Items 1, 2 and 3 of Part I are omitted from this filing for the reasons
described in Part II, Item 5.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly Period Ended April 1, 2005
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 (I.R.S. Employer Identification No.)
incorporation or organization)
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
Title of each Class Name of each exchange on which registered
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None Not applicable
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
- --------- ----------
Indicate by check mark whether the registrant is an accelerated filer as
defined in Rule 12b-2 of the Exchange Act.
Yes No X
- --------- ----------
ML-MEDIA PARTNERS, L.P.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Item 3. Quantitative and Qualitative Disclosure about Market Risk.
Item 4. Controls and Procedures.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
See Part II, Item 5.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
------------------------------------------------------------------
See Part II, Item 5.
Item 3. Quantitative and Qualitative Disclosure about Market Risk.
---------------------------------------------------------
See Part II, Item 5.
Item 4. Controls and Procedures.
ML Media Partners, L.P. (the "Registrant" or the "Partnership") maintains
disclosure controls and procedures designed to ensure that information required
to be disclosed in Registrant's filings under the Securities Exchange Act of
1934, as amended, is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms. Registrant's chief executive officer and chief financial officer have
evaluated, with the participation of Registrant's management, the effectiveness
of Registrant's disclosure controls and procedures as of the end of the period
covered by this report. Based on the evaluation, Registrant's chief executive
officer and chief financial officer concluded that Registrant's disclosure
controls and procedures are effective. However, see Part II, Item 5, Other
Information.
There have been no changes in Registrant's internal control over financial
reporting that occurred during the period covered by this Form 10-Q that have
materially affected, or are reasonably likely to materially affect, Registrant's
internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
(a) Litigation Against Adelphia Communications Corporation And Others
As of April 1, 2005, Registrant's sole remaining operating investment in
media properties is its 50% interest in Century/ML Cable Venture (the "Venture"
or "C-ML Cable"), a joint venture with Century Communications Corp. ("Century",
a subsidiary of Adelphia Communications Corporation ("Adelphia")). The Venture
owns two cable television systems in Puerto Rico.
On December 13, 2001, Registrant entered into a Leveraged Recapitalization
Agreement (the "Recapitalization Agreement"), pursuant to which the Venture
agreed to redeem Registrant's 50% interest in the Venture at a closing to be
held on September 30, 2002, for a purchase price of $279.8 million. Highland
Holdings ("Highland"), a Pennsylvania general partnership owned by members of
the Rigas family (the 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. 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 a lawsuit against the Venture,
Adelphia and Highland in New York State Supreme Court, seeking specific
performance of the Recapitalization Agreement and compensatory and punitive
damages for breach by the defendants, including, but not limited to, payment of
the full purchase price of $279.8 million for Registrant's interest in the
Venture.
Century and Adelphia removed Registrant's action to the United States
Bankruptcy Court for the Southern District of New York. 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.
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. Adelphia, Century and the Venture filed
counterclaims against Registrant alleging, among other things, that the
Recapitalization Agreement was an invalid fraudulent conveyance and that
Registrant aided and abetted a breach of fiduciary duty by certain members of
the Rigas family in entering into the Recapitalization Agreement.
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. Both Adelphia and Highland have filed
counterclaims against the Registrant seeking the return of those funds.
The Court has ruled that the Venture, Adelphia, Century and Highland
defaulted in their obligations to pay the purchase price set under the
Recapitalization Agreement to Registrant by no later than September 30, 2002,
subject to a determination that the Recapitalization Agreement is enforceable.
The determination of enforceability has been reduced to two claims. On April 15,
2004, the Court ruled that it was going to dismiss all but one of the eleven
counterclaims filed by Adelphia and Century. The sole remaining counterclaim
alleges that the Registrant aided and abetted a breach of fiduciary duty by the
Rigas family members against Adelphia and Century. The Court also stated that it
was going to dismiss all but one of the counterclaims by the Venture, leaving
only a claim for constructive fraudulent conveyance to be further developed
through discovery. The litigation as to these remaining issues is continuing;
however, it is difficult to predict when this lawsuit may be finally resolved.
