Items 1, 2 and 3 of Part I are omitted from this filing
for the reasons described in Part II, Item 5.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended March 28, 2003
Or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 0-14871
ML MEDIA PARTNERS, L.P.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3321085
- ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Four World Financial Center - 23rd Floor
New York, New York 10080
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (800) 288-3694
Title of each Class Name of each exchange on which registered
- -----------------------------------------------------------------------------
None Not applicable
- -------------------------------------------------------------------------------
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
---- ----
Indicate by check mark whether the registrant is an accelerated filer as
defined in Rule 12b-2 of the Exchange Act. Yes X No
---- ----
ML-MEDIA PARTNERS, L.P.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Item 3. Quantitative and Qualitative Disclosure about Market Risk.
Item 4. Controls and Procedures.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities and Use of Proceeds.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
See Part II, Item 5.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
----------------------------------------------------------------
See Part II, Item 5.
Item 3. Quantitative and Qualitative Disclosure about Market Risk.
---------------------------------------------------------
See Part II, Item 5.
Item 4. Controls and Procedures.
ML Media Partners, L.P. (the "Registrant" or the "Partnership") maintains
disclosure controls and procedures designed to ensure that information required
to be disclosed in Registrant's filings under the Securities Exchange Act of
1934, as amended, is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms. Registrant's chief executive officer and chief financial officer have
evaluated, with the participation of Registrant's management, the effectiveness
of Registrant's disclosure controls and procedures as of the end of the period
covered by this report. Based on the evaluation, Registrant's chief executive
officer and chief financial officer concluded that Registrant's disclosure
controls and procedures are effective. However, see Part II, Item 5, Other
Information.
There have been no changes in Registrant's internal control over financial
reporting that occurred during the period covered by this Form 10-Q that have
materially affected, or are reasonably likely to materially affect, Registrant's
internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
As of March 28, 2003, Registrant's sole remaining operating investment in media
properties is its 50% interest in Century/ML Cable Venture (the "Venture" or
"C-ML Cable"), a joint venture, with Century Communications Corp. ("Century", a
subsidiary of Adelphia Communications Corporation ("Adelphia")), that owns two
cable television systems in Puerto Rico. 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. Highland Holdings ("Highland"), a Pennsylvania
general partnership owned by members of the Rigas family (the then 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 failed for any reason to redeem
Registrant's 50% interest in the Venture, the Recapitalization Agreement
required Adelphia to purchase Registrant's interest in the Venture at the same
price and on the same terms that applied to the redemption in the
Recapitalization Agreement. Century 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 failed to redeem the interest.
On June 12, 2002, Registrant commenced an action against the Venture, Adelphia
and Highland in New York Supreme Court, New York County, 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 of $279.8 million for Registrant's interest in the
Venture.
Century and Adelphia removed Registrant's action to the United States Bankruptcy
Court for the Southern District of New York. Following Adelphia's Chapter 11
bankruptcy filing on June 25, 2002, Registrant's actions were consolidated as
adversary proceedings before the Bankruptcy Judge overseeing Adelphia's
bankruptcy.
On June 21, 2002, the Bankruptcy Judge permitted Registrant to withdraw the $10
million that had been deposited in escrow by Highland as security for
Highland's, Adelphia's and the Venture's performance of their obligations under
the Recapitalization Agreement.
Registrant amended its complaint to add Century as a defendant as well, and
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. Thereafter, Registrant moved for judgment
as a matter of law against all four defendants, and each of the defendants moved
to dismiss the amended complaint. On January 17, 2003, the Bankruptcy Court
denied defendants' motions, denied Registrant's motion in part and granted
Registrant's motion in part, holding that, to the extent the Recapitalization
Agreement is an enforceable contract, all defendants were in default under that
contract by no later than October 1, 2002, the last possible date for
consummation of the transactions contemplated by the Recapitalization Agreement.
