<PAGE>   1


                       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 Quarter Ended June 30, 2001

                                       or

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                    For the transition period from n/a to n/a

                                 ---------------

                         Commission File Number 0-27192

                        ASCENT ENTERTAINMENT GROUP, INC.
             (Exact name of registrant as specified in its charter)

           Delaware                                             52-1930707
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

                              12300 Liberty Blvd.
                            Englewood, Colorado 80112
                     (Address of principal executive office)

                                 (720) 875-5400
              (Registrant's telephone number, including area code)

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 twelve (12) months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes        No X(*)
                                      -----     -----

The number of shares outstanding of the Registrant's Common Stock as of June 30,
2001 was 1,000 shares.

REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H OF FORM 10-Q
AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT

(*) The Registrant filed a Form 15 with the Securities and Exchange Commission
    on June 8, 2000 and is no longer subject to such filing requirements. This
    filing is being made in accordance with the requirements of the Registrant's
    Indenture for its 11.875% Senior Secured Notes.


<PAGE>   2


PART I    FINANCIAL INFORMATION

Item 1.   Financial Statements

                        ASCENT ENTERTAINMENT GROUP, INC.
            (A WHOLLY-OWNED SUBSIDIARY OF LIBERTY MEDIA CORPORATION)

                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                          JUNE 30,         DECEMBER 31,
                                                            2001              2000
                                                          ---------        ------------
                                                         (UNAUDITED)
<S>                                                       <C>              <C>
ASSETS
Current Assets:
     Cash and cash equivalents                            $ 241,342         $ 309,488
     Receivables, net                                        37,623            38,275
     Prepaid expenses                                         2,715             2,132
     Other current assets                                        48               172
                                                          ---------         ---------
       Total current assets                                 281,728           350,067
                                                          ---------         ---------

Property and equipment, net                                 326,154           324,701
Goodwill, net                                                81,239            83,669
Other investments (Note 5)                                   25,148             1,563
Deferred income taxes                                        21,616            17,956
Other assets, net                                             7,688            12,880
                                                          ---------         ---------
Total Assets                                              $ 743,573         $ 790,836
                                                          =========         =========

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
     Accounts payable                                     $  44,372         $  41,783
     Payable to stockholder and other related
       parties, net                                          36,263            34,166
     Deferred income                                          1,208             1,271
     Other taxes payable                                      3,423             4,113
     Accrued compensation                                     8,656             9,386
     Other accrued liabilities                                9,398            17,601
     Current portion of capital lease obligations               704               705
                                                          ---------         ---------
       Total current liabilities                            104,024           109,025
                                                          ---------         ---------

Long-term debt (Note 7)                                     448,055           426,396
Obligations under capital leases and other
   long-term liabilities                                      2,150             1,656
                                                          ---------         ---------
Total liabilities                                           554,229           537,077
                                                          ---------         ---------

Minority interest                                            26,745            54,816
Commitments and contingencies (Notes 2 and 7)                    --                --

Stockholder's equity (Note 9):
     Preferred stock, par value $.01 per
       share, no shares authorized at December 31,
       2000 and at June 30, 2001                                 --                --
     Common stock, par value $.01 per share,
       50,000 shares authorized, and 1,000 shares
       issued and outstanding at December 31, 2000
       and June 30, 2001                                          1                 1


   Additional paid-in capital                               305,626           307,509
   Accumulated deficit                                     (143,028)         (108,567)
                                                          ---------         ---------
        Total stockholder's equity                          162,599           198,943
                                                          ---------         ---------
Total Liabilities and Stockholder's Equity                $ 743,573         $ 790,836
                                                          =========         =========
</TABLE>

See accompanying notes to these unaudited consolidated financial statements.


                                       2
<PAGE>   3


                        ASCENT ENTERTAINMENT GROUP, INC.
            (A WHOLLY-OWNED SUBSIDIARY OF LIBERTY MEDIA CORPORATION)

                      Consolidated Statements of Operations
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED JUNE 30,          SIX MONTHS ENDED JUNE 30,
                                                ---------------------------         ---------------------------
                                                  2001              2000              2001              2000
                                                ---------         ---------         ---------         ---------
<S>                                             <C>               <C>               <C>               <C>
Revenues                                        $  69,044         $  71,325         $ 136,689         $ 141,361
                                                ---------         ---------         ---------         ---------

Operating expenses:
     Cost of services                              62,302            49,582           118,228            98,481
     Depreciation and amortization                 20,903            23,190            43,082            43,880
     General and administrative                     7,951               939             8,233            17,768
                                                ---------         ---------         ---------         ---------
         Total operating expenses                  91,156            73,711           169,543           160,129
                                                ---------         ---------         ---------         ---------

Loss from continuing operations before
   interest, taxes and minority interest          (22,112)           (2,386)          (32,854)          (18,768)

Interest and other income, net                      2,055               641             2,599             1,531
Interest expense                                  (10,992)           (8,407)          (21,825)          (16,900)
                                                ---------         ---------         ---------         ---------

Loss from continuing operations before
   taxes and minority interest                    (31,049)          (10,152)          (52,080)          (34,137)

Income tax benefit (expense)                         (145)             (756)            1,350              (862)
Minority interest in loss of subsidiary,
   net of taxes                                     7,820             3,042            16,269             5,022
                                                ---------         ---------         ---------         ---------


Loss from continuing operations                   (23,374)           (7,866)          (34,461)          (29,977)

Income from discontinued operations, net
   taxes (Note 4)                                      --             6,643                --             3,631
                                                ---------         ---------         ---------         ---------

Net loss                                        $ (23,374)        $  (1,223)        $ (34,461)        $ (26,346)
                                                =========         =========         =========         =========
</TABLE>

See accompanying notes to these unaudited consolidated financial statements.


