<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[x]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
       ACT OF 1934

       For the fiscal year ended December 31, 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 numbers: 333-36519 and 333-36519-01

                          FrontierVision Holdings, L.P.
                  FrontierVision Holdings Capital Corporation*
           (Exact names of Registrants as specified in their charters)

     Delaware                                           84-1432334
     Delaware                                           84-1432976
(States or other jurisdiction              (IRS Employer Identification Numbers)
of incorporation or organization)

     1777 South Harrison Street,
     Suite P-200, Denver, Colorado                        80210
(Address of principal executive offices)               (Zip Code)

                                 (303) 757-1588
              (Registrants' telephone number, including area code)

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

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

         Indicate  by check  mark  whether  the  Registrants  (1) have 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
Registrants  were required to file such  reports),  and (2) have been subject to
such filing requirements for the past 90 days.

                Yes [x]                              No [  ]

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

         Number of shares of common stock of FrontierVision  Holdings Capital  
Corporation  outstanding as of March 26, 1999: 100.

*        FrontierVision  Holdings Capital  Corporation  meets the conditions set
         forth in General  Instruction  I(1)(a)  and (b) to the Form 10-K and is
         therefore filing with the reduced disclosure format.

Documents Incorporated by Reference:  None.

<PAGE>



                                TABLE OF CONTENTS


<TABLE>

                                     PART I
<S>              <C>                   
Item 1.           BUSINESS.                                                                        <C>
                  FrontierVision.................................................................   4
                  Development of the Systems ....................................................   4
                  System Descriptions............................................................   5
                  Technological Developments.....................................................   7
                  The Cable Television Industry..................................................   7
                  Programming, Service and Rates.................................................   8
                  Marketing, Customer Service and Community Relations ...........................   9
                  Franchises ....................................................................  10
                  Competition ...................................................................  11
                  Employees .....................................................................  14
                  Legislation and Regulation ....................................................  14

Item 2.           PROPERTIES. ...................................................................  22

Item 3.           LEGAL PROCEEDINGS..............................................................  23

Item 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................  23



                                     PART II

Item 5.           MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS............................................................  24

Item 6.           SELECTED FINANCIAL DATA........................................................  24

Item 7.           MANAGEMENT'S DISCUSSION AND ANAYLSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS.
                  Introduction...................................................................  26
                  Results of Operations .........................................................  27
                  Liquidity and Capital Resources ...............................................  28

Item 7A.          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                  RISK...........................................................................  33

Item 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. ..................................  34

Item 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE. ..........................................  34



                                       2
<PAGE>




                                    PART III

Item 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
                  Directors and Executive Officers of FrontierVision Inc.........................  35
                  Advisory Committee ............................................................  37

Item 11.          EXECUTIVE COMPENSATION.
                  Deferred Compensation Plan.....................................................  38
                  Compensation Committee Interlocks and Insider Participation ...................  38

Item 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT.....................................................................  39

Item 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................................  40



                                     PART IV
Item 14.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
                  FORM 8-K.
                  Financial Statements ..........................................................  41
                  Financial Statement Schedules .................................................  43
                  Exhibits ......................................................................  43
                  Reports on Form 8-K ...........................................................  43

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(d) OF THE EXCHANGE ACT BY REGISTRANT'S
WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF
THE EXCHANGE ACT ................................................................................  44


GLOSSARY ........................................................................................  45

FINANCIAL STATEMENTS ............................................................................ F-1

FINANCIAL STATEMENT SCHEDULES ................................................................... S-1

EXHIBITS

</TABLE>



                                       3
<PAGE>




                                     PART I

Item 1.           Business

We own, operate and develop cable  television  systems in small and medium-sized
suburban and exurban  communities in the United States. As of December 31, 1998,
we were one of the  twenty  largest  operators  of cable  television  systems (a
multiple  system  operator) in the United  States,  owning  systems which passed
approximately   1,007,100   homes  and  served   approximately   702,200   basic
subscribers.

On  February  22,  1999,  the  owners  of our  general  partner,  FrontierVision
Partners, L.P. (which we refer to as "FVP"), entered into a definitive agreement
to sell their  ownership  interests  in our company to  Adelphia  Communications
Corporation. This change in our ownership is likely to have a significant effect
on our continued operations. We expect to continue the execution of our business
plan through the closing of this  transaction,  which is  currently  expected to
occur during the third-quarter of 1999.

We were  organized  in 1995  under  the laws of the  State of  Delaware  and our
headquarters  are located at 1777 South Harrison  Street,  Suite P-200,  Denver,
Colorado, 80210. Our telephone number is (303) 757-1588 and we may be reached by
e-mail at InvestorRel@FVP.com.

FrontierVision

Since closing our first  acquisition in November 1995, we have completed over 30
acquisitions  and have  established  significant  critical  mass and  subscriber
density within our targeted geographic markets.  The following table illustrates
our growth and operating  characteristics  of our systems  through  December 31,
1998.

<TABLE>
                               --------------------------------------------------------------------------------------
                                                          Basic                Premium               Total Revenue
                                Homes Passed           Subscribers              Units               (In Thousands)
                               ----------------       ---------------       --------------         ------------------

<S>                                 <C>                    <C>                    <C>                       <C>  
December 31, 1995                   125,300                92,700                 35,700                    4,369
December 31, 1996                   498,900               356,400                152,100                   76,464
December 31, 1997                   817,000               559,800                275,400                  145,126
December 31, 1998                 1,007,100               702,200                285,300                  245,134

</TABLE>

We have established  three primary operating  clusters in New England,  Ohio and
Kentucky,  with a  fourth,  smaller  group of cable  television  systems  in the
Southeast.  As of December 31, 1998, over 90% of our subscribers were within our
three primary operating  clusters.  We are currently the second largest multiple
system operator in Kentucky,  the largest  multiple system operator in Maine and
the third largest multiple system operator in Ohio.


Development of the Systems

We were  organized  in 1995 to exploit  acquisition  opportunities  in the cable
television   marketplace   created  by  the  confluence  of  several   economic,
regulatory,  competitive and technical forces. The cable television industry has
experienced rapid and continuing  consolidation  over the last several years for
various reasons. Operators have been faced with the need for increased levels of
capital  expenditures to expand channel capacity and have recently begun to face
the threat of competition from new market  entrants,  including DBS services and
telephone  company video  programming  services.  Many smaller  multiple  system
operators,  particularly  those that were acquisitive during the late 1980's and
purchased systems at prices  significantly  higher than those paid by us, sought
liquidity for their  investors or were  constrained  from  accessing  additional
capital to upgrade or rebuild aging plant to remain competitive with other video
programming  providers.  More recently,  larger multiple  system  operators have
embarked on their own program of divesting or trading less strategic  systems to
redirect their resources to major urban and suburban markets.


                                       4
<PAGE>


As a result of this supply and demand anomaly,  we have been able to selectively
acquire cable  television  properties  from both small and large multiple system
operators,  thereby  establishing core geographic  clusters and subscriber mass.
The following table summarizes our acquisitions through December 31, 1998:

<TABLE>

                                                            -----------------------------------------------
                                                                                     Purchase       Basic    
                                                                                     Price(1)   Subscribers  
Predecessor Owner                                                Date Acquired    (in millions) Acquired(2) 
-----------------                                             -----------------   ------------  -----------       
<S>                                                                     <C>         <C>              <C>         
United Video Cablevision, Inc. ............................    November 9, 1995     $     120.8      87,400    
Longfellow Cable Company, Inc. ............................   November 21, 1995             6.1       5,100     
C4 Media Cable Southeast, Limited Partnership..............    February 1, 1996            47.6      40,400     
Americable International Maine, Inc........................      March 29, 1996             4.8       3,350     
Cox Communications.........................................       April 9, 1996           136.0      77,200     
Phoenix Grassroots Cable Systems, LLC......................     August 29, 1996             9.3       7,400     
Triax Southeast Associates, L.P............................     October 7, 1996            84.7      53,200     
American Cable Entertainment of Kentucky-Indiana, Inc......     October 9, 1996           146.0      83,250     
SRW, Inc.'s Penn/Ohio Cablevision, L.P.....................    October 31, 1996             3.8       3,225     
SRW, Inc.'s Deep Creek Cable TV, L.P. .....................   December 23, 1996             3.0       2,175     
Bluegrass Cable Partners, L.P..............................      March 20, 1997             9.9       7,225     
Clear Cable T.V., Inc. and B&G Cable T.V. Systems,
   Inc.....................................................      March 31, 1997             1.7       1,450     
Milestone Communications of New York, L.P. ................      March 31, 1997             2.8       2,125     
Triax Associates I, L.P....................................        May 30, 1997            34.5      20,700     
Phoenix Front Row Cablevision .............................        May 30, 1997             6.8       5,250     
PCI Incorporated...........................................     August 29, 1997            13.5       7,750     
SRW, Inc.'s Blue Ridge Cable Systems, L.P..................   September 3, 1997             4.1       4,550       
Harold's Home Furnishings, Inc.............................    October 31, 1997             1.5       1,480     
A-R Cable Services - ME, Inc...............................    October 31, 1997            78.2      54,300     
TCI Cablevision of Vermont, Inc. and Westmarc Development                                         
    Joint Venture..........................................    December 2, 1997            34.5      22,100     
Cox Communications, Inc....................................   December 19, 1997           203.0      85,400     
TVC-Sumpter   Linked   Partnership   and   North   Oakland
Cablevision                                                       March 6, 1998            14.2       8,100     
    Partners  Limited Partnership ........................
TCI Cablevision of Ohio, Inc...............................       April 1, 1998            10.0       6,000     
New England Cablevision of Massachusetts, Inc. ............       April 3, 1998            44.7      26,500     
Ohio Cablevision Network, Inc..............................       July 31, 1998            38.0      19,700     
Appalachian Cablevision of Ohio............................   September 1, 1998             0.3         280       
Unity Cable Television, Inc................................  September 30, 1998             0.8         590     
State Cable TV Corporation ................................    October 23, 1998           188.2      75,000     
Paint Valley Cable Company, Inc............................    October 30, 1998             1.7       1,300     
Casco Cable Television, Inc................................   November 30, 1998             3.2       2,185     
 ____________                       
</TABLE>
(1) Represents the contract  purchase price excluding  working capital  purchase
adjustments and transaction  costs.  
(2) Includes 10,600  subscribers to systems that were sold by  FrontierVision in
1996.

On January 7, 1999, we sold nine cable systems located in eastern  Tennessee and
western North Carolina to Helicon  Partners I, LP. The systems served a total of
approximately  4,400 basic subscribers in smaller,  rural communities in western
Tennessee  and eastern  North  Carolina.  The systems were part of our Southeast
operating  region.  In  addition,  on February 17, 1999 we entered into an asset
exchange  agreement to obtain one Kentucky  system serving  approximately  6,200
subscribers  outside of Lexington,  Kentucky in exchange for one of our existing
Kentucky systems serving  approximately  4,800  subscribers south of Cincinnati,
Ohio and approximately  $3.1 million of cash. There can be no assurance that the
system  trade will be  consummated  or that we can  successfully  integrate  any
acquired business with our existing operations.


System Descriptions

Our cable  television  systems consist of three primary  clusters--New  England,
Ohio and Kentucky--with a fourth, smaller group of systems in the Southeast. The
following chart provides certain operating and technical  profile  statistics as
of December 31, 1998 for our cable systems.




                                       5
<PAGE>




<TABLE>

                                               -----------------------------------------------------------------
                                                New England     Ohio       Kentucky    Southeast      Total
                                                  Cluster      Cluster      Cluster      Region      Systems
                                               -----------------------------------------------------------------
<S>                                               <C>          <C>          <C>         <C>         <C>      
Homes passed...................................   351,300      383,200      172,600     100,000     1,007,100
Basic subscribers..............................   248,000      268,800      123,700      61,700       702,200
Basic penetration..............................     70.6%        70.1%        71.7%       61.7%         69.7%
Premium units..................................   107,400      119,700       37,800      20,400       285,300
Premium penetration............................     43.3%        44.5%        30.6%       33.1%         40.6%
Digital cable television subscribers...........       744        2,929         None       1,358         5,031
Average  monthly  revenue per basic  subscriber    $33.20       $35.85       $34.20      $26.95        $33.84
(1)............................................
Number of headends.............................        87           87           38          46           258
Percentage   of   subscribers   with  at  least
54-channel                                           63.7%        76.8%        57.6%      32.1%         65.6%
   capacity....................................
</TABLE>
 ___________                            
(1)  Average  monthly  revenue per basic subscriber equals revenue for the month
     ended  December 31, 1998 divided by the number  of basic subscribers  as of
     the end of such period.

New England Cluster. The systems in our New England cluster passed approximately
351,300 homes and served  approximately  248,000 basic  subscribers  and 107,400
premium  units as of December  31,  1998.  The New England  cluster is comprised
primarily of systems  located in  communities  in  southern,  middle and coastal
Maine, central New Hampshire,  northeastern  Massachusetts and northern Vermont.
Of the Maine systems'  approximately  168,400 total  subscribers,  approximately
155,000  subscribers are located in Augusta,  Bangor and Lewiston and contiguous
communities or in nearby coastal  communities.  Most of the approximately 45,300
subscribers in New Hampshire are located in Lebanon and surrounding communities,
the 27,100  Massachusetts  subscribers  are located  within 30 miles of suburban
Boston and most of the 7,200 Vermont  subscribers are located within 20 miles of
Burlington,  the state's largest city. Approximately 63.7% of our subscribers in
the New  England  cluster are offered at least 54  channels,  including  750 MHz
design systems in Amesbury and Glouchester, Massachusetts and Augusta, Maine and
550 MHz design systems in Waterville and Rockland, Maine.

Ohio Cluster. Systems in the Ohio cluster passed approximately 383,200 homes and
served  approximately  268,800 basic subscribers and 119,700 premium units as of
December  31,  1998.  The  majority of the  subscribers  in the Ohio cluster are
located in northwest Ohio,  extending from the northern  suburbs of Toledo south
along the Indiana  state border,  and central  Ohio,  south and east of suburban
Columbus to the Ohio River.  Approximately  76.8% of the our  subscribers in the
Ohio cluster are offered at least 54 channels,  including 550 MHz design systems
in Ashland, Kentucky and Newark and New Philadelphia, Ohio.

Kentucky  Cluster.  The systems in the  Kentucky  cluster  passed  approximately
172,600  homes and served  approximately  123,700 basic  subscribers  and 37,800
premium units as of December 31, 1998. A single regional customer service center
in Richmond,  Kentucky  serves all Kentucky  subscribers,  the majority of which
reside in outlying  communities  of Lexington,  Kentucky and  Cincinnati,  Ohio.
Approximately  57.6% of our  subscribers in the Kentucky  cluster are offered at
least 54 channels,  including 550 MHz design systems in Nicholasville,  Kentucky
and Delhi,  Ohio and 750 MHz design systems in Madison,  Indiana and Winchester,
Kentucky.

Southeast Systems. The Southeast systems passed approximately  100,000 homes and
served  approximately  61,700 basic  subscribers  and 20,400 premium units as of
December 31, 1998. The Southeast  systems at December 31, 1998 were comprised of
groups of systems located in the following states:

     o Tennessee, serving approximately 23,000 basic subscribers
     o North Carolina, serving approximately 13,400 basic subscribers
     o Virginia, serving approximately 17,300 basic subscribers, and
     o Maryland/Pennsylvania, serving approximately 8,000 basic subscribers

The  Tennessee  systems are located  primarily  in  Greeneville,  Tennessee  and
surrounding  communities;  the North  Carolina  systems are  located  near Rocky
Mount,  North  Carolina;  and the Virginia  systems are located in north central
Virginia between  Charlottesville  and Winchester and in Eastern Virginia,  near
Richmond. The  Maryland/Pennsylvania  systems are located along the Maryland and
Pennsylvania   border,   approximately  120  



                                       6
<PAGE>



miles west of Washington,  D.C.  Approximately 32.1% of the current plant design
in the Southeast region is at least 54 channels.


Technological Developments

The  following  tables  set forth  certain  information  regarding  the  channel
capacities and miles of plant and the average number of subscribers  per headend
for our cable systems as of December 31, 1998.

<TABLE>

                                             ----------------------------------------------------------------
                                               <220 MHz:  221-399 MHz:400-549 MHz:550-750 MHz:
                                               Up to 32     33 to 53    54 to 77    78 to 110
                                               Channels     Channels    Channels    Channels       Total
                                             ----------------------------------------------------------------
<S>                                               <C>        <C>         <C>         <C>           <C>   
        Miles of plant.......................     362        11,033      10,819      3,594         25,808
        % miles of plant.....................    1.4%         42.8%       41.9%      13.9%         100.0%
        % of basic subscribers...............    1.3%         33.1%       44.1%      21.5%         100.0%

                                       ----------------------------------------------------------------------
                                                         Number of Subscribers Per Headend
                                       ----------------------------------------------------------------------
                                                    1,001-     5,001-     10,001-
                                           <1,000    5,000      10,000      20,000     >20,001     Total
     --------------------------------------------------------------------------------------------------------
        # of subscribers..............    58,300   191,620      126,010    130,930     195,340     702,200
        % of subscribers..............      8.3%      27.3%       18.0%      18.6%       27.8%      100.0%

</TABLE>

Our cable systems have an average  capacity of  approximately 59 analog channels
and delivered an average of 50 analog channels of programming to our subscribers
as of December  31, 1998.  Approximately  64% of our  subscribers  are served by
systems with more than 5,000  subscribers  and  approximately  46% are served by
systems serving more than 10,000 subscribers. We believe that our current excess
channel capacity and significant  number of larger systems will allow us to cost
effectively introduce new service offerings.

Recently,   digital  cable  television  has  become   commercially  viable  with
technological cost reductions. We believe that this development will allow us to
increase  services  to  our  subscribers.  As  of  December  31,  1998,  we  had
successfully launched digital cable television services in 12 of our systems and
were in the process of installing  necessary  headend  equipment for launches in
additional  systems.  As of March 15,  1999,  we had  introduced  digital  cable
television to approximately one-third of our basic cable subscribers.


The Cable Television Industry

Our cable television systems receive television, radio and data signals that are
transmitted to the system's headend site by means of off-air antennas, microwave
relay systems and/or satellite earth stations. These signals are then modulated,
amplified and distributed,  primarily  through  coaxial,  and in some instances,
fiber optic cable,  to customers who pay a fee for this service.  In some cases,
we may also  originate  our own  television  programming  and other  information
services  for  distribution  through the system.  Our cable  television  systems
generally are constructed and operated  pursuant to non-exclusive  franchises or
similar licenses granted by local governmental  authorities for a specified term
of years, generally for extended periods of up to 15 years.

The cable television  industry developed in the United States in the late 1940's
and early 1950's in response to the needs of residents  in  predominantly  rural
and  mountainous  areas of the country  where the quality of off-air  television
reception was inadequate  due to factors such as topography and remoteness  from
television  broadcast towers. In the late 1960's,  cable television systems also
developed in small and medium-sized cities and suburban areas that had a limited
availability of clear off-air television  station signals.  All of these markets
are regarded  within the cable industry as "classic"  cable  television  station
markets. In more recent years, cable television systems have been constructed in
large urban cities and nearby suburban areas,  where good off-air reception from
multiple television  stations usually is already available,  in order to receive
the numerous,  satellite-delivered  channels carried by cable television systems
which are not otherwise available via broadcast television reception.



                                       7
<PAGE>



Our cable television  systems offer customers various levels,  commonly known as
"tiers," of cable services consisting of:

     o    off-air   television   signals  of  local  network,   independent  and
          educational stations;
     o    a limited number of television signals from so-called  "superstations"
          originating from distant cities (such as WGN-TV);
     o    various  satellite-delivered,  non-broadcast  channels  (such as Cable
          News Network,  MTV: Music Television,  the USA Network,  Entertainment
          and Sports Programming Network and Turner Network Television);
     o    certain programming  originated locally by the cable television system
          (such as public, governmental and educational access programs); and
     o    informational  displays  featuring  news,  weather,  stock  market and
          financial reports and public service announcements.

For an extra monthly  charge,  our cable  television  systems also offer premium
television services to their customers.  These services (such as Home Box Office
(R), Showtime (R) and regional sports networks) are satellite-delivered channels
consisting principally of feature films, live sports events,  concerts and other
special   entertainment   features,   usually   presented   without   commercial
interruption.

Customers  generally pay an initial  installation  charge and fixed monthly fees
for basic and premium  television  services and for other  services (such as the
rental of converters  and remote  control  devices).  Such monthly  service fees
constitute our primary source of revenue.  In addition to customer  revenue from
these services,  we also generate revenue from additional fees paid by customers
for  pay-per-view  programming of movies and special events and from the sale of
available advertising spots on  advertiser-supported  programming networks, such
as MTV:  Music  Television,  the  USA  Network,  and  Entertainment  and  Sports
Programming  Network.  We also offer to our customers  home  shopping  services,
which pay our systems a share of revenue  from sales of products in the systems'
service areas.


Programming, Services and Rates

We have  various  contracts  to obtain  basic and  premium  programming  for our
systems from program suppliers whose  compensation is typically based on a fixed
fee per customer.  Our programming contracts are generally for a fixed period of
time and are subject to  negotiated  renewal.  Some  program  suppliers  provide
volume  discount  pricing  structures  or  offer  marketing  support  to us.  In
particular,  we have  negotiated  programming  agreements  with premium  service
suppliers  that offer cost  incentives  to us under which  premium  service unit
prices  decline  as certain  premium  service  growth  thresholds  are met.  Our
successful  marketing of multiple premium service packages  emphasizing customer
value has enabled us to take advantage of such cost incentives.

We are a member of a programming  consortium consisting of small to medium-sized
cable companies serving, in the aggregate, over eight million cable subscribers.
The consortium was formed to help create  efficiencies  in the areas of securing
and administering  programming contracts, as well as to establish more favorable
programming  rates and contract terms for small to  medium-sized  operators.  We
also have various  retransmission consent arrangements with commercial broadcast
stations.  Some of these  consents  require  direct  payment of nominal fees for
carriage.  In some other  instances  no payment is  required;  however,  we have
entered into agreements with certain stations to carry satellite-delivered cable
programming which is affiliated with the network carried by such stations.

Although  services  vary from  system to system  due to  differences  in channel
capacity,  viewer  interests  and  community  demographics,  the majority of our
systems offer a "basic service tier,"  consisting of local  television  channels
(network and  independent  stations)  available  over-the-air  and local public,
governmental,  home-

                                       8
<PAGE>




shopping and leased access  channels.  The majority of our systems offer,  for a
monthly fee, an expanded basic tier of "superstations"  originating from distant
cities (such as WGN-TV),  various  satellite-delivered,  non-broadcast  channels
(such  as  Cable  News  Network,   MTV:  Music  Television,   the  USA  Network,
Entertainment and Sports Programming Network) and certain programming originated
locally by the cable system (such as public, governmental and educational access
programs)  providing  information  with respect to news,  time,  weather and the
stock market.  In addition to these services,  our systems typically provide one
or more premium services  purchased from  independent  suppliers and combined in
different  formats to appeal to the various  segments  of the viewing  audience,
such as Home Box Office (R),  Showtime (R),  Cinemax (R) The Movie  Channel(TM),
and  Starz!.   These  services  are   satellite-delivered   channels  consisting
principally of feature films, original programming, live sports events, concerts
and other special entertainment  features,  usually presented without commercial
interruption.  Such premium programming services are offered by our systems both
on an a la carte  basis and as part of  premium  service  packages  designed  to
enhance customer value and to enable us systems to take advantage of programming
agreements  offering cost incentives  based on premium unit growth.  Subscribers
may subscribe for one or more premium units.

Subscriber  rates vary from market to market and in accordance  with the type of
service selected.  As of December 31, 1998, the combined average monthly service
rate in our cable  systems was $26.15 for the basic and expanded  basic  service
tiers. Our subscriber service rates reflect  reductions  required in response to
federal rate  regulation.  A one-time  installation  fee, which may be waived in
whole  or in  part  during  certain  promotional  periods,  is  charged  to  new
subscribers. Management believes that the Company's rate practices are generally
consistent  with  the  current   practices  in  the  industry.   For  additional
information on rate regulation of our services,  see "Legislation and Regulation
-- Rate Regulation."


Marketing, Customer Service and Community Relations

We market and promote cable television services with the objective of adding and
retaining customers and increasing  subscriber revenue. We actively market basic
and  premium  program  packages  through  a  number  of  coordinated   marketing
techniques, which include:

     o    direct consumer sales and subscriber audit programs;
     o    direct mail for basic and upgrade acquisition campaigns;
     o    monthly subscriber statement inserts;
     o    local  newspaper  and  broadcast/radio  advertising  where  population
          densities are sufficient to provide a reasonable cost per sale; and
     o    cross-channel promotion of new services and pay-per-view.

We have a single  centralized  telemarketing  center  to  provide  the  outbound
telemarketing  support for all  operating  regions.  Using a predictive  dialing
system platform, the operation is focused on:

     o    basic and pay unit acquisition;
     o    delinquent account collection activities;
     o    customer satisfaction surveys; and
     o    targeted marketing campaigns.

We are dedicated to providing superior customer service. To meet this objective,
we provide our customers with a full line-up of  programming,  a wide variety of
programming  options and  packages,  timely and  reliable  service and  improved
technical  quality.  Our employees receive ongoing training in customer service,
sales and subscriber  retention and technical support.  In general,  following a
new installation,  a customer service representative will follow up by telephone
contact  with the  subscriber  to assess  the  quality of  installation  and the
service  the   subscriber  is  receiving  and  to  ensure   overall   subscriber
satisfaction.  Customer service representatives and technicians are also trained
to market upgrades or cross-sell services at the point of sale of


                                       9
<PAGE>



service. As part of our consolidation  efforts, we have established  centralized
customer  service  facilities,  increased  hours  of  operation,  and  installed
state-of-the-art   telephone,   information   and  billing  systems  to  improve
responsiveness  to customer needs.  In addition,  we have retained local payment
and technical  offices to maintain a local  presence and  visibility  within the
communities we serve.

Recognizing that strong governmental, franchise and public relations are crucial
to our overall success,  we maintain and improve the working  relationships with
all governmental  entities within the franchise areas. Regional management meets
regularly  with local  officials for the purposes of keeping them advised on our
activities  within the communities,  to receive  information and feedback on our
standing with  officials and customers  alike and to ensure that we can maximize
our growth  potential  in areas where new housing  development  is  occurring or
where  significant  technical  plant  improvement  is  underway.   The  regional
management is also responsible for franchise renewal negotiations as well as the
maintenance of Company visibility  through  involvement in various community and
civic  organizations  and  charities.  In  addition,  we have hired  experienced
community relations personnel in its New England,  Ohio and Kentucky clusters to
enhance local visibility and long-term relationships.


Franchises

Our cable  television  systems are  generally  constructed  and  operated  under
non-exclusive  franchises  granted  by  local  governmental   authorities.   Our
franchises typically contain many conditions, such as:

     o    time limitations on commencement and completion of construction; and
     o    conditions  of  service,   including  number  of  channels,  types  of
          programming  and the  provision of free service to schools and certain
          other public institutions.

The  provisions of local  franchises  are subject to regulation  under state and
federal law,  including the  Communications  Act of 1934, as amended,  the Cable
Communications  Policy Act of 1984, the Cable Television Consumer Protection and
Competition Act of 1992, and the  Telecommunications Act of 1996, as well as the
rules,  regulations and policies of the FCC and applicable  state agencies.  For
additional information on the federal and state regulation of our cable services
and operations, see " Legislation and Regulation."

As of December 31, 1998, we held 744 franchises. These franchises, most of which
are  non-exclusive,  provide for the  payment of fees to the issuing  authority.
Generally,  such franchise  fees are passed  through  directly to the customers.
Federal law prohibits  franchising  authorities from imposing  franchise fees in
excess of 5% of gross  revenue  and also  permits us to seek  renegotiation  and
modification of franchise requirements if warranted by changed circumstances.

Approximately  94% of our basic  subscribers are in service areas that require a
franchise.  The table below groups the our  franchises by date of expiration and
presents the  approximate  number and percentage of basic  subscribers  for each
group of franchises as of December 31, 1998.

<TABLE>

                                                 -----------------------------------------------------
                                                             Percentage of              Percentage of
                                                  Number of      Total       Number of   Franchised
           Year of Franchise Expiration           Franchises   Franchises   Subscribers  Subscribers
                                                 -----------------------------------------------------
<S>                                                     <C>          <C>      <C>                <C>
           1997 through 2001...................         348          47%      288,400            44%
           2002 and thereafter.................         396          53%      368,500            56%
                                                   --------     --------    ---------     ----------
            Total..............................         744         100%      656,900           100%
</TABLE>

Federal law  provides,  among other  things,  for an orderly  franchise  renewal
process in which  franchise  renewal  will not be  unreasonably  withheld.  If a
franchise renewal is denied and the franchising  authority acquires ownership of
our system or effects a transfer of our system to another  person,  we generally
are  entitled  to the  "fair  market  value"  for  the  system  covered  by such
franchise. In addition, federal law established


                                       10
<PAGE>



comprehensive  renewal procedures which requires that our renewal application be
assessed  on its  own  merits  and not as part  of a  comparative  process  with
competing applications.

We believe that we generally have very good  relationships  with our franchising
communities. We have never had a franchise revoked or failed to have a franchise
renewed.  In  addition,  all of our  franchises  eligible  for renewal have been
renewed or extended at or prior to their stated expirations.


Competition

Our  cable  systems  compete  with  a  number  of  different  sources  of  news,
information and entertainment, including:

     o    local  television   broadcast   stations  that  provide  free  off-air
          programming  which  can be  received  in many  communities  by using a
          roof-top antenna and television set;
     o    program  distributors that transmit satellite signals containing video
          programming, data and other information to receiving dishes of varying
          sizes located on the subscriber's premises;
     o    satellite master antenna television  systems,  commonly known as SMATV
          systems,  which  generally  serve  condominiums,  apartment and office
          complexes  and  private  residential  developments,  but do not use or
          cross public rights-of-way;
     o    multichannel,  multipoint  distribution  service  operators,  commonly
          known  as  MMDS or  wireless  cable  operators,  which  use  low-power
          microwave   frequencies  to  transmit  video   programming  and  other
          information over-the-air to subscribers;
     o    other cable  operators who build and operate cable systems in the same
          communities that we serve, commonly known as overbuilders;
     o    interactive online computer services;
     o    newspapers, magazines and book stores;
     o    movie theaters;
     o    live concerts and sporting events; and
     o    home video products, including videotape cassette recorders.

Our cable systems will be competitive  with other businesses  providing  similar
communications services if we provide, at a reasonable price to our subscribers,
superior technical performance,  superior customer service and a greater variety
of video  programming  and  other  communications  services  than are  available
off-air or through other alternative delivery sources.

Modifications to federal law in 1996 changed the regulatory environment in which
our cable  systems  operate.  Federal law now allows  local  exchange  carriers,
commonly known as LECs or local  telephone  companies,  and other  businesses to
provide  directly  to  subscribers  a wide  variety of video  services  that are
competitive with our communications services. Some local telephone companies:

     o    provide  video  services  within and outside their  telephone  service
          areas through a variety of distribution  methods,  including broadband
          cable networks and wireless transmission facilities; and
     o    have  announced  plans to construct and operate  cable  communications
          systems in various states.

Local  telephone  companies  and other  businesses  with  significant  financial
resources construct and operate communications facilities that provide access to
the  Internet;  such  facilities  also  transmit  and  distribute  to homes  and
businesses  interactive   computer-based  services,  data  and  other  non-video
services. Our cable systems may be at a competitive disadvantage if the delivery
of video and interactive  online computer services by local telephone  companies
becomes widespread because local telephone companies are not required in certain
circumstances  to  obtain  local  franchises  to  deliver  these  communications
services or to comply with the variety of obligations  that are imposed upon our
cable systems under our franchises.  We cannot predict the likelihood of success
of competing video or broadband service ventures by local telephone companies or
other  




                                       11
<PAGE>



well-financed  businesses.  Nor can we predict  the impact of these  competitive
ventures on our cable systems and other  businesses.  For more information about
the  federal  and state  laws and  regulations  governing  our  businesses,  see
"Legislation and Regulation".

We operate our cable systems in the communities we serve  generally  pursuant to
non-exclusive  franchises  that are negotiated  with and issued by a community's
governing body such as a city council,  a county board of supervisors or a state
regulatory  agency.  Federal law prohibits local  franchising  authorities  from
unreasonably  denying requests for additional  franchises,  and it permits local
franchising  authorities to operate cable systems.  Companies that traditionally
have not provided cable services and that have substantial  financial  resources
(such as public  utilities that own certain of the poles to which our cables are
attached)  may  also  obtain  cable   franchises   and  may  provide   competing
communications services.

In the past few years Congress has enacted  legislation  and the FCC has adopted
regulatory policies intended to provide a more favorable  operating  environment
for  existing  and new  technologies  that  provide,  or have the  potential  to
provide,  substantial  competition to cable systems. These technologies include,
among others, direct broadcast satellite service, commonly known as DBS service,
whereby signals are transmitted by satellite  directly to small receiving dishes
located on the customer's property.  According to recent government and industry
reports, conventional,  medium and high-power satellites currently provide video
programming to over 7.2 million individual households,  condominiums,  apartment
and office  complexes in the United  States.  DBS providers  typically  offer to
their subscribers more than 150 channels of programming including:

     o    news channels;
     o    movies;
     o    broadcast stations;
     o    live concerts and sporting events; and
     o    other program services  similar to those program services  provided by
          cable systems.

DBS systems use video  compression  technology  to  increase  significantly  the
channel   capacity  of  their  systems,   and  digital   technology  to  improve
significantly the technical  quality of the signals  transmitted to subscribers.
DBS service  currently  has certain  competitive  advantages  and  disadvantages
compared  to  cable  service.   The  advantages  of  DBS  service  include  more
programming,  greater channel  capacity,  and the digital quality of the signals
delivered to subscribers.  The  disadvantages  of DBS service  compared to cable
service include high up-front  customer  equipment and installation  costs and a
lack of local programming and local service.  The FCC and Congress are presently
considering  proposals  that will enhance the ability of DBS providers and other
video  program  distributors  to gain access to  additional  programming  and to
transmit local broadcast signals to local markets. These proposals,  if adopted,
will likely increase competition to our cable systems.

Two major  companies,  DirecTV  and  EchoStar  Communications  Corporation,  are
currently offering nationwide high-power DBS services. Additionally,  Primestar,
Inc.  currently offers video  programming to subscribers from a medium-power DBS
satellite system.  DirecTV and Primestar  recently reported that DirecTV and its
parent  company are  acquiring  Primestar's  medium-power  DBS  business and the
high-power DBS business of Tempo, a subsidiary of Primestar.  EchoStar  recently
announced   that  it  is   acquiring  a   high-power   DBS   license   from  MCI
Telecommunications  Corporation and two satellites  currently under construction
from News Corp.  Various  agencies of the federal  government must still approve
these transactions;  however,  if they are completed,  DirecTV and EchoStar will
significantly  enhance  the  number  of  channels  on  which  they  can  provide
programming  to  subscribers  and may improve  significantly  their  competitive
positions  against  cable  operators.  We are unable  predict  the impact  these
transactions may have on our business and operations.

