SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 27, 1997
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ASCENT ENTERTAINMENT GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27192 52-1930707
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
One Tabor Center
1200 Seventeenth Street, Suite 2800
Denver, Colorado 80202
(Address of principal executive offices)
(303) 626-7000
(Registrant's telephone number, including area code)<PAGE>
Item 5. Other Events
On October 27, 1997, Ascent Entertainment Group, Inc. (Ascent@) issued a
press release reporting its third quarter 1997 financial results. A copy of the
release is attached hereto as Exhibit 20.1 and incorporated herein by reference.
On October 31, 1997, Ascent issued a press release reporting that Ascent
and the City and County of Denver had reached final agreements related to the
construction and operation of Ascent's proposed downtown Denver sports and
entertainment arena project (the _Arena_) and such agreements would be
submitted to Denver City Council for final approval by November 10, 1997.
Additionally, Ascent reported that its lender had extended the date by which
Ascent would have to commence construction of the Arena under Ascent's credit
facility from October 31, 1997 to November 11, 1997 with a further extension of
the date to November 30, 1997, if the City Council approved the agreements
regarding the Arena by November 10, 1997. A copy of the release is attached
hereto as Exhibit 20.2 and incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits (listed according to the number assigned in Item 601 of
Regulation S-K).
Exhibit No. Description
20.1 Press Release dated October 27, 1997.
20.2 Press Release dated October 31, 1997.
SOME OF THE STATEMENTS IN THIS FORM 8-K ARE FORWARD-LOOKING AND RELATE TO
ANTICIPATED FUTURE OPERATING RESULTS. FORWARD-LOOKING STATEMENTS ARE BASED UPON
ASCENT'S MANAGEMENT'S CURRENT ASSUMPTIONS, WHICH MAY BE AFFECTED BY SUBSEQUENT
DEVELOPMENTS AND BUSINESS CONDITIONS, AND NECESSARILY INVOLVE RISKS AND
UNCERTAINTIES. THEREFORE, THERE CAN BE NO ASSURANCE THAT ACTUAL FUTURE RESULTS
WILL NOT DIFFER MATERIALLY FROM ANTICIPATED RESULTS. READERS SHOULD REFER TO
ASCENT'S OTHER DISCLOSURE DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1996 AND QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL
QUARTER ENDED JUNE 30, 1997, FOR SPECIFIC DETAILS ON SOME OF THE FACTORS THAT
MAY AFFECT OPERATING RESULTS.<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Ascent Entertainment Group, Inc.
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By:/s/ Arthur M. Aaron
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Arthur M. Aaron
Vice President, Business and Legal Affairs
Date: October 31, 1997<PAGE>
ASCENT ENTERTAINMENT REPORTS RECORD 3RD QUARTER REVENUES AND EBITDA
FOR RELEASE:
Monday, October 27, 1997
CONTACT: MEDIA: MEDIA & ANALYSTS: ANALYSTS:
PAUL JACOBSON KAREN AMRHINE JIM CRONIN
ASCENT SARD, VERBINNEN ASCENT
(303) 626-7060 (212) 687-8080 (303) 626-7010
DENVER, COLO. / Ascent Entertainment Group, Inc. (NASDAQ:GOAL) today reported
record third quarter earnings before interest, taxes, depreciation and
amortization (EBITDA) of $28.0 million, nearly three times the $9.8 million for
the third quarter of 1996. Revenues for the third quarter 1997 were a record
$141 million, up 270 percent from 1996 third quarter revenues of $38.1 million.
The company reported a net loss for the 1997 third quarter of $1.3 million, or
$0.04 per common share, compared with a net loss of $6.0 million, or $0.20 per
common share, for the third quarter of 1996.
_The spectacular success of Air Force One was clearly the primary driver for
this strong quarter. We also enjoyed a solid operating performance at On Command
Corporation,_ said Charlie Lyons, chairman and CEO of Ascent.
The increase in third quarter revenues is primarily due to the release and
delivery of two films produced by the company's wholly-owned subsidiary, Beacon
Communications Corp.: Air Force One and A Thousand Acres. Air Force One,
starring Harrison Ford, has grossed approximately $170 million at the domestic
box office since its July 25th release, the third biggest movie of the summer
season and the fourth largest domestic box office gross so far in 1997. On
Command Corporation, Ascent's 57 percent-owned subsidiary, also produced a
significant increase in revenues due to the increase in the number of hotel
rooms it serves, largely as a result of the acquisition of SpectraVision, Inc.<PAGE>
assets in October 1996. The quarter-to-quarter EBITDA increase is primarily
attributable to the operations of Beacon and On Command. Specifically, Beacon's
EBITDA increased $14.3 million which primarily reflects the results of Air Force
One while On Command's EBITDA increased $4.2 million. The decrease in the net
loss is primarily due to the earnings recognized at Beacon on Air Force One,
offset by increased losses at On Command Corporation. Third quarter 1996 results
for On Command Corporation reflect only the results of On Command Video prior to
the acquisition of SpectraVision which was completed in the fourth quarter of
1996.
