased from various Canadian and United
States sources, including Garden State Paper Company, Inc., a wholly owned
subsidiary of the Company, and Southeast Paper Manufacturing Co., in which the
Company owns a one-third equity interest. The publishing operations of the
Company consumed approximately 123,000 tons of newsprint in 1996. Management of
the Company believes that newsprint inventory and sources of supply under
existing arrangements will be adequate in 1997.
On September 28, 1994, the Company acquired 40% of the common stock of
Denver Newspapers, Inc. (DNI), the parent company of The Denver Post, a Denver,
Colorado, daily newspaper company, through the exercise for $40,000 of a warrant
held since 1987. Beginning with the fourth quarter of 1994, the Company began
recognizing in its earnings 40% of DNI's net income applicable to common
stockholders.
2
On May 20, 1994, the Company sold its 40% common equity interest (held
since 1985) in Garden State Newspapers, Inc. (GSN), a domestic daily and weekly
newspaper company, along with its GSN Series A and Series C Preferred Stock, for
$63 million in cash. Additionally, in exchange for the GSN Series B Preferred
Stock previously owned by the Company, the Company received 1,200 shares of
$25,000 par, 9% Cumulative Preferred Stock of DNI (previously owned by GSN),
which included accumulated, unpaid dividends of approximately $17.4 million.
This preferred stock was valued at $34 million, net of an unamortized discount
of $27.3 million, based on an imputed discount rate of 12% and a redemption date
of June 30, 1999. Incorporating all of the foregoing, the sale of GSN resulted
in a gain of $91.5 million ($83.3 million after-tax; $3.17 per share).
The following table presents certain circulation and advertising data
for the Company's three largest, wholly owned daily newspaper companies:
(Dollar amounts in thousands)
Richmond Times-Dispatch 1996 1995 1994
- ----------------------- ---- ---- ----
Average Circulation
Daily 209,343 211,725 212,189
Sunday 245,104 256,147 254,971
Inches
ROP full run 1,505,594 1,506,981 1,550,668
Revenue
Retail Advertising $ 41,664 $ 42,976 $ 41,832
Classified Advertising 38,220 35,471 32,221
Circulation 30,261 29,140 27,230
The Tampa Tribune
- -----------------
Average Circulation
Daily 251,445 261,706 265,616
Sunday 350,311 359,780 361,147
Inches
ROP full run 1,800,492 1,669,168 1,755,501
Revenue
Retail Advertising $ 60,201 $ 61,923 $ 61,281
Classified Advertising 61,655 58,718 52,401
Circulation 25,595 25,513 24,184
Winston-Salem Journal
- ---------------------
Average Circulation
Daily 91,972 91,002 90,275
Sunday 104,094 103,301 102,975
Inches
ROP full run 1,487,229 1,531,333 1,538,568
Revenue
Retail Advertising $ 18,416 $ 18,172 $ 17,775
Classified Advertising 14,004 13,522 12,266
Circulation 7,847 7,787 7,495
3
Broadcast Television Business
The ownership, operation and sale of broadcast television stations,
including those licensed to the Company, are subject to the jurisdiction of the
FCC, which engages in extensive and changing regulation of the broadcasting
industry under authority granted by the Communications Act of 1934
(Communications Act). The Communications Act requires broadcasters to serve the
public interest. Among other things, the FCC assigns frequency bands for
broadcasting; determines the particular frequencies, locations and operating
power of stations; issues, renews, revokes and modifies station licenses;
determines whether to approve changes in ownership or control of station
licenses; regulates equipment used by stations; adopts and implements
regulations and policies that directly or indirectly affect the ownership,
operation and employment practices of station; regulates program content and has
the authority to impose penalties for violations of its rules or the
Communications Act.
Pursuant to the Children's Television Act of 1990 (Children's
Television Act), the FCC has adopted rules limiting advertising in children's
television programming and requiring that broadcast television stations serve
the educational and informational needs of children. The Children's Television
Act specifically requires the FCC to consider compliance with these obligations
in deciding whether to renew a television broadcast license.
Reference should be made to the Communications Act, the
Telecommunications Act of 1996 (1996 Telecom Act), the Children's Television
Act, FCC rules and the public notices and the rulings of the FCC for further
information concerning the nature and extent of federal regulation of broadcast
television stations.
