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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
COMMISSION FILE NUMBER 0-20570

HSN, INC.
(Exact name of Registrant as specified in its charter)

DELAWARE 59-2712887
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1 HSN DRIVE, ST. PETERSBURG, FLORIDA
(Address of principal executive offices)

33729
(Zip Code)

(813) 572-8585
(Registrant's telephone number, including area code)

2501 118TH AVENUE NORTH
ST. PETERSBURG,FLORIDA
33716
(Former name, former address and former fiscal year,
if changed since last report)

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 ___

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date.

Total number of shares of outstanding stock as of May 1, 1997

Common stock......................... 36,094,593
Class B common stock................. 10,225,056

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2

PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HSN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

- -----------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31,
---------------------
1997 1996
- -----------------------------------------------------------------------------------
(In thousands, except
per share data)

NET REVENUES
Home Shopping............................................. $261,418 $ --
Broadcasting.............................................. 12,294 11,112
Other..................................................... 5,839 --
-------- -------
Total net revenues................................ 279,551 11,112
-------- -------
Operating costs and expenses:
Cost of sales............................................. 158,614 128
Selling and marketing..................................... 35,294 --
General and administrative................................ 22,562 5,811
Engineering and programming............................... 18,713 88
Depreciation and amortization............................. 20,959 3,458
-------- -------
Total operating costs and expenses................ 256,142 9,485
-------- -------
Operating profit.................................. 23,409 1,627
-------- -------
Other income (expense):
Interest income........................................... 1,340 619
Interest expense.......................................... (7,021) (2,412)
Miscellaneous............................................. (3,229) 137
-------- -------
(8,910) (1,656)
-------- -------
Earnings (loss) before income taxes and minority interest... 14,499 (29)
Income tax expense.......................................... (11,129) (577)
Minority interest........................................... 400 --
-------- -------
NET EARNINGS (LOSS)......................................... $ 3,770 $ (606)
======== =======
Net earnings (loss) per common share........................ $ .07 $ (.06)
======== =======
Weighted average shares outstanding......................... 50,623 9,456
======== =======

The accompanying notes are an integral part of these statements.

1
3

HSN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

- ---------------------------------------------------------------------------------------------
MARCH 31,
---------------------- DECEMBER 31,
ASSETS 1997 1996 1996
- ---------------------------------------------------------------------------------------------
(In thousands)

CURRENT ASSETS
Cash and cash equivalents............................ $ 41,562 $ 23,318 $ 42,606
Accounts and notes receivable, net................... 53,291 3,421 56,832
Inventories, net..................................... 113,479 -- 100,527
Deferred income taxes................................ 34,718 1,797 40,842
Other current assets, net............................ 6,778 841 7,791
---------- -------- ----------
Total current assets....................... 249,828 29,377 248,598

PROPERTY, PLANT AND EQUIPMENT
Computer and broadcast equipment..................... 98,556 73,575 95,472
Buildings and leasehold improvements................. 63,072 19,395 63,739
Furniture and other equipment........................ 20,889 2,225 20,414
---------- -------- ----------
182,517 95,195 179,625
Less accumulated depreciation and amortization..... 78,143 70,942 73,959
---------- -------- ----------
104,374 24,253 105,666
Land................................................. 14,944 3,334 14,944
Projects in progress................................. 6,519 139 1,365
---------- -------- ----------
125,837 27,726 121,975
OTHER ASSETS
Intangible assets, net............................... 1,529,969 57,643 1,545,947
Cable distribution fees, net ($39,825; $0; and
$40,892, respectively, to related parties)......... 112,854 -- 113,594
Long-term investments ($15,729; $5,000; and $5,581,
respectively, in related parties).................. 27,958 5,135 30,121
Notes receivable, net of current portion ($1,639; $0;
and $1,639, respectively, from related parties).... 17,042 11,396 17,741
Deferred income taxes................................ 6,086 -- 1,926
Deferred charges and other, net...................... 29,726 3,693 36,330
---------- -------- ----------
1,723,635 77,867 1,745,659
---------- -------- ----------
$2,099,300 $134,970 $2,116,232
========== ======== ==========

The accompanying notes are an integral part of these statements.

