<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q


(X)      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934.

         For the quarterly period ended March 31, 2001
                                        --------------

                                       OR

(  )     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934.

         For the transition period from__________ to __________

                         Commission File Number 0-21389
                                                -------

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



                  Delaware                                     51-0374669
                  --------                                     ----------
         (State or other jurisdiction of                      (IRS Employer
          incorporation or organization)                  Identification Number)


         c/o Pegasus Communications Management Company;
         225 City Line Avenue, Suite 200, Bala Cynwyd, PA               19004
         ------------------------------------------------               -----
         (Address of principal executive offices)                     (Zip code)


         Registrant's telephone number, including area code:   (888) 438-7488
                                                               --------------


         Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (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___



         Number of shares of each class of the Registrant's common stock
outstanding as of May 15, 2001:

                  Class B, Common Stock, $0.01 par value                 200


<PAGE>



                     PEGASUS SATELLITE COMMUNICATIONS, INC.

                                    Form 10-Q
                                Table of Contents
                  For the Quarterly Period Ended March 31, 2001

<TABLE>
<CAPTION>
                                                                                                 Page
                                                                                                 ----
<S>     <C>                <C>                                                                   <C>
Part I.  Financial Information


         Item 1            Financial Statements

                           Condensed Consolidated Balance Sheets
                             March 31, 2001 and December 31, 2000                                4

                           Consolidated Statements of Operations and
                             Comprehensive Loss
                             Three months ended March 31, 2001 and 2000                          5

                           Condensed Consolidated Statements of Cash Flows
                             Three months ended March 31, 2001 and 2000                          6

                           Notes to Consolidated Financial Statements                            7


         Item 2            Management's Discussion and Analysis of
                             Financial Condition and Results of Operations                       12


         Item 3            Quantitative and Qualitative Disclosures About
                             Market Risk                                                         17


Part II.  Other Information


         Item 1            Legal Proceedings                                                     18

         Item 2            Changes in Securities and Use of Proceeds                             18

         Item 6            Exhibits and Reports on Form 8-K                                      18

         Signature                                                                               20
</TABLE>





                                        2
<PAGE>


PART I.           FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS

































                                        3


<PAGE>
                     Pegasus Satellite Communications, Inc.
                      Condensed Consolidated Balance Sheets
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                                  March 31,            December 31,
                                                                                                    2001                   2000
                                                                                              ------------------     ---------------
                                    ASSETS                                                                  (unaudited)
<S>                                                                                            <C>                   <C>
Current  assets:
     Cash and cash equivalents                                                                        $ 160,305            $ 214,361
     Restricted cash                                                                                     11,710                9,071
     Accounts receivable, net                                                                            61,458               57,643
     Inventory                                                                                           12,030               16,854
     Prepaid expenses                                                                                    12,434               12,778
     Other current assets                                                                                 6,680                4,967
                                                                                              ------------------     ---------------
       Total current assets                                                                             264,617              315,674

Property and equipment, net                                                                              68,449               64,609
Intangible assets, net                                                                                1,977,941            2,036,208
Investment in affiliates                                                                                      -              116,364
Other non-current assets                                                                                 56,795               72,531
                                                                                              ------------------     ---------------
     Total assets                                                                                    $2,367,802           $2,605,386
                                                                                              ==================     ===============

               LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY

Current liabilities:
     Current portion of long-term debt                                                                 $ 14,357             $ 10,891
     Taxes payable                                                                                       29,620               29,620
     Accounts payable                                                                                     7,073                9,782
     Accrued satellite programming, fees and commissions                                                 86,065              104,627
     Other current liabilities                                                                           50,044               66,401
                                                                                              ------------------     ---------------
       Total current liabilities                                                                        187,159              221,321

Long-term debt                                                                                        1,201,014            1,171,967
Deferred income taxes, net                                                                              103,842              145,912
Other non-current liabilities                                                                            43,590               40,198
                                                                                              ------------------     ---------------
      Total liabilities                                                                               1,535,605            1,579,398
                                                                                              ------------------     ---------------

Commitments and contingent liabilities  (see Note 10)

Minority interest                                                                                         1,033                  911

Redeemable preferred stock                                                                              167,224              490,646

Stockholder's equity:
     Common stock                                                                                             -                  551
     Other stockholder's equity                                                                         663,940              533,880
                                                                                              ------------------     ---------------
       Total stockholder's equity                                                                       663,940              534,431
                                                                                              ------------------     ---------------

     Total liabilities, redeemable preferred stock and stockholder's equity                          $2,367,802           $2,605,386
                                                                                              ==================     ===============
</TABLE>

           See accompanying notes to consolidated financial statements

                                        4
<PAGE>
                     Pegasus Satellite Communications, Inc.
          Consolidated Statements of Operations and Comprehensive Loss
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                            Three Months Ended March 31,
                                                                                            2001                    2000
                                                                                     --------------------    --------------------
                                                                                                      (unaudited)
<S>                                                                                  <C>                     <C>
Net revenues:
     DBS                                                                                       $ 205,838                $ 95,857
     Broadcast                                                                                     7,646                   8,138
                                                                                     --------------------    --------------------
       Total net revenues                                                                        213,484                 103,995

Operating expenses:
     DBS
        Programming, technical, general and administrative                                       146,227                  67,858
        Marketing and selling                                                                     53,992                  25,409
        Depreciation and amortization                                                             62,754                  20,274
        Other                                                                                        525                     400
     Broadcast
        Programming, technical, general and administrative                                         5,436                   5,963
        Marketing and selling                                                                      1,882                   1,869
        Depreciation and amortization                                                              1,281                   1,325
        Other                                                                                        110                      15
                                                                                                                               -
     Corporate expenses                                                                            2,637                   1,860
     Corporate depreciation and amortization                                                         387                     363
     Development costs                                                                             3,376                     427
     Other expense                                                                                 8,336                     865
                                                                                     --------------------    --------------------
       Loss from operations                                                                      (73,459)                (22,633)

Interest expense                                                                                 (34,331)                (21,247)
Interest income                                                                                    2,708                   3,426
Other non-operating expense, net                                                                  (3,495)                   (116)
                                                                                     --------------------    --------------------
     Loss from continuing operations before income taxes
       and extraordinary items                                                                  (108,577)                (40,570)