Our cable systems also compete for  subscribers  with  satellite  master antenna
systems,  commonly known as SMATV or satellite TV systems.  Satellite TV systems
serve  condominiums,  apartment  and office  complexes  and private  residential
developments and, because they do not use public  rights-of-way,  they typically
are not subject to regulation like local franchised  cable operators.  Satellite
TV  systems  offer  subscribers  both  improved  reception  of local  television
stations and many of the same  satellite-delivered  programming services offered
by  franchised  cable  systems.  In addition,  some  satellite TV operators  are
developing  and/or  offering  packages of telephony,  data and video services to
private  residential and commercial  developments.  Satellite 



                                       12
<PAGE>



TV operators often enter into exclusive service  agreements with building owners
or homeowners'  associations,  although some states have enacted laws to provide
franchised cable systems access to these private complexes. Courts have reviewed
challenges  to these  laws and have  reached  varying  results.  Our  ability to
compete for  subscribers in residential  and commercial  developments  served by
satellite TV operators is  uncertain.  However,  we are  developing  competitive
packages  of  services  (video  and  data) to offer  to  these  residential  and
commercial developments.

Cable systems also compete with wireless program  distribution  services such as
multichannel,  multipoint  distribution  services,  commonly  known  as  MMDS or
wireless cable systems,  which use low-power  microwave  frequencies to transmit
video  programming and other information  over-the-air to subscribers.  The FCC,
which licenses wireless cable systems,  has authorized wireless cable systems to
operate in areas served by our cable systems. Individual households also receive
many of the  satellite-delivered  program  services  formerly  available only to
cable  subscribers  through the use of reasonably  priced home satellite dishes.
Federal law  enhances  the  ability of cable  competitors  to  purchase  certain
satellite-delivered  cable  programming at competitive  costs.  Federal law also
significantly  limits  certain  local  restrictions  on  the  use  of  roof-top,
satellite  and  microwave   antennae  to  receive   satellite   programming  and
over-the-air  broadcasting  services.  We are unable to predict whether wireless
video  services,  satellite TV operations or home satellite dish use will have a
material impact on our business and operations.

Some of our cable  systems are currently  offering or plan to offer  interactive
online computer services to subscribers. These cable systems will compete with a
number of other companies, many of whom have substantial resources, such as:

     o    existing Internet service providers, commonly known as ISPs;
     o    local telephone companies; and
     o    long distance telephone companies.

Recently a number of companies,  including local  telephone  companies and ISPs,
have  requested  local  authorities  and the FCC to require  cable  operators to
provide open access to cable operators'  broadband  infrastructure so that these
companies may deliver  Internet and other  communications  services  directly to
customers  over the  operators'  broadband  facilities.  In a recent  report  to
Congress, the FCC declined to institute an administrative  proceeding to examine
this issue  because,  in part, it believes  that multiple  methods of increasing
bandwidth  are or soon  will be made  available  to a broad  range  ISPs and the
public.  At the present time,  several  local  jurisdictions  are  attempting to
impose  open access  obligations  on other cable  operators  as a condition  for
obtaining municipal consent for franchise  transfers;  however,  such conditions
are  currently  being  challenged  in  court.  Although  the  FCC  currently  is
refraining  from imposing  conditions on the  availability  of cable  operators'
broadband facilities to other competing companies,  the FCC, Congress, and state
and local  regulatory  authorities will continue to monitor and consider further
actions in this area.

The  deployment  by certain  local  telephone  companies of  Asymmetric  Digital
Subscriber  Line  technology,  known as ADSL,  will  allow  Internet  access  to
subscribers at data transmission  speeds equal to or greater than that of modems
over  conventional   telephone  lines.  A  number  of  large  companies  in  the
telecommunications  and  technology  industries,  including  the  Regional  Bell
Operating Companies, GTE Corporation, Microsoft, Compaq Computer Corporation and
Intel  Corporation,  have formed a working group to accelerate the deployment of
ADSL service.  Several telephone  companies have initiated ADSL service and have
requested the FCC to fully deregulate  packet-switched networks to allow them to
provide high-speed  broadband services,  including  interactive online services,
without regard to present service boundaries and other regulatory  restrictions.
We are  unable to predict  the  likelihood  of  success  of the online  services
offered by our competitors or the impact on our business and operations of these
competitive ventures.

We expect  advances  in  communications  technology,  as well as  changes in the
marketplace  and the regulatory  and  legislative  environment,  to occur in the
future.  For a detailed  discussion of the  legislative  and regulatory  factors
effecting our business and operations,  see "Legislation and Regulation".  Other
new  technologies  and  services  may develop in the future and may compete with
services that our cable systems  offer.  Consequently,




                                       13
<PAGE>



we are unable to predict the effect that  ongoing or future  developments  might
have on the cable industry or on our business and operations.


Employees

At December 31, 1998, we had approximately 1,206 equivalent full-time employees,
fourteen of whom  belonged to a  collective  bargaining  unit.  We consider  our
relations with our employees to be good.


Legislation and Regulation

A federal law known as the Communications Act of 1934, as amended, establishes a
national  policy to guide the  regulation,  development  and  operation of cable
communications systems. In 1996, a comprehensive amendment to the Communications
Act became  effective  and is  expected  to  promote  competition  and  decrease
governmental  regulation  of various  communications  industries,  including the
cable television  industry.  However,  until the desired  competition  develops,
various federal,  state and local  governmental units will have broad regulatory
authority and  responsibilities  over  telecommunications  and cable  television
matters.  The courts,  especially the federal  courts,  will continue to play an
important  oversight  role  as  the  statutory  and  regulatory  provisions  are
interpreted and enforced by the various  federal,  state and local  governmental
units.

The  Communications  Act allocates  principal  responsibility  for enforcing the
federal policies between the FCC, state and local governmental authorities.  The
FCC and state regulatory agencies regularly conduct  administrative  proceedings
to  adopt  or  amend  regulations  implementing  the  statutory  mandate  of the
Communications Act. At various times interested parties to these  administrative
proceedings  challenge the new or amended regulations and policies in the courts
with  varying  levels of  success.  We expect  that  further  court  actions and
regulatory  proceedings will occur and will refine the rights and obligations of
various parties,  including the government,  under the  Communications  Act. The
results of these judicial and  administrative  proceedings may materially affect
the cable industry and our business and operations. In the following paragraphs,
we summarize the federal laws and  regulations  materially  affecting the growth
and  operation of the cable  industry.  We also provide a brief  description  of
certain state and local laws.

THE COMMUNICATIONS ACT AND FCC REGULATIONS

The  Communications  Act and the  regulations  and  policies  of the FCC  affect
significant aspects of our cable system operations, including:

     o    subscriber rates;
     o    the content of the programming we offer to subscribers, as well as the
          way we sell our program packages to subscribers;
     o    the use of our cable systems by the local franchising authorities, the
          public and other unrelated companies;
     o    our franchise agreements with local governmental authorities;
     o    cable system ownership limitations and prohibitions; and
     o    our use of utility poles and conduit.

Rate Regulation

The  Communications Act and the FCC's regulations and policies limit the ability
of cable systems to raise rates for basic services and equipment, as well as for
certain  non-basic  cable  programming  services.  Federal  law  prohibits  rate
regulation of cable services and customer equipment only in communities that are
subject to "effective  competition," as defined by federal law. Federal law also
prohibits  the  regulation  of cable  operators'  



                                       14
<PAGE>



rates where comparable video programming  services,  other than DBS, are offered
by local telephone companies, or their affiliates, or by third parties using the
local telephone company's  facilities.

Where  there is no  effective  competition  to the  cable  operator's  services,
federal law gives local franchising  authorities the  responsibility to regulate
the rates charged by the operator for:

     o    the lowest level of programming service offered by the cable operator,
          typically  called basic service,  which  includes the local  broadcast
          channels  and any  public  access or  governmental  channels  that are
          required by the operator's franchise; and
     o    the  installation,  sale and lease of equipment used by subscribers to
          receive  basic  service,  such as converter  boxes and remote  control
          units.

Local  franchising  authorities  who wish to regulate  basic  service  rates and
related  equipment  rates must first  obtain FCC  certification  to  regulate by
following  a  simplified  FCC  certification  process  and  agreeing  to  follow
established FCC rules and policies when regulating the operator's rates.

Several years ago, the FCC adopted  detailed rate  regulations,  guidelines  and
rate forms that we and the local  franchising  authority  must use in connection
with the regulation of our basic service and equipment  rates. The FCC adopted a
benchmark  methodology as the principal method of regulating rates.  However, if
this  methodology  produces  unacceptable  rates,  we may also justify our rates
using a detailed and complicated  cost-of-service  methodology.  The FCC's rules
also require franchising authorities to regulate equipment rates on the basis of
our actual cost plus a reasonable profit, as defined by the FCC.

If the local franchising  authority  concludes that our rates are too high under
the FCC's rate rules, the local  franchising  authority may require us to reduce
our rates and to refund overcharges to subscribers with interest.  We may appeal
adverse local rate decisions to the FCC.  Approximately  125 of the  communities
served by our cable systems,  representing  approximately 12% of the communities
we serve,  currently  regulate  our  basic  service  and  equipment  rates.  The
Communications Act and the FCC's regulations also permit franchising authorities
to file complaints with the FCC concerning rates we charge for certain non-basic
cable  programming  services  tiers.  Only  one of  the  communities  we  serve,
representing  approximately 1% of our subscribers,  has a complaint pending with
the FCC  challenging  the rates we charge for the  non-basic  cable  programming
service tier.

The FCC also adopted several years ago comprehensive and restrictive regulations
that allow us to modify our regulated rates on a quarterly or annual basis using
various methodologies that account for changes in:

     o    the number of regulated channels;
     o    inflation; and
     o    certain external costs, such as franchise and other governmental fees,
          copyright and retransmission consent fees, taxes, programming fees and
          franchise-related obligations.

The Communications  Act prohibits  regulation of certain non-basic rates, and in
some cases  basic  rates,  of  qualified  small cable  operators,  as defined by
federal law. For certain other small cable  operators who continue to be subject
to rate  regulation,  the FCC has  adopted  regulations  designed  to reduce the
substantive  and procedural  burdens of rate regulation on qualified small cable
systems,  as  defined  by federal  law.  The  regulatory  benefits  accruing  to
qualified small cable systems under certain  circumstances remain effective even
if such systems are  subsequently  acquired by a larger cable operator.  Many of
our cable systems currently satisfy the FCC's small system eligibility  criteria
and are eligible to use the FCC's  simplified rate methodology and procedures to
justify cable service and equipment rates.

The Communications Act and the FCC's regulations also:



                                       15
<PAGE>



     o    prohibit the  regulation of the rates  charged by cable  operators for
          programming  offered on a per  channel or per program  basis,  and for
          certain multi-channel groups of new non-basic programming;
     o    eliminate the regulation of non-basic cable programming  service tiers
          after March 31, 1999,  although  Congress may consider  legislation to
          extend the period  during  which  non-basic  rates  remain  subject to
          regulation;
     o    require  operators to charge uniform rates  throughout  each franchise
          area  that  is  not  subject  to  effective  competition;  o  prohibit
          regulation of  non-predatory  bulk discount rates offered by operators
          to subscribers in commercial and residential developments; and
     o    permit regulated  equipment rates to be computed by aggregating  costs
          of broad categories of equipment at the franchise, system, regional or
          company level.

Content Requirements

The  Communications  Act and the  FCC's  regulations  contain  broadcast  signal
carriage requirements that allow local commercial television broadcast stations:

     o    to elect once every three years to require a cable system to carry the
          station, subject to certain exceptions, or
     o    to negotiate with us on the terms by which we carry the station on our
          cable system, commonly called "retransmission consent."

The  Communications  Act requires a cable  operator to devote up to one-third of
its activated  channel  capacity for the mandatory  carriage of local commercial
television  stations.  The  Communications  Act also gives local  non-commercial
television  stations mandatory carriage rights;  however,  such stations are not
given the option to negotiate  retransmission  consent for the carriage of their
signals by cable systems. Additionally, cable systems must obtain retransmission
consent for:

     o    all "distant"  commercial  television  stations (except for commercial
          satellite-delivered independent "superstations" such as WGN);
     o    commercial radio stations; and
     o    certain low-power television stations.

The  FCC has  also  initiated  an  administrative  proceeding  to  consider  the
requirements,  if any,  for  mandatory  carriage of digital  television  signals
offered by local television broadcasters.  We are unable to predict the ultimate
outcome of this  proceeding  or the impact of new carriage  requirements  on the
operation of our cable systems.

The  Communications  Act requires  our cable  systems to permit  subscribers  to
purchase  video  programming  we offer on a per channel or a per  program  basis
without the  necessity  of  subscribing  to any tier of service,  other than the
basic  cable  service  tier.  However,  we are not  required to comply with this
requirement  until  December  2002 for any of our cable systems that do not have
addressable  converter  boxes  or  that  have  other  substantial  technological
limitations.  Many of our cable systems do not have the technological capability
to offer  programming  in the manner  required by the statute and thus currently
are exempt from complying with the requirement. We anticipate having significant
capital  expenditures  over the next two to three  years in order for us to meet
this  requirement.  We are unable to predict whether the full  implementation of
this  statutory  provision in December  2002 will have a material  impact on the
operation of our cable systems.

To  increase  competition  between  cable  operators  and  other  video  program
distributors, the Communications Act and the FCC's regulations:



                                       16
<PAGE>



     o    preclude  any  satellite  video  programmer  affiliated  with a  cable
          company, or with a common carrier providing video programming directly
          to  its  subscribers,   from  favoring  an  affiliated   company  over
          competitors;
     o    require  such  programmers  to sell their  programming  to other video
          program distributors; and
     o    limit the ability of such  programmers to offer exclusive  programming
          arrangements to their affiliates.

The  Communications  Act  and  FCC  regulations  contain   restrictions  on  the
transmission by cable operators of obscene or indecent programming.  It requires
cable  operators  to block  fully both the video and audio  portion of  sexually
explicit or indecent  programming  on channels that are  primarily  dedicated to
sexually oriented programming or alternatively to carry such programming only at
"safe harbor" time periods  currently defined by the FCC as the hours between 10
p.m. to 6 a.m. A three-judge  federal  district  recently  determined  that this
provision was  unconstitutional;  however, the federal government announced that
it will appeal the lower court's ruling.

The FCC actively  regulates  other aspects of our  programming,  involving  such
areas as:

     o    our use of syndicated and network  programs and local sports broadcast
          programming;
     o    advertising in children's programming;
     o    political advertising;
     o    origination cablecasting;
     o    sponsorship identification; and
     o    closed captioning of video programming.

Use of Our Cable Systems by The Government and Unrelated Third Parties

The Communications Act allows local franchising  authorities and unrelated third
parties to have access to our cable systems' channel capacity for their own use.
For example, it:

     o    permits  franchising  authorities  to require  cable  operators to set
          aside certain channels for public, educational and governmental access
          programming; and
     o    requires  a  cable  system  with  36 or  more  activated  channels  to
          designate a significant portion of its channel capacity for commercial
          leased access by third parties to provide programming that may compete
          with services offered by the cable operator.

The FCC  regulates  various  aspects of third  party  commercial  use of channel
capacity on our cable systems, including:

     o    the  maximum  reasonable  rate a cable  operator  may charge for third
          party commercial use of the designated channel capacity;
     o    the terms and conditions for commercial use of such channels; and
     o    the  procedures  for the expedited  resolution of disputes  concerning
          rates or commercial use of the designated channel capacity.

The FCC is also considering  proposals by various companies,  including Internet
service  providers,  to gain  access to our cable  systems  on a common  carrier
basis.  We cannot  predict if these or other similar  proposals will be adopted,
or, if adopted,  whether  they will have an adverse  impact on our  business and
operations.

Franchise Matters

We have  franchises  that  authorize us to  construct,  operate and maintain our
cable systems in approximately 744 communities. Although franchising matters are
normally  regulated at the local level  through a franchise  agreement  and/or a
local ordinance,  the  Communications  Act provides  oversight and guidelines to
govern our relationship with local  franchising  authorities.  For example,  the
Communications Act:



                                       17
<PAGE>



     o    affirms  the  right  of  franchising   authorities  (state  or  local,
          depending on the practice in  individual  states) to award one or more
          franchises within their jurisdictions;
     o    generally  prohibits  us  from  operating  in  communities  without  a
          franchise;
     o    encourages competition with existing cable systems by:

                  o        allowing  municipalitie  to operate  their  own cable
                           systems without franchises; and
                  o        preventing  franchising   authorities  from  granting
                           exclusive franchises or from unreasonably refusing to
                           award  additional  franchises  covering  an  existing
                           cable system's service area.

     o    permits local  authorities,  when granting or renewing our franchises,
          to establish requirements for cable-related  facilities and equipment,
          but prohibits franchising  authorities from establishing  requirements
          for specific video  programming or information  services other than in
          broad categories;
     o    permits us to obtain  modification of our franchise  requirements from
          the franchise  authority or by judicial action if warranted by changed
          circumstances;
     o    generally prohibits franchising authorities from:

                  o        imposing   requirements   during  the  initial  cable
                           franchising  process or during franchise renewal that
                           require,  prohibit  or  restrict  us  from  providing
                           telecommunications services,
                  o        imposing  franchise  fees on revenues we derived from
                           providing  telecommunications services over our cable
                           systems, or
                  o        restricting  our  use  of  any  type  of  subscriber
                           equipment or transmission technology.

     o    limits  our  payment  of  franchise  fees  to  the  local  franchising
          authority to 5% of our gross  revenues  derived from  providing  cable
          services over our cable system.

Franchise  fees may be passed  on to  subscribers  and  separately  itemized  on
subscribers'  bills. In 1997, a federal  appellate court overturned an FCC order
that had  concluded a cable  operator's  gross  revenue  did not  include  money
collected  from  subscribers  that is  allocated  by the  operator  to pay local
franchise  fees.  Instead,  the court  concluded that a cable  operator's  gross
revenue includes all revenue received from subscribers,  without deduction.  The
FCC  subsequently   determined  that  cable  operators  may  "pass  through"  on
subscribers'  monthly  bills any  additional  payments  of  franchise  fees that
franchising  authorities  require cable  operators to make for past periods when
they had relied upon the FCC's earlier  decision.  Various municipal groups have
requested  the FCC to  reconsider  its  decision.  We are unable to predict  the
ultimate  resolution  of this matter,  but we do not expect that any  additional
franchise fees we may be required to pay to our franchising  authorities will be
material to our business and operations.

The  Communications  Act  contains  renewal  procedures  designed  to protect us
against arbitrary  denials of renewal of our franchises,  although under certain
circumstances  the  franchising  authority  could deny us a  franchise  renewal.
Moreover,  even if our franchise is renewed, the franchising  authority may seek
to impose upon us new and more onerous requirements such as significant upgrades
in  facilities  and  services or  increased  franchise  fees as a  condition  of
renewal.  Similarly,  if a franchising  authority's  consent is required for the
purchase or sale of our cable system or franchise, the franchising authority may
attempt to impose more  burdensome or onerous  franchise  requirements  on us in
connection  with a  request  for such  consent.  Historically,  cable  operators
providing  satisfactory  services to their  subscribers  and complying  with the
terms of their franchises have typically obtained franchise renewals. We believe
that we have generally met the terms of our franchises and have provided quality
levels of service.  We anticipates that our future franchise  renewal  prospects
generally will be favorable.

Various courts have considered  whether  franchising  authorities have the legal
right to limit the number of franchises awarded within a community and to impose
certain  substantive  franchise  requirements  (e.g. access 



                                       18
<PAGE>



channels,  universal service and other technical requirements).  These decisions
have been inconsistent  and, until the U.S. Supreme Court rules  definitively on
the scope of cable operators' First Amendment  protections,  the legality of the
franchising process generally and of various specific franchise  requirements is
likely to be in a state of flux.

Ownership Limitations

The  Communications  Act  generally  prohibits  us from  owning or  operating  a
satellite TV or wireless  cable  system in any area where we provide  franchised
cable service and do not have effective competition,  as defined by federal law.
We may,  however,  acquire  and  operate  satellite  TV systems in our  existing
franchise  service areas if the programming  and other services  provided to the
satellite TV  subscribers  are offered  according to the terms and conditions of
our local franchise agreement.

The Communications Act also authorizes the FCC to adopt nationwide limits on the
number of subscribers under the control of a cable operator.  A federal district
court has concluded that this subscriber  limitation is unconstitutional and has
delayed  its  enforcement;  an appeal of this  decision  is pending in a federal
appellate court.  Pending further action by the federal courts, the FCC recently
reconsidered it cable ownership regulations and:

     o    reaffirmed  its  30%  nationwide   subscriber   ownership  limit,  but
          maintained  its  voluntary  stay on  enforcement  of  that  limitation
          pending further action;
     o    reaffirmed its subscriber ownership  information  reporting rules that
          require any person holding an attributable interest (as defined by FCC
          rules) in cable systems  reaching 20% or more of homes passed by cable
          plant  nationwide to notify the FCC of any incremental  change in that
          person's cable ownership interests; and
     o    opened an administrative proceeding to reevaluate its cable television
          ownership attribution rules.

The  Communications  Act and FCC regulations also impose limits on the number of
channels that can be occupied on a cable system by a video programmer in which a
cable operator has an attributable  interest.  This statutory provision has also
been declared  unconstitutional  by a federal  district  court. An appeal of the
district court's  decision has been  consolidated  with appeals  challenging the
FCC's regulatory cable ownership restrictions. Both appeals are pending.

In  1996  amendments  to  the   Communications   Act  eliminated  the  statutory
prohibition on the common ownership,  operation or control of a cable system and
a television  broadcast  station in the same service area.  Although the FCC has
eliminated its regulatory  restriction on  cross-ownership  of cable systems and
national  broadcasting  networks,  it has not yet  completed its review of other
regulations  that prohibit  common  ownership of other  broadcast  interests and
cable systems in the same geographical area.

The 1996 amendments to the Communications Act also made far-reaching  changes in
the relationship  between local telephone companies and cable service providers.
These amendments:

     o    eliminated   federal  legal  barriers  to  competition  in  the  local
          telephone  and cable  communications  businesses,  including  allowing
          local  telephone  companies  to offer  video  services  in their local
          telephone service areas;
     o    preempted  legal  barriers  to  telecommunications   competition  that
          previously existed in state and local laws and regulations;
     o    set  basic  standards  for  relationships  between  telecommunications
          providers; and
     o    generally limited  acquisitions and prohibited  certain joint ventures
          between  local  telephone  companies  and cable  operators in the same
          market.

Local  telephone  companies may provide  service as traditional  cable operators
with  local  franchises  or  they  may opt to  provide  their  programming  over
unfranchised "open video systems," subject to certain conditions, 



                                       19
<PAGE>



including, but not limited to, setting aside a portion of their channel capacity
for use by unaffiliated program  distributors on a  non-discriminatory  basis. A
federal  appellate  court  recently  overturned  various parts of the FCC's open
video rules,  including the FCC's preemption of local  franchising  requirements
for open video  operators.  We expect the FCC to modify its open video  rules to
comply  with the  federal  court's  decision,  but we are unable to predict  the
impact any rule modifications may have on our business and operations.

Pole Attachment Regulation

The  Communications  Act  requires  the FCC to  regulate  the  rates,  terms and
conditions  imposed by public  utilities for cable  systems' use of utility pole
and conduit space unless state authorities have demonstrate to the FCC that they
adequately  regulate pole attachment  rates, as is the case in certain states in
which we operate.  In the absence of state regulation,  the FCC administers pole
attachment  rates on a formula basis.  The FCC's current rate formula,  which is
being  reevaluated  by the FCC,  governs the maximum rate certain  utilities may
charge for attachments to their poles and conduit by cable  operators  providing
only  cable   services  and,   until  2001,  by  certain   companies   providing
telecommunications  services.  The FCC also  adopted a second rate  formula that
will be effective in 2001 and will govern the maximum rate certain utilities may
charge  for  attachments  to their  poles and  conduit  by  companies  providing
telecommunications services, including cable operators.

Any  resulting  increase in  attachment  rates due to the FCC's new rate formula
will be phased in over a five-year period in equal annual increments,  beginning
in February 2001.  Several  parties have requested the FCC to reconsider its new
regulations  and  several  parties  have  challenged  the new rules in court.  A
federal  district  court  recently  upheld  the  constitutionality  of  the  new
statutory  provision  which  requires that  utilities  provide cable systems and
telecommunications  carriers with nondiscriminatory  access to any pole, conduit
or  right-of-way  controlled  by the  utility;  the  utilities  involved in that
litigation  have appealed the lower court's  decision.  We are unable to predict
the outcome of this  litigation  or the ultimate  impact of any revised FCC rate
formula or of any new pole  attachment  rate  regulations  on our  business  and
operations.

Other Regulatory Requirements of the Communications Act and The FCC

The Communications Act also includes provisions, among others, regulating:

     o    customer service;
     o    subscriber privacy;
     o    marketing practices;
     o    equal employment opportunity; and
     o    regulation of technical standards and equipment compatibility.

The FCC has  adopted  cable  inside  wiring  rules to  provide  a more  specific
procedure for the disposition of residential  home wiring and internal  building
wiring  that  belongs  to an  incumbent  cable  operator  that is  forced by the
building  owner to  terminate  its cable  services in a building  with  multiple
dwelling units. The FCC is also considering  additional rules relating to inside
wiring that, if adopted, may disadvantage incumbent cable operators.

The FCC actively  regulates other parts of our cable operations,  involving such
areas as:

     o    hiring  and  promotion  of  employees  and use of outside  vendors;  
     o    consumer protection and customer service;
     o    technical standards and testing of cable facilities;
     o    consumer electronics equipment compatibility;
     o    registration of cable systems;
     o    maintenance of various records and public inspection files;
     o    microwave frequency usage; and
     o    antenna structure notification, marking and lighting.



                                       20
<PAGE>




The FCC may enforce its regulations through the imposition of substantial fines,
the  issuance  of  cease  and  desist  orders  and/or  the  imposition  of other
administrative  sanctions,  such as the  revocation  of FCC  licenses  needed to
operate  certain  transmission  facilities  often used in connection  with cable
operations.  The FCC has  ongoing  rulemaking  proceedings  that may  change its
existing rules or lead to new  regulations.  We are unable to predict the impact
that any further FCC rule changes may have on our business and operations.

Other bills and administrative proposals pertaining to cable communications have
previously  been  introduced  in Congress or  considered  by other  governmental
bodies over the past several years. It is probable that further attempts will be
made by Congress and other  governmental  bodies  relating to the  regulation of
cable communications services.


COPYRIGHT

Our cable systems  typically include in their channel line-ups local and distant
television  and radio  broadcast  signals  which are  protected by the copyright
laws. We generally do not obtain a license to use this programming directly from
the owners of the  programming,  but instead comply with an alternative  federal
compulsory  copyright  licensing process. In exchange for filing certain reports
and  contributing  a percentage of our revenues to a federal  copyright  royalty
pool,  we obtain  blanket  permission  to retransmit  the  copyrighted  material
carried on these broadcast  signals.  The nature and amount of future  copyright
payments for broadcast signal carriage cannot be predicted at this time.

In a report to Congress,  the U.S.  Copyright  Office  recommended that Congress
make major  revisions  to both the cable  television  and  satellite  compulsory
licenses.  The  possible  simplification,  modification  or  elimination  of the
compulsory  copyright license is the subject of continuing  legislative  review.
The  elimination or substantial  modification  of the cable  compulsory  license
could  adversely  affect our ability to obtain  suitable  programming  and could
substantially  increase  the cost of  programming  that  remains  available  for
distribution  to  our  subscribers.  We  cannot  predict  the  outcome  of  this
legislative activity.

Our cable systems also utilize music in certain programming and advertising that
we  provide to  subscribers.  The  rights to use this  music are  controlled  by
various music performing rights organizations which negotiate on behalf of their
copyright owners for license fees covering each performance.  The cable industry
and one of the major music  performing  rights  organizations  have negotiated a
standard  licensing  agreement  covering the  performance of music  contained in
advertising and other  information  inserted by operators into cable programming
and on certain local access and origination  channels  carried on cable systems.
Negotiations on a similar standard licensing agreement are occurring between the
cable industry and another major music performing rights  organization  covering
the use of music in local  origination  and  access  channels  and  pay-per-view
programming.  Rate  courts  established  by a New York  federal  court  exist to
determine  appropriate  copyright  coverage  and  royalty  fees in the event the
parties  fail to  reach a  settlement  or to  negotiate  renewals  of  licensing
agreements.  Although we cannot  predict the ultimate  outcome of these industry
negotiations  or the amount of any  license  fees we may be  required to pay for
past and  future  use of music,  we do not  believe  such  license  fees will be
significant to our financial position, results of operations or liquidity.

STATE AND LOCAL REGULATION

Our cable systems use local  streets and  rights-of-way.  Consequently,  we must
comply with state and local  regulation  which is typically  imposed through the
franchising  process.  Our cable  systems  generally  are  operated  pursuant to
non-exclusive franchises, permits or licenses granted by a municipality or other
state or local government entity. Our franchises generally are granted for fixed
terms  and in many  cases are  terminable  if we fail to  comply  with  material
provisions.  The terms and conditions of our  franchises  vary  materially  from
jurisdiction  to  jurisdiction.  Each franchise  generally  contains  provisions
governing:

     o    cable service rates;



                                       21
<PAGE>


     o    franchise fees;
     o    franchise term;
     o    system construction and maintenance obligations;
     o    system channel capacity;
     o    design and technical performance;
     o    customer service standards;
     o    franchise renewal;
     o    sale or transfer of the franchise;
     o    territory of the franchisee;
     o    indemnification of the franchising authority;
     o    use and occupancy of public streets; and
     o    types of cable services provided.

A number of states  subject cable  systems to the  jurisdiction  of  centralized
state  governmental  agencies,  some of which impose  regulation  of a character
similar to that of a public utility.  Attempts in other states to regulate cable
systems are continuing and can be expected to increase. To date, those states in
which we operate that have enacted such state level  regulation  are Vermont and
Massachusetts.  State  and  local  franchising  jurisdiction  is not  unlimited,
however; it must be exercised  consistently with federal law. The Communications
Act immunizes  franchising  authorities from monetary damage awards arising from
regulation of cable  systems or decisions  made on franchise  grants,  renewals,
transfers and amendments.

The  summary  of  certain  federal  and  state  regulatory  requirements  in the
preceding  pages does not describe all present and proposed  federal,  state and
local regulations and legislation  affecting the cable industry.  Other existing
federal regulations,  copyright licensing, and, in many jurisdictions, state and
local franchise requirements, are currently the subject of judicial proceedings,
legislative hearings and administrative proposals which could change, in varying
degrees, the manner in which cable systems operate. Neither the outcome of these
proceedings nor their impact upon the cable industry or our cable operations can
be predicted at this time.


Item 2.     Properties

Our principal  physical assets consist of cable  television  operating plant and
equipment,  including signal receiving,  encoding and decoding devices, headends
and distribution systems and customer house drop equipment for each of its cable
television  systems.  The signal receiving apparatus typically includes a tower,
antenna,  ancillary  electronic  equipment  and earth  stations for reception of
satellite  signals.  Headends,  consisting  of associated  electronic  equipment
necessary  for the  reception,  amplification  and  modulation  of signals,  are
located near the receiving devices.  Our distribution  system consists primarily
of coaxial and fiber optic  cables and related  electronic  equipment.  Customer
devices consist of decoding converters,  which expand channel capacity to permit
reception  of more than  twelve  channels  of  programming.  Some of our systems
utilize  converters  that can be  addressed  by sending  coded  signals from the
headend over the cable network. See "Business--Technological Developments."

We own or lease parcels of real  property for signal  reception  sites  (antenna
towers and headends),  microwave facilities and business offices. We own most of
our service vehicles. We believe that our properties, both owned and leased, are
in good condition and are suitable and adequate for our business operations.

Our cables generally are attached to utility poles under pole rental  agreements
with local public  utilities,  although in some areas the distribution  cable is
buried in  underground  ducts or trenches.  The physical  components  of the our
systems  require   maintenance   and  periodic   upgrading  to  keep  pace  with
technological advances.


                                       22
<PAGE>

Item 3.     Legal Proceedings

There are no material  pending legal  proceedings  to which we are a party or to
which any of our properties are subject.


Item 4.     Submission Of Matters To A Vote Of Security Holders
            
Not applicable.


                                       23
<PAGE>

                                     PART II

Item 5.     Market For Registrant's Common Equity And Related Stockholder 
            Matters

There is no established public trading market for our common equity.


Item 6.     Selected Financial Data

The following tables present selected  financial data derived from our financial
statements as of December 31, 1998,  1997, 1996 and 1995 and for the years ended
December 31, 1998,  1997,  1996 and the period from  inception  (April 17, 1995)
through  December  31,  1995  which have been  audited by KPMG LLP,  independent
certified public  accountants,  and selected  unaudited  operating data for such
periods.

The following table also presents combined  historical  financial data as of and
for the years ended December 31, 1995 and 1994 for the United Video  Cablevision
systems,  the C4 Media systems,  the Cox  Communications  systems,  the American
Cable Entertainment of Kentucky-Indiana systems and the Triax Southeast systems.
The summary unaudited  combined selected  historical  financial data are derived
from the audited and unaudited  historical financial statements of these systems
and should be read in  conjunction  with the audited  financial  statements  and
related  notes  thereto  of the  systems.  We  previously  filed  these  audited
statements with our Form 10-K for the year ended December 31, 1997. The combined
selected  financial  data set forth  below  represent  the  combined  results of
operations  for the systems for the periods  during  which the systems  were not
owned  by  us  and,   accordingly,   do  not  reflect  any  purchase  accounting
adjustments, including acquisition debt service, or any changes in the operation
or management of the systems that we have made since the date of  acquisition or
intends  to  make  in the  future.  Accordingly,  we do not  believe  that  such
operating results are indicative of our future operating results.




