<PAGE>

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934
         For the quarterly period ended March 31, 2000

                                       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:  0-21317


                        TCI SATELLITE ENTERTAINMENT, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


       State of Delaware                                 84-1299995
--------------------------------            ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


7600 East Orchard Road, Suite 330 South
         Englewood, Colorado                                            80111
----------------------------------------                              ----------
(Address of principal executive offices)                              (Zip Code)


       Registrant's telephone number, including area code: (303) 268-5440


Indicate by check mark 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,  and (2) has been subject to such filing  requirements
for the past 90 days [X] Yes [ ] No

The number of shares outstanding of TCI Satellite  Entertainment,  Inc.'s common
stock as of April 28, 2000, was:

                 Series A common stock - 63,727,396 shares; and
                   Series B common stock - 7,749,774 shares.

<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                                    Form 10-Q

                                      INDEX

<TABLE>
<CAPTION>
                                                                              PAGE
<S>                                                                          <C>
PART I. FINANCIAL INFORMATION

  Item 1. Financial Statements (unaudited)

          Consolidated Balance Sheets -
            March 31, 2000 and December 31, 1999                              I-2

          Consolidated Statements of Operations and Other Comprehensive
            Income (Loss) - Three months ended March 31, 2000 and 1999        I-3

          Consolidated Statement of Stockholders' Equity -
            Three months ended March 31, 2000                                 I-4

          Consolidated Statements of Cash Flows -
            Three months ended March 31, 2000 and 1999                        I-5

          Notes to Consolidated Financial Statements                          I-6

  Item 2. Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                        I-16

  Item 3. Qualitative and Quantitative Disclosures about Market Risk         I-18

PART II. OTHER INFORMATION

  Item 2. Changes in Securities and Use of Proceeds                          II-1

  Item 6. Exhibits and Reports on Form 8-K                                   II-1

Signatures                                                                   II-2

</TABLE>
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                           Consolidated Balance Sheets
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                                  MARCH 31,            DECEMBER 31,
                                    ASSETS                                          2000                   1999
                                                                                 -----------           ------------
                                                                                       amounts in thousands
<S>                                                                              <C>                  <C>
Cash and cash equivalents                                                        $   251,740                2,473
Receivables and prepaid expenses                                                         235                  113
Investment in General Motors Corporation (General Motors),
    at fair value (note 3)                                                           175,210              135,101
Investment in Sprint Corporation PCS Group Stock (Sprint PCS Stock),
    at fair value (note 2)                                                           333,051                   --
Investment in Astrolink International L.L.C. (Astrolink) (notes 2 and 7)             173,941                   --
Other investments (note 8)                                                           172,454                5,000
Support equipment, net                                                                   296                  275
Deferred financing costs                                                                 204                  235
                                                                                 -----------              -------
                                                                                 $ 1,107,131              143,197
                                                                                 ===========              =======

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable                                                                 $       890                  139
Accrued interest payable                                                                 133                   53
Other accrued expenses                                                                   599                   71

Due to parent (note 9):
    Accrued interest                                                                     205                   --
    Other accrued expenses                                                               141                   --
    Note payable                                                                      60,000                   --
                                                                                 -----------              -------
                                                                                      60,346                   --
                                                                                 -----------              -------
Taxes payable                                                                            650                  650
General Motors Corporation share appreciation right  liability (note 3)              109,066               68,959
Employee stock appreciation right liability                                            7,009                5,554
Debt (note 10)                                                                         3,044                3,044
Deferred tax liability                                                                12,540                   --
                                                                                 -----------              -------
          Total liabilities                                                          194,277               78,470
                                                                                 -----------              -------

Minority interests in equity of consolidated subsidiaries                            531,158                   --

Redeemable preferred stock (notes 2 and 11)                                          186,861                   --

Stockholders' equity:
    Series A common stock, $1 par value; authorized 85,000,000 shares;
       issued and outstanding 63,720,531 in 2000 and 62,894,446  in 1999              63,720               62,894
    Series B common stock, $1 par value; authorized 10,000,000 shares;
       issued and outstanding 7,756,639 and 8,465,224 in 2000 and 1999                 7,757                8,465
    Additional paid-in capital                                                       938,822              825,726
    Accumulated other comprehensive income, net of taxes                              20,622                   --
    Accumulated deficit                                                             (836,086)            (832,358)
                                                                                 -----------              -------
          Total stockholders' equity                                                 194,835               64,727
                                                                                 -----------              -------
Commitments (note 14)
                                                                                 $ 1,107,131              143,197
                                                                                 ===========              =======

</TABLE>

See accompanying notes to consolidated financial statements.

                                      I-2
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

   Consolidated Statements of Operations and Other Comprehensive Income (Loss)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED
                                                                                 MARCH 31,
                                                                        --------------------------
                                                                          2000               1999
                                                                        --------           -------
                                                                          amounts in thousands,
                                                                         except per share amounts
<S>                                                                     <C>                <C>
Management fee revenue (note 4)                                         $     90                --
                                                                        --------           -------
Operating costs and expenses:
    Operating                                                                 --             2,777
    Selling, general and administrative                                    1,218                43
    Stock compensation (note 12)                                           2,388               181
    Depreciation                                                              13                --
                                                                        --------           -------
                                                                           3,619             3,001
                                                                        --------           -------

          Operating loss                                                  (3,529)           (3,001)

Other income (expense):
    Loss on sale of satellites (note 3)                                       --           (83,765)
    Interest income                                                          673                --
    Interest expense - parent                                               (205)
    Interest expense - other                                                (137)
    Share of losses of Astrolink                                            (139)               --
    Minority interests in earnings of consolidated subsidiaries             (391)               --
    Other, net                                                                --                 2
                                                                        --------           -------
                                                                            (199)          (83,763)
                                                                        --------           -------
          Loss before income taxes                                        (3,728)          (86,764)

Income tax expense (note 13)                                                  --                --
                                                                        --------           -------
          Net loss                                                        (3,728)          (86,764)

Accretion of redeemable preferred stock (note 11)                           (239)               --
Dividends on redeemable preferred stock                                   (1,250)               --
                                                                        --------           -------
          Net loss attributable to common shareholders                  $ (5,217)          (86,764)
                                                                        ========           =======
Basic and diluted loss per common share (note 5)                        $  (0.07)            (1.28)
                                                                        ========           =======
Other comprehensive income:
    Net loss                                                            $ (3,728)          (86,764)
    Unrealized holding gain on available for sale securities,
       net of taxes                                                       45,389                --
    Unrealized loss on share appreciation right liability,
       net of taxes                                                      (24,767)               --
                                                                        --------           -------
          Comprehensive income (loss)                                   $ 16,894           (86,764)
                                                                        ========           =======

</TABLE>

See accompanying notes to consolidated financial statements.