2
4

HSN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

- ----------------------------------------------------------------------------------------------
MARCH 31,
----------------------- DECEMBER 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996 1996
- ----------------------------------------------------------------------------------------------
(In thousands)

CURRENT LIABILITIES
Current maturities of long-term obligations.......... $ 14,734 $ 12,638 $ 42,906
Accounts payable..................................... 109,599 -- 95,421
Programming fees ($8,703; $0; and $9,051,
respectively, to related parties).................. 35,472 -- 40,717
Other accrued liabilities............................ 82,572 6,967 93,998
---------- --------- ----------
Total current liabilities.................. 242,377 19,605 273,042

LONG-TERM OBLIGATIONS (net of current maturities).... 269,071 92,730 271,430
DEFERRED INCOME TAXES................................ -- 14,451 --
OTHER LONG-TERM LIABILITIES, net..................... 58,392 -- 56,875
MINORITY INTEREST.................................... 365,009 -- 356,136
COMMITMENTS AND CONTINGENCIES........................ -- -- --
STOCKHOLDERS' EQUITY
Preferred stock -- $.01 par value; authorized
15,000,000; 50,000; and 15,000,000 shares,
respectively, no shares issued and outstanding..... -- -- --
Common stock -- $.01 par value; authorized
150,000,000; 30,000,000; and 150,000,000 shares,
respectively; issued
and outstanding 36,094,193; 7,055,332; and
35,992,903 shares, respectively.................... 361 71 360
Class B -- convertible common stock -- $.01 par
value; authorized, 30,000,000; 2,415,945; and
30,000,000 shares, respectively; issued and
outstanding, 10,225,056; 2,415,945; and 10,225,056
shares, respectively............................... 102 24 102
Additional paid-in capital........................... 1,286,671 127,189 1,285,277
Accumulated deficit.................................. (112,892) (110,729) (116,662)
Unearned compensation................................ (4,793) (3,373) (5,330)
Note receivable from key executive for common stock
issuance........................................... (4,998) (4,998) (4,998)
---------- --------- ----------
1,164,451 8,184 1,158,749
---------- --------- ----------
$2,099,300 $ 134,970 $2,116,232
========== ========= ==========

The accompanying notes are an integral part of these statements.

3
5

HSN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

- -------------------------------------------------------------------------------------------------------------------
NOTE
RECEIVABLE
FROM KEY
EXECUTIVE
CLASS B FOR
CONVERTIBLE ADDITIONAL COMMON
COMMON COMMON PAID-IN ACCUMULATED UNEARNED STOCK
STOCK STOCK CAPITAL DEFICIT COMPENSATION ISSUANCE TOTAL
- ------------------------------------------------------------------------------------------------------------------
(In thousands)

BALANCE AT JANUARY 1,
1996................... $ 70 $ 24 $ 126,119 $(110,123) $(3,621) $(4,998) $ 7,471
Issuance of common stock
upon exercise of stock
options................ 1 -- 640 -- -- -- 641
Income tax benefit
related to executive
stock options
exercised.............. -- -- 430 -- -- -- 430
Amortization of unearned
compensation related to
grant of stock options
to key executive....... -- -- -- -- 248 -- 248
Net loss for the three
months ended March 31,
1996................... -- -- -- (606) -- -- (606)
---- ---- ---------- --------- ------- ------- ----------
BALANCE AT MARCH 31,
1996................... $ 71 $ 24 $ 127,189 $(110,729) $(3,373) $(4,998) $ 8,184
==== ==== ========== ========= ======= ======= ==========

BALANCE AT JANUARY 1,
1997................... $360 $102 $1,285,277 $(116,662) $(5,330) $(4,998) $1,158,749
Issuance of common stock
upon exercise of stock
options................ 1 -- 806 -- -- -- 807
Income tax benefit
related to executive
stock options
exercised.............. -- -- 588 -- -- -- 588
Amortization of unearned
compensation related to
grant of stock options
to key executive....... -- -- -- -- 248 -- 248
Expense related to
executive stock award
program and stock
options................ -- -- -- -- 34 -- 34
Expense related to
employee equity
participation plan..... -- -- -- -- 255 -- 255
Net earnings for the
three months ended
March 31, 1997......... -- -- -- 3,770 -- -- 3,770
---- ---- ---------- --------- ------- ------- ----------
BALANCE AT MARCH 31,
1997................... $361 $102 $1,286,671 $(112,892) $(4,793) $(4,998) $1,164,451
==== ==== ========== ========= ======= ======= ==========

The accompanying notes are an integral part of these statements.

