<PAGE>   1
 
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           -------------------------
 
                                   FORM 10-K
                           -------------------------
 
   (MARK ONE)
      [X]            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                               SECURITIES EXCHANGE ACT OF 1934
                        FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 OR
      [ ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                               SECURITIES EXCHANGE ACT OF 1934
                       FOR THE TRANSITION PERIOD FROM
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                                     TO
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                        COMMISSION FILE NUMBER 1-9329
                           -------------------------
                          PULITZER PUBLISHING COMPANY
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                           -------------------------
 
                   DELAWARE                            430496290
       (State or other jurisdiction of              (I.R.S. Employer
        incorporation or organization)           Identification Number)
 
                           900 NORTH TUCKER BOULEVARD
                           ST. LOUIS, MISSOURI 63101
                    (Address of principal executive offices)
 
                                 (314) 340-8000
              (Registrant's telephone number, including area code)
 
                           -------------------------
 
   Securities registered pursuant to Section 12(b) of the Act: Common Stock,
              par value $.01 per share -- New York Stock Exchange
 
        Securities registered pursuant to Section 12(g) of the Act: None
                           -------------------------
 
     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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]
 
     The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $547,437,042 as of the close of business on
March 20, 1998.
 
     The number of shares of Common Stock, $.01 par value, outstanding as of
March 20, 1998 was 6,840,409.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     Portions of the registrant's definitive Proxy Statement to be used in
connection with its Annual Meeting of Stockholders to be held on June 3, 1998
are incorporated by reference into Part III of this Report.
 
     The registrant's fiscal year ends on the last Sunday of December in each
year. For ease of presentation, the registrant has used December 31 as the
fiscal year-end in this Annual Report. Except as otherwise stated, the
information in this Report on Form 10-K is as of December 31, 1997.
================================================================================
<PAGE>   2
 
                                     PART I
 
ITEM 1. BUSINESS
 
GENERAL
 
     The Company is engaged in newspaper publishing and television and radio
broadcasting. Its newspaper operations consist of two major metropolitan
dailies: the St. Louis Post-Dispatch (the "Post-Dispatch"), the only major daily
newspaper serving the St. Louis metropolitan area; and The Arizona Daily Star
(the "Star"), serving the Tucson metropolitan area. In addition, the Company's
Pulitzer Community Newspaper group includes 13 dailies which serve smaller
markets, primarily in the West and Midwest. The Company's broadcasting
operations consist of nine network-affiliated television stations located in
Greenville, South Carolina; New Orleans, Louisiana; Lancaster, Pennsylvania;
Winston-Salem, North Carolina; Albuquerque, New Mexico; Louisville, Kentucky;
Omaha, Nebraska; Daytona Beach/Orlando, Florida and Des Moines, Iowa; and five
radio stations located in Phoenix, Arizona; Eden, North Carolina; and
Louisville, Kentucky.
 
     The Pulitzer Publishing Company was founded by the first Joseph Pulitzer in
1878 to publish the original St. Louis Post-Dispatch and has operated
continuously since that time under the direction of the Pulitzer family. Michael
E. Pulitzer, a grandson of the founder, currently serves as Chairman of the
Board, President and Chief Executive Officer of the Company.
 
                                        1
<PAGE>   3
 
ITEM 1. BUSINESS -- CONTINUED
     The following table sets forth certain historical financial information
regarding the Company's two business segments, publishing and broadcasting, for
the periods and at the dates indicated. Comparability of publishing segment
amounts is affected by the acquisition of the Company's Pulitzer Community
Newspaper group on July 1, 1996 (See "-- Publishing -- Pulitzer Community
Newspapers, Inc.") and the sale of a Chicago publishing subsidiary on December
22, 1994. (See "-- Publishing -- Chicago Publications.") Comparability of
broadcasting segment amounts is affected by the acquisitions of WESH-TV and
KCCI-TV on June 30, 1993 and September 9, 1993, respectively.
 
<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                            ----------------------------------------------------
                                              1997       1996       1995       1994       1993
                                              ----       ----       ----       ----       ----
                                                               (IN THOUSANDS)
<S>                                         <C>        <C>        <C>        <C>        <C>
Operating revenues -- net:
  Publishing..............................  $357,969   $309,096   $269,388   $304,779   $290,146
  Broadcasting............................   227,016    224,992    202,939    180,800    136,839
                                            --------   --------   --------   --------   --------
  Total...................................  $584,985   $534,088   $472,327   $485,579   $426,985
                                            ========   ========   ========   ========   ========
Operating income (loss):
  Publishing..............................  $ 47,544   $ 32,577   $ 25,393   $ 30,486   $ 23,702
  Broadcasting............................    82,180     83,246     65,939     47,963     27,947
  Corporate...............................    (6,007)    (5,532)    (4,666)    (3,871)    (3,692)
                                            --------   --------   --------   --------   --------
  Total...................................  $123,717   $110,291   $ 86,666   $ 74,578   $ 47,957
                                            ========   ========   ========   ========   ========
Depreciation and amortization:
  Publishing..............................  $ 13,007   $  8,660   $  4,307   $  6,128   $  6,938
  Broadcasting............................    23,447     22,442     22,843     24,358     16,854
                                            --------   --------   --------   --------   --------
  Total...................................  $ 36,454   $ 31,102   $ 27,150   $ 30,486   $ 23,792
                                            ========   ========   ========   ========   ========
Operating margins (operating income to revenues)
  Publishing(1)...........................      18.7%      15.1%      14.1%      14.8%      11.8%
  Broadcasting............................      36.2%      37.0%      32.5%      26.5%      20.4%
Assets:
  Publishing..............................  $364,360   $351,685   $141,441   $136,818   $156,398
  Broadcasting............................   255,847    259,114    253,252    254,410    270,250
  Corporate...............................    62,749     73,052    100,380     77,084     34,970
                                            --------   --------   --------   --------   --------
  Total...................................  $682,956   $683,851   $495,073   $468,312   $461,618
                                            ========   ========   ========   ========   ========
</TABLE>
 
-------------------------
(1) Operating margins for publishing are stated with St. Louis Agency adjustment
    (which is recorded as an operating expense for financial reporting purposes)
    added back to publishing operating income. See "-- Publishing -- Agency
    Agreements."
 
OPERATING STRATEGY
 
     Pulitzer's long-term operating strategy for its media assets is to maximize
each property's growth and profitability through maintenance of editorial
excellence, leadership in locally-responsive news, and prudent control of costs.
Management believes that editorial excellence and leadership in
locally-responsive news will, over the long-term, allow Pulitzer to maximize its
revenue share in each of its respective markets. Experienced local managers
implement the Company's strategy in each media market, with centralized Pulitzer
management providing oversight and guidance in all areas of planning and
operations.
 
     In addition to internal growth, Pulitzer selectively acquires media
properties which the Company believes are consistent with its operating strategy
and present attractive investment opportunities. Although the Company has no
agreements to acquire additional properties, management believes that the
Company's strong cash flow and conservative capital structure, among other
factors, will enable the Company to pursue additional acquisitions as
opportunities arise. The Company is currently exploring potential strategic
alternatives relating to its broadcasting division, including the potential sale
of that division, among other possibilities. However, at this point the Company
has not entered into any agreement, and there can be no
 
                                        2
<PAGE>   4
 
ITEM 1. BUSINESS -- CONTINUED
assurance that any agreement will be reached. The Company decided to explore
potential alternatives for the broadcasting business for various strategic and
financial reasons, including the current strength of and consolidation in the
radio and television market. The Company intends to continue to own and operate
its newspaper properties.
 
     Pulitzer believes that cost controls are an important tool in the
management of media properties which are subject to significant fluctuations in
advertising volume. The Company believes that prudent control of costs permits
it to respond quickly when positive operating conditions offer opportunities to
expand market share and profitability and, alternatively, when deteriorating
operating conditions require cost reductions to protect profitability. The
Company aggressively employs production technology in all of its media
operations in order to minimize production costs and produce the most attractive
and timely news product for its readers, viewers and listeners.
 
     Pulitzer's media operations are geographically diverse, placing the Company
in the Midwest, Southwest, West, Southeast, and Northeast regions of the United
States. Due to the close relationship between economic activity and advertising
volume, the Company believes that geographic diversity provides the Company with
valuable protection from regional economic variances.
 
PUBLISHING
 
     The Company intends to continue the tradition of reporting and editorial
excellence that has resulted in 17 Pulitzer Prizes* over the years. In addition,
management continues to seek ways to leverage its newspaper assets, such as
electronic publishing, voice services delivered by phone, electronic
dissemination of information via the world wide web/Internet and alternative
newspaper delivery systems to provide advertisers with either targeted or total
market coverage.
 
     The Company publishes two major metropolitan daily newspapers, the St.
Louis-Dispatch and The Arizona Daily Star. Both daily newspapers have weekly
total market coverage sections to provide advertisers with market saturation. In
addition, both newspapers also offer an electronic news, information and
communication web site on the Internet. Full access to these "electronic
publication" web sites, as well as full Internet access, is provided on a
subscription basis. The Star's service, StarNet (www.azstarnet.com), began
operations in May, 1995 and had approximately 10,300 subscribers at December 31,
1997. The service provided by the Post-Dispatch, POSTnet (www.stlnet.com),
started in January 1996 and had approximately 10,500 subscribers as of December
31, 1997.
 
     The Company also owns a group of 13 daily community newspapers (Pulitzer
Community Newspapers, Inc.) that have a combined average daily circulation of
approximately 165,000. The smaller markets served by these newspapers and their
locations provide the Company with further diversification and participation in
several higher growth areas of the western United States. Although smaller in
size than the Company's two metropolitan dailies, a strong focus on local
reporting and editorial excellence is also considered the key to long-term
success in these markets.
 
-------------------------
 
* Pulitzer Prizes are awarded annually at Columbia University by the Pulitzer
  Prize Board, an independent entity affiliated with the Columbia University
  School of Journalism, founded by the first Joseph Pulitzer.
                                        3
<PAGE>   5
 
ITEM 1. BUSINESS -- CONTINUED
     The Company's publishing revenues are derived primarily from advertising
and circulation, averaging approximately 87 percent of total publishing revenue
over the last five years. Advertising rates and rate structures and resulting
revenues vary among publications based, among other things, on circulation, type
of advertising, local market conditions and competition. The following table
provides a breakdown of the Company's publishing revenues for the past five
years. Comparability is affected by the acquisition of the Company's Pulitzer
Community Newspaper group on July 1, 1996 (See "-- Publishing -- Pulitzer
Community Newspapers, Inc.") and the sale of a Chicago publishing subsidiary on
December 22, 1994. (See "-- Publishing -- Chicago Publications.")
 
<TABLE>
<CAPTION>
                                                           YEARS ENDED DECEMBER 31,
                                       ----------------------------------------------------------------
                                         1997          1996          1995          1994          1993
                                         ----          ----          ----          ----          ----
                                                                (IN THOUSANDS)
<S>                                    <C>           <C>           <C>           <C>           <C>
Advertising:
  Retail.............................  $107,916      $ 91,373      $ 78,362      $ 88,450      $ 85,860
  General............................    10,466        10,123         7,645         7,830         7,154
  Classified.........................   109,435        90,443        75,925        84,738        75,670
                                       --------      --------      --------      --------      --------
          Total......................   227,817       191,939       161,932       181,018       168,684
Circulation..........................    87,611        81,434        76,349        77,941        78,661
Other................................    42,541        35,723        31,107        45,820        42,801
                                       --------      --------      --------      --------      --------
          Total......................  $357,969      $309,096      $269,388      $304,779      $290,146
                                       ========      ========      ========      ========      ========
</TABLE>
 
ST. LOUIS POST-DISPATCH
 
     Founded in 1878 by the first Joseph Pulitzer, the Post-Dispatch has a long
history of reporting and editorial excellence and innovation in newspaper
publishing under the direction of the Pulitzer family. The Post-Dispatch is a
morning daily and Sunday newspaper serving primarily the greater St. Louis
metropolitan area. St. Louis is currently the 17th largest metropolitan
statistical area in the United States with a population of approximately 2.6
million (Source: Claritas, Inc.).
 
     Based on Audit Bureau of Circulations ("ABC") Publisher's Statement and
reports for the six-month period ended September 30, 1997, the market
penetration (i.e., percentage of households reached) of the Post-Dispatch's
daily and Sunday editions is 8th and 3rd, respectively, in the United States
among major metropolitan newspapers. The newsstand price is $0.50 for the daily
paper and $1.25 for the Sunday edition.
 
                                        4
<PAGE>   6
 
ITEM 1. BUSINESS -- CONTINUED
     The Post-Dispatch operates under an Agency Agreement between the Company
and The Herald Company, Inc. (the "Herald Company") pursuant to which the
Company performs all activities relating to the day-to-day operations of the
newspaper, but pursuant to which it must share one-half of the Agency's
operating income or one-half of the Agency's operating loss with the Herald
Company. The following table sets forth for the past five years certain
circulation and advertising information for the Post-Dispatch and operating
revenues for the St. Louis Agency, all of which are included in the Company's
consolidated financial statements. See "-- Publishing -- Agency Agreements."
 
<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                          ----------------------------------------------------------------
                                            1997          1996          1995          1994          1993
                                            ----          ----          ----          ----          ----
<S>                                       <C>           <C>           <C>           <C>           <C>
Post-Dispatch:
  Circulation(1):
     Daily (including Saturday).........   319,887       319,203       323,137       335,819       341,797
     Sunday.............................   530,442       540,434       545,882       555,488       564,761
Advertising lineage (in thousands of
  inches):
  Retail................................       841           819           880           912           913
  General...............................        91           101            75            75            62
  Classified............................     1,003         1,007         1,057         1,039           977
                                          --------      --------      --------      --------      --------
       Total............................     1,935         1,927         2,012         2,026         1,952
  Part run..............................       607           792           594           591           481
                                          --------      --------      --------      --------      --------
       Total inches.....................     2,542         2,719         2,606         2,617         2,433
                                          ========      ========      ========      ========      ========
Operating revenues (in thousands):
  Advertising...........................  $147,770      $137,054      $130,600      $125,704      $116,951
  Circulation...........................    63,216        63,858        64,862        61,207        62,345
  Other(2)..............................    24,276        23,231        24,404        23,490        22,387
                                          --------      --------      --------      --------      --------
       Total............................  $235,262      $224,143      $219,866      $210,401      $201,683
                                          ========      ========      ========      ========      ========
</TABLE>
 
-------------------------
(1) Amounts for 1997 based on Company records for the twelve-month period ended
    September 30, 1997. All other years based on ABC Publisher's Statement for
    the twelve-month period ended September 30.
 
(2) Primarily revenues from preprinted inserts.
 
     The Post-Dispatch has consistently been a leader in technological
innovation in the newspaper industry. It was the first major metropolitan
newspaper in the United States to be printed by the offset process. Currently,
sophisticated computer systems are used for writing, editing, composing and
producing the printing plates used in each edition. In the preparation of news
and color sections, the Post-Dispatch utilizes a Scitex graphics system which
automates the processing of film and color separations. This system is part of
an ongoing project intended to give the Post-Dispatch the capability of
full-page pagination. At presstime, a fiber optic link allows the Post-Dispatch
to send full-page images and then print newspapers simultaneously in its
downtown and suburban plants, thereby allowing it to deliver newspapers to
suburban readers earlier in the morning. In the distribution process, certain
sections of the newspaper as well as advertising supplements are handled using a
sophisticated palletized inserting operation. This allows the Post-Dispatch to
efficiently distribute into selected geographic areas as necessary. The
Company's commitment to the ongoing enhancement of its operating systems has
enabled the Post-Dispatch to offer a continually improving product to both
readers and advertisers while also realizing substantial savings in labor cost.
The Company believes the Post-Dispatch has adequate facilities to sustain up to
at least a 35 percent increase in daily circulation without incurring
significant capital expenditures.
 
     The Post-Dispatch is distributed primarily through independent home
delivery carriers and single copy dealers. Home delivery accounted for
approximately 76 percent of circulation for the daily Post-Dispatch and
approximately 55 percent of circulation for the Sunday edition during 1997.
 
                                        5
<PAGE>   7
 
ITEM 1. BUSINESS -- CONTINUED
THE ARIZONA DAILY STAR
 
     Founded in 1877, the Star is published in Tucson, Arizona, by the Company's
wholly-owned subsidiary, Star Publishing Company. The Star, a morning and Sunday
newspaper, and the Tucson Citizen (the "Citizen"), an afternoon newspaper owned
by Gannett Co., Inc. ("Gannett"), are southern Arizona's leading dailies. The
Star and the Citizen are published through an agency operation (the "Tucson
Agency") and have a combined weekday circulation of approximately 140,000.
Tucson is currently the 69th largest metropolitan statistical area in the United
States with a population of approximately 781,000 (Source: Claritas, Inc.).
 
     The Tucson Agency operates through TNI Partners, an agency partnership
which is owned half by the Company and half by Gannett. TNI Partners is
responsible for all aspects of the business of the two newspapers other than
editorial opinion and gathering and reporting news. Revenues and expenses are
generally shared equally by the Star and the Citizen. Unlike the St. Louis
Agency, the Company's consolidated financial statements include only its share
of the combined operating revenues and operating expenses of the two newspapers.
See "-- Publishing -- Agency Agreements."
 
     As a result of the Tucson Agency, the financial performance of the
Company's Star Publishing Company subsidiary is directly affected by the
operations and performance of both the Star and the Citizen. The following table
sets forth certain information concerning circulation and combined advertising
linage of the Star and the Citizen and the Company's share of the operating
revenues of the Star and the Citizen for the past five years.
 
<TABLE>
<CAPTION>
                                                             YEARS ENDED DECEMBER 31,
                                            -----------------------------------------------------------
                                             1997         1996         1995         1994         1993
                                             ----         ----         ----         ----         ----
<S>                                         <C>          <C>          <C>          <C>          <C>
Circulation(1):
  Star daily..............................   96,106       96,198       97,134       98,050       96,926
  Citizen daily...........................   43,959       46,062       47,240       48,272       49,560
  Star Sunday.............................  175,660      178,820      180,170      179,652      175,321
Combined advertising (in thousands of
  inches):
  Full run (all zones)
     Retail...............................    1,587        1,499        1,565        1,565        1,675
     General..............................       51           45           49           50           45
     Classified...........................    1,713        1,684        1,682        1,608        1,462
                                            -------      -------      -------      -------      -------
       Total..............................    3,351        3,228        3,296        3,223        3,182
     Part run.............................      264          201          171          116           98
                                            -------      -------      -------      -------      -------
       Total inches.......................    3,615        3,429        3,467        3,339        3,280
                                            =======      =======      =======      =======      =======
Operating revenues (in thousands):
  Advertising.............................  $34,302      $31,765      $31,332      $28,459      $25,562
  Circulation.............................   11,023       11,194       11,487       11,434       11,065
  Other(2)................................    7,712        7,139        6,703        5,833        5,298
                                            -------      -------      -------      -------      -------
       Total..............................  $53,037      $50,098      $49,522      $45,726      $41,925
                                            =======      =======      =======      =======      =======
</TABLE>
 
-------------------------
(1) Amounts for 1997 based on Company records for the 52 week period ended
    December 31. Amounts for 1995 based on ABC Publisher's Statement for the 53
    week period ended December 31. All other years based on ABC Publisher's
    Statement for the 52 week period ended December 31.
 
(2) Primarily revenues from preprinted inserts.
 
     In 1997, the Star's daily edition accounted for approximately 69 percent of
the combined daily circulation of the Tucson Agency publications. The Star's
daily and Sunday editions accounted for approximately 60 percent of the agency's
total advertising linage.
 
                                        6
<PAGE>   8
 
ITEM 1. BUSINESS -- CONTINUED
     The Star and the Citizen are printed at TNI Partners' modern, computerized
facility equipped with two, eight-unit Metro offset presses. The writing,
editing and composing functions have been computerized, increasing efficiency
and reducing workforce requirements.
 
     The newsstand prices of the daily editions of the Star and the Citizen are
$0.50 and $0.35, respectively, and the newsstand price of the Sunday edition of
the Star is $1.50. The Star and the Citizen are distributed by independent
contractors.
 
PULITZER COMMUNITY NEWSPAPERS, INC.
 
