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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 27, 1998
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 Franklin 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, based upon the closing price of the Company's Class A Common Stock
as reported on the American Stock Exchange, as of February 28, 1999, was
approximately $1,158,000,000.
The number of shares of Class A Common Stock outstanding on February 28,
1999, was 26,307,781. The number of shares of Class B Common Stock outstanding
on February 28, 1999, 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 27, 1998. Part III
incorporates information by reference from the proxy statement for the Annual
Meeting of Stockholders to be held on May 21, 1999.
INDEX TO MEDIA GENERAL, INC.
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 27, 1998
Item No. Page
- ------- ----
Part I
1. Business
General 1
Publishing 2
Broadcast Television 2
Cable Television 5
Newsprint 7
2. Properties 7
3. Legal Proceedings 8
4. Submission of Matters to a Vote of Security Holders 9
Executive Officers of Registrant 9
Part II
5. Market for Registrant's Common Equity and Related Stockholder Matters 9
6. Selected Financial Data 9
7. Management's Discussion and Analysis of Financial Condition and Results
of Operation 9
7A. Quantitative and Qualitative Disclosures About Market Risk 10
8. Financial Statements and Supplementary Data 10
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 10
Part III
10. Directors and Executive Officers of the Registrant 10
11. Executive Compensation 10
12. Security Ownership of Certain Beneficial Owners and Management 10
13. Certain Relationships and Related Transactions 10
Part IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 11
Schedule II 12
Index to Exhibits 13
Signatures 17
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. The Company's businesses are somewhat seasonal; the second
and fourth quarters are typically stronger than the first and third quarters.
As part of the Company's continuing commitment to a southeastern focus,
it has completed a series of acquisitions, exchanges and divestitures over the
past several years which have contributed to its strength in the Southeast. In
January 1998 the Company acquired, for approximately $93 million, the assets of
the Bristol Herald Courier, a daily newspaper in southwestern Virginia
(circulation - 42,000 daily, 45,000 Sunday), and two affiliated weekly
newspapers (circulation - 5,000 weekly). In July 1998 the Company acquired, for
approximately $40 million, the assets of the Hickory Daily Record, a daily
newspaper in northwestern North Carolina (circulation - 19,000 daily, 20,000
Sunday). Additionally, in June 1998, the Company completed the sale of its
Kentucky newspaper properties for approximately $24 million.
In January 1997, the Company acquired Park Acquisitions, Inc., parent of
Park Communications, Inc. (Park), which included ten network affiliated
television stations, 28 daily newspapers and 82 weekly newspapers. The total
consideration approximated $715 million. In conjunction with this acquisition,
and as intended, the Company sold certain of the former Park properties, most
all of which were located outside of the Southeast, for approximately $147
million and purchased new properties for approximately $53 million. These
purchases were the Potomac News (Woodbridge, Virginia; circulation - 22,000
daily, 24,000 Sunday) in February 1997, The Reidsville Review (Reidsville, North
Carolina) and The Messenger (Madison, North Carolina) in April 1997. In August
1997 the Company exchanged WTVR-TV (Richmond, Virginia), a station acquired from
Park, for three other stations, WSAV-TV (Savannah, Georgia), WJTV-TV (Jackson,
Mississippi) and WHLT-TV (Hattiesburg, Mississippi), in order to comply with the
Federal Communication Commission's requirement that WTVR-TV be divested within
one year of its January 1997 purchase date.
In August 1996 the Company acquired, for approximately $38 million, the
Danville Register & Bee, a daily newspaper in Virginia.
INDUSTRY SEGMENTS
The Company is engaged in four significant industry segments. For
financial information related to these segments see pages 33 through 35 of the
1998 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.
1
PUBLISHING BUSINESS
At December 27, 1998, the Company's wholly owned publishing operations
included daily and Sunday newspapers in Virginia, Florida and North Carolina.
