SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934. FOR THE PERIOD ENDED SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934. FOR THE TRANSITION PERIOD FROM TO
--- ---
COMMISSION FILE NUMBER 0-22662
UNITED VIDEO SATELLITE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 73-1290412
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7140 SOUTH LEWIS AVENUE
TULSA, OKLAHOMA 74136-5422
(Address of principal executive offices) (Zip code)
(918) 488-4000
(Registrant's telephone number, including area code)
Indicate by check whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter periods
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Number of shares outstanding of each of the registrant's classes of
common stock as of November 8, 1996:
TITLE OF CLASS NUMBER OF SHARES
Class A Common Stock $.01 Par Value 23,782,286
Class B Common Stock $.01 Par Value 12,373,294
1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITED VIDEO SATELLITE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
September 30, December 31,
1996 1995
---- ----
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 31,586 $ 28,485
Marketable securities, at market 58,722 32,208
Accounts receivable, net of allowance
for doubtful accounts of $4,438 and
$1,788 at September 30, 1996 and
December 31, 1995, respectively 46,758 28,890
Accrued interest receivable 735 667
Prepaid expenses and other 11,346 5,960
Deferred tax asset 729 1,371
-------- --------
Total current assets 149,876 97,581
Property, plant and equipment, at cost,
net of accumulated depreciation and
amortization 55,639 52,844
Goodwill, net of accumulated amortization
of $3,520 and $1,733 at September 30,
1996 and December 31, 1995, respectively 32,154 32,685
Minority interest 42,822 --
Deferred tax asset 46 475
Other assets 2,201 2,295
-------- --------
Total assets $282,738 $185,880
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 10,427 $ 4,976
Accrued liabilities 43,172 27,441
Current portion of capital lease
obligations and long-term debt 6,842 3,053
-------- --------
60,441 35,470
Customer prepayments 99,166 49,994
-------- --------
Total current liabilities 159,607 85,464
Deferred compensation 2,050 4,269
Capital lease obligations and
long-term debt 21,570 23,992
Minority interest 4,726 3,062
Stockholders' equity
Preferred stock, par value $.01
per share -- --
Class A common stock, par value $.01
per share 236 55
Treasury stock, at cost (77) --
Class B common stock, par value $.01
per share 124 124
Additional paid-in capital 32,346 29,507
Note receivable from stockholder (500) (472)
Retained earnings 62,656 39,879
-------- --------
Total stockholders' equity 94,785 69,093
-------- --------
Total liabilities and stockholders' equity $282,738 $185,880
======== ========
See accompanying notes.
2
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UNITED VIDEO SATELLITE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Satellite services $105,646 $57,214 $264,688 $165,173
Advertising sales 5,763 4,011 16,785 11,597
Systems integration
services 6,100 6,427 24,260 6,427
Other 192 249 732 672
------- ------- ------- --------
117,701 67,901 306,465 183,869
Operating expenses:
Programming and
delivery 63,677 30,006 157,275 86,508
Selling, general
and administrative 34,785 25,100 95,771 61,002
Depreciation and
amortization 4,512 3,147 11,936 8,317
------- ------- ------- -------
102,974 58,253 264,982 155,827
------- ------- ------- -------
Operating income 14,727 9,648 41,483 28,042
Other income
(expenses), net 423 (430) 1,069 (238)
------- ------- ------- -------
Income before income
taxes and minority
interest 15,150 9,218 42,552 27,804
Provision for income
taxes (4,241) (3,822) (13,371) (10,663)
Minority interest
in earnings (3,400) (116) (6,602) (116)
-------- ------- -------- --------
Net income $ 7,509 $ 5,280 $ 22,579 $ 17,025
======== ======= ======== ========
Common and common
equivalent shares
outstanding (1) 37,042 36,738 37,044 36,562
Earnings per
share (1) $ 0.20 $ 0.14 $ 0.61 $ 0.47
(1) 1995 amounts adjusted for two-for-one stock split (See Note 4).
See accompanying notes.
3
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UNITED VIDEO SATELLITE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands)
Nine Months Ended
September 30,
1996 1995
---- ----
Operating activities:
Net income $22,579 $17,025
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 11,936 8,317
Minority interest in earnings 6,602 116
Net deferral of compensation (2,219) 421
Non-cash compensation expense 1,061 --
Deferred income taxes 979 (578)
Amortization of bond premiums 386 503
Loss on asset dispositions 39 71
Loss from equity method affiliate -- 146
Amortization of deferred lease expense (89) 341
Changes in operating assets and
liabilities:
Accounts receivable (2,455) (5,133)
Accrued interest receivable (68) 253
Prepaid expenses and other (4,979) (4,127)
Accounts payable 5,381 (1,913)
Accrued liabilities 2,946 4,179
Customer prepayments (4,389) 7,418
Other (18) --
------- -------
Net cash provided by operating activities 37,692 27,039
Investing activities:
Capital expenditures (10,000) (6,548)
Purchases of marketable securities (42,352) (29,273)
Maturities of marketable securities 15,742 33,668
Investment in SSDS, Inc., net of cash
acquired (106) (25,204)
Investments in affiliates and other
long-term assets (120) (706)
Other (644) (10)
------- -------
Net cash used in investing activities (37,480) (28,073)
Financing activities:
Repayment of capital lease obligations
and long-term debt (2,260) (2,107)
Borrowing under SSDS credit facility 3,627
Issuance of stock 1,522 951
Decrease in notes receivable
from stockholders -- 150
------- -------
Net cash provided by (used in)
financing activities 2,889 (1,006)
------- -------
Net increase (decrease) in cash and
cash equivalents 3,101 (2,040)
Cash and cash equivalents at beginning of
period 28,485 32,524
------- -------
Cash and cash equivalents at end of period $31,586 $30,484
======= =======
Supplemental Disclosures of Cash
Flow Information:
Interest paid $ 1,470 $ 1,522
Income taxes paid $12,777 $10,023
See accompanying notes.
