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Item 8 and corresponding
references in items 1, 6 and 7
are omitted from this filing for
the reasons described in Item 14.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended December 29, 2000
0-14871
(Commission File Number)
ML MEDIA PARTNERS, L.P.
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(Exact name of registrant as specified in its governing instrument)
Delaware 13-3321085
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(State or other jurisdiction of organization) (IRS Employer Identification No.)
Four World Financial Center - 26th Floor
New York, New York 10080
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (800) 288-3694
Securities registered pursuant to Section 12(b) of the Act:
None
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(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
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(Title of Class)
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 No X .
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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 a definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Part I
Item 1. Business.
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Formation
ML Media Partners, L.P. (the "Registrant" or the "Partnership"), a Delaware
limited partnership, was organized February 1, 1985. Media Management Partners,
a New York general partnership (the "General Partner"), is Registrant's sole
general partner. The General Partner is a joint venture, organized as a general
partnership under New York law, between RP Media Management ("RPMM") and ML
Media Management Inc. ("MLMM"). MLMM is a Delaware corporation and an indirect
wholly-owned subsidiary of Merrill Lynch & Co., Inc. and an affiliate of Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"). RPMM was organized
as a general partnership under New York law, consisting of The Elton H. Rule
Company and IMP Media Management Inc. As a result of the death of Elton H. Rule,
the owner of The Elton H. Rule Company, the general partner interest of The
Elton H. Rule Company was acquired by IMP Media Management, Inc., a company
controlled by I. Martin Pompadur, and a corporation wholly-owned by Mr.
Pompadur. The General Partner was formed for the purpose of acting as general
partner of Registrant.
Registrant was formed to acquire, finance, hold, develop, improve, maintain,
operate, lease, sell, exchange, dispose of and otherwise invest in and deal with
media businesses and direct and indirect interests therein.
On February 4, 1986, Registrant commenced the offering through Merrill Lynch of
up to 250,000 units of limited partnership interest ("Units") at $1,000 per
Unit. Registrant held four closings of Units; the first for subscriptions
accepted prior to May 14, 1986 representing 144,990 Units aggregating
$144,990,000; the second for subscriptions accepted thereafter and prior to
October 9, 1986 representing 21,540 Units aggregating $21,540,000; the third for
subscriptions accepted thereafter and prior to November 18, 1986 representing
6,334 Units aggregating $6,334,000; and the fourth and final closing of Units
for subscriptions accepted thereafter and prior to March 2, 1987 representing
15,130 Units aggregating $15,130,000. At these closings, including the initial
limited partner capital contribution, subscriptions for an aggregate of
187,994.1 Units representing the aggregate capital contributions of $187,994,100
were accepted. During 1989, the initial limited partner's capital contribution
of $100 was returned.
The Registration Statement relating to the offering was filed on December 19,
1985 pursuant to the Securities Act of 1933 under Registration Statement No.
33-2290 and was declared effective on February 3, 1986 and amendments thereto
became effective on September 18, 1986, November 4, 1986 and on December 12,
1986 (such Registration Statement, as amended from and after each such date, the
"Registration Statement").
Media Properties
As of December 29, 2000, Registrant's sole remaining operating investment in
media properties is its 50% interest in Century/ML Cable Venture (the
"Venture"), a joint venture, with Century Communications Corp. ("Century"), (a
subsidiary of Adelphia Communications Corporation ("Adelphia"), that owns two
cable television systems in Puerto Rico, as further described below, under
Puerto Rico Investments.
On December 13, 2001, Registrant entered into a Leveraged Recapitalization
Agreement (the "Recapitalization Agreement") pursuant to which the Venture
agreed to redeem Registrant's 50% interest in the Venture at a closing to be
held on September 30, 2002, for a purchase price of $279.8 million; under the
terms of the Recapitalization Agreement, the Venture may elect to hold the
closing on June 28, 2002, July 31, 2002, or August 30, 2002, in which event the
purchase price shall be reduced by $1.6 million times the number of months
between the date of the closing and September 30, 2002. Highland Holdings
("Highland"), a Pennsylvania general partnership owned by members of the Rigas
family (the controlling shareholders of Adelphia), agreed to arrange financing
for the Venture in the amount required to redeem Registrant's interest in the
Venture and Adelphia agreed to guaranty the financing. If the Venture fails for
any reason to redeem Registrant's 50% interest in the Venture, the
Recapitalization Agreement requires Adelphia to purchase Registrant's interest
in the Venture at essentially the same price and on the same terms that apply to
the redemption in the Recapitalization Agreement. Century has pledged its 50%
interest in the Venture as security for Adelphia's obligation to consummate the
purchase of Registrant's interest in the Venture if the Venture fails to redeem
the interest. If Adelphia were to default on its obligation to consummate the
purchase, Registrant would have the right to seek to foreclose on Century's 50%
interest and to sell 100% of the assets of the cable systems owned by the
Venture to a third party. Under the pledge agreement, the proceeds of such a
sale would first be paid to Registrant to the extent of $275 million up to
$279.8 million, depending on the date of the default, plus interest and any
expenses incurred in effecting the sale.
Simultaneously with the execution of the Recapitalization Agreement, Registrant
and Adelphia and certain of its subsidiaries, including Century, entered into a
Stipulation of Settlement, pursuant to which the litigation between them (see
"Legal Proceedings" in Item 3, below) will be stayed pending the closing and
dismissed with prejudice at the closing of the redemption or purchase of
Registrant's interest in the Venture pursuant to the Recapitalization Agreement.
On March 27, 2002, Adelphia publicly disclosed that as of December 31, 2001,
Highland had borrowed $2.3 billion under previously disclosed co-borrowing
arrangements with Adelphia, and that Adelphia was contingently liable for such
debt if Highland defaulted on the debt. Following that disclosure, the
Securities and Exchange Commission (the "SEC") announced its formal
investigation into, among other things, Adelphia's financial disclosure of the
co-borrowing arrangements. In addition, numerous class action lawsuits were
commenced against Highland, Adelphia and members of the Rigas family with
respect to the financial disclosure and other matters. Moreover, on May 16,
2002, Adelphia announced that it had missed an interest payment on one of its
senior debt instruments, as well as a dividend payment on one of its convertible
preferred stock instruments, and that interest payments were also missed by
certain of its subsidiaries. Each of these defaults was subject to a 30-day
grace period, which expired on June 15, 2002.
On May 17, 2002, Adelphia announced that two grand juries in the Southern
District of New York and the Middle District of Pennsylvania are investigating
matters related to the company. In addition, on June 3, 2002, the National
Association of Securities Dealers, following a hearing held on May 16, 2002,
delisted Adelphia's common stock from NASDAQ. Such delisting gives the holders
of certain convertible debt of Adelphia the right to sell the debt back to
Adelphia at face value.
On May 23, 2002, Adelphia announced in a filing with the SEC that: (1) the
amount of Highland's debt under various co-borrowing arrangements was $2.5
billion as of December 31, 2001, and $3.1 billion as of March 31, 2002; (2)
members of the Rigas family had resigned from their executive positions and
board seats at Adelphia and transferred all their Adelphia stock to a voting
trust to be controlled by the company's Special Committee of Independent
Directors; and (3) the Rigas family members were transferring certain assets to
Adelphia in partial satisfaction of their obligations.
On June 10, 2002, Adelphia announced in a filing with the SEC that it had
overstated its operating cash flow and the number of subscribers to its cable
systems in its financial statements for 2000 and 2001 and had dismissed Deloitte
& Touche LLP as its auditors.
On July 24, 2002, John Rigas, the founder of Adelphia and two of his sons, both
former officers and directors of Adelphia, were arrested and criminally charged
with bank, securities and wire fraud and two other former executives were also
arrested. Each of the above individuals, along with Adelphia itself and another
Rigas son, also a former officer and director of Adelphia, were named in a
related SEC civil suit. On the same day, Adelphia sued all of the Rigases,
including the wife and daughter of John Rigas, charging each of the defendants
with racketeering violations as well as breach of fiduciary responsibility,
among other charges.
Under the terms of the Recapitalization Agreement, the closing of the redemption
or purchase of the Registrant's 50% interest in the Venture is accelerated to a
date that is 10 days after the occurrence of certain events, including a change
in control of Adelphia from the Rigas family to any other person or group or a
default by Adelphia or a subsidiary in payment of interest on certain
indebtedness beyond the applicable grace period. Therefore, on May 28, 2002,
upon the resignation of each member of the Rigas family as officers and
directors of Adelphia and the agreement by the Rigas family to transfer their
Adelphia stock to a voting trust, Registrant notified Adelphia that the closing
was accelerated to June 7, 2002 (for the redemption) and June 10, 2002 (for the
purchase by Adelphia). Adelphia disputed the acceleration of the closing, and
the Venture failed to redeem Registrant's interest and Adelphia failed to
purchase Registrant's interest on the accelerated closing dates. Accordingly, on
June 12, 2002, Registrant commenced an action against the Venture, Adelphia and
Highland in New York Supreme Court seeking specific performance of the
Recapitalization Agreement and compensatory and punitive damages for breach by
the defendants, including, but not limited to, payment of the full purchase
price for the Registrant's interest in the Venture. See "Legal Proceedings" in
Item 3, below.
Century has pledged its 50% interest in the Venture as security for Adelphia's
obligation to consummate the purchase of Registrant's interest in the Venture.
Under the terms of the pledge agreement, upon Adelphia's default on its
obligation to consummate the purchase of Registrant's interest on June 10, 2002
(the date scheduled for the accelerated closing resulting from the change in
control) Registrant has the right to seek to foreclose on Century's 50% interest
and to sell 100% of the Venture to a third party. However, on June 10, 2002,
Century filed a voluntary petition for relief under Chapter 11 of the Bankruptcy
Code in the U.S. Bankruptcy Court for the Southern District of New York and,
under bankruptcy law, Century's bankruptcy filing precludes Registrant from
foreclosing at this time and will significantly delay Registrant's ability to
foreclose on Century's 50% interest. In addition, on June 25, 2002, Adelphia
filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in
the U.S. Bankruptcy Court for the Southern District of New York. Because of the
defaults by the Venture, Highland and Adelphia, and the Century and Adelphia
bankruptcies, it currently is not possible to predict when Registrant will
realize value for its interest in the Venture, although it may be anticipated
that there will be a substantial delay.
On June 12, 2002, Registrant commenced an action against the Venture, Adelphia
and Highland in New York Supreme Court seeking specific performance of the
Recapitalization Agreement and compensatory and punitive damages for breach by
the defendants, including, but not limited to, payment of the full purchase
price for Registrant's interest in the Venture. Century (which filed for Chapter
11 bankruptcy protection on June 10, 2002) and Adelphia removed Registrant's
action, together with the original litigation described above, to the United
States Bankruptcy Court for the Southern District of New York. Following
Adelphia's own Chapter 11 bankruptcy filing on June 25, 2002, Registrant's
actions have been consolidated as adversary proceedings before the Bankruptcy
Judge overseeing Adelphia's bankruptcy.
Registrant has amended its complaint to add Century as a defendant as well, and
now seeks damages for breach of the Recapitalization Agreement from all four
defendants (the Venture, Adelphia, Century and Highland), as well as specific
performance by Adelphia and Century of their obligations to turn over management
rights of the Venture to Registrant. Registrant has moved to remand the portions
of its action against the Non-Debtors, the Venture and Highland, back to New
York Supreme Court. All defendants have opposed that motion, seeking to retain
the entire action in the Bankruptcy Court, and the motion has been submitted to
the Bankruptcy Court for decision. All four defendants have also moved to
dismiss Registrant's complaint. Registrant has also (without prejudice to its
pending motion for remand), moved for the entry of judgment as a matter of law
against the Non-Debtors, the Venture and Highland on Registrant's claim for
damages. Registrant's motion for judgment and the defendants' motions for
dismissal are scheduled for hearing before the Bankruptcy Court on September 24,
2002.
Registrant does not intend to amend this Annual Report on Form 10-K to disclose
developments relating to Adelphia after the date hereof.
As of December 29, 2000, Registrant had completed the sale of the following
media properties:
o an AM and FM radio station combination in Bridgeport, Connecticut was
sold on August 31, 1999;
o a corporation which owns a FM radio station in Cleveland, Ohio was
sold on January 28, 1999;
o an AM and FM radio station combination in Anaheim, California was
sold on January 4, 1999;
o an AM and FM radio station combination and a background music
service in San Juan, Puerto Rico was sold on June 3, 1998;
o four cable television systems located in the California communities of
Anaheim, Hermosa Beach/Manhattan Beach, Rohnert Park/Yountville, and
Fairfield were sold on May 31, 1996;
o a VHF television station located in Lafayette, Louisiana was sold on
September 30, 1995;
o a VHF television station located in Rockford, Illinois was sold on
July 31, 1995;
o an AM and FM radio station combination in Indianapolis, Indiana was
sold on October 1, 1993;
o the Universal Cable systems were sold on July 8, 1992; and
o two radio stations, one located in Tulsa, Oklahoma and the other in
Jacksonville, Florida, were sold on July 31, 1990.
Puerto Rico Investments
Cable Television Investments
Pursuant to the management agreement and joint venture agreement dated December
16, 1986 (the "Joint Venture Agreement"), as amended and restated, between
Registrant and Century, the parties formed the Venture under New York law, in
which each has a 50% ownership interest. On December 16, 1986 the Venture,
through its wholly-owned subsidiary corporation, Century-ML Cable Corporation
("C-ML Cable Corp."), purchased all of the stock of Cable Television Company of
Greater San Juan, Inc. ("San Juan Cable"), and liquidated San Juan Cable into
C-ML Cable Corp. C-ML Cable Corp., as successor to San Juan Cable, is the
operator of the largest cable television system in Puerto Rico.
