SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
-----------------------
FORM 10-K/A
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 1997
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 1-10880
BET HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 52-1742995
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE BET PLAZA
1900 W PLACE, N.W., WASHINGTON, D.C. 20018-1211
(Address of principal executive offices)
(202) 608-2000
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH NAME OF EACH EXCHANGE ON
CLASS WHICH REGISTERED
------------- -------------------------
CLASS A COMMON STOCK, NEW YORK STOCK EXCHANGE
$.02 PAR VALUE
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 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 DEFINITIVE
PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF
THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. /_/
AS OF OCTOBER 17, 1997, THERE WERE 10,055,048 SHARES OF THE
REGISTRANT'S CLASS A COMMON STOCK, $.02 PAR VALUE PER SHARE (THE "CLASS A
STOCK"), OUTSTANDING. THE AGGREGATE MARKET VALUE OF SHARES HELD BY
NON-AFFILIATES OF THE REGISTRANT (BASED ON THE CLOSING PRICE OF SUCH
SHARES ON THE NEW YORK STOCK EXCHANGE COMPOSITE TAPE ON OCTOBER 17, 1997)
WAS APPROXIMATELY $340,371,000. AS OF OCTOBER 17, 1997, THERE WERE
1,831,600 SHARES AND 4,820,000 SHARES OF THE REGISTRANT'S CLASS B COMMON
STOCK (THE "CLASS B STOCK") AND CLASS C COMMON STOCK (THE "CLASS C
STOCK"), RESPECTIVELY, OUTSTANDING, NONE OF WHICH WERE HELD BY
NON-AFFILIATES OF THE REGISTRANT.
EXPLANATORY NOTE
This Amendment on Form 10-K/A to the Annual Report on Form 10-K of
BET Holdings, Inc. ("BET Holdings"or the "Company") for the fiscal year
ended July 31, 1997 (the "Form 10-K") sets forth the information required
by Part III (Items 10, 11, 12 and 13) of the Form 10-K. The Part III
information was originally incorporated into the Form 10-K by reference
to BET Holding's definitive proxy statement which, at the time the Form
10-K was filed, was expected to be filed within 120 days after the end of
the fiscal year covered by the Form 10-K. Since, however, no such
definitive proxy statement will be filed within the 120-day period
specified in General Instruction G to the Form 10-K, the Part III
information is being reported herein. Capitalized terms used and not
defined herein shall have the meanings ascribed to them in the Form 10-K.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
A. DIRECTORS OF THE COMPANY
The directors of the Company as of October 17, 1997 and their ages,
terms of office and a brief description of their business experience
during the past five years, including any positions with the Company, are
set forth below.
Director
Name Age Since Description
Robert L. Johnson 51 1991 Mr. Johnson founded Black Entertainment
Television ("BET"), the Company's
primary operating subsidiary, in
1979. Mr. Johnson has served as
President, Chief Executive Officer
and a director of BET since its
creation. Since 1991, Mr. Johnson
has served as the Chairman of the
Company's Board of Directors.
Since 1991, Mr. Johnson has also
served as Chief Executive Officer
of the Company and has served as
its President from 1991 until
March 1996. Mr. Johnson is also
the Chairman of District
Cablevision, Inc. ("DCI"), a
Washington, D.C. cable operating
company which he founded in 1980,
and has served as a director of
Liberty Media Corporation
("Liberty") since December 1991.
Since January 1994, Mr. Johnson
has served as a director of Hilton
Hotels Corporation.
John C. Malone, 56 1991 Since December 1996, Dr. Malone has
Ph.D. served as Chairman of the Board
and Chief Executive Officer of
Tele-Communications, Inc. ("TCI"),
the largest owner/operator of
cable television systems in the
United States. From 1973 through
November 1996, Dr. Malone served
as President and Chief Executive
Officer of TCI. Dr. Malone has
also served as the Chairman and a
director of Liberty since 1991,
and is a director of a variety of
other affiliates of TCI, The Bank
of New York and Discovery
Communications, Inc. Dr. Malone
has served as a director of BET
since 1979 and as its Chairman
from 1979 to 1991.
Herbert P. Wilkins, 55 1991 Since 1990, Mr. Wilkins has been
Sr. the President of Syncom Management
Company, Inc., formally, W&J
Management Company, Inc., which
manages a group of minority
oriented venture capital funds,
including Syndicated
Communications, Inc., Syncom
Capital Corporation, Syndicated
Communications Venture Partners
II, L.P. and Syndicated
Communications Venture Partners
III, L.P. From 1977 to 1989, Mr.
Wilkins served as President of
Syndicated Communications, Inc. He
has also been a director of DCI
since 1982. Of the funds managed
by Syncom Management Company,
Inc., Syndicated Communications,
Inc. is a shareholder of DCI. Mr.
Wilkins has served as a director
of BET, since 1983 and as a
director of Cowles Media Company
since 1992.
Delano E. Lewis 59 1994 Mr. Lewis has been President and
Chief Executive Officer of
National Public Radio since
January 1994. From January 1990 to
January 1994, Mr. Lewis served as
Chief Executive Officer of C&P
Telephone Company, a subsidiary of
Bell Atlantic. From July 1988 to
January 1990, Mr. Lewis was
President of C&P Telephone
Company. Mr. Lewis also serves as
a director of Colgate Palmolive,
Guest Services and Halliburton
Company.