4
6

HSN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Cash flows from operating activities:
Net earnings (loss)......................................... $ 3,770 $ (606)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation and amortization............................. 16,111 3,458
Amortization of cable distribution fees................... 4,851 --
Non-cash operating expense................................ (4,694) --
Non-cash interest expense................................. 1,054 216
Deferred income taxes..................................... 7,615 412
Equity in losses of unconsolidated affiliates............. 3,322 --
Amortization of unearned compensation..................... 537 248
Inventory carrying adjustment............................. (712) --
Minority interest......................................... (400) --
(Gain) loss on retirement or sale of fixed assets......... 5 (2)
Provision for losses on accounts and notes receivable..... 509 20
Changes in current assets and liabilities:
Decrease in accounts receivable........................ 3,189 847
Increase in inventories................................ (12,240) --
Decrease in other current assets....................... 1,013 358
Increase in accounts payable........................... 14,178 --
Increase (decrease) in accrued liabilities............. (12,579) 1,297
Increase in cable distribution fees....................... (4,112) --
(Increase) decrease in other.............................. 8,121 (20)
-------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES......... 29,538 6,228
-------- -------
Cash flows from investing activities:
Capital expenditures...................................... (9,405) (73)
Capital contributions received............................ 9,000 --
Increase in long-term investments......................... (1,159) --
Proceeds from long-term notes receivable.................. 815 617
Payment of merger costs................................... (341) --
Proceeds from sale of fixed assets........................ 236 3
Payment of capitalized restructuring fees................. -- (170)
-------- -------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES...................................... (854) 377
-------- -------
Cash flows from financing activities:
Principal payments on long-term obligations............... (30,534) (3,068)
Proceeds from issuance of common stock.................... 806 641
-------- -------
NET CASH USED IN FINANCING ACTIVITIES............. (29,728) (2,427)
-------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ (1,044) 4,178
Cash and cash equivalents at beginning of period............ 42,606 19,140
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 41,562 $23,318
======== =======

The accompanying notes are an integral part of these statements.

5
7

HSN, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A -- BASIS OF PRESENTATION

The interim Condensed Consolidated Financial Statements of HSN, Inc. and
Subsidiaries (the "Company") are unaudited and should be read in conjunction
with the audited Consolidated Financial Statements and Notes thereto for the
year ended December 31, 1996.

In the opinion of the Company, all adjustments necessary for a fair
presentation of such Condensed Consolidated Financial Statements have been
included. Such adjustments consist of normal recurring items. Interim results
are not necessarily indicative of results for a full year. The interim Condensed
Consolidated Financial Statements and Notes thereto are presented as permitted
by the Securities and Exchange Commission and do not contain certain information
included in the Company's audited Consolidated Financial Statements and Notes
thereto.

The Condensed Consolidated Financial Statements include the operations of
Savoy Pictures Entertainment, Inc. and subsidiaries ("Savoy") and the operations
of Home Shopping Network, Inc. and subsidiaries ("Home Shopping") from the date
of acquisition (collectively, the "Mergers") on December 19, 1996 and December
20, 1996, respectively.

NOTE B -- RECLASSIFICATION

Certain amounts in the Condensed Consolidated Financial Statements for
March 31, 1996 have been reclassified to conform to the 1997 presentation,
including costs associated with the operations of the broadcast stations which
were classified as general and administrative expense in 1996 and reclassified
to engineering and programming in 1997.

NOTE C -- CREDIT FACILITIES AND CONVERTIBLE SUBORDINATED DEBENTURES

During the first quarter, the Company made principal repayments of $12.5
million and $18.0 million on its 12% Convertible Senior Subordinated Note and
the SF Broadcast Facility, respectively. Savoy's broadcasting operations ("SF
Broadcasting") are 50% owned by each of Savoy and Fox Broadcasting Company
("Fox"). Savoy and Fox each made a capital contribution to SF Broadcasting of
$9.0 million on March 27, 1997 which was used to repay borrowings under the SF
Broadcast Facility. On that date, SF Broadcasting entered into an Amendment and
Waiver to the SF Broadcast Facility which provided a waiver of certain covenants
for the quarters ended September 30, 1996 and December 31, 1996 and amended
certain covenants for the first two quarters of 1997. The Company was in
compliance with the amended terms and all other covenants at March 31, 1997.

In connection with the Mergers, the Company became a joint and several
obligor with respect to the Home Shopping Network 5 7/8% Convertible
Subordinated Debentures and to the Savoy Pictures Entertainment, Inc. 7%
Convertible Subordinated Debentures. The liability of Home Shopping and Savoy is
subordinated under these debentures.

On May 1, 1997, the Company entered into a new credit facility. See Note H.

NOTE D -- INCOME TAXES

The Company had taxable income for the three months ended March 31, 1997
which was offset in part by net operating losses.

The Company's federal income tax returns for fiscal years 1992, 1993 and
1994 are currently under examination by the Internal Revenue Service ("IRS").
Although the IRS has proposed adjustments, it has not issued a Statutory Notice
of Deficiency. The Company maintains that it has meritorious positions with
respect to these adjustments which are not anticipated to have a material impact
on the financial position or results of operations of the Company.

6
8

HSN, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

NOTE E -- EARNINGS (LOSS) PER SHARE

Primary earnings (loss) per common share is based on net earnings (loss)
divided by the weighted average number of common shares outstanding giving
effect to stock options and convertible debt when applicable. Fully diluted
earnings (loss) per common share is considered to be the same as primary
earnings (loss) per common share since the effect of certain potentially
dilutive securities is anti-dilutive in all periods presented.

