<PAGE 1>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended May 31, 1998
[ ] 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 1-9244
_____________________________
KING WORLD PRODUCTIONS, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 13-2565808
_______________________________ ____________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
12400 Wilshire Boulevard
Suite 1200
Los Angeles, California 90025
__________________________________________________
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: 310 826-1108
____________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
_____ _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common Stock, $.01 par
value, 73,175,007 shares outstanding as of July 8, 1998.
<PAGE 2>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in thousands)
May 31, August 31,
1998 1997
___________ __________
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $224,752 $317,782
Short-term investments 77,476 234,677
Accounts receivable (net of allowance
for doubtful accounts of $3,301 and
$4,101 at May 31, 1998 and August 31,
1997, respectively) 81,780 75,092
Producer advances and deferred costs 85,698 74,652
Other current assets 1,482 1,857
________ ________
Total current assets 471,188 704,060
________ ________
LONG-TERM INVESTMENTS, at cost,
which approximates market value 422,560 177,590
________ ________
FIXED ASSETS, at cost 29,349 21,455
Less - accumulated depreciation
and amortization (13,070) (11,706)
________ ________
16,279 9,749
________ ________
PRODUCER ADVANCES AND OTHER ASSETS 83,342 10,668
________ ________
$993,369 $902,067
======== ========
The accompanying Notes to Consolidated Financial Statements
are an integral part of these balance sheets.
<PAGE 3>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
(Dollars in thousands)
May 31, August 31,
1998 1997
____________ __________
(Unaudited)
CURRENT LIABILITIES:
Accounts payable and
accrued liabilities $ 16,680 $ 18,014
Payable to producers and others 78,823 69,599
Income taxes payable 28,377 30,372
__________ __________
Total current liabilities 123,880 117,985
__________ __________
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
5,000,000 shares authorized,
none issued -- --
Common stock, $.01 par value;
150,000,000 shares authorized,
88,093,701 shares and
87,664,828 shares issued
at May 31, 1998 and August 31,
1997, respectively 881 877
Paid-in capital 133,195 124,130
Retained earnings 1,103,339 1,001,190
Treasury stock, at cost; 15,250,494 and
14,413,594 shares at May 31, 1998 and
August 31, 1997, respectively (367,926) (342,115)
__________ __________
869,489 784,082
__________ __________
$ 993,369 $ 902,067
========== ==========
The accompanying Notes to Consolidated Financial Statements
are an integral part of these balance sheets.
<PAGE 4>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
May 31, May 31,
1998 1997 1998 1997
(Dollars in thousands except per share data)
REVENUES....................... $167,968 $166,751 $514,810
$506,207
________ ________ ________ ________
EXPENSES:
Producers' fees, programming
and other direct
operating costs............ 106,510 97,745 324,439
300,315
Selling, general and
administrative expenses.... 18,564 22,385 57,720
62,078
________ ________ ________ ________
125,074 120,130 382,159 362,393
________ ________ ________ ________
Income from operations..... 42,894 46,621 132,651 143,814
INTEREST AND
DIVIDEND INCOME.............. 7,620 8,269
21,692 22,184
________ ________ ________ ________
Income before provision
for income taxes......... 50,514 54,890 154,343 165,998
PROVISION FOR INCOME TAXES..... 16,312 19,185 52,194
58,649
________ ________ ________ ________
Net income................. $ 34,202 $ 35,705 $102,149
$107,349
======== ======== ======== ========
BASIC EARNINGS PER SHARE....... $ .47 $ .48 $ 1.40 $
1.44
======== ======== ======== ========
DILUTED EARNINGS PER SHARE..... $ .45 $ .48 $ 1.34 $
1.43
======== ======== ======== ========
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE 5>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
May 31,
______________________
1998 1997
_________ _________
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $102,149 $107,349
Items not affecting cash:
Depreciation and amortization 1,364 1,247
Change in assets and liabilities:
Accounts receivable (6,688) (5,922)
Producer advances and
deferred costs (81,296) 55,143
Accounts payable and accrued
liabilities (1,334) 2,224
Payable to producers and others 9,224 (6,647)
Income taxes payable (1,995) (1,939)
Other, net (2,049) (50)
________ ______
Net cash provided by operating
activities 19,375 151,405
________
________
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in investments (87,769) (119,002)
Additions to fixed assets (7,894) (7,584)
________ ________
Net cash used in investing
activities (95,663) (126,586)
________
________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 9,069 6,138
Purchase of treasury stock (25,811) (24,739)
Payment of special dividend -- (74,843)
________
_______
Net cash provided by
financing activities (16,742) (93,444)
________
________
NET DECREASE IN CASH AND
CASH EQUIVALENTS (93,030) (68,625)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 317,782 344,766
________
________
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $224,752 $276,141
========
========
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE 6>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Summary of significant accounting policies
Principles of consolidation
___________________________
The accompanying consolidated financial statements include the
accounts of King World Productions, Inc. ("King World") and its wholly-owned
subsidiaries. All significant intercompany transactions have been
eliminated. Unless the context suggests otherwise, the "Company", as used
herein, means King World and its subsidiaries. All share and per share data
presented in these consolidated financial statements have been adjusted to
give effect to a two-for-one stock split, effected in the form of a 100% stock
dividend, which was paid by the Company on February 17, 1998.
