TV GUIDE, INC.
(formerly United Video Satellite Group, Inc.)
7140 South Lewis Avenue
Tulsa, Oklahoma 74136-5422
(918) 488-4000
COMMISSION FILE NUMBER 0-22662
INFORMATION STATEMENT
PURSUANT TO
SECTION 14(f) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND
RULE 14f-1 THEREUNDER
Introduction
This Statement is being mailed on or about March 19, 1999 to holders of record
on March 2, 1999 of the shares of Class A Common Stock, par value $.01 per share
(the "Class A Common Stock"), and Class B Common Stock, par value $.01 per share
(the "Class B Common Stock" and, together with the Class A Common Stock, the
"Common Stock") of TV Guide, Inc. (formerly United Video Satellite Group, Inc.),
a Delaware corporation (the "Company"). You are receiving this Information
Statement in connection with the anticipated appointment of persons designated
by Liberty Media Corporation ("Liberty"), The News Corporation Limited ("News
Corp.") and the Board of Directors of the Company to a majority of the seats on
the Board of Directors of the Company (the "Board" or "Board of Directors") on
March 29, 1999.
On March 1, 1999, the Company completed the following transactions:
(1) the Company acquired from TVG Holdings, Inc. ("News Holdings"), a subsidiary
of News Corp. (the "TV Guide Acquisition"), for $800 million in cash, 22,503,412
shares of Class A Common Stock and 37,496,588 shares of Class B Common Stock,
two corporations that publish TV Guide magazine and other printed television
program listings guides and operate, through the Internet, an entertainment
service known as TV Guide Online;
(2) the Company acquired from Liberty (the "Netlink Acquisition," and together
with the TV Guide Acquisition, the "Acquisitions") for 12,750,000 shares of
Class B Common Stock three corporations which own approximately 40% of
Superstar/Netlink Group LLC and the Netlink Wholesale Division, which includes a
business that provides satellite-transmitted programming services known as the
"Denver 6" and a separate business that sells programming packages to satellite
master antenna television systems;
(3) the Company changed its name to TV Guide, Inc.; and
(4) the Company sold to News Holdings 6,534,108 shares of Class A Common Stock
for approximately $129.0 million in cash, which was paid by offset against the
cash portion of the consideration in the TV Guide Acquisition.
News Corp. indirectly through News Holdings owns shares representing
approximately 44% of the Company's Common Stock and approximately 49% of the
voting power of the Company's Common Stock. Liberty, directly or indirectly
through its subsidiary TCI UVSG, Inc. ("TCI Holdings"), owns shares representing
approximately 44% of the Company's Common Stock and approximately 49% of the
voting power of the Company's Common Stock. Pursuant to a Stockholders Agreement
described herein entered into in connection with the TV Guide Acquisition,
Tele-Communications, Inc. ("TCI"), Liberty, TCI Holdings, News Corp. and News
Holdings have agreed that each stockholder or group of related stockholders that
are party to such Agreement shall be entitled to designate one member of the
Company's Board of Directors for each 12.5% of the
1
<PAGE>
Class B Common Stock owned by such stockholder or group, and the other parties
to such Agreement would vote their shares of Common Stock in favor of the
election of such designees as director. Based on their relative share ownership
following the TV Guide Acquisition, each of TCI Holdings and News Holdings is
entitled to designate four members of the Board of Directors. The eight members
so designated will then appoint two persons who are independent directors within
the meaning of the rules of the Nasdaq Stock Market (the "Nasdaq Stock Market
Rules").
This Statement is being mailed to the Company's stockholders to provide to them
information about the new directors. You are urged to read this Information
Statement carefully. You are not, however, required to take any action with
respect to the appointment of the new directors.
The information contained in this Information Statement concerning the new
directors has been furnished to the Company by Liberty and News Corp. The
Company assumes no responsibility for the accuracy or completeness of such
information.
CERTAIN INFORMATION REGARDING THE COMPANY'S COMMON STOCK
This Statement is being sent only to stockholders of record of shares of Common
Stock at the close of business on March 2, 1999. At the close of business on
March 2, 1999, there were 76,944,408 shares of Class A Common Stock outstanding,
held by 103 holders of record, and 74,993,176 shares of Class B Common Stock
outstanding, held by two holders of record. The holders of Class A Common Stock
are entitled to one vote for each share of Class A Common Stock held and the
holders of Class B Common Stock are entitled to ten votes for each share of
Class B Common Stock held.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 2, 1999 regarding
ownership of the Common Stock by (1) each person believed by the Company to be
the beneficial owner of more than five percent of its outstanding Common Stock;
(2) each Director, the Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company for the fiscal year ended
December 31,1998; and (3) all current executive officers and directors of the
Company as a group. Shares of Class B Common Stock are convertible at the option
of the holder immediately into shares of Class A Common Stock on a one-for-one
basis and, accordingly, holders of Class B Common Stock are deemed to own
beneficially the same number of shares of Class A Common Stock. The table below
does not reflect such beneficial ownership of Class A Common Stock.