     On July 1, 1996, the Company acquired for approximately $216 million all
the stock of Scripps League Newspapers, Inc. (subsequently renamed Pulitzer
Community Newspapers, Inc. ("PCN")), a privately owned publisher of community
newspapers which serve smaller markets, primarily in the West and Midwest. The
PCN group includes 13 daily newspapers which publish morning or afternoon
editions during the week and, generally, morning editions on the weekend. Home
delivery through independent contract carriers accounts for the significant
portion of each newspaper's circulation. With circulations ranging from
approximately 8,000 to 33,000, the ten largest daily circulation newspapers in
the PCN group are:
 
                  The Daily Herald...............................Provo, Utah
                  The Arizona Daily Sun...................Flagstaff, Arizona
                  The Napa Valley Register..................Napa, California
                  Santa Maria Times..................Santa Maria, California
                  The Daily Chronicle.......................DeKalb, Illinois
                  The Garden Island............................Lihue, Hawaii
                  The Hanford Sentinel...................Hanford, California
                  The World.................................Coos Bay, Oregon
                  The Daily Journal.....................Park Hills, Missouri
                  The Haverhill Gazette.............Haverhill, Massachusetts
 
     For the year ended December 31, 1997, PCN had consolidated operating
revenues of approximately $69.7 million, of which advertising, preprints and
circulation accounted for approximately 66 percent, 12 percent and 19 percent,
respectively. For the six-month period ended December 31, 1996, PCN had
consolidated operating revenues of approximately $34.9 million, of which
advertising, preprints and circulation accounted for approximately 67 percent,
11 percent and 18 percent, respectively.
 
CHICAGO PUBLICATIONS
 
     On December 22, 1994, the Company sold its wholly-owned publishing
subsidiary located in the Chicago area. Since 1986, the subsidiary's primary
operations consisted of the publication of a daily suburban newspaper, the Daily
Southtown, and commercial printing services for several national and local
newspapers. The sale completed the Company's exit from the Chicago area after
having closed down and partially sold its weekly community newspaper business in
October 1992.
 
     The Company's 1994 consolidated and publishing segment operating results
included substantially a full year of the subsidiary's operations. During 1994,
advertising, preprints, circulation and contract printing accounted for
approximately 55 percent, 4 percent, 11 percent and 28 percent, respectively, of
the subsidiary's total operating revenues of $48.7 million. The sale did not
have a significant impact on the Company's 1995 earnings results.
 
AGENCY AGREEMENTS
 
     Newspapers in approximately 17 cities operate under joint operating or
agency agreements. Agency agreements generally provide for newspapers servicing
the same market to share certain printing and other facilities and to pool
certain revenues and expenses in order to decrease aggregate expenses and
thereby allow
 
                                        7
<PAGE>   9
 
ITEM 1. BUSINESS -- CONTINUED
the continuing operation of multiple newspapers serving the same market. The
Newspaper Preservation Act of 1970 permits joint operating agreements between
newspapers under certain circumstances without violation of the Federal
antitrust laws.
 
     St. Louis Agency. An agency operation between the Company and the Herald
Company is conducted under the provisions of an Agency Agreement, dated March 1,
1961, as amended. For many years, the Post-Dispatch was the afternoon and Sunday
newspaper serving St. Louis, and the Globe-Democrat was the morning paper and
also published a weekend edition. Although separately owned, from 1961 through
February 1984, the publication of both the Post-Dispatch and the Globe-Democrat
was governed by the St. Louis Agency Agreement. From 1961 to 1979, the two
newspapers controlled their own news, editorial, advertising, circulation,
accounting and promotion departments and Pulitzer managed the production and
printing of both newspapers. In 1979, Pulitzer assumed full responsibility for
advertising, circulation, accounting and promotion for both newspapers. In
February 1984, after a number of years of unfavorable financial results at the
St. Louis Agency, the Globe-Democrat was sold by the Herald Company and the St.
Louis Agency Agreement was revised to eliminate any continuing relationship
between the two newspapers and to permit the repositioning of the daily
Post-Dispatch as a morning newspaper.
 
     Following the renegotiation of the St. Louis Agency Agreement at the time
of the sale of the Globe-Democrat, the Herald Company retained the contractual
right to half the profits or losses (as defined) of the operations of the St.
Louis Agency, which from February 1984 forward consisted solely of the
publication of the Post-Dispatch. The St. Louis Agency Agreement provides for
the Herald Company to share half the cost of, and to share in a portion of the
proceeds from the sale of, capital assets used in the production of the
Post-Dispatch. Under the St. Louis Agency Agreement, Pulitzer supervises,
manages and performs all activities relating to the day-to-day publication of
the Post-Dispatch and is solely responsible for the news and editorial policies
of the newspaper.
 
     The consolidated financial statements of the Company include all the
operating revenues and expenses of the St. Louis Agency. An agency adjustment is
provided as an operating expense which reflects that portion of the operating
income of the St. Louis Agency allocated to the Herald Company. Under the St.
Louis Agency Agreement, for fiscal 1997, 1996, 1995, 1994, and 1993, the Company
paid the Herald Company $19,450,000, $13,972,000, $12,502,000, $14,706,000, and
$10,660,000, respectively, for the Herald Company's share of the operating
income of the St. Louis Agency. As a result of such agency adjustment, the
Company is, and during, the term of the St. Louis Agency will continue to be,
entitled to half the profits (as defined) from the operations of the St. Louis
Agency, the amount of which cannot be determined until the end of each fiscal
year.
 
     The current term of the St. Louis Agency Agreement runs through December
31, 2034, following which either party may elect to renew the agreement for
successive periods of 30 years each.
 
     Tucson Agency. The Tucson Agency Agreement has, since 1940, governed the
joint operations of the Star and Citizen. For financial reporting purposes the
operations of the Tucson Agency are reflected in the Company's consolidated
financial statements differently from the operations of the St. Louis Agency.
The consolidated financial statements of the Company include only the Company's
share of the combined revenues, operating expenses and income of the Star and
Citizen. TNI Partners, as agent for the Company and Gannett, is responsible for
advertising and circulation, printing and delivery and collection of all
revenues of the Star and the Citizen. The Board of Directors of TNI Partners
presently consists of three directors chosen by the Company and three chosen by
Gannett. Budgetary, personnel and other non-news and editorial policy matters,
such as advertising and circulation policies and rates or prices, are determined
by the Board of Directors of TNI Partners. Each newspaper is responsible for its
own news and editorial content. Revenues and expenses are recorded by TNI
Partners, and the resulting profit is split 50-50 between Pulitzer and Gannett.
Both partners have certain administrative costs which are borne separately. As a
result of the Tucson Agency, the Star and the Citizen benefit from increases and
can be adversely affected by decreases in each other's circulation.
 
                                        8
<PAGE>   10
 
ITEM 1. BUSINESS -- CONTINUED
     The Tucson Agency Agreement runs through June 1, 2015, and contains renewal
provisions for successive periods of 25 years each.
 
COMPETITION
 
     The Company's publications compete for readership and advertising revenues
in varying degrees with other metropolitan, suburban, neighborhood and national
newspapers and other publications as well as with television, radio, cable,
Internet, direct mail and other news and advertising media. Competition for
advertising is based upon circulation levels, readership demographics, price and
advertiser results, while competition for circulation is generally based upon
the content, journalistic quality and price of the publication. In St. Louis and
its surrounding suburban communities, the Post-Dispatch's closest competition
for circulation and advertising revenues includes paid suburban daily newspapers
as well as a chain of community newspapers and shoppers. These community
newspapers and shoppers target selected geographic markets throughout the St.
Louis metropolitan area.
 
     Due to the agency relationship existing in Tucson, the Star and the Citizen
cannot be viewed as competitors for advertising or circulation revenues. The
Star and the Citizen compete primarily against other media and against
Phoenix-area and suburban, neighborhood and national newspapers and other
publications.
 
EMPLOYEE RELATIONS
 
     The Company has contracts with substantially all of its production unions
related to the Post-Dispatch, with expiration dates ranging from February 1999
through February 2010. In addition, the Company has a multi-year contract with
the St. Louis Newspaper Guild which expires in January 2003. All of the
Post-Dispatch labor contracts contain no strike provisions.
 
     TNI Partners has a one-year contract, expiring December 31, 1998, with
Tucson Graphic Communications Union Local No. 212, covering certain pressroom
employees.
 
RAW MATERIALS
 
     The publishing segment's results are significantly impacted by the cost of
newsprint which accounted for approximately 20 percent of the segment's total
1997 operating expenses. During 1997, the Company used approximately 100,900
metric tons of newsprint in its production process at a total cost of
approximately $56.8 million. Consumption at the Post-Dispatch represented
approximately 72,600 metric tons of the Company's total newsprint usage in 1997.
In the last five years, the Company's average cost per ton of newsprint has
varied from a low of $452 per metric ton in 1994 to a high of $675 per metric
ton in 1995. During the first three quarters of 1997, the Company benefited from
newsprint prices at levels below the prior year. However, current year price
increases pushed the company's fourth quarter average cost per metric ton above
the comparable prior year cost. During the first quarter of 1998, the Company's
average cost per metric ton for newsprint has been in the range of $600. The
Company has been informed by some of its suppliers of a plan to increase the
price of newsprint by approximately $40 per metric ton during the second quarter
of 1998.
 
     The Post-Dispatch obtains the newsprint necessary for its operations from
five separate mills, three of which are located in Canada and two in the United
States. The Post-Dispatch has guaranteed the future supply of certain volume
levels through long-term agreements with two of its newsprint suppliers. The
Company believes that the absence of long-term agreements with the remaining
three newsprint suppliers will not affect the Company's ability to obtain
newsprint at competitive prices.
 
     The Company acquired five newsprint contracts with the purchase of the
Company's Pulitzer Community Newspaper group in 1996. Combined with the tonnage
purchased for the Post-Dispatch, the Company has been able to leverage its
pricing power to obtain the best price available for its new community newspaper
group, and to assure adequate supplies for all locations.
 
                                        9
<PAGE>   11
 
ITEM 1. BUSINESS -- CONTINUED
     TNI Partners obtains the newsprint necessary for the Tucson Agency's
operations pursuant to an arrangement with Gannett, the owner of the Citizen.
Gannett purchases newsprint on behalf of TNI Partners under various contractual
arrangements and agreements. Newsprint is also purchased on the spot market.
 
BROADCASTING
 
     The Company's broadcasting operations currently consist of the ownership
and operation of eight network-affiliated VHF television stations, one
network-affiliated UHF television station, two satellite network television
stations rebroadcasting KOAT, four AM radio stations and one FM radio station.
The Company has diversified its revenues by purchasing properties in different
geographic regions of the United States, thus insulating itself, somewhat, from
regional economic downturns. The local management of each of the Company's
broadcasting properties is partially compensated based on the cash flow
performance of its respective station. Senior management believes that the
success of a local television station is driven by strong local news
programming, and that the Company has developed a particular strength in local
news programming. As is the case with all Company operations, there is major
emphasis on cost control in the broadcasting segment. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Recent Events."
 
TELEVISION
 
     The following table sets forth certain information concerning the
television stations which the Company owns and the markets in which they
operate.
 
<TABLE>
<CAPTION>
                                                                                     COMMERCIAL
                                                     DMA-TV                           STATIONS               EXPIRATION
                                                   HOUSEHOLDS     DMA       LOCAL    OPERATING                DATE OF
                            CALL       NETWORK         IN       NATIONAL   MARKET        IN         DATE        FCC
   STATION AND MARKET      LETTERS   AFFILIATION   MARKET(1)    RANK(2)    RANK(3)   MARKET(3)    ACQUIRED    LICENSE
   ------------------      -------   -----------   ----------   --------   -------   ----------   --------   ----------
<S>                        <C>       <C>           <C>          <C>        <C>       <C>          <C>        <C>
VHF STATIONS(4):
Greenville/Spartanburg/
  Asheville, SC/NC.......  WYFF      NBC             717,510       35         2           8        2/28/83    12/01/04
New Orleans, LA..........  WDSU      NBC             622,760       41         2           8       12/14/89     6/01/05
Harrisburg/Lancaster/
  Lebanon/York, PA.......  WGAL      NBC             588,310       45         1           7        8/13/79     8/01/99
Greensboro/
  Winston-Salem/ High
  Point, NC..............  WXII      NBC             577,070       46         2           8        2/28/83    12/01/04
Daytona Beach/Orlando/
  Melbourne, FL..........  WESH      NBC           1,041,380       22         2          11        6/30/93     2/01/05
Albuquerque, NM(5).......  KOAT      ABC             560,130       48         1          12         6/1/69    10/01/98
Omaha, NE................  KETV      ABC             370,560       74         1           5        4/15/76     6/01/98
Des Moines, IA...........  KCCI      CBS             383,460       69         1           4         9/9/93     2/01/06
UHF STATIONS(4):
Louisville, KY...........  WLKY      CBS             554,240       50         1           7        6/23/83     8/01/05
</TABLE>
 
-------------------------
(1) Based upon the Designated Market Area ("DMA") for the station as reported in
    the November, 1997 Nielsen Station Index ("NSI"). DMA is a geographic area
    defined as all counties in which the local stations receive a preponderance
    of total viewing hours. DMA data is a primary factor in determining
    television advertising rates.
 
(2) National DMA rank for each market as reported in the November, 1997 NSI.
 
(3) Based on November, 1997 NSI audience estimates, 7:00 am-1:00 am,
    Sunday-Saturday. The number of commercial stations operating in market does
    not include public broadcasting stations, satellite stations or translators
    which rebroadcast signals from distant stations.
 
                                       10
<PAGE>   12
 
ITEM 1. BUSINESS -- CONTINUED
(4) VHF (very high frequency) stations transmit on channels 2 through 13, and
    UHF (ultra high frequency) stations transmit on channels 14 through 69.
    Technical factors, such as station power, antenna location and height and
    topography of the area served, determine geographic market served by a
    television station. In general, a UHF station requires greater power or
    antenna height to cover the same area as a VHF station.
 
(5) The Company is also the licensee of KOVT, a satellite TV station licensed to
    Silver City, New Mexico and KOCT, a satellite TV station licensed to
    Carlsbad, New Mexico. The Company is the holder of a construction permit to
    build a satellite TV station, KOFT, in Gallup, New Mexico. On January 15,
    1998, the FCC granted an application filed by Pulitzer requesting that the
    community of license of KOFT be changed from Gallup to Farmington, New
    Mexico. In February 1998, KOB-TV, L.L.C. filed a petition with the FCC
    requesting reconsideration of the grant of the Farmington application.
 
     Average audience share, number of stations serving the market and market
rank for each television station which the Company currently owns for the past
five years are shown in the following table.
 
<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                       -----------------------------------------------------------------------------------------------------------
                              1997                  1996                  1995                  1994                  1993
                       -------------------   -------------------   -------------------   -------------------   -------------------
                                  STATIONS              STATIONS              STATIONS              STATIONS              STATIONS
                                  SERVING               SERVING               SERVING               SERVING               SERVING
                                  MARKET/               MARKET/               MARKET/               MARKET/               MARKET/
                       AVERAGE     LOCAL     AVERAGE     LOCAL     AVERAGE     LOCAL     AVERAGE     LOCAL     AVERAGE     LOCAL
                       AUDIENCE    MARKET    AUDIENCE    MARKET    AUDIENCE    MARKET    AUDIENCE    MARKET    AUDIENCE    MARKET
       STATION         SHARE(1)   RANK(2)    SHARE(1)   RANK(2)    SHARE(1)   RANK(2)    SHARE(1)   RANK(2)    SHARE(1)   RANK(2)
       -------         --------   --------   --------   --------   --------   --------   --------   --------   --------   --------
<S>                    <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
WYFF.................     26%        8/2        28%        7/2        26%        7/1        27%        6/1        29%        6/2
WDSU.................     20         8/2        25         8/2        21         8/2        20         6/2        21         5/2
WGAL.................     38         7/1        38         7/1        37         7/1        36         7/1        36         7/1
WXII.................     22         8/2        24         8/2        25         7/2        23         7/3        26         7/3
WESH(3)..............     24        11/2        24        11/2        23        10/2        21        10/2        23         9/2
KOAT.................     30        12/1        29        12/1        32        12/1        30        11/1        32        10/1
KETV.................     28         5/1        27         5/1        31         5/1        27         4/1        29         4/1
KCCI(4)..............     40         4/1        38         4/1        37         4/1        41         4/1        35         4/1
WLKY(5)..............     28         7/1        25         6/2        24         6/3        28         6/3        29         5/1
</TABLE>
 
-------------------------
(1) Represents the number of television households tuned to a specific station
    9:00 am-Midnight, Sunday-Saturday, as a percentage of Station Total
    Households. Source: 1994-1997 data from February, May and November Nielsen
    Station Index ("NSI"). Schedules for 1993 include both NSI and Arbitron
    Ratings Audience Estimates information. NOTE: The Arbitron Company ceased to
    provide local television market reports in 1994.
 
(2) Stations serving market and local market rank data for 1994-1997 based on
    November NSI. Schedules for 1993 include both NSI and Arbitron Ratings
    Audience Estimates information.
 
(3) Acquired June 30, 1993.
 
(4) Acquired September 9, 1993.
 
(5) WLKY and WAVE (a competitor station) are tied for first place.
 
     The Company's television stations are affiliated with national television
networks under ten-year contracts which are automatically renewed for successive
five-year terms unless the Company or network exercises its right to cancel.
Prior to executing new contracts in early 1995, the stations' old network
affiliation agreements were for two year periods with automatic renewal
provisions.
 
     The ratings of the Company's television stations are affected by
fluctuations in the national ratings of its affiliated networks. The Company
believes that such network rating fluctuations are normal for the
 
                                       11
<PAGE>   13
 
ITEM 1. BUSINESS -- CONTINUED
broadcasting industry and in the past has not sought to change its network
affiliations based on the decline of the national ratings of an affiliated
network.
 
ADVERTISING REVENUES
 
     The principal source of broadcasting revenues for the Company is the sale
of time to advertisers. The Company derives television broadcasting revenues
from local and national spot advertising and network compensation. Local
advertising consists of short announcements and sponsored programs on behalf of
advertisers in the immediate area served by the station. National spot
advertising generally consists of short announcements and sponsored programs on
behalf of national and regional advertisers. Network revenue is based upon a
contractual agreement with a network and is dependent upon the network programs
broadcast by the stations. The following table sets forth the television
broadcasting revenues received by the Company from each of these types of
advertising during the past five years.
 
<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                              --------------------------------------------------------
                                                1997        1996        1995        1994      1993(1)
                                                ----        ----        ----        ----      -------
                                                                   (IN THOUSANDS)
<S>                                           <C>         <C>         <C>         <C>         <C>
Local.....................................    $ 98,638    $ 99,465    $ 88,419    $ 82,463    $ 63,565
National spot.............................      92,907      91,395      80,760      76,925      52,869
Network...................................      17,841      16,788      17,096       6,557       5,840
Other.....................................       1,700       1,691       1,779       1,832       1,665
                                              --------    --------    --------    --------    --------
     Total(2).............................    $211,086    $209,339    $188,054    $167,777    $123,939
                                              ========    ========    ========    ========    ========
</TABLE>
 
------------------------
(1) The Company acquired television stations WESH and KCCI on June 30, 1993 and
    September 9, 1993, respectively.
 
(2) Automotive advertising is significant and historically has represented
    approximately 22 to 25 percent of total broadcast revenues.
 
     The Company believes that its stations are particularly strong in local
news programming, an important revenue source for network-affiliated stations.
Advertising during local news programs accounted for approximately 35 to 50
percent of each station's total revenues in 1997.
 
     Local time spots are sold by the Company's sales personnel at each
broadcast station. Company sales departments make extensive use of computers to
track and schedule all commercial spots sold, to maintain the broadcast station
operating schedule, to determine time spot availability and to record accounts
receivable. National spots are sold by the Company's three national sales
representative firms.
 
     Advertising rates are based primarily on audience size, audience share,
demographics and time availability. The Company's ability to maximize
advertising revenues is dependent upon, among other things, its management of
the inventory of advertising time available for sale.
 
PROGRAMMING
 
     The national television networks with which the Company's stations are
affiliated offer a variety of sponsored and unsponsored programs to affiliated
stations. The affiliated stations have the right of first refusal before the
programs may be offered to any other television station in the same city.
 
     When not broadcasting network programs, the Company's stations broadcast
local news programs, movies, syndicated programs acquired from independent
sources and public service programs. Movies and syndicated programs have
frequently been shown previously on network or cable television. Syndicated
programs are programs that are licensed to individual stations for one or more
showings in a particular market as distinguished from programs licensed for
national distribution through one of the major networks.
 
                                       12
<PAGE>   14
 
ITEM 1. BUSINESS -- CONTINUED
     The Company's stations make programming decisions on the basis of a number
of factors, including program popularity and cost. On occasion, the Company has
not renewed a popular program when syndication costs exceeded the level the
Company believed appropriate compared to the potential advertising revenues to
be derived from the program.
 
