Note 2: Acquisitions, Dispositions and Discontinued Operations

In October 1999, the Company sold its cable operations to Cox Communications, Inc., for approximately $1.4 billion in cash. The Company recorded a gain of $799 million (net of income taxes of $510 million) which is subject to resolution with the buyer of certain post-closing adjustments relating to working capital and income tax matters. The following results of the Cable Segment have been presented as income from discontinued operations in the accompanying consolidated statements of operations:

Immediately following the sale, approximately $735 million of the proceeds were used to repay all amounts then outstanding under the Company’s revolving credit agreements and to terminate the associated interest rate swaps (see Note 4) and the remaining proceeds of approximately $665 million were invested, primarily in prime-rated commercial paper.

In January 1998, the Company acquired, for approximately $93 million, the assets of the Bristol Herald Courier (Bristol), a daily newspaper in southwestern Virginia, and two affiliated weekly newspapers. In July 1998, the Company acquired, for approximately $40 million, the assets of the Hickory Daily Record (Hickory), a daily newspaper in northwestern North Carolina. Both transactions were accounted for as purchases and have been included in the Company’s consolidated results of operations since their respective dates of acquisition. Purchase price has been allocated to the assets acquired based on estimated fair values. The amount allocated to identifiable intangibles (principally subscriber lists) was $8 million, to other assets, net (principally property, plant and equipment) was $17 million, and to excess cost over the net assets acquired was $108 million. Also, in June 1998, the Company completed the sale of its Kentucky newspaper properties for approximately $24 million. The Bristol and Hickory acquisitions were funded with borrowings under an existing revolving credit facility (see Note 4), coupled with proceeds from the disposition of the Kentucky newspaper properties. Assuming the acquisitions had occurred at the beginning of the year, there would be no significant difference between actual and pro forma results of operations.

In January 1997, the Company acquired Park Acquisitions, Inc., parent of Park Communications, Inc. (Park). The acquisition included ten network affiliated television stations, 28 daily newspapers and 82 weekly newspapers. The total consideration approximated $715 million, representing the purchase of all the issued and outstanding common stock of Park, the assumption of liabilities (primarily $476 million of Park’s high coupon long-term debt) and transaction costs. In early February 1997, the Company redeemed Park’s high coupon debt and recorded an extraordinary charge of $63 million ($2.39 per share, or $2.37 per share — assuming dilution), representing the debt prepayment premium and the write-off of associated debt issuance costs, net of a $38.6 million tax benefit. The acquisition and redemption were financed with borrowings under an existing revolving credit facility (see Note 4). As intended, after the acquisition the Company completed sales of certain of the former Park properties for approximately $147 million and purchased new properties for approximately $53 million. These purchases included the Potomac News (Woodbridge, Virginia) in February 1997, and the Reidsville Review (Reidsville, North Carolina) and The Messenger (Madison, North Carolina) in April 1997.

In order to comply with the Federal Communications Commission’s requirement that WTVR-TV be divested within one year of its January 1997 purchase date, in August 1997, the Company completed the exchange of WTVR-TV (Richmond, Virginia) for three other stations, WSAV-TV (Savannah, Georgia), WJTV-TV (Jackson, Mississippi) and WHLT-TV (Hattiesburg, Mississippi). The new stations’ results of operations have been included in the Company’s operations beginning with the exchange date.

These acquisitions were also accounted for as purchases and the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values. The amount allocated to FCC licenses and other identifiable intangibles and to excess cost over the net assets acquired relating to Park and the related sale, purchase, and exchange activities was $415 million and $313 million, respectively. These amounts are being amortized on a straight-line basis over periods ranging from 3 to 40 years. The results of operations of these businesses, since their respective dates of acquisition, have been included in the Company’s consolidated results of operations.

In December 1999, the Company announced an agreement to acquire Spartan Communications for approximately $605 million. Spartan owns and operates 12 network-affiliated stations and one UPN affiliate under a local marketing agreement. This transaction is expected to close early in the second quarter of 2000. The acquisition will be included in the Company’s results of operations from the date of acquisition.

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