Benefit for income taxes                                                                         (37,935)                      -
                                                                                     --------------------    --------------------

     Loss from continuing operations before
       extraordinary items                                                                       (70,642)                (40,570)
Discontinued operations:
     Income from discontinued operations of cable segment, net of income
       tax expense of $187                                                                             -                     304
                                                                                     --------------------    --------------------
     Loss before extraordinary items                                                             (70,642)                (40,266)

Extraordinary loss from extinquishment of debt, net of income tax
     benefit of $3,526                                                                                 -                  (5,754)
                                                                                     --------------------    --------------------
     Net loss                                                                                    (70,642)                (46,020)

Other comprehensive loss:
     Unrealized loss on marketable equity securities, net of income
       tax benefit of $4,665                                                                      (7,611)                      -
                                                                                     --------------------    --------------------
     Comprehensive loss                                                                        $ (78,253)              $ (46,020)
                                                                                     ====================    ====================
</TABLE>



           See accompanying notes to consolidated financial statements

                                        5
<PAGE>
                     Pegasus Satellite Communications, Inc.
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                                Three Months Ended March 31,
                                                                                                2001                    2000
                                                                                          ------------------      ------------------
                                                                                                          (unaudited)
<S>                                                                                       <C>                     <C>
Net cash used for operating activities                                                            $ (67,699)               $ (5,698)
                                                                                          ------------------      ------------------

Cash flows from investing activities:
       Acquisitions, net of cash acquired                                                              (889)                (35,967)
       Capital expenditures                                                                          (7,188)                 (8,005)
       Investment in affiliates                                                                           -                 (14,462)
       Other                                                                                         (2,584)                 (1,261)
                                                                                          ------------------      ------------------
    Net cash used by investing activities                                                           (10,661)                (59,695)
                                                                                          ------------------      ------------------

Cash flows from financing activities:
       Repayments of long-term debt                                                                  (3,037)                 (9,761)
       Net borrowings on bank credit facilities                                                      31,313                  70,800
       Restricted cash, net of cash acquired                                                         (2,639)                 (2,070)
       Debt financing costs                                                                             (23)                (10,052)
       Net proceeds from issuance of preferred stock                                                      -                 290,619
       Other                                                                                         (1,310)                    721
                                                                                          ------------------      ------------------
    Net cash provided by financing activities                                                        24,304                 340,257
                                                                                          ------------------      ------------------

Net (decrease) increase in cash and cash equivalents                                                (54,056)                274,864
Cash and cash equivalents, beginning of year                                                        214,361                  40,453
                                                                                          ------------------      ------------------
Cash and cash equivalents, end of period                                                          $ 160,305               $ 315,317
                                                                                          ==================      ==================
</TABLE>



               See accompanying notes to consolidated financial statements

                                        6
<PAGE>


                     PEGASUS SATELLITE COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   The Company

         On February 22, 2001, the Company undertook a corporate reorganization
and is now named Pegasus Satellite Communications, Inc. (formerly Pegasus
Communications Corporation). As a result of the reorganization, Pegasus
Satellite Communications, Inc. (herein referred to as "Pegasus" or together with
its subsidiaries "the Company") became a direct subsidiary of a new publicly
held parent holding company that was formed and which assumed the name Pegasus
Communications Corporation ("PCC"). In the reorganization, the ownership
interests and rights of Pegasus' common and preferred stockholders were
automatically transferred into common and preferred stocks of PCC.
Simultaneously in the reorganization, Pegasus distributed its subsidiary Pegasus
Development Corporation ("PDC") to PCC.

2.   Basis of Presentation

         The consolidated financial statements include the accounts of Pegasus
and all of its subsidiaries on a consolidated basis. All intercompany
transactions and balances have been eliminated. The balance sheets and
statements of cash flows are presented on a condensed basis.

         The amounts on the balance sheet as of December 31, 2000 were derived
from the audited balance sheet of Pegasus as of that date. For further
information, refer to the consolidated financial statements and footnotes
thereto included in Pegasus' Annual Report on Form 10-K for the year ended
December 31, 2000.

         The accompanying unaudited consolidated financial statements are
prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The unaudited consolidated financial statements reflect
all adjustments consisting of normal recurring items that are, in the opinion of
management, necessary for a fair presentation, in all material respects, of the
financial position of the Company and the results of its operations and
comprehensive loss and its cash flows for the interim period.

3.   Redeemable Preferred Stock

         In the corporate reorganization indicated in Note 1, all shares of
Series A, B, C, D and E preferred stocks of Pegasus issued and outstanding at
the date of the reorganization were cancelled, and balances associated with
these stocks were transferred to additional paid-in capital.

         Concurrent with the reorganization, Pegasus issued a new 12-3/4% Series
A cumulative exchangeable preferred stock in exchange for PCC's 12-3/4% Series A
cumulative exchangeable preferred stock that it had received from Pegasus in the
reorganization. The terms, conditions and amounts outstanding, including
dividends accrued, of Pegasus's new Series A preferred stock are identical to
those of PCC's Series A preferred stock as well as those of Pegasus's Series A
preferred stock outstanding at the date of the reorganization.

         The number of shares of Pegasus' Series A preferred stock issued and
outstanding was 162,587 and 152,844 at March 31, 2001 and December 31, 2000,
respectively. The increase in the number of shares was due to the payment of
semi-annual dividends on January 1, 2001 of $9.7 million in shares of Series A
preferred stock. The carrying amount increased $5.2 million to $167.2 million at
March 31, 2000 from $162.0 million at December 31, 2000. The increase was
principally due to accrued dividends.

4.   Common Stock

         In the corporate reorganization indicated in Note 1, all shares of
Class A and B common stocks of Pegasus issued and outstanding on the date of the
reorganization were cancelled. Simultaneously in the reorganization, Pegasus
issued 200 shares of new Class B common stock, $.01 par value. All of these
shares became wholly owned by PCC in the reorganization. The difference in the
amount of par value of the new Class B common stock and the amount of the par
values of the Class A and B common stocks outstanding at the date of the
reorganization was transferred to additional paid-in capital.

