<PAGE>
As filed with the Securities and Exchange Commission on January 14, 1998
Registration No. 333-20357
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Post-effective Amendment No. 1 on
FORM S-3
TO
REGISTRATION STATEMENT
ON FORM S-1
UNDER
THE SECURITIES ACT of 1933
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PEGASUS COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 51-0374669
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation of Organization) Identification Number)
c/o Pegasus Communications Management Company
Suite 454, 5 Radnor Corporate Center
100 Matsonford Road
Radnor, Pennsylvania 19087
(610) 341-1801
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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Marshall W. Pagon, President and Chief Executive Officer
c/o Pegasus Communications Management Company
Suite 454, 5 Radnor Corporate Center
Radnor, Pennsylvania 19087
(610) 341-1801
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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<TABLE>
<CAPTION>
Copies to:
<S> <C>
Ted S. Lodge, Esq. Michael B. Jordan, Esq.
Pegasus Communications Corporation Scott A. Blank, Esq.
c/o Pegasus Communications Management Company Drinker Biddle & Reath LLP
Suite 454, 5 Radnor Corporate Center 1100 Philadelphia National Bank Building
100 Matsonford Road 1345 Chestnut Street
Radnor, Pennsylvania 19087 Philadelphia, Pennsylvania 19107-3496
(610) 341-1801 (215) 988-2700
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this post-effective amendment becomes effective.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]______________
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED JANUARY 14, 1998
PROSPECTUS
[GRAPHIC OMITTED]
PEGASUS COMMUNICATIONS CORPORATION
193,600 Shares of Class A Common Stock
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This Prospectus relates to 193,600 shares (the "Warrant Shares") of
Class A Common Stock, par value $.01 per share (the "Class A Common Stock"), of
Pegasus Communications Corporation ("Pegasus," and together with its direct and
indirect subsidiaries, the "Company"). The Warrant Shares are issuable upon
exercise of warrants (the "Warrants"), which were originally issued on January
27, 1997 in connection with Pegasus' offering (the "Unit Offering") of 100,000
units (the "Units") consisting of 100,000 shares of 12 3/4% Series A Cumulative
Exchangeable Preferred Stock (the "Series A Preferred Stock") and 100,000
Warrants. The Warrants, unless exercised, will automatically expire on January
1, 2007. Each Warrant entitles the holder thereof to purchase 1.936 Warrant
Shares at an exercise price of $15.00 per share, subject to adjustment under
certain circumstances (the "Exercise Price"). The Exercise Price may be paid in
cash or by tendering Warrants, shares of Series A Preferred Stock or Exchange
Notes (as defined) or any combination thereof.
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Pursuant to the terms of a Warrant Agreement (as defined), the Company
has agreed to keep the registration statement of which this Prospectus forms a
part effective until 30 days after the earlier of (i) January 1, 2007 or (ii)
the date when all Warrants have been exercised.
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See "Risk Factors" beginning on page 4 for a discussion of certain
factors that should be considered by prospective purchasers of the Warrant
Shares.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is January , 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission" or "SEC"). Such reports,
proxy statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549-1004 and at the regional offices of the Commission
located at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such materials may also be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549-1004 at prescribed rates. The Commission maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants, like the Company, that file
electronically with the Commission. The Company's Class A Common Stock is quoted
on the Nasdaq National Market, and reports and other information concerning the
Company may be inspected at the Nasdaq Stock Market at 1735 K Street, N.W.,
Washington, D.C. 20006-1500.
This Prospectus constitutes a part of a Registration Statement on Form S-3
filed by the Company with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus omits certain of the information
contained in the Registration Statement, and reference is hereby made to the
Registration Statement and related exhibits for further information with respect
to the Company and the securities offered hereby. Any statements contained
herein concerning the provisions of any document are not necessarily complete,
and, in such instance, reference is made to the copy of such document filed as
an exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
The Company intends to furnish to its stockholders annual reports
containing audited financial information and furnish quarterly reports
containing condensed unaudited financial information for each of the first three
quarters of each fiscal year.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference the following documents previously
filed with the Commission under the Exchange Act:
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1996;
(b) Quarterly Reports on Form 10-Q for the quarterly periods ended March
31, 1997, June 30, 1997 and September 30, 1997;
(c) Current Reports on Forms 8-K dated January 31, 1997, April 16, 1997,
September 8, 1997 (as amended by a Form 8-K/A filed October 31, 1997),
November 5, 1997 and December 10, 1997; and
(d) Form 8-A dated September 18, 1996.
Additionally, all documents filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the offering made
hereby shall be deemed to be incorporated by reference in this Prospectus and to
be a part hereof from the date of filing of such documents. Any statement or
information contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement or information contained herein modifies or replaces
such a statement or such information. Any such statement or information so
modified or replaced shall not be deemed, except as so modified or replaced, to
constitute a part of this Prospectus. Such incorporation by reference shall not
be deemed specifically to incorporate by reference the information referred to
in Item 402(a)(8) of Regulation S-K under the Securities Act.
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The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request, a copy of any and all of the information that has been incorporated by
reference in this Prospectus, other than exhibits to such information, unless
such exhibits are specifically incorporated by reference into the information
that this Prospectus incorporates. Requests should be submitted by telephone to
(610) 341-1801 or in writing to Pegasus Communications Corporation c/o Pegasus
Communications Management Company, Suite 454, 5 Radnor Corporate Center, 100
Matsonford Road, Radnor, Pennsylvania 19087, Attention: Chief Financial Officer.
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RISK FACTORS
Prospective investors should consider carefully the following risk
factors, in addition to the other information contained in this Prospectus and
incorporated herein by reference concerning the Company and its business, before
purchasing the Warrant Shares offered hereby. See "Glossary of Defined Terms,"
which begins on page G-1 of this Prospectus, for definitions of certain terms
used in this section and elsewhere in this Prospectus.
Risks Relating to Forward-Looking Statements
Certain statements contained in this Prospectus and incorporated herein by
reference including, without limitation, statements containing the words
"anticipates," "believes," "intends," "estimates," "expects" and "projects" and
words of similar import constitute forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company or industry results to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions, both nationally, internationally and
in the regions in which the Company operates; demographic change; existing
government regulations and changes in, or the failure to comply with, government
regulations; competition; the loss of any significant numbers of subscribers or
viewers; changes in business strategy or development plans; technological
developments; the ability to attract and retain qualified personnel; the
significant indebtedness of the Company; the availability and terms of capital
to fund the expansion of the Company's business; and other factors referenced in
this Prospectus and in the documents incorporated herein by reference. Given
these uncertainties, prospective investors are cautioned not to place undue
reliance on such forward-looking statements. The Company disclaims any
obligations to update any such factors or publicly announce the result of any
revisions to any of the forward-looking statements contained herein to reflect
future events or developments.
Substantial Indebtedness and High Degree of Leverage
The Company is highly leveraged. As of September 30, 1997, on a pro forma
basis after giving effect to the Transactions, other than the DTS Acquisition,
the Company would have had indebtedness of $218.6 million, total common
stockholders' equity of $63.0 million, Series A Preferred Stock of $108.7
million and, assuming certain conditions are met, $180.0 million available under
the New Credit Facility. For the year ended December 31, 1996 and the nine
months ended September 30, 1997, on a pro forma basis after giving effect to the
Transactions, other than the DTS Acquisition, the Company's earnings would have
been inadequate to cover its combined fixed charges and dividends on Series A
Preferred Stock by approximately $44.3 million and $32.4 million, respectively.