RADIO
 
     The Company owns three radio stations serving the Phoenix, Arizona market:
KTAR (AM), KMVP (AM) and KKLT (FM). KMVP was acquired in an asset purchase
transaction for approximately $5 million in December 1996. Phoenix is the 17th
largest Metro Market in the United States, and the Phoenix Radio Metro Area is
served by eleven AM and twenty-one FM radio stations. KTAR (AM) ranks second in
the Phoenix market, KKLT (FM) ranks twelfth and KMVP (AM) ranks twenty-sixth,
with 6.4 percent, 3 percent, and 0.5 percent average quarter hour market shares,
respectively (source: Arbitron Radio Ratings Summary-Fall 1997). KTAR (AM)
operates as a news/talk/sports radio station while KKLT (FM) has an adult
contemporary music format. KMVP (AM) began airing an "all sports" information
format in February 1997. The FCC licenses for KTAR (AM), KMVP (AM) and KKLT (FM)
expire on October 1, 2005.
 
     On June 16, 1997, the Company acquired the assets of WAVG, Louisville,
Kentucky. The station's call letters were subsequently changed to WLKY (AM) and
it currently operates as an all-news station. On August 23, 1997, the Company
acquired the assets of WETR (AM), Eden, North Carolina and changed the call
letters of the station to WXII (AM). On May 18, 1997, the FCC granted an
application to change the city of license of WXII (AM) from Eden to
Kernersville, North Carolina, and to permit the station to operate with 50
kilowatts during the daytime hours and 10 kilowatts at night. It is expected
that WXII (AM) will operate as a news/sports station beginning in mid-1998. The
FCC licenses for WXII (AM) and WLKY (AM) expire on December 1, 2003, and August
1, 2004, respectively.
 
     Advertising rates charged by a radio station are based primarily upon the
number of homes in the station's primary market, the number of persons using
radio in the area and the number of persons listening to the station.
Advertising is sold by a national sales representative and by the stations'
advertising sales personnel. The Company's radio stations manage their inventory
of available advertising time in much the same manner as the television
stations. Radio broadcasting net revenues during each of the past five years
were as follows: 1997 -- $15,930,000; 1996 -- $15,653,000; 1995 -- $14,885,000;
1994 -- $13,023,000 and 1993 -- $12,900,000.
 
COMPETITION
 
     Competition for television and radio audiences is based primarily on
programming content. Programming content for the Company's television stations
is significantly affected by network affiliation and by local programming
activities. Competition for advertising is based on audience size, audience
share, audience demographics, time availability and price. The Company's
television stations compete for audience and advertising with other television
stations and with radio stations, cable television and other news, advertising
and entertainment media serving the same markets. In addition, the Company's
television stations compete for audience and, to a lesser extent, advertising,
with other forms of home entertainment such as home video recorders and direct
broadcast satellite service. Cable systems, which operate generally on a
subscriber payment basis, compete by carrying television signals from outside
the broadcast market and by distributing signals from outside the broadcast
market and by distributing programming that is originated exclusively for cable
systems. The Company's television stations are also affected by local
competitive conditions, including the number of stations serving a particular
area and the programming content of those stations.
 
     The Company believes that the competitive position of its radio and
television properties is enhanced by the Company's policy of operating its
broadcasting properties with a view to long-term growth. Strong local news
programming is an important factor for the competitive position of the Company's
television stations.
 
                                       13
<PAGE>   15
 
ITEM 1. BUSINESS -- CONTINUED
The Company's system for managing advertising inventory of its television and
radio stations is also an important factor in its ability to compete effectively
for advertising revenues.
 
     The Company's radio stations compete for audience and advertising with
other radio and television stations serving the same market area and with other
print, advertising and entertainment media. The Company's radio stations compete
for audience primarily on the basis of their broadcasting format.
 
FEDERAL REGULATION OF BROADCASTING
 
     Television and radio broadcasting are subject to the jurisdiction of the
Federal Communications Commission ("FCC") pursuant to the Communications Act of
1934, as amended (the "Communications Act"). The Communications Act prohibits
the public dissemination of radio and television broadcasts except in accordance
with a license issued by the FCC and empowers the FCC to issue, revoke, modify
and renew broadcasting licenses and adopt such regulations as may be necessary
to carry out the provisions of the Communication Act. The recently enacted
Telecommunications Act of 1996 ("Telecommunications Act") effected sweeping
changes in the Communications Act, many of which will influence the Company's
broadcasting operations.
 
BROADCAST LICENSES
 
     Under the amendments to the Communications Act provided for in the new
legislation, broadcasting licenses for both radio and television stations will
now be granted for a maximum period of eight years. Such licenses are renewable
upon application, and the Telecommunications Act fundamentally changed the
manner in which the FCC processes renewal applications. Petitions to deny
license renewals may still be filed against licensees by interested parties,
including members of the public. However, competing applicants no longer may
file for the frequency being used by the renewal applicant during the period
when a renewal application is pending. In addition, the new law provides that
the FCC must grant renewal if it finds that the station has served the public
interest during its previous license term and has not otherwise engaged in
serious violations (or a pattern of lesser violations) of the Communications Act
or the FCC's Rules.
 
     These changes in renewal procedures apply to renewal applications filed
after May 1, 1995. The Company will file applications to renew the licenses of
stations KOAT, Albuquerque, New Mexico, KOCT, Carlsbad, New Mexico, and KOVT,
Silver City, New Mexico on June 1, 1998. There is currently pending before the
FCC an application to renew the license of KETV, Omaha, Nebraska.
 
MULTIPLE OWNERSHIP
 
     While requiring FCC review every two years, the Telecommunications Act
substantially liberalized the FCC's regulations governing the multiple, common
and cross ownership of broadcast stations. The new law lifts the numerical
restrictions on the number of radio stations a licensee may own nationwide;
however, it restricts the number of stations a licensee may own in any
individual market based upon the total number of stations in the market; the mix
of stations in different services (e.g., AM or FM) that a licensee owns; and, in
the smallest communities, a limitation that a licensee may not own more than 50
percent of all stations in the market.
 
     The Telecommunications Act also eliminates the cap on the number of TV
stations a party may own nationwide, provided that the total number of
households reached by any individual owner's stations does not exceed 35 percent
of the national household audience. For this purpose, only 50 percent of the
television households in a market are counted toward the 35 percent national
audience reach limitation if the owned station is a UHF station. With respect to
the local market, the new law requires the FCC to conduct a proceeding to
determine whether to preserve or eliminate its present rule forbidding the
common ownership of two television stations in the same market. Moreover, the
law permits the use of so-called Local Marketing Agreements (or "LMAs") between
television stations in the same market to the extent they are allowed by the
FCC's rules. The agreements permit one station in a market to lease and program
the broadcast time and
                                       14
<PAGE>   16
 
ITEM 1. BUSINESS -- CONTINUED
sell the advertising time of another station in the market. Proposals currently
pending before the FCC could substantially alter these standards.
 
     The AM-FM radio ownership rules prohibit granting a license to operate an
AM or FM radio station or television station to an applicant who already owns,
operates or controls or has an interest in a daily newspaper in the community in
which the broadcast license is requested. In addition, they generally prohibit
ownership of a VHF television station and either an AM or FM radio station in
the same market. While the Telecommunications Act left the first restriction in
place, it expanded considerably the FCC's authority to grant waivers of the
television/radio cross-ownership rule in the top 50 markets. The FCC has
instituted a rulemaking proceeding requesting comments on liberalizing its
application of the newspaper/radio cross-ownership rule.
 
     Further, the Telecommunications Act repeals the law which prohibited a
cable television system from carrying the signal of a television broadcast
station if such system owns, operates, controls or has an interest in a
broadcast television station which serves substantially the same area that the
cable television system is serving. Although the FCC rule prohibiting such
cross-ownership remains in place, it is expected that the FCC will undertake a
proceeding to eliminate the rule.
 
CABLE CARRIAGE
 
     On March 11, 1993, the FCC adopted rules pursuant to the Cable Television
Consumer Protection and Competition Act of 1992 (the "1992 Cable Act")
concerning the mandatory signal carriage ("must carry") rights of commercial and
noncommercial television stations that are local to the area serviced by a cable
system and the requirement prohibiting cable operators and other multichannel
video programming providers from carrying television stations without obtaining
their consent in some circumstances ("retransmission consent"). On March 31,
1997, the Supreme Count upheld the constitutionality of the must-carry
provisions of the 1992 Cable Act. The Supreme Court decision did not expressly
address the issue of must-carry of digital television ("DTV") signals. While the
FCC has not decided whether to adopt must carry rules for DTV broadcasting, it
has announced that this issue will be addressed in a future rulemaking
proceeding. On June 13, 1997, Malrite Communications Group filed a petition with
the FCC seeking to modify the "must carry" rules to require cable systems to
adopt "appropriate" digital technologies, i.e., technologies compatible with
broadcast DTV standards. On February 17, 1998, the FCC decided not to address
the Malrite's request separate from a separate rulemaking proceeding on DTV must
carry, and the FCC affirmed its intention to issue a Notice of Proposed
Rulemaking on DTV must carry.
 
OTHER RECENTLY ADOPTED RULE CHANGES
 
     It has been the policy of the FCC to rely increasingly upon the interplay
of marketplace forces in lieu of direct government regulation and to encourage
increasing competition among different electronic communication media. This
policy was ratified by the Telecommunications Act which effected other changes
that may affect the competitive environment in the local markets served by the
Company's broadcast stations.
 
     One such change authorizes local telephone companies to provide video
programming to subscribers in their local telephone service areas either as
cable operators or over their own networks known as "open video systems." The
new law provides that a telephone company offering video programming will be
regulated according to the method of delivering programming. However, under the
law, whether the telephone company operates as a cable operator or an open video
system operator, it will be subject to must carry and retransmission consent
obligations and the Commission's rules on sports exclusivity, network
nonduplication, and syndicated exclusivity. In addition, the Telecommunications
Act requires the FCC to adopt certain additional safeguards for broadcasters
which forbid a telephone company that provides video programming from
discriminating against broadcasters in favor of an affiliated programmer in
subscriber communications and placement on any on-screen program guide or menu.
Furthermore, a telephone company video provider must ensure that broadcasters
and other copyright holders are able to identify their programming, and if such
 
                                       15
<PAGE>   17
 
ITEM 1. BUSINESS -- CONTINUED
identifying information is carried as part of the programming signal, the
telephone company must transmit it without alteration.
 
     The FCC has granted several applications to establish direct broadcast
satellite systems ("DBS"). Several other new technologies are in their
developmental stages, such as Digital Television capable of transmitting
television pictures with higher resolution, truer color and wider aspect ratios,
and Digital Audio Broadcasting capable of transmitting radio signals on a
terrestrial basis and by space satellites. The potential impact of these
technologies on the Company's business cannot be predicted.
 
     The Telecommunications Act required that if the FCC issued licenses for
Digital Television (DTV) services, only incumbent broadcast licensees and
construction permit holders will be eligible initially for these licenses. Also,
the Telecommunications Act authorized the Commission to adopt regulations that
permit broadcasters to use such digital DTV spectrum for ancillary or
supplementary services, provided that such secondary services may not impair the
quality of the DTV signal and such services would be subject to a fee payable to
the U.S. Treasury. The Balanced Budget Act of 1997 (the "1997 Budget Act")
directed the FCC to reclaim the analog spectrum from existing television
stations by December 31, 2006, subject to the grant of an extension of that date
to a station under a number of specific circumstances set forth in the statute.
 
     On April 21, 1997, the FCC issued initial DTV channel assignments and
licenses simultaneously to all eligible full-power television licensees and
issued related policies and rules. On February 17, 1998, the FCC declined to
reconsider the decision to grant initial DTV channel assignments and licenses
simultaneously to all eligible television licensees, but made adjustments in the
DTV channel assignments and related rules to address various Petitions for
Reconsideration and new test data on DTV interference characteristics. These
adjustments include revisions to the plan for recovery of spectrum after the
analog-to-digital transition is completed so that the spectrum available for DTV
broadcasting after the transition will include channels 2-6; increases in
authorized transmission power for UHF DTV stations; adoption of a de minimis
interference standard; clarification of the rules and procedures for modifying
initial DTV channel assignments and the DTV table of channel allotments; and
adoption of additional guidelines and procedures regarding the displacement of
low power television stations.
 
     These FCC decisions are highly advantageous for incumbent television
station owners such as the Company. It ensures that the Company will not face
competing applications from the general public as it applies for its DTV
licenses in the future. However, licenses for DTV services issued to incumbent
broadcast licensees or permittees must be preconditioned with a requirement that
either the new DTV channel or the original broadcast channel be surrendered to
the FCC for reallocation or reassignment at the end of a transition period. Most
incumbent television stations, including all of the Company's stations, will
have the option of utilizing their current (NTSC) channels for DTV after the
transition.
 
     The new FCC rules require television stations affiliated with ABC, CBS, FOX
and NBC to construct digital facilities in the ten largest television markets by
May 1, 1999. Other stations affiliated with ABC, CBS, FOX and NBC in the top 30
television markets must construct DTV facilities by November 1, 1999. All other
commercial stations must construct DTV facilities by May 1, 2002. Noncommercial
stations must construct their DTV facilities by May 1, 2003. In June, 1997, the
Company applied for DTV construction permits for stations WESH, Daytona Beach,
Florida; KOAT, Albuquerque, New Mexico; KETV, Omaha, Nebraska; and KCCI, Des
Moines, Iowa. These applications request slight modifications of the initial DTV
channel assignments to provide added coverage permitted under the new rules. The
FCC issued public notice of these applications on June 27, 1997, and they remain
pending.
 
LIMITATIONS ON OWNERSHIP OF THE COMPANY'S STOCK
 
     The Communications Act prohibits the assignment or transfer of broadcasting
licenses, including the transfer of control of any corporation holding such
licenses, without the prior approval of the FCC. The Communications Act would
prohibit the Company from continuing to control broadcast licenses if, in the
absence of FCC approval, more than one-fourth of the Company's capital stock
were acquired or voted
                                       16
<PAGE>   18
 
ITEM 1. BUSINESS -- CONTINUED
directly or indirectly by alien individuals, corporations, or governments, or if
it otherwise fell under alien influence or control in a manner determined by the
FCC to be contrary to the public interest.
 
     Because of the multiple, common and cross ownership rules, if a holder of
the Company's common stock or Class B common stock acquired an attributable
interest in the Company and had an attributable interest in other broadcast
stations, a cable television operation or a daily newspaper, there could be a
violation of FCC regulations depending upon the number and location of the other
broadcasting stations, cable television operations or daily newspapers
attributable to such holder.
 
     The information contained under this heading does not purport to be a
complete summary of all the provisions of the Communications Act and the rules
and regulations of the FCC thereunder or of pending proposals for the other
regulation of broadcasting and related activities. For a complete statement of
such provisions, reference is made to the Communications Act, to such rules and
regulations and to such pending proposals.
 
EMPLOYEES
 
     At December 31, 1997, the Company had approximately 3,500 full-time
employees, of whom approximately 2,200 were engaged in publishing and 1,300 in
broadcasting. In St. Louis, a majority of the approximately 1,200 full-time
employees engaged in publishing are represented by unions. In addition, certain
employees of the broadcasting segment, PCN and TNI Partners are represented by
unions. The Company considers its relationship with its employees to be good.
 
                                       17
<PAGE>   19
 
ITEM 2. PROPERTIES
 
     The corporate headquarters of the Company is located at 900 North Tucker
Boulevard, Saint Louis, Missouri. The general character, location and
approximate size of the principal physical properties used by the Company at
December 31, 1997, are set forth below. Leases on the properties indicated as
leased by the Company expire at various dates through July 2012.
 
     The Company believes that all of its owned and leased properties are in
good condition, well maintained and adequate for its current and immediately
foreseeable operating needs. The Company, however, currently has a building
project in process to address the long-term operating requirements of its
Louisville broadcasting property.
 
<TABLE>
<CAPTION>
                                                                APPROXIMATE AREA IN
                                                                    SQUARE FEET
                     GENERAL CHARACTER                          --------------------
                        OF PROPERTY                              OWNED       LEASED
                     -----------------                           -----       ------
<S>                                                             <C>         <C>
Publishing:
  Printing plants, business and editorial offices, and
     warehouse space located in:
     St. Louis, Missouri(1).................................    579,500     138,700
     St. Louis, Missouri....................................                  5,600
     Tucson, Arizona(2).....................................    265,000      41,800
     Washington, D.C........................................                  2,250
     Provo, Utah............................................     22,900
     Flagstaff, Arizona.....................................     23,200
     DeKalb, Illinois.......................................     15,900
     Santa Maria, California................................     20,800
     Napa, California.......................................     21,000
     Hanford, California....................................     16,500       3,600
     Lihue, Hawaii..........................................      8,500      20,900
     Coos Bay, Oregon.......................................     15,200
     Park Hills, Missouri...................................      9,100
     Haverhill, Massachusetts...............................     24,500
     Rhinelander, Wisconsin.................................      6,400
     Hamilton, Montana......................................      2,900
     Petaluma, California...................................      9,000
     Farmington, Missouri...................................     11,800
     Fredericktown, Missouri................................      1,800         650
Broadcasting:
  Business offices, studios, garages and transmitters
     located in:
     St. Louis, Missouri....................................                  5,300
     Albuquerque, New Mexico................................     39,700       9,200
     Omaha, Nebraska........................................     37,900         600
     Lancaster, Pennsylvania................................     55,200       2,200
     Winston-Salem, North Carolina..........................     41,100         600
     Greenville, South Carolina.............................     53,600       2,300
     Louisville, Kentucky...................................     22,500
     New Orleans, Louisiana.................................     50,500
     Phoenix, Arizona.......................................     23,500
     Orlando, Florida.......................................     61,300       1,300
     Daytona Beach, Florida.................................     28,100
     Des Moines, Iowa.......................................     53,350
</TABLE>
 
-------------------------
(1) Property is subject to the provisions of the St. Louis Agency Agreement.
 
(2) The 265,000 square foot facility in Tucson, Arizona, is used in the
    production of the Star and the Citizen and is jointly owned with Gannett
    pursuant to the Tucson Agency.
 
                                       18
<PAGE>   20
 
ITEM 3. LITIGATION
 
     Subsequent to the Scripps League acquisition, Barry H. Scripps commenced an
action against Edward W. Scripps, Betty Knight Scripps and Pulitzer Community
Newspapers, Inc. Barry H. Scripps is the child of Edward W. Scripps and Betty
Knight Scripps. Barry Scripps alleges that as a former minority shareholder and
executive employee of Scripps League, the defendant Betty Knight Scripps formed
and implemented a wrongful scheme to transfer the ownership of Scripps League
outside the Scripps family in violation of the Scripps League corporate mission
by (1) inducing the defendant Edward W. Scripps to breach their life-long
promises to Barry Scripps to retain the ownership of Scripps League Newspapers
in the family and ultimately turn over its management and control to Barry
Scripps; (2) engineering an unlawful freeze-out of Barry Scripps as a minority
shareholder from Scripps League and its subsidiaries; and (3) tortiously causing
Scripps League to breach its promise to Barry Scripps of permanent employment.
The claims asserted are for breach of promise against Edward W. Scripps and
Betty Knight Scripps, breach of employment contract against Pulitzer Community
Newspapers, Inc. as successor to Scripps League, interference with contract
against Betty Knight Scripps, breach of fiduciary duty against Betty Knight
Scripps, and promissory estoppel against Edward W. and Betty Knight Scripps.
Barry Scripps seeks (1) money damages, together with interest and counsel fees
in the amount to be proven at trial against Edward and Betty Scripps; (2)
judgment rescinding each of the actions that Betty Knight Scripps caused to be
taken that allegedly froze out Barry Scripps as a stockholder in Scripps League;
and (3) damages against Pulitzer Community Newspapers, Inc. for loss of income
plus interest and counsel fees in an amount to be proven at trial for breach of
the purported employment agreement. The Sellers agreed to indemnify the Company
and its affiliates, officers, directors, stockholders, employees, agents,
successors and assigns at all times after the closing for any and all losses
arising from Barry Scripps' claims. On January 8, 1997, the defendants filed
their answers to the complaint in the Action. On January 11, 1997, the Court
entered an order for entry of a Judgment Nisi dismissing the complaint for want
of jurisdictional amount. The Court's judgment noted that the facts on which
Barry Scripps relies to determine money damages present no reasonable likelihood
that recovery will exceed $25,000.00, the Court's minimum jurisdictional amount,
and that a final judgment of dismissal would be entered fourteen days from the
entry of the Judgment Nisi, subject to the right of the parties to file written
responses and request a further hearing. On January 29, 1997, Barry Scripps
filed a written response opposing the Judgment Nisi and requested a hearing on
the issues presented. On February 4, 1997, defendants filed their response in
support of the entry of the Judgment Nisi. On March 26, 1997, the Court declined
to enter an order granting the Judgment Nisi. On October 29, 1997, the
defendants' motion for summary judgment was submitted to the Court. That motion
is under consideration.
 
     The Company becomes involved from time to time in various claims and
lawsuits incidental to the ordinary course of its business, including such
matters as libel, slander and defamation actions and complaints alleging
discrimination. In addition, the Company is involved from time to time in
various governmental and administrative proceedings relating, among other
things, to renewal of broadcast licenses.
 