                                      I-3
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                 Consolidated Statement of Stockholders' Equity

                        Three months ended March 31, 2000
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                      ACCUMULATED
                                                 COMMON STOCK           ADDITIONAL       OTHER                         TOTAL
                                           ------------------------      PAID-IN     COMPREHENSIVE   ACCUMULATED    STOCKHOLDERS'
                                           SERIES A        SERIES B      CAPITAL         INCOME        DEFICIT         EQUITY
                                           --------        --------     ----------   -------------   -----------    -------------
                                                               amounts in thousands
<S>                                        <C>             <C>          <C>          <C>             <C>            <C>
Balance at January 1, 2000                 $ 62,894         8,465        825,726             --      (832,358)           64,727

Net loss                                         --            --             --             --        (3,728)           (3,728)
Reversal of deferred tax asset
  valuation allowance resulting from
  the Liberty transaction (note 13)              --            --        114,628             --            --           114,628
Unrealized holding gains on
  available-for-sale securities,
  net of taxes                                   --            --             --         45,389            --            45,389
Unrealized holding losses on share
  appreciation right liability,
  net of taxes                                   --            --             --        (24,767)           --           (24,767)
Accretion and dividends on redeemable
  preferred stock                                --            --         (1,489)            --            --            (1,489)
Recognition of stock compensation
  related to stock options and
  restricted stock awards                        --            --             35             --            --                35
Issuance of Series A common stock
  related to stock options exercised              5            --             35             --            --                40
Issuance of common stock related
  to restricted stock awards                    113            --           (113)            --            --                --
Series B common stock exchanged
  for Series A common stock                     708          (708)            --             --            --                --
                                           --------         -----        -------         ------      --------           -------
Balance at March 31, 2000                  $ 63,720         7,757        938,822         20,622      (836,086)          194,835
                                           ========         =====        =======         ======      ========           =======

</TABLE>

See accompanying notes to consolidated financial statements.

                                      I-4
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                      Consolidated Statements of Cash Flows
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED
                                                                               MARCH 31,
                                                                       -----------------------
                                                                         2000            1999
                                                                       ---------       -------
                                                                         amounts in thousands
                                                                             (see note 6)

<S>                                                                    <C>             <C>
Cash flows from operating activities:
  Net loss                                                             $  (3,728)      (86,764)
  Adjustments to reconcile net loss to net cash
    used by operating activities:
      Loss on sale of satellites                                              --        83,765
      Depreciation                                                            13            --
      Share of losses of Astrolink                                           139            --
      Minority interests in earnings of consolidated subsidiaries            391            --
      Amortization of deferred loan costs                                     31            --
      Stock compensation                                                   2,388           181
      Payments for stock compensation                                       (898)           --
      Changes in operating assets and liabilities, net of the
        effects of the Liberty transaction:
          Change in receivables and prepaid expenses                        (122)           --
          Change in accruals and payables                                  1,471            --
                                                                       ---------       -------
            Net cash used by operating activities                           (315)       (2,818)
                                                                       ---------       -------
Cash flows from investing activities:
  Net proceeds from sale of satellites                                        --           750
  Capital expended for property and equipment                                (34)           --
  Proceeds received from the Liberty transaction                         249,620            --
  Other investing activities                                                 (44)           --
                                                                       ---------       -------
            Net cash provided by investing activities                    249,542           750
                                                                       ---------       -------
Cash flows from financing activities:
  Increase in due to Phoenixstar                                              --         2,820
  Proceeds from share issuances from stock options                            40            --
                                                                       ---------       -------
            Net cash provided by financing activities                         40         2,820
                                                                       ---------       -------
            Net increase in cash and cash equivalents                    249,267           752

Cash and cash equivalents:
  Beginning of period                                                      2,473            --
                                                                       ---------       -------
  End of period                                                        $ 251,740           752
                                                                       =========       =======

</TABLE>

See accompanying notes to consolidated financial statements.

                                      I-5
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                   Notes to Consolidated Financial Statements

                                 March 31, 2000
                                   (Unaudited)


(1)  BASIS OF PRESENTATION

     The accompanying consolidated financial statements include the accounts of
     TCI Satellite Entertainment, Inc. and those of all majority-owned or
     controlled subsidiaries, including the TSAT LLC's described in note 2,
     (TSAT or the Company). All significant inter-company transactions have
     been eliminated.

     As a result of the Liberty transaction described in note 2, the Hughes
     Transaction described in note 3 and the TSAT Asset Transfer described in
     note 4, TSAT is currently a holding company.

     The Company has had no significant operations subsequent to the TSAT Asset
     Transfer other than (i) expenses associated with the operation and
     maintenance of the Tempo Satellites, as defined below, prior to the sale to
     Hughes effective June 4, 1999 and (ii) general and administrative expenses
     incurred to maintain the Company's status as a publicly traded company. The
     Company's majority owned subsidiary conducts research and development in
     certain emerging technologies.