Denzel Washington 42 1996 Mr. Washington is an Academy Award
winning and critically acclaimed
feature film actor. Mr. Washington
also serves as director of the
Sundance Institute.
Sheila Crump Johnson 48 1991 Mrs. Johnson has served as
Executive Vice President,
Corporate Affairs of the Company
since September 1992. From
September 1991 to September 1992,
she served as Vice President,
Corporate Affairs of the Company.
Since 1979 she has served as a
director of BET and, since 1990,
as Vice President, Corporate
Affairs of BET. Prior to 1990,
Mrs. Johnson was a lecturer and
author in the area of early
childhood music education.
Robert R. Bennett 39 1997 Since April 1997, Mr. Bennett has
served as President and Chief
Executive Officer of Liberty. Mr.
Bennett served as Liberty's
principal financial officer from
1990 to April 1997. Mr. Bennett
has also served as an Executive
Vice President of TCI. From 1987
to 1990, Mr. Bennett served as a
Vice President and Director of
Finance at TCI. Mr. Bennett has
also served in the Communications
Entertainment and Publishing
Division of the Bank of New York.
He also serves as a director of
Discovery Communications Inc.
Robert L. Johnson and Sheila Crump Johnson are married to one
another. No other family relationships exist among any executive officers
or directors of the Company.
There is a shareholders' agreement among the Company, Mr. Johnson,
TW/BET Holding Co. ("TW/BET") and LMC BET, Inc. dated November 6, 1991
which states that as long as Mr. Johnson, TW/BET and LMC BET, Inc. each
continue to hold not less than 1,500,000 shares of Class B Stock or Class
C Stock, each such shareholder will have the right to designate one
nominee to the Company's Board of Directors (the "Board") and that each
such other shareholder will use his or its best efforts to cause the
election of the nominee of such shareholder. In December 1995, the
Company repurchased 1,518,300 shares of Class A Stock and 1,518,300
shares of Class B Stock owned by TW/BET, after which TW/BET ceased to be
a shareholder and no longer has a nominee serving on the Board. Mr.
Bennett has been designated as LMC BET Inc.'s nominee to the Board. Mr.
Lewis was designated as Mr. Johnson's nominee to the Board in connection
with the Company's 1996 Annual Meeting of Shareholders.
B. EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company as of October 17, 1997 and
their ages and positions with the Company are set forth below.
Name Age Position
---- --- --------
Robert L. Johnson 51 Chairman of the Board of Directors, Chief
Executive Officer
Debra L. Lee 43 President and Chief Operating Officer
William T. Gordon, III 44 Executive Vice President, Chief
Financial Officer and Treasurer
James A. Ebron 43 Executive Vice President, Corporate Media
Sales
Sheila Crump Johnson 48 Executive Vice President, Corporate
Affairs and Director
Jefferi K. Lee 40 Executive Vice President, Network
Operations and Programming
Curtis N. Symonds 42 Executive Vice President, Affiliate Sales
and Marketing
Janis P. Thomas 42 Executive Vice President, Brand Marketing
and Licensing
The executive officers of the Company serve at the pleasure of the
Board of Directors. The following is a brief description for at least the
past five years of the current executive officers of the Company.
Mr. Johnson founded BET, the Company's primary operating subsidiary, in
1979. Mr. Johnson has served as President, Chief Executive Officer and a
director of BET since its creation. Since 1991 Mr. Johnson has served as the
Chairman of the Company's Board of Directors. Since 1991, Mr. Johnson also
served as Chief Executive Officer of the Company and has served as its
President from 1991 until March 1996. Mr. Johnson is also the Chairman of
District Cablevision, Inc., a Washington, D.C. cable system operating company
which he founded in 1980, and has served as a director of Liberty Media
Corporation since December 1991. Since January 1994, Mr. Johnson has served
as a director of Hilton Hotels Corporation.
Ms. Lee has served as President and Chief Operating Officer since
March 1996. Prior to that time Ms. Lee served as an Executive Vice
President of the Company since September 1992. From September 1991 until
May 1997, she served as the General Counsel and Secretary of the Company.
From September 1991 to September 1992, she served as a Vice President of
the Company. Ms. Lee has also served as Vice President and General
Counsel of BET since April 1986. In July 1991, she became the Secretary
of BET.
Mr. Gordon has served as Executive Vice President, Chief Financial
Officer and Treasurer since August 1993. From 1987 to 1993, Mr. Gordon was
a partner with the accounting firm of Price Waterhouse LLP. Mr. Gordon was
BET's audit partner on behalf of Price Waterhouse, LLP between 1989 and
early 1992. Mr. Gordon joined Price Waterhouse in 1975.
Mr. Ebron has served as Executive Vice President, Corporate Media
Sales since September 1995. He previously served as Executive Vice
President, Media Sales since 1992. Prior to that time, Mr. Ebron served
as Vice President, Network Sales of the Company from September 1991 to
September 1992 and as Vice President, Network Sales of BET from August
1983 until September 1991.