Class A Class B Percent of
Common Stock Common Stock Vote of All
------------------- ------------------- Outstanding
Number Percent Number Percent
Beneficial Owner of Shares of Class of Shares of Class Common Stock
- ---------------- ---------- -------- ---------- -------- ------------
Liberty Media
Corporation(1) ..... 29,037,520 37.7% 37,496,588 50.0% 48.9%
The News Corporation
Limited(2) ......... 29,037,520 37.7% 37,496,588 50.0% 48.9%
Anthea Disney ....... -- -- -- -- --
Joachim Kiener....... -- -- -- -- --
Peter C. Boylan III(3) 669,288 * -- -- *
Charles Butler
Ammann(4) .......... 24,800 * -- -- *
Craig M. Waggy(5) ... 41,200 * -- -- *
<PAGE>
Toby DeWeese(6) ..... 8,000 * -- -- *
Robert R. Bennett(7) 6,000 * -- -- *
Lawrence Flinn, Jr (8) 199,600 * -- -- *
Gary S. Howard(9) ... 40,000 * -- -- *
Larry E. Romrell(10) 12,000 * -- -- *
J. David Wargo(10) .. 12,000 * -- -- *
All Directors and
Executive Officers
as a Group (11
persons)(11) ........ 1,012,888 1.3% -- -- *
* Less than 1%
(1) The address for Liberty Media Corporation is 8101 Prentice Avenue, Suite
500, Englewood, CO 80111. Liberty holds shares of Common Stock, directly or
indirectly through its subsidiary TCI UVSG, Inc. Liberty is an indirect
subsidiary of Tele-Communications, Inc. ("TCI"), which in turn is an indirect
subsidiary of AT&T Corp.
(2) The Class A Common Stock and Class B Common Stock reported as beneficially
owned by News Corp. are directly owned by TVG Holdings, Inc. ("News Holdings"),
an indirect subsidiary of News Corp. and a direct subsidiary of News Publishing
Australia Limited ("NPAL"). Each of News Corp and NPAL, as persons who may be
deemed to control Holdings, may also be deemed to indirectly beneficially own
such shares. By virtue of ordinary shares of News Corp. owned by (i) Mr. K.
Rupert Murdoch and members of his family, (ii) Cruden Investments Pty. Limited,
a private Australian investment company owned by Mr. Murdoch, members of his
family and certain charities, and (iii) corporations which are controlled by
trustees of settlements and trusts set up for the benefit of the Murdoch family,
certain charities and other persons, and Mr. Murdoch's positions as Chairman and
Chief Executive of News Corporation, Mr. Murdoch may be deemed to control the
operations of News Corp., and may therefore be deemed to indirectly beneficially
own such shares of News Holdings. The address of News Holdings is 1300 North
Market Street, Suite 404, Wilmington, Delaware 19801; the address of News Corp.
is 2 Holt Street, Sydney, New South Wales 2010, Australia; the address of NPAL
is 1300 North Market Street, Suite 404, Wilmington, Delaware 19801; and the
address of Mr. Murdoch is 10201 West Pico Boulevard, Los Angeles, California
90035.
(3) Includes 546,584 shares of Class A Common Stock subject to presently
exercisable options and 94,400 shares of Class A Common stok subject to options
that will become exercisable within 60 days.
(4) Includes 24,800 shares of Class A Common Stock subject to presently
exercisable options.
(5) Includes 34,000 shares of Class A Common Stock subject to presently
exercisable options and 7,200 shares of Class A Common Stock subject to options
that will become exercisable within 60 days.
(6) Includes 8,000 shares of Class A Common Stock subject to presently
exercisable options.
(7) Includes 6,000 shares of Class A Common Stock subject to presently
exercisable options.
(8) Includes 199,600 shares of Class A Common Stock owned by the Lawrence Flinn,
Jr. Charitable Trust of which Mr. Flinn is Trustee. Mr. Flinn disclaims
beneficial ownership of such shares.
(9) Includes 40,000 shares of Class A Common Stock subject to presently
exercisable options.
2
<PAGE>
(10) Includes 12,000 shares of Class A Common Stock subject to presently
exercisable options.
(11) Includes 683,384 shares of Class A Common Stock subject to presently
exercisable options and 101,600 shares of Class A Common Stock subject to
options that will become exercisable within 60 days.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and persons who own more than ten percent of a
registered class of the Company's equity securities (collectively, the
"reporting persons") to file reports of ownership and changes in ownership with
the Securities and Exchange Commission and to furnish the Company with copies of
these reports. Based solely upon a review of copies of such reports furnished to
the Company, and written representations received from the reporting persons,
the Company believes that all filings required to be made by the reporting
persons for the last fiscal year were made on a timely basis.
MANAGEMENT
The Directors and Officers of the Company as of the date of this Statement are
as follows:
Name Age Position
Anthea Disney* ...... 54 Chief Executive Officer
Joachim Kiener* ..... 45 President; Chairman and
Chief Executive Officer of
TV Guide Magazine Group
Peter C. Boylan III . 35 Director; Executive Vice President
of the Company; Chairman and Chief Executive
Officer of TV Guide Entertainment Group and
United Video Group
Charles B. Ammann .. 44 Senior Vice President, Secretary
and General Counsel
Craig M. Waggy ..... 40 Senior Vice President, Chief Financial
Officer and Treasurer
Toby DeWeese ...... 38 Vice President, Corporate Development
Robert R. Bennett .... 40 Director
Lawrence Flinn, Jr.** 63 Chairman of the Board Emeritus
Gary S. Howard ...... 48 Director, Chairman of the Board
Larry E. Romrell** . 59 Director
J. David Wargo** .... 45 Director
* Appointed on March 1, 1999 upon closing of the TV Guide Acquisition.
** Resigned effective March 29, 1999.
Set forth below is a description of the backgrounds of such persons:
Anthea Disney has been Chief Executive Officer of the Company since March 1999.
