<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                           COMMISSION FILE NO. 0-27192

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

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

                            9197 South Peoria Street
                            Englewood, Colorado 80112
              (Address and Zip Code of principal executive offices)

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

        Securities registered pursuant to Section 12(b) of the Act: None.

        Securities registered pursuant to Section 12(g) of the Act: None.


    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 Act of 1934 during
the preceding 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 [X*] No

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

    At March 26, 2001, 1,000 shares of voting common stock, which constitute all
of the outstanding common equity, with a par value of $.01 were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND (b)
OF FORM 10-K AND IS THEREFORE FILING THIS FORM 10-K 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 7/8 % Senior
         Secured Discount Notes due 2004.


<PAGE>   2
<TABLE>
<CAPTION>
TABLE OF CONTENTS                                                                 PAGE
<S>     <C>                                                                       <C>
PART I
ITEM 1
        GENERAL INFORMATION ....................................................    2
        MULTIMEDIA DISTRIBUTION ................................................    3
        ON COMMAND CORPORATION .................................................    3
        NETWORK SERVICES .......................................................    4
         LIVEWIRE NETWORK SERVICES, LLC ........................................    4
        DISCONTINUED OPERATIONS ................................................    5
ITEM 2.  PROPERTIES ............................................................    6
ITEM 3.  LEGAL PROCEEDINGS .....................................................    6
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ...................    7

PART II
ITEM 5.  MARKET PRICE OF AND DIVIDENDS ON REGISTRANTS COMMON
         EQUITY AND RELATED STOCKHOLDER MATTERS ................................    7
ITEM 6.  SELECTED FINANCIAL DATA ...............................................    7
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS ...................................    7
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK .............   11

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ...........................   13
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE ...................................   37

PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ....................   37
ITEM 11. EXECUTIVE COMPENSATION ................................................   37
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT ............................................................   37
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ........................   37
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
         ON FORM 8-K ...........................................................   38
</TABLE>



                                     PART I

THIS REPORT ON FORM 10-K CONTAINS STATEMENTS THAT ARE FORWARD-LOOKING WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION
21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 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. SUCH FORWARD-LOOKING STATEMENTS
INCLUDE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT FACTORS THAT
COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENT OF THE COMPANY, OR
INDUSTRY RESULTS, TO DIFFER MATERIALLY FROM FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. 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. THESE FORWARD-LOOKING STATEMENTS (AND SUCH
RISKS, UNCERTAINTIES AND OTHER FACTORS) SPEAK ONLY AS OF THE DATE OF THIS
REPORT, AND THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO
DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENT CONTAINED
HEREIN, TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO,
OR ANY OTHER CHANGES OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH
STATEMENT IS BASED.


                                       1

<PAGE>   3
ITEM 1. BUSINESS

                               GENERAL INFORMATION

    Ascent Entertainment Group, Inc. and its subsidiaries (collectively,
"Ascent" or the "Company") conduct their business in two reportable segments,
Multimedia Distribution and Network Services. In the Company's Multimedia
Distribution segment, the Company's approximately 56.1% owned publicly traded
subsidiary, On Command Corporation ("On Command" or "OCC"), is the leading
provider (by number of hotel rooms served) of in-room, on-demand video
entertainment and information services to the domestic lodging industry. The
Company's Network Services segment is comprised of the Company's LiveWire
Network Services, LLC ("LNS") division. LNS, to which the Company transferred
all of the assets of its Ascent Network Services division in January 2001, is
the primary provider of satellite distribution support services that link the
National Broadcasting Company ("NBC") television network with 182 of its
affiliated stations nationwide. 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 on July 6, 2000. In
addition, discontinued operations include the results of the Company's former
motion picture production subsidiary, Beacon Communications, LLC ("Beacon"), in
which a 90% interest was sold on January 20, 1999, and the remaining 10% was
sold on July 3, 2000. The Company began accounting for Beacon as a discontinued
operation as of December 31, 1998 and for the Sports-related businesses as a
discontinued operation during the first quarter of 1999.

    The Company is a Delaware corporation and was incorporated in 1995. The
Company was formed by COMSAT Corporation ("COMSAT"). An initial public offering
(the "Ascent IPO") of Ascent's common stock was completed in December 1995. As a
result of the Ascent IPO, COMSAT owned 80.67% of the Company's common stock. On
June 27, 1997, COMSAT consummated the distribution of all of its 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") pursuant to a Distribution Agreement dated June 3, 1997, between
Ascent and COMSAT.

    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. On March 28, 2000, Merger Sub accepted for payment
all shares of Ascent common stock validly tendered, which constituted
approximately 85% of the total shares of Ascent common stock then outstanding.
Merger Sub purchased such shares for an aggregate purchase price of
approximately $385 million with funds contributed to it by Liberty. Under the
terms of the Merger Agreement, on June 8, 2000, Merger Sub merged with and into
Ascent (the "Merger"), becoming an indirect, wholly-owned subsidiary of Liberty.
All outstanding shares not owned by Liberty and 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 certificate of incorporation and bylaws
of Merger Sub immediately prior to the Merger became the certificate of
incorporation and bylaws of the Company effective upon the Merger. During the
year ended December 31, 2000, the Company expensed approximately $8.4 million of
costs associated with the Merger Agreement, primarily investment banker and
legal costs.




                                       2
<PAGE>   4
                             MULTIMEDIA DISTRIBUTION

                             ON COMMAND CORPORATION


GENERAL

    On Command is the leading provider (by number of hotel rooms served) of
in-room, on-demand video entertainment and information services to the domestic
lodging industry. OCC has experienced rapid growth in the past eight years,
increasing its base of installed rooms from approximately 37,000 rooms at the
end of 1992 to approximately 977,000 rooms at December 31, 2000, of which
approximately 929,000 rooms are served by on-demand systems. OCC is a holding
company whose principal assets are On Command Video Corporation ("OCV"),
SpectraVision, Inc. and On Command Development Corporation, each of which is a
separate wholly owned subsidiary of OCC.

    OCC provides in-room video entertainment and information services on three
technology platforms, the OCX video system, the OCV System and the SpectraVision
video system. The OCX video system provides enhanced multimedia applications,
including an improved graphical interface for movies and games, television-based
internet with a wireless keyboard and other guest services. At December 31,
2000, OCC had installed the OCX systems in approximately 145,000 hotel rooms,
120,000 with Internet capability. The OCV System is a patented video selection
and distribution technology platform that allows hotel guests to select, at any
time, movies and games through the television sets in their hotel rooms. At
December 31, 2000, OCC had installed approximately 710,000 rooms with the OCV
video system. The SpectraVision video system, which provides in-room
entertainment on a rolling basis and, in some upgraded versions, on an on-demand
basis, was, as of December 31, 2000 installed in 122,000 hotel rooms. The
SpectraVision video system generally offers fewer movie choices than the OCV and
OCX video systems.

    In addition to movies, OCC's platforms provide for in-room viewing of
programming of select cable channels (such as HBO, Starz Encore, ESPN, CNN and
Disney Channel) and other interactive and information services, which includes
the capability for high speed internet access through the OCX platform. OCC
primarily provides its services under long-term contracts to hotel chains, hotel
management companies, and individually owned and franchised hotel properties,
predominantly in the large deluxe, luxury and upscale hotel categories serving
business travelers, such as Marriott, Hyatt, Wyndham, Starwood, Doubletree,
Fairmont, Embassy Suites, Four Seasons, and other select hotels.

    At December 31, 2000, approximately 86% of OCC's 977,000 installed rooms
were located in the United States, with the balance located primarily in Canada,
the Caribbean, Australia, Europe, Latin America and the Asia-Pacific region. In
addition to installing systems in hotels served by OCC, OCC sells its systems to
certain other providers of in-room entertainment, including Hospitality Network,
Inc., which is licensed to use OCC's system to provide on-demand, in-room
entertainment and information services to certain gaming-based, hotel properties
and ALLIN Interactive, which is licensed to install OCC's systems on cruise
ships.

    The Company owns approximately 56.1% of the outstanding common stock of OCC.
On March 5, 2001, OCC sold 15,000 shares of a newly issued series of its
preferred stock, designated as Cumulative Redeemable Preferred Stock, Series B,
par value $.01 per share (the "Series B Preferred Stock"), to Ascent in
consideration for $15,000,000 in cash. The sale of the Series B Preferred Stock
to Ascent was exempt from the registration requirements of the Securities Act of
1933, as amended, pursuant to Section 4(2) thereof. Shares of Series B Preferred
Stock are not convertible into any other equity security of OCC. The holders of
Series B 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. 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 from and
including April 15, 2001 to but excluding the date on which the Liquidation
Preference is made available pursuant to a redemption of the Series B Preferred
Stock or a liquidation of OCC. Accrued dividends are payable monthly, commencing
on April 15, 2001, in cash.

    The Company currently has no agreements or understandings with the minority
stockholders of OCC, other than a letter agreement dated April 19, 1996 with
Gary Wilson Partners that provides that Gary Wilson Partners will, so long as
(a) it owns any shares of OCC common stock received upon exercise of the Series
C Warrant that it received for advisory and other services that it provided in
connection with the acquisition of SpectraVision, Inc. and (b) the Company
continues to own at least 20% of the outstanding shares of OCC common stock,
vote its shares of OCC common stock in accordance with the instructions of the
Company.




                                       3

<PAGE>   5
                                NETWORK SERVICES

LIVEWIRE NETWORK SERVICES, LLC

    LiveWire Network Services, LLC (LNS) was formed as a wholly owned subsidiary
of the Company 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 and LNS
assumed all liabilities, obligations and commitments of the Company relating to
the ANS business, whether before or after January 5, 2001. On January 5, 2001,
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. References to LNS mean ANS prior to January 5, 2001 and LNS
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 the Company for a purchase price equal to $300,000.

    LNS principally operates a nationwide network (excluding satellite
transponders) for satellite distribution of NBC's national television
programming to the majority of NBC's affiliate stations nationwide, as well as
an installation, field service and maintenance support business relating to such
network. LNS also provides satellite distribution field service and maintenance
support for networks operated by other customers. LNS has operated its satellite
distribution network for NBC since 1984 under the NBC Agreement, a 10-year
agreement that was first extended in 1994 through the end of 1999. The NBC
Agreement was initially entered into in connection with LNS's construction,
service and support of NBC's master earth station and receiver earth stations at
NBC affiliates. Pursuant to such contract, LNS designed, built and continues to
operate a Ku-band satellite distribution network, for which the network control
center is located in Florida. LNS owns and operates the network (excluding the
satellite transponders, which are leased by NBC) and receives monthly payments
from NBC in connection with such operations. The network consists of the network
control center, two master earth stations, eight transmit/receive stations, 174
receive earth stations at NBC affiliates, 57 portable uplink antennas, and six
transportable transmit/receive trucks. On August 1, 1999, LNS completed
negotiations and entered into a second extension through the end of 2002 of the
NBC Agreement, under which LNS provides satellite service, maintenance and
support of NBC's national television network. Management of the Company does not
anticipate any significant capital expenditures will be incurred in connection
with the extension agreement.

    In 1998, NBC issued a request for information from LNS and certain of its
other vendors with respect to an upgrade of each component of the NBC
distribution network to digital technology. Previously, in August 1996, LNS and
NBC executed a binding letter of intent pursuant to which LNS had procured and
installed certain of such digital equipment to provide MSNBC, LLC, a partnership
between NBC and Microsoft Corporation ("MSNBC") with network service,
maintenance and support. The partial digital upgrade service was being provided
for a 10-year term and was governed by the underlying NBC Agreement. On February
23, 2001, LiveWire, acting on behalf of LNS, and NBC entered into a binding
Letter of Intent to extend the NBC and MSNBC agreements through 2006. Pursuant
to the Letter of Intent, LNS will provide substantially the same services to
both NBC and MSNBC as are currently provided through December 2002, be engaged
to complete the full digital upgrade of the NBC satellite distribution network
and provide a reduced level of maintenance services to both NBC and MSNBC for
the years 2003-2006. Under the Letter of Intent, revenues and cash flows under
the new contract for 2001-2002 will be similar to those realized during 1999.
Commencing in 2003, the NBC and MSNBC payments will be substantially reduced
(from $16.2 million per year to $6.0 million per year), reflecting the reduction
in services to be performed by LNS. Accordingly, management of LNS and LiveWire
expect to make appropriate changes




                                       4
<PAGE>   6







in the LNS cost structure over the next two years, including personnel and
overhead cost reductions, to coincide with the reduction in services to be
performed. Definitive documentation is to be executed and delivered by the
relevant parties on or before May 31, 2001.


                             DISCONTINUED OPERATIONS

SPORTS-RELATED BUSINESSES

    The Company owned and operated franchises in two major professional sports
leagues, the Colorado Avalanche in the NHL and the Denver Nuggets in the NBA.
Both of these franchises are located in Denver, Colorado where residents have
historically supported successful local sports franchises. The Arena Company was
formed for the purpose of developing plans for the Pepsi Center as a privately
financed arena in Denver for the Avalanche, the Nuggets and other entertainment
events, including among other things, concerts, college sporting events, ice and
dance performances, comedy shows and circuses. The Pepsi Center was completed in
the fall of 1999 and commenced operations in September 1999.

    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 Company began accounting for the Nuggets, the Avalanche and the Arena
Company (collectively, the "Sports-related businesses" as a discontinued
operation as of March 31, 1999, pursuant to guidance contained in Emerging
Issues Task Force Issues (EITF) No. 95-18, "Accounting and Reporting for
Discontinued Business Segment when the Measurement Date occurs after the Balance
Sheet Date but before the Issuance of the Financial Statements." That is, in
conjunction with the Company entering into an agreement on April 25, 1999 to
sell its Sports-related businesses, the Sports-related businesses met the
conditions for classification as discontinued operations contained in EITF
95-18.