On September 24, 1987, the Venture acquired all of the assets of Community
Cable-Vision of Puerto Rico, Inc., Community Cablevision of Puerto Rico
Associates, and Community Cablevision Incorporated (collectively, the "Community
Companies"), which consisted of a cable television system serving the
communities of Catano, Toa Baja and Toa Alta, Puerto Rico, which are contiguous
to San Juan Cable. C-ML Cable Corp. and the Community Companies are herein
referred to as C-ML Cable ("C-ML Cable").
On October 1, 1999, Adelphia through its wholly owned subsidiary Arahova
Communications Inc. ("Arahova") consummated its acquisition of Century. While
Adelphia's purchase included Century's 50% interest in C-ML Cable, it did not
include a purchase of Registrant's 50% interest in C-ML Cable.
On December 13, 2001, Registrant entered into the Recapitalization Agreement
described above.
Radio Investments
On February 15, 1989, Registrant and Century entered into a Management Agreement
and Joint Venture Agreement whereby a new joint venture, Century-ML Radio
Venture ("C-ML Radio"), was formed under New York law. Responsibility for the
management of radio stations to be acquired by C-ML Radio was assumed by
Registrant.
On March 10, 1989, C-ML Radio acquired all of the issued and outstanding stock
of Acosta Broadcasting Corporation ("Acosta"), Fidelity Broadcasting Corporation
("Fidelity"), and Broadcasting and Background Systems Consultants Corporation
("BBSC"); all located in San Juan, Puerto Rico. The purchase price for the stock
was approximately $7.8 million. At the time of acquisition, Acosta owned radio
stations WUNO-AM and Noti Uno News, Fidelity owned radio station WFID-FM, and
BBSC owned Beautiful Music Services, all serving various communities within
Puerto Rico.
In February 1990, C-ML Radio acquired the assets of Radio Ambiente Musical
Puerto Rico, Inc. ("RAM"), a background music service. The purchase price was
approximately $200,000 and was funded with cash generated by C-ML Radio. The
operations of RAM were consolidated into those of BBSC.
Effective January 1, 1994, all of the assets of C-ML Radio were transferred to
the Venture in exchange for the assumption by the Venture of all the obligations
of C-ML Radio and the issuance to Century and Registrant by the Venture of new
certificates evidencing partnership interests of 50% and 50%, respectively. The
transfer was made pursuant to a Transfer of Assets and Assumption of Liabilities
Agreement. At the time of this transfer, Registrant and Century entered into an
amended and restated management agreement and joint venture agreement (the
"Revised Joint Venture Agreement") governing the affairs of the venture as
revised.
Under the terms of the Revised Joint Venture Agreement, Century is responsible
for the day-to-day operations of C-ML Cable and until the sale of C-ML Radio
(see below), Registrant was responsible for the day-to-day operations of C-ML
Radio. For providing services of this kind, Century is entitled to receive
annual compensation of 5% of C-ML Cable's net gross revenues (defined as gross
revenues from all sources less monies paid to suppliers of pay TV product, e.g.,
HBO, Cinemax, Disney and Showtime) and Registrant was entitled to receive annual
compensation of 5% of C-ML Radio's gross revenues including the local marketing
agreement ("LMA") revenue (after agency commissions, rebates or discounts and
excluding revenues from barter transactions). Pursuant to the Recapitalization
Agreement, Century was entitled to increase the management fee from 5% to 10%
and Century was obligated to reimburse the Joint Venture the excess fee if the
transaction does not close. With the Joint Venture, Highland and Adelphia having
now defaulted, Registrant intends to pursue its rights under the
Recapitalization Agreement seeking reimbursement of the excess fees.
On June 3, 1998, the Venture consummated the sale of C-ML Radio pursuant to a
sales agreement entered into in October 1997 between the Venture and Madifide,
Inc. The base sales price for C-ML Radio was approximately $11.5 million,
approximately $5.8 million of which was Registrant's share, subject to closing
adjustments. Pursuant to an LMA entered into, effective as of October 1, 1997,
the buyer was allowed to program the station from such date through the date of
sale. C-ML Radio collected a monthly LMA fee from the buyer, which was equal to
the operating income for that month, provided however, that it not be less than
$50,000 or more than $105,000. The monthly fee was recognized as revenue during
the LMA period and Registrant did not recognize any operating revenues nor incur
any net operating expenses of C-ML Radio during the LMA period. At the closing,
the Venture and Madifide, Inc. entered into escrow agreements pursuant to which
the Venture deposited, in aggregate, approximately $725,040, $362,520 of which
was Registrant's share, into three separate escrow accounts with respect to
which indemnification, benefit, and chattel mortgage claims could be made by
Madifide, Inc. for a period of one year. All of the escrows have been released.
Pursuant to the terms of the outstanding senior indebtedness that jointly
finances C-ML Radio and C-ML Cable, the net proceeds and remaining escrow
amounts from the resulting sale of C-ML Radio must be retained by the Venture
and cannot be distributed to Registrant or its partners.
California Cable Systems
In December 1986, ML California Cable Corporation ("ML California"), a
wholly-owned subsidiary of Registrant, entered into an agreement with SCIPSCO,
Inc. ("SCIPSCO"), a wholly-owned subsidiary of Storer Communications, Inc. for
the acquisition by ML California of four cable television systems servicing the
California communities of Anaheim, Hermosa Beach/Manhattan Beach, Rohnert
Park/Yountville, and Fairfield and surrounding areas. The acquisition was
completed on December 23, 1986 with the purchase by ML California of all of the
stock of four subsidiaries of SCIPSCO, which at closing owned all the assets of
the California cable television systems. The term "California Cable Systems" or
"California Cable" as used herein means either the cable systems or the owning
entities, as the context requires.
On December 30, 1986, ML California was liquidated into Registrant and
transferred all of its assets, except its Federal Communications Commission
("Commission" or "FCC") licenses, subject to its liabilities, to Registrant. The
licenses were transferred to ML California Associates, a partnership formed
between Registrant and the General Partner for the purpose of holding the
licenses in which Registrant is Managing General Partner and 99.99% equity
holder.
On November 28, 1994, Registrant entered into an agreement (the "Asset Purchase
Agreement") with Century to sell to Century substantially all of the assets used
in Registrant's California Cable Systems. On May 31, 1996, Registrant
consummated such sale pursuant to the terms of the Asset Purchase Agreement. The
base purchase price for the California Cable Systems was $286 million, subject
to certain adjustments including an operating cash flow as well as a working
capital adjustment as provided in the Asset Purchase Agreement.
On August 15, 1996, Registrant made a cash distribution to limited partners of
record on May 31, 1996, of approximately $108.1 million ($575 per Unit) and
approximately $1.1 million to its General Partner, representing its 1% share,
from net distributable sales proceeds from the sale of the California Cable
Systems.
In addition, upon closing of the sale of the California Cable Systems,
Registrant set aside approximately $40.7 million in a cash reserve to cover
operating liabilities, current litigation, and litigation contingencies relating
to the California Cable Systems' operations prior to and resulting from their
sale, as well as a potential purchase price adjustment. In accordance with the
terms of the Partnership Agreement, any amounts which may be available for
distribution from any unused cash reserves, after accounting for certain other
expenses of Registrant including certain expenses incurred after May 31, 1996,
will be distributed to partners of record as of the date such unused reserves
are released, rather than to the partners of record on May 31, 1996, the date of
the sale.
Effective August 14, 1997, reserves in the amount of approximately $13.2 million
were released and, after accounting for certain expenses of Registrant, in
accordance with the terms of the Partnership Agreement, were included in the
cash distribution that was distributed to partners on November 25, 1997. On
March 1, 1999, reserves in the amount of approximately $6.1 million were
released and, in accordance with the terms of the Partnership Agreement, were
included in the cash distribution made to partners on March 31, 1999. As of
December 29, 2000, Registrant had approximately $13.7 million remaining in cash
reserves to cover operating liabilities, current litigation, and litigation
contingencies relating to the California Cable Systems prior to and resulting
from their sale.
Effective December 14, 2001, reserves in the amount of approximately $6.7
million were released and, after accounting for certain expenses of Registrant,
in accordance with the terms of the Partnership Agreement, were included in the
cash distribution that was distributed to partners on January 25, 2002.
As of June 30, 2002, Registrant had approximately $6.5 million remaining in cash
reserves to cover operating liabilities, current litigation, and litigation
contingencies relating to the California Cable Systems prior to and resulting
from their sale.
WEBE-FM and WICC-AM
On August 20, 1987, Registrant entered into an Asset Purchase Agreement with 108
Radio Company, L.P. for the acquisition of the business and assets of radio
station WEBE-FM, Westport, Connecticut ("WEBE-FM" or "WEBE"), which serves
Fairfield and New Haven counties, for $12.0 million.
On July 19, 1989, Registrant purchased all of the assets of radio station
WICC-AM located in Bridgeport, Connecticut ("WICC-AM" or "WICC") from
Connecticut Broadcasting Company, Inc. The purchase price of $6.25 million was
financed solely from proceeds of the Wincom-WEBE-WICC Loan.
On August 31, 1999, Registrant consummated a sale to Aurora Communications, LLC
("Aurora") (formerly known as Shadow Communications, LLC) of substantially all
of the assets used in the operations of Registrant's radio stations, WEBE-FM and
WICC-AM (the "Connecticut Stations"), pursuant to a sales agreement dated April
22, 1999 (the "Connecticut Agreement").
The base sales price for the Connecticut Stations was $66 million, subject to
certain adjustments, including a working capital adjustment, as provided in the
Connecticut Agreement.
Pursuant to the Connecticut Agreement, Registrant deposited $3.3 million into an
indemnity escrow account against which Aurora could make indemnification claims
until December 31, 2000; no such claims were made. At the closing, pursuant to
the terms of the Wincom-WEBE-WICC Loan, an initial amount of approximately $8.2
million was paid to the Wincom Bank, as partial payment of the lender's 15%
residual interest in the net proceeds from the sale of the Connecticut Stations.
In addition, Registrant held approximately $11.5 million of the sales proceeds
to pay (or to reserve for payment of) expenses and liabilities relating to the
operations of the Connecticut Stations prior to the sale, as well as wind-down
expenses, sale-related expenses, contingent obligations of the Connecticut
Stations, and the balance of the 15% residual interest in the net sales proceeds
payable to the lender under the Wincom-WEBE-WICC Loan. On October 29, 1999, the
remaining sales proceeds of approximately $36.4 million, after accounting for
certain expenses of Registrant, were distributed to partners of record as of
August 31, 1999, in accordance with the terms of the Partnership Agreement.
As of December 29, 2000, Registrant had approximately $4.6 million remaining in
cash reserves from the sale of the Connecticut Stations.
On January 24, 2001, $3.3 million plus interest was released from the escrow
account relating to the sale of the Connecticut Stations. In addition, on April
30, 2001, approximately $4.6 million was released from the reserve established
upon such sale. In accordance with the terms of the Partnership Agreement, the
amounts of such discharged escrowed proceeds and released reserves from the sale
of the Connecticut Stations, after accounting for certain expenses of
Registrant, were included in a cash distribution to partners on May 29, 2001.
As of June 30, 2002, Registrant had approximately $74,000 remaining in cash
reserves from the sale of the Connecticut Stations. To the extent any such
amounts are subsequently released, such amounts will be distributed to partners
of record as of the date such reserves are released.
Wincom
On August 26, 1988, Registrant acquired 100% of the stock of Wincom Broadcasting
Corporation ("Wincom"), an Ohio corporation headquartered in Cleveland for $46.0
million. At acquisition, Wincom and its subsidiaries owned and operated five
radio stations - WQAL-FM, Cleveland, Ohio; WCKN-AM/WRZX-FM, Indianapolis,
Indiana (the "Indianapolis Stations", including the Indiana University Sports
Radio Network, which was discontinued after the first half of 1992); KBEZ-FM,
Tulsa, Oklahoma; and WEJZ-FM, Jacksonville, Florida. On July 31, 1990,
Registrant sold the business and assets of KBEZ-FM and WEJZ-FM to Renda
Broadcasting Corp. for net proceeds of approximately $10.3 million. On October
1, 1993, Registrant sold the Indianapolis stations, which generated net proceeds
in the approximate amount of $6.1 million. All proceeds of the sales were paid
to the lender.
On January 28, 1999, Registrant consummated a sale to Chancellor Media
Corporation of Los Angeles ("Chancellor") of the stock of Wincom, pursuant to a
stock purchase agreement (the "Cleveland Agreement") dated August 11, 1998.
Wincom owns all of the outstanding stock of Win Communications, Inc. ("WIN"),
which owns and operates the radio station WQAL-FM, serving Cleveland, Ohio (the
"Cleveland Station").
The base sales price for the Cleveland Station was $51,250,000, subject to
certain adjustments for the apportionment of current assets and liabilities as
of the closing date, as provided for in the Cleveland Agreement, resulting in a
reduction of the base sales price of approximately $1.6 million.
Pursuant to the Cleveland Agreement, Registrant deposited $2.5 million into an
indemnity escrow account against which Chancellor could make indemnification
claims for a period of up to two years after the closing; no such claims were
made. Approximately $2.0 million was used to repay in full the remaining
outstanding balance of the Wincom-WEBE-WICC Loan and pursuant to the terms of
the Wincom-WEBE-WICC Loan, an initial amount of approximately $7.3 million was
paid to the Wincom Bank, pursuant to its 15% residual interest in the net sales
proceeds from the sale of Wincom. In addition, Registrant held approximately
$2.6 million of the sales proceeds to pay (or to reserve for payment of)
wind-down expenses, sale-related expenses and the balance, if any, of the Wincom
Bank's residual interest. The remaining sales proceeds of $35.3 million were
included in the cash distribution made to partners on March 30, 1999 in
accordance with the terms of the Partnership Agreement.