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" ("SFAS 128"), which is effective for financial
statements issued for periods ending after December 15, 1997. At that time, the
Company will be required to change the method currently used to compute earnings
per share and to restate all prior periods. Under the new requirements for
calculating primary earnings per share, the dilutive effect of stock options
will be excluded. Management has not yet determined whether SFAS 128 will have
any material impact on the Company's per share amounts.

NOTE F -- CONSOLIDATED STATEMENTS OF CASH FLOWS

For purposes of reporting cash flows, cash and cash equivalents include
cash and short-term investments. Short-term investments consist primarily of
auction preferred shares, money market funds and certificates of deposit with
original maturities of less than 91 days.

Supplemental disclosures of cash flow information:

- ------------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31,
----------------------
1997 1996
- ------------------------------------------------------------------------------------
(In thousands)

CASH PAID FOR:
Interest............................................. $7,895 $1,541
Income taxes......................................... 213 64
CASH RECEIVED FOR:
Income tax refund.................................... 14 --

NOTE G -- SAVOY SUMMARIZED FINANCIAL INFORMATION (UNAUDITED)

The Company has not presented separate financial statements and other
disclosures concerning Savoy because management has determined that such
information is not material to holders of the Savoy Debentures, all of which
have been assumed by the Company as a joint and several obligor. The information
presented is reflected at Savoy's historical cost basis.

- ---------------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31,
-------------------------
SUMMARIZED OPERATING INFORMATION 1997 1996
- ---------------------------------------------------------------------------------------
(In thousands)

Net revenue............................................ $17,659 $ 27,574
Operating expenses..................................... 19,757 42,014
Operating loss......................................... (2,098) (14,440)
Net loss............................................... (3,652) (23,114)

7
9

HSN, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

- ----------------------------------------------------------------------------------------------
MARCH 31,
-------------------------- DECEMBER 31,
SUMMARY BALANCE SHEET INFORMATION 1997 1996 1996

- ----------------------------------------------------------------------------------------------
(In thousands)
Current assets................................ $ 42,789 $151,572 $61,901
Non-current assets............................ 288,099 373,751 302,195
Current liabilities........................... 24,299 85,978 60,716
Non-current liabilities....................... 123,449 178,842 124,198
Minority interest............................. 120,233 68,346 112,717

NOTE H -- SUBSEQUENT EVENT

On May 1, 1997, the Company entered into a new $275.0 million Revolving
Credit Facility (the "New Facility") with a $35.0 million sub-limit for letters
of credit. The New Facility, which replaced both the Home Shopping Revolving
Credit Facility and the Company's Secured Senior Term Loans, expires on May 1,
2002. The New Facility is unsecured and the interest rate on borrowings is tied
to the London Interbank Offered Rate plus an applicable margin. At May 1, 1997,
there was $70.0 million in outstanding borrowings under the New Facility and
$195.5 million was available for borrowing after taking into account outstanding
letters of credit.

8
10

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

GENERAL

HSN, Inc. and its subsidiaries (the "Company") is a holding company, the
subsidiaries of which conduct the operations of the Company's various business
activities. On December 19 and 20, 1996, the Company merged with Savoy Pictures
Entertainment, Inc. ("Savoy") and Home Shopping Network, Inc. ("Home Shopping"),
respectively (collectively, the "Mergers"). The Mergers were accounted for using
the purchase method of accounting. Following the Mergers, the Company's
principal areas of business are electronic retailing and television
broadcasting. The electronic retailing business operates two services, The Home
Shopping Network ("HSN") and America's Store, through an indirect wholly-owned
subsidiary Home Shopping Club, Inc. ("HSC"). The television broadcasting
business owns and operates twelve full-power UHF television stations (the "SKTV
Stations") and four full-power VHF television stations ("SF Broadcasting"). SF
Broadcasting is 50% owned by each of Savoy and Fox Broadcasting Company ("Fox").