BEACON

    Acquired in 1994, Beacon produced feature-length motion pictures for
theatrical distribution and television programming. 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.
During the second and third quarters of 1999, the Company attempted to collect
the remaining balance due under the Purchase Agreement of approximately
$900,000. In turn, Beacon filed a claim against the Company seeking an
adjustment to the purchase price. Pursuant to the Purchase Agreement, any
disputes or disagreements among the parties were to be settled pursuant to a
binding arbitration in the State of California. The arbitration commenced in
November 1999 and on February 21, 2000, the arbitrator issued his opinion
awarding Beacon approximately $3.5 million which was paid in May of 2000.
Accordingly, the Company recorded a $3.5 million loss during the fourth quarter
of 1999, resulting in the recognition of a $0.2 million loss (net of the gain
recognized during the first quarter of 1999) from the sale of its 90% interest
in Beacon during fiscal 1999.

    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.

    The Company began accounting for Beacon as a discontinued operation as of
December 31, 1998 ( See Note 3 to the Company's Consolidated Financial
Statements).




                                       5
<PAGE>   7





ITEM 2. PROPERTIES

    The Company's principal offices are located in Liberty's Corporate offices
in Englewood, Colorado. The Company's Network Service segment, which includes
LNS, leases facilities from COMSAT in Maryland and also leases its principal
facilities which are located in Palm Bay, Florida. The Company's Multimedia
Distribution segment, which includes OCC, began the relocation of its corporate
headquarter operations from San Jose, California to Denver, Colorado in the
second half of 2000. The new headquarters contain approximately 55,000 square
feet of leased office and storage space. As of March 2001 an additional 16,000
square feet has been leased at the Denver corporate headquarters. The San Jose,
California facility contains approximately 131,000 square feet of office, light
manufacturing, and storage space. By the end of 2001, OCC will have moved the
balance of functions currently remaining in San Jose to Denver, and intends to
sublease its San Jose space. OCC also leases space that houses SpectraVision's
customer support operations throughout the United States, Canada, Latin America,
and Puerto Rico. The Company's properties are suitable and adequate for the
Company's business operations.

ITEM 3. LEGAL PROCEEDINGS

    On September 11, 1998, OCC reached an agreement with LodgeNet Entertainment
Corporation ("LodgeNet") to settle all pending litigation between the companies.
As part of an otherwise confidential settlement, OCC received royalty payments,
net of legal fees and expenses, in an aggregate amount of approximately
$10,700,000 payable in three installments. OCC received the first payment of
approximately $2,900,000 (net of expenses) in September 1998 and received the
second payment of approximately $3,950,000 (net of expenses) in July 1999. OCC
received the final payment of approximately $3,900,000 (net of expenses) in July
2000. OCC has recognized the royalty revenue as payments are received.

    In September 1998, OCV filed suit against the MagiNet Corporation
("MagiNet") in the Superior Court, State 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, among other things, that
OCV breached the license agreement. On January 4, 2001, OCC signed a settlement
agreement with MagiNet. In exchange for contributing its Asia-Pacific subsidiary
assets to MagiNet, payment of $1.0 million cash, and the issuance of 275,000
shares of OCC common stock, March OCC will receive shares of MagiNet common
stock representing approximately 7.5% of the issued and outstanding common
equity of MagiNet. OCC also agreed that MagiNet will have an option, exercisable
during the period of 15 days beginning on the second anniversary of the
execution of the settlement agreement, to require OCC to repurchase all, but not
less than all, of the shares of OCC common stock issued to MagiNet at a per
share price of $15.00. This option will not become exercisable, however, if (i)
the closing price of OCC's common stock equals or exceeds $15.00 per share for a
period of ten consecutive trading days occurring prior to the second anniversary
of the execution of the settlement agreement and (ii) all such shares held by
MagiNet could have been sold in the public markets during such period, either
because such shares are covered by an effective registration statement or such
sale in the public markets would be exempt from registration. OCC estimated the
fair value of its 7.5% interest in MagiNet at approximately $5.3 million and
valued the assets, stock and cash transferred to MagiNet at $10.1 million. As a
result, OCC recorded a charge of approximately $4.8 million in 2000 relating to
this settlement.

    In June 1999, the Company and certain of its present and former directors
were named as defendants in lawsuits filed by shareholders (the "Shareholder
lawsuits") in the Delaware Court of Chancery. These proposed class actions
asserted that the Company's then agreement to sell the Company's Sports-related
businesses to entities controlled by William and Nancy Laurie constituted a sale
of substantially all assets of the Company, thereby requiring a shareholder
vote, and resulted from breaches of fiduciary duties by the director defendants
(see Note 3 of Notes to Consolidated Financial Statements). On June 23, 1999,
the Company, the director defendants and the Laurie-controlled purchasing
entities that were also named as defendants, entered into an agreement with the
shareholder plaintiffs to settle the lawsuits. Under the settlement agreement,
the Company, the director defendants, and the Laurie-controlled entities agreed,
among other things, to amend the terms of the proposed sale to the Laurie
entities to permit the Company to conduct a new process in which the Company
would solicit additional offers for the purchase of the Sports-related
businesses. The Company and the director defendants also agreed, among other
things, to engage an additional investment banker to assist in the new auction
process, and to add Peter W. May to the Company's Board of Directors. On July
27, 1999, as a result of the new auction process, the Company entered into a
definitive agreement to sell the Sports-related businesses to The Sturm Group.
The settlement of the Shareholder lawsuits was approved by the Delaware Court of
Chancery during the fourth quarter of 2000. The settlement resulted in, among
other things, the dismissal with prejudice of the claims asserted in the
Shareholder lawsuits and the future payment by the Company of plaintiff attorney
fees and expenses totaling $4.0 million. During the year ended December 31,
1999, the Company recorded a $1.0 million charge for potential costs anticipated
with the contemplated settlement of the Shareholder lawsuits. During the first
quarter of 2000, the Company recorded an additional $3.0 million charge for
costs anticipated in conjunction




                                       6
<PAGE>   8
with the Shareholder lawsuits and, as of December 31, 2000, the Company had
accrued legal settlement costs totaling approximately $4.0 million. In February
2001, the Company made the payment due as approved by the Court.

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

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

    Omitted pursuant to General Instruction I of Form 10-K.

                                     PART II

ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
        RELATED STOCKHOLDER MATTERS.

    As a result of the Merger described in Item 1, Ascent has been an indirect,
wholly owned subsidiary of Liberty since June 2000. Accordingly, none of the
Company's common equity is publicly traded.


ITEM 6. SELECTED FINANCIAL DATA

    Omitted pursuant to General Instruction I of Form 10-K.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

    The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the Consolidated
Financial Statements and Notes thereto and other financial information included
elsewhere in this Annual Report. In accordance with General Instruction 1 of
Form 10-K, the following discussion and analysis is limited to a comparison of
1999 to 2000.

                                    OVERVIEW

    The Company operates in two reportable segments: Multimedia Distribution,
which consists of OCC; and Network Services, which consists of LNS.

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 additional discussion under
Item 1 - Network Services), LiveWire assumed management responsibilities over
LNS effective January 5, 2001 and, accordingly, will receive an amount of
$800,000 per month





                                       7
<PAGE>   9





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 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.

    It is expected that the Company will continue to derive a majority of its
consolidated revenues from OCC. The Company expects that the installation of
OCC's OCX systems in new hotels, the continued conversion of SpectraVision
properties to the more flexible OCX system, the conversion of OCV rooms to OCX
and internal fixed asset purchases may require capital expenditures of
approximately $100.0 million to $120.0 million during 2001, as well as funding
for the operational requirement of OCC, including additional relocation costs
estimated at $11.0 million to $12.0 million.

    The Company expects to incur operating losses on a consolidated basis during
2001.

Results of Operations

Consolidated Operations

    The Company's continuing operations are comprised of the results of On
Command Corporation, LiveWire Network Services, LLC 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 has sold (see Note 2 of Notes to the Consolidated Financial
Statement). In addition, discontinued operations include the results of the
Company's former subsidiary, Beacon Communications, LLC ("Beacon"), in which a
90% interest was sold on January 20, 1999, and the remaining 10% was sold on
July 3, 2000.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

The following table sets forth certain data as a percentage of revenues for the
period indicated:


<TABLE>
<CAPTION>
                                                                      2000                             1999
                                                          ----------------------------     ----------------------------
                                                             AMOUNT          PERCENT          AMOUNT          PERCENT
                                                          ------------    ------------     ------------    ------------
                                                                               (DOLLARS IN THOUSANDS)
<S>                                                       <C>             <C>              <C>             <C>
Revenues ..............................................   $    287,864           100.0%    $    275,379           100.0%
Cost of services ......................................        209,891            72.9          187,302            68.0
Depreciation and amortization .........................         88,268            30.7          104,283            37.9
General and administrative ............................         18,699             6.5           26,161             9.5
                                                          ------------    ------------     ------------    ------------
Loss from operations ..................................        (28,994)          (10.1)         (42,367)          (15.4)
Interest and other income (expense), net ..............          6,787             2.4            5,531             2.0
Interest expense, net .................................        (37,608)          (13.1)         (29,265)          (10.6)
Income tax benefit ....................................          3,546             1.2            2,277             0.8
Minority interest .....................................         17,058             5.9           12,706             4.6
                                                          ------------    ------------     ------------    ------------
Loss from continuing operations .......................        (39,211)          (13.7)         (51,118)          (18.6)
Gain (loss) from discontinued operations, net .........          3,631             1.3          (26,243)           (9.6)
Gain (loss) from sale of discontinued
operations, net .......................................        135,462            47.1             (216)            0.0
                                                          ------------    ------------     ------------    ------------

Net income (loss) .....................................   $     99,882            34.7%    $    (77,577)          (28.2)%
                                                          ============    ============     ============    ============

Room Data:
  Total Number of Guest-pay total rooms
    (at end of period):
  On-Demand ...........................................        929,000                          884,000
  Scheduled only ......................................         48,000                           72,000
                                                          ------------                     ------------
             Total rooms ..............................        977,000                          956,000
                                                          ============                     ============
</TABLE>

Continuing Operations

Revenues

    Revenues for the year ended December 31, 2000 were $287.9 million, an
increase of $12.5 million, or 4.5%, as compared to $275.4 million in revenues
for the year ended December 31, 1999. This increase is attributable to a $12.4
million increase in revenues at OCC within the Multimedia Distribution segment.
The increase in revenues at OCC is primarily attributable to new hotel
installations, continued conversions of SpectraVision equipped properties,
conversion of installed OCV video systems to OCX video



                                       8
<PAGE>   10





systems, lower movie denial rates, higher average movie prices and higher video
game and internet revenue during 2000. In addition, OCC's revenues increased due
to a $3.0 million increase in equipment sales. This increase was primarily due
to increased ordering of video systems by a major customer and sales of OCX
systems to a provider of entertainment services to the cruise ship industry.

Cost of Services

    Cost of services for the year ended December 31, 2000 were $209.9 million,
an increase of $22.6 million, or 12.1%, compared to $187.3 million for the year
ended December 31, 1999. Cost of services at OCC increased by $21.1 million.
This increase in costs at OCC is partially due to the incurrence of relocation
costs of $6.1 million in 2000. Direct costs associated with the increase in
movie revenues at OCC also increased during 2000 (primarily studio royalties,
hotel commissions, guest programming and internet expenses). In addition,
increases in OCC's other operating expenses are primarily attributable to cost
increases for administrative expenses, primarily legal and personal costs.
Relocation expenses include all severance, stay bonuses, hiring costs, moving
costs, travel, contractors and redundant salaries associated with moving OCC's
headquarters to Denver.

Depreciation and Amortization

    Depreciation and amortization for the year ended December 31, 2000 was $88.3
million, a decrease of $16.0 million or 15.3% compared to $104.3 million for the
year ended December 31, 1999. This decrease occurred primarily due to the
absence of depreciation on certain video systems assets acquired during the 1996
acquisition of SpectraVision by OCC, which became fully depreciated in October
1999. In addition, depreciation and amortization expense at LNS decreased by
$5.7 million during the year ended December 31, 2000 as compared to the same
period last year. LNS depreciated the equipment relating to the network
distribution system over the term of the original agreement with NBC, which
expired in December 1999. Accordingly, depreciation expense relating to such
equipment has decreased, as such equipment was fully depreciated as of December
31, 1999.

General and Administrative Expenses

    General and administrative expenses, which include only those costs incurred
by the parent company, were $18.7 million for the year ended December 31, 2000,
a decrease of $7.5 million compared to $26.2 million for the year ended December
31, 1999. This decrease primarily reflects a reduction in various transaction
costs associated with the Company's efforts to sell selected assets and the
Company itself. Specifically, during 2000, $11.4 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 during the first quarter of 2000 in conjunction with the
contemplated settlement of the Shareholder lawsuits (see Note 8 of Notes to
Consolidated Financial Statements). In contrast, during 1999, $3.7 million was
incurred for the Company's stock appreciation rights due to increases in the
Company's stock price, $1.9 million in expenses were recognized for severance
payments made to the Company's former President and Chief Executive Officer,
costs of $.8 million were incurred in conjunction with the settlement of the
Shareholder lawsuits, and costs of $13.3 million were recognized in connection
with the Company's unsuccessful efforts in 1999 to sell its Sports-related
business and have its continuing operations acquired by Liberty in a
stock-for-stock merger (see Note 2 of the Notes to Consolidated Financial
Statements). In addition, expenses have also decreased due to reductions in
salaries and employee benefit costs at the parent company in 2000 due to a
reduction in employees, reduced legal and professional service costs and various
other cost containment efforts.

Interest and Other Income (Expense)

    Interest and other income (expense) increased by $1.3 million during the
year ended December 31, 2000 as compared to the year ended December 31, 1999.
This increase is due to an increase in interest income of $7.8 million from
interest earned on the cash proceeds received from the sale of the
Sports-related businesses, offset by the non-recurrence of a $1.8 million gain
at corporate from the sale of investment securities during the third quarter of
1999 and the impairment and settlement loss recognized on OCC's investment in
MagiNet of $4.8 million during the fourth quarter of 2000 (see Note 8 of Notes
to Consolidated Financial Statements).