5.   Other Stockholder's Equity

         Stockholder's equity increased by $338.1 million as a result of
balances associated with preferred and common stocks that were transferred to
additional paid-in capital in the corporate reorganization, as discussed in
Notes 3 and 4. Additionally, stockholder's equity was reduced by a charge to
additional paid-in capital of $206.7 million representing Pegasus' net
investment in PDC that was distributed to PCC in the reorganization, as
indicated in Note 1.

         Within other stockholder's equity is accumulated other comprehensive
loss, net of income tax, representing the cumulative unrealized loss on
marketable equity securities held by the Company. Balances were $19.6 million,
net of income tax benefit of $12.0 million at March 31, 2001 and $12.0 million,
net of income tax benefit of $7.3 million at December 31, 2000.


                                        7
<PAGE>


                     PEGASUS SATELLITE COMMUNICATIONS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6.   Long-Term Debt

         In the corporate reorganization discussed in Note 1, Pegasus continues
to be obligated under debt securities and agreements after the reorganization
that were outstanding at the date of the reorganization, which are the same that
existed at December 31, 2000.

         During the three months ended March 31, 2001, Pegasus Media &
Communications, Inc. ("PM&C"), a direct subsidiary of Pegasus, borrowed $32.0
million under its revolving credit facility. The total amount outstanding under
the revolving credit facility was $67.0 million at March 31, 2001 and $35.0
million at December 31, 2000. Letters of credit outstanding under the revolving
credit facility, which reduce the availability thereunder, were $36.6 million at
March 31, 2001 and $40.4 million at December 31, 2000. At March 31, 2001, the
commitment for the revolving credit facility was permanently reduced as
scheduled under the terms of the governing credit agreement by approximately
$5.6 million to approximately $219.4 million. Availability under the revolving
credit facility at March 31, 2000 was $115.6 million. On March 31, 2001, PM&C
began making scheduled quarterly payments on its term loan facility amounting to
$687,500. This reduced the amount outstanding thereunder to $274.3 million at
March 31, 2001. The weighted average rates of interest including applicable
margins on amounts outstanding at March 31, 2001 and December 31, 2000 were
8.63% and 10.19%, respectively, for the term facility and 7.71% and 10.11%,
respectively, for the revolving facility.

         At March 31, 2001 and December 31, 2000, the total amount outstanding
under Golden Sky Systems, Inc.'s ("GSS") revolving credit facility was $37.0
million. GSS is an indirect subsidiary of Pegasus. Letters of credit outstanding
under the revolving credit facility, which reduce the availability thereunder,
were $28.7 million at March 31, 2001 and $35.9 million at December 31, 2000. At
March 31, 2001, the commitment for the revolving credit facility was permanently
reduced as scheduled under the terms of the governing credit agreement by
approximately $1.2 million to approximately $113.9 million. Availability under
the revolving facility at March 31, 2001 was $48.1 million. The weighted average
rates of interest including applicable margins on amounts outstanding at March
31, 2001 and December 31, 2000 were 8.33% and 9.90%, respectively, for the term
facility and 8.05% and 10.26%, respectively, for the revolving facility.

         At March 31, 2001, GSS was in violation of covenants under its credit
agreement with respect to certain operational thresholds. GSS has requested a
waiver of these violations from the participating lenders to the agreement. In
exchange for the waiver, GSS would amend the agreement to permanently reduce the
commitment under the revolving facility to $90.0 million. GSS intends to repay
amounts outstanding under the term loan facility and revolving credit facility
by the end of the third quarter 2001. The waiver and amendment are pending
approval by the participating lenders. The amount outstanding under the credit
agreement of $72.0 million is classified as non-current, as the Company intends
to refinance the debt on a long-term basis with availability under the PM&C
revolving credit facility described above.

         On April 27, 2001, Pegasus offered to exchange its new issue of $195.0
million in principal amount of 12-3/8% senior notes due 2006 for GSS'
outstanding $195.0 million in principal amount of Series A and B 12-3/8% senior
subordinated notes due 2006. Additionally on this date, Pegasus offered to
exchange its new issue of $193.1 million in maturity value of 13-1/2% senior
subordinated discount notes due 2007 for Golden Sky DBS, Inc.'s ("GSDBS")
outstanding $193.1 million in maturity value of 13-1/2% Series B senior discount
notes due 2007. GSDBS is an indirect wholly owned subsidiary of Pegasus. In the
exchange, the holders of the GSS and GSDBS notes are being solicited for their
consent to amend each indenture governing GSS' and GSDBS' notes that would
eliminate substantially all restrictive covenants under the indentures. Tender
of the notes constitutes consent to the applicable indenture amendments. The
exchange offer is scheduled to expire in the second quarter of 2001.



                                        8
<PAGE>

7.   Industry Segments

         At March 31, 2001 and December 31, 2000, the Company's only reportable
segment was DBS. Information on DBS' revenue and measure of profit/loss and how
this contributes to the Company's consolidated loss from continuing operations
before income taxes for each period reported is as presented on the consolidated
statements of operations and comprehensive loss. DBS derived all of its revenues
from external customers for each period presented. Identifiable total assets for
DBS were $2.1 billion at March 31, 2001, which did not change significantly from
the total assets at December 31, 2000.

8.   Supplemental Cash Flow Information

         Significant noncash investing and financing activities are as follows
(in thousands):
<TABLE>
<CAPTION>
                                                                                          Three Months
                                                                                        Ended March 31,
                                                                                     2001             2000
                                                                                 --------------   --------------
<S>                                                                              <C>              <C>
Preferred stock dividends and reduction of paid-in capital....................           5,432           10,318
Barter revenue and related expense............................................           1,677            1,807
Capital issued and related investment in affiliates...........................               -           97,555
Capital issued and related acquisition of intangibles.........................               -           78,115
Deferred taxes, net and related acquisition of intangibles....................               -           27,985
Mortgage payable and related purchase of building.............................               -            8,750
</TABLE>

9.   Derivative Instruments

         Statement of Financial Accounting Standards No. 133 "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), as amended by SFAS
No. 138, became effective for the Company on January 1, 2001. SFAS 133
establishes accounting and reporting standards for derivative instruments and
hedging activities. The statement requires that all derivatives are to be
recognized as either assets or liabilities in the statement of financial
position and the instruments are to be measured at fair value. The accounting
for changes in the fair value of a derivative depends on the intended use of the
derivative and the resulting designation.