The following table sets forth certain information on each of the
Company's television stations, including those as to which exchange or sale
agreements presently are pending (as noted):
Expiration Expiration
National Date of Date of
Station Market Station Audience FCC Network
Location Rank (a) Rank (a) * % Share (a) * License Agreement
-------- -------- ---------- ------------- ------- ---------
WFLA-TV NBC (b) 15 1 17% 2/1/97 12/31/04
Tampa, FL
WBMG(TV) CBS (b) 51 4 8% 4/1/97 12/31/04
Birmingham, AL
WJWB(TV) WB (c) 54 --- --- 2/1/02 1/12/99
Jacksonville, FL
WTVR-TV CBS (d) 59 2 19% 10/1/04 12/31/04
Richmond, VA
4
Expiration Expiration
National Date of Date of
Station Market Station Audience FCC Network
Location Rank (a) Rank (a) * % Share (a) * License Agreement
-------- -------- ---------- ------------- ------- ---------
WSLS-TV NBC 67 2 14% 10/1/97 10/1/05
Roanoke, VA
WTVQ-TV ABC 71 3 11% 8/1/97 1/1/06
Lexington, KY
WDEF-TV CBS 87 3 14% 8/1/97 12/31/04
Chattanooga, TN
WJTV(TV) CBS (b)(d) 90 2 20% 6/1/97 12/22/97
Jackson, MS
WJHL(TV) CBS 93 2 17% 8/1/97 12/31/04
Johnson City, TN
WSAV-TV NBC (b) (d) 100 2 13% 11/1/01 9/30/04
Savannah, GA
WNCT-TV CBS 105 1 20% 12/1/01 12/31/04
Greenville, NC
WCBD-TV NBC (e) 109 2 17% 12/1/01 1/1/05
Charleston, SC
WHOA-TV ABC (b) 113 3 8% 4/1/97 6/11/06
Montgomery, AL
WUTR(TV) ABC (f) 166 2 11% 6/1/99 1/1/06
Utica, NY
WHLT(TV) CBS (b) (d) 169 2 11% 6/1/97 8/31/05
Hattiesburg, MS
KALB-TV NBC (b) 177 1 31% 6/1/97 10/1/05
Alexandria, LA
(a) Source: November 1996 Nielson Rating Books.
(b) The station presently has pending before the FCC an application to renew its license.
(c) Formerly WJKS-TV; transferred network affiliation from ABC to Warner Brothers in February 1997.
Current station rank and audience % share as a Warner Brothers affiliate is not available.
(d) An application to exchange the Company's Richmond, Virginia, station for stations in Savannah,
Georgia, and Jackson and Hattiesburg, Mississippi, presently is pending before the FCC.
(e) Transferred network affiliation from ABC to NBC in August 1996.
(f) An application to sell the Company's Utica, New York, station presently is pending before the FCC.
* Sign-On to Sign-Off.
5
Prior to the Park acquisition, the Broadcast Television Division
operated three network affiliated television stations: Tampa and Jacksonville,
Florida, and Charleston, South Carolina. As a result of the Park acquisition,
the Company acquired ten additional television stations located in seven states.
Due to FCC rules which generally prohibit common ownership of a daily
newspaper and a television station in the same market, the Company, upon FCC
consent, will exchange its Richmond, Virginia, station for stations located in
Savannah, Georgia, and Hattiesburg and Jackson, Mississippi. The Company has
requested a waiver of the FCC's multiple ownership rules to commonly control the
Savannah station and its Charleston station. The Company also has requested
permission from the FCC to continue to operate the Hattiesburg station as a
"satellite" of the Jackson station. The sale of the Company's Utica, New York,
station additionally is pending FCC consent. Upon completion of these
transactions, the Company will own 13 network affiliated broadcast television
stations, all located in the Southeast.
The primary source of revenues for the Company's television stations is
the sale of time to national and local advertisers. Since each of the stations
is network affiliated, additional revenue is derived from the network
programming carried by each.
The Company's television stations are in competition for audience and
advertising revenues with other television and radio stations and cable
television systems as well as magazines, newspapers and other promotional media.
A number of cable television systems which operate generally on a subscriber
payment basis are in business in the Company's broadcasting markets and compete
for audience by importing out-of-market television signals and by presenting
cable network and other program services. The television stations compete for
audience on the basis of program content and quality of reception, and for
advertising revenues on the basis of price, share of market and performance.
Under the 1996 Telecom Act, television broadcasting licenses are
granted for maximum terms of eight years and are subject to renewal upon
application to the FCC.
The Communications Act prohibits the assignment of a broadcast
television license or the transfer of control of such a license without the
prior approval of the FCC. In determining whether to grant or renew a broadcast
license, the FCC considers a number of factors pertaining to the licensee,
including compliance with various rules limiting common (cross) ownership of
broadcast, newspaper and cable properties and the "character" of the licensee.
The FCC's cross-ownership rules prohibit the common ownership of
interests in certain media outlets serving the same geographic area. Under these
rules, absent approval or a FCC waiver, a single entity generally may not have
interests in: (i) both a radio station and a television station that serve
specified overlapping areas; (ii) a daily newspaper and either a radio station
or a television station that serve specified overlapping areas; or (iii) a
television station and a cable television system that serve specified
overlapping areas. The Company's common control of WFLA-TV and a daily newspaper
in Tampa, Florida, was approved by the FCC in 1975.