     The accompanying interim consolidated financial statements of TSAT are
     unaudited. In the opinion of management, all adjustments (consisting only
     of normal recurring accruals) have been made that are necessary to present
     fairly the financial position of TSAT as of March 31, 2000 and the results
     of its operations for the three months ended March 31, 2000 and 1999. The
     results of operations for any interim period are not necessarily indicative
     of the results for the entire year. These consolidated financial statements
     should be read in conjunction with the consolidated financial statements
     and related notes thereto included in TSAT's December 31, 1999 Annual
     Report on Form 10-K.

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities at
     the date of the financial statements and the reported amounts of revenue
     and expenses during the reporting period. Actual results could differ from
     those estimates.

     Certain amounts have been reclassified for comparability with the 2000
     presentation.

(2)  LIBERTY TRANSACTION

     On March 16, 2000, the Company entered into two transactions (collectively,
     the Liberty Transactions), both of which closed simultaneously, with
     Liberty Media Corporation (Liberty). Pursuant to the terms of the first
     transaction, the Company acquired a beneficial interest in 5,084,745 shares
     of Sprint PCS Stock with an aggregate market value on the closing
     date of $300 million in exchange for TSAT Series A Preferred Stock with a
     liquidation value of $150 million and TSAT Series B Preferred Stock (Series
     B Preferred Stock) with a liquidation value of $150 million. The attributes
     of both series of preferred stock are described in more detail in note 11.
     The shares of Series B Preferred Stock have super voting rights which gives
     Liberty voting control over the Company. Accordingly, since March 16, 2000,
     the Company has been a consolidated subsidiary of Liberty. The Company
     accounts for its investment in Sprint PCS Stock as an available for sale
     security. The closing share price of Sprint PCS Stock as of March 31, 2000
     was $65.50 per share.

                                      I-6
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                   Notes to Consolidated Financial Statements

                                 March 31, 2000
                                   (Unaudited)


     Pursuant to the terms of the second transaction, the Company (through its
     wholly owned subsidiaries) became the managing member of two newly formed
     limited liability companies, Liberty Satellite, LLC (LSAT LLC) and LSAT
     Astro LLC (LSAT Astro, and together with LSAT LLC, the TSAT LLC's). The
     Company contributed its beneficial interest in 1,407,307 shares of General
     Motors Class H Common Stock (GMH Stock), net of the General Motors share
     appreciation right liability described in note 3, and its interest in JATO
     Communications Corp. to LSAT LLC in exchange for a 10.59% ownership
     interest in LSAT LLC. Liberty contributed its interests in various
     satellite related assets, including an 86.01% ownership interest in LSAT
     Astro, to LSAT LLC in exchange for the remaining 89.41% ownership interest
     in LSAT LLC. As the Company is a consolidated subsidiary of Liberty, all of
     the investments contributed by the Company and Liberty to the TSAT LLC's
     were recorded at their net book values at the date of contribution. In
     addition, TSAT received a 13.99% ownership interest in LSAT Astro in
     exchange for a $60 million note payable to Liberty.

     The Company operates and manages the activities of the TSAT LLC's and has
     decision-making authority with respect to significant business transactions
     entered into by such entities. Accordingly, the TSAT LLC's are included in
     the Company's consolidated financial statements since March 16, 2000.

(3)  HUGHES TRANSACTIONS

     Effective June 4, 1999, the Company completed the sale of its high power
     direct broadcast satellite (DBS) assets to Hughes Electronics Corporation
     (Hughes), pursuant to an asset purchase agreement dated as of January 22,
     1999 (the Hughes High Power Agreement), among Tempo Satellite, Inc., a
     wholly-owned subsidiary of the Company (Tempo), Phoenixstar, Inc., a
     Delaware corporation formerly known as PRIMESTAR, Inc. (Phoenixstar),
     Phoenixstar Partners L.P., a Delaware limited partnership and wholly-owned
     subsidiary of Phoenixstar formerly known as PRIMESTAR Partners L.P.
     (PRIMESTAR Partners), and Hughes, a subsidiary of General Motors. The
     assets transferred by the Company pursuant to the Hughes High Power
     Agreement consisted of Tempo's two high-power DBS satellites (the Tempo
     Satellites), one of which was in orbit at 119DEG. West Longitude (the
     In-Orbit Satellite) and one of which was used as a ground spare (the Ground
     Satellite), its FCC authorizations with respect to the 119(degree) West
     Longitude orbital location (the FCC License), and certain related assets
     (collectively, the Tempo High Power Assets).

     The Company had previously granted Phoenixstar the transferable right and
     option (the Tempo Purchase Option) to purchase 100% of the Tempo High Power
     Assets for aggregate consideration of $2.5 million in cash and the
     assumption of all liabilities. In addition, Tempo had previously granted to
     PRIMESTAR Partners the right to purchase or lease 100% of the capacity of
     the DBS system being constructed by Tempo (the Tempo Capacity Rights), and
     PRIMESTAR Partners had made advances to Tempo to fund the construction of
     Tempo's DBS system in the aggregate amount of $465 million (the Tempo
     Reimbursement Obligation).

                                      I-7
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                   Notes to Consolidated Financial Statements

                                 March 31, 2000
                                   (Unaudited)

     Accordingly, the Hughes High Power Agreement provided for (i) the sale by
     Phoenixstar to Hughes of the Tempo Purchase Option, (ii) the exercise of
     the Tempo Purchase Option by Hughes, and (iii) the termination of the Tempo
     Capacity Rights (collectively, the Hughes High Power Transaction). The
     aggregate consideration payable by Hughes in the Hughes High Power
     Transaction was $500 million, payable as described below.

     As regulatory approval was required to transfer the In-Orbit Satellite and
     the FCC License, the Hughes High Power Agreement provided for the Hughes
     High Power Transaction to be completed in two steps. To facilitate the
     transaction, the Tempo Purchase Option was amended to provide for a
     two-stage exercise process. The parties allocated 70% of the total
     consideration under the Hughes High Power Agreement to the In-Orbit
     Satellite and related assets and 30% of the total consideration thereunder
     to the Ground Satellite and related assets.