(b) Bankruptcy Claims Against Adelphia, Century and the Venture
On October 8, 2004, Registrant filed claims in the Chapter 11 cases of
Adelphia and Century, including its claim for breach of the Recapitalization
Agreement, its secured claim against Century for breach of the Recapitalization
Agreement, and other claims based on Adelphia's breaches of the management
provisions of the joint venture agreement between Registrant and Century and
breach of fiduciary duty. The Venture separately has filed its own claims
against Adelphia and Century.
Because the Venture was placed into Chapter 11 bankruptcy by Adelphia,
creditors of the Venture also had to file claims against the Venture. On January
15, 2004, Registrant filed a claim against the Venture for breach of the
Recapitalization Agreement. The exclusivity period for the Venture (i.e., the
period where only the Venture can propose a plan of reorganization) was
scheduled to expire on April 6, 2004. That period has been extended but modified
to allow any of Registrant, Adelphia or Century to propose a plan of
reorganization. The exclusivity period has been further extended by the Court
and currently expires on June 30, 2005.
(c) Related Matters
In addition, the Partnership seeks to market the ownership interests in the
Venture to potential third-party purchasers and, on April 15, 2004, the
Bankruptcy Court directed Adelphia to cooperate in providing due diligence to
the Vaughn Group, as described in the Partnership's Current Report on Form 8-K
filed on April 6, 2004. Pursuant to a letter agreement with the Vaughn Group,
the Partnership agreed that it would not discuss or negotiate a sale of the
interests in the Venture with any other person, except Adelphia, during an
exclusivity period, which expired in May 2004. No agreement was reached with the
Vaughn Group and the Partnership began marketing all of the interests in the
Venture, and Adelphia began marketing a portion of its interests in the Venture.
Several non-binding bids were received for all of the interests in the Venture.
Adelphia and Century have informally agreed to join with the Partnership in a
potential sale of all of the interests in the Venture and the sale process is
continuing. Adelphia, Century and the Partnership are currently negotiating
exclusively with one potential purchaser. However, there can be no assurances
that any agreement will be reached to sell the Partnership's interest in the
Venture on terms acceptable to the Partnership. In addition, any sale will be
subject to the approval of the Bankruptcy Court. For the three months ended
April 1, 2005, Registrant incurred approximately $1,048,000 for legal costs
relating to the above legal proceedings. Cumulative legal costs related to such
legal proceedings totaled approximately $7,992,000 through April 1, 2005.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
No matter was submitted to a vote of security holders during the period covered
by this report.
Item 5. Other Information.
(a) For the reasons stated below, the Partnership's consolidated financial
statements for the quarterly periods ended March 26, 2004 and April 1, 2005 have
been omitted from Item 1, Part I of this report. Accordingly, information
derived from the financial statements that otherwise would be included in Items
2 and 3 of Part I 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 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 been unable to
prepare financial statements for the years ended December 29, 2000, December 28,
2001, December 27, 2002, December 26, 2003, and December 31, 2004. 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, 2003, and 2004 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.
(b) The Registrant has no executive officers or directors. Media Management
Partners, a New York general partnership (the "General Partner"), is
Registrant's sole general partner and manages the Registrant's affairs and has
general responsibility and authority in all matters affecting its business. As a
result, the Registrant 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 board. The Registrant does not have
in place procedures by which security holders may recommend nominees to the
Registrant's board.
Item 6. Exhibits.
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The certifications required to be filed or furnished, respectively, with
this report pursuant to Rule 13a-14 under the Securities Exchange Act of 1934
have not been so filed or furnished herewith as a result of the matters
discussed in Part II, Item 5.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the 16th day of May, 2005.
ML-MEDIA PARTNERS, L.P.
By: Media Management Partners
General Partner
By: ML Media Management Inc.
By:
/s/ George A. Bitar
--------------------
George A. Bitar
President and Director
ML Media Management Inc.
RP Media Management
By:
/s/ I. Martin Pompadur
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I. Martin Pompadur
President, Secretary and Director
RP Media Management
(Principal Executive Officer of Registrant)
ML Media Management Inc.
By:
/s/ Jeffrey Meshberg
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Jeffrey Meshberg
Vice President, Treasurer and Director
ML Media Management Inc.
(Principal Financial Officer of Registrant)