On February 4, 2000, Registrant received the discharge of escrowed proceeds of
$1.5 million, plus interest earned thereon, generated from the sale of the
Cleveland Station. In accordance with the terms of the Partnership Agreement,
the amount of such discharged escrowed proceeds, after accounting for certain
expenses of Registrant, were included in the cash distribution to partners of
record as of February 4, 2000, on June 21, 2000.
As of December 29, 2000, Registrant had approximately $2.3 million remaining in
cash reserves from the sale of the Cleveland Station.
On February 5, 2001, the remaining $1.0 million plus interest was released from
the escrow account relating to the sale of the Cleveland Station. In addition,
on April 30, 2001, approximately $2.3 million was released from the reserve
established upon such sale. In accordance with the terms of the Partnership
Agreement, the amounts of such discharged escrowed proceeds and released
reserves from the sale of the Cleveland Station, after accounting for certain
expenses of Registrant, were included in a cash distribution to partners on May
29, 2001.
As of June 30, 2002, Registrant had approximately $76,000 remaining in cash
reserves from the sale of the Cleveland Station. To the extent any such amounts
are subsequently released, such amounts will be distributed to partners of
record as of the date such reserves are released.
KEZY-FM and KORG-AM
On November 16, 1989, Registrant acquired an AM ("KORG-AM") and an FM
("KEZY-FM") (jointly the "Anaheim Stations" or "KORG/KEZY") radio station
combination located in Anaheim, California, from Anaheim Broadcasting
Corporation. The total acquisition cost was approximately $15.1 million.
On January 4, 1999, Registrant consummated a sale to Citicasters Co., a
subsidiary of Jacor Communications, Inc. ("Citicasters") of substantially all of
the assets, other than cash and accounts receivable, used in the operations of
Registrant's radio stations, KORG-AM and KEZY-FM, serving Anaheim, California
(the "Anaheim Stations"), pursuant to the asset purchase agreement (the "Anaheim
Agreement") dated September 14, 1998, as amended.
The base sales price for the Anaheim Stations was $30,100,000, subject to
certain adjustments for the apportionment of income and liabilities as of the
closing date, as provided for in the Anaheim Agreement, resulting in a reduction
of the base sales price of approximately $20,000.
Pursuant to the Anaheim Agreement, Registrant deposited $1.0 million into an
indemnity escrow account against which Citicasters could make indemnification
claims for a period of one year after the closing. In addition, Registrant held
approximately $5.2 million of the sales proceeds to pay (or to reserve for
payment of) expenses and liabilities relating to the operations of the Anaheim
Stations prior to the sale as well as wind-down expenses, sale-related expenses
and contingent obligations of the Anaheim Stations. The remaining sales proceeds
of approximately $23.9 million were included in the cash distribution made to
partners on March 30, 1999, after accounting for certain expenses of Registrant,
in accordance with the terms of the Partnership Agreement.
On January 31, 2000, Registrant received the discharge of escrowed proceeds of
$1.0 million, plus interest earned thereon, generated from the sale of the
Anaheim Stations. In accordance with the terms of the Partnership Agreement, the
entire amount of such discharged escrowed proceeds was used to pay for certain
expenses of Registrant.
As of December 29, 2000, Registrant had approximately $4.1 million remaining in
cash reserves from the sale of the Anaheim Stations.
On April 30, 2001, approximately $4.1 million was released from the reserve
account relating to the sale of the Anaheim Stations. In accordance with the
terms of the Partnership Agreement, the amounts of such released reserves from
the sale of the Anaheim Stations, after accounting for certain expenses of
Registrant, was included in a cash distribution to partners on May 29, 2001.
As of June 30, 2002, Registrant had approximately $4,000 remaining in cash
reserves from the sale of the Anaheim stations. To the extent any such amounts
are subsequently released, such amounts will be distributed to partners of
record as of the date such reserves are released.
Employees
Registrant does not have any employees.
COMPETITION
Cable Television
Cable television systems compete with other communications and entertainment
media, including over-the-air television broadcast signals. The extent of this
competition is dependent in part upon the quality and quantity of such
over-the-air signals. Because a substantial variety of broadcast television
programming can be received over the air in the areas served by Registrant's
systems, the extent to which Registrant's cable television service is
competitive depends largely upon the system's ability to provide a greater
variety of programming than that available over the air and the rates charged
for programming. Cable television systems also are susceptible to competition
from other multichannel video programming distribution ("MVPD") systems, such as
direct broadcast satellite ("DBS") systems and satellite master antenna
television ("SMATV"); from other forms of home entertainment, such as video
cassette recorders; and in varying degrees from other sources of entertainment
in the area, including motion picture theaters, live theater, and sporting
events.
In recent years, the level of competition in the MVPD market has increased
significantly, most notably by the provision of high-powered DBS service in the
continental United States. In addition, the FCC has adopted policies providing
for authorization of new technologies and a more favorable operating environment
for certain existing technologies that provide, or have the potential to
provide, substantial additional competition to cable television systems. For
example, the FCC has revised its rules on multichannel multipoint distribution
service ("MMDS" or "wireless cable") to foster competition between MMDS services
and cable television systems, has authorized telephone companies to deliver
video programming directly to their subscribers, and has authorized local
multipoint distribution service ("LMDS"), which employs technology analogous to
that used by cellular telephone systems to distribute multiple channels of video
programming and/or other data directly to subscribers. Regulatory initiatives
that will result in additional competition for cable television systems are
described in the following sections.
LEGISLATION AND REGULATION
Cable Television Industry
The cable television industry is extensively regulated by the federal
government--primarily through the Federal Communications Commission--some state
governments, and most local franchising authorities. In addition, the Copyright
Act of 1976 (the "Copyright Act") imposes copyright liability on all cable
television systems for their primary and secondary transmissions of copyrighted
programming. The regulation of cable television systems at the federal, state,
and local levels has been in constant flux over the past decade. Legislators and
government agencies continue to generate proposals for new laws and for the
adoption or deletion of administrative regulations and policies. Further
material changes in the law and regulatory requirements must be expected. There
can be no assurance that Registrant's cable systems will not be adversely
affected by future legislation, new regulations, or judicial or administrative
decisions. The following is a summary of federal laws and regulations materially
affecting the cable television industry and a description of certain state and
local laws with which the cable industry must comply.
Federal Statutes and Regulation
The Communications Act
The Communications Act, as amended by the Cable Communications and Policy Act of
1984 ("1984 Cable Act"), the Cable Television Consumer Protection and
Competition Act of 1992 ("1992 Cable Act"), and the Telecommunications Act of
1996 (The "1996 Act"), imposes uniform national standards and guidelines for the
regulation of cable television systems. Among other things, the Communications
Act regulates the provision of cable television service pursuant to local
franchise agreements, authorizes a system for regulating certain subscriber
rates and services, outlines signal carriage requirements, imposes certain
ownership restrictions, and sets forth customer service, consumer protection,
and technical standards.
Violations of the Communications Act or any FCC regulations implementing the
statutory laws can subject a cable operator to substantial monetary penalties
and other sanctions.
Federal Communications Commission
Federal regulation of cable television systems is conducted primarily through
the FCC pursuant to the Communications Act, although, as discussed below, the
Copyright Office also regulates certain aspects of cable television system
operation. FCC regulations currently contain detailed provisions concerning
non-duplication of network programming, sports program blackouts, program
origination and ownership of cable television systems. There are also
comprehensive registration and reporting requirements and various technical
standards. Moreover, pursuant to changes imposed by the 1992 Cable Act, the FCC,
among other things, established regulations concerning mandatory signal carriage
and retransmission consent of broadcast television stations; consumer service
standards; the rates for service, equipment, and installation that may be
charged to subscribers; MVPD access to cable programming owned by vertically
integrated cable systems; and the rates and conditions for commercial channel
leasing. The FCC also issues permits, licenses, and registrations for microwave
facilities, mobile radios, and receive-only satellite earth stations, all of
which are commonly used in the operation of cable systems.
The FCC is authorized to impose monetary fines upon cable television systems for
violations of existing regulations, to suspend licenses and other
authorizations, and to issue cease and desist orders. The agency also is
authorized to promulgate new rules and to modify existing rules affecting cable
television services.
The 1992 Cable Act and the 1996 Act
The 1992 Cable Act clarified and modified certain provisions of the 1984 Cable
Act. It also codified certain FCC regulations and added a number of new
requirements. Subsequent to the passage of the 1992 Cable Act, the FCC undertook
a substantial number of rulemaking proceedings resulting in a host of new
regulatory requirements and guidelines. In addition, a number of provisions have
been modified by the 1996 Act.
The 1996 Act's cable provisions expanded and in some cases substantially
modified the rules applicable to cable systems. Most significantly, the 1996 Act
took steps to (1) reduce, or in some cases eliminate, rate regulation of cable
systems; and (2) permit substantially greater telephone company participation in
the MVPD market, while at the same time promoting cable operator provision of
telecommunications services.
As previously noted, under the broad statutory scheme, cable operators are
subject to a two-level system of regulation with some matters under federal
jurisdiction, others subject strictly to local regulation, and still others
subject to both federal and local regulation. Following are descriptions of some
of the more significant regulatory areas of concern to cable operators.
Franchises / State and Local Regulation
Cable television systems are generally operated pursuant to non-exclusive
franchises, permits, or licenses issued by a local government entity. The
franchises are generally contracts between the cable system owner and the
issuing authority, and typically cover a broad range of obligations directly
affecting the cable operator's business. Except as otherwise specified in the
Communications Act or limited by specific FCC rules and regulations, the
Communications Act permits state and local officials to retain their primary
responsibility for selecting franchisees to serve their communities and to
continue regulating other essentially local aspects of cable television.
Cable television franchises generally contain provisions governing the length of
the franchise term, franchise renewal, sale or transfer of the franchise, system
design and technical performance, and the number and types of cable services
provided. The specific terms and conditions of the franchise directly affect the
profitability of the cable television system. Franchises are generally issued
for fixed terms and must be renewed periodically. There can be no assurance that
franchises will be granted renewal or that renewals will be based on terms and
conditions similar to those in an initial franchise.
The 1984 Cable Act provides that in granting or renewing franchises, franchising
authorities may establish requirements for cable-related facilities and
equipment, but may not specify requirements for video programming or information
services other than in broad categories. The 1992 Cable Act provides that
franchising authorities may not grant an exclusive franchise or unreasonably
deny award of a competing franchise.
Local franchising authorities are permitted to require cable operators to set
aside certain channels for public, educational, and governmental access ("PEG")
programming and to impose a franchise fee of up to 5% of the gross annual
revenues derived from the operation of the cable system to provide cable
services. In addition, cable television systems with 36 or more channels are
required to designate a portion of their channel capacity for leased access,
which generally is available to commercial and non-commercial parties to provide
programming (including programming supported by advertising). As required by the
1992 Cable Act, the FCC adopted rules setting maximum reasonable rates and other
terms for the use of such leased channels.
Pursuant to the 1992 Cable Act, franchising authorities are exempt from money
damages in cases involving their exercise of regulatory authority, including the
award, renewal, or transfer of a franchise, unless the case involves
discrimination based on race, sex, or similar impermissible grounds. Remedies
are limited exclusively to injunctive or declaratory relief. Franchising
authorities may also build and operate their own cable systems without a
franchise.
Various proposals have been introduced at state and local levels with regard to
the regulation of cable television systems, and a number of states have adopted
legislation subjecting cable television to the jurisdiction of centralized state
governmental agencies, some of which impose regulation of a public utility
character. Increased state and local regulations may increase cable television
system expenses.
Rate Regulation
Cable systems that are not subject to "effective competition" are subject to
regulation by local franchising authorities regarding the rates that may be
charged to subscribers. A cable system is subject to effective competition if
one of the following conditions is met: (1) fewer than 30% of the households in
the franchise area subscribe to the system; (2) at least 50% of the households
in the franchise area are served by two MVPDs and at least 15% of the households
in the franchise area subscribe to any MVPD other than the dominant cable
system; (3) a franchising authority for that franchise area itself serves as an
MVPD offering service to at least 50% of the households in the franchise area;
or (4) a local exchange carrier ("LEC"), or an entity using the LEC's
facilities, offers video programming services (including 12 or more channels of
programming, at least some of which are television broadcasting signals)
directly to subscribers by any means (other than direct-to-home satellite
services) in the franchise area of an unaffiliated cable operator.
A local franchising authority may certify with the FCC to regulate the rates
charged for the Basic Service Tier ("BST") of programming and the associated
subscriber equipment of a cable system within its jurisdiction. For systems
subject to rate regulation, the BST must include all broadcast signals (with the
exception of national "superstations"), including those required to be carried
under the mandatory carriage provisions of the 1992 Cable Act (see infra). Any
PEG access channels required by the local franchise agreement also must be
offered on the BST.
Pursuant to FCC rules, the Telecommunications Regulatory Board of Puerto Rico
(the "Board") filed for certification to regulate the rates of the cable system
operated by the Venture. The cable system operator contested the certification,
claiming that it was subject to effective competition, and therefore exempt from
rate regulation, because fewer than 30% of the households in the franchise area
subscribe to the system. The FCC's Cable Services Bureau upheld the Board's
certification, and in November 1998 the FCC denied both the operator's
application for review of the decision and a request for stay. In July of 2001,
the Commission granted the cable operator's petition for reconsideration in this
matter, finding that the system is subject to effective competition, and
accordingly, revoked the Board's certification to regulate the system's basic
cable rates.