4
<PAGE>
UNITED VIDEO SATELLITE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements of United Video Satellite Group, Inc. ("UVSG" or the
"Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and pursuant to
the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements.
In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three-month and nine-
month periods ended September 30, 1996, are not necessarily indicative
of the results that may be expected for the year ended December 31,
1996. The operating results include the results of the combined retail
operations of the Company's Superstar Satellite Entertainment division
and Liberty Media Corporation's Netlink division beginning on April 1,
1996. (See Note 5).
The condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
2. Contingencies
On October 8, 1993, the Company received correspondence from
attorneys representing StarSight Telecast, Inc. ("StarSight") bringing
to the Company's attention the existence of three patents and various
patent applications containing claims relating to certain functions
performed by interactive television program scheduling services,
alleging that the Company is or may be infringing StarSight issued
patents, including U.S. Patent No. 4,706,121 and then pending
Reexamination Certificate B1 4,706,121 (collectively, the "121
Patent"), and claims of its pending patent applications, and
threatening the Company with enforcement litigation. On October 19,
1993, the Company filed an action in the United States District Court
for the Northern District of Oklahoma seeking a Declaratory Judgment to
the effect that the services offered by the Company do not infringe the
three United States patents issued to StarSight, including the 121
Patent. On October 22, 1993, StarSight filed a separate action in the
United States District Court for the Northern District of California,
alleging that certain of the Company's interactive services infringe
the 121 Patent. This action was dismissed by StarSight on May 25,
5
<PAGE>
UNITED VIDEO SATELLITE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1994. On July 16, 1994, the Company filed an Amended Complaint seeking
declaratory judgment that it did not infringe the three StarSight
patents listed in the original complaint as well as five other patents
licensed to StarSight. On July 19, 1994, StarSight refiled its
infringement claim against the Company as a counter-claim to the
Company's Amended Complaint. On February 15, 1995, the Company filed an
Amended and Supplemental Complaint which averred that the 121 Patent is
invalid, and not infringed, that the 121 Patent is unenforceable
because of StarSight's inequitable conduct in obtaining the patent and
its misuse of the patent, and that StarSight violated the antitrust
laws. The Company also sought a Declaratory Judgment that the five
other patents licensed to StarSight are not infringed by the Company.
The trial commenced on May 8, 1996 with respect to the validity,
infringement and inequitable conduct issues relative to the 121 Patent.
The trial is currently in adjournment and a date for resumption has not
been set, but is anticipated within the next few months. Discovery and
trial of all other issues has been stayed. There can be no assurance
that this litigation will be resolved without material adverse effect
on the business prospects of the Company's Prevue Interactive
subsidiary and the future financial position or results of operations
of the Company.
The State of Illinois (the "State") has asserted that certain
uplinking services performed by the Company at its Chicago Teleport are
subject to the State's Telecommunications Excise Tax Act. The State
contends that the Company should have collected approximately $1.5
million in excise taxes from its customers during the period August
1985 through June 1994 and remitted such receipts to the State. In
addition to that amount, Illinois assessed penalties and interest of
approximately $900,000. The Company, after consulting with outside
counsel, strongly disagrees with the State's position. No provision has
been made in the Company's financial statements for this contingency,
nor has the Company collected from its customers and remitted this tax
(which would currently aggregate approximately $350,000 annually) for
periods subsequent to June 1994. However, pursuant to the State's
Protest Money Act which stops further accrual of interest during the
appeals process, the Company has paid into the Illinois Court
approximately $2.4 million, which represents the amount of the State's
claim applicable to the period August 1985 through June 1994. Also
pursuant to the State's Protest Money Act, the Company filed a Verified
Complaint for Injunctive and Other Relief in the Cook County Chancery
Court on February 28, 1995, and an Amended Verified Complaint on
October 6, 1995. Discovery is proceeding, and the Company anticipates
filing dispositive motions within the near future. While the Company
believes that this matter will not have a material adverse effect on
its business or results of operations, the ultimate resolution, which
may occur within one year, could result in a loss of up to $3 million.
6
<PAGE>
UNITED VIDEO SATELLITE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On July 20 and July 28, 1994, certain of the Company's Superstar
Satellite Entertainment ("Superstar") wholesale programming
distributors initiated a complaint proceeding with the Federal
Communications Commission ("FCC") which alleged that Superstar was
discriminating in its pricing of superstation programming when compared
to the rates cable television operators pay for programming. Superstar
reached a final settlement agreement with the complainants and the FCC
order dismissing the complaints with prejudice was adopted June 17,
1996. The settlement had no significant impact on the Company's results
of operations.
The Company is also a party to certain other ordinary routine
claims, actions and proceedings incidental to its business, none of
which is expected to have a material adverse effect on the business,
financial position or results of operations of the Company.
3. Merger with Tele-Communications, Inc.
On January 25, 1996, the stockholders of the Company adopted the
Agreement and Plan of Merger dated as of July 10, 1995, as amended (the
"Merger Agreement"), among UVSG, Tele-Communications, Inc. ("TCI") and
TCI Merger Sub, Inc. ("Merger Sub"), pursuant to which Merger Sub was
merged into UVSG, with UVSG as the surviving corporation (the
"Merger"). The Merger was consummated later that same day.
Pursuant to the terms of the Merger Agreement, holders of Class A
Common Stock of UVSG (other than the then controlling stockholder) had
the right to elect to have up to half of their shares of Class A Common
Stock converted into "Merger Consideration" consisting of one share of
TCI's Redeemable Convertible TCI Group Preferred Stock, Series G, par
value $.01 per share and one share of TCI's Redeemable Convertible
Liberty Media Group Preferred Stock, Series H, par value $.01 per
share. A total of 5,557,696 (11,115,392 as adjusted for the stock
split, see Note 4) shares of Class A Common Stock were held by
stockholders who had the right to convert up to half of their shares
into Merger Consideration, and a total of 1,072,733 (2,145,466 as
adjusted for the stock split) shares were so converted.