         At March 31, 2001, the Company's derivative instruments were two
interest rate swap and two interest rate cap instruments. The Company has not
designated these instruments as hedges, so the changes in the fair values of
these instruments are recognized in earnings in the period of change. The fair
values of these swaps and caps are determined by the financial institutions that
are party to the contracts and the fair values are determined by the amount that
the Company or other parties to the contracts would pay if the contracts were
terminated at March 31, 2001. No cash is transferred in determining the
termination values. The Company recorded a liability and a charge to earnings at
March 31, 2001 of $3.3 million for the amount of the combined fair values of the
swaps and caps that the Company would pay to terminate the respective contracts.

10.  Commitments and Contingent Liabilities

Legal Matters:

         DIRECTV, Inc. Litigation
         ------------------------

         The Company is an affiliate of the National Rural Telecommunications
Cooperative ("NRTC"). The NRTC is a cooperative organization whose members and
affiliates are engaged in the distribution of telecommunications and other
services in predominantly rural areas of the United States. The Company's
ability to distribute DIRECTV programming services is dependent upon agreements
between the NRTC and Hughes Electronics Corporation and between the Company and
the NRTC.




                                        9

<PAGE>

10.  Commitments and Contingent Liabilities (continued)

         The NRTC:

         On June 3, 1999, the NRTC filed a lawsuit in federal court against
DIRECTV seeking a court order to enforce the NRTC's contractual rights to obtain
from DIRECTV certain premium programming formerly distributed by United States
Satellite Broadcasting Company, Inc. for exclusive distribution by the NRTC's
members and affiliates in their rural markets. The NRTC also sought a temporary
restraining order preventing DIRECTV from marketing the premium programming in
such markets and requiring DIRECTV to provide the NRTC with the premium
programming for exclusive distribution in those areas. The court, in an order
dated June 17, 1999, denied the NRTC a preliminary injunction on such matters,
without deciding the underlying claims.

         On July 22, 1999, DIRECTV responded to the NRTC's continuing lawsuit by
rejecting the NRTC's claims to exclusive distribution rights and by filing a
counterclaim seeking judicial clarification of certain provisions of DIRECTV's
contract with the NRTC. As part of the counterclaim, DIRECTV is seeking a
declaratory judgment that the term of the NRTC's agreement with DIRECTV is
measured only by the orbital life of DBS-1, the first DIRECTV satellite
launched, and not by the orbital lives of the other DIRECTV satellites at the
101(Degree) W orbital location. According to DIRECTV, DBS-1 suffered a failure
of its primary control processor in July 1998 and since that time has been
operating normally using a spare control processor. While the NRTC has a right
of first refusal to receive certain services from any successor DIRECTV
satellite, the scope and terms of this right of first refusal are also being
disputed in the litigation, as discussed below. This right is not expressly
provided for in the agreements with the NRTC.

         On September 9, 1999, the NRTC filed a response to DIRECTV's
counterclaim contesting DIRECTV's interpretations of the end of term and right
of first refusal provisions. On December 29, 1999, DIRECTV filed a motion for
partial summary judgment. The motion sought a court order that the NRTC's right
of first refusal, effective at the termination of DIRECTV's contract with the
NRTC, does not include programming services and is limited to 20 program
channels of transponder capacity. On January 31, 2001, the court issued an order
denying DIRECTV's motion in its entirety for partial summary judgment relating
to the right of first refusal.

         If DIRECTV were to prevail on its counterclaim, any failure of DBS-1
could have a material adverse effect on the DIRECTV rights. The Company has been
informed that DIRECTV may amend its counterclaim to file additional claims
against the NRTC.

         On August 26, 1999, the NRTC filed a separate lawsuit in federal court
against DIRECTV claiming that DIRECTV had failed to provide to the NRTC its
share of launch fees and other benefits that DIRECTV and its affiliates have
received relating to programming and other services. On November 15, 1999, the
court granted a motion by DIRECTV and dismissed the portion of this lawsuit
asserting tort claims, but left in place the remaining claims asserted by the
NRTC.

         Both of the NRTC's lawsuits against DIRECTV have been consolidated. A
trial date of August 13, 2002 has been set for these lawsuits and two additional
lawsuits against DIRECTV discussed below.

         Pegasus Satellite Television, Inc. ("PST") and GSS:

         On January 10, 2000, PST, a direct subsidiary of Pegasus, and GSS filed
a class action lawsuit in federal court in Los Angeles against DIRECTV as
representatives of a proposed class that would include all members and
affiliates of the NRTC that are distributors of DIRECTV. The complaint contained
causes of action for various torts, common law counts and declaratory relief
based on DIRECTV's failure to provide the NRTC with certain premium programming,
and on DIRECTV's position with respect to launch fees and other benefits, term
and right of first refusal. The complaint sought monetary damages and a court
order regarding the rights of the NRTC and its members and affiliates.




                                       10

<PAGE>


10.  Commitments and Contingent Liabilities (continued)

         On February 10, 2000, PST and GSS filed an amended complaint which
added new tort claims against DIRECTV for interference with their relationships
with manufacturers, distributors and dealers of direct broadcast satellite
equipment. The class action allegations PST and GSS previously filed were later
withdrawn to allow a new class action to be filed on behalf of the members and
affiliates of the NRTC. The new class action was filed on February 27, 2000.

         On December 10, 2000, the court rejected in its entirety DIRECTV's
motion to dismiss certain of the claims asserted by PST, GSS and the putative
class. On January 31, 2001, the court denied in its entirety a motion for
summary judgment filed by DIRECTV relating to the right of first refusal. The
court also certified the plaintiff's class on December 28, 2000.

