sign in sign up
<<
Home , Young Broadcasting

Looking into the future of broadcast television $ 4 0 0 G rowth of Young $ 3 5 0 B ro a d c a s t i n g

in millions $ 3 0 0

Net Revenue B roadcast Cash Flow $ 2 5 0

$ 2 0 0

YOUNG BROADCASTING INC. $ 1 5 0 ( N A S D A Q : Y BT V A ) was founded in 1986 b y Vincent and Adam Young to acquire $ 10 0 it first two broadcast television stations. T h rough an emphasis on targ e t e d $ 5 0 marketing, strong local presence in its 0 communities, aggressive cost contro l s , ‘ 9 6 ‘ 9 7 ‘ 9 8 ‘ 9 9 ‘ 0 0 and a disciplined acquisition stra t e g y, The Company has grown ra p i d l y. To d a y, The Company owns and operates twelve Market Prices of b roadcast television stations opera t i n g Common Stock in important Eastern, Midwestern and H i g h L o w Western growth regions of the and now reaches appro x i m a t e l y F iscal 2000 $ $ 11.3% of the nation. Six of these 1Q 5 0 . 0 0 1 9 . 0 0 stations are affiliated with the ABC 2Q $2 5 . 6 9 $1 8 . 3 8 Television Network, three are affiliated with the CBS Television Network, two 3Q $3 7 . 1 9 $2 6 . 0 6 a re affiliated with the NBC Te l e v i s i o n Network, and one is an independent. 4Q $3 5 . 9 4 $2 4 . 7 5 The largest of these is KRON-TV in S a n F rancisco. Curre n t l y, the only H i g h L o w unaffiliated station, KCAL-TV in , CA, is the largest independent F iscal 1 9 9 9 $ $ b roadcast television station in America 1Q 4 5 . 6 3 3 9 . 5 0 and the only independent VHF station 2Q $ $ o p e rating in the Los Angeles market. 4 4 . 3 8 3 7 . 7 5 Young Broadcasting currently achieves 3Q $6 5 . 0 0 $4 0 . 0 0 b roadcast cash flow margins that are among the highest in the country. 4Q $5 2 . 0 6 $3 8 . 6 3 Chairman’s Letter Letter to Shareholders 2

KRON-TV Overview We saw opportunity and seized it 6

Station Profiles C o n t e n ts Stations Report 10

Board of Directors 12 Financial Data Selected Financial Data 13 Management’s Discussion 14 Consolidated Statements 26 Notes to Financial Statements 32 Report of Independent Accountants 48

Corporate Information inside back cover

1 SHAREHOLDERS LETTER Dear Share h o l d e rs :

n your behalf, the following interview was conducted with Vincent J.Young, Chairman of the OBoard and Chief Executive Officer. Now that Young Broadcasting Inc. is entering its third decade, how do you view the television industry? My attitude towards broadcast television is as positive as Vincent J. Yo u n g Adam Young ever. We started Young Broadcasting Inc. (YBI) because we Chairman & Tre a s u re r believed in the significant growth potential of television Chief Executive Officer broadcasting in America. That belief has been confirmed by the dramatic increase in the value of broadcast television stations over the years.

Why do you believe broadcast television stations are so strongly positioned in today’s multimedia B roadcast Cash marketplace? Flow Composi t i o n Year ended 12/31 / 0 0 Br oadcast television remains the strongest existing medium by affiliation for both advertisers and prog ra m m e r s to reach the large s t audience. This remains true even given the prog re s s i v e 14.1% C B S er osion in total household viewership. Local stations tend to be the community’s strongest marketing platform — on e that constantly grows more creative and more effective in 34.5 % N B C the ability to connect local prog r amming and advertising with their desired audiences. Our local news prog ra m s 29.3% A B C continue to show strong positive rating trends in contras t to the erosion of the network audience that prime time pro g r amming is experiencing. 22.1% I n d e p e n d e n t

2 Prepared for what’s ahead. S h a re h o l d e rs Letter c o n t i n u e d . . .

What role does local advertising play in your overall strategy? As a company, we have devoted our energies to localism in programming and localism in terms of our outreach to the advertising community. We have been very successful in following this strategy. We are also confident that local stations still remain the most efficient and effective vehicle to reaching target audiences for the marketers of products and services.

How important is a station’s brand? We have devoted significant time and resources to the development and strengthening of the brands in the markets we serve. Although we have a number of network affiliations, the call letters of a station, its brand, resonates very strongly in the community. Brand identity is particu- larly important in Los Angeles and San Francisco where KCAL-TV and KRON-TV enjoy a high degree of loyalty and awareness.

Do you expect digital television to be a positive change for stations and will it be costly? Although still largely in the formative stage, many stations are developing plans for utilizing digital band- width and launching an impressive range of e-commerce business applications. The potential returns on these projects are considerable.

Yes, the initial expenditures may be steep, but we have good reason to believe the effort will pay off. We are simply looking to leverage cross-platform media opportu- nities through one of the strongest assets stations already possess: longstanding, strong ties to local advertisers and viewers.