For a listing of the Company's daily and Sunday newspapers by location, see the
inside cover of the 1998 Annual Report to Stockholders, which is incorporated
herein by reference. Combined daily circulation for the Virginia, Florida and
North Carolina newspapers in 1998 was 389,000, 241,000 and 172,000,
respectively; combined Sunday circulation for these newspapers was 433,000,
325,000 and 181,000, respectively. The Company also owns weekly newspapers,
shoppers and other publications in Virginia, Florida and North Carolina, with
weekly circulation of 28,000, 2,000 and 20,000, respectively; and it holds 40%
of the common stock and all of the preferred stock of Denver Newspapers, Inc.,
the parent company of The Denver Post, a daily newspaper in Denver, Colorado.
Additionally, the Company owns Media General Financial Services, Inc., which
compiles and makes available both current and historical data on publicly traded
companies to a broad spectrum of users, including many on-line financial data
services, and also offers other specialized financial products.
The newspaper publishing industry in the United States is comprised of
hundreds of public and private companies ranging from large national and
regional companies, publishing multiple newspapers across many states, to small
privately held companies publishing one newspaper in one locality. Acquisitions
and growth achieved by the Company over the past several years have placed the
Company's newspaper circulation among the top twenty in the United States and
situated the Company among the top fifteen publicly-held newspaper publishers in
the country based on revenue. Moreover, the Company has achieved the number
three position in circulation in its chosen southeastern area of focus, with its
published product reaching nearly one million households across the Southeast
every week. Additionally, the Company's on-line news, information and
entertainment services are becoming increasingly important as they reach
additional viewers and readers without geographic restriction.
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, broadcast and cable television, the
internet and other promotional media. All of the newspapers compete for
circulation principally on the basis of content, quality of 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 137,000 tons of newsprint in 1998. Management of
the Company believes that sources of supply under existing arrangements will be
adequate in 1999.
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
Federal Communication Commission (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; assigns and controls the particular
frequencies, locations and operating power of stations; issues, renews, revokes
and modifies station licenses; assigns and controls changes in ownership or
control of station licenses; regulates equipment used by stations;
2
adopts and implements regulations and policies that directly or indirectly
affect the ownership, operation and employment practices of stations; 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
and the FCC's rules, public notices and rulings for further information
concerning the nature and extent of federal regulation of broadcast television
stations.
The Broadcast Television Division operates fourteen network-affiliated
television stations in the southeastern United States. The following table sets
forth certain information on each of these stations:
Expiration Expiration
National Date of Date of
Station Location Market Station Audience FCC Network
and Affiliation Rank (a) Rank (a) * % Share (a) * License (b) Agreement
---------------- -------- ---------- ------------- ----------- ----------
WFLA-TV NBC 14 2 13% 2/1/05 12/31/04
Tampa, FL
WIAT-TV CBS 39 4 9% 4/1/05 12/31/04
Birmingham, AL
WJWB-TV WB (c) 52 4 6% 2/1/05 1/12/02
Jacksonville, FL
WTVQ-TV ABC 67 3 9% 8/1/05 1/1/06
Lexington, KY
WSLS-TV NBC 68 3 11% 10/1/04 10/1/05
Roanoke, VA
WDEF-TV CBS 87 3 14% 8/1/05 12/31/04
Chattanooga, TN
WJTV-TV CBS 89 1 22% 6/1/05 12/31/04
Jackson, MS
WJHL-TV CBS 92 2 17% 8/1/05 12/31/04
Johnson City, TN
3
Expiration Expiration
National Date of Date of
Station Location Market Station Audience FCC Network
and Affiliation Rank (a) Rank (a) * % Share (a) * License (b) Agreement
---------------- -------- ---------- ------------- ------------ -----------
WSAV-TV NBC 100 2 11% 4/1/05 9/30/04
Savannah, GA
WNCT-TV CBS 105 1 20% 12/1/04 12/31/04
Greenville, NC
WHOA-TV ABC (d) 113 3 8% 4/1/05 1/3/07
Montgomery, AL
WCBD-TV NBC 120 2 17% 12/1/04 1/1/05
Charleston, SC
WHLT-TV CBS 167 2 11% 6/1/05 8/31/05
Hattiesburg, MS
KALB-TV NBC 173 1 25% 6/1/05 10/1/05
Alexandria, LA
(a) Source: November 1998 Nielsen Rating Books.