6
Broadcast of obscene or indecent material is regulated by the FCC as
well as by state and federal law. Stations also must follow various rules
promulgated under the Communications Act that regulate, among other things,
political advertising, sponsorship identifications, the advertising of contests
and lotteries, and technical operations, including limits on human exposure to
radio frequency energy. In addition, licensees must develop and implement
affirmative action programs designed to promote equal employment opportunities
and must submit reports to the FCC with respect to these matters on an annual
basis and in connection with a renewal application.
Congress and the FCC have under consideration, and in the future may
consider and adopt, new laws, regulations and policies regarding a wide variety
of matters that could affect, directly or indirectly, the operation, ownership
and profitability of the Company's broadcast television stations and affect the
ability of the Company to acquire additional stations. In addition to the
matters noted above, these include, for example, spectrum use fees, political
advertising rates, potential restrictions on the advertising of certain products
(such as alcoholic beverages) and the rules and policies to be applied in
enforcing the FCC's equal employment opportunity regulations. Other matters that
could potentially affect the Company's broadcast properties include
technological innovations and developments generally affecting competition in
the mass communications industry, such as direct radio and television broadcast
satellite service, wireless cable systems and low power television stations,
digital television and radio technologies and the advent of telephone company
participation in the provision of video programming services.
Cable Television Business
The Cable Television Division includes two cable systems in Northern
Virginia, Media General Cable of Fairfax County, Inc., and Media General Cable
of Fredericksburg, Inc., and a cable advertising agency, Mega Advertising, Inc.
The Fairfax County system has a 120-channel capacity, with two-way dual coaxial
cable passing approximately 328,000 homes. The Fredericksburg system has a
60-channel capacity and passes approximately 20,000 homes.
The Company has cable television franchises to operate its existing
systems in portions of Fairfax County, Virginia, and adjoining cities and towns
and in Fredericksburg, Virginia, and portions of Spotsylvania and Stafford
Counties, Virginia. These jurisdictions have enacted extensive regulations
governing cable television systems within their borders. In anticipation of a
series of expiration dates commencing in September 1997, renewal proceedings are
underway for the Company's Fairfax County system. Renewal proceedings are also
underway for the Company's Spotsylvania and Stafford County franchises. At
December 29, 1996, the Company's cable television systems served approximately
243,000 subscribers.
The Company's cable television systems have substantially the same
competition as its television stations. The cable television systems compete for
audience on the basis of program content and quality of reception and for
advertising revenues on the basis of price, share of market and performance.
7
The FCC has jurisdiction over and has adopted a regulatory program
concerning the cable television industry. The FCC's regulations govern cable
television engineering standards, registration and reporting obligations and
other matters. In 1992, Congress passed, effective December 4, 1992, the Cable
Television Consumer Protection and Competition Act of 1992 (1992 Cable Act). It
contains a number of provisions affecting and potentially affecting the Company,
including service, programming and equipment mandates and other limitations
which impact the Company's costs and business. Additionally, the 1992 Cable Act
established rate regulation for the cable services (other than premium and
pay-per-view services) which the Company offers to subscribers. Ratemaking
authority is divided between local franchisors and the FCC, and some of the
Company's rates are under review by franchisors and under review by or on appeal
to the FCC. While the Company believes that its rates have been established in
compliance with the applicable FCC regulations and the 1992 Cable Act, it is
possible that rate refunds and/or rate adjustments may be ordered. The 1996
Telecom Act eliminates rate regulation after March 31, 1999, for all cable
services except the "basic" tier, which is the service including the local
broadcast signals carried by a cable system.
The 1996 Telecom Act removes previously applicable restrictions that
prevented most local telephone companies from providing cable services within
the areas in which they provided telephone services. This will almost certainly
lead to increased competition by competitive providers of video services within
the areas served by the Company's cable systems. Increases in competition from
wireless cable and direct broadcast satellite providers of video programming to
the home is also highly likely. Reference is made to pages 44 and 45 of the 1996
Annual Report to Stockholders, which is incorporated herein by reference, for
information regarding cable competition and strategic planning alternatives
being considered by the Company.
Reference should be made to the Communications Act, the 1992 Cable Act,
the 1996 Telecom Act, FCC rules and the public notices and rulings of the FCC
for further information concerning the nature and extent of federal regulation
of cable television systems.
The following table sets forth certain information with respect to the
Company's largest cable operation:
Media General Cable of Fairfax
- ------------------------------
1996 1995 1994
---- ---- ----
Subscribers 227,717 221,784 214,259
Penetration 69.4% 69.2% 68.8%
Monthly revenue per home passed $32.87 $31.82 $28.65
Monthly average revenue per subscriber $47.54 $46.25 $42.50
Newsprint Paper Manufacturing Business
Media General's newsprint operations consist of the Garden State Paper
Company (Garden State), a wholly owned newsprint mill in Garfield, New Jersey,
with an annual capacity of 235,000 short tons, and a one-third interest in
Southeast Paper Manufacturing Co. (SEPCO) in Dublin, Georgia, with an annual
capacity of 485,000 short tons. Both facilities use Media General's proprietary
de-inking technology to produce 100 percent recycled, high quality newsprint
from recovered old newspapers (ONP). Media General's share of their combined
total capacity is approximately 400,000 short tons, making Media General the
nation's leading producer of 100 percent recycled newsprint. The Company also
earns licensing fees pursuant to a contract with SEPCO, in addition to its share
of operating results.