                                       3
<PAGE>   4


                        ASCENT ENTERTAINMENT GROUP, INC.
            (A WHOLLY-OWNED SUBSIDIARY OF LIBERTY MEDIA CORPORATION)

                      Consolidated Statements of Cash Flows
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                         SIX MONTHS ENDED JUNE 30,
                                                                        ---------------------------
                                                                           2001              2000
                                                                        ---------         ---------
<S>                                                                     <C>               <C>
Operating activities:
     Net loss                                                           $ (34,461)        $ (26,346)
     Adjustments  to reconcile  net loss to net cash provided by
       (used in) continuing operations:
         Income from discontinued operations, net                              --            (3,631)
         Depreciation and amortization                                     43,082            43,880
         Minority interest in losses of subsidiary                        (16,269)           (5,022)
         Interest accretion on Senior Secured Notes                        10,658             9,283
         Changes in operating assets and liabilities                      (13,406)              (94)
                                                                        ---------         ---------


     Net cash used in operating activities of
        continuing operations                                             (10,396)           18,070
     Net cash used in discontinued operations                                  --           (12,863)
                                                                        ---------         ---------
     Net cash provided by (used in) operating activities                  (10,396)            5,207
                                                                        ---------         ---------

Investing activities:
     Purchase of property and equipment                                   (52,149)          (53,744)
     Investments in unconsolidated entities and notes                     (15,985)           (2,000)
                                                                        ---------         ---------
receivable

     Net cash used in investing activities                                (68,134)          (55,744)
                                                                        ---------         ---------

Financing activities:
     Proceeds from borrowings under OCC credit facility                    26,000            25,000
     Repayment of borrowing under OCC credit facility                     (15,000)               --
     Payments on obligations under capital lease                             (617)           (1,565)
                                                                        ---------         ---------
     Net cash provided by financing activities                             10,383            23,435
                                                                        ---------         ---------

Net decrease in cash and cash equivalents                                 (68,147)          (27,102)

Cash and cash equivalents, beginning of period                            309,488            60,349
                                                                        ---------         ---------

Cash and cash equivalents, end of period                                $ 241,341         $  33,247
                                                                        =========         =========

Supplemental cash flow information:
     Interest paid, net of interest capitalized                         $  10,643         $   6,633
                                                                        =========         =========

     Income taxes paid                                                  $      48         $     374
                                                                        =========         =========
</TABLE>

See accompanying notes to these unaudited consolidated financial statements.


                                       4
<PAGE>   5


                        ASCENT ENTERTAINMENT GROUP, INC.
            (A WHOLLY-OWNED SUBSIDIARY OF LIBERTY MEDIA CORPORATION)

                  Consolidated Statements of Comprehensive Loss
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED JUNE 30,        SIX MONTHS ENDED JUNE 30,
                                              ---------------------------        -------------------------
                                                 2001             2000             2001             2000
                                               --------         --------         --------         --------
   <S>                                         <C>              <C>              <C>              <C>
   Net loss                                    $(23,234)        $ (1,223)        $(34,461)        $(26,346)

   Other comprehensive loss, net of tax              --               --               --               --
                                               --------         --------         --------         --------

   Comprehensive loss                          $(23,374)        $ (1,223)        $(34,461)        $(26,346)
                                               ========         ========         ========         ========
</TABLE>

See accompanying notes to these unaudited consolidated financial statements.





                                       5
<PAGE>   6


                        ASCENT ENTERTAINMENT GROUP, INC.
            (A WHOLLY-OWNED SUBSIDIARY OF LIBERTY MEDIA CORPORATION)
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

1.   GENERAL

     The accompanying unaudited consolidated financial statements have been
prepared by Ascent Entertainment Group, Inc. ("Ascent" or the "Company")
pursuant to the rules and regulations of the Securities and Exchange Commission
(the "Commission"). These financial statements should be read in the context of
the consolidated financial statements and notes thereto filed with the
Commission in the Company's 2000 Annual Report on Form 10-K. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been included or
omitted pursuant to such regulations. The accompanying consolidated financial
statements reflect all adjustments and disclosures which are, in the opinion of
management, necessary for a fair presentation. All such adjustments are of a
normal recurring nature. The results of operations for the interim periods are
not necessarily indicative of the results for the entire year.

2.   ORGANIZATION AND BASIS OF PRESENTATION

     The accompanying consolidated financial statements include the accounts of
Ascent and its majority-owned subsidiaries, On Command Corporation ("OCC") and
LiveWire Network Services, LLC ("LNS"). The Company's discontinued operations
are comprised of the results of the Company's former entertainment segment,
which included the Denver Nuggets, the Colorado Avalanche and Ascent Arena
Company (the "Arena Company"), the owner and manager of the Pepsi Center,
(collectively the "Sports-related businesses"), which the Company sold in July
2000 (see Note 4). In addition, discontinued operations include the results of
the Company's former subsidiary, Beacon Communications, LLC ("Beacon"), in which
a 90% interest was sold in January 1999 and the remainder in July 2000.

     Ascent executed an initial public offering (the "Ascent IPO") of its common
stock on December 18, 1995. Prior to the Ascent IPO, Ascent was a wholly owned
subsidiary of COMSAT Corporation ("COMSAT"). Until June 27, 1997 COMSAT
continued to own a majority (80.67%) of Ascent's common stock and control
Ascent. On June 27, 1997, COMSAT consummated the distribution of its 80.67%
ownership interest in Ascent to the COMSAT shareholders on a pro-rata basis in a
transaction that was tax-free for federal income tax purposes (the
"Distribution"). Ascent and COMSAT entered into a Distribution Agreement and a
Tax Disaffiliation Agreement, both dated as of June 3, 1997, in connection with
the Distribution. As a result of the Distribution, Ascent became an independent
publicly held corporation.

     On February 22, 2000, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Liberty Media Corporation ("Liberty") and
Liberty AEG Acquisition, Inc. ("Merger Sub"), an indirect wholly-owned
subsidiary of Liberty. Pursuant to the Merger Agreement, Merger Sub commenced a
tender offer (the "Offer"), offering Ascent stockholders $15.25 in cash for each
share of Ascent common stock. Liberty commenced the Offer on February 29, 2000
which expired at midnight on March 27, 2000 whereupon approximately 25.2 million
shares of Ascent common stock were validly tendered and not withdrawn pursuant
to the Offer. On March 28, 2000, Merger Sub accepted for payment all shares of
Ascent common stock tendered, which constituted approximately 85% of the total
outstanding shares of Ascent common stock. Merger Sub purchased such shares at
an aggregate purchase price of approximately $385 million with funds contributed
to it by Liberty from its cash on hand. Under the terms of the Merger Agreement,
Merger Sub was merged with and into Ascent (the "Merger") on June 8, 2000. At
the time of the Merger, Ascent became an indirect, wholly-owned subsidiary of
Liberty and all outstanding shares not owned by Liberty with respect to which
appraisal rights were not properly exercised were converted into the right to
receive $15.25 per share in cash on the terms and conditions set forth in the
Merger Agreement. Pursuant to the Merger, the charter of Merger Sub immediately
prior to the Merger became the charter of the Company effective upon the Merger,
each outstanding share of the Company's common stock held by Liberty or Merger
Sub was canceled and each outstanding share of common stock of Merger Sub was
converted into a share of Common Stock of the Company. There are 1,000 shares of
Common Stock of the Company outstanding, all of which are held indirectly by
Liberty. During 2000, the Company expensed approximately $8.4 million of costs



                                       6
<PAGE>   7


associated with the Merger Agreement, primarily investment banker and legal
costs, and has included these costs in general and administrative expenses
during the year ended December 31, 2000.