(b) Television broadcast licenses are granted for maximum terms of eight years
and are subject to renewal upon application to the FCC.
(c) Formerly WJKS-TV; transferred network affiliation from ABC to Warner
Brothers in February 1997.
(d) Sale pending.
* Sign-On to Sign-Off.
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, the internet 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.
The television broadcast industry presently is planning for the
transition from analog to digital (DTV) technology in accordance with a mandated
conversion timetable established by the FCC. The FCC's timetable directs that
stations affiliated with the top four networks in the eleventh to thirtieth
largest markets begin DTV service by November 1, 1999. The Company's Tampa
television station is included within this group and is on schedule to meet this
timetable. The Company's other television stations must begin DTV service by May
1, 2002.
4
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 satellite radio and television
broadcast service, wireless cable systems, low-power television stations, 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., a cable advertising agency, Mega Advertising, Inc., and
an interest in a cable advertising interconnect business serving five cable
systems in the Washington, D.C. area. The Fairfax system presently has a
120-channel capacity on dual coaxial cables which pass approximately 343,000
homes. The Fredericksburg system presently has a 60-channel capacity and passes
approximately 22,000 homes.
The Company has cable television franchises to operate its existing
systems in the overwhelming majority of the territory of Fairfax County,
Virginia, in certain cities and towns adjoining Fairfax County, in
Fredericksburg and Spotsylvania County, Virginia, and a portion of Stafford
County, Virginia. These jurisdictions have enacted extensive regulations
governing cable television systems within their borders. Franchise renewal
proceedings were completed in 1998 in Fairfax County and have been completed or
substantially completed in the adjoining cities and towns, with new 15-year
franchises in all jurisdictions. Renewal proceedings also are underway for the
Company's Stafford County franchise. At December 27, 1998, the Company's cable
television systems served approximately 258,000 subscribers.
The Company's cable television systems are being upgraded over the next
several years to hybrid fiber-coaxial cable networks (fiber backbone from
head-ends to local nodes and coaxial cable from local nodes to the subscriber)
to improve signal transmission and permit the introduction of non-video
services. Associated costs are estimated to be $100 million.
The Fairfax system began offering high speed data services (HSDS),
including Internet access, in early 1999; the Fredericksburg system will
introduce HSDS later in 1999. The Company also is studying other strategic
planning initiatives for long-term implementation, including entry into
commercial and residential telephone markets at its Fairfax system.
The Company intends to introduce digital compression technology into
both its cable systems, commencing in 1999 in Fredericksburg and in 2000 in
Fairfax. Depending upon the final digital compression ratios used, this
technology will permit eight or more digital channels to be compressed into the
space now occupied by a single existing analog channel.
5
The FCC has jurisdiction over and has adopted a regulatory program
concerning the cable television industry. The FCC's regulations establish cable
television service and programming requirements and govern cable television
engineering standards, registration and reporting obligations and other matters.
Among the regulatory limitations which impact the Company's costs and business,
federal law establishes 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 applicable federal law, 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 level that
includes the local broadcast signals carried by a cable system. If effective
competition by other video programming providers develops generally in a
franchise area, cable rate regulation will end in that area, including the
"basic" tier.
The Company's cable television systems compete for viewers, on the basis
of price, program selection and content and quality of reception, with
programming offered by satellite and broadcast television providers (and with
video rentals in the case of pay-per-view movies). Open video systems, which
also offer television programming under a different regulatory framework
authorized by the 1996 Telecom Act, provide another method of competition. In
early 1998, a local telephone company affiliate was certificated by the FCC to
operate a competitive open video system in a portion of the franchise area
served by the Company's Fairfax system. The Company's HSDS services compete with
incumbent telephone companies and other internet providers leasing telephone
company or using similar transmission lines.
Most of the revenues generated by the Company's cable television systems
are derived from subscribers' payments for programming services; additional
revenue is also derived from pay-per-view services and from advertising. The
Company's cable television systems have substantially the same competition for
advertising as its television stations, competing on the basis of price, program
content and quality of reception.
