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EXHIBIT 21.1
[HARTE-HANKS LOGO]
News From Harte-Hanks Communications, Inc.
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FOR IMMEDIATE RELEASE:
May 19,1997
HARTE-HANKS SIGNS DEFINITIVE AGREEMENT TO SELL
ITS NEWSPAPERS AND TV STATION TO E.W. SCRIPPS COMPANY
SAN ANTONIO, TX -- Harte-Hanks Communications, Inc. (NYSE:HHS) announced today
that it has signed a definitive agreement to sell to the E.W. Scripps Company
(NYSE:SSP) its newspaper operations and KENS-TV, the CBS affiliate in San
Antonio. The announcement was made by Larry Franklin, president and chief
executive officer of Harte-Hanks.
Harte-Hanks publishes five daily newspapers in Texas -- the Corpus Christi
Caller-Times, Abilene Reporter-News, Wichita Falls Times Record News, San
Angelo Standard-Times and Plano Star Courier -- and one in South Carolina, the
Anderson Independent-Mail. The company also publishes approximately 25
associated non-daily publications, including community newspapers and
supplemental publications. All of the company's newspapers, along with KENS-TV
and its radio station KENS-AM, are included in the sale agreement with Scripps.
The agreement calls for a Morris Trust form of transaction. Immediately before
the sale to Scripps, Harte-Hanks will spin off to its stockholders a new
holding company bearing the Harte-Hanks name and comprising its direct
marketing and shopper businesses.
It is anticipated that Scripps will assume approximately $200 million of
Harte-Hanks debt in connection with the transaction, in which case Scripps would
issue to Harte-Hanks stockholders in a tax-free exchange Class A common stock
of Scripps with a value at closing of $425 million, bringing the transaction's
total value to $625 million. In the event that Scripps assumes less debt of
Harte-Hanks, the amount of Class A common stock issued by Scripps will increase
to a maximum of $605 million if Scripps assumes no debt of Harte-Hanks. The
exact number of shares to be issued by Scripps will be determined by the
trading price of Scripps shares within a "collar" range of $32.72 and $40.00.
Harte-Hanks has the right to terminate the transaction if the Scripps stock is
trading below $32.72, subject to Scripps' right to offer sufficient additional
shares to restore the value of the transaction. Neither party has the right to
terminate the transaction if the Scripps stock is trading above $40.00.
Recently, legislation has been introduced which would prevent Morris Trust
transactions. The agreement announced today assumes that any final legislation
will permit Morris Trust transactions in some form. The parties' motivation in
selecting the Morris Trust form of transaction is like that of parties to a
typical stock-for-stock tax-free merger, rather than the elimination of debt
or a typical cash sale. In fact, the maximum debt that could be involved in
this
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P.O. BOX 269 SAN ANTONIO, TEXAS 78291-0269 210-829-9000
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transaction represents less than one-third the value of the total transaction.
Furthermore, unlike some Morris Trust transactions, the debt Scripps will
assume arose from the ordinary course of Harte-Hanks' operations and was not
incurred in contemplation of this transaction.
Harte-Hanks has the right to terminate the Morris Trust form of transaction at
any time through December 31, 1997, in which case Scripps would acquire the
Harte-Hanks newspaper operations, KENS-TV and KENS-AM directly for a cash price
of $775 million. If the tax status of Morris Trust transactions remains unclear
at December 31, 1997, the parties will call off the Morris Trust transaction
and proceed with the cash transaction. However, if it is clear at December 31,
1997 that Morris Trust transactions can be done, the parties will call off the
cash transaction and proceed with the Morris Trust transaction.
Commenting on the agreement, Franklin said, "We are very pleased to have
reached agreement to sell our newspapers and KENS-TV to an outstanding
communications company like E.W. Scripps. We have the highest respect for the
Scripps organization and believe that our people will have tremendous
opportunity to grow and advance in a company like theirs, which is focused
primarily on publishing and broadcasting. We are also pleased to have found a
single buyer for all our newspapers and television operations and are
optimistic about making a Morris Trust transaction work. Although it will be
sad to say goodbye to the many talented, dedicated people who have made our
newspapers and KENS industry leaders, this transaction will make it possible
for Harte-Hanks to focus on our more targeted direct marketing and shopper
businesses, which together represent about 75% of our revenues today. We are
convinced this is the right decision for all our stakeholders and look forward
to closing the transaction by the end of the year."
William R. Burleigh, president and chief executive officer of Scripps, said,
"This is the kind of deal we've been looking for. For an attractive price,
we're going to greatly increase the geographic diversity of our newspaper
division through the addition of five mid-sized markets in the vibrant Texas
economy, plus one growth market in South Carolina. The television station --
KENS in San Antonio, Texas -- has been one of the industry's strongest
franchises for many years. This also puts us back in business with the CBS
network, adding some diversity to our current lineup of ABC and NBC stations."
The closing is subject to Federal Communications Commission approval and other
customary conditions including, in the case of the Morris Trust transaction,
the effectiveness of a registration statement with the Securities and Exchange
Commission, the approval of Harte-Hanks stockholders, clarification of the tax
status of Morris Trust transactions and receipt of a tax ruling from the
Internal Revenue Service. Harte-Hanks' financial advisor, Donaldson, Lufkin &
Jenrette Securities Corporation, has delivered a fairness opinion to the
company's board of directors.
Based in San Antonio, Texas, Harte-Hanks owns and operates an international
direct marketing company that provides a full range of specialized, coordinated
and integrated services including response management/teleservices, database
marketing and marketing services. The company also owns and operates shoppers
that are zoned into 580 separate editions reaching almost 7 million households
in four major markets each week; six daily newspapers and approximately 25 non-
daily publications, including community newspapers and supplemental
publications; KENS-TV, the CBS affiliate in San Antonio and KENS-AM Radio.
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Based in Cincinnati, Ohio, the E.W. Scripps Company currently operates
television stations in nine markets and newspapers in 16 markets. Through its
entertainment division, the company operates United Media, a syndicator and
licensor of news features and comics; two television programming companies,
Scripps Howard Productions and Cinetel Productions; and a cable television
network, Home & Garden Television.
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FOR MORE INFORMATION, CONTACT: LARRY FRANKLIN (210) 829-9105
This release and other information on Harte-Hanks can be found on the World
Wide Web at http://www.harte-hanks.com
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COMPARISON CHART
PURCHASE PRICE FOR HARTE-HANKS NEWSPAPERS AND TELEVISION STATION
I. MERGER FOR STOCK EXAMPLE A EXAMPLE B EXAMPLE C
("MORRIS TRUST")
Purchase price $625 million $615 million $605 million
Debt assumed $200 million $100 million 0
Stock value $425 million $515 million $605 million
Shares issued* 10.6M - 13.0M 12.9M - 15.7M 15.1M - 18.5M
* exact number of shares determined by market price for Scripps during period
prior to closing, subject to a "collar" price of $32.72 to $40.
II. CASH PURCHASE $775 MILLION