     In connection with this Merger, Liberty did not push down the purchase
consideration since the Company's outstanding Senior Secured Notes are publicly
held.

     LiveWire Network Services, LLC - LNS was formed on November 15, 2000 to
acquire the assets of the Company's former Ascent Network Services ("ANS")
division. On January 5, 2001, all of the assets used in connection with the ANS
business were transferred to LNS, a wholly owned subsidiary of the Company. The
Company transferred a 1% ownership interest in LNS to Liberty LiveWire
Corporation (LiveWire), a majority-owned subsidiary of Liberty, in exchange for
$300,000 in cash and the Company and LiveWire became parties to the Operating
Agreement of LNS. Under the Purchase Agreement between the Company and LiveWire,
the Company and LNS executed a Contribution and Assumption Agreement pursuant to
which LNS assumed all liabilities, obligations and commitments of the Company
relating to the ANS business, whether before or after January 5, 2001.

     The Operating Agreement of LNS provides (i) that as of January 5, 2001,
LiveWire will be the manager of LNS, (ii) that LiveWire will receive an amount
equal to $800,000 per month from available cash of LNS as a guaranteed payment
to compensate LiveWire as the manager of LNS, (iii) that the Company has the
right to receive a preferred return in the amount of ten percent per annum,
compounded quarterly, on the balance of the Company's capital account as of
January 5, 2001 ($29,700,000), calculated for the period beginning on January 5,
2001 and ending on the date on which the members of LNS receive final
liquidating distributions (the "Preferred Return"), and (iv) for the
implementation of the Put-Call. Pursuant to the Put-Call, (i) at any time on or
after March 1, 2001 (the "Put Exercise Date"), the Company will have the right
to require LiveWire to purchase all, but not less than all, of the Company's
ownership interest in LNS (the "Put Option") for a purchase price equal to
$29,700,000, plus a 10% return, compounded quarterly, minus the amount of any
Preferred Return that has been distributed to the Company, and (ii) at any time
on or after June 1, 2001 (the "Call Exercise Date"), LiveWire will have the
right to require the Company to sell all, but not less than all, of the
Company's ownership interest in LNS (the "Call Option") for a purchase price
equal to $29,700,0000, plus 10%, compounded quarterly, minus the amount of any
Preferred Return that has been distributed to the Company. If LiveWire exercises
the Call Option, the Company will have the right, in its discretion, to postpone
the Call Option closing date to a date no later than December 31, 2001. If the
Company exercises the Put Option and LiveWire does not fulfill its obligations
under the Operating Agreement, in addition to any other rights or remedies
provided by law, in equity or other wise, the Company will have the right to
require LiveWire to sell all, but not less than all, of LiveWire's ownership
interest in LNS back to AEG for a purchase price equal to $300,000.

3.   NEW ACCOUNTING PRONOUNCEMENTS

     In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141, "Business Combinations"
which requires the use of the purchase method and eliminates the option of using
the pooling-of-interests method of accounting for all business combinations. The
provisions in this statement apply to all business combinations initiated after
June 30, 2001, and all business combinations accounted for using the purchase
method for which the date of acquisition is July 1, 2001, or later. The Company
does not believe the adoption of this statement will have a material impact on
the Company's financial position, results of operations or cash flows.

     In July 2001, the FASB issued Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets" which requires that all
intangible assets acquired, other than those acquired in a business combination,
be initially recognized and measured based on the asset's fair value. In
addition, the intangible asset should be amortized based upon its useful life.
If the intangible asset is determined to have an indefinite useful life, it
shall not be amortized until its useful life can be determined. Management has
not determined the potential impact that this statement will have on the
Company's financial position, results of operations or cash flows.


                                       7
<PAGE>   8


4.   DISCONTINUED OPERATIONS

     Beacon - On January 20, 1999, the Company sold ninety percent of the
membership interests in Beacon to an investment group which included Beacon's
Chairman and Chief Executive Officer. The purchase price for the 90% interest
was $19 million in cash, net of certain adjustments, after which Ascent received
approximately $15.9 million at closing. In July 2000, the Company exercised its
option pursuant to an Option Agreement to require the investment group to
purchase Ascent's remaining 10% interest in Beacon. Subsequently, on July 3,
2000, the Company received $2.1 million in cash in accordance with the terms of
the Option Agreement and assigned its interest in Beacon to the investment
group. The Company recognized a gain of approximately $1.7 million, net of
taxes, during the third quarter of 2000 in connection with the sale of its
interest in Beacon.

     Sports-related businesses - On April 24, 2000, the Company entered into a
definitive Purchase and Sale Agreement (the "Sports Sale Agreement") to sell the
Sports-related businesses to a group of entities controlled by E. Stanley
Kroenke (the "Kroenke entities"). On July 6, 2000, the Company consummated the
sale of its Sports-related businesses to the Kroenke entities for approximately
$267.7 million in net cash proceeds. In addition, the Kroenke entities assumed
approximately $136.2 million in outstanding nonrecourse Arena Note obligations.
An indirect wholly owned subsidiary of Liberty retained an approximate 6.5%
interest in the Sports-related businesses, with an agreed upon valuation of
approximately $18.7 million.

     The income from the Sports-related businesses, net of tax, for the
three-month and six-month periods ending June 30, 2000 was as follows:

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED   SIX MONTHS ENDED
                                                                 JUNE 30, 2000      JUNE 30, 2000
                                                              ------------------   ----------------
            <S>                                               <C>                  <C>
            Revenues                                                $ 42,971          $117,052
                                                                    ========          ========

            Income from discontinued operations before taxes        $  6,643          $  3,631
            Income tax benefit                                            --                --
                                                                    --------          --------

            Income from discontinued operations                     $  6,643          $  3,631
                                                                    ========          ========
</TABLE>

5.   OTHER INVESTMENTS

     On March 30, 2001, OCC completed a $20 million investment in convertible
preferred stock of STSN, Inc. ("STSN"), a high-speed broadband Internet access
provider for hotels. In connection with this investment, OCC advanced $15
million in cash and converted a $5 million Convertible Promissory Note in
consideration for a 9.7% equity interest in STSN. OCC uses the cost method to
account for this investment. Other strategic investors in STSN include Marriott
International, Inc. ("Marriott"), a hotel company and major customer of OCC, and
Siemens Corporation, a German corporation which, among many other things,
manufactures electronic equipment and supplies. STSN has an exclusive contract
with Marriott to provide its in-room services to Marriott hotels.