In November 1998, the Company filed a request for relief from a FCC rule
concerning set-top converter devices. Without the requested relief,
approximately 17% of such converters presently in service at the Company's
Fairfax system would have to be replaced by the end of 1999 at an estimated cost
of approximately $9.2 million; the Company would expect to recover this amount
over time through increased subscriber billings.
Reference should be made to the Communications Act, the 1996 Telecom Act
and the FCC's rules, public notices and rulings for further information
concerning the nature and extent of federal regulation of cable television
systems.
6
The following table sets forth certain information with respect to the
Company's largest cable operation:
Media General Cable of Fairfax
- ------------------------------
1998 1997 1996
---- ---- ----
Subscribers 241,570 235,551 227,717
Penetration 70.5% 70.2% 69.4%
Monthly revenue per home passed $33.98 $33.79 $32.87
Monthly average revenue per subscriber $48.37 $48.64 $47.54
NEWSPRINT PAPER MANUFACTURING BUSINESS
Media General's newsprint operations consist of the Garden State Paper
Company, a wholly owned newsprint mill in Garfield, New Jersey, with an annual
capacity of 242,000 short tons, and a one-third interest in Southeast Paper
Manufacturing Company (SEPCO) in Dublin, Georgia, with an annual capacity of
535,000 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 the combined total
capacity of these facilities is approximately 420,000 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.
Garden State competes with approximately twenty Canadian and American
companies in selling newsprint, its sole product, to newspaper publishers.
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 the past decade, environmentally driven legislation, as well as both
the newspaper and newsprint industries, have encouraged the use of recycled
paper. Consequently, newspaper recycling rates rose steadily and increased
supply led to a gradual decline in ONP prices throughout all of 1996 and into
1997, with prices beginning to stabilize towards the close of 1997. 1998 showed
moderate increases in ONP prices as demand rose due to increased competition
within the industry. Media General's strategically located and cost-effective
newsprint recycling facilities have helped assure the Company of adequate
supplies of ONP.
The newsprint business has historically been a cyclical industry. In
1994, newsprint demand was on the rise, 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 that year. Prices peaked in early 1996 and then declined
throughout the remainder of the year. However, prices began a gradual and steady
ascent in 1997 and leveled out during 1998, reflecting the cyclical nature of
newsprint prices inherent to the industry.
ITEM 2. PROPERTIES
The headquarters of Media General, Inc., and its Richmond Newspapers,
Inc., subsidiary are located in downtown Richmond, Virginia, in four adjacent
buildings. In the second quarter of 1998, the Company occupied the new corporate
headquarters building which it now leases. The Company will lease a new
headquarters facility for Richmond Newspapers, currently under construction by a
third party, on adjacent land beginning in early 2000. The Richmond newspaper
7
is printed at a production and distribution facility located on an 86 acre site
in Hanover County, Virginia, near Richmond. The Company owns nine other daily
newspapers in Virginia, all of which are printed in or around their respective
cities at production and distribution facilities situated on parcels of land
ranging from one-half acre to six acres. 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 headquarters of the Company's Brooksville and
Sebring, Florida, daily newspapers are located on leased property in their
respective cities; however, these newspapers are printed at the Tampa production
facility. 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 remaining seven
daily newspapers in North Carolina are printed at production and distribution
facilities on sites which range from one-half acre to seven acres, all located
in or around their respective cities. Substantially all of the newspaper
production equipment, land and buildings, are owned by the Company.
Before the close of 1999, the Company's station, WFLA-TV in Tampa,
Florida, is expected to occupy its new headquarters and studio building, which
is currently being constructed by a third party and will be leased by the
Company. This building, which adjoins The Tampa Tribune, will provide the
television station with the ability to broadcast digital signal as well as
provide a new and expanded newsroom for the Tampa newspaper.