The Company is not required under the terms of the Series A Preferred Stock and
is restricted under the terms of the Senior Notes Indenture from paying its
dividends in cash prior to July 1, 2002. The ability of the Company to repay its
existing indebtedness will depend upon future operating performance, which is
subject to the success of the Company's business strategy, prevailing economic
conditions, regulatory matters, levels of interest rates and financial, business
and other factors, many of which are beyond the Company's control. There can be
no assurance that the Company's growth strategy will be successful in generating
the substantial increases in cash flow from operations that will be necessary
for the Company to meet its obligations on it existing indebtedness. The current
and future leverage of the Company could have important consequences, including
the following: (i) the ability of the Company to obtain additional financing for
future working capital needs or financing for possible future acquisitions or
other purposes may be limited, (ii) a substantial portion of the Company's cash
flow from operations will be dedicated to payment of the principal and interest
on its indebtedness, thereby reducing funds available for other purposes, and
(iii) the Company may be more vulnerable to adverse economic conditions than
some of its competitors and, thus, may be limited in its ability to withstand
competitive pressures. The agreements with respect to the Company's
indebtedness, including the Senior Notes Indenture, the PM&C Indenture, the
Certificate of Designation and the Exchange Note Indenture, contain numerous
financial and operating covenants, including,
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among others, restrictions on the ability of the Company to incur additional
indebtedness, to create liens or other encumbrances, to pay dividends and to
make certain other payments and investments, and to sell or otherwise dispose of
assets or merge or consolidate with another entity. A failure to comply with the
obligations contained in any agreement with respect to any indebtedness could
result in events of default which could permit acceleration of such indebtedness
and acceleration of indebtedness under the debt agreements that may contain
cross-acceleration or cross-default provisions.
Dividend Policy; Restrictions on Payment of Dividends
Pegasus does not anticipate paying cash dividends in the foreseeable
future. The Certificate of Designation and the Senior Notes Indenture also
impose restrictions on Pegasus' obligations to pay dividends on its Common
Stock. Moreover, Pegasus is a holding company, and its ability to pay dividends
is dependent upon the receipt of dividends from its direct and indirect
subsidiaries. The New Credit Facility and the PM&C Indenture each impose
substantial restrictions on PM&C's ability to pay dividends to Pegasus.
Dependence on Network Affiliations
Certain of the Company's TV stations are affiliated with the Fox network,
which provides the stations with up to 40 hours of programming time per week,
including 15 hours of prime time programming, in return for the broadcasting of
Fox-inserted commercials by the stations during such programming. The Company
programs, or intends to program, pursuant to local marketing agreements
("LMAs"), other TV stations as affiliates of United Paramount Network ("UPN") or
The WB Television Network ("WB"). As a result, the successful operation of the
Company's TV stations is highly dependent on the Company's relationship with its
broadcast networks and upon the success of such broadcast networks. All of the
Company's affiliation agreements with Fox expire on October 31, 1998 with the
exception of the affiliation agreement with respect to TV station WTLH, which
expires on December 31, 2000. Thereafter, the affiliation agreements may be
extended for additional two-year terms by Fox in its sole discretion. Fox has,
in the past, changed affiliates in certain markets where it acquired a
significant ownership position in a station in such market. In the event that
Fox, directly or indirectly, acquires any significant ownership and/or
controlling interest in any TV station licensed to any community within the
Company's TV markets, Fox has the right to terminate the affiliation agreement
of the Company's TV station serving that market. As a consequence, there is no
assurance that Fox could not enter into such an arrangement in one of the
Company's markets. Although the Company's affiliation agreement with UPN expires
on January 15, 2001, the affiliation agreement may be terminated earlier under
certain circumstances. The Company has entered into commitments to program TV
stations WOLF and WGFL as affiliates of WB and is currently in the process of
negotiating agreements with respect to these stations, although there can be no
assurance that a definitive affiliation agreement will result. There can also be
no assurance that Fox, UPN or WB programming will be successful or that such
networks will continue to provide programming to their respective affiliates on
the same basis as they currently do, all of which matters are beyond the
Company's control. The non-renewal or termination of the affiliation of one or
more of the Company's stations could have a material adverse effect on the
Company's operations.
Reliance on DBS Technology and DIRECTV
The Company's direct broadcast satellite television ("DBS") business is a
new business with unproven potential. There are numerous risks associated with
DBS technology, in general, and DIRECTV(R) ("DIRECTV"), in particular. DBS
technology is highly complex and requires the manufacture and integration of
diverse and advanced components that may not function as expected. Although the
DIRECTV satellites are estimated to have orbital lives at least through the year
2007, there can be no assurance as to the longevity of the satellites or that
loss, damage or changes in the satellites as a result of acts of war,
anti-satellite devices, electrostatic storms or collisions with space debris
will not occur and have a material adverse effect on DIRECTV and the Company's
DBS business. Furthermore, the digital compression technology used by DBS
providers is not standardized and is undergoing rapid change. Since the Company
serves as an intermediary for DIRECTV, the Company would be adversely affected
by material adverse changes in DIRECTV's financial condition, programming,
technological capabilities or services,
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and such effect could be material to the Company's prospects. There can also be
no assurance that there will be sufficient demand for DIRECTV services since
such demand depends upon consumer acceptance of DBS, the availability of
equipment and related components required to access DIRECTV services and the
competitive pricing of such equipment.
The National Rural Telecommunications Cooperative (the "NRTC") is a
cooperative organization whose members and affiliate members are engaged in the
distribution of telecommunications and other services in predominantly rural
areas of the U.S. Pursuant to agreements between Hughes and the NRTC (the "NRTC
Agreement") and between the NRTC and participating NRTC members and affiliate
members (the "Member Agreement" and, together with the NRTC Agreement, the "DBS
Agreements"), participating NRTC members and affiliate members acquired the
exclusive right to provide DIRECTV programming services to residential and
commercial subscribers in certain service areas. The DBS Agreements authorize
the NRTC and participating NRTC members and affiliate members to provide all
commercial services offered by DIRECTV that are transmitted from the frequencies
that the Federal Communications Commission (the "FCC") has authorized for
DIRECTV's use at its present orbital location for a term running through the
life of the current satellites. The NRTC has advised the Company that the NRTC
Agreement also provides the NRTC a right of first refusal to acquire comparable
rights in the event that DIRECTV elects to launch successor satellites upon the
removal of the present satellites from active service. The financial terms of
any such purchase are likely to be the subject of negotiations. Any exercise of
such right is uncertain and will depend, in part, on DIRECTV's costs of
constructing, launching and placing in service such successor satellites. The
Company is, therefore, unable to predict whether substantial additional
expenditures by the NRTC and its members and affiliate members, including the
Company, will be required in connection with the exercise of such right of first
refusal.
Competition in the TV, DBS and Cable Businesses
Each of the markets in which the Company operates is highly competitive.
Many of the Company's competitors have substantially greater resources than the
Company and may be able to compete more effectively than the Company in the
Company's markets. In addition, the markets in which the Company operates are in
a constant state of change due to technological, economic and regulatory
developments. The Company is unable to predict what forms of competition will
develop in the future, the extent of such competition or its possible effects on
the Company's businesses. The Company's TV stations compete for audience share,
programming and advertising revenue with other television stations in their
respective markets and with other direct to home ("DTH") providers including DBS
operators, cable operators and wireless-cable operators, and compete for
advertising revenue with other advertising media, such as newspapers, radio,
magazines, outdoor advertising, transit advertising, yellow page directories,
direct mail and local cable systems. The Company's DBS business faces
competition from other current or potential multichannel programming
distributors, including other DBS operators, other DTH providers, cable
operators, wireless cable operators and local exchange and long-distance
telephone companies, which may be able to offer more competitive packages or
pricing than the Company or DIRECTV. The Company's cable systems face
competition from TV stations, SMATV systems, wireless cable systems, DTH and DBS
systems.
