SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
(RULE 14d-101)
Solicitation/Recommendation Statement Under Section 14(d)(4)
of the Securities Exchange Act of 1934
(Amendment No. 2)
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ASCENT ENTERTAINMENT GROUP, INC.
(Name of Subject Company)
ASCENT ENTERTAINMENT GROUP, INC.
(Name of Person(s) Filing Statement)
Common Stock, Par Value $0.01 Per Share
(Title of Class of Securities)
043628106
(CUSIP Number of Class of Securities)
David Ehrlich, Esq.
Vice President and General Counsel
Ascent Entertainment Group, Inc.
1225 Seventeenth Street, Suite 1800
Denver, Colorado 80202
Telephone: (303) 308-7000
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person(s) Filing Statement).
With a Copy to:
Jeffrey W. Tindell, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
[ ] Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer.
This Amendment No. 2 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 (as amended, the
"Schedule 14D-9"), filed by Ascent Entertainment Group, Inc., a Delaware
corporation (the "Company"), relating to the tender offer by Liberty AEG
Acquisition, Inc., a Delaware corporation, a wholly owned subsidiary of
Liberty Media Corporation, a Delaware corporation, to purchase all of the
outstanding shares of Common Stock, par value $0.01 per share, of the
Company, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated February 29, 2000, as amended.
Item 9. Exhibits.
Item 9 of the Schedule 14D-9 is hereby amended by the addition of the
following exhibit:
Exhibit No. Description
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20. Press Release issued by Ascent Entertainment
Group, Inc. on March 13, 2000
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
/s/ Arthur M. Aaron, Esq.
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Name: Arthur M. Aaron
Title: Executive Vice President,
Business Affairs
Dated: March 17, 2000
EXHIBIT INDEX
Exhibit No. Description
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20. Press Release issued by Ascent Entertainment Group,
Inc. on March 13, 2000
EXHIBIT 20
Ascent Reports 1999 Results
For Release:
Monday, March 13, 2000
Contact:
Analysts: David A. Holden (303) 308-7033
Media: Arthur M. Aaron (303) 308-7040
Denver, Colo. -- Ascent Entertainment Group, Inc. (Nasdaq: GOAL) today
reported 1999 revenues from continuing operations of $275.4 million
compared with revenues of $261.3 million in 1998. The Company reported
earnings before interest, taxes, depreciation and amortization (EBITDA)
from continuing operations of $61.9 million in 1999, as compared to 1998's
$75.4 million. The Company's 1999 net loss from continuing operations was
$51.1 million, or $1.72 per common share, compared to its 1998 net loss
from continuing operations of $31.9 million, or $1.07 per common share.
The increase in revenues from continuing operations is attributable to
improvements at On Command Corporation (NASDAQ: ONCO), Ascent's 56.5%
percent-owned subsidiary. While both On Command and the Company's Ascent
Network Services division reflected year-to-year improvements in EBITDA,
these improvements were more than offset by the costs incurred by the
Company in 1999 for transaction expenses totaling $13.3 million relating to
the Company's unsuccessful efforts to sell its sports related businesses
and have its continuing operations acquired by Liberty Media Corporation
(Liberty) (NYSE: LMG.A, LMG.B), in a stock-for-stock merger, for expenses
of $3.7 million associated with the Company's stock appreciation rights and
for severance payments totaling $1.9 million made to the Company's former
President and Chief Executive Officer.
As previously announced, on February 22, 2000, Ascent signed a definitive
merger agreement with Liberty Media Corporation under which Liberty will
pay Ascent stockholders $15.25 in cash for each share of the Company's
common stock. Pursuant to the merger agreement, Liberty commenced a
tender offer for all shares of stock of Ascent on February 29, 2000 which
will terminate on March 27, 2000, unless extended. The tender offer is
conditioned on the tender of at least a majority of the Ascent shares, as
well as other customary conditions. If Liberty purchases a majority of the
Ascent shares in the tender offer, it will then merge a wholly-owned
subsidiary into Ascent and all remaining shareholders will receive $15.25
per share.
1999 Summary Results
Multimedia Distribution
For 1999, the Company's Multimedia Distribution segment, which includes On
Command, had revenues of $252.9 million, up 5.9 percent from $238.8
million in 1998. The improvement in On Command's 1999 revenues as compared
to 1998 was primarily attributable to new hotel installations, continued
conversions of SpectraVision properties to the superior performing On
Command systems, an increase in cable programming revenues, an increase in
the royalty payment received from LodgeNet Entertainment Corporation, an
increase in game and equipment sales revenues and continued reductions in
movie denial rates. Fourth quarter 1999 revenues were $61.4 million
compared to revenues of $59.1 million reported in the fourth quarter of
1998. This increase is primarily attributable to an increase in higher net
movie revenues per room combined with an overall increase in the number of
rooms served, partially offset by a decrease in equipment sales to
licensees.
