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Exhibit 99.7
Corporate and Institutional
Client Group
World Financial Center
North Tower
New York, New York 10281-1328
000 000 0000
[XXXXXXX XXXXX LOGO]
November 12, 1996
Board of Directors
The X.X. Xxxxxxx Company
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Dear Sirs:
The X.X. Xxxxxxx Company, a Delaware corporation (the "Company"), has (a)
entered into (i) an Agreement and Plan of Merger, dated as of October 28, 1995
(the Agreement and Plan of Merger and together with the Form of Agreement to
Agreement and Plan of Merger, attached as Annex II to the Proxy, as hereinafter
defined, the "Merger Agreement"), by and among the Company, Scripps Xxxxxx,
Inc., an Ohio corporation ("SHI"), and Comcast Corporation, a Pennsylvania
corporation (the "Acquiror"), and (ii) a Voting Agreement, dated as of October
28, 1995 (the "Voting Agreement"), by and among the Company, the Acquiror, The
Xxxxxx X. Xxxxxxx Trust (the "Trust") and the Acquiror stockholder signatory
thereto (the "Acquiror Stockholder"), and (b) pursuant to the Merger Agreement,
has entered into (iii) a Contribution and Assumption Agreement (the
"Contribution Agreement") between the Company and SHI and (iv) a Non-Competition
Agreement (the "Non-Competition Agreement") by and among the Company, SHI and
the Acquiror. The Trust, which owns approximately 79.5% of the Company's Common
Voting Stock, $.01 par value (the "Voting Common Stock"), and approximately
54.7% of the Company's Class A Common Stock, $.01 par value (the "Class A Common
Stock" and together with the Voting Common Stock, the "Company Common Stock"),
has entered into or will enter into (a) a Board Representation Agreement (the
"Board Representation Agreement") by and among the Trust, the Acquiror and the
Acquiror Stockholder and (b) a Registration Rights Agreement (the "Registration
Rights Agreement") between the Trust and the Acquiror. The Merger Agreement, the
Contribution Agreement, the Voting Agreement, the Non-Competition Agreement, the
Board Representation Agreement and the Registration Rights Agreement are
collectively referred to herein as the "Agreements."
Pursuant to the Agreements, (i) the Company has contributed to SHI
substantially all of the assets of the Company (other than those assets
described in the Contribution Agreement as being retained by the Company (the
"Company Cable Business")) and will distribute to its stockholders the
outstanding shares of capital stock of SHI so that the holders of the Voting
Common Stock will receive the Common Voting Shares, $.01 par value, of SHI (the
"SHI Voting Shares") and the holders of the Class A Common Stock will receive
the Class A Common Shares, $.01 par value, of SHI (the Class A Common Shares
together with the SHI Voting Shares, "SHI Stock") and (ii) the Company
(immediately following such distribution) will merge with and into the Acquiror
(the "Merger") as a result of which each share of Company Common Stock will be
converted into the right to receive the Common Stock Conversion Number (as
defined in the Merger Agreement) of shares of Class A Special Common Stock,
$1.00 par value, of the Acquiror (the "Acquiror Stock"). The aforementioned
transactions and related transactions
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[XXXXXXX XXXXX LOGO]
Board of Directors
The X.X. Xxxxxxx Company
Page 2
described in the Agreements are collectively referred to herein as the
"Transactions." The consideration to be received by the holders of the Company
Common Stock pursuant to the Merger is herein referred to as the "Merger
Consideration".