Risks Attendant to Acquisition Strategy
The Company regularly considers the acquisition of media and
communications properties and, at any given time, is in various stages of
considering such opportunities. Since January 1, 1997, the Company has acquired
or entered into agreements or letters of intent to acquire a number of
properties, including the Pending DBS Acquisitions and the DTS Acquisition. Each
of the Pending DBS Acquisitions and the DTS Acquisition are subject to the
negotiation of a definitive agreement, if not already entered into, and, among
other conditions, the prior approval of Hughes Electronics Corporation or one of
its subsidiaries ("Hughes") and the NRTC. In addition to these conditions, each
of the Pending DBS Acquisitions and the DTS Acquisition are expected to be
subject to conditions typical in acquisitions of this nature, certain of which
conditions, like the Hughes and NRTC consents, may be beyond the Company's
control. There can be no assurance that definitive agreements will be entered
into
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with respect to all of the Pending DBS Acquisitions or the DTS Acquisition, or,
if entered into, that all or any of the Pending DBS Acquisitions or the DTS
Acquisition will be completed. The Company sometimes structures its acquisitions
to qualify for tax-free treatment. There is no assurance that such treatment
will be respected by the Internal Revenue Service. There can also be no
assurance that the anticipated benefits of any of the acquisitions described
herein or future acquisitions will be realized. The process of integrating
acquired operations into the Company's operations may result in unforeseen
operating difficulties, could absorb significant management attention and may
require significant financial resources that would otherwise be available for
the ongoing development or expansion of the Company's existing operations. The
Company's acquisition strategy may be unsuccessful since the Company may be
unable to identify acquisitions in the future or, if identified, to arrive at
prices and terms comparable to past acquisitions, especially in light of the
competition the Company faces from other well-financed organizations. The
competition has resulted and is expected to further result in increased
acquisition prices for such acquisitions. The successful completion of an
acquisition may depend on consents from third parties, including federal, state
and local regulatory authorities or private parties such as Fox, UPN, WB, the
NRTC, DIRECTV and, in certain circumstances, lenders under the New Credit
Facility, all of whose consents are beyond the Company's control. Possible
future acquisitions by the Company could result in dilutive issuances of equity
securities, the incurrence of additional debt and contingent liabilities, and
additional amortization expenses related to goodwill and other intangible
assets, which could materially adversely affect the Company's financial
condition and operating results.
Offer to Purchase DTS Notes
The DTS Acquisition will constitute a "Change of Control" of DTS within
the meaning of the indenture (the "DTS Indenture") governing DTS' Series A
12 1/2% Senior Subordinated Notes due 2007 (the "DTS Notes"). This will require
DTS to make an offer to the holders of the DTS Notes to purchase the DTS Notes
(the "Offer to Purchase") for 101% of their principal amount (approximately
$155.0 million) plus accrued interest. Pegasus intends to arrange for a stand-by
commitment to purchase DTS Notes tendered in response to the Offer to Purchase,
or otherwise to arrange to finance the Offer to Purchase, but there is no
assurance this can be done on satisfactory economic terms, or at all. If DTS is
unable to purchase DTS Notes tendered in response to the Offer to Purchase,
substantially all of DTS' indebtedness will be in default.
Uncertainties Relating to Integration of Operations from the DTS Acquisition
The anticipated benefits of the DTS Acquisition may not be achieved unless
the operations of DTS are combined successfully with those of the Company in a
coordinated, timely and efficient manner, and there can be no assurance that
this will occur. Even if the two companies' operations are integrated
successfully, there can be no assurance that the benefits anticipated by the DTS
Acquisition will be achieved. The transition to a combined company will require
substantial attention from management. The diversion of the attention of
management and any difficulties encountered in the transition process could have
an adverse impact on the revenues and operating results of the combined
companies. These difficulties will be increased by the fact that Pegasus and DTS
will have separate and independent sources of debt financing and will be subject
to separate financial covenants and operating restrictions, each of which will
require that transactions between Pegasus and DTS be carried out on an
arm's-length basis and with a greater degree of formality than is normally the
case for companies and their wholly-owned subsidiaries. These difficulties may
also be increased by the necessity of integrating personnel with disparate
business backgrounds and combining two different corporate cultures. In
addition, the process of combining the two organizations could cause the
interruption of, or a loss of momentum in, the activities of either or both of
the companies' businesses, which could have an adverse effect on their combined
operations. The uncertainties associated with such integration may result in the
loss of key management and other employees. Failure to achieve the anticipated
benefits of the DTS Acquisition or to integrate successfully the operations of
the companies could have a material adverse effect upon the business, operating
results and financial condition of the Company after the DTS Acquisition. Even
if the benefits of the DTS Acquisition are achieved and the two companies'
operations are integrated successfully, there can be no assurance that the
operating results and financial condition of the Company
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after the DTS Acquisition will not be materially and adversely affected by any
number of economic, market or other factors that are not related to the DTS
Acquisition.
Consequences Under Debt Agreements and Preferred Stock Terms
Pegasus intends to designate DTS and its subsidiaries as "Unrestricted
Subsidiaries" under the Senior Notes Indenture relating to the Senior Notes and
under the Certificate of Designation relating to its Series A Preferred Stock.
The consequences of this are, among other things, that DTS and its subsidiaries
will not be subject to compliance with many of the covenants and operating
restrictions imposed by the Senior Notes Indenture and the Certificate of
Designation; that neither their indebtedness nor the results of their operations
will enter into the determination of Pegasus' ability to incur indebtedness or
make dividends, investments and other restricted payments; that Pegasus and its
"Restricted Subsidiaries" may not make loans to or guarantee indebtedness of DTS
and its subsidiaries; that neither DTS nor any of its subsidiaries may make
loans to or guarantee indebtedness of Pegasus or any of its Restricted
Subsidiaries; and that all transactions between Pegasus and its Restricted
Subsidiaries, on the one hand, and DTS and its subsidiaries, on the other hand,
must be carried out on arm's-length terms and, in certain cases, must be
supported by a fairness opinion from an investment banking firm of national
standing.
Pegasus' existing DBS business is conducted by Restricted Subsidiaries of
PM&C, a first-tier subsidiary of Pegasus. The PM&C Indenture requires that
transactions between PM&C and its subsidiaries, on the one hand, and affiliates
of PM&C, such as DTS will be after the closing of the DTS Acquisition, on the
other hand, must be carried out on arm's-length terms and, in certain cases,
must be supported by a fairness opinion from an investment banking firm of
national standing. The DTS Indenture contains similar provisions that will
affect transactions between DTS and PM&C's subsidiaries. The New Credit Facility
contains similar requirements regarding arm's-length treatment.
Because of these provisions, dealings between DTS' DBS business and
Pegasus' other DBS businesses will need to be carried out with a greater degree
of formality than is normally the case among wholly-owned subsidiaries of a
common parent, and Pegasus will not have the same degree of flexibility to
finance DTS' continuing operations as a parent company not subject to these
provisions would have. This may adversely affect the ability of the Company to
fully integrate DTS' business with the Company's other DBS businesses and may
limit the advantages of the DTS Acquisition.
Inability to Manage Growth Effectively
The Company has experienced a period of rapid growth primarily as a result
of its acquisition strategy. In order to achieve its business objectives, the
Company expects to continue to expand largely through acquisitions, which could
place a significant strain on its management, operating procedures, financial
resources, employees and other resources. The Company's ability to manage its
growth may require it to continue to improve its operational, financial and
management information systems, and to motivate and effectively manage its
employees. If the Company's management is unable to manage growth effectively,
the Company's results of operations could be materially adversely affected.
Dependence on Key Personnel
The Company's future success may depend to a significant extent upon the
performance of a number of the Company's key personnel, including Marshall W.
Pagon, Pegasus' President and Chief Executive Officer. The loss of Mr. Pagon or
other key management personnel or the failure to recruit and retain personnel
could have a material adverse effect on the Company's business. The Company does
not maintain "key-man" insurance and has not entered into employment agreements
with respect to any such individuals.
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Discretion of Management Concerning Funds
A portion of the net proceeds of the Senior Notes Offering is anticipated
to be contributed to current or future subsidiaries of Pegasus or to be used to
fund acquisitions, such as the Pending DBS Acquisitions. It is anticipated that
pending such use, such proceeds will be invested in certain short-term
investments. Such funds, together with the Company's existing working capital
and funds available to the Company under the New Credit Facility, will represent
a significant amount of funds over which management will have substantial
discretion as to their application. There can be no assurance the Company will
deploy such funds in a manner that will enhance the financial condition of the
Company.
Government Legislation, Regulation, Licenses and Franchises
The Company's businesses are subject to extensive and changing laws and
regulations, including those of the FCC and local regulatory bodies. Many of the
Company's operations are subject to licensing and franchising requirements of
federal, state and local law and are, therefore, subject to the risk that
material licenses and franchises will not be obtained or renewed in the future.
