-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EKXPnp8EZ3t7CpwU8ewvBImLGDg8jetcrnwgGEBlK4i/D0DY0cdhBEZzI/qDh/Mg AAYxgbKG74y6Q7E5df9GjQ== 0000904454-98-000002.txt : 19980107 0000904454-98-000002.hdr.sgml : 19980107 ACCESSION NUMBER: 0000904454-98-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971130 FILED AS OF DATE: 19980106 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KING WORLD PRODUCTIONS INC CENTRAL INDEX KEY: 0000756764 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE DISTRIBUTION [7822] IRS NUMBER: 132565808 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09244 FILM NUMBER: 98501380 BUSINESS ADDRESS: STREET 1: 1700 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2123154000 10-Q 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 November 30, 1997 [ ] 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, 36,800,303 shares outstanding as of December 29, 1997. KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS (Dollars in thousands) November 30, August 31, 1997 1997 ___________ __________ (Unaudited) CURRENT ASSETS: Cash and cash equivalents . . . . . . . . $192,158 $317,782 Short-term investments. . . . . . . . . . 178,409 234,677 Accounts receivable (net of allowance for doubtful accounts of $4,101 at November 30, 1997 and August 31, 1997. . . . . . . . . . . . 80,383 75,092 Producer advances and deferred costs. . . 91,586 74,652 Other current assets. . . . . . . . . . . 1,510 1,857 ________ ________ Total current assets . . . . . . . . 544,046 704,060 ________ ________ LONG-TERM INVESTMENTS, at cost, which approximates market value . . . . 277,010 177,590 ________ ________ FIXED ASSETS, at cost . . . . . . . . . . . 23,696 21,455 Less - accumulated depreciation and amortization. . . . . . . . . . . . (12,121) (11,706) ________ ________ 11,575 9,749 ________ ________ PRODUCER ADVANCES AND OTHER ASSETS. . . . . 101,819 10,668 ________ ________ $934,450 $902,067 ======== ======== The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets. KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) LIABILITIES AND STOCKHOLDERS' EQUITY (Dollars in thousands) November 30, August 31, 1997 1997 ____________ __________ (Unaudited) CURRENT LIABILITIES: Accounts payable and accrued liabilities . . . . . . . . . . $ 15,490 $ 18,014 Payable to producers and others . . . . . 52,814 69,599 Income taxes payable. . . . . . . . . . . 43,353 30,372 __________ __________ Total current liabilities . . . . 111,657 117,985 __________ __________ STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; 5,000,000 shares authorized, none issued . . . . . . . . . . . . . . -- -- Common stock, $.01 par value; 75,000,000 shares autho- rized, 51,190,897 shares and 51,039,211 shares issued at November 30, 1997 and August 31, 1997, respectively . . . . . 512 510 Paid-in capital . . . . . . . . . . . . . 128,837 124,497 Retained earnings . . . . . . . . . . . . 1,035,559 1,001,190 Treasury stock, at cost; 14,413,594 shares at November 30, 1997 and August 31, 1997. . . . . . . . . . . . (342,115) (342,115) __________ __________ 822,793 784,082 __________ __________ $ 934,450 $ 902,067 ========== ========== The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets. KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended November 30, _______________________ 1997 1996 ________ ________ (Dollars in thousands except per share data) REVENUES . . . . . . . . . . . . . . . $172,926 $164,287 EXPENSES: Producers' fees, programming and other direct operating costs . . 107,235 98,806 Selling, general and administrative expenses. . . . . 20,041 18,439 ________ ________ 127,276 117,245 ________ ________ Income from operations . . . . . 45,650 47,042 INTEREST AND DIVIDEND INCOME . . . . . 6,894 6,881 ________ ________ Income before provision for income taxes . . . . . . . 52,544 53,923 PROVISION FOR INCOME TAXES. . . . . . . 18,175 18,956 ________ ________ Net income . . . . . . . . . . . $ 34,369 $ 34,967 ======== ======== BASIC EARNINGS PER SHARE. . . . . . . . $ .94 $ .94 ======== ======== DILUTED EARNINGS PER SHARE. . . . . . . $ .91 $ .93 ======== ======== The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended November 30, _______________________ 1997 1996 ________ ________ (Dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income . . . . . . . . . . . . . $ 34,369 $ 34,967 Items not affecting cash: Depreciation and amortization . . 415 235 Change in assets and liabilities: Accounts receivable . . . . . . . (5,176) (11,441) Producer advances and deferred costs. . . . . . . . . (105,935) 22,790 Accounts payable and accrued liabilities . . . . . . . . . . (2,524) (399) Payable to producers and others . (16,785) (21,093) Income taxes payable. . . . . . . 12,981 12,811 Other, net. . . . . . . . . . . . (1,918) (557) ________ ________ Net cash (used in) provided by operating activities. . . . . . . (84,573) 37,313 ________ ________ CASH FLOWS FROM INVESTING ACTIVITIES: Increase in investments. . . . . . . (43,152) (38,991) Additions to fixed assets . . . . . . (2,241) (479) ________ ________ Net cash used in investing activities. . . . . . . . . . . . . (45,393) (39,470) ________ ________ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock. . . . . . . . . . . . 4,342 1,860 NET DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . (125,624) (297) ________ ________ CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . . . . . 317,782 344,766 ________ ________ CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . $ 192,158 $ 344,469 ======== ======== The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 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. The unaudited consolidated financial statements for the three months ended November 30, 1997 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 period. 