Thereafter, on January 27, 2003, Adelphia and Century filed counterclaims,
seeking to have the Recapitalization Agreement declared unenforceable as a
fraudulent conveyance and on the ground that the Recapitalization Agreement was
procured by the alleged fraud of the Rigas family on Adelphia, and seeking
additional unspecified damages. The Venture filed nearly identical counterclaims
on April 30, 2003, seeking to have its own obligations under the
Recapitalization Agreement declared unenforceable. Because the Partnership has
sued Adelphia, Century, the Venture and Highland seeking to enforce its claim
under the Recapitalization Agreement, and because the Partnership claims
entitlement to the recovery of its damages and/or the sale proceeds from any of
those entities, including the Venture, the Partnership is "adverse" to the
Venture for this purpose, and the Venture has separate counsel. The Partnership
has moved to have each of these counterclaims dismissed as a matter of law and
to have defendants' affirmative defenses stricken. Those motions are currently
being briefed, and oral argument will be scheduled subsequently.
On March 31, 2003, the Bankruptcy Court refused to turn over day-to-day
management rights over the Venture to the Partnership, but granted the
Partnership's motion requiring Adelphia and Century to accept or reject the
Recapitalization Agreement by no later than June 30, 2003. Adelphia and Century
have elected to reject the Recapitalization Agreement, an election that will be
treated under the bankruptcy laws as a breach of the Recapitalization Agreement
by Adelphia and Century (giving the Partnership a claim for damages against
Adelphia and Century, payable through the bankruptcy proceedings of those
entities, if the Recapitalization Agreement is held to be enforceable). As noted
above, because each of Adelphia, Century, the Venture and Highland are jointly
and severally obligated under the Recapitalization Agreement, the Partnership
will be entitled to satisfy any judgment for damages from the assets of the
Venture (which has sufficient net assets to satisfy such judgment) as well as
from Adelphia, Century and Highland.
Adelphia and Highland also seek recovery of the $10 million which had been
deposited into escrow as security for Highland's, Adelphia's and the Venture's
performance of their obligations under the Recapitalization Agreement and which
the Bankruptcy Judge permitted the Partnership to withdraw in June 2002.
Discovery proceedings with regard to the Partnership's claims and Adelphia and
Century's counterclaims have begun.
For the three months ended March 28, 2003, Registrant incurred approximately
$689,000 for legal costs relating to the above litigation. Cumulatively, the
legal costs related to such litigation efforts totaled approximately $3,041,000
through March 28, 2003.
Item 2. Changes in Securities and Use of Proceeds.
-----------------------------------------
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
No matter was submitted to a vote of security holders during the period covered
by this report.
Item 5. Other Information.
For the reasons stated below, the Partnership's consolidated financial
statements for the quarterly periods ended March 29, 2002 and March 28, 2003
have been omitted from this report. Accordingly, information derived from the
financial statements that would otherwise be included in items 2 and 3 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. Additionally, financial
statements for the quarter and year to date period ended September 29, 2000 were
filed with the Partnership's quarterly report on Form 10-Q for the quarter ended
September 29, 2000.
The financial statements of C-ML Cable, the joint venture between the
Partnership and 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 any period subsequent to September 29, 2000. In
addition, Deloitte & Touche LLP, the auditors for C-ML Cable, has retracted its
audit of C-ML Cable for the years ended December 31, 1999, 2000 and 2001. 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 years ended December 31, 2000 and 2001.
Additionally, audited statements of C-ML Cable for the year ended December 31,
2002 have not been released as of the date of this filing. The Partnership,
therefore, is unable to prepare and include herewith, financial statements that
rely on such financial information of C-ML Cable.
Item 6. Exhibits and Reports on Form 8-K.
1. Exhibits
The certifications required to be filed or furnished, respectively,
with this report pursuant to Rule 13a-14 under the Securities
Exchange Act of 1934 have not been so filed or furnished herewith as
a result of the matters discussed in Part II, Item 5.
2. Reports on Form 8-K:
No report on Form 8-K was filed during the quarterly period covered
by this interim report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the 13th day of August, 2003.
ML-MEDIA PARTNERS, L.P.
By: Media Management Partners
General Partner
By: ML Media Management Inc.
By:
/s/ Kevin K. Albert
----------------------------------------
Kevin K. Albert
Director and President
ML Media Management Inc.
RP Management Inc.
By:
/s/ I. Martin Pompadur
----------------------------------------
(I. Martin Pompadur)
Director, President and Secretary
(Principal Executive Officer of Registrant)
ML Media Management Inc.
By:
/s/ Curtis W. Cariddi
-----------------------------------------------
Curtis W. Cariddi
Treasurer
ML Media Management Inc.
(Principal Financial Officer of Registrant)