6.   ACQUISITIONS

     On February 28, 2001, pursuant to a stock purchase agreement between OCC
and Hotel Digital Network, Inc. ("DMN"), for aggregate consideration of
approximately $1.7 million (which consisted primarily of the conversion of a
$1.4 million promissory note and accrued interest thereon), DMN issued to OCC
common stock equal to 80% of the equity interests in DMN, on a fully diluted
basis, and approximately 85% of the voting securities of DMN. The acquisition
has been accounted for using the purchase method of accounting. Accordingly, the
excess purchase price over the fair market value of net tangible assets acquired
was allocated to goodwill and is being amortized over five years. In addition,
OCC has agreed to fund additional contributions up to $2.7 million towards
future operations. The operating results of DMN are included in OCC's
consolidated financial statements of operations from the date of acquisition.


                                       8
<PAGE>   9


7.   LONG-TERM DEBT

<TABLE>
<CAPTION>
                                                           JUNE 30,      DECEMBER 31,
                                                             2001           2000
                                                           --------      ------------
                                                                (IN THOUSANDS)
            <S>                                            <C>            <C>
            Senior Secured Discount Notes, 11.875%,
                due 2004, net of unamortized
                discount of $34,728 and $65,078            $189,922        $179,263
            OCC Revolving Credit Facility, variable
                rate, due 2005                              258,133         247,133
                                                           --------        --------
            Total Long Term Debt                           $448,055        $426,396
                                                           ========        ========
</TABLE>

     Senior Secured Discount Notes ("Senior Notes") - As discussed in Note 6 to
the Company's 2000 Consolidated Financial Statements, under the terms of the
Senior Notes, to the extent that within one year of the sale of the
Sports-related businesses (see Note 4), Ascent does not use the net cash
proceeds for certain permitted uses under the Senior Note Indenture, Ascent will
be required to use all remaining proceeds to offer to repurchase the Senior
Notes at 100% of their accreted value.

     Pursuant to the foregoing provision of the Senior Notes and effective July
30, 2001, the Company commenced an Offer to Purchase up to $124 million in
accreted value of the Senior Notes. Under the Offer to Purchase, registered
holders of the Senior Notes have the right to require the Company to repurchase
the Senior Notes on a pro rata basis up to $124 million in accreted value for a
cash purchase price equal to 100% of the accreted value thereof on August 28,
2001, unless the Offer to Purchase is extended. The purchase price is $861.64
per $1,000 principal amount at maturity of the Senior Notes. The Offer to
Purchase is not conditioned on any minimum principal amount of Senior Notes
being tendered.

     OCC Credit Facilities - On July 18, 2000, OCC entered into a new credit
agreement with a group of banks (the "OCC Credit facility"), that provided OCC
with access to unsecured borrowings of up to $350.0 million for the next five
years, with a maturity date in July 2005. Subsequently, on March 27, 2001, OCC
and the banks amended the OCC Credit facility to decrease the maximum amount of
borrowings under the Credit facility from $350.0 million to $320.0 million and
increase the borrowing ratio from 3.5 to 4.25. At June 30, 2001, there was $61.9
million of available borrowings under the OCC Credit Facility, as amended,
subject to certain covenant restrictions. In addition to the limitations on
borrowings contained in the OCC Credit Facility, certain covenants contained in
the Indenture for the Company's Senior Secured Discount Notes discussed above
effectively prevent OCC's total indebtedness from exceeding an aggregate of $275
million so long as the Company's Senior Secured Discount Notes are outstanding.

     The OCC Credit facility, as amended, contains covenants that place certain
limits on OCC's ability to pay dividends or make distributions on its equity,
repurchase equity, merge or acquire another entity, incur debt or create liens
on assets, among other things. OCC was in compliance with such covenants at June
30, 2001.

8.   CONTINGENCIES

     In September 1998, On Command Video Corporation ("OCV"), a subsidiary of
OCC, filed suit against Maginet Corporation ("Maginet"), in the Superior State
Court of California, County of Santa Clara Case No. CV776723, for past due
royalties and for judicial declaration that the license agreement between OCV
and Maginet was terminated by Maginet's material breach. Maginet counter-claimed
against OCV, alleging that OCV breached the license agreement, and alleging
various torts by OCV in its relationship with Maginet. On January 4, 2001, OCC
signed a settlement agreement with Maginet. In exchange for the (i) contribution
of 100% of OCC's equity interest in its Asia-Pacific subsidiary, (ii) payment of
$1.0 million in cash, and (iii) issuance of 275,000 shares of OCC's common
stock, OCC received a 7.5% minority interest in Maginet. OCC also agreed that
Maginet will have the option during the period of 15 days beginning on the
second anniversary of the execution of the settlement agreement to cause OCC to
repurchase all, but not less than all, of the shares of OCC's common stock
issued to Maginet at a price per share of $15.00. This obligation will terminate
if OCC's common stock closes at or above $15.00 per share on any ten consecutive
trading days prior to the second anniversary of the execution of the settlement
agreement and the shares of OCC's common stock held by Maginet are freely
tradable by Maginet during such time, either because a registration statement
covering those shares is effective or the shares are saleable pursuant to an
exemption under the Securities Act. OCC estimated the fair value of its 7.5%
minority interest at approximately $5.3 million, which



                                       9
<PAGE>   10


resulted in a charge of approximately $4.8 million recorded in the fourth
quarter of 2000, and an additional charge of $3.7 million recorded in the first
quarter of 2001. This additional charge was the result of a change in the
estimate of the amount of inter-company debt to be forgiven in connection with
the settlement.

     The settlement agreement was finalized on March 1, 2001. As a result the
results of operations of the Asia-Pacific subsidiary have been excluded from
OCC's consolidated operating results since February 28, 2001.

     The Company is a defendant, and may be a potential defendant, in lawsuits
and claims arising in the ordinary course of its business. While the outcomes of
such claims, lawsuits, or other proceedings cannot be predicted with certainty,
management expects that such liability, to the extent not provided for by
insurance or otherwise, will not have a material adverse effect on the financial
condition of the Company.

9.   STOCKHOLDERS' EQUITY

Series B and C Preferred Stock

     Pursuant to Preferred Stock Agreements dated March 5, 2001 and April 23,
2001 between the Company and OCC, OCC sold 15,000 newly issued shares of its
Series B Cumulative Redeemable Preferred Stock (the "Series B Preferred Stock"),
and 10,000 shares of its Series C Cumulative Redeemable Preferred Stock (The
"Series C Preferred Stock"), (collectively, the "Redeemable Preferred Stock"),
for cash consideration of $15 million and $10 million, respectively.