The U.S. Congress and the FCC have in the past, and may in the future, adopt new
laws, regulations and policies regarding a wide variety of matters, including
rulemakings arising as a result of the Telecommunications Act of 1996 (the "1996
Act"), that could, directly or indirectly, affect the operations of the
Company's businesses. The business prospects of the Company could be materially
adversely affected by the application of current FCC rules or policies in a
manner leading to the denial of pending applications by the Company, by the
adoption of new laws, policies and regulations, or changes in existing laws,
policies and regulations, including changes to their interpretations or
applications, that modify the present regulatory environment or by the failure
of certain rules or policies to change in the manner anticipated by the Company.
To the extent that the Company expects to program stations through the use
of LMAs, there can be no assurance that the licensees of such stations will not
exercise rights to preempt the programming of the Company, in a fashion which
interferes with the Company's business objectives, or that the licensees of such
stations will continue to maintain the transmission facilities of the stations
in a manner sufficient to broadcast a high quality signal over the station. As
the licensees must also maintain all of the qualifications necessary to be a
licensee of the FCC, and as the principals of the licensees are not under the
control of the Company, there can be no assurance that these licenses will be
maintained by the entities which currently hold them. There can also be no
assurance that any LMAs entered into by the Company, whether or not in
conjunction with the sale of a TV station by the Company or the acquisition of
an LMA by the Company with an option to purchase the underlying station, will
not be questioned by the FCC as being attributable to the Company due to the
relationship between the Company and the holder or proposed holder of the
license. In such an instance, the FCC may force the Company to terminate the LMA
or other arrangements entered into in connection with the operation or
programming of such station.
Pursuant to the 1996 Act, the continued performance of then existing LMAs
was generally grandfathered. The LMA for TV station WPME (the "Portland LMA")
was entered into prior to the adoption of the 1996 Act but the Company did not
begin programming the station until August 1997 upon completion of construction
of the station. The FCC suggested in a recent rulemaking proposal that LMAs
entered into after November 6, 1996 will not be grandfathered. The Company
cannot predict if the Portland LMA will be grandfathered. Currently, television
LMAs are not considered attributable interests under the FCC's multiple
ownership rules. However, the FCC is considering proposals which would make such
LMAs attributable, as they generally are in the radio broadcasting industry. If
the FCC were to adopt a rule that makes such interests attributable, without
modifying its current prohibitions against the ownership of more than one TV
station in a market, the Company could be prohibited from entering into such
arrangements with other stations in markets in which it owns TV stations and
could be required to modify any then existing LMAs. The LMAs entered into with
respect to TV stations WFXU and WOLF could also be barred by any new rule
adopted by the FCC which makes LMAs attributable without changing the multiple
ownership rules.
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<PAGE>
Additionally, irrespective of the FCC rules, the Department of Justice and
the Federal Trade Commission (the "Antitrust Agencies") have the authority to
determine that a particular transaction presents antitrust concerns. The
Antitrust Agencies have recently increased their scrutiny of the television and
radio industry, and have indicated their intention to review matters related to
the concentration of ownership within markets (including through LMAs) even when
the ownership or LMA in question is permitted under the regulations of the FCC.
There can be no assurance that future policy and rulemaking activities of the
Antitrust Agencies will not affect the Company's operations (including existing
stations or markets) or expansion strategy.
The FCC has recently adopted orders requiring that television stations
begin operating digital television stations on new channels by May 1, 2002, and
cease operating their current analog channels by 2006. The costs of this
conversion is currently unknown. As digital television allows a single station
to broadcast multiple channels of programming, the impact of this conversion on
audience share, advertising revenues, and program availability is unknown.
Also, the FCC's orders allotted television stations which currently
operate on VHF channels substantially higher power levels for their digital
operations than were permitted for stations which currently operate on the UHF
band. As the Company's stations all operate on the UHF band, this power
disparity, if not reconsidered by the FCC, could have an adverse impact on the
competitive posture of the Company's TV stations after the digital conversion
takes place.
Concentration of Share Ownership and Voting Control By Marshall W. Pagon
Pegasus' Common Stock is divided into two classes with different voting
rights. Holders of Class A Common Stock are entitled to one vote per share on
all matters submitted to a vote of stockholders generally and holders of Class B
Common Stock are entitled to ten votes per share. Both classes vote together as
a single class on all matters except in connection with certain amendments to
Pegasus' Amended and Restated Certificate of Incorporation, the authorization or
issuance of additional shares of Class B Common Stock, and except where class
voting is required under the Delaware General Corporation Law. As a result of
his beneficial ownership of all the outstanding voting stock of the sole general
partner of a limited partnership that indirectly controls Pegasus' parent and of
his control of the only other holder of Class B Common Stock, Marshall W. Pagon,
the President and Chief Executive Officer of Pegasus, beneficially owns all of
the Class B Common Stock of Pegasus. After giving effect to the greater voting
rights attached to the Class B Common Stock, Mr. Pagon will be able to
effectively vote 89.6% (80.3% after giving effect to the DTS Acquisition) of the
combined voting power of the outstanding Common Stock and will have sufficient
power (without the consent of the holders of the Class A Common Stock) to elect
the entire Board of Directors of Pegasus and, in general, to determine the
outcome of matters submitted to the stockholders for approval. Except as
required under the Delaware General Corporation Law and the Certificate of
Designation, holders of the Series A Preferred Stock will have no voting rights.
Volatility of Stock Price
There may be significant volatility in the market price of the Class A
Common Stock due to factors that may or may not relate to the Company's
performance. The market price of the Class A Common Stock may be significantly
affected by various factors such as economic forecasts, financial market
conditions, acquisitions and quarterly variations in the Company's results of
operations.
Potential Anti-Takeover Provisions; Change of Control
Pegasus' Amended and Restated Certificate of Incorporation contains, among
other things, provisions authorizing the issuance of "blank check" preferred
stock and two classes of Common Stock with different voting rights. In addition,
the Company is subject to the provisions of Section 203 of the Delaware General
Corporation Law. These provisions could delay, deter or prevent a merger,
consolidation, tender offer, or other business combination or change of control
involving the Company that some or a majority of the Company's stockholders
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<PAGE>
might consider to be in their best interests, including tender offers or
attempted takeovers that might otherwise result in such stockholders receiving a
premium over the market price for the Class A Common Stock.
Upon a Change of Control (as defined in the Senior Notes Indenture, the
Certificate of Designation and, if the Exchange Notes are issued, the Exchange
Note Indenture, as applicable), Pegasus will be required to offer to purchase
all Senior Notes, shares of Series A Preferred Stock or Exchange Notes, as the
case may be, then outstanding at 101% of, in the case of Series A Preferred
Stock, the Liquidation Preference thereof plus, without duplication, accumulated
and unpaid dividends to the repurchase date or, in the case of each of the
Senior Notes and the Exchange Notes, the aggregate principal amount, plus
accrued and unpaid interest, if any. The repurchase price is payable in cash.
There can be no assurance that, were a Change of Control to occur, Pegasus would
have sufficient funds to pay the purchase price for the Senior Notes, the shares
of Series A Preferred Stock or Exchange Notes, as the case may be, which Pegasus
might be required to purchase. There can also be no assurance that the
subsidiaries of Pegasus would be permitted by the terms of their outstanding
indebtedness, including pursuant to the PM&C Indenture and the New Credit
Facility, to pay dividends to Pegasus to permit Pegasus to purchase the Senior
Notes, the shares of the Series A Preferred Stock or Exchange Notes, as
applicable. Any such dividends are currently prohibited. In addition, any such
Change of Control transaction may also be a change of control under the New
Credit Facility and the PM&C Indenture, which would require PM&C to prepay all
amounts owing under the New Credit Facility and to reduce the commitments
thereunder to zero and to offer to purchase all outstanding PM&C Notes at a
price of 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon to the date of purchase. In the event Pegasus does not have
sufficient funds to pay the purchase price of the Senior Notes, the Series A
Preferred Stock or the Exchange Notes, as the case may be, upon a Change of
Control, Pegasus could be required to seek third party financing to the extent
it did not have sufficient funds available to meet its purchase obligations, and
there can be no assurance that Pegasus would be able to obtain such financing on
favorable terms, if at all. In addition, any change of control would be subject
to the prior approval of the FCC.
