<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

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

For the quarterly period ended NOVEMBER 30, 1998
                               -----------------

                                       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 1-8654

                              UNITEL VIDEO, INC.
--------------------------------------------------------------------------------
           (Exact name of registrant as specified in its charter)

         DELAWARE                                               23-1713238
--------------------------------------------------------------------------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

               555 WEST 57TH STREET - NEW YORK, NEW YORK 10019
--------------------------------------------------------------------------------
                   (Address of principal executive offices)

                                (212) 265-3600
--------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)


--------------------------------------------------------------------------------
             (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 twelve months and (2) has been subject to such 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.

2,714,116 common shares outstanding as of January 19, 1999
(Number of shares)                             (Date)

<PAGE>

                               UNITEL VIDEO, INC.

                                    FORM 10-Q

                         QUARTER ENDED NOVEMBER 30, 1998

                                                                 Page
                                  INDEX                         Number

Part I.   FINANCIAL INFORMATION

          Item 1.  Financial Statements

                   Consolidated Balance Sheets
                   November 30, 1998  (Unaudited) and             3-4
                   August 31, 1998

                   Consolidated Statements of Operations
                   November 30, 1998 (Unaudited) and              5
                   November 30, 1997 (Unaudited)

                   Consolidated Statements of Cash Flows
                   November 30, 1998 (Unaudited)                  6-7
                   and November 30, 1997 (Unaudited)

                   Notes to Consolidated Financial                8
                   Statements  (Unaudited)

          Item 2.  Management's Discussion and Analysis
                   of Financial Condition and Results of          9-15
                   Operations

          Item 3.  Quantitative and Qualitative Disclosure
                   About Market Risk                              15

Part II.  OTHER INFORMATION

          Item 6.  Exhibits and Reports on Form 8-K               16



                                       2
<PAGE>

                               UNITEL VIDEO, INC.

                                    FORM 10-Q

                         QUARTER ENDED NOVEMBER 30, 1998

Part 1.  FINANCIAL INFORMATION

         ITEM 1.  Financial Statements

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                           November 30, 1998           August 31, 1998
                                           -----------------           ---------------
                                              (Unaudited)                   (Note)
<S>                                           <C>                         <C>
ASSETS

Current Assets:
    Cash                                      $   349,000                 $ 1,190,000
    Accounts receivable, net                    4,825,000                   4,784,000
    Other receivables                             149,000                      93,000
    Prepaid income taxes                           55,000                      62,000
    Prepaid expenses                              397,000                     498,000
    Deferred tax asset                            312,000                     312,000
                                              -----------                 -----------
    Total current assets                        6,087,000                   6,939,000

Property and equipment - at cost
    Land, buildings
      and improvements                         23,644,000                  23,490,000
    Video equipment                            78,590,000                  78,113,000
    Furniture and fixtures                      1,773,000                   1,758,000
                                              -----------                 -----------
                                              104,007,000                 103,361,000

    Less accumulated depreciation
      and amortization                         54,593,000                  52,420,000
                                              -----------                 -----------
                                               49,414,000                  50,941,000

Deferred tax asset                              2,157,000                   2,157,000
Goodwill                                        1,549,000                   1,583,000
Other assets                                    2,191,000                   2,112,000
                                              -----------                 -----------
                                              $61,398,000                 $63,732,000
                                              ===========                 ===========
</TABLE>

Note:  The balance sheet at August 31, 1998 has been taken from the audited 
consolidated financial statements at that date.

See notes to consolidated financial statements.


                                       3
<PAGE>

                               UNITEL VIDEO, INC.

                                    FORM 10-Q

                           CONSOLIDATED BALANCE SHEETS

                                   (Continued)
<TABLE>
<CAPTION>
                                           November 30, 1998           August 31, 1998
                                           -----------------           ---------------
                                              (Unaudited)                   (Note)
<S>                                           <C>                         <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

    Accounts payable                          $ 5,602,000                 $ 5,282,000
    Accrued expenses                            1,007,000                   2,056,000
    Payroll and related taxes                   1,406,000                   1,434,000
    Current maturities of long-term debt        3,729,000                   3,563,000
    Current maturities of subordinated debt     2,438,000                     640,000
    Current maturities of capital lease 
      obligations                               2,016,000                   2,077,000
                                              -----------                 -----------
    Total current liabilities                  16,198,000                  15,052,000

