UVSG Assets Up in the Air, Analysts Say

Author:
Updated:
Original:

United Video Satellite Group Inc. has quite a few asset
deals in the works.

Executives at the satellite-programming distributor told
analysts last week that they have hired investment bank Robertson Stephens & Co. to
explore the possible sale of UVSG's SSDS Inc. unit.

Meanwhile, talks involving other UVSG assets -- including
its C-band satellite-programming venture and its SpaceCom data-distribution service -- are
under way, analysts said after being briefed by UVSG executives following the
company's earnings report last Tuesday. Tulsa, Okla.-based UVSG is controlled by
Tele-Communications Inc., but its stock trades separately.

SSDS, a software and systems integrator, doesn't
really fit into UVSG's overall mix of satellite and programming assets. Analysts said
they weren't sure what SSDS -- which had $42 million in revenue last year -- might
fetch in a sale. UVSG took control of SSDS in July 1995, paying $28.5 million for a 50
percent stake and converting a $4 million note into another 10 percent.

The Superstar/Netlink joint venture -- owned by UVSG,
Liberty Media Group and Turner-Vision Inc. (no relation to Turner Broadcasting System
Inc.) -- could also be dealt to either PrimeStar Inc. or DirecTv Inc. Media Research Group
analyst Mark Riely said he believes that a deal will be struck soon to "migrate"
the venture's 1.3 million C-band satellite-programming subscribers over to one of
those direct-broadcast satellite companies.

UVSG officials also indicated that the company's
SpaceCom subsidiary, which distributes data by satellite for companies such as paging
networks, is among the assets that could get rolled up into a venture being discussed with
Loral Corp.

Last month, UVSG chairman Gary Howard, the former TCI
mergers-and-acquisitions chief who also oversees TCI Ventures Group, and other TCI
officials said they were in talks aimed at creating a data-by-satellite venture that could
involve @Home Network, the data-over-cable venture controlled by TCI and other cable
operators.

At the time, Howard said the talks centered on contributing
assets -- including UVSG's stake in Kastar Satellite Communications Corp., a company
that planned to launch Ka-band satellites -- and a service agreement in exchange for a
minority stake in a new venture. UVSG officials said last week that SpaceCom could be
among the contributed assets, according to analysts.

Riely estimated that SpaceCom has an asset value of about
$30 million.

Company officials also reported that talks continue with
Gemstar International Group Ltd. over the intellectual-property-rights dispute that
scuttled a planned joint venture to combine their respective interactive program guides.

UVSG's remarks to analysts came after its
fourth-quarter earnings report showed that its cash flow increased 15 percent and its net
income doubled, while quarterly revenue rose 14 percent.

Cash flow in the quarter rose to $25.4 million from $22
million; net income rose to $18.9 million, or 51 cents per share, from $9.4 million (26
cents); and revenue rose to $140.3 million from $122.9 million.

The results were lifted by a $14.7 million one-time gain
from the merger of Turner-Vision's C-band satellite-programming business with the
Superstar/Netlink Group LLC venture. Excluding that gain and one-time charges -- including
$2.3 million to improve The Prevue Channel's on-air look -- net earnings in the
quarter would have risen by 31 percent, to 34 cents per share.

UVSG chose to highlight improvements at Prevue since its
"relaunch" with a new look and some new programming. Primetime Nielsen Media
Research ratings at the channel are up "as much as 21 percent," and average
viewing time rose to 6.2 minutes from 5.1 minutes, or 21 percent longer.

At Prevue Networks Inc., revenue in the quarter rose 27
percent, to $17.3 million, and cash flow rose 39 percent, to $6 million.

Related