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Items 8 and 15 (a) (1) and (2) and corresponding references in Items 1, 6,
7 and 7A are omitted from this filing for the reasons described in Item 15.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Fiscal Year Ended December 26, 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.
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(Exact name of registrant as specified in its charter)
Delaware 13-3321085
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(State or other jurisdiction of organization) (IRS Employer Identification No.)
Four World Financial Center - 23rd 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
- ------ ---------
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
-----
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes X No
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As of March 1, 2004, 187,061 units of limited partnership interest
("Units") were held by non-affiliates of the registrant. There is no established
public trading market for such Units.
6
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, a Delaware corporation, is 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 corporation
controlled by I. Martin Pompadur and a corporation wholly-owned by I. Martin
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
Century/ML Cable Venture
As of December 26, 2003, 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. Highland
Holdings ("Highland"), a Pennsylvania general partnership owned by members of
the Rigas family (the controlling shareholders of Adelphia at that time), 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. 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.
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.
After Century's bankruptcy filing, Century and Adelphia removed
Registrant's action to the United States Bankruptcy Court for the Southern
District of New York. Adelphia filed its own Chapter 11 bankruptcy on June 25,
2002, and Registrant's actions have been docketed as adversary proceedings
before the Bankruptcy Judge overseeing the bankruptcy of Adelphia and Century.
In addition, on September 30, 2002, Adelphia and Century, over the Registrant's
objections, caused the Venture to file for bankruptcy protection.
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 the defendants' affirmative defenses stricken. Those motions have been
briefed, oral arguments occurred on September 5, 2003 and the Partnership is
awaiting decisions from the Court.
On March 31, 2003, the Bankruptcy Court refused to turn over day-to-day
management rights of 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.
In addition, on April 21, 2003, the Bankruptcy Court denied the
Partnership's motion to dismiss the bankruptcy filing by the Venture. The
creditors of the Venture have filed their claims against the Venture (including
the claim of the Partnership for breach of the Recapitalization Agreement) and
the Venture is in the process of reviewing such claims. The Venture will then be
able to consider potential plans for reorganization that take these claims into
account.
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 are continuing; however, due to the existence of
criminal prosecution against the Rigas family, discovery on the Partnership's
matter cannot be completed until after the conclusion of those criminal
proceedings and, therefore, it is difficult to predict when the Partnership's
matter may go to trial.
Liquidated Media Properties
The Partnership has 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 Venture the excess fee
if the transaction does not close. With the 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.
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. 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 December 26, 2003, 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.
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 December 26, 2003, 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.
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 December 26, 2003, 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.
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 December 26, 2003, 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 multi-channel 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 multi-channel 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
multi-channel video distribution and data service ("MVDDS") and local multipoint
distribution service ("LMDS") licensees 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 of 1934, as amended, 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. The FCC also has 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.
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.
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. 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). The FCC has
adopted rules setting maximum reasonable rates and other terms for the use of
such leased channels.
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 "super stations") and any PEG access channels
required by the local franchise agreement.
Rates for basic services generally are set pursuant to a benchmark formula.
In the alternative, an operator may opt for a cost-of-service methodology to
show that its basic service rates are reasonable. 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 Communications Act contains procedures for the renewal of cable
television franchises. Among other things, 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.
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.
Under the Communications 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. Local franchising officials may
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
The Communications Act also contains provisions regarding the ability of
local exchange carriers ("LECs") - providing local phone service - to provide
video programming under the Act, telephone companies have 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.
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 Communications Act contains a 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 Communications Act also allows for cable provision of telephony and
states that 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 2002, 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). In February 2003, the FCC, in accordance with
the court's decision, formally repealed its cable/broadcast cross-ownership
rule.
Concentration of Ownership
Pursuant to the directive of the Communications Act, the FCC promulgated
rules that allowed an entity to hold an "attributable interest" in cable systems
serving no more than 30% of all multi-channel video programming subscribers
served nationwide. 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, 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 Communications 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. In 2002, the FCC concluded that the
restrictions on exclusive arrangements continued to serve the public interest,
and extended the term of the restrictions through 2007. Vertically integrated
programmers also are generally prohibited from favoring cable operators over
other multi-channel video programming distributors.