Ms. Disney has been Chairman and Chief Executive Officer of News America
Publishing Group, a division of News Corp., since September 1997. She is also a
member of News Corp.'s worldwide Executive Management Team. Prior to her
appointment as head of News America Publishing Group, Ms. Disney was President
and Chief Executive Officer of HarperCollins Publishers, a position she held
since March 1996. Ms. Disney joined News Corp. in 1990 and has held a number of
senior management positions, including Editor-in-Chief of TV Guide; Editor-
in-Chief and creator of News Corp.'s on-line development; and executive producer
of Fox Television's A Current Affair. Ms. Disney is also a director of The CIT
Group.
3
<PAGE>
Joachim Kiener has been President of the Company and Chairman and Chief
Executive Officer of TV Guide Magazine Group since March 1999. Mr. Kiener has
been President and Chief Operating Officer of News America Publishing Group, a
division of News Corp., since March 1998. Mr. Kiener oversees the business,
operations and financial management of News America Publishing Group and its
divisions, which include HarperCollins Publishers, The Weekly Standard and News
America Digital Publishing. He joined News Corp. as Executive Vice President and
Chief Operating Officer of HarperCollins Publishers in September 1996. Prior to
joining HarperCollins Publishers, Mr. Kiener spent seven years in various senior
executive positions at EMI-Capitol Music Group, N.A., one of the major worldwide
operating music distribution and publishing companies.
Peter C. Boylan III has been Executive Vice President of the Company and
Chairman and Chief Executive Officer of TV Guide Entertainment Group and United
Video Group since March 1999 and a Director of the Company since July 1995. Mr.
Boylan served as President of the Company from August 1997 to March 1998; Chief
Operating Officer of the Company from December 1996 to March 1998 and Executive
Vice President and Chief Financial Officer of the Company from October 1994 to
December 1996. Beginning in 1992 through October 1994, Mr. Boylan served with
Hallmark Cards, Inc. in its Corporate Development and Strategy Group, focusing
primarily on the communications and entertainment industries.
Charles B. Ammann joined the Company in January 1996 as Senior Vice President,
Secretary and General Counsel. Mr. Ammann is responsible for the Company's
legal, risk management and legislative affairs. From 1990 until he joined the
Company, Mr. Ammann served as Vice President of Administration and General
Counsel for Flint Industries, Inc., a privately-held company engaged in general
contracting of commercial and industrial construction, oil and gas pipeline
construction, oil field services and construction management services.
Craig M. Waggy has been Senior Vice President and Chief Financial Officer of the
Company since September 1997 and Treasurer of the Company since June 1995. Mr.
Waggy joined the Company in June 1995 as Vice President of Finance and
Treasurer. Mr. Waggy is responsible for the Company's accounting and finance
functions. Prior to joining the Company, he was with Ernst & Young LLP.
Toby DeWeese joined the Company in September 1997 as Vice President of Corporate
Development. From 1990 until he joined the Company, Mr. DeWeese held several
positions at TCI, including Director of Primestar Development from November 1991
to March 1993, Vice President of Sales and Distribution for Primestar by TCI
from April 1993 to October 1995, Vice President of Business Development and
Technology for Netlink from November 1995 to May 1997 and Vice President of
Operations for the National Digital Television Center from May 1997 to September
1997.
Robert R. Bennett has been a Director of the Company since February 1998 and has
been Executive Vice President of TCI and President and Chief Executive Officer
of Liberty since April 1997. Mr. Bennett has also been President and Chief
Executive Officer of AT&T's Liberty Media Group since the closing of the merger
of TCI and AT&T in March 1999. From June 1995 through March 1997, Mr. Bennett
was an Executive Vice President and the Chief Financial Officer, Secretary and
Treasurer of Liberty. Mr. Bennett served as Senior Vice President of Liberty
from September 1991 through June 1995. Mr. Bennett is a director of TCI Music,
Inc.
Lawrence Flinn, Jr. assumed the position Chairman Emeritus in June 1997. Prior
to that time, Mr. Flinn had been Chairman of the Board and Chief Executive
Officer since he acquired a majority ownership interest in the Company in 1976.
Mr. Flinn is a director of LodgeNet Entertainment Corporation.
4
<PAGE>
Gary S. Howard has been Chairman of the Board of Directors since May 1997 and
was Chief Executive Officer of the Company from May 1997 to March 1999. Mr.
Howard has been an Executive Vice President of TCI since December 1997 and
Executive Vice President and Chief Operating Officer of Liberty since March
1999. Mr. Howard has also been Executive Vice President and Chief Operating
Officer of AT&T's Liberty Media Group since the closing of the merger of TCI and
AT&T in March 1999. Mr. Howard was President and Chief Executive Officer of TCI
Ventures Group, LLC, a subsidiary of TCI, from December 1997 to March 1999. He
has served as Chief Executive Officer of TCI Satellite Entertainment, Inc. since
December 1996 and was President from February 1995 to August 1997. Mr. Howard
served as President of the Company from June 1997 to August 1997, Senior Vice
President in charge of Mergers and Acquisitions of TCI Communications, Inc.
("TCIC") from October 1994 to December 1996 and as Vice President of TCIC from
December 1991 through October 1994.
Larry E. Romrell was an Executive Vice President of TCI from January 1994 to
March 1999. He is currently a consultant to TCI. Mr. Romrell had served as the
Executive Vice President and Chief Executive Officer of TCI Business Alliance
and Technology Co., Inc., a subsidiary of TCI, since February 1998, a Senior
Vice President of Ventures LLC since December 1997, and President of TCI
Technology Ventures, Inc., a subsidiary of TCI, from September 1994 to October
1997. Mr. Romrell served as a Senior Vice President of TCIC from 1991 to
September 1994. Currently, Mr. Romrell is a director of General Communication,
Inc., Liberty and Guaranty Bank & Trust Company.