In connection with the Merger, UVSG's then controlling stockholder
converted 6,186,647 (12,373,294 as adjusted for the stock split) of the
shares of Class B Common Stock of UVSG held by him into shares of Class
A Common Stock. Pursuant to the terms of the Merger Agreement, the
remaining 6,186,647 (12,373,294 as adjusted for the stock split) shares
of Class B Common Stock retained by UVSG's controlling stockholder were
converted into Merger Consideration.
7
<PAGE>
UNITED VIDEO SATELLITE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As a consequence of the foregoing transactions, TCI acquired
6,186,647 (12,373,294 as adjusted for the stock split) shares of Class
B Common Stock and 1,072,733 (2,145,466 as adjusted for the stock
split) shares of Class A Common Stock, together representing
approximately 40% of the issued and outstanding common stock of UVSG
and approximately 86% of the total voting power of UVSG common stock
immediately after the Merger, resulting in UVSG becoming a majority-
controlled subsidiary of TCI.
4. Stock Split
On February 8, 1996, the Board of Directors declared a two-for-one
split of the Company's Class A Common Stock and Class B Common Stock.
The stock split was effected in the form of a stock dividend on March
12, 1996 of one additional share of Class A Common Stock for each share
of Class A Common Stock outstanding and one additional share of Class B
Common Stock for each share of Class B Common Stock outstanding to
holders of record on February 22, 1996. The par value of the Class A
Common Stock and Class B Common Stock remained $.01 per share. The
Company had previously increased the number of authorized shares of
Class A Common Stock from 30 million shares to 60 million shares and
Class B Common Stock from 15 million shares to 30 million shares in
connection with the Merger. All references in the financial statements
to number of shares and per share amounts have been adjusted to reflect
the stock split where indicated.
5. Retail C-Band Home Satellite Dish Joint Venture
On August 9, 1996, the Company and Liberty Media Corporation
("Liberty") executed an amended and restated agreement (the
"Agreement") under which the Company's Superstar division and Liberty's
Netlink division will contribute their retail C-band home satellite
dish business' assets, obligations and operations, effective April 1,
1996, to a new entity owned 50% each by UVSG and Liberty. Liberty is a
wholly-owned subsidiary of TCI and, accordingly, for financial
reporting purposes, the combination will be accounted for as a merger
of businesses under common control, whereby the assets and obligations
of both Superstar and Netlink will be contributed to the venture at
their historical cost. The Agreement amends and restates a letter of
intent between the two parties to include necessary elements of the
basis upon which Superstar and Netlink are being combined. While
documentation for the combination was still being finalized, the new
venture commenced operating on a combined basis beginning April 1, 1996
in anticipation of the final agreement being documented as now
reflected in the Agreement. The operations of the combined businesses
have been consolidated, effective April 1, 1996, with the operating
results of the Company as the Company has voting control over the
venture's operations.
Assets being contributed by Liberty to the venture total $14.7
million and consist primarily of $14.3 million of accounts receivable.
These assets are subject to liabilities of $64.0 million, consisting of
$50.9 million of customer prepayments and $13.1 million of accounts
payable and accrued liabilities. The Company is contributing $9.4
million of assets to the venture, consisting principally of $4.9
million of accounts receivable and $4.2 million of property and
equipment, which are subject to liabilities of $55.6 million, composed
of $44.3 million of customer prepayments and $11.3 million of accounts
payable and accrued liabilities.
The following pro forma financial information reflects the
Company's results of operations for the nine-month periods ended
September 30, 1996 and 1995 as though the retail operations had been
combined as of January 1, 1995:
Nine Months Ended
September 30,
1996 1995
---- ----
(in thousands, except per share amounts)
Pro forma:
Revenues $344,796 $284,223
Net income $ 22,304 $ 13,183
Net income per share $ 0.60 $ 0.36
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
The Company operates six businesses: program promotion and guide
services (Prevue Networks), interactive information delivery services
(Prevue Interactive), home satellite and business services (Superstar),
satellite distribution of video services (UVTV), software development
and systems integration services (SSDS) and satellite transmission
services for private networks (SpaceCom).
The following table sets forth certain unaudited financial
information for the Company and each of the businesses operated by it
during the three months and nine months ended September 30, 1996 and
1995.