Broadband Services
Many cable operators now offer high-speed Internet and other broadband
services over their cable systems. In 2002, the Commission 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. In October 2003, the United States Court of Appeals for
the Ninth Circuit held, in Brand X Internet Services v. Federal Communications
Commission, that although cable modem service was not a cable service it was
part telecommunications service and part information service. The court
therefore vacated in part the FCC's declaratory ruling and remanded the case to
the agency for further proceedings. The FCC has appealed the court's decision.
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 multi-channel 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.
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. Most television
stations have begun to broadcast a digital signal. 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 allows holders of MVDDS and LMDS licenses to
provide video programming services - sometimes referred to as "wireless cable" -
via multiple microwave transmissions to home subscribers.
Programming Issues
Mandatory Carriage and Retransmission Consent: Cable operators are required
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 and that proceeding remains
pending.
Program Content Regulation: The FCC has adopted regulations requiring the
"closed captioning" of programming. The closed captioning rules went into effect
January 1, 1998. 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 multi-channel 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 Supreme Court has
determined, in Gulf Power et. al. v. FCC, that the protections of the Pole
Attachments Act extend to cable operators' offering of Internet access services
and to wireless service providers. In December, 2002, the United States Court of
Appeals for the District of Columbia Circuit generally upheld the FCC's pole
attachment rules.
In addition, the FCC has established procedures for the orderly disposition
of multiple dwelling unit ("MDU") wiring, designed to make 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.
The FCC is empowered 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.
The FCC also has adopted regulations to ensure the commercial availability
of equipment (such as converter boxes and interactive equipment) used to access
services offered over multi-channel 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 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.
Available Information
The Registrant does not have an internet address. However, the Registrant
will provide free of charge, upon written request, a copy of its paper filings
to the Securities and Exchange Commission. Such requests should be directed to
ML Media Partners, L.P., 101 Hudson Street, Jersey City, NJ 07302, Attn:
Ignathea Barrett.
Item 2. Properties
A description of the media properties of Registrant is contained in Item 1
above. C-ML Cable 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 - 23rd
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. Cumulatively,
Registrant incurred legal costs relating to such indemnification of
approximately $704,000.
Adelphia Litigation
On March 24, 2000, Registrant commenced suit (the "Original Adelphia
Litigation") 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.
Litigation continued in the New York Supreme Court (including an order
granting Registrant partial summary judgment (which was affirmed on appeal), a
consent order with respect to management, an order requiring Adelphia to proceed
with an accounting and an order holding Adelphia in contempt of Court), until
December 13, 2001, at which time the matter was placed in abeyance pursuant to a
Stipulation of Settlement pending the closing of transactions contemplated by
the Recapitalization Agreement (see "Media Properties" in Item 1, above). As a
result of the default by Adelphia in its obligations to close under the
Recapitalization Agreement, Registrant may resume prosecution of that action, in
addition to pursuing other remedies for Adelphia's default, although the action
is now before the Bankruptcy Court for the Southern District of New York rather
than the New York Supreme Court, as a result of Adelphia's and Century's filings
for bankruptcy and their removal of such action.
For the years ended December 26, 2003, December 27, 2002 and December 28,
2001, Registrant incurred approximately $0, $78,000 and $1,772,000, respectively
for legal costs relating to the Original Adelphia Litigation. Cumulatively, the
legal costs related to such litigation efforts totaled approximately $3,815,000
through December 26, 2003.
On June 12, 2002, Registrant commenced a new 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.
After Century's bankruptcy filing, Century and Adelphia removed
Registrant's action to the United States Bankruptcy Court for the Southern
District of New York. Adelphia filed its own Chapter 11 bankruptcy on June 25,
2002, and Registrant's actions have been docketed as adversary proceedings
before the Bankruptcy Judge overseeing the bankruptcy of Adelphia and Century.