J. David Wargo has been President of Wargo & Company, a private investment
company specializing in the communications industry, since January 1993. Mr.
Wargo was a Managing Director of The Putnam Companies from December 1989 to
December 1992. Mr. Wargo is a director of On Command Corporation.
At closing of the Acquisitions, the Company's bylaws were amended to fix the
number of the Company's directors at ten, to provide for an Office of the
Chairman and to provide that approval of any action by the Board will require
the affirmative vote of at least seven of the ten directors, except for the
removal of any officer of the Company, which will require approval of six of the
ten directors.
Leo J. Hindery resigned from the Board on March 8, 1999. Messrs. Flinn, Romrell
and Wargo have resigned effective March 29, 1999.
Pursuant to the Stockholders Agreement discussed below under "Certain
Transactions," TCI, Liberty and News Corp. have agreed that they and their
affiliates will vote their shares of Common Stock for the election of four
directors designated by TCI Holdings and four directors designated by News
Holdings. Two independent directors within the meaning of the Nasdaq Stock
Market Rules will be appointed by those eight directors. The four directors
designated by TCI Holdings are Messrs. Bennett, Boylan, Howard and Charles Y.
Tanabe and the four directors designated by News Holdings are Ms. Disney and Mr.
Kiener, Chase Carey and Peter Chernin. The new directors (Ms. Disney and Messrs.
Kiener, Carey, Chernin and Tanabe) will take office without stockholder action
on or about March 29, 1999, when the resignation of Messrs.
Flinn, Romrell and Wargo will become effective.
5
<PAGE>
After the various resignations and appointments, the Directors of the Company
will be as follows:
Name Age Position
Anthea Disney .......... 54 Director; Chairman and Chief
Executive Officer of the Company;
Member, Office of the Chairman
Joachim Kiener ......... 45 Director; President of the Company;
Chairman and Chief Executive Officer of
TV Guide Magazine Group; Member, Office
of the Chairman
Peter C. Boylan III .... 35 Director; Executive Vice President of the
Company; Chairman and Chief Executive
Officer of TV Guide Entertainment Group
and United Video Group; Member, Office of
the Chairman
Robert R. Bennett ...... 40 Director
Chase Carey ............ 45 Director
Peter Cherin ........... 47 Director
Gary S. Howard ......... 48 Director
Charles Y. Tanabe ...... 47 Director
Set forth below is a description of the backgrounds of the new Directors, other
than Ms. Disney and Mr. Kiener, who are described under "Management" above:
Chase Carey has been a Director of Fox Entertainment Group, Inc. and Co-Chief
Operating Officer of Fox Entertainment Group, Inc. since August 1998. Mr. Carey
was President of Fox Entertainment Group, Inc. from 1995 to 1998, Executive Vice
President and Chief Operating Officer from 1991 to 1995 and Senior Vice
President from 1988 to 1991. Mr. Carey is an Executive Director and has been the
Co-Chief Operating Officer of News Corp. and a Director and Executive Vice
President of News America Incorporated since 1996. Mr. Carey has served as the
Chairman and Chief Executive Officer of Fox Television since July 1994. Mr.
Carey joined Fox, Inc. (predecessor of Fox Entertainment Group, Inc.) in 1988 as
Executive Vice President, served as Chief Financial Officer, and assumed the
title of Chief Operating Officer in February 1992. Prior to joining Fox
Television, Mr. Carey worked at Columbia Pictures in several executive
positions, including President of Pay/Cable and Home Entertainment and Executive
Vice President of Columbia Pictures International. Mr. Carey is also a member of
the Boards of Directors of Gateway 2000 and Colgate University.
Peter Chernin has been a Director and President and Chief Operating Officer of
Fox Entertainment Group, Inc. since August 1998. Mr. Chernin has been an
Executive Director, President and Chief Operating Officer of News Corp. and a
Director, Chairman and Chief Executive Officer of News America Incorporated
since 1996. Mr. Chernin was Chairman and Chief Executive Officer of Fox Filmed
Entertainment from 1994 until 1996, Chairman of Twentieth Century Fox Film
Corporation from 1992 until 1994 and President of Fox Broadcasting Company from
1989 until 1992.
Charles Y. Tanabe has served as Senior Vice President and General Counsel of
Liberty since January 1999. For more than five years before he assumed that
position, Mr. Tanabe was a member of Sherman & Howard L.L.C., a law firm based
in Denver, Colorado.
It is anticipated that Mr. Boylan will continue to be employed by the Company
after the Acquisitions under a two-year employment agreement with the Company,
although there can be no assurance such will be the case. Ms. Disney and Mr.
Kiener are to remain employees of News Corp., but will be seconded to the
Company under agreements whereby the substantial majority of their time is to be
made available to the Company and the Company will reimburse News Corp. for an
appropriate portion of the cost of their cash compensation and employee benefits
paid by News Corp.
6
<PAGE>
Ms. Disney, Mr. Kiener and Mr. Boylan will together form the Office of the
Chairman. Mr. Kiener and Mr. Boylan each will report to Ms. Disney. Mr. Kiener
will have responsibility for the Company's TV Guide Magazine Group as Chairman
and Chief Executive Officer, as well as responsibility for international matters
and information technology services for the Company. Mr. Boylan will have
responsibility for the Company's TV Guide Entertainment and United Video Groups
as Chairman and Chief Executive Officer, as well as responsibility for the
finance, corporate development and legal affairs functions of the Company.