The Company's fourteen television facilities are located in ten
southeastern states. Two stations are located in each of the following states:
Alabama, Florida, Mississippi and Tennessee. The six remaining stations are
located in the following states: Georgia, Kentucky, Louisiana, North Carolina,
South Carolina and Virginia. Substantially all of the television stations are
located on land owned by the Company. Ten station tower sites are owned by the
Company; four are leased.
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 which are located in
Fairfax County, Virginia, one on property owned by the Company and one on leased
property. In addition, Fairfax Cable leases a facility for its service
maintenance operations and fleet in Springfield, Virginia. The cable system
includes a home subscriber network and a separate institutional network.
Newsprint production facilities at 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 also leases four
properties in New Jersey and one in New York for its recycling operations.
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
None.
8
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 1998.
EXECUTIVE OFFICERS OF THE REGISTRANT
NAME AGE POSITION AND OFFICE YEAR FIRST TOOK OFFICE*
J. Stewart Bryan III 60 Chairman, President, Chief Executive Officer 1990
Marshall N. Morton 53 Senior Vice President, Chief Financial Officer 1989
H. Graham Woodlief, Jr. 54 Vice President, President of Publishing Division 1989
Stephen Y. Dickinson 53 Controller 1989
George L. Mahoney 46 General Counsel, Secretary 1993
Stephen R. Zacharias 49 Treasurer 1989
- --------------------------
* The year indicated is the year in which the officer first assumed an
office with the Company. Mr. Dickinson assumed executive officer
responsibilities as of May 1994.
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 1998 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 pages 50 and 51 of the 1998 Annual Report to
Stockholders, which are incorporated herein by reference, for information
required by this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Reference is made to pages 43 through 48 of the 1998 Annual Report to
Stockholders, which are incorporated herein by reference, for information
required by this item.
9
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reference is made to page 47 of the 1998 Annual Report to Stockholders,
which is 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 27,
1998, and December 28, 1997, and for each of the three fiscal years in the
period ended December 27, 1998, and the report of independent auditors thereon,
as well as the Company's unaudited quarterly financial data for the fiscal years
ended December 27, 1998, and December 28, 1997, are incorporated herein by
reference from the 1998 Annual Report to Stockholders pages 25 through 42 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 21, 1999, 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 21, 1999.
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 21, 1999.
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 21, 1999.
10
PART IV
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
None
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 42
Consolidated statements of operations for the fiscal years ended
December 27, 1998, December 28, 1997, and December 29, 1996 25
Consolidated balance sheets at December 27, 1998, and
December 28, 1997 26-27
Consolidated statements of stockholders' equity for the fiscal
years ended December 27, 1998, December 28, 1997,
and December 29, 1996 28
Consolidated statements of cash flows for the fiscal years ended
December 27, 1998, December 28, 1997, and December 27, 1996 29
Notes to consolidated financial statements 30-41
Schedule:
II - Valuation and qualifying accounts and reserves for the fiscal
years ended December 27, 1998, December 28, 1997, and
December 29, 1996 12
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 27, 1998, 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 1998 Annual Report to Stockholders is not deemed filed as part of this
report.
11
MEDIA GENERAL, INC., AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FISCAL YEARS ENDED DECEMBER 27, 1998, DECEMBER 28, 1997, AND DECEMBER 29, 1996
BALANCE AT ADDITIONS BALANCE
BEGINNING CHARGED TO DEDUCTIONS AT END
OF PERIOD EXPENSE-NET NET TRANSFERS OF PERIOD
---------- ----------- ---------- --------- ---------
1998
Allowance for doubtful accounts $ 6,653,367 $ 6,727,114 $ 5,059,996 $ 112,815 (a) $ 8,433,300
Reserve for warranties 3,523,324 --- 383,390 --- 3,139,934
-------------- ------------- ------------- ----------- -------------
10,176,691 $ 6,727,114 $ 5,443,386 $ 112,815 $ 11,573,234
============== ============= ============= =========== =============
1997
Allowance for doubtful accounts $ 5,270,765 $ 5,716,864 $ 6,122,261 $ 1,787,999 (a) $ 6,653,367
Reserve for warranties 4,146,005 --- 622,681 --- 3,523,324
-------------- ------------- ------------- ----------- -------------
Totals $ 9,416,770 $ 5,716,864 $ 6,744,942 $ 1,787,999 $ 10,176,691
============== ============= ============= =========== =============
1996
Allowance for doubtful accounts $ 4,529,960 $ 5,195,767 $ 4,546,572 $ 91,610 (a) $ 5,270,765
Reserve for warranties 3,040,833 1,700,000 594,828 --- 4,146,005
-------------- ------------- ------------- ----------- -------------
Totals $ 7,570,793 $ 6,895,767 $ 5,141,400 $ 91,610 $ 9,416,770
============== ============= ============= =========== =============
(a) Amount associated with net acquisitions of properties.