Interest Expense

    Interest expense increased $8.3 million in the year ended December 31, 2000
as compared to the year ended December 31, 1999. This increase is attributable
to additional borrowings incurred at OCC during 2000 combined with an increase
in interest rates applicable to these borrowings and additional borrowing costs
at Ascent, primarily those costs related to the interest accretion on the
Company's Senior Notes.




                                       9
<PAGE>   11





Income Tax Benefit

    The Company recorded an income tax benefit from continuing operations of
$3.5 million, or 9.0% of losses from continuing operations, during the year
ended December 31, 2000 as compared to an income tax benefit of $2.3 million, or
4.5% of losses from continuing operations, during the year ended December 31,
1999. The increase in the Company's effective tax benefit during the year ended
December 31, 2000 is due to the Company's ability to utilize tax benefits from
its operating loss carryforwards due to the Company's sale of its Sports-related
businesses and the Company being 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

    Minority interest reflects the losses attributable to the minority interest
in the Company's 56.1% owned subsidiary, OCC.

Discontinued Operations

    The combined income from discontinued operations totaled $3.6 million during
the year ended December 31, 2000 as compared to a loss of $26.2 million during
1999. The decreased loss is primarily due to the improvement in the operations
of the Colorado Avalanche, the Arena Company and the Denver Nuggets through the
date of sale, July 6, 2000, and the lack of operations during the second half of
2000. The improvement in operating results for the Avalanche during the first
six months of 2000 is attributable to an increase in revenues from more home
games and an incremental increase in attendance, which resulted in increased
ticket and ancillary sales revenues (parking and concessions) combined with an
increase in playoff revenues from the team's participation in the 2000 Stanley
Cup playoffs. The Arena Company's improved financial results are due principally
to the Arena Company being an operating entity during the first half of 2000, as
compared to being under construction during the comparable period in 1999.
Finally, revenues for the Nuggets increased during the six months ended June 30,
2000 as compared to 1999 and this increase more than offset the increase in
operating expenses (primarily player salaries) during this same period.

    The $135.5 million gain from sale of discontinued operations, net of taxes,
during the year ended December 31, 2000 reflects a $1.7 million gain, net of
taxes, from the sale of the Company's remaining 10% interest in Beacon and a
$133.8 million gain, net of taxes, recognized from the sale of the Company's
Sports-related businesses. The $0.2 million loss from sale of discontinued
operations, net of taxes, during the year ended December 31, 1999 reflects the
loss from the sale of 90% of the Company's interest in Beacon.

Liquidity and Capital Resources

    Cash and cash equivalents increased by $249.1 million since December 31,
1999 to $309.4 million at December 31, 2000. The primary sources of cash during
2000 were cash from the sale of the Sports-related assets of $267.7 million,
cash from continuing operating activities of $54.5 million and bank borrowings
at OCC of $67.1 million. Cash was expended primarily for property and equipment
at OCC, specifically $117.8 million of capital expenditures were incurred at
OCC, primarily for the hotel installations with the OCX and OCV systems, the
conversion of SpectraVision systems and OCV systems to OCX, increased inventory,
and internal fixed asset purchases.

    Long-term debt totaled $426.4 million at December 31, 2000 as compared to
$339.9 million at December 31, 1999. The increase in long-term debt is
attributable to additional bank borrowings of $67.1 million at OCC and the
accretion of interest on the Company's Senior Notes. In connection with the sale
of the Sports-related businesses, the Arena Notes remained the obligation of an
entity acquired by the Kroenke entities (see Note 2 of Notes to Consolidated
financial statements).

    The Company's cash requirements during 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, which are anticipated
to be approximately $100.0 million to $120.0 million, (ii) funding the operating
requirements of Ascent and OCC, including additional OCC relocation costs
estimated at $11.0 million to $12.0 million, (iii) the payment of interest under
the OCC Credit Facility, as amended, (iv) the payment of legal settlement costs
relating to the Shareholder lawsuits (see Note 8 of Notes to Consolidated
Financial Statements), (v) funding of equity investments made by OCC, and (vi)
the redemption, if any, of the Company's Senior Notes or, pursuant to an offer
to Repurchase described below.



                                       10
<PAGE>   12






    At December 31, 2000, OCC had $247.1 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
following paragraph, OCC could obtain an additional $72.9 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 March 30, 2001, the total indebtedness of OCC was equal to $275 million, and
therefore no funds are or will be available for borrowing under the OCC Credit
Facility while the Company's Senior Notes remain outstanding. Without additional
sources of capital, OCC will not be able to satisfy its future working capital,
capital expenditure and debt service requirements from existing cash, cash
generated from operations and funds available under existing borrowing
arrangements. It will be necessary for the OCC to raise additional capital
through additional debt or equity financing in order to satisfy these
requirements. However, there can be no assurance that such financing would be
available on terms acceptable to OCC or, if available, that the proceeds of such
financing would be sufficient to enable OCC to satisfy all of its requirements.
In addition, so long as the Company's Senior Notes are outstanding, OCC will not
be able to raise additional debt financing. If OCC is unable to raise additional
financing, OCC will need to reduce its capital spending well below the levels
stated above for the year 2001.

    Pursuant to the terms of the Senior Notes and as a result of the acquisition
by Liberty of the Company, the Company offered to redeem the Senior Notes at
101% of their accreted value as of May 31, 2000 (see Note 6 of Notes to
Consolidated Financial Statements). A total of $350,000 was paid to noteholders
who tendered. Under the terms of Ascent's outstanding Senior Notes, 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. Management of the Company is exploring its
alternatives with respect to the repayment of the Senior Notes. However, the net
cash proceeds received from the closing of the Sports sale and if the Put Option
or Call Option is exercised, proceeds from the resulting sale of the balance of
its interest in LNS (see Note 2 of the Notes to Consolidated Financial
Statements) 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.

ITEM 7(a). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    Interest Rate Risk. The Company's exposure to market risk for changes in
interest rates relates 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 December 31, 2000, the weighted average interest rate on
the Company's cash and cash equivalent balance of $309.4 million was 5.86%
consisting of fixed rate short-term investments.

    The Company does have exposure to interest rate changes for portions of its
debt obligations. No exposure to interest rate fluctuations exists on the
Company's Senior Notes as they represent fixed-rate obligations. 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 December 31, 2000, OCC had
$247.1 million outstanding under the OCC Revolving Credit Facility, with a
weighted average interest rate of approximately 8.151%. Assuming no increase or
decrease in the amount outstanding a hypothetical immediate 100 basis point
increase (or decrease) in interest rates at December 31, 2000 would increase (or
decrease) the Company's annual interest expense and cash outflow by
approximately $2.5 million.

    The estimated fair value of Company's Senior Secured Discount Notes was
$184,000,000 and $157,000,000 at December 31, 2000 and 1999, respectively. This
value was estimated by obtaining a yield-adjusted price as of December 31, 2000,
for each obligation



                                       11
<PAGE>   13




from an investment banker. The fair values of the Company's remaining long-term
liabilities and other financial instruments approximate their carrying values.
The book value of the Company's Senior Secured Discount Notes was $179,263,000
and $142,537,000 at December 31, 2000 and 1999 respectively.

    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.




                                       12
<PAGE>   14




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholder
Ascent Entertainment Group, Inc.:

We have audited the accompanying consolidated balance sheet of Ascent
Entertainment Group, Inc. and subsidiaries as of December 31, 2000, and the
related consolidated statements of operations, comprehensive income (loss),
stockholders' equity, and cash flows for the year ended December 31, 2000. Our
audit also included the financial statement schedule for the year ended December
31, 2000 listed in the Index at Item 14(a). These consolidated financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 2000, and the results of their operations and their cash flows for
the year ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, such
financial statement schedule for the year ended December 31, 2000, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly in all material respects, the information set forth
therein.






KPMG LLP

Denver, Colorado
February 16, 2001, except as to the first paragraph of Note 15, which is as of
March 30, 2001



                                       13
<PAGE>   15







INDEPENDENT AUDITORS' REPORT

To the Board of Directors of Ascent Entertainment Group, Inc.:

    We have audited the accompanying consolidated balance sheet of Ascent
Entertainment Group, Inc. and its subsidiaries (the "Company") as of December
31, 1999, and the related consolidated statements of operations, comprehensive
income (loss), stockholders' equity and cash flows for each of the two years in
the period ended December 31, 1999. Our audits also included the financial
statement schedule for the years ended December 31, 1999 and 1998 listed in the
Index at Item 14(a). These financial statements and financial statement
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and financial statement
schedules based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Ascent
Entertainment Group, Inc. and its subsidiaries as of December 31, 1999, and the
results of their operations and their cash flows for each of the two years in
the period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, such
financial statement schedule for the years ended December 31, 1999 and 1998,
when considered in relation to the basic consolidated financial statements taken
as a whole, present fairly in all material respects, the information set forth
therein.






Deloitte & Touche LLP

Denver, Colorado
March 10, 2000




                                       14
<PAGE>   16






                        ASCENT ENTERTAINMENT GROUP, INC.
            (A wholly owned subsidiary of Liberty Media Corporation)

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2000 and 1999
                    (in thousands, except par value amounts)


<TABLE>
<CAPTION>
                                                                                                2000          1999
                                                                                            ----------    ----------
<S>                                                                                         <C>           <C>
                                     ASSETS
Current assets:
   Cash and cash equivalents ............................................................   $  309,488    $   60,349
   Receivables, net (Note 4) ............................................................       38,275        33,492
   Prepaid expenses .....................................................................        2,132         1,253
   Income taxes receivable (Note 7) .....................................................           --         2,050
   Other current assets .................................................................          172           289
   Net assets of discontinued operations (Note 3) .......................................           --        82,216
                                                                                            ----------    ----------
    Total current assets ................................................................      350,067       179,649
                                                                                            ----------    ----------

Property and equipment, net (Note 5) ....................................................      324,701       294,498
Goodwill, net ...........................................................................       83,669        90,086
Other investments .......................................................................        1,563           364
Deferred income taxes (Note 7) ..........................................................       17,956         9,320
Other assets, net (Note 7) ..............................................................       12,880         7,384
                                                                                            ----------    ----------

Total assets ............................................................................   $  790,836    $  581,301
                                                                                            ==========    ==========

                      LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:

   Accounts payable .....................................................................   $   41,783    $   32,038
   Payable to stockholder, net (Note 7) .................................................       34,166            --
   Deferred income ......................................................................        1,271           788
   Other taxes payable ..................................................................        4,113         5,476
   Accrued compensation .................................................................        9,386        10,715
   Other accrued liabilities ............................................................       17,601        16,820
   Current portion of capital lease obligations (Note 8) ................................          705         2,533
                                                                                            ----------    ----------
    Total current liabilities ...........................................................      109,025        68,370
                                                                                            ----------    ----------

Long-term debt (Note 6) .................................................................      426,396       339,922
Obligations under capital leases and other long-term liabilities (Notes 8) ..............        1,656         2,082
                                                                                            ----------    ----------

       Total liabilities ................................................................      537,077       410,374
                                                                                            ----------    ----------

Minority interest .......................................................................       54,816        71,206
Commitments and contingencies (Notes 2, 6 and 8).........................................

Stockholder's equity (Notes 2 and 9):
   Preferred stock, par value $.01 per share, 5,000 shares authorized and none
     Outstanding at December 31, 1999 and none authorized at December 31,  2000 .........           --            --

   Common stock, par value $.01 per share, 60,000 shares authorized,
    29,756 shares issued and outstanding at December 31, 1999; 50,000 shares
    authorized, and 1,000 shares issued and outstanding at December 31, 2000 ............            1           297

   Additional paid-in capital ...........................................................      307,509       307,873
   Accumulated deficit ..................................................................     (108,567)     (208,449)
                                                                                            ----------    ----------

       Total stockholder's equity .......................................................      198,943        99,721
                                                                                            ----------    ----------

Total liabilities and stockholders' equity ..............................................   $  790,836    $  581,301
                                                                                            ==========    ==========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                       15
<PAGE>   17





                        ASCENT ENTERTAINMENT GROUP, INC.
            (A wholly owned subsidiary of Liberty Media Corporation)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  Years ended December 31, 2000, 1999 and 1998
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                                  2000           1999           1998
                                                                              -----------    -----------    -----------
<S>                                                                           <C>            <C>            <C>
Revenues (Notes 8 and 11, and Note 11 for related party revenues) .........   $   287,864    $   275,379    $   261,276
                                                                              -----------    -----------    -----------

Operating expenses:
       Cost of services ...................................................       209,891        187,302        178,262
       Depreciation and amortization ......................................        88,268        104,283         98,194
       General and administrative (Notes 2 and 3) .........................        18,699         26,161          7,651
                                                                              -----------    -----------    -----------
               Total operating expenses ...................................       316,858        317,746        284,107
                                                                              -----------    -----------    -----------

Operating loss ............................................................       (28,994)       (42,367)       (22,831)

Interest and other income (expense), net ..................................         6,787          5,531          1,942
Interest expense, net (Notes 6 and 12) ....................................       (37,608)       (29,265)       (24,473)
                                                                              -----------    -----------    -----------

Loss from continuing operations before taxes and minority interest ........       (59,815)       (66,101)       (45,362)
Income tax benefit (Note 7) ...............................................         3,546          2,277          2,248
                                                                              -----------    -----------    -----------

Loss from continuing operations before minority interest ..................       (56,269)       (63,824)       (43,114)
Minority interest .........................................................        17,058         12,706         11,188
                                                                              -----------    -----------    -----------

Loss from continuing operations ...........................................       (39,211)       (51,118)       (31,926)
Income (loss) from discontinued operations, net of taxes (Note 3) .........         3,631        (26,243)       (17,799)
Gain (loss) from sale of discontinued operations, net of taxes ............       135,462           (216)            --
                                                                              -----------    -----------    -----------
Net income (loss) .........................................................   $    99,882    $   (77,577)   $   (49,725)
                                                                              ===========    ===========    ===========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                       16
<PAGE>   18



                        ASCENT ENTERTAINMENT GROUP, INC.
            (A wholly owned subsidiary of Liberty Media Corporation)

             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                  Years ended December 31, 2000, 1999, and 1998
                                 (in thousands)


<TABLE>
<CAPTION>
                                                        2000         1999         1998
                                                     ----------   ----------    ----------
<S>                                                  <C>          <C>           <C>
Net income (loss) ................................   $   99,882   $  (77,577)   $  (49,725)
                                                     ----------   ----------    ----------
Other comprehensive income (loss):
  Unrealized loss on securities ..................           --       (1,143)         (857)
  Income tax benefit related to items of
    other comprehensive loss .....................           --          400           300
                                                     ----------   ----------    ----------
  Other comprehensive loss, net of tax ...........           --         (743)         (557)
                                                     ----------   ----------    ----------
Comprehensive income (loss) ......................   $   99,882   $  (78,320)   $  (50,282)
                                                     ==========   ==========    ==========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.