8
Garden State owns certain United States patent rights and also has
obtained patents in various foreign countries. Although these have been of
value, their loss would not materially affect the conduct of its business as the
Company has developed substantial proprietary knowledge related to its
manufacturing process which enhances its competitive position.
Garden State competes with approximately twenty Canadian and American
companies in selling newsprint, its sole product, to newspaper publishers.
Distribution from the Garden State mill is primarily by truck transportation.
Competition is based principally on price, quality of product and service,
although the percentage of recovered fiber contained in manufactured newsprint
is becoming increasingly important to newspaper publishers to meet various
existing and proposed state and federal standards.
In recent years, environmentally driven legislation has encouraged the
use of recycled paper. With demand pushing against the practical limits of
recovery, ONP costs accelerated during much of 1995, but began to decline to
more favorable levels by year-end. ONP prices continued to decline gradually
throughout all of 1996. Media General's strategically located and cost-effective
newsprint recycling facilities have helped assure the Company of adequate
supplies of ONP.
Historically a cyclical industry, the newsprint business peaked in
1988, declining over the next four years as U.S. newsprint consumption slipped
and demand fell. In late 1992, a threatened Canadian newsprint strike resulted
in a short period of somewhat improved newsprint prices which lasted until
mid-1993, when supply again exceeded demand. Demand picked up again in 1994
producing higher selling prices as most mills reached 96-97 percent of operating
capacity. The trend upward continued through 1995, enabling Media General's
newsprint operations to implement four price increases during the year. However,
prices peaked in early 1996 and then fell throughout the remainder of the year,
reflecting an industry cycle of declining selling prices and weak demand.
Item 2. Properties
The headquarters of Media General, Inc., and its Richmond Newspapers,
Inc., subsidiary are located in downtown Richmond, Virginia, in five adjacent
buildings. The Richmond newspaper is printed at a production and distribution
facility located on an 86 acre site in Hanover County, Virginia, near Richmond.
The Tampa, Florida, newspaper is located in a single unit production plant and
office building located on a six acre tract in that city. The Winston-Salem
newspaper is headquartered in one building in downtown Winston-Salem. Its
newspapers are printed at a production and distribution facility located on a
nearby 12 acre site. The Lynchburg newspaper is printed at a production and
distribution facility, which also contains VNI's headquarters, on a six acre
tract in that city. The Charlottesville newspaper is printed at a production and
distribution facility, located on a four acre site in that city. The Danville
newspaper is printed at a production and distribution facility located on a one
acre parcel adjacent to the newspaper's headquarters. All of the newspapers
acquired as a result of the Park acquisition are located in North Carolina,
Virginia and Kentucky. Substantially all of the newspaper production equipment,
land and buildings, including those acquired and retained from the Park
acquisition, are owned by the Company.
9
Television facilities for WFLA-TV Tampa, Florida, WJWB-TV Jacksonville,
Florida, and WCBD-TV Charleston, South Carolina, are located on land owned by
the Company in and around these respective cities. Substantially all of the
television facilities, including those acquired and to be retained in or as a
result of the Park acquisition, are owned by the Company. They are located in
Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina,
South Carolina, Tennessee and Virginia.
Media General Cable of Fairfax County, Inc., a subsidiary of the
Company, has its headquarters located in one building owned by the Company in
Chantilly, Virginia, and two signal retransmission centers are located in
Fairfax County, Virginia, one on property owned by the Company and adjacent to
its production studio and one on leased property. In addition, Fairfax Cable
leases an operations center for its service maintenance fleet in Springfield,
Virginia. The cable system includes a home subscriber network and a separate
institutional network.
Newsprint production facilities of Garden State consist of a
Company-owned mill in Garfield, New Jersey, housing two paper-making machines
adjacent to a Company-owned power plant which supplies it with steam and
electric power. Garden State leases adequate storage facilities for waste paper
in the general vicinity of the newsprint mill.
The Company considers all of its properties, together with the related
machinery and equipment contained therein, to be well-maintained, in good
operating condition, and adequate for its present and foreseeable future needs.
Item 3. Legal Proceedings
One Company subsidiary has been identified as a potentially responsible
party (PRP), along with many other businesses unrelated to the Company, in
connection with alleged soil and/or groundwater contamination at a former
solvent reclamation location. Another Company subsidiary has been identified as
a PRP in connection with a drum reconditioning facility. With respect to these
matters, the involved subsidiaries have contributed, or may in the future be
asked to contribute, to the costs of site assessment and cleanup. In addition, a
third Company subsidiary is involved in an environmental remediation project at
a facility currently owned. While the ultimate costs of the foregoing matters
are not presently determinable, based on information currently available,
management believes such costs will not be material to the Company's financial
position or results of operations.