The unaudited consolidated financial statements for the nine months
and three months ended May 31, 1998 have been prepared in accordance with the
instructions to Form 10-Q and include, in the opinion of management, all
adjustments (consisting only of normal recurring accruals) necessary for a
fair presentation of the results of operations for such periods. They do not,
however, include all of the information and disclosures required by generally
accepted accounting principles for complete financial statements. For further
information, reference is made to the consolidated financial statements for
the fiscal year ended August 31, 1997 and the footnotes related thereto
included in the Company's Annual Report on Form 10-K from which the August 31,
1997 balances presented herein have been derived. The results of operations
for the nine months and three months ended May 31, 1998 are not necessarily
indicative of the results of operations for the full year.
Revenue recognition
___________________
License fees from first-run syndicated television properties are
recognized at the commencement of the license period pursuant to
noncancelable agreements and as each show is made available to the licensee
via satellite transmission. Because transmission to the satellite takes
place, on the average, no more than two to three days prior to the broadcast
of the programming, revenues are recognized on or about the air date.
The Company typically receives a portion of the fees derived from
the licensing of syndicated television programming in the form of retained
advertising time, which is sold to advertisers by King World Media Sales Inc.,
a wholly-owned
<PAGE 7>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Summary of significant accounting policies (continued)
subsidiary of the Company. Such revenues are recognized at the same time as
the cash portion of the license fees derived from such programming is
recognized, in amounts adjusted for expected ratings.
License fees for non-first-run syndicated properties are recognized
at the gross contract amount (net of discount to present value for license
periods greater than one year) at the commencement of the license period and
when certain other conditions are satisfied.
Principal properties
____________________
The Company's principal properties are licenses to distribute THE
OPRAH WINFREY SHOW, WHEEL OF FORTUNE and JEOPARDY!; and INSIDE EDITION, a
first-run syndicated series produced and distributed by the Company. THE
OPRAH WINFREY SHOW accounted for approximately 42% and 40% of revenues for the
nine months ended May 31, 1998 and 1997, respectively; WHEEL OF FORTUNE
accounted for approximately 21% and 20% of revenues for each of such periods,
respectively; JEOPARDY! accounted for approximately 18% and 17% of revenues
for each of such periods, respectively; and INSIDE EDITION accounted for
approximately 7% and 8% of revenues for each of such periods, respectively.
The Company distributes THE OPRAH WINFREY SHOW pursuant to an
agreement with Harpo, Inc., the producer of the series ("Harpo"). Under the
terms of the Company's agreement with Harpo, the Company has the exclusive
right, and has agreed, to distribute episodes of THE OPRAH WINFREY SHOW
produced through the 1999-2000 broadcast season. Pursuant to such agreement,
Harpo and Ms. Winfrey have also committed to produce and host the show through
the 1999-2000 broadcast season. Even if Harpo elects to continue to produce
THE OPRAH WINFREY SHOW after the 1999-2000 broadcast season, it will not be
obligated to distribute the series through the Company.
The Company's agreements with Columbia TriStar Television, the
producer of WHEEL OF FORTUNE and JEOPARDY!, provide that King World will be
the exclusive distributor for each such series so long as the Company has
obtained sufficient
<PAGE 8>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Summary of significant accounting policies (continued)
broadcast commitments to cover the production and distribution costs of that
series and that the Company may not, unless otherwise agreed by Columbia
TriStar Television, distribute other game shows for first-run strip
syndication so long as the Company is distributing WHEEL OF FORTUNE or
JEOPARDY!.