In addition, on September 30, 2002, Adelphia and Century, over the Registrant's
objections, caused the Venture to file for bankruptcy protection.
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 the defendants' affirmative defenses stricken. Those motions have been
briefed, oral arguments occurred on September 5, 2003 and the Partnership is
awaiting decisions from the Court.
On March 31, 2003, the Bankruptcy Court refused to turn over day-to-day
management rights of 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.
In addition, on April 21, 2003, the Bankruptcy Court denied the
Partnership's motion to dismiss the bankruptcy filing by the Venture. The
creditors of the Venture have filed their claims against the Venture (including
the claim of the Partnership for breach of the Recapitalization Agreement) and
the Venture is in the process of reviewing such claims. The Venture will then be
able to consider potential plans for reorganization that take these claims into
account.
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 are continuing; however, due to the existence of
criminal prosecution against the Rigas family, discovery on the Partnership's
matter cannot be completed until after the conclusion of those criminal
proceedings, and, therefore, it is difficult to predict when the Partnership's
matter may go to trial.
For the years ended December 26, 2003 and December 27, 2002, Registrant
incurred legal costs relating to the litigation arising from the breach of the
Recapitalization Agreement of $2,385,000 and $2,352,000, respectively.
Cumulatively, the legal costs related to such litigation efforts totaled
approximately $4,737,000 through December 26, 2003. These costs are in addition
to the costs relating to the Original Adelphia Litigation discussed above.
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 fiscal year covered by this report.
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
-------------------------------------------------------------
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 March 1, 2004, the number of owners of Units was approximately
10,802.
Registrant does not distribute dividends, but rather distributes
Distributable Cash from Operations, Distributable Refinancing Proceeds, and
Distributable Sale Proceeds, to the extent available. 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. No distributions were made to partners during the fiscal year ended
December 26, 2003.
Item 6. Selected Financial Data
See note in Item 15
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation
-----------------------------------------------------------------
See note in Item 15
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
See note in Item 15
Item 8. Financial Statement and Supplemental Data
See note in Item 15
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
-----------------------------------------------------------------
None.
Item 9A. Controls and Procedures
Registrant maintains disclosure controls and procedures and internal
controls designed to ensure that information required to be disclosed in
Registrant's filings under the Securities Exchange Act of 1934 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 the effectiveness
of Registrant's controls and procedures as of the end of the period covered by
this annual report on Form 10-K. Based on their evaluation of such controls and
procedures, Registrant's chief executive officer and chief financial officer
believe such controls and procedures to be effective. However, see Item 15,
Exhibits, Financial Statement Schedules and Reports on Form 8-K.
Additionally, there have been no changes in internal control over financial
reporting that occurred during the Registrant's fourth quarter that have
materially affected, or are reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
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
Curtis W. Cariddi 3/22/02 Vice President, Treasurer and Director
George A. Bitar 10/18/02 Vice President and Director
Angel L. Morales 10/24/03 Vice President and Director
James V. Bruno 11/05/99 Vice President and Assistant Treasurer
(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, 68, 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. News Corporation is the owner of DirecTV, the
satellite television company which competes with Registrant's cable television
system in Puerto Rico. 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, 40, 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.
Kevin K. Albert, 51, a Managing Director of Merrill Lynch Investment
Banking Group ("MLIBK") is responsible for the Private Equity Placement Group.
He joined Merrill Lynch in 1981. Mr. Albert's work in the Private Equity
Placement 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
the Managing General Partner of ML-Lee Acquisition Fund II, L.P. and ML-Lee
Acquisition Fund (Retirement Accounts II, L.P.)
Curtis W. Cariddi, 48, 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.
George A Bitar, 39, is a Managing Director in the Merrill Lynch Global
Private Equity Division and a Principal in Merrill Lynch Global Partners, Inc.,
the Managing Member of Merrill Lynch Global Emerging Markets Partners, L.P., an
institutional private equity fund. Prior to joining the Global Private Equity
Division, Mr. Bitar was a Vice President in the High Yield Finance and
Restructuring Group where he worked for four years. Mr. Bitar joined Merrill
Lynch in 1990.