                                       24
<PAGE>
<TABLE>

                                      ----------------------------------------------------------------------------------------------
                                                        FrontierVision Holdings, L.P.                        Predecessor Systems
                                      ---------------------------------------------------------------  -----------------------------


                                        For the Year   For the Year    For the Year   From April 17,   For the Year    For the Year
                                           Ended          Ended           Ended      1995 (inception)     Ended           Ended
                                        December 31,   December 31,    December 31,   to December 31,  December 31,     December 31,
                                           1998           1997            1996             1995        1995 (1)(2)      1994 (3)(4)
                                        ------------   ------------    ------------  ----------------  ------------    -------------
In thousands, except ratios                                                       
operating statistical data

Statement of Operations Data:
<S>                                     <C>            <C>             <C>           <C>               <C>             <C>          
Revenue.............................    $    245,134   $    145,126    $     76,464  $          4,369  $    109,765    $    105,368
Operating expenses..................         123,818         74,314          39,181             2,311        62,098          58,643
Corporate administrative expenses...           6,965          4,418           2,930               127             -               -
Depreciation and amortization.......         114,155         65,502          35,724             2,308        42,354          46,345
Preacquisition expenses.............               -              -               -               940             -               -
                                        ------------   ------------    ------------  ----------------  ------------    ------------
Operating income (loss).............             196            892          (1,371)           (1,317)        5,313             380
Interest expense, net(5)............         (88,875)       (48,005)        (22,422)           (1,386)      (37,898)        (34,506)
Other income (expense)..............            (526)           (57)             (8)                -        (4,409)         (2,570)
Income tax benefit..................           2,927              -               -                 -             -               -
Extraordinary item - Loss on early
   retirement of debt...............               -         (5,046)              -                 -             -               -
                                        ------------   ------------    ------------  ----------------  ------------    ------------
Net income (loss)...................    $    (86,278)  $    (52,216)   $    (23,801) $         (2,703) $    (36,994)   $    (36,696)
                                        ============   ============    ============  ================  ============    ============

Balance Sheet Data
   (End of Period):
Total assets........................    $  1,210,421   $    927,275    $    549,168  $        143,512  $    288,253    $    228,820
Total debt..........................       1,121,142        787,047         398,194            93,159       285,144         263,660
Partners' capital...................          29,162        115,440         130,003            46,407 

Financial Ratios and Other Data:
EBITDA(6)...........................    $    114,351   $     66,394    $     34,353  $            991  $     47,667    $     46,725
EBITDA margin(6)....................           46.7%          45.8%           44.9%             22.7%         43.4%           44.3%
Total debt to EBITDA(7).............            8.08           7.71            6.75                                 
Net cash flows from operating           
activities..........................    $     61,955   $     26,343    $     18,911  $          1,907 
Net cash flows from investing           
activities..........................        (373,399)      (427,921)       (418,215)         (131,345)
Net cash flows from financing             
activities..........................         311,807        402,667         400,293           132,088
Deficiency of earnings to fixed          
charges(8)..........................    $     86,205   $     52,216    $     23,801  $          2,703

Operating Statistical Data (End of
    Period Except Average):
Homes passed........................       1,007,100        817,000         498,900           125,300 
Basic subscribers...................         702,200        559,800         356,400            92,700 
Basic penetration...................           69.7%          68.5%           71.4%             74.0% 
Premium units.......................         285,300        275,400         152,100            35,700 
Premium penetration.................           40.6%          49.2%           42.7%             38.5% 
Average monthly revenue per                                                           
basic subscriber(9).................    $      33.84   $      31.53    $      29.73  $          27.76 
-------------
</TABLE>
<TABLE>
(1) Includes the combined  results of operations of the systems we acquired from
United Video Cablevision, C4 Media Cable Southeast, Cox Communications, American
Cable  Entertainment  and Triax  Associates for the year ended December 31, 1995
(except for the United Video systems,  which is for the period ended November 8,
1995).  As the results of operations of the United Video systems are included in
the  our  historical  results  of  operations  subsequent  to  the  date  of our
acquisition  thereof (November 9, 1995), the amounts do not include $4.2 million
in revenue,  $2.4 million in operating expenses and $2.2 million in depreciation
and  amortization   (computed  after  the  application  of  purchase  accounting
adjustments)  attributable to such systems.  
(2) Includes  combined  balance  sheet data for the United  Video  systems as of
November 9, 1995, the date of our  acquisition,  and combined balance sheet data
for the C4 systems,  the Cox systems,  the American Cable Entertainment  systems
and the Triax  systems  as of  December  31,  1995,  because  such  acquisitions
occurred subsequent to that date.
(3) Includes the combined results of operations of the United Video systems, the
C4 systems,  the Cox systems,  the American Cable Entertainment  systems and the
Triax  systems for the years ended  December  31, 1994.  
(4) Includes  combined  balance sheet data for the UVC systems,  the C4 systems,
the Cox systems, the American Cable Entertainment  systems and the Triax systems
as of December 31, 1994.
(5)  Interest  expense for December  31,  1998,  1997,  1996 and 1995 was net of
interest income of $902, $1,023, $471 and $60, respectively.
(6) EBITDA is net income before interest,  taxes, depreciation and amortization.
We believe  that EBITDA is a  meaningful  measure of  performance  because it is
commonly  used in the cable  television  industry to analyze  and compare  cable
television  companies  on the  basis  of  operating  performance,  leverage  and
liquidity.  In addition, our senior bank indebtedness and our Subordinated Notes
Indenture  contain  certain  covenants,  compliance  with which is  measured  by
computations substantially similar to those used in determining EBITDA. However,
EBITDA is not intended to be a performance measure that should be regarded as an
alternative  either  to  operating  income  or net  


                                       25
<PAGE>

income as an indicator of operating performance or to cash flows as a measure of
liquidity,  as determined  in  accordance  with  generally  accepted  accounting
principles. EBITDA margin represents the percentage of EBITDA to revenue.
(7) For purposes of this  computation,  EBITDA for the most recent quarter ended
is multiplied by four.  This  presentation  is consistent with the incurrence of
indebtedness tests in the indenture governing FrontierVision Operating Partners,
L.P.'s subordinated notes. In addition, this ratio is commonly used in the cable
television industry as a measure of leverage.
(8) For  purposes of this  computation,  earnings  are defined as income  (loss)
before income taxes and fixed  charges.  Fixed charges are defined as the sum of
(i) interest costs (including an estimated interest component of rental expense)
and (ii) amortization of deferred financing costs.
(9) Average  monthly  revenue per basic  subscriber  equals revenue for the last
month of the period divided by the number of basic  subscribers as of the end of
such period.


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

The following discussion of our financial condition and results of operations as
well as  other  sections  of this  Form  10-K  contain  certain  forward-looking
statements.  Our actual  results could differ  materially  from those  discussed
herein and our  current  business  plans may be altered  in  response  to market
conditions  and other factors beyond our control.  Additionally,  our investors'
decision  to  sell  their   ownership   interest  in  our  company  to  Adelphia
Communications Corporation may ultimately cause our business plan and results of
operations  to differ  materially  from our current  business  plan and expected
future operating results.  Our operations commenced on November 9, 1995 with the
acquisition of our first cable television systems. See "Business--Development of
the Systems" for a description of our cable television systems. We have operated
these  systems  for a  limited  period  of time and had no  operations  prior to
November 9, 1995.  We have  accounted  for all  acquisitions  under the purchase
method of  accounting  and,  therefore,  our  historical  results of  operations
include the results of  operations  for each acquired  system  subsequent to its
respective acquisition date.


Introduction

In this section,  we explain the general financial  condition and the results of
operations for FrontierVision and its subsidiaries including what factors affect
our business,  what our revenues and expenses were for 1998,  1997 and 1996, why
those  revenues and expenses were  different from the year before and how all of
this effects our overall financial position.

We commenced operations in November,  1995 with the acquisition of certain cable
television  systems.  Since that first  acquisition,  we have  completed over 30
separate  acquisitions  and  have  grown to  become  one of the  twenty  largest
multiple system operators in the United States, serving over 702,200 subscribers
as of December  31,  1998.  Our systems are located in three  primary  operating
clusters - New  Engalnd,  Ohio and  Kentucky - with a fourth,  smaller  group of
systems in the  Southeast.  See  "Business -  Development  of the Systems" for a
summary of our past acquisitions and operating clusters.

During 1998, we completed nine  acquisition  transactions,  acquiring a total of
approximately 140,000 basic subscribers.  These acquisitions  increased the size
and scale of each of our three  primary  operating  clusters  and  significantly
increased the size and scale of our New England operating  cluster.  Our October
1998  acquisition of eight cable systems from State Cable TV  Corporation  added
approximately  75,000 basic subscribers to our New England cluster in attractive
communities  directly  contiguous  to systems which we already owned in southern
Maine and central New Hampshire.  With the State Cable systems, we have grown to
serve over  248,000  subscribers  in our New England  cluster  and over  168,000
subscribers and four of the five largest cities in the state of Maine.  See Note
5  to  the  financial  statements  for  more  detailed   descriptions  of  these
transactions.


                                       26
<PAGE>


Results of Operations

In this  section,  we discuss our 1998,  1997 and 1996  earnings and the factors
affecting them.


YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997 AND YEAR
ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996

The following table  summarizes  certain of our operating and financial data for
the years ended  December  31, 1998,  1997 and 1996.  As a result of our limited
operating history, and the fact that acquired systems are only included from the
date of  acquisition,  we believe that the results of operations for the periods
presented in this table are not indicative of our future results.


                                         --------------------------------------------------------------------------
                                               Year Ended               Year Ended               Year Ended
                                           December 31, 1998        December 31, 1997         December 31, 1996
                                         ------------------------ -----------------------  ------------------------
                                                         % of                    % of                     % of
                                            Amount     Revenue      Amount     Revenue         Amount   Revenue  
                                            ------     -------      ------     -------         ------   -------
   In thousands
<S>                                       <C>            <C>       <C>           <C>       <C>            <C>    
   Revenue............................    $   245,134    100.0 %   $ 145,126     100.0 %   $   76,464     100.0 %
   Expenses
       Operating expenses.............        123,296     50.3        74,314      51.2         39,181      51.2   
       Corporate expenses.............          6,965      2.8         4,418       3.0          2,930       3.9
       Depreciation and amortization..        114,155     46.6        65,502      45.2         35,724      46.7
       Storm related costs............            522      0.2             -         -              -         -
                                          -----------   ------     -----------   ------    ----------   -------
              Total expenses..........        244,938     99.9       144,234      99.4         77,835     101.8
                                          -----------   ------     -----------   ------    ----------   -------
   Operating income/(loss)............            196      0.1           892       0.6         (1,371)     (1.8)
   Interest expense, net..............        (88,875)   (36.3)      (48,005)    (33.1)       (22,422)    (29.3)
   Other expense......................           (526)    (0.2)          (57)      0.0             (8)        -
   Income tax benefit.................          2,927      1.2             -         -              -         -
   Extraordinary item - Loss on early    
       retirement of debt.............              -        -        (5,046)     (3.5)             -         -
                                          -----------   ------     -----------   -----     ----------   -------
   Net loss...........................    $   (86,278)   (35.2)%   $ (52,216)    (36.0)%   $  (23,801)    (31.1)%
                                          ===========   ======     ===========   ======    ==========   =======
   EBITDA                                 $   114,351     46.7%    $  66,394      45.8 %   $   34,353      44.9 %
                                          ===========   ======     ===========   ======    ==========   =======

   Basic subscribers..................        702,200                  559,800                356,400     
   Premium units......................        285,300                  275,400                152,100     

</TABLE>


YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31, 1997

Significant  increases in the amounts of revenue,  operating  expense and EBITDA
are primarily  attributable to acquisition  activity during 1998 and 1997, which
increased our size from 559,800 basic  subscribers  at December 31, 1997 to over
702,000 at December 31, 1998.  Revenue increased 68.9%, or approximately  $100.0
million,  to  approximately  $245.1 million for the year ended December 31, 1998
from  approximately  $145.1  million  for the  year  ended  December  31,  1997.
Operating expenses,  including storm related costs attributable to ice storms in
Maine described below, and corporate expenses increased  approximately 66.6% and
57.7%,  respectively,  for the year ended  December 31, 1998 from the year ended
December  31,  1997.  The decrease in the  percentage  of operating  expenses to
revenue was primarily  attributable to cost  efficiencies  achieved  through the
integration of cable systems and increased revenue per subscriber per month. The
EBITDA margin,  when adjusted to exclude the storm related costs,  improved from
45.8% for the twelve months ended December 31, 1997 to 46.9% in 1998.

During  mid-January  1998,  certain  of the  communities  we  service  in  Maine
experienced  devastating  ice storms.  For the twelve months ended  December 31,
1998 we recognized a loss due to service  outages and  increased  labor costs of
approximately  $522,000 due these storms,  net of $183,000 related to a claim on
our business interruption insurance for the storm damage. Additionally, we spent
approximately  $540,000  of capital  expenditures  to replace  subscriber  drops
damaged in the storms.

                                       27
<PAGE>

Depreciation and amortization expense increased 74.3% as a result of acquisition
activity that occurred in 1997 and 1998. Net interest expense increased to $88.9
million from $48.0 million  primarily as a result of the higher weighted average
drawings on our senior bank indebtedness.

During the year ended  December 31, 1998, (i) our  annualized  subscriber  churn
rate, which represents the annualized number of subscriber  terminations divided
by  the  weighted  average  number  of  subscribers   during  the  period,   was
approximately  31.5%,  and (ii) the  average  subscriber  life  implied  by such
subscriber  churn rate was  approximately  3.2 years.  Churn rates are  computed
without  adjustment  for  the  effects  of  seasonal   subscriber  activity  and
acquisitions and are within our expectations.

YEAR ENDED DECEMBER 31, 1997 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1996

Significant  increases in the amounts of revenue,  operating  expense and EBITDA
are primarily  attributable to acquisition  activity during 1997 and 1996, which
increased  our size from  356,400  basic  subscribers  at  December  31, 1996 to
559,800 at December 31, 1997.  Revenue increased to $145.1 million in the twelve
months ended December 31, 1997 from $76.5 million in the year ended December 31,
1996.  Operating and corporate  expenses were reduced to 54.2% of revenue in the
twelve  months ended  December 31, 1997 from 55.1% of revenues in the year ended
December  31, 1996 due  primarily  to the  achievement  of  efficiencies  in the
corporate  office  through the  elimination  of  duplicative  expenses,  such as
customer billing, accounting, accounts payable and payroll administration.  As a
result  of  cost  efficiencies  and  the  aforementioned  acquisitions,   EBITDA
increased to 45.8% of revenues in the twelve months ended December 31, 1997 from
44.9% of revenues in the year ended December 31, 1996.

The increase in depreciation and amortization  expense of $29.8 million from the
year ended December 31, 1996 to the year ended December 31, 1997 was a result of
the inclusion of a full year of expense for  acquisitions  completed in 1996 and
new  acquisitions  completed in 1997.  Net interest  expense  increased by $25.6
million due to the higher  weighted  average debt balance  outstanding  over the
year ended December 31, 1997.


Liquidity and Capital Resources

The cable television  business  generally requires  substantial  capital for the
construction,   maintenance  and  expansion  of  cable  plant  and  distribution
equipment.  In  addition,  we have  pursued  selective  acquisitions.  Since its
founding in 1995, our cash received from equity investments, bank borrowings and
other debt issued by FrontierVision  Operating Partners, L.P. (which we refer to
as "FVOP") and FrontierVision  Holdings, L.P. has been sufficient to finance our
acquisitions and, together with cash generated from operating  activities,  also
has been sufficient to service our debt,  provide sufficient working capital and
fund required capital  expenditures.  We intend to continue to finance such debt
service,   working  capital  and  capital  expenditure  requirements  through  a
combination of cash from operations, indebtedness and equity capital sources. We
believe that we will continue to generate  cash and be able to obtain  financing
sufficient to meet such  requirements.  Our ability to meet our debt service and
other  obligations  will depend upon our future  performance  which, in turn, is
subject to general economic conditions and to financial, political, competitive,
regulatory and other factors, many of which are beyond our control.

Amended Bank Credit Facility

Drawings on our amended  bank credit  facility,  along with cash flow  generated
from operations and high yield debt  financing,  have been sufficient to finance
capital  improvement  projects  as well  as  acquisitions.  We  have  adequately
serviced our debt in accordance  with the  provisions of the amended bank credit
facility from EBITDA of approximately $114.4 million generated by FrontierVision
Operating Partners, L.P. for the year ended December 31, 1998.

On December  19,  1997,  we amended our existing  senior bank  indebtedness  and
entered  into an $800.0  million  amended  bank credit  facility  with The Chase
Manhattan  Bank,  as  Administrative  Agent,  J.P.  Morgan  Securities  


                                       28
<PAGE>

Inc., as Syndication  Agent,  CIBC Inc., as  Documentation  Agent, and the other
lenders  signatory  thereto.  The amended bank credit facility includes a $300.0
million,  7.75-year  reducing  revolving  credit  facility,  a  $250.0  million,
7.75-year term loan and a $250.0 million, 8.25-year term loan.

At December 31, 1998,  we had $172.0  million  outstanding  under the  revolving
credit facility,  $248.1 million  outstanding  under the 7.75 year term loan and
$250.0 million  outstanding  under the 8.25 year term loan. The weighted average
interest  rates at December  31, 1998 on the  outstanding  borrowings  under the
revolving credit facility were approximately 7.25%, and under the 7.75 year term
loan  and  the  8.25  year  term  loan  were  approximately   7.29%  and  7.63%,
respectively.  We have entered into interest rate protection agreements to hedge
the  underlying  LIBOR rate exposure for $437.5  million of  borrowings  through
November  1999 and  October  2001.  For the year ended  December  31,  1998,  we
recognized an increase to interest  expense of  approximately  $0.6 million as a
result of these interest rate swap agreements.

In general,  the amended  bank credit  facility  requires us to use the proceeds
from any equity or subordinated debt issuance or any cable system disposition to
reduce indebtedness for borrowings under the amended bank credit facility and to
reduce  permanently  commitments  thereunder,   subject  to  certain  exceptions
permitting  us to use such  proceeds  to fund  certain  permitted  acquisitions,
provided that we are otherwise in compliance  with the terms of the amended bank
credit facility.

The  amended  bank  credit  facility  is secured by a pledge of all  limited and
general partnership interests in FrontierVision  Operating Partners, L.P. and in
any of our restricted subsidiaries and a first priority lien on all the tangible
and intangible assets of FrontierVision Operating Partners, L.P. and each of its
restricted  subsidiaries.  In  addition,  in the  event  of the  occurrence  and
continuance of an event of default under the amended bank credit  facility,  the
Administrative  Agent is  entitled  to  replace  our  general  partner  with its
designee.

FrontierVision Holdings, L.P. (which we refer to as "Holdings"),  as the general
partner of FrontierVision  Operating Partners, L.P., guarantees the indebtedness
under the amended bank credit facility on a limited  recourse basis. The amended
bank  credit  facility  is also  secured by a pledge of all  limited and general
partnership  interests in FrontierVision  Operating  Partners,  L.P. and a first
priority lien on all the assets of FrontierVision  Operating  Partners,  L.P and
its subsidiaries.

Senior Subordinated Notes

On  October 7, 1996,  FrontierVision  Operating  Partners,  L.P.  issued  $200.0
million aggregate  principal amount of 11% senior  subordinated  notes due 2006.
The notes  mature on October 15, 2006 and bear  interest at 11%,  with  interest
payments due  semiannually  commencing on April 15, 1997.  The notes are general
unsecured obligations of FrontierVision and rank subordinate in right of payment
to all existing  and any future  senior  indebtedness.  In  anticipation  of the
issuance  of the notes,  FrontierVision  entered  into  deferred  interest  rate
setting  agreements to reduce the interest  rate exposure  related to the notes.
The  financial  statement  effect of these  agreements  will be to increase  the
effective interest rate which FrontierVision incurs over the life of the notes.

Senior Discount Notes, Series A

Holdings and  FrontierVision  Holdings  Capital  Corporation were formed for the
purpose of acting as co-issuers of $237.7 million aggregate  principal amount at
maturity of 11 7/8% senior discount notes due 2007. FVP contributed to Holdings,
both directly and indirectly,  all of the outstanding  partnership  interests of
FrontierVision  Operating  Partners,  L.P. prior to the issuance of the discount
notes on September 19, 1997 and as a result,  FrontierVision Operating Partners,
L.P.  and  FrontierVision  Capital  Corporation  are  wholly-owned  consolidated
subsidiaries of Holdings.  Holdings contributed the majority of the net proceeds
of the discount notes totaling  approximately  $142.3 million to  FrontierVision
Operating Partners, L.P. as a capital contribution.


                                       29
<PAGE>

Senior Discount Notes, Series B

Holdings and FrontierVision  Holdings Capital II Corporation acted as co-issuers
of $91.3  million  aggregate  principal  amount at  maturity  of 11 7/8%  senior
discount  notes due 2007.  Holdings  II Capital  was  formed for the  purpose of
acting as co-issuer on these discount  notes.  The discount notes were issued on
December 2, 1998.  Holdings  contributed  the  majority  of the net  proceeds of
approximately  $72.8  million  from  the  issuance  of  the  discount  notes  to
FrontierVision Operating Partners, L.P. as a capital contribution.

Cash Flows From Operating Activities

Cash flows from  operating  activities for the year ended December 31, 1998 were
$62.0 million compared to $26.3 million for the year ended December 31, 1997 and
$18.9 million for the year ended December 31, 1996. The increase was primarily a
result of cable  television  system  operations  acquired  during 1996, 1997 and
1998.

Cash Flows From Investing Activities

Investing  cash flows  were  primarily  used to fund  capital  expenditures  and
acquire  cable  television  systems.  Capital  expenditures  for the year  ended
December 31, 1998 were  approximately  $65.6 million  compared to  approximately
$32.7 million for the year ended December 31, 1997 and $9.3 million for the year
ended  December  31,  1996.   Capital   expenditures   primarily   consisted  of
expenditures  for the construction and expansion of cable plant and distribution
equipment,  and  additional  costs were  incurred  related to the  expansion  of
customer  service  facilities.  We  invested  approximately  $307.6  million  in
acquisitions during the year ended December 31, 1998 compared with approximately
$392.6  million for the year ended  December 31, 1997 and $421.5 million for the
year ended December 31, 1996.

Cash Flows From Financing Activities

We financed acquisitions during the year ended December 31, 1998 with borrowings
under our senior bank  indebtedness.  We financed  acquisitions  during the year
ended  December  31,  1997  with  equity  contributions  from our  partners  and
borrowings  under our senior bank  indebtedness.  During the year ended December
31, 1996, we financed  acquisitions with equity contributions from our partners,
borrowings under our senior bank indebtedness and the issuance of $200.0 million
aggregate principal amount of senior subordinated notes.

During the year ended  December  31, 1998,  we received no equity  contributions
from our partners as compared with $37.7 million for the year ended December 31,
1997 and $107.4 million for the year ended December 31, 1996.

As of December 31, 1998 and 1997,  we received  approximately  $75.0 million and
$150.0 million, respectively, in net proceeds as a result of the issuance of the
Discount  Notes.  Furthermore,  from  inception  through  December 31, 1998, FVP
received a total of $199.4  million of debt and  equity  contributions  from its
partners,  all of which has been invested in Holdings and down streamed to FVOP.
Such  amount  represents  the  contractual  maximum  amount  committed  by FVP's
partners.


Year 2000

Many  existing  hardware  and  software  elements of computer  systems and other
technologies  represent the year as a two-digit number.  Such representation may
cause  software  and  hardware  malfunctions  to  occur  as  a  system  date  or
application  date  crosses the Year 2000  boundary.  This might  happen when the
actual century turns, the date of some input data exceeds January 1, 2000 and/or
the  system or  application  must  internally  refer to a date that  occurs  on,
before, or after January 1, 2000.

During 1998,  we continued a review of the Year 2000 Issue with the objective of
formulating a plan to identify and correct any system  malfunctions  which might
occur due to Year 2000  Issues.  An  informal  task force,  comprised  solely of
FrontierVision  employees,  was  established  in the  fourth  quarter of 1997 to
determine which of our mission critical business  processes could be impacted by
Year 2000 issues. Those mission critical 



                                       30
<PAGE>

business  processes  that were  identified as subject to Year 2000 Issues are as
follows:  Signal  Delivery,  Franchise  Services,  Service  Delivery and Revenue
Collection.

The following table illustrates the primary  components of each of the Year 2000
effected mission critical business processes:


<TABLE>

    ------------------------------------------------------------------------------------------------
    Mission Critical
    Business Process         Description                              Significant Components
    ------------------------------------------------------------------------------------------------
<S>                          <C>                                      <C>
    Signal Delivery          Process of receiving a video signal from Headend equipment
                             satellite or broadcast sources and       Plant infrastructure
                             transmitting that signal via fiber-optic Programming suppliers
                             and co-axial cable to a customer's
                             residence or place of business.
    Franchise Services       The performance of tasks specifically    Local origination
                             required by local or national            Emergency broadcast
                             regulatory agencies.
    Service Delivery         The ongoing process of responding timely Customer call center infrastructure
                             to customer service requests.            Dispatch equipment
    Revenue Collection       The process of collecting customer       Subscriber management systems
                             billings and utilizing those cash        Cash management
                             receipts for necessary corporate 
                             purposes.
</TABLE>

Since the task force was  established,  FrontierVision  management has committed
additional  internal and external resources to address Year 2000 Issues.  During
the  third  quarter  of 1998,  we  engaged  an  external  third-party  Year 2000
consultant  to review our informal task force's Year 2000 efforts to date and to
produce a formal,  written Year 2000  project  plan.  This plan  provides a work
schedule for us to address our Year 2000 Issues by December 31, 1999. Since that
date, we have formally  adopted a Year 2000 Compliance  Plan,  discussed in more
detail below. Additionally,  we have joined an industry initiative whereby along
with other similar companies,  we will achieve  efficiencies in their individual
Year 2000 plans through the sharing of information  and joint  testing.  We have
also entered into cooperative agreements with other multiple system operators to
share pertinent assessment information.

We have  established  a Year 2000 team which  consists  of a  full-time  Project
Manager,  one  full-time  Project  Administrator  and two  full-time  equivalent
consultants.   The  Year  2000  team  also  involves   certain   individuals  in
FrontierVision  who are subject matter  experts,  for example,  engineering  and
information  technology.  The  Project  Manager is  accountable  directly to our
senior management team, who in turn is accountable to  FrontierVision's  general
partner.

The Year 2000 Compliance Plan,  consists of an awareness  program,  a prevention
program and a find and fix program. The awareness program is designed to educate
employees and customers on the implications of Year 2000 Issues.  Employees have
been trained on our Year 2000  Compliance  Plan and their role in the success of
the Plan has been  communicated.  The prevention  program is designed to prevent
new problems from arising while we resolve existing problems. For example, since
October  30,  1998,  we have  required a Year 2000  compliance  warranty  on all
purchase  orders to ensure that vendors ship to  FrontierVision  only  equipment
that  they  have  warranted  is Year 2000  compliant.  The find and fix  program
includes three phases: inventory,  assessment and remediation,  and is initially
focused on mission critical business processes.

The inventory phase consists of a physical inventory of all susceptible business
components within each mission critical business process.  A physical  inventory
of the components used in certain of our mission critical business processes was
initiated  during 1998. We  substantially  completed the inventory  phase of the
mission critical items on January 31, 1999. We plan to initiate random inventory
verification  audits during the second quarter of 1999. The inventory  consisted
of specifically  identifying each  component/system  (both internal and external
systems)  of a mission  critical  business  process.  Internal  systems  include
computer systems and related software  (information  technology systems) as well
as systems and devices that manage the distribution of cable television  service
to customers (non information technology systems).  External systems include our
third party billing service provider and subscriber  management system,  banking
partners  (including  cash  management,   lockbox  providers  and  lenders)  and
programming providers.




                                       31
<PAGE>



An end product of the inventory phase is a  comprehensive  database which allows
us to  review  any  of our  business  components  by,  among  other  attributes,
manufacturer/supplier,  geographic  location,  compliance status or asset class.
This database allows us to  electronically  track the assessments for each item.
Once an assessment  is made on a given item,  the  assessment  is  automatically
linked to the individual inventory piece.  Furthermore,  the database allows for
the tracking of remediation  efforts at the inventory level,  including the date
the item was ordered,  the expected and actual cost,  who the repair is made by,
when it is made and who tests the repair. This method of item management ensures
normalization  of  the  descriptions  of  like  items,   enhancing  the  overall
efficiency of the project.

We are also in the process of communicating  with our significant  suppliers and
service  providers to determine  their  position with regard to Year 2000 Issues
and evaluating  the potential  impact on  FrontierVision  if those third parties
fail to remediate  their own Year 2000 Issues.  We have received  responses from
approximately  50% of such  significant  suppliers  and service  providers;  the
majority of which are currently in their own assessment and remediation  phases.
Material  relationships with third parties include utility companies  (providing
power to the cable plant),  telephone companies  (providing  communication lines
for use in  customer  contact,  employee  communications  and in  data  transfer
related  to  subscriber  and  billing   management   information   systems)  and
programming  and  equipment  vendors  (providing  the  product   distributed  by
FrontierVision as well as maintenance and construction materials).

Since the  inventory  phase was  completed,  the Year 2000 team has  focused  on
assessing  each  business  component's  vulnerability  to Year 2000 Issues.  The
assessment phase requires  management to attain a high degree of confidence that
FrontierVision prevents Year 2000 problems with respect to components of mission
critical  business  processes and minimize  such problems in other  non-critical
areas,  while  controlling  replacement  costs.  To ensure that the most at-risk
components/systems  are assessed first, the initial task in the Assessment stage
was the prioritization of each  equipment/system in the project database.  Items
of  inventory  have  been  reviewed  for  Year  2000   compatibility   first  by
cross-referencing  the project  database to  materials  received  from  vendors,
industry  groups and other  multiple  systems  operations,  second by contacting
vendors as  necessary  and finally,  by making an  "in-house"  determination  of
compatibility  where no other  information is available.  The end product of the
assessment  phase  for  each  item  is the  determination  of  whether  a  given
component/system  is to be replaced or upgraded or whether specific  contingency
plans are needed.

Approximately  95% of the total  inventory  components  in our  headends,  plant
infrastructure and customer service  infrastructure  have proven to have no date
sensitive components.  Of the remaining 5% subject to future  investigation,  we
have  completed  assessments  on  approximately  70% of the  components and have
determined that less than 1% of these to be  non-compliant  with respect to Year
2000 Issues.

After the assessment  phase is completed for a given component and the component
is  found  to  have a  Year  2000  Issue,  the  remediation  phase  begins.  The
remediation phase includes the following activities:

    o     A decision is made as to the optimal remedy of the Year 2000 Issue.

    o     A purchase order is placed for the new component or upgrade.

    o     Based  upon the  expected delivery date, the appropriate resources are
          scheduled to complete the implementation.

    o     After the new  component is implemented,  dependent  testing occurs to
          verify that  remediations do not introduce new Year 2000 problems.

If  remediation  is  determined  to be  impossible  with  respect  to a business
component, the Year 2000 team will create an appropriate contingency plan.


                                       32
<PAGE>


As of March 20, 1999,  our overall  progress in the find and fix program for our
mission critical systems as follows:
<TABLE>

           ----------------------------- ------------------------ ----------------------------
                                         Percentage Complete      Completion Date or
           Phase                                of Phase          Expected Completion Date
           ----------------------------- ------------------------ ----------------------------
<S>                                                <C>            <C> 
           Inventory                               99%            January 31, 1999
           Assessment                              70%            April 30, 1999
           Remediation                             30%            November 30, 1999
</TABLE>

The  expected  completion  dates  set  forth  above  are  based  on our  current
expectations. The assessment phase is expected to be completed by April 30, 1999
which is two months  behind our original  estimate for  completion.  We are also
dependent on our suppliers for timely  fulfillment of purchase  orders that will
be made to replace non-compliant  equipment and assistance in installations.  In
addition,  the current  remediation  timetable  does not allow for a significant
amount of time for testing. Further delays in the assessment phase and/or delays
in the purchasing and receipt of replacement  equipment further reduces the time
available for testing and places additional risk on the successful completion of
the  remediation  phase.  As a result,  no assurances can be given as to whether
each of the phases will be completed on schedule due to uncertainties  which are
inherent in the remediation of Year 2000 Issues.

As we have not yet  completed  the  assessment  of each of our mission  critical
systems (either internal or external),  the total costs to address the Year 2000
Issue are uncertain.  To date, we have expended approximately  $2,200,000 to fix
components  with Year 2000 Issues.  Based on the assessment  results to date, we
plan to spend an additional $600,000 in replacing equipment with known Year 2000
Issues.  Furthermore,  as of March  20,  1999,  we have  expended  approximately
$270,000  in  third-party  consulting  fees and  expect  to spend an  additional
$200,000 in external fees in conjunction with the Year 2000 project team through
December 31, 1999.

We have budgeted in excess of $1,000,000 in incremental capital expenditures for
fiscal year 1999 to complete the Year 2000 Compliance  Plan. It is not known, at
this point in time, if these budgeted amounts will be sufficient to identify and
correct our Year 2000 Issues.

While management  believes that the Year 2000 Compliance Plan will significantly
reduce  the risks  associated  with the  transition  to the year 2000  through a
process of  inventory,  assessment  and  remediation,  we have yet to develop or
implement any significant  contingency  plans. There can be no assurance that we
will  identify  all Year 2000 Issues or that we will be able to remedy each Year
2000 Issue. A failure to sufficiently correct a material Year 2000 problem could
cause us to suffer an  interruption or a failure of certain  important  business
operations.  Additionally,  the  failure  of a material  external  (third-party)
system  may cause us to  experience  an  interruption  or a failure  of  certain
important business operations.  The interruption or failure by FrontierVision in
an important  business  operation  may cause a material,  adverse  impact on our
financial  position.  It is not management's  intention that certain information
technology  and  technical  enhancement  projects  planned will be deferred as a
result  of  the  cost  to  address  Year  2000  Issues.  Additionally,  although
management  believes that a combination of cash from operations and indebtedness
will fund the costs  associated with correcting Year 2000 Issues,  no assurances
can be given that costs  ultimately  required  to be paid to ensure the our Year
2000  readiness  will not have an adverse  effect on our financial  position and
results of operations.



Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

In order to convert certain of the interest  payable at variable rates under our
Amended bank credit  facility to interest at fixed  rates,  we have entered into
interest  rate  exchange  agreements  pursuant  to which we pay or  receive  the
difference  between an average fixed rate and a floating rate.  During the years
ended  December  31,  1998,  1997 and 1996,  our net  payments  pursuant to such
agreements were approximately  $585,000,  $312,000 and $195,000. At December 31,
1998,  we would be required to pay an estimated  $8.8 million to terminate  such
agreements.




                                       33
<PAGE>

We are  exposed to credit  losses for the  periodic  settlements  of amounts due
under interest rate exchange  agreements in the event of  nonperformance  by the
other parties to the agreements.  However,  the Company does not anticipate that
it will  incur  any  material  credit  losses  because  it does  not  anticipate
nonperformance by the  counterparties.  Further,  as of December 31, 1998, we do
not anticipate material near-term losses in future earnings, fair values or cash
flows  resulting  from  derivative  financial  instruments.  See  note  6 to the
accompanying  financial  statements for additional  information  regarding these
interest rate exchange agreements.

At December 31, 1998,  after  considering  the net effect of the  aforementioned
interest rate exchange agreements,  we had $637.5 million (or 73%) of fixed rate
debt and $234.1  million  (or 27%) of  variable  rate debt.  Our  interest  rate
exposure is primarily due to changes in LIBOR rates. The aggregate  hypothetical
loss in earnings and cash flows on an annual basis on our variable  rate debt as
of December 31, 1998 that would have resulted from a hypothetical adverse change
of 10% in the related  LIBOR rates,  sustained  for one year, is estimated to be
$23 million.