The Company has entered into an agreement with Full Moon & High Tide
Productions, Inc., a company controlled by Roseanne, to co-produce THE
ROSEANNE SHOW, an hour-long strip talk show hosted by Roseanne and distributed
by the Company in first-run syndication. The series is scheduled to premiere
on September 14, 1998. Under the terms of the agreement, the Company will
have the exclusive right to distribute the show through the 2003-2004
broadcast season. As of July 8, 1998, the series had been licensed for the
1998-1999 and 1999-2000 broadcast seasons to television stations covering 90%
of the total domestic television viewing households.
The Company has also entered into an agreement with Columbia TriStar
Television to co-produce a new strip version of the game show HOLLYWOOD
SQUARES for distribution by the Company in first-run syndication. This series
is also scheduled to premiere on September 14, 1998. As of July 8, 1998, the
series had been licensed for the 1998-1999, 1999-2000 and 2000-2001 broadcast
seasons to television stations covering 80% of the total domestic television
viewing households.
Producers' fees, programming and other direct operating costs
_____________________________________________________________
Producers' fees, programming and other direct operating costs
primarily include the producers' share of both cash license fees from the sale
of programming to television stations and revenues derived from the sale of
retained advertising time to advertisers with respect to programming
distributed by the Company; participation fees payable by the Company to
producers and talent; production and distribution costs for first-run
syndicated programming; and the direct operating costs of King World Direct,
the Company's direct response marketing subsidiary. That portion of any
recognized revenue that is to be paid to producers and owners of programming
is accrued as the license fees are earned. The share of revenues payable by
the Company to such
<PAGE 9>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Summary of significant accounting policies (continued)
producers and others is generally paid as cash license fees and revenues
derived from the sale of retained advertising time are received from
television stations and advertisers.
Stockholders' equity
____________________
In the first quarter of fiscal 1998, the Company adopted Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128").
SFAS 128 requires the presentation of "basic" earnings per share, which
excludes any common stock equivalents and their related dilution, and
"diluted" earnings per share, which includes the potential dilution from all
common stock equivalents including options, warrants and convertible
securities. Basic earnings per share has been computed using the weighted
average number of shares of Common Stock outstanding of 72,921,000 and
74,228,000 for the three months ended May 31, 1998 and 1997, respectively, and
73,193,000 and 74,569,000 for the nine months ended May 31, 1998 and 1997,
respectively. Diluted earnings per share, which includes the dilutive effect
of the assumed exercise of vested and unvested stock options outstanding as of
the end of each period reported, has been computed using the weighted average
number of shares of Common Stock outstanding of 76,512,000 and 74,906,000 for
the three months ended May 31, 1998 and 1997, respectively, and 76,458,000 and
75,320,000 for the nine months ended May 31, 1998 and 1997, respectively.
Reported earnings per share in prior periods has been restated to conform with
the provisions of SFAS 128.
On January 19, 1998 the Company's Board of Directors declared a
two-for-one stock split, effected in the form of a 100% stock dividend, which
was paid on February 17, 1998 to stockholders of record on February 3, 1998.
In connection with the stock split, the Company increased the number of
authorized shares of Common Stock from 75 million to 150 million, which
increase was approved by the stockholders of the Company on January 19, 1998.
The par value of the additional 36,738,470 shares of Common Stock issued in
connection with the stock split was credited to common stock and a like amount
charged to paid-in capital. All share and per share data presented in these
consolidated financial statements have been adjusted for all periods presented
to reflect the stock split.
<PAGE 10>
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(2)Producer advances
On January 2, 1996, the Company paid an advance of $65 million to
Harpo against Harpo's minimum participation payments for the 1997-1998
broadcast season which was fully recouped as of May 31, 1998. In addition, in
September 1997, the Company made advances to Harpo in the aggregate amount of
$130 million against Harpo's minimum participation payments for the 1998-1999
and 1999-2000 broadcast seasons, none of which had been recouped as of May 31,
1998. Based on the license agreements in place for such broadcast seasons,
the Company believes that revenues from the series will be sufficient to
enable the Company to recoup such advances for such seasons. All of the
advances paid to Harpo are refundable to the Company by Harpo and Ms. Winfrey
if King World terminates such license agreements with Harpo due to Harpo's
failure to deliver episodes of THE OPRAH WINFREY SHOW.