     While the results of litigation cannot be predicted, management believes
the ultimate outcome of such litigation will not have a material adverse effect
on the consolidated financial statements of the Company and its subsidiaries.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     Not Applicable.
 
                                       19
<PAGE>   21
 
                                    PART II
 
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
 
     The Company's common stock is listed and traded on the New York Stock
Exchange under the symbol "PTZ."
 
     At March 20, 1998, there were approximately 394 record holders of the
Company's common stock and 2 record holders of its Class B common stock.
 
     The following table sets forth the range of high and low sales prices and
dividends paid for each quarterly period in the past two years:
 
<TABLE>
<CAPTION>
                      1997(2)                         HIGH     LOW     DIVIDEND(1)
                      -------                         ----     ---     -----------
<S>                                                  <C>      <C>      <C>
First Quarter......................................  $50.63   $43.38     $0.1300
Second Quarter.....................................   54.25    40.88      0.1300
Third Quarter......................................   57.50    49.75      0.1300
Fourth Quarter.....................................   63.31    51.81      0.1300
</TABLE>
 
<TABLE>
<CAPTION>
                      1996(2)                         HIGH     LOW     DIVIDEND(1)
                      -------                         ----     ---     -----------
<S>                                                  <C>      <C>      <C>
First Quarter......................................  $39.00   $33.38     $0.1125
Second Quarter.....................................   45.19    39.00      0.1125
Third Quarter......................................   45.56    38.72      0.1125
Fourth Quarter.....................................   49.63    42.75      0.1200
</TABLE>
 
-------------------------
(1) In 1997 and 1996, the Company paid cash dividends of $0.5200 and $0.4575
    respectively, per share of common stock and Class B common stock (see Note 5
    of Notes to Consolidated Financial Statements for restrictions on
    dividends).
 
(2) The high and low sales prices and dividends per share have been restated for
    1996 to reflect the impact of a four-for-three stock split, effected in the
    form of a 33 1/3 percent common and Class B common stock dividend, declared
    by the Company's Board of Directors on September 12, 1996.
 
                                       20
<PAGE>   22
 
ITEM 6. SELECTED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                            ----------------------------------------------------
                                              1997       1996       1995       1994       1993
                                              ----       ----       ----       ----       ----
                                                  (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                         <C>        <C>        <C>        <C>        <C>
Operating Revenues -- net.................  $584,985   $534,088   $472,327   $485,579   $426,985
                                            --------   --------   --------   --------   --------
Operating Expenses:
  Operations..............................   214,935    205,885    190,013    191,570    180,998
  Selling, general and administrative.....   190,429    172,838    155,996    174,239    163,578
  St. Louis Agency adjustment.............    19,450     13,972     12,502     14,706     10,660
  Depreciation and amortization...........    36,454     31,102     27,150     30,486     23,792
                                            --------   --------   --------   --------   --------
     Total operating expenses.............   461,268    423,797    385,661    411,001    379,028
                                            --------   --------   --------   --------   --------
Operating income..........................   123,717    110,291     86,666     74,578     47,957
Interest income...........................     4,652      4,522      5,203      1,971      1,090
Interest expense..........................   (16,081)   (13,592)   (10,171)   (12,009)    (9,823)
Gain on sale of publishing property.......                                      2,791
Net other expense.........................    (1,203)    (5,449)    (2,330)    (1,461)    (1,011)
                                            --------   --------   --------   --------   --------
Income before provision for income taxes
  and cumulative effects of changes in
  accounting principles...................   111,085     95,772     79,368     65,870     38,213
Provision for income taxes................    45,057     38,272     30,046     25,960     15,260
                                            --------   --------   --------   --------   --------
Income before cumulative effects of
  changes in accounting principles........    66,028     57,500     49,322     39,910     22,953
Cumulative effects of changes in
  accounting principles, net of applicable
  income taxes............................                                       (719)       360
                                            --------   --------   --------   --------   --------
Net income................................  $ 66,028   $ 57,500   $ 49,322   $ 39,191   $ 23,313
                                            ========   ========   ========   ========   ========
Basic Earnings Per Share of Stock:
  Earnings (loss) per share of stock:(1)
       Income before cumulative effects of
          changes in accounting
          principles......................  $   2.99   $   2.62   $   2.26   $   1.84   $   1.13
       Cumulative effects of changes in
          accounting principles...........                                      (0.03)      0.02
                                            --------   --------   --------   --------   --------
Basic Earnings Per Share..................  $   2.99   $   2.62   $   2.26   $   1.81   $   1.15
                                            ========   ========   ========   ========   ========
Weighted average number of shares
  outstanding -- Basic(1).................    22,110     21,926     21,800     21,655     20,371
                                            ========   ========   ========   ========   ========
Diluted Earnings Per Share of Stock:
  Earnings (loss) per share of stock:(1)
       Income before cumulative effects of
          changes in accounting
          principles......................  $   2.94   $   2.58   $   2.23   $   1.83   $   1.11
       Cumulative effects of changes in
          accounting principles...........                                      (0.03)      0.02
                                            --------   --------   --------   --------   --------
Diluted Earnings Per Share................  $   2.94   $   2.58   $   2.23   $   1.80   $   1.13
                                            ========   ========   ========   ========   ========
Weighted average number of shares
  outstanding -- Diluted(1)...............    22,452     22,273     22,097     21,822     20,609
                                            ========   ========   ========   ========   ========
Dividends per share of common and Class B
  Common stock(1).........................  $   0.52   $   0.46   $   0.41   $   0.35   $   0.32
                                            ========   ========   ========   ========   ========
OTHER DATA
Cash and cash equivalents.................  $ 62,749   $ 73,052   $100,380   $ 77,084   $ 34,970
Working capital...........................    99,322     95,330    128,853     96,729     60,688
Total assets(2)...........................   682,956    683,851    495,073    468,312    461,618
Long-term debt, less current
  maturities(3)...........................   172,705    235,410    114,500    128,750    161,920
Stockholders' equity(4)...................   310,777    249,937    198,771    155,019    122,143
</TABLE>
 
                                       21
<PAGE>   23
 
ITEM 6. SELECTED FINANCIAL DATA -- CONTINUED
-------------------------
(1) Shares outstanding, dividends per share and earnings per share have been
    adjusted for the Company's four-for-three stock split, on September 12,
    1996, five-for-four stock split, on January 4, 1995 and 10 percent stock
    dividend on January 4, 1993.
 
(2) On July 1, 1996, the Company acquired Scripps League Newspapers, Inc.
    ("Scripps League") for approximately $216 million. During 1993 the Company
    acquired television stations WESH and KCCI for approximately $164.7 million.
 
(3) As of December 31, 1996, approximately $135 million of new long-term debt
    financing was outstanding related to the acquisition of Scripps League on
    July 1, 1996. As of December 31, 1993, approximately $118.6 million of new
    long-term debt financing was outstanding related to the acquisition of WESH
    and KCCI during 1993.
 
(4) On July 9, 1993, the Company sold 1.35 million shares of common stock in a
    public offering. The $37 million in net proceeds from the offering was used
    to partially finance the acquisition of WESH and KCCI in 1993.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
 
     Statements in this Annual Report on Form 10-K concerning the Company's
business outlook or future economic performance; anticipated profitability,
revenues, expenses or other financial items, together with other statements that
are not historical facts, are "forward-looking statements" as that term is
defined under the Federal Securities Laws. Forward-looking statements are
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from those stated in such statements. Such risks,
uncertainties and factors include, but are not limited to industry cyclicality,
the seasonal nature of the business, changes in pricing or other actions by
competitors or suppliers, and general economic conditions, as well as other
risks detailed in the Company's filings with the Securities and Exchange
Commission including this Annual Report on Form 10-K.
 
GENERAL
 
     The Company's operating revenues are significantly influenced by a number
of factors, including overall advertising expenditures, the appeal of
newspapers, television and radio in comparison to other forms of advertising,
the performance of the Company in comparison to its competitors in specific
markets, the strength of the national economy and general economic conditions
and population growth in the markets served by the Company.
 
     The Company's business tends to be seasonal, with peak revenues and profits
generally occurring in the fourth and, to a lesser extent, second quarters of
each year as a result of increased advertising activity during the Christmas and
spring holiday periods. The first quarter is historically the weakest quarter
for revenues and profits.
 
RECENT EVENTS
 
     The Company is currently exploring potential strategic alternatives
relating to its broadcasting division, including the potential sale of that
division, among other possibilities. However, at this point the Company has not
entered into any agreement, and there can be no assurance that any agreement
will be reached. The Company decided to explore potential alternatives for the
broadcasting business for various strategic and financial reasons, including the
current strength of and consolidation in the radio and television market. The
Company intends to continue to own and operate its newspaper properties.
 
                                       22
<PAGE>   24
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- CONTINUED
1997 COMPARED WITH 1996
 
CONSOLIDATED
 
     Operating revenues for the year ended December 31, 1997 increased 9.5
percent to $585 million from $534.1 million in 1996. The revenue comparison was
affected by the acquisition of Scripps League Newspapers, Inc. ("Scripps League"
which was subsequently renamed Pulitzer Community Newspapers, Inc. ("PCN")) on
July 1, 1996. On a comparable basis, excluding PCN from the first six months of
1997, consolidated revenues increased 3.2 percent. The increase reflected gains
in both publishing and broadcasting revenues.
 
     Operating expenses, excluding the St. Louis Agency adjustment, were $441.8
million compared to $409.8 million in 1996, an increase of 7.8 percent. Prior
year operating expenses included approximately $1.8 million of non-recurring
costs related to the acquisition of Scripps League. On a comparable basis,
excluding PCN from the first six months of 1997 and the non-recurring costs from
1996, operating expenses increased 1.4 percent. Major increases in comparable
expenses were overall personnel costs of $10.9 million, circulation distribution
expenses of $1.5 million and promotion expenses of $1.3 million. Partially
offsetting these increases were declines in newsprint expense of $6.0 million
and purchased supplements of $3.1 million.
 
     Operating income for fiscal 1997 increased 12.2 percent to $123.7 million
from $110.3 million in 1996. On a comparable basis, excluding PCN from the first
six months of 1997 and the non-recurring costs from 1996, operating income
increased 5.6 percent. The 1997 increase reflected improvements in publishing
segment profits.
 
     Interest expense increased $2.5 million in 1997 compared to 1996 due to
higher average debt levels in 1997. The Company's average debt level for 1997
increased to $220 million from $186.9 million in the prior year due to new
long-term borrowings related to the July 1, 1996 acquisition of Scripps League.
The Company's average interest rate for 1997 was unchanged from the prior year
rate of 7.3 percent.
 
     The effective income tax rate for 1997 increased to 40.6 percent from 40
percent in the prior year, due to an additional $2.1 million of nondeductible
goodwill amortization related to the Scripps League acquisition. The Company
expects its effective tax rate for 1998 to be similar to its 1997 rate.
 
     Net other expense (non-operating) decreased $4.2 million in 1997 compared
to 1996. The decrease resulted from a 1996 non-recurring charge of approximately
$2.7 million for the write-down in value of a joint venture investment and lower
joint venture losses in 1997.
 
     For the year ended December 31, 1997, the Company reported net income of
$66 million, or $2.99 per share, compared with net income of $57.5 million, or
$2.62 per share, in the prior year. Comparability of the earnings results was
affected by the joint venture write-off in 1996 ($1.6 million after-tax) and
non-recurring costs related to the Scripps League acquisition ($1.1 million
after-tax) in 1996. Excluding the non-recurring items from 1996, 1997 net income
would have increased 9.5 percent to $66 million, or $2.99 per share, from $60.3
million, or $2.74 per share, for the prior year. The gain in net income
reflected increased publishing profits, resulting primarily from higher
advertising revenue and lower newsprint costs.
 
PUBLISHING
 
     Operating revenues from the Company's publishing segment for 1997 increased
15.8 percent to $358 million from $309.1 million in 1996. On a comparable basis,
excluding PCN from the first six months of 1997, publishing revenues increased
4.9 percent. The comparable increase reflected higher advertising revenues in
1997.
 
     Newspaper advertising revenues, on a comparable basis, increased $13.8
million, or 7.2 percent, in 1997. A significant portion of the current year
increase resulted from higher classified and retail advertising revenue at both
the St. Louis Post-Dispatch ("Post-Dispatch") and The Arizona Daily Star
("Star"). Full run
 
                                       23
<PAGE>   25
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- CONTINUED
advertising volume (linage in inches) increased 0.4 percent at the Post-Dispatch
and 3.8 percent at Star for 1997. Varying rate increases were implemented at the
Post-Dispatch and most of the Pulitzer Community Newspaper properties in the
first quarter of 1997 while Star increased advertising rates in the fourth
quarters of 1996 and 1997.
 
     Circulation revenues, on a comparable basis, decreased approximately
$390,000, or 0.5 percent, in 1997. The decline reflected slight fluctuations in
paid circulation and average rates at the Post-Dispatch and Star in 1997
compared to the prior year.
 
     Other publishing revenues, on a comparable basis, increased $1.8 million,
or 5.1 percent, in 1997, resulting primarily from higher preprint revenue at the
Post-Dispatch.
 
     Operating expenses (including selling, general and administrative expenses
and depreciation and amortization) for the publishing segment, excluding the St.
Louis Agency adjustment, increased to $291 million in 1997 from $262.5 million
in 1996, an increase of 10.8 percent. On a comparable basis, excluding PCN from
the first six months of 1997 and the non-recurring costs from 1996, operating
expenses increased 0.8 percent. Major increases in comparable expenses were
overall personnel costs of $7.4 million, promotion expense of $1.6 million, and
circulation distribution expenses of $1.5 million. Partially offsetting these
increases were declines in newsprint expense of $6 million and purchased
supplement costs of $3.1 million.
 
     Operating income from the Company's publishing activities increased 45.9
percent to $47.5 million in 1997 from $32.6 million in 1996. On a comparable
basis, excluding PCN from the first six months of 1997 and the non-recurring
costs from 1996, operating income from the publishing segment increased 22.7
percent. The increase resulted primarily from higher advertising revenues and
lower newsprint costs.
 
     Fluctuations in the price of newsprint significantly impact the results of
the Company's publishing segment, where newsprint expense accounts for
approximately 20 percent of the segment's total operating costs. During the
first three quarters of 1997, the publishing segment benefited from newsprint
prices below prior year levels. However, as a result of 1997 price increases and
declining prices in late 1996, the Company's 1997 fourth quarter newsprint
expense increased over the comparable prior year period. For the full year of
1997, the Company's newsprint cost and metric tons consumed, after giving effect
to the St. Louis Agency adjustment, were approximately $36.5 million and 64,600
tons respectively. During the first quarter of 1998, the Company's average cost
per metric ton for newsprint has been in the range of $600, above prior year
levels. In addition, the Company has been informed by some of its suppliers of a
plan to increase the price of newsprint by approximately $40 per metric ton
during the second quarter of 1998.
 
BROADCASTING
 
     Broadcasting operating revenues for 1997 increased 0.9 percent to $227
million from $225 million in 1996. For the year, a 1.6 percent increase in
national spot advertising and a 6.1 percent increase in network compensation
were partially offset by a 0.5 percent decline in local spot advertising. The
modest increases in current year advertising revenues reflect the impact of
decreased political advertising of approximately $12 million in 1997. In
addition, the Company's five NBC affiliated television stations benefited from
significant Olympic related advertising in the prior year third quarter.
 
     Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) increased 2.2 percent
to $144.8 million in 1997 from $141.7 million in 1996. The increase was
attributable to higher overall personnel costs of $3.2 million and higher
depreciation and amortization of $1 million. These increases were partially
offset by decreases in program rights costs of $493,000, promotion costs of
$333,000 and license fees of $246,000.
 
                                       24
<PAGE>   26
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- CONTINUED
     Operating income from the broadcasting segment in 1997 decreased 1.3
percent to $82.2 million from $83.2 million in the prior year. The 1997 decrease
reflected the modest overall revenue gain, resulting primarily from the effect
of significant political and Olympic related advertising revenue in the prior
year.
 
1996 COMPARED WITH 1995
 
CONSOLIDATED
 
     Operating revenues for the year ended December 31, 1996 increased 13.1
percent to $534.1 million from $472.3 million in 1995. The revenue comparison
was affected by the acquisition of Scripps League Newspapers, Inc. ("Scripps
League" which was subsequently renamed Pulitzer Community Newspapers, Inc.
("PCN")) on July 1, 1996. In addition, the revenue comparison was affected by an
extra week of operations in 1995; fiscal 1995 contained 53 weeks, versus 52
weeks in fiscal 1996. On a comparable basis (i.e., excluding PCN from 1996 and
the extra week from 1995), consolidated revenues increased 7.6 percent. The
increase reflected gains in both broadcasting and publishing revenues.
 
     Operating expenses, excluding the St. Louis Agency adjustment, were $409.8
million compared to $373.2 million in 1995, an increase of 9.8 percent. On a
comparable basis, excluding PCN from 1996 and the extra week from 1995,
operating expenses increased 3.2 percent. Major increases in comparable expenses
were overall personnel costs of $5.2 million, promotion expenses of $1.2
million, national advertising commissions of $951,000 and circulation
distribution expenses of $611,000. Partially offsetting these increases were
declines in newsprint expense of $1.1 million and inducement costs of $798,000.
 
     Operating income for fiscal 1996 increased 27.3 percent to $110.3 million
from $86.7 million in 1995. On a comparable basis, excluding PCN from 1996 and
the extra week from 1995, operating income increased 25.9 percent. The 1996
increase reflected improvements in both the broadcasting and publishing
segments, resulting from increased revenues.
 
     Interest expense increased $3.4 million in 1996 compared to 1995 due to
higher debt levels in the second half of 1996. New long-term borrowings related
to the acquisition of Scripps League added approximately $4.8 million to 1996
interest expense. The Company's average debt level for 1996 increased to $186.9
million from $133.2 million in the prior year. The Company's average interest
rate for 1996 decreased slightly to 7.3 percent from 7.5 percent in the prior
year. Interest income for the year decreased $681,000, due to both lower average
balances of invested funds and lower interest rates in 1996.
 
     The effective income tax rate for 1996 increased to 40 percent from 37.9
percent in the prior year, due to approximately $2.1 million of nondeductible
goodwill amortization related to the Scripps League acquisition. The prior year
rate was affected by the settlement of a state tax examination which reduced
income tax expense by $911,000 in 1995. Excluding the non-recurring tax
settlement from the prior year, the effective income tax rate for 1995 would
have been 39 percent.
 
     The Company's 1996 non-operating expenses included a non-recurring charge
of approximately $2.7 million ($1.6 million after-tax) for the write-down in
value of a joint venture investment.
 
     For the year ended December 31, 1996, the Company reported net income of
$57.5 million, or $2.62 per share, compared with net income of $49.3 million, or
$2.26 per share, in the prior year. Comparability of the earnings results was
affected by the joint venture write-off in 1996, non-recurring costs related to
the Scripps League acquisition ($1.1 million after tax) in 1996, and the
positive income tax adjustment in 1995. Excluding the non-recurring items from
both years, 1996 net income would have increased to $60.3 million, or $2.74 per
share, from $48.4 million, or $2.22 per share, for the prior year. The gain in
net income reflected a significant increase in the broadcasting segment's
operating profits.
 
                                       25
<PAGE>   27
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- CONTINUED
PUBLISHING
 
     Operating revenues from the Company's publishing segment for 1996 increased
14.7 percent to $309.1 million from $269.4 million in 1995. On a comparable
basis, excluding PCN from 1996 and the extra week from 1995, publishing revenues
increased 3.5 percent. The comparable increase reflected higher advertising
revenues in 1996.
 
     Newspaper advertising revenues, on a comparable basis, excluding PCN from
1996 and the extra week from 1995, increased $9.5 million, or 6 percent, in
1996. The significant portion of the current year increase resulted from higher
classified advertising revenue at the St. Louis Post-Dispatch ("Post-Dispatch").
Increases in advertising rates for most categories and higher volume for zoned
advertising were the primary factors in the 1996 revenue increase. In the fourth
quarter of 1996 and the first quarter of 1997, varying rate increases were
implemented at the Post-Dispatch, The Arizona Daily Star ("Star") and most of
the Company's new community newspaper properties.
 
     Circulation revenues, on a comparable basis, excluding PCN from 1996 and
the extra week from 1995, increased approximately $100,000, or 0.2 percent, in
1996. The Post-Dispatch and Star experienced only slight fluctuations in paid
circulation and average rates in 1996 compared to the prior year.
 