Item 8.   Financial Statements And Supplementary Data

FrontierVision's  financial statements appear on page F-1 of this Form 10-K. The
financial  statement  schedules  required under  Regulation S-X and of this Form
10-K, appear on page S-1 of this Form 10-K.

All other schedules are omitted as the required information is not applicable or
the information is presented in the financial statements, related notes or other
schedules.


Item 9.   Changes In And Disagreements With Accountants On Accounting And 
          Financial Disclosure

During 1996, FVOP dismissed its independent public accountants,  Arthur Andersen
LLP and  subsequently  engaged KPMG LLP as FVOP's principal  independent  public
accountants.  FVOP had no disagreements with Arthur Andersen since formation and
through the date of dismissal,  nor did any of Arthur Andersen's  reports on the
financial  statements  of FVOP  contain an  adverse  opinion  or  disclaimer  of
opinion,  nor was  any  report  modified  as to  uncertainty,  audit  scope,  or
accounting  principle.  The change in accountants  is fully  disclosed in FVOP's
Form 8-K filed with the SEC on October 29, 1996.



                                       34
<PAGE>


                                    PART III


Item 10.   Directors And Executive Officers Of The Registrant

Holdings' sole general partner is FrontierVision  Partners (which we refer to as
"FVP"). FVP's sole general partner is FVP GP, L.P. FVP GP's sole general partner
is FrontierVision  Inc.  Information with respect to the directors and executive
officers of FrontierVision Inc. and FrontierVision Holdings Capital Corporation,
respectively, is set forth below:

FrontierVision Inc.

Name                        Age Position
----                        --- --------
James C. Vaughn            53   President, Chief Executive Officer and Director
John S. Koo                37   Executive Vice President, Chief  Financial 
                                Officer, Secretary and Director
William J. Mahon Jr.       58   Senior Vice President - Operations
David M. Heyrend           48   Vice President of Engineering
Albert D. Fosbenner        44   Vice President - Treasurer
William P. Brovsky         42   Vice President of Marketing and Sales
James W. McHose            35   Vice President - Finance
Richard G. Halle           35   Vice President of New Business Development


FrontierVision Holdings Capital Corporation

Name                        Age Position
----                        --- --------
James C. Vaughn            53   President, Chief Executive Officer and Director
John S. Koo                37   Executive Vice President, Chief  Financial 
                                Officer, Secretary and Director 
Albert D. Fosbenner        44   Vice President - Treasurer

James  C.  Vaughn,  President,   Chief  Executive  Officer  and  a  Director  of
FrontierVision  Inc. and Holdings Capital and a founder of FrontierVision,  is a
cable television system operator and manager with over 30 years of experience in
the  cable  television  industry.  From 1987 to 1995,  he served as Senior  Vice
President of Operations for Triax Communications Corp., a top 40 multiple system
operator,  where he was  responsible  for  managing  all  aspects  of small  and
medium-sized  cable television  systems.  These systems grew from serving 57,000
subscribers to over 376,000  subscribers  during Mr. Vaughn's  tenure.  Prior to
joining Triax  Communications,  Mr. Vaughn served as Director of Operations  for
Tele-Communications,  Inc. from 1986 to 1987, with  responsibility  for managing
the development of Chicago-area cable television systems. From 1985 to 1986, Mr.
Vaughn was Division Manager for Harte-Hanks  Communications.  From 1983 to 1985,
Mr. Vaughn served as Vice President of Operations  for Bycom,  Inc. From 1979 to
1983, Mr. Vaughn served as Director of Engineering for the Development  Division
of Cox Cable Communications Corp. From 1970 to 1979, Mr. Vaughn served as Senior
Staff Engineer for Viacom, Inc.'s cable division,  and a Director of Engineering
for Showtime, a division of Viacom International, Inc.

John S. Koo, Executive Vice President,  Chief Financial Officer, Secretary and a
Director  of  FrontierVision   Inc.  and  Holdings  Capital  and  a  founder  of
FrontierVision,   has  over   eleven   years  of  banking   experience   in  the
telecommunications  industry.  From  1990 to  1995,  Mr.  Koo  served  as a Vice
President  at  Canadian  Imperial  Bank of  Commerce,  where he  co-founded  its
Mezzanine  Finance  Group,  targeted  at emerging  media and  telecommunications
businesses.  From  1986 to 1990,  Mr.  Koo was a Vice  President  at Bank of New
England  specializing  in media finance.  From 1984 to 1986, he was a management
consultant to the financial services industry.

William J. Mahon, Jr., Senior Vice President - Operations of FrontierVision Inc.
since  December  1995,  has over fifteen  years of cable  television  operations
management  experience.  Prior to joining the Company,  Mr. Mahon served as Vice
President of Operations for United Video Cablevision, a top 50 MSO, from 1990 to
1995,  where he was responsible for the day-to-day  operations of  approximately
130 cable systems located in twelve states.  From 1983 to 1989, Mr. 



                                       36
<PAGE>


Mahon served as President and General Manager of Heritage Cable Vision, a 90,000
subscriber  MSO.  Mr.  Mahon is a member of the Society of Cable  Engineers  and
serves  on  the  Board  of  Directors  of  the  New  England  Cable   Television
Association.

David M. Heyrend,  Vice President of Engineering of FrontierVision  Inc., has 24
years of cable  television  engineering  management and  operations  experience.
Prior to joining FrontierVision in 1996, Mr. Heyrend served from 1988 to 1995 as
Director  of  Engineering  for  United  Video  Cablevision,  where he  developed
technical   standards,   employee   development   programs  and  oversaw   plant
construction  projects.   From  1985  to  1988,  as  Director  of  Programs  for
Tele-Engineering  Corporation,  he developed  and managed  broadband  local area
network projects for clients such as Allen Bradley,  Ford Motor Company and TRW.
Mr.  Heyrend also worked for several  years with Daniels & Associates  in system
technical operations and engineering management.

Albert D.  Fosbenner,  Vice  President - Treasurer  of  FrontierVision  Inc. and
Holdings Capital, has fourteen years of domestic, international and new business
cable television experience and is responsible for FrontierVision's  accounting,
reporting,  treasury and  information  technology  activities.  Prior to joining
FrontierVision in early 1998 Mr. Fosbenner served as the Chief Financial Officer
of a Denver-based  interactive  television  network startup company from 1994 to
1997,  where  he was  responsible  for all  finance,  treasury,  accounting  and
administrative  functions. From 1991 to 1994 Mr. Fosbenner served (in Norway) as
the CFO of Norkabel A/S, a Norwegian cable  television  multiple system operator
(owned by United  International  Holdings,  Inc.) serving  142,000  subscribers.
While at  Norkabel  Mr.  Fosbenner  was  responsible  for  finance,  accounting,
treasury,  investor relations and management  information systems.  From 1985 to
1991 Mr.  Fosbenner  worked for both United Cable  Television and United Artists
Entertainment  in a number of financial  and  operations  management  positions,
including  Director of Finance & Administration  and Division  Business Manager.
Mr.  Fosbenner  is a Certified  Public  Accountant  and a  Certified  Management
Accountant.

William P.  Brovsky,  Vice  President of Marketing  and Sales of  FrontierVision
Inc., has fifteen years of cable  television  experience and is responsible  for
programming  and contract  negotiations  in addition to overseeing the sales and
marketing  activities of FrontierVision's  operating  divisions.  Before joining
FrontierVision  in 1996,  Mr.  Brovsky  managed  day-to-day  sales and marketing
operations from 1989 to 1996 for Time Warner Cable of Cincinnati, serving almost
200,000 subscribers. He also served as Project Manager,  supervising all aspects
of system  upgrades to fiber optics.  From 1982 to 1989,  Mr.  Brovsky served as
General Sales Manager for American Television and  Communications,  where he was
responsible for sales, marketing and telemarketing operations for Denver and its
suburban markets.

James W. McHose,  Vice President - Finance of FrontierVision  Inc., has over ten
years of  accounting  and tax  experience,  including six years  providing  tax,
accounting and consulting  services to companies engaged in the cable television
industry.  Through  early 1998,  Mr. McHose  served  FrontierVision  as the Vice
President - Treasurer. Prior to joining FrontierVision in 1996, Mr. McHose was a
Senior Manager in the Information, Communications, and Entertainment practice of
KPMG Peat Marwick,  LLP,  where he  specialized  in taxation of companies in the
cable television industry.  In this capacity,  Mr. McHose served multiple system
operators with over 14 million  subscribers  in the  aggregate.  Mr. McHose is a
member of the Cable Television Tax  Professional's  Institute and is a Certified
Public Accountant.

Richard G. Halle', Vice President of New Business  Development of FrontierVision
Inc. since February 1997, is responsible  for the evaluation and  development of
new businesses  including cable modems and Internet access,  digital programming
delivery,  distance learning and alternative  telephone access. Prior to joining
FrontierVision,  from 1995 to 1996 Mr.  Halle  served as the Vice  President  of
Operations   and  then  as  the  Vice   President   of   Development   at  Fanch
Communications,  a top 20  multiple  system  operator,  where  he was  initially
responsible for the management of an operating region of 100,000 subscribers and
subsequently  responsible  for  the  planning  and  deployment  of all  advanced
services  including digital  television,  dial-up Internet access and high speed
cable  modems.  Prior to that,  he spent  nine  years in the  banking  industry,
specializing in media and telecommunications finance.



                                       36
<PAGE>

Advisory Committee

The partnership  agreement of FVP provides for the  establishment of an Advisory
Committee to consult with and advise FVP GP, with respect to FVP's  business and
overall  strategy.  The  Advisory  Committee  has broad  authority to review and
approve  or  disapprove  matters  relating  to all  material  aspects  of  FVP's
business.  The  approval  of  seventy-five  percent  (75%) of the members of the
Advisory  Committee that are entitled to vote on the matter is required in order
for FrontierVision to effect any cable television system acquisition.

The Advisory  Committee  consists of four  representatives  of the  Attributable
Class A Limited  Partners of FVP and one  representative  of FVP GP.  Subject to
certain  conditions,  each of the four  Attributable  Class A  Limited  Partners
listed in  "Principal  Security  Holders" is entitled to designate  (directly or
indirectly) one of the four Attributable Class A Limited Partner representatives
on the Advisory Committee.  The designees of J.P. Morgan Investment Corporation,
1818 II Cable Corp.  (whose  designee is selected by two affiliated  individuals
specified in the FVP partnership agreement), Olympus Cable Corp. and First Union
Capital  Partners Inc. are John W.  Watkins,  Richard H. Witmer,  Jr.,  James A.
Conroy and L. Watts Hamrick, III, respectively. FVP GP's designee is Mr. Vaughn.


Item 11.    Executive Compensation

The following table summarizes the compensation  paid to  FrontierVision  Inc.'s
Chief  Executive  Officer  and  to  each  of  the  four  remaining  most  highly
compensated  officers receiving  compensation in excess of $100,000 for services
rendered during the fiscal years ended December 31, 1998, 1997 and 1996.

                           Summary Compensation Table
<TABLE>

                                                                    ----------------------------------------------------
                                                                               Annual Compensation        All Other
                                                                               -------------------       
Name and Principal Position                                             Year     Salary      Bonus       Compensation (1)
---------------------------                                         --------  ---------      --------    ----------------
<S>                                                                 <C>       <C>            <C>         <C>       
James C. Vaughn                                                     1998      $ 361,158      $      -    $   12,877
   President and Chief Executive Officer                            1997        305,030        90,000        11,465
                                                                    1996        283,986       120,000         7,882
                                                                            
John S. Koo                                                         1998        196,250             -         6,349
   Executive Vice President, Chief Financial Officer and Secretary  1997        179,745       150,000         5,241
                                                                    1996        170,192       111,618         4,760

William J. Mahon, Jr.                                               1998        123,600             -         2,451
     Senior Vice President - Operations                             1997        121,175        25,000         3,761
                                                                    1996         13,900        53,350             -

David M. Heyrend                                                    1998        114,586             -         2,245
   Vice President of Engineering                                    1997        110,000        22,000         3,597
                                                                    1996         45,034         5,000         1,351

Richard G. Halle'                                                   1998        112,665             -         3,447
   Vice President of New Business Development                       1997         91,109        40,000         2,733
                                                                    1996              -             -             -
</TABLE>

 ________________
(1) Consists of contributions to the 401(k) Plan and to a key man life insurance
    plan.



                                       37
<PAGE>



Deferred Compensation Plan

FVP  established  the   FrontierVision   Partners,   L.P.   Executive   Deferred
Compensation  Plan  effective  January  1,  1996  to  allow  key  employees  the
opportunity  to  defer  the  payment  of  compensation  to a later  date  and to
participate  in any  appreciation  of  FrontierVision's  business.  The deferred
compensation plan is administered by FVP's Advisory Committee.  Participation in
the deferred  compensation  plan is limited to James C. Vaughn,  John S. Koo and
other key  executives  of FVP or its  affiliates  approved  by the  compensation
committee of the Advisory Committee.

Under the deferred  compensation plan, eligible  participants may elect to defer
the  payment  of a  portion  of their  compensation  each  year up to an  amount
determined by the compensation  committee.  Any amount deferred is credited to a
bookkeeping  account,  which is  credited  with  interest at the rate of 12% per
annum.  Each  participant's  account also has a phantom equity component through
which the account will be credited  with  earnings in excess of 12% per annum to
the extent the net equity  value of FVP  appreciates  in excess of 12% per annum
during  the term of the  deferral.  Net  equity  value of FVP is  determined  by
multiplying  each cable  television  system's  EBITDA for the most recent fiscal
quarter by the weighted  average  multiple of EBITDA paid by FVP to acquire each
cable television  system;  provided that if  substantially  all of the assets or
partnership interests of FVP are sold, net equity value shall be based upon such
actual sale price  adjusted to reflect any prior  distributions  to the partners
and any  payments  during  the term of the  deferral  to the  holders of certain
subordinated notes issued to the limited partners of FVP.

Accounts  shall  be paid  following  (1) the  sale of all of  FVP's  partnership
interests or upon liquidation of FVP, other than sales or liquidations which are
part of a  reorganization,  or (2) the death or  disability  of the  participant
prior to  termination  of employment  with FVP. The  compensation  committee may
agree to pay the account in the event the participant  incurs a severe financial
hardship  or if the  participant  agrees  to an  earlier  payment.  There are 20
employees currently  participating in the Deferred  Compensation Plan, including
Messrs. Vaughn and Koo.


Compensation Committee Interlocks and Insider Participation

The  compensation  committee of the Advisory  Committee,  consisting  of Messrs.
Watkins and Witmer, as representative of J.P. Morgan Investment  Corporation and
1818 II Cable  Corp.,  respectively,  sets  the  compensation  of the  executive
officers   of   FrontierVision.   See   "Certain   Relationships   and   Related
Transactions."



                                       38
<PAGE>




Item 12.     Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of December 31, 1998:

     (1) the percentage of the total  partnership  interests of FVP beneficially
         owned by the directors and executive  officers of  FrontierVision  Inc.
         and each person who is known to FrontierVision to own beneficially more
         than 5.0% of any class of FVP's partnership interests; and

     (1) the percentage of the equity securities of FrontierVision Inc., FVP GP,
         FVP and  Holdings  owned  by each  director  or  executive  officer  of
         FrontierVision Inc. named in the Summary  Compensation Table and by all
         executive officers of FrontierVision Inc.
         as a group.

Holdings was formed as a Delaware  limited  partnership  in August 1997. FVP has
contributed  its 99.9%  general  partner  interest in  FrontierVision  Operating
Partners,  L.P. to Holdings.  FVP has contributed its 100% interest in FVOP Inc.
to Holdings,  with the result that FrontierVision  Operating  Partners,  L.P. is
wholly  owned,  directly or  indirectly,  by Holdings.  Holdings  Capital II was
incorporated in December,  1998 and is a wholly-owned subsidiary of Holdings. It
has  nominal  assets and does not conduct any  operations.  For a more  detailed
discussion of the ownership of  FrontierVision,  see "Certain  Relationships and
Related Transactions."


<TABLE>

Name and Address of Beneficial Owners                    Type of Interest                            % of Class
-------------------------------------                    ----------------                            ----------
<S>                                                      <C>                                             <C>   
FrontierVision Partners, L.P. ("FVP")(1)                 General Partner Interest in Holdings (2)        99.90%
1777 South Harrison Street, Suite P-200
Denver, Colorado 80210

FVP GP, L.P. (3)                                         General Partner Interest in FVP                  1.00%
1777 South Harrison Street, Suite P-200
Denver, Colorado 80210

J.P. Morgan Investment Corporation                       Limited Partnership Interest in FVP             22.83%
101 California Street, Suite 3800                           (Attributable Class A Limited Partner)
San Francisco, CA 94111                                  Limited Partnership Interest in FVP GP           6.57%

1818 II Cable Corp.                                      Limited Partnership Interest in FVP             23.63%
c/o Brown Brothers Harriman & Co.                           (Attributable Class A Limited Partner)
59 Wall Street                                           Limited Partnership Interest in FVP GP           6.57%
New York, NY 10005

Olympus Cable Corp.                                      Limited Partnership Interest in FVP             14.77%
Metro Center--One Station Place                              (Attributable Class A Limited Partner)
Stamford, CT 06920                                       Limited Partnership Interest in FVP GP           6.57%

First Union Capital Partners, Inc.                       Limited Partnership Interest in FVP             15.05%
One First Union Center, 5th Floor                           (Attributable Class A Limited Partner)
Charlotte, NC 28288                                      Limited Partnership Interest in FVP GP           3.94%

James C. Vaughn                                          Stockholder of FrontierVision Inc.              66.67%
1777 South Harrison Street, Suite P-200                  Limited Partnership Interest in FVP GP          50.24%
Denver, Colorado 80210

John S. Koo                                              Stockholder of FrontierVision Inc.              33.33%
1777 South Harrison Street, Suite P-200                  Limited Partnership Interest in FVP GP          25.12%
Denver, Colorado 80210

All other executive officers and directors as a group                                                     0.00%
</TABLE>

----------------
     (1)  FVP's  limited  partners  (owning  99%  of the  partnership  interests
          therein) are various institutional investors and accredited investors.
     (2)  Holdings'  sole  limited  partner  (owning  0.1%  of  the  partnership
          interests therein) is FrontierVision  Holdings, LLC. 
     (3)  FVP GP's sole general partner (owning 1% of the partnership  interests
          therein) is FrontierVision Inc., which is owned by James C. Vaughn and
          John S. Koo. FVP GP's limited  partners (owning 99% of the partnership
          interests therein) consist of various institutional  investors,  James
          C. Vaughn and John S. Koo.



                                       39
<PAGE>

Item 13. Certain Relationships and Related Transactions


The sole general partner (owning 99.9% of the partnership  interests therein) of
FrontierVision  Operating  Partners,  L.P. is Holdings.  Holdings'  sole general
partner (owning 99.9% of the partnership  interests  therein) is FVP.  Holdings'
sole limited  partner  (owning  0.1% of the  partnership  interests  therein) is
FrontierVision  Holdings,  LLC, which is a wholly owned subsidiary of FVP. FVP's
sole general partner (owning 1% of the partnership interests therein) is FVP GP.
FVP's limited partners (owning 99% of the partnership interests therein) consist
of J.P. Morgan  Investment  Corporation,  an affiliate of J.P. Morgan Securities
Inc., First Union Capital Partners,  Inc., and various  institutional  investors
and  accredited  investors.  FVP GP's sole  general  partner  (owning  1% of the
partnership  interests therein) is FrontierVision  Inc., which is owned by James
C. Vaughn and John S. Koo. See "Principal Security Holders".

As of December 31, 1998,  J.P.  Morgan  Investment  Corporation  and First Union
Capital  Partners,  Inc. had  committed  approximately  $44.9  million and $30.0
million,  respectively,  to FVP, all of which has been contributed to FVP. As of
December  31,  1998,   FrontierVision   Inc.  had  committed   and   contributed
approximately  $19,935  to  FVP,  representing  contributions  of  approximately
$13,290  and $6,645 by James C.  Vaughn and John S. Koo,  respectively,  who are
directors of  FrontierVision  Inc. Such capital  commitments were contributed as
equity to FVOP in  connection  with the  closing of  acquisitions  by FVOP,  for
escrow  deposits for  acquisitions  by FVOP under  contract and for FVOP working
capital requirements.

J.P. Morgan Investment  Corporation and First Union Capital  Partners,  Inc. are
"Special  Class A Limited  Partners" of FVP. Upon the  termination of FVP and in
connection with  distributions  to its partners in respect of their  partnership
interests,  J.P. Morgan  Investment  Corporation,  First Union Capital Partners,
Inc. and FVP GP will be entitled to receive "carried interest"  distributions or
will be allocated a portion of 15% of any remaining capital to be distributed by
FVP after certain other  distributions  are made.  J.P.  Morgan  Securities Inc.
acted as  placement  agent  for the  initial  offering  of  limited  partnership
interests of FVP (other than with respect to the investment  made by J.P. Morgan
Investment  Corporation)  and the  placement  of debt  securities  of FVP and in
connection with those activities  received  customary fees and  reimbursement of
expenses.

J.P.  Morgan  Securities  Inc., The Chase  Manhattan Bank, an affiliate of Chase
Securities  Inc.  and CIBC  Inc.,  an  affiliate  of CIBC  Wood  Gundy  Security
Corporation,  are agents and lenders under the amended bank credit  facility and
have received  customary fees for acting in such capacities.  In addition,  J.P.
Morgan Securities Inc. and Chase Securities Inc. received:

     (1) compensation  in  the  aggregate  of  approximately   $6.0  million  in
         connection with the issuance of the Senior Subordinated Notes;

     (2) received compensation in the aggregate of approximately $5.3 million in
         connection with the issuance of the Senior Discount Notes, Series A;

     (3) received compensation in the aggregate of approximately $1.5 million in
         connection with the issuance of the Senior Discount Notes, Series B.

There are no other  arrangements  between FVOP, J.P. Morgan  Securities Inc. and
Chase Securities Inc. and their affiliates and Holdings or any of its affiliates
in which  J.P.  Morgan  Securities  Inc.  and  Chase  Securities  Inc.  or their
affiliates will receive any additional  compensation from Holdings or any of its
affiliates.




                                       40
<PAGE>


                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules, And Reports On Form 8-K
<TABLE>

(A)(1)   Financial Statements.  The following financial statements are included in Item 8 of Part II:

FrontierVision Holdings, L.P. and Subsidiaries
<S>                                                                                                              <C>
   Independent Auditors' Report                                                                                F-2
   Consolidated Balance Sheets as of December 31, 1998 and 1997                                                F-3
   Consolidated Statements of Operations for the years ended December 31, 1998, 1997 and 1996                  F-4
   Consolidated Statements of Partners' Capital for the years ended December 31, 1998, 1997 and 1996           F-5
   Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996                  F-6
   Notes to Consolidated Financial Statements                                                                  F-7

FrontierVision Holdings Capital Corporation
   Independent Auditors' Report                                                                                F-19
   Balance Sheet as of December 31, 1997 and 1998                                                              F-20
   Note to the Financial Statements                                                                            F-21

Central Ohio Cluster (Selected Assets Acquired From Cox Communications, Inc. by FVOP)
   Independent  Auditor's  Report                                                                              F-22  
   Combined  Statements of Net Assets as of September 30, 1997 (unaudited) and December 31, 1996               F-23 
   Combined Statements of Income for the nine-month periods ended September 30, 1997 (unaudited) and
     September  30, 1996  (unaudited)  and for the year ended  December 31, 1996                               F-24 
   Combined  Statements of Changes in Net Assets for the nine-month  period ended September 30, 1997
     (unaudited)  and for  the  year  ended  December  31,  1996                                               F-25  
   Combined Statements of Cash Flows for the nine-month  periods ended September 30, 1997(unaudited)
     and September 30, 1996 (unaudited) and for the year ended December 31, 1996                               F-26
   Notes to Combined Financial Statements                                                                      F-27

State Cable TV Corporation and Subsidiary
   Independent Auditor's Report                                                                                F-34 
   Consolidated Balance Sheets as of September 30, 1998  (unaudited) and December 31, 1997                     F-35  
   Consolidated  Statements of Operations and Deficit for the nine months ended September 30, 1997 and
     1998 (unaudited) and the year ended December 31, 1997                                                     F-36
   Consolidated  Statements  of Cash  Flow  for the  nine  months  ended  September  30,  1997 and 1998
     (unaudited) and the year ended December 31, 1997                                                          F-37
   Notes to Consolidated Financial Statements                                                                  F-38

New England Cablevision of Massachusetts, Inc.
   Independent  Auditors'  Report                                                                              F-46  
   Balance  Sheets  as of March  31,  1998(unaudited),  December 31, 1997 and 1996                             F-47  
   Statements of Earnings for the three months ended March 31, 1998 and 1997 (unaudited) and the years
     ended   December  31,  1997  and  1996                                                                    F-49   
   Statements   of  Changes  in Stockholders' Equity for the three months ended March 31, 1998 (unaudited)
     and the years ended December 31, 1997 and 1996                                                            F-50
   Statements  of Cash Flows for the three  months  ended March 31, 1998 and 1997  (unaudited)  and the
     years ended December 31, 1997 and 1996                                                                    F-52
   Notes to Financial Statements                                                                               F-54

(2)      Financial Statement Schedules.  The following Financial Statement Schedules are submitted herewith:

         Independent Auditors' Report                                                                          S-2
         Schedule I:  Condensed Information as to the Financial Position of the Registrant                     S-3
         Schedule II:  Valuation and Qualifying Accounts                                                       S-7
</TABLE>

                                       41
<PAGE>

(3)      List of Exhibits.

         2      Purchase   Agreement   dated  as  of  February  22,  1999  among
                FrontierVision Partners, L.P., FVP GP, L.P., the General Partner
                and   Certain   Direct  and   Indirect   Limited   Partners   of
                FrontierVision   Partners,   L.P.  and  Adelphia  Communications
                Corporation.
         3.1    Amended and Restated  Agreement of Limited  Partnership of FVOP.
                (1)
         3.2    Certificate of Limited Partnership of FVOP. (2)
         3.3    First Amended and Restated  Agreement of Limited  Partnership of
                FVP. (2)
         3.4    Amendment No. 1 to the First  Amended and Restated  Agreement of
                Limited Partnership of FVP. (1)
         3.5    Amendment No. 2 to the First  Amended and Restated  Agreement of
                Limited Partnership of FVP. (1)
         3.6    Amendment No. 3 to the First  Amended and Restated  Agreement of
                Limited Partnership of FVP. (1)
         3.7    Amendment No. 4 to the First  Amended and Restated  Agreement of
                Limited Partnership of FVP. (1)
         3.8    Amendment No. 5 to the First  Amended and Restated  Agreement of
                Limited Partnership of FVP. (1)
         3.9    Certificate of Limited Partnership of FVP.  (2)
         3.10   First Amended and Restated  Agreement of Limited  Partnership of
                FVP GP. (2)
         3.11   Amendment No. 1 to the First  Amended and Restated  Agreement of
                Limited Partnership of FVP GP. (1)
         3.12   Amendment No. 2 to the First  Amended and Restated  Agreement of
                Limited Partnership of FVP GP. (1)
         3.13   Certificate of Limited Partnership of FVP GP. (2)
         3.14   Certificate of Incorporation of FrontierVision Inc. (2)
         3.15   Bylaws of FrontierVision, Inc. (2)
         3.16   Agreement of Limited Partnership of Holdings. (1)
         3.17   Certificate of Limited Partnership of Holdings. (1)
         3.18   Certificate of Incorporation of FrontierVision  Holdings Capital
                Corporation. (1)
         3.19   Bylaws of FrontierVision Holdings Capital Corporation. (1)
         4.1    Indenture  dated as of  October 7,  1996,  among  FrontierVision
                Operating Partners, L.P., FrontierVision Capital Corporation and
                Colorado National Bank, as Trustee. (3)
         4.2    Indenture dated as of September 19, 1997,  among  FrontierVision
                Holdings, L.P.,  FrontierVision Holdings Capital Corporation and
                U.S. Bank National  Association d/b/a Colorado National Bank, as
                Trustee. (1)
         4.3    Purchase Agreement, dated as of September 19, 1997, by and among
                FrontierVision Holdings,  L.P.,  FrontierVision Holdings Capital
                Corporation,  and J.P. Morgan Securities, Inc., Chase Securities
                Inc.,  CIBC Wood Gundy  Corp.  and First Union  Capital  Markets
                Corp., as Initial Purchasers. (1)
         4.4    Registration  Rights Agreement,  dated as of September 19, 1997,
                by  and  among  FrontierVision  Holdings,  L.P.,  FrontierVision
                Holdings Capital Corporation,  and J.P. Morgan Securities, Inc.,
                Chase  Securities  Inc.,  CIBC Wood Gundy Corp.  and First Union
                Capital Markets Corp., as Initial Purchasers. (1)
         10.1   Senior Credit Facility. (2)
         10.2   Employment Agreement of James C. Vaughn. (2)
         10.3   Asset  Purchase  Agreement  dated July 20, 1995  between  United
                Video Cablevision,  Inc. and FrontierVision  Operating Partners,
                L.P. (2)
         10.4   Asset  Acquisition  Agreement (July 27, 1995 Auction Sale) dated
                as of July 27,  1995 among  Stephen S. Gray in his  capacity  as
                Receiver  of  Longfellow  Cable  Company,   Inc.,   Carrabassett
                Electronics   and   Carrabassett   Cable   Company,   Inc.   and
                FrontierVision Operating Partners, L.P. (2)
         10.5   Asset Purchase  Agreement  dated October 27, 1995 among C4 Media
                Cable Southeast, Limited Partnership, County Cable Company, L.P.
                and FrontierVision Operating Partners, L.P. (2)
         10.6   Asset  Purchase  Agreement  dated  November  17,  1995 among Cox
                Communications  Ohio,  Inc.,  Times Mirror Cable  Television  of
                Defiance, Inc., Chillicothe Cablevision, Inc. Cox Communications
                Eastern Kentucky,  Inc. and FrontierVision  Operating  Partners,
                L.P. (2)
         10.7   Asset  Purchase   Agreement  dated  February  27,  1996  between
                Americable   International   Maine,   Inc.  and   FrontierVision
                Operating Partners, L.P. (2)


                                       42
<PAGE>

         10.8   Asset  Purchase   Agreement  dated  May  16,  1996  among  Triax
                Southeast  Associates,  L.P.,  Triax Southeast  General Partner,
                L.P. and FrontierVision Operating Partners, L.P. (2)
         10.9   Asset  Purchase and Sale  Agreement  dated June 21, 1996 between
                HPI Acquisition Co. LLC (assignee of Helicon Partners I, LP) and
                FrontierVision Operating Partners, L.P. (2)
         10.10  Asset Purchase  Agreement  dated July 15, 1996 between  American
                Cable Entertainment of Kentucky-Indiana, Inc. and FrontierVision
                Operating Partners, L.P. (2)
         10.11  Asset  Purchase  Agreement  dated  as of July 30,  1996  between
                Shenandoah Cable Television Company and FrontierVision Operating
                Partners, L.P. (2)
         10.12  Purchase  Agreement dated as of August 6, 1996 between Penn/Ohio
                Cablevision,  L.P. and FrontierVision  Operating Partners,  L.P.
                (2)
         10.13  Asset  Purchase  Agreement  dated July 19, 1996 between  Phoenix
                Grassroots Cable Systems,  L.L.C. and  FrontierVision  Operating
                Partners, L.P. (2)
         10.14  Amendment No. 1 to Senior Credit Facility. (2)
         10.15  Consent and Amendment No. 2 to Senior Credit Facility. (3)
         10.16  Asset  Purchase  Agreement  dated May 8, 1997  between A-R Cable
                Services--ME,  Inc. and FrontierVision  Operating Partners, L.P.
                (1)
         10.17  Asset  Purchase   Agreement  dated  May  12,  1997  between  TCI
                Cablevision of Vermont, Inc., Westmarc Development Joint Venture
                and FrontierVision Operating Partners, L.P. (1)
         10.18  Amended Credit Facility.
         10.19  Asset  Purchase  Agreement  dated as of October 15, 1997 between
                Coxcom, Inc. and FrontierVision Operating Partners, L.P. (1)
         10.20  Asset Purchase Agreement dated as of June 24, 1998 between State
                Cable TV Corporation, Better Cable TV Company and FrontierVision
                Operating Partners, L.P.(4)
         12.1   Statement of Computation of Ratios.
         16.1   Report of change in accountants.  (3)
         27.1   Financial  Data Schedule as of and for the period ended December
                31, 1998.

         Footnote References
         (1)    Incorporated  by reference  to the exhibits to the  Registrant's
                Registration Statement on Form S-4, Registration No. 333-36519.
         (2)    Incorporated  by  reference  to the  exhibits to FVOP's and FVOP
                Capital's  Registration  Statement on Form S-1, Registration No.
                333-9535.
         (3)    Incorporated  by  reference  to the  exhibits to FVOP's and FVOP
                Capital's  Quarterly  Report on Form 10-Q, File No. 333-9535 for
                the quarter ended September 30, 1996.
         (4)    Incorporated  by  reference  to the  exhibit  to  FrontierVision
                Holdings, L.P.'s Current Report on Form 8-K, File No. 333-36519.

(B) Reports on Form 8-K.

         1.     Item 5,  Form 8-K  dated  February  22,  1999.  Filed to  report
                announcement  of Adelphia  Communications  agreement  to acquire
                FVP.
         2.     Item 7,  Form  8-K/A  dated  October  23,  1998 to  provide  the
                financial  information and pro forma  financial  information for
                acquisition of the State Systems.

(C) Exhibits. The exhibits required by this Item are listed under Item 14(A)(3).

(D) Financial Statement Schedules. The financial statement schedules required by
this Item are listed under Item 14(A)(2).


                                       43
<PAGE>


                    Supplemental Information To Be Furnished
                 With Reports Filed Pursuant To Section 15(D) Of
                 The Exchange Act By Registrant's Which Have Not
                 Registered Securities Pursuant To Section 12 Of
                                The Exchange Act


         Other than a copy of this Form 10-K, no annual report or proxy material
has been or will be sent to security holders of FrontierVision Holdings, L.P. or
FrontierVision Holdings Capital Corporation.


                                       44
<PAGE>

                                    Glossary

The following is a description of certain terms used in this Form 10-K.

Acquisition Cash Flow--Forecasted net income of an acquired system, for a period
believed to be appropriate  based on the facts and  circumstances  of a specific
acquisition,  calculated as of the date of  acquisition  of such system,  before
interest,  taxes,   depreciation,   amortization  and  corporate  administrative
expenses.  The Company believes that Acquisition Cash Flow is a measure commonly
used in the cable television  industry to analyze and compare the purchase price
of cable television systems.  However,  Acquisition Cash Flow is not intended to
be an  indicator  of  actual  operating  performance  and is not  determined  in
accordance with generally accepted accounting principles.

A La Carte--The purchase of programming services on a per-channel or per-program
basis.

Addressability--"Addressable"  technology permits the cable operator to activate
remotely the cable  television  services to be delivered to subscribers  who are
equipped with  addressable  converters.  With  addressable  technology,  a cable
operator can add to or reduce services provided to a subscriber from the headend
site without dispatching a service technician to the subscriber's home.