<PAGE 11>
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
_____________________________________________
The discussion herein contains certain forward-looking statements
covering the Company's objectives, planned or expected activities and
anticipated financial performance. These forward-looking statements may
generally be identified by words such as "expects", "anticipates", "believes",
"plans", "should", "will" "may", "projects" (or variants of these words or
phrases), or similar language indicating the expression of an opinion or view
concerning the future with respect to the Company's financial position,
results of operations, prospects or business. The Company's actual results
may differ significantly from the results described in or suggested by such
forward-looking statements.
RESULTS OF OPERATIONS
COMPARISON OF NINE MONTHS AND THREE MONTHS ENDED MAY 31, 1998 AND 1997
Revenues
________
Revenues for the first nine months of fiscal 1998 increased by
approximately 2% over revenues for the first nine months of the prior fiscal
year, primarily due to increased revenues from the sale of retained
advertising time on and increased cash license fees from THE OPRAH WINFREY
SHOW, WHEEL OF FORTUNE and JEOPARDY!, offset by lower revenues from ROLONDA
(due to the discontinuation of the show) and King World Direct. The decrease
in revenues from King World Direct was attributable to significantly lower
sales of the WILD AMERICA video series and the Sears Craftsman Robogrip
pliers. King World Direct operates in a seasonal business with revenues
heavily reliant on the Christmas selling season. Consequently, King World
Direct's revenues and earnings have historically been higher in the Company's
second fiscal quarter than in the first, third and fourth fiscal quarters.
The Company's revenues for the three months ended May 31, 1998 were
comparable to revenues for the three months ended May 31, 1997, increasing by
less than 1%, due primarily to the same factors discussed above with respect
to the nine month period.
<PAGE 12>
The principal components of the Company's revenues for the nine
months and three months ended May 31, 1998 and 1997 are as follows:
Nine Months Ended Three Months Ended
May 31, May 31,
_________________ __________________
1998 1997 1998 1997
____ ____ ____ ____
THE OPRAH WINFREY SHOW 42% 40% 42% 41%
WHEEL OF FORTUNE 21% 20% 21% 21%
JEOPARDY! 18% 17% 18% 17%
INSIDE EDITION 7% 8% 7% 8%
AMERICAN JOURNAL (1) 4% 4% 4% 4%
ROLANDA (2) -- 1% -- 1%
King World Direct 2% 4% 1% 2%
(1) The production of AMERICAN JOURNAL will be discontinued after the current
broadcast season.
(2) The production of ROLONDA was discontinued after the 1996-1997
broadcast season.
Producers' fees, programming and other direct operating costs
_____________________________________________________________
Under the terms of its agreement with Harpo, following the 1996-1997
season, the profit sharing arrangements between Harpo and the Company
previously in effect were terminated and, in the 1997-1998 season and
thereafter, the Company instead receives distribution fees based on a
percentage of gross revenues derived from the series. These arrangements are
less favorable to the Company than those contained in prior agreements between
the Company and Harpo. As a result of these changes, the contribution of THE
OPRAH WINFREY SHOW to the Company's net profits and cash flow has declined.
Producers' fees, programming and other direct operating costs
increased by approximately 8% in the first nine months of fiscal 1998 compared
to the first nine months of fiscal 1997. The increase was primarily due to
the greater portion of revenues payable to Harpo, as discussed above, as well
as the increase in revenues generated by THE OPRAH WINFREY SHOW, WHEEL OF
FORTUNE and JEOPARDY! (a portion of which is payable to the producer of each
such series). These effects were partially offset by the lower operating
costs of King World Direct and a decrease in production costs due to the
discontinuation of ROLONDA. For the three months ended February 28, 1998,
producers' fees, programming and other direct operating costs increased by
approximately
<PAGE 13>
9% due primarily to the same factors as those discussed above for the nine
month period.
Selling, general and administrative expenses.
The Company has entered into employment agreements with its Chairman
of the Board, its Vice Chairman and Chief Executive Officer and certain other
executive officers. Such agreements provide, among other things, for
performance-based bonuses, including bonuses payable upon the introduction of
new shows and bonuses which vary depending on the Company's net income and
Common Stock price during preestablished measurement periods. As a result,
the Company's compensation expense will increase if the Company introduces a
new series in syndication, if the Company's net income increases or if the
Company's Common Stock price exceeds the specified levels during the
applicable measurement periods. The Company has recognized the impact of
certain of these bonuses in its operating results for the first, second and
third quarters of fiscal 1998, which include all amounts payable in accordance
with the terms of such employment agreements.