                                       17
<PAGE>   19
                        ASCENT ENTERTAINMENT GROUP, INC.
            (A wholly owned subsidiary of Liberty Media Corporation)

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years ended December 31, 2000, 1999 and 1998
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                               ACCUMULATED
                                                             ADDITIONAL                           OTHER           TOTAL
                                              COMMON          PAID-IN         ACCUMULATED     COMPREHENSIVE    STOCKHOLDER'S
                                               STOCK          CAPITAL           DEFICIT       INCOME (LOSS)       EQUITY
                                           -------------    -------------    -------------    -------------    -------------
<S>                                        <C>              <C>              <C>              <C>              <C>
Balance at
January 1, 1998 ........................   $         297    $     307,248    $     (81,147)   $       1,300    $     227,698

 Net loss ..............................              --               --          (49,725)              --          (49,725)
 Other comprehensive loss, net .........              --               --               --             (557)            (557)
 Other .................................              --             (890)              --               --             (890)
                                           -------------    -------------    -------------    -------------    -------------

Balance at
December 31, 1998 ......................             297          306,358         (130,872)             743          176,526

 Net loss ..............................              --               --          (77,577)              --          (77,577)
 Other comprehensive loss, net .........              --               --               --             (743)            (743)
 Other .................................              --            1,515               --               --            1,515
                                           -------------    -------------    -------------    -------------    -------------

Balance at
December 31, 1999 ......................             297          307,873         (208,449)              --           99,721

 Net income ............................              --               --           99,882               --           99,882
 Common shares retired .................            (297)              --               --               --             (297)
 Common shares issued ..................               1               --               --               --                1
 Other .................................              --             (364)              --               --             (364)
                                           -------------    -------------    -------------    -------------    -------------

Balance at
December 31, 2000 ......................   $           1    $     307,509    $    (108,567)   $          --    $     198,943
                                           =============    =============    =============    =============    =============
</TABLE>



              The accompanying notes are an integral part of these
                       consolidated financial statements.




                                       18
<PAGE>   20





                        ASCENT ENTERTAINMENT GROUP, INC.
            (A wholly owned subsidiary of Liberty Media Corporation)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2000, 1999 and 1998
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                                     2000           1999           1998
                                                                                  -----------    -----------    -----------
<S>                                                                                <C>            <C>            <C>
OPERATING ACTIVITIES:
 Net income (loss) .............................................................   $    99,882    $   (77,577)   $   (49,725)
 Adjustments to reconcile net income (loss) to net cash provided by
   continuing operations:
   Depreciation and amortization ...............................................        88,268        104,283         98,194
   Minority interest in losses of subsidiaries .................................       (17,058)       (12,706)       (11,188)
   (Income)/Loss from discontinued operations, net of tax ......................        (3,631)        26,243         17,799
   (Gain)/Loss from sale of discontinued operations, net of tax ................      (135,462)           216             --
   Legal Settlement/Impairment Loss ............................................         5,734             --            856
   Gain on sale of investments .................................................            --         (1,758)            --
   Accretion of discount on Senior Secured Discount Notes ......................        19,341         17,385         15,579

  (Gain) Loss on disposals of property and equipment ...........................            --             --             72
 Changes in operating assets and liabilities:
    Current assets .............................................................        (3,363)         2,730          4,972
    Current liabilities ........................................................        40,655         (8,277)         6,988
    Noncurrent assets ..........................................................       (39,472)        11,053         (4,509)
    Noncurrent liabilities .....................................................          (422)         2,525         (6,712)
                                                                                   -----------    -----------    -----------
 Net cash provided by operating activities of continuing operations ............        54,472         64,117         72,326
 Net cash provided by (used in) discontinued operations ........................       (12,863)         4,553          2,186
                                                                                   -----------    -----------    -----------
 Net cash provided by operating activities .....................................        41,609         68,670         74,512
                                                                                   -----------    -----------    -----------

INVESTING ACTIVITIES:

   Proceeds from sale of discontinued operations ...............................       269,772         15,893           --
   Proceeds from notes and other long-term receivable ..........................            --             --          2,703
   Proceeds from sale of investments ...........................................        (1,215)         1,758            396
   Purchase of property and equipment ..........................................      (118,232)       (86,080)       (86,633)
   Investments and advances to unconsolidated businesses .......................        (7,675)            --             --
                                                                                   -----------    -----------    -----------
 Net cash provided by (used in) investing activities ...........................       142,650        (68,429)       (83,534)
                                                                                   -----------    -----------    -----------

FINANCING ACTIVITIES:


   Proceeds from borrowings under new OCC credit facility ......................       247,133             --             --
   Payments on obligations under capital lease .................................        (2,253)        (1,468)            --
   Proceeds from borrowings under former OCC credit facilities .................        30,000         17,000         30,000
   Repayments of borrowings under former OCC credit facilities .................      (210,000)            --             --
                                                                                   -----------    -----------    -----------
 Net cash provided by financing activities .....................................        64,880         15,532         30,000
                                                                                   -----------    -----------    -----------

 Net increase in cash and cash equivalents .....................................       249,139         15,773         20,978

 Cash and cash equivalents, beginning of year ..................................        60,349         44,576         23,598
                                                                                   -----------    -----------    -----------

 Cash and cash equivalents, end of year ........................................   $   309,488    $    60,349    $    44,576
                                                                                   ===========    ===========    ===========

Supplemental cash flow information:
 Interest paid .................................................................   $    13,848    $     9,843    $     9,856
                                                                                   ===========    ===========    ===========

 Income taxes paid .............................................................   $       131    $     2,721    $       581
                                                                                   ===========    ===========    ===========

Non-cash investing and financing activities:

   Capitalized lease obligations incurred at OCC ...............................   $      --      $     5,760    $        --
                                                                                   ===========    ===========    ===========
</TABLE>



              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                       19
<PAGE>   21






                        ASCENT ENTERTAINMENT GROUP, INC.
            (A wholly owned subsidiary of Liberty Media Corporation)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

Note 1 - Organization and Summary of Significant Accounting Policies:

    The accounting and reporting practices of Ascent Entertainment Group, Inc.
(the "Company" or "Ascent") and its majority owned subsidiaries conform to
generally accepted accounting principles and prevailing industry practices. The
following is a summary of the Company's significant accounting and reporting
policies.

Basis of Presentation and Principles of Consolidation. The accompanying
consolidated financial statements include the accounts of Ascent and its
majority-owned subsidiary, On Command Corporation ("OCC"). LiveWire Network
Services, LLC, a majority owned subsidiary of Ascent, was formed on November 15,
2000 to own the assets previously directly held by Ascent in its Ascent Network
Services division (see Note 2). 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
3). 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.

    OCC provides video distribution and pay-per-view video entertainment
services to the lodging industry and has operating subsidiaries or branches in
the United States, Canada, Mexico, Hong Kong, Singapore, Thailand, the United
Kingdom, Spain and Australia. Effective October 8, 1996, OCC acquired the
assets, properties and certain liabilities of SpectraVision, Inc. (the
"SpectraVision Acquisition"), a leading provider of in-room video entertainment
services to the lodging industry. Prior to the acquisition of SpectraVision, On
Command Video Corporation ("OCV"), formerly an 84% owned subsidiary of Ascent,
was merged with a subsidiary of OCC and became a wholly owned subsidiary of OCC
pursuant to an Agreement and Plan of Merger. LNS provides video distribution
services to the National Broadcasting Company ("NBC") television network and
other private networks.

    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 (see Notes 7 and 12)
in connection with the Distribution. As a result of the Distribution, Ascent
became an independent publicly held corporation.

Cash and Cash Equivalents. Ascent considers highly liquid investments with a
maturity of three months or less at the time of purchase to be cash equivalents.

Property and Equipment. Property and equipment is stated at cost, less
accumulated depreciation and amortization. Installed video systems consist of
equipment, related costs of manufacturing, and costs of installation at hotel
locations. Distribution systems to networks consist of equipment at network
affiliates and the related costs of installation. Capitalized leases are
recorded at the present value of future lease payments. Construction in progress
consists of purchased and manufactured parts of partially constructed video
systems at OCC.

Depreciation and amortization. Depreciation and amortization are calculated
using the straight-line method over the estimated service life of each asset,
generally three to eight years, or lease terms. Video systems and equipment
acquired in the acquisition of SpectraVision (see Note 5) were depreciated over
3 years.

Goodwill. The consolidated balance sheets include goodwill related to the
acquisitions of On Command Video Corporation and SpectraVision by OCC. Goodwill
is amortized over 10 to 25 years. Accumulated goodwill amortization was
$34,075,000 and $27,657,000 at December 31, 2000 and 1999, respectively.



                                       20
<PAGE>   22




Evaluation of Long-Lived Assets. The Company evaluates the potential impairment
of long-lived assets and long-lived assets to be disposed of in accordance with
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
SFAS No. 121 requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to the future net cash flows
expected to be generated by the asset. If assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to
sell.

Other Investments. Other investments at December 31, 2000, consists of OCC's
investment in MagiNet Corporation (MagiNet), a private company (see Note 8) and
STS Hotel Net, LLC ("STS"). Other investments are accounted for at cost, net of
appropriate reserves for declines in value based on management's evaluation. At
December 31, 1999, other investments consisted of OCC's investment in MagiNet
Corporation (MagiNet), a private company and the Company's 10% ownership
interest in Beacon Communications, LLC (see Note 3). The Company's investment in
marketable equity securities was sold in 1999 for a net gain of $1.8 million
which is included in other income in the accompanying financial statements.

Debt Issuance Costs. Costs associated with the issuance of the Company's Senior
Secured Discount notes and current credit facilities are capitalized and
amortized over the term of the related borrowing or facility. Amortization of
debt issuance costs is charged to operations and is included in interest
expense.

Revenue and Cost Recognition. OCC installs pay-per-view video systems in hotels,
generally under five to seven-year agreements. Revenue from the sale of video
systems is recognized when the equipment is shipped, except for systems
requiring installation by OCC, which is recognized upon completion of the
installation and acceptance by the customer. Revenues from video management
services, prewire and royalties are recognized when earned. OCC recognizes
pay-per-view revenue at the time of viewing and payment is considered probable.

General and administrative expense. General and administrative expenses include
only those costs incurred by the parent company, Ascent Entertainment Group,
Inc. Similar costs incurred by the Company's division and majority-owned
subsidiary are included in the cost of services in the accompanying consolidated
statements of operations. For the years ended December 31, 2000, 1999, and 1998,
the Company's subsidiary incurred related costs of $18,699,000, $26,130,000 and
$24,448,000 respectively.

Research and Development Costs. Research and development costs are charged to
operations as incurred. These costs are included in cost of services in the
consolidated statements of operations. The amounts charged were $8,461,000,
$8,479,000 and $7,537,000 for the years ended December 31, 2000, 1999 and 1998,
respectively.

Income Taxes. A current or deferred income tax liability or asset is recognized
for temporary differences which exist due to the recognition of certain income
and expense items for financial reporting purposes in periods different than for
tax reporting purposes. The provision for income taxes is based on the amount of
current and deferred income taxes at the date of the financial statement as
measured by the provisions of current tax laws.

Internally Developed Software. OCC capitalizes certain internal development
software costs in accordance with SOP 98-1 "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". Amortization commences when
the software is ready for its intended use. Software is generally amortized over
five years. Capitalized costs primarily include internal salaries and wages of
individuals dedicated to the development of internal use software. OCC
capitalized software development costs of $4,088,000, $5,700,000 and $4,100,000
during the years ended December 31, 2000, 1999, and 1998, respectively.

Use of Estimates, Significant Risks and Uncertainties. 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 and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant estimates include
the allowance for doubtful accounts receivable, the estimated useful lives of
video systems and property and equipment, intangible assets, including goodwill,
reducing construction in progress to its net realizable value and the amounts of
certain accrued liabilities. Actual results could differ from these estimates.

    The Company participates in the highly competitive multimedia distribution
and network services businesses and believes that changes in any of the
following areas could have a material adverse effect on the Company's future
financial position or results of operations; declines in hotel occupancy as a
result of general business, economic, seasonal or other factors; loss of one or
more of its





                                       21
<PAGE>   23





major hotel chain customers; ability for OCC to obtain additional capital to
finance capital expenditures; ability to maintain compliance with the OCC Credit
Facility covenants; ability to retain senior management and key employees; and
risks of technological obsolescence.

Recently Issued Accounting Standards. In June 1998, the Financial Accounting
Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," which defines derivatives, requires that all derivatives be
carried at fair value, and provides for hedging accounting when certain
conditions are met. SFAS No. 133, which has been amended by SFAS 137, is
effective for the Company's fiscal year ended December 31, 2000. The adoption of
SFAS No. 133 did not have any impact on the Company's financial position,
results of operations or cash flows.