Mrs. Johnson has served as Executive Vice President, Corporate
Affairs of the Company since September 1992. From September 1991 to
September 1992, she served as Vice President, Corporate Affairs of the
Company. Since 1979 she has served as a director of BET and, since 1990,
as Vice President, Corporate Affairs of BET. Prior to 1990, Mrs. Johnson
was a lecturer and author in the area of early childhood music education.
Mr. Lee has served as Executive Vice President, Network Operations and
Programming since September 1992. Mr. Lee served as Vice President, Network
Operations of the Company from September 1991 to September 1992 and of BET
since September 1982.
Mr. Symonds has served as Executive Vice President, Affiliate Sales
and Marketing since September 1992. Mr. Symonds served as Vice President,
Affiliate Marketing of the Company from September 1991 to September 1992 and
of BET since July 1988.
Ms. Thomas has served as Executive Vice President, Brand Marketing and
Licensing since August 1997. She previously served as Executive Vice
President, Marketing and Merchandising from May 1996 to August 1997. Ms.
Thomas served as Executive Vice President, Direct Marketing and Advertising
Services from September 1992 to April 1996. Ms. Thomas served as Vice
President, Advertising Services of the Company from September 1991 to
September 1992 and of BET since September 1982.
C. OTHER SIGNIFICANT EMPLOYEES OF THE COMPANY
Certain other significant employees of the Company as of October
17, 1997 and their ages and positions with the Company are set forth
below.
Name Age Position
Louis Carr 41 Senior Vice President, National
Media Sales
Maurita Coley 41 Senior Vice President,
Network Operations and Programming
Byron Marchant 40 Senior Vice President and
General Counsel
Scott Mills 29 Senior Vice President, Business
Development
Mr. Carr has served as Senior Vice President, National Media Sales
since January 1995. Prior to that time, Mr. Carr served as Vice President,
Midwest Advertising from August 1992 to January 1995. From August 1989 to
August 1992, he served as Director, Midwest Advertising. He joined the
Company as an account executive in August 1986.
Ms. Coley has served as Senior Vice President, Network Operations and
Programming, since August 1995. Prior to that time, Ms. Coley served as
Senior Vice President, Legal Affairs of the Company from February 1993
through August 1995. Prior to February 1993, Ms. Coley was a partner with
the Washington D.C. law firm of Cole, Raywid and Braverman. Ms. Coley joined
Cole, Raywid & Braverman in November 1983.
Mr. Marchant has served as Senior Vice President and General Counsel
since May 1997. Mr. Marchant was a partner at Patton Boggs, L.L.P. from 1996
to 1997. Prior to 1996, Mr. Marchant was Senior Vice President and General
Counsel for TeleCommunications Systems, Inc. Mr. Marchant has also held
previous positions as senior legal advisor to Commissioner Andrew Barrett of
the Federal Communications Commission and as an attorney with the law firm
of Sidley & Austin.
Mr. Mills has served as Senior Vice President, Business Development
since September 1997. Prior to that time, Mr. Mills was a Vice President
with the investment banking firm of Lehman Brothers since 1993.
D. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
executive officers and directors, and persons who beneficially own more
than ten percent (10%) of the Company's stock, to file initial reports of
ownership and reports of changes in ownership with the Commission and the
New York Stock Exchange. Executive officers, directors and greater than
ten percent (10%) beneficial owners are required by Commission
regulations to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on a review of the copies of such forms furnished
to the Company and written representations from the executive officers,
directors and certain shareholders, the Company believes that its
executive officers, directors and greater than ten percent (10%)
beneficial owners complied with all applicable Section 16(a) filing
requirements, except for: (i) the failure of Mr. Wilkins to file a Form
5 for the fiscal year ended July 31, 1997 to reflect 5,113 shares of Class A
Stock which was distributed to him from Syndicated Communications Venture
Partners II, L.P. and (ii) a Form 3 which was filed by Mr. Lewis on October
6, 1997 which was originally due when Mr. Lewis first became a director of the
Company. The Form 3 filed by Mr. Lewis indicates that he does not
beneficially own any securities of the Company.
ITEM 11. EXECUTIVE COMPENSATION
A. COMPENSATION OF DIRECTORS
Directors of the Company currently receive $25,000 per annum as
compensation for attending meetings of the Board, reimbursement for
travel and out-of-pocket expenses incurred in connection with Board
meetings and otherwise with respect to their duties as directors.
As discussed in Item 12(C) below, the Board has appointed Mr.
Delano E. Lewis to serve on an independent committee (the "Independent
Committee") which was established to review, evaluate and report to the
Board its determination regarding an unsolicited proposal from Mr.
Johnson and Liberty Media Corporation to acquire all of the outstanding
shares of the Company's Class A Stock which they do not own at a price
per share of $48.00 cash. The Company has agreed to compensate Mr. Lewis
at the rate of $1,000 per Independent Committee meeting and to reimburse
him for all reasonable expenses incurred in connection with his
responsibilities thereto.
B. EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued for the last three complete fiscal years
ended July 31, 1997 to or on behalf of the Company's chief executive
officer and the four other most highly paid executive officers of the
Company during fiscal year 1997 for services in all capacities for the
Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
--------------------------------------------------- Awards
------------
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary($) Bonus($)(2) Compensation($)(3) Options (#) Compensation($)(4)
- ------------------ ---- --------- ----------- ------------------ ------------ ------------------
Robert L. Johnson (1) 1997 877,121 381,121 0 0 111,746
Chairman and CEO 1996 625,039 261,250 0 0 95,456
1995 581,182 288,691 9,820 172,000 169,730
Debra L. Lee 1997 383,809 210,500 0 0 4,750
President and 1996 227,771 243,925 0 0 4,750
Chief Operating 1995 196,419 134,774 7,998 85,000 4,620
Officer
William Gordon 1997 248,531 127,230 0 0 4,750
Executive Vice 1996 229,187 123,925 0 0 4,750
President and Chief 1995 193,769 133,684 9,365 85,000 4,620
Financial Officer
Janis P. Thomas 1997 244,655 125,324 0 0 5,195
Executive Vice 1996 225,614 123,925 0 0 5,079
President, Brand 1995 192,866 133,684 7,811 85,000 3,446
Marketing and
Licensing
James A. Ebron 1997 268,164 92,924 0 0 5,916
Executive Vice 1996 248,113 123,925 0 0 9,458
President, Media 1995 227,941 159,103 9,380 85,000 9,143
Sales
(1) Includes for Mr. Johnson director's fees paid for each fiscal year,
but excludes salary, director's fees, bonus, options and other
amounts paid or accrued to or on behalf of Mrs. Johnson in each
fiscal year.
(2) Includes Christmas bonuses for fiscal 1997, 1996 and 1995. Includes
for Mr. Johnson amounts earned under the President's Incentive Plan
for 1995. Includes for Messrs. Ebron and Gordon, and Ms. Lee and Ms.
Thomas amounts earned under the Executive Incentive Plan for 1995.
Includes amounts earned under a Special Retroactive Bonus program in
fiscal 1995 for Messrs. Ebron and Gordon, and for Ms. Lee and Ms.
Thomas.
(3) Includes for fiscal 1995 amounts reimbursed for the payment of taxes
on benefits.
(4) Includes the payment by the Company of annual premiums
of $111,746 paid during fiscal 1997, $95,456 during fiscal 1996 and
$169,730 paid during fiscal 1995 for Split-Dollar Life insurance
policies for Mr. Johnson. The Company is entitled to recover all
premiums paid by the Company from any amounts paid by the insurer on
such Split-Dollar Life insurance policies, and the Company has
retained a collateral interest in each policy to the extent of the
premiums paid by the Company with respect to such policy. Also
included are: (i) contributions in 1997 by the Company pursuant to
the Black Entertainment Television, Inc. 401(k) Plan for Mr. Ebron
($5,575), Ms. Lee ($4,750), Mr. Gordon ($4,750) and Ms. Thomas
($5,195); (ii) contributions in 1996 by the Company pursuant to the
Black Entertainment Television, Inc. 401(k) Plan for Mr. Ebron
($4,935), Ms. Lee ($4,750), Mr. Gordon ($4,750) and Ms. Thomas
($5,079); and (iii) contributions in 1995 by the Company pursuant to
the Black Entertainment Television, Inc. 401(k) Plan for Mr. Ebron
($4,620), Ms. Lee ($4,620), Mr. Gordon ($4,620) and Ms. Thomas
($3,446). The amount also includes in 1997, 1996 and 1995, below
market interest of $341, $4,523 and $4,523, respectively,
attributable to loans made by the Company to Mr. Ebron.
C. STOCK OPTION GRANTS IN FISCAL 1997
No stock options were granted during fiscal year 1997 to the named
executive officers.
D. AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND VALUE OF OPTIONS AT END
OF FISCAL 1997
The following table provides certain information concerning the
exercise of stock options by the named executive officers during fiscal
year 1997 and the number and value of unexercised options held by the
named executive officers as of July 31, 1997.
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
End of Fiscal 1997(#) End of Fiscal 1997($)(1)
---------------------------- ---------------------------
Shares Acquired Value
Name on Exercise Realized Exercisable Nonexercisable Exercisable Unexercisable
- ---- --------------- -------- ----------- -------------- ----------- -------------
Robert L. Johnson........ 0 0 115,200 68,800 $2,572,200 $1,530,800
James A. Ebron........... 10,000 $204,500 150,800 41,000 $3,826,000 $ 946,900
William Gordon........... 0 0 176,000 41,000 $4,443,398 $ 946,900
Debra L. Lee.............. 0 0 191,000 41,000 $4,859,850 $ 946,900
Janis Thomas............... 0 0 191,000 41,000 $4,859,850 $ 946,900
(1) These amounts represent the excess of the fair market value of the
Class A Common Stock of $40.00 per share as of July 31, 1997, above the
exercise price of the options.
G. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, Herbert P. Wilkins, Sr. and Delano E. Lewis served
as members of the Company's Compensation Committee. In addition to serving
on the Company's Compensation Committee, Mr. Wilkins and Mr. Lewis also serve
on the Company's Audit Committee.