     Operating expenses (including selling, general and administrative expenses
and depreciation and amortization) for the publishing segment, excluding the St.
Louis Agency adjustment, increased to $262.5 million in 1996 from $231.5 million
in 1995, an increase of 13.4 percent. On a comparable basis, excluding PCN from
1996 and the extra week from 1995, operating expenses increased 2.1 percent.
Major increases in comparable expenses were promotion expense of $1.5 million,
circulation distribution expenses of $611,000 and overall personnel costs of
$574,000. Partially offsetting these increases were declines in newsprint
expense of $1.1 million and inducement costs of $798,000.
 
     Operating income from the Company's publishing activities increased 28.3
percent to $32.6 million in 1996 from $25.4 million in 1995. On a comparable
basis, excluding PCN from 1996 and the extra week from 1995, operating income
from the publishing segment increased 12 percent. The increase resulted from
higher advertising revenues on a comparable basis.
 
BROADCASTING
 
     Broadcasting operating revenues for 1996 increased 10.9 percent to $225
million from $202.9 million in 1995. On a comparable basis, excluding the extra
week from 1995, operating revenues increased 12.9 percent. Local spot
advertising increased 14.2 percent and national spot advertising increased 14.7
percent. The current year increases reflected strong Olympic-related advertising
at the Company's five NBC affiliated stations and significant political
advertising of $13.2 million, an increase of $10.3 million.
 
     Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) increased 3.5 percent
to $141.7 million in 1996 from $137 million in 1995. On a comparable basis,
excluding the extra week from 1995, operating expenses increased 4.5 percent.
This increase was primarily attributable to higher overall personnel costs of
$4.2 million and higher national advertising commissions of $951,000.
 
     Operating income from the broadcasting segment in 1996 increased 26.2
percent to $83.2 million from $65.9 million in the prior year. On a comparable
basis, excluding the extra week from 1995, operating income from the
broadcasting segment increased 30.9 percent. The 1996 gain resulted from the
significant increases in both local and national advertising revenues.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Outstanding debt, inclusive of the short-term portion of long-term debt, as
of December 31, 1997, was $185.4 million, compared with $250.1 million at
December 31, 1996. The decrease in the outstanding debt
                                       26
<PAGE>   28
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- CONTINUED

balance reflects the final repayment of $14.5 million under the Company's 8.8
percent Senior Note Agreement which matured in 1997 and the repayment of $50
million of credit agreement borrowings with The First National Bank of Chicago,
as Agent, for a group of lenders ("FNBC"). Although, the FNBC credit agreement
borrowings were repaid during 1997, the $50 million line of credit remains
available to the Company through June, 2001. As of December 31, 1997, the
Company's outstanding debt balance consists primarily of fixed-rate senior notes
with The Prudential Insurance Company of America ("Prudential").
 
     The Company's Senior Note Agreements with Prudential and FNBC Credit
Agreement require it to maintain certain financial ratios, place restrictions on
the payment of dividends and prohibit new borrowings, except as permitted
thereunder.
 
     As of December 31, 1997, commitments for capital expenditures were
approximately $13.8 million, relating to normal capital equipment replacements
and the cost of a building project at the Louisville broadcasting property.
Commitments for film contracts and license fees as of December 31, 1997 were
approximately $30 million. In addition, as of December 31, 1997, the Company had
unfunded capital contribution commitments of approximately $13.9 million related
to investments in three limited partnerships.
 
     At December 31, 1997, the Company had working capital of $99.3 million and
a current ratio of 2.32 to 1. This compares to working capital of $95.3 million
and a current ratio of 2.24 to 1 at December 31, 1996.
 
     The Company from time to time considers acquisitions of properties when
favorable investment opportunities are identified. Currently, the Company has no
agreements to acquire additional properties. In the event an investment
opportunity is identified, management expects that it would be able to arrange
financing on terms and conditions satisfactory to the Company.
 
     The Company generally expects to generate sufficient cash from operations
to cover ordinary capital expenditures, film contract and license fees, working
capital requirements, debt installments and dividend payments.
 
INFORMATION SYSTEMS AND THE YEAR 2000
 
     The Year 2000 Issue is the result of information systems being designed
using two digits rather than four to define the applicable year. As the year
2000 approaches, such information systems may be unable to accurately process
certain date-based information.
 
     In 1995, the Company initiated the process of preparing its information
systems and applications for the Year 2000. For the Company, this process
involves the replacement of aging hardware and software to address most of its
Year 2000 issues. A significant portion of the Company's information systems
were scheduled to be replaced during the next few years, regardless of the Year
2000 Issue. The Company plans to have substantially all of the system and
application changes completed by March 31, 1999.
 
     The Company expects to incur internal staff costs as well as consulting and
other expenditures to install new information systems and modify existing
systems during the next twelve to fifteen months. The remaining cost of the
Company's Year 2000 project is estimated at approximately $16.1 million, of
which approximately $15.8 million represents the cost of new hardware and
software to be capitalized. These expenditures have been considered in the
Company's normal capital budgeting process and will be funded through operating
cash flows. The remaining maintenance & modification costs (approximately
$300,000) will be expensed as incurred.
 
                                       27
<PAGE>   29
 
DIGITAL TELEVISION
 
     The company is required to construct digital television facilities for its
Orlando television station, WESH. The station must be broadcasting digitally by
November 1, 1999 in order to comply with Federal Communications Commission
("FCC") rules. The deadline for constructing digital facilities at the remainder
of the Company's television stations is May 1, 2002. The Company is currently
considering available options to comply with the FCC's timetable and expects
that capital expenditures required over the next several years to construct
digital facilities will be funded through normal operating cash flows.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
     The following consolidated financial statements of Pulitzer Publishing
Company and Subsidiaries are filed as part of this report. Supplementary
unaudited data with respect to the quarterly results of operations of the
Company are set forth in the Notes to Consolidated Financial Statements.
 
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
     Independent Auditors' Report
 
     Statements of Consolidated Income for each of the Three Years in the Period
        Ended December 31, 1997
 
     Statements of Consolidated Financial Position at December 31, 1997 and 1996
 
     Statements of Consolidated Stockholders' Equity for each of the Three Years
        in the Period Ended December 31, 1997
 
     Statements of Consolidated Cash Flows for each of the Three Years in the
        Period Ended December 31, 1997
 
     Notes to Consolidated Financial Statements for the Three Years in the
        Period Ended December 31, 1997
 
                                       28
<PAGE>   30
 
                          INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors and Stockholders of
Pulitzer Publishing Company:
 
     We have audited the accompanying statements of consolidated financial
position of Pulitzer Publishing Company and subsidiaries as of December 31, 1997
and 1996, and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the companies at December 31,
1997 and 1996, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles.
 
DELOITTE & TOUCHE LLP
 
Saint Louis, Missouri
February 6, 1998
(February 27, 1998 as to the last
paragraph of Note 3)
 
                                       29
<PAGE>   31
 
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                       STATEMENTS OF CONSOLIDATED INCOME
 
<TABLE>
<CAPTION>
                                                                       YEARS ENDED DECEMBER 31,
                                                                --------------------------------------
                                                                   1997          1996          1995
                                                                   ----          ----          ----
                                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                             <C>           <C>           <C>
OPERATING REVENUES -- NET:
  Publishing:
     Advertising............................................     $227,817      $191,939      $161,932
     Circulation............................................       87,611        81,434        76,349
     Other..................................................       42,541        35,723        31,107
  Broadcasting..............................................      227,016       224,992       202,939
                                                                 --------      --------      --------
          Total operating revenues..........................      584,985       534,088       472,327
                                                                 --------      --------      --------
OPERATING EXPENSES:
  Publishing operations.....................................      145,730       139,259       125,811
  Broadcasting operations...................................       69,205        66,626        64,202
  Selling, general and administrative.......................      190,429       172,838       155,996
  St. Louis Agency adjustment (Note 2)......................       19,450        13,972        12,502
  Depreciation and amortization.............................       36,454        31,102        27,150
                                                                 --------      --------      --------
          Total operating expenses..........................      461,268       423,797       385,661
                                                                 --------      --------      --------
  Operating income..........................................      123,717       110,291        86,666
  Interest income...........................................        4,652         4,522         5,203
  Interest expense..........................................      (16,081)      (13,592)      (10,171)
  Net other expense.........................................       (1,203)       (5,449)       (2,330)
                                                                 --------      --------      --------
INCOME BEFORE PROVISION FOR INCOME TAXES....................      111,085        95,772        79,368
PROVISION FOR INCOME TAXES (Note 8).........................       45,057        38,272        30,046
                                                                 --------      --------      --------
NET INCOME..................................................     $ 66,028      $ 57,500      $ 49,322
                                                                 ========      ========      ========
BASIC EARNINGS PER SHARE OF STOCK (Note 11):
  Earnings per share........................................        $2.99         $2.62         $2.26
                                                                 ========      ========      ========
  Weighted average number of shares outstanding.............       22,110        21,926        21,800
                                                                 ========      ========      ========
DILUTED EARNINGS PER SHARE OF STOCK (Note 11):
  Earnings per share........................................        $2.94         $2.58         $2.23
                                                                 ========      ========      ========
  Weighted average number of shares outstanding.............       22,452        22,273        22,097
                                                                 ========      ========      ========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       30
<PAGE>   32
 
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                 STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                              ---------------------
                                                                1997        1996
                                                                ----        ----
                                                                 (IN THOUSANDS)
<S>                                                           <C>         <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................  $  62,749   $  73,052
  Trade accounts receivable (less allowance for doubtful
    accounts of $2,411 and $2,576)..........................     85,882      80,010
  Inventory.................................................      5,265       4,976
  Prepaid expenses and other................................     12,847       5,650
  Program rights............................................      7,866       8,452
                                                              ---------   ---------
      Total current assets..................................    174,609     172,140
                                                              ---------   ---------
PROPERTIES:
  Land......................................................     16,154      14,692
  Buildings.................................................     84,215      78,733
  Machinery and equipment...................................    225,113     209,854
  Construction in progress..................................      7,324       2,071
                                                              ---------   ---------
      Total.................................................    332,806     305,350
  Less accumulated depreciation.............................    170,992     149,418
                                                              ---------   ---------
      Properties -- net.....................................    161,814     155,932
                                                              ---------   ---------
INTANGIBLE AND OTHER ASSETS:
  Intangible assets -- net of applicable amortization (Notes
    3 and 4)................................................    287,617     298,305
  Receivable from The Herald Company (Notes 2 and 7)........     39,733      39,955
  Other.....................................................     19,183      17,519
                                                              ---------   ---------
      Total intangible and other assets.....................    346,533     355,779
                                                              ---------   ---------
         TOTAL..............................................  $ 682,956   $ 683,851
                                                              =========   =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Trade accounts payable....................................  $  16,158   $  13,355
  Current portion of long-term debt (Note 5)................     12,705      14,705
  Salaries, wages and commissions...........................     15,232      14,897
  Income taxes payable......................................      3,070       1,267
  Program contracts payable.................................      7,907       8,916
  Interest payable..........................................      5,677       7,177
  Pension obligations (Note 6)..............................        348       2,123
  Acquisition payable.......................................      9,804       9,804
  Other.....................................................      4,386       4,566
                                                              ---------   ---------
      Total current liabilities.............................     75,287      76,810
                                                              ---------   ---------
LONG-TERM DEBT (Note 5).....................................    172,705     235,410
                                                              ---------   ---------
PENSION OBLIGATIONS (Note 6)................................     26,709      23,415
                                                              ---------   ---------
POSTRETIREMENT AND POSTEMPLOYMENT BENEFIT OBLIGATIONS (Note
  7)........................................................     91,906      92,252
                                                              ---------   ---------
OTHER LONG-TERM LIABILITIES.................................      5,572       6,027
                                                              ---------   ---------
COMMITMENTS AND CONTINGENCIES (Note 12).....................
STOCKHOLDERS' EQUITY (Note 9):
  Preferred stock, $.01 par value; 25,000,000 shares
    authorized; issued and outstanding -- none..............
  Common stock, $.01 par value; 100,000,000 shares
    authorized; issued -- 6,797,895 in 1997 and 6,498,215 in
    1996....................................................         68          65
  Class B common stock, convertible, $.01 par value;
    50,000,000 shares authorized; issued -- 27,125,247 in
    1997 and 27,214,842 in 1996.............................        271         272
  Additional paid-in capital................................    135,542     129,173
  Retained earnings.........................................    362,828     308,283
                                                              ---------   ---------
      Total.................................................    498,709     437,793
  Treasury stock -- at cost; 24,660 and 22,811 shares of
    common stock in 1997 and 1996, respectively, and
    11,700,850 shares of Class B common stock in 1997 and
    1996....................................................   (187,932)   (187,856)
                                                              ---------   ---------
      Total stockholders' equity............................    310,777     249,937
                                                              ---------   ---------
         TOTAL..............................................  $ 682,956   $ 683,851
                                                              =========   =========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       31
<PAGE>   33
 
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                         CLASS B   ADDITIONAL                              TOTAL
                                                COMMON   COMMON     PAID-IN     RETAINED   TREASURY    STOCKHOLDERS'
                                                STOCK     STOCK     CAPITAL     EARNINGS     STOCK        EQUITY
                                                ------   -------   ----------   --------   --------    -------------
                                                                           (IN THOUSANDS)
<S>                                             <C>      <C>       <C>          <C>        <C>         <C>
BALANCES AT JANUARY 1, 1995..................    $44      $206      $122,070    $220,322   $(187,623)    $155,019
  Issuance of common stock grants............                            218                                  218
  Common stock options exercised.............      2                   2,327                                2,329
  Conversion of Class B common stock to
    common stock.............................      1        (1)
  Tax benefit from stock options exercised...                            924                                  924
  Net income.................................                                     49,322                   49,322
  Cash dividends declared and paid $.41 per
    share of common and Class B common.......                                     (8,828)                  (8,828)
  Purchase of treasury stock.................                                                   (213)        (213)
                                                 ---      ----      --------    --------   ---------     --------
BALANCES AT DECEMBER 31, 1995................     47       205       125,539     260,816    (187,836)     198,771
  Issuance of common stock grants............                             76                                   76
  Common stock options exercised.............      1                   2,166                                2,167
  Conversion of Class B common stock to
    common stock.............................      1        (1)
  Tax benefit from stock options exercised...                          1,476                                1,476
  Net income.................................                                     57,500                   57,500
  Cash dividends declared and paid $.46 per
    share of common and Class B common.......                                    (10,033)                 (10,033)
  Purchase of treasury stock.................                                                    (20)         (20)
  Four for three stock split in the form of a
    33.3 percent stock dividend (Note 9).....     16        68           (84)
                                                 ---      ----      --------    --------   ---------     --------
BALANCES AT DECEMBER 31, 1996................     65       272       129,173     308,283    (187,856)     249,937
  Issuance of common stock grants............                             70                                   70
  Common stock options exercised.............      2                   3,297                                3,299
  Conversion of Class B common stock to
    common stock.............................      1        (1)
  Common stock issued under Employee Stock
    Purchase Plan............................                            322                                  322
  Tax benefit from stock options exercised...                          2,680                                2,680
  Net income.................................                                     66,028                   66,028
  Cash dividends declared and paid $.52 per
    share of common and Class B common.......                                    (11,483)                 (11,483)
  Purchase of treasury stock.................                                                    (76)         (76)
                                                 ---      ----      --------    --------   ---------     --------
BALANCES AT DECEMBER 31, 1997................    $68      $271      $135,542    $362,828   $(187,932)    $310,777
                                                 ===      ====      ========    ========   =========     ========
</TABLE>
 
<TABLE>
<CAPTION>
                                                                 COMMON STOCK                CLASS B COMMON STOCK
                                                            -----------------------         -----------------------
                                                                           HELD IN                         HELD IN
                                                            ISSUED         TREASURY         ISSUED         TREASURY
                                                            ------         --------         ------         --------
                                                                                (IN THOUSANDS)
<S>                                                         <C>            <C>              <C>            <C>
SHARE ACTIVITY:
BALANCES AT JANUARY 1, 1995...............................  4,444            (11)           20,609          (8,776)
  Issuance of common stock grants.........................      6
  Common stock options exercised..........................    119
  Conversion of Class B common stock to common stock......    135                             (135)
  Purchase of treasury stock..............................                    (6)
                                                            -----            ---            ------         -------
BALANCES AT DECEMBER 31, 1995.............................  4,704            (17)           20,474          (8,776)
  Issuance of common stock grants.........................      2
  Common stock options exercised..........................    140
  Conversion of Class B common stock to common stock......     84                              (84)
  Four for three split in the form of a 33.3 percent stock
    dividend (Note 9).....................................  1,568             (6)            6,825          (2,925)
                                                            -----            ---            ------         -------
BALANCES AT DECEMBER 31, 1996.............................  6,498            (23)           27,215         (11,701)
  Issuance of common stock grants.........................      1
  Common stock options exercised..........................    202
  Conversion of Class B common stock to common stock......     90                              (90)
  Common stock issued under Employee Stock Purchase
    Plan..................................................      7
  Purchase of treasury stock..............................                    (2)
                                                            -----            ---            ------         -------
BALANCES AT DECEMBER 31, 1997.............................  6,798            (25)           27,125         (11,701)
                                                            =====            ===            ======         =======
</TABLE>
 
          See accompanying notes to consolidated financial statements.
                                       32
<PAGE>   34
 
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                     STATEMENTS OF CONSOLIDATED CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1997       1996       1995
                                                                ----       ----       ----
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income................................................  $ 66,028   $ 57,500   $ 49,322
  Adjustments to reconcile net income to net cash provided
    by operating activities:
    Depreciation............................................    22,884     20,434     19,281
    Amortization of intangibles.............................    13,570     10,668      7,869
    Deferred income taxes...................................    (3,367)    (1,943)    (1,847)
    Gain on sale of assets..................................                 (421)
    Changes in assets and liabilities (net of the effects of
     the purchase and sale of properties) (Note 3) which
     provided (used) cash:
      Trade accounts receivable.............................    (5,872)    (9,737)    (1,581)
      Inventory.............................................      (289)     3,017     (3,121)
      Other assets..........................................    (3,766)     7,842      1,150
      Trade accounts payable and other liabilities..........     2,494      3,659      1,594
      Income taxes payable..................................     1,803       (239)    (3,713)
                                                              --------   --------   --------
NET CASH PROVIDED BY OPERATING ACTIVITIES...................    93,485     90,780     68,954
                                                              --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures......................................   (28,191)   (17,787)   (22,934)
  Purchase of publishing properties, net of cash acquired...             (203,306)
  Purchase of broadcast assets..............................    (3,141)    (5,187)
  Investment in joint ventures and limited partnerships.....    (4,792)    (2,983)    (3,637)
  Sale of assets, net of cash sold..........................                4,150
  (Increase) decrease in notes receivable...................     4,979     (4,904)     1,875
                                                              --------   --------   --------
NET CASH USED IN INVESTING ACTIVITIES.......................   (31,145)  (230,017)   (24,696)
                                                              --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of long-term debt..................              135,000
  Repayments on long-term debt..............................   (64,705)   (15,205)   (14,250)
  Dividends paid............................................   (11,483)   (10,033)    (8,828)
  Proceeds from exercise of stock options...................     3,299      2,167      2,329
  Proceeds from employee stock purchase plan................       322
  Purchase of treasury stock................................       (76)       (20)      (213)
                                                              --------   --------   --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES.........   (72,643)   111,909    (20,962)
                                                              --------   --------   --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........   (10,303)   (27,328)    23,296
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR..............    73,052    100,380     77,084
                                                              --------   --------   --------
CASH AND CASH EQUIVALENTS AT END OF YEAR....................  $ 62,749   $ 73,052   $100,380
                                                              ========   ========   ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid (received) during the year for:
    Interest paid...........................................  $ 17,469   $  9,716   $ 10,147
    Interest received.......................................    (4,574)    (4,872)    (4,805)
    Income taxes............................................    45,110     38,530     35,862
    Income tax refunds......................................    (1,108)      (195)    (1,280)
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING
  ACTIVITY:
  Increase (decrease) in minimum pension liability and
    related intangible asset (Notes 4 and 6)................  $    402   $ (1,059)  $   (227)
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       33
<PAGE>   35
 
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
     Basis of Consolidation -- The consolidated financial statements include the
accounts of Pulitzer Publishing Company (the "Company") and its subsidiary
companies, all of which are wholly-owned. All significant intercompany
transactions have been eliminated from the consolidated financial statements.
 
     Fiscal Year -- The Company's fiscal year ends on the last Sunday of the
calendar year, which in 1995 resulted in a 14-week fourth quarter and a 53-week
year. In 1997 and 1996, the fourth quarter was 13 weeks and the year was 52
weeks. For ease of presentation, the Company has used December 31 as the
year-end.
 
     Cash Equivalents -- For purposes of reporting cash flows, the Company
considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.
 
     Inventory Valuation -- Inventory, which consists primarily of newsprint, is
stated at the lower of cost (determined primarily using the last-in, first-out
method) or market. If the first-in, first-out cost method had been used,
inventory would have been $805,000 and $874,000 higher than reported at December
31, 1997 and 1996, respectively. Ink and other miscellaneous supplies are
expensed as purchased.
 