         On March 9, 2001, DIRECTV filed a counterclaim against PST and GSS, as
well as the class members. In the counterclaim, DIRECTV seeks two claims for
relief: a declaratory judgement that PST has no right of first refusal in the
agreements with the NRTC to have DIRECTV provide any services after the
expiration of the term of these agreements; and an order that DBS-1 is the
satellite (and the only satellite) that measures the term of the agreements with
the NRTC. PST has been informed by DIRECTV that it intends to file a motion for
summary judgment on both of those claims. PST's and GSS' motion to dismiss the
counterclaim was denied on May 8, 2001 and a response by PST and GSS to the
counterclaim is due May 21, 2001.

         All four lawsuits discussed above, including both lawsuits brought by
the NRTC, the class action and PST's and GSS' lawsuit, are pending before the
same judge. The court has set a trial date of August 13, 2002 for all four of
these actions.

         The outcome of this litigation could have a material adverse effect on
the Company's direct broadcast satellite business. The Company's revenue and
financial performance would be adversely affected if the Company were unable to
continue offering DIRECTV products.

Other Matters
-------------

         From time to time the Company is involved with other claims that arise
in the normal course of business. In the opinion of the Company's management,
any liability that may result with respect to these other claims and matters
will not have a significant adverse effect on the consolidated operations,
liquidity, cash flows or financial position of the Company.

11.  New Accounting Pronouncements

         SFAS No. 140 "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities" revises standards for accounting for
securitizations and other transfers of financial assets and collateral. The
statement provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities. Certain
provisions of this standard became effective for the Company on January 1, 2001
and other provisions became effective after March 31, 2001. The adoption of this
standard did not have any impact on the Company.

12.  Income Taxes

         The Company's effective federal income tax rate for continuing
operations for the three months ended March 31, 2001 was (34.94)%, compared to
the statutory federal income tax rate of 35.00%. The effective federal income
tax rate for continuing operations for the year ended December 31, 2000 was
(32.31)%. The Company's effective federal income tax rate varies with the
changes in the Company's net deferred income tax position. The current year's
rate reflects more of the effects of deferred income tax assets associated with
increased cumulative net operating loss carryforwards available for income tax
purposes than were able to be used in 2000.

                                       11
<PAGE>


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

         This report contains certain forward-looking statements (as such term
is defined in the Private Securities Litigation Reform Act of 1995) and
information relating to us that are based on our beliefs, as well as assumptions
made by and information currently available to us. When used in this report, the
words "estimate," "project," "believe," "anticipate," "intend," "expect" and
similar expressions are intended to identify forward-looking statements. Such
statements reflect our current views with respect to future events and are
subject to unknown risks, uncertainties and other factors that may cause actual
results to differ materially from those contemplated in such forward-looking
statements. Such factors include, among other things, the following: general
economic and business conditions, both nationally, internationally and in the
regions in which we operate; relationships with and events affecting third
parties like DIRECTV, Inc.; litigation with DIRECTV; demographic changes;
existing government regulations and changes in, or the failure to comply with
government regulations; competition; the loss of any significant numbers of
subscribers or viewers; changes in business strategy or development plans;
technological developments and difficulties; the ability to attract and retain
qualified personnel; our significant indebtedness; the availability and terms of
capital to fund the expansion of our businesses; and other factors referenced in
this report and in reports and registration statements filed from time to time
with the Securities and Exchange Commission. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as the date
hereof. We do not undertake any obligation to publicly release any revisions to
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.

         The following discussion of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and related notes which are included herein.

         General

         On February 22, 2001, we undertook a corporate reorganization and are
now named Pegasus Satellite Communications, Inc. (formerly Pegasus
Communications Corporation). As a result of the reorganization, we became a
direct subsidiary of a new publicly held parent holding company that was formed
and which assumed the name Pegasus Communications Corporation. All of our
preferred and common stocks issued and outstanding at the date of the corporate
reorganization were cancelled. Simultaneously in the reorganization, we issued a
new Class B $.01 par value common stock which became wholly owned by Pegasus
Communications. In the reorganization, we distributed our subsidiary Pegasus
Development Corporation to Pegasus Communications.

          We have a history of reported losses from our operations principally
due to our significant amounts of interest expense and amortization and
depreciation, and we are likely to continue to report losses for the foreseeable
future.

          A substantial portion of our business is derived from providing
multichannel DBS services as an independent DIRECTV provider. DIRECTV is a
service of DIRECTV, Inc. We may be adversely affected by any material adverse
changes in the assets, financial condition, programming, technological
capabilities or services of DIRECTV, Inc. Separately, we are involved in
litigation with DIRECTV. An outcome in this litigation that is unfavorable to us
could have a material adverse effect on our DBS business. See Note 10 of the
Notes to Consolidated Financial Statements for information on the litigation.


                                       12
<PAGE>


Results of Operations

Comparison of Three Months Ended March 31, 2001 and 2000

         In this section, amounts and changes specified are for the three months
ended March 31, 2001, compared to the three months ended March 31, 2000, unless
indicated otherwise.

DBS Business

         Revenues more than doubled, with an increase of $110.0 million to
$205.8 million, principally due to an increase of 637,100 subscribers in the
last 12 months to 1,439,500 at March 31, 2001. Of this subscriber increase,
396,100 were from acquisitions, of which 345,000 resulted from our acquisition
of Golden Sky Holdings in May 2000 and 241,000 were from internal growth. In the
12 months ended March 31, 2001, we acquired the exclusive DIRECTV distribution
rights to 2.1 million households, of which 1.9 million came from the Golden Sky
Holdings acquisition. At March 31, 2001, we had exclusive DIRECTV distribution
rights to 7.5 million households. Our sales and marketing efforts have increased
our penetration within our territories to 19.3% at March 31, 2001 from 15.1% at
March 31, 2000. Revenue per average subscriber was $48.48 compared to $43.52,
primarily due to the incremental impact of the seamless consumer program we
entered into with DIRECTV in August 2000 in which we are able to directly
provide certain premium programming from DIRECTV and earn the associated
revenues.

         Because of the increased number of households available to us within
our territories that are not yet our subscribers, we believe that the prospects
for continued subscriber growth are favorable. Also, we believe that favorable
conditions still exist for further subscriber growth through acquisitions in the
remainder of 2001. However, we cannot make any assurances that internal growth
or growth through acquisitions will occur or as to the rate of that growth.