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
----------- ----------- ----------- ------------
Amount %(1) Amount %(1) Amount %(1) Amount %(1)
------ --- ------ --- ------ --- ------ ---
(in thousands)
Revenues:
Prevue
Networks(2) $ 12,411 11% $ 9,990 15% $ 35,799 12% $ 28,297 15%
Prevue
Interactive 70 -- 17 -- 137 -- 35 --
Superstar(3) 88,352 75 41,669 61 215,111 70 119,630 65
UVTV 6,676 6 6,592 10 19,630 6 20,523 11
SSDS(4) 6,100 5 6,427 9 24,260 8 6,427 4
SpaceCom 4,092 3 3,206 5 11,528 4 8,957 5
-------- --- ------- --- -------- --- -------- ---
Total $117,701 100% $67,901 100% $306,465 100% $183,869 100%
======== === ======= === ======== === ======== ===
EBITDA(5):
Prevue
Networks(2) $ 4,470 23% $ 4,417 34% $ 15,375 29% $ 11,959 33%
Prevue
Interactive (1,535) (8) (1,838)(14) (3,790) (7) (3,751) (10)
Superstar(3) 11,074 57 5,413 42 25,348 47 15,221 42
UVTV 4,360 23 3,991 31 12,979 24 11,803 32
SSDS(4) (95) -- 717 6 1,085 2 717 2
SpaceCom 965 5 95 1 2,422 5 410 1
-------- --- ------- --- -------- --- -------- ---
Total $ 19,239 100% $12,795 100% $ 53,419 100% $ 36,359 100%
======== === ======= === ======== === ======== ===
Operating income:
Prevue
Networks(2) $ 2,415 16% $ 3,017 31% $ 10,196 25% $ 8,049 29%
Prevue
Interactive (1,654)(11) (1,911)(20) (4,106)(10) (3,947) (14)
Superstar(3) 10,457 71 5,067 53 23,860 57 14,140 51
UVTV 3,740 26 3,374 35 11,138 27 9,925 35
SSDS(4) (832) (6) 296 3 (989) (2) 296 1
SpaceCom 601 4 (195) (2) 1,384 3 (421) (2)
-------- --- ------ --- -------- --- -------- ---
Total $ 14,727 100% $9,648 100% $ 41,483 100% $ 28,042 100%
======== === ====== === ======== === ======== ===
Consolidated
depreciation
and amorti-
zation $ 4,512 $ 3,147 $ 11,936 $ 8,317
Consolidated
capital
expenditures $ 3,292 $ 2,280 $ 10,000 $ 6,548
Consolidated
cash flows
from
operations $ 15,501 $10,374 $ 37,692 $ 27,039
9
<PAGE>
(1) The percentages shown in the above table represent the percentage
of the Company's consolidated revenues, EBITDA or operating
income, as applicable, attributable to each of the businesses
operated by the Company.
(2) The revenues, EBITDA and operating income for Prevue Networks
include Prevue Channel, Sneak Prevue and other services offered
both domestically and internationally.
(3) The amounts shown in the above table for Superstar represent
Superstar's revenues, EBITDA and operating income included in the
Company's consolidated results of operations. Beginning April 1,
1996, these operating results include the combined retail
operations of Superstar and those of Liberty Media Corporation's
Netlink division.
(4) The amounts shown in the above table for SSDS represent SSDS's
revenues, EBITDA and operating income included in the Company's
consolidated results of operations. The Company increased its
ownership interest in SSDS to 70% on July 20, 1995. Prior to that
date, the Company accounted for its investment in SSDS under the
cost method. Operating results of SSDS for the nine months ended
September 30, 1995 are shown in the table below under Results of
Operations - SSDS.
(5) "EBITDA" represents operating income, plus depreciation and
amortization. Financial analysts generally consider EBITDA to be
an appropriate measure of performance in the industries in which
the Company operates. EBITDA does not take into account
substantial costs of doing business, such as income taxes and
interest expense, and should not be considered as an alternative
to net income or to cash flow or to any other generally accepted
accounting principles measure of performance, liquidity or
financial position.
10
<PAGE>
Results of Operations
Consolidated
Revenues for the three months ended September 30, 1996 were $117.7
million, an increase of $49.8 million, or 73%, over the same period in
1995. For the nine months ended September 30, 1996, revenues were
$306.5 million, an increase of $122.6 million, or 67%, over the
corresponding 1995 period. The increases in revenues for the quarter
and nine-month period are primarily due to $40.2 million and $78.6
million, respectively, of additional revenues attributable to Liberty
Media Corporation's Netlink division retail operations ("Netlink")
which were combined with those of Superstar's retail operations
effective April 1, 1996, revenues from system integration services by
SSDS, which was acquired in 1995, and increased advertising revenues by
Prevue Networks.
Operating expenses, excluding depreciation and amortization, were
$98.5 million for the three months ended September 30, 1996, an
increase of $43.4 million, or 79%, when compared to $55.1 million for
the same period in 1995. For the nine months ended September 30, 1996,
operating expenses, excluding depreciation and amortization, were
$253.0 million, an increase of $105.5 million, or 72%, over the
corresponding 1995 period. Operating expenses, excluding depreciation
and amortization, increased primarily due to increased operating costs
of $36.5 million and $71.8 million, respectively, attributable to
Netlink, operating expenses of SSDS (which were not consolidated in the
prior year) and increased personnel costs resulting from additional
personnel, primarily attributable to the growth in Prevue Networks and
Superstar. Included in operating expenses, for both the quarter and
nine months ended September 30, 1996, were approximately $1.9 million
and $2.4 million, respectively, of non-recurring charges associated
with failed transaction costs, StarSight litigation, severance and
other items, while for the same periods in 1995, $1.1 million and $1.3
million, respectively, of costs associated with the StarSight
litigation and other matters were incurred.
Depreciation and amortization during the third quarter of 1996 was
$4.5 million, an increase of $1.4 million, or 43%, over the same period
in 1995. For the nine months ended September 30, 1996, depreciation and
amortization increased $3.6 million, or 44%, over the same period in
1995. The increases in depreciation and amortization in 1996 were a
result of the acquisition of equipment to support the various Prevue
products, growth in Superstar subscribers and personnel and
amortization of the goodwill resulting from the Company's investment in
SSDS.
Other income and expenses for the third quarter and nine months
ended September 30, 1996 increased $853,000 and $1.3 million,
respectively, over the same periods in 1995. Included in the 1995
periods were approximately $900,000 and $1.3 million, respectively, of
non-recurring expenses associated with the merger between the Company
and Tele-Communications, Inc.