Selling, general and administrative expenses for the first nine
months of fiscal 1998 were lower by approximately 7%. The decrease was
primarily due to a decrease in advertising and promotion costs for THE OPRAH
WINFREY SHOW, ROLONDA and AMERICAN JOURNAL, partially offset by increases in
the costs of programming under development and greater costs incurred in
connection with the sales of programs distributed by the Company. Selling,
general and administrative expenses for the three months ended May 31, 1998
decreased by 17% compared to the corresponding period of fiscal 1997,
primarily due to the decrease in advertising and promotion costs for THE OPRAH
WINFREY SHOW, ROLONDA and AMERICAN JOURNAL.
Net income and earnings per share
_________________________________
Due to the factors discussed above, the Company's operating income
for the nine months and three months ended May 31, 1998 decreased by
approximately 8% for each such period compared to the corresponding period of
the prior year. Net income decreased by approximately $5.2 million, or 5%,
for the nine months ended May 31, 1998 in comparison to the nine months ended
May 31, 1997, reflecting the decrease in operating income and slightly lower
interest income earned on the Company's cash and investments, partially offset
by a lower effective tax rate for the first nine months of fiscal 1998. Basic
earnings per share decreased by 3% from $1.44 per share in the first nine
months of fiscal 1997 to $1.40 per share in the first nine months of the
current fiscal year as a result of the decline in net income offset by a
decrease in the number of shares outstanding resulting from the Company's
stock repurchase program. Diluted earnings per share decreased by 6% from
$1.43 per share in the first nine months of the prior year to $1.34 in the
first nine
<PAGE 14>
months of fiscal 1998, due primarily to a higher average Common Stock price
for the first nine months of fiscal 1998 (which resulted in a greater dilutive
effect of outstanding stock options under the method used by the Company to
calculate diluted earnings per share).
For the three months ended May 31, 1998 as compared to the same
period of the prior year, net income decreased by 4% from $35.7 million to
$34.2 million; basic earnings per share decreased by 2% from $.48 per share to
$.47 per share; and diluted earnings per share decreased by 6% from $.48 per
share to $.45 per share, all for the same reasons discussed above for the nine
month period.
Due to the success of the shows distributed by the Company and in
order to mitigate the influence of some of the factors referred to above, the
Company has been obtaining multi-year licenses and license renewals from
television stations for its principal distribution properties, extending as
far into the future as the 2001-2002 broadcast season. In general, these
licenses and renewals have been at rates as favorable or more favorable to the
Company than the rates applicable to the 1997-1998 broadcast season. All such
licenses and renewals are contingent upon the continued production of the
series by their respective producers through the broadcast seasons for which
the licenses run.
The Company believes that the impact of inflation on its operations
has not been significant.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital resources to fund development,
production and promotion costs of independently produced programming,
including, in some instances, advances to producers and talent, to produce its
own programs and to acquire distribution rights to new programming. In
acquiring distribution rights from independent producers, King World has tried
to avoid making significant capital commitments to such producers until it has
obtained broadcast commitments from a substantial number of television
stations. As a result of this strategy and the success of its existing
syndication properties, to date, King World has funded substantially all
programming acquisition, development, production and promotion costs and
advances from its operations. The Company is currently funding the
development and production costs of THE ROSEANNE SHOW and its new version of
HOLLYWOOD SQUARES.
The distribution of television programming is highly competitive and
the Company may be obliged to offer, among other things, guarantees and cash
advances to acquire, renew or extend distribution rights. Under the terms of
the Company's agreement with Harpo, the Company has the exclusive right, and
has agreed,
<PAGE 15>
to distribute episodes of THE OPRAH WINFREY SHOW produced through the
1999-2000 broadcast season. Pursuant to such agreement, Harpo and Ms. Winfrey
have also committed to produce and host the show through the 1999-2000
broadcast season.
After the 1999-2000 broadcast season, King World's right to
distribute THE OPRAH WINFREY SHOW, if not renewed, will terminate. For
several years, the Company has been, and is now, in the process of developing
new television shows for syndication that it hopes will gain widespread
audience appeal and generate significant revenues and income for the Company.