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 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 three months ended November 30, 1997 are not neces- sarily 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 noncancel- able agreements and as each show is made available to the licensee via satellite transmission. KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Summary of significant accounting policies (continued) 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. (formerly, Camelot Entertainment Sales, Inc.), a wholly-owned subsid- iary of the Company. Such revenues are recognized at the same time as the cash portion of the license fees derived from such programming is recog- nized, in amounts adjusted for expected ratings. License fees for non-first-run syndicated properties are recog- nized 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 43% and 41% of revenues for the three months ended November 30, 1997 and 1996, respectively. WHEEL OF FORTUNE accounted for approximately 21% and 20% of revenues for the three months ended November 30, 1997 and 1996, respectively. JEOPARDY! accounted for approximately 17% of revenues for each of the three months ended November 30, 1997 and 1996. INSIDE EDITION accounted for approximately 7% and 8% of revenues for the three months ended November 30, 1997 and 1996, respectively. KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Summary of significant accounting policies (continued) 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 television 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 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 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 distribut- ing 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 distrib- uted by the Company in first-run syndication. The series is scheduled to premiere in the Fall of 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 December 29, 1997, the series had been licensed for the 1998-1999 and 1999-2000 broadcast seasons to television stations covering over 80% of the total domestic television viewing house- holds. KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Summary of significant accounting policies (continued) 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 in the Fall of 1998. As of December 29, 1997, the series had been licensed for the 1998-1999, 1999- 2000 and 2000-2001 broadcast seasons to television stations covering over 70% of the total domestic television viewing households. Producers' fees, programming and other direct operating costs _____________________________________________________________ Producers' fees, programming and other direct operating costs include primarily 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 program- ming 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 such revenues are earned. The share of revenues payable by the Company to such producers and others is generally paid as cash license fees and revenues derived from the sale of retained advertis- ing time are received from television stations and advertisers. Stockholders' equity ____________________ In the first quarter of fiscal 1998, the Company adopted State- ment 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 KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Summary of significant accounting policies (continued) stock equivalents and their related dilution, and "diluted" earnings per share, which includes the potential dilution from all common stock equiva- lents 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 36,683,000 and 37,354,000 for the fiscal quarters ended November 30, 1997 and 1996, 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 37,913,000 and 37,687,000 for the fiscal quarters ended November 30, 1997 and 1996, respectively. Reported earnings per share in prior periods has been restated to conform with the provisions of SFAS 128. (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. As of November 30, 1997, unrecouped advances related to such season amounted to approximately $38.8 million. In addition, 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 November 30, 1997. 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. 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", "be- lieves", "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 de- scribed in or suggested by such forward-looking statements. RESULTS OF OPERATIONS Comparison of Three Months Ended November 30, 1997 and 1996 Revenues ________ Revenues for the first quarter of fiscal 1998 increased by approximately 5% compared to the first quarter of the prior year, primarily due to increased revenues from the sale of retained advertising time on, and to increased cash license fees from, THE OPRAH WINFREY SHOW, WHEEL OF FORTUNE and JEOPARDY! THE OPRAH WINFREY SHOW, WHEEL OF FORTUNE, JEOPARDY! and INSIDE EDITION accounted for approximately 43%, 21%, 17% and 7% respectively, of the Company's revenues for the first quarter of fiscal 1998 compared to 41%, 20%, 17% and 8%, respectively, for the first quarter of fiscal 1997. AMERICAN JOURNAL, another first-run syndicated newsmagazine produced and distributed by the Company, accounted for approximately 4% of the Company's revenues for the first quarter of fiscal 1998 and fiscal 1997 and ROLONDA accounted for approximately 1% of the Company's revenues for the first quarter of fiscal 1997. (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 per- centage 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 contribu- tion of THE OPRAH WINFREY SHOW to the Company's net profits and cash flow can be expected to decline. Producers' fees, programming and other direct operating costs increased by approximately 9% in the first quarter of fiscal 1998 compared to the first quarter 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 a decrease in production costs due to the discontinuation of ROLONDA. 