11
<PAGE>
Prevue Networks
The following table sets forth certain financial information for
Prevue Networks for the three months and nine months ended September
30, 1996 and 1995:
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
(in thousands)
Revenues $12,411 $9,990 $35,799 $28,297
Operating expenses,
before depreciation
and amortization 7,941 5,573 20,424 16,338
------- ------ ------- -------
EBITDA 4,470 4,417 15,375 11,959
Depreciation and
amortization 2,055 1,400 5,179 3,910
------- ------ ------- -------
Operating income $ 2,415 $3,017 $10,196 $ 8,049
======= ====== ======= =======
EBITDA margin
percentage 36% 44% 43% 42%
Operating margin
percentage 19% 30% 28% 28%
Prevue Networks' revenues for the three months ended September 30,
1996 were $12.4 million, an increase of $2.4 million, or 24%, over the
same period in 1995. For the nine months ended September 30, 1996,
revenues were $35.8 million, an increase of $7.5 million, or 27%, over
the corresponding 1995 period. The increases during both periods were
largely attributable to national advertising revenues which grew $1.7
million, or 43%, over the third quarter of 1995 and $5.1 million, or
44%, over the first nine months of 1995 due to growth in measured
viewership. Domestic service fee revenues attributable to Prevue
Channel and Sneak Prevue increased $411,000, or 11%, and $145,000, or
9.1%, respectively, for the quarter and $1.7 million, or 17%, and
$351,000, or 8%, respectively, for the nine-month period when compared
to the same respective 1995 periods. Domestically, Prevue Channel
subscriber counts increased by 3.1 million, or 8%, to 40.8 million as
of September 30, 1996 compared to those as of September 30, 1995.
Sneak Prevue increased by 8.9 million subscribers, or 35%, to 34.8
million during the same period. This increase includes approximately
8.6 million subscribers acquired as a result of the formation of Sneak
Prevue LLC, an entity formed in September 1996 to combine StarNet,
Inc.'s ("StarNet") pay-per-view promotion product with Sneak Prevue.
Operating expenses, excluding depreciation and amortization,
increased by $2,4 million, or 42%, during the third quarter of 1996 and
by $4.1 million, or 25%, for the first nine months of 1996 when
compared to the same periods in 1995. The increased operating expenses
were due primarily to increased compensation and maintenance expenses.
Compensation expense increased as a result of additional employees to
accommodate Prevue's growth and severance paid to three executives.
Maintenance expense increased as a result of a repair project on the
Amiga platform and laser players.
Depreciation and amortization during the third quarter of 1996 was
$2.1 million, an increase of $655,000, or 47%, over the same period in
1995. For the nine months ended September 30, 1996, depreciation and
amortization increased $1.3 million, or 32%, over the same period in
1995. The increases in depreciation and amortization in 1996 were a
result of the acquisition of additional customer control units and
video production equipment necessary to support the various Prevue
products.
12
<PAGE>
Prevue Interactive
The following table sets forth certain financial information for
Prevue Interactive for the three months and nine months ended September
30, 1996 and 1995:
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
(in thousands)
Revenues $ 70 $ 17 $ 137 $ 35
Operating expenses,
before depreciation
and amortization 1,605 1,855 3,927 3,786
------- ------- ------ ------
EBITDA (1,535) (1,838) (3,790) (3,751)
Depreciation and
amortization 119 73 316 196
------- ------- ------- -------
Operating loss $(1,654) $(1,911) $(4,106) $(3,947)
======= ======= ======= =======
Prevue Interactive generated no significant revenues during the
first nine months of 1996 or 1995. The revenues in both 1996 and 1995
were primarily attributable to Quikvue, which launched in late 1994.
The Company believes the interactive market has the potential to yield
significant revenues in the future; however, the Company does not
believe there will be any significant increase in the amount of Prevue
Interactive's revenues during 1996.
The Company's operating expenses, before depreciation and
amortization, decreased by $250,000, or 13%, during the third quarter
of 1996 compared to the same period in 1995. Operating expenses, before
depreciation and amortization, were $3.9 million for the nine months
ended September 30, 1996, an increase of $141,000, or 4%, from the
corresponding 1995 period. Decreased operating expenses for the quarter
resulted from decreased legal costs associated with the StarSight
litigation offset in part by increased compensation expense related to
severance payments to one executive. Increased operating expenses for
the nine-month period are a result of increased compensation expense
offset in part by decreased legal costs. (See Note 2 of Notes to
Condensed Consolidated Financial Statements).
Depreciation and amortization during the third quarter of 1996 was
$119,000, an increase of $46,000, or 63%, over the same period in 1995.
For the first nine months of 1996, depreciation and amortization
increased $120,000, or 61%, over the first nine months of 1995. The
increases in depreciation were primarily due to the acquisition of
computer equipment placed in cable systems to support the Quikvue
service.
13
<PAGE>
Superstar
The following table sets forth certain financial information for
Superstar for the three months and nine months ended September 30, 1996
and 1995:
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
(in thousands)
Revenues $88,352 $41,669 $215,111 $119,630
Operating expenses,
before depreciation
and amortization 77,278 36,256 189,763 104,409
------- ------- -------- --------
EBITDA 11,074 5,413 25,348 15,221
Depreciation and
amortization 617 346 1,488 1,081
------- ------- -------- --------
Operating income $10,457 $ 5,067 $ 23,860 $ 14,140
======= ======= ======== ========
EBITDA margin
percentage 13% 13% 12% 13%
Operating margin
percentage 12% 12% 11% 12%
Revenues generated by Superstar for the three months ended
September 30, 1996 were $88.4 million, an increase of $46.7 million, or
112%, over the same period in 1995. For the nine months ended September
30, 1996, revenues were $215.1 million, an increase of $95.5 million,
or 80%, over the corresponding period in 1995. Included in the revenue
increases for the three and nine month periods, respectively, are
approximately $40.2 million and $78.6 million of revenues attributable
to Netlink's operations which were combined with those of Superstar's
effective April 1, 1996. Also contributing to the increases were an
increase in the number of retail subscribers served, as well as growth
in commission income earned as service agent for a program supplier to
the direct broadcast satellite (DBS) market. Retail subscribers
purchasing programming directly from Superstar and Netlink as of
September 30, 1996 totaled approximately 992,000, an increase of 51,000
during the quarter and an increase of 96,000 during the prior twelve
months compared to the aggregate Superstar and Netlink subscribers then
existing. During the quarter ended September 30, 1996, the venture
purchased approximately 36,000 subscribers from Jones Satellite which
are included in the above increases. During the quarter ended September
30, 1996, the industry declined 1%, decreasing by 16,000 subscribers
and for the twelve month period ended September 30, 1996, the industry
decreased by 49,000 subscribers, or 2%. Commission revenues from acting
as a service agent in the DBS market increased by approximately $2.5
million and $5.8 million in the third quarter and first nine months of
1996, respectively, over those in the same periods in 1995. The current
contract governing the commissions earned as a service agent in the DBS
market expires December 31, 1996 with commissions on subscribers
serviced continuing to be earned through 1999. Negotiations for a
renewal of the contract are on-going; however, the parties have been
unable to reach agreement on the terms of a new contract to date.