    In December 1999, the Securities and Exchange Commission (the "SEC")
released Staff Accounting Bulletin No. 101 ("SAB 101") "Revenue Recognition in
Financial Statements," which provides guidance on the recognition, presentation
and disclosure of revenue in financial statements filed with the SEC. The
provisions of SAB 101 and certain related Emerging Issue Task Force Consensuses
were required to be adopted in the quarter ended December 31, 2000, retroactive
to January 1, 2000, with any cumulative effect as January 1, 2000 reported as
the cumulative effect of a change in accounting principle. The adoption of SAB
101 resulted in no recognition of a cumulative effect of a change in accounting
principle.

Reclassifications. Certain prior year amounts have been reclassified to conform
to the current year presentation.

Note 2 - Business Combinations and Other Investments

    Merger Agreement - 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 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 - 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 LiveWire Network Services,
LLC (LNS), a newly formed and 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 the 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





                                       22
<PAGE>   24



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.

    Other Investments - On June 29, 2000, OCC made an investment of $2.0 million
in an unrelated company, STS Hotel Net, LLC ("Hotel Net") for a 5% equity
interest with an option (subject to certain conditions and satisfactory due
diligence) to invest an additional $18 million for an additional 40% equity
share. OCC declined to exercise this option during the fourth quarter of 2000
and recorded an impairment loss of $900,000 on its original investment in Hotel
Net.

In addition, during 2000, OCC advanced to STSN, Inc. ("STSN") $5.0 million
pursuant to the terms of a convertible promissory note due on the earlier of
December 31, 2002 or the Secured Loan funding date and an advance of $1.4
million to Hotel Digital Network, Inc. ("DMN") pursuant to a convertible
promissory note (see Note 15). These balances are included in other long-term
assets in the accompanying financial statements as of December 31, 2000.

    Terminated Merger Agreement - Previously, on October 20, 1999, the Company
entered into an Agreement and Plan of Merger with AT&T Corp., and Liberty. On
November 29, 1999, Liberty terminated the Agreement and Plan of Merger due to
the Company's amendment of a sale agreement for its Sports-related businesses
and its inability to renegotiate the terms of the merger agreement with Liberty.
Costs incurred in conjunction with the terminated Merger Agreement of
approximately $1.3 million, primarily investment banker fees and attorney fees,
were expensed and are included in General and Administrative Expenses in the
accompanying statement of operations for the year ended December 31, 1999.


Note 3 -- Discontinued Operations:

    Beacon - On January 20, 1999, the Company sold 90% of its interest in Beacon
to an investor group controlled by Beacon's management and venture capital
investors (the "Buyers") pursuant to a Purchase and Sale Agreement (the "Beacon
Purchase Agreement"). The purchase price for the 90% interest was $19.0 million
in cash, net of certain adjustments. At closing, approximately $15.9 million in
cash was received. After the sale of the 90% interest, the Company had no future
obligations to fund any of Beacon's liabilities or film development or
production commitments. During the first quarter of 1999, the Company reported a
gain of $3.2 million on the sale of 90% of its interest in Beacon.

    During the second and third quarters of 1999, the Company attempted to
collect the remaining balance due under the Beacon Purchase Agreement of
$900,000. Beacon filed a claim against the Company seeking an adjustment to the
purchase price. Pursuant to the Beacon Purchase Agreement, any disputes or
disagreements among the parties were to be settled pursuant to binding
arbitration in the State of California. The arbitration commenced in November
1999 and on February 21, 2000, the arbitrator issued his opinion awarding Beacon
approximately $3.5 million which was paid in May of 2000. Accordingly, the
Company recorded a $3.5 million loss during the fourth quarter of 1999,
resulting in the recognition of a $0.2 million loss (net of the gain recognized
during the first quarter of 1999) from the sale of its 90% interest in Beacon
during fiscal 1999.

    In July 2000, the Company exercised its option pursuant to an Option
Agreement to require the Buyers 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 buyers. 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



                                       23
<PAGE>   25





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.

    In the third quarter of 2000, Ascent reported a pre-tax gain, net of
transaction costs, of approximately $133.8 million, net of taxes of $31.7
million, on the sale of the Sports-related businesses. Transaction costs,
including investment banker and attorney fees and expenses and other associated
costs of the transaction were approximately $3.4 million and have been netted
against the gain from the transaction for financial reporting purposes.

    The Company began accounting for Beacon as a discontinued operation as of
December 31, 1998 and for the Sports-related businesses as a discontinued
operation as of March 31, 1999, pursuant to guidance contained in Emerging
Issues Task Force Issue No. 95-18, "Accounting and Reporting for Discontinued
Business Segment when the Measurement Date occurs after the Balance Sheet Date
but before the Issuance of the Financial Statements." Accordingly, the
consolidated financial statements have been restated for all prior periods
presented to reflect the results of operations and net assets of Beacon and the
Sports-related businesses as discontinued operations. The loss from discontinued
operations of Beacon and the Sports-related businesses, net of taxes, for the
years ended December 31, 2000, 1999 and 1998 is composed of the following:

<TABLE>
<CAPTION>
                                                                      YEARS ENDED DECEMBER 31,
                                           ---------------------------------------------------------------------------
                                               2000           1999                            1998
                                           ------------   ------------    --------------------------------------------
                                             SPORTS         SPORTS          SPORTS
                                             RELATED        RELATED         RELATED                           1998
                                            BUSINESSES     BUSINESSES      BUSINESSES        BEACON           TOTAL
                                           ------------   ------------    ------------    ------------    ------------
                                                                         (IN THOUSANDS)
<S>                                        <C>            <C>             <C>             <C>             <C>
Revenues ...............................   $    117,050   $    125,125    $     82,353    $     28,195    $    110,548
                                           ============   ============    ============    ============    ============
Loss from discontinued operations ......          3,631        (28,134)   $    (17,155)   $     (4,798)   $    (21,953)
 before taxes
Income tax benefit .....................             --          1,891           3,264             890           4,154
                                           ------------   ------------    ------------    ------------    ------------
Loss from discontinued operations ......   $      3,631   $    (26,243)   $    (13,891)   $     (3,908)   $    (17,799)
                                           ============   ============    ============    ============    ============
</TABLE>



    The net assets of the discontinued operations included in the consolidated
balance sheets as of December 31, 1999 consists of the following:

<TABLE>
<CAPTION>
                                                           (IN THOUSANDS)
                                                           -------------
<S>                                                        <C>
Current assets .........................................   $      61,997
Property and equipment, net ............................         194,823
Restricted cash held in trust ..........................          30,915
Film inventory .........................................              --
Franchise rights, net ..................................          87,745
Other assets ...........................................          21,685
Current liabilities, including current portion of
     Arena Notes .......................................        (154,680)
Non-recourse Arena Notes and other obligations .........        (126,685)
Other long term liabilities ............................         (33,584)
                                                           -------------

Net assets of discontinued operations ..................   $      82,216
                                                           =============
</TABLE>

    Forgone transaction costs, totaling $12.0 million, which include investment
banker and attorney fees and expenses, fees payable to William and Nancy Laurie
in conjunction with the termination of the previous agreement between Ascent and
the Lauries, which was entered into on April 25, 1999 and other costs associated
with the Company's attempts to sell its Sports-related businesses during 1999
have been expensed and are included in General and Administrative Expenses in
the accompanying statement of operations for the year ended December 31, 1999.
Fees totaling approximately $1.7 million and $1.8 million, respectively, were
paid to Allen and Company, an investment banking firm in which a former Director
of the Company was employed during the years ended December 31, 2000 and 1999.




                                       24
<PAGE>   26




Note 4 -- Receivables:

Receivables consist of the following at December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                    2000             1999
                                                ------------    ------------
                                                       (IN THOUSANDS)
<S>                                             <C>             <C>
Trade receivables ...........................   $     39,657    $     36,557

  Less allowance for doubtful accounts ......         (1,382)         (3,065)
                                                ------------    ------------
  Receivables, net ..........................   $     38,275    $     33,492
                                                ============    ============
</TABLE>

    Ascent generates a substantial portion of its revenues from OCC and from
hotel guests' usage of OCC pay-per-view video systems located in various hotels
primarily throughout the United States, Canada, Mexico, Europe, Australia, and
the Far East. OCC performs periodic credit evaluations of its installed hotel
locations and generally requires no collateral. While the Company does maintain
allowances for potential credit losses, actual bad debts have not been
significant. Other than its investment in OCC's Series B Preferred Stock (see
Note 15), the Company invests its cash in high-credit quality instruments and/or
institutions. These instruments are short-term in nature and, therefore, bear
minimal interest rate or credit risk.

Note 5 -- Property and Equipment:

Property and equipment consists of the following at December 31, 2000 and 1999:


<TABLE>
<CAPTION>
                                                               2000            1999
                                                           ------------    ------------
                                                                  (IN THOUSANDS)
<S>                                                        <C>             <C>
Buildings and leasehold improvements ...................   $      1,937    $      1,687
Installed video systems ................................        625,696         546,618
Distribution systems to networks .......................         93,891          93,641
Leased vehicles under capital leases ...................          3,127           2,675
Furniture, fixtures and equipment ......................         39,066          28,323
                                                           ------------    ------------
    Total ..............................................        763,717         672,944
Less accumulated depreciation and amortization .........       (494,298)       (429,144)
                                                           ------------    ------------
Net property and equipment in service ..................        269,419         243,800
Construction-in-progress ...............................         55,282          50,698
                                                           ------------    ------------
   Property and equipment, net .........................   $    324,701    $    294,498
                                                           ============    ============
</TABLE>

Vehicles acquired under capital leases had a cost basis of $3,127,000 at
December 31, 2000, and $2,675,000 at December 31, 1999 less accumulated
amortization of $1,221,000 and $453,900, respectively.

Note 6 -- Long-term debt:

Long-term debt consists of the following at December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                                    2000         1999
                                                                                 ----------   ----------
                                                                                     (IN THOUSANDS)
<S>                                                                              <C>          <C>
OCC Revolving Credit Facility, variable rate, due 2005 .......................   $  247,133   $       --
Former OCC Credit Facility, paid in full, July 2000 ..........................           --     180,0000
Senior Secured Discount Notes, 11.875%, due 2004 net of unamortized
discount of $45,387 and $65,078 ..............................................      179,263     159,9222
                                                                                 ----------   ----------
               Total long-term debt ..........................................   $  426,396    $339,9222
                                                                                 ==========   ==========
</TABLE>

OCC Credit Facilities - On July 18, 2000, OCC entered into a new credit
agreement with a group of banks (the "OCC Credit facility"), that provides 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
restate other terms and conditions of the previous agreement. At December 31,
2000, there was $72.9 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 below 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.



                                       25
<PAGE>   27



      Several options are available to borrow at floating interest rates based
on LIBOR (London Interbank Offered Rate) or the bank's alternate base rate
(prime rate) plus a spread that may range from 1.10% to 2.25%, depending on
certain operating ratios of OCC. The new OCC Credit facility 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. In addition, the new
OCC Credit facility requires OCC to meet certain leverage and interest coverage
tests. OCC was in compliance with such covenants at December 31, 2000. In order
to meet its business plan beyond the first quarter of 2001, OCC will need to
raise additional financing. OCC is currently pursuing its alternatives in this
area. If OCC is unable to raise additional financing, OCC would need to reduce
its capital spending for the year 2001 which would inhibit its ability to grow.

      In connection with OCC entering into the new OCC Credit facility, the
Company and the Indenture Trustee entered into a supplement to the Indenture for
the Senior Notes to clarify that OCC's subsidiaries could guarantee the OCC
Credit facility

Senior Secured Discount Notes - The Senior Secured Discount Notes ("Senior
Notes"), which mature on December 15, 2004, were sold at a discount for an
aggregate price of $126,663,750, representing a yield to maturity of 11.875%
computed on a semi-annual bond equivalent basis from the date of issuance. Cash
interest will not be payable on the Senior Notes prior to December 15, 2002.
Commencing December 15, 2002, cash interest on the senior notes will accrue and
thereafter will be payable on June 15 and December 15 of each year (commencing
June 15, 2003) at a rate of 11.875% per annum. The Senior Notes are redeemable,
at the option of Ascent, in whole or in part, on or after December 15, 2001, at
specified redemption prices plus accrued and unpaid interest. In addition, at
any time prior to December 15, 2000, Ascent may redeem up to 35% of the
originally issued principal amount at maturity of the Senior Notes with the net
cash proceeds of one or more sales of its capital stock at a redemption price
equal to 111.875% of the accreted value thereof to the redemption date. The
Senior Notes are senior secured indebtedness of Ascent, secured by a pledge of
all of the capital stock of OCC, now owned or hereafter acquired by Ascent. The
Senior Notes rank senior to all existing and future subordinated indebtedness of
Ascent and pari passu in right of payment to all unsubordinated indebtedness of
Ascent. The Senior Notes contain covenants, which restrict, among other things,
the Company's ability to pay dividends, incur additional indebtedness and the
making of loans, investments and other defined payments. The net proceeds from
the offering and sale of the Senior Notes of approximately $121.0 million, after
deducting debt issuance costs, were used to repay outstanding indebtedness under
Ascent's former credit facility.

    As a result of the acquisition by Liberty of the Company's stock pursuant to
the Offer, which constituted a change in control under the terms of the Senior
Notes, the Company was required to offer to redeem the Senior Notes at 101% of
their accreted value within 60 to 90 days after such change in control. On April
27, 2000, the Company notified the registered holders of the Senior Notes of its
offer to purchase the Senior Notes pursuant to the terms of the Indenture (the
"Purchase Right Notice"). The Purchase Right Notice provided that the Company
would pay a cash purchase price for the Senior Notes equal to 101% of the
accreted value on the date of purchase. Pursuant to the Purchase Right Notice,
the noteholders had until May 30, 2000 to tender their notes. A total of
$350,000 in cash was paid to noteholders who tendered.