     The liquidation preference (the "Liquidation Preference") of each share of
the Redeemable 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 that have been added to and remain a part of
the Liquidation Preference as of such date, plus (c) for purposes of the
liquidation and redemption provisions of the Redeemable Preferred Stock, an
amount equal to all unpaid dividends accrued on the sum of the amounts specified
in clauses (a) and (b) above during the period from and including the
immediately preceding dividend payment date to but excluding the date in
question.

     The holders of Redeemable Preferred Stock are entitled to receive
cumulative dividends, when and as declared by OCC, in preference to dividends on
junior securities, including the common stock and the Series A Preferred Stock,
and ratably on dividends to parity securities. Dividends accrue on the Series B
Preferred Stock on a daily basis at the rate of 8.5% per annum of the
Liquidation Preference from and including March 5, 2001 to but excluding April
15, 2001 and at the rate of 12% per annum of the Liquidation Preference
thereafter. Dividends accrue on the Series C Preferred Stock on a daily-basis at
the rate of 12% per annum of the Liquidation Preference. Accrued dividends are
payable monthly, in cash. Dividends not paid on any dividend payment date are
added to the Liquidation Preference on such date and remain a part of the
Liquidation Preference until such dividends are paid.

     Upon any liquidation, dissolution or winding up of OCC, the holders of
Redeemable Preferred Stock are entitled to receive, from the assets of OCC
available for distribution to stockholders, an amount in cash per share equal to
the Liquidation Preference of a share of Redeemable Preferred Stock, after
payment is made on any senior securities and before any distribution or payment
is made on any junior securities, which payment will be made ratably among the
holders of Redeemable Preferred Stock and the holders of any parity securities.

     Shares of Redeemable Preferred Stock are redeemable at the option of OCC at
any time after the issuance date at a redemption price per share payable in cash
equal to the Liquidation Preference of such share on the redemption date. Any
redemptions by OCC are required to be made pro rata if less than all shares of
Redeemable Preferred Stock are to be redeemed.

Series D Preferred Stock

     On June 29, 2001, pursuant to a Preferred Stock Agreement between the
Company and Ascent (the "Series D Purchase Agreement"), the Company authorized
for issuance 60,000 shares of its Cumulative Convertible Redeemable Preferred
Stock, Series D, par value $.01 per share (the "Series D Preferred Stock") to
Ascent in consideration of $60 million in cash. The Series D Purchase Agreement
states that the shares are issuable in three



                                       10
<PAGE>   11


sub-series, Series D-1, Series D-2, and Series D-3, each with an aggregate
authorized amount of $20 million in stated value. The Series D-1 shares were
issued on June 29, 2001, the Series D-2 shares will be issued after June 30,
2001 and on or before September 30, 2001, and the Series D-3 shares will be
issued after September 30, 2001 and on or before December 31, 2001. Shares of
Series D Preferred Stock are convertible on or after December 31, 2002 at the
option of the holder, into the Company's common stock at a conversion price of
$7.55 per share of common stock. On July 30, 2001, the Company gave notice to
Ascent, in accordance with the Series D Purchase agreement, of its intention to
sell, on August 2, 2001, 20,000 shares of Series D-2 Preferred Stock to Ascent
for cash consideration of $20 million.

     The liquidation preference (the "Series D Liquidation Preference") of each
share of Series D 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 that have been added to and remain a part
of the Series C Liquidation Preference as of such date, plus (c) for purposes of
the liquidation and redemption provisions of the Series D Preferred Stock, an
amount equal to all unpaid dividends accrued on the sum of the amounts specified
in clauses (a) and (b) above during the period from and including the
immediately preceding dividend payment date to but excluding the date in
question.

     The holders of the Series D Preferred Stock are entitled to receive
cumulative dividends, when and as declared by the Company, in preference to
dividends on junior securities, including the common stock and the Series A
Preferred Stock and ratably to dividends to parity securities. Dividends accrue
on each sub-series of the Series D Preferred Stock on a daily basis at the rate
of 8% per annum of the Series D Liquidation Preference from and including the
applicable issue date of such shares (the "Issue Date"). Accrued dividends are
payable in cash quarterly on the last day of March, June, September and
December, commencing, with respect to each outstanding share of a sub-series of
Series D Preferred Stock, on the first date following the Issue Date of such
share. Dividends not paid on any dividend payment date are added to the Series D
Liquidation Preference until such dividends are paid.

     Upon any liquidation, dissolution or winding up of the Company, the holders
of shares of Series D Preferred Stock are entitled to receive, from the assets
of the Company available for distribution to stockholders, an amount in cash per
share equal to the Series D Liquidation Preference of a share of Series D
Preferred Stock, after payment is made on any senior securities and before any
distribution or payment is made on any junior securities, which payment will be
made ratably among the holders of Series D Preferred Stock and the holders of
any parity securities.

     Shares of the Series D Preferred Stock are redeemable, at the option of the
Company, between June 29, 2001 and December 31, 2002 at a redemption price per
share payable in cash equal to the Series D Liquidation Preference. The Series D
Preferred Stock is not redeemable during the period from December 31, 2002 to
June 30, 2005. Thereafter, the shares are redeemable at the Series D Liquidation
Preference plus the percentage set forth opposite the applicable redemption
date.

<TABLE>
<CAPTION>
                   Redemption Date               Percentage
            -----------------------------        ----------
            <S>                                  <C>
            June 30, 2005 - June 29, 2006            4%
            June 30, 2006 - June 29, 2007            3%
            June 30, 2007 - June 29, 2008            2%
            June 30, 2008 - June 29, 2009            1%
            June 30, 2009 - thereafter               0%
</TABLE>




                                       11
<PAGE>   12


10.  SEGMENT OPERATING RESULTS

     The Company classified its businesses into three reporting segments:
multimedia distribution, network services and corporate. The multimedia
distribution segment includes the video distribution and on-demand video
entertainment services provided by OCC to the lodging industry. The network
services segment includes the results of LNS and the video distribution services
it provides to the NBC television network and other private networks. Results by
segment are as follows:

   <TABLE>
   <CAPTION>
                                           THREE MONTHS ENDED JUNE 30,          SIX MONTHS ENDED JUNE 30,
                                           ---------------------------         ---------------------------
                                             2001              2000              2001              2000
                                           ---------         ---------         ---------         ---------
                                                                 (DOLLARS IN THOUSANDS)
                                                                      (UNAUDITED)
<S>                                        <C>               <C>               <C>               <C>
INCOME STATEMENT DATA:
Revenues:
     Multimedia Distribution               $  63,338         $  65,769         $ 125,552         $ 130,733
     Network Services                          5,706             5,556            11,137            10,628
                                           ---------         ---------         ---------         ---------

         Total revenues                    $  69,044         $  71,325         $ 136,689         $ 141,361
                                           =========         =========         =========         =========