Deferred rent                                     111,000                     112,000
Long-term debt, less current maturities        32,206,000                  32,679,000
Subordinated debt, less current maturities         --                       2,171,000
Long-term leases, less current maturities       3,948,000                   4,468,000
Accrued retirement                              1,013,000                   1,047,000

Stockholders' equity:
    Common stock, par value
      $.01 per share:
      Authorized 5,000,000 shares
      Issued 3,544,854 and 3,541,754 shares,
        respectively, and outstanding 2,714,116
        and 2,711,016 shares, respectively         27,000                      27,000
      Additional paid-in capital               27,284,000                  27,275,000
      Accumulated deficit                     (11,744,000)                (11,454,000)
      Common stock held in treasury,
        at cost (830,738 shares)               (7,645,000)                 (7,645,000)
                                              -----------                 -----------
      Total stockholders' equity                7,922,000                   8,203,000
                                              -----------                 -----------
                                              $61,398,000                 $63,732,000
                                              ===========                 ===========
</TABLE>


Note:  The balance sheet at August 31, 1998 has been taken from the audited 
consolidated financial statements at that date.

See notes to consolidated financial statements.


                                       4
<PAGE>

                               UNITEL VIDEO, INC.

                                    FORM 10-Q

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                  Three Months Ended November 30,
                                              ---------------------------------------
                                                 1998                        1997
                                              -----------                 -----------
<S>                                           <C>                         <C>
Sales                                         $12,322,000                 $13,768,000

Cost of sales:
    Production costs                            8,012,000                   9,279,000
    Depreciation and amortization               2,097,000                   2,151,000
                                              -----------                 -----------
                                               10,109,000                  11,430,000
                                              -----------                 -----------

Gross profit                                    2,213,000                   2,338,000

Operating expenses:
    Selling                                       268,000                     363,000
    General and administrative                  1,201,000                   1,620,000
    Interest                                    1,043,000                     899,000
                                              -----------                 -----------
                                                2,512,000                   2,882,000
                                              -----------                 -----------
Loss from operations                             (299,000)                   (544,000)
Other income                                       --                          90,000
Loss before income taxes                         (299,000)                   (454,000)
Income taxes                                       --                           2,000

Net loss applicable for common stock-
     basic and diluted                        $  (299,000)                $  (456,000)
                                              ===========                 ===========
Net loss per common share                     $      (.11)                $      (.17)
                                              ===========                 ===========

Weighted average number of common
    shares outstanding                          2,714,000                   2,675,000
                                              ===========                 ===========
</TABLE>

                  See notes to consolidated financial statements.


                                        5
<PAGE>
                               UNITEL VIDEO, INC.

                                    FORM 10-Q

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                  Three Months Ended November 30,
                                              ---------------------------------------
                                                 1998                        1997
                                              -----------                 -----------
<S>                                           <C>                         <C>
Cash Flows From Operating Activities:

    Net loss                                  $  (299,000)                $  (456,000)
    Adjustments to reconcile
       net loss to net cash
       provided by operating
       activities:
    Depreciation and amortization               2,337,000                   2,151,000
    Net gain on disposal of equipment            (240,000)                    --
    Amortization of deferred financing costs       56,000                      47,000
    Deferred rent and other                         8,000                       2,000
    Accrued retirement expense                    (34,000)                    (33,000)
    Changes in operating assets
      and liabilities:
        Accounts receivable, net                  (41,000)                 (1,625,000)
        Other receivables                        (339,000)                    (82,000)
        Prepaid expenses                          101,000                    (181,000)
        Prepaid taxes                               7,000                     (26,000)
        Other assets                             (106,000)                   (229,000)
        Accounts payable                          603,000                   1,410,000
        Accrued expenses                       (1,049,000)                    294,000
        Payroll and related taxes                 (28,000)                   (452,000)
                                              -----------                 -----------
                                                1,275,000                   1,276,000
                                              -----------                 -----------
         Net cash provided by operating
            activities                            976,000                     820,000

Cash Flows from Investing
    Activities:
      Capital expenditures                       (851,000)                   (947,000)
      Proceeds from disposal of equipment         316,000                      --
                                              -----------                 -----------
         Net cash used in
             investing activities                (535,000)                   (947,000)

</TABLE>
                                                                     (Continued)


                                       6
<PAGE>

                               UNITEL VIDEO, INC.
                                    FORM 10-Q
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Continued)

