| Viacom/Infinity Outdoor, Inc. |
|
|
|
Infinity Outdoor, Inc. is a subsidiary of media conglomerate Viacom, Inc., which reported revenues of $20 billion for 2000. Viacom also controls CBS, MTV, Nickelodeon, VH1, BET, Paramount Pictures, Infinity Broadcasting, UPN, The National Network, Country Music Television, Showtime, Blockbuster, and Simon & Schuster. Viacom's website is at www.viacom.com. According to Viacom's website [03/10/01], "Infinity's outdoor advertising units, Infinity Outdoor and TDI Worldwide, comprise the largest outdoor advertising company in the world, with operations in the U.S., Canada, Mexico, and Europe." Infinty Outdoor's website is at http://www.infinity-outdoor.com/. According to Infinity Outdoor's website [03/10/01] "Infinity Outdoor is North America's largest outdoor advertising company." Infinity Outdoor, Inc. is the result of the acquisition of Outdoor Systems, Inc. for $8.7 billion by Infinity Broadcasting in late December, 1999. Two years earlier, Outdoor Systems, Inc. had acquired National Advertising Co. for $1 billion cash from 3M. Additional Information about Infinity Outdoor and its billboard assets can be gleaned from public filings with the Securities and Exchange Commission by Viacom, as well as filings previously made by Outdoor Systems, Inc., CBS Corp., Infinity Broadcasting, Inc., and 3M. According to Hoover's Online [03/10/01], Infinity Outdoor (formerly Outdoor Systems) is one of the world's largest outdoor advertising firms, with more than 117,000 billboards, posters, and transit displays in nearly 150 metropolitan markets throughout North America. As of March, 2001, two of Infinity Outdoor, Inc.'s officers were also listed as officers of the Outdoor Advertising Association of America, and included: Wally Kelly, Treasurer, and Randy Romig, Vice Chair, Legislative. Infinity Outdoor, Inc. is still based at 2502 N. Black Canyon Hwy., Phoenix, AZ 85009. Viacom, Inc. is a NYSE company, symbol VIA. Viacom's Chairman/CEO, Sumner Redstone, was recently identified by Forbes as one of the richest men in the United States and in the World. According to Forbes, in the Year 2000, Sumner Redstone became the 14th richest person in the United States with an estimated net worth of $14 billion (14,000 times $1 million). This would exceed the combined net worth of Ted Turner and Ross Perot. "At the end of the world, if there's only one dollar left, there will be two hands on it. One will be Gates', the other will be (Viacom CEO Sumner) Redstone's." Quoted Excerpt from "World War 3.0: Microsoft and Its Enemies," by Ken Auletta. The following remarks were delivered by Viacom Chairman Sumner M. Redstone on January 8, 2001 at a global entertainment, media and telecommunications conference: "Just to get an idea of Viacom's power and impact, let's take a snapshot of New York City where people can tune in to CBS and UPN, to seven of our niche cable networks, listen to six of our radio stations, or be exposed to more than a half million displays on billboards, buses, phone kiosks or subway cars and stations. We had an advertising agency analyze our reach and they determined that Viacom reaches 91% of adults in New York City in any given week. ... Infinity's outdoor group, made up of TDI Worldwide and Infinity Outdoor, is the largest outdoor advertising group in the world. We recently acquired outdoor advertising companies in Italy, France, Ireland, and Holland. In the U.S., our strategy has been to pair our radio stations with outdoor advertising opportunities in many major markets – unique and valuable exposure that can't be offered by anyone else." The following are excerpts from remarks made by Sumner M. Redstone, Chairman and CEO, Viacom Inc., delivered at the Annual Meeting of Shareholders, New York, New York, June 29, 2000: "The media and entertainment industry as a whole is currently benefiting from several powerful trends. The exciting news for Viacom, and for you, its shareholders, is that we will reap disproportionate benefits. ... Viacom has an extraordinary management team, led by the best operator in the business, Mel Karmazin. Mel and I share an obsession with building shareholder wealth, and we have delivered. Together, we will be unrelenting in our drive to exceed what we've thus far accomplished. And helping us get there is a deep and seasoned team of operational executives who continue to outperform their peers year after year. You can look to them to drive cash flow growth at our core operations at the rate of 20 percent or more. ... Infinity's outdoor group, composed of TDI Worldwide and Infinity Outdoor, is the largest outdoor advertising group in the world. Our strategy has been to pair our radio stations with outdoor advertising opportunities in many major markets – unique and valuable exposure unavailable anywhere else and a major reason Infinity consistently outperforms its industry." According to Outdoor Systems, Inc.'s 1999 Form 10-K http://www.sec.gov/Archives/edgar/data/874534/0000950153-99-000311.txt), Outdoor Systems, Inc. had the following billboards in the United States near the end of 1999 (prior to being acquired by Infinity): 29,495 - Bulletins In Florida's 5 metropolitan markets, the number of Outdoor Systems, Inc.'s bulletins were listed as follows: 913 - Tampa-St. Petersburg-Sarasota The 1999 10-K recited: "Billboards generally are mounted on structures owned by the outdoor advertising company and located on sites that are either owned or leased by it or on which it has acquired a permanent easement. Billboard structures, bus shelters and benches are durable, have