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THE COMPANY
General
Pegasus is a diversified company that operates in growing segments of the
media and communications industries. The Company owns and operates five TV
stations affiliated with the Fox Broadcasting Company ("Fox") and has or plans
to enter into local marketing agreements ("LMAs") to operate three television
stations, two of which are to be affiliated with The WB Television Network
("WB") and one affiliated with United Paramount Network ("UPN"). The Company is
the largest independent provider of DIRECTV(R) ("DIRECTV"). Giving effect to the
Pending DBS Acquisitions and the DTS Acquisition, the Company will have the
exclusive right to provide DIRECTV services to approximately 4.2 million U.S.
television households in rural areas of 33 states serving a subscriber base of
approximately 266,000 DBS customers, as of November 7, 1997. The Company also
provides cable service to approximately 27,600 subscribers in Puerto Rico and
approximately 15,200 subscribers in New England. The Company has entered into a
letter of intent to sell its New England cable operations (the "New England
Cable Sale").
Pegasus was incorporated under the laws of the State of Delaware in May
1996. Management's principal executive offices are located at Suite 454, 5
Radnor Corporate Center, 100 Matsonford Road, Radnor, Pennsylvania 19087. Its
telephone number is (610) 341-1801.
USE OF PROCEEDS
Any proceeds from the exercise of the Warrants, to the extent that the
Warrants are exercised and are exercised for cash, will be utilized by the
Company for working capital and general corporate purposes.
PLAN OF DISTRIBUTION
Pursuant to the Warrant Agreement (the "Warrant Agreement"), the Company
was obligated to register the Warrant Shares with the Commission and to keep the
registration statement of which this Prospectus forms a part effective until 30
days after the earlier to occur of (i) January 1, 2007 or (ii) the date when all
Warrants have been exercised. The Warrant Shares are issuable upon payment of
the Exercise Price, which may be made in cash or by tendering Series A Preferred
Stock or Exchange Notes or any combination thereof. In accordance with the
Warrant Agreement, the Company will pay substantially all of the expenses
incident to the registration, offering and sale of the Warrant Shares, other
than commission and discounts of dealers or agents.
LEGAL MATTERS
The validity of the Warrant Shares offered hereby has been passed upon by
Drinker Biddle & Reath LLP, counsel for the Company. Michael B. Jordan, a
partner of Drinker Biddle & Reath LLP, is an Assistant Secretary of the Company.
EXPERTS
The Company's consolidated balance sheets as of December 31, 1995 and 1996
and the related consolidated statements of operations, statements of changes in
total equity and statements of cash flows for each of the three years in the
period ended December 31, 1996, incorporated by reference in this Prospectus,
have been incorporated
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herein in reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
The balance sheet of Clearvision, Inc. as of January 16, 1997, and the
related statement of operations, statement of stockholders' equity and statement
of cash flows for the fiscal year ended January 16, 1997, incorporated by
reference in this Prospectus, have been included herein in reliance on the
report of Poole Cunningham & Reitano, P.A., independent accountants.
The statement of net assets to be sold of Southeastern Communication
Systems, Inc. as of December 31, 1996, and the related statement of operations
of assets to be sold and the statement of cash flows for the year ended December
31, 1996, incorporated by reference in this Prospectus, have been included
herein in reliance on the report of Greenway, Smith & Haisten, P.C., independent
accountants.
The balance sheet of Northern Electric Service Corporation as of December
31, 1996, and the related statement of operations and accumulated deficit and
statement of cash flows for the year ended December 31, 1996, incorporated by
reference in this Prospectus, have been included herein in reliance on the
report of Larson, Allen, Weishair & Co., LLP, independent accountants.
The financial statements of Direct Broadcast Satellites for the year ended
December 31, 1996, have been audited by Ernst & Young, LLP, independent
auditors, as set forth in their report and incorporated herein by reference.
Such financial statements have been incorporated herein by reference and
included herein, in reliance on such reports given upon the authority of such
firm as experts in accounting and auditing.
The balance sheet of Suwannee Valley Satellite, Inc. as of December 31,
1996, and the related statement of income and retained earnings and statement of
cash flows for the year ended December 31, 1996, incorporated by reference in
this Prospectus, have been included herein in reliance on the report of
Bolinger, Segars, Gilbert & Moss, L.L.P., independent accountants.
The balance sheet of View Star Entertainment Services, Inc. as of December
31, 1996, and the related statement of operations, statement of stockholders'
equity and statement of cash flows for the year ended December 31, 1996,
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent accountants, and are included herein in reliance upon
the authority of said firm as experts in giving said reports.
The statement of net assets to be sold of Midwest Minnesota DBS, LLC as of
December 31, 1996, and the related statement of operations of assets to be sold
and statement of cash flows for the year ended December 31, 1996, incorporated
by reference in this Prospectus, have been included herein in reliance on the
report of Bradley R. Helmeke, Ltd., independent accountants.
The statement of net assets to be sold of the DBS Operations of
Turner-Vision, Inc. as of December 31, 1996, and the related statement of
operations and statement of cash flows for the year ended December 31, 1996,
incorporated by reference in this Prospectus, have been included herein in
reliance on the report of Grigoraci, Trainer, Wright & Paterno, independent
accountants.
The balance sheet of the DBS Operations of Pioneer Services Corporation as
of September 30, 1997, and the related statement of operations and division
deficiency and statement of cash flows for the fiscal year ended September 30,
1997, incorporated by reference in this Prospectus, have been included herein in
reliance on the report of Jackson, Thornton & Co., P.C., independent
accountants.
The (i) consolidated financial statements of Digital Television Services,
LLC and its subsidiaries for the period from inception (January 30, 1996)
through December 31, 1996, (ii) financial statements of WEP Intermediate Corp.
for the period from inception (January 28, 1997) through September 30, 1997,
(iii) financial statements of Direct Programming Services Limited Partnership
for the years ended December 31, 1994, December 31, 1995 and
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December 31, 1996, (iv) financial statements of Kansas DBS, L.L.C. for the years
ended December 31, 1995 and December 31, 1996, (v) financial statements of the
DBS Operations of NRTC System No. 0422 for the years ended December 31, 1995 and
December 31, 1996, (vi) financial statements of the DBS Operations of NRTC
System No. 0073 for the year ended December 31, 1996, (vii) financial statements
of Northeast DBS Enterprises, L.P. for the year ended December 31, 1996, (viii)
financial statements of the DBS Operations of NRTC System No. 0001 for the year
ended December 31, 1995 and for the period from January 1, 1996 through November
26, 1996, (ix) financial statements of the DBS Operations of NRTC System No.
1025 for the period from March 10, 1995 (inception) through December 31, 1995
and the period from January 1, 1996 through August 28, 1996 and (x) financial
statements of Ocmulgee Communications, Inc. for the year ended December 31,
1996, incorporated by reference in this Prospectus have been audited by Arthur
Andersen LLP, independent accountants and are included herein in reliance upon
the authority of said firm as experts in giving said reports.
The financial statements of Northeast DBS Enterprises, L.P. for the years
ended December 31, 1994 and December 31, 1995 incorporated by reference in this
Prospectus have been audited by Fishbein & Company, P.C., independent auditors
and are included herein in reliance upon the authority of said firm as experts
in giving said reports.
The financial statements of Satellite Television Services, Inc.
incorporated in this prospectus by reference from Pegasus Communications
Corporation's Current Report on Form 8-K dated December 10, 1997 (and filed
January 12, 1998) have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and has been so incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
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<PAGE>
GLOSSARY OF DEFINED TERMS
Certificate of Designation The Certificate of Designation, Preferences
and Relative, Participating, Optional and
Other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions
Thereof, which sets forth the terms of the
Series A Preferred Stock.
Class A Common Stock Pegasus' Class A Common Stock, par value $.01
per share.
Class B Common Stock Pegasus' Class B Common Stock, par value $.01
per share.
Common Stock The Class A Common Stock and the Class B
Common Stock.
Company Pegasus and its direct and indirect
subsidiaries.
Completed DBS Acquisitions The acquisition of DBS territories and
related assets from 25 independent providers
of DIRECTV services, which were all acquired
from January 1, 1997 to an effective date as
of November 7, 1997.
Completed Transactions The Completed DBS Acquisitions, the New
Hampshire Cable Sale, the Unit Offering and
the Senior Notes Offering.