         Programming, technical, general and administrative expenses more than
doubled, with an increase of $78.4 million to $146.2 million. This increase was
primarily due to the incremental costs incurred in providing service to an
increased subscriber base. We experienced a slight erosion in our overall
margin, as programming, technical, general and administrative expenses were
71.0% of revenues for the three months ended March 31, 2001 compared to 70.8%
for the three months ended March 31, 2000. This was primarily caused by margins
associated with the seamless consumer program being lower than our other
programs.

         Marketing and selling costs, which are also known as subscriber
acquisition costs, increased $28.9 million to $54.0 million. This increase was
principally due to increased commissions and subsidies to our dealer network
resulting from the subscriber growth we experienced and revisions to and
expansion of our commission and subsidy programs that were initiated in the
second half of 2000. As a result of these increased expenses, our subscriber
acquisition costs per gross subscriber based on subscribers added through
internal growth increased to $489 per subscriber for 110,400 subscribers added
in the three months ended March 31, 2001 compared to $321 per subscriber for
79,300 subscribers added for the three months ended March 31, 2000.

         Depreciation and amortization increased $42.5 million to $62.8 million
principally due to increased amortization on increased DBS rights assets. DBS
rights assets increased by $1.1 billion during the 12 months ended March 31,
2001 due to acquisitions we made during this time. Approximately $1.0 billion of
the increase resulted from our acquisition of Golden Sky Holdings. Amortization
of the DBS rights assets from the Golden Sky Holdings acquisition contributed
approximately $25.0 million of the increase in depreciation and amortization.
The annual amortization expense associated with the DBS rights from the Golden
Sky Holdings acquisition is approximately $100.0 million.

Broadcast Business

         Revenues decreased $492,000 to $7.6 million partly due to reduced
revenue in the current quarter from national advertising accounts. In large part
as a response to the general slow down recently being experienced in the overall
economy, national advertisers, particularly within the automotive sector, have
reduced dollars available for advertising. The decrease in current period
revenues is also partly due to increased advertising revenue in the prior year
quarter generated by the presidential campaigns underway at that time. Based on
industry information available to us, these effects on advertising revenues are
being felt by other media providers across the country in varying degrees. Our
advertising revenues for our second quarters historically have trailed those of
our first quarters. We cannot predict with any assurance whether or not
advertising revenues will improve or worsen in the second half of 2001.



                                       13
<PAGE>

         Excluding a nonrecurring adjustment in programming expenses, expenses
of the Broadcast business were relatively flat. Expenses are not necessarily
directly related to the movement in revenues. This is because many programming
costs are associated with multi-year contracts that are entered into one or more
years in advance of when the related expense is recognized. The expenses
recognized may bear little relationship to the influence that economic
conditions have on revenues at the time that revenue, especially advertising
revenue, is earned and recognized. In view of the impact on us of the
unfavorable advertising revenue conditions, we have instituted cost management
efforts to reduce costs without compromising programming content and marketing
efforts, which is a principal reason why the quarter over quarter change in
expenses is relatively flat.

Other Statement of Operations and Comprehensive Loss Items

         Development costs increased by $2.9 million to $3.4 million. These
costs primarily represent start up costs of our developing broadband business.
This business was launched in May 2001. Our expectations for this business in
2001 are discussed below.

         Other operating expenses of $8.3 million for the three months ended
March 31, 2001 primarily consist of costs associated with the ongoing DIRECTV
litigation of $7.4 million.

         Interest expense increased $13.1 million to $34.3 million. This
increase was principally due to additional borrowings outstanding during the
current year period than in the prior year period. Debt outstanding at March 31,
2001 was $460.4 million higher than debt outstanding at March 31, 2000. This
increase was principally due to debt of Golden Sky Systems and Golden Sky DBS in
a combined amount of $399.0 million at a combined rate of 12.93% that we
included as a result of our acquisition of Golden Sky Holdings. Additionally, we
had an average amount of $61.4 million outstanding under Pegasus Media &
Communications' revolving credit facility during the three months ended March
31, 2001 and only an average of $26.5 million outstanding under revolving credit
facilities during the three months ended March 31, 2000.

         For the three months ended March 31, 2001, we had an income tax benefit
for the loss from continuing operations of $37.9 million compared to no income
taxes allocated to the loss from continuing operations for the three months
ended March 31, 2000. The difference is due to sufficient deferred income tax
liabilities generated by our acquisitions that have occurred since March 31,
2000, particularly our acquisition of Golden Sky Holdings, that enabled us to
use the benefits of our deferred income tax assets and recognize the related
income tax benefits in earnings in the current year period.

         Other non-operating expense for the three months ended March 31, 2001
of $3.5 million primarily consists of the loss we recognized on the fair value
of our derivative instruments of $3.3 million.

Liquidity and Capital Resources

         At March 31, 2001, we had cash and cash equivalents, excluding
restricted cash, on hand of $160.3 million.

         During the three months ended March 31, 2001, our subsidiary Pegasus
Media & Communications borrowed $32.0 million under its revolving credit
facility. The total amount outstanding under the revolving credit facility was
$67.0 million at March 31, 2001. At March 31, 2001, the commitment for the
revolving credit facility was permanently reduced as scheduled under the terms
of the governing credit agreement by approximately $5.6 million to approximately
$219.4 million. Availability under the revolving credit facility at March 31,
2000 was $115.6 million. Pegasus Media & Communications began on March 31, 2001
making scheduled quarterly payments on its term loan facility amounting to
$687,500. This reduced the amount outstanding thereunder to $274.3 million at
March 31, 2001. At March 31, 2001, the total amount outstanding under our
subsidiary Golden Sky Systems' revolving credit facility was $37.0 million. At
March 31, 2001, the commitment for the revolving credit facility was permanently
reduced as scheduled under the terms of the governing credit agreement by
approximately $1.2 million to approximately $113.9 million. Availability under
the revolving facility at March 31, 2001 was $48.1 million.



                                       14
<PAGE>

         At March 31, 2001, Golden Sky Systems was in violation of covenants
under its credit agreement with respect to certain operational thresholds.
Golden Sky Systems has requested a waiver of these violations from the
participating lenders to the agreement. In exchange for the waiver, Golden Sky
Systems would amend the agreement to permanently reduce the commitment under the
revolving facility to $90.0 million. Golden Sky Systems intends to repay amounts
outstanding under the term loan facility and revolving credit facility by the
end of the third quarter 2001. The waiver and amendment are pending approval by
the participating lenders.