Operating expenses, excluding depreciation and amortization, were
$77.3 million in the third quarter of 1996, compared to $36.3 million
for the same period in 1995. For the first nine months of 1996,
operating expenses, excluding depreciation and amortization, increased
$85.4 million, or 82%, over the same period in 1995. The increases in
operating expenses, before depreciation and amortization, in the third
quarter and first nine months of 1996 as compared to the previous
year's results were due primarily to the expenses attributed to
Netlink, increased programming fees, which vary in relation to
revenues, and selling, general and administrative costs necessary to
service the growing customer base.
Depreciation and amortization for the third quarter of 1996 was
$617,000, an increase of $271,000, or 78%, over the third quarter of
1995. Depreciation and amortization for the first nine months of 1996
was $1.5 million, an increase of $407,000, or 38%, compared to the same
period in 1995. The increases in depreciation and amortization for both
periods were a result of the acquisition of additional data processing
equipment and office furniture necessitated by the increase in
subscribers and employees and an upgrade of the call center.
14
<PAGE>
UVTV
The following table sets forth certain financial information for
UVTV for the three months and nine months ended September 30, 1996 and
1995:
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
(in thousands)
Revenues $6,676 $6,592 $19,630 $20,523
Operating expenses,
before depreciation
and amortization 2,316 2,601 6,651 8,720
------ ------ ------- -------
EBITDA 4,360 3,991 12,979 11,803
Depreciation and
amortization 620 617 1,841 1,878
------ ------ ------- -------
Operating income $3,740 $3,374 $11,138 $ 9,925
====== ====== ======= =======
EBITDA margin
percentage 65% 61% 66% 58%
Operating margin
percentage 56% 51% 57% 48%
UVTV's revenues for the three months ended September 30, 1996 were
$6.7 million, an increase of $84,000, or 1%, from the same period in
1995. For the nine months ended September 30, 1996, revenues were
$19.6 million, a decrease of $893,00, or 4%, from the corresponding
1995 period. The decrease in revenues resulted primarily from $2.0
million of non-recurring 1995 revenues related to the promotion of a
pay-per-view boxing event in the second quarter of 1995. Partially
offsetting these non-recurring 1995 revenues were increases in revenues
for both periods from UVTV/WGN programming services. UVTV/WGN
subscribers increased by 1.7 million, or 5%, from September 1995 to
September 1996.
Operating expenses, excluding depreciation and amortization, were
$2.3 million during the third quarter of 1996, a decrease of $285,000,
or 11%, from those during the third quarter of 1995. For the nine
months ended September 30, 1996, operating expenses, excluding
depreciation and amortization, decreased $2.1 million, or 24%, from the
corresponding period in 1995. The decreases in operating expenses for
both periods results primarily from non-recurring 1995 expenses
associated with the pay-per-view boxing event and cost saving measures
implemented in 1996.
Depreciation and amortization in the third quarter of 1996 was
$620,000, relatively unchanged compared to the same period in 1995. For
the nine months ended September 30, 1996, depreciation and amortization
was $1.8 million, $37,000, or 2%, lower than for the same period in
1995.
In October 1996, the Seventh Circuit Court of Appeals issued a
decision under which the Chicago Bulls' games are temporarily barred
from the UVTV/WGN national satellite feed. Commencing November 2, 1996,
UVTV/WGN began replacing the Bulls' games with other programming. The
length of time the Bulls' games will be pre-empted on the UVTV
satellite feed and the ultimate impact of the pre-emption of the Bulls'
games on UVTV's business are unknown at this time; however, management
does not expect the impact will be significant.
15
<PAGE>
SSDS
The following table sets forth certain financial information for
SSDS for the three months and nine months ended September 30, 1996 and
1995:
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
(in thousands)
Revenues $6,100 $8,824 $24,260 $24,856
Operating expenses,
before depreciation
and amortization 6,195 7,913 23,175 22,839
------ ------ ------- -------
EBITDA (95) 911 1,085 2,017
Depreciation and
amortization 234 116 566 306
------ ------ ------- -------
Operating income(loss) $ (329) $ 795 $ 519 $ 1,711
====== ====== ======= =======
EBITDA margin
percentage (2)% 10% 4% 8%
Operating margin
percentage (5)% 9% 2% 7%
The results of operations of SSDS have been consolidated with the
results of operations of the Company for reporting purposes subsequent
to July 20, 1995, the date the Company increased its ownership interest
in SSDS to 70%. The above table and following discussion are based on
the financial statements of SSDS, both prior to and subsequent to its
July 20, 1995 acquisition date and do not include the amortization of
goodwill resulting from the acquisition, which amounted to
approximately $503,000 and $1.5 million for the third quarter and nine
months ended September 30, 1996, respectively.
SSDS' revenues for the third quarter of 1996 were $6.1 million, a
decrease of $2.7 million, or 31%, compared to the third quarter of
1995. Revenues for the first nine months of 1996 were $24.3 million, a
decrease of $596,000, or 2%, below the same period in 1995. Included in
the third quarter of 1996 was a downward adjustment of $2.4 million,
which resulted from revised revenue estimates of contract revenues
reported during the first two quarters of 1996. Excluding this
adjustment, revenues for the quarter and year-to-date were relatively
unchanged from that of the preceding year. Revenues from the public
sector during the first quarter of 1995 were negatively impacted by a
contractual dispute on a government project. Defense revenues in the
first quarter of 1996 were negatively impacted by the severe weather
conditions on the East coast which virtually shut down the defense
sector for most of one week.