DBS Direct broadcast satellite television.
DBS Acquisitions The Completed DBS Acquisitions and the
Pending DBS Acquisitions.
DIRECTV The video, audio and data services provided
via satellite by DIRECTV Enterprises, Inc.,
or the entity, as applicable.
DTS Acquisition The acquisition of the stock of Digital
Television Services, Inc., the second largest
independent provider of DIRECTV services, for
approximately 5.5 million shares of Pegasus'
Class A Common Stock.
Exchange Note Indenture The indenture between Pegasus and First Union
National Bank, as trustee, governing the
Exchange Notes.
Exchange Notes Pegasus' 12 3/4% Senior Subordinated Exchange
Notes due 2007, which are issuable at
Pegasus' option upon exchange of the Series A
Preferred Stock.
FCC Federal Communications Commission.
Fox Fox Broadcasting Company.
Hughes Hughes Electronics Corporation or one of
its subsidiaries, including DIRECTV
Enterprises, Inc., as applicable.
LMAs Local marketing agreements, program
service agreements or time brokerage
agreements between broadcasters and
television station licensees pursuant to
which broadcasters provide programming to
and retain the advertising
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revenues of such stations in exchange for
fees paid to television station licensees.
New Credit Facility PM&C's $180.0 million credit facility, which
was entered into as of December 10, 1997.
New England Cable Sale The proposed sale of the Company's New
England cable systems.
New Hampshire Cable Sale The sale of the Company's New Hampshire cable
system which took place effective January 31,
1997.
NRTC The National Rural Telecommunications
Cooperative, the only entity authorized to
provide DIRECTV services that is
independent of DIRECTV Enterprises, Inc.
Approximately 200 NRTC members and
affiliate members are authorized to
provide DIRECTV services in exclusive
territories granted to the NRTC by DIRECTV
Enterprises, Inc.
Pegasus Pegasus Communications Corporation, the
issuer of the Warrant Shares offered
hereby.
Pending DBS Acquisitions The acquisition of DBS territories and
related assets from seven independent
providers of DIRECTV services, without giving
effect to any letters of intent entered into
after November 24, 1997.
PM&C Pegasus Media & Communications, Inc., a
wholly-owned subsidiary of Pegasus.
PM&C Indenture The indenture dated July 7, 1995 by and among
PM&C, certain of its subsidiaries and First
Union National Bank, as trustee, relating to
the PM&C Notes.
PM&C Notes PM&C's 12 1/2% Series B Senior Subordinated
Notes due 2005 issued in an aggregate
principal amount of $85.0 million.
PSH Pegasus Satellite Holdings, Inc., a
wholly-owned subsidiary of Pegasus, which
concurrently with the consummation of the
Senior Notes Offering sold its assets to PM&C
in connection with the Subsidiaries
Combination.
PSH Credit Facility PSH's $130.0 million credit facility, which
was terminated upon the consummation of the
Senior Notes Offering.
Senior Notes Pegasus' 9 5/8% Series A Senior Notes due
2005 issued in an aggregate principal amount
of $115.0 million or Pegasus' 9 5/8% Series B
Senior Notes due 2005, which will be issued
upon exchange of the Series A Senior Notes
and which will have terms substantially
similar to the Series A Senior Notes, as
applicable.
Senior Notes Indenture The indenture between Pegasus and First Union
National Bank, as trustee, governing the
Senior Notes.
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Senior Notes Offering Pegasus' offering of its 9 5/8% Series A
Senior Notes due 2005, which was completed on
October 21, 1997.
Series A Preferred Stock The 12 3/4% Series A Cumulative Exchangeable
Preferred Stock, which was offered in
connection with the Unit Offering.
Subsidiaries Combination The acquisitions of the assets of PSH by
PM&C, which took place concurrently with the
consummation of the Senior Notes Offering.
Transactions The Completed Transactions, the DBS
Acquisitions, the Senior Notes Offering, the
New Credit Facility, the Subsidiaries
Combination, the DTS Acquisition and the New
England Cable Sale.
Unit Offering Pegasus' public offering of 100,000 Units
consisting of 100,000 shares of Series A
Preferred Stock and 100,000 Warrants, which
was completed on January 27, 1997.
Units The units consisting of Series A Preferred
Stock and Warrants offered in the Unit
Offering.
UPN United Paramount Network.
Warrant Agreement The warrant agreement between Pegasus and
First Union National Bank, as warrant agent,
relating to the registration of the Warrant
Shares.
Warrant Shares Pegasus' Class A Common Stock issuable upon
exercise of the Warrants and offered hereby.
WB The WB Television Network.
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No dealer, salesperson or other person has been
authorized to give any information or to make any
representation other than those contained in this
Prospectus, and, if given or made, such information
or representation must not be relied upon as having
been authorized by the Company. This Prospectus
does not constitute an offer to sell or a solicitation of
an offer to buy the Warrant Shares by anyone in any
jurisdiction in which the person making the offer or
solicitation is not qualified to do so or to any person
to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus
nor any sale made hereunder shall create any
implication that there has been no change in the
affairs of the Company since the date hereof or that
information contained herein is correct as of any time
subsequent to the date hereof.
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TABLE OF CONTENTS
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Page
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Available Information............................................2
Incorporation of Certain
Documents by Reference.........................................2
Risk Factors.....................................................4
The Company.....................................................12
Use of Proceeds.................................................12
Plan of Distribution............................................12
Legal Matters...................................................12
Experts.........................................................12
Glossary of Defined Terms......................................G-1
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<PAGE>
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[GRAPHIC OMITTED]
PEGASUS COMMUNICATIONS
CORPORATION
193,600 Shares of Class A Common Stock
--------------
PROSPECTUS
--------------
January , 1998
================================================================================
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses payable by the Company in
connection with this Registration Statement. All of such expenses are estimates,
other than the filing and listing fees payable to the Securities and Exchange
Commission.
Filing fee -- Securities and Exchange Commission................. $ 880*
Fees and expenses of Accountants................................. 20,000
Fees and expenses of Counsel..................................... 20,000
Printing expenses ............................................... 10,000
Miscellaneous Expenses........................................... 49,120
----------
Total........................................................... $100,000.00
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* Previously paid
Item 15. Indemnification of Directors and Officers.
The Registrant's Amended and Restated Certificate of Incorporation
provides that a director of the Registrant shall have no personal liability to
the Registrant or to its stockholders for monetary damages for breach of
fiduciary duty as a director except to the extent that Section 102(b)(7) (or any
successor provision) of the Delaware General Corporation Law, as amended from
time to time, expressly provides that the liability of a director may not be
eliminated or limited.
Article 6 of the Registrant's By-Laws provides that any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director or
officer of the Registrant, or is or was serving while a director of officer of
the Registrant at the request of the Registrant as a director, officer,
employee, agent, fiduciary or other representative of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
shall be indemnified by the Registrant against expenses (including attorneys'
fees), judgments, fines, excise taxes and amounts paid in settlement actually
and reasonably incurred by such person in connection with such action, suit or
proceeding to the full extent permissible under Delaware law. Article 6 also
provides that any person who is claiming indemnification under the Registrant's
ByLaws is entitled to advances from the Registrant for the payment of expenses
incurred by such person in the manner and to the full extent permitted under
Delaware law.
The Underwriting Agreement entered into in connection with Registrant's
initial public offering provides that the Underwriters are obligated, under
certain circumstances, to indemnify directors, officers and controlling persons
of the Registrant against certain liabilities under the Securities Act of 1933,
as amended. Reference is made to Section 8 of the form of Underwriting
Agreement, which is incorporated by reference to Exhibit 1.1 to Pegasus'
Registration Statement on Form S-1 (File No. 333-05057). The Underwriting
Agreement entered into in connection with Registrant's offering of Series A
Cumulative Exchangeable Preferred Stock and Warrants to purchase 193,600 shares
of Class A Common Stock contains similar provisions. See Section 9 of the Form
of Underwriting Agreement which is incorporated by reference to Exhibit 1.2 to
Pegasus' Registration Statement on Form S-1 (File No. 333-18739). The Purchase
Agreement entered into in connection with Registrant's offering of its 9 5/8%
Series A Senior Notes due 2005 also contained similar provisions.