     Program Rights -- Program rights represent license agreements for the right
to broadcast programs over license periods which generally run from one to five
years. The total cost of each agreement is recorded as an asset and liability
when the license period begins and the program is available for broadcast.
Program rights covering periods greater than one year are amortized over the
license period using an accelerated method as the programs are broadcast. In the
event that a determination is made that programs will not be used prior to the
expiration of the license agreement, unamortized amounts are then charged to
operations. Payments are made in installments as provided for in the license
agreements. Program rights expected to be amortized in the succeeding year and
payments due within one year are classified as current assets and current
liabilities, respectively.
 
     Property and Depreciation -- Property is recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
individual assets. Buildings are depreciated over 20 to 50 years and all other
property over lives ranging from 3 to 15 years.
 
     Intangible Assets -- Intangibles consisting of goodwill, FCC licenses and
network affiliations acquired subsequent to the effective date of Accounting
Principles Board Opinion No. 17 ("Opinion No. 17") are being amortized over
lives of either 15 or 40 years while all other intangible assets are being
amortized over lives ranging from 4 to 23 years. Management periodically
evaluates the recoverability of intangible assets by reviewing the current and
projected cash flows of each of its properties. Intangibles in the amount of
$1,520,000, related to acquisitions prior to the effective date of Opinion No.
17, are not being amortized because, in the opinion of management, their value
is of undeterminable duration. In addition, the intangible asset relating to the
Company's additional minimum pension liability under Statement of Financial
Accounting Standards No. 87 is adjusted annually, as necessary, when a new
determination of the amount of the additional minimum pension liability is made
annually.
 
     Long-Lived Assets -- The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, in
March 1995. This statement became effective for the Company's 1996 fiscal year.
The general requirements of this statement are applicable to the properties and
intangible assets of the Company and require impairment to be considered
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Adoption of this standard on its effective date
of January 1, 1996 had no impact on the Company's financial position or results
of operations.
 
     Employee Benefit Plans -- The Company and its subsidiaries have several
noncontributory pension plans covering substantially all of their employees.
Benefits under the plans are generally based on salary and years
 
                                       34
<PAGE>   36
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
of service. The Company's liability and related expense for benefits under the
plans are recorded over the service period of active employees based upon annual
actuarial calculations. Plan funding strategies are influenced by tax
regulations. Plan assets consist primarily of government bonds and corporate
equity securities.
 
     The Company provides retiree medical and life insurance benefits under
varying postretirement plans at several of its operating locations. In addition,
the Company provides postemployment disability benefits to certain former
employee groups prior to retirement. The significant portion of these benefits
results from plans at the St. Louis Post-Dispatch. The Company's liability and
related expense for benefits under the postretirement plans are recorded over
the service period of active employees based upon annual actuarial calculations.
The Company accrues postemployment disability benefits when it becomes probable
that such benefits will be paid and when sufficient information exists to make
reasonable estimates of the amounts to be paid. All of the Company's
postretirement and postemployment benefits are funded on a pay-as-you-go basis.
 
     Income Taxes -- Deferred tax assets and liabilities are recorded for the
expected future tax consequences of events that have been included in either the
financial statements or tax returns of the Company. Under this asset and
liability approach, deferred tax assets and liabilities are determined based on
temporary differences between the financial statement and tax bases of assets
and liabilities by applying enacted statutory tax rates applicable to future
years in which the differences are expected to reverse.
 
     Stock-Based Compensation Plans -- Effective January 1, 1996, the Company
adopted the disclosure requirements of Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), Accounting for Stock-Based Compensation. The new
standard defines a fair value method of accounting for stock options and similar
equity instruments. Under the fair value method, compensation cost is measured
at the grant date based on the fair value of the award and is recognized over
the service period, which is usually the vesting period. Pursuant to the new
standard, companies are encouraged, but not required, to adopt the fair value
method of accounting for employee stock-based transactions. Companies are also
permitted to continue to account for such transactions under Accounting
Principles Board Opinion No. 25 ("APB 25"), Accounting for Stock Issued to
Employees, but are required to disclose pro forma net income and, if presented,
earnings per share as if the company had applied the new method of accounting.
The accounting requirements of the new method are effective for all employee
awards granted after the beginning of the fiscal year of adoption, whereas the
disclosure requirements apply to all awards granted subsequent to December 31,
1994. The Company continues to recognize and measure compensation for its
restricted stock and stock option plans in accordance with the existing
provisions of APB 25.
 
     Earnings Per Share of Stock -- Effective December 15, 1997, the Company
adopted Statement of Financial Accounting Standards No. 128, Earnings per Share
("SFAS 128"). This statement simplifies the standards for computing earnings per
share ("EPS"), making them comparable to international standards, and supersedes
Accounting Principles Board Opinion No. 15, Earnings Per Share ("APB 15"). SFAS
128 replaces the presentation of primary EPS with a presentation of basic EPS.
The statement also requires dual presentation of basic and diluted EPS on the
face of the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation. As
required by SFAS 128, diluted EPS has been computed for all prior periods
presented to conform to the provisions of the new statement. Basic earnings per
share under SFAS 128 for prior periods is the same as earnings per share
previously reported by the Company under APB 15.
 
     Basic earnings per share of stock is computed using the weighted average
number of Common and Class B shares outstanding during the applicable period,
adjusted for the stock splits described in Note 9. Diluted earnings per share of
stock is computed using the weighted average number of Common and Class B shares
outstanding and common stock equivalents. (see Note 11)
                                       35
<PAGE>   37
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
     Use of Management Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires that
management make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. The reported amounts of
revenues and expenses during the reporting period may also be affected by the
estimates and assumptions management is required to make. Actual results may
differ from those estimates.
 
     Reclassifications -- Certain reclassifications have been made to the 1996
and 1995 consolidated financial statements to conform with the 1997
presentation.
 
2. AGENCY AGREEMENTS
 
     An agency operation between the Company and The Herald Company is conducted
under the provisions of an Agency Agreement, dated March 1, 1961, as amended.
For many years, the Post-Dispatch (owned by the Company) was the afternoon and
Sunday newspaper serving St. Louis, and the Globe-Democrat (formerly owned by
The Herald Company) was the morning paper and also published a weekend edition.
Although separately owned, from 1961 through February 1984, the publication of
both the Post-Dispatch and the Globe-Democrat was governed by the St. Louis
Agency Agreement. From 1961 to 1979, the two newspapers controlled their own
news, editorial, advertising, circulation, accounting and promotion departments
and Pulitzer managed the production and printing of both newspapers. In 1979,
Pulitzer assumed full responsibility for advertising, circulation, accounting
and promotion for both newspapers. In February 1984, after a number of years of
unfavorable financial results at the St. Louis Agency, the Globe-Democrat was
sold by The Herald Company and the St. Louis Agency Agreement was revised to
eliminate any continuing relationship between the two newspapers and to permit
the repositioning of the daily Post-Dispatch as a morning newspaper. Following
the renegotiation of the St. Louis Agency Agreement at the time of the sale of
the Globe-Democrat, The Herald Company retained the contractual right to receive
one-half the profits (as defined), and the obligation to share one-half the
losses (as defined), of the operations of the St. Louis Agency, which from
February 1984 forward consisted solely of the publication of the Post-Dispatch.
The St. Louis Agency Agreement also provides for The Herald Company to share
one-half the cost of, and to share in a portion of the proceeds from the sale
of, capital assets used in the production of the Post-Dispatch. Under the St.
Louis Agency Agreement, Pulitzer supervises, manages and performs all activities
relating to the day-to-day publication of the Post-Dispatch and is solely
responsible for the news and editorial policies of the newspaper. The
consolidated financial statements of the Company include all the operating
revenues and expenses of the St. Louis Agency relating to the Post-Dispatch.
 
     In Tucson, Arizona, a separate partnership, TNI Partners, ("TNI"), acting
as agent for the Star (a newspaper owned by the Company) and the Citizen (a
newspaper owned by Gannett Co., Inc.), is responsible for printing, delivery,
advertising, and circulation of the Star and the Citizen. TNI collects all of
the receipts and income relating to the Star and the Citizen and pays all
operating expenses incident to the partnership's operations and publication of
the newspapers. Each newspaper is solely responsible for its own news and
editorial content. Net income or net loss of TNI is generally allocated equally
to the Star and the Citizen. The Company's consolidated financial statements
include its share of TNI's revenues and expenses.
 
3. ACQUISITION AND DISPOSITION OF PROPERTIES
 
     During 1996, the Company acquired in a purchase transaction all of the
stock of Scripps League Newspapers, Inc. ("Scripps League"), a privately owned
publisher of community newspapers serving smaller markets, primarily in the West
and Midwest. The purchase price of approximately $216 million (including
acquisition costs) includes all of the operating assets of the newspapers,
working capital of approximately $6 million and intangibles. The acquisition was
financed by long-term borrowings of $135 million (see Note 5)
 
                                       36
<PAGE>   38
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
and cash of approximately $81 million (approximately $69 million net of cash
acquired). The results of the operations of Scripps League for the period
subsequent to June 30, 1996 are included in the Company's Statements of
Consolidated Income.
 
     The following supplemental unaudited pro forma information shows the
results of operations of the Company for the years ended December 31, 1996 and
1995 adjusted for the acquisition of Scripps League, assuming such transaction
and the related debt financing had been consummated at the beginning of each
year presented. The unaudited pro forma financial information is not necessarily
indicative either of results of operations that would have occurred had the
transaction occurred at the beginning of each year presented or of future
results of operations.
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                             ----------------------
                                                               1996         1995
                                                               ----         ----
                                                                  (UNAUDITED)
                                                             (IN THOUSANDS, EXCEPT
                                                                PER SHARE DATA)
<S>                                                          <C>          <C>
Operating revenues -- net................................    $566,915     $536,803
Operating income.........................................    $113,660     $ 93,896
Net income...............................................    $ 54,519     $ 44,203
Earnings per share of stock:
  Basic earnings per share...............................    $   2.49     $   2.03
  Diluted earnings per share.............................    $   2.45     $   2.00
</TABLE>
 
     In December 1996, the Company acquired in a purchase transaction the assets
of an AM radio station in Phoenix, Arizona for approximately $5,187,000.
 
     On February 27, 1998, the Company announced that its Board of Directors
decided to explore potential strategic alternatives relating to its broadcasting
division, including the potential sale of that division, among other
possibilities. However, the Company has not entered into any agreement, and
there can be no assurance that any agreement will be reached.
 
4. INTANGIBLE ASSETS
 
     Intangible assets consist of:
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                             --------------------
                                                               1997        1996
                                                               ----        ----
                                                                (IN THOUSANDS)
<S>                                                          <C>         <C>
FCC licenses and network affiliations....................    $114,376    $112,161
Goodwill.................................................     178,355     178,327
Intangible pension asset (Note 6)........................       2,320       1,918
Other....................................................      63,924      63,914
                                                             --------    --------
       Total.............................................     358,975     356,320
Less accumulated amortization............................      71,358      58,015
                                                             --------    --------
Total intangible assets -- net...........................    $287,617    $298,305
                                                             ========    ========
</TABLE>
 
                                       37
<PAGE>   39
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
5. FINANCING ARRANGEMENTS
 
     Long-term debt consists of:
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                             --------------------
                                                               1997        1996
                                                               ----        ----
                                                                (IN THOUSANDS)
<S>                                                          <C>         <C>
Credit Agreement.........................................    $     --    $ 50,000
Senior notes maturing in substantially equal annual
  installments:
  8.8% due through 1997..................................                  14,500
  6.76% due 1998-2001....................................      50,000      50,000
  7.22% due 2002-2005....................................      50,000      50,000
  7.86% due 2001-2008....................................      85,000      85,000
  Other..................................................         410         615
                                                             --------    --------
       Total.............................................     185,410     250,115
Less current portion.....................................      12,705      14,705
                                                             --------    --------
Total long-term debt.....................................    $172,705    $235,410
                                                             ========    ========
</TABLE>
 
     On July 1, 1996, in connection with the acquisition of Scripps League (see
Note 3), the Company issued to The Prudential Insurance Company of America
$85,000,000 principal amount of 7.86 percent Senior Notes due 2008 ("Notes"). In
addition, on July 1, 1996, the Company entered into a credit agreement with The
First National Bank of Chicago, as Agent, for a group of lenders ("FNBC"),
providing for a $50,000,000 five year variable rate revolving credit facility
("Credit Agreement"). The Company immediately borrowed the full amount under the
Credit Agreement and used the proceeds, together with the proceeds from the
Notes, to partially finance the Scripps League acquisition.
 
     The Notes mature in equal annual installments beginning July 25, 2001 and
ending July 25, 2008. All borrowings under the Credit Agreement are due on July
2, 2001, the termination date of the facility. Prior to the credit facility's
termination, loans may be borrowed, repaid and reborrowed by the Company. In
addition, the Company has the option to repay any borrowings and terminate the
credit facility prior to its scheduled maturity. As of December 31, 1997, the
Company had no borrowings under the Credit Agreement.
 
     The Credit Agreement allows the Company to elect an interest rate with
respect to each borrowing under the facility equal to a daily floating rate or
the Eurodollar rate plus 0.225 percent. As of December 31, 1996, the interest
rate on the Credit Agreement borrowings with FNBC was 5.875 percent.
 
     The terms of the various senior note agreements contain certain covenants
and conditions including the maintenance of cash flow and various other
financial ratios, limitations on the incurrence of other debt and limitations on
the amount of restricted payments (which generally includes dividends, stock
purchases and redemptions).
 
     Under the terms of the most restrictive borrowing covenants, in general,
the Company may pay annual dividends not to exceed the sum of $10,000,000, plus
75% of consolidated net earnings commencing January 1, 1993, less the sum of all
dividends paid or declared and redemptions in excess of sales of Company stock
after December 31, 1992. Pursuant to this calculation, approximately
$138,938,000 is available for distribution as dividends at December 31, 1997.
 
                                       38
<PAGE>   40
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
     Approximate annual maturities of long-term debt for the five years
subsequent to December 31, 1997 are as follows:
 
<TABLE>
<CAPTION>
                        FISCAL YEAR
                        -----------
                       (IN THOUSANDS)
<S>                                                             <C>
1998........................................................    $ 12,705
1999........................................................      12,705
2000........................................................      12,500
2001........................................................      23,125
2002........................................................      23,125
Thereafter..................................................     101,250
                                                                --------
       Total................................................    $185,410
                                                                ========
</TABLE>
 
6. PENSION PLANS
 
     The pension cost components were as follows:
 
<TABLE>
<CAPTION>
                                                        YEARS ENDED DECEMBER 31,
                                                    --------------------------------
                                                      1997        1996        1995
                                                      ----        ----        ----
                                                             (IN THOUSANDS)
<S>                                                 <C>         <C>         <C>
Service cost for benefits earned during the
  year..........................................    $  3,966    $  4,154    $  3,834
Interest cost on projected benefit obligation...       8,470       8,185       8,057
Actual loss (return) on plan assets.............     (18,785)    (12,507)    (17,541)
Net amortization and deferrals..................      10,001       4,833      11,365
                                                    --------    --------    --------
Net periodic pension cost.......................    $  3,652    $  4,665    $  5,715
                                                    ========    ========    ========
</TABLE>
 
     The funded status of the Company's pension plans was as follows:
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                             --------------------
                                                               1997        1996
                                                               ----        ----
                                                                (IN THOUSANDS)
<S>                                                          <C>         <C>
Actuarial present value of:
  Vested benefit obligation..............................    $117,854    $107,637
                                                             ========    ========
  Accumulated benefit obligation.........................    $118,735    $108,380
                                                             ========    ========
Projected benefit obligation.............................    $128,690    $118,414
Plan assets at fair value................................     119,353     104,046
                                                             --------    --------
Plan assets less than projected benefit obligation.......       9,337      14,368
Unrecognized transition obligation, net..................      (1,318)     (1,539)
Unrecognized net gain....................................      16,507      10,557
Unrecognized prior service cost..........................         211         234
Additional minimum liability.............................       2,320       1,918
                                                             --------    --------
Pension obligations......................................    $ 27,057    $ 25,538
                                                             ========    ========
</TABLE>
 
     The projected benefit obligation was determined using assumed discount
rates of 7% and 7.5% at December 31, 1997 and 1996, respectively. The expected
long-term rate of return on plan assets was 8.5% for both 1997 and 1996. For
those plans that pay benefits based on final compensation levels, the actuarial
assumptions for overall annual rate of increase in future salary levels was 4.5%
and 5% at December 31, 1997 and 1996, respectively.
 
                                       39
<PAGE>   41
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
     Certain of the Company's employees participate in multi-employer retirement
plans sponsored by their respective unions. Amounts charged to operations,
representing the Company's required contributions to these plans in 1997, 1996
and 1995, were approximately $844,000, $781,000, and $731,000, respectively.
 
     The Company also sponsors an employee savings plan under Section 401(k) of
the Internal Revenue Code. This plan covers substantially all employees.
Contributions by the Company amounted to approximately $1,899,000, $1,668,000
and $1,494,000 for 1997, 1996 and 1995, respectively.
 
7. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
 
     The net periodic postretirement benefit cost components were as follows:
 
<TABLE>
<CAPTION>
                                                         YEARS ENDED DECEMBER 31,
                                                       -----------------------------
                                                        1997       1996       1995
                                                        ----       ----       ----
                                                              (IN THOUSANDS)
<S>                                                    <C>        <C>        <C>
Service cost (for benefits earned during the
  year)............................................    $   970    $   926    $   933
Interest cost on accumulated postretirement benefit
  obligation.......................................      4,632      4,683      5,799
Net amortization, deferrals and other components...     (2,538)    (2,308)    (1,787)
                                                       -------    -------    -------
Net periodic postretirement benefit cost...........    $ 3,064    $ 3,301    $ 4,945
                                                       =======    =======    =======
</TABLE>
 
     The Company funds its postretirement benefit obligation on a pay-as-you-go
basis, and, for 1997, 1996 and 1995 made payments of $4,118,000, $4,207,000 and
$4,071,000, respectively.
 
     The status of the Company's postretirement benefit plans was as follows:
 
<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                             -----------------
                                                              1997      1996
                                                              ----      ----
                                                              (IN THOUSANDS)
<S>                                                          <C>       <C>
Retirees and surviving beneficiaries.......................  $39,549   $37,734
Actives eligible to retire.................................   14,418    13,516
Other actives..............................................   12,756    11,142
                                                             -------   -------
Accumulated postretirement benefit obligation..............   66,723    62,392
Unrecognized prior service gain............................    6,658     7,990
Unrecognized net gain......................................   15,351    19,404
                                                             -------   -------
Accrued postretirement benefit cost........................  $88,732   $89,786
                                                             =======   =======
</TABLE>
 
     The preceding amounts for the December 31, 1997 and 1996 accrued
postretirement benefit cost and the 1997, 1996 and 1995 net periodic
postretirement benefit expense have not been reduced for The Herald Company's
share of the respective amounts. However, pursuant to the St. Louis Agency
Agreement (see Note 2), the Company has recorded a receivable for The Herald
Company's share of the accrued postretirement benefit cost as of December 31,
1997 and 1996.
 
     For 1997 and 1996 measurement purposes, health care cost trend rates of 9%,
7% and 5% were assumed for indemnity plans, PPO plans and HMO plans,
respectively. For 1997, these rates were assumed to decrease gradually to 5%
through the year 2010 and remain at that level thereafter. For 1996; the
indemnity and PPO rates were assumed to decrease gradually to 5.5% through the
year 2010 and remain at that level thereafter. The health care cost trend rate
assumptions have a significant effect on the amount of obligation and expense
reported. A 1% increase in these annual trend rates would have increased the
accrued postretirement benefit
 
                                       40
<PAGE>   42
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
cost at December 31, 1997 by approximately $1,162,000 and the 1997 annual net
periodic postretirement benefit cost by approximately $1,164,000.
 
     Administrative costs related to indemnity plans were assumed to increase at
a constant annual rate of 6% for both 1997 and 1996. The assumed discount rate
used in estimating the accumulated postretirement benefit obligation was 7% and
7.5% for 1997 and 1996, respectively.
 
     The Company's postemployment benefit obligation, representing certain
disability benefits at the St. Louis Post-Dispatch, was $3,174,000 and
$2,466,000 at December 31, 1997 and 1996, respectively.
 