Basic  Penetration--Basic  subscribers  as a  percentage  of the total number of
homes passed in the system.

Basic  Service--A  package of  over-the-air  broadcast  stations,  local  access
channels and certain  satellite-delivered  cable television services (other than
premium services).

Basic  Subscriber--A  subscriber  to a cable  or other  television  distribution
system who  receives  the basic  level of cable  television  service  and who is
usually charged a flat monthly rate for a number of channels. A home with one or
more  television  sets  connected  to a cable  system  is  counted  as one basic
subscriber.

Cable  Plant--A  network of coaxial  and/or  fiber optic  cables  that  transmit
multiple channels carrying  video-programming,  sound and data between a central
facility and an individual customer's television set. Networks may allow one-way
(from a headend to a residence  and/or business) or two-way (from a headend to a
residence and/or business with a data return path to the headend) transmission.

Clustering--A  general term used to describe  the  strategy of  operating  cable
television  systems in a  specific  geographic  region,  thus  allowing  for the
achievement  of economies of scale and operating  efficiencies  in such areas as
system management, marketing and technical functions.

Coaxial  Plant--Cable  consisting  of a  central  conductor  surrounded  by  and
insulated  from  another  conductor.   It  is  the  standard  material  used  in
traditional  cable  systems.  Signals are  transmitted  through it at  different
frequencies,  giving greater channel capacity than is possible with twisted pair
copper wire, but less than is possible with optical fiber.

Competitive Access Provider (CAP)--A company that provides its customers with an
alternative to the local telephone  company for local transport of private line,
special access services and switched access services.  CAPs are also referred to
in   the   industry   as   alternative   access   vendors,   alternative   local
telecommunications  service  providers  (ALTS)  and  metropolitan  area  network
providers (MANs).

Cost-Of-Service--A  general  term  used to refer  to the  regulation  of  prices
charged to a customer. Existing prices are set and price increases are regulated
by allowing a company to earn a reasonable rate of return,  as determined by the
regulatory authority.

Density--A  general term used to describe the number of homes passed per mile of
cable plant.




                                       45
<PAGE>

Digital  Compression--The  conversion  of the standard  analog video signal into
digital signal, and the compression of that signal so as to facilitate  multiple
channel transmission through a single channel's bandwidth.

Digital  Programming  System--A  programming  distribution  system  under  which
multiple  channels of programming  are digitally  transmitted via satellite to a
cable  television  system's  headend  and then  retransmitted,  using  the cable
system's existing  distribution  platform,  to subscribers equipped with special
digital  converters.   One  such  example  is  the  Headend-in-the-Sky   digital
programming system ("HITS"). The use of the HITS system enables a cable operator
to transmit from 6 to 14 digital  channels using the same bandwidth as used by a
single analog  channel and,  thus,  has the potential to  dramatically  expand a
system's channel capacity.

Direct   Broadcast   Satellite   (DBS)--A   service   by   which   packages   of
satellite-delivered   television   programming  are  transmitted  directly  into
individual homes, each serviced by a single satellite dish.

Expanded  Basic  Service--A  package of  satellite-delivered  cable  programming
services  available  only for additional  subscription  over and above the basic
level of television service.

Fiber  Optics--Technology  that involves sending laser light pulses across glass
strands to transmit digital information; fiber is virtually immune to electrical
interference  and most  environmental  factors  that  affect  copper  wiring and
satellite  transmissions.  Use of fiber optic  technology  reduces  noise on the
cable system,  improves signal quality and increases system channel capacity and
reliability.

Fiber Optic Backbone  Cable--The  principal  fiber optic trunk lines for a cable
system which is using a hybrid fiber-coaxial  architecture to deliver signals to
customers.

Fiber Optic Trunk  Lines--Cables  made of glass fibers through which signals are
transmitted  as  pulses  of  light  to the  distribution  portion  of the  cable
television system which in turn goes to the customer's home. Capacity for a very
large number of channels can be more easily provided.

Fiber-To-The-Feeder--Network  topology/architecture using a combination of fiber
optic  cable  and  coaxial  cable  transmission  lines  to  deliver  signals  to
customers.  Initially  signals are  transmitted  from the headend on fiber optic
trunk lines into  neighborhood  nodes (an individual  point of  origination  and
termination  or  intersection  on the network,  usually  where  electronics  are
housed)  and then from the  nodes to the end user on a  combination  of  coaxial
cable  distribution/feeder  and drop lines.  The  coaxial  feeder and drop lines
typically represent the operator's "last mile" of plant to the end user.

Headend--A  collection of hardware,  typically  including  satellite  receivers,
modulators,  amplifiers  and video  cassette  playback  machines,  within  which
signals  are  processed  and then  combined  for  distribution  within the cable
network.

Homes Passed--Homes that can be connected to a cable distribution system without
further extension of the distribution network.

HFC--Hybrid  fiber  optic/coaxial  cable  design,  used  in a  cable  television
system's distribution plant.

Microwave  Links--The transmission of voice, video or data using microwave radio
frequencies, generally above 1 GHz, from one location to another.

MMDS--Multichannel Multipoint Distribution Service. A one-way radio transmission
of programming over microwave  frequencies from a fixed station  transmitting to
multiple receiving facilities located at fixed points.

New Product Tiers--A general term used to describe  unregulated cable television
services.



                                       46
<PAGE>

Over-The-Air  Broadcast  Stations--A  general  term  used  to  describe  signals
transmitted by local television broadcast stations, including network affiliates
or independent  television  stations,  that can be received directly through the
air by the use of a standard rooftop receiving antenna.

Pay-Per-View--Payment  made for individual movies, programs or events as opposed
to a monthly subscription for a whole channel or group of channels.

Premium  Penetration--Premium  service units as a percentage of the total number
of basic  service  subscribers.  A customer may  purchase  more than one premium
service, each of which is counted as a separate premium service unit. This ratio
may be greater  than 100% if the average  customer  subscribes  to more than one
premium service unit.

Premium  Service--An  individual cable  programming  service  available only for
additional  subscription  over and above the basic or expanded  basic  levels of
cable television service.

Premium  Units--The  number of  subscriptions to premium services which are paid
for on an individual basis.

Rebuild--The  replacement  or  upgrade  of an  existing  cable  system,  usually
undertaken  to improve  either its  technological  performance  or to expand the
system's channel or bandwidth capacity in order to provide more services.

SMATV--Satellite  Master Antenna Television System. A video programming delivery
system to multiple dwelling units utilizing satellite transmissions.

Tiers--Varying levels of cable services consisting of differing  combinations of
several  over-the-air   broadcast  and   satellite-delivered   cable  television
programming services.


                                       47
<PAGE>



                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
                                                                                                                        Page

FrontierVision Holdings, L.P. and Subsidiaries
<S>                                                                                                              <C>
   Independent Auditors' Report                                                                                F-2
   Consolidated Balance Sheets as of December 31, 1998 and 1997                                                F-3
   Consolidated Statements of Operations for the years ended December 31, 1998, 1997 and 1996                  F-4
   Consolidated Statements of Partners' Capital for the years ended December 31, 1998, 1997 and 1996           F-5
   Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996                  F-6
   Notes to Consolidated Financial Statements                                                                  F-7

FrontierVision Holdings Capital Corporation
   Independent Auditors' Report                                                                                F-19
   Balance Sheet as of December 31, 1997 and 1998                                                              F-20
   Note to the Financial Statements                                                                            F-21

Central Ohio Cluster (Selected Assets Acquired From Cox Communications, Inc. by FVOP)
   Independent  Auditor's  Report                                                                              F-22  
   Combined  Statements of Net Assets as of September 30, 1997 (unaudited) and December 31, 1996               F-23 
   Combined Statements of Income for the nine-month periods ended September 30, 1997 (unaudited) and
     September  30, 1996  (unaudited)  and for the year ended  December 31, 1996                               F-24 
   Combined  Statements of Changes in Net Assets for the nine-month  period ended September 30, 1997
     (unaudited)  and for  the  year  ended  December  31,  1996                                               F-25  
   Combined Statements of Cash Flows for the nine-month  periods ended September 30, 1997(unaudited)
     and September 30, 1996 (unaudited) and for the year ended December 31, 1996                               F-26
   Notes to Combined Financial Statements                                                                      F-27

State Cable TV Corporation and Subsidiary
   Independent Auditor's Report                                                                                F-34 
   Consolidated Balance Sheets as of September 30, 1998  (unaudited) and December 31, 1997                     F-35  
   Consolidated  Statements of Operations and Deficit for the nine months ended September 30, 1997 and
     1998 (unaudited) and the year ended December 31, 1997                                                     F-36
   Consolidated  Statements  of Cash  Flow  for the  nine  months  ended  September  30,  1997 and 1998
     (unaudited) and the year ended December 31, 1997                                                          F-37
   Notes to Consolidated Financial Statements                                                                  F-38

New England Cablevision of Massachusetts, Inc.
   Independent  Auditors'  Report                                                                              F-46  
   Balance  Sheets  as of March  31,  1998(unaudited),  December 31, 1997 and 1996                             F-47  
   Statements of Earnings for the three months ended March 31, 1998 and 1997 (unaudited) and the years
     ended   December  31,  1997  and  1996                                                                    F-49   
   Statements   of  Changes  in Stockholders' Equity for the three months ended March 31, 1998 (unaudited)
     and the years ended December 31, 1997 and 1996                                                            F-50
   Statements  of Cash Flows for the three  months  ended March 31, 1998 and 1997  (unaudited)  and the
     years ended December 31, 1997 and 1996                                                                    F-52
   Notes to  Financial Statements                                                                              F-54

</TABLE>


                                      F-1
<PAGE>




                          INDEPENDENT AUDITORS' REPORT



To the Partners of 
FrontierVision Holdings, L.P.:

We have audited the accompanying  consolidated  balance sheets of FrontierVision
Holdings,  L.P.  and  subsidiaries  as of December  31,  1998 and 1997,  and the
related consolidated statements of operations,  partners' capital and cash flows
for each of the years in the three year period ended  December  31, 1998.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of  FrontierVision
Holdings,  L. P. and  subsidiaries  as of December  31,  1998 and 1997,  and the
results  of their  operations  and their cash flows for each of the years in the
three year period ended December 31, 1998 in conformity with generally  accepted
accounting principles.







                                                                        KPMG LLP

Denver, Colorado
March 19, 1999





                                      F-2
<PAGE>

                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                  In Thousands



<TABLE>
                                                                            -------------------------------------
                                                                             December 31,          December 31,
                                                                                 1998                  1997
                                                                            ----------------       --------------

                                   ASSETS
<S>                                                                          <C>                    <C>         
  Cash and cash equivalents                                                  $      5,091           $      4,728
  Accounts receivable, net of allowance for doubtful accounts                
      of $666 and $767                                                             13,602                  8,071
  Other receivables                                                                   174                      -
  Prepaid expenses and other                                                        4,046                  2,785
  Investment in cable television systems, net:                                                      
      Property and equipment                                                      342,754                247,724
      Franchise cost and other intangible assets                                  820,524                637,725
                                                                             ------------           ------------
         Total investment in cable television systems, net                      1,163,278                885,449
                                                                             ------------           ------------
  Deferred financing costs, net                                                    24,080                 24,242
  Earnest money deposits                                                              150                  2,000
                                                                             ------------           ------------
         Total assets                                                        $  1,210,421           $    927,275
                                                                             ============           ============

                      LIABILITIES AND PARTNERS' CAPITAL
  Accounts payable                                                           $     18,233           $      2,770
  Accrued liabilities                                                              17,169                 15,126
  Subscriber prepayments and deposits                                               3,312                  1,828
  Accrued interest payable                                                          9,547                  5,064
  Deferred income taxes                                                            11,856                      -
  Debt                                                                          1,121,142                787,047
                                                                             ------------           ------------
       Total liabilities                                                        1,181,259                811,835
                                                                             ------------           ------------

  Partners' capital:
      FrontierVision Partners, L.P.                                                29,133                115,325
      FrontierVision Holdings, LLC                                                     29                    115
                                                                             ------------           ------------
         Total partners' capital                                                   29,162                115,440
  Commitments                                                                

                                                                             ------------           ------------
         Total liabilities and partners' capital                             $  1,210,421           $    927,275
                                                                             ============           ============
</TABLE>








          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>


                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                  In Thousands



<TABLE>

                                                -------------------------------------------------------------------
                                                For the Year Ended     For the Year Ended     For the Year Ended
                                                     December 31,           December 31,           December 31,
                                                        1998                   1997                   1996
                                                ---------------------- ---------------------- ---------------------

<S>                                                 <C>                      <C>                      <C>      
Revenue                                             $ 245,134                $ 145,126                $  76,464
Expenses:
    Operating expenses                                123,296                   74,314                   39,181
    Corporate administrative expenses                   6,965                    4,418                    2,930
    Depreciation and amortization                     114,155                   65,502                   35,724
    Storm costs                                           522                     --                       --
                                                    ---------                ---------                ---------
        Total expenses                                244,938                  144,234                   77,835
                                                    ---------                ---------                ---------
Operating income/(loss)                                   196                      892                   (1,371)
Interest expense, net                                 (88,875)                 (48,005)                 (22,422)
Other expense                                            (526)                     (57)                      (8)
                                                    ---------                ---------                ---------
Loss before income tax benefit and
   extraordinary item                                 (89,205)                 (47,170)                 (23,801)
Income tax benefit                                      2,927                        -                        -
                                                    ---------                ---------                ---------
Loss before extraordinary item                        (86,278)                 (47,170)                 (23,801)
Extraordinary item - Loss on early
   retirement of debt                                       -                   (5,046)                       -
                                                    ---------                ---------                ---------
Net loss                                            $ (86,278)               $ (52,216)               $ (23,801)
                                                    =========                =========                =========
                                                                                                        
Net loss allocated to:
FrontierVision Partners, L.P. 
     (General Partner)                              $ (86,192)               $ (52,164)               $ (23,776)
FrontierVision Holdings, LLC
     (Limited Partner)                                    (86)                     (52)                     (25)
                                                    ---------                ---------                ---------
                                                    $ (86,278)               $ (52,216)               $ (23,801)
                                                    =========                =========                =========

</TABLE>













          See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>


                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
                                  In Thousands



<TABLE>

                                   ------------------------------------------------------------
                                     FrontierVision       FrontierVision
                                       Partners, L.P.       Holdings, LLC
                                     (General Partner)   (Limited Partner)            Total
                                     -----------------   -----------------            -----
<S>                                     <C>                   <C>                   <C>      
Balance, December 31, 1995              $  46,361             $      46             $  46,407
       Capital contributions              107,289                   108               107,397
       Net loss                           (23,776)                  (25)              (23,801)
                                        ---------             ---------             ---------
Balance, December 31, 1996                129,874                   129               130,003
       Capital contributions               37,615                    38                37,653
       Net loss                           (52,164)                  (52)              (52,216)
                                        ---------             ---------             ---------
Balance, December 31, 1997                115,325                   115               115,440
       Net loss                           (86,192)                  (86)              (86,278)
                                        ---------             ---------             ---------
Balance, December 31, 1998              $  29,133             $      29             $  29,162
                                        =========             =========             =========

</TABLE>





























          See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>


                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  In Thousands
<TABLE>

                                                             ----------------------------------------------------
                                                               For the Year       For the Year     For the Year
                                                                  Ended              Ended             Ended
                                                               December 31,       December 31,     December 31,
                                                                   1998               1997             1996
                                                             -----------------  -----------------  --------------
Cash Flows From Operating Activities:
<S>                                                               <C>               <C>               <C>       
      Net loss                                                      $ (86,278)     $ (52,216)     $ (23,801)
       Adjustments to reconcile net loss to net
          cash flows from operating activities:
          Extraordinary item - Loss on early retirement of debt             -          5,046              -
          Depreciation and amortization                               114,155         65,502         35,724
          Gain on swap of assets                                       (2,362)             -              -
          Deferred tax benefit                                         (2,927)             -              -
          Amortization of deferred debt issuance costs                  2,965          1,825            999
          Accretion of interest on indebtedness                        19,485          5,768            924
          Changes in operating assets and liabilities, net of
              effect of acquisitions:
              Accounts receivable                                      (3,480)          (582)        (1,946)
              Receivable from seller                                        -            846          1,377
              Prepaid  expenses and other                                (870)          (249)        (1,266)
              Accounts  payable and accrued liabilities                15,698          3,152          3,423
              Subscriber prepayments and deposits                       1,086         (1,523)        (2,393)
              Accrued interest payable                                  4,483         (1,226)         5,870
                                                                    ---------      ---------      ---------
                  Total adjustments                                   148,233         78,559         42,712
                                                                    ---------      ---------      ---------
                  Net cash flows from operating activities             61,955         26,343         18,911
                                                                    ---------      ---------      ---------
Cash Flows From Investing Activities:
      Capital expenditures                                            (65,570)       (32,738)        (9,304)
      Pending acquisition costs                                           (22)          (146)             -
      Cash paid for franchise costs                                       (12)          (406)        (2,009)
      Earnest money deposits                                             (200)        (2,000)          (500)
      Proceeds from disposition of cable television systems                 -              -         15,065
      Cash paid in acquisitions of cable television systems          (307,595)      (392,631)      (421,467)
                                                                    ---------      ---------      ---------
                   Net cash flows from investing activities          (373,399)      (427,921)      (418,215)
                                                                    ---------      ---------      ---------
Cash Flows From Financing Activities:
      Debt borrowings                                                 316,485        523,000        137,700
      Payments on debt borrowings                                     (76,875)      (289,845)       (33,600)
      Proceeds of issuance of Senior Subordinated Notes                     -              -        200,000
      Proceeds of issuance of Senior Discount Notes                    75,000        150,000              -
      Principal payments on capital lease obligations                       -            (70)           (16)
      Increase in deferred financing fees                                (395)       (11,357)        (3,771)
      Offering costs related to Senior Subordinated Notes                   -           (129)        (7,417)
      Offering costs related to Senior Discount Notes                  (2,408)        (6,585)             -
      Partner capital contributions                                         -         37,653        107,397
                                                                    ---------      ---------      ---------
                 Net cash flows from financing  activities            311,807        402,667        400,293
                                                                    ---------      ---------      ---------
Net Increase in Cash and Cash Equivalents                                 363          1,089            989
Cash and Cash Equivalents, at beginning of period                       4,728          3,639          2,650
                                                                    ---------      ---------      ---------
Cash and Cash Equivalents, end of period                            $   5,091      $   4,728      $   3,639
                                                                    =========      =========      =========

Supplemental Disclosure of Cash Flow Information:
      Cash paid for interest                                        $  62,789      $  42,226      $  15,195
                                                                    =========      =========      =========

</TABLE>



          See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>


                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              Amounts In Thousands

(1)  THE COMPANY

Organization and Capitalization

FrontierVision  Holdings,  L.P.  ("Holdings" or the "Company"),  wholly-owned by
FrontierVision  Partners,  L.P., a Delaware limited  partnership  ("FVP"),  is a
Delaware  limited  partnership  formed on  September  3, 1997 for the purpose of
acting as co-issuer with its wholly-owned  subsidiary,  FrontierVision  Holdings
Capital Corporation ("Holdings Capital"), of $237,650 aggregate principal amount
at maturity of 11 7/8% Senior  Discount Notes due 2007 (the  "Discount  Notes").
FVP  contributed  to  Holdings,  both  directly  and  indirectly,   all  of  the
outstanding  partnership  interests of FrontierVision  Operating Partners,  L.P.
("FVOP")  prior to the issuance of the Discount Notes on September 19, 1997 (the
"Formation  Transaction") and, as a result FVOP and its wholly-owned subsidiary,
FrontierVision Capital Corporation ("Capital"),  are wholly-owned,  consolidated
subsidiaries  of  Holdings.  The  Formation  Transaction  was  accounted  for at
predecessor cost. As used herein, the "Company" collectively refers to Holdings,
Holdings Capital,  FrontierVision  Operating Partners,  Inc. ("FVOP Inc."), FVOP
and Capital.

On December  2, 1998,  Holding  along with  FrontierVision  Holdings  Capital II
Corporation  ("Holdings  Capital II"),  co-issued  $91,298  aggregate  principal
amount at maturity of Discount  Notes,  Series B. Net proceeds from the issuance
were contributed to FVOP as a capital contribution.

The  Company  owns and  operates  cable  television  systems  in  three  primary
operating  clusters - New England,  Ohio and  Kentucky - with a fourth,  smaller
group of cable television systems in the Southeast.

FVOP was initially  capitalized in November 1995 with approximately $38 from its
sole limited  partner,  FVOP Inc.,  a Delaware  corporation,  and  approximately
$38,300 from at the time its sole general  partner,  FVP.  During the year ended
December 31, 1997, the Company  received  additional  capital  contributions  of
approximately  $37,653 from its  partners.  These  capital  contributions  and a
portion  of the  proceeds  from  the  Discount  Notes  was used by FVOP to repay
certain bank indebtedness with the remainder placed in escrow to finance pending
acquisitions.

Allocation of Profits, Losses and Distributions

Generally,  Holdings'  Partnership  agreement provides that profits,  losses and
distributions  will be allocated to the general  partner and the limited partner
pro rata based on capital contributions.


(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of Holdings and those
of its wholly-owned  subsidiaries,  Holdings Capital,  FVOP Inc., FVOP, Capital,
FrontierVision  New England  Cable,  Inc.  ("New  England"),  New England  Cable
Television of Massachusetts,  Inc. ("NECMA") and FrontierVision Access Partners,
LLC ("Access"). All significant intercompany accounts and transactions have been
eliminated in consolidation.


                                      F-7
<PAGE>

                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              Amounts In Thousands

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash and Cash Equivalents

For  purposes of the  financial  statements,  the Company  considers  all highly
liquid  investments with original  maturities of three months or less to be cash
equivalents.

Property and Equipment

Property  and  equipment   are  stated  at  cost  and  include  the   following:
distribution   facilities,   support   equipment  and  leasehold   improvements.
Replacements,  renewals and  improvements  are capitalized and costs for repairs
and  maintenance are charged to expense when incurred.  The Company  capitalized
direct labor and overhead related to installation  and construction  activities.
Depreciation  is computed on a  straight-line  basis using an average  estimated
useful life of 8 years.

Franchise Costs, Covenants not to Compete, Subscriber Lists and Goodwill

Franchise costs, covenants not to compete,  subscriber lists and goodwill result
from  the   application  of  the  purchase  method  of  accounting  to  business
combinations.  Such  amounts are  amortized  on a  straight-line  basis over the
following  periods:  15 years for franchise  costs (which reflects the Company's
ability to renew existing  franchise  agreements),  5 years for covenants not to
compete, 7 years for subscriber lists and 15 years for goodwill.

Impairment of Long-lived Assets

The Company periodically reviews the carrying amount of its property,  plant and
equipment  and its  intangible  assets to determine  whether  current  events or
circumstances  warrant  adjustments to such carrying  amounts.  If an impairment
adjustment  is deemed  necessary,  such loss is  measured by the amount that the
carrying value of such assets exceeds their fair value.  Considerable management
judgment is necessary to estimate the fair value of assets, accordingly,  actual
results could vary significantly from such estimates.

Deferred Financing Costs and Deferred Bond Issue Costs

Deferred financing costs and deferred bond issue costs are being amortized using
the straight  line method over the life of the loans and the bonds.  Accumulated
amortization at December 31, 1998 and 1997 is $4,236 and $1,246, respectively.

Revenue Recognition

Revenue is recognized  in the period in which the related  services are provided
to the  subscribers.  Installation  revenue is  recognized  in the  period  that
installation  services are provided to the extent of direct selling  costs.  Any
remaining  amount is deferred and recognized  over the estimated  average period
that customers are expected to remain connected to the cable television system.

Derivative Financial Instruments

The Company  manages risk arising from  fluctuations  in interest rates by using
interest  rate swap  agreements,  as  required by its credit  agreements.  These
agreements are treated as off-balance sheet financial instruments.  The interest
rate swap agreements are being accounted for as a hedge of the debt  obligation,
and  accordingly,  the net  settlement  amount is recorded as an  adjustment  to
interest expense in the period incurred.


                                      F-8
<PAGE>

                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              Amounts In Thousands

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes

The Company and its direct and  indirect  subsidiaries,  except for New England,
NECMA, Main Security  Surveillance,  Inc., FVOP Inc., Capital,  Holdings Capital
and Holdings Capital II, are limited partnerships or limited liability companies
and  pay  no  income  taxes  as  entities.  All of the  income,  gains,  losses,
deductions  and  credits  of the  Company  are passed  through to its  partners.
Nominal taxes are assessed by certain state and local  jurisdictions.  The basis
in the Company's assets and liabilities  differs for financial and tax reporting
purposes.  At December  31,  1998,  the book basis of the  Company's  net assets
exceeded its tax basis by $43.7 million.

New England,  NECMA, Main Security Surveillance,  FVOP, Inc., Capital,  Holdings
Capital and Holdings Capital II, are corporations and are subject to federal and
state  income  taxes  which have not been  significant.  Deferred  taxes  relate
principally to the difference between book and tax basis of the cable television
assets  owned by NECMA,  partially  offset  by the tax  effect  of  related  net
operating loss carryforwards.

New Accounting Standard

The Financial  Accounting Standards Board recently issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities,"  ("SFAS 133"),  which is effective  for all fiscal years  beginning
after June 15, 1999. SFAS 133 establishes accounting and reporting standards for
derivative  instruments and hedging  activities by requiring that all derivative
instruments  be reported  as assets or  liabilities  and  measured at their fair
values. Under SFAS 133, changes in the fair values of derivative instruments are
recognized immediately in earnings unless those instruments qualify as hedges of
the (1) fair values of existing assets,  liabilities,  or firm commitments,  (2)
variability of cash flows of forecasted  transactions,  or (3) foreign  currency
exposures of net investments in foreign  operations.  Although management of the
Company  has not  completed  its  assessment  of the  impact  of SFAS 133 on its
consolidated results of operations and financial position,  management estimates
that the impact of SFAS 133 will not be material.

Reclassification

Certain amounts have been reclassified for comparability.


(3)  STORM RELATED COSTS

During  mid-January of 1998, certain of the communities served by the Company in
Maine experienced  devastating ice storms. For the year ended December 31, 1998,
the Company has  recognized a loss due to service  outages and  increased  labor
costs of approximately $522 due to the ice storms. Additionally, the Company has
incurred   approximately  $540  of  capital   expenditures  to  replace  damaged
subscriber  drops.  The Company  received  $183  subsequent to December 31, 1998
related to a claim on its business interruption insurance for the storm damage.




                                      F-9
<PAGE>


                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              Amounts In Thousands

(4)  INVESTMENT IN CABLE TELEVISION SYSTEMS

The  Company's  investment  in cable  television  systems  is  comprised  of the
following:

<TABLE>
                                                                    --------------------------------------
                                                                       December 31,         December 31,
                                                                           1998                 1997
                                                                    -----------------    -----------------

<S>                                                                     <C>                 <C>        
         Property and equipment                                         $   435,531         $   297,229
         Less--accumulated depreciation                                     (92,777)            (49,505)
                                                                        -----------         -----------
                Property and equipment, net                                 342,754             247,724
                                                                        -----------         -----------
         Franchise costs                                                    717,614             523,096
         Covenants not to compete                                            16,856              14,983
         Subscriber lists                                                   146,411             106,270
         Goodwill                                                            53,937              44,702
                                                                        -----------         -----------
                                                                            934,818             689,051
         Less--accumulated amortization                                    (114,294)            (51,326)
                                                                        -----------         -----------
                Franchise costs and other intangible assets, net            820,524             637,725
                                                                        -----------         -----------
         Total investment in cable television systems, net              $ 1,163,278         $   885,449
                                                                        ===========         ===========
</TABLE>

(5)  ACQUISITIONS AND DISPOSITIONS

Acquisitions

The Company has  completed  several  acquisitions  since its  inception  through
December 31, 1998.  All of the  acquisitions  have been  accounted for using the
purchase  method of accounting,  and,  accordingly,  the purchase price has been
allocated  to the  assets  acquired  and  liabilities  assumed  based  upon  the
estimated fair values at the respective  dates of acquisition.  Such allocations
are subject to  adjustments  as final  appraisal  information is received by the
Company.  Amounts  allocated to property and equipment and to intangible  assets
will be respectively  depreciated and amortized,  prospectively from the date of
acquisition  based upon remaining  useful lives and  amortization  periods.  The
following table lists the  acquisitions  and the purchase price for transactions
occurring in the most recent two years.
<TABLE>

--------------------------------------------------------------------------------------------------------------------------------
                   Predecessor Owner                      Primary Location of Systems     Date Acquired     Acquisition Cost (a)
                   -----------------                      ---------------------------     -------------     --------------------   
<S>                                                                 <C>                   <C>                       <C>    
Bluegrass Cable Partners, L.P.                                      Kentucky              March 20, 1997            $10,400
Clear Cable T.V., Inc. and B&G Cable T.V. Systems, Inc.             Kentucky              March 31, 1997             $1,800
Milestone Communications of New York, L.P.                            Ohio                March 31, 1997             $3,000
Triax Associates I, L.P. ("Triax I")                                  Ohio                 May 30, 1997             $34,800
Phoenix Front Row Cablevision                                         Ohio                 May 30, 1997              $6,900
PCI Incorporated                                                    Michigan             August 29, 1997            $13,600
SRW, Inc.'s Blue Ridge Cable Systems, L.P.                Tennessee and North Carolina  September 3, 1997            $4,100
A-R Cable Services - ME, Inc. ("Cablevision")                        Maine               October 31, 1997           $78,600
Harold's Home Furnishings, Inc.                            Pennsylvania and Maryland     October 31, 1997            $1,600
TCI Cablevision of Vermont, Inc. and Westmarc Development   
    Joint Venture ("TCI-VT/NH")                             Vermont and New Hampshire    December 2, 1997           $34,800
Cox Communications, Inc.("Cox-Central Ohio")                         Ohio               December 19, 1997          $204,100
TVC-Sumpter Limited Partnership and North Oakland Cablevision       
    Partners Limited Partnership                                   Michigan               March 6, 1998             $14,400
TCI Cablevision of Ohio, Inc.                                         Ohio                April 1, 1998             $10,000
New England Cablevision of Massachusetts, Inc. ("NECMA")         Massachusetts            April 3, 1998             $44,900
Ohio Cablevision Network, Inc. ("TCI-Bryan")                          Ohio                July 31, 1998             $37,400
Unity Cable Television, Inc.                                         Maine              September 30, 1998             $800*
Appalachian Cablevision of Ohio                                       Ohio              September 1, 1998              $300
State Cable TV Corporation ("State")                          Maine, New Hampshire       October 23, 1998          $190,200*
Paint Valley Cable                                                    Ohio               October 30, 1998            $1,900*
CASCO                                                                Maine              November 30, 1998            $3,200*
---------------
</TABLE>


                                      F-10
<PAGE>


                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              Amounts In Thousands

(5)  ACQUISITIONS AND DISPOSITIONS (continued)

(a) Acquisition cost represents the purchase price  allocation  between tangible
and intangible  assets including certain purchase  accounting  adjustments as of
December 31, 1998.
*     Subject to adjustment.

The combined purchase price of certain of these  acquisitions has been allocated
to the acquired assets and liabilities as follows:
<TABLE>
                                             ---------------------------------------------------
                                                    1998             1997            1996
                                             Acquisitions(a)   Acquisitions(a)   Acquisitions(a)
                                             ---------------   ---------------   ---------------
<S>                                              <C>             <C>             <C>      
Property and equipment                           $  79,526       $  48,805       $ 169,240
Franchise costs and other intangible assets        244,492         344,490         268,836
                                                 ---------       ---------       ---------
     Subtotal                                      324,018         393,295         438,076
                                                 ---------       ---------       ---------
Net working capital (deficit)                          410            (164)         (7,107)
Deferred income taxes                              (14,783)              -               -
Less - Earnest money deposits applied               (2,050)           (500)         (9,502)
                                                 ---------       ---------       ---------
     Total cash paid for acquisitions            $ 307,595       $ 392,631       $ 421,467
                                                 =========       =========       =========
</TABLE>

------------
(a) The combined  purchase price includes certain purchase price adjustments for
acquisitions consummated prior to the respective periods.

The Company has reported the  operating  results of its acquired  cable  systems
from the dates of their respective  acquisition.  Unaudited pro forma summarized
operating results of the Company, assuming the Triax I, Cablevision,  TCI-VT/NH,
Cox-Central   Ohio,   NECMA,   TCI-Bryan  and  State  Cable   acquisitions  (the
"Acquisitions") had been consummated on January 1, 1997, are as follows:

<TABLE>
                                                          -------------------------------------------------
                                                                    Year Ended December 31, 1998
                                                          -------------------------------------------------
                                                            Historical                      Pro Forma
                                                             Results      Acquisitions       Results
                                                          ------------  ----------------    ---------------
<S>                                                        <C>            <C>               <C>      
Revenue                                                    $ 245,134      $  31,842         $ 276,976
Operating, selling, general and administrative expenses     (130,783)       (20,245)         (151,028)
Depreciation and amortization                               (114,155)       (15,546)         (129,701)
                                                           ---------      ---------         ---------
Operating income (loss)                                          196         (3,949)           (3,753)
Interest and other expenses                                  (86,474)       (20,624)         (107,098)
                                                           ---------      ---------         ---------
Net loss                                                   $ (86,278)     $ (24,573)        $(110,851)
                                                           =========      =========         =========

                                                          -------------------------------------------------
                                                                    Year Ended December 31, 1997
                                                          -------------------------------------------------
                                                            Historical                      Pro Forma
                                                             Results      Acquisitions       Results
                                                          ------------  ----------------    ---------------
<S>                                                        <C>            <C>               <C>      
Revenue                                                    $ 145,126      $ 105,533         $ 250,659
Operating, selling, general and administrative expenses      (78,732)       (56,312)         (135,044)
Depreciation and amortization                                (65,502)       (47,543)         (113,045)
                                                           ---------      ---------         ---------
Operating income                                                 892          1,678             2,570
Interest and other expenses                                  (53,108)       (47,237)         (100,345)
                                                           ---------      ---------         ---------
Net loss                                                   $ (52,216)     $ (45,559)        $ (97,775)
                                                           =========      =========         =========
</TABLE>

The pro  forma  financial  information  presented  above has been  prepared  for
comparative purposes only and does not purport to be indicative of the operating
results which actually would have resulted had the Acquisitions been consummated
on the dates indicated.  Furthermore,  the above pro forma financial information
does not include the effect of certain  acquisitions  and  dispositions of cable
systems  because  these  transactions  were not  material  on an  individual  or
aggregate basis.


                                      F-11
<PAGE>


                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              Amounts In Thousands

(5)  ACQUISITIONS AND DISPOSITIONS (continued)

Dispositions

The Company has completed two dispositions  from its inception  through December
1996.

On July 24, 1996,  the Company  sold  certain  cable  television  system  assets
located primarily in Chatsworth, Georgia to an affiliate of Helicon Partners for
an aggregate sales price of approximately $7,900.