    Under the terms of the Senior Notes, 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, Ascent will
be required to use all remaining proceeds to offer to repurchase the Senior
Notes at 100% of their accreted value.

    Total minimum payments on long-term debt for the years subsequent to
December 31, 2000, assuming the Senior Notes are not redeemed prior to maturity
and the OCC Credit Facility is not extended, are as follows (in thousands):


<TABLE>
<CAPTION>
<S>                                  <C>
              2001.............      $      --
              2002.............             --
              2003.............             --
              2004.............        225,000
              2005.............        247,133
              Thereafter.......             --
                                     ---------
              Total............      $ 472,133
                                     =========
</TABLE>




                                       26
<PAGE>   28






Note 7   -- Income Taxes

    As a result of the Company becoming a member of Liberty's consolidated tax
group for federal income tax purposes, the Company calculates its tax provision
as if prepared on a separate return basis. Taxes payable or receivable with
respect to periods after the Merger are being reflected in the receivable due
from (to) Liberty and are settled annually. At December 31, 2000, the Company
has recorded a tax payable to Liberty of $36.7 million and has included this
amount in the Payable to Stockholder.

    Through June 27, 1997, the date of the Distribution, Ascent was a member of
COMSAT's consolidated tax group for federal income tax purposes. Accordingly,
Ascent prepared its tax provision based on Ascent's inclusion in COMSAT's
consolidated tax return pursuant to the tax sharing agreement entered into in
connection with the Offering. Such tax provision, up to the Distribution, was
calculated as if prepared on a separate return basis. At December 31, 2000 and
1999, Ascent's tax receivable pursuant to the tax sharing agreement from COMSAT
was $1,196,000. The balance due from COMSAT as of December 31, 2000 and 1999 is
included in other long-term assets in the accompanying financial statements.

    The components of income tax expense (benefit) attributable to continuing
operations for the years ended December 31, 2000, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                 2000             1999             1998
                             -------------    -------------    -------------
                                             (IN THOUSANDS)
<S>                         <C>              <C>              <C>
Federal:
   Current ..............   $      (4,083)   $          --    $         851
   Deferred .............             960           (2,477)          (2,815)
 State and local ........            (238)             162             (175)
 Foreign ................            (185)              38             (109)
                            -------------    -------------    -------------
   Total ................   $      (3,546)   $      (2,277)   $      (2,248)
                            =============    =============    =============
</TABLE>

    The difference between the Company's income tax benefit computed at the
statutory federal tax rate and Ascent's effective tax rate for the years ended
December 31, 2000, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                                                   2000            1999            1998
                                                               ------------    ------------    ------------
                                                                              (IN THOUSANDS)
<S>                                                            <C>             <C>             <C>
Federal income tax benefit computed at the statutory
    rate ...................................................   $    (20,935)   $    (23,135)   $    (15,877)
State income tax benefit, net of federal income tax
    benefit ................................................           (598)           (689)         (1,194)
Goodwill amortization ......................................          2,446           2,404           2,542
Foreign taxes ..............................................            185              38            (109)
Changes in valuation allowance .............................        (10,614)         26,839          15,815
Valuation allowance attributable to losses from
discontinued operations ....................................         26,401          (9,276)             --
Other ......................................................           (431)          1,542          (3,425)
                                                               ------------    ------------    ------------
 Income tax benefit from continuing operations .............   $     (3,546)   $     (2,277)   $     (2,248)
                                                               ============    ============    ============
</TABLE>

    The net current and net non-current components of deferred tax assets and
liabilities as shown on the balance sheets at December 31, 2000 and 1999 are:

<TABLE>
<CAPTION>
                                                   2000          1999
                                                ----------    ----------
                                                      (IN THOUSANDS)
<S>                                             <C>           <C>
Current deferred tax asset
(liability) .................................   $     (747)   $       --
Non-current deferred tax asset ..............       18,703         9,320
                                                ----------    ----------
   Net deferred tax asset ...................   $   17,956    $    9,320
                                                ==========    ==========
</TABLE>



                                       27


<PAGE>   29




    The deferred tax assets and liabilities at December 31, 2000 and 1999 are:

<TABLE>
<CAPTION>
                                                    2000             1999
                                                ------------    ------------
                                                       (IN THOUSANDS)
Assets:
<S>                                             <C>             <C>
 Net operating loss carryforwards ...........   $     68,203    $     67,073
 Alternative minimum tax credit
   carryforwards ............................             --           9,320
 Other accrued liabilities ..................         23,827          19,071
 Other ......................................             --           3,970
 Valuation allowance ........................        (71,425)        (82,039)
                                                ------------    ------------
 Total deferred tax assets ..................         20,605          17,395
                                                ------------    ------------

Liabilities:
   Property and equipment, net ..............         (2,036)         (6,642)
   Other ....................................           (613)         (1,433)
                                                ------------    ------------
   Total deferred tax liabilities ...........         (2,649)         (8,075)
                                                ------------    ------------
Net deferred asset ..........................   $     17,956    $      9,320
                                                ============    ============
</TABLE>

    In 2000, the Company reduced the valuation allowance applied against the net
operating loss carryforwards and other deferred tax assets attributable to
Ascent based upon the sale of the Company's Sports-related assets (see Note 3)
and the Company becoming a member of Liberty's consolidated tax group.

    OCC has federal net operating loss carryforwards of approximately $165.0
million which expire beginning in 2010. However, because of the acquisition of
SpectraVision by OCC, the pre-ownership change net operating loss carryforwards
(approximately $43.0 million) are subject under Section 382 of the Internal
Revenue Code to an annual limitation estimated to be approximately $6.0 million.
In addition, OCC has state net operating loss carryforwards of approximately
$117.0 million which expire beginning in 2000 and may be subject to limitation
in the event of certain defined changes in stock ownership. OCC's alternative
minimum tax credit carryforwards of approximately $1.6 million and $251,000 at
December 31, 2000 are available to offset future regular federal and state tax
liabilities, respectively.

Note 8 -- Commitments and Contingencies

Facility and Equipment Leases. Ascent leases other facilities used by LNS from
COMSAT under a three year lease. Total rental payments to COMSAT were
approximately $52,000, $46,000 and $46,000 for the years ended December 31,
2000, 1999 and 1998, respectively. LNS' lease for its principal facility expires
in February 2005.

      OCC leases its Denver corporate headquarters under a noncancellable
operating lease which expires in June 2002. OCC also leases its former corporate
headquarters and manufacturing facility located in San Jose, California under a
noncancellable operating lease which expires in June 2004. In addition to lease
payments, OCC is responsible for taxes, insurance and maintenance of the leased
premises. The Company also leases certain other office space and equipment.

    Rental expenses for OCC's San Jose facility, the owner of which was former
minority stockholder of OCC, were approximately $1,690,000, $1,690,000,and
$1,553,000 during the years ended December 31, 2000, 1999, and 1998,
respectively.

    The Company and its subsidiary also lease equipment under noncancellable
operating leases which extend through 2004. Rental expense under all
noncancellable operating leases was approximately $3,609,000, $2,726,000 and
$5,714,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

    The future minimum rental commitments under the Company's facility and
equipment leases at December 31, 2000 are as follows (in thousands):

<TABLE>
<S>                                            <C>
                  2001.....................    $  5,020
                  2002.....................       2,542
                  2003.....................       2,470
                  2004.....................       1,561
                  2005 and thereafter......         373
                                               --------
                     Total.................    $ 11,966
                                               ========
</TABLE>




                                       28
<PAGE>   30





Capital Leases - During 2000, OCC amended certain of its operating lease
agreements, primarily for vehicles and equipment, which were subsequently
accounted for as capitalized leases. Certain of these leases contain
restrictions including maintenance of certain operating ratios. Following is a
summary of future minimum lease payments for OCC's capital lease obligations:

<TABLE>
<CAPTION>
         Years ending December 31 (in thousands):
<S>                                                                        <C>
                 2001                                                      $   805
                 2002                                                          760
                 2003                                                          573
                 2004                                                            1
                                                                           -------
                 Total future minimum lease payments                         2,139
                 Less amounts representing interest                           (171)
                                                                           -------
                 Present value of future minimum lease payments              1,968
                 Less current portion                                         (705)
                                                                           -------

                 Long-term portion of capital lease obligations            $ 1,263
                                                                           =======
</TABLE>


    Purchase Commitments - OCC has noncancellable commitments for the purchase
of video systems and office equipment totaling $7,800,000 as of December 31,
2000.

      Relocation Costs - At December 31,2000, OCC was in the process of
relocating its headquarter operations from San Jose, California, to Denver,
Colorado. Most sales, marketing, field support, accounting, finance, and
executive management were transitioned to Denver by the end of 2000. The cost of
moving those departments was $6.1 million which has been recognized and recorded
during the year ended December 31, 2000. The relocation expenses include
severance, retention bonuses, search fees, contractors, travel and redundant
operating expenses. The retention bonuses have been accrued ratably over the
retention period (employees not relocating to Denver were offered bonuses to
stay through the estimated transition date of December 31, 2000, although, for a
few key employees the transition date extends into early 2001). The remaining
expenses are recognized as they are incurred.

    Litigation. On September 11, 1998, OCC reached an agreement with LodgeNet
Entertainment Corporation ("LodgeNet") to settle all pending litigation between
the companies. As part of an otherwise confidential settlement, OCC received
royalty payments, net of legal fees and expenses, in an aggregate amount of
approximately $10,700,000 payable in three installments. OCC received the first
payment of approximately $2,900,000 (net of expenses) in September 1998 and
received the second payment of approximately $3,950,000 (net of expenses) in
July 1999. OCC received the final payment of approximately $3,900,000 (net of
expenses) in July 2000. OCC has recognized the royalty revenue as payments are
received.

    In September 1998, OCV filed suit against MagiNet, alleging breach by
MagiNet Corporation in the Superior Court, State 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, among other
things, that OCV breached the license agreement. On January 4, 2001, OCC signed
a settlement agreement with MagiNet. In exchange for contributing its
Asia-Pacific subsidiary assets to MagiNet, payment of $1.0 million cash, and the
issuance of 275,000 shares of OCC common stock, OCC will receive shares of
MagiNet common stock representing approximately 7.5% of the issued and
outstanding common equity of MagiNet. OCC also agreed that MagiNet will have an
option, exercisable during the period of 15 days beginning on the second
anniversary of the execution of the settlement agreement to require OCC to
repurchase all, but not less than all, of the shares of OCC common stock issued
to MagiNet at a per share price of $15.00. This option will not become
exercisable, however, if (i) the closing price of OCC's common stock equals or
exceeds $15.00 per share for a period of ten consecutive trading days occurring
prior to the second anniversary of the execution of the settlement agreement and
(ii) all such shares held by MagiNet could have been sold in the public markets
during such period, either because such shares are covered by an effective
registration statement or such sale in the public markets would be exempt from
registration. OCC estimated the fair value of its 7.5% interest in MagiNet at
approximately $5.3 million and valued the assets, stock and cash transferred to
MagiNet at $10.1 million. As a result, OCC recorded a charge of approximately
$4.8 million in 2000 relating to this settlement.

    In June 1999, the Company and certain of its present and former directors
were named as defendants in lawsuits filed by shareholders (the "Shareholder
lawsuits") in the Delaware Court of Chancery. These proposed class actions
asserted that the Company's then agreement to sell the Company's Sports-related
businesses to entities controlled by William and Nancy Laurie constituted a sale
of substantially all assets of the Company, thereby requiring a shareholder
vote, and resulted from breaches of fiduciary duties by the director defendants
(see Note 3). On June 23, 1999, the Company, the director defendants and the
Laurie-controlled purchasing entities that were also named as defendants,
entered into an agreement with the shareholder plaintiffs to settle



                                       29
<PAGE>   31




the lawsuits. Under the settlement agreement, the Company, the director
defendants, and the Laurie-controlled entities agreed, among other things, to
amend the terms of the proposed sale to the Laurie entities to permit the
Company to conduct a new process in which the Company would solicit additional
offers for the purchase of the Sports-related businesses. The Company and the
director defendants also agreed, among other things, to engage an additional
investment banker to assist in the new auction process, and to add Peter W. May
to the Company's Board of Directors. On July 27, 1999, as a result of the new
auction process, the Company entered into a definitive agreement to sell the
Sports-related businesses to The Sturm Group. The settlement of the Shareholder
lawsuits was approved by the Delaware Court of Chancery during the fourth
quarter of 2000. The settlement resulted in, among other things, the dismissal
with prejudice of the claims asserted in the Shareholder lawsuits and the future
payment by the Company of plaintiff attorney fees and expenses totaling $4.0
million. During the year ended December 31, 1999, the Company recorded a $1.0
million charge for potential costs anticipated with the contemplated settlement
of the Shareholder lawsuits. During the first quarter of 2000, the Company
recorded an additional $3.0 million charge for costs anticipated in conjunction
with the Shareholder lawsuits and, as of December 31, 2000, the Company had
accrued legal settlement costs totaling approximately $4.0. In February 2001,
the Company made the payment due as approved by the Court.

    The Company is a party to certain additional legal proceedings in the
ordinary course of its business. However, the Company does not believe that any
such legal proceedings will have a material adverse effect on the Company's
financial position or results of operations.