You have asked us whether, in our opinion, the Merger Consideration is
fair to the stockholders of the Company from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Company's Annual Reports, Forms 10-K and related
financial information for the four fiscal years ended December 31, 1995 and the
Company's Forms 10-Q and the related unaudited financial information for the
quarterly periods ended March 31, 1996, June 30, 1996 and September 30, 1996;
(2) Reviewed the Acquiror's Annual Reports, Forms 10-K and related
financial information for the four fiscal years ended December 31, 1995 and the
Acquiror's Forms 10-Q and the related unaudited financial information for the
quarterly periods ended March 31, 1996, June 30, 1996 and September 30, 1996;
(3) Reviewed certain other filings by the Company and the Acquiror
with the Securities and Exchange Commission;
(4) Reviewed certain information, including internal and unaudited
financial statements, operating data and forecasts relating to the business,
earnings, cash flow, assets and prospects of the Company and the Company Cable
Business, furnished to us by the Company;
(5) Conducted discussions with members of senior management of the
Company, the Company Cable Business and the Acquiror concerning their
respective businesses, strategic objectives and prospects;
(6) Reviewed the recent market prices and trading activity of the
Acquiror Stock, including the fact that since July 10, 1996, the Acquiror Stock
has traded at closing prices below the minimum Collar Price (as defined in the
Proxy);
(7) Reviewed the historical market prices and trading activity of
equity securities of publicly traded companies engaged in businesses we believe
to be generally comparable to those of the Company, the Company Cable Business
and the Acquiror, respectively;
(8) Compared the results of certain operations of the Company, the
Company Cable Business and the Acquiror with that of certain companies which we
deemed to be reasonably similar to the Company, the Company Cable Business and
the Acquiror, respectively;
(9) Compared the financial terms of the Merger with the financial
terms of certain cable television acquisitions which we deemed to be relevant;
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[XXXXXXX XXXXX LOGO]
Board of Directors
The X.X. Xxxxxxx Company
Page 3
(10) Reviewed and analyzed the pro forma financial effects of the
Transactions on the Company;
(11) Reviewed the Agreements and related schedules;
(12) Reviewed the Joint Proxy Statement-Prospectus for the Company and the
Acquiror dated September 30, 1996 (the "Proxy"); and
(13) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we deemed
necessary, including our assessment of general economic, market and monetary
conditions.
In preparing our opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Company,
the Company Cable Business and the Acquiror, and we have not independently
verified such information or any underlying assumptions. With respect to the
financial forecasts furnished by the Company and the Company Cable Business, we
have assumed that they have been reasonably prepared in accordance with accepted
industry practice and reflect the best currently available estimates and
judgment of the Company's or the Company Cable Business' management as to the
future competitive, operating and regulatory environments and expected future
financial performance of the Company or the Company Cable Business. We have not
made any independent evaluation or appraisal of the assets or liabilities of the
Company, the Company Cable Business or the Acquiror, nor have we been furnished
with any such appraisals. We understand that the Transactions qualify as a
tax-free reorganization and understand that the Trust has sufficient voting
power to approve the Transactions. Furthermore, we express no opinion as to the
price or range of prices at which the shares of Acquiror Stock or SHI Stock will
trade subsequent to the consummation of the Transactions.
As part of this assignment, we have assisted the Company in identifying a
broad spectrum of knowledgeable and qualified buyers who were contacted and
given the opportunity to make a thorough evaluation of the Company Cable
Business in preparation for the submission of a proposal to acquire the Company
Cable Business. As a result of these efforts, the Company received various
indications of interest regarding possible business transactions involving the
Company Cable Business, which we have assessed and reviewed with the management
and the Board of Directors of the Company.
We have acted as financial advisor to the Company in connection with the
Transactions and will receive a fee for our services, payment of a significant
portion of which is contingent upon consummation of the Transactions. We have,
in the past, provided financial advisory and/or financial services to the
Company and the Acquiror and its affiliates, and have received fees for the
rendering of such services. In addition, in the ordinary course of our
securities business, we may actively trade debt and/or equity securities of the
Acquiror and its affiliates for our own account and the accounts of our
customers, and we may from time to time hold a long or short position in such
securities.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be relied upon or used for any other
purpose without our prior written consent; provided, however, that this letter
may be filed with the Securities and Exchange Commission as an exhibit to the
Registration Statement on Form S-4, of which the Proxy forms a part.
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[XXXXXXX XXXXX LOGO]
Board of Directors
The X.X. Xxxxxxx Company
Page 4
On the basis of, and subject to, the foregoing and such other matters as we
consider relevant, we are of the opinion that, as of the date hereof, the Merger
Consideration is fair to the stockholders of the Company from a financial point
of view.
Very truly yours,
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX
INCORPORATED
By /s/ Xxxxxxx X. Xxxxx
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