10
Items 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
fourth quarter of 1996.
Executive Officers of the Registrant
Name Age Position and Office Year First Took Office*
D. Tennant Bryan 90 Chairman of the Executive Committee 1930
J. Stewart Bryan III 58 Chairman, President, Chief Executive Officer 1990
Marshall N. Morton 51 Senior Vice President, Chief Financial Officer 1989
H. Graham Woodlief, Jr. 52 Vice President 1989
Stephen Y. Dickinson 51 Controller 1989
George L. Mahoney 44 General Counsel, Secretary 1993
Stephen R. Zacharias 47 Treasurer 1989
* The year indicated is the year in which the officer first assumed an
office with the Company or with Richmond Newspapers, Inc., the predecessor of
the Company, involving essentially the same duties and responsibilities as the
office presently held, regardless of its formal titles at that time. Mr.
Dickinson assumed executive officer responsibilities as of May 1994. Mr. Mahoney
previously served as Assistant General Counsel of Dow Jones & Company, Inc., for
more than five years. Mr. Zacharias assumed executive officer responsibilities
as of December 1993.
Officers of the Company are elected at the Annual Meeting of the Board
of Directors to serve, unless sooner removed, until the next Annual Meeting of
the Board of Directors and/or until their successors are duly elected and
qualified.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Reference is made to page 49 of the 1996 Annual Report to Stockholders,
which is incorporated herein by reference, for information required by this
item.
Item 6. Selected Financial Data
Reference is made to Note 5 on pages 33 and 34, and to pages 50 and 51
of the 1996 Annual Report to Stockholders, which are incorporated by reference,
for information required by this item.
11
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Reference is made to pages 42 through 48 of the 1996 Annual Report to
Stockholders, which are incorporated herein by reference, for information
required by this item.
Item 8. Financial Statements and Supplementary Data
Consolidated financial statements of the Company as of December 29,
1996, and December 31, 1995, and for the fiscal years ended December 29, 1996,
December 31, 1995, and December 25, 1994, and the report of independent auditors
thereon, as well as the Company's unaudited quarterly financial data for the
fiscal years ended December 29, 1996, and December 31, 1995, are incorporated
herein by reference from the 1996 Annual Report to Stockholders pages 25 through
41 and page 49.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders on May 16, 1997, except as to
certain information regarding executive officers included in Part I.
Item 11. Executive Compensation
Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders on May 16, 1997.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders on May 16, 1997.
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders on May 16, 1997.
12
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. and 2. The financial statements and schedule listed in the
accompanying index to financial statements and financial statement
schedules are filed as part of this annual report.
3. Exhibits
The exhibits listed in the accompanying index to exhibits are filed as
part of this annual report.
(b) Reports on Form 8-K
On January 21, 1997, the Company filed a Form 8-K to report the January
7, 1997, acquisition of Park Acquisitions, Inc., parent of Park
Communications, Inc. (Park).
On January 29, 1997, the Company filed a Form 8-K to amend and restate
the title of its Thrift Plan Plus for Employees of Media General, Inc.
and Register Publishing Company, Inc.
Index to Financial Statements and Financial Statement Schedules - Item 14(a)
Annual Report to
Form 10-K Stockholders
--------- ------------
Media General, Inc.
(Registrant)
Report of independent auditors 14 41
Consolidated statements of operations for the fiscal years ended
December 29, 1996, December 31, 1995, and December 25, 1994 25
Consolidated balance sheets at December 29, 1996, and
December 31, 1995 26-27
Consolidated statements of stockholders' equity for the fiscal
years ended December 29, 1996, December 31, 1995,
and December 25, 1994 28
Consolidated statements of cash flows for the fiscal years ended
December 29, 1996, December 31, 1995, and December 25, 1994 29
Notes to consolidated financial statements 30-40
Schedule:
II - Valuation and qualifying accounts and reserves 15
Schedules other than Schedule II, listed above, are omitted since they are not
required or are not applicable, or the required information is shown in the
financial statements or notes thereto.
The consolidated financial statements of Media General, Inc., listed in the
above index which are included in the Annual Report to Stockholders of Media
General, Inc., for the fiscal year ended December 29, 1996, are incorporated
herein by reference. With the exception of the pages listed in the above index
and the information incorporated by reference included in Parts I, II and IV,
the 1996 Annual Report to Stockholders is not deemed filed as part of this
report.
13
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Media General, Inc.
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Media General, Inc., of our report dated February 10, 1997, included in the
1996 Annual Report to Stockholders of Media General, Inc.
Our audits also included the financial statement schedule of Media General,
Inc., listed in Item 14(a). This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, the financial statement schedule referred to above, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
We also consent to the incorporation by reference in (a) the Registration
Statement (Form S-8 No. 2-56905) pertaining to the 1971 Unqualified Stock Option
Plan and the 1976 Qualified and Non-Qualified Stock Option Plans of Media
General, Inc.; (b) the Registration Statement (Form S-8 No. 33-29478) pertaining
to the Media General, Inc., Employees Thrift Plan; (c) the Registration
Statement (Form S-8 No. 33-23698) pertaining to the 1987 Non-Qualified Stock
Option Plan of Media General, Inc.; (d) the Registration Statement (Form S-3 No.