<TABLE>
<CAPTION>
                                                           Three Months Ended November 30,
                                                       ---------------------------------------
                                                          1998                        1997
                                                       -----------                 -----------
<S>                                                    <C>                         <C>
Cash Flows From Financing
    Activities:
        Proceeds from long term financing              $    --                     $ 6,832,000
        Proceeds from issuance of common stock               9,000                      --
        Deferred financing costs                           (30,000)                     --
        Principal repayments                            (1,261,000)                 (6,274,000)
                                                       -----------                 -----------
           Net cash (used) provided in financing
           Activities                                   (1,282,000)                    558,000
                                                       -----------                 -----------
Net (Decrease) Increase in Cash                           (841,000)                    431,000
Cash Beginning of Year                                   1,190,000                     137,000
                                                       -----------                 -----------
Cash End of Quarter                                    $   349,000                 $   568,000
                                                       ===========                 ===========


Schedule of income taxes and interest paid:

        Income Taxes Paid                              $     2,000                 $     2,000

        Interest Paid                                      982,000                     854,000
                                                       -----------                 -----------

                                                       $   984,000                 $   856,000
                                                       ===========                 ===========
</TABLE>


                     See notes to consolidated financial statements.



                                           7
<PAGE>

                               UNITEL VIDEO, INC.
                                    FORM 10-Q
                      THREE MONTHS ENDED NOVEMBER 30, 1998
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.  CONSOLIDATED FINANCIAL STATEMENTS

The condensed consolidated balance sheet as of November 30, 1998, the 
consolidated statements of operations for the quarters ended November 30, 
1998 and 1997, and the consolidated statements of cash flows for the three 
months then ended have been prepared by the Company without audit. In the 
opinion of management, all adjustments (which include only normal recurring 
adjustments) necessary to present fairly the financial position, results of 
operations, and cash flows at November 30, 1998 and for all periods presented 
have been made.

Certain information and footnote disclosure normally included in the 
financial statements prepared in accordance with generally accepted 
accounting principles have been condensed or omitted. It is suggested that 
these condensed consolidated financial statements be read in conjunction with 
the financial statements and notes thereto in the Company's August 31, 1998 
Form 10-K filed with the Securities and Exchange Commission. The results of 
operations for the quarter ended November 30, 1998 are not necessarily 
indicative of the operating results for the full year.

2.  STOCKHOLDERS' EQUITY

During the three months ended November 30, 1998, stockholders' equity 
decreased due to:

Net loss                                              $  (299,000)
Translation adjustment                                      9,000
Purchase of stock under the Unitel Video, Inc.
    Employee Stock Purchase Plan                            9,000
                                                      -----------
Total decrease in stockholders' equity                $  (281,000)
                                                      ===========


                                       8
<PAGE>


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

LIQUIDITY AND CAPITAL RESOURCES

The Company has taken several steps to increase its liquidity, which had been 
significantly reduced by the losses incurred during the past several fiscal 
years.

In August 1998, the Company refinanced its owned New York City real estate 
generating funds of approximately $4,600,000 after repayment of the existing 
first mortgages on such properties, closing costs and escrows. These funds 
were used to repay Term Loan D of the credit facility described below in this 
item in the amount of $1,600,000, with the balance used for working capital 
purposes.

Additionally, the holders of subordinated debt of the Company related to the 
acquisition of the mobile facilities company GC& Co. by the Company in 1995, 
which had been due in August 1998, agreed to a new payment schedule providing 
for payments of fifty percent of the $650,000 in October 1998 and the balance 
in six equal installments beginning November 1998.

In a third step, another holder of subordinated debt of the Company agreed to 
restructure its note with the Company by postponing the maturity date from 
May 1999 to September 1999 and by eliminating principal payments that had 
been due for the months of April 1998 through April 1999, totaling $450,000. 
The holder also agreed to add $108,000 of accrued but unpaid interest to the 
principal balance payable in September 1999. The new terms require that 
interest only be paid on a current basis effective September 1, 1998 through 
the September 30, 1999 maturity date.

The Company has reduced its cash requirements through cost reductions. 
Additionally, due to capital expenditures in fiscal years 1996 through 1998 
totaling approximately $30,000,000, the Company currently anticipates that 
capital expenditures in fiscal 1999 will be less than $2,500,000. Capital 
expenditures were $535,000 (net of proceeds from dispositions of equipment) 
during the quarter ended November 30, 1998, and consisted of the purchase of 
production, post production and graphics equipment for use throughout the 
Company.