EBITDA for this segment in 1999 was $75.9 million, up 5.4 percent from
$72.0 million in 1998. Fourth quarter 1999 EBITDA for the segment was
$17.0 million versus $18.1 million during the fourth quarter of 1998. The
improvement in On Command's year-to-date EBITDA is primarily attributable
to the increased revenues noted above. The decline in EBITDA during the
fourth quarter of 1999 is attributable to an increase in On Command's
operating expenses. Specifically, field service expenses have increased
due to the deployment of On Command's new digital platform, known as OCX,
the expansion of On Command's international operations and certain end-of-
life write-offs associated with the Company's On Command Video and
SpectraVision systems.
The segment reported an operating loss for 1999 of $20.9 million compared
to an operating loss of $18.5 million in 1998. The increase in On Command's
operating loss during 1999 is primarily attributable to the increase in
depreciation and amortization expense from the significant capital
expenditures made by On Command during 1999 as it increased its room base
and converted hotels served by SpectraVision equipment, accelerated
depreciation on certain end-of-life assets and stock based compensation,
offset in part by the termination of amortization of SpectraVision
equipment in October, 1999. The segment reported an operating loss for the
fourth quarter of 1999 of $6.5 million compared to an operating loss of
$5.2 million during the fourth quarter of 1998. The increase in the 1999
fourth quarter operating loss is primarily due to the lower EBITDA during
the quarter and an increase in interest expense.
At December 31, 1999, On Command's installed room base was approximately
956,000 as compared to approximately 929,000 at the end of 1998. In the
fourth quarter of 1999, On Command installed its on-demand system in
approximately 25,000 rooms, of which approximately 6,000 were conversions
of SpectraVision properties, and approximately 18,000 were new hotel
installations. In addition, during the fourth quarter of 1999 the Company
upgraded approximately 5,000 OCV rooms to OCX with Internet capabilities.
At December 31, 1999 rooms installed with OCX Internet capable systems
totaled approximately 30,000.
Network Services
For both 1999 and 1998, the Company's Network Services segment, which
includes the operations of the Company's Ascent Network Services division,
had revenues of $22.5 million. Fourth quarter 1999 revenues for this
segment were $6.2 million, down 10 percent from $6.9 million in the
comparable 1998 period. The decrease in revenues during the fourth quarter
of 1999 is attributable to the non-recurrence of ancillary equipment sales
and service revenues from NBC affiliates and other private networks which
occurred during the fourth quarter of 1998.
The Network Services segment's EBITDA for 1999 was $12.2 million versus
$11.0 million in 1998. Fourth quarter 1999 EBITDA for the segment was $3.1
million as compared to $2.8 million in the fourth quarter of 1998. While
revenues for both the year and the quarter were relatively flat, EBITDA
increased for both the year and the quarter due primarily to cost
containment efforts at Ascent Network Services. For 1999, the Network
Services segment reported an operating income of $4.9 million versus an
operating income of $3.5 million in 1998. The segment reported an
operating income for the fourth quarter of 1999 of $1.6 million compared to
operating income of $.9 million in the fourth quarter of 1998. Once again,
the increase in operating income for the year and quarter is primarily
attributable to cost containment efforts at Ascent Network Services.
Discontinued Operations
Ascent's discontinued operations are comprised of the results of the
Company's former entertainment segment, which includes the Denver Nuggets,
the Colorado Avalanche and Ascent Arena Company (the Arena Company), the
owner and manager of the Pepsi Center, the recently opened new sports and
entertainment center in Denver which is home to the Denver Nuggets and
Colorado Avalanche. In addition, discontinued operations also include the
results of Beacon Communications LLC (Beacon), which was sold on January
20, 1999. Loss from discontinued operations for these entities totaled
$26.3 million during 1999 as compared to a loss of $17.8 million during
1998. The decline in operating results during 1999 from discontinued
operations is primarily attributable to the operations of the Denver
Nuggets and the Arena Company, partially offset by the absence of operating
losses from Beacon and improved year-to-year results from the Avalanche.
