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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13G
Under the Securities Exchange Act of 1934
(Amendment No. *)
DIGITAL GENERATION SYSTEMS, INC.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
125708107
(CUSIP Number)
February 17, 1998
(Date of Event Which Requires Filing of this Statement)
Check the appropriate box to designate the rule pursuant to which
this Schedule is filed:
/___/ Rule 13d-1(b)
/_X_/ Rule 13d-1(c)
/___/ Rule 13d-1(d)
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in
a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
Potential persons who are to respond to the collection of
information contained in this form are not required to respond
unless the form displays a currently valid OMB control number.
SEC 1745 (2-96)
<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 2 of 17 Pages
- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
London Merchant Securities plc
- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)/X /
(b)/ /
- -----------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
United Kingdom
- -----------------------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY ----------------------------------------
OWNED BY 6 SHARED VOTING POWER
EACH 1,222,500
REPORTING ----------------------------------------
PERSON 7 SOLE DISPOSITIVE POWER
WITH -0-
----------------------------------------
8 SHARED DISPOSITIVE POWER
1,222,500
- -----------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,222,500
- -----------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES
CERTAIN SHARES*
- -----------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
10.1%
- -----------------------------------------------------------------
12 TYPE OF REPORTING PERSON
00
- -----------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 3 of 17 Pages
- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
Lion Investments Limited
- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)/X /
(b)/ /
- -----------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
United Kingdom
- -----------------------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER
SHARES 430,000
BENEFICIALLY ----------------------------------------
OWNED BY 6 SHARED VOTING POWER
EACH -0-
REPORTING ----------------------------------------
PERSON 7 SOLE DISPOSITIVE POWER
WITH 430,000
----------------------------------------
8 SHARED DISPOSITIVE POWER
-0-
- -----------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
430,000
- -----------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES
CERTAIN SHARES*
- -----------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
3.5%
- -----------------------------------------------------------------
12 TYPE OF REPORTING PERSON
00
- -----------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 4 of 17 Pages
- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
Westpool Investment Trust plc
- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)/X /
(b)/ /
- -----------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
United Kingdom
- -----------------------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER
SHARES 792,500
BENEFICIALLY ----------------------------------------
OWNED BY 6 SHARED VOTING POWER
EACH -0-
REPORTING ----------------------------------------
PERSON 7 SOLE DISPOSITIVE POWER
WITH 792,500
----------------------------------------
8 SHARED DISPOSITIVE POWER
-0-
- -----------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
792,500
- -----------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES
CERTAIN SHARES*
- -----------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
6.5%
- -----------------------------------------------------------------
12 TYPE OF REPORTING PERSON
00
- -----------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 5 of 17 Pages
- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
Robert A. Rayne
- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)/X /
(b)/ /
- -----------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
United Kingdom
- -----------------------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER
SHARES 72,500
BENEFICIALLY ----------------------------------------
OWNED BY 6 SHARED VOTING POWER
EACH -0-
REPORTING ----------------------------------------
PERSON 7 SOLE DISPOSITIVE POWER
WITH 72,500
----------------------------------------
8 SHARED DISPOSITIVE POWER
-0-
- -----------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
72,500
- -----------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES
CERTAIN SHARES*
- -----------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
0.6%
- -----------------------------------------------------------------
12 TYPE OF REPORTING PERSON
IN
- -----------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 6 of 17 Pages
- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
Eugene M. Weber
- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)/X /
(b)/ /
- -----------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- -----------------------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER
SHARES 7,600
BENEFICIALLY ----------------------------------------
OWNED BY 6 SHARED VOTING POWER
EACH -0-
REPORTING ----------------------------------------
PERSON 7 SOLE DISPOSITIVE POWER
WITH 7,600
----------------------------------------
8 SHARED DISPOSITIVE POWER
-0-
- -----------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,600
- -----------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES
CERTAIN SHARES*
- -----------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
0.1%
- -----------------------------------------------------------------
12 TYPE OF REPORTING PERSON
IN
- -----------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 7 of 17 Pages
- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
Morris Cheston III
- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)/X /
(b)/ /
- -----------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- -----------------------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER
SHARES 2,440
BENEFICIALLY ----------------------------------------
OWNED BY 6 SHARED VOTING POWER
EACH -0-
REPORTING ----------------------------------------
PERSON 7 SOLE DISPOSITIVE POWER
WITH 2,440
----------------------------------------
8 SHARED DISPOSITIVE POWER
-0-
- -----------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,440
- -----------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES
CERTAIN SHARES*
- -----------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
0.02%
- -----------------------------------------------------------------
12 TYPE OF REPORTING PERSON
IN
- -----------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 8 of 17 Pages
- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
Angela G. Weber
- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)/X /
(b)/ /
- -----------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- -----------------------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER
SHARES 1,000
BENEFICIALLY ----------------------------------------
OWNED BY 6 SHARED VOTING POWER
EACH -0-
REPORTING ----------------------------------------
PERSON 7 SOLE DISPOSITIVE POWER
WITH 1,000
----------------------------------------
8 SHARED DISPOSITIVE POWER
-0-
- -----------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000
- -----------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES
CERTAIN SHARES*
- -----------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
0.01%
- -----------------------------------------------------------------
12 TYPE OF REPORTING PERSON
IN
- -----------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 9 of 17 Pages
ITEM 1.