     The first closing under the Hughes High Power Agreement was consummated
     effective March 10, 1999. In the first closing, Hughes acquired the Ground
     Satellite and related assets for aggregate consideration of $150 million,
     comprised of (i) $9,750,000 paid by Hughes to Phoenixstar and PRIMESTAR
     Partners for the transfer to Hughes of that portion of the Tempo Purchase
     Option allocable to the Ground Satellite and the termination of that
     portion of the Tempo Capacity Rights allocable to the Ground Satellite,
     (ii) $750,000 paid by Hughes to Tempo to exercise that portion of the Tempo
     Purchase Option allocable to the Ground Satellite; and (iii) the assumption
     and payment by Hughes of a portion of the Tempo Reimbursement Obligation in
     the amount of $139,500,000.

     At the time of the first closing, the carrying value of the Ground
     Satellite was $224 million. In addition, as required by the Hughes High
     Power Agreement, the Company and Phoenixstar agreed to terminate the
     previously announced merger of the Company with and into Phoenixstar,
     effective as of such first closing.

     The FCC approved the transfer of the FCC License to Hughes on May 28, 1999,
     and the second closing under the Hughes High Power Agreement was
     consummated effective June 4, 1999. In the second closing, Hughes acquired
     the In-Orbit Satellite and related assets, including all rights of Tempo
     with respect to the FCC License, for aggregate consideration of $350
     million comprised of (i) $22,750,000 paid by Hughes to Phoenixstar and
     PRIMESTAR Partners for the transfer to Hughes of that portion of the Tempo
     Purchase Option allocable to the In-Orbit Satellite and the termination of
     that portion of the Tempo Capacity Rights allocable to the In-Orbit
     Satellite, (ii) $1,750,000 paid by Hughes to Tempo to exercise that portion
     of the Tempo Purchase Option allocable to the In-Orbit Satellite; and (iii)
     the assumption and payment by Hughes of the remainder of the Tempo
     Reimbursement Obligation, in the amount of $325,500,000.

     The carrying value of the In-Orbit Satellite was approximately $239 million
     at the time of the second closing. In addition, Phoenixstar agreed to
     forgive amounts due from Tempo not assumed by Hughes in the amount of
     $9,346,000.

                                      I-8
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                   Notes to Consolidated Financial Statements

                                 March 31, 2000
                                   (Unaudited)

     In a separate transaction (the Hughes Medium Power Transaction) completed
     on April 28, 1999 (the Hughes Closing Date), Phoenixstar sold to Hughes
     Phoenixstar's medium-power DBS business and assets for $1.1 billion in cash
     and 4.871 million shares of GMH Stock valued at approximately $258 million
     on the date of closing. At March 31, 2000, Phoenixstar is responsible for
     the payment of certain obligations not assumed by Hughes, and the payment
     of costs, estimated not to exceed $180 million, associated with the
     termination of certain vendor and service contracts and lease agreements
     not assumed by Hughes. Affiliates of stockholders of Phoenixstar, other
     than the Company, and an affiliate of AT&T Broadband, LLC., formerly known
     as Tele-Communications, Inc., have committed to make funds available to
     Phoenixstar, up to an aggregate of $1,013.3 million to fund such payments.
     Through March 31, 2000, approximately $465.3 million of such commitments
     have been funded to Phoenixstar, and $382.6 million of such commitments
     expired undrawn.

     In connection with their approval of the Hughes Medium Power Transaction
     and other transactions, the stockholders of Phoenixstar approved the
     payment to TSAT of consideration in the form of 1.407 million shares of GMH
     Stock (the Phoenixstar Payment), subject to the terms and conditions set
     forth in an agreement (the Phoenixstar Payment Agreement) dated as of
     January 22, 1999. In consideration of the Phoenixstar Payment, the Company
     agreed to approve the Hughes Medium Power Transaction and Hughes High Power
     Transaction as a stockholder of Phoenixstar, to modify certain agreements
     to facilitate the Hughes High Power Transaction, and to issue Phoenixstar a
     share appreciation right (the TSAT GMH SAR) with respect to the shares of
     GMH Stock received as the Phoenixstar Payment, granting Phoenixstar the
     right to any market price appreciation in such GMH Stock during the
     one-year period following the date of issuance, over an agreed strike price
     of $47.00. Pursuant to the Phoenixstar Payment Agreement, TSAT has also
     agreed to forego any liquidating distribution or other payment that might
     be made in respect of the outstanding shares of Phoenixstar upon any
     dissolution and winding-up of Phoenixstar, or otherwise in respect of
     Phoenixstar's existing equity and, subject to the approval of the Company's
     stockholders, to transfer its shares in Phoenixstar to the other
     Phoenixstar stockholders. On the Hughes Closing Date, the Company received
     1.407 million shares of GMH Stock from Phoenixstar in satisfaction of the
     Phoenixstar Payment. The Company accounts for its GMH Stock as an
     available-for-sale security.

     The TSAT GMH SAR is secured by a first priority pledge and security
     interest in the underlying shares of GMH Stock, and both the TSAT GMH SAR
     and such pledge and security interest have been pledged by Phoenixstar for
     the benefit of certain holders of share appreciation rights issued by
     Phoenixstar with respect to shares of GMH Stock (the Phoenixstar GMH SARs).
     The shares of GMH Stock issued to TSAT pursuant to the Phoenixstar Payment
     Agreement are subject to certain restrictions on transfer during the first
     year after the closing of the Hughes Medium Power Transaction, and TSAT
     will be entitled (together with Phoenixstar) to certain registration rights
     with respect to such shares following the expiration of such one-year
     period.

     The closing price of GMH Stock as of March 31, 2000 was $124.50. The
     increase in the share appreciation right liability of $40,107,000 for the
     three months ended March 31, 2000 is effectively hedged by the unrealized
     holding gain on the GMH Stock, therefore, the amounts are included in other
     comprehensive income.