THIS REPORT INCLUDES FORWARD-LOOKING STATEMENTS RELATING TO SUCH MATTERS AS
ANTICIPATED FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, NEW DEVELOPMENTS, NEW
MERCHANDISING STRATEGIES AND SIMILAR MATTERS. A VARIETY OF FACTORS COULD CAUSE
THE COMPANY'S ACTUAL RESULTS AND EXPERIENCE TO DIFFER MATERIALLY FROM THE
ANTICIPATED RESULTS OR OTHER EXPECTATIONS EXPRESSED IN THE COMPANY'S
FORWARD-LOOKING STATEMENTS. THE RISKS AND UNCERTAINTIES THAT MAY AFFECT THE
OPERATIONS, PERFORMANCE, DEVELOPMENT AND RESULTS OF THE COMPANY'S BUSINESS
INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING: BUSINESS AND GENERAL ECONOMIC
CONDITIONS, COMPETITIVE FACTORS, CHANNEL SPACE AVAILABILITY, THE COST AND
AVAILABILITY OF APPROPRIATE MERCHANDISE, CONSOLIDATION WITHIN THE CABLE
INDUSTRY, COST OF CARRIAGE OF THE COMPANY'S PROGRAMMING AND CHANGES IN THE
REGULATORY ENVIRONMENT.

A. CONSOLIDATED RESULTS OF OPERATIONS

The following discussions present the material changes in the consolidated
results of operations of the Company for the quarter ended March 31, 1997,
compared with the quarter ended March 31, 1996, and separately with the pro
forma quarter ended March 31, 1996. The operations of the quarter ended March
31, 1996, consist solely of the operations of the SKTV Stations while the
operations of the pro forma quarter ended March 31, 1996, are stated as if the
Mergers occurred on January 1, 1996. Reference should also be made to the
Condensed Consolidated Financial Statements included herein.

QUARTER ENDED MARCH 31, 1997 VS. QUARTER ENDED MARCH 31, 1996

The Mergers resulted in significant increases in net revenues, operating
costs and expenses, other income (expense), income taxes and net earnings, and
will continue to materially impact the Company's operations for the remainder of
1997 when compared to 1996, and accordingly, no significant discussion of these
fluctuations is presented.

INCOME TAXES

The Company's effective tax rate of 77% is higher than the statutory rate
due primarily to the amortization of non-deductible goodwill and other acquired
intangibles, the non-recognition of net operating losses from less than 80%
owned subsidiaries, certain non-deductible executive compensation and state
income taxes. The Company's effective tax rate is expected to exceed the
statutory rate for the remainder of 1997.

MINORITY INTEREST

Minority interest represents Liberty HSN, Inc.'s ("Liberty HSN") 19.9%
interest in Home Shopping's earnings and Fox's 50% interest in SF Broadcasting
for the quarter ended March 31, 1997.

9
11

QUARTER ENDED MARCH 31, 1997 VS. PRO FORMA QUARTER ENDED MARCH 31, 1996

The following unaudited pro forma operating results of the Company have
been prepared using the purchase method of accounting. During 1996, Savoy ceased
its activities in the motion picture business and accordingly, the following
results for the quarter ended March 31, 1996, were prepared excluding the
operating results of the Savoy motion picture business and giving effect to the
Mergers as if they had occurred January 1, 1996.

The Unaudited Combined Condensed Statements of Operations -- 1997 Actual
vs. 1996 Pro forma are presented for illustrative purposes only and are not
necessarily indicative of the results of operations which would have actually
been reported had any of the transactions occurred as of January 1, 1996, nor
are they necessarily indicative of future results of operations.

HSN, INC. AND SUBSIDIARIES

UNAUDITED COMBINED CONDENSED STATEMENTS OF OPERATIONS -- 1997 ACTUAL VS. 1996
PRO FORMA

NET REVENUES:
Home Shopping............................................. $261,418 $255,613
Broadcasting.............................................. 12,294 11,430
Other..................................................... 5,839 --
-------- --------
Total net revenues................................ 279,551 267,043
Operating costs and expenses:
Cost of sales............................................. 158,614 164,940
Other costs............................................... 76,569 75,946
Depreciation and amortization............................. 20,959 22,566
-------- --------
Total operating costs and expenses................ 256,142 263,452
-------- --------
Operating profit.................................. 23,409 3,591
Interest expense, net....................................... (5,681) (10,739)
Other income (expense), net................................. (3,229) 2,302
-------- --------
(8,910) (8,437)
-------- --------
Income (loss) before income taxes and minority interest..... 14,499 (4,846)
Income tax expense.......................................... (11,129) (3,273)
Minority interest........................................... 400 1,252
-------- --------
NET EARNINGS (LOSS)......................................... $ 3,770 $ (6,867)
======== ========
Net earnings (loss) per common share........................ $ .07 $ (.14)
======== ========
Weighted average number of common shares.................... 50,623 48,731
======== ========

EBITDA...................................................... $ 44,368 $ 26,157
======== ========
Attributable EBITDA......................................... $ 43,634 $ 24,520
======== ========

REVENUES -- ACTUAL VS. PRO FORMA

For the quarter ended March 31, 1997, total revenues for the Company
increased $12.5 million, or 4.7%, to $279.6 million from $267.0 million compared
to the pro forma quarter ended March 31, 1996. The increase in revenues for the
quarter ended March 31, 1997, resulted in part from an increase in net sales for
Home Shopping of $5.8 million, or 2.3%, to $261.4 million from $255.6 million
for the pro forma quarter ended March 31, 1996.