Net cash provided by operating activities during the quarter ended November 
30, 1998 and 1997 was $976,000 and $820,000, respectively. Net cash provided 
by operating activities for the quarter ended November 30, 1998 was offset by 
net cash of $535,000 used in investing activities which consisted of capital 
expenditures (net of proceeds from asset dispositions), and by net cash used 
in financing activities of $1,282,000 for debt repayment, resulting in a net 
decrease in cash available of $841,000. Net cash provided by operating 
activities for the quarter ended November 30, 1997 was increased by net cash 
provided from financing activities of $558,000 from additional long term debt 
and was offset by net cash of $947,000 used in investing activities which 
consisted of capital expenditures resulting in a net increase in cash 
available of $431,000


                                       9
<PAGE>

In December 1995, the Company entered into a $26 million revolving credit and 
term loan agreement (the "credit facility") with a financial institution, 
consisting of an $11 million revolving credit facility and two $7.5 million 
term loans (Term Loans A and B). In May 1997, Term Loan A was revised by the 
inclusion of $2,500,000 of the original Term Loan B and the advance of 
$518,000 of new funds, resulting in a revised Term Loan A balance of 
$9,000,000. Term Loan A is payable in equal monthly principal installments of 
$100,000 plus interest, with the balance of $6,000,000 due March 2000. In 
November 1997 Term Loan B was repaid, in part from the proceeds of a new Term 
Loan D in the amount of $2,500,000. $3,742,000 of the original Term Loan B 
was repaid from sales of equipment from the Company's Editel Chicago, Editel 
New York and Unitel Hollywood divisions. The Company refinanced its New York 
owned real estate in August 1998 and used a portion of the proceeds of the 
refinancing to repay Term Loan D and other indebtedness and the balance of 
the proceeds for working capital purposes.

In July 1997 the credit facility was further amended by the issuance of a 
$5,080,000 letter of credit to secure payment of principal and interest on 
$5,000,000 principal amount of Allegheny County (Pennsylvania) Industrial 
Development Authority Variable Rate Demand Revenue Bonds (the "Bonds"). The 
proceeds from the sale of the Bonds were loaned to the Company and were used 
by the Company to build a new digital mobile teleproduction unit. The credit 
facility requires quarterly principal payments of $179,000 commencing 
December 1998 in respect of the Bonds. The Bonds mature on July 1, 2009 and, 
to the extent not previously redeemed in full, are required to be repaid by 
the Company on that date.

In December 1997 a second series of Bonds were issued in an amount of 
$3,500,000. The proceeds of the second series of Bonds were used to finance 
the construction of a second digital mobile unit. The credit facility 
requires quarterly principal payments of $125,000 commencing February 1999 in 
respect of this second series of Bonds which also mature on July 1, 2009.

The terms of the credit facility with the financial institution provide that 
the lender receive a first lien on all property and equipment and accounts 
receivable that are not encumbered by another lender. The Company has at 
certain times during the quarter ended November 30, 1998 not been in 
compliance with certain of the financial covenants contained in the credit 
facility and the lender has waived such non-compliance. In addition, the 
Company has at certain times during the quarter ended November 30, 1998 been 
in arrears on certain other indebtedness. The Company is currently in 
discussions with various lenders to refinance the credit facility and make 
available to the Company additional working capital. The Company is also in 
negotiations to restructure the repayment terms of certain of its other 
long-term debt. The Company anticipates that the steps enumerated above in this
item together with funds generated from operations and proceeds from the sale 
of selected fixed assets no longer useful in the Company's business will be 
sufficient to meet the Company's anticipated working capital and investment 
needs in fiscal 1999.

                                       10
<PAGE>

RESULTS OF OPERATIONS

Sales were $12,322,000 and $13,768,000 for the quarters ended November 30, 
1998 and 1997, respectively, resulting in a decrease from the same period of 
the prior year. The decrease in sales of $1,446,000 in the quarter ended 
November 30, 1998 is primarily attributable to the following three areas of 
the Company's business. First, the consolidation of the Company's two New 
York City based post-production facilities into a single facility at Unitel 
Post 38 resulted in a decrease in sales of approximately $600,000 from the 
closing of the Unitel Post 57 facility and the elimination of the interactive 
segment of the Company's post-production business. Second, sales of the 
Company's mobile division declined approximately $400,000 as a result of 
pass-through costs being eliminated from mobile division billing and absorbed 
directly by the Company's clients. Although mobile division sales were lower 
in the quarter ended November 30, 1998 compared to sales for that division in 
the quarter ended November 30, 1997, results of operations for that division 
were the same in both the quarters ended November 30, 1998 and November 30, 
1997. Third, sales for the Company's Editel Los Angeles division declined 
approximately $400,000 as a result of the loss of the Company's business in 
connection with the Star Trek television series in the fourth quarter of 
fiscal 1998.