                                      I-9
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                   Notes to Consolidated Financial Statements

                                 March 31, 2000
                                   (Unaudited)

(4)  THE RESTRUCTURING

     Effective April 1, 1998 (the Closing Date) and pursuant to (i) a Merger and
     Contribution Agreement dated as of February 6, 1998, (the Restructuring
     Agreement), among TSAT, Phoenixstar (which, prior to the Restructuring was
     a wholly-owned subsidiary of TSAT), Time Warner Entertainment Company, L.P.
     (TWE), Advance/Newhouse Partnership (Newhouse), Comcast Corporation
     (Comcast), Cox Communications, Inc. (Cox), MediaOne of Delaware, Inc.,
     (MediaOne), and GE American Communications, Inc., and (ii) an Asset
     Transfer Agreement dated as of February 6, 1998, (the TSAT Asset Transfer
     Agreement) between TSAT and Phoenixstar, a business combination (the
     Restructuring) was consummated. In connection with the Restructuring, TSAT
     contributed and transferred to Phoenixstar (the TSAT Asset Transfer) all of
     TSAT's assets and liabilities except (i) the capital stock of Tempo, (ii)
     the consideration to be received by TSAT in the Restructuring and (iii) the
     rights and obligations of TSAT under certain agreements with Phoenixstar
     and others.

     In addition, the business of PRIMESTAR Partners and the business of
     distributing the PRIMESTAR-Registered Trademark- programming service
     (PRIMESTAR-Registered Trademark-) of each of TWE, Newhouse, Comcast, Cox
     and affiliates of MediaOne were consolidated into Phoenixstar.

     In connection with the TSAT Asset Transfer, Phoenixstar assumed all of
     TSAT's indebtedness on such date, and TSAT received from Phoenixstar 66.3
     million shares of Class A Common Stock of Phoenixstar (Phoenixstar Class A
     Common Stock) and 8.5 million shares of Class B Common Stock of Phoenixstar
     (Phoenixstar Class B Common Stock and together with the Phoenixstar Class A
     Common Stock, (Phoenixstar Common Stock), in accordance with the
     Restructuring Agreement and the TSAT Asset Transfer Agreement. As a result,
     TSAT owns approximately 37% of the outstanding shares of common equity of
     Phoenixstar, representing approximately 38% of the combined voting power of
     such common equity. As a result of the dilution of TSAT's investment in
     Phoenixstar from 100% to approximately 37%, TSAT recognized an increase in
     its investment in Phoenixstar and an increase in additional paid-in capital
     of $299,046,000, net of income taxes. Such increase represents the
     difference between TSAT's historical investment basis in Phoenixstar and
     TSAT's proportionate share of Phoenixstar's equity subsequent to the
     Restructuring.

     As of March 31, 2000, TSAT's share of losses of Phoenixstar had reduced the
     book value of TSAT's investment in Phoenixstar to zero. Also, as noted
     above, TSAT has no further commitment to fund obligations of Phoenixstar
     and has agreed to forego any liquidating distribution upon dissolution of
     Phoenixstar.

     Effective February 1, 2000, the Company entered into a management agreement
     with Phoenixstar pursuant to which the Company is managing Phoenixstar's
     affairs in exchange for a monthly fee. Such fees aggregated $90,000 for the
     three months ended March 31, 2000.

(5)  EARNINGS (LOSS) PER COMMON SHARE

     The Company computes earnings (loss) per share in accordance with SFAS No.
     128, EARNINGS PER SHARE and Securities and Exchange Commission Staff
     Accounting Bulletin No. 98 (SAB 98). SFAS No. 128 requires companies with
     complex capital structures to present basic and diluted EPS. Basic EPS is
     measured as the income or loss available to common shareholders divided by
     the weighted average outstanding common shares for the period. Diluted EPS
     is similar to basic EPS but presents the dilutive effect on a per share
     basis of potential common shares (e.g. convertible securities,

                                      I-10
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                   Notes to Consolidated Financial Statements

                                 March 31, 2000
                                   (Unaudited)

     options, etc.) as if they had been converted at the beginning of the
     periods presented, or at original issuance date, if later. Dilutive common
     shares that have an anti-dilutive effect (i.e., those that increase income
     per share or decrease loss per share) are excluded from diluted EPS.

     The basic earnings (loss) per common share is based on the weighted average
     number of shares outstanding during the period of 71,359,000 and 67,783,000
     shares for the three months ended March 31, 2000 and 1999, respectively.
     Excluded from the computation of diluted earnings (loss) per common share
     for the three months ended March 31, 2000 and 1999 are options and
     convertible securities to acquire 18,940,000 and 8,515,000 shares of Series
     A Common Stock, respectively, because inclusion of such options would be
     anti-dilutive.

(6)  SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

     Cash paid for interest and income taxes was not significant during the
     three months ended March 31, 2000 and 1999.

     Significant non-cash investing and financing activities are as follows:

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED
                                                                           MARCH 31,
                                                                   -----------------------
                                                                     2000           1999
                                                                   ---------       -------
                                                                    (amounts in thousands)
<S>                                                                <C>             <C>
     Cash received in Liberty Transactions:
        Value of investments received                              $(649,385)           --
        Debt issued                                                   60,000            --
        Deferred tax liability assumed                               114,628            --
        Redeemable preferred stock issued                            185,372            --
        Minority interests                                           539,005            --
                                                                   ---------       -------
                                                                   $ 249,620            --
                                                                   =========       =======
     Assumption of amounts due to Phoenixstar in exchange for
        Ground Satellite                                           $      --       139,500
                                                                   =========       =======
</TABLE>

(7)  INVESTMENT IN ASTROLINK

     Pursuant to the Liberty Transactions described in note 2, Liberty
     contributed its approximate 32% ownership interest in Astrolink to the TSAT
     LLC's. Liberty contributed Astrolink at its net book value at the date of
     the transaction. Astrolink is currently in its developmental stages but
     intends to build a global telecom network using Ka-band geostationary
     satellites to provide broadband data communications services. The first two
     satellites are expected to be launched in 2002 and are intended to service
     customers in North and South America, Europe and the Middle East.
     Additional