Three such shows, THE ROSEANNE SHOW and a new version of the game show
HOLLYWOOD SQUARES, are scheduled to premiere in the 1998-1999 broadcast season
and a variety/talk show hosted by Martin Short for possible premiere in the
1999/2000 broadcast season. Although the Company hopes to renew its
distribution arrangements with Harpo for television seasons following the
1999-2000 season, there can be no assurance that (a) Harpo and Ms. Winfrey
will continue to produce and host the show beyond that season; (b) even if
they do continue to produce and host the show beyond that season, that the
Company will be able to obtain the distribution rights for any such future
season on terms favorable to the Company; or (c) that the revenues generated
by these or any other new shows will be sufficient to offset the loss of
revenues and income that would result if such future distribution rights are
not so obtained. The failure to renew such distribution rights on favorable
terms, coupled with the failure of such new shows to gain widespread audience
appeal, could be expected to have a material adverse effect on the Company's
results of operations and financial condition after the 1999-2000 broadcast
season.
On January 2, 1996 the Company paid an advance of $65 million to
Harpo against Harpo's minimum participation payments for the 1997-1998
broadcast season which was fully recouped as of May 31, 1998. In addition, in
September 1997, the Company made advances to Harpo in the aggregate amount of
$130 million against Harpo's minimum participation payments for the 1998-1999
and 1999-2000 broadcast seasons, none of which was recouped as of May 31,
1998. Based on the license agreements in place for such broadcast seasons,
the Company believes that revenues from the series will be sufficient to
enable the Company to recoup the advances for such seasons. All of the
advances paid to Harpo are refundable to the Company by Harpo and Ms. Winfrey
if King World terminates its agreement with Harpo due to Harpo's failure to
deliver episodes of THE OPRAH WINFREY SHOW.
The Company has used its cash reserves to make acquisitions of and
investments in broadcast and related properties in the entertainment field, to
repurchase shares of its Common Stock and to fund the cost of development,
production and promotion of new programming. The Company continues to
evaluate opportunities in these areas, and may seek to raise capital in public
or private securities markets to finance such activities if it
<PAGE 16>
considers it advantageous to do so. A division of the Company, King World
Ventures, has primary responsibility for the Company's investment and
acquisition program, including analysis of new business opportunities.
On April 15, 1997, the Company announced that the Board of Directors
had approved a program to repurchase up to 10,000,000 shares of its Common
Stock from time to time in the open market and in privately negotiated
transactions. Through July 8, 1998, 3,041,700 shares of Common Stock had been
repurchased for aggregate consideration of approximately $66.0 million or
approximately $21.70 per share (such amounts have been adjusted to reflect the
two-for-one stock split). The Company intends to continue to repurchase
shares of its Common Stock in the open market and in privately negotiated
transactions if and when it deems it advantageous to do so. Purchases under
the share repurchase program will be financed out of the Company's available
cash and liquid investments.
On May 16, 1997, a special dividend distribution of $1.00 per share
was paid to stockholders of record on April 25, 1997. The Company used
approximately $74.8 million of its cash and liquid investments to pay the
special dividend. The Company has no present plan to declare additional cash
dividends in the foreseeable future.
On January 19, 1998 the Company's Board of Directors declared a
two-for-one stock split, effected in the form of a 100% stock dividend, which
was paid on February 17, 1998 to stockholders of record on February 3, 1998.
In connection with the stock split, the Company increased the number of
authorized shares of Common Stock from 75 million to 150 million, which
increase was approved by the stockholders of the Company on January 19, 1998.
The par value of the additional 36,738,470 shares of Common Stock issued in
connection with the stock split was credited to Common Stock and a like amount
charged to paid-in capital. All share and per share data presented in these
consolidated financial statements have been adjusted for all periods presented
to reflect the stock split.
PART II - OTHER INFORMATION
Item 5. Other Information
_________________
On May 8, 1998, the Board of Directors elected Avram Miller as a
director, to fill a new position on the Board created pursuant to Section 2.2
of the Company's By-Laws. Mr. Miller has been elected to the class of the
Company's directors whose term expires at the 1999 annual meeting of
stockholders.
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Item 6. Exhibits and Reports on Form 8-K
________________________________
(a) Exhibits:
________
3.(i)Certificate of Amendment dated January 28, 1998 to Restated
Certificate of Incorporation of the Company.
3.(ii)Restated By-Laws of the Company (as of May 8, 1998).
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
___________________
None.
<PAGE 18>
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.
KING WORLD PRODUCTIONS, INC.
By: /s/ Steven A. LoCascio
______________________________
Steven A. LoCascio
Senior Vice President and
Chief Financial Officer
and on behalf of the Registrant
July 14, 1998