Pursuant to the 1996 Act, the FCC's jurisdiction to regulate the rates of the
cable programming service tier ("CPST"), which generally includes programming
other than that carried on the BST or offered on a per-channel or per-program
basis, expired on March 31, 1999. The CPST is now exempt from rate regulation.
The FCC has continued, however, to process and rule upon rate complaints
relating to the CPST for periods prior to April 1, 1999.
Rates for basic services generally are set pursuant to a benchmark formula. The
Commission has reserved the right to alter its established benchmarks. In the
alternative, an operator may opt for a cost-of-service methodology to show that
its basic service rates are reasonable. This approach allows cable system
operators to recover normal operating expenses as well as a reasonable return on
investment. In addition, the FCC's rules limit increases in regulated rates to
an inflation indexed amount plus increases in certain costs, such as taxes,
franchise fees, programming costs, and the costs of complying with certain
franchise requirements. Rates also can be adjusted if an operator adds or
deletes channels or completes a significant system rebuild or upgrade.
Parties periodically have called upon the FCC to freeze cable rates and to
increase rate regulation. Congress and the FCC also have continued to express
some interest in cable rates and programming costs. Registrant cannot predict
the likelihood or potential outcome of any FCC or congressional action on these
issues.
Renewal and Transfer
The 1984 Cable Act established procedures for the renewal of cable television
franchises. The procedures were designed to provide incumbent franchisees with a
fair hearing on past performances, an opportunity to present a renewal proposal
and to have it fairly and carefully considered, and a right of appeal if the
franchising authority either fails to follow the procedures or denies renewal
unfairly. These procedures were intended to provide an incumbent franchisee with
substantially greater protection than previously available against the denial of
its franchise renewal application.
The 1992 Cable Act sought to address some of the issues left unresolved by the
1984 Cable Act. It established a more definite timetable in which the
franchising authority is to act on a renewal request. It also narrowed the range
of circumstances in which a franchised operator might contend that the
franchising authority had constructively waived non-compliance with its
franchise.
Cable system operators are sometimes confronted by proposals for competing local
cable franchises. Such proposals may be presented during renewal proceedings. In
addition, local franchising authorities occasionally have proposed to construct
their own cable systems or decided to invite other private interests to compete
with the incumbent cable operator. Judicial challenges to such actions by
incumbent system operators have, to date, generally been unsuccessful.
Registrant cannot predict the outcome or ultimate impact of these or similar
franchising and judicial actions.
Pursuant to the 1992 Cable Act, when local consent to a transfer is required,
the franchise authority must act within 120 days of submission of a transfer
request. If this deadline is not met, the transfer is deemed approved. The
120-day period commences upon the submission to a local franchising authority of
a standardized FCC transfer form. The franchise authority may request additional
information beyond that required on the form. Further, the 1992 Cable Act gave
local franchising officials the authority to prohibit the sale of a cable system
if the proposed buyer operates another cable system in the jurisdiction or if
such sale would reduce competition in cable service. Approval by LFAs may be
required in order for the Venture to redeem Registrant's interest in the
Venture.
Cable/Telephone Cross-Ownership
Prior to the passage of the 1996 Act, providers of local phone service - or
local exchange carriers ("LECs") - generally were prohibited from owning cable
television systems or offering video programming directly to subscribers in
their local telephone service areas. The 1996 Act eliminated the ban on
cable/telco cross-ownership and gave telephone companies four options for
entering the MVPD market: (1) as wireless carriers; (2) as common carriers; (3)
as cable operators; or (4) by establishing an "open video system", a mode of
entry established by the 1996 Act that allows common carriers to program 33
percent of their video distribution systems, so long as the rest of their
capacity is made available to unaffiliated program providers. The open video
system ("OVS") rules were intended to subject OVS operators to less extensive
regulation than traditional cable operators in exchange for requiring them to
open much of their systems to competitors. Most notably, under the framework of
the 1996 Act, OVS providers were not required to obtain local franchises.
In City of Dallas v. FCC, 165 F.3d 341 (5th Cir. 1999), however, a federal
appellate court determined that local officials are not preempted from requiring
OVS operators to obtain local franchises or imposing franchise-like obligations
on OVS systems. The Court affirmed FCC rules implementing other aspects of the
1996 Act provisions regarding OVS, including rules that limit fees that open
video system operators can be required to pay to local franchises.
In addition, OVS operators, which may include entities other than LECs, are
required under the 1996 Act to comply with certain cable regulations, including
the must-carry/retransmission consent requirements and the rules governing
carriage of PEG channels. Cable companies are, in certain circumstances, also
permitted to operate open video systems.
Although telephone companies may now provide video programming to their
telephone subscribers, the 1996 Act maintains the prohibition on cable/telco
buy-outs. A LEC or any of its affiliates generally may not acquire more than a
10% financial interest, or any management interest, in a cable operator serving
the LEC's telephone service area. Similarly, a cable operator may not acquire a
10% financial interest, or any management interest, in a LEC providing telephone
exchange service within the cable operator's franchise area.
The 1996 Act also cleared the way for cable provision of telephony and clarified
that the provisions in the Communications Act governing cable operators do not
apply to cable operators' provision of telecommunications services. State
regulations that may prohibit the ability to provide telecommunications services
are preempted.
Cable/Television Cross Ownership
In February of this year, the U.S. Court of Appeals for the D.C. Circuit vacated
the FCC's restriction on the common ownership of a broadcast television station
and a cable system in the same local community in Fox Television Stations v. FCC
280 F. 3d 1027 (D.C. Cir 2002). To date, the Commission has not taken action to
reinstate any restriction on cable/television cross-ownership.
Concentration of Ownership
The 1992 Cable Act directed the FCC to establish reasonable limits on the number
of cable subscribers a single company may reach through cable systems it owns
(horizontal concentration) and the number of system channels that a cable
operator can use to carry programming services in which it holds an ownership
interest (vertical concentration).
Pursuant to that directive, the FCC promulgated rules that allowed an entity to
hold an "attributable interest" in cable systems serving no more than 30% of all
cable subscribers nationwide. The FCC revised these horizontal ownership
restrictions in October of 1999, retaining a 30% nationwide cap, but relaxing it
somewhat by basing the cap on the percentage of multichannel video programming
subscribers served nationwide. This standard, therefore, took into account DBS
and other alternative providers. The FCC also promulgated vertical ownership
restrictions based upon a "channel occupancy" standard, which placed a 40% limit
on the number of channels (up to 75 channels) that may be occupied by services
from programmers in which the cable operator has an attributable ownership
interest.
In the same decision in which it revised its horizontal cap, the agency also
modified its rules regulating the attribution of limited partners with respect
to both the horizontal ownership and vertical ownership (or "channel occupancy")
rules to now allow a limited partnership interest to be treated as
non-attributable for purposes of those rules so long as the general partner is
able to certify that the limited partner is not materially involved in the video
programming activities of the partnership.
In March of 2001, however, a federal court of appeals held in Time Warner
Entertainment Co., L.P. v. Federal Communications Commission, 240 F.3d 1126
(D.C. Cir. 2001) that both the horizontal and vertical ownership limits that the
FCC adopted pursuant to the 1992 Cable Act were unconstitutional. Accordingly,
the Court reversed and remanded the FCC's ownership limits and vacated specific
portions of the FCC's ownership attribution rules. In September 2001, the
Commission initiated a rulemaking proceeding to reconsider the issue. That
proceeding remains pending.
In addition, the 1992 Cable Act and FCC rules restrict the ability of
programmers in which cable operators hold an attributable interest to enter into
exclusive contracts with cable operators. This prohibition on exclusive
contracts is scheduled to expire in October of 2002 unless the Commission finds
that the restriction serves the public interest. The agency has initiated a
rulemaking proceeding to address this issue. Vertically integrated programmers
also are generally prohibited from favoring cable operators over other
multichannel video programming distributors.
Broadband Services
Many cable operators now offer high-speed Internet and other broadband services
over their cable systems. A vigorous debate has arisen over the manner in which
such services should be regulated, whether cable operators should be required to
open their high-speed platforms to competitive Internet service providers
("ISPs"), and the role of local franchising authorities in any such regulation.
A proceeding to further examine these issues currently is pending before the
agency.
The Commission recently has released a declaratory ruling concluding that cable
modem service is properly classified as an "interstate information service."
Whether the service should be considered a "cable service," a
"telecommunications service," or an "information service" had been the subject
of considerable debate because the regulatory classification has important
implications on the ability of both the FCC and LFAs to regulate cable modem
services.
At the same time that the declaratory ruling was issued, the agency initiated a
rulemaking proceeding to determine the regulatory implications of this
classification. Among other things, the proceeding will consider whether the
Commission should preclude state and local regulatory authorities from
regulating cable modem service and facilities. The FCC also tentatively
concluded in its notice of proposed rulemaking that cable modem service is
exempt from local franchise fees.
Alternative Video Programming Services
Direct Broadcast Satellites: DBS providers offer video programming directly to
home subscribers through high-powered direct broadcast satellites. Since the
launch of the first system in 1994, DBS has become one of the primary
competitors to cable operators in the multichannel video-programming
marketplace. DBS providers served approximately 18 million customers as of June
of 2002. In addition, Congress has amended the Satellite Home Viewer Act to
allow DBS operators to provide local broadcast station signals to subscribers in
a manner similar to cable operators, thereby removing a major competitive
barrier to DBS growth. Under the legislation, DBS operators also became subject
to "must-carry" obligations to carry broadcast signals in January 2002. The
must-carry requirement recently was held to be constitutional by the U.S. Court
of Appeals for the Fourth Circuit. A petition for certiorari of this decision is
currently pending.
Digital Television: In 1997, the FCC adopted rules allowing television
broadcasters to provide digital television ("DTV") to consumers and provided
eligible broadcasters with a second channel on which to provide DTV service.
Broadcasters generally will be allowed to use their increased digital capacity
according to their best business judgment. Such uses can include data transfer,
subscription video, interactive materials, and audio signals, although
broadcasters will be required to provide a free digital video programming
service that is at least comparable to today's analog service. Broadcasters will
not be required to air "high definition" programming or, at least initially, to
simulcast their analog programming on the digital channel.
Certain television stations already have begun to broadcast a digital signal.
Affiliates of the top four networks (ABC, CBS, FOX, and NBC) in the top ten
markets were required to be on the air with a digital signal by May 1, 1999.
Affiliates of those networks in markets 11-30 were required to be on the air
with a digital signal by November 1, 1999. All other commercial stations were
required to construct their digital facilities by May 1, 2002, although a large
number have sought and obtained extensions. The Commission recently initiated a
rulemaking proceeding to examine what measures it should take with respect to
broadcasters who failed to meet the deadlines. Although the FCC has targeted
December 1, 2006 as the date by which all broadcasters must return their analog
licenses, the Balanced Budget Act of 1997 allows broadcasters to keep both their
analog and digital licenses until at least 85 percent of television households
in their respective markets can receive a digital signal. The Commission has
stated that it will review the progress of DTV every two years and make
adjustments to the 2006 target date, if necessary.
Wireless Cable: The FCC has expanded the authorization of MMDS services to
provide "wireless cable" via multiple microwave transmissions to home
subscribers. In 1990, the FCC increased the availability of channels for use in
wireless cable systems by eliminating MMDS ownership restrictions and
simplifying various processing and administrative rules. Since then, the FCC has
resolved certain additional wireless cable issues, including channel allocations
for MMDS, the facilities for Operational Fixed Service and Instructional
Television Fixed Service ("ITFS"), and restrictions on ownership or operation of
wireless facilities by cable entities.
Local Multipoint Distribution Service: The FCC has allocated a total of 1300 MHZ
of spectrum for LMDS, with one 1150 MHz license and one 150 MHz license
available in each of 493 designated areas. LMDS licensees are permitted to offer
a wide variety of services, including broadband data and video offerings.
Programming Issues
Mandatory Carriage and Retransmission Consent: The 1992 Cable Act required cable
operators to carry the signals of local commercial and non-commercial television
stations and certain low power television stations. Television broadcasters, on
a cable system-by-cable system basis, must decide once every three years whether
to proceed under the must carry rules or to waive that right to mandatory but
uncompensated carriage and negotiate a grant of retransmission consent to permit
the cable system to carry the station's signal.
The FCC currently is considering cable operators' obligations to carry the
digital signals of broadcast stations, including the obligations that should
exist during the digital television transition period, when broadcasters' analog
and digital signals will be operating simultaneously. In January 2001, the FCC
resolved a number of technical and legal issues concerning cable must carry
rights of digital broadcasters, including a determination that digital-only
television stations are entitled to carriage of a single programming stream. The
FCC also tentatively concluded, however, that a dual carriage obligation
(applicable to both analog and digital signals) would be unconstitutional. The
Commission has sought further comment on this issue.
Program Content Regulation: The 1996 Act contained a number of regulations
affecting program content. For example, the FCC has adopted regulations
requiring the "closed captioning" of programming. The closed captioning rules
went into effect January 1, 1998, although a transition period has been
established to enable cable operators and programmers to achieve full compliance
with the rules. The FCC also has adopted video description rules, which went
into effect in 2002. In addition, the FCC has adopted an order finding
acceptable the voluntary video programming rating system developed by
distributors of video programming--including cable operators--to identify
programming that contains sexual, violent, or other indecent material. The
Commission has also established technical requirements for consumer electronic
equipment to enable the blocking of such video programming. Distributors of
rated programs are required to transmit these ratings, thereby permitting
parents to block the programs.
Copyright: Cable television systems are subject to the Copyright Act of 1976,
which, among other things, covers the carriage of television, broadcast signals.