                                      I-11
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                   Notes to Consolidated Financial Statements

                                 March 31, 2000
                                   (Unaudited)

     spacecraft will extend the network worldwide and may provide in-orbit
     back up as well. TSAT accounts for this investment using the equity
     method. Summarized operational data for Astrolink for the period from
     March 16, 2000 to March 31, 2000 is as follows:

<TABLE>
<S>                                                <C>
     Investment income                             $ 315,088
     Operating expenses                             (732,571)
     Depreciation and amortization                   (23,910)
                                                   ---------
                                                   $(441,393)
                                                   =========
</TABLE>

(8)  OTHER INVESTMENTS

     Pursuant to the Liberty Transactions described in note 2, the Company owns
     a number of satellite-related assets through the TSAT LLC's. All of these
     investments were contributed at net book value at the date of the
     transaction. The following table summarizes each investment March 31, 2000:

<TABLE>
<CAPTION>
                                                                           ACCOUNTING
                                    INVESTMENT                               METHOD           BASIS
      --------------------------------------------------------------       ----------     --------------
                                                                                          (in thousands)

<S>                                                                        <C>            <C>
      (1)  Investments in various Latin American satellite companies          Cost        $   102,579

      (2)  XMSR Satellite Radio, Inc. (XMSR)                                  AFS*             34,875

      (3)  iSKY, Inc.                                                         Cost             30,000

      (4)  Jato Communications Corp.                                          Cost              5,000
                                                                                          -----------
                                                                                          $   172,454
                                                                                          ===========
</TABLE>

*Denotes an investment carried as an available-for-sale security.

(1)  Represents the aggregate book basis of a number of different satellite
     television operators located in Mexico, Brazil, Chile and Columbia. LSAT
     LLC has a 10% ownership interest in each Latin and South American company.

(2)  XMSR, a publicly traded company, plans to transmit up to 100 national audio
     channels of music, news, talk, sports and children's programming from two
     satellites directly to vehicle, home and portable radios. LSAT LLC
     currently owns a 2% interest in XMSR. XMSR closing stock price as of March
     31, 2000 was $34.875 per share.

(3)  iSky, Inc. plans to build a Ka-band satellite network that will focus on
     providing broadband services to homes and small offices in North America
     and Latin America. LSAT LLC owns an approximate 19% interest in iSky, Inc.

(4)  The Company's investment in Jato Communications Corp. was previously
     included in the consolidated financial statements of TSAT at December 31,
     1999.

                                      I-12
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                   Notes to Consolidated Financial Statements

                                 March 31, 2000
                                   (Unaudited)


(9)  AMOUNTS DUE TO PARENT

     Certain payroll and other expenses are advanced to TSAT by Liberty. Such
     advances are non-interest bearing, aggregated $141,000 at March 31, 2000,
     and are repaid monthly.

     In addition, the Company entered into a $60,000,000 promissory note on
     March 16, 2000 in exchange for its interest in LSAT Astro. The note bears
     interest at Libor plus 2% (approximately 8.19% at March 31, 2000). Interest
     payments are due semi-annually on the first day of March and September,
     commencing on September 1, 2000. The note matures on March 16, 2003 at
     which time all principal and unpaid interest is due. Accrued interest
     aggregated $205,000 at March 31, 2000.

(10) DEBT

     On November 19, 1999, TSAT entered into a loan agreement with the Bank of
     America (TSAT Credit Facility) for the following facilities (i) Facility A
     commitment of $5,000,000; (ii) Facility B commitment of $15,000,000; and
     (iii) Facility C commitment of $5,000,000. Upon the "Collateral Pledge
     Perfection Date" as defined as in the TSAT Credit Facility, Facility C
     expires and the Facility A commitment increases to $10,000,000.

     At March 31, 2000, $3,044,000 had been drawn on Facility C at an interest
     rate of 10.5% per annum. The unused Facility A, Facility B and Facility C
     amounts are charged a commitment fee at a rate of 0.375%.

(11) REDEEMABLE PREFERRED STOCK

     On March 16, 2000, the Company issued 150,000 shares of Series A Cumulative
     Preferred Stock (Series A Preferred Stock) and 150,000 shares of Series B
     Preferred Stock to Liberty in exchange for shares of Sprint PCS Group
     Stock.

     SERIES A CUMULATIVE PREFERRED STOCK

     The Series A Preferred Stock accrues dividends at 12% per annum at all
     times prior to April 1, 2005, 11% on and after April 1, 2005 and prior to
     April 1, 2010, and 10% on and after April 1, 2010. Such dividends are
     payable the last day of each March, June, September and December,
     commencing March 2000. Dividends not paid are added to the liquidation
     preference on such date and remain a part of the liquidation preference
     until such dividends are paid. Subject to certain specified exceptions,
     the Company is prohibited from paying dividends on any shares, parity
     securities or junior securities and from setting aside any money or assets
     for any such purpose during any period in which the Company is in arrears
     with respect to payment of dividends on Series A Preferred Stock.

     The holder of Series A Preferred Stock is not entitled to vote on any
     matters submitted to a vote of the shareholders of TSAT, except as required
     by law and other limited exceptions.

                                      I-13
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                   Notes to Consolidated Financial Statements

                                 March 31, 2000
                                   (Unaudited)

     The liquidation preference of each share of the Series A Preferred Stock
     is equal to the sum of (a) the stated value per share of $1,000, plus
     (b) an amount equal to all dividends accrued on such shares.

     The Series A Preferred Stock is redeemable at the option of the Company by
     action of the Board of Directors, in whole or from time to time in part, on
     any business day after April 1, 2020 at the redemption price per share
     equal to the liquidation preference of such share on the applicable
     redemption date. If less than all outstanding shares are to be redeemed,
     shares will be redeemed ratably among the holders. On or after April 1,
     2020, the Series A Preferred Stock is redeemable at the option of the
     holder for cash.