Mr. Wilkins also serves as a director of TCI Great Lakes, Inc., one of
TCI's six regional operating companies, and is also a director and
stockholder of DCI.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
A. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Except as otherwise noted, the following table sets forth
information with respect to the beneficial ownership of the Company's
Class A Stock, Class B Stock and Class C Stock as of October 17, 1997 by
each person known to the Company to own beneficially more than 5% of the
outstanding shares of any class of the Common Stock. The persons
indicated below have sole voting and investment power with respect to the
shares indicated as owned by them, except as otherwise stated in the
notes to the table.
Class A Stock Class B Stock Class C Stock
------------------- --------------- --------------- Percent of vote of
Number of Number of Number of All Classes of
Name of Beneficial Owner Shares %(a) Shares % Shares % Common Stock(a)
Robert L. Johnson (b)........... 2,147,103(c) 20.9 0 0.0 4,820,000 100.0 65.6
Tele-Communications, Inc. (d)... 1,831,600(e) 18.2 1,831,600 100 0 0 26.3
GAMCO Investors, Inc.
et al. (f).................... 1,426,250 14.2 0 0.0 0 0.0 1.5
Capital Group Cos., Inc.
et al & affiliates (g)........ 662,100 6.6 0 0.0 0 0.0 0.9
(a) Shares issuable upon exercise of options that are exercisable
currently or within the next sixty days are deemed to be outstanding
for the purpose of computing the percentage ownership and overall
voting power of persons beneficially owning such options, but have
not been deemed to be outstanding for the purpose of computing the
percentage ownership or overall voting power of any other person.
(b) The business address for such person is One BET Plaza, 1900 W
Street, N.E., Washington, D.C. 20018.
(c) Includes 115,200 shares of Class A Stock which are subject to
purchase upon exercise of options, 103,600 shares of Class A Stock
owned beneficially by Sheila Crump Johnson, Mr. Johnson's wife, of
which 103,500 shares are subject to purchase upon exercise of
options. Mr. Johnson disclaims beneficial ownership of all shares
owned by his wife. Excludes Class A Stock issuable upon conversion
of Class C Stock, which is convertible into Class A Stock on a one
for one basis, and is entitled to 10 votes per Share, since such
Class C Stock is shown separately above. If such Class C Stock were
converted into Class A Stock, Mr. Johnson would beneficially own
46.2% of such Class A Stock.
(d) Based solely on information contained in Amendment No. 1 to TCI's
report on Schedule 13D dated September 15, 1997 relative to
ownership in the Company's Common Stock as of September 10, 1997.
The business address for TCI is Terrace Tower II, 5619 DTC Parkway,
Englewood, Colorado 80111. The record holder of these shares is LMC
BET, Inc., a wholly-owned subsidiary of Liberty. Mr. Bennett is an
Executive Vice President of TCI and the President and Chief
Executive Officer of Liberty. Mr. Bennett has been designated as LMC
BET, Inc.'s nominee to the Company's Board. John Malone, a director
of the Company, is the Chairman of the Board and Chief Executive
Officer of TCI.
(e) Excludes Class A Stock issuable upon conversion of Class B Stock,
which is convertible into Class A Stock on a one for one basis and
is entitled to 10 votes per Share, since such Class B Stock is shown
separately above. If such Class B Stock were converted into Class A
Stock, TCI would beneficially own 44.1% of the Class A Stock.
(f) Based solely on information contained in Amendment No. 9 to the
report on Schedule 13D dated November 19, 1997 relative to ownership
in the Company's Class A Stock as of November 17, 1997. The shares
listed consist of shares held by Gabelli Funds, Inc. (337,500),
GAMCO Investors, Inc. (1,078,250), Gabelli Asset Management Company
International Advisory Services Ltd. (3,000), Gabelli Associates
Limited (2,000), Gabelli International Limited (2,500) and Gabelli
International II Limited (3,000). Mr. Mario Gabelli is deemed to
have beneficial ownership of all such shares, and Gabelli Funds,
Inc. is deemed to have beneficial ownership of all such shares. The
business address for such persons is One Corporate Center, Rye, New
York 10580-1434. Of the 1,426,250 shares of Class A Stock reported,
each entity has the sole power to vote or direct the vote and sole
power to dispose or to direct the disposition of the securities
reported for it, either for its own benefit or for the benefit of
its investment clients or its partners, as the case may be, except
that: (i) GAMCO Investors, Inc. does not have authority to vote
16,000 of the reported shares; (ii) Gabelli Funds, Inc., which
currently provides management services for various funds which are
registered investment companies (the "Funds"), has sole dispositive
and voting power with respect to the 337,500 shares held by the
Funds, so long as the aggregate voting interest of all joint filers
does not exceed 25% of their voting interest in the Company and in
that event, each of the Funds shall respectively vote that Fund's
shares; (iii) at any time, each Fund may take and exercise in its
sole discretion the entire voting power with respect to the shares
held by such Fund under special circumstances such as regulatory
considerations; and (iv) the power of Mr. Gabelli and Gabelli Funds,
Inc. is indirect with respect to the shares beneficially owned
directly by the other entities.
(g) Based solely upon information contained in their report on Schedule
13G dated February 12, 1997 filed jointly by The Capital Group
Companies, Inc., Capital Research and Management Company and SMALL
CAP World Fund, Inc. relative to ownership in the Company's Common
Stock as of February 12, 1997. Capital Research and Management
Company, a wholly owned subsidiary of The Capital Group Companies,
Inc., serves as investment adviser to SMALLCAP World Fund, Inc. The
business address for such person is 333 South Hope Street, Los
Angeles, California 90071. The Capital Group Companies, Inc. and
Capital Research and Management Company both have dispositive power
over the 662,100 shares and SMALLCAP World Fund, Inc. has sole
voting power over the 662,100 shares.
B. SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of the Common Stock by each of the Company's
directors and nominees, each executive officer named in the Summary
Compensation Table, and by all executive officers, directors and nominees
of the Company as a group as of October 17, 1997. Under the rules of the
Securities and Exchange Commission, generally, a person is deemed to be a
"beneficial owner" of a security if he has or shares the power to vote or
direct the voting of such security, or the power to dispose or to direct
the disposition of such security. Thus, more than one person may be
deemed a beneficial owner of the same security. Except as otherwise
indicated, each person listed below has informed the Company that such
person has (i) sole voting and investment power with respect to such
person's shares of stock, except to the extent that authority is shared
by spouses under applicable law, and (ii) record and beneficial ownership
with respect to such person's shares of stock.
Class A Stock Class B Stock Class C Stock
------------------- --------------- -----------------
Number of Number of Number of
Name of Beneficial Owner Shares %(a) Shares % Shares %
- -------------------------------------------------------------------------------------------
Robert L. Johnson (b).......... 2,147,103 20.9 0 * 4,820,000 100.0
William Gordon (c)............. 176,842 1.7 0 * 0 *
Sheila Crump Johnson (d)....... 103,600 1.0 0 * 0 *
John C. Malone, Ph.D. (e)...... 0 * 0 * 0 *
Robert R. Bennett (f).......... 0 * 0 * 0 *
Denzel Washington.............. 0 * 0 * 0 *
Herbert P. Wilkins, Sr. (g).... 5,113 * 0 * 0 *
Delano E. Lewis................ 0 * 0 * 0 *
James A. Ebron (h)............. 150,800 1.5 0 * 0 *
Debra L. Lee (i)................ 191,550 1.9 0 * 0 *
Janis P. Thomas (j)............. 191,100 1.9 0 * 0 *
All Directors, Officers and
Nominees as a Group (k)...... 3,173,303 28.1 0 * 4,820,000 100.0
- -----------------
* Less than one percent (1%).
(a) Shares issuable upon exercise of options that are exercisable
currently or within the next sixty days are deemed to be
outstanding for the purpose of computing the percentage ownership
and overall voting power of persons beneficially owning such
options, but have not been deemed to be outstanding for the
purpose of computing the percentage ownership or overall voting
power of any other person.
(b) Includes (i) 115,200 shares of Class A Stock which are subject to
purchase upon exercise of options and (ii) 103,600 shares of
Class A Stock owned by Sheila Crump Johnson, Mr. Johnson's wife,
of which 103,500 shares are subject to purchase upon exercise of
options. Mr. Johnson disclaims beneficial ownership of all shares
owned by his wife. Excludes Class A Stock issuable upon
conversion of Class C Stock, which is convertible into Class A
Stock on a one for one basis, and is entitled to 10 votes per
share, since such Class C Stock is shown separately above. If
such Class C Stock were converted into Class A Stock, Mr. Johnson
would beneficially own 46.2% of such Class A Stock. By virtue of
his ownership of the Class A Stock and the Class C Stock, Mr.
Johnson is entitled to 65.6% of the vote of all classes of the
Company's common stock.
(c) Includes 176,000 shares of Class A Common Stock subject to
purchase upon exercise of options by Mr. Gordon. The remaining 842
shares are directly owned by Mr. Gordon.
(d) Excludes shares of Common Stock owned by Robert L. Johnson, Mrs.
Johnson's husband, as to which Mrs. Johnson disclaims beneficial
ownership. Includes 103,500 shares of Class A Common Stock which
are subject to purchase upon exercise of options. The remaining
100 shares are directly owned by Mrs. Johnson.
(e) Dr. Malone is a director and Chairman of the Board of Liberty, a
wholly owned subsidiary of TCI. Dr. Malone is also Chairman of
the Board and Chief Executive Officer of TCI. Dr. Malone
disclaims beneficial ownership of 1,831,600 shares of Class A
Stock and 1,831,600 shares of Class B Stock owned of record by
LMC BET, Inc. (a wholly-owned subsidiary of Liberty Media
Corporation) and beneficially owned by TCI, none of which have
been attributed to him in the table.
(f) Mr. Bennett is an Executive Vice President of TCI and the
President and Chief Executive Officer of Liberty. Mr. Bennett
disclaims beneficial ownership of 1,831,600 shares of Class A
Stock and 1,831,600 shares of Class B Stock owned of record by
LMC BET, Inc. (a wholly-owned subsidiary of Liberty Media
Corporation) and beneficially owned by TCI, none of which have
been attributed to him in the table.
(g) Includes 4,436 shares as to which Mr. Wilkins shares voting and
investment power with two limited partners of Syndicated
Communications Venture Partners II, L.P.
(h) Includes 150,800 shares of Class A Stock subject to purchase upon
exercise of options by Mr. Ebron.