Operating income (loss):
     Multimedia Distribution(1)            $ (13,481)        $  (3,440)        $ (23,502)        $  (4,607)
     Network Services                           (165)            2,528               (90)            4,688
     Corporate                                (8,466)           (1,474)           (9,262)          (18,849)
                                           ---------         ---------         ---------         ---------

         Total operating loss              $ (22,112)        $  (2,386)        $ (32,854)        $ (18,768)
                                           =========         =========         =========         =========

OTHER DATA:

EBITDA(2):
     Multimedia Distribution               $   6,513         $  18,818         $  17,757         $  37,400
     Network Services                            230             2,925               705             5,481
     Corporate                                (7,952)             (939)           (8,234)          (17,769)
                                           ---------         ---------         ---------         ---------

         Total EBITDA                         (1,209)           20,804            10,228            25,112
                                           ---------         ---------         ---------         ---------

     Less reconciling item -
     depreciation and
     amortization                            (20,903)          (23,190)          (43,082)          (43,880)
                                           ---------         ---------         ---------         ---------

     Total operating loss                  $ (22,112)        $  (2,386)        $ (32,854)        $ (18,768)
                                           =========         =========         =========         =========

Capital Expenditures:
     Multimedia Distribution               $  36,709         $  33,581         $  51,225         $  53,212
     Network Services                            551               377               924               532
                                           ---------         ---------         ---------         ---------

         Total Capital Expenditures        $  37,260         $  33,958         $  52,149         $  53,744
                                           =========         =========         =========         =========
</TABLE>

<TABLE>
<CAPTION>
                                                 AS OF JUNE 30,
                                             ----------------------
                                              2001           2000
                                             -------        -------
<S>                                          <C>            <C>
Room Data (Relates only to Multimedia
   Distribution):
       Number of Guest-Pay rooms:
       On-Demand                             902,000        906,000
       Schedule only                          37,000         63,000
                                             -------        -------

         Total Guest-Pay rooms               939,000        969,000
                                             =======        =======
</TABLE>

(1) The Multimedia Distribution segments' operating results reflect the
    allocation of intangible asset amortization incurred by Ascent resulting
    from the acquisition of OCV by Ascent.

(2) EBITDA represents earnings from continuing operations before interest
    expense, income taxes, depreciation and amortization, other income
    (expense), relocation costs and non-cash charges related to stock based
    compensation. The most significant difference between EBITDA and cash
    provided from operating activities is changes in working capital. EBITDA is
    presented because it is a widely accepted financial indicator used by
    certain investors and analysts to analyze and compare companies on the basis
    of operating performance. In addition, management believes EBITDA provides
    an important additional perspective on the Company's operating results and
    the Company's ability to service its long-term debt and fund the Company's
    operations. EBITDA is not intended to represent cash flows for the period,
    or to depict funds available for dividends,


                                       12
<PAGE>   13


    reinvestment or other discretionary uses. EBITDA has not been presented as
    an alternative to operating income or as an indicator of operating
    performance and should not be considered in isolation or as a substitute for
    measures of performance prepared in accordance with generally accepted
    accounting principles, which are presented and discussed in Item 2 under
    Liquidity and Capital Resources. See the Company's 2000 Consolidated
    Financial Statements and the Notes thereto. The Company's method for
    calculating EBITDA may be different than other companies and thus not
    comparable.

11.  SIGNIFICANT CUSTOMER

     On March 21, 2001, OCC and Marriott (see Note 5) entered into a definitive
agreement pursuant to which OCC will distribute its interactive television
platform in approximately 165,000 U.S. and Canadian hotel rooms managed by
Marriott and an additional approximately 135,000 U.S. and Canadian hotel rooms
franchised by Marriott.

12.  RELOCATION AND RESTRUCTURING COSTS

     OCC is in the process of relocating its headquarter operations from San
Jose, California, to Denver, Colorado. It is estimated that most sales,
marketing, field support, accounting, finance, and executive management will be
transitioned to Denver by December, 2001. During the three months and six months
ended June 30, 2001, $6.4 million and $9.7 million of relocation expenses have
been recognized and recorded. The relocation expenses include severance, stay
bonuses, search fees, contractors, travel and redundant operations expenses.

     On May 21, 2001, the compensation committee of OCC's board of directors
approved a restructuring plan (the "Plan"), which effected approximately 50
employees. Severance costs associated with the Plan aggregated $1.7 million and
were recognized during the three months ended June 30, 2001. Annual savings of
salary and employee related costs from the restructuring are estimated to be
approximately $5.4 million.

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

GENERAL:

     Certain of the statements in this report are forward-looking and relate to
anticipated future events and operating results. Statements which look forward
in time are based on management's current expectations and assumptions, which
may be affected by subsequent developments and business conditions, and
necessarily involve risks and uncertainties. Therefore, there can be no
assurance that actual future results will not differ materially from anticipated
results. Although the Company has attempted to identify some of the important
factors that may cause actual results to differ materially from those
anticipated, those factors should not be viewed as the only factors which may
affect future operating results. Accordingly, the following should be read in
conjunction with the Consolidated Financial Statements (unaudited) included in
this filing, and with the Consolidated Financial Statements, notes thereto, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's 2000 Annual Report on Form 10-K, as
previously filed with the Commission.

SEASONALITY, VARIABILITY AND OTHER:

     The Company's businesses are subject to the effects of both seasonality and
variability.

     The Multimedia Distribution segment revenues are influenced principally by
hotel occupancy rates and the "buy rate" or percentage of occupied rooms at
hotels that buy movies or other services at the property. Higher revenues are
generally realized during the summer months and lower revenues realized during
the winter months due to business and vacation travel patterns which impact the
lodging industry's occupancy rates. Buy rates generally reflect the hotel's
guest mix profile, the popularity of the motion pictures or services available
at the hotel and the guests' other entertainment alternatives.

     Pursuant to the Operating Agreement of LNS (see Note 2), LiveWire assumed
management responsibilities over LNS effective January 5, 2001 and, accordingly,
receives $800,000 per month from the available cash of LNS as a guaranteed
payment. While Ascent will continue to consolidate the operations of LNS up to
and until LiveWire



                                       13
<PAGE>   14


purchases the remaining 99% interest in LNS, it is anticipated that revenues and
cash flows to be realized from the Network Services segment will decline
substantially during 2001.

ANALYSIS OF OPERATIONS

     The Company's continuing operations are comprised of the results of On
Command Corporation, LNS and the parent company, Ascent Entertainment Group,
Inc. The Company's discontinued operations are comprised of the results of the
Company's former entertainment segment, which included the Denver Nuggets, the
Colorado Avalanche and the Arena Company which the Company sold on July 6, 2000
(see Note 4). In addition, discontinued operations include the results of the
Company's former subsidiary, Beacon, in which a 90% interest was sold on January
20, 1999, and the remaining 10% on July 3, 2000.