On September 30, 1996, the Company sold certain cable  television  system assets
located in Virginia to  Shenandoah  Cable  Television  Company,  an affiliate of
Shenandoah  Telephone  Company,  for an aggregate  sales price of  approximately
$7,100.

On January 7, 1999,  the Company sold certain  cable  television  system  assets
located in the  Southeast  region to Helicon  Partners  I, LP, for an  aggregate
sales price of approximately $5,220.


(6)  DEBT

The Company's debt was comprised of the following:
<TABLE>

                                                                                      -------------------------------
                                                                                      December 31,     December 31,
                                                                                          1998             1997
                                                                                          ----             ----
       Bank Credit Facility (a) --
        Revolving Credit Facility, interest based on various floating rate options
<S>                                                                                   <C>              <C>        
          (7.25% average at December 31, 1998), payable monthly                        $    172,000     $         -
         Term loans, interest based on various floating libor rate options            
            (7.46% and 8.33% weighted average at December 31, 1998 and 1997,
            respectively), payable monthly                                                  498,125         432,000
       11% Senior Subordinated Notes due 2006 (b)                                           200,000         200,000
       11 7/8% Senior Discount Notes due 2007 (c)                                           249,532         155,047
       Capital leases                                                                         1,485               -
                                                                                       ------------    ------------
            Total debt                                                                 $  1,121,142     $   787,047
                                                                                       ============     ===========
</TABLE>

(a)    Bank Credit Facility.

       On December  19,  1997,  the Company  entered  into a Second  Amended and
       Restated Credit Agreement (the "Amended Credit Facility")  increasing the
       available  senior debt by $535.0  million,  for a total  availability  of
       $800.0  million.  The amount  available under the Amended Credit Facility
       includes two term loans of $250.0  million  each  ("Facility A Term Loan"
       and  "Facility  B Term  Loan")  and a  $300.0  million  revolving  credit
       facility ("Revolving Credit Facility").  The Facility A Term Loan and the
       Revolving  Credit  Facility both mature on September 30, 2005. The entire
       outstanding  principal  amount of the Revolving Credit Facility is due on
       September  30, 2005,  with  escalating  principal  payments due quarterly
       beginning  December 31, 1998 under the Facility A Term Loan. The Facility
       B Term Loan matures March 31, 2006 with 95% of the principal being repaid
       in the last two quarters of the term of the facility.

       Under the terms of the Amended Credit Facility,  with certain exceptions,
       the  Company  has a  mandatory  prepayment  obligation  upon a change  of
       control of the Company and the sale of any of its operating systems. This
       obligation may be waived with the consent of the majority of the lenders.
       Further, beginning with the year ending December 31, 2001, the Company is
       required to make  prepayments  equal to 50% of its excess  cash flow,  as
       defined in the Amended Credit Facility. The 



                                      F-12
<PAGE>


                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              Amounts In Thousands

(6)  DEBT (continued)

       Company  also  payscommitment  fees ranging from 1/2% - 3/8% per annum on
       the average  unborrowed  portion of the total amount  available under the
       Amended Credit Facility.

       The  Amended  Credit  Facility  also  requires  the  Company to  maintain
       compliance with various financial  covenants  including,  but not limited
       to,  covenants  relating to total  indebtedness,  debt  ratios,  interest
       coverage ratio and fixed charges ratio.  In addition,  the Amended Credit
       Facility has  restrictions on certain  partnership  distributions  by the
       Company.  

       All  partnership  interests  in the Company and all assets of the Company
       and its  subsidiaries  are pledged as collateral  for the Amended  Credit
       Facility.

(b)    Senior Subordinated Notes

       On October 7, 1996,  the Company  issued,  pursuant to a public  offering
       (the "Offering"),  $200,000 aggregate  principal amount of the Notes. Net
       proceeds  from the  Offering of  $192,500,  after costs of  approximately
       $7,500, were available to the Company on October 7, 1996.

       In connection  with the  anticipated  issuance of the Notes in connection
       with the  Offering,  the Company  entered  into  deferred  interest  rate
       setting  agreements  to reduce the  Company's  interest  rate exposure in
       anticipation of issuing the Notes. The cost of such agreements, amounting
       to $1,390,  are  recognized  as a component of interest  expense over the
       term of the Notes.

       The  Notes  are  unsecured   subordinated   obligations  of  the  Company
       (co-issued by Capital) that mature on October 15, 2006.  Interest accrues
       at 11% per annum beginning from the date of issuance, and is payable each
       April 15 and October 15, commencing April 15, 1997.

       The   Subordinated   Notes  Indenture  (the   "Indenture")   has  certain
       restrictions on incurrence of indebtedness, distributions, mergers, asset
       sales and changes in control of the Company.

J.P.  Morgan  Investment  Corporation  and First Union  Capital  Partners,  Inc.
("Equity  Holders") are affiliates of the Company,  owning in the  aggregate,  a
37.6% limited  partnership  interest in FVP.  Affiliates  of the Equity  Holders
received  underwriting fees of approximately $3.6 million in connection with the
issuance of the Notes.

(c)    Senior Discount Notes

         On September 19, 1997, Holdings issued, pursuant to a private offering,
         the Discount Notes. The Discount Notes were sold at approximately 63.1%
         of the stated principal amount at maturity and provided net proceeds of
         $144,750, after underwriting fees of approximately $5,250.

         On December 2, 1998,  Holdings issued,  pursuant to a private offering,
         the  Discount  Notes,  Series  B. The  Discount  Notes  were sold at at
         approximately  82.149% of the stated  principal  amount at maturity and
         provided  net  proceeds  of  $72,750,   after   underwriting   fees  of
         approximately $2,250.

         The Discount  Notes are unsecured  obligations of Holdings and Holdings
         Capital (collectively,  the "Issuers"),  ranking pari passu in right of
         payment  to all  existing  and  future  unsecured  indebtedness  of the
         Issuers and will mature on  September  15,  2007.  The  discount on the
         Discount  Notes is being  accreted  using  the  interest  method  until
         September 15, 2001,  the date at which cash interest  begins to accrue.
         Cash  interest  will  accrue at a rate of 11 7/8% per annum and will be
         payable each March 15 and September 15, commencing March 15, 2002.

                                      F-13
<PAGE>

                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              Amounts In Thousands

(6)  DEBT (continued)

         The Discount  Notes are  redeemable  at the option of the  Issuers,  in
         whole  or in  part,  at any time on or after  September  15,  2001,  at
         redemption  prices set forth in the  Indenture  for the Discount  Notes
         (the "Discount Notes Indenture"),  plus any unpaid interest, if any, at
         the date of the redemption.  The Issuers may redeem, prior to September
         15, 2001, up to 35% of the principal amount at maturity of the Discount
         Notes  with  the net cash  proceeds  received  from one or more  public
         equity offerings or strategic equity investments at a redemption prices
         set forth in the Discount Notes Indenture, plus any unpaid interest, if
         any, at the date of the redemption.

         The Discount Notes Indenture has certain  restrictions on incurrence of
         indebtedness,  distributions,  mergers,  asset  sales  and  changes  in
         control of Holdings.

J.P.  Morgan  Investment  Corporation  and First Union  Capital  Partners,  Inc.
("Equity  Holders") are affiliates of the Company,  owning in the  aggregate,  a
37.6% limited  partnership  interest in FVP.  Affiliates  of the Equity  Holders
received  underwriting fees of approximately $3.6 million in connection with the
issuance  of  the  Notes  and  received   compensation   in  the   aggregate  of
approximately  $3.1  million in  connection  with the  issuance of the  Discount
Notes.

(d)      Interest Rate Protection Agreements

         In order to  convert  effectively  certain of the  interest  payable at
         variable rates under the Amended  Credit  Facility to interest at fixed
         rates,  the Company has entered into interest rate swap  agreements for
         notional amounts totaling  $187,500,  and maturing between November 15,
         1999 and October 7, 2001.  According to these  agreements,  the Company
         pays or receives the  difference  between (1) an average  fixed rate of
         5.84% and (2) a floating  rate of the three month libor  applied to the
         same $187,500 notional amount every three months during the term of the
         interest rate swap agreement.  On April 7, 1998, the Company terminated
         one of its  interest  rate swap  agreements  for a  notional  amount of
         $82,500  and  entered  into a new  interest  rate  swap  agreement  for
         $100,000.There was no termination fee associated with this transaction.

         On April 8, 1998, the Company  entered into a collar interest rate swap
         agreement  ("Collar  Agreement")  for a  notional  amount of  $100,000,
         maturing  on  January  8,  2001.  The  Collar  Agreement  provides  for
         different exchanges between the Company and the counterparty  depending
         on the level of the floating  three month LIBOR rate (5.32% at December
         31, 1998).  Such exchanges  occur every three months during the term of
         the Collar Agreement. The different exchanges are as follows:

        (1)  When LIBOR is below 5.05%, the Company pays to the counterparty the
             difference  between  the  fixed rate of 5.65%  and  the LIBOR rate,
             applied to the $100,000 notional amount; 
        (2)  When  LIBOR is between 5.65% and 6.65%,  the Company  receives from
             the counterparty the difference between the fixed rate of 5.65% and
             LIBOR rate, applied to the $100,000 notional amount;
        (3)  When  LIBOR is in  excess of 6.65% or  between 5.65% and 5.05%, the
             Collar Agreement has no financial effect.

         On October 3, 1997, in order to convert certain of the interest payable
         at  variable  rates under  indebtedness,  the  Company  entered  into a
         forward  interest rate swap  agreement.  This  commenced on October 15,
         1998, for a notional amount totaling $150,000,  maturing on October 15,
         2001. According to this agreement,  the Company will pay or receive the
         difference  between (1) a fixed rate of 6.115% and (2) a floating  rate
         based on three month libor applied to the same $150,000 notional amount
         every three months during the term of the interest rate swap agreement.

                                      F-14
<PAGE>

                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              Amounts In Thousands

(6)  DEBT (continued)

         For the years  ended  December  31,  1998 and  1997,  the  Company  had
         recognized an increase in interest  expense of  approximately  $585 and
         $312, respectively, as a result of the interest rate swap agreements.

         Information  concerning  the  Company's  interest  rate  agreements  at
         December 31, 1998 is as follows:

<TABLE>
                                                                                                 Amount to be
                                            Interest rate                Notional                  paid upon
           Expiration date                 to be received                 amount                termination (i)
           ---------------                 --------------                 ------                ---------------
         <S>                                   <C>                    <C>                        <C>          
         November 15, 1999                     5.912%                 $     65,000               $       472.5
         November 15, 1999                     5.188%                       22,500                        12.1
         January 8, 2001                       5.650%                      100,000                     1,215.3
         October 7, 2001                       5.940%                      100,000                     2,731.9
         October 15, 2001                      6.115%                      150,000                     4,340.7
                                                                      ------------               -------------
                                                                      $    437,500               $     8,772.5
                                                                      ============               =============

</TABLE>
         (i)      The  estimated  amount that the Company would pay to terminate
                  the  agreements  on December 31, 1998.  This amount takes into
                  consideration    current    interest   rates,    the   current
                  creditworthiness of the counterparties and represents the fair
                  value of the interest rate agreements.

The debt of the Company, excluding future accretion, matures as follows:

               Year Ended December 31 --
               -------------------------
               1999                           $       11,144
               2000                                   24,575
               2001                                   34,575
               2002                                   44,575
               2003                                   55,825
               Thereafter                            950,448
                                              --------------
                                              $    1,121,142
                                              ==============

(7)  GUARANTOR SUBSIDIARIES

The  Indenture  for the  Discount  Notes has been amended to add New England and
NECMA as  guarantors  ("Guarantor  Subsidiaries")  of the  Discount  Notes.  The
guaranty  is  full  and  unconditional.  Separate  financial  statements  of the
Guarantor  Subsidiaries are not presented because management  believes that they
are not material to investors.

Following is condensed consolidating financial information for the Company:



                                      F-15
<PAGE>



                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              Amounts In Thousands

(7)  GUARANTOR SUBSIDIARIES (continued)

                      Balance Sheet as of December 31, 1998
<TABLE>

                                        --------------------------------------------------------------------------------------------
                                                                                         Non-Guarantor
                                                                           Guarantor     Subsidiaries    Consolidating  Consolidated
                                           Holdings           FVOP       Subsidiaries                       Entries        Holdings
                                        ---------------- --------------- --------------  --------------  --------------  -----------

<S>                                      <C>              <C>               <C>            <C>            <C>             <C>       
Cash                                     $      200      $    4,249     $      559      $       83      $        -      $    5,091
Receivables                                       -          18,330            287             288          (5,129)         13,776
Prepaid expenses                                  -           3,929            115               2               -           4,046
Investment in cable
    Television systems                            -       1,137,025         56,574           4,679         (35,000)      1,163,278
Other assets                                277,570          24,460              -             269        (278,069)         24,230
                                         ----------      ----------     ----------      ----------      ----------      ----------
    Total assets                         $  277,770      $1,187,993     $   57,535      $    5,321      $ (318,198)     $1,210,421
                                         ==========      ==========     ==========      ==========      ==========      ==========

 Accounts payable and
    Accrued liabilities                  $     (924)     $   34,021     $    6,705      $      729      $   (5,129)     $   35,402
 Subscriber prepayments and deposits              -           3,320             (8)              -               -           3,312
Accrued interest payable                          -           9,547              -               -               -           9,547
Deferred income taxes                             -               -         11,859              (3)              -          11,856
Debt                                        249,532         871,610         35,000               -         (35,000)      1,121,142
Partners' capital/
    Subsidiary equity                        29,162         269,495          3,979           4,595        (278,069)         29,162
                                         ----------      ----------     ----------      ----------      ----------      ----------
    Total liabilities and
       partners' capital                 $  277,770      $1,187,993     $   57,535      $    5,321      $ (318,198)     $1,210,421
                                         ==========      ==========     ==========      ==========      ==========      ==========
</TABLE>


          Statement of Operations for the Year Ended December 31, 1998

<TABLE>
                                        --------------------------------------------------------------------------------------------
                                                                                         Non-Guarantor
                                                                           Guarantor     Subsidiaries    Consolidating  Consolidated
                                           Holdings           FVOP       Subsidiaries                       Entries         Holdings
                                                                                                                           
                                        ---------------- --------------- --------------  --------------  --------------  -----------
<S>                                     <C>               <C>               <C>            <C>            <C>              <C>      
Revenue                                 $            -    $    236,728      $  8,219       $      187     $          -   $  245,134
Operating expenses                                  39         119,532         4,112              135                -      123,818
Corporate administrative
    expenses                                         -           6,513           452                -                -        6,965
Depreciation and
    amortization                                     -         106,609         7,494               52                -      114,155
                                         -------------    ------------      --------       ----------     ------------   ----------
Operating income                                   (39)          4,074        (3,839)               -                -          196
Interest expense, net                          (20,043)        (64,025)       (4,807)               -                -      (88,875)
Equity in losses of affiliate                  (66,196)         (6,020)            -              (66)          72,282            -
Other expense                                        -            (225)         (301)               -                -         (526)
Income tax benefit                                   -               -         2,927                -                -        2,927
                                         -------------    ------------      --------       ----------     ------------   ----------
Net loss                                 $     (86,278)   $    (66,196)     $ (6,020)      $      (66)    $     72,282   $  (86,278)
                                         =============    ============      ========       ==========     ============   ==========

</TABLE>



                                      F-16
<PAGE>



                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              Amounts In Thousands

(8)   DEFERRED FINANCING COSTS

The  Company   refinanced  its  Senior  Credit   Facility  in  December,   1997.
Accordingly,  the  deferred  financing  costs  related to the initial  debt were
written off. The effect of this write-off was a $5,046 charge to expense and was
recorded  as an  extraordinary  item.  Additional  costs  related to the Amended
Credit Facility were recorded as deferred financing costs during 1997.


(9)   FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents  approximate  their fair value
due to the nature and length of maturity of the investments.

The estimated fair value of the Company's  Amended  Credit  Facility is based on
floating  market  rates at December 31,  1998;  therefore,  there is no material
difference  in the  fair  market  value  and the  carrying  value  of such  debt
instruments. The Notes have an aggregate principal amount of $200,000 with a 11%
coupon rate. The fair value for the Notes at December 31, 1998 is $222,000.  The
Discount Notes have an aggregate principal amount at maturity of $328,948 with a
11 7/8%  coupon.  At  December  31,  1998,  the  approximate  fair  value of the
Company's Discount Notes was $273,030.  The fair value of the Notes and Discount
Notes is estimated based on Portal Market quotations of the issue.


(10)  COMMITMENTS AND CONTINGENCIES

The Company has annual  commitments  under lease  agreements  for office  space,
equipment,  pole rental and land upon which  certain of its towers and  antennae
are  constructed.  Rent expense for the years ended December 31, 1998,  1997 and
1996 was $5,806, $4,065 and $2,365, respectively.

Estimated  future  noncancelable  lease  payments  under such lease  obligations
subsequent to December 31, 1998 are as follows:

               Year Ended December 31 --
               -------------------------
               1999                               $      1,404
               2000                                      1,104
               2001                                        781
               2002                                        646
               2003                                        390
               Thereafter                                  737
                                                  ------------
                                                  $      5,062
                                                  ============



                                      F-17
<PAGE>


                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              Amounts In Thousands

(10)  COMMITMENTS AND CONTINGENCIES (continued)

In October 1992,  Congress enacted the Cable Television Consumer and Competition
Act of 1992 (the "1992  Cable  Act") which  greatly  expanded  federal and local
regulation  of  the  cable  television  industry.   The  Federal  Communications
Commission ("FCC") adopted  comprehensive  regulations,  effective  September 1,
1993,  governing  rates  charged  to  subscribers  for  basic  cable  and  cable
programming services which allowed cable operators to justify regulated rates in
excess  of the FCC  benchmarks  through  cost of  service  showings  at both the
franchising  authority  level for basic service and at the FCC level in response
to  complaints  on rates for cable  programming  services.  The FCC also adopted
comprehensive  and restrictive  regulations  allowing  operators to modify their
regulated rates on a quarterly or annual basis using various  methodologies that
account  for the changes in the number of  regulated  channels,  inflation,  and
increases in certain  external costs,  such as franchise and other  governmental
fees,  copyright and  retransmission  consent fees, taxes,  programming fees and
franchise related obligations.  The FCC has also adopted regulations that permit
qualifying  small  cable  operators  to  justify  their  regulated  service  and
equipment rates using a simplified cost-of-service formula.

As a result of such actions,  the Company's basic and tier service rates and its
equipment and installation charges (the "Regulated Services") are subject to the
jurisdiction of local franchising  authorities and the FCC. The Company believes
that  it  has  complied  in all  material  respects  with  the  rate  regulation
provisions  of the federal  law.  However,  the  Company's  rates for  Regulated
Services are subject to review by the FCC, if a complaint has been filed,  or by
the  appropriate  franchise  authority if it is certified by the FCC to regulate
basic rates. If, as a result of the review process, a system cannot substantiate
its  rates,  it could be  required  to  retroactively  reduce  its  rates to the
appropriate  benchmark  and  refund the excess  portion of rates  received.  Any
refunds of the excess  portion of tier service rates would be retroactive to the
date of  complaint.  Any  refunds of the excess  portion of all other  Regulated
Service rates would be  retroactive to one year prior to the  implementation  of
the rate reductions.

The  Company's  agreements  with  franchise  authorities  require the payment of
annual fees which  approximate 3% of system franchise  revenue.  Such franchises
are generally nonexclusive and are granted by local governmental authorities for
a  specified  term of years,  generally  for  extended  periods of up to fifteen
years.


(11)  YEAR 2000 COMPLIANCE

The  Company  has under way a project to review and modify,  as  necessary,  its
computer  applications,  hardware  and  other  equipment  to make them Year 2000
compliant.  The  Company has also  initiated  formal  communications  with third
parties having a substantial relationship to its business, including significant
suppliers  and  financial  institutions,  to  determine  the extent to which the
Company may be vulnerable to such third  parties'  failures to achieve Year 2000
compliance.

Failure to achieve Year 2000 compliance by the Company,  its principal suppliers
and  certain  financial  institutions  with  which  it  has  relationship  could
negatively  affect the  Company's  ability to conduct  business  for an extended
period.  There can be no  assurances  that all  Company  information  technology
systems and components  will be fully Year 2000  compliant;  in addition,  other
companies on which the Company's  systems and  operations  rely may not be fully
compliant on a timely basis,  and any such failure could have a material adverse
effect on the Company's financial position, results of operations or liquidity.


(12)  SUBSEQUENT EVENT

On February 22, 1999,  FVP entered into a  definitive  agreement  with  Adelphia
Communications  Corporation to sell all outstanding partnership interests of FVP
in exchange for cash, the assumption of certain liabilities and 7,000,000 shares
of Adelphia Class A common stock.

                                      F-18
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


To The Shareholder of
FrontierVision Holdings Capital Corporation:

We have  audited  the  accompanying  balance  sheet of  FrontierVision  Holdings
Capital  Corporation as of December 31, 1998 and 1997. This financial  statement
is the  responsibility  of the Company's  management.  Our  responsibility is to
express an opinion on this financial statement based on our audit.

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

In our opinion,  the balance sheet  referred to above  presents  fairly,  in all
material  respects,  the financial  position of FrontierVision  Holdings Capital
Corporation  as of  December  31,  1998 and 1997 in  conformity  with  generally
accepted accounting principles.





                                                                        KPMG LLP


Denver, Colorado
March 19, 1999



                                      F-19
<PAGE>


                   FRONTIERVISION HOLDINGS CAPITAL CORPORATION
                                  BALANCE SHEET

<TABLE>

                                                                           ---------------------------------
                                                                            December 31,      December 31,
                                                                                1998              1997
                                                                           ----------------  ---------------

                                  ASSETS


<S>                                                                          <C>               <C>       
Cash                                                                         $      100        $      100
                                                                             ----------        ----------
            Total assets                                                     $      100        $      100
                                                                             ==========        ==========


                      LIABILITIES AND OWNER'S EQUITY

Owner's equity:
      Common stock, par value $.01; 1,000 shares authorized;
         100 shares issued and outstanding                                    $       1         $       1
      Additional paid-in capital                                                     99                99
                                                                              ---------         ---------
          Total owner's equity                                                      100               100
                                                                              ---------         ---------

          Total liabilities and owner's equity                                $     100         $     100
                                                                              =========         =========
</TABLE>



























                   See accompanying note to the balance sheet.


                                      F-20
<PAGE>




                   FRONTIERVISION HOLDINGS CAPITAL CORPORATION
                            NOTE TO THE BALANCE SHEET


FrontierVision  Holdings Capital Corporation,  a Delaware corporation ("Holdings
Capital"),  is a  wholly  owned  subsidiary  of  FrontierVision  Holdings,  L.P.
("Holdings"),  and was  organized  on August  22,  1997 for the sole  purpose of
acting as co-issuer with Holdings of $237.7 million  aggregate  principal amount
at  maturity  of the 11 7/8%  Senior  Discount  Notes.  Holdings  Capital had no
operations from September 18, 1997 through December 31, 1998.





                                      F-21
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Cox Communications, Inc.

We have  audited  the  accompanying  combined  statement  of net  assets  of Cox
Communications, Inc.'s ("CCI") Central Ohio Cluster as of December 31, 1996, and
the related combined statements of income, changes in net assets, and cash flows
for the year then ended.  These financial  statements are the  responsibility of
CCI's management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion,  the combined  financial  statements  referred to above  present
fairly,  in all  material  respects,  the  combined  financial  position  of Cox
Communications,  Inc.'s  Central  Ohio  Cluster at December  31,  1996,  and the
combined  results of its  operations and its cash flows for the year then ended,
in conformity with generally accepted accounting principles.

As  discussed  in Note 1, CCI sold the assets  and  certain  liabilities  of the
Central Ohio Cluster.



DELOITTE & TOUCHE LLP

August 29, 1997
(December 19, 1997 as to the second paragraph in Note 1)
Atlanta, Georgia






 
                                      F-22
<PAGE>


                              CENTRAL OHIO CLUSTER
                        COMBINED STATEMENTS OF NET ASSETS

<TABLE>
                                                            -------------------------------------
                                                             September 30,            December 31,
                                                                 1997                    1996
                                                               --------------------------------
                                                             (Unaudited)
                                                                    (Thousands of Dollars)


                                 ASSETS
<S>                                                             <C>                    <C>     
Cash                                                            $     28               $    239
Accounts receivable, less allowance for doubtful
     accounts of  $87 and $66                                      2,511                  2,310
Net plant and equipment                                           24,278                 24,512
Intangible assets                                                148,284                151,263
Other assets                                                         853                  1,448
                                                                --------               --------

     Total assets                                               $175,954               $179,772
                                                                ========               ========

                       LIABILITIES AND NET ASSETS
Accounts payable and accrued expenses                           $    667               $  1,245
Deferred income                                                    1,416                  1,430
Deferred income taxes                                             62,294                 63,442
Other liabilities                                                    399                    191
Amounts due to Affiliates                                         29,571                 35,107
                                                                --------               --------
     Total liabilities                                            94,347                101,415

Net assets                                                        81,607                 78,357
                                                                --------               --------

     Total liabilities and net assets                           $175,954               $179,772
                                                                ========               ========



</TABLE>



















                   See notes to combined financial statements.


                                      F-23
<PAGE>


                              CENTRAL OHIO CLUSTER
                          COMBINED STATEMENTS OF INCOME
<TABLE>


                                        ----------------------------------------------------------
                                        Nine Months Ended    Nine Months Ended       Year Ended
                                           September 30,        September 30,        December 31,
                                               1997                1996                 1996
                                            ----------         --------------       -------------
                                          (Unaudited)           (Unaudited)
                                                            (Thousands of Dollars)

<S>                                         <C>                <C>                   <C>      
Revenues                                    $ 25,486           $   23,389             $ 31,749
                                                                                 
Costs and expenses:
   Operating                                   8,387                7,371               10,132
   Selling, general and administrative         3,408                3,772                5,143
   Depreciation                                3,735                3,579                4,846
   Amortization                                2,979                2,979                3,972
                                               -----                -----                -----                                    
Operating income                               6,977                5,688                7,656
Interest expense with affiliates              (1,443)              (1,851)              (2,346)
Other, net                                       (25)                   6                    5
                                               -----                -----                -----                                    
Income before income taxes                     5,509                3,843                5,315
Income taxes                                  (2,259)              (1,576)              (2,176)
                                               -----                -----                -----                                    
Net income                                   $ 3,250              $ 2,267              $ 3,139
                                               =====                =====                =====


</TABLE>


























                   See notes to combined financial statements.


                                      F-24
<PAGE>


                              CENTRAL OHIO CLUSTER
                  COMBINED STATEMENTS OF CHANGES IN NET ASSETS



                                              ---------------------
                                              (Thousands of Dollars)
                                              ---------------------

Balance at December 31, 1995                       $ 75,218
  Net income                                          3,139
                                                     ------
Balance at December 31, 1996                         78,357
  Net income (Unaudited)                              3,250
                                                     ------
Balance at September 30, 1997 (Unaudited)          $ 81,607
                                                     ======































                   See notes to combined financial statements.



 
                                      F-25
<PAGE>


                              CENTRAL OHIO CLUSTER
                        COMBINED STATEMENTS OF CASH FLOWS

<TABLE>

                                                               ----------------------------------------------------
                                                              Nine Months          Nine Months 
                                                                 Ended                Ended              Year Ended
                                                             September 30,         September 30,         December 31,
                                                                 1997                  1996                 1996
                                                             ---------------       --------------        -----------
                                                              (Unaudited)           (Unaudited)
                                                                              (Thousands of Dollars)
Cash flows from operating activities
<S>                                                            <C>                  <C>                  <C>     
Net income                                                     $  3,250             $  2,267             $  3,139
Adjustments to reconcile net income to net cash
provided
  by operating activities:
    Depreciation                                                  3,735                3,579                4,846
    Amortization                                                  2,979                2,979                3,972
    Deferred income taxes                                        (1,148)              (1,245)              (1,849)
(Increase) decrease in accounts receivable                         (201)                 155                 (120)
Decrease in other assets                                            595                  348                  206
Increase (decrease) in accounts payable and accrued expenses       (592)                 289                  803
Other, net                                                          208                  (20)                 (42)
                                                               --------             --------             --------
       Net cash provided by operating activities                  8,826                8,352               10,955
                                                               --------             --------             --------
Cash flows from investing activities
Capital expenditures                                             (3,501)              (2,549)              (2,939)
                                                               --------             --------             --------
       Net cash used in investing activities                     (3,501)              (2,549)              (2,939)
                                                               --------             --------             --------
Cash flows from financing activities
Decrease in amounts due to Affiliates                            (5,536)              (4,933)              (7,777)
                                                               --------             --------             --------
       Net cash provided by financing activities                 (5,536)              (4,933)              (7,777)
                                                               --------             --------             --------
Net increase (decrease) in cash                                    (211)                 870                  239
Cash at beginning of period                                         239                 --                   --
                                                               --------             --------             --------
Cash at end of period                                          $     28             $    870             $    239
                                                               ========             ========             ========


Cash paid during the period for:
     Interest                                                  $     17             $     11             $     14
     Income taxes                                                   788                  852                  905

</TABLE>











                   See notes to combined financial statements.



 
                                      F-26
<PAGE>


                              CENTRAL OHIO CLUSTER
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                   (Information as of and for the Nine Months
                     Ended September 30, 1997 is unaudited)


(1)    ORGANIZATION AND BASIS OF PRESENTATION

The combined  financial  statements  represent  the combined  operations  of Cox
Communications,   Inc.'s  ("CCI")  cable   television   systems   serving  eight
communities  in Central  Ohio  (collectively  referred to as the  "Central  Ohio
Cluster").  These cable  television  systems  were  acquired by CCI, an indirect
75.3% owned subsidiary of Cox Enterprises,  Inc. ("CEI"),  from the Times Mirror
Company ("Times  Mirror") in connection  with CCI's  acquisition of Times Mirror
Cable  Television,  Inc.  ("TMCT") on February 1, 1995. The historical  combined
financial  statements  do not  necessarily  reflect the results of operations or
financial  position that would have existed had the Central Ohio Cluster been an
independent company. All significant intercompany accounts and transactions have
been  eliminated  in the  combined  financial  statements  of the  Central  Ohio
Cluster.

On December 19, 1997, CCI sold the assets and certain liabilities of the Central
Ohio Cluster to FrontierVision Operating Partners, L.P. for approximately $204.0
million.


(2)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Central Ohio Cluster  bills its  customers in advance;  however,  revenue is
recognized as cable television services are provided.  Receivables are generally
collected within 30 days.  Credit risk is managed by  disconnecting  services to
customers who are delinquent  generally greater than 75 days. Other revenues are
recognized as services are provided.  Revenues  obtained from the  connection of
customers to the cable  television  systems are less than related direct selling
costs; therefore, such revenues are recognized as services are provided.

Plant and Equipment

Depreciation  is computed using  principally the  straight-line  method at rates
based upon estimated  useful lives of five to 20 years for building and building
improvements,  five to 12 years for  cable  television  systems  and three to 10
years for other plant and equipment.

The costs of initial cable television connections are capitalized as cable plant
at standard  rates for the Central Ohio  Cluster's  labor and at actual cost for
materials  and  outside  labor.  Expenditures  for  maintenance  and repairs are
charged to operating  expense as incurred.  At the time of  retirement,  sale or
other  disposition  of  property,  the  original  cost and  related  accumulated
depreciation are written off.

Intangible Assets

Intangible  assets  consist of goodwill and cable  television  franchise  rights
recorded in  connection  with the  acquisition  of the Central Ohio Cluster from
TMCT and are amortized on a straight-line  basis over 40 years. The Central Ohio
Cluster assesses on an on-going basis the  recoverability  of intangible  assets
based on estimates of future undiscounted cash flows for the applicable business
acquired compared to net book value. The Central Ohio Cluster also evaluates the
amortization  period  of  intangible  assets  to  determine  whether  events  or
circumstances warrant revised estimated of useful lives.



                                      F-27
<PAGE>

                              CENTRAL OHIO CLUSTER
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                   (Information as of and for the Nine Months
                     Ended September 30, 1997 is unaudited)


(2)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment of Long-Lived Assets

Effective  January 1, 1996,  the  Central  Ohio  Cluster  adopted  Statement  of
Financial  Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of  Long-Lived  Assets  and for  Long-Lived  Assets  to be  Disposed  Of."  This
statement  requires that long-lived  assets and certain  intangibles be reviewed
for  impairment  when  events or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable,  with any impairment  losses
being reported in the period in which the recognition criteria are first applied
based on the fair value of the asset.  Long-lived assets and certain intangibles
to be disposed of are  required to be reported at the lower of carrying  amounts
or fair value less cost to sell.

Income Taxes

The  accounts  of the Central  Ohio  Cluster  are  included in the  consolidated
federal  income tax return and certain state income tax returns of CEI.  Current
federal and state  income tax expenses  and  benefits  have been  allocated on a
separate  return basis to the Central Ohio Cluster based on the current year tax
effects of the inclusion of its income, expenses and credits in the consolidated
income tax returns of CEI or based on separate state income tax returns.

Deferred income tax assets and liabilities  arise from temporary  differences in
the financial  reporting and income tax basis of assets and  liabilities.  These
differences primarily result from property and intangible assets.

Fees and Taxes

The Central Ohio Cluster  incurs  various fees and taxes in connection  with the
operations of its cable  television  systems,  including  franchise fees paid to
various  franchise  authorities,  copyright  fees  paid  to the  U.S.  Copyright
Tribunal and business and  franchise  taxes paid to the State of Ohio. A portion
of these  fees and  taxes are  passed  through  to the  Central  Ohio  Cluster's
subscribers.  Amounts  collected from subscribers are recorded as a reduction of
operating expenses.

Pension, Postretirement and Postemployment Benefits

CCI generally  provides defined pension benefits to substantially  all employees
based on years of service and compensation during those years. CCI also provides
certain health care and life insurance  benefits to  substantially  all retirees
and  employees  through  certain CEI plans.  Expense  related to the CCI and CEI
plans is allocated to the Central Ohio Cluster through the intercompany account.
The amount of the allocations is generally based on actuarial  determinations of
the effects of the Central Ohio Cluster employees' participation in the plans.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.


                                      F-28
<PAGE>


                              CENTRAL OHIO CLUSTER
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                   (Information as of and for the Nine Months
                     Ended September 30, 1997 is unaudited)


(2)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The unaudited combined financial  statements as of and for the nine months ended
September  30,  1997  and  1996,  in the  opinion  of  management,  include  all
adjustments,  consisting only of normal recurring  adjustments,  necessary for a
fair  presentation of the financial  position and results of operations for this
period.  Operating  results for nine  months  ended  September  30, 1997 are not
necessarily indicative of the results that may be expected for the entire year.


(3)    CASH MANAGEMENT SYSTEM

The Central Ohio Cluster  participates in CEI's cash management system,  whereby
the bank sends daily notification of checks presented for payment. CEI transfers
funds from other sources to cover the checks presented for payment.