The Copyright Act grants cable operators a compulsory license to retransmit
copyrighted programming broadcast by local and distant stations in exchange for
contributing a percentage of their revenues as statutory royalties to the
Copyright Office. The amount of this royalty payment varies depending on the
amount of system revenues from certain sources, the number of distant signals
carried, and the locations of the cable television system with respect to
off-air television stations and markets.
Several types of multichannel video programming distributors that compete with
cable operators have been successful in gaining compulsory license coverage of
their retransmission of television broadcast signals. Recent amendments to the
Satellite Home Viewer Act have revised the compulsory copyright license granted
to DBS operators (and other satellite distributors) to allow for the carriage of
local broadcast stations.
The FCC has, in the past, recommended that Congress eliminate the compulsory
copyright license for cable retransmission of both local and distant broadcast
programming. In addition, legislative proposals have been and may continue to be
made to simplify or eliminate the compulsory license. Without the compulsory
license, cable operators would need to negotiate rights for the copyright
ownership of each program carried on each broadcast station transmitted by the
system. Registrant cannot predict whether Congress will act on any such FCC or
Copyright Office recommendations or similar proposals.
Pole Attachment Rates, Inside Wiring, and Technical Standards
The FCC currently regulates the rates and conditions imposed by public utilities
for use of their poles, unless, under the Federal Pole Attachments Act, a state
public service commission demonstrates that it is entitled to regulate the pole
attachment rates. The FCC has adopted a specific formula to administer pole
attachment rates under this scheme. The 1996 Act revised the pole attachment
rules in a number of ways to encourage competition in the provision of
telecommunications services and to address inequity in the current pole
attachment rates. In 1998, the FCC revised its pole attachment rules. The
Supreme Court has issued a decision in Gulf Power et. al. v. FCC addressing a
number of issues arising out of the FCC's 1998 revisions to these rules. Most
importantly, the Court determined that the protections of the Pole Attachments
Act extend to cable operators' offering of Internet access services and to
wireless service providers.
In addition, the FCC has established procedures for the orderly disposition of
multiple dwelling unit ("MDU") wiring, making it easier for the owners and
residents of a MDU to change video service providers.
The FCC also has set forth standards on signal leakage. Like all systems,
Registrant's cable television systems are subject to yearly reporting
requirements regarding compliance with these standards. Further, the FCC has
instituted on-site inspections of cable systems to monitor compliance. Any
failure by Registrant's cable television systems to maintain compliance with
these standards could adversely affect the ability of Registrant's cable
television systems to provide certain services.
In addition, the 1992 Cable Act empowered the FCC to set certain technical
standards governing the quality of cable signals and to preempt local
authorities from imposing more stringent technical standards. In 1992, the FCC
adopted mandatory technical standards for cable carriage of all video
programming. Those standards focus primarily on the quality of the signal
delivered to the cable subscriber's television.
As part of the 1996 Act, the FCC adopted regulations to ensure the commercial
availability of equipment (such as converter boxes and interactive equipment)
used to access services offered over multichannel video programming distribution
systems, from sources that are unaffiliated with any MVPD. These regulations
require that all MVPDs, including cable operators (1) allow customers to attach
their own equipment to their systems, (2) not prevent equipment from being
offered by retailers, manufacturers or other unaffiliated vendors, (3) separate
out security functions from non-security functions of digital equipment by July
1, 2000, (4) not offer equipment with integrated security and non-security
functions after January 1, 2005, and (5) provide, upon request, technical
information concerning interface parameters needed to permit equipment to
operate with their systems. MVPDs are allowed to protect the security of their
systems and programming from unauthorized reception. The rules are subject to
sunset after the markets for MVPDs and equipment become fully competitive in a
particular geographic market.
Impact of Legislation and Regulation
As detailed above, the cable industry is subject to significant regulation. The
foregoing, however, does not purport to be a complete summary of all the
provisions of the Communications Act, the 1996 Act, or the 1992 Cable Act, nor
of the regulations and policies of the FCC thereunder. Because regulation of the
cable industry is subject to the political process, it continues to change.
Proposals for additional or revised regulations and requirements are pending
before and are being considered by Congress and federal regulatory agencies and
will continue to be generated. Also, several of the foregoing matters are now,
or may become, the subject of court litigation. Registrant cannot predict the
outcome of pending regulatory proposals, any future proposals, or any such
litigation. Nor can Registrant predict the impact of these on its business.
Item 2. Properties
A description of the media properties of Registrant is contained in Item 1
above. Through C-ML Cable, Registrant owns or leases real estate for certain
transmitting equipment along with space for studios and offices.
In addition, the offices of RPMM and MLMM are located at 444 Madison Avenue -
Suite 703, New York, New York 10022 and at Four World Financial Center - 26th
Floor, New York, New York, 10080; respectively.
Item 3. Legal Proceedings
Class Action Litigation
On August 29, 1997, a purported class action was commenced in New York Supreme
Court, New York County, on behalf of the limited partners of Registrant, against
Registrant, Registrant's general partner, Media Management Partners (the
"General Partner"), the General Partner's two partners, RP Media Management
("RPMM") and ML Media Management Inc. ("MLMM"), Merrill Lynch & Co., Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"). The action
concerned Registrant's payment of certain management fees and expenses to the
General Partner and the payment of certain purported fees to an affiliate of
RPMM.
Specifically, the plaintiffs alleged breach of the Amended and Restated
Agreement of Limited Partnership (the "Partnership Agreement"), breach of
fiduciary duties, and unjust enrichment by the General Partner in that the
General Partner allegedly: (1) improperly deferred and accrued certain
management fees and expenses in an amount in excess of $14.0 million; (2)
improperly paid itself such fees and expenses out of proceeds from sales of
Registrant assets; and (3) improperly paid MultiVision Cable TV Corp., an
affiliate of RPMM, supposedly duplicative fees in an amount in excess of $14.4
million.
With respect to Merrill Lynch & Co., Inc., Merrill Lynch, MLMM and RPMM,
plaintiffs claimed that these defendants aided and abetted the General Partner
in the alleged breach of the Partnership Agreement and in the alleged breach of
the General Partner's fiduciary duties. Plaintiffs sought, among other things,
an injunction barring defendants from paying themselves management fees or
expenses not expressly authorized by the Partnership Agreement, an accounting,
disgorgement of the alleged improperly paid fees and expenses, and compensatory
and punitive damages.
Defendants moved to dismiss the complaint and each claim for relief therein. On
March 3, 1999, the New York Supreme Court issued an order granting defendants'
motion and dismissing plaintiffs' complaint in its entirety, principally on the
grounds that the claims are derivative and plaintiffs lack standing to bring
suit because they failed to make a pre-litigation demand on the General Partner.
Plaintiffs both appealed that order and moved, inter alia, for leave to amend
their complaint in order to re-assert certain of their claims as derivative
claims on behalf of Registrant.
On June 8, 2000, the New York Supreme Court, Appellate Division - First
Department, issued a Decision and Order unanimously affirming the New York
Supreme Court's dismissal of the plaintiffs' complaint in its entirety. On June
13, 2000, the New York Supreme Court denied plaintiffs' motion for leave to
amend their complaint. On August 17, 2000, plaintiffs filed a motion to modify
the Supreme Court's June 13, 2000 order and to permit them to file their
previously proposed amended complaint. On January 16, 2001, the Supreme Court
denied the motion. On July 20, 2001, the court issued an amended decision and
order, correcting in certain respects, its January 16, 2001 decision and order.
Plaintiff's time to appeal from the July 20, 2001 decision and order has now
expired and, accordingly the litigation is concluded.
The Partnership Agreement provides for indemnification, to the fullest extent
provided by law, for any person or entity named as a party to any threatened,
pending or completed lawsuit by reason of any alleged act or omission arising
out of such person's activities as a General Partner or as an officer, director
or affiliate of either RPmm, MLMM or the General Partner, subject to specified
conditions. In connection with the purported class action filed on August 29,
1997, Registrant has received notices of requests for indemnification from the
following defendants named therein: the General Partner, RPMM, MLMM, Merrill
Lynch & Co., Inc. and Merrill Lynch. For the years ended December 29, 2000,
December 31, 1999 and December 25, 1998, Registrant incurred approximately
$138,000, $205,000 and $223,000, respectively, for legal costs relating to such
indemnification. Cumulatively, such legal costs amounted to approximately
$704,000 through June 30, 2002.
Adelphia Litigation
On March 24, 2000, Registrant commenced suit in New York Supreme Court (the
"Court"), New York County, against Century Communications Corp. ("Century"),
Adelphia Communications Corporation ("Adelphia") and Arahova Communications Inc.
seeking a dissolution of Century-ML Cable Venture (the "Venture") and the
appointment of a receiver for the sale of the Venture's assets (primarily the
stock of the subsidiary of the Venture that owns the cable systems). The
complaint alleged that, as successor to Century's position as Registrant's joint
venture partner, Adelphia breached its fiduciary and contractual obligations to
Registrant with respect to the operations of the Venture and by proposing to
take action that would interfere with the sale of the cable systems to a third
party through an auction process conducted in accordance with the terms of the
joint venture agreement. Registrant also sought in the suit an order directing
Adelphia and its affiliates to comply with the terms of the joint venture
agreement and sought other equitable relief. Registrant also sought in the suit
compensatory and punitive damages. The complaint stated that, if the Court
should determine not to appoint a receiver for the sale of the Venture's assets,
it should enter an order authorizing Registrant to conduct an auction for the
sale of the Venture's assets to an unrelated third party or, in the alternative,
directing that Registrant and the defendants diligently proceed to locate a
buyer for the cable systems for the highest possible price and that the
defendants be enjoined from interfering in any manner in the sale process,
including by participating in that process as a bidder.
On or about April 24, 2000, the Adelphia parties served their verified answer,
affirmative defenses and counterclaims. The Adelphia parties denied the material
allegations of the verified complaint. In addition, Adelphia asserted
counterclaims for breach of contract, breach of fiduciary duty, breach of
implied duty of good faith and fair dealing, and declaratory relief based on its
claim that it is entitled to act as both seller and purchaser under the terms of
the "buy-sell" provision of the joint venture agreement and that it has been
injured by reason of Registrant's position to the contrary. Adelphia sought
compensatory and punitive damages in an unspecified amount and a declaration
that nothing in the joint venture agreement limits the right of Adelphia, or any
of its affiliates, from participating as an actual or potential purchaser in a
sale of the system pursuant to the "buy-sell" provision of the joint venture
agreement.
By order dated July 12, 2000, the Court granted Registrant's motion for partial
summary judgment, declaring that neither Adelphia nor any of its affiliates may
bid on or attempt to purchase the assets and business of the Venture. The Court
ordered Adelphia to proceed diligently with Registrant to locate one or more
third parties to complete the sale and enjoined the defendants from interfering
with the sale. By order dated July 26, 2000, the Court clarified its decision to
provide that the sale must be structured so as to avoid any unnecessary tax
liability and thus to generate the highest net return to the joint venture.
On July 25, 2000, Registrant filed an order to show cause why defendants should
not be required to comply with the terms of the joint venture agreement relating
to Registrant's right to participate in the management of the Venture. By a
Stipulation and Consent Order dated July 31, 2000 (the "Consent Order"),
Adelphia consented to the requested relief, and the Court entered the
stipulation as an order of the Court on August 3, 2000. No action has yet been
taken on Registrant's request to dismiss the remainder of the defendants'
counterclaims, which Registrant believes cannot be sustained in light of the
Court's rulings.
On August 4, 2000, the Adelphia parties served a notice of appeal of the Court's
July 12 and July 26, 2000 orders granting Registrant's motion for partial
summary judgment and requiring defendants to proceed diligently with Registrant
to sell the assets and business of the Venture to a third party and to do so in
a manner that would result in the highest net return to the joint venture.
On August 15, 2000, the Adelphia defendants moved before the Appellate Division,
First Department, to stay enforcement of the trial court's orders and judgments
entered July 12 and July 26, 2000. On September 15, 2000, the Appellate Division
of the New York State Supreme Court denied Adelphia's motion for a stay of the
July 12 and July 26 orders of the Supreme Court. On January 23, 2001, the
Appellate Division affirmed the decisions and orders of the lower court. On
February 26, 2001, Adelphia moved before the Appellate Division for leave to
file an appeal to the Court of Appeals. On April 17, 2001, the Appellate
Division denied that motion.
Pursuant to an order of the Supreme Court issued on August 1, 2000, in response
to Registrant's request, the parties were directed to proceed with an accounting
before a Special Referee to determine how the proceeds of the sale should be
apportioned between the parties so as to compensate Registrant for its potential
damages.
On October 25, 2000, Registrant sent a notice to Adelphia, in accordance with
the provisions of the joint venture agreement, terminating Adelphia's position
as manager of the joint venture, effective November 15, 2000. The notice (and
the documents incorporated in the notice) cited numerous breaches of the joint
venture agreement by Adelphia, which Adelphia has failed to cure, including,
among other things, unilaterally making decisions on material matters that are
supposed to be made jointly with Registrant, making unauthorized capital
expenditures totaling tens of millions of dollars without the consent of
Registrant, engaging in a major capital improvement program in violation of
Registrant's express instructions, and concealing from Registrant the operating
and capital budgets pursuant to which Adelphia was managing the joint venture,
while at the same time denying their existence to Registrant. As a result of the
notice, Adelphia was required to cede to Registrant managerial responsibility
for the day-to-day operations of the joint venture on November 15, 2000. By
letters dated November 1 and November 3, 2000, Adelphia disputes the validity
and effect of Registrant's notice.