8. INCOME TAXES
 
     Provisions for income taxes (benefits) consist of the following:
 
<TABLE>
<CAPTION>
                                                            YEARS ENDED DECEMBER 31,
                                                        ---------------------------------
                                                         1997         1996         1995
                                                         ----         ----         ----
                                                                 (IN THOUSANDS)
<S>                                                     <C>          <C>          <C>
Current:
  Federal.........................................      $41,389      $33,465      $28,352
  State and local.................................        7,035        5,750        3,541
Deferred:
  Federal.........................................       (2,878)        (805)      (1,641)
  State and local.................................         (489)        (138)        (206)
                                                        -------      -------      -------
     Total........................................      $45,057      $38,272      $30,046
                                                        =======      =======      =======
</TABLE>
 
     Factors causing the effective tax rate to differ from the statutory Federal
income tax rate were:
 
<TABLE>
<CAPTION>
                                                           YEARS ENDED DECEMBER 31,
                                                           ------------------------
                                                           1997      1996      1995
                                                           ----      ----      ----
<S>                                                        <C>       <C>       <C>
Statutory rate...........................................   35%       35%       35%
Favorable resolution of prior year federal and state tax
  issues.................................................                       (1)
Amortization of intangibles..............................    2         1
State and local income taxes, net of U.S. Federal income
  tax benefit............................................    4         4         3
Other-net................................................                        1
                                                            --        --        --
     Effective rate......................................   41%       40%       38%
                                                            ==        ==        ==
</TABLE>
 
                                       41
<PAGE>   43
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
     The Company's deferred tax assets and liabilities, net, which have been
included in other assets in the statements of consolidated financial position
consisted of the following:
 
<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                             -----------------
                                                              1997      1996
                                                              ----      ----
                                                              (IN THOUSANDS)
<S>                                                          <C>       <C>
Deferred tax assets:
  Pensions and employee benefits...........................  $11,403   $ 9,575
  Postretirement benefit costs.............................   19,248    19,284
  Other....................................................    1,561     2,110
                                                             -------   -------
     Total.................................................   32,212    30,969
                                                             -------   -------
Deferred tax liabilities:
  Depreciation.............................................   19,583    19,590
  Amortization.............................................    7,765     9,882
                                                             -------   -------
     Total.................................................   27,348    29,472
                                                             -------   -------
Net deferred tax asset.....................................  $ 4,864   $ 1,497
                                                             =======   =======
</TABLE>
 
     The Company had no valuation allowance for deferred tax assets as of
December 31, 1997, 1996 and 1995.
 
9. STOCKHOLDERS' EQUITY
 
     Each share of the Company's common stock is entitled to one vote and each
share of Class B common stock is entitled to ten votes on all matters. Holders
of outstanding shares of Class B common stock representing 95.5% of the combined
voting power of the Company have deposited their shares in a voting trust (the
"Voting Trust").
 
     The trustees generally hold all voting rights with respect to the shares of
Class B common stock subject to the Voting Trust; however, in connection with
certain matters, including any proposal for a merger, consolidation,
recapitalization or dissolution of the Company or disposition of all or
substantially all its assets, the calling of a special meeting of stockholders
and the removal of directors, the Trustees may not vote the shares deposited in
the Voting Trust except in accordance with written instructions from the holders
of the Voting Trust Certificates. The Voting Trust may be terminated with the
written consent of holders of two-thirds in interest of all outstanding Voting
Trust Certificates. Unless extended or terminated by the parties thereto, the
Voting Trust expires on January 16, 2001.
 
     On September 12, 1996, the Board of Directors declared a four-for-three
stock split of the Company's common and Class B common stock payable in the form
of a 33.3% stock dividend. The dividend was distributed on November 1, 1996 to
stockholders of record on October 10, 1996. The Company's capital balances and
share amounts were adjusted in 1996 to reflect the split.
 
     On January 4, 1995, the Board of Directors declared a five-for-four stock
split of the Company's common and Class B common stock payable in the form of a
25% stock dividend. The dividend was distributed on January 24, 1995 to
stockholders of record on January 13, 1995. Even though this stock split was
declared subsequent to December 31, 1994, the Company's capital balances and
share amounts were adjusted in 1994 to reflect the split.
 
                                       42
<PAGE>   44
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
10. COMMON STOCK PLANS
 
     On May 11, 1994, the Company's stockholders adopted the Pulitzer Publishing
Company 1994 Stock Option Plan (the "1994 Plan"), replacing the Pulitzer
Publishing Company 1986 Employee Stock Option Plan (the "1986 Plan"). The 1994
Plan provides for the issuance to key employees and outside directors of
incentive stock options to purchase up to a maximum of 2,500,000 shares of
common stock. Under the 1994 Plan, options to purchase 1,667 shares of common
stock will be automatically granted to outside directors on the date following
each annual meeting of the Company's stockholders and will vest on the date of
the next annual meeting of the Company's stockholders. Total shares available
for issue to outside directors under this automatic grant feature are limited to
a maximum of 166,667. The issuance of all other options will be administered by
the Compensation Committee of the Board of Directors, subject to the 1994 Plan's
terms and conditions. Specifically, the exercise price per share may not be less
than the fair market value of a share of common stock at the date of grant. In
addition, exercise periods may not exceed ten years and the minimum vesting
period is established at six months from the date of grant. Option awards to an
individual employee may not exceed 250,000 shares in a calendar year.
 
     Prior to 1994, the Company issued incentive stock options to key employees
under the 1986 Plan. As provided by the 1986 Plan, certain option awards were
granted with tandem stock appreciation rights which allow the employee to elect
an alternative payment equal to the appreciation of the stock value instead of
exercising the option. Outstanding options issued under the 1986 Plan have an
exercise term of ten years from the date of grant and vest in equal installments
over a three-year period.
 
     Stock option transactions are summarized as follows:
 
<TABLE>
<CAPTION>
                                                                              WEIGHTED
                                                                              AVERAGE
                                                 SHARES       PRICE RANGE      PRICE
                                                 ------       -----------     --------
<S>                                             <C>          <C>              <C>
Common Stock Options:
Outstanding, January 1, 1995................    1,198,371    $ 9.27-$21.98     $16.69
  Granted...................................      192,853    $30.47-$34.41     $34.31
  Canceled..................................      (39,632)   $11.73-$21.98     $16.69
  Exercised.................................     (158,304)   $ 9.27-$21.98     $14.71
                                                ---------
Outstanding, December 31, 1995..............    1,193,288    $ 9.27-$34.41     $19.80
  Granted...................................      179,809    $41.91-$46.25     $46.03
  Canceled..................................       (2,146)   $21.53-$34.41     $28.77
  Exercised.................................     (140,096)   $ 9.27-$21.98     $15.47
                                                ---------
Outstanding, December 31, 1996..............    1,230,855    $ 9.27-$46.25     $24.11
  Granted...................................      211,231    $45.63-$58.81     $58.41
  Canceled..................................      (14,235)   $21.53-$47.38     $38.91
  Exercised.................................     (201,920)   $ 9.27-$46.25     $16.34
                                                ---------
Outstanding, December 31, 1997..............    1,225,931    $ 9.27-$58.81     $31.13
                                                =========
Exercisable at:
  December 31, 1996.........................      855,445    $ 9.27-$34.41     $18.19
                                                =========
  December 31, 1997.........................      849,565    $ 9.27-$46.25     $22.21
                                                =========
Shares Available for Grant at December 31,
  1997......................................    1,712,004
                                                =========
</TABLE>
 
                                       43
<PAGE>   45
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
     Stock appreciation right transactions are summarized as follows:
 
<TABLE>
<CAPTION>
                                                                SHARES     PRICE
                                                                ------     -----
<S>                                                             <C>        <C>
Common Stock Appreciation Rights:
  Outstanding, January 1, 1995..............................     37,584    $14.87
  Canceled..................................................    (10,183)   $14.87
  Exercised.................................................    (27,401)   $14.87
                                                                -------
Outstanding, December 31, 1995, 1996 and 1997...............         --
                                                                =======
</TABLE>
 
     On May 11, 1994, the Company's stockholders also adopted the Pulitzer
Publishing Company 1994 Key Employees' Restricted Stock Purchase Plan (the "1994
Stock Plan") which replaced the Pulitzer Publishing Company 1986 Key Employees'
Restricted Stock Purchase Plan ("1986 Stock Plan"). The 1994 Stock Plan provides
that an employee may receive, at the discretion of the Compensation Committee, a
grant or right to purchase at a particular price, shares of common stock subject
to restrictions on transferability. A maximum of 416,667 shares of common stock
may be granted or purchased by employees. In addition, no more than 83,333
shares of common stock may be issued to an employee in any calendar year.
 
     Prior to 1994, the Company granted stock awards under the 1986 Stock Plan.
For grants awarded under both the 1994 and 1986 Stock Plans, compensation
expense is recognized over the vesting period of the grants. Stock Purchase Plan
transactions are summarized as follows:
 
<TABLE>
<CAPTION>
                                                                             WEIGHTED
                                                                             AVERAGE
                                                 SHARES      PRICE RANGE      PRICE
                                                 ------      -----------     --------
<S>                                              <C>        <C>              <C>
Common Stock Grants:
  Outstanding, January 1, 1995...............      4,236    $20.25-$21.38     $20.89
  Granted....................................      8,880    $24.53            $24.53
  Vested.....................................     (7,460)   $20.25-$24.53     $23.93
                                                 -------
Outstanding, December 31, 1995...............      5,656    $20.25-$24.53     $22.60
  Granted....................................      2,093    $36.70            $36.70
  Vested.....................................     (1,864)   $20.25-$24.53     $22.12
                                                 -------
Outstanding, December 31, 1996...............      5,885    $20.25-$36.70     $27.78
  Granted....................................      1,468    $47.44            $47.44
  Canceled...................................     (1,393)   $20.25-$47.44     $33.13
  Vested.....................................     (2,272)   $20.25-$36.70     $25.56
                                                 -------
Outstanding, December 31, 1997...............      3,688    $21.38-$47.44     $34.95
                                                 =======
Shares Available for Grant at December 31,
  1997.......................................    400,776
                                                 =======
</TABLE>
 
     As required by SFAS 123, the Company has estimated the fair value of its
option grants since December 31, 1994 by using the binomial options pricing
model with the following assumptions:
 
<TABLE>
<CAPTION>
                                                                 YEARS ENDED
                                                                 DECEMBER 31,
                                                              ------------------
                                                              1997   1996   1995
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Expected Life (years).......................................     7      7      7
Risk-free interest rate.....................................   5.8%   6.4%   5.7%
Volatility..................................................  23.6%  22.5%  19.6%
Dividend yield..............................................   1.1%   1.2%   1.3%
</TABLE>
 
                                       44
<PAGE>   46
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
     As discussed in Note 1, the Company accounts for its stock option grants in
accordance with APB 25, resulting in the recognition of no compensation expense
in the consolidated statements of income. Had compensation expense been computed
on the fair value of the option awards at their grant date, consistent with the
provisions of SFAS 123, the Company's net income and earnings per share would
have been reduced to the pro forma amounts below:
 
<TABLE>
<CAPTION>
                                                         YEARS ENDED DECEMBER 31,
                                                       -----------------------------
                                                        1997       1996       1995
                                                        ----       ----       ----
<S>                                                    <C>        <C>        <C>
Net income (in thousands):
  As reported......................................    $66,028    $57,500    $49,322
  Pro forma........................................    $64,487    $56,820    $49,288
Basic earnings per share:
  As reported......................................      $2.99      $2.62      $2.26
  Pro forma........................................      $2.92      $2.59      $2.26
Diluted earnings per share:
  As reported......................................      $2.94      $2.58      $2.23
  Pro forma........................................      $2.87      $2.55      $2.23
</TABLE>
 
     Because the provisions of SFAS 123 have not been applied to options granted
prior to January 1, 1995, the pro forma compensation cost may not be
representative of compensation cost to be incurred on a pro forma basis in
future years.
 
     On April 24, 1997, the Company's stockholders approved the adoption of the
Pulitzer Publishing Company 1997 Employee Stock Purchase Plan (the "Plan"). The
Plan allows eligible employees to authorize payroll deductions for the quarterly
purchase of the Company's Common Stock ("Common Stock") at a price generally
equal to 85 percent of the Common Stock's fair market value at the end of each
quarter. The Plan began operations as of July 1, 1997.
 
     In general, other than Michael E. Pulitzer, all employees of the Company
and its subsidiaries are eligible to participate in the Plan after completing at
least one year of service. Subject to appropriate adjustment for stock splits
and other capital changes, the Company may sell a total of 500,000 shares of its
Common Stock under the Plan. Shares sold under the Plan may be authorized and
unissued or held by the Company in its treasury. The Company may purchase shares
for resale under the Plan.
 
11. EARNINGS PER SHARE
 
     Weighted average shares of common and Class B common stock and common stock
equivalents used in the calculation of basic and diluted earnings per share are
summarized as follows:
 
<TABLE>
<CAPTION>
                                                           YEARS ENDED DECEMBER 31,
                                                          --------------------------
                                                           1997      1996      1995
                                                           ----      ----      ----
                                                                (IN THOUSANDS)
<S>                                                       <C>       <C>       <C>
Weighted average shares outstanding (Basic EPS).......    22,110    21,926    21,800
Stock option equivalents..............................       342       347       297
                                                          ------    ------    ------
Weighted average shares and equivalents (Diluted
  EPS)................................................    22,452    22,273    22,097
                                                          ======    ======    ======
</TABLE>
 
     Stock option equivalents included in the Diluted EPS calculation were
determined using the treasury stock method. Under the treasury stock method and
SFAS 128, outstanding stock options are dilutive when the average market price
of the Company's common stock exceeds the option price during a period. In
 
                                       45
<PAGE>   47
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
addition, proceeds from the assumed exercise of dilutive options along with the
related tax benefit are assumed to be used to repurchase common shares at the
average market price of such stock during the period.
 
12. COMMITMENTS AND CONTINGENCIES
 
     At December 31, 1997, the Company and its subsidiaries had construction and
equipment commitments of approximately $13,779,000 and commitments for program
contracts payable and license fees of approximately $30,025,000.
 
     The Company is an investor in three limited partnerships requiring future
capital contributions. As of December 31, 1997, the Company's unfunded capital
contribution commitment related to these investments was approximately
$13,863,000.
 
     The Company and its subsidiaries are defendants in a number of lawsuits,
some of which claim substantial amounts. While the results of litigation cannot
be predicted, management believes the ultimate outcome of such litigation will
not have a material adverse effect on the consolidated financial statements of
the Company and its subsidiaries.
 
     In connection with the September 1986 purchase of the Company's Class B
common stock, the Company agreed to make an additional payment to the selling
stockholders in the event that prior to May 13, 2001, the stockholders receive
dividends or distributions in excess of specified amounts in connection with the
sale of more than 85% of the voting securities or equity of the Company, a
merger, or a complete or partial liquidation or similar corporate transaction.
Any payment pursuant to this requirement would be based upon a percentage of the
dividend or distribution per share in excess of $15.72 increased by 15%
compounded annually beginning May 12, 1986.
 
13. FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The Company has estimated the following fair value amounts for its
financial instruments using available market information and appropriate
valuation methodologies. However, considerable judgment is required in
interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.
 
     Cash and Cash Equivalents, Accounts Receivable, Accounts Payable and
Program Contracts Payable -- The carrying amounts of these items are a
reasonable estimate of their fair value.
 
     Long-Term Debt -- Interest rates that are currently available to the
Company for issuance of debt with similar terms and remaining maturities are
used to estimate fair value. The fair value estimates of the Company's long-term
debt as of December 31, 1997 and 1996 were $195,969,000 and $259,958,000,
respectively.
 
     The fair value estimates presented herein are based on pertinent
information available to management as of December 31, 1997 and 1996. Although
management is not aware of any facts that would significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date, and current
estimates of fair value may differ from the amounts presented herein.
 
                                       46
<PAGE>   48
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
14. BUSINESS SEGMENTS
 
     The Company's operations are divided into two business segments, publishing
and broadcasting. The following is a summary of operations, assets and other
data.
 
<TABLE>
<CAPTION>
                                                                 AS OF AND FOR THE YEARS ENDED
                                                                          DECEMBER 31,
                                                                --------------------------------
                                                                  1997        1996        1995
                                                                  ----        ----        ----
                                                                         (IN THOUSANDS)
<S>                                                             <C>         <C>         <C>
OPERATING REVENUES:
  Publishing(a).............................................    $357,969    $309,096    $269,388
  Broadcasting..............................................     227,016     224,992     202,939
                                                                --------    --------    --------
       Total................................................    $584,985    $534,088    $472,327
                                                                ========    ========    ========
OPERATING INCOME (LOSS):
  Publishing(a).............................................    $ 47,544    $ 32,577    $ 25,393
  Broadcasting..............................................      82,180      83,246      65,939
  Corporate.................................................      (6,007)     (5,532)     (4,666)
                                                                --------    --------    --------
       Total................................................    $123,717    $110,291    $ 86,666
                                                                ========    ========    ========
TOTAL ASSETS:
  Publishing(a).............................................    $364,360    $351,685    $141,441
  Broadcasting..............................................     255,847     259,114     253,252
  Corporate.................................................      62,749      73,052     100,380
                                                                --------    --------    --------
       Total................................................    $682,956    $683,851    $495,073
                                                                ========    ========    ========
CAPITAL EXPENDITURES:
  Publishing(a).............................................    $ 15,215    $  6,433    $  6,627
  Broadcasting..............................................      12,976      11,354      16,307
                                                                --------    --------    --------
       Total................................................    $ 28,191    $ 17,787    $ 22,934
                                                                ========    ========    ========
DEPRECIATION & AMORTIZATION:
  Publishing(a).............................................    $ 13,007    $  8,660    $  4,307
  Broadcasting..............................................      23,447      22,442      22,843
                                                                --------    --------    --------
       Total................................................    $ 36,454    $ 31,102    $ 27,150
                                                                ========    ========    ========
OPERATING MARGINS:
  (Operating income to revenues):
  Publishing(a)(b)..........................................       18.7%       15.1%       14.1%
  Broadcasting..............................................       36.2%       37.0%       32.5%
</TABLE>
 
-------------------------
(a) Publishing information for 1997 and 1996 includes Scripps League Newspapers,
    Inc. (subsequently renamed Pulitzer Community Newspapers, Inc.), which was
    acquired on July 1, 1996. (see Note 3)
 
(b) Operating margins for publishing are stated with St. Louis Agency adjustment
    (which is recorded as an operating expense in the accompanying consolidated
    financial statements) added back to publishing operating income.
 
                                       47
<PAGE>   49
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 -- CONTINUED
 
15. QUARTERLY FINANCIAL DATA (UNAUDITED)
 
     Operating results for the years ended December 31, 1997 and 1996 by
quarters are as follows:
 
<TABLE>
<CAPTION>
                                             FIRST      SECOND     THIRD      FOURTH
                                            QUARTER    QUARTER    QUARTER    QUARTER     TOTAL
                                            -------    -------    -------    -------     -----
                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                         <C>        <C>        <C>        <C>        <C>
1997
OPERATING REVENUES -- NET:................  $136,006   $151,398   $141,244   $156,337   $584,985
                                            ========   ========   ========   ========   ========
NET INCOME................................  $ 12,495   $ 19,681   $ 14,223   $ 19,629   $ 66,028
                                            ========   ========   ========   ========   ========
BASIC EARNINGS PER SHARE OF STOCK 
(Note 11):
  Earnings Per Share......................  $   0.57   $   0.89   $   0.64   $   0.88   $   2.99
                                            ========   ========   ========   ========   ========
  Weighted Average Shares Outstanding.....    22,029     22,081     22,151     22,185     22,110
                                            ========   ========   ========   ========   ========
DILUTED EARNINGS PER SHARE OF STOCK  
(Note 11):
  Earnings Per Share......................  $   0.56   $   0.88   $   0.63   $   0.87   $   2.94
                                            ========   ========   ========   ========   ========
  Weighted Average Shares Outstanding.....    22,378     22,413     22,489     22,526     22,452
                                            ========   ========   ========   ========   ========
</TABLE>
 
<TABLE>
<CAPTION>
                                             FIRST      SECOND     THIRD      FOURTH
                                            QUARTER    QUARTER    QUARTER    QUARTER     TOTAL
                                            -------    -------    -------    -------     -----
                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                         <C>        <C>        <C>        <C>        <C>
1996
OPERATING REVENUES -- NET:................  $115,706   $127,574   $138,865   $151,943   $534,088
                                            ========   ========   ========   ========   ========
NET INCOME................................  $ 10,241   $ 16,185   $ 12,964   $ 18,110   $ 57,500
                                            ========   ========   ========   ========   ========
BASIC EARNINGS PER SHARE OF STOCK (Note
(Note 11):
  Earnings Per Share......................  $   0.47   $   0.74   $   0.59   $   0.82   $   2.62
                                            ========   ========   ========   ========   ========
  Weighted Average Shares Outstanding.....    21,864     21,912     21,949     21,978     21,926
                                            ========   ========   ========   ========   ========
DILUTED EARNINGS PER SHARE OF STOCK
 (Note 11):
  Earnings Per Share......................  $   0.46   $   0.73   $   0.58   $   0.81   $   2.58
                                            ========   ========   ========   ========   ========
  Weighted Average Shares Outstanding.....    22,191     22,271     22,291     22,291     22,273
                                            ========   ========   ========   ========   ========
</TABLE>
 
     In the fourth quarter of 1996, the Company determined that the carrying
value of one of its joint venture investments had been impaired. Accordingly,
the investment was reduced by a $2.7 million adjustment resulting in an
after-tax charge of $1.6 million or $0.07 per share. In the fourth quarter of
1995, a state tax examination was settled favorably resulting in a reduction of
income tax expense of approximately $900,000, or $0.04 per share for the
quarter.
 