Each of Ms. Disney, Mr. Kiener, Mr. Tanabe, Mr. Carey and Mr. Chernin, has
advised the Company that he or she has consented to serve on the Board of
Directors and he or she (i) does not have a family relationship with any of the
directors or executive officers of the Company, (ii) does not beneficially own
any securities of the Company, (iii) has not been involved in any transactions,
and has no business relationships, with the Company or any of its directors,
executive officers or affiliates of a type required to be disclosed pursuant to
Rule 14f-1 under the Exchange Act, except as disclosed herein, and (iv) has not
been the subject of any civil, regulatory or criminal proceeding.
Directors' Compensation
Directors who are not also employees of the Company or its subsidiaries or
affiliates receive a fee of $4,000 per meeting attended in person and a fee of
$2,000 per committee meeting attended in person, unless such committee meeting
is held on the same day as a meeting of the full Board. Telephonic meetings of
the Board and committees are compensable at the rate of $400. Directors who are
also employees of the Company or its subsidiaries or affiliates receive no
additional compensation for serving as directors. The Company reimburses all of
its directors for reasonable travel and out-of-pocket expenses in connection
with their attendance at meetings of the Board. The directors are eligible to
participate in the Stock Option Plan for Non-Employee Directors (the "Directors
Plan"). The Company has reserved 470,000 shares of Class A Common Stock to be
issued pursuant to the exercise of options granted under the Directors Plan.
Committees and Meetings
The Board has standing Executive, Audit, Compensation and Special Compensation
Committees. It does not have a nominating committee.
The Executive Committee was originally established to serve as a representative
committee of the Board to transact the ordinary business of the Company when the
full membership of the Board, or a quorum of the Board, cannot reasonably be
convened. The Executive Committee currently consists of Messrs. Howard
(Chairman), Bennett and Boylan. The Company's bylaws have been amended to set
the number of Executive Committee members at four, all of whom are to be
designated by the holders of the Class B Common Stock,with such powers as may be
delegated to it by the unanimous vote of the entire Board. In accordance with
the Stockholders Agreement discussed below under "Certain Transactions," the
four members of the Executive Committee will initially consist of two members
designated by TCI Holdings and two members designated by News Holdings.
The Audit Committee was established to recommend selection of the Company's
independent auditors and to review the financial statements and reports of the
Company and the reports of the independent auditors. The Audit Committee
currently consists of Messrs. Wargo (Chairman), Bennett and Flinn.
The Compensation Committee was established to make recommendations regarding
compensation, including incentive compensation, stock bonus, stock option, and
7
<PAGE>
other incentive or stock plans, and previously administered the Company's Equity
Incentive Plan. The Compensation Committee also reviews and approves, subject to
ratification by the Board, all compensation to the executive officers. The
Compensation Committee currently consists of Messrs. Wargo (Chairman), Bennett
and Flinn.
The Special Compensation Committee was established to grant awards under the
Company's Equity Incentive Plan and to make other compensation awards where
necessary in order to comply with the requirements of Section 162(m) of the
Code. The Special Compensation Committee currently consists of two members of
the Compensation Committee, Messrs. Bennett and Wargo.
Changes in the membership of Board Committees will be determined by the Board
after the various resignations and appointments.
During 1998, the Board held six meetings. Each director attended more than 75%
of the aggregate number of Board meetings held during the year. The Audit
Committee met separately from the Board two times during 1998, the Compensation
Committee met separately two times, the Executive Committee did not meet
separately and the Special Compensation Committee met separately two times. Each
director attended more than 75% of the aggregate number of meetings of all
committees of the Board on which such director served.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table sets forth a summary of the
compensation paid by the Company during each of the fiscal years ended December
31, 1998, 1997 and 1996, to the Chief Executive Officer and four other most
highly compensated executive officers ("the Named Executive Officers"). During
the last three fiscal years, none of the Named Executive Officers received any
restricted stock awards or long-term incentive payouts nor did any of the Named
Executive Officers receive any other annual compensation.
8
<PAGE>
<TABLE>
<CAPTION>
Long-Term
Name and Annual Compensation Compensation
------------------------- Awards All Other
Principal Position(1) Year Salary($) Bonus($) Options(#)(2) Compensation($)(3)
- ------------------ ---- --------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Gary S. Howard (4) 1998 $275,000 -0- -0- -0-
Chairman of the Board 1997 $215,480 $174,300 200,000 -0-
and Chief Executive 1996 -0- -0- -0- -0-
Officer
Peter C. Boylan III(5) 1998 $406,637 $325,000 200,000 $40,560
President and 1997 $323,091 $256,300 172,000 $16,025
Chief Operating Officer 1996 $259,721 $212,710 300,000 $21,571
Charles Butler Ammann 1998 $204,000 $115,000 40,000 $16,523
Senior Vice President, 1997 $180,000 $ 78,000 -0- $7,843
Secretary and General Counsel 1996 $166,000 $ 25,000 28,000 $ 260
Craig M. Waggy 1998 $150,000 $115,000 50,000 $14,017
Senior Vice President, 1997 $115,667 $ 77,000 36,000 $ 5,371
Chief Financial 1996 $ 99,117 $ 46,170 28,000 $ 3,276
Officer and Treasurer
Toby DeWeese (6) 1998 $131,327 $ 50,000 -0- $23,416
Vice President - Corporate 1997 $ 33,173 $ 10,000 40,000 -0-
Development 1996 -0- -0- -0- -0-
- ----------
</TABLE>
9
<PAGE>
(1) The positions shown represent the positions held by such persons at the end
of 1998.