 The Company's net loss for the quarter ended November 30, 1998 was 
($299,000) compared to a net loss of ($456,000) for the quarter ended 
November 30, 1997. The comparative decrease in the net loss of approximately 
$157,000 for the quarter ended November 30, 1998 compared to the quarter 
ended November 30, 1997 is principally due to the improvement in the results 
of the New York post production operation resulting from the closure of the 
Unitel Post 57 facility and improvements in the New York studio division. 
These improvements were offset by a loss in the Editel Los Angeles division 
caused by a decrease in sales.

Production costs, the main component of cost of sales, consist primarily of 
direct labor, equipment maintenance expenses and occupancy costs. The 
Company's production costs, as a percentage of sales, were 65% for the 
quarter ended November 30, 1998, as compared to 67% for the quarter ended 
November 30, 1997. The decrease in production costs for the quarter ended 
November 30, 1998 compared with the same period of the prior year is 
primarily due to the efficiencies achieved from an increase in sales without 
a proportionate increase in costs at the Company's Unitel Post 38 facility as 
a result of the closure of the Company's Unitel Post 57 facility and the 
relocation of a significant portion of that facility's customer base to the 
Unitel Post 38 facility.

Depreciation, as a percentage of sales, was 17.0% and 15.6% for the quarters 
ended November 30, 1998 and 1997, respectively. Had gain on sale of equipment 
of $240,000 been excluded from depreciation expense for the quarter ended 
November 30, 1998, depreciation as a percentage of sales would have been 
19.0% compared with 15.6% for the same period in the prior year. The increase 
in the quarter ended November 30, 1998 compared to the same period in the 
prior year was primarily a result of the introduction of a digital mobile 
teleproduction unit in the quarter ended February 28, 1998. Additionally, the 
Company retained the majority of the equipment previously used at the 
Company's Post 57 facility that was closed in the third quarter of the 
Company's 1998 fiscal year.

Selling expenses, as a percentage of sales, for the quarters ended November 
30, 1998 and 1997 were 2.2% and 2.6%, respectively. The decrease in the 
quarter ended November 30, 1998 as compared to the quarter ended November 30, 
1997 is due to a decrease in the Company's overall sales staff primarily as a 
result of the closure of the Unitel Post 57 facility in May 1998. Also, 
promotional expenses were higher in the quarter ended


                                       11
<PAGE>

November 30, 1997 due to the introduction of one of the Company's new digital 
mobile teleproduction units.

General and administrative expenses, as a percentage of sales, for the 
quarters ended November 30, 1998 and 1997 were 9.7% and 11.8%, respectively. 
The decrease in general and administrative expenses as a percentage of sales 
is primarily due to the greater decrease in expense in relation to the 
decrease in sales. General and administrative expenses decreased by 
approximately $400,000 primarily from reductions in corporate expenses, bad 
debt allowances and professional fees.

Interest expense, as a percentage of sales, for the quarters ended November 
30, 1998 and 1997 was 8.5% and 6.5%, respectively. Interest expense for the 
quarter ended November 30, 1998 increased approximately $140,000 compared to 
the quarter ended November 30, 1997 primarily from new debt added as of 
August 31, 1998, partially offset by normal principal reductions on older 
debt.

The Company's effective tax rate was 0% for the first quarter of fiscal years 
1999 and 1998. The effective tax rate for the first quarter of fiscal 1999 is 
less than the federal statutory rate of 34% due to the utilization of net 
operating loss carryforwards generated by the losses incurred in fiscal 1998 
and prior years.