Continuing Operations

     Revenues decreased $2.3 million and $4.7 million during the three and six
months ended June 30, 2001 compared to the corresponding periods in 2000. These
decreases are attributable to a $2.4 million and a $5.2 million decrease in
revenues at OCC within the Multimedia Distribution segment and a $.1 million and
a $.5 million increase in revenues at LNS which comprises the Network Services
segment. The decrease in revenues at OCC is the result of a reduction in total
rooms served by OCC and an overall decrease in occupancy rates in the hotel
industry, offset by an increase in room revenue generated primarily from OCC's
@Hotel TV internet and short video products. Total rooms served decreased from
approximately 969,000 rooms as of June 30, 2000 to approximately 939,000 rooms
as of June 30, 2001. The decrease is the result of the loss of approximately
35,000 rooms, related to OCC's Asia-Pacific operations, as part of the
settlement agreement with Maginet (see Note 8). The increase in Network Services
revenues is attributable to an increase in equipment sales to NBC affiliates and
other private networks.

     Cost of services increased $12.7 million and $19.7 million during the three
and six months ended June 30, 2001 compared to the corresponding periods in
2000. These increases in costs are due primarily to costs of $6.4 million and
$9.7 million incurred for restructuring costs and the relocation of OCC from San
Jose, California to Denver, Colorado, increased direct costs associated with the
increase in other guest pay revenues at OCC (primarily, internet and game
expenses), increased costs associated with providing "free-to-guest" programming
to the hotels and an increase in other operating expenses, which is due to
increases in administrative expenses at OCC, primarily legal and information
technology. Cost of services at LNS increased by $2.8 million and $5.3 million.
These increases are primarily attributable to incurrence of management fees
payable to LiveWire as the manager of LNS per the Operating Agreement dated
January 5, 2001 (see Note 2).

     Depreciation and amortization decreased $2.3 million and $0.8 million
during the three and six months ended June 30, 2001 as compared to he
corresponding periods in 2000. These decreases are due primarily to OCC's
reduction in the depreciable base of video systems and property and equipment,
resulting from the contribution of OCC's Asia-Pacific assets to Maginet, as well
as an increase in the number of fully depreciated OCV and SpectraVision video
systems.

     General and administrative expenses, which include only those costs
incurred by the parent company increased $7.0 million and decreased $9.5 million
during the three and six months ended June 30, 2001 as compared to the
corresponding periods in 2000. The increase during the three months ended June
30, 2001 is due primarily to expense related to the purchase by the Company of
outstanding shares of OCC owned by a former executive of OCC for $7 million more
than the market value at the date of purchase. The decrease during the six
months ended June 30, 2001 is due primarily to the costs relating to the Merger
Agreement with Liberty. Specifically, in the first half of 2000, $8.5 million of
expenses were recognized in connection with the Company's Merger Agreement with
Liberty, primarily investment banker and legal costs, and an additional $3.0
million of costs were accrued in conjunction with the contemplated settlement of
the Shareholder lawsuits. Also, in the first half of 2000, $3.6 million was
incurred for the Company's stock appreciation rights due to increases in the
Company's stock price. These decreases are offset by expense incurred during the
first half of 2001 when the Company purchased the outstanding shares of OCC
owned by a former executive of OCC for $7 million more than the market value at
the date of purchase. In addition, expenses have also decreased in 2001 due to
reductions in salaries and employee benefit costs at the parent



                                       14
<PAGE>   15


company from a reduction in employees, reduced legal and professional service
costs and various other cost containment efforts.

     Interest and other income increased $1.4 million and $1.1 million during
the three and six months ended June 30, 2001 as compared to the corresponding
period in 2000. The increase during the three months ended June 30, 2001 is due
to an increase in interest income of $3.0 million from interest earned on the
cash proceeds received from the sale of the Sports-related businesses offset by
legal settlement and other expenses associated with the settlement of the
Maginet litigation during the second quarter of 2001. The increase during the
six months ended June 30, 2001 is due to an increase in interest income of $6.2
million from interest earned on the cash proceeds received from the sale of the
Sports-related businesses offset by the impairment and settlement loss
recognized on OCC's investment in MagiNet of $3.8 million during the first half
of 2001 and the non-recurrence of a $1.8 million gain that the Company
recognized from the sale of investment securities during the six month period
ended June 30, 2000.

     Interest expense increased $2.6 million and $4.9 million during the three
and six months ended June 30, 2001 as compared to the corresponding periods
during 2001. This increase is attributable to additional borrowings incurred at
OCC during 2001 offset by a decrease in the weighted average interest rate
charged on such borrowings and additional borrowing costs at Ascent, primarily
those costs related to the interest accretion on the Company's Senior Notes.

     The Company recorded an increase in income tax benefit from continuing
operations of $611,000 and $2.3 million during the three and six months ended
June 30, 2001 as compared to the corresponding periods in 2000, The Company's
effective tax rate decreased due to the Company's ability to use tax benefits
from its operating loss carryforwards when the Company became a member of
Liberty's consolidated tax group. Prior to the Merger, the Company was unable to
recognize tax benefits from its operating losses due to uncertainties regarding
its ability to realize a portion of the benefits associated with future
deductible temporary differences (deferred tax assets) and net operating loss
carryforwards, prior to their expiration.

     Minority interest in loss of subsidiary reflects the losses attributable to
the minority interest in the Company's 62.9% owned subsidiary, OCC.

Discontinued Operations

     The $6.6 million and $3.6 million income from discontinued operations, net
of taxes, during the three and six months ended June 30, 2000 reflects the
combined income from the Sports-related businesses.

LIQUIDITY AND CAPITAL RESOURCES

     Cash and cash equivalents decreased by $68.1 million since December 31,
2000 to $241.3 million at June 30, 2001. The primary sources of cash during the
first six months of 2001 were net bank borrowings at OCC of $11.0 million. Cash
was expended for continuing operating activities of $10.4 million, OCC's $15.0
million investment in the convertible preferred stock of STSN, and the purchase
of property and equipment at OCC. Specifically $51.2 million of capital
expenditures were incurred at OCC to support continued hotel installations with
the OCX and OCV systems, conversions of SpectraVision systems, increased
inventory and other fixed asset purchases.

     Long-term debt totaled $448.1 million at June 30, 2001 as compared to
$426.4 million at December 31, 2000. The increase in long-term debt is
attributable to additional net bank borrowings of $11.0 million at OCC and the
accretion of interest on the Company's Senior Notes.