(i) Includes (i) 191,000 shares of Class A Stock subject to purchase
upon exercise of options by Ms. Lee; (ii) 100 shares of Class A
Stock held by her spouse, with respect to which Ms. Lee disclaims
beneficial ownership; and (iii) 100 shares of Class A Stock held
by an investment club in which Ms. Lee is a member, with respect to
which Ms. Lee disclaims beneficial ownership. The remaining 350
shares are directly owned by Ms. Lee.
(j) Includes 191,000 shares of Class A Stock subject to purchase upon
exercise of options by Ms. Thomas. Ms. Thomas shares voting and
investment power in the remaining 100 shares with her spouse.
(k) Excludes shares of Class A Stock and Class B Stock which have not
been attributed to any director in the table and Class A Stock
issuable upon conversion of Class C Stock. Includes 1,238,195
shares of Class A Stock, which are subject to purchase upon
exercise of options. Ownership of the Class A Stock and the Class
C Stock by the directors, officers and nominees as a group
entitles them to 66.0% of the vote of all classes of the
Company's common stock.
C. CHANGES IN CONTROL - - PROPOSED OFFER
On September 10, 1997 the Board of Directors received an
unsolicited proposal from Mr. Johnson and Liberty Media Corporation to
acquire, through an acquisition corporation to be formed by them, all of
the outstanding shares of the Company's Class A Stock which they do not
own at a price per share of $48.00 cash (the "Offer").
Mr. Johnson and Liberty are holders of approximately 38.67% of the
Company's outstanding shares of Class A Stock. However, Mr. Johnson owns
100% of the Class C Stock and Liberty owns 100% of the Class B Stock.
Such Class B Stock and Class C Stock are convertible into Class A Stock
on a one for one basis. If such Class B Stock and Class C Stock were
converted into Class A Stock, Mr. Johnson and Liberty would beneficially
own 62.8% of the Company's outstanding shares of Class A Stock. Because
of the voting power attributable to the Class B Stock and the Class C
Stock beneficially owned by Mr. Johnson and Liberty, the shares
beneficially owned by Mr. Johnson and Liberty constitute approximately
91.8% of the outstanding voting power of all of the outstanding shares of
Company.
At a meeting held on September 15, 1997, the Board appointed an
independent committee, consisting of Mr. Delano E. Lewis, to review,
evaluate, and report to the Board its determination regarding the Offer.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
AGREEMENTS WITH CABLE AFFILIATES
LMC BET, Inc. (a wholly-owned subsidiary of Liberty), one of the
Company's shareholders, is an affiliate of TCI. TCI controls a number of
cable affiliates with which BET has entered into affiliation agreements
pursuant to which such cable affiliates carry the BET Cable Networks.
BET's affiliation agreements with both related and unrelated cable
affiliates are substantially similar. The Company earned approximately
$16,382,000 from cable operators affiliated with Liberty in fiscal 1997.
These affiliates accounted for approximately 24% of BET Cable Network's
subscribers and 28% of subscriber fee revenues in fiscal 1997. In
addition, Mr. Johnson, who is a stockholder and director of the Company,
and Mr. Wilkins, who is a director of the Company, are also directors and
stockholders of DCI, the cable system serving Washington, D.C. DCI is
operated by Satellite Services, Inc. ("SSI"), an affiliate of Liberty,
with whom BET has an affiliation agreement. DCI offers BET Cable Network
programming to its subscribers. A pro rata portion of the subscriber fee
revenues received by BET under its contract with SSI is attributable to
the carriage of the BET Cable Network by DCI.
LOANS TO MANAGEMENT
In December 1991 and May 1992, the Company made loans to Mr. Ebron,
an executive officer of the Company, in the amounts of $75,000 and
$100,000, respectively. The loans bear interest at a rate of 5% per
annum, payable monthly, and were originally due on August 1, 1995. The
Company granted Mr. Ebron an extension for the repayment of the loans
which required annual payments of approximately $50,000 during fiscal
years 1997 and 1998. The largest amount outstanding during fiscal 1997
was $111,749. As of July 31, 1997, $58,573 (including accrued and unpaid
interest) was outstanding under the loan. As of October 17, 1997, $1,550
(including accrued and unpaid interest) remained outstanding under the
loan.
AGREEMENTS WITH RELATED PARTIES
In February 1994, BET Films, Inc., a subsidiary of the Company, and
QE + Limited, an indirect wholly-owned subsidiary of TCI, and Live
Entertainment, Inc., an unrelated third party, entered into a partnership
agreement establishing BET Film Productions, a joint venture which plans
to develop, produce and distribute motion pictures targeted primarily to
minority audiences. Under the joint venture agreement, each of the
parties owns a one-third interest in the joint venture and has agreed to
contribute up to $5 million as a capital contribution to the joint
venture. To date $1,050,000 has been funded by the Company towards the
capital contribution obligation for the joint venture.
In December 1996, the Company and Encore Media Corporation, a
wholly-owned subsidiary of Liberty, formed a joint venture, BET
Movies/Starz!3, LLC, for the purposes of the creation, operation,
programming, packaging, distribution, advertising, sales, exhibition and
marketing of the BET Movies/Starz!3 cable television programming service,
a pay TV channel within the Starz!-Encore 8 multiplex showcasing Black
film artists and targeted to African-American viewers. To date $4,144,000
has been funded by the Company towards the capital contribution
obligation for the joint venture. Pursuant to the terms of a term sheet
executed in September 1997, the venturers agreed to modify the venture
such that the Company is not required to make additional equity
contributions to the venture. However, the Company is required to loan
the venture up to $4 million through December 31, 1997.