     SERIES B CUMULATIVE CONVERTIBLE VOTING PREFERRED STOCK

     The Series B Preferred Stock accrues dividends at the rate of 8% per annum.
     Such dividends are payable the last day of each March, June, September and
     December commencing March 31, 2000. Dividends not paid are added to the
     liquidation preference on such date and remain a part of the liquidation
     preference until such dividends are paid. On and after the occurrence and
     during the continuance of a default, the dividend rate will be 10% per
     annum. Subject to certain specified exceptions, the Company is prohibited
     from paying dividends on any shares, parity securities or junior securities
     and from setting aside any money or assets for any such purpose during any
     period in which the Company is in arrears with respect to payment of
     dividends on Series B Preferred Stock.

     In addition to voting rights required by law, each share of Series B
     Preferred Stock will be entitled to vote together with holders of the
     Series A Common Stock as a single class upon all matters upon which holders
     of Series A Common Stock are entitled to vote. In any such vote, the
     holders of Series B Preferred Stock will be entitled to 5,580 votes per
     share held. The Series B Preferred Stock is redeemable at the option of
     the Company on April 1, 2005. At any date on or after April 1, 2020, the
     Series B Preferred Stock is redeemable at the option of the holder for
     cash.

     The liquidation preference of each share of the Series B Preferred Stock
     as of any date of determination is equal to the sum of (a) the stated value
     per share of $1,000, plus (b) an amount equal to all dividends accrued on
     such shares.

     Each share of the Series B Preferred Stock is initially convertible into
     113.1145 shares of Series B Common stock. Such conversion rate was
     calculated as the liquidation value of such shares divided by $8.8406 and
     is adjustable based on the adjusted liquidation value at the date of
     conversion.

     Both the Series A and Series B Preferred Stock were issued at a discount
     from the stated values of such shares. Therefore, the Company is accreting
     both the Series A Preferred Stock and the Series B Preferred Stock up to
     the respective redemption values over the period from the issuance date to
     the redemption date using the effective interest method. Accretion on the
     Series A and B Preferred Stock for the period from March 16, 2000 to March
     31, 2000 aggregated $239,000 and has been accounted for as a direct charge
     to additional-paid-in-capital and has been added to net loss in the
     calculation of loss attributed to common shareholders.

                                      I-14
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES
            (A Consolidated Subsidiary of Liberty Media Corporation)

                   Notes to Consolidated Financial Statements

                                 March 31, 2000
                                   (Unaudited)


(12) STOCK OPTIONS

     Certain officers and key employees of the Company are party to stock based
     compensation arrangements. Participants under the Company's plans hold
     options, some of which have tandem stock appreciation rights, which base
     compensation on the performance of the Company's stock. Stock compensation
     expense has been recorded in the accompanying consolidated financial
     statements pursuant to APB Opinion No. 25. These estimates are subject to
     future adjustments based upon vesting and the market value of the Company's
     Series A Common Stock, when the rights are exercised. The consolidated
     statements of operations and comprehensive income (loss) for the three
     months ended March 31, 2000 include $2,388,000 in compensation expense as a
     result of an increase in the Company's market price.

(13) INCOME TAXES

     TSAT recognized no income tax benefit or expense during the three months
     ended March 31, 2000 and 1999. TSAT is only able to realize income tax
     benefits for financial reporting purposes to the extent that such benefits
     are offset by TSAT's income tax liabilities or if TSAT generates taxable
     income. During the foreseeable future, TSAT believes that it will incur net
     losses for income tax purposes, and accordingly, will not be in a position
     to realize income tax benefits on a current basis.

     Pursuant to the Liberty Transactions described in note 2, the Company
     recorded an approximate $114 million deferred tax liability in connection
     with its investment in Sprint, which is accounted for as an
     available-for-sale security in the accompanying consolidated financial
     statements. This future taxable income is used to offset historical net
     taxable losses incurred by the Company. Accordingly, a portion of the tax
     valuation allowance established as of December 31, 1999 for deferred tax
     assets has been reversed. The Company has accounted for the decrease in the
     tax valuation allowance for the three months ended March 31, 2000 as a
     direct credit to additional paid-in capital in the accompanying
     consolidated financial statements.

(14) COMMITMENTS

     Pursuant to the terms of the Liberty Transactions, Liberty contributed
     $249,620,000 in cash to LSAT Astro. The Company intends to use such cash to
     fund future capital requirements of Astrolink. TSAT and LSAT Astro assumed
     the obligation for such capital requirements in connection with the Liberty
     Transactions.

                                      I-15
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

GENERAL

The following discussion and analysis provides information concerning the
financial condition and results of operations of TSAT and should be read in
conjunction with (i) the accompanying consolidated financial statements of TSAT,
and (ii) the consolidated financial statements, and related notes thereto, of
TSAT, and MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS included in TSAT's Annual Report on Form 10-K for the year
ended December 31, 1999.

Certain statements in this Quarterly Report on Form 10-Q constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other important factors that could cause the
actual results, performance or achievements of TSAT, or industry results, to
differ materially from any future results, performance or achievements expressed
or implied by such forward-looking statements. Such risks, uncertainties and
other factors include, among others: general economic and business conditions
and industry trends; uncertainties inherent in proposed business strategies and
development plans, including uncertainties regarding possible regulatory issues
under the Investment Company Act of 1940, as amended (the Investment Company
Act); future financial performance, including availability, terms and deployment
of capital; the ability of vendors to deliver required equipment, software and
services; availability of qualified personnel; changes in, or the failure or the
inability to comply with, government regulations, including, without limitation,
regulations of the FCC, and adverse outcomes from regulatory proceedings;
changes in the nature of key strategic relationships with partners and joint
venturers; and other factors referenced in this Report. These forward-looking
statements speak only as of the date of this Report. TSAT expressly disclaims
any obligation or undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in TSAT's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.

See note 2 to the accompanying consolidated financial statements for a
discussion of the Liberty Transactions.

See note 3 to the accompanying consolidated financial statements for a
discussion of the transactions with Hughes.