         Net cash used by operating activities was $67.7 million for the three
months ended March 31, 2001 compared to $5.7 million for the same period last
year. Several factors caused this variance. Cash interest paid in the current
year period increased by $26.3 million to $37.5 million due to higher amounts of
debt outstanding during the current year period than in the prior year period as
previously discussed. We incurred DIRECTV litigation costs of $7.4 million in
the current year period. Broadband start up costs of approximately $3.0 million
were also incurred in the current year period. The remainder of the increased
net cash used used by operating activities was primarily due to increased
subscriber acquisition costs due to a greater number of subscriber additions in
the current year period than in the prior year period and increased cost per
subscriber in the current year period than in the prior year period, as
previously discussed. These factors contributed to our overall decrease in cash
for the three months ended March 31, 2001 of $54.1 million. We borrowed a net
$31.3 million under our credit facilities to aid in funding our operating cash
usage.

         DBS pre-marketing cash flow was $59.6 million for the three months
ended March 31, 2001 compared to $28.0 million for the same prior year period,
and location cash flow was $5.6 million for three months ended March 31, 2001
compared to $2.6 million for the same prior year period. Broadcast location cash
flow was $328,000 for the three months ended March 31, 2001 compared to $306,000
for the same prior year period. Pre-marketing cash flow of the DBS business is
calculated by taking the DBS revenues and deducting from them their related
programming, technical, general and administrative expenses. Location cash flow
of the DBS business is its pre-marketing cash flow less its marketing and
selling expenses. Marketing and selling expenses incurred by DBS are also known
as subscriber acquisition costs. Location cash flow for the broadcast television
business is calculated by taking the broadcast revenues and deducting from them
their related programming, technical, general and administrative and marketing
and selling expenses. Pre-marketing and location cash flows are not, and should
not be considered, alternatives to income from operations, net income, net cash
provided by operating activities or any other measure for determining our
operating performance or liquidity, as determined under generally accepted
accounting principles. Pre-marketing and location cash flows also do not
necessarily indicate whether our cash flow will be sufficient to fund working
capital, capital expenditures or to react to changes in our industry or the
economy generally. We believe that pre-marketing and location cash flows are
important for the following reasons:

o people who follow our industry frequently use them as measures of financial
  performance and ability to pay debt service; and
o they are measures that we, our lenders and investors use to monitor our
  financial performance and debt leverage.

         We launched our broadband business in May 2001. This is a new service
provided by us. This service offers two-way Internet access via satellite
principally to rural and underserved areas. Because of our previous success in
introducing DBS services to rural and underserved areas, we believe that we are
well situated to introduce this new service to these areas, though we cannot
assure you that we will be successful. Unlike our DBS business that is
geographically constrained, we may offer the broadband service to all of North
America. We estimate our aggregate operational and net capital requirements to
vary between $30.0 million and $60.0 million in 2001 depending upon the number
of subscribers we enroll. We expect that subscriber acquisition costs for the
broadband service will include substantial equipment subsidies to make the
equipment more affordable and attractive to users. This will initially have a
negative impact on margins and the payback period in recovering our costs. For
2001, we expect that the broadband operations will be a net user of cash, and
that the funding of operational and capital requirements in excess of cash from
operations will be provided from our other available capital resources.

         We believe, but cannot assure, that we have adequate resources to meet
our operational needs, including those of the new broadband business, and
investing, debt service and capital stock requirements for at least the next
twelve months. However, because we are highly leveraged, our ability to repay
our existing debt and preferred stock will depend upon the success of our
business strategy, prevailing economic conditions, regulatory risks, our ability





                                       15

<PAGE>



to integrate acquired assets successfully into our operations, competitive
activities by other parties, equipment strategies, technological developments,
level of programming costs, levels of interest rates and financial, business and
other factors that are beyond our control. Our indebtedness and preferred stock
generally limit our ability, among other things, to incur additional
indebtedness and liens, issue other securities, make certain payments and
investments, pay dividends, transfer cash, dispose of assets and enter into
other transactions, and imposes limitations on the activities of subsidiaries as
applicable. Furthermore, our agreements with respect to our indebtedness contain
numerous covenants that, among other things, restrict our ability to pay
dividends and make certain other payments and investments, borrow additional
funds, create liens and sell our assets. Failure to make debt payments or comply
with our covenants could result in an event of default that, if not cured or
waived, could have a material adverse effect on us.

         In compliance with the certificates of designation governing our Series
A preferred stock and the indentures governing our senior notes, we provide
below adjusted operating cash flow data for our restricted subsidiaries on a
consolidated basis. Under the governing documents, adjusted operating cash flow
is defined as operating cash flow for the four most recent fiscal quarters less
DBS cash flow for the most recent four-quarter period plus DBS cash flow for the
most recent quarterly period, multiplied by four. Operating cash flow is income
from operations before income taxes, depreciation and amortization, interest
expense, extraordinary items and non-cash charges. Although adjusted operating
cash flow is not a measure of performance under generally accepted accounting
principles, we believe that adjusted operating cash flow is accepted as a
recognized measure of performance within the industries that we operate. This
data is also used by analysts who report publicly on the performance of
companies in the industries in which we operate. Including the effects of DBS
acquisitions completed in the first quarter of 2001, as if these acquisitions
had occurred on April 1, 2000, pro forma adjusted operating cash flow would have
been as follows:


                                                             Four Quarters Ended
                                                               March 31, 2001
                                                             -------------------
(in thousands)
Revenues...................................................      $ 554,816
Direct operating expenses, excluding depreciation,
  amortization and other non-cash charges..................        385,224
                                                                 ---------
Income from operations before incentive compensation,
  corporate expenses, depreciation and amortization and
  other non-cash charges...................................        169,592
Corporate expenses.........................................         10,205
                                                                 ---------
Pro forma adjusted operating cash flow.....................      $ 159,387
                                                                 =========

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<PAGE>



ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Our principal market risk exposure continues to be interest rate risk.
Our primary exposure is to variable rates of interest associated with borrowings
under our credit facilities. Also, the amount of interest we incur also depends
upon the amount of borrowings outstanding. The way we manage these risks did not
change during the three months ended March 31, 2001.