On October 25, 2000, the Supreme Court signed an order, as requested by
Registrant, requiring Adelphia and one of its executives to show cause why they
should not be held in contempt of court because of their alleged violations of
terms of the Consent Order concerning Registrant's right to participate in the
management of the joint venture. Among the relief sought in Registrant's motion
was an order holding Adelphia and an executive in contempt and requiring
Adelphia to provide to Registrant all books, records and assistance necessary to
enable Registrant to assume management responsibility for the joint venture, and
awarding a statutory fine of $250 per violation and the attorneys' fees incurred
in bringing the motion. In seeking such relief, Registrant alleged that, among
other things, Adelphia has been making substantial capital expenditures without
Registrant's knowledge or approval, and managing the joint venture in accordance
with detailed operating and capital expense budgets that were concealed from
Registrant. On November 15, 2000, the Supreme Court referred the matter to a
Special Referee to conduct any necessary evidentiary hearings and to hear and
report his findings. The hearing took place during January 2001 and post-hearing
memoranda were provided to the Court on February 9, 2001. By report filed March
15, 2001, the Special Referee recommended that Adelphia (but not the executive)
be adjudged in contempt and that Adelphia be ordered to pay a statutory fee and
reimburse Registrant for its reasonable attorneys' fees, but recommended against
Registrant's having the right to assume management responsibility for the joint
venture. On April 30, 2001, the Supreme Court entered an order confirming the
conclusion of the Referee that Adelphia be held in contempt, and referred the
matter to the Referee for an assessment of the attorneys' fees to be reimbursed
to Registrant. The Court declined to reject the Referee's finding that
Registrant should not be allowed to assume management of the joint venture and
declined to reject the Referee's finding that the Adelphia executive not be held
in contempt. On June 1, 2001, Registrant filed a notice of appeal to the
Appellate Division from those portions of the Supreme Court's April 30, 2001
order that confirmed the Referee's Report over Registrant's objection.
For the six months ended June 30, 2002, and the years ended December 28, 2001
and December 29, 2000, Registrant incurred approximately $78,000, $1,772,000 and
$1,965,000 respectively for legal costs relating to such litigation.
Cumulatively, the legal costs related to the above litigation efforts amount to
approximately $3,815,000 through June 30, 2002.
In connection with the execution of the Recapitalization Agreement (see "Media
Properties" in Item 1, above), the above litigation with Adelphia had been
placed in abeyance. However, as a result of the default by Adelphia in its
obligations to close under the Recapitalization Agreement, Registrant may resume
prosecution of that action (although the action could be subject to
determination by the Bankruptcy Court since Adelphia filed for bankruptcy
protection).
On June 12, 2002, Registrant commenced an action against the Venture, Adelphia
and Highland Holdings in New York Supreme Court seeking specific performance of
the Recapitalization Agreement and compensatory and punitive damages for breach
by the defendants, including, but not limited to, payment of the full purchase
price for Registrant's interest in the Venture. (See "Media Properties" in Item
1, above). Century (which filed for Chapter 11 bankruptcy protection on June 10,
2002) and Adelphia removed Registrant's action, together with the original
litigation described above, to the United States Bankruptcy Court for the
Southern District of New York. Following Adelphia's own Chapter 11 bankruptcy
filing on June 25, 2002, Registrant's actions have been consolidated as
adversary proceedings before the Bankruptcy Judge overseeing Adelphia's
bankruptcy.
Registrant has amended its complaint to add Century as a defendant as well, and
now seeks damages for breach of the Recapitalization Agreement from all four
defendants (the Venture, Adelphia, Century and Highland Holdings), as well as
specific performance by Adelphia and Century of their obligations to turn over
management rights of the Venture to Registrant. Registrant has moved to remand
the portions of its action against the Non-Debtors, the Venture and Highland
Holdings, back to New York Supreme Court. All defendants have opposed that
motion, seeking to retain the entire action in the Bankruptcy Court, and the
motion has been submitted to the Bankruptcy Court for decision. All four
defendants have also moved to dismiss Registrant's complaint. Registrant has
also (without prejudice to its pending motion for remand), moved for the entry
of judgment as a matter of law against the Non-Debtors, the Venture and Highland
Holdings on Registrant's claim for damages. Registrant's motion for judgment and
the defendants' motions for dismissal are scheduled for hearing before the
Bankruptcy Court on September 24, 2002.
For the six months ended June 30, 2002, Registrant incurred approximately
$588,000 for legal costs relating to the litigation arising from the breach of
the Recapitalization Agreement.
Registrant is not aware of any other material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
There were no matters, which required a vote of the limited partners of
Registrant during the fourth quarter of the fiscal year covered by this report.
Part II
Item 5. Market for Registrant's Common Stock and Stockholder Matters
An established public market for Registrant's Units does not now exist, and it
is not anticipated that such a market will develop in the future. Accordingly,
accurate information as to the market value of a Unit at any given date is not
available.
As of June 30, 2002, the number of owners of Units was 12,048.
Merrill Lynch has implemented guidelines pursuant to which it reports estimated
values for limited partnership interests originally sold by Merrill Lynch (such
as Registrant's Units) two times per year. Such estimated values are provided to
Merrill Lynch by independent valuation services based on financial and other
information available to the independent services on (1) the prior August 15th
for reporting on December year-end and subsequent client account statements
through the following May's month-end client account statements, and on (2)
March 31st for reporting on June month-end and subsequent client account
statements through the November month-end client account statements of the same
year. The estimated values provided by the independent services and Registrant's
current net asset value are not market values and Unit holders may not be able
to sell their Units or realize either amount upon a sale of their Units. In
addition, Unit holders may not realize the independent estimated value or
Registrant's current net asset value amount upon the liquidation of Registrant.
Registrant does not distribute dividends, but rather distributes Distributable
Cash from Operations, Distributable Refinancing Proceeds, and Distributable Sale
Proceeds, to the extent available. In 1995, $7.5 million ($40 per Unit) was
distributed to its limited partners and $75,957 to its General Partner from
distributable sales proceeds from the sale of KATC-TV. In 1996, $108.1 million
($575 per Unit) was distributed to its limited partners and $1.1 million to its
General Partner from distributable sales proceeds from the sale of California
Cable Systems. In 1997, $18.8 million ($100 per Unit) was distributed to its
limited partners and $189,893 accrued to its General Partner from the (i)
discharge of certain proceeds that were deposited into escrow upon the sale of
KATC-TV; (ii) discharge of certain proceeds that were deposited into escrow upon
the sale of the California Cable Systems; and (iii) release of certain reserves
previously established upon the sales of KATC-TV, WREX-TV and the California
Cable Systems. In 1998, the $189,893 accrued in 1997 was distributed to its
General Partner. In March 1999, $63.4 million ($337 per Unit) was distributed to
its limited partners and $639,939 to its General Partner from (i) distributable
sales proceeds from the sale of the Anaheim Stations, (ii) distributable sales
proceeds from the sale of the Cleveland Station and (iii) the release of certain
reserves previously established upon the sale of the California Cable Systems.
In October 1999, $35.7 million ($190 per Unit) was distributed to its limited
partners and $360,797 to its General Partner from distributable sales proceeds
from the sale of the Connecticut Stations. In 2000, $1.5 million ($7.90 per
Unit) was distributed to its limited partners and $15,001 to its General Partner
from the discharge of proceeds that were deposited into escrow upon the sale of
the Cleveland Station. In May 2001, $12.4 million ($65.90 per Unit) was
distributed to its limited partners and $125,139 to its General Partner from the
discharge of proceeds that were deposited into escrow upon the sale of the
Cleveland, Connecticut and Anaheim stations. In January 2002, $49.4 million
($263 per Unit) was distributed to its limited partners and $499,418 to its
General Partner from the release of reserves from the sale of the California
Cable Systems, as well as operating cash balances held by the Partnership.
Item 6. Selected Financial Data.
-----------------------
See note in Item 14
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
-----------------------------------------------------------
See note in Item 14
Item 7A. Quantitative and Qualitative Disclosure about Market Risk.
----------------------------------------------------------
See note in Item 14
Item 8. Financial Statement and Supplemental Data
See note in Item 14
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
-----------------------------------------------------------
None.
Part III
Item 10. Directors and Executive Officers of Registrant
Registrant has no executive officers or directors. The General Partner manages
Registrant's affairs and has general responsibility and authority in all matters
affecting its business. The responsibilities of the General Partner are carried
out either by executive officers of RP Media Management or ML Media Management
Inc. acting on behalf of the General Partner. The executive officers and
directors of RP Media Management and ML Media Management Inc. are:
RP Media Management (the "Management Company")
Served in Present
Capacity
Name Since (1) Position Held
I. Martin Pompadur 1/01/86 President, Chief Executive Officer, Chief
Operating Officer, Secretary, Director
Elizabeth McNey Yates 4/01/88 Executive Vice President
(1) The Director holds office until a successor is elected and qualified.
All executive officers serve at the pleasure of the Director.
ML Media Management Inc. ("MLMM")
Served in Present
Capacity
Name Since (1) Position Held
- ---------------------------------------------------------------------
Kevin K. Albert 2/19/91 President
12/16/85 Director
James V. Caruso 11/20/98 Executive Vice President
11/20/98 Director
Thomas C. Powers 5/23/01 Vice President
6/01/02 Director
Gary C. Dolan 6/01/02 Director
Curt W. Cariddi 3/22/02 Treasurer
James V. Bruno 11/05/99 Vice President
(1) Directors hold office until their successors are elected and qualified. All
executive officers serve at the pleasure of the Board of Directors.
I. Martin Pompadur, 67, Director and President of RP Media Management. Mr.
Pompadur is an Executive Vice President of News Corporation and President of
News Corporation-Eastern and Central Europe and a member of News Corporation's
Executive Management Committee. Mr. Pompadur is also Chairman of News
Corporation Europe. Mr. Pompadur is a principal owner, member of the Board of
Directors and Secretary of Caribbean International News Corporation
("Caribbean"). Caribbean owns and publishes EL Vocero, the largest Spanish
language daily newspaper in the United States. Mr. Pompadur sits on the Boards
of Directors of the following companies: BskyB, Stream, Metromedia
International, Premiere World, Kirch Media, Linkshare, News Out of Home B.V.,
Balkan Bulgarian, Nexstar and RP Coffee Ventures.
Elizabeth McNey Yates, 39, Executive Vice President of RP Media Management,
joined RP Companies Inc., an entity controlled by Mr. Pompadur, in March 1988
and has senior executive responsibilities in the areas of finance, operations,
administration, acquisitions and dispositions. Ms. Yates is Chief Operating
Officer and Executive Vice President of RP Companies, Inc., Chief Operating
Officer and Executive Vice President of RP Radio. In addition, Ms. Yates is the
President and Chief Operating Officer of MultiVision.
Kevin K. Albert, 49, a Managing Director of Merrill Lynch Investment
Banking Group ("MLIBK") is responsible for the Private Equity Group. He joined
Merrill Lynch in 1981. Mr. Albert's work in the Private Equity Group is involved
in structuring and placing a diversified array of private equity financings,
including common stock, preferred stock, limited partnership interests and other
equity-related securities. Mr. Albert is also a director of ML Mezzanine II
Inc., an affiliate of MLMM and a general partner of ML-Lee Acquisition Fund II,
L.P.
James V. Caruso, 50, Director of MLIBK joined Merrill Lynch in January 1975. Mr.
Caruso is the director of Technology for the Global Investment Banking Group. He
is responsible for ensuring that the business requirements of MLIBK are
supported by managing the development of new technologies and enhancing existing
systems.
Gary C. Dolan, 47, Director and Senior Counsel of the Merrill Lynch Office of
General Counsel, joined Merrill Lynch in September 1980. His responsibilities
include the provision of legal advice to various areas of MLIBK, including
primarily, the Private Equity Placements Group.
Thomas C. Powers, 37, a Vice President of Merrill Lynch Asset Recovery
Management Group, joined Merrill Lynch in 2000. Mr. Power's responsibilities
include the management and resolution of impaired and non-performing assets,
including the enforcement, collection and restructuring of problem credit
exposures. Prior to joining Merrill Lynch, from 1996 through 2000, Mr. Powers
was employed by UBS Warburg, where he was a Director.
Curtis W. Cariddi, 46, a Director and Chief Financial Officer for the Merrill
Lynch Private Equity Division, joined Merrill Lynch in February 1986. His
responsibilities include controllership, financial management, and financial
reporting and administrative functions for Merrill Lynch private equity
initiatives including, direct investments, investments in third-party private
equity funds and Merrill Lynch-sponsored funds. He has held a number of finance
positions at both the corporate level as well as in the Firm's operating
divisions including, International Private Client Group, U.S. Private Client
Group and Global Markets & Investment Banking.
James V. Bruno, 36, a Vice President for the Merrill Lynch Private Equity
Division, joined Merrill Lynch in 1997. Mr. Bruno's responsibilities include
controllership and financial management functions for certain partnerships and
other entities for which subsidiaries of Merrill Lynch are the general partner
or manager.
An Investment Committee of Registrant was established to have the responsibility
and authority for developing, in conjunction with the Management Company,
diversification objectives for the investments to be made by Registrant, for
reviewing and approving each investment proposed by the Management Company for
Registrant and for evaluating and approving dispositions of investments of
Registrant. The Investment Committee will also establish reserves for Registrant
for such purposes and in such amounts, as it deems appropriate. A simple
majority vote shall be required for any proposed investment or disposition. The
Investment Committee also has the responsibility and authority for monitoring
the management of the investments of Registrant by the Management Company.