10
12

Net sales of HSC increased $17.9 million, or 8.0%, for the quarter ended
March 31, 1997, reflecting a 12.1% increase in the number of packages shipped
and a 10.6% decrease in the average price per unit sold compared to the pro
forma quarter ended March 31, 1996. The increase in HSC net sales was primarily
offset by planned decreases in net sales by wholly-owned subsidiaries, HSN Mail
Order, Inc. ("Mail Order"), Internet Shopping Network, Inc. ("ISN"), and the
retail outlet stores of $6.7 million, $1.7 million and $2.5 million,
respectively.

The Company believes that the improved sales in the quarter ended March 31,
1997, compared to the same period in 1996, were primarily the result of ongoing
changes made by new management to the Company's merchandising and programming
strategies. Management is continuing to take additional steps to improve sales
by changing the mix of products sold, introducing new products, maintaining the
desired average price point and creating exciting programming. Additional
personnel have been hired to assist in implementing these new merchandising and
programming strategies. Management has reformatted the former Spree! service to
America's Store which was launched in January 1997. This change was designed to
focus America's Store on some of the most popular product areas of electronic
retailing. This service has undergone various format changes to date, and the
Company is continuing to develop this service. There can be no assurance that
the additional changes to the Company's merchandising and programming strategies
will achieve management's intended results.

For the quarter ended March 31, 1997, HSC's merchandise return percentage
decreased to 22.0% from 24.9% for the same period in 1996. Management believes
that the lower return rate is primarily attributable to the decrease in the
average price per unit and the mix of products sold. Promotional price discounts
decreased to 1.7% of the HSC sales for the quarter ended March 31, 1997 from
3.8% in the same period in 1996 as fewer discounts were offered.

At March 31, 1997 and 1996, HSC had approximately 4.7 million active
customers. An active customer is one who has completed a transaction within the
last eighteen months or placed an order within the last seven months. In
addition, 59.8% of active customers have made more than one purchase in the last
eighteen months, compared to 59.4% at March 31, 1996.

The following table highlights the changes in the estimated unduplicated
television household reach of HSN, the Company's primary service, for the twelve
months ended March 31, 1997:

- --------------------------------------------------------------------------------------------------
CABLE* BROADCAST SATELLITE TOTAL
- --------------------------------------------------------------------------------------------------
(In thousands of households)

Households -- March 31, 1996.......................... 44,513 20,220 3,788 68,521
Net additions/(deletions)............................. 3,614 (1,118) -- 2,496
Shift in classification............................... 643 (643) -- --
Change in Nielsen household counts.................... -- (687) -- (687)
------ ------ ----- ------
Households -- March 31, 1997.......................... 48,770 17,772 3,788 70,330
====== ====== ===== ======

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

* Households capable of receiving both broadcast and cable transmissions are
included under cable and therefore are excluded from broadcast to present
unduplicated household reach. Cable households included 2.9 million and 1.3
million direct broadcast satellite ("dbs") households at March 31, 1997 and
1996, respectively, and therefore, these households are excluded from
satellite.

According to industry sources, as of March 31, 1997, there were 96.9
million homes in the United States with a television set, 64.4 million basic
cable television subscribers and 3.8 million homes with satellite dish
receivers, excluding dbs.

In addition to the households in the above table, as of March 31, 1997,
approximately 11.0 million cable television households were reached by America's
Store, of which 4.2 million were on a part-time basis. Of the total cable
television households receiving America's Store, 9.6 million also receive HSN.
During the remainder of 1997, cable system contracts covering 2.8 million cable
subscribers are subject to termination or renewal. This represents 5.7% of the
total number of unduplicated cable households receiving HSN. The Company is
pursuing both renewals and additional cable television system contracts, but
channel availability, competition, consolidation within the cable industry and
cost of carriage are some of the factors affecting the negotiations for cable

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television system contracts. Although management cannot determine the percentage
of expiring contracts that will be renewed or the number of households that will
be added through new contracts, management believes that a majority of these
contracts will be renewed.

For the quarter ended March 31, 1997, broadcasting revenues for SF
Broadcasting increased $1.1 million, or 10.2%, to $11.8 million from $10.7
million compared to the pro forma quarter ended March 31, 1996. For the quarter
ended March 31, 1997, other revenues of $5.8 million relate to the motion
picture business of Savoy which was discontinued in 1996 and the Company does
not expect significant additional revenues from this business.