long useful lives and do not require substantial maintenance. When disassembled, they typically can be moved and relocated at new sites. EMPLOYEES The Company had approximately 2,500 employees at December 31, 1998." The following excerpts come from CBS Corp.'s 1999 Form 10-K filed March 29, 2000 (http://www.sec.gov/Archives/edgar/data/106413/0000950128-00-000600.txt): The terms "we," "our," "us," "CBS" and "Corporation" as used in this Report onForm 10-K refer to CBS Corporation and its consolidated subsidiaries unless the context indicates otherwise. PART I ITEM 1. BUSINESS. GENERAL CBS Corporation is one of the largest radio and television broadcasters in the United States and operates the largest outdoor advertising business in North America. We operate our businesses primarily in the United States through our Infinity, Television, Cable and Internet Group business segments. The Infinity segment consists of radio stations and outdoor advertising businesses. The Television segment consists of 16 owned and operated television stations which are integrated with our television network and television syndication operations. Our television and radio stations are operated under licenses from the Federal Communications Commission (FCC). The Cable segment consists of cable networks, including The Nashville Network (TNN), Country Music Television (CMT) and two regional sports networks. The Internet Group segment, formerly referred to as the New Media segment, consists of our interests in Internet based companies, certain of which are consolidated and others accounted for under the cost or equity method of accounting. On September 6, 1999, we entered into an agreement and plan of merger, as amended, with Viacom Inc. (Viacom). Viacom is a diversified entertainment company with operations in six segments: Networks, Entertainment, Video, Parks, Publishing and Online. See note 2 to the financial statements. We have dramatically redefined our business portfolio and strategic direction in recent years. Through acquisitions and divestitures we have essentially transformed ourselves from an industrial company to a media company. A number of significant acquisitions in 1999 and in recent years contributed to the successful execution of our strategy. We acquired CBS Inc. in November 1995; the radio and outdoor advertising business of Infinity Media Corporation in December1996; Gaylord Entertainment Company's two major cable networks, TNN and CMT, in September 1997; the radio broadcasting operations of American Radio Systems Corporation (American Radio) in June 1998; the television syndication operations of King World Productions, Inc. (King World) in November 1999; and, through our majority owned subsidiary, Infinity Broadcasting Corporation (Infinity Broadcasting), acquired Outdoor Systems, Inc. (Outdoor Systems), an outdoor advertising business, now known as Infinity Outdoor, Inc. (Infinity Outdoor), in December 1999. For information about significant mergers and acquisitions, see note 2 to the financial statements. We have also adopted various disposal plans that, in the aggregate, provide for the disposal or liquidation of all of our industrial and financial services businesses. The assets and liabilities and the results of operations for these businesses are classified as Discontinued Operations for all periods presented in our financial statements. At December 31, 1999, essentially all of the industrial businesses were divested, all in accordance with the terms of their respective agreements. See notes 12 and 19 to the financial statements. In August 1998, we formed a new company named Infinity Broadcasting comprising our radio and outdoor advertising businesses. In December 1998, Infinity Broadcasting issued approximately 18% of its common stock in an initial public offering (IPO). After giving effect to the offering, we beneficially owned approximately 82% of Infinity Broadcasting's equity, which represented 96% of its combined voting power. On December 7, 1999, Infinity Broadcasting exchanged 1.25 of its shares of Class A common stock for each outstanding common share of Outdoor Systems. The closing of this transaction caused a reduction in our ownership and voting interests in Infinity Broadcasting to approximately 65% and 90%, respectively, excluding the dilutive effect of stock options, at December 31, 1999. We were founded in 1886 and operate under a corporate charter granted by the Commonwealth of Pennsylvania in 1872. BUSINESS SEGMENTS Financial and other information by segment is included in note 18 to the financial statements. Infinity The Infinity segment is comprised of the radio and outdoor advertising businesses of Infinity Broadcasting. The Infinity segment is characterized as out-of-home media because the majority of radio listening and virtually all viewing of outdoor advertising takes place in automobiles, transit systems, on the street and other locations outside the consumer's home, including listening to radio at work. Infinity Broadcasting acquired American Radio in June 1998 as part of its continued strategy of pursuing acquisitions in the top 50 markets. In December 1999, Infinity Broadcasting acquired Outdoor Systems. On March 3, 2000, Infinity Broadcasting entered into an asset purchase agreement to acquire 18 radio stations, located in the top 50 markets, from Clear Channel Communications, Inc. (Clear Channel Communications) for approximately $1.4 billion. This transaction is expected to close by year-end 2000 and is subject to regulatory reviews and approvals. In addition, on March 21, 