     Earnings per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share may not equal
the total for the year.
 
                                  * * * * * *
 
                                       48
<PAGE>   50
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE
 
     Not applicable.
 
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     The information set forth under the caption "Management" in the Company's
definitive Proxy Statement to be used in connection with the 1998 Annual Meeting
of Stockholders is incorporated herein by reference.
 
ITEM 11. EXECUTIVE COMPENSATION
 
     The information set forth under the caption "Executive Compensation" in the
Company's definitive Proxy Statement to be used in connection with the 1998
Annual Meeting of Stockholders is incorporated herein by reference.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     The information set forth under the caption "Principal Stockholders" in the
Company's definitive Proxy Statement to be used in connection with the 1998
Annual Meeting of Stockholders is incorporated herein by reference.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     The information set forth under the caption "Compensation Committee
Interlocks and Insider Participation" in the Company's definitive Proxy
Statement to be used in connection with the 1998 Annual Meeting of Stockholders
is incorporated herein by reference.
 
                                       49
<PAGE>   51
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
(a) DOCUMENT LIST
 
     1. Financial Statements
 
          The following financial statements are set forth in Part II, Item 8 of
     this report.
 
     PULITZER PUBLISHING COMPANY AND SUBSIDIARIES:
 
          (i) Independent Auditors' Report.
 
          (ii) Statements of Consolidated Income for each of the Three Years in
     the Period Ended December 31, 1997.
 
          (iii) Statements of Consolidated Financial Position at December 31,
     1997 and 1996.
 
          (iv) Statements of Consolidated Stockholders' Equity for each of the
     Three Years in the Period Ended December 31, 1997.
 
          (v) Statements of Consolidated Cash Flows for each of the Three Years
     in the Period Ended December 31, 1997.
 
          (vi) Notes to Consolidated Financial Statements for the Three Years in
     the Period Ended December 31, 1997.
 
     2. Supplementary Data and Financial Statement Schedules
 
          (i) Supplementary unaudited data with respect to quarterly results of
     operations is set forth in Part II, Item 8 of this Report.
 
          (ii) The following financial statement schedule and opinion thereon
     are filed as a part of this Report:
 
<TABLE>
<CAPTION>
                                                              SEQUENTIAL PAGE
                                                              ---------------
<S>                                                           <C>
Independent Auditors' Report................................        54
Schedule II -- Valuation and Qualifying Accounts and
  Reserves..................................................        55
</TABLE>
 
     All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore have
been omitted.
 
     3. Exhibits Required by Securities and Exchange Commission Regulation S-K
 
     (a) The following exhibits are filed as part of this report:
 
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<S>             <C>  
3.2              By-laws of the Company restated as of October 29, 1997
10.8.1           Amendment, dated September 16, 1997, to Pulitzer Retirement
                 Savings Plan
10.34            Letter Agreement, dated January 26, 1998, between Pulitzer
                 Publishing Company and Emily Rauh Pulitzer
21               Subsidiaries of Registrant
23               Independent Auditors' Consent
24               Power of Attorney
27.1             Financial Data Schedule for 1997
27.2             Restated Financial Data Schedules for 1995 and 1996
                 (including 1996 Quarterly Data)
27.3             Restated Financial Data Schedules for 1997 Quarterly Data
</TABLE>
 
                                       50
<PAGE>   52
 
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<S>  <C>    
     (b) The following exhibits are incorporated herein by reference:
 3.1        --   Restated Certificate of Incorporation of the Company.(iii)
 4.1        --   Form of Certificate for Common Stock.(iii)
 9.1        --   Voting Trust Agreement, dated June 19, 1995 between the
                 holders of voting trust certificates and Michael E.
                 Pulitzer, Emily Rauh Pulitzer, Ronald H. Ridgway, Nicholas
                 G. Penniman IV, Ken J. Elkins, Cole C. Campbell and David
                 Moore. (xiii)
 9.2        --   Termination Agreement, dated June 19, 1995 between the
                 holders of voting trust certificates and Michael E.
                 Pulitzer, Emily Rauh Pulitzer, Ronald H. Ridgway, Nicholas
                 G. Penniman IV, Ken J. Elkins, Cole C. Campbell and David
                 Moore.(xiii)
10.1        --   Agreement, dated January 1, 1961, between the Pulitzer
                 Publishing Company, a Missouri corporation, and the
                 Globe-Democrat Publishing Company, as amended on September
                 4, 1975, April 12, 1979 and December 22, 1983.(i)
10.2.1      --   Amended and Restated Joint Operating Agreement, dated
                 December 30, 1988 between Star Publishing Company and
                 Citizen Publishing Company.(v)
10.2.2      --   Partnership Agreement, dated December 30, 1988 between Star
                 Publishing Company and Citizen Publishing Company.(v)
10.3        --   Agreement, dated as of May 12, 1986, among the Pulitzer
                 Publishing Company, Clement C. Moore, II, Gordon C. Weir,
                 William E. Weir, James R. Weir, Kenward G. Elmslie, Stephen
                 E. Nash and Manufacturers Hanover Trust Company, as Trustees
                 and Christopher Mayer.(i)
10.4        --   Letter Agreement, dated September 29, 1986, among the
                 Pulitzer Publishing Company, Trust Under Agreement Made by
                 David E. Moore, Frederick D. Pulitzer, Michael E. Pulitzer,
                 Jr., Robert S. Pulitzer, Joseph Pulitzer, IV, Joseph
                 Pulitzer, Jr., Michael E. Pulitzer, Stephen E. Nash and
                 Manufacturers Hanover Trust Company, as Trustees, Kenward G.
                 Elmslie, Gordon C. Weir, William E. Weir, James R. Weir,
                 Peter W. Quesada, T. Ricardo Quesada, Elinor P. Hempelmann,
                 The Moore Foundation, Inc., Mariemont Corporation, Z Press
                 Inc. and Clement C. Moore, II.(ii)
10.5        --   Letter Agreement, dated May 12, 1986, among the Pulitzer
                 Publishing Company, Peter W. Quesada, T. Ricardo Quesada,
                 Kate Davis Pulitzer Quesada and Elinor P. Hempelmann.(i)
10.6        --   Agreement, dated as of September 29, 1986, among the
                 Pulitzer Publishing Company, Peter W. Quesada, T. Ricardo
                 Quesada, Kate Davis Pulitzer Quesada and Elinor
                 Hempelmann.(ii)
10.7.1      --   Amendment, dated March 9, 1992, to the Pulitzer Publishing
                 Annual Incentive Plan.(vi)
10.7.2      --   Annual Incentive Compensation Plan.(iii)
10.8.2      --   Amendment, dated January 28, 1997, to Pulitzer Retirement
                 Savings Plan.(xvii)
10.8.3      --   Amendment, dated October 30, 1996, to Pulitzer Retirement
                 Savings Plan.(xvii)
10.8.4      --   Amendment, dated July 31, 1996, to Pulitzer Retirement
                 Savings Plan.(xvii)
10.8.5      --   Amendment, dated October 25, 1995, to Pulitzer Retirement
                 Savings Plan.(xvii)
10.8.6      --   Amendment, dated October 25, 1995, to Pulitzer Retirement
                 Savings Plan.(xiii)
10.8.7      --   Amendment, dated January 24, 1995, to Pulitzer Retirement
                 Savings Plan.(xi)
10.8.8      --   Amended and restated Pulitzer Retirement Savings Plan.(xi)
10.9        --   Amended and restated Joseph Pulitzer Pension Plan.(xi)
10.10.1     --   Amendment, dated October 25, 1995, to Pulitzer Publishing
                 Company Pension Plan.(xvii)
10.10.2     --   Amended and restated Pulitzer Publishing Company Pension
                 Plan.(xi)
</TABLE>
 
                                       51
<PAGE>   53
 
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<S>         <C>  <C>
10.11       --   Restated Supplemental Executive Benefit Pension Plan.(vii)
10.12       --   Employment Agreement, dated October 1, 1986, between the
                 Pulitzer Publishing Company and Joseph Pulitzer, Jr.(i)
10.13       --   Employment Agreement, dated January 2, 1986, between the
                 Pulitzer Publishing Company and Michael E. Pulitzer.(i)
10.14       --   Pulitzer Publishing Company Senior Executive Deferred
                 Compensation Plan.(xiii)
10.15       --   Consulting Agreement, dated May 1, 1993, between Pulitzer
                 Publishing Company and Glenn A. Christopher.(ix)
10.16       --   Supplemental Executive Retirement Pay Agreement dated June
                 5, 1984, between the Pulitzer Publishing Company and Glenn
                 A. Christopher.(i)
10.17       --   Letter Agreement, dated October 26, 1984, between the
                 Pulitzer Publishing Company and Glenn A. Christopher.(i)
10.18       --   Letter Agreement, dated October 21, 1986, between the
                 Pulitzer Publishing Company and David E. Moore.(i)
10.19       --   Pulitzer Publishing Company 1994 Key Employees' Restricted
                 Stock Purchase Plan.(x)
10.20.1     --   Amendment, dated April 24, 1996, to Pulitzer Publishing
                 Company 1994 Stock Option Plan.(xiv)
10.20.2     --   Amendment, dated April 20, 1995, to Pulitzer Publishing
                 Company 1994 Stock Option Plan.(xii)
10.20.3     --   Pulitzer Publishing Company 1994 Stock Option Plan.(x)
10.21       --   Registration Rights Agreement.(i)
10.22       --   Note Agreement, dated April 22, 1987, between the Pulitzer
                 Publishing Company and The Prudential Insurance Company of
                 America.(iv)
10.23       --   Employment Agreement, dated May 10, 1955, between the
                 Pulitzer Publishing Company and Joseph Pulitzer, Jr.(ii)
10.24       --   Note Agreement, dated June 30, 1993, between Pulitzer
                 Publishing Company and The Prudential Insurance Company of
                 America.(viii)
10.25       --   Stock Purchase Agreement by and among Pulitzer Publishing
                 Company and Mr. Edward W. Scripps, Mrs. Betty Knight
                 Scripps, and the Edward W. Scripps and Betty Knight Scripps
                 Charitable Remainder Unitrust dated as of May 4, 1996.(xv)
10.26       --   Note Agreement, dated July 1, 1996, between Pulitzer
                 Publishing Company and The Prudential Insurance Company of
                 America.(xvi)
10.27       --   Credit Agreement among Pulitzer Publishing Company, The
                 Lending Institutions Party Hereto, as Lenders, and The First
                 National Bank of Chicago, as Agent, dated as of July 1,
                 1996.(xvi)
10.28       --   Split Dollar Life Insurance Agreement, dated December 27,
                 1996, between Pulitzer Publishing Company and Richard A.
                 Palmer, Trustee of the Michael E. Pulitzer 1996 Life
                 Insurance Trust.(xvii)
10.29       --   Split Dollar Life Insurance Agreement, dated December 31,
                 1996, between Pulitzer Publishing Company and Rose M.
                 Elkins, Trustee of the Kennie J. Elkins Insurance
                 Trust.(xvii)
10.30       --   Split Dollar Life Insurance Agreement, dated December 30,
                 1996, between Pulitzer Publishing Company and Rebecca H.
                 Penniman and Nicholas G. Penniman V, Trustees of the
                 Nicholas G. Penniman IV Irrevocable 1996 Trust.(xvii)
</TABLE>
 
                                       52
<PAGE>   54
 
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<S>         <C>  <C>
10.31       --   Split Dollar Life Insurance Agreement, dated December 30,
                 1996, between Pulitzer Publishing Company and Doris D.
                 Ridgway and Boatmen's Trust Company, Trustees of The Ronald
                 H. Ridgway Insurance Trust.(xvii)
10.32       --   Consulting Agreement, dated May 1, 1996, between Pulitzer
                 Publishing Company and Glenn A. Christopher.(xvii)
10.33       --   Pulitzer Publishing Company 1997 Employee Stock Purchase
                 Plan.(xviii)
</TABLE>
 
-------------------------
(i)   Incorporated by reference to Registration Statement on Form S-1 (No.
      33-9953) filed with the Securities and Exchange Commission on November 4,
      1986.
 
(ii)  Incorporated by reference to Amendment No. 1 to Registration Statement on
      Form S-1 (No. 33-9953) filed with the Securities and Exchange Commission
      on December 9, 1986.
 
(iii) Incorporated by reference to Amendment No. 2 to Registration Statement on
      Form S-1 (no. 33-9953) filed with the Securities and Exchange Commission
      on December 11, 1986.
 
(iv) Incorporated by reference to Current Report on Form 8-K dated May 4, 1987.
 
(v)  Incorporated by reference to Annual Report on Form 10-K for the fiscal year
     ended December 31, 1988.
 
(vi) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
     ended December 31, 1991.
 
(vii) Incorporated by reference to Annual Report on Form 10-K for the fiscal
      year ended December 31, 1992.
 
(viii) Incorporated by reference to Quarterly Report on Form 10-Q for the
       quarterly period ended June 30, 1993.
 
(ix) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
     ended December 31, 1993.
 
(x)  Incorporated by reference to the Company's definitive Proxy Statement used
     in connection with the 1994 Annual Meeting of Stockholders.
 
(xi) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
     ended December 31, 1994.
 
(xii) Incorporated by reference to the Company's definitive Proxy Statement used
      in connection with the 1995 Annual Meeting of Stockholders.
 
(xiii) Incorporated by reference to Annual Report on Form 10-K for the fiscal
       year ended December 31, 1995.
 
(xiv) Incorporated by reference to the Company's definitive Proxy Statement used
      in connection with the 1996 Annual Meeting of Stockholders.
 
(xv) Incorporated by reference to Quarterly Report on Form 10-Q for the
     quarterly period ended March 31, 1996.
 
(xvi) Incorporated by reference to Quarterly Report on Form 10-Q for the
      quarterly period ended June 30, 1996.
 
(xvii) Incorporated by reference to Annual Report on Form 10-K for the fiscal
       year ended December 31, 1996
 
(xviii) Incorporated by reference to Quarterly Report on Form 10-Q for the
        quarterly period ended March 31, 1997.
 
     (c) Reports on Form 8-K.
 
          The Company did not file any reports on Form 8-K during the fourth
     quarter of fiscal year 1997.
 
                                       53
<PAGE>   55
 
                          INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors and Stockholders
 of Pulitzer Publishing Company:
 
We have audited the consolidated financial statements of Pulitzer Publishing
Company and its subsidiaries as of December 31, 1997 and 1996, and for each of
the three years in the period ended December 31, 1997, and have issued our
report thereon dated February 6, 1998 (February 27, 1998 as to the last
paragraph of Note 3); such report is included elsewhere in this Form 10-K. Our
audits also included the consolidated financial statement schedule of Pulitzer
Publishing Company and its subsidiaries, listed in the accompanying index at
Item 14(a)2.(ii). This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
 
DELOITTE & TOUCHE LLP
 
Saint Louis, Missouri
February 6, 1998
 
                                       54
<PAGE>   56
 
                                                                     SCHEDULE II
 
                  PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
 
            SCHEDULE II  VALUATION & QUALIFYING ACCOUNTS & RESERVES
               FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 & 1995
 
<TABLE>
<CAPTION>
                                          BALANCE AT   CHARGED TO   CHARGED TO                       BALANCE
                                          BEGINNING     COSTS &       OTHER                         AT END OF
              DESCRIPTION                 OF PERIOD     EXPENSES     ACCOUNTS       DEDUCTIONS       PERIOD
              -----------                 ----------   ----------   ----------      ----------      ---------
                                                                    (IN THOUSANDS)
<S>                                       <C>          <C>          <C>             <C>             <C>
YEAR ENDED DECEMBER 31, 1997
Valuation Accounts:
  Allowance for Doubtful Accounts.......    $2,576       $1,468        $178(a)        $1,811(b)      $2,411
Reserves:
  Accrued Medical Plan..................       389        4,714           0            4,060(c)       1,043
  Workers Compensation..................     2,126        1,199           0            1,368          1,957
YEAR ENDED DECEMBER 31, 1996
Valuation Accounts:
  Allowance for Doubtful Accounts.......    $2,009       $2,131        $321(a)        $1,885(b)      $2,576
Reserves:
  Accrued Medical Plan..................       561        4,198           0            4,370(c)         389
  Workers Compensation..................     2,005        1,478           0            1,357          2,126
YEAR ENDED DECEMBER 31, 1995
Valuation Accounts:
  Allowance for Doubtful Accounts.......    $2,135       $1,538        $247(a)        $1,911(b)      $2,009
Reserves:
  Accrued Medical Plan..................       789        4,907           0            5,135(c)         561
  Workers Compensation..................     2,327        1,192           0            1,514          2,005
</TABLE>
 
-------------------------
(a) -- Accounts reinstated, cash recoveries, etc.
 
(b) -- Accounts written off
 
(c) -- Amount represents:
 
<TABLE>
<CAPTION>
                                              1997     1996     1995
                                              ----     ----     ----
                <S>                          <C>      <C>      <C>
                Claims paid................  $3,596   $3,830   $4,660
                Service fees...............     473      579      548
                Cash refunds...............      (9)     (39)     (73)
                                             ------   ------   ------
                                             $4,060   $4,370   $5,135
                                             ======   ======   ======
</TABLE>
 
                                       55
<PAGE>   57
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 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, on the 26th day of March, 1998.
 
                                          PULITZER PUBLISHING COMPANY
 
                                          By:    /s/ Michael E. Pulitzer
                                            ------------------------------------
                                                   Michael E. Pulitzer,
                                                    Chairman, President and
                                                    Chief Executive Officer
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons on behalf of the Registrant in
the capacities indicated on the dates indicated.
 
<TABLE>
<CAPTION>
                  SIGNATURE                                       TITLE                          DATE
                  ---------                                       -----                          ----
<C>                                                 <C>                                     <S>
 
           /s/ Michael E. Pulitzer                  Director; Chairman, President and       March 26, 1998
---------------------------------------------            Chief Executive Officer
            (Michael E. Pulitzer)                     (Principal Executive Officer)
 
            /s/ Ronald H. Ridgway                    Director; Senior Vice President        March 26, 1998
---------------------------------------------        --Finance (Principal Financial
             (Ronald H. Ridgway)                         and Accounting Officer)
 
             /s/ Ken J. Elkins*                      Director; Senior Vice President        March 26, 1998
---------------------------------------------           --Broadcasting Operations
               (Ken J. Elkins)
 
             /s/ David E. Moore*                                Director                    March 26, 1998
---------------------------------------------
              (David E. Moore)
 
        /s/ Nicholas G. Penniman IV*                 Director; Senior Vice President        March 26, 1998
---------------------------------------------            --Newspaper Operations
          (Nicholas G. Penniman IV)
 
              /s/ William Bush*                                 Director                    March 26, 1998
---------------------------------------------
               (William Bush)
 
          /s/ Emily Rauh Pulitzer*                              Director                    March 26, 1998
---------------------------------------------
            (Emily Rauh Pulitzer)
 
             /s/ Alice B. Hayes*                                Director                    March 26, 1998
---------------------------------------------
              (Alice B. Hayes)
 
         /s/ James M. Snowden, Jr.*                             Director                    March 26, 1998
---------------------------------------------
           (James M. Snowden, Jr.)
</TABLE>
 
                                          By:     /s/ Ronald H. Ridgway
                                            ------------------------------------
                                                    Ronald H. Ridgway*
                                                    attorney-in-fact
 
                                       56
<PAGE>   58
                         PULITZER PUBLISHING COMPANY

                 REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED

                               DECEMBER 31, 1997

                                 EXHIBIT INDEX



3.2     By-Laws of the Company restated as of October 29, 1997

10.8.1  Amendment, dated September 16, 1997, to Pulitzer Retirement Savings Plan

10.34        Letter Agreement, dated January, 26, 1998, between
               Pulitzer Publishing Company and Emily Rauh Pulitzer
                 
21                      Subsidiaries of Registrant
                 
23                     Independent Auditors' Consent
                 
24                           Power of Attorney
                 
27.1                  Financial Data Schedule for 1997
                 
27.2            Restated Financial Data Schedules for 1995 and
                     1996 (including 1996 Quarterly Data)

27.3                Restated Financial Data Schedules for
                             1997 Quartley Data