12
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 and restated as of
July 31, 1997, incorporated by reference to Exhibit 3 (ii) of
Form 10-Q for the period ended September 28, 1997.
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.
13
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 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.
10.10 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 ended
March 27, 1994.
10.11 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.
10.12 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.
10.13 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.
10.14 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.
10.15 Media General, Inc., Deferred Compensation Plan, amended and
restated as of January 1, 1999, incorporated by reference to
Exhibit 4.3 of Registration Statement 333-69527.
10.16 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.
10.17 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.
10.18 Media General, Inc., 1996 Employee Non-Qualified Stock Option
Plan, adopted as of January 30, 1996, incorporated by reference
to Exhibit 10.20 of Form 10-K for the fiscal year ended December
29, 1996.
10.19 Media General, Inc., 1997 Employee Restricted Stock Plan, adopted
as of May 16, 1997, incorporated by reference to Exhibit 10.21 of
Form 10-K for the fiscal year ended December 29, 1996.
14
10.20 Media General, Inc., Directors' Deferred Compensation Plan,
adopted as of May 16, 1997, incorporated by reference to Exhibit
10.22 of Form 10-K for the fiscal year ended December 29, 1996.
10.21 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.
10.22 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.
10.23 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.
10.24 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.
10.25 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.
10.26 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.
10.27 Franchise Agreements, dated June 1, 1998, between Fairfax County,
Virginia, and Media General Cable of Fairfax County, Inc.,
incorporated by reference to Exhibit 10.1 of Form 10-Q for the
period ended June 28, 1998.
10.28 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.
10.29 Asset Purchase Agreement dated February 13, 1997, by and among
Media General Newspapers, Inc., and Newspaper Holdings, Inc.,
incorporated by reference to Exhibit 10.36 of Form 10-K dated
March 27, 1997.
10.30 Credit Agreement, dated December 4, 1996, among Media General,
Inc., and various lenders.
15
13 Media General, Inc., Annual Report to Stockholders for the fiscal
year ended December 27, 1998.
21 List of subsidiaries of the registrant.
23 Consent of Ernst & Young LLP, independent auditors.
27 1998 Financial Data Schedule.
Note: Exhibits 10.1 - 10.20 are management contracts or
compensatory plans, contracts or arrangements.
16
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 24, 1999
/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
/s/ Marshall N. Morton Senior Vice President and March 24, 1999
- ----------------------------- Chief Financial Officer and Director
Marshall N. Morton
/s/ Stephen Y. Dickinson Controller March 24, 1999
- -----------------------------
Stephen Y. Dickinson
/s/ Robert P. Black Director March 24, 1999
- -----------------------------
Robert P. Black
/s/ Charles A. Davis Director March 24, 1999
- -----------------------------
Charles A. Davis
/s/ Robert V. Hatcher, Jr. Director March 24, 1999
- -----------------------------
Robert V. Hatcher, Jr.
/s/ John G. Medlin, Jr. Director March 24, 1999
- -----------------------------
John G. Medlin, Jr.
/s/ Roger H. Mudd Director March 24, 1999
- -----------------------------
Roger H. Mudd
/s/ Wyndham Robertson Director March 24, 1999
- -----------------------------
Wyndham Robertson
/s/ Henry L. Valentine, II Director March 24, 1999
- -----------------------------
Henry L. Valentine, II