(4)    PLANT AND EQUIPMENT

                                             ----------------- -----------------
                                             September 30,        December 31,
                                                 1997                 1996
                                              --------             ---------
                                                          (In Thousands)
Land                                           $    313             $    311
Buildings and building improvements                 990                1,033
Transmission and distribution plant              43,531               41,329
Miscellaneous equipment                           2,343                1,478
Construction in progress                            531                  825
                                               --------             --------
     Plant and equipment, at cost                47,708               44,976
Less accumulated depreciation                   (23,430)             (20,464)
                                               --------             --------
     Net plant and equipment                   $ 24,278             $ 24,512
                                               ========             ========


(5)    INTANGIBLE ASSETS

                                        ----------------------------------
                                        September 30,         December 31,
                                            1997                  1996
                                          ----------            ---------
                                                   (In Thousands)
Goodwill                                 $ 158,876             $ 158,876
Less accumulated amortization              (10,592)               (7,613)
                                         ---------             ---------
  Net intangible assets                  $ 148,284             $ 151,263
                                         =========             =========




 
                                      F-29
<PAGE>


                              CENTRAL OHIO CLUSTER
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                   (Information as of and for the Nine Months
                     Ended September 30, 1997 is unaudited)


(6)    INCOME TAXES

Current and deferred income tax expenses (benefits) are as follows:

                                    ------------------------------------------
                                    Nine months ended          Year ended
                                    September 30, 1997      December 31, 1996
                                          -------                -------
                                                  (In Thousands)
Current:
  Federal                                 $ 2,906                $ 3,289
  State                                       520                    736
                                          -------                -------
     Total current                          3,426                  4,025
                                          -------                -------
Deferred:
  Federal                                  (1,119)                (1,385)
  State                                       (48)                  (464)
                                          -------                -------
     Total deferred                        (1,167)                (1,849)
                                          -------                -------
     Net income tax expense               $ 2,259                $ 2,176
                                          =======                =======


Income  tax  expense  differs  from the amount  computed  by  applying  the U.S.
statutory  federal income tax rate (35%) to income (loss) before income taxes as
a result of the following items:

<TABLE>
                                                      -------------------------------------------
                                                         Nine months ended           Year ended
                                                        September 30, 1997       December 31, 1996
                                                              ------               ------
                                                                     (In Thousands)
Computed tax expense at federal statutory
<S>                                                           <C>                  <C>   
       rates on income before income taxes                    $1,928               $1,860
State income taxes, net of federal tax benefit                   307                  177
Other, net                                                        24                  139
                                                              ------               ------
       Net income tax expense                                 $2,259               $2,176
                                                              ======               ======
</TABLE>

Significant  components  of  the  net  deferred  tax  liability  consist  of the
following:

                                        ---------------------------------------
                                      Nine months ended           Year ended
                                       September 30, 1997     December 31, 1996
                                            --------              --------
                                                   (Thousands of Dollars)

Plant and equipment                         $ (5,618)             $ (5,787)
Franchise rights                             (57,569)              (58,638)
Other                                            893                   983
                                            --------              --------
     Net deferred tax liability             $(62,294)             $(63,442)
                                            ========              ========


(7)    RETIREMENT PLANS

Qualified Pension Plan

Effective January 1, 1996, CCI established the Cox Communications,  Inc. Pension
Plan (the "CCI Plan"), a qualified  noncontributory defined benefit pension plan
for  substantially  all of CCI's employees  including the Central Ohio Cluster's
employees. Plan assets consist primarily of common stock, investment-


                                      F-30
<PAGE>

                              CENTRAL OHIO CLUSTER
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                   (Information as of and for the Nine Months
                     Ended September 30, 1997 is unaudited)


(7)    RETIREMENT PLANS (CONTINUED)

grade  corporate  bonds,   cash  and  cash   equivalents  and  U.S.   government
obligations. The CCI Plan calls for benefits to be paid to eligible employees at
retirement based primarily upon years of service with CCI and compensation rates
near  retirement.  The funded status of the portion of the CCI Plan covering the
employees of the Central Ohio Cluster is not determinable. The fair value of the
CCI Plan assets was greater than the projected benefit obligation as of December
31, 1996.

Total  pension  expense  attributable  to the Central  Ohio  Cluster  employees'
participation  in the CCI  Plan was  $33,000  for the nine  month  period  ended
September 30, 1997 and $158,000 for the year ended December 31, 1996.

The assumptions used in the actuarial computations at December 31, 1996 were:

Discount rate                                                   7.75%
Rate of increase in compensation levels                         5.50%
Expected long-term rate of return on plan assets                9.00%

Other Retirement Plans

CEI provides  certain health care and life insurance  benefits to  substantially
all retirees of CEI and its  subsidiaries.  Postretirement  expense allocated to
the Central  Ohio  Cluster by CEI was $13,000  for the nine month  period  ended
September  30, 1997 and $15,000 for the year ended  December 31,  1996.  CEI has
been  contributing  additional  amounts  to the Cox  Pension  Plan Trust to fund
health care benefits  pursuant to Section  401(h) of the Internal  Revenue Code.
CEI is funding  benefits  to the extent  contributions  are tax  deductible.  In
general,  retiree health benefits are paid as covered expenses are incurred. The
funded status of the  postretirement  plan covering the employees of the Central
Ohio  Cluster  is  not  determinable.  The  accumulated  postretirement  benefit
obligation for the  postretirement  plan of CEI substantially  exceeded the fair
value of assets held in the Cox Pension Plan Trust at December 31, 1996.

In addition,  substantially all of Central Ohio Cluster's employees are eligible
to participate in the savings and investment plan of CEI. Under the terms of the
plan,  the Central Ohio Cluster  matches 50% of employee  contributions  up to a
maximum of 6% of the employee's base salary.  The Central Ohio Cluster's expense
under the plan was $57,000 for the  nine-month  period ended  September 30, 1997
and $83,000 for the year ended December 31, 1996.


(8)    TRANSACTIONS WITH AFFILIATED COMPANIES

The Central Ohio Cluster  borrows funds for working capital and other needs from
CCI. Certain management services are provided to the Central Ohio Cluster by CCI
and CEI. Such services  include legal,  corporate  secretarial,  tax,  treasury,
internal  audit,  risk  management,  benefits  administration  and other support
services.  The Central Ohio Cluster was  allocated  expenses for the nine months
ended  September  30,  1997  and  for  the  year  ended  December  31,  1996  of
approximately  of  $604,000  and  $1,320,000,  respectively,  related  to  these
services.  Allocated  expenses  are based on  management's  estimate of expenses
related to the  services  provided  to the Central  Ohio  Cluster in relation to
those provided to other divisions of CCI and CEI. Management believes that these
allocations were made on a reasonable  basis.  However,  the allocations are not
necessarily  indicative  of the level of expenses  that might have been incurred
had the Central Ohio Cluster contracted directly with third parties.  Management
has not made a


                                      F-31
<PAGE>

                              CENTRAL OHIO CLUSTER
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                   (Information as of and for the Nine Months
                     Ended September 30, 1997 is unaudited)


(8)    TRANSACTIONS WITH AFFILIATED COMPANIES (CONTINUED)

study or any attempt to obtain quotes from third  parties to determine  what the
cost of obtaining such services from third parties would have been. The fees and
expenses to be paid by the Central Ohio Cluster various transactions,  including
those described above. At December 31, 1996 and September 30, 1997,  outstanding
amounts  due to  affiliates  bear  interest at fifty  basis  points  above CCI's
commercial paper borrowings. This rate as of September 30, 1997 and December 31,
1996 was 6.32% and 6.6%, respectively.

In accordance  with the  requirements of SFAS No. 107,  "Disclosures  About Fair
Value of Financial Instruments," the Central Ohio Cluster has estimated the fair
value of its  intercompany  advances  and notes  payable.  Given the  short-term
nature of these advances, the carrying amounts reported in the statements of net
assets approximate fair value.


(9)    COMMITMENTS AND CONTINGENCIES

The Central Ohio Cluster leases office facilities and various items of equipment
under  noncancelable  operating  leases.  Rental expense under operating  leases
amounted to $259,000  for the nine month  period  ended  September  30, 1997 and
$331,000 for the year ended December 31, 1996.  Future minimum lease payments as
of September 30, 1997 for all noncancelable operating leases are as follows:

                                   1997                       $   18
                                   1998                           40
                                   1999                           31
                                   2000                           31
                                   2001                           31
                                   2002                            7
                                                              ------
                                     Total                    $  158
                                                              ======

The FCC has adopted rate regulations  required by the Cable Television  Consumer
Protection  and  Competition  Act of 1992 (the "1992 Cable  Act").  Beginning in
September  1995, the FCC authorized a method of  implementing  rate  adjustments
which allows cable operators to increase rates for  programming  annually on the
basis of proposed  increases in external  costs rather than on the basis of cost
increases incurred in the preceding quarter. Local franchising  authorities have
the ability to obtain  certification  from the FCC to regulate  rates charged by
the Central Ohio Cluster for basic cable  services  and  associated  basic cable
services equipment.  In addition,  the rates charged by the Central Ohio Cluster
for cable  programming  services  ("CPS") can be regulated by the FCC should any
franchising  authority of the Central Ohio Cluster file rate complaints with the
FCC. To date,  the local  franchising  authorities  for the Central Ohio Cluster
have not become  certified by the FCC to regulate  rates for basic cable service
and associated basic cable services  equipment and no complaints have been filed
by customers  with the FCC  regarding  rates  charged for CPS.  Though rates for
basic and CPS are  presently  not  regulated,  management  of the  Central  Ohio
Cluster  believes  the rates  charged  for basic and CPS comply in all  material
respects with the 1992 Cable Act and that should such rates become  regulated in
the future the impact on the financial  position and results of operation of the
Central Ohio Cluster would not be material.



                                      F-32
<PAGE>


                              CENTRAL OHIO CLUSTER
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                   (Information as of and for the Nine Months
                     Ended September 30, 1997 is unaudited)


(9)    COMMITMENTS AND CONTINGENCIES (CONTINUED)

On February 1, 1996,  Congress  passed the  Telecommunications  Act of 1996 (the
"1996  Act"),  which was signed into law by the  President  on February 8, 1996.
Among other  provisions,  the 1996 Act  deregulates  the CPS tier of large cable
television  operators  on March 31,  1999 and upon  enactment,  the CPS rates of
small cable television operators,  where a small cable operator serves 50,000 or
fewer subscribers,  revises the procedures for filing a CPS complaint and adds a
new effective competition test.


 
                                      F-33
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To State Cable TV Corporation and Subsidiary:

We have audited the accompanying  consolidated  balance sheets of State Cable TV
Corporation and Subsidiary as of December 31, 1997, and the related consolidated
statement  of  operations  and  deficit  and cash flows for the year then ended.
These consolidated financial statements referred to below are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated  financial position of State
Cable  TV  Corporation   and  Subsidiary  as  of  December  31,  1997,  and  the
consolidated  results of their operations and their cash flows for the year then
ended, in conformity with generally accepted accounting principles.







Boston, Massachusetts
March 13, 1998


                                      F-34
<PAGE>


                    STATE CABLE TV CORPORATION AND SUBSIDIARY

                           Consolidated Balance Sheets
<TABLE>

                                     Assets
                                                                                            December 31,     September 30,
                                                                                                1997              1998
                                                                                                              (Unaudited)

Current Assets:
<S>                                                                                     <C>               <C>            
   Cash                                                                                 $       605,832   $       915,676
   Subscriber receivables, net of allowance for doubtful accounts of $706,140 at              1,688,694         1,505,602
     December, 31 1997 and $1,150,567 at September 30, 1998 (unaudited)
   Other current assets                                                                         440,594           474,408
                                                                                        ---------------   --------------- 
         Total current assets                                                                 2,735,120         2,895,686
                                                                                        ---------------   --------------- 
Property, Plant and Equipment, at cost:
   Land and building held for sale                                                              383,219           383,219
   Land                                                                                         235,674           235,674
   Building and building improvements                                                         2,317,728         2,386,357
   Cable TV equipment                                                                        56,274,822        60,072,379
   Office equipment                                                                           1,558,486         1,666,208
   Vehicles                                                                                   2,017,865         2,212,835
                                                                                        ---------------   ---------------
                                                                                             62,787,794        66,956,672
   Less-Accumulated depreciation                                                            (40,957,381)      (44,491,861)
                                                                                        ---------------   ---------------
                                                                                             21,830,413        22,464,811
   Construction in process                                                                      805,422               -
                                                                                        ---------------   ---------------
                                                                                             22,635,835        22,464,811

Notes Receivable from Affiliate (Note 8)                                                     10,115,617        11,070,626
Deferred Income on Installment Sale (Note 8)                                                 (7,291,147)       (7,684,897)
                                                                                        ---------------   ---------------
         Total notes receivable                                                               2,824,470         3,385,729
                                                                                        ---------------   ---------------
Intangible Assets, net
   Franchises                                                                                 2,420,280         2,221,019
   Goodwill                                                                                     285,409           276,877
   Loan costs                                                                                 1,200,807         1,011,805
                                                                                        ---------------   ---------------
                                                                                              3,906,496         3,509,701
                                                                                        ---------------   ---------------
Other Assets (Note 3)                                                                            93,543               -
                                                                                        ---------------   ---------------
         Total assets                                                                   $    32,195,464   $    32,255,927
                                                                                        ===============   ===============
                      Liabilities and Shareholders' Deficit
Current Liabilities:
   Current maturities of long-term debt                                                 $     5,254,068   $     7,011,576
   Accounts payable                                                                           2,845,415         2,438,018
   Accrued expenses                                                                           1,856,008         1,719,585
   Subscriptions received in advance                                                            351,032           346,694
                                                                                        ---------------   ---------------
         Total current liabilities                                                           10,306,523        11,515,873
                                                                                        ---------------   ---------------

Long-Term Debt, net of current maturities                                                    55,704,532        54,804,435
Deferred State Tax Payable                                                                       18,355               -
Other Long-Term Liabilities                                                                     102,579           311,829
                                                                                        ---------------   ---------------
         Total liabilities                                                                   66,131,989        66,632,137
                                                                                        ---------------   ---------------
Commitments and Contingencies (Note 5)
Minority Interest                                                                             2,082,054         2,665,322
Shareholders' Deficit:
  Common stock, par value $1.00 per share, authorized, issued and outstanding, 1,822              1,822             1,822
     shares
  Accumulated deficit                                                                       (36,020,401)      (37,043,354)
                                                                                        ---------------   ---------------
         Total shareholders' deficit                                                        (36,018,579)      (37,041,532)
                                                                                        ---------------   ---------------
         Total liabilities and shareholders' deficit                                    $    32,195,464   $    32,255,927
                                                                                        ===============   ===============

</TABLE>

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



 
                                      F-35
<PAGE>



                    STATE CABLE TV CORPORATION AND SUBSIDIARY

                Consolidated Statements of Operations and Deficit


<TABLE>

                                                    Year Ended        Nine Months Ended           Three Months Ended
                                                   December 31,         September 30,               September 30,
                                                       1997           1997           1998         1997          1998
                                                                         (Unaudited)                 (Unaudited)

Gross Service Revenue:
<S>                                               <C>            <C>             <C>          <C>           <C>         
   Subscriber revenue                             $  22,327,282  $  16,508,075   $ 18,500,996 $   5,736,622 $  6,380,173
   Premium services and pay per view revenue          3,274,880      2,260,703      2,488,962       826,772      958,136
   Advertising revenue                                1,441,866        946,370        981,967       276,455      376,642
   Installation revenue                                 594,663        469,068        371,564       136,114      123,544
   Other revenue                                        702,014        608,805        655,733       215,741      350,609
                                                  -------------  -------------   ------------ ------------- ------------ 
                                                     28,340,705     20,793,021     23,126,355     7,191,704    8,089,104
Programming Costs                                     5,434,797      3,905,225      4,689,751     1,391,621    1,648,373
                                                  -------------  -------------   ------------ ------------- ------------ 
         Net revenue (after programming costs)       22,905,908     16,887,796     18,436,604     5,800,083    6,440,731
                                                  -------------  -------------   ------------ ------------- ------------ 
Operating Expenses:
   General and adminstrative                          6,009,795      4,652,460      5,248,940     1,569,971    1,824,686
   Production and advertising                         3,848,847      2,869,849      2,930,704       912,574      984,781
   Depreciation                                       4,259,092      3,653,200      3,534,480     1,238,400    1,178,160
   Ice storm damage                                         -              -        1,595,567            -        71,465
                                                  -------------  -------------   ------------ ------------- ------------ 
                                                     14,117,734     11,175,509     13,309,691     3,720,945    4,059,092
                                                  -------------  -------------   ------------ ------------- ------------ 

Income  from Operations Before Other Expenses         8,788,174      5,712,287      5,126,913     2,079,138    2,381,639
(Income)

Other Expenses (Income):
   Interest expense                                   4,875,201      3,556,976      3,954,002     1,249,541    1,464,951
   Management fees to affiliated company                687,177        506,039        566,316       174,000      188,772
   Amortization of intangible assets                    626,813        368,014        396,917       126,792      132,306
   Gain on sale of equipment                            (31,051)        (6,737)           -            -             -
   Interest income                                      (71,117)       (24,517)       (31,693)       (7,453)     (12,114)
   Minority interest in income of Better Cable          768,594        588,255        583,268       207,994      245,251
                                                  -------------  -------------   ------------ ------------- ------------  
    TV Company
                                                      6,855,617      4,988,030      5,126,913     1,750,874    2,019,166
                                                  -------------  -------------   ------------ ------------- ------------ 
Income  (Loss) Before State Income Taxes              1,932,557        724,257       (341,897)      328,264      362,473

Provision for State Income Taxes                         18,000           -              -            -            -
                                                  -------------  -------------   ------------ ------------- ------------ 
         Net income (Loss)                            1,914,557        640,714       (341,897)      328,264      362,473
                                                  -------------  -------------   ------------ ------------- ------------ 
Accumulated Deficit, beginning of period            (36,780,806)   (36,780,806)   (36,020,401)  (36,384,813) (36,724,771)

Distribution to Shareholders (Note 2(g))             (1,154,152)    (1,536,000)      (681,056)   (1,536,000)    (681,056)
                                                  -------------  -------------   ------------ ------------- ------------ 
Accumulated Deficit, end of period                $ (36,020,401) $ (37,592,549)  $ (37,043,354)$(37,592,549)$(37,043,354)
                                                  =============  =============   ============= ============ ============
</TABLE>


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



                                      F-36
<PAGE>


                    STATE CABLE TV CORPORATION AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

<TABLE>
                                                                       Year Ended             Nine Months Ended 
                                                                      December 31,              September 30,
                                                                          1997              1997              1998
                                                                                                 (Unaudited)
Cash Flows from Operating Activities:
<S>                                                                 <C>               <C>              <C>             
   Net income (loss)                                                $     1,914,557   $       640,714  $      (341,897)
   Adjustments to reconcile net income to net cash provided by
   operating activities-
     Depreciation and amortization                                        4,885,905         3,866,493        3,931,397
     Provision for bad debts                                                284,565           855,381          444,427
     Gain on sale of equipment                                              (31,051)           (6,737)             -
     Minority interest                                                      386,746           588,255          583,268
     Deferred taxes                                                          (1,645)          (20,000)         (18,355)
     Changes in operating assets and liabilities, net of effects
     from purchase of Pegasus-
       Increase in subscriber receivables                                  (305,301)         (618,571)        (261,335)
       Increase in other current assets                                    (536,180)         (446,422)         (33,814)
       Increase in notes receivable                                      (2,024,992)         (340,836)        (561,259)
       Decrease in other assets                                             377,242           440,785           93,543
       Increase (decrease) in accounts payable                              551,984           828,584         (407,397)
       Increase (decrease) in accrued expenses                              223,702           215,148         (136,423)
       Increase in subscriptions received in advance                         36,526           118,021          204,912
                                                                    ---------------   ---------------  ---------------
           Net cash provided by operating activities                      5,762,058         6,120,815        3,497,067
                                                                    ---------------   ---------------  ---------------
Cash Flows from Investing Activities:
   Acquisition of property, plant and equipment                          (7,463,502)      (11,481,424)      (3,363,456)
   Payment for purchase of Pegasus, net of cash acquired                 (6,838,183)             -                -
   Acquisition of intangible assets, exclusive of effects from             (261,374)       (2,354,232)            (122)
                                                                    ---------------   ---------------  ---------------
     purchase of Pegasus

           Net cash used in investing activities                        (14,563,059)      (13,835,656)      (3,363,578)
                                                                    ---------------   ---------------  ---------------
Cash Flows from Financing Activities:
   Repayment of long-term debt                                           (3,132,621)       (2,224,971)      (3,942,589)
   Proceeds from long-term debt                                          13,200,000        11,500,000        4,800,000
   Distributions to shareholders                                         (1,154,152)       (1,536,000)        (681,056)
                                                                    ---------------   ---------------  ---------------
           Net cash provided by financing activities                      8,913,227         7,739,029          176,355
                                                                    ---------------   ---------------  ---------------
Net Increase in Cash                                                        112,226            24,188          309,844

Cash, beginning of year                                                     493,606           493,606          605,832
                                                                    ---------------   ---------------  ---------------
Cash, end of year                                                   $       605,832   $       517,794  $       915,676
                                                                    ===============   ===============  ===============
Supplemental Disclosures of Cash Flow Information:
   Cash paid during the year for-
     Interest                                                       $     4,681,103   $     3,423,872  $     3,904,574
                                                                    ===============   ===============  ===============
     Income taxes                                                            23,634                 -                -
                                                                    ===============   ===============  ===============
Supplemental Disclosures of Noncash Investing Activities:
   Increase in promissory note receivable and deferred income on            525,000           393,750          393,750
                                                                    ===============   ===============  ===============
     installment sale due to accrued interest

</TABLE>

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



                                      F-37
<PAGE>


                    State Cable TV Corporation and Subsidiary

                   Notes to Consolidated Financial Statements
                 (Including Data Applicable to Unaudited Period)

(1)    Organization

       State  Cable TV  Corporation  and  Subsidiary  (the  Company)  is engaged
       primarily in providing cable television and related services to the Maine
       and New Hampshire areas.

       On January 31,  1997,  the  Company  purchased  substantially  all of the
       assets and assumed  current  liabilities of Pegasus,  a cable  television
       company that provides service to areas in the State of New Hampshire. The
       total purchase price was  $7,135,000,  of which $300,000 was paid in 1996
       and is included in deposits and other  assets at December  31, 1996.  The
       balance due was paid utilizing the Company's credit facility in 1997. The
       transaction  was  treated as a  purchase.  The fair  market  value of the
       assets  approximated  the  purchase  price.  The  value  of the  acquired
       franchises was approximately  $2,000,000 which is being amortized over 10
       years, which represents the lives of the franchise agreements.

(2)    Summary of Significant Accounting Policies

       The  accompanying   financial   statements  reflect  the  application  of
       accounting   policies  described  in  this  note  and  elsewhere  in  the
       accompanying notes to consolidated financial statements.

       (a)    Principles of Consolidation

              The consolidated  financial statements include the accounts of the
              Company and Better Cable TV Company, its 60%-owned subsidiary (see
              Note 9). Material intercompany transactions and accounts have been
              eliminated in  consolidation.  The shareholders of the Company are
              the  partners  of a  partnership  (the  Affiliate)  that  owns the
              minority   interest  of   $2,082,054  as  of  December  31,  1997,
              representing a 40% interest in the subsidiary. Changes in minority
              interest reflect Better Cable TV Company's capital adjusted by its
              portion of the net gain or loss.

       (b)    Management Estimates

              The  preparation  of  financial   statements  in  conformity  with
              generally accepted  accounting  principles  requires management to
              make estimates and assumptions that affect the reported amounts of
              assets and  liabilities  and  disclosure of contingent  assets and
              liabilities  at the  date  of the  financial  statements  and  the
              reported  amounts of revenues  and expenses  during the  reporting
              period. Actual results could differ from those estimates.

       (c)    Property, Plant and Equipment

              Property,  plant and  equipment  is  carried  at cost and is being
              depreciated  under the  straight-line  method  over the  estimated
              useful  lives  of the  assets  which  range  from 5 to 33 years as
              described  below.  Repair  and  maintenance  costs are  charged to
              expense as incurred.

              Building and building improvements....................20-33 years
              Cable TV equipment......................................5-7 years
              Office equipment..........................................5 years
              Vehicles..................................................5 years


                                      F-38
<PAGE>


                    State Cable TV Corporation and Subsidiary

                   Notes to Consolidated Financial Statements
                 (Including Data Applicable to Unaudited Period)
                                   (Continued)

              Property and equipment  include the  following  amounts held under
              capital leases:

                                               December 31,      September 30,
                                                  1997               1998

         Land                                  $  169,000       $  169,000
         Building and building improvements     1,606,422        1,644,230
         Less--Accumulated depreciation          (160,403)        (240,544)
                                               ----------       ----------
                                               $1,615,019       $1,572,686
                                               ==========       ==========
       (d)    Intangible Assets

              Intangible  assets  are  carried  at cost and are being  amortized
              under the straight-line  method over the periods indicated in Note
              3.

       (e)    Investment in an Affiliate

              Investment  in  a  33-1/3%-owned  affiliate,   Pinetree  Microwave
              Corporation,  is carried under the equity method and classified in
              other  assets  in the  accompanying  balance  sheet.  The  assets,
              liabilities   and  results  of  operations  of  Pinetree  are  not
              significant to the Company.  During 1998, the Company  reevaluated
              the value of the asset and wrote it down to zero.

       (f)    Revenue Recognition

              Operating  revenues for cable  services are recognized as services
              are rendered.  Revenues from services  contracts are recognized in
              earnings over the terms of the contract.

       (g)    Income Taxes

              The  Company  has  elected  subchapter  S  Corporation  status for
              federal and the State of Maine income tax purposes. Provisions for
              federal and Maine income taxes have not been made as the Company's
              operations  are  included  pro rata in the  individual  income tax
              returns of its shareholders.  A provision for New Hampshire income
              taxes has been  made in the  accompanying  consolidated  financial
              statements  due to the fact New  Hampshire  does not recognize the
              Company's S  corporation  status.  During  1997,  the Company made
              distributions to shareholders of $1,154,152 to pay their estimated
              tax payments.

              The Company  provides  for New  Hampshire  income  taxes under the
              liability method in accordance with the provisions of Statement of
              Financial  Accounting  Standards  (SFAS) No. 109,  Accounting  for
              Income  Taxes.  Under the liability  method  specified by SFAS No.
              109, a deferred tax asset or liability is determined  based on the
              difference between the financial statement and tax bases of assets
              and liabilities,  as measured by the enacted tax rates expected to
              be in effect when these differences reverse. Temporary differences
              relate mainly to depreciation and deferred interest.


                                      F-39
<PAGE>

                    State Cable TV Corporation and Subsidiary

                   Notes to Consolidated Financial Statements
                 (Including Data Applicable to Unaudited Period)
                                   (Continued)

              The  components of the provision for income taxes for December 31,
              1997 is as follows:

                                                                  December 31,
                                                                      1997

                Current-
                   State                                        $    20,500

                Deferred-
                   State                                             (2,500)
                                                                -----------
                         Total provision (benefit)              $    18,000
                                                                ===========
       (h)    Cash

              The  Company  considers  all  highly  liquid  investments  with  a
              maturity  of  three  months  or  less  when  purchased  to be cash
              equivalents.

       (i)    Concentration of Credit Risk

              SFAS  No.  105,   Disclosure  of   Information   About   Financial
              Instruments with  Off-Balance-Sheet Risk and Financial Instruments
              with  Concentrations  of Credit Risk,  requires  disclosure of any
              significant off-balance-sheet and credit risk concentrations.  The
              Company  has no  significant  off-balance-sheet  concentration  of
              credit risks such as foreign exchange contracts, options contracts
              or other foreign hedging arrangements.  Financial instruments that
              subject the Company to credit risk  consist  primarily of cash and
              accounts receivable.

       (j)    Long-Lived Assets

              The Company  has  assessed  the  realizability  of its  long-lived
              assets  in  accordance  with  SFAS  No.  121,  Accounting  for the
              Impairment of Long-Lived  Assets and for  Long-Lived  Assets To Be
              Disposed  Of. As of December  31,  1997 and  September  30,  1998,
              management  believes  there has been no  impairment  of long-lived
              assets.

       (k)    Interim Financial Statements (Unaudited)

              The accompan ying  consolidated  balance sheet as of September 30,
              1998, is unaudited, but in the opinion of management, includes all
              adjustments  consisting of normal recurring  adjustments necessary
              for fair  presentation of results for the interim period.  Certain
              information  and  footnote   disclosures   normally   included  in
              financial   statements   prepared  in  accordance  with  generally
              accepted  accounting  principles have been omitted with respect to
              the nine months ended,  September,  30, 1998, although the Company
              believes  that the  disclosures  included are adequate to make the
              information presented not misleading.  Results for the nine months
              ended  September  30, 1998 are not  necessarily  indicative of the
              results  that may be  expected  for the year ending  December  31,
              1998.


                                      F-40
<PAGE>

                    State Cable TV Corporation and Subsidiary

                   Notes to Consolidated Financial Statements
                 (Including Data Applicable to Unaudited Period)
                                   (Continued)

(3)    Intangible Assets

       Intangible assets consist of the following:

<TABLE>
                                               December 31,   September 30,   Amortization
                                                   1997            1998          Period
                                                                               in Years


<S>                                         <C>             <C>                   <C>
        Customer lists                      $    2,858,218  $    2,858,218        7
        Franchises                               4,348,947       4,349,069      10-15
        Restrictive covenants                      317,921         317,921       2-10
        Goodwill                                   454,013         454,013        40
        Loan costs                               1,770,629       1,770,629       5-8
        Other                                      253,476         253,476       5-10
                                            --------------  --------------       
                                                10,003,204      10,003,326

        Less--Accumulated amortization           6,096,708       6,493,625
                                            --------------  --------------
                                            $    3,906,496  $    3,509,701
                                            ==============  ==============
</TABLE>

(4)    Long-Term Debt

       Long-term debt consists of the following:

                                           December 31,      September 30,
                                               1997              1998

          Term loan                   $     42,276,500    $     38,363,675
          Revolving line of credit          17,200,000          22,000,000
          Capital lease                      1,482,100           1,452,336
                                      ----------------    ----------------
                                            60,958,600          61,816,011

          Less--Current maturities           5,254,068           7,011,576
                                      ----------------    ----------------
                                      $     55,704,532    $     54,804,435
                                      ================    ================

       The Company has a $67,000,000  credit  facility (the  Facility)  with The
       First National Bank of Chicago  (First  Chicago) as agent for the lending
       institutions (the Lenders) under a credit agreement  (Credit  Agreement).
       The Facility  consists of a $47,000,000  amortizing term loan maturing on
       December 31, 2002 and a $20,000,000 revolving credit facility terminating
       on  March  31,  2004.  The  revolving  line  of  credit  is  for  capital
       expenditures,  system  acquisitions and other general corporate  purposes
       subject to  limitations  as defined in the  agreement.  The  Facility  is
       collateralized  by  all  of  the  Company's  assets.  In  addition,   the
       shareholders pledge the stock of the Company and the partnership interest
       in Better Cable TV Company as  collateral.  The 40% minority  interest in
       Better Cable TV Company has also been pledged as  collateral.  The Credit
       Agreement requires the Company to meet various financial covenants and as
       of December 31, 1997 the Company was in compliance with these  covenants.
       The  Credit  Agreement  limits the  payments  for  capital  expenditures,
       management  fees and dividends.  The Credit  Agreement  requires that the
       term loan be repaid by quarterly  installments.  The repayments are based
       upon a percentage of the amount outstanding as of June 30, 1997 and these
       percentages  increase  annually  until 2002 when it  decreases.  Advances
       under the revolving credit facility are payable quarterly beginning March
       31, 2003. In addition, mandatory prepayments of an amount equal to 50% of
       the excess cash flows,  if positive,  for the most recently  ended fiscal
       year are required under the revolving credit facility.

                                      F-41
<PAGE>


                    State Cable TV Corporation and Subsidiary

                   Notes to Consolidated Financial Statements
                 (Including Data Applicable to Unaudited Period)
                                   (Continued)

       
       The Credit Agreement requires the Company to pay a commitment fee of .30%
       and .40% for Facilities B and C,  respectively,  per annum on the average
       daily  unborrowed  portion of the revolving  credit  facility.  Fees paid
       under this  arrangement  amounted to $20,466 in 1997.  In  addition,  the
       Company paid  management fees associated with the agreement of $30,000 in
       1997.

       The  Credit  Agreement  requires  interest  based on the type of  advance
       requested by the Company,  either  floating rate or Eurodollar,  plus the
       applicable margin, as defined in the Credit Agreement. The interest rates
       at December 31, 1997 for the  Facility  ranged from 7.99% to 8.23% with a
       weighted average rate of 8.05%.

       Maturities of long-term debt are as follows:

          Year Ending December 31,               Amount

          1998                               $    5,254,068
          1999                                    7,602,643
          2000                                    9,320,371
          2001                                   10,410,565
          2002                                    9,972,788
          Thereafter                             18,398,165
                                             --------------
                                             $   60,958,600
                                             ==============

(5)    Commitments and Contingencies

       (a)    Leases

              The Company leases telephone and utility poles at a current annual
              rental  of  approximately   $914,000.  The  leases  are  one  year
              self-renewing agreements.

              The Company is also  obligated  under leases with an affiliate and
              others for microwave  relay  services and tower sites,  the latest
              expiring in 2079. The Company entered into a capital lease for its
              current office location  expiring in 2011, with aggregate  monthly
              payments of  approximately  $14,000.  The minimum annual  payments
              under the leases are approximately as follows:

 

                                      F-42
<PAGE>

                    State Cable TV Corporation and Subsidiary

                   Notes to Consolidated Financial Statements
                 (Including Data Applicable to Unaudited Period)
                                   (Continued)

                                                 Operating      Capital Lease
                                                  Leases

                1998                          $  103,678      $   168,861
                1999                              26,638          174,642
                2000                              27,143          178,954
                2001                              27,672          184,323
                2002                              28,228          189,852
                Thereafter                       288,658        1,697,798
                                              ----------      -----------
                                              $  502,017
                                              ==========
                Total minimum future payments                   2,594,430
                Less--Amounts representing interest             1,112,330
                                                              -----------
                Present value of net minimum lease              1,482,100
                  payments
                Less--Current maturity                             37,147
                                                              -----------
                                                              $ 1,444,953
                                                              ===========

              Rent expense,  including pole  attachments,  charged to operations
              amounted to $974,521  for the year  ended,  December  31, 1997 and
              $763,427 for the nine months ended, September 30, 1998.

       (b)    Litigation

              In the  ordinary  course  of  business,  the  Company  is party to
              various  types  of  litigation.   The  Company   believes  it  has
              meritorious  defenses to all  claims,  and,  in its  opinion,  all
              litigation  currently  pending  or  threatened  will  not  have  a
              material  adverse  effect on the Company's  financial  position or
              results of operations.

(6)    Due to Affiliate and Other Related Party Transactions

       (a)    Affiliate

              Fees for management services provided by its Affiliate amounted to
              $687,177 in 1997.