OPERATING EXPENSES -- ACTUAL VS. PRO FORMA

COST OF SALES

For the quarter ended March 31, 1997, cost of sales decreased $6.3 million,
or 3.8%, to $158.6 million from $164.9 million compared to the pro forma quarter
ended March 31, 1996. The decrease in cost of sales for the quarter ended March
31, 1997, primarily relates to a decrease in cost of sales for Home Shopping of
$12.3 million, or 7.5%, to $152.4 million from $164.8 million for the pro forma
quarter ended March 31, 1996. As a percentage of net sales, Home Shopping's cost
of sales decreased to 58.3% from 64.5% compared to the pro forma quarter ended
March 31, 1996.

Cost of sales of HSC decreased $4.7 million for the quarter ended March 31,
1997. In addition, cost of sales of Mail Order, ISN and the retail outlet stores
decreased $3.5 million, $1.8 million and $2.7 million, respectively as a result
of the planned reduction in revenues for these subsidiaries. As a percentage of
HSC's net sales, cost of sales decreased to 59.2% from 66.0% compared to the pro
forma quarter ended March 31, 1996.

Management believes the decreases in Home Shopping's and HSC's cost of
sales when compared to pro forma 1996, are primarily the result of changes in
merchandising and programming strategies, as discussed in "Revenues -- Actual
vs. Pro forma."

For the quarter ended March 31, 1997, the decrease in cost of sales of Home
Shopping was offset in part by a $4.9 million increase in cost of sales related
to the discontinued motion picture business. Significant additional cost of
sales are not expected from the motion picture business.

OTHER COSTS

For the quarter ended March 31, 1997, other costs increased $.6 million, or
0.8%, to $76.6 million from $76.0 million compared to the pro forma quarter
ended March 31, 1996. These expenses are expected to increase primarily due to
increases in certain general and administrative expenses.

DEPRECIATION AND AMORTIZATION

For the quarter ended March 31, 1997, depreciation and amortization expense
decreased $1.6 million, or 7.1%, to $21.0 million from $22.6 million. The
decrease primarily relates to a $1.5 million decrease in depreciation and
amortization related to the SKTV Stations resulting from certain broadcast
related intangibles which are now fully amortized. Depreciation expense will
increase in 1997 compared to pro forma 1996 related to increased capital
expenditures in 1997.

INTEREST EXPENSE, NET

For the quarter ended March 31, 1997, interest expense, net, decreased $5.0
million, or 47.1%, to $5.7 million from $10.7 million because of lower borrowing
levels, and a lower average borrowing rate. In addition to these decreases,
interest income increased due to the Company's higher overall cash balance
compared to the pro forma quarter ended March 31, 1996.

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OTHER INCOME (EXPENSE), NET

For the quarter ended March 31, 1997, other expense increased $5.5 million
compared to the quarter ended March 31, 1996. This is primarily due to equity
losses totaling $3.3 million relating to the Company's investments in Home Order
Television GmbH & Co. ("HOT") and Jupiter Shop Channel Co. Ltd. compared to the
quarter ended March 31, 1996, which included a one-time $1.5 million payment
received in connection with the termination of the Canadian Home Shopping
Network license agreement.

INCOME TAXES

MINORITY INTEREST

For the quarter ended March 31, 1997, minority interest decreased $.9
million, or 68.1%, to $.4 million from $1.3 million compared to the pro forma
quarter ended March 31, 1996. This decrease relates to Liberty HSN's minority
interest in the pretax profit of Home Shopping offset by Fox's minority interest
in SF Broadcasting's pretax loss.

EBITDA AND ATTRIBUTABLE EBITDA

Earnings before interest, income taxes, depreciation and amortization
("EBITDA") is defined as operating profit plus depreciation and amortization.
EBITDA is presented here as a management tool and as a valuation methodology for
companies in the media, entertainment and communications industries. EBITDA does
not purport to represent cash provided by operating activities. EBITDA should
not be considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles. The
Company owns 50% of the common equity and 100% of the voting stock of SF
Broadcasting. As a result of voting and management control, SF Broadcasting's
operating results are consolidated with the Company's operating results.
Attributable EBITDA reflects 50% of SF Broadcasting's EBITDA based on the
Company's common equity ownership.

B. FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $35.0 million for the twelve
months ended March 31, 1997. In addition, in connection with the Mergers, the
Company acquired cash of $52.7 million. These cash proceeds were used to repay
outstanding borrowings of $67.2 million of the Company's long-term obligations,
pay for capital expenditures of $10.5 million and pay cable distribution fees of
$5.0 million. Net earnings adjusted for non-cash items totaled $41.5 million for
the twelve months ended March 31, 1997. The decrease in working capital of $2.3
million for the twelve months ended March 31, 1997 is primarily the result of
the Mergers and the purchase accounting adjustments recorded in connection
therewith.