YEAR 2000 UPDATE

General

The Company's company-wide Year 2000 Project (the "Project") is proceeding on 
schedule. The purpose of the Project is to evaluate the ability of computer 
programs (software) and embedded chips to distinguish between the year 1900 
and the year 2000. The Project has been underway since the middle of calendar 
year 1998, is proceeding on schedule and is expected to be completed by the 
middle of calendar year 1999. While many different types of equipment and 
software products may be prone to the Year 2000 problem, major emphasis is 
being placed on those items considered to be material to the operation of the 
Company's business.

The Company's primary business is to provide services to the video and film 
communications industry for the recording, editing, creation of digital 
effects and duplication of television programs, commercials, corporate 
communications and feature films. Because the various operating divisions of 
the Company share much of the software and hardware necessary to provide 
these services, Year 2000 research done at one division is largely applicable 
at the Company's other divisions. This fact will greatly simplify the process 
of evaluating the impact of Year 2000 issues on the Company's business and 
minimize the costs to the Company involved in becoming Year 2000 compliant.


                                       12
<PAGE>

Project

The Company's Project is divided into four major sections:

1.  Administrative Functions - accounts payable, accounts receivable, client 
scheduling, purchasing and payroll.

2.   Technical Services - equipment/systems, software packages, 
interconnectivity issues.

3. Infrastructure - personal computers (PC's and MAC's), owned telephone 
system equipment, networks (Novell, Microsoft), office equipment, etc.

4. External Services Vendors - 401K/health care management, payroll services, 
property/liability insurance providers, etc.

Administrative Functions:

The accounts payable, accounts receivable and client scheduling tasks at most 
divisions of the Company are provided by industry standard software 
applications, for example J.D. Edwards Accounting Package or Xytech Systems 
(Xymox), or both, depending on the division. Both J.D. Edwards and Xytech 
Systems have available Year 2000 upgrade programs and the Company anticipates 
these will be installed in early calendar year 1999. Standard PC based 
applications, used for these and other applications, are either currently 
compliant or are expected to have suitable upgrades available in early 
calendar year 1999. Similarly, the payroll services vendor expects to have 
Year 2000 software available early in calendar year 1999. These will be 
purchased by the Company as soon as they become available.

Technical Services:

The Company utilizes technical hardware from various vendors to provide a 
wide range of services to its clients. All divisions have been compiling 
lists of equipment considered critical to their operations. Based on written 
responses from various vendors, the Company has been advised that the 
majority of these items are either Year 2000 compliant or not affected by 
Year 2000 issues. Some software packages utilized on Silicon Graphics and 
Apple platforms are still being evaluated with respect to Year 2000 issues, 
but since these items are routinely upgraded by the Company as part of its 
ongoing operations to insure that the Company is staying current with 
technology it is anticipated that the Year 2000 issues in such cases should 
be minimal. Furthermore, the products produced by the Company for its clients 
are delivered to the client at the conclusion of a job and such products are 
not thereafter affected by Year 2000 issues. Therefore, Year 2000 compliance 
is not considered a material issue for already completed client work. All 
critical equipment and software products utilized in the production of client 
material will have been certified, either through testing by the Company or 
vendor representation, to be Year 2000 compliant or not affected by Year 2000 
issues by the middle of calendar year 1999.


                                       13
<PAGE>

Infrastructure:

It is expected that general purpose PC workstations purchased within the past 
12 months should be able to recognize the date change to the Year 2000. A 
comprehensive checklist is being prepared that will assist each division in 
determining which PCs need to have some form of upgrade. Some older PCs may 
require replacement, or may be upgraded through inexpensive after-market 
clock upgrades. Also being evaluated are Company owned telephone systems 
which contain embedded chips which may be date sensitive. To date, all 
telephone systems checked have been found to be either Year 2000 compliant or 
not affected by the Year 2000 issue. Novell or Microsoft computer network 
products have upgrades available supplied and represented by the vendor to be 
Year 2000 compliant which will be installed by the Company by the middle of 
calendar 1999. Other general purpose office equipment such as copy machines 
and fax machines are being evaluated but are not considered to be material.

External Services Vendors:

The Company utilizes numerous outside vendors for management of such services 
as payroll, health care benefits, 401K administration and insurance 
coverages. All of these vendors are being asked to supply a written statement 
concerning Year 2000 compliance and a general scope of appropriate needed 
actions, costs, and time-frames. This part of the Project is expected to be 
completed by the middle of calendar 1999.