Specifically, the Nuggets incurred a significant increase in player
salaries during 1999 and have also incurred contract termination costs
relating to its former coach. While the Arena Company has realized
improved financial results since opening in September of 1999, its
operating losses have increased over 1998 due to an increase in both
depreciation and interest costs attributable to the Pepsi Center. The
improvement in operating results for the Avalanche during 1999 is primarily
attributable to the teams participation in three rounds of the NHL
playoffs, compared to one round in 1998.
The Company reported a loss from discontinued operations of $12.9 million
during the fourth quarter of 1999 as compared to a loss of $1.2 million in
the comparable period in 1998. The decline in operating results during the
fourth quarter of 1999 is primarily attributable to the operations of the
Denver Nuggets and the Colorado Avalanche, which is primarily due to
increases in player salaries, and the NBA work stoppage, which was
concluded in January of 1999. Specifically, the Avalanche had 2 fewer home
games during the fourth quarter of 1999 versus 1998 and accordingly,
realized less incremental revenues while incurring higher player costs. In
addition, during the fourth quarter of 1998, the Nuggets did not play any
games due to the NBA work stoppage and accordingly, while minimal revenues
were realized at this time, no player or game operation costs were incurred
as well. Partially offsetting the negative operating results of the Teams
is the improved financial performance of the Arena Company (the Pepsi
Center commenced operations in September, 1999 and through the end of 1999,
hosted over 50 events, including Avalanche and Nuggets home games) and the
absence of operating losses from Beacon in 1999 as compared to 1998.
The $.2 million loss from the sale of discontinued operations, net of
taxes, during the year ended December 31, 1999 reflects the loss from the
sale of 90% of the Company's interest in Beacon.
Ascent Consolidated
General and administrative expenses at Ascent Corporate were $26.2 million
for 1999 as compared to $7.6 million for 1998. This increase is primarily
attributable to an increase in costs of $13.3 million in connection with
the Company's unsuccessful efforts in 1999 to sell its sports related
businesses and have its continuing operations acquired by Liberty in a
stock-for-stock merger, expenses of $1.9 million associated with severance
payments made to the Company's former President and CEO, and an increase of
$3.7 million in expenses associated with the Company's outstanding stock
appreciation rights due to increases in the Company's stock price.
Interest expense, net of amounts capitalized, for 1999 was $29.3 million as
compared to $24.3 million during 1998. This increase is attributable to
the additional borrowings incurred during 1999 by On Command for capital
expenditures combined with increased borrowing costs at Ascent, primarily
those costs related to the Company's 11.875% Senior Secured Discount Notes
issued in December 1997. Other income was $5.5 million for 1999 as
compared to $1.7 million during 1998. This increase is primarily
attributable to the recognition of a gain of $1.8 million from the sale of
investment securities and an increase in interest income recognized on the
Company's cash and cash equivalent balances during 1999.
Liquidity and Capital Resources
Cash and cash equivalents increased by $15.8 million since December 31,
1998 to $60.4 million at December 31, 1999. The primary sources of cash
during 1999 were cash from continuing operating activities of approximately
$69.4 million, proceeds of $15.9 million from the sale of 90% of the
Company's interest in Beacon and borrowings under On Command's credit
facility of $17.0 million. Cash was expended primarily for property and
equipment at On Command.
Long-term debt totaled $339.9 million at December 31, 1999 as compared to
$305.5 million at December 31, 1998. The increase in long-term debt is
attributable to additional borrowings of $17.0 million under On Command's
credit facility and the accretion of interest on the Company's 11.875%
Senior Secured Discount Notes. The Arena Revenue Backed Notes of $139.8
million (the "Arena Notes") which were issued by the Arena Company's
beneficially owned trust are classified in the Company's condensed
consolidated balance sheet in the net assets of discontinued operations.
The Arena Notes are non-recourse to the Arena Company but the Arena Company
is obligated to the noteholders to operate the Pepsi Center in a first-
class manner. Based on borrowings outstanding at December 31, 1999, the
Company had access to $42.5 million of long-term financing under the Ascent
credit facility and On Command had access to $20.0 million of long-term
financing under its credit facility, in each case, subject to certain
covenant restrictions.
Other
Ascent Entertainment Group's principal business is providing pay-per-view
entertainment and information services through its 56.5 percent-owned
subsidiary On Command Corporation. In addition, Ascent also provides video
distribution services to NBC and other private networks through its Ascent
Network Services division.
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.
Readers should refer to Ascent's disclosure documents filed with the
Securities and Exchange Commission, including the Company's 1998 Annual
Report on Form 10-K for specific details on some of the factors that may
affect operating results.
# # #
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