Operating expenses, before depreciation and amortization,
decreased during the third quarter of 1996 by $1.7 million, or 22%,
over the same period in 1995 to $6.2 million. The decrease in operating
expense during the third quarter was primarily due to a reduction in
operating costs reported during the first two quarters of 1996 related
to revisions to the revenue estimates. For the nine months ended
September 30, 1996, operating expenses, excluding depreciation and
amortization, increased $336,000, or 1%, from the corresponding 1995
period. The increase in operating expense during the first nine months
results primarily from payroll costs that were absorbed in overhead and
not billable due to inclement weather conditions on the East coast
during the first quarter of 1996.
Depreciation expense during the third quarter of 1996 was
$234,000, an increase of $118,000, or 102%, over the third quarter of
1995. Depreciation expense during the nine months ended September 30,
1996 increased by $260,000, or 85%, over the same period in 1995. The
increases in both periods were the result of ongoing infrastructure
equipment upgrades and new equipment to support the increase of new
employees over 1995.
16
<PAGE>
SpaceCom
The following table sets forth certain financial information for
SpaceCom for the three months and nine months ended September 30, 1996
and 1995:
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
(in thousands)
Revenues $4,092 $3,206 $11,528 $8,957
Operating expenses,
before depreciation
and amortization 3,127 3,111 9,106 8,547
------ ------ ------- ------
EBITDA 965 95 2,422 410
Depreciation and
amortization 364 290 1,038 831
------ ------ ------- ------
Operating income (loss) $ 601 $ (195) $ 1,384 $ (421)
====== ====== ======= ======
EBITDA margin
percentage 24% 3 % 21% 5 %
Operating margin
percentage 15% (6)% 12% (5)%
SpaceCom's revenues for the three months ended September 30, 1996
were $4.1 million, an increase of $886,000, or 28%, over the same
period in 1995. For the nine months ended September 30, 1996, revenues
were $11.5 million, an increase of $2.5 million, or 29%, over the
corresponding 1995 period. The increases in revenues in both periods
were attributable principally to increased demand for channel space
from SpaceCom's existing paging customers. SpaceCom's transponders had
an average occupancy, based on revenue dollars, of 69% as of September
30, 1996, compared to 60% as of September 30, 1995.
Operating expenses, excluding depreciation and amortization, were
$3.1 million during the third quarter of 1996, an increase of $16,000,
or 1%, compared to the same period in 1995. During the nine months
ended September 30, 1996, operating expenses, excluding depreciation
and amortization increased $559,000, or 7%, over the corresponding 1995
period. The increases in operating expenses, before depreciation and
amortization, for both periods resulted primarily from increased
compensation expenses as SpaceCom increased the number of sales and
engineering personnel.
Depreciation and amortization in the third quarter of 1996 was
$364,000, an increase of $74,000, or 26%, over that in the same period
in 1995. For the nine months ended September 30, 1996, depreciation and
amortization was $1.0 million, an increase of $207,000, or 25%, over
the corresponding 1995 period. The increases in depreciation and
amortization for both periods were the result of acquiring new assets
to provide a wider range of services.
17
<PAGE>
Liquidity and Capital Resources
Cash provided by operations continues to be the Company's primary
source of funds to finance operating needs, capital expenditures and
investments. During the first nine months of 1996, net cash flows from
operating activities were $37.7 million, reflecting the continued
growth of the Company's after-tax earnings. This cash plus existing
cash resources were used to fund capital expenditures of $10.0 million
and the reduction in the Company's capitalized lease obligations of
$2.3 million during the nine-month period.
At September 30, 1996, the Company's cash, cash equivalents and
marketable securities aggregated $90.3 million, an increase of $29.6
million over that as of December 31, 1995. The above total includes
$15.4 million of cash and cash equivalents held by Superstar/Netlink
Group LLC, in which the Company has a 50% ownership interest. The
Company has invested the majority of its cash available for current
operations in investment grade municipal governmental obligations. As
of September 30, 1996, approximately $58.7 million of such securities
had maturities greater than 90 days and, accordingly, were classified
as available-for-sale marketable securities. The Company's policy
pertaining to the temporary investment of cash available for operations
currently prohibits investments in fixed rate securities with
maturities in excess of eighteen months from the date of investment.
The Company has a credit agreement with a bank under which,
subject to certain conditions, the bank has agreed to lend up to $10.0
million on a revolving basis through March 30, 1997, at which time the
outstanding balance, if any, will convert to a five-year term
amortizing loan. Borrowings under this facility are guaranteed by the
Company's subsidiaries, excluding SSDS, and bear interest at the bank's
designated prime rate, the London Interbank Offering Rate ("LIBOR")
plus a margin or the Certificate of Deposit rate plus a margin. At
September 30, 1996, $150,000 in letters of credit and no borrowings
were outstanding under the credit facility.
In addition, SSDS has a revolving credit facility with a bank
which provides for unsecured borrowings up to $7.5 million, subject to
certain conditions. The bank has extended the credit facility, which
expired on August 31, 1996, to December 31, 1996 pending finalization
of the documentation for a new credit facility. Borrowings under this
credit facility bear interest at the bank's designated prime rate or
LIBOR plus a margin. There were $3.6 million of borrowings outstanding
under this credit facility at September 30, 1996.
