EXHIBIT 1.3

                                                             December 23, 1998


To the Shareholders of Interactive Network, Inc.

     As Chief Executive Officer of your Company, I would like to take this
opportunity to update you on the current status of your company.  The Board and
management of Interactive Network have been working diligently over the past
several months attempting to turn your Company from a dormant and failed
operating entity, overrun with the litigious issues of a complicated law suit,
into an aggressive entity that will be actively seeking alternative joint
ventures to grow and develop the primary asset of Interactive Network, which is
its patent portfolio.

     After three years of litigation, millions of dollars of fees and deferral
of the opportunity to realize the potential of your Company's most valuable
asset, our patents, your Board of your Company decided to settle its law suit
with its secured creditors, recover the freedom to exploit its patents, and
receive $10.0 million so as to restart the process of enhancing shareholder
value. This decision was made in order to permit the Company to begin to realize
the value of its patent portfolio, which it could not do so long as the patent
portfolio was subject to the liens of its secured creditors who were involved in
the litigation. If the Company had not settled the law suit (which we were
strongly advised to do by independent counsel to the Board, the Honorable
Charles Renfrew, a retired Federal judge with considerable past practical legal
experience), the Company could have been enmeshed in protracted litigation that
would have drained the Company's resources and delayed our ability to exploit
our patents. In July 1998, we reached a final settlement of the litigation with
the secured creditors. As a condition of this settlement demanded by the secured
creditors, the Board agreed to file a Chapter 11 voluntary bankruptcy
proceeding. This action, in the eyes of our secured creditors who were
converting their debt into common stock, provided the only absolute protection
to shareholders from future claims made due to the actions of prior management.

     On December 22, 1998 the Company filed a plan of reorganization under its
Chapter 11 bankruptcy proceeding pursuant to the settlement agreement entered
into in July 1998. The plan of reorganization contemplates payment to all the
Company's creditors in full on their allowed claims, and the conversion by the
Company's secured creditors/investors (TCI, NBC, Motorola and Sprint) of
approximately $39,000,000 in debt (including accrued interest) into
approximately 7,800,000 shares of the Company's Common Stock at a conversion
price of $5 per share, and the release by the secured creditors of their liens
on the Company's assets, including its patent portfolio. The Company intends to
contest certain creditors' claims, including an unsecured claim of $3,394,000
asserted by its former Chief Executive Officer, David Lockton, based on an
alleged deferred compensation arrangement, which makes Mr. Lockton the Company's
largest unsecured creditor. The Company may also assert claims against Mr.
Lockton, based on what it believes are his mismanagement, breaches of fiduciary
duty and failure to satisfy a contractual condition to his receipt of
compensation. A copy of the plan of

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reorganization (including the Settlement Agreement) has been sent to
shareholders under separate cover. Shareholders are entitled to file any
objections to the plan with the Bankruptcy Court if they believe it does not
comply with the Bankruptcy Code's standard for confirmation, but confirmation of
the plan is not subject to shareholder approval.

     The Company intends to vigorously exploit the Company's patent portfolio
once its Chapter 11 plan is confirmed, which is expected to occur in February
1999, shortly after which the Company will receive $10,000,000 in cash pursuant
to the Settlement Agreement with its secured creditors/investors, approximately
70% of which it anticipates will be required to pay its unsecured creditors (and
less if the Company is successful in resisting Mr. Lockton's claim for deferred
compensation).  While the Company has valued its patent portfolio (which
constitutes the largest part of its present assets) at $40,000,000 for purposes
of the Chapter 11 proceedings, the Company makes no representation as to what
the patent portfolio may in fact be worth when the Company is free to exploit
it.  The Company has in the recent past received and continues to receive
indications of interest in its patent portfolio from responsible businesses,
including Cable and Wireless Communications and Two Way TV, to which it has
already begun to respond.

     Pursuant to an order entered by a California Superior Court in San Mateo
County, David Lockton's call for a special shareholders' meeting to be held on
December 30, 1998 to remove the current board of directors, has been declared
ineffective and cancelled, and, at the Company's request, a new meeting date of
March 31, 1999 has been set to elect directors, as in the best interests of
shareholders. Shareholders of record on March 1, 1999 will be entitled to vote
at the March 31, 1999 meeting. The Company is in the process of preparing
current audited financial statements and expects to mail proxy material and an
annual report to its shareholders in early March, 1999. At that time, the
Company would expect to add nominees to its own slate of directors in addition
to and/or in replacement of one or more of its current directors. In that
connection, the Company has contractual obligations to certain of its larger
shareholders (Gannett, Motorola, NBC, Sprint and TCI) to place nominees of those
shareholders on our Board of Directors should they choose to exercise that
right. These obligations predated and are unaffected by the Settlement
Agreement. The Company intends to actively explore with those shareholders their
desires for Board representation. In addition, the Company intends to put in
place an Advisory Board, made up of several independent analysts who are expert
in the area of intellectual property and technology transfer as related to the
Company's patent portfolio, to assist the Company in developing the
opportunities the Company believes will be available to it in the internet,
telecommunications and entertainment industries.

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     We are excited about our prospects. We look forward to presenting to you in
the very near future the results of a very long and arduous process of valuation
and negotiation, and eventual decisions as to the very best of these
opportunities. We believe the shareholders of Interactive Network deserve the
opportunity, free from debt, to engage with all those proven technology
suppliers and creators who would seek to join with this Company and develop the
greatest opportunity for your success.

                                Sincerely,

                                /s/ BRUCE BAUER
                                Bruce Bauer
                                Chief Executive Officer

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