See note 4 to the accompanying consolidated financial statements for a
description of the Restructuring Transaction.

MATERIAL CHANGES IN RESULTS OF OPERATIONS

Subsequent to the TSAT Asset Transfer, the Company has had no significant
operations other than (i) expenses associated with the operation and maintenance
of the Tempo Satellites, prior to the sale to Hughes effective June 4, 1999
($2,777,000 during the three months ended March 31, 1999) and (ii) general and
administrative expenses incurred to maintain the Company's status as a publicly
traded company ($328,000 and $43,000 during the three months ended March 31,
2000 and 1999, respectively). In addition, the Company incurred $800,000 in
investment banking, legal and accounting fees with respect to the Liberty
Transactions. The Company also recorded $2,388,000 in stock compensation expense
primarily as a result of an increase in stock price through March 31, 2000.

                                      I-16
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES

TSAT recognized no income tax benefit or expense during either of the three
months ended March 31, 2000 and 1999. TSAT is only able to realize income tax
benefits for financial reporting purposes to the extent that such benefits
offset TSAT's income tax liabilities or TSAT generates taxable income. For
financial reporting purposes, all of TSAT's income tax liabilities had been
fully offset by income tax benefits at March 31, 2000 and December 31, 1999.
Additionally, TSAT believes that it will incur net losses for income tax
purposes during the foreseeable future, and accordingly, will not be in a
position to realize income tax benefits on a current basis.

MATERIAL CHANGES IN FINANCIAL CONDITION

As a result of the consummation of the Hughes transactions, the Company
currently has no operating income or cash flow. On November 19, 1999, TSAT
entered into the TSAT Credit Facility for the following facilities (i) Facility
A commitment of $5,000,000; (ii) Facility B commitment of $15,000,000; and (iii)
Facility C commitment of $5,000,000. Upon the "Collateral Pledge Perfection
Date" as defined as in the TSAT Credit Facility, Facility C expires and the
Facility A commitment increases to $10,000,000. At March 31, 2000, $3,044,000
had been drawn on Facility C at an interest rate of 10.5% per annum. The unused
Facility A, Facility B and Facility C amounts are charged a commitment fee at a
rate of 0.375%.

Through March 15, 2000, Facility A and Facility B of the TSAT Credit Facility
were collateralized by the GMH Stock. Upon consummation of the Liberty
Transactions and the contribution by TSAT of the GMH Stock to LSAT LLC, the
TSAT Credit Facility is no longer collateralized. As a result, the TSAT
Credit Facility was converted to a demand note which is due and payable upon
10 days notice from Bank of America.

In addition to the TSAT Credit Facility, the Company's current sources of
liquidity are its available cash and any proceeds from the monetization or
liquidation of the GMH Stock and Sprint PCS Stock. There can be no assurance
that TSAT will be able to monetize such investments on terms acceptable to
the Company.

Pursuant to the terms of the Liberty Transactions, Liberty contributed
$249,620,000 in cash to LSAT Astro. The Company intends to use such cash to fund
future capital requirements of Astrolink. TSAT and LSAT Astro assumed the
obligation for such capital requirements in connection with the Liberty
Transactions.

The Company currently intends to leverage its capital position and interests in
the TSAT LLC's to pursue strategic opportunities worldwide in the distribution
of internet data and other content via satellite and related businesses and is
actively seeking to develop or acquire an operating business related to, or
complementary with, such strategy.

TSAT will continue to be subject to the risks associated with operating as a
holding company including possible regulation under the Investment Company Act.
TSAT does not currently intend to be an investment company within the meaning of
the Investment Company Act.

                                      I-17
<PAGE>

               TCI SATELLITE ENTERTAINMENT, INC. AND SUBSIDIARIES

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a result of the transaction described in notes 2 and 3 to the accompanying
consolidated financial statements, the Company has price risk related to
investments in equity securities. The following table summarizes the market risk
for the Company:

<TABLE>
<CAPTION>
                                MARCH 31, 2000                   DECEMBER 31, 1999
                        -----------------------------      ----------------------------
                            FAIR            CARRYING          FAIR            CARRYING
                            VALUE            VALUE            VALUE            VALUE
                        ------------      -----------      -----------      -----------
<S>                     <C>               <C>              <C>              <C>
Equity price risk:
    GMH Stock           $175,210,000      175,210,000      135,101,000      135,101,000
    Sprint PCS Stock     333,050,000      333,050,000               --               --
    XMSR Stock            34,875,000       34,875,000               --               --

</TABLE>

The Company has a share appreciation right liability of $109,066,000 at March
31, 2000 relating to its GMH Stock owned.

                                      I-18
<PAGE>

PART II - OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

The Company acquired from Liberty beneficial ownership in over 5,000,000 shares
of Sprint Corporation PCS Group common stock, having a market value of
approximately $330 million as of March 24, 2000, in exchange for the issuance by
the Company to Liberty of (i) Series A Preferred Stock of the Company with a
liquidation value of $150 million and (ii) Series B Preferred Stock of the
Company with a liquidation value of $150 million. The Series B Preferred Stock
is convertible into Series B Common Stock of the Company at a conversion price
of $8.84 per share, subject to adjustment, and prior to conversion represents
approximately 85% of the voting power of the Company.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibit

          27 - Financial Data Schedule

     (b)  Report on Form 8-K filed during quarter ended March 31, 2000:

<TABLE>
<CAPTION>
          Date of Report       Items Reported     Financial Statements Filed
          ----------------     --------------     --------------------------
<S>                            <C>                <C>
          March 22, 2000           Item 5                   None

</TABLE>

                                      II-1
<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.


                                       TCI SATELLITE ENTERTAINMENT, INC.


Date:  May 12, 2000                    By:  /s/ Kenneth G. Carroll
                                          -------------------------------------
                                            Kenneth G. Carroll
                                            Senior Vice President, Chief
                                              Financial Officer and Treasurer
                                              (Principal Financial Officer and
                                              Chief Accounting Officer)



                                      II-2