MULTIMEDIA DISTRIBUTION
Third quarter 1997 revenues for this segment, which includes On Command
Corporation and Ascent Network Services, were $62.1 million, up 74 percent from
$35.6 million in the comparable 1996 quarter. Third quarter EBITDA for this
segment was $19.0 million, up 30 percent from $14.6 million in the third quarter
of 1996. The segment reported an operating loss for the 1997 third quarter of
$3.2 million compared to an operating profit of $0.4 million in the third
quarter of 1996.
Revenues increased due to a higher installed room base at On Command resulting
primarily from the acquisition of SpectraVision, Inc. assets in October of 1996.
The increase in the operating loss in the third quarter is attributable to
several non-cash items: increased depreciation expense due to the significant
capital expenditures made by On Command in the past 12 months as it increased
its room base, an increase in depreciation relating to the SpectraVision assets
acquired and the amortization of goodwill arising from the acquisition.
As of September 30, 1997, On Command's room installation base was 872,000, a 98
percent increase over the same period a year earlier. Conversions of
SpectraVision properties to On Command's more reliable on-demand system totaled<PAGE>
20,000 rooms for the quarter, while new hotel installations for the quarter were
12,000. Compared to last quarter, On Command's room base declined by 49,000
rooms, primarily due to the previously announced assignment of selected hotel
contracts to Skylink Cinema Corporation. These assigned contracts were
predominantly for hotels receiving satellite delivery of scheduled movies. This
transaction marked the end of On Command's satellite delivery of movie
programming and further decreased its overall expense structure.
ENTERTAINMENT
Third quarter 1997 revenues for this segment, which includes the NHL Colorado
Avalanche, the NBA Denver Nuggets and Beacon Communications, were $78.9 million,
an increase of $76.4 million from $2.5 million in the comparable 1996 quarter.
In the third quarter of 1997, Beacon recognized revenues of $68.1 million from
the delivery and release of Air Force One and $7.6 million from the delivery of
A Thousand Acres to its domestic distributor. This $68.1 million from Air Force
One includes Beacon's share of the net domestic box results to-date (after the
domestic distributor and others have recouped certain distribution costs) and
$50.0 million attributable to recognition of previously deferred revenues upon
the delivery of the film to its foreign distributor during the quarter. In the
third quarter of 1996, Beacon had no movie releases and generated minimal
revenues from prior movie releases. While the Nuggets continued their off
season, the Avalanche commenced their pre-season schedule in September and
reflected approximately a $1.0 million increase in pre-season revenues over the
third quarter of 1996, in spite of one fewer pre-season game.
The segment's operating income of $8.9 million for the 1997 third quarter
compares to a $4.9 million loss in the third quarter of 1996. The improved
operating profit for the segment is attributable to the success of Air Force
One. While the Avalanche reflected an improvement in operating income due to an<PAGE>
increase in pre-season revenues, this improvement was offset by increased costs
at the Nuggets related to player contract terminations.
ASCENT CONSOLIDATED
Interest expense for the third quarter of 1997 was $6.0 million compared to $2.3
million in the third quarter of 1996. This increase is attributable to the
additional borrowings incurred during 1996 and the first three quarters of 1997
for capital expenditures, investment requirements (primarily the assumption of
debt in the SpectraVision transaction) and the funding of operating requirements
of Ascent and its subsidiaries.
Ascent has recorded an income tax expense of $1.2 million during the third
quarter of 1997 as compared to an income tax benefit of $2.7 million during the
third quarter of 1996. Up to and until the previously announced spin-off from
COMSAT Corporation on June 27, 1997, the company was able to recognize tax
benefits from its taxable losses as a result of a tax sharing agreement with
COMSAT so long as Ascent was included as a member of the consolidated tax group
of COMSAT. During the third quarter of 1997, the company and the members of its
consolidated tax group recognized tax expense to appropriately reflect its
consolidated net deferred tax liabilities after the spin-off. Furthermore, On
Command, which files a separate return, recognized no tax benefit from its
operating losses due to uncertainties regarding its ability to realize a portion
of the benefits associated with future deductible temporary differences
(deferred tax assets) and net operating loss carry forwards prior to their
expiration.
CASH AND LIQUIDITY
Cash and cash equivalents have increased $14.4 million since year end 1996 to
$18.4 million, which is primarily attributable to the receipt of significant<PAGE>
cash deposits at quarter end relating to the company's local television rights
agreement with Fox Sports. Consolidated bank borrowings under the $140.0 million
Ascent credit facility and the $150.0 million On Command credit facility are
$242.0 million at September 30, 1997. At September 30, 1997, Ascent had $23.0
million of available borrowings and OCC had $13.0 million of available
borrowings under their respective credit facilities subject to certain covenant
restrictions.