Angel L. Morales, 29, is a Vice President in the Merrill Lynch Global
Private Equity Division. His responsibilities include sourcing, structuring,
executing and monitoring investments for several Merrill Lynch private equity
initiatives. Mr. Morales joined Merrill Lynch in 1996.
James V. Bruno, 37, 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
Curtis W. Cariddi
George A. Bitar
Angel L. Morales
Audit Committee Financial Expert
As noted above, the Registrant has no executive officers or directors. The
General Partner manages the Registrant's affairs and has general responsibility
and authority in all matters affecting its business. As a result, the Registrant
does not have an audit committee, and must look to the directors of IMP Media
Management, Inc. and ML Media Management Inc., the corporate general partners of
the General Partner (or in the case of RP Media Management, its corporate
general partner), as fulfilling the role of the Registrant's audit committee.
The members of such audit committee have determined that such audit committee
does not have an audit committee financial expert serving on the audit
committee. However, the members of the audit committee, after considering all
the factors that they deem relevant, including the experience and business
backgrounds of its members, have determined that as a group they have the
attributes necessary to provide appropriate oversight in connection with the
preparation of the Registrant's financial statements. For the reasons stated in
Item 15, the Registrant's consolidated financial statements for the years ended
December 26, 2003, December 27, 2002 and December 28, 2001, have been omitted
from this report.
Code of Ethics for Principal Executive and Senior Financial Officers
As of December 26, 2003, the Registrant had adopted a code of ethics that
applies to the Registrant's principal executive and senior financial officers,
or persons performing similar functions, regardless of whether these individuals
are employed by the Registrant or a third party.
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
and Related Stockholder Matters.
As of March 1, 2004, Smithtown Bay, LLC, and affiliates, having the mailing
address 601 Carlson Parkway, Suite 200, Minnetonka, Minnesota, 55305, is the
owner of 17,337 Units, representing approximately 9.22% of all such Units. As of
March 1, 2004, Madison Liquidity Investors, LLC, and affiliates, having the
mailing address of 6143 South Willow Drive, Suite 200, Englewood Village, CO
80111, and 4210 Shawnee Mission Parkway, Suite 310A, Fairway, KS 66205, is the
owner of 14,960 Units, representing approximately 7.96% of all such Units. As of
March 1, 2004, no person or entity, other than Smithtown Bay, LLC and Madison
Liquidity Investors, LLC, and 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 March 1, 2004, the officers
and directors of the General Partner in aggregate own less than 1% of the
outstanding common stock of Merrill Lynch & Co., Inc.
Registrant has not established any stock option plans.
Item 13. Certain Relationships and Related Transactions
During the three years ended December 26, 2003, the Partnership incurred or
accrued the following expenses in connection with services provided by the
General Partner and its affiliates:
2003 2002 2001
-------------- -------------- ---------------
Partnership Management Fee $ 557,980 $ 557,980 $ 557,987
Property Management Fee 506,264 506,264 506,264
Reimbursement of Operating Expenses 840,067 920,433 783,706
-------------- -------------- ---------------
$ 1,904,311 $ 1,984,677 $ 1,847,957
============== ============== ===============
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 totaled
$0, $0 and $1,812,063 for 2003, 2002 and 2001, respectively.
Item 14. Principal Accounting Fees and Services
During the fiscal years ended December 26, 2003 and December 27, 2002, the
Partnership incurred the following costs relating to accounting fees and
services:
2003 2002
---------- ----------
Audit Fees $ 0 $ 0
Audit-Related Fees 0 0
Tax Fees 31,200 21,400
All Other Fees 0 0
Audit Committee Pre-Approval Policy.
The policy of the audit committee on behalf of the Registrant is to
pre-approve all auditing services to be provided to the Registrant by the
independent auditor and to pre-approve (or establish policies for the
pre-approval of) all non-auditing services, including tax services, to be
provided to the Registrant by the independent auditor.
100% of the services listed above were approved by the audit committee on behalf
of the Registrant.