The Registrant has obtained directors' and officers' liability
insurance.
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Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
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<S> <C>
4.1 Certificate of Incorporation of Pegasus, as amended (which is incorporated by reference to Exhibit 3.1 to
Pegasus' Registration Statement on Form S-1) (File No. 333-05057).
4.2 By-Laws of Pegasus (which is incorporated by reference to Exhibit 3.2 to Pegasus' Registration Statement
on Form S-1 (File No. 333-05057).
4.3 Certificate of Designation, Preferences and Relative, Participating, Optional and Other Special Rights of
Preferred Stock and Qualifications, Limitations and Restrictions Thereof, which is incorporated by
reference to Exhibit 3.3 to Pegasus' Registration Statement on Form S-1 (File No. 333-23595).
5.1+ Opinion of Drinker Biddle & Reath LLP.
23.1+ Consent of Drinker Biddle & Reath LLP (included in their opinion filed as Exhibit 5.1).
23.2* Consent of Coopers & Lybrand L.L.P.
23.3* Consent of Poole Cunningham & Reitano, P.A.
23.4* Consent of Greenway, Smith & Haisten, P.C.
23.5* Consent of Larson, Allen, Weishair & Co., LLP.
23.6* Consent of Ernst & Young, LLP.
23.7* Consent of Bolinger, Segars, Gilbert & Moss, L.L.P.
23.8* Consent of Arthur Andersen LLP.
23.9* Consent of Bradley R. Helmeke, Ltd.
23.10* Consent of Grigoraci, Trainer, Wright & Paterno.
23.11* Consent of Jackson, Thornton & Co., P.C.
23.12* Consent of Arthur Andersen LLP.
23.13* Consent of Fishbein & Company, P.C.
23.14* Consent of Deloitte & Touche LLP.
24.1+ Powers of Attorney (included in Signatures and Powers of Attorney filed
with the original filing of this Registration Statement).
</TABLE>
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* Filed herewith.
+ Previously filed.
Item 17. Undertakings.
The undersigned registrant hereby undertakes that:
(1) During any period in which offers or sales are being made, a
post-effective amendment to this registration statement will be filed:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered ) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
II-2
<PAGE>
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) It will remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
Post-Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, hereunto duly authorized in the city of Radnor,
Commonwealth of Pennsylvania, on the 14th day of January, 1998.
PEGASUS COMMUNICATIONS CORPORATION
By: /s/ Marshall W. Pagon
---------------------------------------------
Name: Marshall W. Pagon
Title: President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended this
Post-Effective Amendment No. 1 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Marshall W. Pagon President, Chief Executive Officer January 14, 1998
- -------------------------------------- and Chairman of the Board
Marshall W. Pagon
(Principal Executive Officer)
/s/ Robert N. Verdecchio Senior Vice President, Chief January 14, 1998
- -------------------------------------- Financial Officer, Assistant
Robert N. Verdecchio Secretary and Director
(Principal Financial
and Accounting Officer)
/s/ James J. McEntee, III Director January 14, 1998
- --------------------------------------
James J. McEntee, III
/s/ Mary C. Metzger Director January 14, 1998
- --------------------------------------
Mary C. Metzger
/s/ Donald S. Weber Director January 14, 1998
- --------------------------------------
Donald W. Weber
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description of Document Page Number
- ------ ----------------------- -----------
<S> <C> <C>
4.1 Certificate of Incorporation of Pegasus, as amended (which is incorporated
by reference to Exhibit 3.1 to Pegasus' Registration Statement on
Form S-1) (File No. 333-05057).
4.2 By-Laws of Pegasus (which is incorporated by reference to Exhibit 3.2 to
Pegasus' Registration Statement on Form S-1 (File No. 333-05057).
4.3 Certificate of Designation, Preferences and Relative, Participating, Optional
and Other Special Rights of Preferred Stock and Qualifications, Limitations
and Restrictions Thereof, which is incorporated by reference to Exhibit 3.3
to Pegasus' Registration Statement on Form S-1 (File No. 333-23595).
5.1+ Opinion of Drinker Biddle & Reath LLP.
23.1+ Consent of Drinker Biddle & Reath LLP (included in their opinion filed as
Exhibit 5.1).
23.2* Consent of Coopers & Lybrand L.L.P.
23.3* Consent of Poole Cunningham & Reitano, P.A.
23.4* Consent of Greenway, Smith & Haisten, P.C.
23.5* Consent of Larson, Allen, Weishair & Co., LLP.
23.6* Consent of Ernst & Young, LLP.
23.7* Consent of Bolinger, Segars, Gilbert & Moss, L.L.P.
23.8* Consent of Arthur Andersen LLP.
23.9* Consent of Bradley R. Helmeke, Ltd.
23.10* Consent of Grigoraci, Trainer, Wright & Paterno.
23.11* Consent of Jackson, Thornton & Co., P.C.
23.12* Consent of Arthur Andersen LLP.
23.13* Consent of Fishbein & Company, P.C.
23.14* Consent of Deloitte & Touche LLP.
24.1+ Powers of Attorney (included in Signatures and Powers of Attorney filed
with the original filing of this Registration Statement).
</TABLE>
- ----------------
* Filed herewith.
+ Previously filed.
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
Pegasus Communications Corporation on Form S-3 (File No. 333-20357) of our
report dated February 21, 1997 except as to note 14 for which the date is March
10, 1997, on our audits of the consolidated financial statements and financial
statement schedule of Pegasus Communications Corporation. We also consent to the
reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
January 12, 1998
<PAGE>
Exhibit 23.3
[POOLE CUNNINGHAM & REITANO, P.A. LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Pegasus Communications Corporation on Form S-3 (file no. 333-20357) of our
financial statements of ClearVision, Inc. as of January 16, 1997 and the related
statements of operations and cash flows for the year then ended which appears in
the Current Report on Form 8-K/A of Pegasus Communications Corporation dated
September 8, 1997 (and filed October 31, 1997). We also consent to the reference
to us under the heading "Experts" in the Prospectus, which is part of the
Registration Statement.
POOLE CUNNINGHAM & REITANO, P.A.
/s/ Poole Cunningham & Reitano, P.A.
Jackson, Mississippi
January 12, 1998
<PAGE>
Exhibit 23.4
[GREENWAY, SMITH & HAISTEN, P.C. LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Pegasus Communications Corporation on Form S-3 (file no. 333-20357) of our
report relating to the Statement of net assets to be sold of Southeastern
Communication Systems, Inc. as of December 31, 1996 and the related statements
of operations and cash flows for the year then ended which appears in the
Current Report on Form 8-K/A of Pegasus Communications Corporation dated
September 8, 1997 (and filed October 31, 1997). We also consent to the reference
to us under the heading "Experts" in the Prospectus, which is part of the
Registration Statement.
/s/ Greenway, Smith & Haisten, P.C.
Greenway, Smith & Haisten, P.C.
Griffin, Georgia
January 12, 1998
<PAGE>
Exhibit 23.5
[LARSON, ALLEN, WEISHAIR & CO., LLP LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
(File No. 333-20357) of Pegasus Communications Corporation on Form S-3 of our
report relating to the balance sheet of Northern Electric Service Corporation
DBA: Northern Horizons as of December 31, 1996, and the related statement of
operations and accumulated deficit and statement of cash flows for the year then
ended, which appears in the Current Report on Form 8-K/A of Pegasus
Communications Corporation dated September 8, 1997 (and filed October 31, 1997).
We also consent to the reference to us under the heading "Experts" in the
Prospectus, which is part of the Registration Statement.
/s/ Larson, Allen, Weishair & Co., LLP
LARSON, ALLEN, WEISHAIR & CO., LLP
Brainerd, Minnesota
January 12, 1998
<PAGE>
Exhibit 23.6
[ERNST & YOUNG LLP LETTERHEAD]
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-20357) and related Prospectus of
Pegasus Communications Corporation ("Pegasus") for the registration of 193,600
shares of its common stock and to the incorporation by reference therein of our
report dated July 16, 1997, with respect to the financial statements of Direct
Broadcast Satellites for the year ended December 31, 1996, included in Pegasus'
Current Report on Form 8-K/A dated September 8, 1997 filed with the Securities
and Exchange Commission on October 31, 1997.