     The Company's cash requirements during the remainder of 2001 are expected
to include (i) the continuing conversion and installation by OCC of on-demand
in-room video entertainment systems and internal fixed asset purchases, (ii)
funding the operating requirements of Ascent and OCC, including additional OCC
relocation costs, (iii) the payment of interest under the OCC Credit Facility,
as amended, (iv) funding of additional strategic investments, if any, made by
OCC, and (v) the redemption, if any, of the Company's Senior Notes or pursuant
to an offer to Repurchase described below.


                                       15
<PAGE>   16


     At June 30, 2001, OCC had $258.1 million outstanding under the OCC Credit
Facility. OCC's ability to draw additional funds under this facility is limited
by the total amount of borrowing permitted by the OCC Credit Facility and
certain financial covenants contained in that facility. Subject to the
discussion below, OCC could obtain an additional $61.9 million in long term
financing under the OCC Credit Facility. In addition to the limitations on
borrowing contained in the OCC Credit Facility, certain covenants in the
Company's Senior Notes effectively prevent OCC's total indebtedness from
exceeding an aggregate of $275.0 million so long as such notes are outstanding.
At June 30, 2001, total borrowings under the revolving credit facility
aggregated $258.1 million, therefore approximately $14.9 million in funds were
available for borrowing under such facility.

     Based upon OCC's current projections of its sources and uses of cash, OCC
anticipates it will use all of the remaining availability under the revolving
credit facility and the proceeds from the issuance of its Series D Preferred
Stock (see Note 9) by February 2002. Accordingly, it will be necessary for OCC
to raise incremental capital through additional debt or equity financing in
order to satisfy its operations and capital expenditures. However, there can be
no assurance that OCC will be able to secure such additional financing on terms
acceptable to OCC, or if available, that the proceeds from such financing would
be sufficient to enable OCC to fund all of its requirements. In addition, while
the Company's public indebtedness is outstanding, OCC will not be able to raise
additional debt financing.

     Pursuant to the terms of the Senior Notes (see Note 6 of the Company's 2000
Consolidated Financial Statements), to the extent that within one year of the
sale of the Sports-related businesses, Ascent does not use the net cash proceeds
for certain permitted uses under the Senior Note Indenture including further
equity investments in OCC, Ascent will be required to use all remaining proceeds
to offer to repurchase the Senior Notes at 100% of their accreted value.
Pursuant to the foregoing provision of the Senior Notes and effective July 30,
2001, the Company commenced an Offer to Purchase up to $124 million in accreted
value of the Senior Notes. Under the Offer to Purchase, registered holders of
the Senior Notes have the right to require the Company to repurchase the Senior
Notes on a pro rata basis up to $124 million in accreted value for a cash
purchase price equal to 100% of the accreted value thereof on August 28, 2001,
unless the Offer to Purchase is extended. The purchase price is $861.64 per
$1,000 principal amount at maturity of the Senior Notes. The Offer to Purchase
is not conditioned on any minimum principal amount of Senior Notes being
tendered. Management of the Company is exploring additional alternatives with
respect to the repayment of the Senior Notes. However, the Company's cash and
cash equivalents and any proceeds from the sale of the interest in LNS, in the
event the Put Option or Call Option is exercised (see Note 2), should be
adequate to satisfy all of the Company's obligations under the Senior Notes.

     Management of the Company continues to focus its efforts on the operations
of OCC and OCC's strategies to successfully upgrade and expand OCC's technology
and service offerings and to convert hotel rooms to OCC's OCX system.

INFLATION

     Inflation has not significantly impacted the Company's financial position
or operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     INTEREST RATE RISK. The Company's exposure to market risk for changes in
interest rates relate primarily to the Company's investment portfolio, including
restricted investments, and long-term debt obligations. The Company does not use
derivative financial instruments in its investment portfolio. The Company places
its investments with high credit quality issuers and, by policy and debt
restrictions, limits the amount of credit exposure to any one issuer. As stated
in its policy, the Company is averse to principal loss and attempts to ensure
the safety and preservation of its invested funds by limiting default risk and
market risk.

     The Company mitigates default risk by investing in only the safest and
highest credit quality securities. The portfolio includes only short-term
investment securities with active secondary or resale markets to ensure
portfolio liquidity. At June 30, 2001, the weighted average interest rate on the
Company's cash and cash equivalent balance of $234.7 million was 4.1% consisting
of fixed rate short-term investments.

     The Company does have exposure to interest rate changes for portions of its
debt obligations. No cash flow




                                       16
<PAGE>   17


exposure exists on the Company's Senior Notes as they represent fixed-rate
obligations. (See Note 5). However, revolving loans extended under the OCC
Credit Facility generally bear an interest rate that is variable and based on
the London Interbank Offering Rate ("LIBOR") and on certain operating ratios at
OCC. At June 30, 2001, OCC had $258.1 million outstanding under the OCC
Revolving Credit Facility, with a weighted average interest rate of
approximately 6.01%. Assuming no increase or decrease in the amount outstanding,
a hypothetical immediate 100 basis point increase (or decrease) in interest
rates would have increased (or decreased) the Company's annual interest expense
and cash outflow by $1.3 million for the remaining six months of 2001.

     FOREIGN CURRENCY RISK. The Company, through OCC, transacts business in
various foreign currencies, primarily in Canada, Asia and in certain European
countries. The Company believes the risks of foreign exchange rate fluctuations
on its present operations are not material to the Company's overall financial
condition. However, should the Company's international operations continue to
grow, the Company will consider using foreign currency contracts, swap
arrangements, or other financial instruments designed to limit exposure to
foreign exchange rate fluctuations.

     PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     The Company is a defendant, and may be a potential defendant, in lawsuits
and claims arising in the ordinary course of its business. While the outcomes of
such claims, lawsuits, or other proceedings cannot be predicted with certainty,
management expects that such liability, to the extent not provided for by
insurance or otherwise, will not have a material adverse effect on the financial
condition of the Company.

Item 2. Change in Securities

     Omitted pursuant to General Instruction H of Form 10-Q.

Item 3. Defaults Upon Senior Securities

     Omitted pursuant to General Instruction H of Form 10-Q.

Item 4. Submission of Matters to a Vote of Security Holders

     Omitted pursuant to General Instruction H of Form 10-Q.

Item 5. Other Information

     None.

Item 6. Exhibits and Reports on Form 8-K

     (A) Exhibit

         None

     (B) Reports on Form 8-K:

         None



                                       17
<PAGE>   18


                                   SIGNATURES

     Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                        Ascent Entertainment Group, Inc.


                                        By: /s/ Robert R. Bennett
                                           -------------------------------------
                                           Robert R. Bennett
                                           President and Chief Executive Officer

Date: August 24, 2001





                                       18