(a) The name of the issuer is Digital Generation Systems,
Inc. (the "Issuer").
(b) The principal executive office of the Issuer is located
at 875 Battery Street, San Francisco, CA 94111.
ITEM 2.
(a) The names of the persons or entities filing this
statement are: London Merchant Securities plc ("LMS"); Lion
Investments Limited ("Lion"); Westpool Investment Trust plc
("Westpool"); Robert A. Rayne ("Rayne"); Eugene M. Weber ("Mr.
Weber"); Morris Cheston III ("Cheston"); and Angela G. Weber
("Ms. Weber").
(b) The principal business address of LMS, Lion, Westpool
and Rayne is 33 Robert Adam Street, London WIM 5AH, United
Kingdom. The principal business address of Mr. Weber, Cheston
and Ms. Weber is 50 California Street, Suite 3200, San Francisco,
CA 94111.
(c) LMS, Lion and Westpool are limited companies organized
under the laws of England and Wales. Rayne is a citizen of the
United Kingdom. Mr. Weber, Cheston and Ms. Weber are citizens of
the United States.
(d) This statement relates to shares of the Issuer's Common
Stock (the "Stock").
(e) The CUSIP number of the Stock is 125708107.
<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 10 of 17 Pages
ITEM 3. If this statement is filed pursuant to rule 240.13d-
1(b), or 240.13d-2(b) or (c), check whether the person filing is
a:
(a) ___ Broker or dealer registered under section 15 of
the Act (15 U.S.C. 78o).
(b) ___ Bank as defined in section 3(a)(6) of the Act (15
U.S.C. 78c).
(c) ___ Insurance company as defined in section 3(a)(19)
of the Act (15 U.S.C. 78c).
(d) ___ Investment company registered under section 8 of
the Investment Company Act of 1940 (15 U.S.C. 80a-8).
(e) ___ An investment adviser in accordance with 240.13d-
1(b)(1)(ii)(E).
(f) ___ An employee benefit plan or endowment fund in
accordance with 240.13d-1(b)(1)(ii)(F).
(g) ___ A parent holding company or control person in
accordance with 240.13d-1(b)(1)(ii)(G)
(h) ___ A savings association as defined in section 3(b)
of the Federal Deposit Insurance Act (12 U.S.C. 1813).
(i) ___ A church plan that is excluded from the definition
of an investment company under section 3(c)(14) of the Investment
Company Act of 1940 (15 U.S.C. 80a-3).
(j) ___ Group, in accordance with section 240.13d-
1(b)(1)(ii)(J)
If this statement is filed pursuant to 240.13d-1(c),
check this box. /_X_/.
<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 11 of 17 Pages
ITEM 4. OWNERSHIP.
Provide the following information regarding the aggregate number
and percentage of the class of securities of the issuer
identified in Item 1.
1) LMS:
(a) Amount beneficially owned: 1,222,500
(b) Percent of class: 10.1%
(c) Number of shares as to which the person has:
(i) Sole power to vote or to direct the vote: 0
(ii) Shared power to vote or to direct the vote:
1,222,500
(iii) Sole power to dispose or to direct the
disposition of: 0
(iv) Shared power to dispose or to direct the
disposition of: 1,222,500
2) Lion
(a) Amount beneficially owned: 430,000.