Costs

The total cost of the Year 2000 Project is not expected to be material to the 
Company's financial position. Because some investigation is still ongoing, 
total costs can only be estimated. Based on mission critical hardware and 
software upgrade costs that are known, and reasonable expectations of results 
from further testing, the total cost of the Project is not expected to exceed 
$100,000 Company-wide and will be expensed as incurred.

Risks

The Company supplies a wide range of services to its clients. Once those 
services are delivered, whether on videotape, CD Rom, computer disk, or other 
media, Year 2000 compliance is no longer a concern. Since it has already been 
determined that much of the hardware and software material to the internal 
operation of the Company's business is or will be compliant, there appears to 
be minimal risk to the internal operations of the Company due to the Year 
2000 issue. This does not include any serious problems or outages caused by 
Year 2000 problems that could exist at local utilities that supply telephone, 
electrical, natural gas and similar services or with external services 
vendors. Due to the general uncertainty inherent in the Year 2000 problem, 
resulting in part from the uncertainty of the Year 2000 readiness of outside 
vendors or clients, the Company is unable to determine at this time whether 
the consequences of Year 2000 failures will have a material impact on the 
Company's results of operations, liquidity or financial condition. However, 
the Company's internal Project is expected to significantly reduce the level 
of uncertainty about the Year 2000 problem particularly with respect to the 
effect on the Company of the readiness of its vendors. It is the opinion of 
the Company that, with the installation of new equipment which the Company is 
advised to be Year 2000 compliant


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and the completion of the Project as scheduled, the possibility of 
significant interruptions of normal operations should be significantly 
reduced.

Contingency Plan

Based on the Company's expectation that Year 2000 issues will be adequately 
addressed by the scheduled completion of the Project, no contingency plans 
have been formulated. In the event an unexpected Year 2000 problem is 
discovered that will affect either the completion or delivery of client 
material, the Company expects that a sufficient number of alternative 
production methods exist in the industry to mitigate any substantial problems.

THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS WHICH ARE BASED UPON 
CURRENT EXPECTATIONS AND INVOLVE CERTAIN RISKS AND UNCERTAINTIES. UNDER THE 
SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 
1995, READERS ARE HEREBY CAUTIONED THAT THESE STATEMENTS MAY BE IMPACTED BY 
SEVERAL FACTORS, AND, CONSEQUENTLY, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM 
THOSE EXPRESSED HEREIN.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

The Company is exposed to interest rate change market risk with respect to 
its credit facility with a financial institution which is priced based on the 
prime rate of interest. At November 30, 1998 $12,172,000 was outstanding 
under the credit facility. Changes in the prime interest rate during fiscal 
1998 will have a positive or negative effect on the Company's interest 
expense. Each 1% fluctuation in the prime interest rate will increase or 
decrease interest expense for the Company by approximately $122,000 annually.

In addition, the Company is exposed to interest rate change market risk with 
respect to the Bonds in the amount of $8,500,000. The Bonds bear interest at 
a floating rate established weekly by the remarketing agent. During fiscal 
1999 the interest rate on the Bonds approximated 3.5%. Each 1% fluctuation in 
the interest rate on the Bonds will increase or decrease interest expense on 
the Bonds by approximately $85,000 annually.

The impact of interest rate fluctuations on other floating rate debt of the 
Company and foreign exchange fluctuation on the Company's Canadian subsidiary 
is not material.


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PART II  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits required to be filed by Item 601 of Regulation S-K.

              1.  Exhibit 10(A).  Agreement, dated as of September 1, 1998, 
                  between Unitel Video, Inc. and Albert Walton.

              2.  Exhibit 27.  Financial Data Schedule.

         (b) There were no reports filed on Form 8-K during the quarter ended
November 30, 1998.

THIS FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS WHICH ARE BASED UPON 
CURRENT EXPECTATIONS AND INVOLVE CERTAIN RISKS AND UNCERTAINTIES. UNDER THE 
SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 
1995, READERS ARE HEREBY CAUTIONED THAT THESE STATEMENTS MAY BE IMPACTED BY 
SEVERAL FACTORS, AND, CONSEQUENTLY, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM 
THOSE EXPRESSED HEREIN.








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<PAGE>

         SIGNATURES

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

         UNITEL VIDEO, INC.


         By:      /s/ Barry Knepper
            ---------------------------------------
                  Barry Knepper
                  President and Chief Executive Officer


         By:      /s/ Neil Marcus
            ---------------------------------------
                  Neil Marcus
                  Chief Financial Officer


Dated:   January 19, 1999





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