Net cash provided by operating activities of $29.5 million was the primary
source of cash for the quarter ended March 31, 1997. These cash proceeds,
capital contributions received of $9.0 million and available cash were used
primarily to repay outstanding borrowings of $30.5 million of the Company's
long-term obligations, pay for capital expenditures and pay cable distribution
fees of $3.0 million. Net earnings adjusted for non-cash items totaled $32.0
million for the quarter ended March 31, 1997. The increase in working capital of
$31.9 million for the quarter ended March 31, 1997 is primarily the result of
the reduction in the current maturities of long-term obligations.

Accounts and notes receivable at March 31, 1997 included "FlexPay" accounts
receivable totaling $22.6 million compared to $20.3 million at December 31,
1996. It is expected that the Company's financing of "FlexPay" accounts
receivable will not have a significant impact on its liquidity position.

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The inventory balance is net of a carrying adjustment of $27.1 million at
March 31, 1997 compared to $27.9 million at December 31, 1996, which is
primarily related to product which is inconsistent with Home Shopping's new
sales and merchandising philosophy.

Capital expenditures were $9.4 million for the quarter ended March 31,
1997. Home Shopping has initiated a plan to improve and expand the capabilities
of its computer systems and accordingly, capital expenditures are expected to
range from $16.0 to $21.0 million for the remainder of 1997. When completed,
Home Shopping expects to achieve savings in its call center and fulfillment
operations.

The Company is considering the orderly disaffiliation of the SKTV Stations
and the development and broadcasting of independent programming. In the event of
disaffiliation, substantial capital expenditures would be required to develop
SKTV programming. These capital expenditures, combined with capital expenditures
for SF Broadcasting and the SKTV Stations, are expected to range from $12.0 to
$14.0 million for the remainder of 1997.

On May 1, 1997, the Company entered into a new $275.0 million Revolving
Credit Facility (the "New Facility") with a $35.0 million sub-limit for letters
of credit. The New Facility, which replaced both the Home Shopping Revolving
Credit Facility and the Company's Secured Senior Term Loans, expires on May 1,
2002. The New Facility is unsecured and the interest rate on borrowings is tied
to the London Interbank Offered Rate plus an applicable margin. At May 1, 1997
there was $70.0 million of outstanding borrowings under the New Facility and
$195.5 million was available for borrowing after taking into account outstanding
letters of credit.

In April 1997, the Company paid $5.0 million of subscriptions payable
related to its investment in HOT and expects to pay the remaining $5.0 million
in September 1997. The Company has certain ongoing funding obligations.

During the remainder of 1997, management expects to pay cable distribution
fees of $28.0 to $32.0 million, relating to new and current contracts with cable
system operators to carry Home Shopping's programming.

During the quarter ended March 31, 1997, the Company received cash proceeds
of $.8 million from the exercise of .1 million options to purchase the Company's
common stock. At May 1, 1997, 3.2 million options to purchase the Company's
common stock were outstanding and exercisable at prices ranging between $2.00
and $148.21. The exercise of such options would result in a cash inflow to the
Company of $49.0 million.

In management's opinion, available cash, internally generated funds and the
New Facility will provide sufficient capital resources to meet the Company's
foreseeable needs.

During the quarter ended March 31, 1997, the Company did not pay any cash
dividends, and none are permitted under the Company's existing credit facilities
or the New Facility.

SEASONALITY

The Company believes seasonality does impact its retailing segment but not
to the same extent it impacts the retail industry in general.

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PART II -- OTHER INFORMATION

ITEM 6(A) -- EXHIBITS

Exhibit 10.60 -- Credit Agreement dated as of May 1, 1997, among HSN, Inc.,
as borrower, The Guarantors party thereto, The Lenders
party thereto, LTCB Trust Company and The Bank of New York
Company, Inc., as Co-Documentation Agents, The Chase
Manhattan Bank, as Administrative Agent, and Chase
Securities Inc., as Arranger.
Exhibit 27 -- Financial Data Schedule (for SEC use only).

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SIGNATURES

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

HSN, INC.
--------------------------------------
(Registrant)

Dated May 15, 1997 /s/ BARRY DILLER
---------------------------------------- --------------------------------------------------------
Barry Diller
Chairman of the Board and
Chief Executive Officer

Dated May 15, 1997 /s/ JED B. TROSPER
---------------------------------------- --------------------------------------------------------
Jed B. Trosper
Vice President, Chief Financial Officer
and Treasurer
(Principal Financial Officer)

Dated May 15, 1997 /s/ BRIAN J. FELDMAN
---------------------------------------- --------------------------------------------------------
Brian J. Feldman
Controller
(Chief Accounting Officer)