33-26853) pertaining to the Media General, Inc., Automatic Dividend Reinvestment
and Stock Purchase Plan; (e) the Registration Statement (Form S-8 No. 33-52472)
pertaining to the 1987 Non-Qualified Stock Option Plan of Media General, Inc.,
amended and restated May 17, 1991; (f) the Registration Statement (Form S-8 No.
333-16731) pertaining to the 1996 Non-Qualified Stock Option Plan Effective
January 30, 1996 and (g) the Registration Statement (Form S-8 No. 333-16737)
pertaining to the Thrift Plan Plus For Employees of Media General, Inc. and
Register Publishing Company, Inc. Incentive Saving Plan, of our report dated
February 10, 1997, with respect to the consolidated financial statements of
Media General, Inc., incorporated herein by reference, and our report included
in the preceding paragraph with respect to the financial statement schedule of
Media General, Inc., included in this Annual Report (Form 10-K) of Media
General, Inc., for the fiscal year ended December 29, 1996.
ERNST & YOUNG LLP
Richmond, Virginia
March 27, 1997
14
Media General, Inc., and Subsidiaries
Schedule II - Valuation and Qualifying Accounts and Reserves
Fiscal Years Ended December 29, 1996, December 31, 1995, and December 25, 1994
Additions
(reductions)
Balance at charged
beginning (credited) to Deductions
of period expense-net net
--------- ----------- ---
1996
Allowance for doubtful accounts $ 4,529,960 $ 5,195,767 $ 4,546,572
Reserve for warranties 3,040,833 1,700,000 594,828
------------------ ------------------ ------------------
Totals $ 7,570,793 $ 6,895,767 $ 5,141,400
================== ================== ==================
1995
Allowance for doubtful accounts $ 3,360,172 $ 4,224,695 $ 3,343,663
Reserve for warranties 3,441,835 --- 401,002
------------------ ------------------ ------------------
Totals $ 6,802,007 $ 4,224,695 $ 3,744,665
================== ================== ==================
1994
Allowance for doubtful accounts $ 3,697,761 $ 3,109,329 $ 3,446,918
Reserve for warranties 3,968,006 --- 526,171
Reserve for discontinuance
of Broadcast Services 784,783 --- 259,347
------------------ ------------------ ------------------
Totals $ 8,450,550 $ 3,109,329 $ 4,232,436
================== ================== ==================
Balance
at end
Transfers of period
--------- ---------
1996
Allowance for doubtful accounts $ 91,610 (a) $ 5,270,765
Reserve for warranties --- 4,146,005
------------------ ------------------
Totals $ 91,610 $ 9,416,770
================== ==================
1995
Allowance for doubtful accounts $ 288,756 (a) $ 4,529,960
Reserve for warranties --- 3,040,833
------------------ ------------------
Totals $ 288,756 $ 7,570,793
================== ==================
1994
Allowance for doubtful accounts $ --- $ 3,360,172
Reserve for warranties --- 3,441,835
Reserve for discontinuance
of Broadcast Services (525,436) (b) ---
------------------ ------------------
Totals $ (525,436) $ 6,802,007
================== ==================
(a) Amount associated with the acquisition of properties.
(b) Amount transferred to other liabilities and deferred credits.
15
Index to Exhibits
Exhibit
Number Description
2.1 Agreement and Plan of Merger dated July 19, 1996, by and among
Media General, Inc., MG Acquisitions, Inc., and Park
Acquisitions, Inc., incorporated by reference to Exhibit 2.1
of Form 8-K dated January 7, 1997.
2.2 First Amendment to Agreement and Plan of Merger dated as of
January 7, 1997, by and among Media General, Inc., MG
Acquisitions, Inc., and Park Acquisitions, Inc., incorporated
by reference to Exhibit 2.2 of Form 8-K dated January 7, 1997.
3 (i) The Amended and Restated Articles of Incorporation of Media
General, Inc., incorporated by reference to Exhibit 3.1 of
Form 10-K for the fiscal year ended December 31, 1989.
3 (ii) Bylaws of Media General, Inc., amended as of May 31, 1993,
incorporated by reference to Exhibit 3 (ii) of Form 10-K for
the fiscal year ended December 26, 1993.
10.1 Form of Option granted under the 1976 Non-Qualified Stock
Option Plan, incorporated by reference to Exhibit 2.2 of
Registration Statement 2-56905.
10.2 Additional Form of Option to be granted under the 1976
Non-Qualified Stock Option Plan, incorporated by reference to
Exhibit 2 to Post-Effective Amendment No. 3 Registration
Statement 2-56905.