(2) All grants for 1998, 1997 and 1996 represent stock options to acquire Class
A Common Stock under the Company's Equity Incentive Plan. All amounts have been
adjusted for stock splits.
(3) 1998 includes (i) contributions under the Company's SERP and 401(k) Plans,
and (ii) the compensation component of term life insurance premiums,
respectively, as follows: Mr.Boylan, $39,502 and $578; Mr. Ammann, $15,890 and
$495; Mr. Waggy, $13,687 and $225; and Mr. DeWeese, $3,347 and none. In
addition, the 1998 amount for Mr. DeWeese includes $20,069 of taxable moving
expense reimbursement.
(4) Mr. Howard joined the Company on June 1, 1997. The amounts presented for
annual compensation and bonus represent those amounts paid by the Company to TCI
for Mr. Howard's services.
(5) Effective December 4, 1998, Mr. Boylan's salary was increased to $550,000
per year.
(6) Mr. DeWeese joined the Company on September 25, 1997.
Option/SAR Grants in Last Fiscal Year
The following table sets forth information concerning options granted in 1998 to
the Named Executive Officers.
10
<PAGE>
<TABLE>
<CAPTION>
Potential Realizable Potential Realizable
Percent of Total Value of Assumed Value of Assumed
Options/SARS Exercise of Annual Rates of Annual Rates of
Options Granted to Employees Base Price Expiration Stock Price Stock Price
Name Granted(#) in Fiscal Year (1) per Share Date Appreciation for Appreciation for
- ---- ---------- ------------------ ----------- ------ Option Term -5% Option Term -10%
---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Gary S. Howard -- -- -- -- -- --
Peter C. Boylan III(2) 200,000 28.2% $16.625 02-08-08 $2,091,075 $5,299,194
Charles Butler
Ammann(2) 40,000 5.6% $16.625 02-08-08 $ 418,215 $1,059,839
Craig M. Waggy (2) 50,000 7.1% $16.625 02-08-08 $ 522,769 $1,324,798
Toby DeWeese -- -- -- -- -- --
</TABLE>
(1) Computation includes 30,000 options granted under the United Video Satellite
Group, Inc. Stock Option Plan for Non-Employee Directors.
(2) Incentive and non-qualified stock options to acquire shares of the Company's
Class A Common Stock.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Year-End Option/SAR Values
The following table sets forth information concerning options exercised in 1998
and outstanding options held by the Named Executive Officers named in the
Summary Compensation Table as of December 31, 1998:
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Options at In-the-Money Options
Acquired on Value December 31, 1998(#) at December 31, 1998($) (1)
Name Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Gary S. Howard -- -- 40,000 / 160,000 % 612,500 / $2,450,000
Peter C. Boylan III 28,304 $403,221 506,584 / 517,600 $ 8,582,154 / $5,772,200
Charles Butler Ammann -- -- 11,200 / 56,800 $ 194,600 / $ 571,900
Craig M. Waggy -- -- 18,400 / 95,600 $ 308,000 / $1,095,500
Toby DeWeese -- -- 8,000 / 32,000 $ 105,000 / $ 420,000
</TABLE>
11
<PAGE>
(1) The value of unexercised in-the-money options is calculated based upon the
last reported sales price per share of the Company's Class A Common Stock on the
Nasdaq National Market on December 31, 1998 ($23.625), less the exercise price.
Compensation Committee Report
The report of the Compensation Committee of the Board (the "Compensation
Committee") shall not be deemed incorporated by reference by any general
statement incorporating by reference this Statement into any filing under the
Securities Act of 1933 or under the Securities Act of 1934, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
Goals. The Company is committed to providing an executive compensation program
that promotes and supports the Company's mission and its stockholder objectives.
This commitment requires an executive compensation program that is managed as an
investment in the Company's executives. In return, these executives are expected
to contribute to the Company's successful financial performance and help provide
an above average return to its stockholders. The Company's executive
compensation program must also:
- - Align the interests of the executives with those of the Company's stockholders
by focusing executives on achieving performance objectives that enhance
stockholder value on a continuing basis;
- - Enable the Company to attract, retain and motivate high caliber executives who
are among the most skilled, talented and persistent individuals available in a
very competitive marketplace;
- - Inspire executives to innovatively and aggressively pursue individual, team,
department and Company goals;
- - Emphasize "pay for performance" by having a significant portion of our
executives' total compensation "at risk";
- - Establish a general corporate atmosphere that encourages a willingness to take
calculated risks, undertake mutually supportive team efforts and develop
leadership to maintain a company that acts quickly and flexibly for the benefit
of its customers and stockholders; and
- - Require each executive to own and maintain a meaningful equity interest in the
Company and together manage the business from the perspective of a long-term
investor and business owner.
The Company's Executive Compensation Policy is implemented by the Compensation
Committee of its Board.
The Company has designed its executive compensation program using the above
objectives as its foundation. The following describes the components of this
program and how each relates to Company goals.
Base Salary. Base compensation for the Chief Executive Officer and the company's
other executive officers in 1998, to the extent not specified by employment
agreements, was proposed by the Chairman and Chief Executive Officer to the
Compensation Committee. The Chairman and Chief Executive Officer arrived at his
proposal after consultation with the Company's President and Chief Operating
Officer, among others. The factors considered by the Chairman and Chief
Executive Officer in determining base compensation were
12
<PAGE>
largely based upon historical compensation studies, but considered the goals
stated above. The salary levels proposed were evaluated by the Compensation
Committee based upon historical compensation studies and are intended to be
consistent with competitive practices (including companies with comparable
market valuations, lines of business and/or revenues) and level of
responsibility (with salary increases reflecting competitive and economic
trends, the overall financial performance of the Company and the performance of
the individual executive). Factors considered in gauging the Company's overall
financial performance include the Company's revenues and profits, but market
performance of the Company's Common Stock was not directly considered.