(b) Percent of class: 3.5%
(c) Number of shares as to which the person has:
(i) Sole power to vote or to direct the vote: 430,000
(ii) Shared power to vote or to direct the vote: -0-
(iii) Sole power to dispose or to direct the
disposition of: 430,000
(iv) Shared power to dispose or to direct the
disposition of: -0-
<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 12 of 17 Pages
3) Westpool
(a) Amount beneficially owned: 792,500
(b) Percent of class: 6.5%
(c) Number of shares as to which the person has:
(i) Sole power to vote or to direct the vote: 792,500
(ii) Shared power to vote or to direct the vote: -0-
(iii) Sole power to dispose or to direct the
disposition of: 792,500
(iv) Shared power to dispose or to direct the
disposition of: -0-
4) Rayne
(a) Amount beneficially owned: 72,500
(b) Percent of class: 0.6%
(c) Number of shares as to which the person has:
(i) Sole power to vote or to direct the vote: 72,500
(ii) Shared power to vote or to direct the vote: -0-
(iii) Sole power to dispose or to direct the
disposition of: 72,500
(iv) Shared power to dispose or to direct the
disposition of: -0-
5) Mr. Weber
(a) Amount beneficially owned: 7,600
(b) Percent of class: 0.1%
(c) Number of shares as to which the person has:
(i) Sole power to vote or to direct the vote: 7,600
(ii) Shared power to vote or to direct the vote: 0
(iii) Sole power to dispose or to direct the
disposition of: 7,600<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 13 of 17 Pages
(iv) Shared power to dispose or to direct the
disposition of: 0
6) Cheston
(a) Amount beneficially owned: 2,440
(b) Percent of class: 0.02%
(c) Number of shares as to which the person has:
(i) Sole power to vote or to direct the vote: 2,440
(ii) Shared power to vote or to direct the vote: 0
(iii) Sole power to dispose or to direct the
disposition of: 2,440
(iv) Shared power to dispose or to direct the
disposition of: 0
7) Ms. Weber
(a) Amount beneficially owned: 1,000
(b) Percent of class: 0.1%
(c) Number of shares as to which the person has:
(i) Sole power to vote or to direct the vote: 1,000
(ii) Shared power to vote or to direct the vote: -0-
(iii) Sole power to dispose or to direct the
disposition of: 1,000
(iv) Shared power to dispose or to direct the
disposition of: -0-
ITEM 5. OWNERSHIP OF FIVE PERCENT OR LESS OF A CLASS
If this statement is being filed to report the fact that as of
the date hereof the reporting person has ceased to be the
beneficial owner of more than five percent of the class of
securities, check the following /___/.
<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 14 of 17 Pages
ITEM. 6. OWNERSHIP OF MORE THAN FIVE PERCENT ON BEHALF OF
ANOTHER PERSON
Not applicable.
ITEM 7. IDENTIFICATION AND CLASSIFICATION OF THE SUBSIDIARY
WHICH ACQUIRED THE SECURITY BEING REPORTED ON BY THE PARENT
HOLDING COMPANY
Not applicable.
ITEM 8. IDENTIFICATION AND CLASSIFICATION OF MEMBERS OF THE
GROUP
Not applicable.
ITEM 9. NOTICE OF DISSOLUTION OF GROUP
Not applicable.
ITEM 10. CERTIFICATION
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were not acquired and
are not held for the purpose of or with the effect of changing or
influencing the control of the issuer of the securities and were
not acquired and are not held in connection with or as a
participant in any transaction having that purpose or effect.
DATED: March 16, 1998
London Merchant Securities plc
By: /s/ Robert A. Rayne
Robert A. Rayne
Director
Lion Investments Limited
By: /s/ Robert A. Rayne
Robert A. Rayne
Director
(Signatures continued on next page)
<PAGE>
<PAGE>
CUSIP No. 125708107 13G Page 15 of 17 Pages
(Signatures continued from previous page)
Westpool Investment Trust plc
By: /s/ Robert A. Rayne
Robert A. Rayne
Director
/s/ Robert A. Rayne
Robert A. Rayne
/s/ Eugene M. Weber
Eugene M. Weber
/s/ Morris Cheston III
Morris Cheston III
/s/ Angela G. Weber
Angela G. Weber<PAGE>
<PAGE>
13G
CUSIP No. 125708107 Page 16 of 17 Pages
EXHIBIT A
AGREEMENT REGARDING JOINT FILING
OF STATEMENT ON SCHEDULE 13D OR 13G
The undersigned agree to file jointly with the Securities and
Exchange Commission (the "SEC") any and all statements on
Schedule 13D or Schedule 13G (and any amendments or supplements
thereto) required under section 13(d) of the Securities Exchange
Act of 1934, as amended, in connection with purchases by the
undersigned of common stock of Digital Generation Systems, Inc.
For that purpose, the undersigned hereby constitute and appoint
London Merchant Securities plc, a limited company organized under
the laws of England and Wales, as their true and lawful agent and
attorney-in-fact, with full power and authority for and on behalf
of the undersigned to prepare or cause to be prepared, sign, file
with the SEC and furnish to any other person all certificates,
instruments, agreements and documents necessary to comply with
section 13(d) and section 16(a) of the Securities Exchange Act of
1934, as amended, in connection with said purchases, and to do
and perform every act necessary and proper to be done incident to
the exercise of the foregoing power, as fully as the undersigned
might or could do if personally present.
DATED: May 10, 1997
London Merchant Securities plc
By: /s/ Robert A. Rayne
Robert A. Rayne
Director
Lion Investments Limited
By: /s/ Robert A. Rayne
Robert A. Rayne
Director
Westpool Investment Trust plc
By: /s/ Robert A. Rayne
Robert A. Rayne
Director
(Signatures continued on next page)<PAGE>
<PAGE>
13G
CUSIP No. 125708107 Page 17 of 17 Pages
(Signatures continued from previous page)
/s/ Robert A. Rayne
Robert A. Rayne
/s/ Iain MacPhail
Iain MacPhail
/s/Eugene M. Weber
Eugene M. Weber
/s/ Morris Cheston III
Morris Cheston III
/s/ Angela G. Weber
Angela G. Weber