              Included in accounts  payable and accrued expenses at December 31,
              1997 was approximately $753,000 due to the Company's Affiliates.

       (b)    Aurora

              The  Company's  shareholders are majority  shareholders  in Aurora
              Telecommunications,  LLC (Aurora). The Company  leases fiber lines
              to Aurora under seven-year operating leases. Lease income amounted
              to $471 in 1997.


                                      F-43
<PAGE>


                    State Cable TV Corporation and Subsidiary

                   Notes to Consolidated Financial Statements
                 (Including Data Applicable to Unaudited Period)
                                   (Continued)

              The Company issued a revolving  credit line to Aurora with maximum
              borrowings of $3,000,000  at an applicable  federal  mid-term rate
              (6.02% at December 31,  1997).  The credit line expires and is due
              September 1, 2003. At December 31, 1997, the outstanding principle
              balance due from Aurora was  $1,991,002  with accrued  interest of
              $28,903.

              Under a  separate  note to  obtain a 5% owned  investment,  Aurora
              issued a $5,000 note payable at an annual compounded interest rate
              of 7% to the Company.  The note is due and payable April 30, 1998.
              Accrued interest on this note was $87 at December 31, 1997.

(7)    Pension

       The  Company   adopted  a  defined   contribution   plan,   which  covers
       substantially  all  employees.  Participants  are fully vested after five
       years.  Annual  contributions  are  based  upon  5% of the  participants'
       compensation earned during the plan year.

       The Company also has a 401(k) plan, which substantially all employees are
       eligible  to  participate  in.  Participants  are fully  vested as to all
       contributions  made to the plan.  The  Company  matches  50% of  employee
       contributions  up to the first 4%. Expenses  related to the plans charged
       to operations amounted to $202,951 in 1997.

(8)    Sale of Partnership Interest

       On November 15, 1996, the Company sold 20% of their partnership  interest
       in Better  Cable TV to an  affiliate  for a  $7,500,000  promissory  note
       maturing on March 31, 2004 bearing interest at 7% per annum. This sale is
       being treated as an  installment  sale for both  financial  reporting and
       income tax purposes  resulting in a deferred gain of $6,700,522.  No gain
       was recognized  during 1997. For financial  reporting  purposes,  accrued
       interest of $590,625  for the year ended,  December 31, 1997 and $984,375
       for the nine months ended, September 30, 1998, is being deferred.

(9)    Disclosure of Fair Market Value of Financial Instruments

       The carrying  amounts of cash approximate fair value because of the short
       maturity of these  investments.  The  carrying  amounts of the  revolving
       notes  receivable and long-term debt  approximates  fair value due to the
       variable  rates  of  these  instruments.  The  fair  value of the 7% note
       receivable  is estimated  based on  currently  quoted  market  prices for
       similar types of borrowing arrangements.

       The estimated  fair value of the Company's  financial  instruments  as of
       December 31, 1997 are as follows (dollars in thousands):

                                             Carrying Value         Fair
                                                                    Value

          Cash                                 $   605,832      $   605,832
          Revolving note receivable              2,019,905        2,019,905
          7% note receivable                     8,095,712        9,413,619
          Long-term debt                        60,958,600       60,958,600



                                      F-44
<PAGE>


                    State Cable TV Corporation and Subsidiary

                   Notes to Consolidated Financial Statements
                 (Including Data Applicable to Unaudited Period)
                                   (Continued)

(10)  Other Events

              (a)  Subsequent Event

              In January 1998, an ice storm severely  damaged cable lines of the
              Company in the Maine  systems.  The  resulting  loss of $1,595,567
              reflects damages incurred.

              (b)  Other Developments

              On February 6, 1998,  the Company  signed a  nonbinding  letter of
              intent with Heathrow Land Company,  L.P. (HLC) whereby the Company
              and HLC agreed in  principle to form a limited  liability  company
              (LLC) to own and operate  the cable  television  system  currently
              operated by Heathrow Cable in and around the private  community of
              Heathrow,  Florida. The terms of the letter of intent provide that
              the Company will pay  $1,350,000  for its 80% interest in the LLC.
              Upon  HLC's  contribution  or sale of the system and the assets to
              the LLC,  HLC will  receive  that  portion of the  purchase  price
              available  after  payment  for  the  Bell  South  assets  and  any
              necessary working capital requirements of the LLC while becoming a
              20% owner of the LLC.


              (c)  Sale to FrontierVision Operating Partners, L.P.

              On June 24, 1998, the Company  signed an asset purchase  agreement
              with FrontierVision  Operating Partners,  L.P. whereby the Company
              agreed to sell the majority of its State Cable TV and Better Cable
              TV assets to FrontierVision  Operating  Partners,  L.P. for a base
              price of $188,750,000. The Company closed on this sale, subject to
              certain purchase price adjustments, on October 22, 1998.



                                      F-45
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
New England Cablevision of Massachusetts, Inc.


We have audited the  accompanying  balance sheets of New England  Cablevision of
Massachusetts,  Inc.  for the years ended  December  31, 1997 and 1996,  and the
related statements of earnings,  changes in stockholders'  equity and cash flows
for the years then ended.  These financial  statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of New England  Cablevision  of
Massachusetts,  Inc.  at  December  31,  1997 and 1996,  and the  results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.




February 11, 1998                                    /s/ Baker Newman & Noyes
Portland, Maine                                      Limited Liability Company



                                      F-46
<PAGE>


                 NEW ENGLAND CABLEVISION OF MASSACHUSETTS, INC.

                                 BALANCE SHEETS


                                     ASSETS

<TABLE>
                                                                         March 31,                December 31,     
                                                                           1998              1997             1996
                                                                        (Unaudited)

<S>                                                                   <C>              <C>               <C>           
Cash                                                                  $       98,861   $      389,703    $      345,126
Investments available for sale (note 3)                                    3,812,685        6,242,464         5,899,258
Investments held to maturity (note 3)                                      4,100,000        9,600,000        12,838,779
Accounts receivable, less allowance for
    doubtful accounts of $60,112 in 1998,
    $76,450 in 1997 and $51,400 in 1996                                       58,087          120,529           154,626
Accrued interest receivable                                                   62,177          100,958            97,870
Prepaid expenses                                                             149,190           79,055           109,665

Property, plant and equipment, net:
    Property and equipment                                                    43,069           43,069            43,069
    Distribution equipment                                                18,755,678       15,835,849        14,704,528
    Support equipment, including construction
       in progress                                                         2,097,744        3,573,833           644,679
                                                                      --------------   --------------    --------------
                                                                          20,896,491       19,452,751        15,392,276
    Less accumulated depreciation                                         12,004,363       11,692,462        10,532,180
                                                                      --------------   --------------    --------------
       Property, plant and equipment, net                                  8,892,128        7,760,289         4,860,096
                                                                      --------------   --------------    --------------
                                                                      $   17,173,128   $   24,292,998    $   24,305,420
                                                                      ==============   ==============    ==============
</TABLE>


                                      F-47
<PAGE>



                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>

                                                                         March 31,                December 31,     
                                                                           1998              1997             1996
                                                                        (Unaudited)

<S>                                                                   <C>              <C>               <C>           
Accounts payable                                                      $      357,213   $      716,957    $      445,932
Accrued expenses                                                              49,318          355,311           263,363
Unearned revenue                                                             141,855          131,740           147,733
Deferred income taxes (note 5)                                               859,000          855,000           864,000
                                                                      --------------   --------------    --------------
       Total liabilities                                                   1,407,386        2,059,008         1,721,028

Commitments (notes 4, 5, 7 and 8)

Stockholders' equity:
    Common stock, par value $1.00 per share.
       Authorized 500,000 shares; issued and
       outstanding 464,212 shares                                            464,212          464,212           464,212
    Additional paid-in capital                                            11,269,195       17,819,736        17,819,736
    Retained earnings                                                      4,032,335        3,950,042         4,300,444
                                                                      --------------   --------------    --------------
       Total stockholders' equity                                         15,765,742       22,233,990        22,584,392

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

                                                                      $   17,173,128   $   24,292,998    $   24,305,420
                                                                      ==============   ==============    ==============
</TABLE>

See accompanying notes.


                                      F-48
<PAGE>


                 NEW ENGLAND CABLEVISION OF MASSACHUSETTS, INC.

                             STATEMENTS OF EARNINGS

<TABLE>

                                                                     Three Months
                                                                         Ended                       Year Ended
                                                              --------------------------       ---------------------
                                                                       March 31,                    December 31,    
                                                                 1998            1997          1997             1996
                                                                 ----            ----          ----             ----
                                                              (Unaudited)     (Unaudited)

<S>                                                          <C>            <C>             <C>            <C>         
Revenues, net of discounts and allowances                    $  2,575,428   $  2,360,711    $  9,927,773   $  9,093,028

Expenses:
    Operating expenses                                            916,960        857,368       3,537,001      3,386,515
    Local production                                              152,958        120,686         433,493        370,913
    General and administrative (notes 2, 4 and 6)                 827,785        507,425       2,391,882      2,064,929
    Depreciation and amortization                                 311,901        370,054       1,226,449        928,427
                                                             ------------   ------------    ------------   ------------    
                                                                2,209,604      1,855,533       7,588,825      6,750,784
                                                             ------------   ------------    ------------   ------------

       Operating earnings                                         365,824        505,178       2,338,948      2,342,244

Other income (expense):
    Interest income                                               162,957        251,613       1,017,564      1,203,608
    Massachusetts franchise tax                                   (10,000)       (12,500)        (50,000)       (50,000)
    Loss on disposition of property, plant
       and equipment                                                 -              (140)         (6,398)      (108,645)
                                                             ------------   ------------    ------------   ------------
                                                                  152,957        238,973         961,166      1,044,963
                                                             ------------   ------------    ------------   ------------
       Earnings before income taxes                               518,781        744,151       3,300,114      3,387,207

Income tax expense (note 5)                                        24,000         36,900         149,000        150,000
                                                             ------------   ------------    ------------   ------------
Net earnings                                                 $    494,781   $    707,251    $  3,151,114   $  3,237,207
                                                             ============   ============    ============   ============

</TABLE>

See accompanying notes.



                                      F-49
<PAGE>


                 NEW ENGLAND CABLEVISION OF MASSACHUSETTS, INC.

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>

                                                                                      Net Unrealized
                                                                                          Gain on
                                Common stock             Additional                     Investments
                           ---------------------
                           Number of                       Paid-in       Retained        Available
                            Shares        Amount           Capital       Earnings        for Sale            Total
                            ------        ------           -------       --------        --------            -----
Balance,
    December 31,
<S>                           <C>       <C>          <C>               <C>              <C>             <C>           
    1995                      464,212   $  464,212   $   17,819,736    $   5,852,204    $   2,514       $   24,138,666

Net earnings                     -            -                -           3,237,207         -               3,237,207

Net change in
    unrealized gain
    on investments
    available for sale
                                 -            -                -                -          (2,514)              (2,514)

Dividends                        -            -                -          (4,788,967)        -              (4,788,967)
                            ---------   ----------   --------------    -------------    ---------       --------------
Balance,
    December 31,
    1996                      464,212      464,212       17,819,736        4,300,444         -              22,584,392

Net earnings                     -            -                -           3,151,114         -               3,151,114

Dividends                        -            -                -          (3,501,516)        -              (3,501,516)
                            ---------   ----------   --------------    -------------    ---------       --------------
Balance,
    December 31,
    1997                      464,212   $  464,212   $   17,819,736    $   3,950,042    $    -          $   22,233,990
                            =========   ==========   ==============    =============    =========       ==============
</TABLE>


 
                                      F-50
<PAGE>


                 NEW ENGLAND CABLEVISION OF MASSACHUSETTS, INC.

            STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)


<TABLE>

                                                                                      Net Unrealized
                                                                                          Gain on
                                Common stock             Additional                     Investments
                           ---------------------   
                           Number of                       Paid-in       Retained        Available
                            Shares        Amount           Capital       Earnings        for Sale            Total
                            ------        ------           -------       --------        --------            -----     

Balance,
    December 31,
<S>                           <C>       <C>          <C>               <C>              <C>             <C>           
    1997                      464,212   $  464,212   $   17,819,736    $   3,950,042    $    -          $   22,233,990

Net earnings
    (unaudited)                  -            -                -             494,781         -                 494,781

Dividends
    (unaudited)                  -            -                -            (412,488)        -                (412,488)

Return of capital
    (unaudited)
    (note 7)                     -            -          (6,550,541)            -            -              (6,550,541)
                              -------   ----------   --------------    -------------    -----------     --------------
Balance,
    March 31, 1998
    (unaudited)               464,212   $  464,212   $   11,269,195    $   4,032,335    $    -          $   15,765,742
                              =======   ==========   ==============    =============    ===========     ==============
</TABLE>

See accompanying notes.

                                      F-51
<PAGE>


                                NEW ENGLAND CABLEVISION OF MASSACHUSETTS, INC.

                                           STATEMENTS OF CASH FLOWS

<TABLE>

                                                                   Three Months
                                                                       Ended                           Year Ended
                                                                     March 31,                        December 31,
                                                            --------------------------           ----------------------   
                                                              1998             1997              1997              1996
                                                              ----             ----              ----              ----
                                                           (Unaudited)      (Unaudited)
Cash flows from operating activities:
<S>                                                      <C>              <C>               <C>             <C>           
    Net earnings                                         $     494,781    $     707,251     $   3,151,114   $    3,237,207
    Adjustments to reconcile net earnings to net
       cash flows from operating activities:
          Depreciation and amortization                        311,901          370,054         1,226,449          928,427
          Accretion of discounts on investments                (38,607)         (57,210)         (100,828)        (267,861)
          Deferred income tax expense (benefit)                  4,000             -               (9,000)           1,000
          Loss on disposition of property, plant
              and equipment                                       -                 140             6,398          108,645
          Changes in:
              Accounts receivable                               62,442           72,740            34,097          (46,361)
              Accrued interest receivable                       38,781          (57,909)           (3,088)         (56,270)
              Prepaid expenses                                 (70,135)           4,052            30,610          (44,867)
              Accounts payable                                (359,744)        (132,773)          271,025          157,267
              Accrued expenses                                (305,993)         (53,758)           91,948           41,698
              Unearned revenue                                  10,115          (75,126)          (15,993)          91,647
                                                         -------------    -------------     -------------    -------------   
    Net cash flows from operating activities                   147,541          777,461         4,682,732        4,150,532

Cash flows from investing activities:
    Purchases of investments available for sale                   -            (501,250)       (5,544,804)      (7,699,807)
    Proceeds from maturities of investments
       available for sale                                    2,750,000          500,000         6,100,000        6,585,000
    Net change in investments available for sale -
       money market mutual funds                            (2,784,793)         (44,951)         (874,795)         928,862
    Purchases of investments held to maturity               (8,100,000)      (9,900,000)      (48,500,000)     (14,998,185)
    Proceeds from maturities of investments held
       to maturity                                          13,600,000       10,491,000        51,816,000        7,759,000
    Collection of note receivable                                 -                -                 -           9,200,000
    Additions to property, plant and equipment              (1,443,740)        (600,681)       (4,133,040)      (1,306,867)
                                                         -------------    -------------     -------------   --------------
    Net cash flows from investing activities                 4,021,467          (55,882)       (1,136,639)         468,003

Cash flows from financing activities:
    Dividends paid                                            (412,488)        (734,169)       (3,501,516)      (4,788,967)
    Return of capital                                       (4,047,362)            -                 -                -   
                                                         -------------    -------------     -------------   --------------
    Net cash flows from financing activities                (4,459,850)        (734,169)       (3,501,516)      (4,788,967)
                                                         -------------    -------------     -------------   --------------
Net change in cash                                            (290,842)         (12,590)           44,577         (170,432)

Cash at beginning of period                                    389,703          345,126           345,126          515,558
                                                         -------------    -------------     -------------   --------------
Cash at end of period                                    $      98,861    $     332,536     $     389,703   $      345,126
                                                         =============    =============     =============   ==============
</TABLE>


                                      F-52
<PAGE>

                 NEW ENGLAND CABLEVISION OF MASSACHUSETTS, INC.

                            STATEMENTS OF CASH FLOWS
                                   (CONTINUED)


<TABLE>
                                                                     Three Months
                                                                         Ended                       Year Ended
                                                                       March 31,                    December 31,
                                                              --------------------------       ---------------------   
                                                                1998             1997          1997             1996
                                                                ----             ----          ----             ----
                                                             (Unaudited)      (Unaudited)

Cash paid for:
<S>                                                       <C>              <C>            <C>            <C>       
  Income taxes                                            $     69,614     $  45,752      $ 213,674      $  179,330
                                                          ============     =========      =========      ==========
Noncash transactions:

    Investments available for sale
       distributed to stockholders as
       a return of capital                                $  2,503,179     $    -         $    -         $     -   

    Effect of changes in market value of 
       investments available for sale:
          Investments                                             -             -              -             (2,614)
          Deferred income taxes                                   -             -              -               (100)
          Net unrealized gain on
            investments available for sale                        -             -              -             (2,514)

</TABLE>


See accompanying notes.


                                      F-53
<PAGE>


                 NEW ENGLAND CABLEVISION OF MASSACHUSETTS, INC.

                          NOTES TO FINANCIAL STATEMENTS


1.    Summary of Significant Accounting Policies

      Nature of Operations

      New England  Cablevision  of  Massachusetts,  Inc. (the Company)  operates
      cable television  franchises in Massachusetts and New Hampshire.

      On April 3, 1998,  the  Company's  stock was  acquired  by  FrontierVision
      Holdings, L.P. (FrontierVision) for approximately $43,600,000.

      Interim Financial Information

      The accompanying interim financial statements as of March 31, 1998 and for
      the  three-month  periods ended March 31, 1998 and 1997 are unaudited but,
      in the opinion of  management,  reflect  all  adjustments  (consisting  of
      normal  recurring  accruals)  necessary  for a  fair  presentation  of the
      results for such periods. The results of operations for any interim period
      are not necessarily indicative of results for the full year.

      Use of Estimates

      The  preparation  of financial  statements  in conformity  with  generally
      accepted  accounting  principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure  of  contingent  assets  and  liabilities  at the  date  of the
      financial  statements  and the  reported  amounts of revenues and expenses
      during the  reporting  period.  Actual  results  could  differ  from those
      estimates;  however management does not anticipate  significant changes in
      estimates in the near term.


      Statement of Cash Flows

      For purposes of the statement of cash flows, the Company considers cash to
      consist of only cash on hand and on deposit.

      Investments

      Debt  securities for which the Company has the ability and positive intent
      to hold to maturity  are  classified  as held to maturity  and reported at
      amortized cost.  Debt  securities  which may be sold prior to maturity are
      classified  as  available  for  sale  and  reported  at fair  value,  with
      unrealized  gains and losses  excluded  from  earnings  and  reported as a
      separate component of stockholders' equity, net of estimated income taxes.
      Gains and  losses on the sales of  investments  are based on the  specific
      identification of the investments sold.

      If a  decline  in the fair  value  below  the  adjusted  cost  basis of an
      investment  is judged to be other  than  temporary,  the cost basis of the
      investment  is  written  down to fair  value as the new cost basis and the
      amount of the write  down is  included  as a charge  in the  statement  of
      earnings.




                                      F-54
<PAGE>


                 NEW ENGLAND CABLEVISION OF MASSACHUSETTS, INC.

                          NOTES TO FINANCIAL STATEMENTS


1.    Summary of Significant Accounting Policies (Continued)

      Property, Plant and Equipment

      Property, plant and equipment is carried at cost. Depreciation is provided
      over  the  estimated  useful  lives of the  various  assets  by using  the
      straight-line method.

      Construction in Progress

      The  Company  capitalizes  certain  operating  costs  incurred  during the
      construction period of cable television systems. These costs are amortized
      on a  straight-line  basis over the estimated  useful lives of the systems
      once  transferred  to their  appropriate  property,  plant  and  equipment
      classification.

      Unearned Revenue

      Advance  payments for cable services are credited to unearned  revenue and
      recorded as sales when earned.

      Income Taxes

      Effective  January 1,  1995,  the  Company  elected to be taxed as a small
      business  corporation  (Subchapter  S) under  Section 1362 of the Internal
      Revenue Code. Accordingly, beginning in 1995, the Company does not provide
      for  federal  income  taxes  since  such  taxes are paid  directly  by the
      shareholders  on their  individual tax returns.  The Company  provides for
      state income taxes in its financial  statements because New Hampshire does
      not recognize  Subchapter S status, and Massachusetts  imposes a corporate
      income tax on S Corporations with over $6,000,000 of total receipts.

      The  Company  accounts  for  income  taxes  under the asset and  liability
      method.  Deferred  taxes are  recognized  for the future tax  consequences
      attributable  to the differences  between the financial  statement and tax
      basis of assets and  liabilities,  measured  at the tax rates  expected to
      apply to taxable income when the temporary  differences are expected to be
      recovered  or settled.  Beginning in 1995,  deferred tax expense  consists
      only of state taxes.

      In accordance  with the Internal  Revenue Code, the Company may be subject
      to a  corporate  level  tax on the  net  built-in  gains  at the  date  of
      conversion  to  Subchapter S status that are realized  during the ten-year
      period after the  conversion.  Consequently,  the Company has retained its
      net deferred tax liability  existing at the date of  conversion.  As such,
      the deferred tax  liability  related to the built in gains is not meant to
      approximate  the  deferred  tax  liability  that would be  required if the
      Company was taxed as a regular  corporation.  Any corporate level built-in
      gains tax  realized  in excess of the amount  recorded  as a deferred  tax
      liability will be charged to earnings when and if realized.

      The Company's tax status will change to a C Corporation as a result of its
      acquisition by FrontierVision.



                                      F-55
<PAGE>


                 NEW ENGLAND CABLEVISION OF MASSACHUSETTS, INC.

                          NOTES TO FINANCIAL STATEMENTS


2.    Management Agreement

      The Company has a Management  Agreement  with  Diversified  Communications
      under which Diversified  Communications  provides the Company with general
      services  consisting of consulting,  recordkeeping,  budgeting,  financial
      reporting, and other miscellaneous services. Diversified Communications is
      also providing the Company with cable  management  services  consisting of
      marketing, customer service training and support, engineering, programming
      administration,    franchise    relations,    general   management,    and
      refranchising, rebuild and rate regulations. The Company incurred $376,428
      in 1997 and $350,352 in 1996 in management  fee  expenses.  The Company is
      allowed, under the Management Agreement,  to develop the internal capacity
      to provide some or all of the above services.

3.    Investments

      Investments  held to maturity at December 31, 1997  consist of  high-grade
      commercial  paper  maturing  in one  year  or  less.  Investments  held to
      maturity at December 31, 1996 consist of high-grade  commercial  paper and
      U.S. Treasury obligations. At December 31, 1997 and 1996, the market value
      of these investments approximates their cost.

      Investments  available for sale at December 31, 1997 consist of $5,214,572
      of U.S.  Treasury and Agency  obligations (of which $4,714,752  matures in
      1998 and $499,820  matures in 1999) and  $1,027,892 of money market mutual
      funds.   At  December  31,  1997  the  market  value  of  the  investments
      approximates their cost.

      Investments available for sale at December 31, 1996 consist of  $5,746,161
      of  U.S.  Treasury and A gencyobligations  substantially  all  maturing in
      1997 and $153,097 of money market mutual  funds.  At December 31, 1996 the
      market value of these investments approximates their cost.

4.    Rental Expense

      The Company leases property under operating leases. Rental expense related
      to these leases was approximately $163,000 for 1997 and $132,000 in 1996.

      At December 31, 1997,  minimum rental payments due for the next five years
      under  remaining  lease terms in excess of one year are  approximately  as
      follows:

         1998             $163,000
         1999              149,000
         2000              109,000
         2001              102,000
         2002              106,000




                                      F-56
<PAGE>


                 NEW ENGLAND CABLEVISION OF MASSACHUSETTS, INC.


                          NOTES TO FINANCIAL STATEMENTS


5.    Income Taxes

      Income tax expense  (benefit) for the periods ended  December 31, 1997 and
      1996 consists of the following components:


                                                         1997            1996
                                                         ----            ----
           Current                                    $ 158,000      $  149,000
           Deferred                                      (9,000)          1,000
                                                      ---------      ----------
                                                      $ 149,000      $  150,000
                                                      =========      ==========

      The state corporate tax rate applicable to the Company in 1997 and 1996 is
      approximately 4.5%.

      The tax effects of  temporary  differences  that give rise to  significant
      portions of the deferred tax assets and  deferred  tax  liabilities  as of
      December 31, 1997 and 1996 are presented below:


                                                          1997         1996
                                                          ----         ----
      Deferred tax assets:
         Allowance for doubtful accounts            $    2,000   $    1,000
         Property, plant and equipment                   4,000         -   
                                                    ----------   ----------
                                                         6,000        1,000

      Deferred tax liabilities:
         Property, plant and equipment                    -           4,000
         Built-in gains                                861,000      861,000
                                                    ----------   ----------
            Total gross deferred tax liabilities       861,000      865,000
                                                    ----------   ----------
            Net deferred tax liability              $  855,000   $  864,000
                                                    ==========   ==========

6.    401(k) Plan

      The Company has a 401(k) Plan that covers all employees over the age of 21
      and who have completed one year of service.  Participants  may defer up to
      14% of their compensation. The Company may make a matching contribution as
      well  as a  discretionary  contribution  as  determined  by its  Board  of
      Directors.   Participants   become   fully   vested   in  the   employer's
      discretionary contributions upon seven years of participation. The expense
      incurred for this Plan was  approximately  $70,000 for 1997 and $71,000 in
      1996.


                                      F-57
<PAGE>


                 NEW ENGLAND CABLEVISION OF MASSACHUSETTS, INC.

                          NOTES TO FINANCIAL STATEMENTS


7.    Sale of the Company

      On December 12, 1997, the Company's  stockholders  entered into a purchase
      and sale  agreement  to sell 100% of the  Company's  stock to an unrelated
      party. The Company was permitted to distribute cash and investments to its
      stockholders  prior to the consummation of the sale.  These  distributions
      are  shown as a return  of  capital  and  charged  to  additional  paid-in
      capital.

      The transaction was consummated on April 3, 1998. Substantially all of the
      remaining cash and investments was distributed to stockholders immediately
      prior to the sale.


8.    Commitments

      The Company has  committed to rebuild the Cape Ann and  Amesbury  regional
      cable  systems to comply with its  franchise  agreements.  At December 31,
      1997, the estimated costs to complete the rebuild were  approximately $5.6
      million.





                                      F-58
<PAGE>


                          FINANCIAL STATEMENT SCHEDULES



FrontierVision Holdings, L.P.                                             Page

Independent Auditors' Report                                              S-2

Schedule I:  Condensed Information of the Registrant                      S-3

Schedule II:  Valuation and Qualifying Accounts                           S-7




                                      S-1
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

Under date of March 19, 1999, we reported on the consolidated  balance sheets of
FrontierVision  Holdings,  L.P. and subsidiaries  (the "Company") as of December
31,  1998 and 1997,  and the  related  consolidated  statements  of  operations,
partners'  capital and cash flows for each of the years in the three year period
ended December 31, 1998, as contained in this annual report on Form 10-K for the
year  1998.  In  connection  with our  audits  of the  aforementioned  financial
statements,  we also audited the related financial  statement schedules on Pages
S-3 through S-7. These financial  statement  schedules are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statement schedules based on our audits.

In our opinion, such financial statement schedules,  when considered in relation
to the basic  financial  statements  taken as a whole,  present  fairly,  in all
material respects, the information set forth therein.






                                                                  KPMG LLP

Denver, Colorado
March 19, 1999



                                      S-2
<PAGE>

                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                    CONDENSED INFORMATION AS TO THE FINANCIAL
                           POSITION OF THE REGISTRANT
                                  In Thousands

<TABLE>

                                                                            ----------------- --- -----------------
                                                                              December 31,          December 31,
                                                                                  1998                  1997
                                                                            -----------------     -----------------
                             ASSETS

<S>                                                                             <C>                   <C>      
Cash and cash equivalents                                                       $     200             $   1,315
Intercompany receivable                                                               924                     -
Deferred financing costs, net                                                       8,074                 6,252 
Investment in consolidated subsidiaries                                           269,496               263,043
                                                                                ---------             ---------
    Total assets                                                                $ 278,694             $ 270,610
                                                                                =========             =========

                LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                                                                $       -             $     123
Debt                                                                              249,532               155,047
Partners' capital:
   FrontierVision Partners, L.P.                                                   29,133               115,325
   FrontierVision Holdings, LLC                                                        29                   115
                                                                                ---------             ---------
       Total partners' capital                                                     29,162               115,440

                                                                                ---------             ---------
       Total liabilities and partners' capital                                  $ 278,694             $ 270,610
                                                                                =========             =========


</TABLE>
















                  See accompanying independent auditors' report
                     and note to the condensed information.



                                      S-3
<PAGE>


                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                         CONDENSED INFORMATION AS TO THE
                          OPERATIONS OF THE REGISTRANT
                                  In Thousands



<TABLE>


                                           ---------------------------------------------------------------
                                          For the Year Ended       For the Year Ended     For the Year Ended
                                              December 31,            December 31,           December 31,
                                                 1998                     1997                  1996
                                               --------                --------                --------
<S>                                            <C>                     <C>                     <C>   
Operating expenses                             $    (39)               $   --                  $   --
Equity in losses of subsidiaries                (66,196)                (46,863)                (23,801)
Interest expense, net                           (20,043)                 (5,353)                   --
                                               --------                --------                --------
Net loss                                       $(86,278)               $(52,216)               $(23,801)
                                               ========                ========                ========



</TABLE>















                 See accompanying independent auditors' report.



                                      S-4
<PAGE>


                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                      CONDENSED INFORMATION AS TO THE CASH
                             FLOWS OF THE REGISTRANT
                                  In Thousands
<TABLE>



                                                             ----------------------------------------------------------
                                                               For the Year       For the Year        For the Year
                                                                  Ended              Ended                Ended
                                                               December 31,       December 31,        December 31,
                                                                   1998               1997                1996
                                                             -----------------  -----------------  --------------------
Cash Flows From Operating Activities:
<S>                                                                    <C>                   <C>                   <C>       
      Net loss                                                         $ (86,278)            $ (52,216)            $ (23,801)
      Adjustments  to  reconcile  net  loss to net
          cash  flows  from  operating activities:
          Amortization of deferred debt issuance costs                       586                   333
          Accretion of interest on indebtedness                           19,485                 5,047                  --
          Share of losses of subsidiary                                   66,196                46,863                23,801
          Changes in operating assets and liabilities:
              Intercompany receivable                                       (924)                 --                    --
              Accounts  payable and accrued liabilities                     (123)                  123                  --
                                                                       ---------             ---------             ---------
                  Total adjustments                                       85,220                52,366                  --
                                                                       ---------             ---------             ---------
                  Net cash flows from operating activities                (1,058)                  150                  --
                                                                       ---------             ---------             ---------
Cash Flows From Investing Activities:
      Investment in subsidiaries                                         (72,649)             (179,903)             (107,397)
                                                                       ---------             ---------             ---------
                   Net cash flows from investing activities              (72,649)             (179,903)             (107,397)
                                                                       ---------             ---------             ---------
Cash Flows From Financing Activities:
      Proceeds of issuance of Senior Discount Notes                       75,000               150,000                  --
      Offering costs related to Senior Discount Notes                     (2,408)               (6,585)                 --
      Partner capital contributions                                         --                  37,653               107,397
                                                                       ---------             ---------             ---------
            Net cash flows from financing  activities                     72,592               181,068               107,397
                                                                       ---------             ---------             ---------

Net Increase in Cash and Cash Equivalents                                 (1,115)                1,315                  --
Cash and Cash Equivalents, at beginning of period                          1,315                  --                    --
                                                                       ---------             ---------             ---------
Cash and Cash Equivalents, end of period                               $     200             $   1,315             $    --
                                                                       =========             =========             =========

</TABLE>





















                 See accompanying independent auditors' report.

                                      S-5
<PAGE>


                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
               NOTE TO THE CONDENSED INFORMATION OF THE REGISTRANT
                                  In Thousands



(1)    DEBT

       On September 19, 1997, FrontierVision Holdings, L.P. ("Holdings") issued,
       pursuant to a private  offering,  the Discount Notes.  The Discount Notes
       were  sold at  approximately  63.1% of the  stated  principal  amount  at
       maturity and provided net proceeds of $144,750,  after  underwriting fees
       of approximately $5,250.

       On December 2, 1998, Holdings issued, pursuant to a private offering, the
       Discount   Notes,   Series  B.  The  Discount   Notes  were  sold  at  at
       approximately  82.149% of the stated  principal  amount at  maturity  and
       provided   net   proceeds  of  $72,750,   after   underwriting   fees  of
       approximately $2,250.

       The Discount  Notes are  unsecured  obligations  of Holdings and Holdings
       Capital  (collectively,  the  "Issuers"),  ranking pari passu in right of
       payment to all existing and future unsecured  indebtedness of the Issuers
       and will mature on September 15, 2007. The discount on the Discount Notes
       is being accreted using the interest method until September 15, 2001, the
       date at which cash interest  begins to accrue.  Cash interest will accrue
       at a rate of 11 7/8% per  annum  and will be  payable  each  March 15 and
       September 15, commencing March 15, 2002.

       The Discount Notes are redeemable at the option of the Issuers,  in whole
       or in part,  at any time on or after  September  15, 2001,  at redemption
       prices set forth in the Indenture for the Discount  Notes (the  "Discount
       Notes Indenture"),  plus any unpaid interest,  if any, at the date of the
       redemption.  The Issuers may redeem,  prior to September  15, 2001, up to
       35% of the  principal  amount at maturity of the Discount  Notes with the
       net cash proceeds  received  from one or more public equity  offerings or
       strategic  equity  investments  at a  redemption  prices set forth in the
       Discount Notes Indenture,  plus any unpaid interest,  if any, at the date
       of the redemption.

       The Discount Notes  Indenture has certain  restrictions  on incurrence of
       indebtedness,  distributions, mergers, asset sales and changes in control
       of Holdings.

The debt of Holdings, excluding future accretion, matures as follows:

               Year Ended December 31 --
               1998                                     $          -
               1999                                                -
               2000                                                -
               2001                                                -
               2002                                                -
               Thereafter                                    249,532
                                                        ------------
                                                        $    249,532
                                                        ============



                                      S-6
<PAGE>


                 FRONTIERVISION HOLDINGS, L.P. AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
                              Amounts in Thousands


<TABLE>


                                                         --------------------------------------------------------
                                                                       Charge to
                                                          Beginning    Costs and    Deductions/    Balance at
                                                          of Period     Expenses     Writeoffs    End of Period
                                                            --------       -----          ------          ---

Allowance for uncollectible trade receivables:

<S>                                                          <C>            <C>              <C>           <C>
       Year ended December 31, 1996                         $     40       1,072            (345)         767
                                                                                   
       Year ended December 31, 1997                         $    767       1,761          (1,888)         640

       Year ended December 31, 1998                         $    640       3,076          (3,050)         666





</TABLE>




























                  See accompanying independent auditors'report.