Annual Bonus. The Company regularly pays cash bonuses to its executive officers.
Bonuses for executive officers in 1998 were based on the earnings- performance
of the Company, the market performance of the Company's Class A Common Stock and
the attainment of specified goals, and were subject to the review and approval
of the Compensation Committee.
Stock Option Plan. Long-term management incentives are intended to be provided
by periodically granting stock options to executives. No specific formulas are
used in determining stock option grants. Factors taken into account in awarding
stock options are generally the same as those used in setting base salaries and
in awarding annual bonuses. The number of options previously awarded to and held
by executive officers is also reviewed in determining current option grants.
During 1998, three executive officers of the Company were granted stock options
due to the performance of the Company.
Stock Retention. The Company requires that all executives retain at least 10% of
shares obtained through exercise of stock options. The Company believes all
stockholders benefit when the Company is managed with a goal of maximizing the
long-term return to stockholders. Stockholder return can only be maximized when
executives are stockholders and, therefore, also conduct business in their own
best self-interests.
Other Matters. Provisions of the Internal Revenue Code limit, with certain
exceptions, the deductibility by the Company for federal income tax purposes of
any Named Executive Officer's annual compensation exceeding $1,000,000. None of
the Company's current named executive officers have received otherwise
deductible compensation that would be subject to this limit and could do so at
current salary levels only in connection with the exercise of stock options or
payment of bonuses. The Company generally intends to comply with the
requirements of the Code for the available exemption from the $1,000,000
limitation, but it may not be practicable to do so in all cases. Accordingly,
the Company may, in its sole discretion, determine in one or more cases that it
is in the Company's best interests not to satisfy the requirements of the Code
for the exemption.
Compensation Committee Members
J. David Wargo
Robert R. Bennett
Lawrence Flinn, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Mr. Bennett, Mr. Howard and Mr. Romrell were Executive Vice Presidents of TCI
during 1998 and Mr. Bennett was the President and Chief Executive Officer of
Liberty during 1998. Liberty is a subsidiary of TCI. Mr. Hindery was a member of
the Compensation Committee prior to his resignation on March 8, 1999. Prior to
the merger of TCI and AT&T Corp. in March 1999, Mr. Hindery was President and
Chief Operating Officer of TCI. See "Certain Transactions" for information
regarding transactions between TCI and Liberty on the one hand and the Company
on the other.
13
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The stock price performance graph shall not be deemed incorporated by reference
by any general statement incorporating by reference this Statement into any
filing under the Securities Act of 1933 or under the Securities Act of 1934,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such Acts.
The graph below compares the cumulative return of the Company's Class A Common
Stock against the Total Return Index for the Nasdaq Stock Market (U.S.) and a
peer group which is comprised of the Total Return Index for the Nasdaq
Telecommunications Stocks, excluding telephone communications companies. The
cumulative return depicted is based upon an initial investment of $100 over the
period December 31, 1993 through December 31, 1998. The stock price performance
on the graph is not necessarily an indicator of future price performance.
The cumulative return of the Company's Class A Common Stock is based on the last
reported sale price of the Class A Common Stock as reported on the Nasdaq
National Market System on the last trading day of 1993 ($3.25) and the last
reported sale price of the Class A Common Stock as reported on on the last
trading day of 1998 ($23.625).
Five Year Total Cumulative Shareholder Return
[Performance Graph appears in this space]
December 31
-------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
TV Guide, Inc. (formerly
United Video Satellite
Group, Inc. $185 $208 $269 $442 $727
Nasdaq Stock Market (US $ 98 $138 $170 $208 $294
Companies) Index
Peer Group Index $ 83 $107 $89 $155 $241
Assumes $100 invested on December 31, 1993 in United Video Satellite Group, Inc.
Class A Common Stock, Nasdaq Stock Market (US Companies) Index and Peer Group
Index.
CERTAIN TRANSACTIONS
Stockholders Agreement. TCI, Liberty, TCI Holdings, News Corp., and News
Holdings and the Company have entered into a Stockholders Agreement which
provides that, among other things, for so long as a stockholder or group of
related stockholders is entitled to designate at least one director to the
Company's Board, the other stockholder or group of related stockholders shall be
subject to certain restrictions on its ability to sell any of its shares of
Common Stock to an unaffiliated third party or to convert any of its shares of
Class B Common Stock to shares of Class A Common Stock unless it first offers
such Common Stock for sale to the non-transferring party. If the non-
transferring party elects not to purchase such Common Stock, the transferring
party will convert any Class B Common Stock to be sold into Class A Common
14
<PAGE>
Stock prior to such sale unless such Class B Common Stock is to be sold to a
third party that has offered to purchase at least 12.5% of the aggregate number
of shares of Class B Common Stock outstanding. Pursuant to the Stockholders
Agreement, so long as there continues to be at least two stockholders or groups
of related stockholders that each own in the aggregate 30% or more of the
outstanding Class B Common Stock, such stockholders or the members of each such
stockholder group will vote their shares of Common Stock on all matters
submitted to a vote of the Company's stockholders only as shall be mutually
agreed upon by such stockholders or stockholder groups and, if they are unable
to agree on how to vote with respect to any such proposal, they will each be
obligated to vote against such proposal. Under the Stockholders Agreement, a
stockholder or group of related stockholders is entitled to designate one
director for each 12.5% of the outstanding shares of Class B Common Stock owned
by such party (rounded to the nearest 12.5%, with more than 6.25% being rounded
up, and 6.25% or less being rounded down), and the other stockholders or group
of related stockholders will vote or cause to be voted all shares of Common
Stock owned by such party for the election of such designee(s) as director. In
addition, the Stockholders Agreement provides for certain registration rights
with respect to the resale of the Class A Common Stock owned by stockholders
that are parties to the Stockholders Agreement. Pursuant to the Stockholders
Agreement, the Parent (as defined in such Agreement) of each stockholder or
group of related stockholders that is entitled to designate at least one
director to the Company's Board pursuant to the Stockholders Agreement agrees
with and for the benefit of the Parent of each other stockholder or group of
related stockholders that is so entitled to designate at least one director to
the Company's Board that, for so long as there are at least two such
stockholders or stockholder groups, the Company will, subject to certain limited
exceptions, be the exclusive vehicle through which such Parent, directly or
indirectly through its controlled affiliates, conducts program guide businesses
(print, electronic or otherwise) worldwide. Currently, TCI and News Corp. are
each Parents within the meaning of the Stockholders Agreement.