10.3 Addendum dated January 1984, to Form of Option granted under
the 1976 Non-Qualified Stock Option Plan, incorporated by
reference to Exhibit 10.13 of Form 10-K for the fiscal year
ended December 31, 1983.
10.4 Addendum dated June 19, 1992, to Form of Option granted under
the 1976 Non-Qualified Stock Option Plan, incorporated by
reference to Exhibit 10.15 of Form 10-K for the fiscal year
ended December 27, 1992.
10.5 The Media General, Inc., Amended and Restated Restricted Stock
Plan, dated January 31, 1996, incorporated by reference to
Exhibit 10.10 of Form 10-K for the fiscal year ended December
31, 1995.
10.6 Addendum dated June 19, 1992, to Form of Option granted under
the 1987 Non-Qualified Stock Option Plan, incorporated by
reference to Exhibit 10.20 of Form 10-K for the fiscal year
ended December 27, 1992.
10.7 Media General, Inc., Executive Death Benefit Plan effective
January 1, 1991, incorporated by reference to Exhibit 10.17 of
Form 10-K for the fiscal year ended December 29, 1991.
16
10.8 Amendment to the Media General, Inc., Executive Death Benefit
Plan dated July 24, 1991, incorporated by reference to Exhibit
10.18 of Form 10-K for the fiscal year ended December 29,
1991.
10.9 1984 Outside Directors Retirement Agreement, incorporated by
reference to Exhibit 10.16 of Form 10-K for the fiscal year
ended December 31, 1984.
10.10 Shareholders Agreement, dated May 28, 1987, between Mary
Tennant Bryan, Florence Bryan Wisner, J. Stewart Bryan III,
and D. Tennant Bryan and J. Stewart Bryan III as trustees
under D. Tennant Bryan Media Trust, and Media General, Inc.,
incorporated by reference to Exhibit 10.50 of form 10-K for
the fiscal year ended December 31, 1987.
10.11 Amended and Restated Redemption Agreement between Media
General, Inc., and D. Tennant Bryan, dated April 7, 1994,
incorporated by reference to Exhibit 10.21 of Form 10-Q for
the period ending March 27, 1994.
10.12 Media General, Inc., Supplemental Thrift Plan, amended and
restated as of November 17, 1994, incorporated by reference to
Exhibit 10.27 of Form 10-K for the fiscal year ended December
25, 1994.
10.13 Media General, Inc., Executive Supplemental Retirement Plan,
amended, and restated as of November 17, 1994, incorporated by
reference to Exhibit 10.28 of Form 10-K for the fiscal year
ended December 25, 1994.
10.14 Deferred Income Plan for Selected Key Executives of Media
General, Inc., and form of Deferred Compensation Agreement
thereunder dated as of December 1, 1984, incorporated by
reference to Exhibit 10.29 of Form 10-K for the fiscal year
ended December 31, 1989.
10.15 Media General, Inc., Management Performance Award Program,
adopted November 16, 1990, and effective January 1, 1991,
incorporated by reference to Exhibit 10.35 of Form 10-K for
the fiscal year ended December 29, 1991.
10.16 Media General, Inc., Deferred Compensation Plan, amended and
restated as of November 17, 1994, incorporated by reference to
Exhibit 10.32 of Form 10-K for the fiscal year ended December
25, 1994.
10.17 Media General, Inc., ERISA Excess Benefits Plan, amended and
restated as of November 17, 1994, incorporated by reference to
Exhibit 10.33 of Form 10-K for the fiscal year ended December
25, 1994.
10.18 Media General, Inc., Restricted Stock Plan for Non-Employee
Directors, adopted as of May 19, 1995, incorporated by
reference to Exhibit 10.32 of Form 10-K for the fiscal year
ended December 31, 1995.
10.19 Media General, Inc., 1995 Long-Term Incentive Plan, adopted as
of May 19, 1995, incorporated by reference to Exhibit 10.33 of
Form 10-K for the fiscal year ended December 31, 1995.
17
10.20 Media General, Inc., 1996 Employee Non-Qualified Stock Option
Plan, adopted as of January 30, 1996.
10.21 Media General, Inc., 1997 Employee Restricted Stock Plan.
10.22 Media General, Inc., Directors' Deferred Compensation Plan.
10.23 Amended and Restated Partnership Agreement, dated November 1,
1987, by and among Virginia Paper Manufacturing Corp., KR
Newsprint Company, Inc., and CEI Newsprint, Inc., incorporated
by reference to Exhibit 10.31 of Form 10-K for the fiscal year
ended December 31, 1987.
10.24 Amended and Restated License Agreement, dated November 1,
1987, by and among Media General, Inc., Garden State Paper
Company, Inc., and Southeast Paper Manufacturing Co.,
incorporated by reference to Exhibit 10.34 of Form 10-K for
the fiscal year ended December 31, 1987.