/s/ Ernst & Young, LLP
January 12, 1998
<PAGE>
Exhibit 23.7
[BOLINGER, SEGARS, GILBERT & MOSS, L.L.P. LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Pegasus Communications Corporation on Form S-3 (file no. 333-20357) of our
report relating to the balance sheet of Suwannee Valley Satellite, Inc. as of
December 31, 1996, and the related statements of income and retained earnings
and cash flows for the year then ended, which appears in the Current Report on
Form 8-K/A of Pegasus Communications Corporation dated September 8, 1997 (and
filed on October 31, 1997). We also consent to the reference to us under the
heading "Experts" in the Prospectus, which is part of the Registration
Statement.
/s/ Bolinger, Segars, Gilbert & Moss, L.L.P.
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
Lubbock, Texas
January 12, 1998
<PAGE>
Exhibit 23.8
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report on the financial statements for the year ended December
31, 1996 of ViewStar Entertainment Services, Inc. dated April 18, 1997 (except
with respect to Note 10, as to which the date is September 15, 1997), which is
included in the Current Report on Form 8-K/A of Pegasus Communications
Corporation dated September 8, 1997 (and filed October 31, 1997), in this
Registration Statement (File No. 333-20357) of Pegasus Communications
Corporation on Form S-3. We also consent to the reference to us under the
heading "Experts" in the Prospectus, which is part of the Registration
Statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
January 12, 1998
<PAGE>
Exhibit 23.9
[BRADLEY R. HELMEKE, LTD. LETTERHEAD]
INDEPENDENT AUDITOR'S CONSENT
I consent to the incorporation by reference in this Registration Statement of
Pegasus Communications Corporation on Form S-3 (file no. 333-20357) of my report
relating to the audited statement of net assets to be sold for the year ended
December 31, 1996 of Midwest Minnesota DBS, LLC for the year ended December 31,
1996, and the related statements of operations of assets to be sold and cash
flows for the year ended December 31, 1996, which appear on the Current Report
on Form 8-K/A of Pegasus Communications Corporation dated September 8, 1997 (and
filed October 31, 1997). I also consent to the reference to me under the heading
"Experts" in the Prospectus, which is part of the Registration Statement.
/s/ Bradley R. Helmeke, Ltd.
Bradley R. Helmeke, Ltd.
Perham, Minnesota
January 12, 1998
<PAGE>
Exhibit 23.10
[GRIGORACI, TRAINER, WRIGHT & PATERNO LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Pegasus Communications Corporation on Form S-3 (file no. 333-20357)
of our report relating to the statement of net assets sold as of December 31,
1996 and the related statements of operations and cash flows for the year ended
of Turner-Vision, Inc. (an S-corporation) DBS Operations, which appears in the
Current Report on Form 8-K/A of Pegasus Communications Corporation dated
September 8, 1997 (and filed October 31, 1997). We also consent to the reference
to us under the heading "Experts" in the Prospectus, which is part of the
Registration Statement.
/s/ Grigoraci, Trainer, Wright & Paterno
Charleston, West Virginia
January 12, 1998
<PAGE>
Exhibit 23.11
[JACKSON THORNTON & CO. LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this to Registration Statement
of Pegasus Communications Corporation on Form S-3 (file no. 333-20357) of our
report relating to the September 30, 1997 audited financial statements of the
DBS Operations of Pioneer Services Corporation, which appears in the Current
Report on Form 8-K of Pegasus Communications Corporation dated December 10, 1997
(and filed January 12, 1998). We also consent to the reference to us under the
heading "Experts" in the Prospectus, which is part of the Registration
Statement.
/s/ Terry Mitchell
JACKSON, THORNTON & CO., P.C.
Montgomery, Alabama
January 12, 1998
<PAGE>
Exhibit 23.12
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement (File No. 333-20357)
of Pegasus Communications Corporation on Form S-3 of our report relating to the
consolidated balance sheet of Digital Television Services, LLC and Subsidiaries
as of December 31, 1996 and the related consolidated statements of operations,
members equity, and cash flows for the period from inception (January 30, 1996)
through December 31, 1996 dated February 28, 1997 (except with respect to the
matters discussed in Note 10 as to which the date is November 6, 1997), our
report relating to the balance sheet of WEP Intermediate Corp. as of September
30, 1997 and the related statement of cash flows for the period from inception
(January 28, 1997) to September 30, 1997 dated October 10, 1997, our report
relating to the balance sheets of Direct Programming Services Limited
Partnership as of December 31, 1995 and 1996 and the related statements of
operations, changes in partners' capital, and cash flows for the years ended
December 31, 1994, 1995 and 1996 dated February 21, 1997, our report relating to
the balance sheets of Kansas DBS, L.L.C. as of December 31, 1995 and 1996 and
the related statements of operations, changes in accumulated deficit, and cash
flows for the years ended December 31, 1995 and 1996 dated February 21, 1997,
our report relating to the statements of assets and liabilities and accumulated
deficit of the DBS Operations of NRTC System No. 0422 as of December 31, 1995
and 1996 and the related statements of expenses over revenues and changes in
accumulated deficit and cash flows for the years ended December 31, 1995 and
1996 dated February 21, 1997, our report relating to the statement of assets and
liabilities and accumulated earnings of the DBS Operations of NRTC System No.
0073 as of December 31, 1996 and the related statements of revenues over
expenses and changes in accumulated earnings and cash flows for the year ended
December 31, 1996 dated February 21, 1997, our report relating to the balance
sheet of Northeast DBS Enterprises, L.P. as of December 31, 1996, and the
related statements of operations, changes in partners' capital and cash flows
for the year ended December 31, 1996 dated February 21, 1997, our report
relating to the statements of assets and liabilities and accumulated deficit of
the DBS Operations of NRTC System No. 0001 as of December 31, 1995 and November
26, 1996 and the related statements of expenses over revenues and changes in
accumulated deficit and cash flows for the year ended December 31, 1995 and for
the period from January 1, 1996 through November 26, 1996 dated March 4, 1997,
our report relating to the statements of assets and liabilities and accumulated
deficit of the DBS Operations of NRTC System No. 1025 as of December 31, 1995
and August 28, 1996 and the related statements of expenses over revenues and
changes in accumulated deficit and cash flows for the period from March 10, 1995
(inception) through December 31, 1995 and the period from January 1, 1996
through August 28, 1996 dated March 4, 1997, and our report relating to the
balance sheet of Ocmulgee Communications, Inc. as of December 31, 1996 and the
related statements of operations, stockholder's deficit, and cash flows for the
year ended December 31, 1996 dated December 11, 1997, all of which appear in the
Current Report on Form 8-K of Pegasus Communications Corporation dated December
10, 1997 (and filed January 12, 1998). We also consent to the reference to us
under the heading "Experts" in the Prospectus, which is a part of the
Registration Statement.
/s/Arthur Andersen LLP
Atlanta, Georgia
January 12, 1998
<PAGE>
Exhibit 23.13
[FISHBEIN & COMPANY, P.C. LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement of Pegasus Communications Corporation on Form S-3 (file no. 333-20357)
of our report dated February 23, 1996 relating to the December 31, 1994 and
December 31, 1995 audited financial statements of Northeast DBS Enterprises,
L.P., which appears in the Current Report on Form 8-K of Pegasus Communications
Corporation dated December 10, 1997 (and filed January 12, 1998). We also
consent to the reference to us under the heading "Experts" in the Prospectus,
which is part of the Registration Statement.
/s/ Fishbein & Company, P.C.
FISHBEIN & COMPANY, P.C.
Elkins Park, Pennsylvania
January 12, 1998
<PAGE>
Exhibit 23.14
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 1 to Registration Statement No. 333-20357 of Pegasus Communications
Corporation on Form S-3 of our report dated November 10, 1997 on the financial
statements of Satellite Television Services, Inc., appearing in the Current
Report on Form 8-K of Pegasus Communications Corporation dated December 10, 1997
(and filed January 12, 1998), and to the reference to us under the heading
"Experts" in the Prospectus, which is part of such Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Indianapolis, Indiana
January 12, 1998
