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[LOGO]
PEGASUS
COMMUNICATIONS
Exchange Offer for 12 3/4% Series A Cumulative
Exchangeable Preferred Stock
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Reorganization/Exchange Offer
|_| Corporate Reorganization
o New holding company created (to be called Pegasus Communications) to
pursue new activities and initiatives
o Existing Pegasus Communications (issuer of 12 3/4% Series A Preferred
Stock (the "Preferred Stock") is renamed Pegasus Satellite and becomes
subsidiary of new holding company
o The Preferred Stock and common stock are automatically transferred up
to new holding company to effect Reorganization
o Reorganization is effected without consents or shareholder vote
|_| Exchange Offer
o Preferred Stock, now at new Pegasus Communications level, is exchanged
back down to Pegasus Satellite (the existing issuer, renamed due to
Reorganization)
o Preferred Stock ends up at same organizational entity with same terms
as currently exist
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Corporate Structure
<TABLE>
<CAPTION>
Current Structure After Reorganization After Exchange Offer
<S> <C> <C>
|--------------------------------------------| |--------------------------------------------|
| Pegasus Communication Corp. | | Pegasus Communication Corp. |
| $162.6 million 12 3/4% Series A Preferred | |Series B, D & E Junior Convertible Preferred|
|-------->|Series B, D & E Junior Convertible Preferred| | $300 million Series C Convertible Preferred|
| | $300 million Series C Convertible Preferred| | 55 million Common Shares (PGTV) |
| | 55 million Common Shares (PGTV) | | |
| |--------------------------------------------| |--------------------------------------------|
| | | |
| | |---| |
| | | |
| | | |
|--------------------------------------------||--------------------------------------| | |-----------------------------------------|
| Pegasus Communication Corp. ||Pegasus Satellite Communications, Inc.| | | Pegasus Satellite Communications, Inc. |
| $370 million in Senior Notes || $370 million in Senior Notes | |>| $370 million in Senior Notes |
| $162.6 million 12 3/4% Series A Preferred || | |$162.6 million 12 3/4% Series A Preferred|
|Series B, D & E Junior Convertible Preferred|| | | |
| $300 million Series C Convertible Preferred|| | | |
| 55 million Common Shares (PGTV) || | | |
|--------------------------------------------||--------------------------------------| |-----------------------------------------|
| | |
| | |
| | |
| | |
|--------------------| |--------------------| |--------------------|
| | | | | |
| | | | | |
|--------------| |--------------| |--------------| |--------------| |--------------| |--------------|
| PM & C | | Golden Sky | | PM & C | | Golden Sky | | PM & C | | Golden Sky |
| | |Holdings, Inc.| | | |Holdings, Inc.| | | |Holdings, Inc.|
|--------------| |--------------| |--------------| |--------------| |--------------| |--------------|
</TABLE>
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Why Holders Should Exchange
|_| As a result of the Reorganization, the Preferred Stock will automatically
become preferred stock of the new holding company
|_| This exchange offer is an opportunity for holders of the Preferred Stock
to retain securities of the same issuer they now hold
|_| Holders that do not exchange will not have the benefit of restrictive
covenants
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Main Effects of Reorganization
|_| Existing public company is made a subsidiary of a new publicly-held
holding company
|_| New activities and initiatives will be pursued through new holding company
|_| Transfer from existing public company to new holding company of:
o Pending applications for satellite and terrestrial broadband licenses
o Intellectual property rights
o $1.5 million in cash
|_| Pegasus Satellite retains DIRECTV(R)DBS, broadcast television and
broadband businesses