18
<PAGE>
The Company collects annually, in advance, a majority of its
Superstar and Netlink retail subscription fees and certain of its UVTV
superstation and Prevue Networks' revenues. As of September 30, 1996,
the unearned portion of all prepayments totaled $99.2 million, of which
approximately $87.7 million, or 88%, was attributable to the combined
retail operations of Superstar and Netlink. Aggregate unearned
prepayments increased by $49.2 million, or 98%, during the first nine
months of 1996 primarily due to the customer prepayments associated
with Netlink's retail operations, which were combined with those of
Superstar's effective April 1, 1996. Superstar and Netlink generally
offer a refund of unearned prepayments at the customer's option if
service is discontinued for any reason. In the case of UVTV and Prevue
Networks, the Company's liability is limited to a refund of unearned
prepayments in the event that the Company is unable to provide service.
No material refunds have been paid to date.
Under the terms of the capital leases for two satellite
transponders placed in service by UVTV and Prevue Networks in 1992, the
Company was obligated for net minimum lease payments through
approximately 2004 aggregating $24.3 million as of September 30, 1996,
a reduction of $2.3 million, or 9%, from the obligation existing at the
prior year's end. The Company expects to further reduce the lease
obligation during the next twelve months by approximately $3.2 million.
The Company also leases various other satellite transponders accounted
for as operating leases. These operating leases accounted for
approximately $4.1 million in operating expenses, net of sublease
revenue, during the nine months ended September 30, 1996.
Capital expenditures during the nine months ended September 30,
1996 of $10.0 million were principally attributable to the purchase of
digital control units for use by Prevue and to data processing
equipment and furniture, fixtures and facilities used by the Company,
primarily to facilitate the combination of the retail operations of
Superstar and Netlink.
In connection with development of its Prevue Interactive
technology and in defending itself against certain patent infringement
claims by StarSight, the Company made expenditures during the first
nine months of 1996 totaling approximately $4.3 million and estimates
that its total expenditures during 1996 will aggregate approximately
$5.9 million. These expenditures for 1996 are expected to relate
primarily to (i) continued market testing of the Company's interactive
technology, (ii) on-going software development which will make the
Company's interactive technology compatible with new set-top
converters, (iii) the launch of Prevue Interactive services to cable
television systems that acquire and install new set-top converters, and
(iv) continued patent litigation. The Company anticipates that
substantially all of the anticipated expenditures will be expensed as
incurred and will be funded by working capital and cash generated by
operations and from the Company's other available capital resources.
At the present time, the Company is unable to estimate the amount of
funds that will be necessary to implement its plan for the development
of its interactive technology or to develop additional applications for
such technology, as much depends on the pace of technological
developments, the response of cable television systems and their
subscribers to initial interactive services and other factors beyond
the Company's control.
19
<PAGE>
The Company believes that currently available cash and cash
equivalents, marketable securities, cash flow generated from operations
and funds available under its credit facility, will provide the
resources necessary to meet its working capital and related financing
needs for the foreseeable future and to pursue opportunities to expand
its businesses.
The Company announced on June 26, 1996 that the Company and News
Corporation ("News Corp") had signed a letter of intent to combine
their efforts in the electronic program guide market, including the
development of the next generation of interactive television guides.
Discussions regarding the proposed combination were terminated in late
August.
In September, Prevue completed a transaction with StarNet which
combined StarNet's pay-per-view promotion product with Sneak Prevue.
Prevue Networks has a 72 percent ownership in the new Company, Sneak
Prevue, LLC, which has been consolidated for financial statement
purposes. The Company will continue operating the StarNet products and
Sneak products under the names Digital Sneak and Sneak Prevue,
respectively.
The Company continues to explore opportunities to expand its
existing businesses, develop new products and acquire interests in new
businesses.
Cautionary Statement
This report contains "forward looking statements" within the
meaning of the federal securities laws, including the Company's pursuit
of certain business activities and other statements of expectations,
beliefs, plans and similar expressions concerning matters that are not
historical facts. These statements are subject to risks and
uncertainties that could cause results to differ materially from those
expressed in the statements. Important factors that could cause such
differences include, but are not limited to, changes in the regulation
of the cable television industry adverse to the Company's services,
loss of the cable compulsory license provided by federal law, the
willingness of cable television systems to acquire and install new
equipment that will allow the Company effectively to market its
interactive technology, increased price and service competition within
the industry, the Company's ability to keep pace with technological
developments and the Company's dependence upon intellectual property
rights, including the Company's ability to defend itself against claims
by StarSight and others asserting infringement of their intellectual
property.
20
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The trial with respect to the validity, infringement and
inequitable conduct issues relative to StarSight Telecast,
Inc.'s U.S. Patent No. 4,706,121 and pending Reexamination
Certificate B1 4,706,121, which commenced on May 8, 1996, is
currently in adjournment. A date for resumption has not
been set.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS
27 Financial Data Schedule
b) REPORTS ON FORM 8-K
On August 9, 1996, the Company filed a report on Form 8-K
reporting the execution of an agreement governing the
formation of Superstar/Netlink Group LLC.
No other reports on Form 8-K were filed during the third
quarter of 1996.
On October 23, 1996, the Company filed an amendment to
the Form 8-K dated August 9, 1996 on Form 8-K/A to
include certain historical financial statements and pro
form financial information which were not available on
August 9, 1996.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
United Video Satellite Group, Inc.
(Registrant)
Date: November 13, 1996 By: /s/ Peter C. Boylan, III
-------------------------------
Peter C. Boylan, III
Executive Vice President and
Chief Financial Officer
22
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME INCLUDED IN
THE QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1996 OF
UNITED VIDEO SATELLITE GROUP, INC. AND IS QUALIFIED IN ITS ENTIRELY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000913061
<NAME> UNITED VIDEO SATELITE GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 31,586
<SECURITIES> 58,722
<RECEIVABLES> 51,196
<ALLOWANCES> 4,438
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<CURRENT-ASSETS> 149,876
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<TOTAL-LIABILITY-AND-EQUITY> 282,738
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