2000, Infinity Broadcasting announced that it had entered into an agreement to purchase Giraudy, one of France's largest outdoor advertising companies, for approximately $425 million. This transaction is expected to close mid-year 2000. Infinity Broadcasting owns and operates 162 radio stations located in 34 markets. Sixty-two of these radio stations are in the nation's ten largest radio markets. We believe that the presence of Infinity's radio stations in large markets makes it attractive to advertisers and that the overall diversity of its stations reduces its dependence on any single station, local economy, or advertiser. These stations serve diverse target demographics through a broad range of programming formats, such as rock, oldies, news/talk, adult contemporary, sports/talk, and country, and include leading franchises in news, sports, and personality programming. Infinity Broadcasting also has a minority equity investment in Westwood One, Inc. (Westwood One), which it manages Westwood One produces and distributes syndicated and network radio programming and also manages the CBS Radio Network. In order to take advantage of the growing opportunity in the internet market, the vast majority of the radio stations operate web sites. These web sites focus on the local markets, promoting the stations' talent and programming, and providing news, information and entertainment, as well as other services to the stations' listeners. Infinity Broadcasting operates the largest outdoor advertising business in North America through its wholly owned subsidiaries. Our outdoor advertising business sells advertising space throughout the United States, United Kingdom, Republic of Ireland, Canada, Mexico and the Netherlands on various media, including buses, trains, malls, train platforms and terminals throughout commuter rail systems, and on painted billboards, eight and thirty-sheet posters and phone kiosks. Information can also be found in Infinity Broadcasting Corp.'s 1999 Form 10-K (http://www.sec.gov/Archives/edgar/data/1070518/0000950128-00-000584.txt) The terms "Infinity" and "Company" as used in this Report on Form 10-K refer to Infinity Broadcasting Corporation and its consolidated subsidiaries unless the context indicates otherwise. PART I ITEM 1. BUSINESS. GENERAL Infinity Broadcasting Corporation is one of the largest radio broadcasting and outdoor advertising companies in the United States, as well as the largest outdoor advertising company in North America. The Company's operations are focused on the out-of-home media business and are aligned in two business segments, Radio and Outdoor. The Company characterizes its radio and outdoor advertising businesses as out-of-home because a majority of radio listening, and virtually all viewing of outdoor advertising, takes place in automobiles, transit systems, on the street and other locations outside the consumer's home. The Company's strategy is to generally acquire out-of-home media properties in the largest markets. The Company was formed in September 1998 to own and operate the radio and outdoor advertising business of CBS Corporation and its subsidiaries (CBS). In December 1998, the Company completed an initial public offering of approximately 155 million shares of its Class A common stock (the IPO), resulting in gross proceeds of approximately $3.2 billion. At December 31, 1999, CBS beneficially owned 100% of the Company's Class B common stock, representing 64.3% of the Company's equity ownership and 90.0% of the combined voting power of Infinity's Class A and Class B common stock, on a fully diluted basis. In December 1996,CBS acquired Infinity Media Corporation, formerly known as Infinity Broadcasting Corporation (Old Infinity). On June 4, 1998, CBS acquired the radio broadcasting operations of American Radio Systems Corporation (American Radio), now known as CBS Radio Inc. Both Old Infinity and American Radio were publicly traded companies prior to their respective acquisitions by CBS. Prior to the IPO, CBS transferred substantially all of its radio, outdoor advertising and related assets to the Company. In December 1999, the Company acquired Outdoor Systems, Inc. (Outdoor Systems),now known as Infinity Outdoor, Inc., for approximately $8.7 billion. The purchase price included the issuance of approximately 233 million shares of the Company's Class A common stock, and the assumption of approximately $1.9 billion in debt, at fair value, and stock options to acquire approximately 28 million shares of the Company's Class A common stock. Outdoor Systems was a publicly traded company prior to its acquisition by Infinity. On March 3, 2000, the Company entered into an Asset Purchase Agreement to acquire 18 radio stations from Clear Channel Communications, Inc. (Clear Channel) for approximately $1.4 billion. These stations are located in San Diego, Phoenix, Denver, Cleveland, Cincinnati, Orlando and Greensboro--Winston-Salem. The purchase allows Infinity to expand into five new Top 50 markets, giving the Company 180 radio stations overall. The transaction is subject to regulatory reviews and approvals, and is expected to close by year-end 2000. On March 21, 2000, the Company announced that it had entered into an agreement to purchase Giraudy, one of France's largest outdoor advertising companies, for approximately $425 million. This acquisition expands the Company's position in Europe. Upon the expected mid-year 2000 completion of the Giraudy acquisition, TDI Europe, the Company's European outdoor advertising subsidiary, will have rights to approximately 430,000 display faces. |