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 speci- fied levels during the applicable measurement periods. The Company has recognized the impact of certain of these bonuses in its operating results for the first quarter 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 quarter of fiscal 1998 increased by approximately 9% from the comparable period of fiscal 1997. Such increase was primarily due to the increased cost of programming under development, including THE ROSEANNE SHOW and HOLLYWOOD SQUARES, two new series that are scheduled to premiere in the Fall of 1998, and greater costs incurred in connection with sales of these and other programs distributed by the Company. Net income and earnings per share _________________________________ Due to the factors discussed above, the Company's operating income for the three months ended November 30, 1997 decreased by approxi- mately 3% compared to the corresponding period of the prior year. Net income decreased by approximately $600,000, or 2%, as a result of the decrease in operating income, which was partially offset by a lower effective tax rate. Basic earnings per share was $.94 per share in the first quarter of fiscal 1998, which was equal to basic earnings per share in the first quarter of fiscal 1997 due to the decrease in the number of shares of Common Stock outstanding resulting from the Company's stock repurchase program. Diluted earnings per share decreased by 2% from $.93 per share in the first quarter of fiscal 1997 to $.91 per share in the first quarter of fiscal 1998, due primarily to a higher average Common Stock price in the first quarter 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). The Company's results of operations are highly dependent upon the viewing preferences of television audiences and the Company's ability to acquire distribution rights to, or itself produce, television programming that achieves broad and enduring audience acceptance. The success of the Company's programming could be significantly affected by changes in viewer preferences or the unavailability of new programming or talent. Moreover, the amount of revenue derived from the sale of retained advertising time is dependent upon a large number of factors, such as household ratings, the demographic composition of the viewing audience and economic conditions in general and in the advertising business in particular. 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 opera- tions 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 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, to distribute episodes of THE OPRAH WINFREY SHOW produced through the 1999-2000 television 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 television 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 devel- oping new television shows for syndication that it hopes will gain wide- spread audience appeal and generate significant revenues and income for the Company. Two such shows, THE ROSEANNE SHOW and a new version of the game show HOLLYWOOD SQUARES, are scheduled to premiere in the 1998-1999 televi- sion season. Although the Company hopes to renew its distribution arrange- ments 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 either or both 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 television 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. As of November 30, 1997, unrecouped advances related to such season amounted to approximately $38.8 million. In addition, 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 November 30, 1997. 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 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 5,000,000 shares of its Common Stock from time to time in the open market and in privately negotiated transactions. Through December 29, 1997, 971,000 shares of Common Stock were repurchased in open market transactions for aggregate consideration of approximately $36.2 million or approximately $37.20 per share. The Company intends to continue to repurchase shares of 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 repur- chase program will be financed out of the Company's available cash and liquid investments. On May 16, 1997, a special dividend distribution of $2.00 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 addition- al cash dividends in the foreseeable future. The Company's Board of Directors has declared a two-for-one stock split of the Company's Common Stock, to be effected as a 100% stock dividend, subject to the approval by stockholders of an amendment to the Company's Restated Certificate of Incorporation increasing the number of shares of authorized Common Stock. The amendment will be voted on at the Company's 1998 Annual Meeting of Stockholders, which is scheduled to be held on January 19, 1998 at 11:30 a.m. local time. PART II - OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds _________________________________________ On September 15, 1997, in connection with the renewal of THE OPRAH WINFREY SHOW for the 1998-1999 and 1999-2000 broadcast seasons, the Company issued stock options to Oprah Winfrey and Jeffrey D. Jacobs to purchase an aggregate 500,000 shares of Common Stock at a price of $39 5/16 per share. Such stock options are currently exercisable, have a term of ten years and are entitled to the benefits of registration rights as set forth in the stock option agreements relating thereto. On November 26, 1997, the Company issued a total of 100,000 shares of Common Stock to Ms. Winfrey and Mr. Jacobs in connection with the exercise of stock options granted to them pursuant to stock option agree- ments dated as of January 25, 1991 between the Company and each of Ms. Winfrey and Mr. Jacobs. The exercise price of such options was $25.50 per share. The foregoing issuances of securities were exempt from registra- tion under the Securities Act of 1933, as amended, by reason of Section 4(2) thereof. Item 6. Exhibits and Reports on Form 8-K ________________________________ (a) Exhibits. None. (b) Reports on Form 8-K. On September 15, 1997, the Company filed a current report on Form 8-K announcing the renewal of THE OPRAH WINFREY SHOW for the 1998-1999 and 1999-2000 broadcast seasons. On September 17, 1997, the Company filed a current report on Form 8-K announcing the settlement of its litigation with Sony Pictures Enter- tainment over the production and distribution of a new version of the game show HOLLYWOOD SQUARES. 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 January 6, 1998 -----END PRIVACY-ENHANCED MESSAGE-----