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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): November 5, 1997
PEGASUS COMMUNICATIONS CORPORATION
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(Exact name of registrant as specified in charter)
Delaware 0-21389 51-0374669
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
c/o Pegasus Communications Management Company, 100 Matsonford Road,
5 Radnor Corporate Center, Suite 454, Radnor, Pennsylvania 19087
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 610-341-1801
Not Applicable
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
(a) Acquisition of Digital Television Services, Inc. Pegasus
Communications Corporation ("Pegasus" and together with its direct and indirect
subsidiaries, the "Company") entered into an agreement in principle (the
"Agreement in Principle") dated as of November 5, 1997 to acquire Digital
Television Services, Inc. ("DTS"), the second largest independent provider of
DIRECTV(R) ("DIRECTV") programming, for approximately 5.5 million shares of
Pegasus' Class A Common Stock. DTS' pro forma net debt was approximately $140
million as of September 30, 1997. Upon completion of the DTS Acquisition, DTS
will become a wholly owned subsidiary of Pegasus. After giving effect to certain
pending DTS acquisitions, DTS serves approximately 120,000 DIRECTV subscribers
in ten states in territories consisting of approximately 1.7 million television
households (including approximately 440,000 households not served by cable).
After giving effect to the DTS Acquisition and certain pending acquisitions, the
Company will serve approximately 250,000 DIRECTV subscribers in 33 states in
territories consisting of approximately four million television households
(including approximately one million households not served by cable).
The transaction is expected to be completed in the first quarter of
1998 and is subject, among other things, to the execution of a definitive
agreement, to the approval of Pegasus' and DTS' Boards of Directors and Pegasus'
stockholders, consents from the National Rural Telecommunications Cooperative,
DIRECTV, Inc., and DTS' lenders, and other conditions customary in transactions
of this nature.
The Agreement in Principle contemplates the granting of certain
registration rights to DTS' stockholders and the execution of a Voting Agreement
among Marshall W. Pagon, Pegasus' President and Chief Executive Officer, certain
affiliates of Mr. Pagon, and certain stockholders of DTS. The Voting Agreement
will provide for an increase in the size of Pegasus' Board of Directors to nine
members consisting of three directors appointed by stockholders of DTS, three
directors designated by Mr. Pagon, and three independent directors.
(b) Sale of New England Cable System. On November 6, 1997,
Pegasus Cable Television, Inc., a subsidiary of Pegasus, entered into a letter
of intent with Avalon Partners & Associates, LLC ("Avalon") to sell its New
England cable systems, which consist of five headends serving 13 towns in
Connecticut and Massachusetts. As of September 30, 1997, Pegasus' New England
cable systems served approximately 15,350 subscribers. The consideration for the
sale will be based upon the twelve month trailing location cash flow of the
systems measured as of the month-end prior to closing but not less than $28
million or
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more than $31 million. As of September 30, 1997, Pegasus' New England cable
systems had trailing location cash flow of approximately $3.0 million. In
addition to being subject to the negotiation of a definitive agreement, consents
from regulatory agencies, including local franchise authorities, and the
approval of Pegasus' Board of Directors, it is anticipated that the sale will
also be subject to conditions customary in transactions of this nature.
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SIGNATURE
Pursuant to the requirements 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.
PEGASUS COMMUNICATIONS CORPORATION
By/s/ Ted S. Lodge
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Ted S. Lodge,
Senior Vice President
November 12, 1997
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