10.25 Amended and Restated Umbrella Agreement, dated November 1,
1987, by and among Media General, Inc., Knight - Ridder, Inc.,
and Cox Enterprises, Inc., incorporated by reference to
Exhibit 10.32 of Form 10-K for the fiscal year ended December
31, 1987.
10.26 Amended Newsprint Purchase Contract, dated November 1, 1987,
by and among Southeast Paper Manufacturing Co., Media General,
Inc., Knight-Ridder, Inc., and Cox Enterprises, Inc.,
incorporated by reference to Exhibit 10.35 of Form 10-K for
the fiscal year ended December 31, 1987.
10.27 Television affiliation agreement, dated February 10, 1995,
between WFLA-TV and the NBC Television Network incorporated by
reference to Exhibit 10.38 of Form 10-K for the fiscal year
ended December 25, 1994.
10.28 Amendments, dated May 17, 1993, to television affiliations
agreement, between WFLA-TV and National Broadcasting Company,
Inc., dated March 22, 1989, incorporated by reference to
Exhibit 10.47 of Form 10-K for the fiscal year ended December
26, 1993.
10.29 Franchise Agreements, dated September 30, 1982, between Media
General, Inc., Media General Cable of Fairfax County, Inc.,
and Fairfax County, Virginia, as amended January 30, 1984,
incorporated by reference to Exhibit 10.32 of Form 10-K for
the fiscal year ended December 31, 1983.
10.30 Agreement dated March 14, 1988, between Media General Cable of
Fairfax County, Inc., and Warner Cable Communications of
Reston, Inc., partially assigning Franchise Agreements dated
September 30, 1982, incorporated by reference to Exhibit 10.34
of Form 10-K for the fiscal year ended December 31, 1988.
10.31 Cable Television Franchise Ordinance of the Town of Herndon,
Virginia, accepted January 24, 1984, by Media General, Inc.,
and Media General Cable of Fairfax County, Inc., incorporated
by reference to Exhibit 10.33 of Form 10-K for the fiscal year
ended December 31, 1983.
18
10.32 Franchise Agreement, dated June 14, 1983, between Media
General, Inc., Media General Cable of Fairfax County, Inc.,
and the City of Fairfax, Virginia, incorporated by reference
to Exhibit 10.34 of Form 10-K for the fiscal year ended
December 31, 1983.
10.33 Franchise Agreement, dated April 9, 1983, between Media
General Cable of Fairfax County, Inc., and the Town of Vienna,
Virginia, incorporated by reference to Exhibit 10.35 of Form
10-K for the fiscal year ended December 31, 1983.
10.34 Franchise Agreement, dated July 12, 1983, between Media
General Cable of Fairfax County, Inc., Media General, Inc.,
and the City of Falls Church, Virginia, incorporated by
reference to Exhibit 10.36 of Form 10-K for the fiscal year
ended December 31, 1983.
10.35 Second Amended and Restated Stock and Warrant Purchase and
Shareholders' Agreement dated May 20, 1994, by and among Media
General, Inc., Affiliated Newspapers Investments, Inc., and
Denver Newspapers, Inc., incorporated by reference to Exhibit
2 of Form 8-K dated September 28, 1994.
10.36 Asset Purchase Agreement dated February 13, 1997, by and among
Media General Newspapers, Inc., and Newspaper Holdings, Inc.
13 Media General, Inc., Annual Report to Stockholders for the
fiscal year ended December 29, 1996.
21 List of subsidiaries of the registrant.
23 Consent of Ernst & Young LLP, independent auditors.
27 Financial Data Schedule
Note: Exhibits 10.1 - 10.22 are management contracts or
compensatory plans, contracts or arrangements.
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MEDIA GENERAL, INC.
Date: March 27, 1997
/s/ J. Stewart Bryan III
----------------------------------------------
J. Stewart Bryan III, Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chairman of the Executive March 27, 1997
- ------------------------------------ Committee and Director
D. Tennant Bryan
/s/ James S. Evans Vice Chairman and Director March 27, 1997
- ------------------------------------
James S. Evans
/s/ Marshall N. Morton Senior Vice President and March 27, 1997
- ------------------------------------ Chief Financial Officer
Marshall N. Morton
/s/ Stephen Y. Dickinson Controller March 27, 1997
- ------------------------------------
Stephen Y. Dickinson
/s/ Robert P. Black Director March 27, 1997
- ------------------------------------
Robert P. Black
Director March 27, 1997
- ------------------------------------
Charles A. Davis
/s/ Wyndham Robertson Director March 27, 1997
- ------------------------------------
Wyndham Robertson
/s/ Robert V. Hatcher, Jr. Director March 27, 1997
- ------------------------------------
Robert V. Hatcher, Jr.
/s/ John G. Medlin, Jr. Director March 27, 1997
- ------------------------------------
John G. Medlin, Jr.
/s/ Henry L. Valentine, II Director March 27, 1997
- ------------------------------------
Henry L. Valentine, II
20