The current members of the Investment Committee are as follows:
RPMM Representative MLMM Representatives
------------------- --------------------
I. Martin Pompadur Kevin K. Albert
Gary C. Dolan
Thomas C. Powers
Item 11. Executive Compensation
Registrant does not pay the executive officers or directors of the General
Partner any remuneration. The General Partner does not presently pay any
remuneration to any of its executive officers or directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of May 15, 2002, Smithtown Bay, LLC, having the mailing address 601 Carlson
Parkway, Suite 200, Minnetonka, Minnesota, 55305, is the owner of 15,055 Units,
representing approximately 8.0% of all such Units. As of May 15, 2002, Madison
Liquidity Investors, LLC, and its affiliates, having the mailing address of 6143
South Willow Drive, Suite 200, Englewood Village, CO 80111, is the owner of
10,639 Units, representing approximately 5.66% of all such Units. As of May 15,
2002, no person or entity, other than Smithtown Bay, LLC, Madison Liquidity
Investors, LLC, and its affiliates, was known by Registrant to be the beneficial
owner of more than five percent of the Units.
To the knowledge of the General Partner, as of June 30, 2002, the officers and
directors of the General Partner in aggregate own less than 1% of the
outstanding common stock of Merrill Lynch & Co., Inc.
Item 13. Certain Relationships and Related Transactions
During the three years ended December 29, 2000, the Partnership incurred the
following expenses in connection with services provided by the General Partner
and its affiliates:
2000 1999 1998
-------------- -------------- ---------------
Partnership Management Fee $ 557,979 $ 557,979 $ 557,979
Property Management Fee 506,264 534,538 649,709
Reimbursement of Operating Expenses 908,920 491,388 1,041,246
-------------- -------------- ---------------
$ 1,973,163 $ 1,583,905 $ 2,248,934
============== ============== ===============
In addition, the Partnership, through the California Cable Systems, was party to
an agreement with MultiVision Cable TV Corp. ("MultiVision"), an affiliate of
the General Partner, whereby MultiVision provided the California Cable Systems
with certain administrative and day-to-day management services. The California
Cable Systems paid for these services at cost. The reimbursed costs incurred by
MultiVision on behalf of the California Cable Systems amounted to an aggregate
of $1,639,914, $1,223,364 and $1,512,955 for 2000, 1999 and 1998, respectively.
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
---------------------------------------------------------------
For the reasons stated below, the Partnership's consolidated financial
statements for the year ended December 29, 2000, have been omitted from this
Report. Accordingly, information derived from the financial statements that
would otherwise be included in Items 1, 6, 7 and 8 are also omitted. Financial
statements for the fiscal years ended December 31, 1999 and December 25, 1998
were filed on May 3, 2000 with the Partnership's annual report on Form 10-K for
the Year ended December 31, 1999.
The financial statements of C-ML Cable, the joint venture between the
Partnership and Adelphia Communications Corporation ("Adelphia") that owns cable
television systems in Puerto Rico, are a material component of the Partnership's
financial statements. Under the terms of the joint venture agreement relating to
C-ML Cable, Adelphia has the responsibility for maintaining the books and
records of the joint venture. Although Adelphia had previously furnished to the
Partnership audited financial statements of C-ML Cable for the year ended
December 31, 2000, the Partnership has raised questions with respect to certain
items in those financial statements, as reported in the Partnership's Form 10-Q
for the quarter ended September 29, 2000. The Partnership has not received
satisfactory responses from Adelphia with respect to such questions, and,
accordingly, has not been able to prepare financial statements for the year
ended December 29, 2000. In addition, as a result of the recent events
surrounding Adelphia as described above, Deloitte & Touche LLP, the auditors for
C-ML Cable, has retracted their audit of C-ML Cable for the year ended December
31, 2000. In consideration of these circumstances, the Partnership has
determined that it has been inappropriate and continues to be inappropriate at
this time to file financial statements that rely on information contained in the
financial statements of C-ML Cable for the year ended December 31, 2000.
(a) Financial Statements, Financial Statement Schedules and Exhibits
(1) Financial Statements
See note in Item 14.
(2) Financial Statement Schedules
See note in Item 14.
(3) Exhibits Incorporated by Reference to
-------- ----------------------------
3.1 Amended and Restated Certificate of Limited Exhibit 3.1 to Registrant's Form S-1 the Registration
Partnership Statement
(File No. 33-2290)
3.2.1 Second Amended and Restated Agreement of Exhibit 3.2.1 to Registrant's Annual Report on Form 10-K
Limited Partnership dated May 14, 1986 for the fiscal year ended
December 26, 1986
(File No. 0-14871)
3.2.2 Amendment No. 1 dated February 27, 1987 to Exhibit 3.2.2 to Registrant's Annual Report on Form 10-K
Second Amended and Restated Agreement of for the fiscal year ended
Limited Partnership December 26, 1986
(File No. 0-14871)
10.1.1 Joint Venture Agreement dated July 2, 1986 Exhibit 10.1.1 to Registrant's Annual Report on Form 10-K
between Registrant and Century for the fiscal year ended
Communications Corp. ("CCC") December 26, 1986
(File No. 0-14871)
10.1.2 Management Agreement and Joint Venture Exhibit 10.1.2 to
Agreement dated December 16, 1986 between Registrant's
Registrant and CCC(attached as Exhibit 1 Annual Report on Form 10-K
to Exhibit 10.3) for the fiscal year ended December 26, 1986 (File No. 0-14871)
10.1.3 Management Agreement and Joint Venture Exhibit 10.1.3 to Registrant's Annual Report on Form 10-K
Agreement dated as of February 15, 1989 for the fiscal year ended
between Registrant and CCC
December 30, 1988
(File No. 0-14871)
10.1.4 Amended and Restated Management Agreement Exhibit 10.1.4 to Registrant's Annual Report on Form 10-K
and Joint Venture Agreement of Century/ML for the fiscal year ended
Cable Venture dated January 1, 1994 between December 31, 1993
Century Communications Corp. and Registrant (File No. 0-14871)
10.2.1 Stock Purchase Agreement dated July 2, 1986 Exhibit 28.1 to Registrant's
between Registrant and the sellers of Form 8-K Report dated
shares of Cable Television Company of December 16, 1986
Greater San Juan, Inc. (File No. 33-2290)
10.2.2 Assignment dated July 2, 1986 between Exhibit 10.2.2 to
Registrant and Century-ML ("C-ML") Registrant's Annual Report on Form 10-K for the fiscal year ended
Cable Corporation December 26, 1986
(File No. 0-14871)
10.2.3 Transfer of Assets and Assumption of Exhibit 10.2.3 to Registrant's Annual Report on Form 10-K
Liabilities Agreement dated January 1, 1994 for the fiscal year ended
between Century-ML Radio Venture, December 31, 1993
Century/ML Cable Venture, Century (File No. 0-14871)
Communications Corp. and Registrant
10.3 Amended and Restated Credit Agreement dated Exhibit 10.3.5 to Registrant's Annual Report on Form 10-K
as of March 8, 1989 between Citibank, N.A., for the fiscal year ended
Agent, and C-ML December 30, 1988
(File No. 0-14871)
10.3.1 Note Agreement dated as of December 1, 1992 Exhibit 10.3.1 to Registrant's Annual Report on Form 10-K
between Century-ML Cable Corporation, for the fiscal year ended
Century/ML Cable Venture, Jackson National December 25, 1992
Life Insurance Company, The Lincoln (File No. 0-14871)
National Life Insurance Company and
Massachusetts Mutual Life Insurance Company
10.3.2 Second Restated Credit Agreement dated Exhibit 10.3.2 to Registrant's Annual Report on Form 10-K
December 1, 1992 among Century-ML Cable for the fiscal year ended December 25, 1992
Corporation, (File No.0-14871)
Century/ML Cable Venture and Citibank
10.3.3 Amendment dated as of September 30, 1993 Exhibit 10.3.3 to Registrant's Quarterly Report on Form
among Century-ML Cable Corporation, the 10-Q
banks parties to the Credit Agreement, and for the quarter ended
Citibank, N.A. and Century/ML Cable Venture September 24, 1993
(File No. 0-14871)
10.3.4 Amendment dated as of December 15, 1993 Exhibit 10.3.4 to Registrant's Annual Report on Form 10-K
among Century-ML Cable Corporation, the for the fiscal year ended
banks parties to the Credit Agreement, and December 31, 1993
Citibank, N.A. and Century/ML Cable Venture (File No. 0-14871)
10.4 Pledge Agreement dated December 16, 1986 Exhibit 10.4 to Registrant's Annual Report on Form 10-K for
among Registrant, CCC, and Citibank, N.A., the fiscal year ended
Agent December 26, 1986
(File No. 0-14871)
10.5 Guarantee dated as of December 16, 1986 Exhibit 10.5 to Registrant's Annual Report on Form 10-K for
among Registrant, CCC and Citibank, N.A., the fiscal year ended
Agent December 25, 1987
(File No. 0-14871)
10.6 Assignment of Accounts Receivable dated as Exhibit 10.6 to Registrant's Annual Report on Form 10-K for
of December 16, 1986 among Registrant, CCC the fiscal year ended
and Citibank, N.A., Agent December 25, 1987
(File No. 0-14871)
10.7 Real Property Mortgage dated as of December Exhibit 10.7 to Registrant's Annual Report on Form 10-K for
16, 1986 among Registrant, CCC and the fiscal year ended
Citibank, N.A., Agent December 30, 1988
(File No. 0-14871)
10.8 Stock Sale and Purchase Agreement dated as Exhibit 28.1 to Registrant's
of December 5, 1986 between SCIPSCO, Inc. Form 8-K Report dated
and ML California Cable Corp. ("ML December 23, 1986
California") (File No. 33-2290)
10.8.1 Asset Purchase Agreement dated as of Exhibit 2 to Registrant's
November 28, 1994 between Registrant and Form 8-K Report dated
Century Communications Corp. November 28, 1994
(File No. 0-14871)
10.9 Security Agreement dated as of December 22, Exhibit 10.10 to Registrant's Annual Report on Form 10-K
1986 among Registrant, ML for the fiscal year ended
California and BA
December 26, 1987
(File No. 0-14871)
10.10 Assets Purchased Agreement dated as of Exhibit 28.1 to Registrant's
September 17, 1986 between Registrant and Form 8-K Report dated
Loyola University February 2, 1987
(File No. 33-2290)
10.11 Asset Acquisition Agreement dated April 22, Exhibit 28.1 to Registrant's
1987 between Community Cable-Vision of Form 8-K Report dated
Puerto Rico Associates, Community October 14, 1987
Cable-Vision of Puerto Rico, Inc., (File No. 33-2290)
Community Cable-Vision Incorporated and
Century Communications Corp., as assigned
10.12 Asset Purchase Agreement dated April 29, Exhibit 2.1 to Registrant's
1987 between Registrant and Gilmore Form 8-K Report dated
Broadcasting Corporation September 16, 1987
(File No. 33-2290)
10.13 License Holder Pledge Agreement dated Exhibit 2.5 to Registrant's
August 27, 1987 by Registrant and Media Form 8-K Report dated
Management Partners in favor of September 15, 1987
Manufacturers Hanover (File No. 33-2290)
10.14 Asset Purchase Agreement dated August 20, Exhibit 28.1 to Registrant's
1987 between 108 Radio Company Limited Form 8-K Report dated
Partnership and Registrant January 15, 1988
(File No. 33-2290)
10.15 Security Agreement dated as of December 16, Exhibit 28.3 to Registrant's
1987 between Registrant and CNB Form 8-K Report dated
January 15, 1988
(File No. 33-2290)
10.16 Asset Purchase Agreement dated as of Exhibit 10.25 to Registrant's Annual Report on Form 10-K
January 9, 1989 between Registrant and for the fiscal year ended
Connecticut Broadcasting Company, Inc. December 30, 1988
("WICC") (File No. 0-14871)
10.17.1 Stock Purchase Agreement dated June 17, Exhibit 28.2 to Registrant's Quarterly Report on Form 10-Q
1988 between Registrant and the certain for the quarter ended
sellers referred to therein relating to June 24, 1988
shares of capital stock of Universal Cable (File No. 0-14871)
Holdings, Inc. ("Universal")
10.17.2 Amendment and Consent dated July 29, 1988 Exhibit 2.2 to Registrant's
between Russell V. Keltner, Larry G. Form 8-K Report dated
Wiersig and Donald L. Benson, Universal September 19, 1988
Cable Midwest, Inc. and Registrant (File No. 0-14871)
10.17.3 Amendment and Consent dated July 29, 1988 Exhibit 2.3 to Registrant's
between Ellsworth Cable, Inc., Universal Form 8-K Report dated
Cable Midwest, Inc. and Registrant September 19, 1988
(File No. 0-14871)
10.17.4 Amendment and Consent dated August 29, 1988 Exhibit 2.4 to Registrant's
between ST Enterprises, Ltd., Universal Form 8-K Report dated
Cable Communications, Inc. and Registrant September 19, 1988
(File No. 0-14871)
10.17.5 Amendment and Consent dated September 19, Exhibit 2.5 to Registrant's
1988 between Dennis Wudtke, Universal Cable Form 8-K Report dated
Midwest, Inc., Universal Cable September 19, 1988
Communications, Inc. and Registrant (File No. 0-14871)
10.17.6 Amendment and Consent dated October 14, Exhibit 10.26.6 to Registrant's Annual Report on Form 10-K
1988 between Down's Cable, Inc., Universal for the fiscal year ended
Cable Midwest, Inc. and Registrant December 30, 1988
(File No. 0-14871)
10.17.7 Amendment and Consent dated October 14, Exhibit 10.26.7 to Registrant's Annual Report on Form 10-K
1988 between SJM Cablevision, Inc., for the fiscal year ended
Universal Cable Midwest, Inc. and Registrant December 30, 1988
(File No. 0-14871)
10.17.8 Bill of Sale and Transfer of Assets dated Exhibit 2.6 to Registrant's
as of September 19, 1988 between Registrant Form 8-K Report dated
and Universal Cable Communications Inc. September 19, 1988
(File No. 0-14871)
10.18 Credit Agreement dated as of September 19, Exhibit 10.27 to Registrant's Annual Report on Form 10-K
1988 among Registrant, Universal, certain for the fiscal year ended
subsidiaries of Universal, and December 30, 1988
Manufacturers Hanover Trust Company, as (File No. 0-14871)
Agent
10.19 Stock Purchase Agreement dated October 6, Exhibit 10.28 to Registrant's Annual Report on Form 10-K
1988 between Registrant and the certain for the fiscal year ended
sellers referred to therein relating to December 30, 1988
shares of capital stock of Acosta (File No. 0-14871)
Broadcasting Corp.