Part IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
For the reasons stated below, the Partnership's consolidated financial
statements for the years ended December 26, 2003, December 27, 2002 and December
28, 2001, have been omitted from this report. Accordingly, information derived
from the financial statements that would otherwise be included in items 1, 6, 7,
7A, 8 and 15 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 years
ended December 29, 2000, December 28, 2001, December 27, 2002 and December 26,
2003. 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 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 years ended
December 31, 2002 and 2003 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.
(a) Financial Statements, Financial Statement Schedules and Exhibits
(1) Financial Statements See note in Item 15.
(2) Financial Statement Schedules See note in Item 15.
(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 Registrant's Annual Report on
Agreement dated December 16, 1986 between Form 10-K for the fiscal year ended
Registrant and CCC (attached as Exhibit 1 December 26, 1986
to Exhibit 10.3) (File No. 0-14871)
10.1.3 Management Agreement and Joint Exhibit 10.1.3 to Registrant's Annual Report on
Venture Agreement dated as of Form 10-K for the fiscal year ended
February 15, 1989 between Registrant December 30, 1988
and CCC (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's Annual Report on
Registrant and Century-ML Cable Corporation Form 10-K for the fiscal year ended
("C-ML") 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
December 1, 1992 among Form 10-K for the fiscal year ended
Century-ML Cable Corporation, December 25, 1992
Century/ML Cable Venture and (File No.0-14871)
Citibank
10.3.3 Amendment dated as of September Exhibit 10.3.3 to Registrant's Quarterly Report on
30, 1993 among Century-ML Cable Corporation, Form 10-Q
the banks parties to the Credit Agreement, for the quarter ended
and Citibank, N.A. and Century/ML Cable September 24, 1993
Venture (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
1986 among Registrant, ML California and BA Form 10-K for the fiscal year ended
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
between Registrant and Manufacturers Hanover Form 10-Q
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
the Universal Companies and Registrant on Form 10-Q for the quarter ended
dated July 8, 1992 between Registrant and September 25, 1992
Chemical Bank (as successor, by merger, to (File No. 0-14871)
Manufacturers Hanover Trust Company)
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 Form 8-K Report dated
Registrant and Century Communications Corp. 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, Exhibit 1 to Registrant's Form 8-K Report dated August 31,
1999, between Registrant and Aurora 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 Exhibit 10.38 to Registrant's Annual Report on Form 10-K
December 13, 2001, among Registrant, for the fiscal year ended
Century/ML Cable Venture, Century December 29, 2000
Communications Corp., Adelphia (File No. 0-14871)
Communications Corporation and Highland
Holdings, to redeem Registrant's 50%
interest in Century/ML Cable Venture
14.1 Code of Ethics for Principal Executive and
Senior Financial Officers
18.1 Letter from Deloitte, Haskins & Sells Exhibit 18.1 to Registrant's Annual Report on
regarding the change in accounting method, Form 10-K for the fiscal year ended
dated March 30, 1989 December 30, 1988
(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.
No reports were filed by the Registrant on Form 8-K during the fiscal year ended
December 26, 2003.
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: March 10, 2004 /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 March 10, 2004
- ------------------------------------------------- (principal executive officer of
(I. Martin Pompadur) Registrant)
/s/ Elizabeth McNey Yates Executive Vice President March 10, 2004
- -------------------------------------------------
(Elizabeth McNey Yates)
ML MEDIA MANAGEMENT INC.
Signature Title Date
/s/ Kevin K. Albert President and Director March 10, 2004
- -------------------------------------------------
(Kevin K. Albert)
/s/ George A. Bitar Vice President and Director March 10, 2004
- -------------------------------------------------
(George A. Bitar)
/s/ Curtis W. Cariddi Vice President, Treasurer and March 10, 2004
- ------------------------------------------------- Director (principal financial and
(Curtis W. Cariddi) accounting officer of Registrant)
/s/ Angel L. Morales Vice President and Director March 10, 2004
- -------------------------------------------------
(Angel L. Morales)