4 “We can make our opinions heard and participate in rewriting the rules for the next century of broadcasting”

Ar e you concerned that KRON-TV’s network affiliation research. These contributions are valuable to viewers, and agreement ends December 31, 2001? stations should be proud of their desirability and freedom to pursue such worthwhile goals. No. It has been stated from the beginning that YBI has always been pre p a red to operate the station as an How does the current state of relations between independent. We have every intention of maintaining and the networks and their affiliates influence your growing the audience that has been very loyal to KRON-TV. enthusiasm for the business? We do recognize that in order to achieve that, we must continue to offer our viewers compelling programming Well, my unwavering optimism comes from the realization which is of the greatest interest to them. This may result in that while the networks would like to change the rules of some increase in operating cost, but our goal is to offset the game, we don’t need to passively stand by and have the that occurrence with both traditional and innovative new new playbook handed to us. We can make our opinions means in which to increase revenue flow. We have been heard and participate in rewriting the rules for the next successful in this strategy with out Los Angeles station, century of broadcasting — if we as station owners can rise KCAL-TV, the largest independent in America. to this challenge. The process certainly won’t be smooth. Networks in general seem to have forgotten both their Is community outreach still an important component need for us and their need to work with us. But, they have of a station’s success? to be reminded that the broadcasting industry’s business culture is still deeply embedded in localism. Our station franchises — a phrase that I use to refer to the brand each of us has worked diligently to create in our The future for broadcasting? respective markets — are more in sync with our local communities than ever before. We have increased spending We believe that the premiere position commercial broad- to expand local news, weather and sports coverage, and we casting stations hold today will increase further — so we see have never done a better job. Our neighborhood philan- an even brighter picture for the future. thropic involvement has deepened. In many cities, stations are community leaders and terrific corporate citizens. They Sincerely, serve their areas through a variety of activities ranging from public service announcements or a televised town hall meetings, to running aggressive outreach programs for Vincent J. Young needy families or sponsoring fund ra i s e rs for cancer Chairman and Chief Executive Officer

5 KRON-TV Acquisi t i o n

We saw opportunity. We seized it. Our station franchises are more in tune with o u r local communities than ever before .

oung Broadcasting is committed to serving local communities with news, information, original Y programming and support of charitable endeavors. Paul Dinovitz This spirit of ‘localism’ is embraced at KRON-TV in San G e n e ral Manager of KRON-TV Francisco, which was acquired by Young Broadcasting from San Francisco, CA The Chronicle Publishing Company on June 26, 2000. KRON-TV is a perfect addition to the company’s family of stations. KRON-TV has successfully served the needs of the Bay area community for over 50 years. With the acquisition came certain key developments to make the station even Paul ‘Dino’ Dinovitz was hired as stronger and prepare it for growth in the years ahead. President and General Manager KRON-TV’s original, locally produced programming also to oversee KRON-TV and Bay-TV continued to resonate strongly with Bay area viewers. operations. Dino joined KRON-TV These series include: Bay Area Backroads, the top-rated from Hearst-Argyle stations locally produced entertainment program in the Bay Area; KCRA-TV (NBC) and KQCA-TV (WB) Bay Cafe, the area’s popular food magazine show; and the in Sacramento, where he was High School Sports Show. President and General Manager

In addition to these programs, KRON-TV sponsors approxi- of both outlets. Dino has more than mately 40 community and performing arts events every 20 years of station management ye a r , including festivals, runs to benefit charities, performing experience running leading arts series, and many more. Along with the Rubber Ducky affiliated and independent stations Derby fund raiser for the Children’s Hospital Oakland, the in major markets. San Francisco Jazz Festival, and the National Multiple Sclerosis Society Read-a-thon, these activities include:

6 Landing the big one. To compliment Dino, a strong management team has been put in place, which includes: KRON-TV Acquisi t i o n c o n t i n u e d . . . C raig Marrs Craig Marrs as VP and Station Vice President and Manager. For the last 27-years KRON-TV and The — in support of Station Manager he has been involved with local the Season of Sharing Fund — feature stories about and news and people in need. Collectively they encourage area residents the Internet. to donate to the Fund that helps area families and Mark Berryhill Mark Berryhill as Vice President of i n d i v i d u a l s. Ty p i c a l l y, these are low-income people Vice President of News News from WMEX Radio, Boston, w h o have one-time emergency needs that can’t be where he was President and GM. met through other resources. Through a network of 120 He also served as News Director at community agencies, assistance to alleviate financial WHDH-TV, Boston, KDKA-TV, stress on a short-term basis is provided. Pittsburgh and KGAN-TV, Beating the Odds, hosted by KRON-TV anchor/reporter Cedar Rapids. Wendy Tokuda, is a special on extraordinary high school Ka ren Oro f i n o Karen Orofino was promoted to students who are rising above tough circumstances to G e n e ral Sales Manager Ge n e r al Sales Manager for KRON-TV. succeed in school and life. KRON-TV and the Peninsula She joined the station in 1994 as Community Foundation established the Beating the Odds local sales manager after a career in Fund to help low-income, high-risk Bay Area high school national television spot sales. students pay for college. Pat Pa t t o n Pat Patton as Program Director. P ro g ram Dire c t o r During his nearly three decades in KRON-TV has every intention of maintaining and growing station management, Pat served as the audience that has been very loyal to the station Director of Programming at ABC during the decades it has served the San Francisco market. affiliate KMBC and UPN affiliate In order to achieve that goal, KRON-TV will continue to KCWE. His career began with CBS’ offer its viewers programming which is of the greatest KPIX-TV in San Francisco. interest to them. Thanks to the experience involved in Already these appointments are acquiring and running KCAL-TV in Los Angeles, the biggest paying dividends. During the impor- independent station in the U.S., the company has a strong tant 2000 November ‘sweeps period,’ u n d e rstanding of how to successfully operate and KRON-TV captured First Place finishes increase the revenue base of a non-affiliated station in a for its ‘NewsCenter 4’ programs at major West Coast market. To help KRON-TV remain the 5:00 a.m., 6:00 a.m., 11:30 a.m. and No. 1 news station in San Francisco, and also in sign-on to 11:00 p.m. and posted ties for #1 in sign-off audience, the company is exploring the application audience share at 4:00 p.m., 5:00 of many of the elements that have served it well with p.m. and 6:00 p.m. KCAL-TV, including an emphasis on news and special community-based local programming.

8 Suiting the desires of many. Providing meaningful content.

In addition to KRON-TV, all of the stations in the Young Broadcasting group have successfully branded themselves in their markets over the years by offering award-winning newscasts, original, locally- produced programming, and through on- and off-air support of causes important to the community and its residents. Station Report perform eight hours of community service. KELO won a National PSA Emmy award for this program and eight 1st Young Broadcasting Gro u p place awards from The Associated Press. WA TE-TV (Knoxville, TN) received three Edward R. Murrow WKRN-TV (Nashville, TN) rated America’s third best Awards for writing, use of video and sports reporting. newscast, received the National Headliners Award and two Knoxville area charities were recipients over 283,000 Edward R. Murrow Awards. The WKRN produced two-hour pounds of food and $103,000 from WATE. The station special, Calls For Kids, which raised $200,000 for the also participated in the American Cancer Society’s ‘Relay Nashville Ronald McDonald House. For Life.’ WTEN-TV (Albany, NY) was recognized for it’s Children’s KWOC-TV (Quad City, Iowa) won 1st place for Best Hospital Telethon and recently added a weekly news Feature and 2nd Place for Best Spot News by the Illinois segment entitled Educator of the Week to its ongoing Associated Press Broadcasters Association. The station also Children First campaign. The station celebrated its 17th participated in the Quad City Race for the Cure and year sponsoring the Second Harvest Food Bank. the Student Hunger Drive collected over 800,000 pounds WRIC-TV (Richmond, VA) was recognized by the of food. Congressional Coalition on Adoption for its weekly news WTVO-TV (Rockford, IL) received honorable mention feature, A Child in Waiting. WRIC is also involved in Toys for for their sports feature entitled Cubs 2000. They were Tots, where its effort included PSAs, news reports and live a l s o p resented with an Award of Distinction by the cut-ins from sponsor’s donation points. Communicator Awards for their locally produced half-hour W B AY-TV (Green Bay, WI) was first in ratings with a health special Time to Breathe, which was the result of a market share of 33% and was number one for every news- community health study on chronic lung disease. cast in 2000. The station won awards for excellence from K L F Y-TV (Lafayette, LA) won Station of the Year in 2000 The Associated Press and first place for Best Spot News and an award for community service from the Louisiana coverage in medium size markets from the Wisconsin Association of Broadcasters. The Associated Press awarded B ro a d c a s t e rs Association. Also, WBAY ’s telethon for them Best Story, Best Reporter, Best Weathercast, and Best Cerebral Palsy Inc. raised $750,000. Spot News. KLFY also raised more than $11 million in WLNS-TV (Lansing, MI) won an award from the donations for Food for Families, The MDA Telethon and Michigan Association of Broadcasters for the station’s Acadian Village. coverage of the East Lansing Riots and 10 Associated Press KCAL-TV (Los Angeles, CA) won nine Emmys for news awards. The station was also honored for being the home and sports coverage as well as three Golden Mikes. Its public of the Muscular Dystrophy Telethon for the past 30 years. service campaign, From the Streets, provides assistance and KELO-TV (Sioux Falls, SD) instituted a Tradition of advice to the community on various subjects. KCAL also Caring public service program where each employee helps received several awards at the Muscular Dystro p h y produce a 30-second spot for a worthy cause as well as Broadcast Awards.

11 B o a rd of Dire c t o rs & Executive Officers Left to right: James A. Morgan, Leif Lomo, David Lee, Vincent J. Young, Adam Young, Alfred J. Hickey, Ronald J. Kwasnick, Robert L. Winikoff, Deborah McDermott, Bernard F. Curry

12