Parent Agreement. News Corp., TCI and the Company are also parties to a letter
agreement, effective as of June 10, 1998 (The "Parent Agreement"), pursuant to
which, among other things, the parties agreed to negotiate in good faith to
enter into, or cause their affiliates to enter into, the following agreements:
(a) affiliation agreements between the Company and News Corp. (or a controlled
affiliate of News Corp.) with respect to the TV Guide Channel and TV Guide
Interactive; (b) affiliation agreements between the Company and TCI (or a
controlled affiliate of TCI) with respect to the TV Guide Channel and TV Guide
Interactive; and (c) carriage/marketing agreements for "TV Guide" branded
monthly and/or weekly cable and DTH guide magazines. In the case of the
carriage/marketing agreement between the Company and TCI, such agreement would
include, among other terms and conditions as the parties may mutually agree
upon, TCI's or its affiliate's agreement to convert TVSM monthly magazines for
cable systems controlled by TCI to weekly magazines, and as consideration
therefor, the agreement of a subsidiary of News Corp. to pay TCI or its designee
an aggregate sum of $10 million upon such conversion being effected.
Continuing Services. Following the closing of the TV Guide Acquisition, for so
long as News Corp. beneficially owns in the aggregate at least 12.5% of the
Class B Common Stock of the Company, News Corp. will continue to make available
to the businesses acquired in the TV Guide Acquisition, at the Company's request
from time to time, services (including bulk paper procurement and the benefits
of certain agreements, to the extent permitted thereunder) consistent with past
practice, but in any event on terms no less favorable to the Company than "most
favored nation" terms, unless the Company shall otherwise agree, provided that
the right to use services that require the involvement of executives of News
Corp. will be subject to agreement upon allocation of costs (including services
of senior management). News Corp.and
15
<PAGE>
the Company have agreed to negotiate to enter into a definitive services
agreement containing the foregoing terms and such other terms and conditions as
may be customary or appropriate under the circumstances.
Programming and Affiliation Agreements. In connection with the Netlink
Acquisition, one of the companies acquired from Liberty entered into programming
and affiliation agreements with Satellite Services, Inc., a subsidiary of TCI
("SSI"), providing, among other things, for SSI to continue providing
programming for the Company's SMATV business to the extent permitted by SSI's
agreements with suppliers of programming services and pursuant to which SSI may
redistribute the Denver 6 service within the service area of certain of TCI's
cable systems. Pursuant to the Parent Agreement, as described above, News Corp.,
TCI and the Company agreed to negotiate in good faith to enter into, or cause
their affiliates to enter into, certain affiliation agreements and
carriage/marketing agreements. SSI and the Company have entered into an
affiliation agreement for the cable systems of certain of TCI's controlled
affiliates to carry TV Guide Interactive.
TCI and its consolidated affiliates purchased system integration services and
video program promotion and guide services from the Company totaling $516,000
and $9.1 million, respectively during 1998. The Company purchased $43.7 million
of programming and production services from TCI and its consolidated affiliates
during 1998.
Trademark License Agreements. Pursuant to the Parent Agreement described above,
News Corp. agreed to cause the termination of certain licenses granting it and
its affiliates the right to use the TV Guide brand or associated trademarks. It
is contemplated that the Company may license to News Corp., TCI or their
respective affiliates, on terms to be agreed upon, the right to use the TV Guide
brand and associated trademarks in connection with the Company's products or
services or other arrangements for the benefit of the Company's products or
services.
Purchase of Intellectual Property. At the closing of the TV Guide Acquisition,
TCI sold to the Company all of TCI's right, title and interest in and to any
intellectual property of or arising out of the joint venture formerly known as
TV Guide On Screen for $3,500,000.
Advertising Revenues. For the fiscal year ended June 30, 1998, the businesses
acquired in the TV Guide Acquisition earned approximately 13.2% of their
advertising revenues from News Corp. affiliates.
See also "Executive Compensation -- Compensation Committee Interlocks and
Insider Participation in Compensation Decisions."
Dated: March 19, 1999.
BY THE BOARD OF DIRECTORS
/s/ PETER C. BOYLAN III
Peter C. Boylan III
Executive Vice President;
Chairman and CEO--TV Guide Entertainment Group
and United Video Group
16
<PAGE>