Note 9 -- Stockholders' Equity

Stock Option Plans. Ascent adopted the 1995 Key Employee Stock Plan (the
"Employee Plan") and the 1995 Non-Employee Directors Stock Plan (the "Directors
Option Plan") contemporaneously with the Offering. The Employee Plan provides
for the issuance of stock options, restricted stock awards, stock appreciation
rights and other stock based awards and the Director Option Plan provided for
the issuance of stock options and common stock. Options granted under the
Employee or Director Option Plans generally expire 10 years from the date of
grant. For each of the plans, options are generally granted at prices not less
than the fair market value of the Company's common stock at the date of grant.
In order for the Distribution to be tax-free (see Notes 1 and 12), the
Distribution Agreement required Ascent to cancel substantially all of the
outstanding options, and not to have any plans or agreements to issue stock.
Therefore, in connection with the Distribution, the Director Option Plan was
terminated as it only provided for the issuance of common stock and stock
options. In addition, substantially all of the stock options previously granted
under the Employee Plan (1,283,750 options) were canceled and, in exchange,
option holders were issued stock appreciation rights ("SARs"), payable only in
cash, with an exercise price equal to $9.53 per share, based on the average
trading price of the Ascent common stock for five days commencing with the date
of the Distribution. In June 1997, the Company also adopted the 1997
Non-employee Directors Stock Appreciation Rights Plan (the "Directors SAR Plan")
approved by the stockholders in April 1998, pursuant to which each non-employee
director was granted a SAR with respect to 100,000 shares of Ascent common stock
with a three year vesting period. The exercise price for the non-employee
directors SARs granted in 1997 is $8.27 per share, the market price on the date
of the Distribution.

    During the year ended December 31, 1999, 100,000 SARs (exercise price of
$13.82) were granted to a director of the Company under the Directors SAR Plan
and, in January 2000, 240,000 options (exercise price of $11.91) were granted to
certain executives of the Company under the Employee Plan.

    The Company's SARs permitted the optionee to surrender the SAR, in whole or
in part, on any date that the fair market value of the Company's common stock
exceeds the exercise price for the SAR and receive payment in cash. Payment
would be equal to the excess of the fair market value of the shares reflected by
the surrendered SAR over the exercise price for such shares. The SARs vest over
either a three year or five year period from the date of grant of the SAR or
option for which they were exchanged.. The change in value of SARs is reflected
in the Company's statement of operations based upon the market value of the
common stock. During the years ended December 31, 2000, 1999 and 1998, the
Company recorded an expense (benefit) of $3,917,000, $3,512,000 and ($424,000)
relating to the SARs, respectively.

    As a result of the acquisition by Liberty of the Company's stock pursuant to
the Offer, which constituted a change in control under the terms of the
Company's Employee, Directors Option and Directors SAR Plans, all outstanding
options and SARs, not previously vested, immediately vested in accordance with
the Plans. Pursuant to the Merger Agreement, cash payments totaling $7,133,000
were paid to participants in the Plans during the first half of 2000.
Accordingly, the Company has no outstanding options or SARs as of December 31,
2000.




                                       30
<PAGE>   32



    The following is a summary of changes in shares under the Company's Stock
Plans:

<TABLE>
<CAPTION>
                                                                      OPTIONS OUTSTANDING
                                                                 ------------------------------
                                                   OPTIONS                          WEIGHTED
                                                AVAILABLE FOR      NUMBER OF        AVERAGE
                                                    GRANT           SHARES       EXERCISE PRICE
                                                -------------    -------------   --------------
<S>                                             <C>              <C>             <C>
Balances, January 1, 1998 ...................         258,750           53,000    $       15.31
  Exercised .................................              --               --               --
  Canceled/Expired ..........................              --          (32,000)           16.31
  Options granted ...........................              --               --               --
                                                -------------    -------------    -------------
Balances, December 31, 1998 .................         258,750           21,000            13.79
  Conversion of options to SARs .............              --           (5,000)           15.00
  Canceled/Expired ..........................              --               --               --
  Options granted ...........................              --               --               --
                                                -------------    -------------    -------------
Balances, December 31, 1999 .................         258,750           16,000            13.41
  Conversion of options to SARs .............              --               --               --
  Canceled/Expired ..........................              --               --               --
  Options granted ...........................         240,000               --            11.91
  Exercised in conjunction
     with Merger ............................        (498,750)         (16,000)           15.25
                                                -------------    -------------    -------------
Balances, December 31, 2000 .................              --               --    $          --
                                                =============    =============    =============
</TABLE>


OCC Stock Option Plans. OCC has also adopted a stock incentive plan (the "OCC
Plan"), expiring in 2006, under which employees of OCC may be granted stock
options, restricted stock awards, stock appreciation rights and other stock
based awards. Under the OCC Plan options generally are granted at fair market
value on the date of grant. At December 31, 2000, the OCC Plan has 11,623,402
shares reserved for issuance and options to purchase 3,998,575 shares of OCC
stock were outstanding.

    In addition, OCC has also adopted a stock option plan for its independent
directors (the "OCC Directors Plan"). The OCC Directors Plan authorizes the
granting of an annual award of 400 shares of OCC's common stock and a one-time
grant of a non-qualified option to purchase 50,000 shares of OCC's common stock
(a "Director Option") to each Independent Director on an annual basis. In 1999,
200,000 options were granted. In 1998, 12,000 options were granted. No options
were grated in 2000.

    During the years ended December 31, 2000 and 1999, OCC recognized $70,000
and $1,064,000, respectively as stock-based compensation expense due to the
cashless exercise feature of such options. No such expense was recorded in 2000
or any period prior to 1999, as the exercise price of such options exceeded the
fair market value of the Company's common stock.

    OCC has adopted the disclosure only provisions of SFAS 123, "Accounting for
Stock-Based Compensation". The Company's share of OCC's pro forma compensation
cost for 2000, 1999 and 1998 would be approximately $5,247,000, $1,011,000 and
$1,652,000.

On Command Warrants. In connection with the SpectraVision Acquisition, OCC also
issued warrants representing the right to purchase a total of 7,500,000 shares
of OCC common stock (20% of the outstanding common stock of OCC, after exercise
of the warrants). The warrants have a term of 7 years and an exercise price of
$15.27 per share. Series A Warrants to purchase on a cashless basis up to
1,425,000 shares of OCC common stock were issued to former OCV shareholders, of
which Ascent received warrants to purchase 1,123,823 shares; Series B warrants
to purchase for cash an aggregate of 2,625,000 shares of OCC common stock were
issued to the SpectraVision bankruptcy estate for distribution to creditors; and
Series C warrants were issued to OCC's investment advisors to purchase for cash
an aggregate of 3,450,000 shares of OCC common stock in consideration for
certain banking and advisory services provided in connection with the
transactions.

OCC Series A Convertible Participating Preferred Stock. On August 8, 2000, OCC
sold to Jerome H. Kern ("Kern") 13,500 shares of the Company's Series A $.01 Par
Value Convertible Participating Preferred Stock, which shares are initially
convertible into 1,350,000 shares of the Company's common stock. The price of
the preferred shares was $1,562.50 per share. The preferred shares participate
in any dividends paid to the holders of the common stock but otherwise are not
entitled to receive any dividends. The preferred shares have a liquidation
preference of $.01 per share; thereafter, the preferred shares are entitled to
participate with the common stock in distributions upon liquidation on an
as-converted basis. The holders of the preferred shares vote with the holders of
the common stock as a single class and are entitled to one vote per share. Kern
made a cash payment of $13,500 and the OCC loaned him $21,674,000 to finance the
balance of the funds needed to acquire the preferred shares. This loan is
secured by the preferred shares or their proceeds and Kern's personal
obligations under such loan are limited. The note may not be prepaid and
interest on the note accrues at a rate of





                                       31
<PAGE>   33




7% per annum, compounded quarterly. The promissory note matures on July 31,
2005, at which time all principal and interest becomes due. Kern's right to
transfer the preferred shares is restricted.

Note 10 -- Employee Benefit Plans

    OCC, LNS and Ascent Corporate each participate in various 401(k) plans for
qualifying employees. A portion of employee contributions is matched by the
respective entity. Matching contributions for the years ended December 31, 2000,
1999 and 1998 were $1,183,000, $1,121,000, and $906,000, respectively.

Note 11 -- Business Segment Information

    The Company implemented SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", during the fourth quarter of 1998. In
accordance with SFAS No. 131, the Company initially classified its businesses
into 3 reporting segments: multimedia distribution, network services and
entertainment. 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. The entertainment segment included three operating
businesses, the Denver Nuggets and the Colorado Avalanche franchises in the NBA
and NHL, respectively, and the Arena Company, the owner and manager of the new
arena. As discussed in Note 2, the entertainment segment's results are included
in discontinued operations.




                                       32
<PAGE>   34





    Information as to the operations of the Company is set forth below based on
the nature of the products and services offered. The Company evaluates
performance based on several factors, of which the primary financial measure is
business segment operating income (loss) before depreciation and amortization,
corporate expenses and interest expense ("EBITDA"). The Company's income taxes
are not evaluated at the segment level and, therefore, are not included herein.
The accounting policies of the business segments are the same as those described
in the Summary of Significant Accounting Policies (see Note 1).

<TABLE>
<CAPTION>
                                                                              YEARS ENDED DECEMBER 31,
                                                                    --------------------------------------------
                                                                        2000            1999            1998
                                                                    ------------    ------------    ------------
                                                                                   (IN THOUSANDS)
<S>                                                                 <C>             <C>             <C>
Revenue (from external customers):
       Multimedia Distribution (1) ..............................   $    265,380    $    252,948    $    238,820
       Network Services .........................................         22,484          22,431          22,456
                                                                    ------------    ------------    ------------
       Total ....................................................   $    287,864    $    275,379    $    261,276
                                                                    ============    ============    ============

Operating income (loss):
       Multimedia Distribution (1) ..............................   $    (19,318)   $    (20,947)   $    (18,493)
       Network Services .........................................          9,097           4,893           3,462
       Corporate ................................................        (18,773)        (26,313)         (7,800)
                                                                    ------------    ------------    ------------
       Total ....................................................   $    (28,994)   $    (42,367)   $    (22,831)
                                                                    ============    ============    ============

Earnings (loss) before interest, taxes, depreciation and
  amortization (EBITDA):
       Multimedia Distribution ..................................   $     67,289    $     75,912    $     72,045
       Network Services .........................................         10,688          12,165          10,970
       Corporate ................................................        (18,703)        (26,161)         (7,652)
                                                                    ------------    ------------    ------------
       Total EBITDA .............................................   $     59,274    $     61,916    $     75,363
                                                                    ------------    ------------    ------------

  Less reconciling item - depreciation and amortization .........         88,268         104,283          98,194
                                                                    ------------    ------------    ------------

  Total operating income (loss) .................................   $    (28,994)   $    (42,367)   $    (22,831)
                                                                    ============    ============    ============

Interest income:
       Multimedia Distribution ..................................   $        565    $        520    $        489
       Network Services .........................................              1             133             386
       Corporate ................................................         10,919           2,985           1,067
                                                                    ------------    ------------    ------------
       Total ....................................................   $     11,485    $      3,638    $      1,942
                                                                    ============    ============    ============

Interest expense, net:
       Multimedia Distribution ..................................   $     17,138    $     10,888    $      9,834
       Corporate ................................................         20,470          18,377          14,442
                                                                    ------------    ------------    ------------
       Total ....................................................   $     37,608    $     29,265    $     24,473
                                                                    ============    ============    ============

Capital expenditures:
       Multimedia Distribution ..................................   $    117,789    $     85,478    $     83,208
       Network Services .........................................            441             570           2,071
       Corporate ................................................              2              32           1,354
                                                                    ------------    ------------    ------------
       Total ....................................................   $    118,232    $     86,080    $     86,633
                                                                    ============    ============    ============

Depreciation and leasehold amortization:
       Multimedia Distribution ..................................   $     75,094    $     87,345    $     81,808
       Network Services .........................................          1,592           7,272           7,508
       Corporate ................................................             70             152             151
                                                                    ------------    ------------    ------------
       Total ....................................................   $     76,756    $     94,769    $     89,467
                                                                    ============    ============    ============
Amortization of intangible assets -
       Multimedia Distribution (1) ..............................   $     11,512    $      9,514    $      8,727
                                                                    ============    ============    ============
</TABLE>

<TABLE>
<CAPTION>
                                                           AS OF DECEMBER 31,
                                                     -----------------------------
                                                         2000             1999
                                                     -------------   -------------
<S>                                                  <C>             <C>
Identifiable assets:
   Multimedia Distribution .......................   $     454,042   $     419,706
   Network Services ..............................           8,486          10,021
   Corporate .....................................         328,308          69,358
   Net Assets of Discontinued Operations .........              --          82,216
                                                     -------------   -------------
       Total .....................................   $     790,836   $     581,301
                                                     =============   =============
</TABLE>


(1)      The Multimedia Distribution segment's operating results reflect the
         allocation of intangible asset amortization incurred by Ascent relating
         to the acquisition of OCV by Ascent.




                                       33
<PAGE>   35





Significant customers. Marriott Corporation ("Marriott") and its affiliates (see
Note 11) accounted for approximately 24%, 25%, and 24%, of revenues for the
years ended December 31, 2000, 1999, and 1998, respectively, while Holiday Inn
Corporation accounted for approximately 11%, 10%, and 11% of revenues for the
years ended December 31, 2000, 1999, and 1998, respectively (see Note 15).

    In addition, OCC earned revenues of approximately $27,870,000, $47,895,000
and $22,955,000 for the years ended December 31, 2000, 1999, and 1998,
respectively, from Hilton and its affiliates. Hilton was a minority stockholder
of OCC prior to 2000. The Hilton Master Contract expired on April 27, 2000. The
Master Contract provided OCC exclusive rights to install its in-room
entertainment system in all corporate-owned Hilton properties and as a preferred
vendor for all managed and franchised properties. Per the terms of the Master
contract, individual hotel installations have a term of seven years from
installation date. Since the expiration date of the Master contract, OCC has
operated under a month-to-month extension. On October 10, 2000, Hilton
Corporation announced that it would not be renewing its contract with OCC. OCC
currently services approximately 26,000 Hilton-owned rooms and approximately
60,300 Hilton managed and franchised rooms. The rooms expire in accordance with
the individual hotel contracts over the next eight years. It is OCC's intention
to pursue the renewal of all managed and franchised Hilton hotels.

    OCC also has a Master Contract in place with Promus Hotel Corporation. This
Master Contract expires on May 25, 2002. Promus owns, manages and franchises the
DoubleTree, Embassy Suites, Hampton Inn and Homewood hotel chains. Promus Hotel
Corporation was acquired by the Hilton Corporation in late 1999. OCC currently
services approximately 6,200 Promus owned rooms and 63,200 Promus managed and
franchised rooms. The rooms expire in accordance with the individual hotel
contracts over the next eight years.