Pursuant to the company's amended bank credit agreement, if Ascent does not
commence construction on the proposed Denver arena project prior to October 31,
1997, the Ascent credit facility will be in default. Due to the existence of
several open issues between Ascent and the City of Denver concerning
construction of the new arena, the office of the mayor of the City of Denver
decided not to seek certain legislative actions from the Denver City Council at
its October 27th meeting that would have averted the default of failing to meet
the deadline. While Ascent and the City of Denver remain in negotiations over
the outstanding issues, Ascent will not meet the October 31 bank deadline nor be
able to provide assurance to its bank lender that a final agreement with the
City of Denver is imminent. Ascent is in discussion with its lender about the
consequences of not beginning construction and the alternatives available to the
company in light of the default. There can be no assurances that Ascent will be
successful in completing its negotiations with the City of Denver or how it will
resolve the construction default with its lender, and accordingly, Ascent could
be required to refinance its current bank agreement or sell assets.
As previously announced, on October 9, 1997, Ascent amended its bank credit
agreement to extend the date by which Ascent has to raise $50.0 million in
additional debt financing from October 9, 1997 to December 31, 1997. Pursuant to
the amendment, after raising the additional debt financing, Ascent would be able
to renew its current $140.0 million credit facility for up to two more years<PAGE>
after December 31, 1997. Ascent's lender agreed to the extension of the maturity
date based on progress in Ascent's efforts to raise financing through a private
placement offering of debt securities which are expected to raise significantly
in excess of $50.0 million in proceeds. Pursuant to Ascent's credit agreement,
the amount available thereunder would be decreased by an amount equal to the
excess over $50.0 million raised. In consideration for the bank to extend the
credit agreement beyond two years, Ascent is considering even a larger decrease
in the amount to be available under the credit agreement. Based on current
market conditions and satisfaction of certain outstanding issues with the city
of Denver, management of Ascent believes that Ascent will be successful in
obtaining the additional debt financing by December 31, though there can be no
assurances that conditions will not change or that other contingencies will not
arise which could impact Ascent's ability to raise the additional debt financing
or that such financing will be available on terms acceptable to Ascent.
OTHER
Ascent Entertainment Group's principal business is providing pay-per-view
entertainment and information services through its 57 percent-owned On Command
Corporation. In addition, Ascent is involved in other entertainment-related
businesses including ownership and operation of the NBA Denver Nuggets and NHL
Colorado Avalanche, and Beacon Communications, a motion picture and television
production company.
Some of the statements in this news release are forward-looking and relate to
anticipated future operating results. Forward-looking statements are based on
Ascent management's current expectations and assumptions, which may be affected
by subsequent developments and business conditions, and necessarily involve
risks and uncertainties. Therefore, there can be no assurance that actual future
results will not differ materially from anticipated results.<PAGE>
Readers should refer to Ascent's disclosure documents filed with the Securities
and Exchange Commission, including the company's 1996 form 10-K and the form 10-
Qs for the first and second quarters of 1997 for specific details on some of the
factors that may affect operating results.
###
For a menu of Ascent Entertainment Group's news releases available by fax 24
hours (no charge) or to retrieve a specific release, please call 1-800-758-5804,
ext. 152850, or access the address http://www.prnewswire.com on the internet.<PAGE>
ASCENT FINALIZES ARENA DEAL WITH DENVER
Lender Grants Extension of Oct. 31 Deadline for Construction Start
FOR IMMEDIATE RELEASE
Monday, November 03, 1997
CONTACT: MEDIA: MEDIA & ANALYSTS: ANALYSTS:
PAUL JACOBSON KAREN AMRHINE JIM CRONIN
ASCENT SARD, VERBINNEN ASCENT
(303) 626-7060 (212) 687-8080 (303) 626-7010
DENVER, COLO. / Ascent Entertainment Group, Inc. (NASDAQ:GOAL) announced today
that it has finalized with the City and County of Denver the definitive
agreements allowing Ascent to build the new Pepsi Center arena in downtown
Denver. As previously announced, the state-of-the-art Pepsi Center is expected
to open in the 1999-2000 NBA and NHL seasons, and serve as the new home for
Ascent's two professional sports franchises, the NBA Denver Nuggets and the NHL
Colorado Avalanche, along with many other entertainment events. The agreements
will be presented to Denver's City Council for approval on November 3, 1997, and
could be finally adopted by November 10.
As a result of the agreement between Ascent and the City, Ascent today received
a waiver from its lender to extend the October 31, 1997 deadline for commencing
construction on the new arena to November 11, 1997, with an additional extension
to November 30, 1997, conditioned on obtaining final City Council approval for
the agreement. Though there can be no assurances that the City Council will
approve the agreement or that other contingencies may not arise which could
prevent Ascent from commencing construction, Ascent management currently<PAGE>
believes that approval can be obtained and that construction can commence before
the November 30 deadline.
Some of the statements in this news release are forward-looking and relate to
anticipated future operating results. Forward-looking statements are based on
Ascent management's current expectations and assumptions, which may be affected
by subsequent developments and business conditions, and necessarily involve
risks and uncertainties. Therefore, there can be no assurance that actual future
results will not differ materially from anticipated results.
Ascent Entertainment Group's principal business is providing pay-per-view
entertainment and information services through its majority-owned On Command
Corporation. In addition, Ascent is involved in other entertainment-related
businesses including ownership and operation of the NBA Denver Nuggets and NHL
Colorado Avalanche, and Beacon Communications, a motion picture and television
production company.
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