During December 1995, the Company entered into a loan agreement
with R&S PCS, Inc., an entity wholly owned by the Company's Chairman and
Chief Executive Officer, Robert L. Johnson, whereby the Company agreed to
loan R&S PCS, Inc. up to $10 million on a revolving basis. Loan advances
bear interest at the prime lending rate plus 2% and are secured by 40,000
shares of the Company's common stock owned by Mr. Johnson. The largest
amount outstanding during fiscal 1997 was $8,933,000. At July 31, 1997,
advances aggregating $8,933,000 were outstanding. As of July 31, 1997
$9,933,000 (including accrued and unpaid interest) was outstanding under
the loan. Substantially all loan advances were used by R&S PCS, Inc. to
establish eligibility to participate in the Broadband PCS C Block Auction
in which R&S PCS, Inc. was a successful bidder. The Company is currently
engaged in negotiations to acquire an equity interest in R&S PCS, Inc.
TRANSACTIONS WITH MANAGEMENT
During May 1996, the Company purchased promissary notes in the
aggregate principal amount of $2.2 million from Mr. Johnson. In
connection with this transaction, Mr. Johnson guaranteed repayment of
these notes plus certain other related notes already held by the Company.
All notes receivable guaranteed by Mr. Johnson bear interest at the prime
lending rate plus 2%, payable monthly; are secured by certain real
property; and mature at varying dates through the Company's fiscal year
ending July 31, 2001. Interest income earned from notes receivable
guaranteed by Mr. Johnson was $.4 million during fiscal year 1997.
In 1993 the Company acquired property known as 63236 Beryl Road,
Alexandria, Virginia. Since that time the property has deteriorated into
a state of significant disrepair and the Company has been unable to sell
it. In July 1997, the Board accepted an offer from Mr. Gordon and another
officer of the Company to purchase the property for the sum of $70,000.
The $70,000 purchase price has been paid in its entirety.
AGREEMENT AMONG STOCKHOLDERS
There is a shareholders' agreement among the Company, Mr. Johnson,
TW/BET and LMC BET, Inc. pursuant to which Mr. Johnson, TW/BET and LMC
BET, Inc. would have certain rights to require that the Company file a
registration statement with the Securities and Exchange Commission (the
"Commission") to permit them to effect a public offering of their shares
of Class A Stock. In December 1995, the Company repurchased all of the
Class A and Class B Common Stock owned by TW/BET at that time.
Pursuant to the agreement between the Company and the remaining
holders of such registration rights, the holders may under certain
circumstances request registration of their shares of Class A Stock and,
subject to certain minimum size conditions, the Company generally will be
required to use its best efforts to effect any such registration on
demand. The Company is not generally required to effect more than two
such demand registrations for each such holder of Class B Stock and each
such holder of Class C Stock. The holders of Class B Stock and the
holders of Class C Stock also have certain "piggyback" rights that
require the Company to notify them and to include all of the shares of
Class A Stock requested to be included by such holders in any
registration statement that the Company proposes to file with the
Commission to register any of its securities, either for its own account
or for the account of other stockholders, with certain exceptions.
Subsequently, the Company has further agreed to pay certain costs
associated with registering the shares of Class A Stock of such
shareholders (other than expenses of counsel and experts retained by such
shareholders and expenses of underwriting that are customarily paid by
selling shareholders, such as underwriting commissions attributable to
shares being sold by such shareholders).
In addition, each of such shareholders (a) has the right to
designate one nominee to the Board as long as such shareholder holds at
least 1,500,000 shares of either Class B Stock or Class C Stock and (b)
has agreed to use his or its best efforts to cause the election of each
other such shareholder's nominee.
PROPOSED OFFER
For information concerning the Offer from Mr. Johnson and Liberty,
see Item12(C).
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BET HOLDINGS, INC.
By: /s/ Robert L.Johnson
Robert L. Johnson
Chairman of the Board and
Chief Executive Officer
Date: November 28,1997
Pursuant to the requirements of the securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert L. Johnson Chief Executive Officer November 28, 1997
- --------------------------- and Executive Officer
Robert L. Johnson
/s/ William T. Gordon, III Chief Financial Officer November 28, 1997
- --------------------------- and Treasurer (Principal
William T. Gordon, III Financial and Accounting
Officer)
/s/ Robert R. Bennett Director November 28, 1997
- ---------------------------
Robert R. Bennett
/s/ Sheila Crump Johnson Director November 28, 1997
- ---------------------------
Sheila Crump Johnson
/s/ Delano E. Lewis Director November 28, 1997
- ---------------------------
Delano E. Lewis
/s/ John C. Malone Director November 28, 1997
- ---------------------------
John C. Malone
/s/ Denzel Washington Director November 28, 1997
- ---------------------------
Denzel Washington
/s/ Herbert P. Wilkins, Sr. Director November 28, 1997
- ---------------------------
Herbert P. Wilkins, Sr.