Geographic Operating Information. The following represents total revenues for
the years ended December 31, 2000, 1999 and 1998 and long-lived assets
(excluding goodwill) as of December 31, 2000 and 1999 by geographic territory
(in thousands):

<TABLE>
<CAPTION>
                                        2000                            1999                     1998
                            -----------------------------   -----------------------------   -------------
                                TOTAL        LONG LIVED         TOTAL         LONG LIVED        TOTAL
                             REVENUES (1)      ASSETS        REVENUES(1)        ASSETS       REVENUES(1)
                            -------------   -------------   -------------   -------------   -------------
<S>                         <C>             <C>             <C>             <C>             <C>
United States               $     260,459   $     318,539   $     250,335   $     275,614   $     237,510
Canada                             13,441          21,130          13,034          21,021          12,690
All other foreign                  13,964          17,431          12,010          14,931          11,076
                            -------------   -------------   -------------   -------------   -------------
Total                       $     287,864   $     357,100   $     275,379   $     311,566   $     261,276
                            =============   =============   =============   =============   =============
</TABLE>

(1)- Net revenues are attributed to countries based on invoicing location of
     customer.

Note 12 -- Related Party Transactions

    In connection with the Distribution, Ascent and COMSAT executed the
Distribution Agreement, dated June 3, 1997. The Distribution Agreement provided,
among other things, that COMSAT would distribute all of its holdings of Ascent
common stock to COMSAT shareholders on a pro-rata basis. COMSAT consummated the
Distribution on June 27, 1997 (see Note 1). In addition, while COMSAT has
received a ruling from the IRS that the Distribution will not be taxable to
COMSAT or its shareholders, such a ruling is based on the representations made
by COMSAT in the IRS ruling documents. Accordingly, in order to maintain the
tax-free status of the Distribution, Ascent is subject to numerous restrictions
under the Distribution Agreement, most of which have expired. The most
significant restriction still in place is that Ascent shall not take any action,
nor fail or omit to take any action, that would cause the Distribution to be
taxable or cause any representation made in the ruling documents to be untrue in
a manner which would have an adverse effect on the tax-free status of the
Distribution.

    Pursuant to the Distribution Agreement, Ascent will indemnify COMSAT against
any tax related losses incurred by COMSAT to the extent such losses are caused
by any breach by Ascent of its representations, warranties or covenants made in
the Distribution Agreement. In turn, COMSAT will indemnify Ascent against any
tax related losses incurred by Ascent to the extent such losses are caused by
any COMSAT action causing the Distribution to be taxable. To the extent that tax
related losses are attributable to subsequent tax legislation or regulation,
such losses will be borne equally by COMSAT and Ascent.

       OCC has also made arrangements for the use of an airplane owned by a
limited liability company of which Jerome H. Kern is the sole member. When that
airplane is used for purposes related to the conduct of OCC's business, OCC
reimburses the limited liability company for such use at market rates.




                                       34
<PAGE>   36





Note 13 - Financial Instruments and Off-Balance Sheet Risks:

Fair Value of Financial Instruments. The fair value of cash and cash
equivalents, receivables, other current assets, accounts payable and other
accrued liabilities approximate their carrying value due to the short-term
nature of these financial instruments. The fair value of certain long-term
investments (the Company's investment in MagiNet and Beacon Communications, LLC)
approximates their carrying value.

    The estimated fair value of Company's Senior Secured Discount Notes was
approximately $184,000,000 and $157,000,000 at December 31, 2000 and 1999,
respectively. This value was estimated by obtaining a yield-adjusted price as of
December 31, 2000, for each obligation from an investment banker. The fair value
of the OCC Credit facility approximates its carrying value at December 31, 2000
and 1999 of $247,133,000 and $180,000,000 respectfully, due to the facilities
variable interest rate. The fair values of the Company's remaining long-term
liabilities and other financial instruments approximate their carrying values.

Note 14 -- Quarterly Results of Operations (Unaudited):

    The following is a summary of unaudited quarterly results of operations for
the years ended December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                       DEC. 31       SEPT. 30      JUNE 30     MARCH 31
                                                                    ------------  ------------  ------------  ----------
                                                                                (IN THOUSANDS)
<S>                                                                 <C>           <C>           <C>           <C>
2000
Revenues ........................................................   $   71,947    $   74,556    $   71,325    $   70,036
Operating expenses ..............................................       57,342        54,999        50,521        65,728
Depreciation and amortization ...................................       22,155        22,233        23,190        20,690
Income (loss) from continuing operations ........................       (9,029)         (205)       (7,866)      (22,811)
Income (Loss) from discontinued operations, net .................           --            --         6,643        (3,012)
Gain (Loss) from sale of discontinued operations, net ...........       (5,873)      141,335            --            --
Net income (loss) ...............................................      (14,902)      141,130        (1,223)      (25,123)

1999
Revenues ........................................................   $   67,636    $   73,147    $   68,268    $   66,328
Operating expenses ..............................................       62,359        51,163        51,781        48,160
Depreciation and amortization ...................................       25,035        27,220        26,778        25,250
Income (Loss) from continuing operations ........................      (21,752)       (9,436)      (10,076)       (9,854)
Income (Loss) from discontinued operations, net .................      (12,669)       (4,557)          225        (9,242)
Gain (Loss) from sale of  discontinued  operations, net .........       (3,453)           --            --         3,237
Net loss ........................................................      (37,874)      (13,993)       (9,851)      (15,859)
</TABLE>


Note 15 - Subsequent Events:

Sale of Series B Preferred Stock

     On March 5, 2001, OCC sold 15,000 newly issued shares of its Cumulative
Redeemable Preferred Stock, Series B, par value $.01 per share (the "Series B
Preferred Stock"), to the Company in consideration of $15,000,000 in cash,
pursuant to a Preferred Stock Purchase Agreement, dated March 5, 2001 (the
"Ascent Purchase Agreement"), between OCC and Ascent.

     The liquidation preference (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 share which 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 Series B 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 Series B 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.
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 from and including April 15, 2001 to but excluding the date on which
the Liquidation Preference is made available pursuant to a redemption of the
Series B Preferred Stock or a liquidation of OCC. Accrued dividends are payable
monthly, commencing on April 15, 2001, 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.
Dividends added to the Liquidation Preference shall accrue dividends on a daily
basis at the rate of 12% per annum. Accrued dividends not paid as provided above
on any dividend payment date accumulate and such accumulated unpaid





                                       35
<PAGE>   37


dividends may be declared and paid at any time without reference to any regular
dividend payment date, to holders of record of Series B Preferred Stock as of a
special record date fixed by OCC. Subject to certain specified exceptions, OCC
is prohibited from paying dividends on any parity securities or any junior
securities (including common stock) during any period in which OCC is in arrears
with respect to payment of dividends on Series B Preferred Stock.

    Upon any liquidation, dissolution or winding up of OCC, the holders of
Series B 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 Series B 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 B Preferred Stock and the holders of any parity securities. The
holders of Series B Preferred Stock will be entitled to no other or further
distribution of or participation in the remaining assets of OCC after receiving
the Liquidation Preference per share. Series B Preferred Stock is not
convertible into any other security of OCC.

    Shares of Series B Preferred Stock are redeemable at the option of OCC at
any time after March 5, 2001 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
Series B Preferred Stock are to be redeemed.

    Series B Preferred Stock will not rank junior to any other capital stock of
OCC in respect of rights of redemption or rights to receive dividends or
liquidating distributions. OCC may not issue any senior securities without the
consent of the holders of at least 66 2/3% of the number of shares of Series B
Preferred Stock then outstanding.

Marriott Agreement

In March 2001, OCC and Marriott (see Note 11) 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.

Hotel Digital Network, Inc. (DMN)

On August 22, 2000, OCC and DMN entered into an agreement (see Note 2) pursuant
to which DMN agreed to provide digital music to OCC, for use by OCC in its Music
OnCommand service. DMN provides music-on-demand services to the hospitality
industry through a patented platform and licenses with major record labels. In
addition to its agreement with OCC, DMN has contracts to provide its services to
LodgeNet Entertainment Corporation and Hospitality Network, Inc.

     On February 28, 2001, pursuant to a stock purchase agreement with DMN, for
aggregate payments by OCC of approximately $1.7 million and a commitment to fund
up to an additional $2.7 million, DMN issued to OCC such number of shares of
DMN's 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.

STSN

     On March 30, 2001, OCC made a strategic $20 million investment in the
convertible preferred stock of STSN, a high speed broad band internet access
provider for hotels (see Note 2). Other strategic investors in STSN include
Marriott, and Siemens Corporation, a German corporation which among other
things, manufactures electronic equipment and supplies. STSN is a provider of
high speed internet access to the hotel industry and has an exclusive contract
to provide its service with Marriott.

OCC Credit Facility Amendment

As discussed in Note 6, on March 27, 2001, OCC signed an amendment to the OCC
Credit Facility. The OCC Credit Facility, as amended, increases the borrowing
ratio from 3.5 to 4.25 and decreases the borrowings allowed from $350 million to
$320 million. OCC is restricted to total borrowings of $275 million until the
Senior Secured Discount Notes owned by the Company are paid.




                                       36
<PAGE>   38




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

    The Company engaged KPMG LLP as independent accountants on April 20, 2000,
replacing Deloitte & Touche LLP. There were no disagreements or reportable
events (as defined by Regulation S-K) with Deloitte & Touche LLP during the
fiscal years ended December 31, 1999 and 1998 and the interim period through
April 20, 2000.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    Omitted pursuant to General Instruction I of Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

    Omitted pursuant to General Instruction I of Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Omitted pursuant to General Instruction I of Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Omitted pursuant to General Instruction I of Form 10-K.




                                       37

<PAGE>   39
                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.


<TABLE>
<CAPTION>
(a)  Documents filed as part of this Report.                                                            PAGE
<S>                                                                                                    <C>
(1)  Consolidated Financial Statements and Supplementary Data of Registrant

         Independent Auditors' Report - KPMG                                                              13

         Independent Auditors' Report - Deloitte & Touche LLP                                             14

         Consolidated Balance Sheets as of December 31, 2000 and 1999                                     15

         Consolidated Statements of Operations for the years ended December 31,
              2000, 1999 and 1998                                                                         16

         Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31,
              2000, 1999 and 1998                                                                         17

         Consolidated Statements of Stockholder's Equity for the years ended December 31,
              2000, 1999 and 1998                                                                         18

         Consolidated Statements of Cash Flows for the years ended December 31,
              2000, 1999 and 1998                                                                         19

         Notes to Consolidated Financial Statements                                                     20-36
</TABLE>

(2) Financial Statement Schedules

    Schedule II - Valuation and Qualifying Accounts for the years ended December
31, 2000, 1999 and 1998

    None.

(b) REPORTS ON FORM 8-K:

    The Registrant filed with the Commission on January 24, 2001, a Form 8-K
    describing that (1) the Company had entered into an Ownership Interest
    Purchase Agreement with Liberty LiveWire Corporation to contribute the
    assets of Ascent Network Services (ANS) to Livewire Network Services, LLC
    (LNS) and subsequently, to sell a 1% ownership interest in LNS and (2) an
    Operating Agreement to appoint a subsidiary of LiveWire as the manager of
    LNS.

(c) EXHIBITS: The following exhibits are listed according to the number assigned
    in the table in Item 601 of Regulation S-K.

        3.1(a) Amended and Restated Certificate of Incorporation of Ascent
        Entertainment Group, Inc.

        3.1(b) Amended and Restated Bylaws of Ascent Entertainment Group, Inc.

        4.1 Indenture between the Registrant and The Bank of New York, as
        Trustee, dated December 22, 1997. (Incorporated by reference from the
        exhibit of the same number to Amendment No. 1 to the Registrant's
        Registration Statement on Form S-4 (No. 333-44461) filed on January 28,
        1998.)

        27. Financial Data Schedule




                                       38
<PAGE>   40





                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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 on April 1, 2001.

                                        ASCENT ENTERTAINMENT GROUP, INC.

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

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities indicated on
April 1, 2001.

    By: /s/John C. Malone
        -----------------------------------------
        John C. Malone
        Chairman of the Board and Director

    By: /s/ Robert R. Bennett
        -----------------------------------------
        Robert R. Bennett
        President and Chief Executive Officer
        (Principal Executive Officer) and Director

    By: /s/ Gary S. Howard
        -----------------------------------------
        Gary S. Howard
        Executive Vice President,
        Chief Operating Officer and Director

    By: /s/ Charles Y. Tanabe
        -----------------------------------------
        Charles Y. Tanabe
        Senior Vice President,
        General Counsel and Asst. Secretary

    By: /s/ David J. A. Flowers
        -----------------------------------------
        David J. A. Flowers
        Senior Vice President and Treasurer
        (Principal Financial Officer)

    By: /s/ Christopher W. Shean
        -----------------------------------------
        Christopher W. Shean
        Vice President and Controller
        (Principal Accounting Officer)




                                       39
<PAGE>   41





ASCENT ENTERTAINMENT GROUP, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                      (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                      BALANCE AT       CHARGED       CHARGED                        BALANCE
                                                      BEGINNING          TO          TO OTHER                       AT END
                                                       OF YEAR         EXPENSES      ACCOUNTS      DEDUCTIONS       OF YEAR
                                                     ------------   ------------   ------------    ----------     ------------
<S>                                                  <C>            <C>            <C>             <C>            <C>
1998: Allowance for loss on accounts receivable      $      1,647   $        982   $     (1,119)   $       (9)    $      1,501

1999: Allowance for loss on accounts receivable      $      1,501   $      2,087   $       (523)   $       --     $      3,065

2000: Allowance for loss on accounts receivable      $      3,065   $        451   $         --    $    2,134     $      1,382
</TABLE>





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