10.20 Stock Purchase Agreement dated April 19, Exhibit 28.1 to Registrant's Quarterly Report on Form 10-Q
1988 between Registrant and the certain for the quarter ended
sellers referred to therein relating to June 24, 1988
shares of capital stock of Wincom (File No. 0-14871)
Broadcasting Corporation
10.21 Subordination Agreement dated as of August Exhibit 2.3 to Registrant's
15, 1988 among Wincom, the Subsidiaries, Form 8-K Report dated
Registrant and Chemical Bank August 26, 1988
(File No. 0-14871)
10.22 Management Agreement dated August 26, 1988 Exhibit A to Exhibit 10.30.2 above
between Registrant and Wincom
10.22.1 Management Agreement by and between Exhibit 10.22.1 to Registrant's Quarterly Report on Form
Fairfield Communications, Inc. and 10-Q
Registrant and ML Media Opportunity for the quarter ended
Partners, L.P. dated May 12, 1993 June 25, 1993
(File No. 0-14871)
10.22.2 Sharing Agreement by and among Registrant, Exhibit 10.22.2 to Registrant's Quarterly Report on
ML Media Opportunity Partners, L.P., RP Form 10-Q for the quarter ended June 25, 1993
Companies, Inc., Radio Equity Partners, (File No. 0-14871)
Limited Partnership and Fairfield
Communications, Inc.
10.23.1 Second Amendment dated as of July 30, 1993 Exhibit 10.23.1 to Registrant's Quarterly Report on
to the Amended and Restated Credit, Form 10-Q for the quarter ended June 25, 1993
Security and Pledge Agreement dated as of (File No. 0-14871)
August 15, 1988, as amended and restated as
of July 19, 1989 and as amended by the
First Amendment thereto dated as of August
14, 1989 among Registrant, Wincom
Broadcasting Corporation, Win
Communications Inc., Win Communications
Inc. of Indiana, WEBE Associates, WICC
Associates, Media Management Partners, and
Chemical Bank and Chemical Bank, as Agent
10.24 Agreement of Consolidation, Extension, Exhibit 10.34 to Registrant's Quarterly Report on
Amendment and Restatement of the WREX Form 10-Q for the quarter ended June 30, 1989
Credit Agreement and KATC Credit Agreement (File No. 0-14871)
between Registrant and Manufacturers
Hanover Trust Company dated as of June 21,
1989
10.25 Asset Purchase Agreement between ML Media Exhibit 10.35 to Registrant's Quarterly Report on
Partners, L.P. and Anaheim Broadcasting Form 10-Q for the quarter ended September 29, 1989
Corporation dated July 11, 1989 (File No. 0-14871)
10.26 Asset Purchase Agreement between WIN Exhibit 10.36 to Registrant's Annual Report on Form 10-K
Communications Inc. of Indiana, and WIN for the fiscal year ended
Communications of Florida, Inc. and Renda December 28, 1990
Broadcasting Corp. dated November 27, 1989 (File No. 0-14871)
10.26.1 Asset Purchase Agreement between WIN Exhibit 10.26.1 to Registrant's Quarterly Report on Form
Communications of Indiana, Inc. and 10-Q
Broadcast Alchemy, L.P. dated April 30, 1993 for the quarter ended
June 25, 1993
(File No. 0-14871)
10.26.2 Joint Sales Agreement between WIN Exhibit 10.26.2 to Registrant's Quarterly Report on
Communications of Indiana, Inc. and Form 10-Q for the quarter ended June 25, 1993
Broadcast Alchemy, L.P. dated May 1, 1993 (File No. 0-14871)
10.27 Credit Agreement dated as of November 15, Exhibit 10.39 to Registrant's Quarterly Report on Form 10-Q
1989 between ML Media Partners, L.P. and for the quarter ended
Bank of America National Trust and Savings June 29, 1990
Association (File No. 0-14871)
10.27.1 First Amendment and Limited Waiver dated as Exhibit 10.27.1 to Registrant's Annual Report on Form 10-K
of February 23, 1995 to the Amended and for the fiscal year ended
Restated Credit Agreement dated as of May December 30, 1994
15, 1990 among ML Media Partners, L.P. and (File 0-14871)
Bank of America National Trust and Saving
Association, individually and as Agent
10.28 Asset Purchase Agreement dated November 27, Exhibit 10.38 to Registrant's Quarterly Report on Form 10-Q
1989 between Win Communications and Renda for the quarter ended
Broadcasting Corp. June 29, 1990
(File No. 0-14871)
10.29 Amended and Restated Credit Agreement dated Exhibit 10.39 to Registrant's Quarterly Report on Form 10-Q
as of May 15, 1990 among ML Media Partners, for the quarter ended
L.P. and Bank of America National Trust and June 29, 1990
Saving Association, individually and as (File No. 0-14871)
Agent
10.30 Stock Purchase Agreement between Registrant Exhibit 10.40.1 to Registrant's Quarterly Report on Form
and Ponca/Universal Holdings, Inc. dated as 10-Q
of April 3, 1992 for the quarter ended
March 27, 1992
(File No. 0-14871)
10.30.1 Earnest Money Escrow Agreement between Exhibit 10.40.1 to Registrant's Quarterly Report on Form
Registrant and Ponca/Universal Holdings, 10-Q
Inc. dated as of April 3, 1992 for the quarter ended
March 27, 1992
(File No. 0-14871)
10.30.2 Indemnity Escrow Agreement between Exhibit 10.40.2 to Registrant's Form 8-K Report dated July
Registrant and Ponca/Universal Holdings, 8, 1992
Inc. dated as of July 8, 1992 (File No. 0-14871)
10.30.3 Assignment by Registrant in favor of Exhibit 10.40.3 to Registrant's Form 8-K Report dated July
Chemical Bank, in its capacity as agent for 8, 1992
itself and the other banks party to the (File No. 0-14871)
credit agreement dated as of September 19,
1988, among Registrant, Universal, certain
subsidiaries of Universal, and
Manufacturers Hanover Trust Company, as
agent
10.30.4 Confirmation of final Universal agreements Exhibit 10.40.4 to Registrant's Quarterly Report on Form
between Registrant and Manufacturers 10-Q
Hanover Trust Company, dated April 3, 1992 for the quarter ended
September 25, 1992
(File No. 0-14871)
10.30.5 Letter regarding discharge and release of Exhibit 10.40.5 to Registrant's Quarterly Report on Form
the Universal Companies and 10Q for the quarter ended September 25, 1992
Registrant dated July 8, 1992 between Registrant
and Chemical Bank (as successor, by merger, to
Manufacturers Hanover Trust Company) (File No. 0-14871)
10.31.1 Asset Purchase Agreement dated May 25, 1995 Exhibit 10.1 to Registrant's
with Quincy Newspapers, Inc. to sell Form 8-K dated
substantially all of the assets used in the May 25, 1995
operations of Registrant's television (File No. 0-14871)
station WREX-TV, Rockford, Illinois
10.31.3 Asset Purchase Agreement dated June 1, 1995 Exhibit to Registrant's
with KATC Communications, Inc., to sell Form 8-K Report dated
substantially all of the assets used in the June 1, 1995
operations of Registrant's television (File No. 0-14871)
station KATC-TV, Lafayette, Louisiana
10.32 Asset Purchase Agreement dated November 28, Exhibit to Registrant's
1994 with Century Communications Corp., to Form 8-K Report dated
sell substantially all of the assets used November 28, 1994
in Registrant's California Cable Systems. (File No. 0-14871)
10.33 Letter Agreement dated May 31, 1996 between Exhibit to Registrant's
Registrant and Century Communications Corp. Form 8-K Report dated
May 31, 1996
(File No. 0-14871)
10.34 Asset Purchase Agreement dated October 9, Exhibit 10.34 to Registrant's Annual Report on Form 10-K
1997 with Madifide, Inc., to sell for the fiscal year ended December 26, 1997 (File 0-14871)
substantially all of the assets used in the
operations of Registrant's C-ML Radio.
10.35 Asset Purchase Agreement dated September Exhibit 1 to Registrant's Form
14, 1998, between Registrant and 8-K/A Report dated January 4, 1999 (File No. 0-14871)
Citicasters Co., to sell substantially all
of the assets used in the operations of
Registrant's Anaheim Stations
10.36 Stock Purchase Agreement dated August 11, Exhibit 1 to Registrant's Form 8-K Report dated January 28,
1998, between Registrant and Chancellor 1999 (File No. 0-14871)
Media Corporation of Los Angeles, to sell
the stock of Wincom
10.37 Asset Purchase Agreement dated April 22, 1999, Exhibit 1 to Registrant's Form
between Registrant and Aurora 8-K Report dated August 31, 1999 (File No. 0-14871)
Communications LLC, to sell substantially
all of the assets used in the operations of
Registrant's Connecticut Stations
10.38 Leveraged Recapitalization Agreement dated
December 13, 2001, among Registrant,
Century/ML Cable Venture, Century
Communications Corp., Adelphia
Communications Corporation and Highland
Holdings, to redeem Registrant's 50%
interest in Century/ML Cable Venture
18.1 Letter from Deloitte, Haskins & Sells Exhibit 18.1 to Registrant's Annual Report on Form 10-K
regarding the change in for the fiscal year ended December 30, 1988
accounting method, dated March 30, 1989 (File No. 0-14871)
99 Pages 12 through 19 and 38 through 46 of Prospectus dated February 4, 1986, filed pursuant to Rule
Prospectus dated February 4, 1986, filed 424(b) under the Securities Act of 1933, as amended
pursuant to Rule 424(b) under the (File No. 33-2290)
Securities Act of 1933, as amended
(b) Reports on Form 8-K.
-------------------
On December 21, 2000, Registrant filed with the SEC a Current
Report on Form 8-K dated August 14, 2000. This Current Report
contained details of reasons why Registrant has not filed
quarterly reports on Form 10-Q for the quarters ended June 30 and
September 29, 2000 with the SEC.
On April 30, 2001, Registrant filed with the SEC a Current Report
on Form 8-K dated April 30, 2001. This Current Report contained
details regarding the release of escrows from the sales of the
Connecticut Stations, Cleveland Station and the Anaheim Stations.
The report also contained the plan for the distribution of these
funds.
On May 25, 2001, Registrant filed with the SEC a Current Report
on Form 8-K dated May 25, 2001. This Current Report contained
details of the cash distribution payable on May 29, 2001 relating
to the sales of the Connecticut Stations, Cleveland Station and
the Anaheim Stations.
On December 14, 2001, Registrant filed with the SEC a current
report on Form 8-K dated December 13, 2001. This current report
contained details of the Recapitalization Agreement pursuant to
which Century/ML Cable Venture (the "Venture") agreed to redeem
registrant's 50% interest in the Venture at a closing on
September 30, 2002, for a purchase price of $279.8 million.
On January 28, 2002, Registrant filed with the SEC a current
report on Form 8-K dated January 25, 2002. This current report
contained details of the cash distribution payable on January 25,
2002, relating to the sale of the California Cable Systems.
On June 21, 2002, Registrant filed with the SEC a current report
on Form 8-K dated June 21, 2002. This current report contained
details regarding the change in control of Adelphia, the related
acceleration of the September 30, 2002 closing to June 7, 2002
pursuant to the Recapitalization Agreement, the subsequent
Adelphia default on its obligation under the Recapitalization
Agreement, and Registrant's legal action against Adelphia because
of said default.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ML MEDIA PARTNERS, L.P.
By: Media Management Partners
General Partner
By: ML Media Management Inc.
Dated: August 28, 2002 /s/ Kevin K. Albert
----------------------------------
Kevin K. Albert
Director and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Registrant in the
capacities and on the dates indicated.
RP MEDIA MANAGEMENT
Signature Title Date
/s/ I. Martin Pompadur President, Secretary and Director August 28, 2002
- ------------------------------------------------- (principal executive officer of
(I. Martin Pompadur) Registrant)
/s/ Elizabeth McNey Yates Executive Vice President August 28, 2002
- -------------------------------------------------
(Elizabeth McNey Yates)
ML MEDIA MANAGEMENT INC.
Signature Title Date
/s/ Kevin K. Albert Director and President August 28, 2002
- -------------------------------------------------
(Kevin K. Albert)
/s/ James V. Caruso Director and Executive Vice President August 28, 2002
- -------------------------------------------------
(James V. Caruso)
/s/ Thomas C. Powers Director and Vice President August 28, 2002
- -------------------------------------------------
(Thomas C. Powers)
/s/ Gary C. Dolan Director August 28, 2002
- -------------------------------------------------
(Gary C. Dolan)
/s/ James V. Bruno Vice President (principal financial August 28, 2002
- ------------------------------------------------- and accounting officer of Registrant)
(James V. Bruno)