         During the three months ended March 31, 2001, we borrowed an additional
$32.0 million under our credit facilities. However, variable interest rates have
declined during the period. The weighted average rates of interest including
applicable margins on amounts outstanding at March 31, 2001 and December 31,
2000 were 8.63% and 10.19%, respectively, for the term facility and 7.71% and
10.11%, respectively, for the revolving facility under Pegasus Media &
Communications' credit agreement. The weighted average rates of interest
including applicable margins on amounts outstanding at March 31, 2001 and
December 31, 2000 were 8.05% and 9.90%, respectively, for the term facility and
8.33% and 10.26%, respectively, for the revolving facility under Golden Sky
Systems' credit agreement.

         As a consequence of declining market interest rates, we made net
payments of $529,000 over the six-month payment interval ended March 31, 2001 on
our interest rate swaps instruments in which we exchange variable interest for
fixed interest.

         With our adoption of Statement of Financial Accounting Standards No.
133 "Accounting for Derivative Instruments and Hedging Activities" on January 1,
2001, we recorded a charge to earnings of $3.3 million for the unfavorable fair
market values to us of our interest rate swaps and caps instruments that existed
at March 31, 2001. We were not required to pay any cash for the unfavorable
positions of these instruments.

         Changes in the fair market values of our fixed rate debt and redeemable
preferred stocks and other financial instruments did not have any impact on us.











                                       17
<PAGE>


PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

DIRECTV Litigation
------------------

      National Rural Telecommunications Cooperative:

              We hereby incorporate by reference the disclosure relating to
"DIRECTV Litigation - National Rural Telecommunications Cooperative" set forth
under "Item 3: Legal Proceedings" on pages 22 and 23 of our Annual Report on
Form 10-K filed with the SEC on April 2, 2001, except that we hereby amend the
last paragraph of this section by changing the trial date of February 25, 2002
to August 13, 2002.

      The Company and Golden Sky Systems:

         We hereby incorporate by reference the disclosure relating to "DIRECTV
Litigation - Pegasus Satellite and Golden Sky Systems" set forth under "Item 3:
Legal Proceedings" on page 23 of our Annual Report on Form 10-K filed with the
SEC on April 2, 2001, except as follows:

         We amend the fourth paragraph of this section, which begins with "On
March 9, 2001 . . .," by adding the following sentence to the end of this
paragraph: "Our motion to dismiss the counterclaim was denied on May 8, 2001 and
our response to the counterclaim is due May 21, 2001."

         The last paragraph of this section is amended by changing the trial
date of February 25, 2002 to August 13, 2002.

Other Matters
-------------

         In addition to the matters discussed above, from time to time we are
involved with claims that arise in the normal course of our business. In our
opinion, the ultimate liability with respect to these claims will not have a
material adverse effect on our consolidated operations, cash flows or financial
position.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         On February 22, 2001, we issued $162.6 million in liquidation
preference of our 12-3/4% Series A cumulative exchangeable preferred stock in
exchange for an identical amount in liquidation preference of outstanding
12-3/4% Series A cumulative exchangeable preferred stock of our newly formed
holding company, Pegasus Communications Corporation. The securities were issued
pursuant to an offering memorandum dated December 19, 2000 in a private
placement to qualified institutional buyers, other accredited investors and a
limited number of unaccredited investors pursuant to Rule 506 under the
Securities Act of 1933. CIBC World Markets Corp. served as dealer manager in the
exchange offer, which was limited to holders of our holding company's 12-3/4%
Series A cumulative exchangeable preferred stock and exchange notes.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

         3.1      Amended and Restated Certificate of Incorporation of Pegasus
Satellite Communications, Inc. (included in Agreement and Plan of Merger among
Pegasus Communications Corporation, Pegasus Holdings Corporation I and Pegasus
Merger Sub, Inc. dated as of February 22, 2001, which is incorporated herein by
reference to Exhibit 2.3 to the Annual Report on Form 10-K of Pegasus Satellite
Communications, Inc. filed with the SEC on April 2, 2001)).

         3.2      By-Laws of Pegasus Satellite Communications, Inc.
(incorporated herein by reference to Exhibit 3.2 to the Annual Report on Form
10-K of Pegasus Satellite Communications, Inc. filed with the SEC on April 2,
2001).




                                       18

<PAGE>

(b)  Reports on Form 8-K

         On February 8, 2001, we filed a Current Report on Form 8-K dated
December 4, 2000 reporting under Item 5 certain developments in the litigation
involving our company, Golden Sky Systems, DIRECTV and Hughes Communications
Galaxy, Inc., notice of alleged territory violations and matters relating to
developments in the patent infringement lawsuit brought by Pegasus Development
Corporation and Personalized Media Communications, L.L.C.

         On February 16, 2001, we filed a Current Report on Form 8-K dated
February 15, 2001 reporting under Item 5 that we were going to hold our annual
meeting of stockholders on April 27, 2001 and that we had issued a press release
containing, among other things, financial information for the quarter and year
ended December 31, 2000. In addition, under Item 9, we provided certain
financial guidance with respect to the first quarter of 2001 compared to first
quarter 2000 and year 2001 compared to year 2000.

         Each Current Report on Form 8-K referred to above was filed before the
consummation of the holding company reorganization while our company was still
named Pegasus Communications Corporation.

















                                       19
<PAGE>



                                    SIGNATURE


         Pursuant to the requirements of Section 13 or 15(d) of the Securities
         Exchange Act of 1934, Pegasus Satellite Communications, Inc. has duly
         caused this Report to be signed on its behalf by the undersigned
         thereunto duly authorized.




                                          Pegasus Satellite Communications, Inc.






            May 16, 2001                  By: /s/   Kasin Smith
            ------------                     -------------------------
                Date                                Kasin Smith


                                    Chief Financial Officer, Treasurer and
                                    Executive Vice President of Finance and
                                    Information Technology
                                    (Principal Financial and Accounting Officer)





                                       20